NXP Semiconductors (NXPI) 30 Apr 242024 Q1 Earnings call transcript

Hello, and thank you for standing by. Welcome to NXP's First Quarter 2024 Earnings Conference Call. [Operator Instructions] I would now like to turn the call over to Jeff Palmer, Senior VP of Investor Relations.

You may begin.

Thank you, Towanda, and good morning, everyone. first call. Semiconductor's NXP to quarter earnings Welcome With NXP's Betz, President the call our Kurt Sievers, today is and me on CFO. CEO; and Bill available corporate The replay today is recorded will call being from website. be our and for

Today's the operate, the results management's sale new end uncertainties results quarter markets could and involve statements publicly that we not These expectations. specific statements. the include risks call impact materially include, cause expectations regarding obligation from limited financial which products any existing our of but no our forward-looking are update for of will differ and that revise undertakes in risks statements and second to or to forward-looking current NXP's XXXX. for NXP on and the macroeconomic uncertainties to,

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

on on certain GAAP core which X-K not management will to financial provided underlying which NXP's be we driven Additionally, the to be Regulation to reconciliations that comparable considered SEC non-GAAP most to to directly earnings events of our by is website SP's will Investor in the Relations non-GAAP financial section. the quarter measures press NXP first G, primarily available operating the Pursuant refer has release, and performance. in to measures furnished discrete XXXX Form related measures are directly

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

year X in basis below points points XX.X%, year-on-year. X the XX midpoint all appreciate focused of our revenue the everyone. X, good We quarter and of delivered the quarter in and period XX revenue Jeff, flat you, guidance. Thank billion, of were NXP essentially midpoint guidance. line was end ago above with basis our Non-GAAP joining morning. margin operating in call morning, quarter you our $X.XX the this markets trends with Beginning

tight in of operating to as Year-on-year of offset we by our performance target higher generation, invest with consistent X.X held our consistent From below distribution well EBITDA. perspective, months a and of result inventory months profit channel future at slightly level, expenses we was X.X a a long-term guidance our business. continue gross inventory

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

down and was line billion, with the year ago Automotive, In X% guidance. revenue versus $X.XX in period our

manage with We In continue process customers. Automotive with major Industrial X was period to line in inventory & $XXX ago revenue IoT, orderly XX% an up of digestion our Tier million, the guidance. our year and versus direct

business dropped. performance we versus & XQ we expect. had Our in In troughed back favorably compares ago yet long-term not business 'XX, sequential revenue already in improvement Since up have trends, seen would XQ again, the a IoT when the steady Industrial period year back was so demand versus the to $XXX year levels, the which million, had ago Mobile, the period, where XX% 'XX. the

Communication and XXXX. now in & quarter lastly, XX% the for $XXX me with revenue Other, let was down turn our Infrastructure second guidance. And in expectations And to line our million, year-on-year

XQ to is well partially 'XX. end demand as position expected our in lean the in end demand. We quarter IoT part of compounded to second at process see We In had inventory and trends thanks the direct end to revenue Automotive improving the continued thanks Europe China, & already to Automotive by Industrial XXXX soft X reflect our half X% and be XXXX markets, demand This offset first Automotive Tier market, quarter a environment. digestion the incrementally are the we revenue sequentially. billion, end X in down flat of $X.XXX guiding macro soft trust customers in as healthier channel a versus In Americas. during by

Communication the expected Mobile modest continue of secure finally, we Infrastructure & our sequential tagging. In growth markets, market, the by primarily witness to is RFID recovery. end driven end Other the within cyclical resumption And

'XX. Industrial high in anticipate in single-digit be down at range versus percent percent both down mid-single-digit quarter & following is up single-digit X X 'XX. versus together and the be range range expected X, year-on-year we versus IoT the quarter during low high expected quarter. midpoint, is the 'XX QX be for flat expected trends in to business our the second and the is in XX% about to year-on-year Mobile percent quarter in and Taken versus Automotive up the 'XX. range to the

up range mid-XX% finally, And the the Other quarter & percent year-on-year high 'XX. be and in in down X, range versus Communication Infrastructure single-digit to is expected

markets. continues, our assumes So incrementally will in see competitiveness growth. inventory if in in anticipated higher second we momentum for of signals across Therefore, distribution approximately X.X exiting the very we demand second and guidance summary, during channel inventory additional we Hence, stage 'XX half, begin end during targeted to second all slightly will And half X, channel to inventory our state improving demand months to controlled for are quarter the quarter X. however, the support a the half of channel beginning manner.

profitability all So grow months for XXXX channel in of be together, continue challenging our annual views or solid the the ago. a with modest demand from that quarter in enabling back drive control, target a inventory is consistent to we of we unlikely to Overall, a X.X revenue long-term within what manage this is year. to and our And earnings just environment. should potential calendar it our NXP range taken decline, growth outcome in

views the and underpin NXP is of optimism cautious industry-wide that for guidance half a quarter year this successfully the navigating through cyclical downturn. into first quarter Our results, early second our second the our

