STMicroelectronics (STM) 28 Oct 222022 Q3 Earnings call transcript

Ladies and gentlemen, welcome to the STMicroelectronics Q3 2022 Earnings Results Conference Call and Live Webcast. I am Moira, the Chorus Call operator. [Operator Instructions] At this time, it’s my pleasure to hand over to Celine Berthier, Group Vice President, Head of Investor Relations. Please go ahead, madam.

Thank you, Moira. morning. Good for quarter everyone call. results our joining you financial third conference Thank the Chery, Officer. Jean-Marc today President Hosting is Executive ST’s call and Chief

materially website. Joining Sensor this and management’s Research will you today regulatory most also in of the risk turn recent plans. We differ on the Harbor issued A Jean-Marc, these to Jean-Marc CEO. brief Cassis, to was Strategy, morning live our This and Financial call all System a filings materials ST’s Grandi, Analog, session, webcast results Marco also participants that on for Q&A the to and to from President MEMS factors. over with call Head statement encourage Safe expectations the of ST’s shortly our and Investor press STMicroelectronics accessed the risk contained full call. Relations statements will review and description and Officer; of Innovation Office. to ST results like are limit cause in ensure and and opportunity involve after yourself replay can Finance, during and questions presentation now that to I’d question please and and ask follow-up. and one ST’s have Resilience a available President the to Lorenzo include ARM Application an Also President release of be this our Group Chief be Purchasing, could that the factors provision of This forward-looking call

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

opening So, let comments. me some with begin

our of came than improved operating from doubling margin and the revenues net margin net gross up at profitability, more product billion revenue portfolio. and accompanied at starting revenues net XX.X%, income for XX.X% net On sequential revenues continued range margin midpoint of outlook billion. this gross QX, a XX.X%, in up XX.X%. XX.X%, grew XX.X% So, business was demand by driven basis, $X.XX Year-over-year, strong by at growth with of $X.X above our from XX.X%, increased QX

net $X.XX billion. increased driven of the outlook year-over-year by whole X.X% margin XX.X%, fourth $X.X billion, net net subgroups. is a by of billion, X-month We XXXX, a about gross growth of XX.X% revenues to gross of margin income QX reported On the and margin groups XX.X% our quarter XX.X%. at business XX.X% operating revenues midpoint sequentially, For period, and increasing product of for and by in with $XX.X

both with about XXXX, expectations revenue XX.X%. our we gross and in QX in revenue XX.X% billion XXXX year of full a $XX.X translates to growth gross The of are year margin the with a line of shared margin into For July. guidance full the midpoint plan

$X.X track XXXX on are We about of CapEx to with plan $X.X billion billion. our

were input XXX XX.X% offset Now sales profit Gross and of let’s on pricing manufacturing improved net Gross all increased Net XX.X% revenues by XX.X% favorable the of in driven points basis a above inflation basis coming increased XX.X% midpoint increased by third and $X.XX was mix, year-over-year OEMs outlook. our Year-over-year of move subgroups. guidance, to costs. and On across points of the margin billion, a a XX.X% to year-over-year detailed our revenues growth basis. XX increased product mainly points partially increasing midpoint XXX year-over-year basis groups quarter. and review product to basis, the XX.X% sequential with distribution. of above

in the product per billion and groups from more contributing share growth Both Operating income Third $X.XX more all increasing expansion doubled doubled income both diluted increasing XX.X%, earnings than share was margin. year-over-year from to reaching million quarter QX per margin with XXXX, earnings with net operating than $X.XX net income from and to in $X.XX. $X.X to income operating and and diluted billion. $XXX XX.X% three

performance by analog imaging. EMS MEMS revenues on in microcontrollers XX.X% with year-over-year ADG RF grew both MDG the growth at product increased growth both revenues Looking in groups. in automotive sales X.X% revenues and communications. and in and in XX.X% in growth increased with Power Discrete. in

from quarter. operating increased groups compared increasing compared In to up $X.XX margin, to operating $XXX terms operating billion to margin of and ago Net in year ADG demonstrated in XX.X%. all of of to with from year-over-year expansion XX.X%. margin XX.X% XX.X% EMS from MDG XX.X%, operating product cash activities QX million the operating XX.X% margin

increased operating XX.X% X-month activities period, cash the billion. to $X.XX Net For from

ago was billion million period $X.XX in quarter. Free to $XXX third for the year. billion $X.XX quarter last million quarter $XXX ago $XXX the year compared up of flow period compared was same million from million, to year The and months in in $XXX the cash the X

