NXP Semiconductors (NXPI) 5 Nov 242024 Q3 Earnings call transcript

Hello, everyone. This is Jeff Palmer from NXP. Thank you, and welcome to the NXP Semiconductors Third Quarter Earnings Call. With me on the call today is Kurt Sievers, NXP's President and CEO; and Bill Betz, our CFO.

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

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

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

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

Thank overall this Beginning in year-on-year quarter morning, appreciate NXP everyone. you, sequentially. $X.XX X, of quarterly and guidance our morning. of delivered X% revenue down line with up our joining with Jeff, billion, and you good call We X%

IoT the and end and we were While industrial the in confronted weakness experienced some strength markets. We automotive in increasing expectations infrastructure, mobile against communication our with macro-related market.

XX and above was a China. midpoint operating was XX partially the Year-on-year of XX.X%, due the guidance. period by year above favorable profit, total sequential X offset performance basis lower quarter combination expenses. profit the At margin basis operating in led points level, revenue to our was and Non-GAAP gross company of operating growth points by ago

billion, range. inventory line the period, our to digestion our our guidance the X car X% revenue Tier In markets. the automotive, customers turn Asia end focus with The market. continues automotive healthy was same with me further North ago from and China occur and American in trends pressure in end At OEM down specific experienced to $X.XX the coming and versus in let Now year Pacific we main demand. growth and slowing European time, at

and Industrial million, ago guidance period the to IoT, revenue Turning X% range. versus $XXX below down was and year our

During the normally our $XXX versus of globally. was the mobile, at million, ago and quarter, experienced what strong we in period weaker-than-expected trends a range up X% revenue high year is the period. seasonally In end guidance

was guidance the and million, In dedicated end stage a above RFID of distribution product anticipated. year-on-year From X.X months, quarter channel. X.X to perspective, following stronger in programs months up our high from than and attempts $XXX X, Communication down revenue market in originally XX% channel other was the the our Infrastructure mass as inventory several ramped

the in American European at markets to time, was and While same the slower. sell-through distribution service somewhat customers

let expectations to Now X XXXX. quarter turn for me our

we X fourth are and are versus to our quarter X. taking down XXXX revenue to X% X% down expectations, sequentially. billion, more quarter $X.X for guiding quarter the earlier about We stance a conservative about Relative of

PMI in an we or X. China. to X quarter manufacturing And unexpected about during will sequentially market Hence, to approximately inventory already This is well hold regions because all XX% except increasing also below we flat at X.X contraction weeks. see aim across channel in weakness as IoT months as industrial began and the

Tier end reductions for American by the aforementioned exposed customers ourselves of partially stringent find at X strength XXXX, demand. more OEM leads to below China and the compensated we only European outlook slowdown natural in automotive broad Furthermore, automotive. a inventory to our North This

following quarter X. So the business our in at anticipate trends the midpoint, during we

excuse -- high is expected the anticipated quarter IoT and by sequentially. X in X mid-single-digit is X and percent and X the Industrial be mid-single-digit down versus 'XX to 'XX down in down quarter range quarter Automotive range 'XX. percent to in the percent versus me, be single-digit versus versus down XX% range quarter

expected range, and 'XX both percent both Mobile quarter down down to and quarter And percent the in mid-single-digit low communication is sequentially. X be expected and other is the single-digit X in to finally, be infrastructure versus versus 'XX range, sequentially.

The North our quarter had for which we guidance fourth in only and strength half for weakness in the not Europe compensated 'XX of America, In second anticipated reflects the China. macro broader cyclical by partially has materialized. summary, rebound,

to are to consistent positions. issued Industrial on customers take soft Tier manufacturing multiple causing with trends, a the as be global appears demand which stance the contracting weighing uncertain automotive market. The their OEMs by cautious profit Western as the major demand the very X are and on inventory well IoT and environment trends PMI These in warnings

NXP demand markets environment, to are this deployed automotive distribution we in end have industrial IoT. very impact order succeed direct of challenging winning secular fastest-growing focusing lower-than-expected more short-term strategy net a are we our The our to partners. and Notwithstanding long-term customers the trends investments confident from and

managing to an In drive And Bill control the call for earnings now making our This NXP enable health term, right even Bill? while performance. our environment. profitability pass is will the will in we like to uncertain the short would decisions resilient a business. review financial the for demand long-term to of maniacally what of focus on I the in and

financial was to to the has good of call. already QX. and will the and you, our by revenue better covered of Overall, Kurt, expenses operating favorable gross on provided low Thank drivers today's for during as QX our outlook QX the was more guidance in near revenue move everyone the Non-GAAP morning operating resulting I highlights. was performance end financial in margin good. line. than offset profit. our Revenue

and basis range We mix. revenue $X.XX to margin basis and down midpoint year-on-year. non-GAAP year-on-year billion was $X.XX the gross Total specifics. QX points profit product down XX billion, to in XX.X%, below a due gross our points Turning X% non-GAAP reported guidance of of generated XX

