ON Semiconductor (ON) 5 Feb 242023 Q4 Earnings call transcript

Good day, and thank you for standing by. Welcome to the ON Semiconductor Fourth Quarter 2023 Earnings Conference Call. [Operator Instructions]. Please be advised that today's conference is being recorded.

I would now like to hand the conference over to your host today, Parag Agarwal, Vice President of Corporate Development and Investor Relations. ahead. go Please

Thad Good of hour Fourth call, at Liz. A joined thank for the replay CEO; you by on is This our Thank webcast the being earnings XXXX quarter fourth be morning, will www.onsemi.com. Quarterly Onsemi's on for and and of President Quarter El-Khoury, available Relations I'm with our be conference call. Results joining website approximately following CFO. release Hassane website our following call section recorded webcast you, Investor our and X Trent, XX our Conference today approximately XXXX and this this webcast, this will available along Call. conference days

section of our is information Additional website. Relations posted on Investor the

Our certain non-GAAP financial this non-GAAP when section. these our Relations most earnings Reconciliation of to certain separately Investor posted of financial GAAP financial website directly release, are comparable in presentation on in discussion measures. limitations include non-GAAP the a our financial measures earnings the included which using is measures and and measures release

the the regarding that of results Securities During and and or differ risks future could Important XX-Qs quarter recent conference factors from of to differ Exchange actual with XX-K, wish future make most to factors materially described we such from affect release our filings company. earnings uncertainties are the caution and the cause could statements projections. Form the including performance can We the other are financial of our events our events for that in Commission results in fourth that business, our XXXX. materially forward-looking or to other and forward-looking Form that course projections or to actual will statements this statements call, subject cause

required except Our events update change change may statements occur or assumes other to other assumptions statements law. forward-looking that obligation actual by forward-looking and reflect estimates as might company no the to results, or

turn Now Hassane. me over it to Hassane? let

call. Parag. morning, all you the and us on you, Thank Good thank for joining

our year the to you to financial accomplishments are another with continue transforming long-term achieve as model. our results We following company pleased significant share of we

Power Intelligent XX% as driven we higher strategic XXXX areas XXXX revenue for in our Sensing our of XX% gross to margin. Our in portfolio & have compared accounted to Technologies with

Power Our revenue from growth XXXX win more image record the revenue 'XX. first continues Sensing. increasing long-term Day. design year $X a our XX% had design increased automotive year-over-year, crude with for fueling revenue our Analyst to growth more wins outpace revenue than Intelligent and products over We we both target XX% XX% than year in achieved growth during of Year-over-year, XXXX, future billion products. by our automotive driven . We sensors outlined new with over increasing

million for silicon great $XXX than a It We year XXXX was shipped or revenue. carbide. in Xx XXXX more

Our silicon terms both percentage industry, in market and share. XX% carbide revenue had in in the delivering of the estimated XXXX, highest an growth dollars

We than XXXX. to increased customer XXX in our customers base more

we distributed European expect XXXX Our XX% further our Korea, the in and to with production. by including customers APAC, ramp top as over followed XX diversify U.S., geographically base customer in are customers

silicon Korea. We manufacturing expansion our continue announced steps, through and to on XXX-millimeter transition our material world's the Bucheon, South already with progress in make to our largest we fab running carbide with

both still silicon signaling industrial expect grow latest growth carbide Xx indicate range EV automotive. still in production a XX%. of to We XX% at reports tapered a and XXXX, in or customers plans more OEM's market XX% growth ramping project the XXXX SiC the to growth market in market While with XX% for growth in

opportunity content a expansion for remains us. Electrification

HEV our IGBT us levels competitive BEV. EVs, a advantage and carbide ranging high-power silicon from of portfolio across of packaging all PATV give broad combined Our with solutions and to

vehicle revenue hybrid vehicles XXXX while our grew doubled In number nearly year-over-year, XX%. fact, the of related

[indiscernible] and We pun We in across specifically to $XXX have X of electric hybrid gains up chargers. content traction, all grow onboard intended. and no content significant drivetrains gains matter which

with silicon MOSFET in technologies. IGBT #X best-in-class power and is Onsemi

doubled further the Our IGBT market by nearly years last [indiscernible] X revenue in energy gains share penetration driven over overall infrastructure. and and

sensors increasing market year-over-year In better ADAS X systems. automotive, move toward megapixel X sensor sensors is higher trend to XXXX revenue with in resolution onsemi image #X driven to shift higher than higher by ASPs. at options performance nearly demonstrating value doubled revenue the year-over-year XX% more the customers for image megapixel as

we also position platform. #X are advance analog leadership plan upcoming LED and our We automotive our in mixed and and with to sensing signal ultrasonic inductive lighting,

utility In with storage is Industrial, demand energy industrial, megatrend infrastructure IGBTs, module with from our carbide we we are scale and still to portfolio string modules silicon continue commercial growth Energy highest in see #X solutions hybrid our for in inverters. silicon where silicon to carbide. our and solar and

