NXP Semiconductors (NXPI) 7 Nov 232023 Q3 Earnings call transcript

Good day, and thank you for standing by. Welcome to the NXP Third 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 speaker, Jeff Palmer, Senior Vice President, Investor Relations. Please go ahead.

good and Shannon, you, morning, everyone. Thank NXP to Semiconductors Third Call. Earnings Quarter Welcome call recorded me is from Bill CEO; the today the our Betz, is Sievers, CFO; With call and corporate Kurt website. on for be will available NXP's President our today replay being and

specific Today's include include, to, expectations. current These that and uncertainties on sale impact fourth regarding markets forward-looking involve existing in and that the limited macroeconomic the XXXX. for and uncertainties the operate, management's call cause we materially end NXP's from are results of will but statements products not which could quarter of for results and new statements the our expectations risks to financial differ risks

no any update revise undertakes obligation Please to forward-looking be publicly that or statements. reminded NXP

full disclosure our statements, please forward-looking release. on refer press For to a

non-GAAP we consider does measures, financial which to are be management underlying to operating refer directly NXP's Additionally, primarily that not discrete to core will events certain by driven related performance.

G, Regulation reconciliations to X-K comparable financial nxp.com. to our NXP provided to SEC press furnished on which Form available Pursuant website NXP's the Investor the the Relations non-GAAP will third section directly on measures in release, be the GAAP XXXX and of measures in earnings most the quarter has at

I'd call turn over the like to Now to Kurt.

joining our appreciate of and Thank I with X good of early you views and very for review our results, X quarter XXXX. call today. you discuss Jeff, our everyone. We morning, start a our provide quarter much, will guidance

communication billion all line $XX and below and industrial of other in markets the slightly our quarter automotive X. year-on-year. our our expectations. IoT NXP mobile, Now end infrastructure or anticipated, quarterly guidance end Revenue let of flat midpoint delivered with above while than in markets me $X.XX trends revenue was better performed million and and essentially begin

X.X target below channel third X.X inventory months. quarter the well slightly long-term to level, distribution our month of a Our during declined

Non-GAAP primarily of points X XX%, is primarily a is was $XX R&D legal investments was versus SG&A. the margin basis operating quarter result to which ago operating Non-GAAP XX the unforecasted due approximately below potential period, XXX year points margin noted the This as basis million, of in and reflected midpoint guidance. of an legal in higher our potential down expense. liability

let focus end Now trends our the to me turn in specific markets.

million, was versus so XX% guidance. $XXX quarter In was our $XXX year line In Automotive, X% was in of so revenue billion, down versus was versus X% high year midpoint IoT, Other, Mobile, and with X midpoint of quarter X% the our Industrial midpoint year In and guidance. $X.XX our ago ago slightly the X the X down revenue above revenue guidance. period period $XXX the million, below our the X revenue In the period, and up million, the quarter and Infrastructure Communication of quarter ago year-on-year, of end up guidance. above

improvement experienced from with improving most regions, solidly quarter, the During geographic third China we quarter-over-quarter. incremental a perspective, across

XX% represented managing inventory quarter. declined our From Overall, XX% to distribution rates direct in the NXP business our business same At are versus second reflection was business. to a of period. improved perspective, customers. sales, our the still of shift by channel So sequentially our China growth in actively distribution down direct year led our digestion from time, at sell-through ago up a the sequential

expectations now I quarter for will XXXX. turn And X, to our

is and flattish trends at business. versus up to anticipate This mid-single-digit X% to $X.X XXXX revenue in sequential X the be the expected XXXX expected sequentially. and the basis We X, the sequential of quarter the Automotive be single range versus versus single-digit decline range up both XXXX. be in our ago quarter a on XXXX mid-single-digit and basis. the digits quarter billion. guiding Mobile following low percent a are is range in percent and in IoT up and year X% to Industrial quarter on in period X, We to X, percentage is versus expected about high represents quarter a down up approximately the is X, midpoint.