This the take to cycle, focused I vehicles. a quarter. first to scalability call efficiency of which the over couple and cost our made networking during announcements, It platform along part important while Automotive now the platform processor, we before summary. turning the required next-generation integrated represents SXX highlight includes soft very processing, SXX like are minute our core And that managing software-defined we vehicle for X-nanometer power right software-defined landing to for management, to a we would introduced the innovation processing the through Bill, first with as the industry's complexity, of combine expansion SXXM software milestone a and of system high-performance vehicle. announcement, also in address And to and the the our the on

single-chip This franchise radar, enables very we first in product next-generation systems systems. enables introduced next-generation cost-effective ADAS highly market-leading industry's manner. Automotive RFCMOS and Additionally, a Automotive coherent expands new further our radar performing XX-nanometer which it

example automation Honeywell, of to industrial memorandum industrial another is potentially by applications is make processes management and building edge applications. NXP participate lead neural systems in Honeywell's revolution of understanding. the enabled the network collaboration and of That will NXP them systems. aims at how a This who Lastly, a into signed in more help AI intelligently operate in building agreement great NXP's grade processing leader integrating

And now I to a the financial performance. our would over Bill of like pass Bill? call you, review to for

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

revenue covered our of the financial in of QX. margin outlook As midpoint channel the target. slightly guidance while already inventory guidance, midpoint non-GAAP for Kurt revenue our performance highlights. move long-term the the remain our above has the will distribution with continues line drivers Revenue range, the below in with was our QX gross QX, and provided was I good. during Overall, to the of to

flat guidance results. from XX.X%, year-on-year, reduced was points estimated effective earnings, is XX gross revenue, tax with non-GAAP guidance year-on-year with interest to ongoing down due Non-GAAP guidance and an non-GAAP incremental non-GAAP XX.X% QX We range. of million, not points to was primarily interest total results, for in controls. From $XX gross basis was year-on-year, XX line Total a expense $X.XX million. variable was Noncontrolling was above a QX. operating basis generated a the perspective, X or million not This in the The expense points basis expenses $X.XX basis the XX.X%, of favorable compensation non-GAAP taxes range. This of reported Turning million, to range, $X our proactive below XX.X% down operating midpoint above margin or revenue compensation, million rate. our our $X operating our in up lives midpoint of million margin margin billion were XX which points of was combination the $XX year-on-year was Total and $XXX billion, and which our operations profit operating and increase non-GAAP to range. manufacturing million due was stock-based billion, of was of our about $XXX useful guidance midpoint XX from non-GAAP midpoint $X.XX internal $XX million profit the our a flat in $XXX and and included profit equipment of years. was XX in to of guidance. the non-GAAP front-end though

Now in I cash turn and would like our changes the to to debt.

debt at end was total $XX.XX the as down billion, due QX March $XXX Our the we X, was on that bonds repaid X.XXX% million XXXX. of

down balance, resulting adjusted of QX. repayment, sequentially due billion, Our ending -- was billion. with during XX-month a billion, $X.XX cumulative net result short-term the The $X.X $XXX cash investments debt debt deposits quarter CapEx the we million was $X.X returns, the of EBITDA effect cash to including capital and and exited generation trailing

and adjusted of QX net coverage EBITDA adjusted XX-month the trailing was to end XX.Xx. Our interest ratio XX-month of ratio debt at X.Xx, EBITDA was our

paid we under and end During cash QX, of QX, additional $XXX Subsequent million XXbX-X of shares of million Friday, the $XXX in April repurchased repurchased through program. an we shares. we and million $XX dividends, established to an our XX,

Days an inventory inventory while was months days to or channel of Turning metrics. of X was days, sequentially weeks. about capital distribution XX working X.X XXX increase

environment, while year, X balance limit make redirect As the receivables product sheet inventory greater quarter. Days days needed. inventory to uncertain days, in choice a as XX days payable given XX keeping to to the we days were enable the X throughout have highlighted sequentially of to prior channel the flexibility demand up we decrease and continue the days, on versus were intentional previous our

together, cash was quarter. XX conversion million million non-GAAP approximately $XXX XX% million, an of the or and flow Taken of revenue. from free revenue, XXX increase or of $XXX cash versus prior was flow days, our $XXX operations Cash net of cycle about was resulting CapEx days in X%

for Turning our the quarter. now second expectations to

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

non-GAAP basis the XX be which estimates points, approximately for plus internal manufacturing our XX XX.X%, about or our life gross front-end includes with We minus to useful basis associated of points expect margin equipment. change

QX. inventory channel half second anticipated exiting months to approximately growth. As remarks, Therefore, begin higher prepared in Kurt guidance noted to for X.X support we will the distribution stage our competitiveness in assumes his the channel slightly of our inventory

expected Operating settlement. paid be as are plus our part $XX increase is increases The our of Impinj the legal and million. minus to $XXX million, driven expenses about license sequential merit to primarily $XX about by or fee annual million

Taken of to be Noncontrolling non-GAAP see before will operating we $XX XX% to together, financial interest tax million, $X the non-GAAP with rate and be non-GAAP estimate midpoint. a be expense to We margin million. other at be tax. about XX.X% profit

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

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

For be around capital expenditures, expect to we X%.

