#1NXP Investor Presentation Fourth Quarter 2019 February 2020 NXP SECURE CONNECTIONS FOR A SMARTER WORLD#21 Forward-Looking Statement This presentation includes forward-looking statements which include statements regarding NXP's business strategy, financial condition, results of operations, and market data, as well as any other statements which are not historical facts. By their nature, forward-looking statements are subject to numerous factors, risks and uncertainties that could cause actual outcomes and results to be materially different from those projected. These factors, risks and uncertainties include the following: market demand and semiconductor industry conditions; the ability to successfully introduce new technologies and products; the end-market demand for the goods into which NXP's products are incorporated; the ability to generate sufficient cash, raise sufficient capital or refinance corporate debt at or before maturity; the ability to meet the combination of corporate debt service, research and development and capital investment requirements; the ability to accurately estimate demand and match manufacturing production capacity accordingly or obtain supplies from third-party producers; the access to production capacity from third-party outsourcing partners; any events that might affect third-party business partners or NXP's relationship with them; including the requirement to suspend activities with customers or suppliers because of changing import and export regulations; the ability to secure adequate and timely supply of equipment and materials from suppliers; the ability to avoid operational problems and product defects and, if such issues were to arise, to correct them quickly; the ability to form strategic partnerships and joint ventures and to successfully cooperate with alliance partners; the ability to win competitive bid selection processes to develop products for use in customers' equipment and products; the ability to achieve targeted efficiencies and cost savings; the ability to successfully hire and retain key management and senior product architects; and, the ability to maintain good relationships with our suppliers. In addition, this document contains information concerning the semiconductor industry and NXP's business generally, which is forward-looking in nature and is based on a variety of assumptions regarding the ways in which the semiconductor industry, NXP's markets and product areas may develop. NXP has based these assumptions on information currently available, if any one or more of these assumptions turn out to be incorrect, actual results NXP#32 NXP Investment Thesis S ୮ Market Leader in Focused on Strong Growing Markets Profitable Growth Shareholder Friendly All Excess Cash Returned to Shareholders NXP#4Secure Connections for the Smarter World... has Evolved Focus Verticals Automotive Industrial & IoT Mobile Comm. Infra. 3 ja Cloud Infrastructure Machine Learning Authentication 10 Services Data Analytics Preprocessing Enabling Technologies Home Gateway Auto Processing Gateway Connectivity IoT Edge La Industrial Controller Smart City Smart Home Smart Smart Wearables Health Retail चल La Security Smart Actuating Buildings Voice Assistant Robotics Media Streaming NXP#5NXP Addresses 4 Major End Markets Automotive ADAS + Electrification System solutions innovation with OEMs Increased content drives growth La 4 Industrial & lot Fragmented customer base Processing needs are transforming markets Scalable solutions as a differentiator Mobile Large mobile and adjacent device market Continued demand for features - innovation Growth driven by increased attach rate Communication Infrastructure & Other Capex-driven wireless infrastructure market Secular growth due to new cellular standard NXP#6Focused Leadership - End Markets NXP 2019 Revenue by End-market Exposure 2 Broad end market exposure Long product life cycles Note: LO 5 1. 