a Infrastructure versus basis down upper percent to in mid-single is the and And expected Communication down finally, Other X, sequentially. percentage XXXX and be quarter digits teens on

in guidance X.X year quarter ending of of combination XXXX continue midpoint the revenue fourth the views we channel contemplates distribution the a our guidance Zooming to our and for Our with versus turn fourth market cross environment currents. of third operating see we full at out, to of now the When be inventory. environment. number flattish early cyclical months quarter XXXX, an indicates on XXXX results X quarter will a and challenging quarter our

times is year, end lead Clearly, going management level, drive to the months. where normalized, At we resulting in needed, quarter anticipate demand versus lean commitments. elevated customers very constraining of channel since our actively of X.X have more pricing on-hand than NCNR rather inventory macro target which position our in neutral environment we just we China, Furthermore, company the remains including enforcing at and have X demonstrated reduction of with environment the several geopolitical already, direct of quarters, long-term And this a distribution a months early large over a inflation, blindly inventory weak, engaged in proactive and channel, have demand. X.X forward. challenges subdued our

we customer the channel inventory with with yet a begin Through all balanced to pockets digestion occur. we replenish to believe will actions, in sometime of these of enter Hence, also proactive position XXXX. some remaining will we inventory XXXX comparatively

focus shift NXP. radar production We hybrid and secure for high-performance NXP's This XXXX. battery of up markets and we very continues electric are systems, from end NXP-specific about by terms In in reaches rich, X% auto the global software-defined produced in vehicles. semiconductor of supportive be as assuming as all solutions and for is XX% the content XX% cars electrification such processes drivers, of mix towards up assume vehicles anticipated XXXX, to 'XX, content

see the to improving trends, business, to similar we our core an Mobile to over weak and incrementally Industrial. pretty Automotive. Turning see especially content a In demand, be growth after year Consumer including IoT environment. We of

we expect our edge do mobile in weak believe build-outs associated in the anticipated Infrastructure Finally, some have a as weak Communication cards Other likely of of demand continues in our in business, station life products. environment pent-up base and end we demand network and to secured

a revenue growth business we the When putting it throughout to against positives continue navigate landing and a return the year-on-year XXXX. anticipate together, headwinds, all soft loan to for netting the

we And to quarter, to the a range financial first performance. pass the I of like to to to return mid- Bill, For digits sequentially. in seasonal our the panels expect upper-single you, for review would now down seasonality call more typical a pre-COVID of

on you, to morning call. everyone and Kurt, Well, good thank today's

As the move Kurt drivers highlights. the the has outlook already financial revenue covered QX, and I QX during will of revenue provided to for the

QX Revenue midpoint our gross and financial good. solid through. performance profit were the Overall, non-GAAP was profit gross fall with of modestly guidance, above

generated the million higher the non-GAAP was of QX. XX XX.X% the gross points essentially the guidance fall-through points basis driven year-on-year. above profit on margin and $X.XX to We billion by and revenues. a midpoint billion, year-on-year midpoint $XX $X.X guidance non-GAAP revenue in up range, basis details above moving the XX of of flat reported of gross Total and Now the

guidance, previously operating was basis billion, up Total is our the was points below to When XX%. This which compensation. where million non-GAAP non-GAAP is created a a operating the to XX.X% operating year-on-year a potential $XX operating revenue, noted liability, compared or XX guidance point legal liability variable from million and the non-GAAP range million due this profit $XXX midpoint total unforecasted year-on-year non-GAAP margin QX. and of headwind margin. midpoint the were expenses XXX of was and of operating $XX up to million, miss legal basis perspectives, $XX due and remainder potential million to From of higher from slightly profit $X.X $XX down the

is non-GAAP tax which reflecting stock-based was non-GAAP of million. million, XX% not provision is above expense $XXX resulted was interest was which to range of with Noncontrolling midpoint versus guidance tax of effective the $XX XX.X%, favorable non-GAAP and guidance. XX%. a Changing earnings in Non-GAAP included a rate interest in of income million, compensation, $XXX together, per the the $X.XX, $X.XX non-GAAP earnings, this million $X of share our

$XX.XX ending debt. of returns million cash billion, working flat cumulative to up during Now sequentially investments debt turning capital The was $X.XX in flat generation cash to positive CapEx was QX our billion, cash improved QX. the affected capital metrics, sequentially. the changes at and Total the $XXX and position due end

of billion. end QX adjusted we exited and EBITDA debt resulting trailing a debt was net was XX-month XX-month adjusted to ratio $X.XX coverage of X.Xx quarter The billion XX-month ratio adjusted the at of XX.Xx. trailing $X.XX the EBITDA net interest the and with The was EBITDA

repurchased we $XXX million our and paid shares cash million of in QX, $XXX dividends. During

our QX, we approximately cash on end flow to November the the free XX% to incremental or our $XXX Friday, owners in X. shares we and trailing buying quarter, execute together, non-GAAP subsequent continue returned million an Furthermore, repurchase $XXX XX-month to a Taken XXX,XXX represented which of through XX% of share program, period. million

