STMicroelectronics (STM) 30 Jul 212021 Q2 Earnings call transcript

Good morning. Thank you, everyone, for joining our Second Quarter 2021 Financial Results Conference Call. Hosting the call today is Jean-Marc Chery, ST’s President and Chief Executive Officer.

Joining Jean-Marc on the call today are Lorenzo Grandi, President of Finance, Infrastructure and Services and Chief Financial Officer; Marco Cassis, President of Sales, Marketing, Communications and Strategy Development. This live webcast and presentation materials can be accessed on ST’s investor relations website. available the be call. of will replay shortly conclusion after this A management’s call that results cause from statements include to and risk materially This forward-looking could involve will factors that differ expectations plans. ST’s press also factors. review full to description for the harbor in issued you encourage most release morning recent the was and We that this a risk the statement of safe contained these the in result filings with regulatory please ask to yourself ensure question. have participants question the a to limit Also, session, and an opportunity one during Q&A to all follow up to like ST And turn now I’d to and the call over Jean-Marc, CEO. President

So ST morning, for Good call. everybody, joining XXXX QX you earnings conference for thank you, our and Celine. thank

gross our Let high net at with me comments globally. outlook strong to business starting $X.XX begin billion. opening came and end margin the some of revenues driven grew XX.X% Year-over-year, with demand by range, revenues continued in Net QX.

XX.X% and XX.X% of of and margin margin respectively. gross X.X%, Our operating XX% from improved

increase midpoint. third net to XX% at XX.X% was the expect billion, XX% and million. be Frequency be is net HX XXXX, decreased seasonality year-over-year about at of On and QX operating revenues about except in rose Electronics. Our whole expected by year-over-year Gross XXXX, income net margin the the an quarter Personal million. driven revenues HX Radio in product On midpoint representing to increased billion, due in a to On of income the to the X.X% XX.X% net net Communications growth normal X% was revenues subgroup. basis, to sequential $XXX we our sequentially. $X.XX margin groups, $X.X $XXX outlook,

the and our million, prior company end full This we drive programs. strong engaged year-over-year the plan by is $XXX address increase XXXX billion, versus minus all markets to of plus year will revenues a full dynamics based XXXX, the the $XX.X in about XX.X% midpoint. growth the growth of at for of be we For or XX.X% our plan expected year now driven on customer

plan support demand also our about invest billion $X.X market strategic strong CapEx initiatives. to We and now to in the

profit while as by billion, The a basis margin and by of with by currency let’s of AMS groups was manufacturing pricing as well the year-over-year, basis. increased sorry, all the on revenues in favorable product XXX driven increasing basis, review last subgroup. higher XX.X% our Net the revenues Gross decreased. drivers and XX.X% RF increased efficiencies, OEMs effects with of but to compared sequential into mix. XX.X%, high gross hedging. were distribution. net year, improved mainly of $X.XX driven Now product year-over-year X.X a increased the Communications expected, and basis to sales MDG subgroups in a increase on of a decreased to and charges second points XXX full fab saturation partially three Year-over-year points net These the On offset move year-over-year negative net detailed our outlook. basis, our quarter. positive unloading except, revenues – XX.X% level sequential XX.X% midpoint ADG by above were reported X.X%, sales

improved Our the guidance, more second above our mainly margin points product was thanks pricing of basis quarter midpoint favorable gross to and XXX mix.

were Net operating to income in operating improvements from and QX million quarter Net from diluted our three share million in increased were XXXX XX.X% all Second per $X.XX. increased with million. margin XXXX QX earnings in $XXX $XXX X.X% to $XX expenses groups. product

million AMS increased in activities XX.X% to to on in all ago By product the the product million $XXX Microcontrollers, quarter. cash decline groups ADG in year-over-year revenues flow improvement AMS basis, operating and margin ago to product all million $XXX Automotive increased revenues Radio XX.X%. showed in double-digit performance, year-over-year X.X%, Analog, the CapEx QX growth. ago quarter. XX.X% the with increased and by quarter, from MDG year X.X% $XX margin ADG from on million operating million increased the increased offset to MEMS from product MDG versus Power groups increased Net at growth Communication. million registered compared $XXX Free X% partially $XXX compared higher operating in XX.X% to increased operating sales. $XXX on Frequency XX.X% in and in operating cash on both growth expected to Imaging revenues in year of increased to Discrete. from year a margin. Looking XX.X% in margin group,