2. ☐ 13% Mobile « C 47% Automotive NXP 18% 21% Comm. Infra. & Other • · High barriers to entry · Application expertise Recognized leadership in Automotive MCU and application processors Industrial & IOT · Mobile transactions RF power solutions Secure identification, mobility, RFID Please refer to the NXP Historic Financial Model file found on the Financial Information page of the Investor Relations section of our website at www.nxp.com/investor for additional information relative to our Non-GAAP Financial Measures The sum of the percentages shown may not add to 100% due to rounding. NXP#76 Growth Opportunity Driven by Focus End Markets Growth by End Market Note: 1. Percent 2018A-2021E End Market $10.9B $11.6B 2018 Revenue 3-yr. CAGR 5-7% 3-Yr CAGR Automotive 48% Up 7 to 10% $9.4B Industrial & IoT 19% Up 8 to 11% La Mobile 12% Up 4 to 6% ja Comm. Infra. & Other 19% 0 to up 2% !») Total Up 5 - 7% 2018A 2021E Please refer to the NXP Historic Financial Model file found on the Financial Information page of the Investor Relations section of our website at www.nxp.com/investor for additional information relative to our Non-GAAP Financial Measures NXP#8Automotive – NXP Leads, Accelerates in New Areas¹² Revenue $4.5B 2018A - 7-10% 3-Yr CAGR 2021E Growth drivers • New business - above market growth - ADAS / radar, vehicle networks, electrification Core business - at market growth - Connected infotainment, powertrain, secure car access Market 7 1. 2. $27B 2018E 5-7% 3-Yr CAGR 2021E O NXP defines "Market" the "TAM-F Auto" which is the total Automotive Semiconductor Industry TAM less Memory, Optoelectronics, Discretes Source: Strategy Analytics Value proposition Solution portfolio • Innovation power Automotive safety & reliability NXP#9Industrial & IoT – Highly Diversified Revenue $1.8B 8-11% 3-Yr CAGR 1,2,3,4 2018A 3-5% Market 3-Yr CAGR $127B 2. 1234 3. 8 4. 2018E 2021E 2021E La • Growth drivers Processing - 32bit microcontrollers & cross-overs -loT application processors - Analog mixed-signal & connectivity Value proposition · Broad, scalable solutions . Common S/W tool environment · Deep application insights · Channel reach Charts/graphics created by NXP based on Gartner research. Source: Gartner Semiconductor Forecast Database, Worldwide, 2Q18 Update (Calculations performed by NXP) NXP defines "Market" the "TAM-F Industrial& loT" which is the total Industrial & lotT Semiconductor Industry TAM less Memory, Optoelectronics, Discretes Industrial/loT includes Industrial, Consumer and Computing, excludes Ultramobile, Wearables and Smartcards The Gartner Report(s) described herein, (the "Gartner Report(s)") represent(s) research opinion or viewpoints published, as part of a syndicated subscription service, by Gartner, Inc. ("Gartner"), and are not representations of fact. Each Gartner Report speaks as of its original publication date (and not as of the date of this Investor Presentation) and the opinions expressed in the Gartner Report(s) are subject to change without notice NXP#10Mobile - Specialty Supplier with High Moats Revenue 4-6% 3-Yr CAGR $1.2B 1,2,3,4 Growth drivers 2018A 4-7% Market 3-Yr CAGR $71B 2. 1234 3. 9 4. 