months was or sequentially of XXX and channel working X to decrease of was XXX turning X.X combined, approximately days, from represents Now distribution days When quarter. decline or approximately second this quarter. the a XX X-day Days from inventory the inventory prior capital about down days metrics. days, X a days

leveraging X materializes. continue form and inventory turnaround days, strength sequential product as down a decrease to We quick tightly receivable of payable days days. XX were Days X channel our levels, our laser while in on demand to sequentially be days, for days balance focused die controlling XX whole were sheet

days cash cycle an quarter. the prior versus together, days, XX of the X Taken conversion improvement was

our from million a QX margin. million is of this approximately free On and net non-GAAP of CapEx flow revenue, better free flow a in flow which or trailing operations of prior slightly quarter. up $XXX Cash XX% XX% represents or XX-month than revenue, basis, million X% $XXX cash cash the $XXX guidance of non-GAAP in resulting XX% X% was from was

future. than driving and the margin have to Overall, demonstrated we achieve XX%, a continue free in to we we believe level the be cash focused can we on non-GAAP greater a level in flow past

to for our quarter. now expectations the fourth Turning

about anticipate or outlook, our As QX year-on-year this we down about plus the midpoint Kurt and up minus X% to be QX. is $X.X At revenue $XXX million. mentioned, versus of X% revenue billion,

inventory. given Furthermore, lean current our times, channel our manufacturing demand environment, the and cycle

guidance for QX. channel inventory the improving contemplates X.X-month Our to level

plus internal and utilizations. to mix We basis expect as points sequentially balance to flat continue minus or XX XX.X%, gross be margin at non-GAAP we

higher do we However, slightly suppliers. see our from input costs

of combination a be or we focused and minus input result, remain expenses our productivity plus Operating million, million. higher these to a input through customers. mitigating to expected about are As along passing $XX on higher costs costs $XXX

non-GAAP at operating XX.X% margin Taken the midpoint. together, be will

$XX expect million XX.X% will million effective financial expense or the We of and tax. profit non-GAAP to be non-GAAP before non-GAAP $XXX be tax of rate an tax

$X will Non-controlling million. be interest

modeling QX, we share and For capital million of revenue. for XXX of count use of shares suggest an purposes, you X% average expenditures

to compensation, expect which is in guidance million. be $XXX stock-based included We not our non-GAAP

a at together, implies midpoint, of non-GAAP earnings $X.XX. Taken per share the

we customer for modeling, channel customers. support to ensure to assume following: to proper propose growth, and inventory XXXX, support expect long-tail XXXX anticipated levels sometime Now in you to non-GAAP our increase we stock the

normal model, business to plus below of sales. at end non-GAAP expenses, long-term at basis our XX% expect points. or to XX remain Non-GAAP manage plan gross We the the the margin or operating the minus high we of

prior XX%. expect in For included is the capital which expenditures, to stay suggest of for X% X% compensation, using model our $XXX to we sales within of of expect versus million. XX% stock-based the rate non-GAAP And non-GAAP we taxes, results, not a for long-term we approximately view

in I we highlight would shared like last closing, what to cycle. So

and manage our a a performance soft standpoint cyclical within and in long-term from stay continue to what control to environment, financial through disciplined First, we model. navigate will demand landing a is as be challenging our we

factory internal until hold inventory to low- will range. we assumes be expect to in operationally, the A level utilization Second, guidance the QX mid-XXs normalizes. internal

hold And sheet lastly, the we on greater more plan to cash to balance enable flexibility.

$X improved in will billion the debt tranche, X.Xx the current plan comes it also an level below which with retire to today. our cash hand, debt when due XXXX gross leverage result on March ratio We

back it remain operator we I repurchasing will Finally, over turn like shares. questions. our would active now for the to to your

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

refilling helpful the talk linearity just so you Congrats bit on that the general, But big the in choppy third in was quarter like on first and the outer channel much Kurt, sequentially to my the of guide about quarter driver little That navigating you're question, the details first quarter. your it very channel times. demand. fourth gave a and a XXXX. in was seems quarter for I wanted in the

of how decisions low are here, think your to the appreciating, to are it's range. end of takes and course, we the the So refill slowly puts that that? directionally from already about at seemingly in What channel the