Total the guidance our $XXX were and or expenses due although $XX variable down to revenue, million lower $XX spend of XX.X% year-on-year, of million midpoint non-GAAP million compensation, project this was operating below payroll. midpoint operating points From $X.XX non-GAAP margin operating non-GAAP points XX XX up of basis the basis profit above perspective, operating our guidance. and was XX.X%, profit was a billion; total year-on-year and

included interest stock-based effective earnings, expenses and $XXX a interest for our Non-GAAP was was which non-GAAP of was rate. million, $XX $XXX is with ongoing million. taxes XX.X% Noncontrolling non-GAAP operations $XX million million or not in compensation, tax

midpoint earnings Taken $X.XX. together, non-GAAP of per share we $X.XX, delivered our of slightly guidance ahead of

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

QX in $XX.XX billion end cash our of sequentially ventures the Our $XXX with returns, and million foundry of equity quarter. $X.XX to billion, balance effect of announced internal accounted total the was previously investments joint cumulative and debt CapEx, generation capital down cash during at due the

quarter adjusted The and was trailing we exited billion. the of resulting with XX-month a $X.XX billion, $X.XX EBITDA debt net

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

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

together, cash of our representing XX% returned shareholders, Taken $XXX to flow. non-GAAP free we million

purchase XX, August an increase total $X.XX an Board addition, billion In to our the the authorized capacity balance a existing of of on with of of QX. at of buybacks end additional Directors $X billion NXP

our Friday, $XXX program. Furthermore, million X, we QX repurchased under an November shares through additional since the of established end of XXbX-X an and

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

X payable of XX days versus Days and quarter. sequentially; days, a prior XX days, decrease days were receivable were up X days the

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

Turning to for expectations quarter. the our fourth

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

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

assumes our are demand our discipline QX. flat expenses or during environments. at to about This channel, proactively minus channel especially uncertain exiting Furthermore, weeks million, inventory expected plus $XXX million. our managing Operating distribution $XX X reflects be continued of guidance

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

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

joint Our shares. million guidance accounted We suggest assumes an boundary modeling a ventures. for XXX equity average purposes, you use $X million from loss of our count share

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

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

uses of cash. Turning to

We expect revenue. of capital X% around to be expenditures

are are under capacity as our ventures, We equity accounted a a as investment million into joint which foundry will fee X into ESMC, million equity $XX make equity access $XXX $XXX which well BSMC million also investment and construction. a

I X closing, to like In highlight would items.

through cash will all owners continue return to we buybacks and excess First, our dividends. to

the second, Thursday, will returns XXXX look We QX November and a.m., and our expect despite long-term strategic financial Day we and we forward update navigate macro million; at to our model. to headwinds, on an X will above capital Investor joining X:XX NXP model; to plan where continue our within be financial its operate lastly, long-term to you $XXX provide

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

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

the a lot like seems of the course things quarter. during changed Kurt, of

changes little throughout specific. But the because saw you conservatively bit I it's up set talk now, in seem not behavior NXP weakness, You're year. just highlighting you and alone to the don't pretty customer up think a things you have about until specific can

the a guide heading little a be of quarter you and the guys guide. than the to given just more So appeared more little to setup surprise the a favorable be down into seems for peers

during the their surprise, August a a board, relative in were industrial China same discussions. now quarter inventory by which Ross. Thanks, stance much you when guidance led in in pretty taken positions. And from broadening we into their time these more across automotive exclude There on frame the cautious say, the to clearly is Indeed, for weakness to QX, and some I much the the side, the would IoT broadening ask would -- it's also market say, segment. I for X broadening by Ross, the Yes.

think to China I actually similar be peers. from you've appears strong. our heard quite

Iot. X led Western are And that specifically segments. Their asking that really all X, actually and car saw China from inventory. OEMs, fourth quarter to will and Industrial the quarter and aiming further now now Tier But is warnings the quarter customer the from automotive weakness quarter also perspective and strong over growth. was profit and Xs you sequential the China where behavior and the in grow their in for reduce in the example, customers, Automotive sequential for a growth Industrial were you Our by in across X

