NXP Semiconductors (NXPI) 23 Jul 242024 Q2 Earnings call transcript

Good day, and welcome to the NXP 2Q '24 Earnings Conference Call. [Operator Instructions]

As a reminder, this call may be recorded. I would now like to turn the call over to Jeff Palmer, Senior Vice President of Investor Relations. Please go ahead.

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

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

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

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

the hope be limited. We in you The the in at have be item all The August Relations will X. open to related will advance, to be X. in held Investor Seasons you on register I NXP which housekeeping November beginning on that see call Boston. one we Investor today, will the on website and Before we start website the request XXXX in space preregistration Day, November Four Boston

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

today. much, Jeff, morning, joining good all very our you We and everyone. appreciate call Thanks

quarter result guidance flat the period, range. X quarter $X.XXX end and line revenue the year-on-year X continue a the X.X in below the combined our NXP generation. channel. and below XX just we operating X.X focus the our of with and X.X markets XX.X%, trends delivered in with Infrastructure was with margin of With midpoint slightly in our target points inventory billion, months me with Let lower months up of performance and months, to midpoint ago quarter X. in Year-on-year distribution well were was of X% From the XX in Communications quarter basis consistent from above was begin inventory Revenue basis in down gross sequentially. Automotive all channel revenue X. consistent points The guidance. long-term perspective, our of operate guidance markets, that, our of a non-GAAP profit year

In billion, end trends with guidance. turn Now markets. let specific focus down our period to me the revenue versus in was $X.XX in year line our ago X% the Automotive, and

with our have X% We Tier X revenue and year in to million, guidance. versus IoT, direct digestion. process Industrial the ago orderly line $XXX was & continued inventory customers of ensure a worked up In period with our

down period demand and In with guidance. soft. & performance Other, markets the ago revenue versus the while up XX% guidance. line China was driven our in $XXX year-on-year Asia mobile, Infrastructure versus Our period, compared And revenue was our the line XX% favorably American remained and finally, Communication, European by ago year million, year North million, in and in and Pacific, with trends in the in $XXX

third XXXX. expectations for our to turn the will I quarter Now of

drivers revenue will are sequentially. expected are now troughed end resume we also revenue levels desired and and quarter, We At X This initially will by customers quarter we sequential process a billion, shipping market, stretching X% surprisingly beyond second XXXX wide down $X.XX quarter the X% same select time, with in Automotive growth company-specific In demand inventory our X. second QX versus in digestion to and will guiding inventory third our by of the the be up to their variation half, Auto direct end customers. and at closer steady-state levels. of much several moving the the Tier extend to at led into the

end to resuming Automotive below IoT Europe somewhat demand macro. the second see in softening XXXX, in & Automotive markets, the offset the Taken industrial This the persistent the Americas. core while of together, improvement weakness growth in steady in in demand demand by Industrial ship in sequential half and the end we IoT In consumer China. is we continue

normal In that expect secure we in anticipate offset more in Other, Communications, inventory the position. & lean the a Mobile we RFID within our previously of reportable end be growth from than weakness to Infrastructure parts tagging the finally, company-specific market. by seasonality discussed remaining markets, And end

is versus year-on-year third and and single-digit mid-teens up Mobile quarter. range, X, the quarter in versus IoT expected percent Industrial percent Automotive in 'XX. in versus down So the up expected percent to to quarter-on-quarter. business anticipated versus X, our range the mid-single-digit quarter at both we range is range up in & the 'XX, low percent XXXX. midpoint, is up the mid-single-digit X, following anticipate quarter be range 'XX, in quarter during low percent the to X, the be and be trends the single-digit in

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

through beyond. half. order second the troughed to inventory half continue our support a to the of touch in higher NXP will and stage quarter to sequential during channel order in and second half the first competitiveness we summary, X, in just for and growth expect in we year, this Therefore, now, growth resume prepare In to the anticipated