energy renewable XXXX, In growth the XX International that over reported Agency, in IEA, rate fastest surpassed XXXX, years. the Energy its the past XX% world's or

revenue to X.Xx on The by for energy by during period XX%. course increase that is infrastructure Our XXXX. the same renewable predicts energy grew IEA

full For Elite chargers. chargers, charging electric modules, suite bidirectional ultrafast EV for capabilities we power integrated enabling vehicle just of sick DC released a

time EV chargers, charging Our near a to in highest XX industry up released can for XXX-kilowatt modules be the newly to used to minutes charge. the full reduce in

our remain best and sensing enabled has for optimized extract of the provide optimized power across performance shop become portfolio is a advantage. source most competitive technologies customers to system broad our It for our us portfolio system and one-stop critical their products a and the customers the to to level solutions. using a for Our solution for

to opportunity also support XX-volt. power transition excited our about the to We are

on already XX-volt already with automotive transition. in we as are had planned their a architecture production a new We customer portfolio such our for leading

market by Last year, our we responded execution. to the focusing uncertainty on

position worldwide in leadership more intelligent our without with of in losing and power operational solutions. innovation to demonstrated market delivered and challenging financial predictable face our sensing sustainable As of the excellence results, teams further conditions sight

having built market in with happy all capable of are We resilient model business in we've performing the a progress environments. made XXXX,

We model. turning operational our improvements in are to to target achieve opportunities now the for XXXX financial

we our all end on early and expect a outlook LTSA of across signals, In term, period inventory current demand. end softness the based slowing markets through continued and digestion near

line performance in is will over on further will we XXXX disproportionately it the we bottom to financial prior to Meanwhile, With as results. Thad? our extending Thad recovers. that better than I'll portfolio, will provide we continue details that, downturns. leading and The substantially weather with to in turn our invest benefit market

Hassane. Thanks,

Our ongoing XXXX our towards in improvement significant transformation delivered financial model. long-term

the have last accomplished a the better X delivering current Our over our while ability than a testament ever work years. through teams the to proactively results in cycle to downturn navigate is

points operating is than share. $X.X having which and which non-GAAP XXXX, in non-GAAP gross revenue the was last year earnings for achieved $X.XX onsemi comparable margin the of more different Today, of billion a year, XX.X%, XX.X% X,XXX at levels. maintained delivered resilient and basis of margin is utilization company, We per of higher XXXX non-GAAP

returned free on For our $X.X the we repurchases to and share announced through authorization year year, flow we shareholders ago. cash of a we remaining the XXX% have buyback billion

$X.XX the earnings margin per all we quarter, the fourth of midpoint revenue of above For of XX.X% share $X.XX, non-GAAP billion, gross our and non-GAAP of reported guidance.

with grew business for declined advanced end in $X.X ago record are by our fourth compared demonstrated breakdown and the and of Automotive sensors as in our driving year safety quarter vehicle quarter-over-quarter, billion automotive market, at expectations. XXXX. line X% electrification upside as by quarter to revenue [indiscernible] Looking our Still, features a image the

in sequentially down for down by versus XX% was as anticipated. activity. and industrial QX XXXX XX% $XXX and Our have slowdown been impacted factors million, Industrial All segments revenue macroeconomic

Our million. for In in in following $XX we the the compared for sustainable ecosystem. to industrial accounted QX, of business. XXXX exited automotive our XX% another exited megatrends of our to XXXX, revenue full strategy shift year, million non-core high-growth and we And to business for $XXX as XX%

the portions are we customers gross of the of to remaining business options, While find portfolio. nearing our demonstrating our margins corporate power non-core alternative healthy and now expected

PSG, mobile softness was to and million, for XX% Looking year-over-year Group, ISG, in $XXX X% revenue due ASG, an driven Group, revenue $X.X the industrial. Advanced Sensing and Group, units, auto Solutions or the carbide Revenue billion or compute increase for the to between Power an silicon for operating infrastructure. at was Solutions the of decrease Revenue Intelligent split due year-over-year year-over-year, XX% by energy and decline $XXX a the million, increase or for markets. end compute a in in decline was

of the In was GAAP the of fourth non-GAAP quarter, guidance. above our gross and midpoint our margin XX.X%

materialized XX% despite the implemented should expectations exceeded decline X in decreasing QX, further full margin gross utilization in the from we have the structural XX% see the years. We utilization changes last to validating QX. total of over impact Our in

structure mid-XX% we gross through our cost Fishkill, we points Based to the Silicon improving the XXXX. than progress less fourth making margin with we mid-XX% range. already of these with in XX hold fall-through, fab expect carbide in made expect overall have basis levels margin maintain it high XX% dilutive our remained also to profit on At the the above current outlook, expected by quarter. gross the above utilization and floor East