2021E • Mobile payment adoption • ● New use cases (transit, access, etc.) High-speed mixed-signal interface Value proposition ● • • Technology innovator and leadership Recognized ecosystem leader Deep application insights 2018E 2021E Charts/graphics created by NXP based on Gartner research. Source: Gartner Semiconductor Forecast Database, Worldwide, 2Q18 Update(Calculations performed by NXP) NXP defines "Market" the "TAM-F Mobile" which is the total Mobile Semiconductor Industry TAM less Memory, Optoelectronics, Discretes Mobile Includes Smartphones, Feature phones, Wearables and Ultramobile The Gartner Report(s) described herein, (the "Gartner Report(s)") represent(s) research opinion or viewpoints published, as part of a syndicated subscription service, by Gartner, Inc. ("Gartner"), and are not representations of fact. Each Gartner Report speaks as of its original publication date (and not as of the date of this Investor Presentation) and the opinions expressed in the Gartner Report(s) are subject to change without notice NXP#11Comm. Infra. & Other - Cyclical and Project Oriented 123 0-2% Revenue $1.8B 3-Yr CAGR 2018A Market $28B 3-5% 3-Yr CAGR 2021E Growth drivers • 5G basestation deployment will result in - - Adoption of mMIMO - Continued leadership in LDMOS - Transition to GaN Leadership in transit, access and retail - MIFARE and RFID Value proposition • O Broadest portfolio • Technology leadership Deep application insights 1. 2. 3. 123 10 10 2021E Charts/graphics created by NXP based on Gartner research. Source: Gartner Semiconductor Forecast Database, Worldwide, 2Q18 Update (Calculations performed by NXP) NXP defines "Market" the "TAM-F Comm. Infra." which is the total Comm. Infra Semiconductor Industry TAM less Memory, Optoelectronics, Discretes The Gartner Report(s) described herein, (the "Gartner Report(s)) represent(s) research opinion or viewpoints published, as part of a syndicated subscription service, by Gartner, Inc. ("Gartner"), and are not representations of fact. Each Gartner Report speaks as of its original publication date (and not as of the date of this Investor Presentation) and the opinions expressed in the Gartner Report(s) are subject to change without notice 2018E NXP#12Diverse Customer Base - Top 20 Customers > 40% of Revenue [ • 11 1. Reflects 2019 sales through all channels >25,000 Total Customers ༦༢༢༦༧མྦུམྦུཀྑུཾཀྑུ་ྲ ུ སྫོཊྛཊྛ༢༠ 災 « Automotive Mobile (Comm. Infra. NXP#13Driving Profitable Growth in Excess of Addressable Market123 As Reported Revenue Down 2% 3-yr. CAGR ($B) 2 Non-GAAP Gross Profit flat 3-yr. CAGR ($B) $9.5 $9.3 $9.4 $8.9 2016 2017 2018 2019 $4.8 $4.9 $5.0 $4.7 2016 2017 2018 2019 2 Non-GAAP EBIT Profit up 1% 3-yr. CAGR ($B) 2,3 Non-GAAP Free Cash Flow Down 1% 3-yr. CAGR ($B) $2.5 $2.7 $2.7 $2.6 2016 2017 2018 2019 $1.9 $1.9 $3.8 $1.9 2016 2017 2018 2019 Note: 1. 12 2. 3. 2018 Non-GAAP Free Cash Flow reflects the receipt of $2 billion termination fee associated with terminated Qualcomm transaction Please refer to the NXP Historic Financial Model file found on the Financial Information page of the Investor Relations section of our website at www.nxp.com/investor for additional information relative to our Non-GAAP Financial Measures Gross Profit, EBIT Profit, Free Cash Flow(FCF), are all non-GAAP figures, 3-yr. CAGR reflect the period 2016 - 2019 NXP#14Recent Quarterly Business Trends₁₂ As Reported Revenue ($M) Non-GAAP Gross Margin 2,269 2,290 2,445 2,403 2,094 2,217 2,265 2,301 52.9% 52.8% 53.0% 53.1% 52.7% 53.3% 53.7% 54.2% Q1 18 Q2 18 Q3 18 Q4 18 Q1 19 Q2 19 Q3 19 Q4 19 Q1 18 Q2 18 Q3 18 Q4 18 Q1 19 Q2 19 Q3 19 Q4 19 Non-GAAP Operating Margin 27.2% 27.0% 30.0% 30.4% 26.7% 28.9% 30.3% 29.9% Q1 18 Q2 18 Q3 18 Q4 18 Q1 19 Q2 19 Q3 19 Q4 19 Note: 13 1. 