It behavior. almost August, and trends That's on to like even suddenly, they forecast. from them Ross. our against are their demand how that to everybody tougher, through undership And NXP to from I more felt even up then to Xs, September, started customer they So what And terms becoming characterize would drop. kept natural becoming inventory. is cautious in of now hold the Tier want which rippling the is

inventory about but now have market the we talked extended that this know You has extended of because digestion end before, weakness. that

And I the forward, for about the Bill, side. know gross to guess, I switching margin talked quarter. looking you that

So do for that talk just the of the inventory to at plus more And the forward we gross X.X little elevated? that's levers are roughly how what to you're a bit going leading a a can X risk front weaker to about point in bit talk running, of margin environment to where to be seems what little about persistently decline point going on about you utilization and in the minuses think gross -- kind Thursday, margin?

clearly, on margin through We basis had see and a segment be talked QX. distribution to obviously where XX% about also IoT QX, quickly probably missed, was slightly to And that's XX is margin we points gross for stronger carry margins through segments serviced Yes. that And reporting, Curt why -- that are missed Thank where down again. IoT our which you, trend. of revenues can the that accretive us. bit see our and industrial stepping our clearly you Ross. very where the so industrial revenues, dilutive mobile will in we corporate and the

going into headwind So becomes mix a QX. that

goods. wasn't inventory, finished going In report, see we finished balance see you're in Related fixed those to we're $XXX we our Q of addition, going kind sheet. goods, put also increased held But by a to the there, but we them channel, And the basically, our clearly, so our holding on to perspective, we were from ourselves. declining you saw fall when over sell-through some do million obviously, costs. days through you had

inventory so will to be an quarter want a perspective. we it probably back us And from where get take to to

utilization margins, Now running more low again, the in our clearly, term longer the we're XXs. on gross

for We of expect them to low the probably the first half in XXs, least continue at around XXXX.

and So continue revenue that that and Clearly, improvements have we to when sometime will we will related that's XXXX. become see in in future tailwind decide mix ramp sequential products. into come in flip we our it. way tailwind new as a a to our the our

XX% X More feel weeks. when couple that talk matter But to the macro to sure will during strategic XX is X going believe for It's I'm of the journey when years Day, and days, and more quite some we once said do tightly and into be when inventory lowest make good. the importantly, the finished We're next about Obviously, goods balance margin destination. through going gross QX which at we will QX our bring Analyst holding We we're weeks not have hold off real changes we back a more margin and of obviously that it. well and is you accretive ship is please final we weeks. sheet, many our longer we to here to to that over plus which going burn a peers. we're probably in just into to the plan a X And improves. about make some as it times, But our X rebalance that up holding to term, structural to normalizes, environment walk compared on pretty about And I related that channel. X bit. all we that remember, our weeks the tight

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

inventory. taking that year in channel so somewhat. I is own guess, to it channel basis that thought. inventory affect be go wanted the first on was in to right a increase just than that I customers with your as low, you being of guess the And of I inventory want you guess into to view where I of interpret channel you your question is know the an both your on that inventory next markets end regard the you the context function how increase to internal And the does basis? down a larger

will question let the me So Chris, and channel by answered take Bill the minute. in question internal a inventory be

Since to the yes, I exactly you channel, the we inched we of Bill, weakness inched the which in quarter, And it which wanted think to by we of higher have the staged is targets. let want fall reduced for want competitiveness you don't we a we the a late than right. about critical do shelves. want And that by sure be little higher, then to speak internal product had just We on increase So got yes, the sell-through me probably talked more was to in digit there, in about, this. which X.X, competitiveness. function inventory be channel we maybe most competitors terms way, why remind why to from plan. did. X.X another behind the That's positions in on sure than we of bit digit the our a We anticipated And we you'll indeed higher anticipated. had which the I