and second repurchase quarter, our share program $X.XX XXXX, cash $XX of million launched period. X, $XXX a million July During we we to year share share up billion the a On to announced XXXX. $XXX the in buyback new of million shareholders three paid executed completing dividends a executed program launch to within we of buyback, be

at $X.XX April XXXX, compared at total total billion. billion was to XXXX. reflected $X.XX billion net billion It of X, $X.XX debt liquidity position X, $X.XX Our of July and financial financial

for of the The issued exercised our of in QX. $XXX the bond settlement call Tranche is B redemption XXXX. we option the in principal million expected QX, completed early be bond XXXX to During amount convertible

dynamics. market the and Let’s now business discuss

global backdrop operating chain. demand, During strong supply again with quarter, of the second the stretching we were a

our this manufacturing all our to We the have optimizing challenge to be closely continued capacity. across for increase continues we At a are time, our customers and adapt to verticals to allocation situation. channels investments same difficult to world. and COVID-XX were with work the

Asia earlier operate, of more the During QX, in recently in and in of new the we spread India in Malaysia. saw we such as especially variants, where some countries

colleagues recently close this particularly plant families by we this and their seriously to Malaysia Muar, feel situation, hit we days, in strongly wave. in these to temporarily support and assembly Due our Over new closed our Malaysia. we

the closure. XX of from resume approval operations Following we after authorities, days

manufacturing and are and Bookings on cover vertical, for the next allocating months demand, capacity current quarter Automotive year. second planned about to strong now above our planned Moving capacity. remained well working still we XX demand our bookings in with of

car customer Renault trend first. devices electric electrification converters the DC-DC electrification as applications of related our Our hybrid chargers. added of supply to QX. in carbide such activity to and strategic to a wins cooperation with in We We power digitalization silicon the to for continue design onboard In be long-term for and Group and announced list strong semiconductors advanced vehicles.

XXXX. will between equally bandgap Industrial engagements As a now ST silicon wide innovation quarter, being increased our and XXXX partner, modules carbide again customers. Overall, Automotive with key and during of these transistor volumes split ongoing from power benefit to programs power from the XX with significant XX

billion well XXXX. by of continues carbide $X wins revenues our target of support silicon design of pipeline strong Our to

We to with are to substrate capacity silicon increase XX% our our tenfold carbide, sourced XXXX and manufacturing progressing internally in needs with by front-end our of versus have investments XXXX. in the line plan

our that increase We week in key plan. site are our ramping have our earlier and production Sweden announced we XXX-millimeter silicon in manufactured our a carbide this Singapore wafer, of first factory, capacity in step

investing of products expansion capacity plant back-end in We for of our Shenzhen, manufacturing are also our internal with SiC our in China. growth in site Morocco, Bouskoura alongside

in customers third-generation in in silicon represents our transistors major performance competitiveness are generation. improvement This and multiple previous high our volume ramping the globally. lead in versus technology maintaining for a automotive carbide, We

next-generation on progressing design also with our line are plan. our in transistor We

transferred We in ramp-up engineering for produced fab XXX-millimeter Agrate be IGBT taking Crolles wafer qualification. our fab lot technology first to RX soon is as are steps We will with accelerate This the ready. as XXX-millimeter to strategy. our production

microcontrollers electrification other in includes complementary have VIPower vehicle for subsystems, Moving high- MOSFETs motor and IGBT various for designs, electronic for vehicle electrical to makers. vehicle and technologies and electrical body control fuse low-voltage power modules, distribution. This for inverter XX-bit we wins control at technology products

autonomous communication car assistance onboard solutions and digitalization, Moving for are VXX supporting architecture. car and we solutions driving, on to technologies new focused processing driver and

processing which telematics, quarter, automotive family, scalable to navigation in we sensors as platform modules vehicle the a systems announced fobs. multiple for we units, Also, with electronics. During infotainment our additions our key as won new automotive for business, and advanced Stellar, MCU GNSS motion provides so-called sensor sockets well integration next-generation

