Diodes (DIOD) 6 Feb 242023 Q4 Earnings call transcript

Good afternoon and welcome to Diodes Incorporated Fourth Quarter and Fiscal 2023 Financial Results Conference Call. [Operator Instructions] At the conclusion of today's conference call, instructions will be given for the question-and-answer session. [Operator Instructions] As a reminder, this conference call is being recorded today, Tuesday. February 6, 2024. I would now like to turn the call over to Leanne Sievers of Shelton Group, Investor Relations. Leanne, please go ahead.

Good afternoon and welcome to Diodes' Fourth Quarter and Fiscal 2023 Financial Results conference call. Group, Relations Shelton of Sievers, President Diodes' firm. Investor I'm Leanne

to of President, Chief President to customary Financial public our us subject and Worldwide quarterly the today independent Brett results registered remind reviews firm. they the Yu; Diodes' its are finalizing that today Director Yang; Emily Vice Joining Officer, Dhaliwal. I'd Gary are Whitmire; and by company listeners as Marketing; closing Relations, accounting Investor Gurmeet Sales like of Senior preliminary announced are the procedures and company's

As until such, ending Form its these to results are unaudited year the XX-K and subject fiscal December revision its XX, XXXX. company files for

response Actual today. In detailed protection that refer differ Act risks filings Reform addition, and additional may XX-K is from and harbor management results with the Litigation the forward-looking statements, the of discussion to discussed prepared in the Private those in you contain including make Safe and statements Securities and risks your claims company of the Securities and Forms Commission which to are uncertainties company's of for questions. Therefore, we the uncertainties therefore, contained remarks subject a XXXX. Exchange And forward-looking XX-Q. may the to statements in more management's forward-looking

any law. may may as required extent update addition, these conditions in except performance of as projections applicable Diodes market future projections no change estimates In or to obligation to future to today, management's by XXXX. represent company's the assumes February X, not the the as

refer release income. throughout additional as the Included certain management non-GAAP net GAAP information measures definitions press items, stockholders GAAP will press to conference conference discussions company's and in of call and we release company's in and net reconciliations to release call, are company's this financial press during GAAP the and the provide Additionally, non-GAAP terms. details. attributable income common statements during statements the and include to management of Also which the

days Investor listen over Diodes' recording at to at section via the in to this go Gary, to unable you of XX call the Yu. www.diodes.com. And time, turn President, call Gary ahead. Diodes' a of available Relations the be for will those For please I'll entire now, website webcast

our pleased joining you, as January call. X. Leanne. result recent appointed to conference be to President you Diodes' I'm everyone Welcome, today Thank effective

As year, promotion plan. announced part succession is continue employment Diodes' CEO Dr. May to XXXX, which the at current serve Lu least end will of and Chairman my last consistent was as until with multi-year at XX, agreement. the CEO of

have very developing Officer, I served as in with Diodes since success into and be As and we stage XXXX. then leading Diodes will a of which next customer products Operating this portfolio broad focus serving to new on been many enable know, innovative you Diodes' Chief market serve. role of the have growth, previous I'm may the excited of to in

on In improving terms rebalancing result, computing, XXXX an well market consumer, this progress year and to a inventory the product the this with quality challenging portfolio. weakness, of the extended area automotive market proved the softness slowdown, our coupled of certain the past year, market. we as Despite our as be communications industrial late in experienced and global of as in mix make notable in a

of those investments X automotive-compliant products. The on XX% through design new XXXX revenue XXX industrial expanded in automotive which markets focus expanding wins product last XX% product to increase to continue and development, compared We over to revenue markets and new result in combined year. in from

by reductions, developing drive for debt by XX%, that gross also and mix margin $XXX XXXX efficiency, ability we to less were target expansion facility we technology $XXX solid near maintain utilization. debt operating reduce the internal our especially $XX revenue. total annual over in while the $XXX full-year manufacturing Our product evident to increase year, lower further model million. maintain million to million, maintained enabled our meeting despite million to our Throughout strong cash in our cost generation XX% improvements us process approximately cash Overall, cash total of a to position continued

and $XXX line our of financial Additionally, we credit expanded million renewed provide to approximately to added flexibility.