Ross. Thanks,

little of the between X.X it that sitting indeed, partially absolute me just control, X.X fluctuations we Let third the are first all, minimum to mean say quarter, we in ticked be our be. these are I beyond at down a honest. and think it should anyway where

general in more move is back I would always kept that around bigger appropriate is very, X.X lean, or this So X.X we dropping over say, very now, of that felt we it intentionally environment. years X.X important it is What the to level management context to level. X.X in think I the a have it

environment, So dropping. an demand was in weak where and rather

is on Going we said magnitude forward, we next as some refill did the is will the at in say start depend my again, or again. channel point which think that why really environment. speed to year, the also remarks, The more through of environment the will we prepared stable and up that I

than will target is target We higher which long-term X.X our go our X.X not the been level, has past. which and in long-term the or

China competitiveness until anticipate we and probably quarter, same in to said as long-term go for a relatively more next Ross, the important a year, sharp would the year, start last in course, refill back If there our we of But was then next we will stable environment hold quickly. in channel that customers. think sure we rebound to is because we we make

it product stable be So there have just to will shelf where environment a be moment, will the in a competitive. important remain on enough to

my for X Bill. as follow-up, guess I

How side, great and despite margin takes puts And and you range high the the it On markets year? the keeping done the at gross keep that the versus the the are and takes weakness XX% you'd you of your XX% What job impressive. the that you are structural range, the puts have the for at overall. minus a able last next guys or the analyst also the fill high you end plus meeting? new at the that Is to stay end of through just said on have all period, that it base to for range end at given company? XX%

Sure.

So let the -- last the current couple of quarters. me address

a mentioned, As richer that XX%. and our offset of this and our that mix. to are It's our of low- quarter, composition call internal which mid-XXs is running, of about by headwind being bit margin distribution represented from it, up revenue XX% in is utilizations

and we So there's to sort the other short of in term, QX. same in occur see offsetting each the

perhaps can But these the to what long I And look going the that revenues is about again, factory fixed think we're levers term. structure eventually, our if we've drive internal over cost in higher of over the Obviously, our continued demand to clearly, Now have from gross past. one. we're productivity going talked ahead, some gains we higher standpoint. are margin

So utilizations. think higher about

introduction. customers we've long-tail about ramp product And I with R&D expanding talked that our then always of focus really, eventually, longer seeing pricing a new then more next in our investment term is neutral about market. Kurt scale mass think share, where our we're and is what the talked

goal. we not Again, of that not We're high comfortable to So initiative. going model. our our margin work continuing this final XX% on continue us a end above on to is It's some of gross our from destination. the levers current to have bring end get those to company

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

growth mid-single-digit grow overall to expect how or Auto 'XX, than growth that you in just lower that mentioned Auto do you with your the X% sales we flat. is production Kurt, saw 'XX through were so when but we production that square

Automotive So in what growth what is, assumptions And content see content for are did 'XX. I you 'XX? your guess question lift the in

the course, X% is more the saw content for clearly, that revenue SAAR. over it's driven driven than same this go you Yes, that are, right, year, latest up the which which At and demand up by much of update XXXX, actually SAAR increase, the the is time, quarter taken was is by I further. every is almost way,

which think just indeed, next [indiscernible] S&P for we So use I yes, year, also year. this the forecast, up. X% it's And from

So it's year. almost flat next

NXP guidance, of X% Now take automotive revenue, like you or be this growth Vivek, if revenue then you if QX will take annual year's our so. NXP

NXP in create a believe demand. of I to demand number, we drop are which we to are automotive inventory X% not we cliff we've 'XX. as down of did because always from. want So ahead under-shipping that will wave With And this intentionally over said, 'XX under-shipping to actually us, lead

that why, That's we to view. Automotive, Also with a make in excess And of tried not we NCNR sure revenue mind not through to have inventory. very in goes the enforce minute to we early XX% we just channel. kept the would an lean since extent year, in Ross to build ago, the see our discussed channel as

also So business. is the of significant the pretty channel Automotive part

digestion mean we at say that more going we tell assume to little the a maybe demand. true inventory bit ourselves year, half, exactly through the be but that's Vivek, working return first levels, will business I automotive through I you are still through here, to next digestion. reflecting are in is that we can't our when safe it's point revenue this growth to to means some year, which are what this So think which next inventory the

year. half, make Including every why the and the for means continue the statement of that probably managing that's issue this discussed year-on-year not growing managed the this then and growth inventory should way, relatively that. We it, throughout the we will statement quarter that's now quarter. we confident Automotive, but just X which it for By proactively to second next relative from explained, pattern, early, so-called have in anticipated as whole in is which I just cliff be into to I NXP. whole run are we of year-over-year replenishment also into why true the landing. be And we that the was company. that that resume clean channel, But early entire year principle, of Since then soft we as have

