By Hamza Faisal

NXP Semiconductors delivered a strong third quarter, reporting revenue of $3.79 billion for the three months ended September 27, 2026, up 19 percent from a year earlier and 8 percent from the second quarter. The Dutch chipmaker said it exceeded its guidance across every end market, with growth led by its automotive and industrial businesses and continued strength in data center infrastructure.

Profitability improved sharply alongside the top line. GAAP net income rose to $884 million, or $3.48 per diluted share, from $631 million, or $2.48 per share, a year earlier. On a non-GAAP basis, earnings per share climbed 35 percent to $4.20, while non-GAAP operating margin widened 330 basis points to 37.1 percent and non-GAAP gross margin reached 58.6 percent.

Chief executive Rafael Sotomayor said every region grew by double digits year on year, and described the growth as structural rather than cyclical. "Our growth is structural," he told analysts on the earnings call, pointing to software-defined vehicles, the intelligent industrial edge, and data center infrastructure as multi-year drivers.

Automotive crosses $2 billion for the first time

Automotive, NXP's largest business, generated $2.07 billion in revenue, up 13 percent from a year earlier, crossing the $2 billion mark for the first time. Excluding the MEMS sensor business, automotive growth was 17 percent, driven by content gains in its software-defined vehicle portfolio even as overall vehicle production stayed roughly flat.

Industrial and Internet of Things revenue jumped 39 percent to $802 million, while communication infrastructure and other revenue soared 54 percent to $503 million on data center strength. Mobile was the one weak spot, with revenue slipping 4 percent to $411 million.

Excluding the MEMS sensor business, total revenue grew 22 percent year on year, a sign that the company's own product drivers, rather than the broader chip cycle, are doing the heavy lifting.

A $5 billion buyback and strong cash generation

The quarter also produced powerful cash flow. Operating cash flow reached $1.26 billion, and non-GAAP free cash flow came in at $1.21 billion, equal to roughly 32 percent of revenue. During the quarter, NXP returned $359 million to shareholders through $256 million in dividends and $103 million in share repurchases.

After the quarter ended, the board authorized an additional $5 billion for share repurchases, bringing total remaining authorization to about $6.3 billion, or roughly 10 percent of the company's market value.

Guidance points to another strong quarter

Looking ahead, NXP guided fourth-quarter revenue to a midpoint of $3.85 billion, up about 15 percent year on year, with non-GAAP earnings per share of about $4.36 at the midpoint and gross margin expected at 59 percent. Management also gave preliminary 2027 commentary, expecting double-digit revenue growth and gross margin expansion to 60 percent, with further gains in 2028 as its VSMC joint venture ramps.

Shares slipped in after-hours trading despite the beat, as investors weighed the guidance against high expectations. Even so, the results underline how NXP's bet on cars that are increasingly defined by software, factory automation, and data center hardware is paying off — and why the company now expects that momentum to carry into 2027.