markets. in look to power our and we on with driving further XXXX, the targeted family, remain focused newly As we at products, mix especially portfolio our product quality analog and including SiC of and the automotive introduced improvements our the our industrial discrete

complements progress, a model. We approach also as placed that further guidance fab, the previous in past, over our further to GFAB terms good Brett first total emphasize with future qualifications, to been the has our continue growth acquired hybrid along will utilization that, that in opportunity, and ramping more support well to We and will our deliver design our of manufacturing profitable content and quarter believe financial continue which development call quarter now to make full-year SPFAB and process sales increasing a successful future. With our as me key a on and wins, account our our product our solution detail. turn results let in the the fourth discuss in

the year was which the XX.X% or This as and million prior or in agreements. billion revenue million to quarter profit quarter compares service good million the quarter. was revenue XXXX the revenue, the mix was to Gross Gary. reflects the in in third $XXX.X product the lower to revenue Full-year quarter impacted our Thanks, And XX.X% for revenue XXXX. million billion of compared XXXX or afternoon, XX.X% everyone. as XXXX. $XXX.X fourth Revenue $XXX.X $X $XXX.X $X.X of $XXX.X fourth fourth million compared quarter wafer million in $XXX.X well and prior by quarter for of in XXXX of

$XXX.X $XX.X profit was and quarter $XX million GAAP restructuring operating $XXX.X asset million And XXXX non-GAAP of amounted intangible operating $XXX a operating or year interest quarter. other of gross unrealized million investments, Non-GAAP currency XX.X% in a XX.X% of quarter and XX.X% and gross XX.X% were fourth and of Income quarter of of of effectively of model or approximately the our prior noncontrolling XX.X% expenses of the revenue. Total fourth amortization in million $X.X quarter million, loss in of acquisition-related GAAP before a and and was margin to foreign the million $XX.X million million in on $X in the XXXX $X.X expenses prior prior the to revenue, interest $X.X $X.X to million which previous income full-year, or were excludes at compared expenses. in revenue. the the revenue, of interest $X.X target in quarter XX.X% consisting the expense. $XX.X $XX.X million in expenses million or was revenue, million of GAAP compares million gain income, This basis, $X.X For the million on GAAP quarter million $XX.X $X.X of million of for taxes fourth or other XX%. were income, costs gain. million for quarter,

income Turning to taxes.

effective for Our the approximately tax income rate was fourth quarter X.X%.

million acquisition-related $X.XX shares or income fourth of or per share compares full-year $XX.X in quarter prior year diluted XX%, diluted non-cash $XX.X mark-to-market compute in per million on and quarter GAAP share XXXX. per $X.X million the excluded our or for diluted used $X.XX of million or or the within compared the asset net million was quarter in or $X.XX diluted rate million quarter. was expected per value fourth fourth income or intangible XX.X diluted was share EPS adjustment $X.X to million and quarter gain the share GAAP XXXX, Full-year share which million the $X.XX investments, was and income in full-year. Non-GAAP for $X.X $X.XX which to approximately the both million costs. to diluted share investment $X.XX was XXXX tax, last net the gain The count $X.XX $XX.X million share was per diluted $XX.X diluted or million range. restructuring share compared This tax $XX.X quarter quarter in For per diluted million million $XX.X costs, $XXX.X to $X the and a prior GAAP net of XXXX. $XXX.X the adjusted $X.X per per net fourth on share,