quarter expenses in the $XXX GAAP expenses the to some Now million fourth GAAP a ago. in margin $XXX was $XXX and quarter models. million operating operating for were compared year million let numbers XXXX. you the margin as for XX.X%, fourth million of was the for give compared me were operating your as additional operating to Non-GAAP $XXX quarter non-GAAP XX.X%. quarter

rate rate Our XX.X%. was non-GAAP GAAP tax X.X%, our tax was and

year share above earnings at QX to was $X.XX compared a quarter to in XXXX. was per $X.XX per as for of ago. in midpoint of as compared diluted the Non-GAAP earnings our quarter guidance GAAP share $X.XX $X.XX the the fourth

million million buybacks. share we count $XXX share million shares. to QX, diluted free and count our XXX returned repurchases shareholders was XXX% GAAP XXX non-GAAP through was of with diluted of our and share In shares, cash aggressive were flow Our

from Turning Cash XX% $XXX or $X.X revenue. had intensity $X.X free of which to $XXX Capital our billion operations billion, million flow equivalents were the we balance XX%. a on undrawn to Cash expenditures was $XXX and cash was and capital equates and revolver. approximately million, during of million, cash was sheet. QX

XXXX expect output ahead manufacturing by intensity silicon on be for improved in capital the carbide to XXX full original year teens low We our our millimeters. and plan the driven of

days transitions of Inventory sequentially support by inventory to days and increased the bridge to approximately days ramp. fab includes XX increased silicon in XXX. million carbide [indiscernible] This by $XX

with at strategic XXX decreased our $XX inventory Excluding these of base million inventory builds, sequentially days. days

QX. down We of distribution manage was in inventory million to inventory. weeks with proactively X.X weeks weeks sequentially continue at [indiscernible] X.X versus $XX inventory

We while we LTSA commitments. mass market the our underserving have this on focused been through channel,

few next to the increase to X start levels We to channel to X inventory expect weeks and over long service replenish the between normalize customers in XXXX inventory of quarters. the expect with tail in and

elements quarter. me key let guidance results. A for related detailing our to provided is table the release provide fourth GAAP Now the quarter you guidance the first our of our press in non-GAAP non-GAAP and

demand Given macro we markets. the across QX environment the be all our billion with current $X.X in visibility, billion revenue to end $X.X and of range softness anticipate will

gross XX.X% to non-GAAP to primarily lower and be expect headwinds. margin continued utilization EFK between We XX.X%, factory and due

Our QX gross $X non-GAAP share-based million. of compensation includes margin

million, We $X operating of $XXX net non-GAAP million. We income of have a a This debt significant exceeding on activities result million historical $XXX compensation we benefit including share-based over of other income drag expect the interest our the interest a non-GAAP our anticipate years, to last expenses X be $XX with million of reducing restructuring is benefit P&L. expense. the completed to

per to our be to diluted results million $X.XX the in range $X.XX. range share the shares. and expect of This to to in count rate the quarter non-GAAP in approximately first XX.X% share our tax for expected XX.X% be of earnings XXX is We to non-GAAP non-GAAP be

$XXX brownfield We and expect $XXX to in million of silicon million EFK. capital investments primarily expenditures carbide in

sight utilization engage operational the losing right markets As through strategy that, and our customers. our in commitments to gross where of customers long-term focus supply we Q&A. across we perfectly target remain in company. we strategic optimize execute our in drive our and shareholders. we positioned continue factory long-term on our With XXXX, We our navigate will like remain efficiencies excellence operational to and the to We focus to with fab as long-term XX% I'd confident start agreements the margin without

turn to the So line. I'll open Liz it over to

the with Ross question first from Deutsche Our of Instructions] Bank. line [Operator Seymore comes

Guys. Can you me? hear Great.

it us guys kind X side a what the automotive side then of as The is weakness of little guess, of the well? just I you carbide And an about parts seen difference Can OEMs. X on the the give quarter, you Tier last and from side, to question update on some on in you've there's kind business between of a you're emerging it. First of like seeing that talked things. Europe. in what third-party silicon sounds estimates bit

down silicon still the all Sure. is tapered Yes. you at Look, platforms the slowing remarks, when also the little we're do And it's it made, regarding in demand. the why tied very in saw just general, inventory third-party tag driven. customers, started demand you however, market look, I look know on announced are. we it in purely the based a but we prepared but demand. public outlook few in will mentioned estimates XXXX, been it's question digestion, the market now even to on carbide, bit. year that a announcements is, confident our on But know has to outlook have been We'll Xx what it's that's my The is From The softness. designs growth. are demand-driven. demand. side, question . And qualified. automotive The XXXX the end what shipping. have then to The for been

as a all that inventory high very externally, You'll outlook it. and priority utilization in which is we But what and see to is we our tailwinds. believe that order of through managing outlook inventory the have us means X work the internally the taking get we as for in the thing down been when recover, we'll as managing match guide

since kind last we've given come of we've So we've us the as outlook. about had giving cautious that signals seen because we've the talked them are seen. that's quarter, approach in the And LTSAs of

follow-up guess for I my that. And

the an is headwind us the gross before. big as and of getting it to going approximately that floor the about be you're the hold On back through XX% to progresses? utilization the how takes kind impact like utilization going side, margin you perhaps walk of puts year XX a the is you floor of the looks how talked XX%? to versus the just Can of side of on is target much long-term And