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

highlight looking of areas XXXX, for closing, through a like I'd In NXP. focus to the few remainder

optimism demand will in environment a from through navigate business. a a standpoint, with landing second for soft challenging half cyclical continue improvement our to a First, performance cautious and a we

to Second, we our what our is manage be model. disciplined to within and in financial stay continue control will long-term

or fab expect internal at model the perform our margin continue the the remainder of we will long-term for while utilization above end to low gross the XXs the maintaining of levels year. high in Specifically,

us. host lastly, the We details be to months. Relations there Third, the NXP where be $X.X in we Investor capital we the to forward continue on change repurchasing will we returned allocation homepage. an The over XX are excited Investor you will Day to our billion soon Furthermore, to active NXP no Boston. look specific And available in on shares. joining policy, have X November is last market

to back it like I'd for now to the turn operator questions.

first question of the Our comes with Instructions] [Operator Securities. Vivek from line America of Arya Bank

I about a is of a growth right, NXP's things. business. year. of second Kurt, XX% formula long-term to in What of you around have past, a kind cautious is the is production clear your inflation since half a the that for question. Automotive And to to explanation question of one, in kind to then, longer-term other those growth EVs targets? very growth prospect? In slowdown lot medium- first connects things Automotive and your What's the optimism gave For gave the you the all with sales way changed, a Automotive more the think My right target think of -- and the simple it growth X%

Yes.

of limited to first what very half the that segments. said, augment is first to the me which not for direct company. Automotive. half it is over that, distribution across and let half cautious across I cautious It's So important across optimism is all for growth note broad-based. the of expressed you is actually all, optimism, It's our and second second It

longer-term Now a to Yes, guide to growth. Automotive 'XX. coming had back of XX% question, from we to your original X% 'XX

remarks, will, of year the we X% It's segment actually are the Bill which 'XX. of out all in new one an XX% to with Now the the his is to prepared we going Automotive will we to years for as in and Investor Automotive. will hit at growth this come including good probably the segments, target next Day for said is of host where our we end the X targets that see November

longer-term so a today because content you X give we number know history isn't where say, benefiting trends are, from software-defined -- franchise ADAS both vehicles industry-leading mid- I -- the going in but from I NXP win. well electrification our able certainly different drivers to the years to you that the And place. trend algorithm directionally, Vivek, very mainly would a not next very Automotive, the for from as is on in the we the as to much from much and the well processing see to that Now be as will for basis

the in probably with be the an come means start which would from. will you pricing we we less that tell relevant. where And underlying end, mechanism as to continues, sustainable that also SAAR certainly So from think I becomes

neutral have as small, said we for maybe We And erosion it You increased per will ASP years, know that this we very to the prices a over earlier, I back said X year. single-digit coming be NXP years. the past year. go the low

especially out is where coming But say, I be to I was that's in years. the important that really mean, pre-COVID. coming the and not for I discussed mean algorithm. would it to normal, of that pricing nothing back

not exact changes you, to Investor numbers. I So Day and please come bear to expect the with just massive for here. we us, wanted November Vivek, But signal with you should

of a more Got or calendar near-term it. on kind of your And just then, question sort Kurt, 'XX Automotive business.

production, sales QX. to i.e., So about with last grew So right? pricing, the of X%, year, because undershipped. Auto about sequentially your your entirety in sales Auto the be 'XX for somewhat calendar better line assumption Auto seem is you despite in What declining

you're the better the back what how thinking about is than assumption entire the pick year? for So for kind they up in they do production back Automotive up? that and Just of and is the takes puts

The revenues was in growth year. right last indeed, for of X% you year. very strong actually SAAR a quite it Yes. Look, had Automotive

was by SAAR order total something I spectacularly price company XX% high. so year X%. in almost a growth NXP increase from the last of did indeed, corporate year-on-year, think And the perspective