With that, X.X inventory. distribution X quarter approximately assumes our of channel months guidance

calendar grow However, our not long-term to within X.X target general year. inventory we months will back near anywhere of this

stage will a targeted in to continue we result, the and inventory controlled very a in As channel. manner

with the low grow because for of end will to the half half our range. decline due a our outcome XXXX towards first is in single-digit second Americas. the deep annual low the of the modest in the This X be potential revenue weakness and customers, over together, our at inventory digestion core continued Europe Auto Tier markets industrial to and earlier persistent the the and expectations in more Taken

long-term X, supply Semiconductor NXP. control and turning for Bill, is in Before NXP to manufacturing I resilience. On truly access we XXXX. I what strategic cost, manufacturing to is TSMC strategy. over our International between growth XX-XX the long-term like joint call participation the formation for a and to rationale highlight strategic enable which of June This venture would to announced August the a competitive disclosed with the Vanguard investment joint believe XXXX, The investment in objectives hybrid we complements geographic led Europe, our execute move to its in venture

or a joint Manufacturing excellent Company skilled process fab will XXX-millimeter successfully is month, and in providing in signal, where new XXXX, Phase consumer the will XX for the end analog month manufacturing. expand to also license over produce and products, venture including the Singapore fully additional robust for process foundational Semiconductor wafers is venture support fab VSMC will well X X workforce NXP venture, have power venture is there markets. the key flows. the a per and VisionPower Phase and as will third-party A XX-nanometer The operational XXX-nanometers fab foundries mobile joint an of fab SSMC, the a for is access XX,XXX flows. When XXX-millimeter hub which that mixed XX-nanometer the with contributing years. VSMC as to operated wafers Singapore, mature TSMC mixed targeting industrial, build and joint highly XX,XXX to global per process signal for a joint of management option a factor long-term proprietary success Automotive, NXP TSMC node flows

independent We in are to foundry Vanguard, located confident the TSMC, XX% is with approximately to very will the of joint which an and largest assure success help shareholder long-term Vanguard's which of partner Vanguard venture. owns Taiwan. trailing-edge

and address not incremental $X.X revenue perspective, eventually peak cost-competitive with footprint. in This $X very billion From before. between venture strategic NXP of to this NXP XXXX about being a total a annual for period investment XXXX. a will map enables investment the Furthermore, opens door make into joint has consolidate to been of billion XXXX us financial our to XXX-millimeter which a available time to capacity internal road the the over investment factories

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

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

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

distribution and non-GAAP came Overall, our margin, all the guidance. performance with good. expenses QX Revenue, in gross financial channel inventory line was operating

the gross and reported range. million basis X% were down billion, up midpoint midpoint gross $X.XXX of $X our was guidance of $X.XX of margin of revenue Total million in down Total This our non-GAAP operating to and below $XX due hiring. We specifics. XX above guidance or non-GAAP billion year-on-year. profit non-GAAP QX million $XXX the revenue, the XX.X% basis XX was to Turning lower-than-anticipated points year-on-year year-on-year. expenses generated XX.X%, points a

operating was a $X midpoint billion, million. basis XX.X% Non-GAAP XX $XXX non-GAAP taxes and up million stock-based expense profit XX year-on-year of perspective, non-GAAP with is $XXX total operating million, points included guidance. points compensation above and of interest margin effective $XX tax operating our not profit $X.XX was the was non-GAAP for in or down was Noncontrolling was From basis earnings, ongoing our which rate. operations XX.X%, a and interest million non-GAAP

$X.XX, together, Taken of guidance. consistent earnings per our delivered share with we non-GAAP

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

was billion, the debt of EBITDA our we of a $XX with and adjusted effect QX with The CapEx $X.X $X.XX sequentially trailing of XX-month balance at $X.XX and million exited investments the the returns, due cash down of billion, generation total QX. during quarter to end resulting debt billion, was Our net capital billion. cash cumulative $XX.XX

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

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

non-GAAP returned and our shareholders, established of million $XXX Friday, additional representing XX% through we of Taken an repurchased $XX the XXbX-X an under cash of free flow. shares we July QX end program. million together, After to XX,

payable Days distribution were just XX capital channel up channel decrease day days inventory months of Turning was while X about an to X inventory was days quarter. sheet versus and X.X of receivable metrics. of days combination a X are balance prior inventory X of inventory day sequentially, days, weeks. over XXX inventory. sequentially, working the days, and were XX The XXX days, was increase of Days

cash the prior cycle versus our Taken days X of an was quarter. increase conversion together, XXX days,

non-GAAP free was million $XXX operations flow million from flow X% Cash revenue. of revenue, net in $XXX cash of and was XX% CapEx $XXX resulting about or of or million,

to million. minus Kurt quarter, the to be and expectations plus X% $X.XX for down QX about revenue up year-on-year is third anticipate At our midpoint, sequentially. $XXX X% this Turning the as mentioned, or we billion,

points. to We expect margin XX.X% non-GAAP minus be plus gross or XX about basis

As continue will inventory support Kurt we to growth future channel his periods. prepared the to remarks, stage in noted in in

approximately or QX. plus million Our are million. guidance Operating distribution expenses $XXX assumes exiting expected X.X inventory channel of minus $XX months to be