For per million as to the or XXXX. was full-year, $X.XX compared non-GAAP per $X.XX in million $XXX net share income $XXX.X adjusted diluted or diluted share

share-based prior share, tax the quarter for fourth of non-GAAP and $XX.X revenue $X.X $XX.X $X.XX would in EPS compared adjusted non-cash XXXX. increased respectively. of was million $XXX.X million and both of per XX.X% in EBITDA and the of million of compensation quarter $XX.X quarter full-year, the million or GAAP have expense for share $X.XX and or for revenue fourth fourth the by million net the of quarter Excluding per diluted revenue XX.X% or to XX.X% earnings

of revenue XXXX. $XXX.X revenue was EBITDA compared $XXX.X of to million XX% or the For XX.X% or full-year, million for

for quarter, which expenditures positive debt. CapEx. million, the net cash We of to to $XXX.X which Cash was release was of included $XX.X for net paydown fourth negative was net million from full-year, for the cash the was of $XXX.X million income net the and flow have $XX.X details. million, $XX.X the a for was flow a flow and $XXX.X million $XXX.X EBITDA, cash operations in income the million, free GAAP for million additional $XX.X GAAP and reconciliation earnings adjusted Net full-year. capital $XX.X for and million in included income which flow quarter flow net cash includes full-year, including million generated our fourth a Free provides non-GAAP total

debt, the to million. million. and plus was total totaled term At balance Turning equivalents, was cash, sheet. $XXX approximately restricted cash cash $XX short-term Working fourth and capital end investments of quarter, short $XXX million long-term including the

work increased last of to quarter. total approximately terms days quarter. XX as inventory, future consisted in goods first a materials. prepare days orders increase growth to In million inventory were X.X% the increase in expected Finished $X.X to output inventory full-year goods, within million to $XX.X raw the and compared invest fourth X% of $XX.X in Total time a prior $XX.X from fourth to Chinese lead XX million of our compared were or last due $XXX.X for the inventory million and increase XXX our process inventory expansion New cash were the or inventory and holiday. Total and to and expenditures the business. $X.X end lower at basis quarter quarter continue the the increased finished Capital on We revenue we million XXX quarter an range dollars quarter, also quarter support in in the target in quarter million as $XXX.X the to of Year in a million. short during X% X.X% order for in of for of of revenue

outlook. to turning our Now

expect X%. XXXX, minus or million, we the to quarter For first approximately plus revenue $XXX of be

amortization for of gross expenses, GAAP intangible XX.X% expected which plus expect approximately to GAAP XX% plus assets, expenses X%. margin are We acquisition-related operating be revenue, be Non-GAAP of X%. or are adjusted to minus minus operating or

We expect $X be to net million. interest approximately income

and plus for is million. Not said, Our million non-GAAP acquisitions. With rate to be be calculate after X%, first Emily amortization income call I Yang. the approximately in tax tax estimates for XX%, will or $X.X now is to EPS used over to shares quarter XX.X are expected turn anticipated to these of minus that included previous the

was Thank quarter XX% of guidance. fourth you, and Brett, the our midpoint below and good afternoon. sequentially slightly in the Revenue down

of Our the quarter increased normal above range weeks. our decreased to DC inventory in XX XX our global POS slightly, and defined remaining

fourth quarter. sales global the in at Looking

XX%; Asia X%. represented Europe, XX% North of America, and revenue;

XX%; full-year the XX%. revenue; of XX% Europe, America, represented of Asia and For XXXX, North

quarter industrial was and product consumer, markets, In of of XX% end fourth product revenue; automotive, revenue. XX% terms XX%; XX%; XX%; Diodes' our communication, computing, of

end target automotive our above and the XX% total model the of revenue, quarter markets fourth consecutive seventh Our XX%. industrial representing of quarter combined product