For the my 'XX, just for on us follow-up, giving thanks views. high-level

So an suggests QX, normal That right? end seasonal kind billion think your What business 'XX so. to Is question kept 'XX low Automotive your is of overall you you at useful should that of CAGR, mentioned your neighborhood normal model, I X% that seasonal. that the in just for QX? that expand of In And assumption 'XX to 'XX. XX% the to as 'XX. be sequentially $XX sales your even presentation, in about overall we or if

overall Autos sales. just and QX So 'XX

of by year. by too far. the to There by color really don't to X shot give quite segment, call, Yes, go really the color quite and we turmoil some on quite of some around quarter. order path will some the given want look, far our we went segment Vivek, We far I this of companies, next us revenue in providing in think just be that created went here down uncertainty peer by

of by always more for for mid- was what is, to pattern said decline, stay single-digit a me upper seasonal which had what the way, with QX company, pre-COVID. with we've the which whole sequential So a I

nothing with pricing about pretty to everything much a this [ really Xx ] back in there's strange normal environment normal. So normalized

that that mean, was more at by question just rest growth, to corridor. And the corridor. being them Investor your model, think, a the in, about of Vivek. end XX%, I of was behind talked about like stand corridor to given margin I the Bill in all in the X-year We the the have we hitting gross half other Day which indeed November commitment, about way. X% 'XX do which of We stand X% our The high yes, behind the all. of XX%

we where a to macroeconomic couple is also in corridor revenue, in of will factors, be X% the especially be the including and to of more depends On really return on of the which we a judge. timing of will It the China very thereof XX%, hard corridor.

way it. there. either can't should just we us hit of So corridor. that that We But get not go out should

comes next Our question Stein Truist Securities. with the from William of line

seems going very among many, I maybe sort the And a I to But been OEMs, success Chinese the I'm I was not outlook Chinese And is for electrified were First, we companies has multinationals the been of well. have still OEM hybrids would this are next think if talking about. it get EV big next had EVs, North their then year really view better really maybe have growing doing weak. won consider but you wonder, of maybe X And restricted OEM sure, embeds But but there's if that X follow-up. been to in bigger? American drivetrain quickly outlook overall Kurt, it what sort like a sales me category has it this was have EV market jump or big of to your traditional your your very the year. multinational do a specifically, comments. only of if more and in that that's

where Thanks, Will. clear as That be possible. and let to try going you me I are as see

combination S&P. First, and called of a hybrid battery category the did It's the is electric That a I yes, xEVs. talk is fully about vehicles. by what the category electric used

that because it's drivetrain electric sharply. believe continues what semiconductors. quite the every only our drivetrain. to calls more yes, also or which an specifically but car, has us drivetrain combustion for do invention, which we matters an a That's grow is And stuff electric So for next engine to it either

which quite XX XX% cars this million forecast are November, So I year guess, are year, this of we produced is total this of, that in I the xEV. of XX% XX since car and order production, million it's think, the latest is, year, units in accurate. the

is that to to which a growth. grow XX% is number And XX%, forecast year-on-year

then XX% So this if xEVs will you in of go next these absolute terms, be more year. there than year

but from? Now U.S. producers Look, I U.S. actually perspective, car a are relatively a it is at this look little where come misleading it a global main perspective. from well, Europe really driven, China. The also the to the vehicle does think small. And that from top now which that, is dynamic is the where volume better, in little space. is electric on China of driving is a is the one

I to XX% if systems, semiconductor which to solid believe this the format which here, of happen above So those adjustment by moving as story supportive the in discussed we be is cars categories content is our companies, some short, in you beyond earlier, programs, take growth, features think not But just of way, long to then commentary that and xEV global to obviously higher of everything. electronics electrification going do some very pure the XX%, a is investment tend we of yes, representative of U.S. published the global what on were level.

also systems why like is not SDV important in revenue. vehicle ADAS faster slowing that We these a introduction So believe happens is which our penetration. in see it electric also we and do cars, massive the with the vehicle to whole our software-defined RADAR

Ultra-Wideband. which helpful. you me sort into And That's really follow-up, is led the of

product in both this hoping see and you to handsets. early among automotive as in but that I'm how trends, update you us think can to you're seeing other were uptake I

side, handset new. nothing the On really

Mobile, up which nothing for again a a dynamic me, our by to in do sequentially driven you space, Android Android. with is Mobile also seen quarter, are more we little for for still Ultra-Wideband, is has industry in are fourth more the mobile-wide guide the bit a in excuse We situation, where have which might which waiting