Yes, Ross, you're right. absolutely

holding look the should we'll on well, think is utilization And network. continue And drive margin to company implemented mid-XX% Liter up I think So as strategy that we X and We're bottom if about is Fab We around that basis plan we years that at out think across very close very our has really mid-XXs. which down. worked we cost our Fab gross about now. floor. execute of utilization today, every the points XX pretty ago shows efficiency effectively. will has to that that Right, you margin point What ways you of going both executed

that at down. about So late in our we've think we kind We can you started we're through we manage think we're taken down can level. kind there, it proactively utilization and at where 'XX, of of this point taking this

Vivek of with America. the Our comes of from next line question Arya Bank

XX% -- crop modeling QX to of think correction kind peers. the the do way? kind is your because we're think should suggests to we trying the at seen I avoid XX%, about do that your And recoveries? deeper have I'm close several trough you trough. has you with, to Thad peak we I And of seasonal of of of related the be when and that curious, helped listen think kind talking it what think of is you to you bottom, what you're do utilization all QX But some that, that grapple to that kind of

of the is onsemi? what trough today the kind from you So can you X has the relative kind helped what of correction cycle QX avoid for of of parts, some and see

call LTSAs if Look, to our a lot better the We about a how, Vivek, thanks the for are really of we navigate given that think you us down, I'm we utilization a way XX% . than that ship we at helped ago. taking phone talked at believe what mentioned, demand of point question. the when quarters companies when calls to what industrial about tied what us fact to I Those when That's the before started that's talking LTSAs. into softness. in in started even minimum, about is things XX%, guide going more channel talked like peers talked anyone the the that softer. provide [indiscernible] getting guided phone Yes, And X we we be happening industrial is that start closely time. already. about

The relief volume. XX we and customers to over we we other when about ago the thing automotive, about wanting about on the talked in earnings some our QX it the in started signs see because to started get LTSAs talked getting calls we days

So implemented us not our demand to seen you've years LTSAs are to But tight to last We've What in the we allowed prepare in it's in softer have we on done have visibility. [indiscernible] us do LTSAs base our few inventory bubble order reduced We've the up. that the solve a those we reduced actually give And -- utilization. are It tools a what put problem. to has that over dollars. not didn't management inventory. response a demand environment. going

All will resiliency the of the other signs which, these side tailwinds by are of all in have of model, way, of on our that. them be we the

call we the Now at the trough believe until top what not. hill a standing -- smart Look, on bottom as I'm or it. as back QX not is far we I'm looking do of to enough

you when happens. let that I'll know So

specific you agreements. mix to implied supply QX, those us And why absolute and what rate, what some in not the sense because tied On auto QX? carbide, it the very of have in why silicon past, industrial had market the is? given help a for could you was give us numbers you What's

rate. number, a tied to why market why So absolute give not an

carbide and rate? an QX did for this What what -- QX. the kind to instead it is year So just implied then for silicon giving more market any tying absolute number in quantification of a of of

Yes.

So silicon in the on Again, I'll carbide QX, it line revenue went our grew -- discussed for with expected, it in came in QX call to and first QX so cover as we as we expectation. our from up QX.

both that remain to that business in strength diversification the the also we're in growth that with and So see XXXX. the XXXX going will in shows

in any is the we to ramping numbers, business, reason Xx is adoption. it is absolute what lumpiness that very like don't a to going by carbide talk be the And and ramping a Day. business about it -- the is went Now it market. of That's is way, new to reason is [indiscernible] ramping tied with our we we to Analyst business the it at silicon

do. to to short XXXX. going call So are on I'm going change the we're All That's market. term. committed if for for which Xx the my discussed going shipments forecast is based more next We've what X to comments demand the the really been we that range is to start have question to demand at Day. on years we than to all design-ins that we be the are the we're And where And didn't We the ramp We're end done. Analyst we of very customers. Xx have. trajectory are, the do. made the That term, remain And as I what it, I remains said would trajectory to better short we better the going with the is outgrow question, our on what will leave we market. design-ins mentioned change -- forecasting, is a term of long always end market. we what kind than going at the Ross's grow broad The

from line with Chris comes question next Danley of Our the Citi.

say, have for on Do cut just . clarifications carbide months to And silicon expectations off ago? changed major say, for so still second. X then Anyway, got revenue? pricing year carbide of the a business. you X have few to that's, I this XX% for a this X Sorry, year customer expect versus, XX%, your silicon

in depending will has me LTSAs, Let changed is of as are improve to is I consistent. not the gross efficiencies -- Therefore, I'm advancements as on market, the Those on yields easier. although customers discuss technology we technologies, volume not that enhance any changes we with margin. seeing Pricing pricing our very tied pricing, ramps impact because or as pricing et other cetera. earlier. the always discussed, transfer discussed cover one, our as it's that Pricing we end to we our the tied we've get actually than

