Dutch chipmaker NXP Semiconductors is experiencing robust demand for what it calls “physical AI” – artificial intelligence integrated directly into industrial systems for logistics automation, workplace safety, and robotics. The company’s new President & CEO Rafael Sotomayor highlighted this emerging market as a key driver for growth during the company’s recent earnings discussion.
Defining Physical AI
“The fastest growing part of our industrial portfolio is the products that have inherent AI capabilities,” Sotomayor explained in an interview. “That’s what we call physical AI. The intelligence on the edge and industrial. It is a big, big part of our strategy.”
Physical AI represents a fundamental shift from cloud-based artificial intelligence to systems that process and act on data locally, at the point of operation. Rather than sending sensor data to remote servers for analysis, physical AI enables robots, industrial equipment, and autonomous vehicles to make split-second decisions on-device.
This architectural difference matters critically for applications where milliseconds count. A warehouse robot navigating around workers can’t afford the latency of cloud round-trips. A safety system monitoring industrial equipment needs to respond instantly to dangerous conditions.
Beyond Automotive
While NXP is best known as a supplier of chips and software for the automotive sector – particularly radar, advanced driver assistance systems, networking, and infotainment – the company’s industrial segment is emerging as a significant growth engine. The physical AI capabilities NXP develops for automotive applications transfer readily to other domains requiring edge intelligence.
Factory robots need similar perception, decision-making, and control capabilities as self-driving vehicles. Warehouse automation systems face comparable challenges in navigating dynamic environments. Industrial equipment monitoring parallels vehicle diagnostics. This technology transfer allows NXP to leverage its automotive expertise across broader markets.
NXP’s focus on physical AI positions the company at the intersection of several powerful trends: the expansion of industrial automation, growth in robotics deployment, increasing vehicle autonomy, and the broader shift toward edge computing. As businesses apply AI to physical systems across logistics, manufacturing, and transportation, demand for the specialized semiconductors that enable edge intelligence should continue growing.
The company’s automotive heritage provides deep expertise in safety-critical systems, real-time processing, and harsh environment operation – all essential for physical AI applications beyond vehicles. This positions NXP well as physical AI expands across industrial sectors.
