NXPI
NXP Semiconductors
Semiconductors
★ Quality 21/100Price today
$227.84
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What this business is made of
Where does the value come from?
5-year cycle
Money made year by year
This business has cycles — good years and bad years. That's why we don't use just the last year.
We use the average of those 5 years as the base for the math — not the good year, not the bad year. That way the value reflects what the company makes steadily.
The business
NXP is the silicon welded to your car for seven years.
NXP designs chips for automotive, industrial and IoT: processors, sensors, connectivity and embedded security. 60% of its revenue comes from cars, where every new vehicle carries more silicon. It gets paid by chip volume with gross margins (GM) of 55%.
Its chips are designed into the customer's platform and last the model's life cycle — seven years or more in a car. Switching suppliers forces requalifying the entire system, so churn is low. It's not a monopoly: it competes with Infineon, Renesas and Texas Instruments for every socket.
Revenue history
From $13.2B to $12.7B in 4 years. Sales aren't taking off — the engine is stuck.
Where each $100 of sales goes
Revenue $12.3B · FY2025
Of every $100 in sales, $83 goes to costs and operations; $17 is left as net profit (17% margin).
Catalysts and risks
Recovery of automotive inventory after the 2024-2025 correction; orders normalize toward 2026.
Content per vehicle growing with electrification and ADAS, pushing the auto segment above $7B.
Normalized FCF of $9.5 per share that sustains buybacks and dividend with $3.3B in cash.
Debt of $11B against $3.3B in cash: little room if the cycle drags on.
Cyclical business tied to car production; a recession hits volume and price at the same time.
3% CAGR — this is not a growth machine, it's a bet on the multiple and the cycle.
Charlie's note
“Good business, bad cycle, uncomfortable debt. At 8.8x normalized FCF you pay for the silicon, not for dreams — and that's already more sensible than almost anything else in semiconductors.”
Analysis · June 2026
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