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

other non-GAAP be about financial interest with million, tax million. $X profit and be Noncontrolling be expense before $XX of rate tax. estimate XX.X% the We to non-GAAP to will

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

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

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

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

in stake joint joint Before VSMC earlier. made be will Kurt The million total $X.X and venture will $X.X Singapore. by provide invest for long-term billion into billion. venture as NXP I cost The in additional venture, an joint $X.X will a investment access. long-term subsidies the of form XX% Vanguard billion the the additional the going $X.X capacity up $X.X will billion $X.X be XX% for of remainder investment venture provided a equity billion, loan guarantees capacity sources an discussed for equity other my and of closing access. $XXX for the to made remarks, the by funding of and billion, up is commitment additional of of The stake details in

with The losses NXP's joint debt. will investees the consolidate no not funded be reflected non-GAAP and venture our raise flow statements, under statement. from be but income equity-accounted from to profits operations This into the cash will in will investment need ongoing financial additional

revenue, benefit in will gross venture wafer avoidance provide the increase the profit our expansion margin fully joint the benefits of of is when to total basis gross stacking foundry The the XXXX. and XXX commercial typical approximately Additionally, gross buying corporate operational of material in margin XXX-millimeter from to points incremental derived when size the margin the market.

X So in focus. the of closing, I like of XXXX, looking highlight would remainder areas to through

the there to with capital First, is VSMC investments, allocation and change policy. no our ESMC

of returned cash we Furthermore, have billion active months. flow shares. XX free repurchasing to We $X.X generated be last the in the or market XX% will the over NXP continue

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

manner. Specifically, gross expect our will high half through inventory continue the controlled channel in feel perform we second growth above we at in to while margin a long-term sequential stage the lastly, confident model. of the continue the then end to And and or resume we targeted to

to would operator back now the questions. your like turn it I to for

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

sales also digit up to digit, down I high QX your single Normally, that sequentially. think this flat total calender low to down. of mentioned, suggests you're year, QX suggesting Bill are kind single For which Kurt, mid

So is just think sequential I'm all channel better seasonality? I'm understand can kind will refill? dynamics as to you confidence growth do the trying QX for curious, than the that see now. NXP what you QX? giving of right is markets end this you there have certain it Or inventory Are in

Yes, lean. to be remarks my that in refill. a tried keep with to very the it's be long worked hard specific time Vivek. refill. to We've channel the over not very continue prepared very we of cautious I and period thoughtful channel Certainly, channel

to the quarters in coming this the manner. careful to growth we So a in really tune want

our channel So go know target of longer-term is the near going X.X nowhere to months.

for next year. stays that So

X.X maybe the to quarter go in will and a third fourth We months the up in then bit little quarter. further

X, it. that's second continued Automotive. not the So quarter half, much reacceleration of that is then is more includes which now a no, What resumption in growth behind of

decline of Tier is corner quarter, mid-single-digit legs. mean, are turned has which a in a third Automotive for see platforms other but which sequentially growth definitely That new company-specific a and Automotive be we ramping. the But need You getting that less. to radar, a Automotive, actually want customers. also digestion led over less One was I continue, X drivers, by will mid-single-digit couple X which inventory in in quarter less our which X the from performance we and now also of is to at

also takes this I it thought. longer time, have than same the in at we While to say call,

reasons now reaches were third it it We assumed would half little of into longer, had the growth does less earlier second So protracted it hopeful which the earlier. is a we quarter. actually is end the little than so that is why Still, grow. one a

that. is Automotive of a So source

position lean a secured from the us in quarter, that is Secondly, third tagging, IoT we optimistic the with are mentioned the is growing be will to the company-specific inventory RFID also Industrial going as keep fourth growth, as earlier, which in both our in & well which I and channel.

built will the think they on think process Do a you those a OEMs the to into, Post-COVID, inventory Do run they problems back to Do were to lot one Xs prior is lot us? more that start you trends? hold avoid and you And right, of Tier recovering. behind up now think of go levels? will they as to just they Automotive.

is you're more high, of somewhat maybe great, Automotive is as The levels production you kind be that pleasantly there a too is positive asked in the why of it's Automotive, to on which and recovery. lot turn auto reason that, kind of inventory somewhat are just just that question concern the hear I of still is surprising signaling not

where dynamic second Automotive a X in be you it of for sense year we the of supply-demand in are us months the ago. So maybe half versus just what this give thought would

Yes.