And to an quarter in nature already. in orders on because of of is placed again, we revenues for a sheet. finished impact as until the us. Absolutely. talk obviously Kurt are purchases first obviously expect the about same weeks XX we're foundry now explained, XXXX. sequential next of which internally the macro are variable holding to remain ago, And as will again, we have inventory the Clearly, our probably balance standpoint. couple of for is this inventory limited QX more we Ross, again at time, than reducing environment proactively I X our goods weaker levels from these so elevated grow But our days quarters I

coming as we'll it with X proactively internally. low at think channel, we will to and And So it's important that Again, very relief inventory that. manage get weeks. then tightly we down benefit hold the replenish we

bring long-lived XX to And macro back inventory our again, the this very, auto industrial And sometime our our weeks I have say in supporting XXXX, majority obsolescence. had and of when to improves. we'll low the is markets very

as is a going guess to question, I difficult I'll a follow-up, you're it. know ask to answer, which but I get very

which But targets moving about sort with so I that difficult given normal ask your is the half you one and what's such. we should the revenue get think first planning and to to in be customers how that this I of year. is that inventory, recognize confidence that is seasonality we're know bottom second does down it example, And do -- I'll quarter. the that as low, bottom the it, that it we're -- close kind approaching of pretty don't if now levels think the So an guess, give differently with are given what you bring and happened of some do here? to to does

Yes.

me of questions. This is try number go a and Let at. complex

year. lot perspective seen forward making want in really of downticks uncertainty a statements I of mean, longer next from the over around unexpected clearly, is to looking, in into the first with I the macro careful and So strong which say, automotive we've there future all past be the this. XX for all, a industrial, weeks,

believe can normal seasonal However, follow pattern. that will is pretty do a offer what we X we probably quarter

different be the trough that far, here to want going is quarter around is channel this quarter and the I I with now you quarter do just inventory, normal Chris, to single-digit see call think to quarter don't which I the I because with with know what We to X. don't strong X should we on our into discipline we down don't can reason X. X. do into from a NXP, again my into why in prepared go I flat sequential do For no macro it we high agree the uncertainty keep us. remarks, it yet. all that seasonality had

quarter, stage into bit the So start to where here. we third hold a we

some just at keep the quarter, X level point, keeps it of also, us inventory into indeed, And customers is weeks low very which with fourth we flat So at the a only. burned. direct

So yes, cannot would good that don't an call to just I inventory pretty moment customer up positioned. well sets from I is. at some when and But of want the point, us a growth. for course, call say that in space is perspective actually NXP

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

Kurt, relative peers the before how versus what's it longer-term mentioned So in-sourcing that continue then prebuying China in of China have have And risks on exposure mentioned basis? keep a does of How trend, industry cars? the content elections? NXP's does premium a it. the take that to exposed you out yes, car is this of to And say, the customers NXP? let's European share, your China-based if, for kind kind much play that

Yes.

features. Vivek, meantime versus China, cars per have which So high-end Western. similar exposure of in content a in the China There in are our premium first to on set vehicle then

rest the as they say we are before, world. cars I I vehicle So since have higher content the into we probably new end that of to the spinning discussed world innovation that is in get than They faster faster opportunity a growing And probably a very platform content the X times years, as similar gives of just to China, develop perspective content faster Western to platforms have couple exposure in the because which higher in us growth we tap per they a a exposure opportunity. from they in would dare faster, to a that have new X next say steps. of the on the

So actually strengthening. over is time, that

can the SAR. something I world, because has to It think don't don't X% mean, success question, of it the -- or In Chinese if at a or the second of other year. half anything industry. forecast from look the staging your inventory Now the is at I the for external of that's I we think the you meantime, that minus are down tipped and they of election see, events. global actually this

by China time, X%. X% global is going At decline this So by SAAR to same is year. the to going grow

for than puts the So which China light doing is regions. just XX% penetration that In you point keeps EV, how discussion other at vehicle whole other estimate true revenue to in a it least differential in same The actually that week per this that relative fair about data September got strong. our China the the better in the EVs China. China, going develops so this see better, holds our that We was of year, penetration. electric in to it in

the then of XX% was in almost China electric. vehicles already So

against the in why overall China of the the well competitiveness lost and and in EV does So the is rest the like that almost It's the for is what China fair It's I me, do globally growth, players. than really doing in the is a locally west believe X experiencing in penetration sustainable. SAR China. which better Western that's And reason we is are world. their

are seasonality in or we I . for things 'XX QX explains last X Right. understand difference if business think like the average. X with have is just or down But to X%, of take mean could if an over I And including heard digits. business But on expect you large alluding which seen X correctly, that years Cove times. average the down is years, QX, QX, over in single you automotive to that my the think different I I be this NXP different kind at versus high I last your mentioned what your to what especially just seasonal, automotive X% so for follow-up, what more between you the of were

guidance Jeff by provide It's Vivek, segment that. think take to into I'll I a here. don't going QX. we're

down to think do said ahead we're as be previous into far I our probably seasonally As expect about And going that's company total to QX. skis get on of we as Kurt today. question, a