So going think benefit given is us because proportional it's space, we that now in more it. the And then Android Android a space, dynamic with from inventory to in our will provide to very also we're be bit up. lean going if there

very In the we space, Auto good. feel

Ultra-Wideband. to we are of what in wanted we ahead So achieve

think, production. something have, I in platforms like we So X

So are which there product. our production are X platforms, Ultra-Wideband in with car automotive

platforms XX to are XX rewarded To my knowledge, NXP. to something new are or XX like XX of awarded

knocked and small Actually, have want X to because been the security under which dilutive. of rejected down have would out we platforms, is we standards them largely NXP there XX. So they ship to which were

So that Ultra-Wideband means very very, overall, Automotive in is good. the momentum

Our Stacy next of Bernstein Rasgon with question comes from Research. the line

channel ship grow wanted to to decide would you Is fill still the XXXX, $XXX million? still have to inventory. amount year-over-year that I to next up the the you if in back And channel go didn't you year?

a immaterial. Stacy. because to precise, is the a to X.X came I and X.X. even now it's That are it's it's -- bigger, be $XXX at bit the So X.X, answer delta million, even Since now -- between months well, going the actually little perfectly yes more million, yes, little think, probably than from we $XXX but that's

That is the yes. is. So answer here

million year channel do year is $XXX Secondly, whole because time to some do need something we next we that the replenishment growth not will amount. no, next some

a be cannot basis of next the that guide So year. for

it. Got

trends land China you on and to thought else some China I like better. guidance ask China follow-ups, like where about better. getting then of like getting in hearing year, full my year But macro just the next I getting little anything you depending your It better. you said found the a it that wanted For you from is geographical We're sounded for mentioned. confusing. was competitors any the not or of that

all think sources like just see like you're you certainly sound maybe you sound discrepancy? change can what And on fairly the Why little by an things I'm do where competitors you do you cautious color market the guys -- what seeing still your overall of of geography? us more cautious. and a fairly in give improving

Okay.

me let the peel onions, So Stacy.

again, on entered have lending First you into and the of we soft maybe this year. middle channel a of reason do already comparably why quarter, our company level. last you to which peers better, year look a is, really we at the early all, if The navigation, already about when think

We Stacy. period, over that have less certainly shipped

softer X last growth, undergrowth is X%, that competitors. be explains growth believe our which if our through that you versus more a course, That, undergrown the of sharp X-year we even if we this that just It's also And said look say, over of some think at going done. is that you decline. And this cycle. especially forward, year's sharply, that I in still years Auto have you less this on peers have we we I a and Auto, you earlier, rates, don't find compare some competitors, see CAGR inventory see ship than management as

is because beneficial which very, to loading this Now from margin we that trajectory, going our too intentionally we do is it to hard. gross very under part suffer believe factories very not

So that's where been the coming direction actually, from. has

the know especially on you in of to is that you largely ask Industrial IoT, Stacy, because do guided, to Now that heard China peers. what what is this relative side, to we different very lot just have geographic and from I a

quarter just our So to up we repeat, several competitors sequentially single-digit we X said. to what I contrast have and by have of sharp both in guided want just which year-on-year, is high a percentage,

saw this IoT think is our calendar had simply Industrial X because this already quarter in we in and We year. trough of

there. numbers, the at sharp we drop had look you If a

we sure absolutely made inventories there. would from have not We increase

was it's incrementally then, the still moving Since been that demand. say from a since around is to have which down I while are And we What confusing up a pulse of quarter-to-quarter-to-quarter, we we close China. readily So messaging, keep have year-on-year up. perspective. been to going very bit meant QX, the long might

again It into in numbers still in we quarter so it our couple of don't But sequentially, put this of past any on and quarters, the that's improve it does the So waiting, there. rebound has incrementally, not X. big now improved improving. and keeps China, we are

So China. that the commentary was on

positive. in quarter simply we tough our had trough So much again, the it and We because already was trough. it's math. But others. it deep. just a there mean cautiously is did earlier really I X, just was many than it you It do

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

to terms and is area volumes, domestic you a ability chip quite a China The be of chain supply some is -- market where enough that in market seems in the perspective. China Clearly, integrated competitors. market, invest China the is by to market vertically be can from there large automotive

your are you long how see my question increasing players? from is, China automotive competition domestic the business you So term to when brands, you with planning for retain probably

Yes, Gary.

be to all, continue and of been it's business our our First has business our competitive. will business. to be It

back So in your I itself, point, mean new. specific it's come I but nothing to

whole in life Our game, is wherever our whole priority play. be to we competitive,

competitors, So Western on, the automotive relates our plus do we which largely the competitors in space, China, which have from see focus so indeed, you been Japan. far, in

competition. we seen any local So hardly have

So absolutely that's right.