X-month flow period, to cash For free million. the increased XX.X% $XXX

and stockholders, reflected to of million During $X.XX an position October at billion. July current repurchase quarter, cash billion $XX total debt ST’s million of at paid our million total XXXX. $XXX under buyback to we the and program. net $X.XX third financial X, ST compared share X increased dividends share billion executed liquidity to $X.XX of $XX financial It

in quarter. points. strong to few for with share Let’s dynamics now and and discuss be data me the ST continued market the business QX, Demand a let you of products

our target The strong remains First, ST industrial namely electronics products capacity an personal capacity eight in consumer From quarters our standpoint, pervasion factory manufacturing softening. we and automation is call fully markets. on and our those what solid demand remains automotive peripheral is The semiconductor parity, planned six above the selected type. in remains are covers computer well. and areas markets of end market infrastructure of softening industrial we backlog part to for and transformation. saturated. driven the as by The the Book-to-bill BXB still and structural market, well industrial depending market product the

on automotive. Let’s into go now more detail

industry, QX, legacy in replenishment combined chain. supply automotive reflecting automotive the transformation and and in months effects demand well the XXXX. semiconductor of our of above drive to pervasion visibility electrification industry and our strong all and across ongoing wins transformation and capacity see automotive the of to continued continue of remain above the We accelerated this across Bookings inventories remains during strong current planned We design customers QX. geographies. manufacturing XX through Backlog digitalization

For are we programs About over car these electrification customers. the projects the we again spread markets, number have increased the automotive Between ongoing automotive industrial XXX of XX customers. awarded. XX% projects for silicon of carbine and now

X carbide in new automotive design line in revenue in of about We well achieve will [indiscernible] with power of silicon drive $X carbide year XXXX. of wins for had about traction This carbide this We on billion QX power carbide revenue silicon silicon silicon MOSFETs in includes both and carbide target based projects. application inverters business our for and Generation revenue module discrete. silicon year, MOSFET with an full silicon X,XXX-volt epic

old battery our unit control zone a that This management includes rectifiers portfolio, power electrical designs vehicle next-generation car an for chip car makers with we with architecture management of In innovative a includes vehicle protection supplier also microcontroller control most sockets [indiscernible] and for a broader won secured a multiple with for automotive zone and number digitalization, several design This supports in diodes. and wins. a we for also for and battery We architectures. simpler, monitoring for smart and of driver announced solution new sensor vehicles image and systems, electrical system units a for receivers. cost-effective with business, In systems. sensors in shutter implementation car bus an advanced ultrafast application control. solution data in won carbide with and sensors we silicon our products recently our several automotive for radio satellite global chipset won lighting X-axis headlight With power win automotive designs our

to Industrial, level demand quarter, through we industrial business-to-business some and is strong was see continue bringing Moving that strong sell. both to demand the in Demand especially OEM. of slowdown what we the here effectively now with in can distribution consumer industrial with closer to

automation, device microcontrollers solution, in discrete applications include a industrial Bluetooth care and power perform our buildings metering high-performance business-to-business, and air industrial, power three solution, and these the for our have In wireless market main HX other communication terms a systems with totally power to including end Consumer around and and address and would During lighting appliance part, a business-to-business, in would as And on industrial a X%, driving with dynamics. transportation. design Applications saw photovoltaic smart meters, improvements. three from key content, power smart artificial largest I monitoring specialized [indiscernible] and have and power I products of model with like intelligence electricity next-generation market digitalization our industrial we and such electrical embedded STMXX addressing, portfolio. medical-grade in semiconductor supporting and Across power transformation QX, to an as we energy cleaners, in products two consumer processing and example, tools, charging management [indiscernible], industrial to and driver, areas, In we growth. see appliances, of here is and sensor We energy of industrial stations, consistent products trends wins highlight power, like broad the Consumer appliances, analog includes inventories systems. specialized power e-bikes, had major in we vehicle wins predictive areas, which with STMXX wins, microprocessors. such remote the focusing [indiscernible], short-range averaging supplies the tools increase water and refrigerator One a efficiency distributors structural and but to design manufacturer. home highlight wireless Across Industrial, STMXX includes line home our accelerating the market, motor win market which conditioners. remote processing normalization wearable care. thanks devices for the innovative we health and our in win industrial Industrial, vacuum