So that's that. on

few As That's handful from concentration, we customers. far not of different to XXXX. going as customer will with a lead any be remain

However, see as a we're more to diversification. going percent,

As we've the second the in going to up and more couple America, start wins across year half customers Asia years. both over the North ramp design the Europe worldwide, and ramp of from you're we in seeing last of done

in profile remain will discuss revenue of call. of keep the it but a having we with key QX So will for each, customers. as won't percentage the diversifying we I predicted just

would to markets either start that get And for them Great. both you trends which here? little X expectations a just for talk automotive industrial, overall your from [indiscernible]. a my sooner? And follow-up, you and markets, in X just much confidence Maybe recover your about expect think more can end of the us bit give the and you can to sense big worse of do

what And comment is it that consistent X manage XXXX just goes se. there financial if take as a metrics. and utilization, and up one, Margin recovery quarters manage the we're kind become we'll no inventory it and et end revenue we're only will across to Look, over there with see goes then that all per Therefore, cetera. And that's of is tailwind demand. I up, going advantage on what very therefore, been to. -- what I've of digestion softer see. almost we managing we can is last

So manage. going to we're that's how

peers. even and these lot industrial, we we say, we've have, -- Now been of will I X largest markets, would what of the markets say, of ahead I our the though, both -- of saw that is a auto softness,

the 'XX QX quarter. in automotive about We softness softness in industrial As I quarter. talked QX mentioned, we about talked

it. and And seen sure, managing we managed and the We've of well So to X it going well. recovering, to thing it, we take it. they control done We've signals we're when start as here, the much keeping doesn't come, markets. just which it high is our seen not then a recovery. some we taking ignoring artificially as correction of we're as it, much our sitting We're to harder, advantage keep far for managing then we'll if hoping you've very disciplined realization to a with can more for But we've can approach how see. address And peers.

to color give little and you QX Chris, for And a more industrial. on auto the

of high kind We digits expect both end be in quarter-on-quarter markets those down to of single QX.

So either we're seeing a yet. not recovery them of . of X

line Our of from comes with question next Sachs. Goldman Toshiya Hari the

well. as X had you your automotive image talked your in I prepared sensor about business. remarks, Yes, Hassane,

or in $X 'XX. I think billion exceeding hitting

you past? more talked in design to you And How up profitability in-source in continue of being as XX% about specifically business thinking also speak that than that are You to the wins 'XX. business year-over-year. can you the

our auto the been Yes. the growth XX% Look, and over a active web the sensor from all has has given auto and is auto industrial. That that over is and industrial, lot industrial, business, of the of been really image to a very consumer that. the away business tied in revenue our transition the capacity few last cams and to of years, moving where and

much is behind been. what than corporate I'm average. So that us. It's transition performance better a it's seeing ever margin than Therefore, the the financial higher is from performance,

would is say, I around the actually corporate. And profitability it accretive. So in, is

invest As maintain megapixels that the we like and the and in in OpEx innovation business Fab transfers. X

from that outside an we sampled mix out to that's becomes a not meaningful of of be will That you're As be far on for of inside, term. see to our to mix call XX% change to but margin of margin a sourcing. our But the model ramps as get it, from the company. products East as that going percent contributor. outlook impact part an a We will Fishkill, revenue, a the change until more longer and internal

reiterating then contributing past, of about In my gross term. And to wanted that's medium you've kind talked That's to great. so long margin I for divestitures the as go, follow-up, gross fab the to margins where you're XX% Thad, maybe the expansion. long-term

You talked about a EFK. little bit

time. I hopefully, you've should and rates, higher think marching SiC over got utilization normalize

XXXX billion I in to model, XX% revenue you guess billion plus think you you've $XX to range, hit lower my hit revenue is, in do made on the fronts? progress get to gross $XX.X levels at multiple the level the even do margin? those was question you to the revenue a those significantly assumption Or somewhere can maybe need given levels

primary don't it's we the driver to is it, recovers dependent. market Toshi, we've the march crank the as But XX% we look being I margin think Look, Thad. utilization revenue don't as that outer Yes, a and years. revenue. up gross the don't Clearly, look at we as the in got footprint, our tailwind normalizes at given current manufacturing

products that It's it, of nailed that the it's margins. of control. we to ramping then that right? utilization, Fabs monetization EFK the divested It's cost gross the the in XXXX. You the And accretive it's new are getting under divested these

there. will tailwind us gets that us of the that All give

have to that don't we got here, some need to have talked we've you from the growth but Clearly, growth about.

as versus controlled, but at much internally can So we number. what a look it we execute more demand revenue-driven to [indiscernible]

next Our Wells Mobley from line of question with Gary the come will Fargo.