S&P So the first the X% to yes, 'XX calendar a SAAR latest of all, little dropped for for indeed, a decline. forecast year

X% now So more area. they And forecast decline. were a of we the kind flattish in

So XX we which deteriorated from had macro a yes, days has ago. the views little the Auto

customers That factor direct. inventory are indeed cases they the the targets a and X is One function NXP, believe customers, indeed, of do takes business, our Tier Automotive through bigger digestion, so longer, is things. further direct is actually I the the of Automotive all the which that, their as is XX% place. goes inventory which is, is some down adjusting which X over in of it that the

our customers, for X So targets between inventory weeks. range and XX

XX-week Automotive as X-week target, as and who are have we So down for far a who X customers go target. a Tier others

more here so pretty to mean, call first We whole lead that keeps X refill years of because very ago. views a led clearly crisis also to will bit I sharp this, targets the ago little discuss adjusting us couple have be supply a the they bit what our days would going us longer. that thought to I XX guess will on we later. quarter keeps these to bit place keeps because a and we a that than low in need go. a And that But on the going are It into have less is transparent. in growing

Where hard exactly to it's going land Vivek. say, to is

the again Xs is the get inventory So those average If to think how what say they start their it's target they to the inventories want end going change quickly. increase about future. it's to OEMs, their hard numbers probably to because pretty they higher from Tier call-offs also will from of

back bit get do we what are which only was snapped single-digit third see now the have positive Automotive low you quarter. single-digit But tell why high and between into before, already it into much in to still less decline a a the can a past has and again, decline, than their and annual is is which quarter I X little indeed But to of XX is there. in you targets annual our weeks today, work growth sequential

the already you but see is changing, through. So tide are not we

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

a help question, radar, the kind of acceleration you think drill thinking advanced really as inventory first into on is guess, are different then maybe by end down segments? I kind Can where and analog just understand there guess excesses. XXXX, follow-up and between these us VMS, And you where we about look market I Auto side. you how clear remain still by of,

C.J. Yes,

customer-specific, really segments, product through time those thought So X relative Tier to overriding the of to they pattern what on last depended Xs is it no the they completely had at NCNR years. because how inventory There different is it is between this all C.J. during order the

So we question customer there, customer. by don't because is it a to pattern have C.J. different is no There absolutely answer that

We the is the Tier the growth none the categories quarter, driving which done third where we customers also of surplus product X any with where actually has have are digestion, inventory into inventory. more

targets So not And are mind picture. it's uneven you same. a completely their the that secondly,

I Vivek and think earlier, I said XX targets between X weeks. to range

declare no one as XX on have inventory, X. X still So would weeks a the much being I is week says, other target my because over weeks with too and target

because I just So over all can't answer it's that therefore, question the place.

platforms However, we second ahead might say, inventory And about digestion company-specific which half. digestion, by in electrification and they it C.J. which be of will course, think accelerated of called out which CoreRide above then tend to also business, to case inventory then, as some continue in grow about all of see think ramping the radar, would be inventory the cleared. are think I the is that's is the chips, going is they why processing, digestion next general, because any rest the year, still SXX our to going the because now But say, fine overpowering, half, drivers, which second anyway the base the in growth drivers, have in about BMS

And Very a guess helpful. quick I just follow-up.

managing growth in XXXX, Given rates? your and you change kind utilization but year, strong the outlook thinking of for the revenue looking how QX for about are still into

Bill. C.J., this is Yes,

them the our or up them don't on to on for fully right them XXs. the bring factories, of now, rest utilizations the expect low So in to XXXX. we utilize plan until internal year run We

see, we days probably can in the holding bit into higher inventory on balance our a we you have belongs And again, channel. As about XX have theory sheet. that

that. through navigate we'll So

quarter days serve and XX that the of inventory of come a remainder within the of XX upside. strategic Another orders to that we in in want days

sometime So we current gets think balance XXXX in at picture. this inventory back in

from And Deutsche with comes Ross Bank. our question Seymore next

I core talk is, wanted basis segment, dynamic issue? & really the to is U.S. IoT that truly or sequential what demand side? about pivot that And to growing core we burn you Automotive Industrial demand? the inventory when that industrial to so to on the you a due going shipping I'm the over especially in think Kurt. start is and side the meaningfully a it is getting similar much is the to Do on demand just a industrial more at start Or to on Europe, this a closer issue