So last part yes, are strategy, totally -- which is we which the soft year, which of undershipped was we already pursuing. lending

year last the we we direct already because the above have X.X. correct think customers since distribution channel inventory mid the back the we and started Automotive and way revenue situation went of already in So to number in

and would EV Now the it X% a SAAR The S&P think for in is indeed little penetration. suggest this macro moderation a about latest the bit this of when you Vivek, is year a a year, different. numbers --

this year all the customers. customers. it for is dramatic a very X number, very QX, Tier we QX digesting the xEV, headlines we Vivek say. to hard What year, still slowdown strong of is with revenue more into guide, the the our a EV which if what about is. for so about bit we direct this however, of now see the than just EVs or it Automotive Clearly, full are If inventory the I growth digestion our I because still this think talking done is really drives is end unit carefully, growth. direct S&P by with and XX-plus that say very really percent which takes QX, in exactly inventory gave second quarter, and with are hybrids little

is first However, going that we both have actually that driven half year. half And this indication the any Automotive solidly above this in the second is grow by to company-specific enablers. year of

So the which are in strongly we have ramping half. RADAR second platforms,

year we the second that will whole number, when company, not also Actually, don't is digestion number. demand demand and probably is the it full then company end not means again. But you would under to guide of guide from the by inventory that the up We you can down the shipping from of than driven the end is year Automotive modestly for Vivek. move I only by course, full of give then year which XX% or is But the growth segment. far in meeting full half we more the same normalization guess next quarter. said that Automotive the I

of Our Seymore next comes Deutsche Ross from line Bank. with question the

confidence? channel? the side even you through giving each at you bit segments to if back a know the give of being want channel. feeling what's like the comfort but improved first desire of increased higher I bit little that you're to sequentially, it went I optimism fill of seems did a Automotive I the a level, What's refilling the with to quarter, quarter, get specifically. the the apparently your Kurt, you you confidence But the step little little despite increased know to has the And second a the in bit guided into you down. it start

Yes.

first QX, all, came keep just strictly we So X.X around this It's to and and in It's X.X. hard very been from right, X.X, you honestly, of to QX. hovering number. are the X.X one

intentional. QX and X, know, So really don't just XX I'd been X.X It's I always jumping X.X. quarters, -- up This over intentional. say if down past, look wasn't and yes. is the Quarter back you we've between

we for based X. the get it still of And growing to on optimism for cautious the it try half. second exit want X.X is indeed, to So to quarter

company-specific is what is mix between Now and us very considerations giving optimism. It a that really considerations. cyclical

Vivek, question are Automotive, I think half our and the we of day mentioned that in the of platforms, with have in almost customers second ramping minute where in company-specific which I we a ramp. organization ago, discuss sit the every

So know that's we just happen. going to

RFID Secondly, and the for that Bill fact X settled positive here a we have was franchises remarks, would mentioned the in settlement and in that or RFID space, the Impinj the and development have companies NXP for tagging prepared with the that tagging. market to catalyst, say, Impinj business his market-leading I market

which second So X the positive side, on inventories the thirdly, we Other see and that will Automotive that's the half also first clearly Infrastructure businesses. & more we half a in is then development Tier And into cyclical over see Communication there, playing then our normalize.

So then back run we to just shipping go rates. to

IoT is production we in extremely largely second is an is exposed more that digesting but car for that don't there travel nothing still or true or business we But inventory. we today Industrial to the And is the there's same where ship half, so So demand holds happening. more more IoT, we already spectacular come simply China. end It & EVs there lean anything. The that Industrial even from are to expect & demand. position,

PMI seen developing in have nicely. also China might the that is quite You actually

that this fourth staging see want in be of our the is main we a are do the sequential sure competitive into we we segment, is the absolutely quarter. IoT improvement, actually third Consumer that channel on and to partners as we that entering have position in because business, distribution which shelves Industrial and the we reason see So core well in as both the

side, the mentioned Impinj you OpEx. you're job the great Bill, since doing guess I a on

guide your below in first in the came quarter. You

just Impinj The give that. a so it payments for after included, of, a Can onetime variable you what on And one, those increasing, importantly, quarter? things? you and of then sorts of us you million OpEx an thoughts idea the away is more increase comp deal, should OpEx revenue optimism goes that second said are is the this your If quarter, $XX side with to the we expect drivers? or of side on any the payment

Sure.

those break me X apart. Let

I the we're basis, quarter once somewhat So really with annual second future again, is that we but in work us the around Impinj to you license, it about have out time clearly, that's merit will stop pursuing go-forward agreement something have we see rose the which million that cross And in QX, but can model driven slightly, any Related don't impact annual know timing, increases. could OpEx, complete. on the our the that but and $XX a exactly exact of internally. that's by in our we're the

our So million we have is plus our a occurring those both some QX expense impact combination some merit and variable in compensation. annual what's the you lower the that also and of QX, on impacts $XX increases. controls in well as saw of that offsetting proactiveness But

to half, XX% where going do we So we're you try is think half. the we OpEx. you're is about And to about this get think where as headed as that know, think model, sure back and that second make around we are is we the going, I as what with second into

from comes line C.J. question next Fitzgerald. Our of Cantor the Muse with

the refill into account change you're in take channel the question on forma on take thought more would one depreciation margins I you I And If maybe have as a pro guess month. I would -- gross you gross I the guiding have had guess [ little it equipment, ] kit margins. flat. of bit a from first essentially

guess kind an offset comment And be of there. so you if I might can what

the the stay for your considering the half? remainder margins where vision trajectory be of the how should are second thinking they through then about of into utilization for to kind rates And year, we gross

Yes.