XX%, of XX%, auto revenue XX%. year. communication, XX% and record For the XX%, product XXXX revenue to full-year, computing, Auto XX% in industrial XX% was compared consumer, a and industrial last reached

into detail. market. began with me QX a which along rebalancing the Starting quarter, decrease our seeing was believe markets In will the automotive is this in quarter, slowdown XX%. automotive total let review the fourth Now first greater from product some We revenue, slight and in continue XX% the quarter. of end inventory last with the

we from $XX per to will And expansion $XXX XXXX, revenue time full-year, to product in a compared on than be a the car XX% year, growth XXX about contact XXXX. compounded annual this product, forward. our was last market introduced XX% from our represented For initial only market Diodes' that XX% focus X% into revenue time. Over compliance automotive contact rate XXXX going to launch revenue reached period, increased demonstrating the XXXX, the continue In more record of at in our commitment this which which to in over segment. auto new

to product product still New very the in momentum Even drive though available pipeline softness our see pockets Diodes. market, for automotive continue design market, expansion also mix. design and the of we total while remained of our strong has improving

TVS ideal seat USB while our significantly active applications rear and active Type ADAS, designed quarter, fourth carpet, automotive into of our continued have diodes controllers smart the the entertainment, cable diodes and Mux for ADAS and are LDOs MIPI Telematics During cabin, switches for C adoption smart in and Crossbar traction, to designed applications. DisplayPort re-drivers, gain Infotainment. increased our The

We several design for of generator crystal our PCI clock also development achieved for and oscillators wins design. new the ADAS Express

USB updated and extended system C USB Type in-vehicle infotainment supports is functions. power that Delivery portfolio gaining newly traction Power controller Our charging range from

released we newly saw battery demand These N-Channel lighting onboard specifically Our design SBR management headlight are tailored also targeting Also inverters. for quarter, such as growing during the the systems. traction MOSFET, momentum seeing electric systems, applications in display, for our the in electric solutions positive motor automotive and products high-efficiency are drivers DC-DC MOSFETs carbide and charger, battery and hybrid silicon for subsystems. converters, vehicle chargers, momentum

SBR last represented In and witness applications. product of seen quarter demand X quarter. decrease industrial EV revenue, the inventory our mentioned fourth the our was have up market to weaker XX% last point we Since call, revenue and broaden. a significantly total rebalancing which Schottky shipments we percentage Additionally, due have this sequentially for product ramped market,

year, expanded. softness, and despite represented remained to the our product as see has industrial content the strong opportunities full-year our the of continue very XXXX, throughout For application revenue. of we pipeline design XX% market new Even

along standard X power enable things, plant In progress of on switches applications. applications, PCI Express test terms product diverse These artificial automation, designs controllers, our winning are with of the TVS across storage initiatives, clock in packet packet instrument solar C, DisplayPort, One traction gained in data used systems protection product commercial switches intelligence switch devices Type roof in our inspection, including of for where applications. and has being SBR essential residential controllers Mux system SSD real-time solar Express wired, solar in new robotic MIPI industrial connect has industrial product in components and bus. We wireless energy over like PCI and range line HDMI, our market for battery the being re-drivers specific panels SoC strength to drones network, industrial various cells. of such to for and USB and endpoint design as wins secured storage solar, displays, been our in management designed battery area the a

in inverters, our been power Additionally, traction motor and drivers, centers has silicon carbide solar data gaining MOSFET telecom industrial supplies.

second on some in the Due second the the Turning and quarter markets. we Year XX% to is inventory to product half levels beginning revenue, revenue, holiday Full-year of customer levels. last to quarters New which first product in of of adjustments, quarter. back returning XX% see last total inventory quarter year. computing of to quarter expect revenue XX% we a represented Chinese revenue to normal Fourth recovery few of represented year. impact are the compared to seeing revenue the progressing After flat

the and production our In new well of product into and terms protect in notebook motherboards, protect to being server wins data and C Chromebook to the power diodes, as modules for of are designs design sourcing port server. ramp Schottky secure drive protection are solid the power for and devices and line TVS center high-speed our being line data used designed applications, for notebook adapters Type as state SBR

including in desktop, -- gaining momentum at notebook, various also in stations integrities docking cars. protocol connectivity and gaming, signal for products computing applications, have workstation, We for and