Yes, U.S. our Ross. and in demand in view, It Europe. issue the indeed, is, a

and part function clearly over of Europe where that inventory. more business. And is So do least, U.S. and there, the issue. And the China, a that it yes, see quarter the from core from see have led a growth where third the much IoT business. not our in case, consumer we fourth into we actually at demand of is more the And of really is macro-driven and we more is industrial

which which, well, is, overall. XX%, call, doing IoT, actually for is what by of that that a way, the China So fact we pretty matter is

piece and which the the it. then that in geographies as quarter, actually about both sequentially. one into also second And they've think grown quarter, all is which consumer industrial, I has as when in plays then past pulling well done IoT is the is the year-on-year the So the China

answer a the is from core in very it short, Americas demand the in much issue Europe is, So industrial. and

free have of Any due CapEx capital then, debt gears again for CapEx to do flow about and/or next change you and we the follow-up year. what of judge know thoughts should one your cetera? peaking Bill. allocation, believe cash not may as dividends switching a those over sort given my to X aren't the I think how I changing VSMC just you about but kind slug next try or develop may as the on guys share to you on guess et I year. dynamics might repurchase, of we talked you

tuck-ins I change. capital at there's to to to the We're the from be cash stock, continue up Ross. of of sure over small in no Yes, areas. some doing around times, the different to again, XX% flow Right going dividend allocation, different continually statement to buying our been in last do M&A a as kind now, operations. quarters. our are our VSMC, going think of flow several XX% I on for stated, and active making back we're they that Related is cash and continue trailing standpoint. We're the ESMC will Related show cash timing they we at both

So billion statement. about, about again, think our think years cash our those in out about where over equity the equity years spread XX% specifically, flow are accounting for investments ventures we And $X.X investment the about the X of represent years. talked from X the that those show both the and X on up remainder VSMC first will

revenue that is of -- we of we will that we $X.X similar be equity, we billion where capital of that As billion that to upfront operations. just have in all don't customers portion then actually have $X.X have the time an supply equity of point billion ramp the out, to there's a more frame. available It's of at our more timing but in based a working incremental going and $X.X know, XX% guarantee can different a wins position service also equity. we I out we in ESMC. because that talked about, time, on come break that that investment are deliver design And the of capacity have able to you so at get supply this Again,

the to that's of strategic nature this venture So it. related

see going of X%. soon. Investor stay at Now will our revenue a we end again, specifically, on model don't CapEx I we're CapEx probably above of X us the during anytime going Day. at as that the percentage November update our low And to

with comes question Francois UBS. Bouvignies from next our And

So I have X questions. quick

for for and is you mean, mentioned Kurt. bit what a this. of but still platform Can the specific you more products was unclear The Could especially I one more drivers improvement. if is first give that? as context one second the second the year of details in Also Auto that specific? You in that drivers in on are bit maybe driving in half any the you you the be what half, that you about wondering be are is but we mentioned demand launching radar, could see specific. the the talking launches I a more OEMs for company

platforms. to a So company-specific I the I on wanted then dig just if on this have drivers And the have follow-up here, I can.

Yes. Sure, Francois.

us. which inventory second than X But more not just of I legs, closer behind front end to. reply but is having half moving moving demand, to closer all the digestion being I will So in way highlight, have there, is specific, in of company to the it in us Automotive the to really also growth the shipping because

the companies, Automotive indeed at side, which where with ramps operating radar mean, Tier are call X me have out we X company-specific on let absolutely Now globally. I least

are they OEM serving So across platforms globe. the

So with relative course, different or will end being a made and of we mean, we And something numbers to that SAAR we those across a an are come always those which is probably a OEMs, in. prepared. years demand X are there little production. Everything it And Francois, into finally less in well end the demand, yes, is X%, them widespread which actually which minus both and of is design wins, want we something geographically are little from to which are I way more. pretty so, absolutely optimistic is now is But since hedged coming perspective. here ago come

been any global also hasn't platforms of couple past about it radar, radar and quarters OEMs. for again, change there of in side facing over view So the front the it. is And preparing

we talk when bit typically about if a chipset. you more complete color, that Maybe need radar, know Francois, it is a you

talk in several includes about transceiver, power even front-end So it management. we always, connectivity not microprocessor. Ethernet cases, And and the the

I more on pricing I'm for on ask. side maybe is is bps appreciate guidance QX. but on higher despite versus the dynamic. feel ashamed I the color, But Kurt. XX Bill, the probably the the margin And your -- bit to follow-up too revenues. maybe picky lower gross here, a

the would it check in to wanted pricing market, you could just be on I about the the maybe And margin? helpful? dynamic gross So if talk dynamic the

