Second Quarter Performance: NXP reported Q2 revenue of $2.93 billion, down 6% year-on-year but $26 million above the midpoint of guidance. The non-GAAP operating margin was 32%, reflecting a 230 basis point decline year-on-year due to lower revenue, partially countered by $40 million in reduced operating expenses.

Third Quarter Guidance: NXP forecasts Q3 revenue to be $3.15 billion, a decrease of 3% compared to Q3 2024 but an 8% sequential increase. The company expects automotive sales to be flat year-on-year and mid-single-digit percentage growth sequentially, indicating a potential return to normal demand levels after recent inventory management by Tier 1 customers.

Cyclical Recovery Signals: Management expressed increased confidence in a cyclical recovery, citing stronger signals such as growing customer backlogs, reduced order pull-ins and pushouts, and increased short-cycle orders. However, tariff uncertainties remain a risk to long-term planning.