2. Non-GAAP Adj. EBITDA Margin 32.0% 31.9% 34.6% 35.3% 32.8% 34.7% 36.3% 35.8% Q1 18 Q2 18 Q3 18 Q4 18 Q1 19 Q2 19 Q3 19 Q4 19 Please refer to the NXP Historic Financial Model file found on the Financial Information page of the Investor Relations section of our website at www.nxp.com/investor for additional information relative to our Non-GAAP Financial Measures Gross Margin, Operating Margin, Adj. EBITDA are all non-GAAP figures. NXP#15Revenue by End Market Trend($M) Automotive 5% Q-Q (1%) Y-Y Industrial & IoT (3%) Q-Q (5%) Y-Y $1,131 $1,143 $1,121 $1,112 $1,036 Q1 18 Q2 18 Q3 18 Q4 18 $1,031 Q1 19 Q2 19 $1,048 Q3 19 $1,097 $426 $454 $498 $435 $368 $390 $426 $415 Q4 19 Q1 18 Q2 18 Q3 18 Q4 18 Q1 19 Q2 19 Q3 19 Q4 19 Mobile 3% Q-Q (3%)Y-Y Communication Infrastructure & Other (3%) Q-Q (5%) Y-Y $266 Q1 18 $238 $316 $344 $241 $297 $321 $332 $407 $419 $478 $483 $449 $499 $470 $457 Q2 18 Q3 18 Q4 18 Q1 19 Q2 19 Q3 19 Q4 19 Q1 18 Q2 18 Q3 18 Q4 18 Q1 19 Q2 19 Q3 19 Q4 19 14 1. Note: Please refer to the NXP Historic Financial Model file found on the Financial Information page of the Investor Relations section of our website at www.nxp.com/investor for additional information relative to our Non-GAAP Financial Measures NXP#16Debt Summary End of 4Q19 Debt Instrument Sr. Unsecured Notes Sr. Unsecured Notes Sr. Unsecured Notes Sr. Unsecured Notes Sr. Unsecured Notes Sr. Unsecured Notes Sr. Unsecured Notes Sr. Unsecured Notes Sr. Unsecured Notes Revolving Credit Facility Issue Date May-16 Jun-15 Aug-16 May-16 Dec-18 Dec-18 Jun-19 Dec-18 Jun-19 Dec-15 Maturity Date Jun-21 Jun-22 Sep-22 Jun-23 Mar-24 Mar-26 Jun-26 Dec-28 Jun-29 Jun-24 Issued Amount (M) $1,350 $400 $1,000 $900 $1,000 $500 $750 $500 $1,000 $1,500 Book Value (M) $1,349 $398 $997 $896 $994 $497 $746 $496 $991 $0 Amount (M) $1,350 $400 $1,000 $900 $1,000 $500 $750 $500 $1,000 $0 Coupon 4.125% 4.625% 3.875% 4.625% 4.875% 5.350% 3.875% 5.550% 4.300% Libor +125 bps Rating Moody's Baa3 Baa3 Baa3 Baa3 Baa3 Baa3 Baa3 Baa3 Baa3 NR Standard & Poor's BBB- BBB- BBB- BBB- BBB- BBB- BBB- BBB- BBB- NR Fitch BBB- BBB- BBB- BBB- BBB- BBB- BBB- BBB- BBB- NR Total Leverage Total Debt ($M) Total Cash ($M) Net Debt ($M) $ 5595 A $ 7,365 $ 1,045 6,320 $ 3,100 15 TTM Adj. EBITDA Cost of Debt Reported Leverage 4.58% 2.0X $1,000 $1,350 $900 $1,000 $750 $1,000 $500 $500 $400 2020 RCF (2.45%) 2021 2022 2023 2024 2026 2028 ■'24 Sr. Unsecured Note (4.875%) ■'21 Sr Unsecured Note (4.125%) '26 Sr. Unsecured Note (5.35%) ■'22 Sr Unsecured Note (4.625%) '26 Sr. Unsecured Note (3.875%) '22 Sr. Unsecured Note (3.875%) '28 Sr. Unsecured Note (5.55%) 2029 '23 Sr. Unsecured Note (4.625%) '29 Sr. Unsecured Note (4.30%) Note: 1. NXP Please refer to the NXP Historic Financial Model file found on the Financial Information page of the Investor Relations section of our website at www.nxp.com/investor for additional information relative to our Non-GAAP Financial Measures#17Working Capital Ratios 12 DSO DPO 32 31 32 30 35 32 32 26 83 90 74 80 74 67 74 81 Q1 18 Q2 18 Q3 18 Q4 18 Q1 19 Q2 19 Q3 19 Q4 19 Q1 18 Q2 18 Q3 18 Q4 18 Q1 19 Q2 19 Q3 19 Q4 19 DIO (2) 106 111 100 102 113 100 98 102 Q1 18 Q2 18 Q3 18 Q4 18 Q1 19 Q2 19 Q3 19 Q4 19 Note: 16 1. 