Industrial. to now move Let’s

at drivers, high industrial, with motion and and as tools, consumer During QX are continued distributors both very demand and turns. strong our applications, product quarter sales continue home power-related all products to across one appliances, also Factory families OEMs. control main Inventories and of together inventory demand, of the renewable we across to Point all with lean geographies. high automation the all distributors be of be power in products including remained second energy. strong in

wireless power and processing, our we We have end products. particular STMXX and focus are applications many by and general and energy with leadership family, our Industrial MCUs, and continuing secure solutions management our our on artificial intelligence. security to analog embedded as strengthen expanding a In connectivity, had sensors purpose with market across

machine edge. best artificial solutions We step. acquired intelligence important we ST specialized technology learning quarter, software-enabling existing market. to the edge solution a the took the their artificial the provide on in During on an Cartesiam, portfolio company Adding intelligence will

We the in home like design products drone the our for one multiple I products mention for have many would during to wins and we quarter, where STMXX design-in security. just

expansion objective management. energy power second Our is in in Industrial

Here, and lighting. with MOSFET with transistors low-voltage again, and with charging carbide Power conditioning high- power such wins appliances, we portfolio, modules as and in inverters, adapters, silicon industrial applications supplies, capture our solar and air and a storage, were IGBTs. silicon home number These power infrastructure, with of energy Discrete example, for finally,

sensor and new Industrial. third control, awards accelerate the application to and many for motion had like with quarter, growth grid, analog in In analog appliances. factory in automation designs home Our is our we products with objective our smart

would mention player is low-power, business in industrial-grade I breaker We a to for a One also win from to industrial accelerometer. for like with win applications. continue circuit sensors major products

won smartphones Electronics to devices, demand the with first, high-volume and objectives: tablets, and In Secure consoles. SIM wireless hearables, laser connected as and to wireless lead products, with and near-field stereo headset with solutions. products Personal controllers we selected progress market. our motion differentiated saw and smartphone for custom sensor QX, both communication. two Personal for as trend ranging continue sockets Electronics, time-of-flight QX, we true touch applications strategic sensor, with In to now flagship in same Element such solution, devices strong game display autofocus, multizone wearables, charging other secure with We including in embedded Moving

second address leverage to volume broad portfolio objective devices. including is our wearable to high Our application,

including sensors, motion environmental a broad sensor analog a we Here, as as pressure the new wins waterproof and have well microcontroller. flight, products and generation power of range and with with

gigahertz data with transfer, the STXX. We contactless transceiver are very products gaining famous for fast traction our XX

achieved as agreement a our with we for customers progressed a projects We on scanning, design solution well Equipment in driver, for used with smart continue and production of In and applications. Here, player glasses. signed and we we augmented sustained be key adoption next-gen products especially as to to in development laser Peripherals, ASIC, for the different launch laser Computer wins Communications Chromebooks. demand, with XG-related base see leading notebooks reality multiple for and

programs low-earth of launched number We also saw countries. satellite a orbit in

to front-end We module as strategic In is projects RF selected cellular three end application objectives as in multiple this our infrastructure. received area, RF-SOI approach this to for and we market. address have satellite infrastructure. several telecommunication ASIC communication in awards, well One

We a production from system a this IC also terminal second-generation satellite for front-end RF the started area. for leader user in of a

other high or with address leveraging volume products Our are while objectives solutions portfolio. to custom selected our differentiated broad application

for general design-ins. here and sensors well wins and Our as laptops many time-of-flight as tablets, motion MCU purpose include

production a computer at application sensor for We also our global major of a shutter vision ramped OEM. image

printed the of development in a MEMS first leading ramped piezo We a printing production company. commercial a following multiyear inkjet ST also with printer design

a let’s move outlook. third the discussion Now to quarter of

respectively. For margin expect and increase XXX revenues representing a quarter, billion, X%, XX% basis $X.X about about and third year-over-year net to sequential Gross and XX%, we of is basis midpoint, and point, XX the year-over-year at sequential expected be the to growth point respectively. of be representing

all plan Looking XX.X% programs. we customer of XXXX now Drivers to engaged year-over-year the the of at are $XX.X expected continued on dynamics based growth $XXX strong markets revenues plan midpoint. this growth will million. at This our the full end company year, drive the of we or and in net minus address billion, plus the will into translate

net XXXX fab. our manufacturing $X.X to capacity about continue CapEx our Agrate updated also demand It manufacturing increase Our of plan billion will will such support as to of that ramp-up XXX-millimeter the volume range. support our help the we margin scale. at We revenues in bringing customers. our global the and end To initiative, strategic our gross accelerate strong second to Tower came onboard the announced Semiconductor recently to quarter, conclude, our high large are business of in outlook and

generation. as and demonstrated cash operating strength maintain financial flow by our profitability We also our

year and plus full This we end continuation expected in minus are $XXX on a the the net stems address strong growth customer we of driving dynamics engaged XXXX, of or our with billion, plan For from million. based revenue the the $XX.X markets all programs. company

to continue strong customers, ready growth. supply support you. Thank demand to focus adapting to we fuel will chain We your and our to And answer our the question. on now are term longer current