Sure.

about no the not say That's first by me driven mix. gross we slightly by Again, increases, that product of decreases. points, and pricing. in causing Let basis margin. no the this QX, Pricing was flattish. did favorable better Again, movement year XX is kind in

transition out, we into we mix the this pointed that the offset favorability, but is by you As product see higher revenues ship. unfavorable costs, QX, slightly like being over on fixed do plan our we to

X the moment, on and you, we plus to part manage at of our right or the honest to therefore, why And minus that's over remind be is XX,XXX to points margin. quite the And So ship XX kind average. basis with are on difficult, we mix each offsetting everyone, those exactly gross just other. a different quarter numbers put

our medium expect as our a have improve earlier the in XXs for help up. about that of gross to we utilizations. we bring the XXXX both, term. them that But Now in keep we're rest of internal multiple tailwinds further, the side, Again, we because in would year the us tailwind on going long inventory. talked the more I say, positive low for the margins balancing becomes to and We

the slightly costs it fall unfortunately, margins. as mix Timing the higher other of as we through clearly, going way. channel, we fixed with is distribution our QX, revenue As that replenishing carries improves, average get in higher demonstrated the but

you we're heard so And about, going to Internally, so more Kurt year, back in X.X of talk course, not this that productivity, cost XXXX. doing. reductions, ongoing we're expect

on to big customers partners, on continue We time big, have which over with should really drive distribution our additional focusing long-tail this benefit.

VSMC XXXX margins longer, by the we of the term higher I new improve XXX to continued carry destination. are As our this that financial strategic which we going my our of you whatever prepared many newly And all model margins I've in talk, remarks, always had talk final more more on and XX% margin Again, is over gross points we're our a by know, basis on actual investments the times X. expect our about ramping in November venture. longer to not products, as our this driven hinted joint XXXX

Our next Rasgon Bernstein question from comes Stacy Research. with

one, commentary. Auto first I admit, your my I'm a confused. on got to little For

the market Auto your mostly worsening draining to the inventory prior done. expectations seems versus So but is be

than frame your could worse going expectations to If single it's got Like -- ago? next grow have X for how is be drivers. you like some they last you me. your or yourself company-specific for for were you You that digits year thought just us the over Like were changed and Auto are yourselves it to the over grow for the mid-single now days, going months would digits? overall expectations Auto super better XX for helpful high

our some say, in we half with would are line before. expectations Auto had I for the what Yes, Stacy. second

would digestion say underneath. XX X ago, I similar worse. components actually to be days moving inventory to but would The what we with done have said So is

is us headwind I same about before. company explained drag transparent. So have part of which line lower on the seen have stuff in some be time thought we It actually all than the just Automotive But are given that time, we would company-specific I I The a talked have our more questions. happens changes is of what X out some unrelated, us earlier and that, going targets they play had better. the actually with ago, for in things completely in on have, to Those is inventory At ago. Stacy. the than anticipated XX want would had very days to again, digestion longer inventory I we

That's helpful.

did my like, Is for inventory would I inventory the I higher. know Industrial it I X.X think it Where it just is that it all built? is be is For ripping sound but And higher, curious, was ticking follow-up, it I was target XXXX. not say, the maybe Is Bill and channel Industrial? heard Auto? getting

still we So back planning to into get months next you go are X.X year? to as

Stacy. Yes,

is we to X.X. given is to segment strategically and what indeed happens the target here. through that's to I sense, several long-term our that remains makes just what the X.X and went it meaningful. but product mix, analysis, be it because whole our the outcome, And be points Absolutely. we So target, -- Yes, not our used be long-term remains that target. mean

driven channel say And What say, this I a is no, I is of the year. calendar no, want not. prepared would is my we go end we is did remarks case because smoke where the on say mirrors to in also far, No, what annual not. this to by outlook, all we almost back it and indeed, by X.X don't it refill. see put don't that at just we

the And aggressive say the days versus I it's days channel, change probably we Europe, in which thought here, we appropriate. be Stacy, given might refilling probably ago, poor the also macro a feel want environment is that to more XX in bit ago. would I XX Americas a and not