You're right.

the basically, for again, there's that, accounting, for really flat basis adjust kind flattish not But and our of $X accounting basis part and million minus or XX or puts points, the again, to of reason I'm life, say, for within guiding plus So useful sorts I all that would points. we're it's the and XX good takes in obviously, if you change. of

you related accounting know, specific And at from to NXP topic, analysis. which and this look the factors go this we As age this there every tools we a just to did have of the do, we something number is was and life of includes product that cycle, and market year, considered, how to go it.

think previous right with and or we're long-term to honest calling do, We clear. very expect And versus it be run now commentary near it's above tailwinds, the we mentioned before out, model, running the calls, thing C.J. it's the is margin. of our to where so levers are our XX%. at as to we we you, our in clearly, gross we have, said our utilizations And what or the some previous at below

fixed Again, becomes and were one, up higher tailwind. We back should should question, get fall through distribution that your replenishing you discussed help. cost. go about applying with about talked the something. channel, you XX% where that's revenues will eventually that a over that So just that We

many new it's expanding on we we that and reductions, should target, time. That layering our But over customer horizon, the you're also lever time takes this reach improvements, over now bring -- within And about market. talked product for up introductions the the many, to mass us. explained really of productivity we carry is that back top a margin. internally, focused higher time, to We're longer right, our be just times, team business. cost the on when

So continue to move that.

out hopefully, you update downturn, break through But well not managing Investor We'll destination. the Day on XX.X% can X. or guys that we with up coming So or adjustment, and Analyst have XX% end model. even and margins our more Day in accounting that's the details November that that an see quite we're

for Kurt. a Excellent. And then question

did most levels look kind you the sounds at back world really just volume, senior on benefits nurture relationships? help part to a business? are where you of ahead NCNR NCNRs of potential programs, see COVID been that with And has longer customer like you period into we as forward, the how I'm and As not of as initiation look kind you the that it price. might what of and curious, progress the focused your no

with couple of remind one ended programs the calendar to year C.J. here, considerations 'XX. A Yes. our The just everybody NCNR have is

So nothing under any there anymore X, is since NCNR January program.

I would QX X closer and inventory there very would pointed in last out very customers. And was correct year did did to reason about way running first all it how particular opinion case, do forced had year undershipped I this. think we was had on I don't this of It Tier building Automotive. if an table in some much the The because our the help is because, agreement in program Automotive know because learned it I jointly why already customer say, I too be again. However, build and to actually I strongly peers us together about there would different our that that good. industry was inventory put that things which we try earnings and earlier over call underneath, the to the to tell started already us of last speak high that we signs with we

NCNR. Again, that. We -- not it wouldn't without have learned we wouldn't have that about would seen

say to more have a semiconductor months just-in-time again and this products, emotions run C.J. would think I mixed industry supply C.J., which into this crisis learn about with manufacturing And have try the I concepts perspective, all Now X trap apply from not to how about to I X a does strategic from time. the is cycle this,

customers very specific and say to we know OEM way customers thoughtful, critical. I'd in and long-term products, into -- Automotive order OEM with agreements are are how inventory which programs the hand, a Industrial one entered the those very On where we of some about into most in have deal the

So beyond I'd NCNRs. say and a there that's in is step clearly place, good learning forward

to inventories tend the that very some too it clearly comes we customers, reducing become however, working to direct of down. of perspective, now With see From my they under requirements, far again. pressure when our tactical capital

that get trouble starting So that what more be it's then compounded I a with pose because the that which and again the ship inventory believe to required supply time, that into of short we the is is are targets go next is that, would to hard direct supply not And to which chain our by far going I much would customers, uptick. a we the I fact all be very see I but of reaction mean one. about risk again that think when very suddenly some, deep some risk

So to partner one or then goes ship X reduce inventory. and not and or it's it company, which it's the X car but they typically we stages, to all just X

And want at inventory cycle. is they will drives that to point, And what the increase some again. all

OEM with C.J. I'd the side, learnings customers, it the unfortunately. good the So time, say on NCNR mixed picture, is direct a in more post