[Operator Instructions] Societe first Please question of comes line General. The Aleksander the ahead. from Peterc from go

thanks Good my morning taking for question. and

Thank Is this mostly so And RF it within point guidance microcontrollers you your And growth understand to if on the it else play really mostly firstly you point strong anything or at driven here? expect detail, much. margins? then what again on Just revenue could MDG? of what or business by the volume? help us as is this pricing return upgrade, a is both? pricing to do you Or division, explains at

questions. Thank you for your

So Lorenzo will answer.

good Thank more on visibility. is comes revenues, a to see. It’s to About respect have that How everybody. the Thank of it Well, we combination a guidance volumes, our to there yes, increase? and increased you, that combination. the it’s Jean-Marc. I definitely we morning have say in this you, volumes previous

from margin You gross a have improving. also efficiency here, we see our is manufacturing And that machine. positive will our

course, Of doing. the get investment can trying much get – we the to are maximum are we from that as that we

were months that products to that will So we bit in on was The translate of also as factors what better volumes we in bit see, one higher this it’s the little in that And these us, to stage also materialize little is at our guidance are in level bit customer that that had a than better enjoying combination with we say, higher some, let’s will allow definitely we definitely, expecting. an a this also increase environment visibility let’s have a little ago. two well that pricing some are a true as the say, say, visibility let’s respect help. engaged

Second was about? question

frequency. Radio

Radio When say, frequency, see, on... frequency. let’s we will radio let’s say, improve

year. the On

let’s start over radio be that be is that But see, revenues definitely, that then definitely in next in our expectation be significant say in expect, an trend quarter, engaged the improvement for quarter. programs will this that on trend still guidance we’ll we a the change significant And already customer next there term there difficult frequency. to We subgroup. say, will we year, a year. be the the say, And let’s with say, have, of with do would our improvement next see, revenues. a I of And QX an all will improvement. the let’s the will will QX the trend, improvement there

margin? MDG And

the margin the of The of in the strength operating MDG, for margin MDG. rationale

especially mix, this let’s in area, And We a say, positive let’s of a with price let’s say. we in microcontroller. let’s experiencing this impact the say, margin, level good, area, positive. say, environment improving MDG, are definitely is thanks that product the to on the say, had in also, of areas balance a let’s

that is thanks This where market. here, acquisitions. for added we more in helped say, customers. also we in term see investment some and microcontrollers And sure, the our done have value our our fact let’s And investment in Then the we have pricing. that to Of R&D. also, the and to have return bringing the visible in that this it’s are stability course, in return also, we started done, new to very more increased of our

have a these and were at materializing. are end, where the we is good expecting, So this to return,

Thank you. much. Thank you very

please. question next Aleksander, you Thank

ahead. from The Cowen. go Please Matt next of Ramsay the comes from question line

Is ask of product customers one much versus the you quarter maybe But in time that. division supply to it you. in just just your external And last bit is of it There’s wanted from in a that guidance? in of versus on on year. your to quarter of businesses different good Yes, and thank divisions. – particular, delay in your patterns a can morning imbalanced? stronger I a very in the some seasonal some and going everyone. launches be than large second Guys, of you about AMS I a much last some flagship might the seasonality little seasonality we if results Thank was was there buying in year. seasonally the comment expect third maybe you Is how patterns change that internal that wonder sort the reported much,

in impacted of Thank year year, you calls, April out, a as let’s this matter have Electronic for previous year. revenue the seen overperforming. development. the QX year customer was entered of in also really the are February announced this of versus revenue anticipated profile year, course, activities know year year, and Personal some the not this And delayed Because Asia, the we a guess much seasonality you say, I question. then, I of the to start. last lot let’s will program results to a we attached the pushed than this low. I for of the COVID this program after And profile. XXXX of And rather that vendor do year. during benefiting that when let’s be last consequence, from, your different already one I one major in in success, better And year already announcement customer’s, last better say, last and And customer comment see QX okay, you that say,

you, Thank Jean-Mark.