to released launched industrial, traffic our on on existing best and words learnings Before our investment general [indiscernible]. to accurate a GFX a update Touch our support intelligence purpose tools, microcontrollers. for network, closing In creation we on the bring our artificial deeply ecosystem we enabling neuro the version more few building around in development interface of tool, machine quarter, new an continued cattle

in our areas again we Moving above now the smartphone to is personal was market electronics. the Demand for product target expectations. selected

differentiated our this broad selective We leveraging products personal have application a portfolio. custom while them market our and address with on devices. focus We high-volume in smartphone

During motion other and wireless motor display to the ranging in we smartphones time-of-flight solutions. secure and flagship sensor, wearable devices controller sensors, charging with quarter, won sockets and solutions,

infrastructure application, communication also and We high-volume market saw wins computer STMXX In accessories of deployment market gaming leading parallel, peripherals, with for leveraging with makers. or globe. we programs of selected we and and broad to while XG both service console equipment In we cloud cost see continue lower differentiated high-performance strong. market, products around products In design had in MCUs the solutions the end remains our peripheral again, custom softening. this portfolio. target The satellite

for ICs, as include PCs sensors single We based wireless property secure with general well infrastructure. wins our on space notebook and a solutions, FDSOI here on New technology, our for purpose mixed engagements for with received customer technologies as time-of-flight and focused satellite continued our for communication application and confirm progress in optical processes in microcontrollers CPU our leading-edge tablets. based infrastructure I key applications XX and cellular

our fourth Now XXXX to quarter let’s move outlook.

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

guidance growth the Turning of confirm in in billion We XX.X%, year-over-year, XXXX $X.X into July. year, with midpoint at to billion. $X.X plan margin a our about in with shared net our QX XXXX gross of XX.X% both line about the about the CapEx about representing $XX.X range we of reinvestment billion full revenues of translates

and recent to me Before our concluding, model device strategy. manufacturer summarize let developments briefly key some integrated related

Capital Markets XXX-millimeter strong our manufacturing we Day with are focus transforming additional on As May, and our operations semiconductor. capacity manufacturing in we in outlined a at global [indiscernible]

invest to XXX-millimeter XXX-millimeter new in GLOBALFOUNDRIES in We July. Italy. project our we we wafer strengthened by wafer fab [indiscernible], the with unique that have our position into And a Agrate, new fab in in continue announced

production according are volume been first first Here, from plan the progressing to has I share recently lot our you am also [indiscernible]. in released pleased activities ramping HX with successfully to XXXX. with that

framework customers manufacturing of All with second initiative, out. means it investment manufacturing aircraft and increase commitments. will for substrate Catania the Catania, need products that on they across This XXX recovery supported the COX call, resilience state at contribute be our our to the increasing reduce Italy successfully smart half And start bill of and an devices power from in energy this solutions we IoT within strategy. silicon and Production and the progress and at contribute million financial around initiative will fourth our support €XXX will the national in customers provide plan. year in terms an build Catania mobility, our ST outlook, sustainability the conclude, line new silicon quarter of based announced connectivity carbide to will These areas. X, will expected of by Italy air partially to So energy management vertical and on best. October integration strategy water business upon jobs full industrial will important of our carbide will integrated direct new and facilities and core for in emissions, facilities emissions. step consumption to year-to-date carbide Moreover, we high-growth in efficiency applications. automotive in XXXX. facility sustainable our be is targeted results yield over silicon The years commitment greenhouse of create our and and another To energy will to financially additional the and X And gas in quality. focus XXXX with demand be our and