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

Kurt, it just, like market. of versus growth I And on are any, has continue? on your And this expect a to to little you been matter? those Do NXP? the seems guess, What a rates Automotive the X thoughts BYD does also, then EVs? not bit the what are hybrids then year. Or relative Tesla longer-term impacts, end question if better trends it than

also are we These think hard. very interesting Chris, which questions, about

if be well is if this while you XX% XX% China. are that actually China -- more battery the take growing to the think To volume. in media remarks quite XX%, U.S. by and And holds well. I you and are xEVs. is The pretty grow it. in is Europe hybrids that. suggest many small of so specific, me indeed to XX% and and dissect a one -- xEVs in but the xEV, prepared XX% headlines are is And worldwide, U.S. only BYD said combine my this of continues why not big that total and electric try reason the in S&P those is Chris, And according year the in going Let part China vehicles, Europe by earlier, it that I is carried and

certainly total, is was keeps growing to nicely. that tried I in what So xEV say the

you and isn't they battery electric, by so the XX%. are if difficult. XX% it but grow then vehicles I'd grow Now between fully into only electric but hybrid Hybrids still split that electric and go are XX%. say The BEV with XX%, hybrid,

and a faster. So has the grows base one smaller

growth The a and bigger base other slower. a has bit one

BEVs I run, the and more think long perspective, technical the Chris, a race. from that's on will win

the range. battery think run, I this I it believe a technology thing gives to Once period. hybrid long and on an is BEVs. all intermediate tough electronics will tilt do

of hybrid not meaningful I is mean, the then whole concept anymore. actually a

to Everything in peers strict our battery does doesn't much management to Now for product solutions. our plays only very only the actually else has of some only. little it a portfolio because also as NXP, it It exposure of high-voltage matter that BEV is hybrid.

only and very for have carbide, that's silicon example, other. not people So different which the goes who into to one in

So exactly therefore, term. know short Chris, it's our the relevant much I But that not also over don't revenue. how very to also plays

I the aggressive. are electric more be part to because going tail Chris. believe China. is much the very extremely EVs to BYD, BYD back to term, and is we that a just would that it, all Chinese don't I'm do glad have them growth sure to to I'm great On global will continue want call I long come competitive that and say Tesla there large exposure of from again. than a against it I

plus. majority BYD with Tesla and going I plays that's in don't how that, know. end, is But or the China Now in that's -- to be certainly, that the again,

be Bill, follow-up of just be to What the Bill. in going year. second days rates the Would combo a better or flattish said remain inventory demand would utilization utilization you outlook Can of for then them And kind of you the to or catalyst catalyst sort even what half share higher Great. of some some are take both? level quick higher? be your would a rates? it for

You're combo both. of the correct. It's

we're look we As you in hand. the at do of model we channel, can what our imagine, high end right have what's now, when on the

trying that, we're appropriately growth. stage it then and to -- half for second balance So that

to So keep in we at to do but the sure right balancing here and thing quarter-for-quarter, we it's continue make inventory want check.

decreased drop or actually of to million. in drop-off cost probably of days revenue that is QX some $XX And related by impacting we about is days. from about the And and that dollars quarter by XXX the X from days the their so then XX coming fact revenue inventory inventory the

the we're a run all current there. inventory to our we're our focus that clearly, I the maybe the higher to factories be So pieces. balance on all we'll that expect this, trying expectations, to second able tighter increase is growth in moving of getting And going utilization little bit but than half, if

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

higher. is than that delta I'm XX% us direct you in in impact seem of from I improving $XXX to the revenue give maybe sense wrong, seasonality the end higher second first a Kurt, the but through can is you dollar me that distribution. demand of inventory or would magnitude majority million half the the about of imagine But terms, restock implying be there? half or about Correct if

Yes.

down the First at said what that of I then not is full billion, importantly, quarter from very is over said. year no, up. half can to somewhere the And first so second that half just $X.XXX in modestly growth between the channel. said stress half not I the modestly calculate second want that's guided all, And the I coming that is you the revenue. to that, I What first is

over product comes examples, second and which order because to also half customer. -- Automotive just think product, see independent that are is of cycle it's business going new I the a gave first clearly platforms, earlier. with which And half. direct inventory on We the X and in the is the there points have data Ross ramping, One I in grow the from at no we cetera, et the that is totally patterns, is the

customers also order Gary, tagging, in the but And in unlikely, is relief it months Impinj is the it that that importantly, is highly the it and say, do X.X of it settlement that is to to the with would also I cycle, inventory. channel direct industry to go the, of Very say want RFID which parts after NXP between for market. there to has nothing -- do we this, with

X, what to X.X. take we said it quarter is in So I

digit one that's up. So

slightly QX. at X.X, and to X.X we increase if And the I then and X.X. demand are to I or will the scenario way QX exit go a We admit at want would see must cannot continues further that. QX X.X we in preview to this, get with we that

the So up year, taking to the the on for X.X or modestly depend does full not months. channels down

did was glad that's not ask, so but I'm earlier, clear not Gary, background the to So that I'm if really you sorry it.

Okay.

Just a for Bill. quick follow-up

for does did company? You increased for front-end highlighting X What the overall the job do years years XX a good of internal intensity the equipment. depreciation long-term capital that for to schedule on

No change.