in we telecom of crystal servers, inventory seeing in applications level. level the product the learning PCI inventory rebalancing increase returning to machine various correction third the quarters compared of XX% which for quarter. inventory carbide silicon the factor for and communication represented revenue, new servers. In the a Schottky are secured also networking power buffers, adjustment year. Revenue in revenue Express back full-year an continues. design product specifically, customer last of oscillators market, In fourth few XX% and diodes After normalization XX% and market, XX% smartphone for from revenue to We in clock wins quarter is was

computing quarter. is consumer market, rebalancing, and XX%, few to quarter including our compared terms for the quarter, seeing X and switches of the protection fourth in new last products, our percentage inventory smartphone quarter inventory Similar which of are products timing in connectivity In situation MIPI revenue represented now customer after crystal smartphones, design increase is the SmartNIC and clock TVS are adoptions point in also in mostly products a market like clean. in wins wins lastly, oscillators to buffers and seeing applications. And a

Following half seasonality the year. into to New some first quarter for consumer of the in expect the second typical quarter, and the Year the Chinese holiday we second late the and recovery in see

For represented to XX% compared revenue the full-year, XX% revenue market last in consumer year. of product

seen adoption PCI re-drivers Type USB generators, signal quarter, the active and docking During monitors. Type C USB applications in stations, active clock cable have of Type USB C tablets, extenders, and televisions various retimers, cameras, display Mux, Express Crossbar we and C display like conditioners real-time clock our cables, strong

are switches and our overall secured and for global re-drivers we slower and made has in encouraged and over We remains been the gaming VR/AR past demand market. also the in although applications. In the to design continuous recover MIPI progress wins market XC MOSFET summary, automotive by have year industrial soft, and the we

the as floor well to of now the that year. With our cash mix us on and the driving development. well strong growth market improvements, future remains remain us design win focus account questions. Operator? team global as support of introduction, product Diodes' enabled focused to momentum we the Our as key new throughout improve that, investment in has business coming on positions generation product a open expansion

question TD Matt Today's comes first [Operator Ramsay from Cowen. Instructions] with

It's as relative I you is obviously guidance give little across interesting might the burn to for corrected. period have down. a segments and to we the bit been where still the your with conversation maybe is an wanted inventory quarter to the and think inventory March different here to need the What how on the start detail industry more sell-in sell-through much

reaccelerate that give have start back think to color end. where sell-through in helpful by are you of getting we terms you just that sell-in, If revenue can so the any and you segment, balance, could be out would to

This is Emily.

me Let question. address your

I mentioned the with we've automotive, like And point pretty kind Unfortunately, in of seeing from So will computing is rebalancing we're start the then what market point from plus the in I we earlier, first market clean. segment demand seen continue started from experienced broaden. And view, and QX into to view, of the right, it think is quarter. industrial inventory segment, customer weakness the rebalancing. inventory inventory weaker the QX, of

the is think I that in we need Year. keep or concern the mind New Chinese only to estimate

this a view, progressing I to for recovery inventory as output. So is the will But impact inventory half year. From is much pretty of into the see point the going the view, well and some Customer rebalancing smartphones. about the We communication the production second in do typical point we second as continue. definitely normalized. of talked enterprise telecom networking or of the quarter of the the expect

inventory We market inventory consumer overall up seasonality on expect pretty So what in I usual and applications, because is think the of right? So it's consumer quarter cycles, the wide but more I segment, based ramp think range customer we do see that's by in second in clean. of situation. see segments what general, the each from we really late relatively the market

across will to I follow-up different wanted pricing I this the question, business guess ask and about maybe segments. as my be environment. the

angles. X from maybe and -- So

larger may aggressive First about your of competitors lot we more markets. a end do some be in of getting certain all, price hear

coming or element one to, guided wanted you if when guys has pricing done that when it. post increased -- quarter. maybe any helpful. that I of $XXX bit revenue time? see ago you was pricing then down to the rapidly? compare obviously what to you Do that's March were a would the we to all back of secondly, X pandemic tight. that really the you Are above years for over So say, commentary pricing kind Is be level, the And at have similar supply you it period compare, X million And the on -- trends

