President and Chief Executive Officer at NXP Semiconductors
Yeah. Thank you very much, Jeff, and good morning, everyone. We really appreciate you joining our call today. I will review our quarter two results and I will discuss our guidance for quarter three. Furthermore, I will provide an updated perspective on how we view the current demand environment.
Now let me start with quarter two. Overall, our results were better than the midpoint of our guidance with the contribution from the communication infrastructure end markets stronger than planned and above the high end of our guidance. At the same time, the trends in the auto, industrial and mobile markets were all slightly above the midpoint of our guidance. Taken together, NXP delivered quarter two revenue of $2.6 billion, an increase of 43% year-on-year and $26 million above the midpoint of our guidance range.
These are very good results given the constrained supply position we knew we would face entering the quarter. Our non-GAAP operating margin in quarter two was a strong 32%, 1,130 basis points better than the year ago period and 70 basis points above the midpoint of our guidance. Our strong operating profit performance was driven by a richer product mix.
Now let me turn to the specific trends in our focused end markets. In automotive, quarter two revenue was $1.26 billion, up 87% versus the year ago period and slightly above the midpoint of our guidance. In industrial and IoT, quarter two revenue was $571 million, up 31% versus the year ago period and slightly above the midpoint of our guidance. In mobile, quarter two revenue was $347 million, up 36% versus the year ago period and slightly above the midpoint of our guidance. And lastly, in communication infrastructure and other, quarter two revenue was $416 million, down 8% year-on-year, however, about $21 million better than our guidance.
With this, let me move to our outlook. We are guiding the midpoint of quarter three revenue to $2.85 billion, up 26% versus the third quarter of 2020, within the range of up 22% to up 29% year-on-year. From a sequential perspective, this is up 10% at the midpoint versus the prior quarter. At the midpoint of this range, we anticipate the following trends in our business. Automotive is expected to be up in the low-50% range versus quarter three 2020 and up in the mid-teens range versus quarter two '21. Industrial and IoT is expected to be up in the high-teens percent range year-on-year and up in the mid-single-digit range versus quarter two '21. Mobile is expected to be down in the low-single-digit range year-on-year and down in the mid-single-digit range versus quarter two '21. And finally, communication infrastructure and other is expected to be up in the low-single-digit range versus the same period a year ago and up about 10% on a sequential basis.
At this point, let me give you an update on NXP's current demand position. As I shared with you on our last earnings call, we had anticipated product supply to be a challenge in quarter two, and this is indeed what we experienced. With the continuation of robust demand, we expect supply to be a challenge for the foreseeable future. We do continue to work very closely with our customers on a day-to-day basis to accommodate their most pressing short-term requirements.
During quarter two, based on the orders and all of the various actions we took over the last six to nine months, we began to see wafer supply from our foundry partners and internal fabs improve. We do anticipate continued increase of wafer supply during quarter three and beyond, which will support our revenue growth in subsequent quarters. However, with customer demand outstripping current supply, a situation that we see across all our end markets, we are working diligently to secure additional supply to achieve a healthy balance of demand versus supply.
A significant number of our customers are also taking action by placing non-cancellable and non-returnable orders for the medium term. Furthermore, based on customer discussions and also based on our own analysis, we do not believe there is excess inventory of NXP components along the extended supply chain.
Additionally, we continue to make significant investments as a direct result of the very detailed conversations and associated commitments concerning long-term demand across our customer base, especially within the automotive and industrial end markets. These investments include long-term contractual commitments to our front end foundry partners in order to assure supply as well as making investments to expand our internal front end capacity and our internal back end test and assembly capabilities so as to avoid potential bottlenecks as wafer supply materializes.
Notwithstanding this challenging supply environment, our results and guidance clearly validate the excellent underlying long-term growth, profitability and cash-generating capability of our business. We continue to see our company-specific key revenue growth drivers in our strategic end markets unfold as we have long anticipated. These drivers include our 77 gigahertz radar systems, our e-corporate solutions, the domain and zonal processes and the electrification products, including our battery management systems, all in the automotive market.
And within the broad-based industrial and IoT market, our significant and focused investments to enable complete secure connected edge processing solutions are being very well validated by strong customer design win awards. And these are just a few of the opportunities we have shared with you at our Product Teach-In, all of them will continue to contribute to our future growth. While we will not provide specific guidance beyond the current quarter, we do anticipate quarter four revenue will be greater than quarter three on an absolute basis. And we are highly confident that 2021 marks just the beginning of a longer term upside for NXP within our strategic end markets.
In summary, we are very encouraged by the continued and consistent rapid rebound in demand across our end markets. Our employees are highly engaged to drive our success. We have a robust pipeline of new and innovative products. And the customer response engagement and design win momentum all underpin our optimism about the future potential of NXP.
Before concluding my prepared remarks, I would like to speak to the impact the COVID-19 pandemic continues to have on NXP. The pandemic remains active with spikes that continue to plague multiple regions where we have operations, namely India in the second quarter and Southeast Asia most recently. We continued to remain very vigilant enforcing our safety protocols across all of our global sites. We have initiated successful vaccination drives in several countries for our team members and their families. However, the highly contagious Delta variant has required that we reverse to a complete work from home situation in several of our locations.
I am extremely proud of all our employees for their dedication and for their resilience during this very challenging period. I would like to especially commend our manufacturing operations and customer-facing teams for their relentless focus and energy while assuring our customer success. It is their dedication and their hard work in the face of the pandemic and the very challenging supply environment at the same time, which truly make a difference.
Now I would like to pass the call over to you, Peter, for a review of our financial performance. Peter?