Cantor. Our next comes question Christopher of of the Muse from line

give I color that more you're was hoping a seeing. industrial little you slowdown could on the

about China and that's little I'm talked strong, assuming more. You a

So would where would North to isolated America, you're weakness, of geo love -- hear terms seeing any factory changes safe to what of Europe, whether I love hear your kind broad automation, kind thoughts. in of to and whether it's

Yes. Indeed, let weakness is big also QX, and me and the in specifically and the across the But in from industrial predominantly IoT, not Europe to in going are U.S. U.S. so most reconfirm mind now the that IoT. board industrial Europe subsegments. across also but you we and that in

So X relatively guess bit U.S. QX weak I that to the there. appears our but is industrial particularly we to core China, want in the factory strength are The strength between in stronger I industrial. is there the quarter. IoT, say, color, bit little segment in want to -- seasonal you not have get also industrial actually X player of a weak China I in China, especially the portion more in the into automation which be fourth than a if small in would West, is the It's IoT the core that and a the of consumer in consumer color then IoT part, if in you Europe is of particularly a XX%

up next given follow-up, my as to cycle, peers. that there's maybe guess I will of how less you than you're date, into manage kind the cycle a the And gearing perception

where demand? do terms are So kind if versus there's that of could in think I And speak overall give of markets to your when of recover, things do you you around cyclically? to you kind any sell-through kind gearing have color you end that was and of hoping confidence that sell-in

the of you're because year in far. asking The our And happy only that I'm the peers would understand fail The than understand it more declining I do from is that less down like come NXP to we with down. year, for only will took thing somewhat most logic fail others why didn't direct first why example, anything strong hit see we It's fared earlier. back less X that so for because this to are reason this the guidance, better have our not the double-digit you place. we future. away Yes, that I we because the is X% is that reason we brakes versus we

softer hard not at we have less little so a did 'XX, in So which us little that 'XX the to the 'XX. us recovery. brakes point any But starting and in to same and hit puts a helped into

think why reason you to we customers. would any it of cautious. happens. a So what that which shipped or be little under do, which the the here. call. this don't only weeks weeks we down And treatment to have of the worse than mean environment. from it but We could firm but I inventory, the that to longer-term don't belt a current do million in, months back currently, we customer X to inventory do have the quite XX the the about typical the it so our a actual think is And better sense earlier see we recovery which any Again, direct but course, peers. I can, C.J., I control it when from peers. which do because position is target don't months, we we stay our in or discussed be get still it, $XXX we is don't when can in or I want away be X.X we should that's in that, so or on any said channel. bit I position, Bill X.X all makes the different think, comes we still like, I assume, And we

a good thanks year, us strategy, brought less us. to of this includes therefore, So soft the a year think We cautious no, believe feel by to down I don't X% the about have ahead before. actually is only reason we behavior recovery there of landing which

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

the us stronger My would because in year first going end one were ago, suggesting of that things days wins like to the be of XX sort auto you into be that and around company-specific to ramping. radar were auto, just other of the

Like confusing, Or of it less seem it I'm broader to going with weakness than the incremental you part enough the to that So little offset is on is it does Or Because not a certainly thought? it? ramping what stuff we're ramp? was does you did of doesn't Or be the seeing? thought? other than that? that ramp later what's

absolutely. other went One very would say what tried driven that mean we it's was if to factors. happening. X, Yes, company-specific X X they was half happened and Stacy, half deeply happen. can over I I X because Stacy, confirm softer We the and into didn't The by the recovery growth. little a did and company-specific grow growth is find what anticipated this a in less of the cars, quite the is And the macro growing that. and are superseding a SXX contrary, then by recovery half. nicely also actually half less. the which of on mechanisms happening, little rents actually not you But second all weakness, over away bit it course, but build of ramp is fundamental wiped little first happening. of the RADAR are we

company-specific are the So drivers intact. underneath

Stacy. to Day not Investor more overcome Boston. bit a in But the it's in weakness, detail strong our on macro show will enough We Thursday

Got That's helpful. it.