2. Cash Conversion Cycle 55 52 52 58 52 74 65 56 47 Q1 18 Q2 18 Q3 18 Q4 18 Q1 19 Q2 19 Q3 19 Q4 19 DSO = (91.25 x AR) / Revenue DPO = (91.25 x AP) / COGS Working capital ratios exclude the effect of (1) assets and liabilities held for sale associated with the divestment of the Standard Products segment; (2) the effect of purchase price accounting amortization effects on GAAP COGS; Please refer to the NXP Historic Financial Model file found on the Financial Information page of the Investor Relations section of our website at www.nxp.com/investor for additional information relative to our Non-GAAP Financial Measures DIO = (91.25 x Inventory) / COGS Cash Conversion Cycle = DIO +DSO - DPO NXP#1817 Guidance for the First Quarter of 2020 GAAP Reconciliation Non-GAAP Low Mid High Low Mid High Total Revenue 2,195 2,225 2,255 2,195 2,225 2,255 Q-Q -5% -3% -2% -5% -3% -2% Y-Y 5% 6% 8% 5% 6% 8% Gross Profit 1,114 1,137 1,160 (47) 1,161 1,184 1,207 Gross Margin 50.8% 51.1% 51.4% 52.9% 53.2% 53.5% Operating Income (loss) 165 179 193 (434) 599 613 627 Operating Margin 7.5% 8.0% 8.6% 27.3% 27.6% 27.8% Financial income (expense) (80) (80) (80) (2) (78) (78) (78) Note (1) Additional Information: 1. GAAP Gross Profit is expected to include Purchase Price Accounting ("PPA") effects, ($36) million); Stock Based Compensation, ($11) million; 2. 3. GAAP Operating Income (loss) is expected to include PPA effects, ($418) million; Stock Based Compensation, ($93) million; Merger related costs ($3) million; Restructuring and Other Incidentals, $80 million; GAAP Financial Income (expense) is expected to include Other financial expense ($2) million; 4. 5. Net cash paid for income taxes related to on-going operations is expected to be approximately ($32) million; Non-controlling interest is expected to be approximately ($6) million; 6. Weighted average diluted share count is expected to be approximately 284.5 million. NXP has based the guidance included in this release on judgments and estimates that management believes are reasonable given its assessment of historical trends and other information reasonably available as of the date of this release. Please note, the guidance included in this release consists of predictions only, and is subject to a wide range of known and unknown risks and uncertainties, many of which are beyond NXP's control. The guidance included in this release should not be regarded as representations by NXP that the estimated results will be achieved. Actual results may vary materially from the guidance we provide today. In relation to the use of non-GAAP financial information see the note regarding "Non-GAAP Financial Measures" below. For the factors, risks, and uncertainties to which judgments, estimates and forward-looking statements generally are subject see the note regarding "Forward-looking Statements." We undertake no obligation to publicly update or revise any forward-looking statements, including the guidance set forth herein, to reflect future events or circumstances. NXP#19Financial Model Focused Market Growth (1) NXP Growth (1) Non-GAAP Gross Margin Non-GAAP R&D Non-GAAP SG&A 2018A-2021E 3 - 5% 5-7% 53 - 57% 14 - 16% 6-8% 31 - 34% Non-GAAP Operating Margin Non-GAAP Operating Income Growth ~8 - 14% 18 1. 