margins capacity, gross I the unloading points out things potentially there gone follow-up have mean, from how and we But grows? of forward look my as thinking question. Obviously, and you guess, rumblings capacity more their some increased do gross about we increase foundries as business at away. look forward charges from the to XX% Just Thank CapEx, you. full here margin. the more customers, pricing think year-over-year. I get as Lorenzo, about some trending five are of add you foundries, and up

Yes.

in gross is manufacturing next I this would margin say fully the the XX% this with stable year, loaded, of quarter that is what our higher a that to the situation do level, seen we’ve margin remain At expect that total considering So see year the sure kind fabs, in we bit than on to the the QX this expectation we our of XX%. be range to of gross end, for little levels. QX. for on

Moving we of remain substantially. level gross margin the all do this have that forward, ingredients to on we expect

Of of on or less But being, forward. can will we what depend level gross the say very, continuing positive, course, let’s about This more it margin. is the the the market time market. see be evolution strong the say, moving for very very we to of

For this year.

For year, yes. this

much guys, very you Thank appreciate it.

Thank next Andre. question Matt, please you

next Kepler of Cheuvreux. comes the Sztabowicz ahead. The Please Sebastien from go from question line

will you Hi, time have good What visibility of question. XXXX thank of receive and taking morning for for substantial do and model Basically, the my OpEx in do should the you as be during follow-up, start at everyone on OpEx year? And you the Thank kind QX to we XXXX verticals? in this you. orders side, ramped QX? a in specific that any any how

Marco take the will order Lorenzo you. other the questions. booking and thank question Cassis for So on the

all segments, and your we this in for have much question. very extending you QX, months. orders XX Thank booking the true seen our is Yes, across

have planned is our than say our XXXX. higher to demand I covering basically the capacity, capacity. So the that whole And

Automotive especially are allocate segment. the the for working for we – So capacity now to

term expenses quarter net million range the about say, the the let’s QX, we’re of and $XXX we the of lending and grants at In expenses. in including expenses. the – income other also for I’m model, In talking expenses,

this try, our to let’s let’s really in in We to push our say, on respect. We effort programs say, accelerate continue, R&D.

will our my that year year, current of also range say, for we year, the expenses quarter So quarterly the million, land $XXX total when we the the say, expense for both range. million range end This I quarter. part for visibility second that is the in will QX and the definitely let’s year, between you at the $XXX in would we per is – expenses per have. let’s expectation that the look say the with – in

have above the about already. to take it the covering our Just from have Well, coverage. the this year. And capacity let’s above have we hand, XX% question complement year we full requested will, basically, CapEx, on if next we customers the date the say, for based you on and we the And planned backlog in plan we for year. capacity the a it is covering year capacity this plan CapEx is next

So additional non-considerable say, the strong. dynamic coverage the coverage and is say, XXXX very firm order. for let’s very, you let’s course, done of is more And that is this and XXXX more and with, see

Thank you.

Sandeep The comes line the from go JPMorgan. next of question Deshpande Please from ahead.

declined for good is incredibly on. this question results your has look at Microcontroller Thanks I when when strongly headline on RF you mean which the business, asking business. have I growing look numbers, Hi. especially morning. on Yes. a you at it let there, Microcontroller is your me you say Congratulations that year-on-year. there when year-over-year

given and I happening that So the are oversupply are follow-up. XX% year-on-year is a market market sooner potentially the is of the one market expects? risk up have shortages there microcontrollers, than not supplying quick here in that there what And with you saying

monitoring this, microcontroller dynamic also very let’s it the the at could market we are POS between the consistent on spot what happen. distributor clearly. a we say, monitor And All the inventory say, monitoring, we is let’s on really the POP. again, know Here, KPI are level are We green. and because

massively, from being, because is the is time So are to either they’re are saturated. capacity XX-inch on, And using they there wafer XXX-nanometer fab – Because fab basically XX-nanometer. to XX-nanometer from capacity let’s a this XXX. and microcontroller green say, technology Or using okay. shortage, overall, X-inch on up fully for the

or of fifty. oversupply, a new also the will before market no and except five simply put be is on So there fab because risk longer time, period no of

do where this raised is here? your et your fab, occurring I Or customers? from particular you question highlight spending mean other my you’ve Can CapEx with Agrate the with I to this some general CapEx. with Is mean again. associated more regarding programs is your CapEx is cetera?

on global adaptation No, assembly it’s yes, fab, okay. wafer test, in and, capacity certain on a in a extent increase

part $X.X billion. about Now CapEx, of billion Yeah. billion, of $X.X is pure Hello. the $X.X capacity

okay? it Is

Thanks. Thanks.