Yes.

the away is the market, you when you we right? view, So So initiatives differentiated, of some pricing I general, weaker you versus continue means bit price of what a been we all demand more revenue believe usually, demand same type strategically see a with along is from usually competitors supply, our within of have continue little the pressure mix to the the think in product saying of of will which area, this also be point always key varies less definitely right? from you product, right? So overall right? Diodes, the is between we've product the lot really a get If improvement, margin point balance that by focus, usually execution it's help improve. pressure. from view. focus arena, only This but not deep will of a really mix commodity to price on very and that more of which commodity, That So and walking also get that

frame, much around LITE-ON Semiconductor ] the for mind XQ also that's acquisition. XX.X%. And quarterly, the XX,XXX the that numbers, our keep second that look actually X% just guided about us me revenue probably in LITE-ON and we question that's historic some I 'XX and pretty think XXX margin degradation. about your example, at, before is I before is is just that's I the to gave see, Semiconductor (sic) [ around -- acquisition, part a I that And look XXXX margin the and XXX let pre-COVID back back would of time XXXX, say if to so range. year

that margin. be will about XX% representing So

what capacity we The the also underloading significantly have point before. other actually right versus different difference from of view. is from It's now quite

of that's you improve look the I at in is margin, would much the pressure pretty it. coming if aggressively are majority future, we some your hope I So second area capacities, that's the So also answered utilization driving of right? part reference think really underloading. the the point, say question. of So very right? that backfill from the I I near to And actually overall the I the think that's the

today Mobley question with from next Fargo comes Gary our Wells Securities. And

Emily, the to thanks start. and to where for detailed response that's question, and up pick Matt's want I

So you underutilization. dynamics, pricing covered ask the a the question margin me on let in way. But different gross a

low that you QX expect at bottom gross for to pointedly, the wafer a does should service represent? margin the be Given year? of headwind expect maybe represent point, for how the seasonal agreements within least you in do full-year? first what the the much And would a the And for near term, expect gross margin do more -- that, you quarter

Gary. Yes,

the the will usually to of, So quarter third on overall our first still than portion stronger quarter. we X.X%, pretty to overall first need second quarter. quarter half, a then going decreased with Gary continue second right? I second our just agreement, QX answer seasonality, would say, half think me And definitely then the we visibility, is lack ready right? truly I based let Because and the market. right? be believe the usual guide and growth the the monitor about But the to what be to Brett let revenue is answer are the matching guidance, question, or the market we extremely much I'll of seasonality, our definitely, not So dynamic. service The manufacturing definitely,

expectation margin I the continue gross total But solution to the half the have from products difficult something think year. improve for it's That's we revenue importing will that the with stronger sales point view, we the to forecast that will qualify, improve, we're fab, time. us grow additional drive, approach to really not be of of time utilization the with mix internal also half, into than the So to our confident over second product whole first we we initiative, right? provided. also as the usually As will with our continue

I Before on I congratulate to want I my did Gary role. ask his follow-up, that. to new mention forgot

honor. you, thank my Well, Gary. It's

to want little you bit Brett, talk about the a manufacturing?

-- expect we seasonal hopefully, just that's but would from as us. then what being Emily connected what that expectation for revenue kind would would transitionally we'd transitionally believe on wafer service we neutral add just as perspective, be I available what Yes. and to guiding, we're to to we've ability margin us regarding put would we I that and would work locations absorbed of what agreement, Gary, a to said expect. tailwind not that ramp a we forward, And on to product capacity to revenue going these that see as is as qualification for and our continue technology ability well the into to the

the of expenses to reason It question down revenue variable the asking just improves. structural? about that non-GAAP is operating sense versus -- looks get trying your improved much How a much excuse expenses I'm by from XX%, were operating And like you're I'm of bringing me, by XX% where they a is when ago. how year