in up more I'd Now China say, the micro low-end came of controllers. over in competition quarters, local past, couple

However, not automotive. in

We that automotive entering haven't into all. seen at

much that low-end play the in don't also We microcontroller space.

all. mean, So I been been seeing we've event but not it's at a us for big it,

for see good from matter would is automotive. away the see a news, probably then simpler China. in massive do which takes I mean, a I on Chinese probably X.X that one was there spent personal significant Secondly, the China, in factory of also silicon My in forward, carbide. focus that things both if local start engineering and obvious just of the of will businesses that's I think will, investment we some touch semiconductor world weeks and The we the do. device you analogic in because competition focus doesn't silicon not signal in carbide do this up-and-coming focus going was on But it take that really more we we of China, be would companies us do. it engineering massive and

today. we say forward. ] the Korea. again, would we But are take in on one will we've yes, going [ focus pressure that's don't it my halved mean or probably also this local I competitors segment, We've where I there like losing seen past. Gray, in this Chinese be semiconductor under the not in Japan But being it's seen

it's an we the local confronted we we'll are top about make on time sure that strategies, made competitors. it, So we paranoid stay that and not long-term first Yes, are of with which that. have

your less you about put commitments. ask commitment the foundry They've running billion this partners. that to of counterintuitive consistent but in, we're to If market follow-up, for dynamics $X your I it to seems knew maybe been wanted a have where year, with flattish you'd just past is which purchase your with the revenue, I below

expect your maybe you that given to So can industry in purchase you in if the 'XX? trends the just speak commitments dynamics

multi-year commitments. Well, those are

to, badly a next so which the is the what to. -- which I referring years, is think you sitting, multiyear in badly have support X-plus guess Q, which we commitment commitment is like to referred $X.X is growth And I needed something billion a required over and this our

This the third-party mean, we of and It's supply worry growth. to woods. which that are the That nothing needed to tight perspective times in we support supply situation. customer Lead unusual, commitments continue very normalized. have wafers, completely foundry from nothing does every those not glad just out actually are place So be these whole a for we to where have however, about.

is leading few there technology short, of to couple we quite actually are a are still a also where So complications. nodes, which

have others, few is we us they comes need back to sure once to not period of sure quite because is business customers actually cycle, forecast that where we similar where are make don't XXXX. not capability give digestion with a our in few, far inventory but Which there supplier second this and very the long-term -- just out perspective. we the half demand And quite like a make mid- we into fine, have a a that's of away stringent that's we enter did from versus to discussions they really

mix long-term have those of that's needed our really we are growth. why the future So in agreements, there which revenue

comes question line Joshua the of from with TD Our next Buchalter Cowen.

you will XXXX, of So I some but sounds If production year. growth to Auto next I about lower, sort it digestion. and the puts pricing neutral, like layout we element that takes, a outlook was growth compared as how stack we 'XX? be and it a reason sort XXXX? for than less should about content growth and to the we up reason production -- Auto think XXXX there there mean pricing, is should your of Is mentioned there of -- flat wanted be ask business flat-to-up the for a

Hey, Josh, trial. good

have say growth next at be now at year. dynamics underlying work will than segment earlier, to think, give SAAR the Yes, the some XXXX, Vivek level not this I less year I here. you well, I SAAR is of it the As least the guide but going was can I to to, -- on

I xEV going is better, to discussed mix to so earlier, think the vehicles of XX-plus the the as penetration we percent level.

So that's supported to this relative year.

statement further we So your content from where pricing. are. agree it I neutral about more drives with

that's is that, the drivers, is piece of next ] growth I only in remaining Board. which fair said our company-specific are across going to which to to The piece having cycle digestion our well the skating and [ all place. And of back end think the a revenue. only demand, assumption through remaining normal inventory

intentionally. another again, I but it we by this are next closer already. fair to demand and that back go quarters, can real a of what is automotive only then couple growth assume behind rates everything We've and we it's it, revenue end the do the is. middle year us will in quarters else few much repeat for It's to maybe to Currently, And done of demand. undershipping going be

that there so because Think at this many revenue other is it growth cycle. so work, this about is SAAR But look to it especially misleading way. inventory in just Automotive things annual against really

it I I [indiscernible] ask way. Understood. another try. I could can guess

help to like the or tied think was to of as guys drivers. directional balance the [ your you things XX% SXX some it more radar, to platform drivers business and of Maybe BMS, content growth was Auto quantify maybe for give You SAAR think you about used ]? a QX metric give of can I that mix sort

haven't That's that. might be That not said you model our model, a made, we but really Josh.