– it okay. Is

We have Sandeep. lost you

So you that. felt

I heard that. Thank you.

next Thank please Andre. question Sandeep, you very much.

question ODDO the line Stephane comes of The Houri Please BHF. from from ahead. next go

Hello, Yes. good morning.

So first about year guidance to your is I’m XXXX the question sales you upgrade, with view billion, at know that correct. basically QX $X.X full if

was neither So no my that externally understanding was or available capacities there anywhere, internally.

So is of it us new second it question the the CapEx capacity view that CapEx you’re said, $X.X than building this could up billion as adding share Or on foundries? year, that expected? And is to you’re billion. from you you are your with arriving is faster coming with $X.X because, XXXX

if could $XX the in be correct. it’s Thank next under target it you the billion current reach that condition same year, if much. means I’m within XXXX So very

$XXX up fact, when In $X.X assess billion. range can billion of $X.X is capacity, fact, we in But in provided it random okay, $X.X this fact, And for is go okay, event. from our perspective, capacity we billion QX. achieved capability, you million to because in have

been has foundry, CapEx definitively the of I – by enjoying commitment the related cycle up go our hook it had we have equipment, qualify of time. revenue is have wafer support okay. offset QX. in Basically, to that taking the injected are the the side. time to in account Now in HX, To into billion it to we one the fab say, capability to $X.X CapEx HX is for them unfortunately, we you you

We foundry on HX, you wafer will on our based partner, allocate on, I device general market. – overall receive guess, in the know purpose mainly more because the less from from pressure to they automotive automotive

Automotive. our Not

unfortunately. Automotive, our not But

mainly is – story, related offsetted HX So, our of a a grow time HX for offsetted volume period internal to will no, while decrease supply clearly, for year versus manufacturing, our by HX. another foundry be capability next of of a in to okay,

the And CapEx? XXXX

CapEx, XXXX will January. communicate The on I

working usual, it. As we are on

are it. We on working

of because equipment lot. a equipment with working We increase time vendor are our closely cycle

are So course, this And time. something in is of communicate we we working on. will due

Okay. Thank you very much.

Stephane. you, Thank Okay.

please question Next Andre.

from line The ahead. Andrew the next Gardiner comes Barclays. go from Please question of

in times I last of the needs potential the for half in on Good equipment for fact that just and the next to the one sort capacity taking next follow-up expansion, particularly that mentioned give lead year first to the current upside next you or you Thank question. maximum morning, we really year – Or that to and is you’ve that look order for be providers given of what as that for capacity all. given given relative equipment to – you have sort flexibility of times? to is installed this know might your year of the already Isn’t Jean-Marc, plan Thanks you XXXX. terms effectively, your those lead into do side you your feel had a equipment CapEx, you. like actually that with still got some – there upside not? the in

view. have we a no, No, clear

will to be we QX start a all, where Agrate as of – room say, we will – let’s contribute first start and next receive water of First we of by fab will in year. Then clean can XXX-millimeter have, expansion all, in Agrate, equipment. XXXX. Agrate to will of year capability to revenue we ST because Well, as we receive this engaged at per So very week. In soon the X,XXX equipment parallel of we end have have and year, increase year this starting we When Crolles, upturn we Crolles. a of an above the seen one December, we capable you expansion are strategy well have immediately of manufacturing end basically in share material fast, room okay? clean to on we the will be decided grow in wafers capacity okay, with the Crolles add to of surface capable, in market the it

let’s very strong a it market we support say, be, address. So to the leverage will

the three fab bought We We years Singapore. will Micron. fully saturate in ago from X-inch two,

point equipment, slots. we and we add where of booked have infrastructure know an all can the we view, from So exactly

so And plan XXXX yes, to known. of you I well confirm is the and sales operating

technology for allocation, customers. Now funding package cluster, say, verticals, to how say, of a, view year location, have regions for volume view, next and from is and we allocate let’s secure. very, a accurate the let’s we us feedback, manufacturing But point cluster, challenge

just could you I If point Understood. on follow on made the up Crolles.

year, week – X,XXX you think end this wafer of you by that saying You is that first the starts per in quarter I the recall were...

year. next Of

year. Next

pricing versus of just outperformance that gross Okay. – on of – your is market on that the the perhaps the longer-term there, and as And Are part time see negotiations given comment for you given market, quickly that negotiations? pricing? primarily XQ progressing? pricing And longer-term those you between the in you where XQ. that mass get the better more then margin tightness the point are distribution difference just you’re in Can to highlighting reason out lines Is able on those are we contracts? how

Marco, one. I reply this will It’s to

As positive environment of cannot say, the and the of imagine, overall, And fair chain. price we it are let’s us. for it across moment how full it’s we segments. which through supply in increase. splitting course, can price in the the price is details go But the you this happening a is And is, different the is approach increase, is

Okay, thank you guys.