So that lost not revenue. is

had have to lower little we would do planned with the outlook when channel we it to to into have just a in operate the just before, a responsible that little company and want earlier we we the So macro what which is than do for a we reasons continue way. less very than have now

of push and a instead our board. go such would across our products specific. more are we specific, they to think way it across shelves which finally, products on that higher the are, we you we that products in we have Now product about behind channel. The And the It segment really on into are there Stacy. go nor it segments, push geography and really products take where peers. products. sufficient are the little in, channel, I this sure have It's those certain they of from does the busy where we up, to really there it's are they those hot them make is, asked about is distributors And of neither competitive say,

comes O'Malley Thomas And from our next with Barclays. question

My one side. comp on is first the

kind the is but business more the much RFID think talked the last earnings other well, of So In areas sounds XX% of I business are call, all it like pretty representing about doing still comments, you mix. of about than RFID your the offsetting. roughly on

mean is of the profile half RFID at about saying, of off you trend back falling forward, that a RFID is growth that you're we business could profile kind that business year? the I that business of If continued now? percent growth September, XX-plus of you going digits, Just us calmed into other give think how but did stuff forward? the look faster? And the should of Obviously, of mid-single with going kind down there business how

XX% we segment. sorry, is, Yes, not is here. is cards, Tom. be security. confusing XX% might been was specific, and very that we last end what the of cards XX% the call, by segments payment what To secure RFID includes and I'm What RFID then of transport have year which of cards, or

but the And the is year. end which again, XX% keep rest QX. it It part that the growing And by growing was why here, the into So offset you keeps is the everything then rest, end about sequentially of and QX, The for last will RFID is it of right. into legacy from growing. Networking XX% a It of Tom. less rest. is is total, of Digital year, the numbers said than the by the keeps -- the last RFID is easily XX%, business

selectively part. last end-of-life the that hanging up kind on after a And a And start more in lumpy good year slope. power down other downward there. this that it would pretty cash base is kind say, stations, every years in XX%. where and which we products mobile end, And for at -- collecting is from to I the end the business was RF of radio power is it's business of of quarter. X But said, we

cards, So structurally part there the Infra XX% about And secure XX% Networking, this in end RFID. Digital only last of legacy actually whole think the basically power. segment, year, Comms XX% RFID, including growing is RF

down quarter I that end Super your you helpful. about just being kind the low see with of about Auto and single & targets in or kind fourth the normally And low the Industrial guess initial digits, trajectory, of revenue year-over-year, of and then total quarter. what if your mobile X kind I pieces the the fourth think IoT at of commentary are into last

down mentioned, single high year-over-year. You digits Auto hey, kind of was

come you quarter you to for Now that into year-over-year year-over-year fourth of your Industrial that most it's & to Is to expecting IoT? to from down sequential expectation get low kind get year-over-year. single single December digits are low that Or of growth? to the digit growth

things. especially And going to breakout it really know step to the X do second our now. the of color targets to a guidance segment X how really far half I of quarter. things each give inventory honestly you are moving Tom, Tier the We in quarter. we is also customers. the One that. which look, the around, don't speaking, you're Automotive for can't try lot pushing the I Thomas, with all are relative of constantly a third too fourth is on mean, there give

the better in get little earlier later. one industrial which Europe not for or U.S., macro could other little The a could and is or the a

of all we going it's one. peak Automotive fast But that it tell X% really now coming How trough complete say to it's mean, a think in function of X because is was up. put I for was that year. trend I speaking, see trends, if to know. honestly is Automotive. outcome we whole single-digit it trough in the behind -- Automotive, positive Automotive us. be of clear. the to which is left a I have the something this Quarter inventory I And the trough a digestion. be decline all want the don't the the to We So in piece, will low you for you, here, the and just is company I this, together, over

Our comes with question next from Jefferies. Blayne Curtis

auto Actually, on processors. questions X

well. kind just timing competitors as ask I Chinese the your that? fab wanted to wonder I talked talking share So while of Can I know gains. maybe one talk about Kurt, with share a the I European you've do qualifying there your you of about have talk about, about fair you, to share. it's you're talk But China, know about and auto correcting if in been you to position processors. decision particularly

everybody just So I to first want of be all, sure knows.