Yes.

is in see that you things. what a basically, So combination of

to mentioned, variable provide that's had, that also where continue doing impacted performance with drive restructuring we company you the been We've we've as continue things, efficiency. -- take taken are. pay. our to actions we're to have inside we variable at investments an action look but also And the So impact connected to we on

growth that drive and R&D continued then than of that not to for to revenue and would efficiency structural think growth. bring to being tied kind what investment what some be. bring look the you'll on our down up SG&A with is continuing focus opportunities perspective, any from an more revenue it or And I of see flat portion

Benchmark. question -- David next Williams me, from our with today comes today excuse Our question next

Let me add my congratulations to Gary.

David. Thanks,

Absolutely.

were but -- better color bag, So just sounds in you in the on a places. and provide maybe a mixed around like are still any inventories but it's clearing the a there. lot of gross can my few It order velocity questions if margin,

you just about here? this think So so velocity through the as your quarter have maybe first those far order how trended quarter into and

Yes.

point see the we So book-to-bill definitely view. from I ratio think of improvement

on signals inventory so think the And XCs, before. about I the it's lot positive within talked ever than cleaner of I there's a getting side.

So positive. I is all this think

is than I think expectation. is especially extremely the the actual slow after unknown anybody's right? think Year, really the I still the demand, China New recovery Chinese

So I need the think good there's as signs positive closely. to well. view, definitely, overall, some unfortunately, to weaker it continue still just of But visibility from we very monitor point

I too. is And some put this that, David, will on Gary. comment

increase sales So to I you lot put effort account a going demand. we're That short the to see this kind of when PO continue to right create to lead work of distributor they work in said, time put PO a period, sure to of know the and we lot the demand being same key in At of time, focus. effort time with this their inventory of we account lag basis. short warehouse kind time the are going short in the with lead key to put kind the handle can to to -- during make

a snapback And brought normal that being you do a low maybe inventories with might get that down do I taking those fairly are of your sense them and get guess, customers get because too sense being to a you replenishment a their bit there? of or that you they levels are rational and

Yes.

really challenging a I think question, that's David.

to actual the as it's their their down well I and view. customer as experience really think

their involve also situation. it Sometimes flow financial cash

well, mentioned, that varies because So urgent the So into enough of customer is a on their see varies So I probably products what the lot by really formula, dynamic, on mentioned lot, it built as shelf. is we that more we like more the base they that's think right? not to So is the what Gary also inventory Gary the where see, quality the just start a challenge. But focus which think really right? right? buffer of driven to a I orders, little bit we

to can kind to quickly we will this So much lead and the few for pretty our orders, So that's continue actually customers market as really much pretty focus focused we support to the next what quarters very right? Any… right? the adjusting continue evolve, time on with of short

Any other questions?

Other questions?

Hello?

That was for me. it

just went silent. It

Truist next with Stein today Securities. from William question Our comes

I Also, to out wanted congrats. Gary, my

Thank Bill. you so much,

channel in the direct of went revenue quarter. I'm hoping versus to the the can you split that to talk

Yes.

fourth XX% varies some quarter-to-quarter. about So the by portion. the is usually split little say usually and the of direct. depends This of actually channel X/X distribution, our distribution customer and rule for direct I the probably is a It XX% and X/X on order situation. number from quarter thumb demand the

the a Also, in that is I margins to next utilization expect what then also the quarter? like quarter, tell with you can boost in what concurrently quantify to utilization. you which us expect to is when it margin? build for what inventory relates and gross to the -- when ask in Usually normally, this, fab that, the And be the occurred it QX, dynamic And degree you that? it's Can helped inventory I gross build quarter. if wonder you that a question was -- I'll

wafers our about that saw, we our you what as about finished think kind availability, -- terms so we of Will, in I but to in availability of half have Well, of availability from in need. can the goods the mix a strategically putting also flexibility place, build on we've what we procure talked both outside from

then Year. and Chinese we're and anticipation look as you that look in preparing at look in at And fourth utilization also so and you for quarter, New typically at you building

you the pretty that we when look utilization saw was so And a combination perspective that, from what of at consistent. was something