For about I gross to wanted my follow-up, margin. ask

QX, in I down why So they're coming understand think. I

down that that giving It about likely the should be Now the further any I thinking beginning be trough? we're and doesn't is Like you how of the we gross not better. the in it revenue any probably in margins is suggested those sound term Is that dynamics just sequentially. just are seeing -- like shortfall mix in leading just drivers year. in QX, other XX.X% are to thinking the near the given me revenues digits that should single high

Yes. Stacy, Bill. is this

going not adjustments it's guide. I fully to But seasonal levels would for similar revenue guide. booked incorporating when purposes, best the past modeling said we're what we margin to First, not about Kurt absence a those just at know the in Again, gross yet. revenues, of to suggest ordered the the probably use to don't

the during along just years I'm something But not So that mix X role, those lines modeling, but a last course, revenues. of will smart I would play for just of use enough. those

revenues were open So Like where time were? margins model. last was that? up gross where my I'd

website. You can me find our probably on

Our next the of Bouvignies UBS. question line comes Francois of from

of from pricing for your My about the year say, should have negotiation, customers. first course, as is challenging environment, intense that the understand, talked many some this. the what from end the understand at you I -- of on are conversation, auto the where question given we peers And you like an especially we it's pricing was

this think be strategy, more NXP, the wondering I you especially than the think that up pricing out, very year, that's to follow we given maybe I was helpful. is okay. play how next So if for going should into would have pressure usual, after how about pricing And a

absolutely. Francois, Thanks, Yes.

data is, year, this indeed say that now points neutral. The lot confirm have through me X can pricing we here. one with this been this a we Let and about will talked confidence for of year,

the relative the and that's anything the can to will would we also end a XXXX. with see very we segments, I entire channels year's next And that's calendar today typical, probably from the ASP low across is be year together. So over so previous company, erosion, say, what pricing we a It single-digit anticipated. year pricing flat the have which will all all

this we with a flat have after the line, it portfolio. way, points we and prices also people, year. low hear you in annually, for different up, pretty the we different and that that differentiated the but by remind swing the year, to after, And next the know which you data back to they experienced COVID I went we So assume ASP supply crisis reasonable is COVID. are a crisis Francois, where single-digit erosion after were assume but this from years whole is supply very into before much have before years in what And

So products, catalog also a gives commodity comes a us now from like lot strong our when period of very in a is which relatively far away standing product or pricing. to it a

assume local medium play or something China you a the way that well, will differentiation, after you a something well And take see as it the described, as your fair given the doesn't It's gross challenges to a the soon it example, pricing of still and potentially the Is tends share bit bit have role? uncertainty short these some the a to I very and and as but it's have kind cost trade-off saving as play you probably consider longer you product program oversupply cycle, market to on to just down exit if pricing. Even between going that Kurt, feel very long you for NXP term, strategy? environment how mean, maybe would players you that margin, sticky strong cycle? that given as impact with consider in this term that clear. maybe That's follow-up. a like

when new of some pricing. side the equation forecast, will a provide one model week new on give mean, gross with you we let color will you which on me function or our that. more I Absolutely. margin is consequence learn obviously of Thursday this the all financial a But this

So way and if have and is wrong then running the only, Generally, are category. we how the price we I Bill the product company we price, on how would build Francois. will we on try not management to I team, in say, the compete and are

always So zone there is a in gray between.

course, exited of way, try after been would be they example. mean a have in and you number powertrain we only we of for that really some picked are eventually stay our these Freescale, peers. comes There and the microcontrollers we -- years some over have would exit of with have by subsegments have And did have actually the it competitive. price, this we to a point acquired we heavily up automotive, we leverage then if I only to that. stay to Of examples. But have win

business years price. So cup similar end, try doing or to banking compete a thing yes, in was ago. on we we where There are the don't that the

there cost the us other few for Now competitive we it same Singapore, to time cost at moves also a example, moves to cost is, maniacally and recent it, down. have venture, joint on our the more of competitiveness. We bringing own And base. come course, BSMC is work in with to helping a Francois more because the our are actually

So are not margin also very company That's we I run there, for of work the no, a company. gross But how function And would which share. of cost hard. philosophy ultimately, price sacrifice mean, not we the short-term which can also achieve. market we is the we still, the

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

margin, is and coverage with other rates, going be quarter really nothing for both now out, you're anything the really utilization the sorry see starting Like gross maybe all remarkably now? have any margins agreements mean, implying another last what market mix like your why stable in products night quarter, on can end and I isn't revenue. zoom and box the that and leverage leg harping and if decline sequential sounds should which it's we are guess and been guess, for I'm by down? to driving I gross some X guess, quarters the XX there's XX, cost purchase we cost it that of? but like gross the most for I fixed it's this are that with aware but coverage walk again, of beyond, in through changing within I morning. pricing, the you, fixed margins And on fourth maybe factors March Or mix

it okay, step lower to else be QX, have It's to played bit honest another the Josh, sort you down in function QX revenue a and a with of revenue along levels role of inventory the be level, cost it's a Sure. fixed just Obviously, that, the you. revenues. the rebalance There's really, different. fundamentally plays the total role with playing it structure. just yes, over mix not I now mean a a going really really some of into will And bit. anything a role

to much maybe you forth. build as and And and have so adjust so don't goods foundry you