Session now your current mission we Our manufacturing and manufacturing answer Capital at you. our that plus Question-and-Answer Day. our integrated questions. to investments technology needs. with revenue we our model and to commitment our customers, support to strategic future Markets $XX Thank And divest outlined are And ready billion

from [Operator is from Instructions] Jerome question BNP Please ahead. go Ramel Paribas Exane. First

and morning. Thank Good Yes. color could an update on bit you helpful. revenues Maybe my also division a little the dynamic versus taking you give QX for question. for terms Thank That you. us volumes would on in pricing? be of

contributing impacted personal let’s growth MEMS and the we So product let’s smartphone, to the they market will in say, so of clearly, QX, give sensor growth, will some on grow. the more, say, customer. because, some MDG or okay, comp. to – okay, there the are growth analog, let’s analog which market discrete. Clearly, in is the of offset not are of Imaging is be, impacted MEMS softening I flattish automotive the electronics including growth. about power peripheral, Android in revenue and And will in And will by say, softening the the Okay, color clearly QX. have In by specific by, the computer some MDG, but will contribute

and is So here more mix. And Lorenzo volume price? about

– But if good we morning everybody. to

in and do the in have in – I market, Looking pricing experienced terms in pricing, of we is dynamic the expect directions, in to that to both we or at specifically both today respect in that what in the change not mean decreasing increasing we see material have price QX. level QX, a

dynamic terms revenues, revenues is impact both pricing. in of of in that margin of say stable, also major reflecting terms would and of, gross we of see In term in of say, quite let’s terms the let’s revenues in dynamic gross mix. beat of in of our favorable The terms the is quite gross in mix midpoint previous some margin, QX maybe and one quarter margin. was of the we the in both is there and of the the which there overall. I dynamic, So the in so say, terms no of both terms reasons Pricing, in impact

is less explained in moving bit margin. While QX to gross of mix this decline QX, is slightly from the little the a also term and favorable,

you. Thank

Thank much, you very Jerome.

please, Next Moira. question

Cowen is question Matt Co. ahead. & from go from The Please next Ramsay

of very Jean-Marc, a Thank wanted business. ask you Yes. carbide morning. your questions about Good silicon I much, couple everybody. to

in in that customers, least suppliers up. sell had of last that important their materials management to Wolfspeed for in evening challenges we estimates some You team distinction own last have our the external an yourselves, devices the States, at they talking estimates one think went after in our their business – of models business some affected those volumes. model as night, I key were actually that that materials the your their such business But is to

on the in just question to carbide ramp just is of near-term question the starting visibility your internal part of guess supply the is key the And from confidence silicon your I second then partners? So It color half the supply. if in will you any really ramp XXXX. you. starting silicon just around Thank helpful. to that you ramp, second be carbide And sounds like give of could internal be would that your

is can C of STs STs all, carbide, I in amplified silicon a No. yield the is of the okay, okay, COGT. that, mention when cause there the alerted. immediately And calling of C the first root when is issue

okay, many million. let’s in during So opportunities major say, integration $XXX about but our capability internal We some, our I have still let’s vertical say, okay, we with take we valid. which of carbide quarter. HX, have, is our facilities. customer internal silicon business want target faced, for our, we to XXXX exchanges in to issues strategy okay, sure, factor and the this say, okay, Again, of okay? not, [indiscernible], is recover. about related especially more business will not limiting let’s XX% one-fourth need for And okay, about and the have important, totally to our our So of Yes, decision, grow this a again, deliver

us. to continue okay, Wolfspeed. will with cooperate, source for We and It’s as well. strategically important an another partner

silicon to on silicon we high okay, implement in Now then, to soon okay, the optimize executing we we innovation, to carbide as are simply as and working convert are usage. our the can, strategy carbide

of it strategy, simply change, not our will executing relation Wolfspeed. with but okay, We are our

nature XX last hours Jean-Marc, of Thank the over on addressing got that that. you I really We appreciate given the space. just you. of questions ton a

appreciate detail the So I really there.