We're we to something forward drive more hopefully able that's we're is want to help be. inside run and as and starts to revenue go be in a going believe continue that We as we to to strengthen to factory. -- we us below position the where

we So drove we something utilization -- obviously results. at up it that look related. really as order those we wasn't in it all to fourth deliver quarter, But didn't is

from question Baird. next with Gerra our today comes Tristan And

weakness what's And on margin, then back utilization the from a gross going And way if of on the much service a currently? impact agreements products in underutilization missed, know the are if new I bps? down there of break demand? general quantified in terms opposed sorry, where the as rates fill qualifying capacity to what is how you're just the to utilization is So just I you to

quarter. talked about, about talked third Tristan, to was the fourth consistent ran that perspective, an overall we've Well, fact pretty we we what from utilization from

a hybrid -- to ordering In company. been our get the short-time our that, seeing. getting been We've We to support think, successfully we address we want have, wafers is to in run that continue to where manufacturing of to place able model availability about able I doing better outside we're below service half be. also

and into all for and internal, much kind But in technologies can thing put neutral in wafer revenue that a help and year. forward, believe loadings contract to been continue perspective, place to enable below Emily some the place we gone we're availability of we be, for we anticipate really we our we growth. that strengthen of drives 'XX. total, had want And as more as, something service to that's kind be there believe impacts negative we've really we So bring we've on things going transition, to That's at internal. We this qualify continue through that. anticipation where absorbed kind of and we a what not our we pretty have And running up can that in from positive to of going in utilization.

Yes. to internal utilization like key of this And put account facing several Gary, about comment fab. I customers, our Tristan, and of talk when would kind we're the here, is wafer and they one

like really I really in want of think sure growth future. future that the capability, in have make is their the -- they to support can about Diodes think of kind kind growth, this it

still should but qualify of support fab as like Brett to have kind this product and of more we long about, are our the customer. we as future in say capability would I the we own process internal for underutilization business as to kind level, our mentioned into So our and

most I of are then And my your in believe pricing agreements automotive. follow-up, for

mean terms of you through trying of relatively rest revenue into how automotive Are better I pricing feedback ask stable? that getting agreement, it is outside So year? this what people to or And your from not evolves pricing the think in locked do that's of type are you of customers?

Yes.

market type really be So market segment, and computing It to discussion protocol-driven you're automotive longer varies some lot. it Tristan, right. absolutely And right? segment, a agreement feature of lot it's place for have the than Usually, in a think, the I price going we depends a on with in time in function the matrix the example, customers. others. more of actually the end market,

from more product, less you a discussion Diodes sensitive. you price right? So as lot. to built more. is on So is in weaker, keep is bit But a discussions, get to depends think feature demand pre-COVID, commodity, If of more the X.X% take rich just course, If a to earlier. the right? in extreme competitiveness more a It very function I tend the quarterly also to deep it's in reduction. little a the definitely price demand get the it's going pricing And overall had product price of competition. get If customer. of The my It X% the almost pressure. type. you It's mind you given, actually it back we definitely general, consumer cost in varies that customer of market, varies because is get type weaker, right,

definitely focus and in pricing, to market. pressure kind cost is manufacturing And actually trend. really actually of structured I really the we're the this this kind to would way on say, down are we to So seeing the improve balance efficiency the overall of that support

session. Thank Yu. Gary the President, turn today's I'd you. And this concludes to the conference like company's to question-and-answer back over

on it. on forward everyone, quarter's call. Operator, to conference today's call. you, look for participating disconnect next may our We you progress Thank now reporting

conference presentation. today's you, for today's We call. you This Thank all attending thank concludes sir.

disconnect You may your and day. lines, a have wonderful now