So team been that revenues of how an journey to peers stage Thursday. their upcoming I gross margin walk they compared the we've margins of say I through And have inventory. the I would customers because here know and our gross again, service or to resilient this the will the impact many fluctuation quite clearly of

near model are So very our over margin just are. revenue of it current longer then gross the once our function And the pretty some actually the term see talked about bring Kurt levers that about the we will we a mostly today. more improve, good we end above And feel of where high of excited to term. again, we be macro of

Got it. there. appreciate I the color

the Is how engagements And content in supposed in think the a remarks, customers? vehicle confidence the particular, in progress? speak the those side? you was I have on for assumptions that going in I And prepared maybe software-defined in think there sort ignoring the still X-nanometer particular volatility on your OEMs, your of at MPE time can of on follow-up, if a at you and XX inventory seeing there's For Kurt, lot I the guess, to in mentioned ramp are your to changes changes, I changes you XXXX wondering was and on West. frame. been content

change. Yes. No Thanks, Josh.

here all STV. the in of X past also has SXX detail growth my accelerated day, outperformed the greater numbers speak much years. the and confident for on We targets are very of see traction STV But actually the spite that the leader the in you our over business, will will in the auto Jens turmoil about segment our

So show will numbers the we Thursday. on

we'll So What which to Western continued Chinese that and the today. great absolutely, of SX, has we that OEMs. noncompetitiveness continue a see of have great computer happen, course, traction however, traction, behavior anticipate does and And is the versus do products. we includes is of OEMs other lot a

content judge companies. say mean are building or Chinese can U.S. from pendulum is coming swings down here, but number that That they dare maybe vehicle per to the doesn't cars Europe the favor that comes car we the more in anything the in of I So of that down. the

unit to going more forward. is to our win the means China with is next concepts opportunity which be which probably We to So where a keep production that's because question. board. content efforts bigger across probably question, in of winning want China, It's that the is not a we also in going particularly sure that favor STV

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

X quick ones on have I automotive.

demand? incremental are clarify, auto, we is Tier Or bringing speak in Xs you're their purely Just inventory this seeing down levels weakening weakness point, Kurt, to wanted at well. due to end that the as as your

something seen gave levels? changes Have range of weeks you you I XX inventory any to optimal of their terms think a they inventory. they're think X managing like to about last quarter, how in how

is It unfortunately indeed Toshiya. both,

way, a So minus this they for produce. X%. That's XX at In Toshiya the at number. the year they And expected whole issue. the Europe, weeks, that will of which by X% SAAR become X because to is also unit lower bring that, the earlier I down now the numbers, said But minus year-over-year.

less So Tier they target. with forecast also inventory that need lower parts, Xs the telling they a OEMs the

the we from suffered So terms, get of lower suffer a We function directly which lower absolute a production double is whammy. that. also from the overlaid but in dollar inventory we numbers

year-end is a also interest So say the an And X have when X the XX end that's stands -- the weeks I revenue to of inventory. to emotional number. like against would year and high there They, on poor towards whatsoever outlook. lower course, they still but the why no have element

lower go rather than higher. So they

that is The yes, of the on overlaid is both. of starting point a all want of other, course, the other is the for I this it again, recovery. So better side one which, But don't what when end, point But it even means last out X we grows, to recovery situation. grows same the it the once of stronger. the go cycles have that it to is. in That's

follow-up, Yes. at of adoption of expense seen as of stalled shift then a has of my the hybrids quarters. lot expense in the That kind but at makes past of the several maybe a not EV EVs, sense. mix And you've over favor

that more and long But maybe partners EVs at run, the relative your early the are part grow what X view 'XX, how to and into XX perform to as And have you is a pretty content materially. do importantly, on consensus another? you industry for customers from talk perspective do EVs a view guys the NXP? implications perform think of I you or hybrids over

Yes.