we if for the mentioned increase for bottom into And days Thad, that for mentioned as utilization I consecutive quarters, -- in read the represents for the that also revenue? your saying should inventory represents that we've for that that you're given the seen believe bottom X QX QX manufacturing you year year. you fiscal

not a answered earlier. Hassane that here. I We're calling bottom Look, No. think

of XXXX. kind going we be earlier starts this in saw In think -- return year market normalize to that normalizes we in and of terms utilization, levels the in we to we're and range mid-XX% the until to the

stay this of kind level. will at utilization So

we've at In what terms transition. strategic the if we you and doing, been we've growing been of what inventory, Fab our actually carbide look silicon call inventory,

through were you in as what inventory, inventory, here. number we'll just a bit up $XX inventory that been those working But and that Fabs that's expect multiyear I plan build the we'll bring been into actually that and COGS lower or always very start dollars. million to period Days little a effectively our base was the kind of call our I we've the burn of good we in our inventory over But number. managing more in If as internal down we tight range off a at was Fabs. year, exit go the it production terms strategic sequentially. because of look a

base terms -- inventory, we're of in we we're are. happy So actually where

That's helpful, Thad.

an I Hassane, that you the signal at maybe it. analog know you're really And year you give 'XX? year into where I it you, if highlight can that was Analyst as the mixed on and that began look be to idea can time ramp balance how believe, fiscal Day, we material of through For 'XX maybe of May your fiscal that first maybe stands, vocal us platforms or your even

Yes.

with fact the platform. progress am remarks made excited that look, So brand-new I the you prepared we've in that a how I'm tells highlighting about my

our We've far far of schedule actually products as as a already track, on lead as technology a So is are little as concerned. development development, few taped of out technology ahead products. bit

to in 'XX. early cycle sampling get obviously, before be design here then you And a there's will We revenue.

the from ahead competitiveness customers, technology I So get where will that that thought of that leading see us. we -- I of, or competitiveness are the from at the one, early the adoptions of indicators of all from products see those and all two, the adoption and platform;

today, it is. power we it competitive as do that will in the about with on I that You'll mixed-signal most you, hear synergistic products platform more will is market highly exists through it get technology what it are of But about that we carry what with and the analog it. side XXXX platform tell the

So very controllers mentioned Day. [indiscernible] complementary drivers, Analyst in

So we we we on progress, forward push through Analyst I'm did I than remain more the was track. bullish will to XXXX. Day, given continue and when

Josh from Our of Buchalter next come with line question will the Cowen. TD

an follow question. to up I wanted earlier on

how as towards and times view silicon guess now, I your more focus to of demand it vertical demand a efforts efforts I of a -- moving given managing your levels, seems that ask carbide is investment do constrained? lead now. integration and are lot more to we think lot the you you silicon is your given to be the peer conventional carbide all that view shifting still are simply, long commentary take? constrained signals And right

Yes. versus remain of From a capacity at you general, the look industry technology believe growth that I if supply, and a trajectory lot about a talked has the that the electrification Fabs constrained. will in for do whole of

capacity to a order Now short of place. put XXXX is in course, in for the term, first

driven. back the goes demand ramp about. that we've a that the So it always of to is lumpiness But talked

don't additional to see I in that going temporary that overcapacity So remain. as the growth is capacity is or nature and given it

way will better be course, we intensity because Majority X-inch internally our to -- is and the we driven. of it, X-inch. -- We originally it managing performing internally than sorry, to generated about we're we a that's last down of of that of are earning substrate as taking XXXX our is Capital utilization majority faster The -- the convert is X-inch and we lot expected. ramp supply -- and down talked able modulate therefore, in capacity. on we've been in utilization quarter's our

internal-external supply modulate as demand to to order So on signal. we're this what tag to see we a in going

the underloading growing, way that matter. It's penetration are it don't a is manage continue and So see are beyond going and business, change it's it that we'll EVs our does the going whether you below and doesn't EVs trend, XX% in it XX, XX%. XX we and the company, it's multi-decade to of in term. in grow, growth, and mega above given because recover. to and to we for is the carbide XX, see outlook going lot revenue general, to a A keep still XX to below not will in to silicon EVs of that upside the long what invest

of for very the term, easily X-inch. And converting the long Josh, capital-light have from strategy because can X-inch investments to a we over our modulate we investments

are Fabs Our X-inch already capable.

think do up. we facility of having to new out convert greenfield So and a can having about and as slowly go we bring to substrates, investments versus that

happening equal on So kind off, what's can correspondingly modulate as move takes needed. very to of capacity quickly our depending and basis, the investments on market if bring we an

There's a lot helpful context there. of

ahead prepared some much you going see channel. and do refill how revenue not what that in of of a on needed refill you XXXX, at you tailwind believe that. be? guess you're to Could is would follow-up, to I remarks, know go to provide you I you signals to my look to the channel? to planning need the expect recovery would to you the that mentioned a I recovery, And a . As were mentioned get point some maybe but in context you