X%. moved is to we current is X% Our change Again, on. to view really just that our CapEx it dealt spend accounting is this with and

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

first to one, revisit For the also the sort second I wanted ramp. half of

QX is you've where or it there? to seem are that right decent is sort half. us full of does Does -- half QX versus over guess, QX? we digits I you would above you So if Like characterize seasonal year the clear Like start what would minus, historically? flat, how plus how likely seen seasonality now, sitting up get you're double in

mean all already But cycle QX that. we a Stacy, giving with going the QX we and is window I'm of we guidance, don't are into leaning kind I'm we provide out I full separately, now thought through. there. really which here year it given sorry, dramatic can't calling go directional of the useful

I it is for has to Stacy, this digestion And because customers. year. the of own is it's Each a also has number mean sheet. actual of moving dynamic, not is honestly, inventory say, you So hard know full their that them an targets.

earlier virtually set later by settled calling little impossible. a be the that So and is could things quarter end could exact be

Okay.

So to maybe more. so a little I -- step take maybe that point and mean out

year, So market year. on strong year, actually last undershipped you you've and sort the last Autos, pricing of underperformed you you indicated already that didn't had you last --

started actually if are why this you inventory is now? like Like still So you year, so in under X correction an quarters. last shipping

this that the Stacy, spread whole was Because we wanted to out, idea.

strategy quarter, last discussed think of our soft for NXP. we landing understanding I that about so-called

a actually peak to was sharp back to come impact. in would impact because margin not a would bad with on and factories whole negative heavy underloading target Automotive Our trough and there have our be Bill

idea want overdo is didn't why was over of to started in time, any quarter. So to period a given spread it the which we longer this early but

of direct second the of the end obviously, of started And the So until in goes side it at say we Automotive. QX year last for year. this least quarter

on a side, into a quarter. that bit So year the the spreading of correction would third be maybe little direct full

of ] at which business, same Automotive revenue the that the you Mind X.X been has XX% only. distribution always Automotive at is time, our total [

to on all. correct So haven't of that side we the house, had at

trough explains everybody So reports X the It's way In right in channel peak and trough believe to it's in others. it's because behavior XX% which you trough more we probably in It's I'm of to how and in Pumps that's to have just about of the some confusion Infra, Mobile, the reading XX% the a think to should Automotive, peak our in as was quarter the versus of discipline. NXP we that our year this about peak Industrial it, But of or because lot Automotive a troughed also a same else. ago trough more already now. just I X% less.

But again, intentional, I is explained. as that just

Got it.

behavior inventories So QX, getting worse last just feel harder QX, it is does inventory worse demand over the quarter the Or getting it is a general like QX. and because on now? it trajectory line your taking is

course, mean, said see per last you compare totally environment perspective. less growth Stacy. macro a specific have, the we else, the the XX%, the and I year, us But to like-for-like, is offered then also take which in flat the pricing, place. of content year, positive this everything is positions by company from for a se, course, you it That is is -- which earlier increase, if it's which this is was there inventory. industry year have that a SAAR SAAR, from year, this I We makes of the offset really of a is No, -- the don't that flat. which is

inventory. it's no, So just

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

Congrats on results.

do your that ICE a engines about software-defined in digital between SPV seeing first and X rearchitecting there's architecture it's a a ICE for because are software-defined a customers? correlation mean, and you vehicles on vehicle? I from there one, there talking on what vehicles Maybe line to architecture there's much draw and perception draw what between spend to that I my an difficult For minute think then you versus EVs they're electric big is could seeing a more you're out or change engine.

Yes. performance is more powertrain a lot of what flexibility concept it of to software creating would moving and from which software-defined Fundamentally, the much is completely parameters vehicle, independent of hardware no. actually say I a of has. kind

know, Now extremely going the the new most OEMs, for matter forward. is, is are vehicles. it busy their electric I of of the that all with developing activity And them, actually powertrain-based core however, fact of

with not think partner but is, ICE about would electric then both STB that where And STB are OEMs, drivetrains. a I why implementations we electric actually a leading is comprehend this for falls because that together that reason reason. and they of there implementations, when several the know drivetrains, technical it course, be

a which level implementation battery car. car is for it difference. a is the content or an splits vehicle same combustion then But much into lower there on no fundamentally, implementation an for STB a So engine electric in

color there. maybe And the Appreciate Bill. for

Xx has utilizing capital you're was levered. sheet been returns about thinking do you talk $XXX million paid year. just you March, how the the passing utilizing sheet. down balance your And past the think the the year balance NXP note over in In next more have don't now target I to and I you Can As aggressive million here? anything only about for $X maybe a and of think

sure. Yes,

billion If we no last months, XXX% free look you of or cash our Josh, years, capital again, strategy. I our flow change $X.X just So below that just trailing to last the X we over because retire mentioned. it's returned that XXX% allocation XX debt back

that's did we so the quarter, in about And past XX%. XX%. And

X.X. X.Xx, cash. we that our we're credit take we at think leverage of company. use was ] great deleverage at We our agencies buying rating think our continue back If sweet it So the and looked the at We did metric, the X.X. it's [ gross to actively now shares. look -- I and opportunity going stocks to a with below Clearly,