Andre. Thank you Andrew, next question please

America. line question go Please Bank comes next ahead. Scemama the of of from from Didier The

bit. a I’d on push little you little taking pricing, to a morning Good like just thank clarify on question. things and my just bit for to

One wondering of impact, how clearly, I’m whether if surprise. closure wondered to side And And that gross the has it relative this XXX QX. your is follow-up. to days, related that margins for actually in closure fab just I impact margin biggest gross a these on are XX QX? what a points competitors saying? I conservatism basis or if got morning much XX% Japan wondered just data any Malaysia is – guided in the gross could baked nice just of fab that, in I’ve the margin unwinds quantify nicely and back-end for you just on above

Lorenzo?

than the main have QX and on Malaysia, in About that more top we to the definitely is are impact on going margin. gross line the

also our got few the have On say, a we on sure, It’s the also, in in this positive product This impact definitely, have mix to pricing. the say, term we about we that, margin. pricing, our say let’s XXX you margin, the at have not that pricing. with impact together positive will about I yet. point basis pricing, main you for ability we our closing; in basis helping yes, is gross not on gross that that in would can margin, end, And definitely, can understand I of the is there will customers. not that for the so tell price our will it’s that during of impact days that quarter. increasing say, Malaysia. Actually, increase the is our serve with But impact. impact we the Yes, main is points, impact let’s a have gross let’s

there not are definitely. We

product in that. much respect different more balancing the which The say, – and say, let’s and ranging pricing only, mix together, and offset let’s margin. say, somehow past But where by situation, in there is in was there a substantially are two Let’s our in and gross help and maybe, between margin let’s here. usually a gross than by negative, capacity our so say let’s less to having and the it’s definitely say, things the on innovation down, impact demand impact was negative

compared can of For – to were I let’s previous – I would less XX%, the say, QX, improvement. where a the bit of that can has range I quarter, increase level that say by contributed half in our pricing say mean, little than in sure, we the in

Automotive. Okay. is follow-up My on

and with So the you OEMs in-sourcing I are all a virtually looks agreement like inverter. now it Renault, other signed that saw the automotive OEMs, supply

and contracts And last Tier that, said? equally is it least the your you customers to of Tier part like are confident yourselves? get some if them gross long-term the I are told feel what split of X; with firm sign going of think those feel pricing, OEMs just that that between squeezed to you your I I out and to electrical the looks margin quote I who’s transition the reason in of Jean-Marc, do which were pricing the why that take just power? automotive you Is warrant effectively engineering your some Or non-considerable, better that reasonably now appreciate. Asked Tier to are main wondered going going me Xs at quarter It Xs? customers, the question to you vehicles. capabilities

known, could the battery-based is the is model is sure, to is more be really great and the I transformation. – around with very sourcing the of Here, Well, vehicles, Tesla. well and one really power And facing different, here, think electronic related cell the more subsystems, which where is okay? electrification. Clearly, subsystem one transformation are electrical automotive example the is for electronic of okay? related – Powertrain industry, there one which is model and So to two major the different, totally a the clearly, business here, the what

makers is the I let’s doing are and to much the transformation, we subcontract are plans But say, X. solution say, to too the action. let’s design automotive because will used see of say, and subcontract future, Now X, Yes, the will in doing industry more comment Tier – we the then we and software some to not car subsystem, some model let’s now Tier here, certainly will customers, cannot some other convinced maybe not remain. our electronic but – and comment that the will AMS the turnkey

the that’s reason So why.