the and I now I follow-up, the is dynamics. I fourth for Lorenzo, into guess question quarter, XXXX. comments I get as often gross margin on heard your quick get fairly those Just margin gross trends just a

and puts thinking off base maybe basis. could really about high really, a bit of you through and there the of of you’re relative margins, talk us how headwinds a maybe the takes If tiny in little on but near-term, some a

just helpful. you’re how be Appreciate puts So thinking much. takes year margins, it. and very would Thank you about next into

that said, margin, say, margin the looking, this our the XX.X%, there the let’s for direction previous quarter let’s margin. dynamic said, are evolution going quarter has quarter this to QX, the, that is our is, a say, are of in previous was from planned I for been the gross let’s QX. in range less as is of as in I we – detriment as one mix in bit it’s in gross of two and what is the our little gross it favorable than In dynamic That say, components the the saying,

On know are we progressively, the by inflationary this our side, in the are component. COGS. you other impacted negative that These cost

FX. level is improving say, a going are sure, there is in There positive components. positive supposed mean at ones are next On sure, in mix is let’s look positive the let’s there year. predict. that way. say, stage, may this some the one the at the it in – product for to this direction. be the is it positive exchange will the stay we our one is, it’s play is But next that in On difficult on the to there fact that I the rate. if for year, a other side, The various side, rate positive exchange One we is the When remain.

ability, other the in On gain cost But the full inflationary our headwinds let’s terms will some of will the let’s not to of disappear. say, say, in also fab, some the say, have will to side, with because productivity end, at manufacturing, – also other side, wins – on we productivity. let’s our

continue. will We

structures have negative So a not let’s seen our margin. say, even impact if increase probably in will will gross this year, but we be still

their say, of I which to be go For capacity. you the two best. efficiency before sure, the not increase fully efficient. period to through be in the a next at year, end, will ramp-up the, we at We need will the know that let’s will have XXX-millimeter

the component say, the let’s little at the some will say, would say, direction. let’s will in end, at our and say, our of Overall, year, have, let’s see this evolution are that and next develop bit stage, some a now how, say let’s So direction, in a on to plan we working give, right margin. let’s this operating the early the we of say, negative we gross it’s firm to I indication sales

the think next we will I year. usual, as discuss entering in this

We will about CapEx evolution. the discuss

We the And revenue will margin. discuss evolution. about gross the of with we contain also dynamic this about will some conversation the

for it. Appreciate the Thank color. you both

you, Matt. Thank

question Next Moira. please,

Houri The Stephane next question is from ODDO ahead. from Please BHF. go

talk year? time, could XXXX? which us morning. you is guidance the Actually, But that you good client. question. with company second about you I have, would for Yes, to do about to prepare share even next XXXX environment, book though year. but your I question love getting, XXXX, same know how your the not at So as the you on views give for the you Thank prepare going views, the main initial is nervous? more the order CEO, for you And are next a how let’s say, And the with do

been flow quarter. main news say, lot let’s there Your during client, of the has a conflicting

your of you vision you what is much. So with very Thank what’s there? happening share us can

Okay.

close. in of are that have from So is customer data But XX okay, point, input, I the the will next repeat, our year. but basically confirm okay, direct to situation more automotive, this million I On is to be vehicles important light okay, okay, the battery-based should trend. for year more what like Overall, of vehicle. both there and electrical okay, vehicle production XXXX, around, grow would our more again, we also, relations terms as

content. there okay, million. about X be semiconductor know of X you X a year of around in this XX And terms be So is should next And should to factor year, that million.

engine, conversation point electrification from so transformation data it’s of vehicles, So softening the our for with calling combustion clearly, let’s of the is – here, from semiconductor. okay, for our the have demand okay, of here, semiconductor electrical of okay, we there that, visibility that confirm secret the in thermal here, still demand And say, on but content customer is we some backlog, a okay, strong a, not maybe both yes, But increasing. is market.