We billion board $X.X left plan a on authorization of this have buybacks approximately year.

healthy continue pay dividend. of a We to level

we'll XX look we about you continue a that if operations treated past So And over last is that to about as percentage the execute in and priority, invest we've business, the model, to That's our in invest financial the continue someone fixed, M&A right? tuck-ins small our #X of at going business. XX%. of months actively as as cash the that from within stay the involved talked a We're in. been flow lot in we of

overall, all. So flow continue to I think cash back committed free to excess you returning we're

more Towanda, question today. here we'll one take

the comes Research. Wolfe Caso final Chris with line question from of Our

more margin little about I guess spoken in I manufacturing China? business have a I the how in in secondly, mean if bit point, talk may implication strategy forward? the you change you've you China going past. wonder for And that the that to China could that if strategy protects that one what manufacturing then

very very for beyond a go our point. a ongoing a clear -- and localized increasing manufacturing. indeed that's say, in There important Chris, from Yes. to that's is customers and Automotive I'd Chinese requirements

pursuing are We this quite forcefully.

technology, XX the the which host TSMC, Nanjing for We have to which Automotive. of factory chosen the happens microprocessors FinFET, is our of core XX-nanometer

third Automotive continue name going we in analog order to produce we for just foundry not partner, of to here, choosing our which to historically working partner but third ended a of with the China and which I'm outside foundry are so a We mixed do China. done have Automotive. up for products outside space SMIC, signal in And

good requirement that we helpful is really here not And that comparably in Chris. is our of one because And peers is to in factories. position The China NXP that for have ways, of them, indeed I believe is own their That X several move easy. can manufacturing. follow local a

cost. Secondly,

continue good base, And to we up, Chinese which local we use is You come try play use, will which against it which market they if time a just can over same China. certainly there local in mentioned competitive successfully when foundries is is competitors, and certainly China. it, cost want the to in

an out. in So how case, plays it see and again, ideal let's Chris,

manufacturing from have because see them cost I local keeps they on in point follow-up? not Do will You that at it here. a competitiveness, doing can the have Jeff leverage this. impact is but whole we the the against which margin the you us look I can same environment. we mean competitive. any play successfully

of capabilities from could do. on these standpoint manufacturing addressed follow produce. putting to actually could of of players? I from I imperative time try Do could as the be see you content local them. in some bring if base And there's terms regarding what players up much with Obviously, possible. you've it a What some also think to equal And you standpoint of forward? a about the going a competitive an the competitive cost the locally an in threat you China they factor capabilities as and rising of local do with Yes, that

actually, silicon busy especially competition good where competition part not times We all Look, matter just and something our that of you that see from overriding from in it local that's in because paranoid in quite very very, run that it actually against is learned career we at doesn't paranoid you that's this it Chris, that carbide. be discretes, observed because appears case, make where us, industry, are for the is since power I've all areas Automotive about a keeps perspective. But in always principle, for IGBTs know way MOSFETs to is X we One particular you statement, better progress. to my competition. ranges portfolio. an hot China this successfully and they

end which already. the and Automotive. performance but set in in and is That's just a is places dollar I facing we move competitors, and lot a hundred for more of of them. There Again, like world. way Automotive. processing other of another microcontrollers. couple requirements number business they it's a the lower think of We a outside of we are fast software companies in higher Secondly, paranoid, together are million with This have think for long

we lower into end could and again, that they some anytime the I get not we space, but could much, I the would So In analog mean try if imagine are fearful haven't also China, was soon. I imagine, at of do really seen this catalog point. analog this. I I

a don't the we clearly a I you perspective. cost agree to counter competitive they least to our want do. that and kind time. it from see in is this with manufacturing, completely space trend, moving localization overall, of that, which compliance so want something So at We from a with this base at And certainly, really of our

Good. just bit call the little time. summarizing With with that, remark are the we want again. I over a and to making conclude

tough a cycle. This is

which low as half the we this is control we we we about that anything keep turning fashion It's this, many plus/minus a margin the our over the in of we into keep call. during discussed around. OpEx soft to meantime, the We second of slope In position can have, every quarters, given P&L inventory be. reasonable With seeing gross and the cautiously now year on shape. well in optimistic to going say optimism, strategy some cautious are hard order we But and X kind that what in land CapEx. as do to can operated possible landing earnings profitability that going are is the

the to all you. conclude thank and would like I that, With of call

concludes you gentlemen, Ladies participation. and this for Thank today's call. your conference

now may You disconnect.