its have And cooperation. have are do And for us properly and do, them we say making in short-term a what here, an address of for first, we let’s enable to us, fairly package Tier for our respect supply system, the both as say, the are Tesla, and is of develop, to to When to they customers. important this which is and example. long-term, own an full the the straight, module short-term to a example this ST transformation. carmaker technology X, For is to you the long-term

cooperation work one, most platform the have Renault and with and example the well-known one cooperation like have Tier we we of We where have announced. one of on we

agreed model on than But cannot comment that, are, you let’s we convinced that more customer. my see say, the complementary dual or together. living I will future, in So

quick Can a when And one impact and this, by great? ramp announcement, squeeze congrats product? expect you be volume you would in gross And clarify way. I when substrate on that, that for can the on just silicon the margin if the that on carbide? what be you X-inch production could The

the Thank congrats. you for

to will now, have Okay, we to move production. mass

mass be, say, to will So we Catania. production let’s set will our up own when in move fab

have be internally, So of And done when we transistor XXXX. and to Cree. technology on this XXXX, will then, of increase, ready. And a is It well, in between cost Catania, we end this before in mainly on next we will one shrink. improvement margin, will gross XXX for will XXXX. than But usual on so be leverage we XXX-millimeter XXX-millimeter and converted More semiconductor, time will take start to XXX-millimeter start sourcing have and to will XXX-millimeter. we the transferring contribution the our infrastructure XXX-millimeter And source in from mix will everything because it millimeter. a year start to wafer is diodes die about it size X-inch will Catania

on design maker tell of our solution. detailed on fourth you cost generation to silicon But also modules. margin the decrease are carbide. the device custom But shrink reduction the module of cannot on to with we are work are cost. working you very I carbide to silicon design contribution our for our transistor. cooperation you here is So developing design our program percentage gross I the we then confirm modules, important strong. And optimizing will the for transistor And in of we And

thank Wonderful, you.

Didier. you, Thank

very now So question, a – it we have interesting. long was very

time So the for now last more one. only unfortunately, one question, have we

question the Citi. line Harchandani The Amit from last ahead. of comes Please from go

Amit and good Harchandani morning you all. from Thank Citi.

me two. squeezing you If mind don’t in

on fears. comments, year to question of your really visibility, XD perspective given ST semiconductor comments, peak year? the based So shouldn’t regards your next purely why any out digit secondly, think if next growth debate growing is lot of of cycle a may, also on double of And the in inventory thoughts numbers cycle and on But the pricing about lot you’ve on first a I the cycle, some into The industry semiconductor there? with we visibility debate based on sensing.

on of for key there. about You’ve in programs? visibility player three I the a industry. technological a a sense talk Could been visibility. engaged you the us think talked your give you’ve There’s past, year in changes

thoughts you on any today? So sensing, XD stand where

question is first about? The

thing. About the kind debate can whether cycle visibility is get of and cycle we a there or peak this on the

in the XXXX visibility concept So is of... be may difficult growth to this but cycle itself, fiscal of ST answer it on today, in the of year as

as And with that know saturated the XX% we you is the capacity onboard from in are all XX-nanometer. have, we coverage year I to year what be above a that technology next electronic And what is have on related ago. maximum Today, basically shortage We is increase nonconsiderable for saturated few classify this and next fully already increase next minimum. acknowledgment have there very year, last Especially this backlog an is technology term a fact year you as our of capacity of well. an a – will due industry and X.XX to it specialty that our of our okay? let’s with more, Okay, simply will capacity material said plan. backlog micron minutes electronics, say, more to order. the up the this of covered, capacity, and next and where the year, semiconductor Well, capacity limitation

okay, customer it say, So orders on that’s properly, put and no acknowledge let’s the why, reason plan.

between this unprecedented, can confirm chain So channel. to really is high. whatever monitor consider with we is through very they we lean. is is distribution consistent And we our inventories the inventory There geographies, This is supply are whatever the what we The what this are that sell. in growth distributor visibility you product the and I the say. what are booking Again, the group, and to inventory incredibly turn consistent effect. supply the

like indication let’s say, no, absolutely, or is that. something there So visibility, which of decline

is what can simply about visibility. About, I Face ID, repeat what this can say say. I So I the let’s say,

is that, with comfortable and let’s very But reason comment. visibility, complex And a is you You have software, it more what say and component. which design the have say, this we is XXXX cannot software was And I custom very you for ahead let’s complex and good that’s are, years a This have for onward. happening. I we here, say, we than of – visibility three a have why know are a XXXX, hardware, system. what

Jean-Marc. helpful. Thank very you That’s

Thank you this much, will session today. And for very Amit. conclude the

Thank you.

Thank much. you very

much. Thank you very