in strong independent and we And And what I SAAR. that a probably why to slowing be something think also there fits X% that next question, bracket. see we what no continued is it is going. Again, content that by to say is of earlier would So is do keeps cycle. the again, year. inventory your overlaid But reason do is X% is increase, which that which the

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

the expectation the neutral I sort bit When little you to back think that for at little wanted into of I our conference mentioned spoke 'XX. more less a time, we environment 'XX your ask than in you environment. be than ago, Kurt, 'XX couple saw that but a pricing pricing up was relatively 'XX, you expect a months a you hinted bit about of then what at to

'XX? this that's to enabling you in pricing lower think flattish Or costs So are B, change that pricing demand-driven? I keep correct? guess you you there's is been A, about little a so, more a And how slight is input into if more seeing

you It this want Toshiya. on cost. relative perspective slightly Yes, to depends better. it's input take It's which on the indeed, to

is a So the in now slight everything. what seeing we input are across costs increase

is -- Others which really down. to it's pieces, come starting up, a So bit. mean, are quite I there going are unfortunately,

customers pass a So to we on it slight pretty you well, neutral our our then that -- area. but and need have land in the mix, terms of a we in put is of to that, top in what on we increase, productivity efforts,

from about the then 'XX better very in mentioned this what years yes, because increased, possibly again is than in neutral, whole indeed, just going wanted to This going And the the XX%. to by in in my make we've for conference. indeed touch made my neutral a think, there perspective. we're we whole year clear. to that it the a what down you is this just next indeed this that you tell QX by analysts would pre-COVID the and view, fine way because our comment X% levels, see of investors. the And from it's it is I which be And to past prepared confusion question solid very to back no it sure to in what had over If remarks, but 'XX, down It's this the context all I not back, we met more in year, earnings, often the a of is your we but company I discussed when be actually is pricing recently I will in important number. couple reverting year, want comes coming just not. be, because

relatively the business you're I follow-up, weakness your station base that on my as teens comps upper then basis guiding it And and Or say sort the could in to it? Is something that you to And the next stay that guess, up helpful. to sequential in bottom into QX. Or very That's guys? year? market catching the is Great. and of that a fair business is down, half is things for primarily of weak market? there first more QX other

Yes.

the is which It both. is station quoting. it weak QX, demand, also into are base So you

have it's this But that on the just hopes that in So is mean, been strong there revenue year all the had component of QX second people for you is we it's as as as weaker in and cards. expected. going and demand -- us realized a I as secure decline right, India pent-up in it and the

year, demand, about in a of undershipped actually we couple solid spoke away. part that by favoring have 'XX think to and I times satisfied the starts that 'XX, the we through brutally demand car we pent-up Mobile this and through of this the go now the year business secure and

mean, through plays And prepared back that clearly, is my environment all to so whole quarter. that's go next base the fourth a year? year it explains lab. the just not How next necessarily up plus remarks, set the into I segment for downtime huge out station weak Mobile victory

will market year. Some likely of into station base these trends, the in especially continue next

relatively staying speaking, weak. So

So I'm at now. time looking

end the of call. I the think are we nearing

IoT there. have And of space drivers think really I different proactively that, the not would managed so growth we place, Industrial cycle. what has and the proactively in inventory in by I like Automotive especially main extent messaging since or this and say, the been the fundamental really massively been all content that of this to our being is key but quarter people Bill theme has to summarize our from peers, think businesses are there overlaid much

for most inventory general reported the in notably do have you of X this all we We productively now. which tried quarters for to as numbers, as could

less situation, NCNR, we We by earlier not alternative finding our do direct forward to we much the situation, thing intended and and a is somewhat a by than in envisaged customers solutions demand where have on more putting have. landing, by wanted realizing lean. And a us being undershipped also the to kept this we more due our in which the similar competitors, pronounced think have and now relative which enforcing which year, -- going this commercial reasonable us dip try actually much very to to leads started we soft

quarter back That growth lead to to that normalized, really is this next growth. the normal a going quarter main reasons point than year-over-year pricing business year, that environment more throughout here. a Other being believe times from all all resuming perspective of

already. You this QX in see

continue growth have and We of throughout next should that all year-on-year year.

much. that, the today. With you very attention I thank you Thank Bye-bye. all for

who are all, here. call you Thank on

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

may You now disconnect.