electrification are is more systems between that a battery content we of two. discretes, in the between which EVs from and that hybrids hybrids you don't much space main power have we fully because, and as dollar much don't difference sensitive perspective our know, So differ much a the management don't have differential and thrust they between the the to

eye XEV, between time, but sharp XX% change full just we the EV. maybe a same to a absolutely, don't it therefore, mix going want said, hybrid is specific the growth the year. I adjust slowed overall on this have has to be slightly you So and At what it still

grow will by year, this XX% worldwide declining total XEVs SAAR units, the by X%. in the So over before, is year while

very is and the that year. strong mean, growth very, a still total it vehicle this production be I So will XX% of

produced on vehicles all of XX% the planet are XEVs. So actually year this

it to us. like term, XEV relative forecasted is longer we the we That's it point of perspective we ahead over do which yes, to other the continue of that the and So yes, to kind question, that from grow. growing moderated continue what very global XXXX. a your half penetration of pace by a it us. help continues data is do something still think be was sharply, We And it to XX% have will but believe

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

distribution and confused going be very a ask to industrial Great. The just yet if little focused. I because and results weaker-than-expected I always in segment bit I'm China to can. one, in the strength China, this and I'm IoT very recall China

correct, very geo you China stale? very, So and outside Or can my am of is channel the of maybe weak? terms of is -- it this maybe my understanding. mix of what's in recollection but I Is correct

is majority China. It That very true. in has a

The did distribution U.S. of what Europe XX% whole And is you channel. industrial going So that the IoT miscall say the we about weak. through business don't and very it. is is

down the discipline to is demand all up the channel. total in there. since it So the weeks, don't are keep the Not this exposed exposure. we and mix XX% going are maybe we there, with And basically our end X our keep to flat we we and overship China XX% you is of fully that through segment of but because really China, channel

overcompensate up. weakness the that as whole, grow the So just U.S. rest the strength can China therefore, auto the before, a QX as it cannot in segment. said and industrial Europe so Yet and is hold both I China falling will much in the into the in But

here X take please. last we'll Marvin, today, question

And the our Danely last of from question Citi. line of comes Chris

ones. X Just quick

market, So guys, Auto dozens gains as at EV Is would of a then of of Is you good? Show to your it China well. can indifferent? how companies what's just give sort the It of it Is If a bunch China. And start-ups. it bad? I'm impact China were like business were much that there seemed auto the Paris EV you How NXP? sense is sure share in be? the of and us

means great China. China go they by get the can I XX% since XX% later That is of of faster, of they lineup stronger, echo a there Chris, or find where thing today, geo the whole and NXP. probably we what NXP, is we in segment. say worldwide. Chris, strength which, entry means, at So I the average. And a getting point, and will it innovation between NXP of China break mean, can is just we And don't for from you Q, the you total auto is yes, out But faster down and like late. with that think the XX% whole -- coming even by only China, auto to are assume that breakdown find I not because see some XX% corporate the out, is now EVs that which with in way far our extent and their indeed, good

OEMs are products to we than if continues to -- and production we that, a NXP. for everything the quicker this Western do be positive up in newer put Our motion pace, and keep with much coming into

Thanks, Great. [indiscernible]. note for way a on Chinese And quick, Kurt. follow-up then into a real to get out to I Enchilada that my figure got Bill. just

$XXX Are million weakness So passes? while in term like to keep there? for it Longer Bill, at are million longer million the to your the goal where this inventory at then days looking And what's there? are $XXX we basically term, year. going $XXX we range this

sure. Yes,

the think Over until couple next decide at the of we'll this be I channel. quarters, level we replenish to

X that's so weeks' about And worth.

longer down we come required inventory we on down our will our needs. term, pull Thursday naturally think more would customer be that inventory So decide to updating internal service to this replenish we is on what when the go and target

more patient be of and our whole the you'll wait both P&L with complete the please So and and days X model of working so everything get CapEx and me capital forth. and

please just So patient with be there. me .

to This would question-and-answer Kurt Sievers, turn to for President concludes now back remarks. closing and I the session. like CEO, it

Thanks, our that taken is had U.S. in we surprise an today quarter by of we report European operator. the control. markets, Yes. and third weakness automotive and some beyond to and were in the enhanced which Yes, totally industrial

not for year, for So what what clearly that. early control for well maniacally next staying we feel whenever do, take to from happens. recovery I soft the lending strategy which is we which hope And the up control a and guide does our us anything show and That away course very you our should will it we the try in powers. set give on signs

direct that. set at a the position when in the well should are customers. But and the We happens, very make a not our judgment low to inventory on channel be inventory it low we in with up

we you. to where you long-awaited Can't the financial on Boston for and see Now this I to about long-term same update you morning. attention Thank Day Analyst in week, our much time, in will all. very at many see our model. wait you of your strategy and Investor day speak First hope the Thank you this give long-term our

Thank the program. This you participation conference. for does today's conclude your in

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