X prepared at market. weeks. the mass In filling start to I to now. We replenishing remarks, to underserving channel said that we're need [indiscernible] going start Yes. We're that this X quarter. We're

So our last long and And start we are continue years, look strategic we few the over LTSA to started customers supply then focused again, long if on constrained, you so tail. tail. that the we

need we start do to that. So replenishing

quarter, right? I us But down thinking tail. be to inventory terms minus. going week plus go that dollars, actually go basis, up channel revenue think that to we're -- keep got this or of first in see way of moving you for may the support up it's likely start it to into weeks, terms mind, longer we've in in a But is about that on

customers not you So industrial those them broad servicing that the been have through all set of think customers, catalog, we about well.

want more to been what putting hold than to actually They us. we've have them allowed on distributors hold. orders Our inventory

step that. of as replenishing big quarters. several start the here function much don't to got as But just we course over gradual we've a increase So a see

the Rolland line from come Susquehanna. Christopher with will of question next Our

SiC then you've overall back? your did fill the if they there? quarter? LTSAs, and what did the I as talk well. And in them -- about there you come double think expectations from Can your Or can, quarter, guys this customer of And last levels on you industrial the Anything given SiC are you clicking then past the LTSAs. update

Yes.

value of and months, next industrial breakdown $X.X kind XX% is The XX% for So that other LTSAs the is like the the auto, bucket. roughly billion. in rest XX about our of about looks what that

coverage. So LTSA view next us XX that the the that of months gives over

Yes.

-- about came it guided quarter. we want came last as don't exactly specific as than but comment far overall, And to higher look, As I it QX. customers,

we'll So that's ramping, keep coming -- keep ramping we 'XX, said that we'll as and through in expected. last exactly we time

that moving and temporary, say, I is would behind the demand . we're So ramp signal with forward that impacted us, QX

other would with In your any there you great? Do update remaining? done at be terms you we thoughts if keep this non-core of are us could there, point? that Any customers,

overcalled a when out, we million million $XXX you Chris, we've rolled years of we would this period. couple Yes. somewhere multiyear $XXX we thought as now. over know, between this for a exit and And

bring of think customers. gives indication we to value you these I the an that that

exited is we business period, about year, the it's the good, healthy for $XXX at over think So multiyear What's about million, the corporate $XXX million. remaining average.

this we've need customers as another So we as at capacity. said, this source, going if haven't to business good just we're point, our found long consider as don't that

products ability So many them those we support because our we're just about. products, to Those talking are customers them to valuing and support we'll provide customers. continue valuing that not these

baseline. talk about So our I'd further, exits we're any not just going be to in

come . will Bolton the Quinn question line Needham next with of Our from

in you then think the the First for specifically sulfate Europe. and business called carbide Korea, and you I Hassane, diversification of mentioned U.S. Asia, out

electric the hybrids? you feel do China, Just in could positioned both with how and if wondering you comment vehicles the battery

position we're -- very in China We're -- actually, our positioned. is Yes. well

about X OEM, to China quarter, demand I and we the again, I end it's both put ramping think But before. tied top LTSAs of talked commentary revenue. the with qualified having X last

our the all the by mentioned, about all them as we with China. OEMs, and electrification in the on I platforms, of storage these with for lot EV. in SiC that [indiscernible] feel energy China as a as in these exposure qualification IGBT, way, engagement both early seeing flavors That's row the in success But of on ramps are that's, is side general, pretty industrial our I growth commentary would on based platforms. good a our to the electrification. So extend platforms, the both with And and the the of far are it same

reduced. gives What on that Got uncertain hold question mid-XXs. this confidence kind utilizations it. needs rates. And the in sort the the utilization then Is to an the just Obviously, sort [indiscernible] you environment, Is the you've inventory normal the visibility you? rate. to LTSAs will a the demand million been give able it of of of utilization inventory it $XX at reduce fact that just be by

utilization? you Just feel there on the how holding do confident line

working mean get that that. but down the level. exactly a more importantly, It's as visibility managing It's inventory. we Yes. through been we've at I base LTSAs,

here. We at inventory to [indiscernible]. have an We've our over levels working base optimal shipped kept our

that that carbide. channel broad-based And market we're to have well. as And need we into in build hold like And we're to so fact mass product line, going forward start take market silicon dynamics, got some inventory can we the it to are something position. to to that as in we shipping an of we've inventoried mid-XX that's because We that for the to lower anywhere. the current look just over specific feel products we that support because not don't where not

the gives where what dynamics. we of the . that's So market given us confidence current are here,