3 Year CAGR from 2018 actuals through 2021E internal NXP estimates NXP#20Updated Modeling Items 1,2 4Q19A 1Q20E 2019A 2020E 2021E Cash Tax on Ongoing Operations $34M $32M 5% 7% 11% Incidental Cash Taxes $15M $248M $125M Stock Based $89M $93M $346M $375M $370M Compensation Non-Controlling Interest $9M $6M $29M $40M $45M 1. Updated since Analyst Day 2018 (Sept 11, 2018); 19 2. Incidental taxes associated with the gain on various disposals and the breakup fee from Qualcomm NXP#21Quarterly Financial Reconciliation (GAAP to non-GAAP) ($ in millions, unless otherwise stated) 1 Other Information for Q4 2019: Q4 Q3 Q4 2019 2019 2018 . PPA effects: ($394M) Total Revenue GAAP Gross Profit Gross profit adjustments Non-GAAP Gross Profit GAAP Gross Margin Non-GAAP Gross Margin 2,301 2,265 2,403 1,209 1,186 1,243 • (39) (30) (32) 1,248 1,216 1,275 Restructuring: $1M Stock-based compensation: ($89M) Merger-related costs: ($4M) 52.5% 52.4% 51.7% Other incidentals: ($4M) 54.2% 53.7% 53.1% GAAP Operating income (loss) 197 233 224 Operating income adjustments Non-GAAP Operating income (loss) (490) (454) (507) 687 687 731 • Non-cash interest expense on convertible notes: ($8M) Foreign exchange loss: ($4M) Other financial expense: ($4M) GAAP Operating Margin 8.6% 10.3% 9.3% Non-GAAP Operating Margin 29.9% 30.3% 30.4% GAAP Financial income (expense) (93) (85) (77) Financial income adjustments Non-GAAP Financial income (expense) (16) (19) (17) (77) (66) (60) 20 NXP Note: 1. Please refer to the NXP Historic Financial Model file found on the Financial Information page of the Investor Relations section of our website at www.nxp.com/investor for additional information relative to our Non-GAAP Financial Measures#22Quarterly Cash Flow Overview ($M) ($ in millions, unless otherwise stated) Net cash provided by (used for) operating activities Net cash provided by (used for) investing activities Net cash provided by (used for) financing activities Effects of changes in exchange rates on cash position Increase (decrease) in cash and cash equivalents Cash and cash equivalents at beginning of the period Cash and cash equivalents at end of period 1 Q4 Q3 Q4 2019 2019 2018 814 746 731 (1,866) (138) (174) (1,443) (95) 288 3 (6) (2,492) 507 845 3,537 3,030 1,944 1,045 3,537 2,789 Net cash provided by (used for) operating activities 814 746 731 Net capital expenditures on property, plant and equipment (138) (115) (170) Non-GAAP free cash flow 676 631 561 Trailing 12-month Non-GAAP free cash flow 1,870 1,755 3,759 Trailing 12-month Non-GAAP free cash flow as a percentage of Revenue 21% 20% 40% Note: 21 NXP 1. Please refer to the NXP Historic Financial Model file found on the Financial Information page of the Investor Relations section of our website at www.nxp.com/investor for additional information relative to our Non-GAAP Financial Measures#23Quarterly Adjusted EBITDA ($M) 1 ($ in millions, unless otherwise stated) Net income (loss) Q4 Q3 Q4 2019 2019 2018 123 119 289 Reconciling items to adjusted net income Financial (income) expense 93 85 77 (Benefit) provision for income taxes (20) 28 (141) Depreciation 131 135 124 Amortization 391 382 379 Adjusted net income 718 749 728 Reconciling items to adjusted EBITDA Results of equity-accounted investees 1 1 (1) Purchase accounting effect on inventory 8 Restructuring Stock-based compensation (1) (1) 1 89 84 93 Merger-related costs 4 6 15 Other incidental items 4 (17) 13 Adjusted EBITDA 823 822 849 Trailing 12-month Adjusted EBITDA 3,100 3,126 3,151 22 1. Note: NXP Please refer to the NXP Historic Financial Model file found on the Financial Information page of the Investor Relations section of our website at www.nxp.com/investor for additional information relative to our Non-GAAP Financial Measures#24NXP M Value Proposition Driving RMS Leadership Focused on RMS >1.5X Multiple High Growth Markets Profitable growth Solutions Core Competency Resolving customer pain-points World-class Expertise & Team Customer focused passion to win 23 23 Maximize Shareholder Value Strong cash flow generation NXP