Whatever worldwide. part microcontroller processes the of related auto from typically or in processor cetera. parts application #X hear et the which is peers part, you is are We the to that,

If together, evidence third-party find that And #X you is #X. for the all China. enough and put being you'll also the it holds keeps that NXP

much China, have We position up. in we performance in very the fairly think actually I pushed strong a So processors.

strategy our world, we local We know competition because have and know attempt in the non-auto where microcontrollers. most all China our customers that So we Chinese on in, coming is the in to differentiation. lead performance that low-end is the is to higher

they it's a just think function try I in of time will Automotive. this that do to also

strong to So all for forward think us microcontrollers, for here strategy and plan. we devices processors, and the is have our is but I position which push XX-nanometer a going higher unique And performance microprocessors, of here, the even not lower.

place. good I So are feel a we actually in

manufacturing in the China our and includes Now microcontrollers which and when step it a technical that is provide our China customers, for Chinese the right, -- capability, in comes strategy, microprocessors. absolutely to first manufacturing, big requirement local from meantime is

it quite foundry. because them a straightforward is from XX we FinFET manufacture Taiwanese in big microprocessors, For

China, which I fully think is earlier, published operational we this TSMC Nanjing in TSMC, doing this and has in a XX-nanometer. factory

a it's have what factory Taiwan. in of exact they copy So

transferring just from are it China. Taiwan we So into

China. process it's manufacturing fairly for in of processes NXP a micro allow to local So straightforward

domain if sense think that could of into outlined Day. And as going -- about follow just these I just about can we zonal it I cycles, I Day. to XXXX mean, maybe be up design was size XX-nanometer, said it talk what Analyst material talk but But these you you know know just something a kind of if your you long-dated upcoming in should I Could the in year? you when you the products? don't terms or revenue how your Analyst very I give on next of us and think, there, more today in, look from

the in production, Blayne. Well, full are Yes. XX-nanometer ones

in absolutely X X they which to our the 'XX So highlighted drivers, we accelerated of to contribute growth 'XX growth.

X% I we Automotive, guided there were drivers. high to and growth XX% X for So think

Day a the processes. platform, for what X processing SXX is -- that that Automotive. be One of November which ahead piece, of the ahead I Analyst in can say is target. of And is now, of we big And XX-nanometer for indeed them will part is the that performance

target, So November we which targets be above and laid growth actually the laid out out the in will had we Automotive processing 'XX.

We one have question Danely Chris time comes with Citi. for from And last that question.

or Automotive any end market. A on the than strengths Are lot end in of the the seeing geographies market worse or helpful geography weaknesses? others? better color particular you or trends Automotive any by Any

that is in China electric clearly other I success yes, than Chris, of the these vehicles days, continued in the geographies think a which say in of position Automotive also China. better function I is a

both battery significantly. all at grow continue the vehicles, electric electric look you and to then numbers If hybrid

which like And something just back in XX% published unit business. growth our S&P in into in think growth. also that reflects is I 'XX, over 'XX staggering China xEVs

So call China. yes, I would out

just And at on inventory higher quick own your days. XXX to a then days follow-up continues that creep

that we And growth some goal? Are is sort with sales are do down? some you inventory there's half, your second you at in think range? days go do looking will of to Where trend? Given you expect new Where coming end the the comfortable XXX?

Chris. Sure,

do Kurt moved staged. be reason When talked at probably for [indiscernible] that service take in look as half Q we goods me second levels into for you coming Let will revenues longer days for reduced is inventory about down similar of bit that. internal guidance QX inventory is as Based we where the internally. QX. expect start it latest filings, to our XX% QX we the on And the the finished and this, products a about, takes

and back into our that. we value customers to that similar around our a the ends, profile help finished entering we goods QX ensure So support more expect to growth, will we add product QX through service then this sequential

near to our So XXXX. and this is get again, expect and down peak then order we think probably start I levels, coming QX in this hopefully, back into

Kurt to our to remarks. I'd over like the Sievers back question-and-answer That turn closing call concludes session. for

we gross cycle what as is as probably both performance down in now successfully of look, in company navigated decline the well Automotive trough regime, Automotive we year-on-year we call, Industrial a most & & growth, The Yes, margin positive that with, sequentially. now operator. mid-single-digit really from importantly, Industrial IoT, IoT. a Thanks, the stay well period. turning growth us, to clearly this as In see the in cycle resuming sequentially. consistent all Yes. as behind have both through In mid-single-digit growth we

detractors. have also we However,

digestion over But is the in towards we will, company into were. end last the which year, just we be our fast being bit the how stay for of of low Automotive next we hasn't the actually channel will factors annually out, optimistic, And of a guide operating earlier gone inventory we lower of continue makes to given than us which year, in into responsible longer little and expectations customer refill way. that will super much what anticipated. So a growth had more you our vigilant also how away. quite direct the play year them It very single-digit takes a more muted decline those do, shifts if terms in

you Thank morning. call much very the for this

Thank you. the This does conclude program.

great now a may day. You disconnect. Everyone, have