Joseph question the of Morgan Moore will Our line from come Stanley. next with

about in But automotive digits the talked sequentially have look your I some QX. revenue, were conservatively. when guys automotive and single down you business You running at deceleration low

double of kind of is You're of digits for of kind everybody bunch which still is that there's kind gamut a in companies guiding use autos, up same but year-on-year, -- ballpark. a of of different

like replaces autos how it much silicon than would year-on-year a you -- to general could how of maybe the imply? numbers that silicon minus IGBTs -- conservatism is carbide growth, maybe and little carbide is are So better seems of that talk the bit much your just

business if I'm in take out declined look we early decline. trying the to -- I I high based silicon -- -- at the silicon at that decline, of declined. business that's you guess, it see general, on the If the the guess tie the expected decline in so all we with carbide, the a amount what market general. silicon to reports I'm starting what level,

with be may of market. some for an our us, an for is peers It from don't have outlier what said. -- business the and others But think our So what outlier some I been because the the customers and LTSAs ship on very ongoing. market approach we're tied that had about what to taking to have disciplined more we've we've a been based discussions the

or So I far quick pretty down to and making matter demand at being it signals response the response inventory taking feel to as our utilization think channel we a direct the build customers fact. of don't in to as in in as pretty it we about response good sure

automotive came I a ASP X, growth these in So growth line, about in which we content talked of pockets, and image an here. between approach few is like the think in except strength sensor, a

will Our Kumar the of Sandler. next Harsh with come Piper line question from

a why congratulations and sequential not doing Yes, because cutting but lot a I peers, companies more. a a basis, guiding [indiscernible], a other smaller. other our of first are lot you're to go loaded XX% on enough? down guiding giving you ahead all, cut am down better and complement, think words, than you you're XX% In Do lot

percent X utilization, question demand quarters excess But know this at inventory how go. stays have? the of part And might demand know will that you think where level, assuming is, you many the then of this we and do don't we at XX-something

cut visibility based are it customers. close guiding need very I'll progression where and engagement Yes. first off our the cover little do on customers and a on our question. second is matter then with where Look, we Where quarter based based us. believe we we a on It's and the -- X not did we [indiscernible]. guided we level bit Look, did the of and on of we the from believe the it's

a is . it demand-driven signal. So

some same visibility. larger our demand of reduction ship We've construct from us need lot they our peers We on difference our of with that a the LTSAs is peers versus of or we historical. have in smaller closer don't that gave versus And between been the we of to reductions whatever similar our customers first believe have our that down LTSAs the more in with program. and line visibility levels quarter believe whether been that -- some the some what tapering Now we've customers.

to we is demand engaged therefore, peers, and as been what have believe our peers. drastic with some We a customers real signals earlier signal most our of with closer demand have as and of not are been to we changes than

So peers. and peers, that the when that, better are think we our in some I some with see business, better And we not of you our business see where the revenue, ourselves than on just of much guide can our on our talk you about put a is we than can our our position by utilization. way,

You can see that base on inventory. our

can channel You see inventory. on our that

than better All peers some larger and better discipline are show of much of these that our correction. had a

"correction", what we as and we what we see a the transparent this don't a a is see view believe it So of is quarter. to view first in demand going do

you, time. taking industrial of saw on in that at to as started QX just down utilization And Yes. in utilization, we softness remind the Harsh, XXXX we

So at look if inventory, very effectively. our you managed it base we've

utilization, to landing over channel had much We utilization. down terms inventory, we If inventory it's hard. position think it in really where been of and soft in too got take weren't in a the a about you

can here. we So that what us confidence it's hold this gives these mid-XXs at levels, that

then reallocated from that then in on, Fabs very And $XXX because believe, important [indiscernible]. to my of my expand you're the or tune about the was, silicon part I in starting your [indiscernible] business think silicon XXXX follow-up, but maybe Guys, And Understood. the Hassane, the on of I helpful. of something question you subtle, very as Could that capacity, of I customers. came to on $X a point carbide think that? a billion made should having just million comment other as already understanding, is that running carbide you X

Yes.

We So to an share better. end question and Xx demand aggressive be the going gains. where look, is on at we're grow customers but end all demand would guide feel Xx What we to is, both seen. and demand, we've silicon an that's it given Xx to believe grow going is and platforms And say market, not carbide. market, going showing we're the is and better, the it ramps I'm will The market. absolute on I the is ramp that, now that given with of the give the comfortable but

So outlook for that's on the XXXX.

As is XXXX. say, X far as it comment to more more, the thought it in always going XXXX in said direct what I we've was I XXX-millimeter a because would ramp XXX-millimeter, we're qualify this -- and was

is already out, So 'XX, in 'XX. is that that on [indiscernible] we purely be are It's ramp of goal Fab, our leading qualifying remarks our in the in good fact which revenue in to we the and which [indiscernible] a indicator in 'XX. highlighting my track is confidence achieve prepared is where running going pretty to set the

concludes back like to closing the for session. question-and-answer El-Khoury call today's turn remarks. to I'd That Hassane

over the made years, resilience We navigate our required close to environment. built a dynamic last remain Through the structural we've X business changes macro the in to our we customers.

target of model We financial are with committed our enabling strategy to our the ecosystem. sustainable

worldwide Again, continued tenacity we'd you success, teams like the their to thank call company's our today. contributions and our to joining for and thank for ongoing

for This today's conference Thank call. concludes you participating.

may You now disconnect.