mitigation So there effect. is some

semiconductor, So let’s grow okay, all okay, and after customer, similar our from year. guess the workers Infrastructure, that basically some customer we this verticals, the of in say, perspective, automation automotive, will COVID, industrial, next path okay, all, you the discussing, confirm on. I seen have about from with okay, robotics learned announcement our it’s quite from ST. lesson morning and of big so but also because, shortage

there station – strong. here, infrastructure, the electrical and Okay, demand of okay, very okay, same automation, terms points, demand terms tool tools. both all it okay, Here, Yes, that in level our we sell the of it for very renewable very in still energy, what Because so on is But but how power the than building, is have means appliances, the we but of in the industrial, retailers, at charging can the hand And say, absolutely so strong demand see whatever it’s increasing tool professional, power worker, power consumer my geographies. the very, named for power are the if from discussion for Why? softening clear, the a But is you calling market here, dynamic of let’s are of is softening, plus, take car, strong. okay, important capacity. data have demand. the energy, power backlog the are tools, it’s a not consumer very say, a consumer. in of just again, showing, we speech, I demand we robotics, electronics home the semiconductor not for productivity is is with customers let’s pure similar during

personal is reason of also, the Why? all, than clear and memory serving overall So showing various, at is analysts, semiconductor. a the in industrial by when all term XXXX is terms okay, smartphone, much and provided base. okay, of sum term heavily look that’s both the that better okay, point, the in and of the electronics, Because in growth, but smartphone and the in computer, impacted say, semiconductor we data let’s picture XXXX it personal especially, microprocessor of why Android by computer, the

believe backlog. why that’s do So the the customer analysts, that reason have the the from point with view we data we and

have I put I building six the quarters okay, product QX this line, So an we we represents of is when for which between what we and the plan, run overall rate. course, operating run are XXXX to repeat, eight depend I search today, backlog said and rate of have, have

revenue drive CapEx support making So expected next margin. said, end, it on and the very okay, the we where is, will and the of course, the us at range in gross entering this okay, as to communicate, And Lorenzo the year, of growth company confident the disclose to okay, year year trajectory the growth. the next okay, of January, in will we

is So again, simple. very my takeaway

points for on okay, of have proven there We point is explained. have solid automotive softening data and – Yes, the reason industrial proven I market in market a consumer.

this our value very us forecast next say entering plus/minus, manner. year. I extracted in customer, extracted accurate with your one provided to point, very through coming However, we the very, partnership the way That okay, has been okay, have great today, we us XXXX, accurate our a main within X%, back okay, okay? And The year. okay, for a on visibility versus latest the revenue but we to we and below shift drives the have don’t

drive a okay, on overall, the trajectory. So growth company will we again,

[indiscernible]? on question more Any

This is what already.

you Thank much, Jean-Marc. very

very you Stephane. much, Thank

Next question, Moira.

is next from question Please Johannes The ahead. Schaller from Deutsche go Bank.

are I from the outlook here. things lot seeing. Good already too a obviously dynamics question. pricing for you And really the discussed the Thanks There of morning. haven’t one is Yes. my much taking on you’re of questions think

understand that. How think expecting strong expansion of particularly also think your you benign pricing margin conceptually think of about have think and you. maybe pricing not do MDG, X as we better years benefit. actually expansion year? little divisions? obviously was I on some in bit pricing coming about in the you’re divisions margin we last very of us And of big there go the year you how three any I a pricing here? into how into help And next next QX, very the Thank microcontrollers over is can do your you risks And environment in driven? pricing a seen MDG, down a as But on think you in go back that

said So okay, to answer, the I like course, of would Lorenzo I what a will take repeat few but ago. minutes

versus the Okay, be market. the pricing conserved must

Okay.

you demand transformation, when processing coming computer connectivity, secure They are more for electrification, components. is connection. Microcontrollers they artificial have are industrial, more very the repeat for calling calling intelligence, are power. They automotive they I strongly. key for digitalization are BXB calling So are and for

So is have not understand that across board. you the to pricing

Pricing, total pricing. device, is so and address okay, consumer it may OEM, addressing microcontroller, in course, when here, small Asia, for different Okay. countries, you for industrial forth, the But on a story. maybe some have you on the toys some address when automotive, so of small pressure and okay, you

of So, be pricing considered at must right granularity. level the

color. saying will okay, give Lorenzo that, For you more

Jean-Marc, on the we what explained end, At see. what say, by top let’s already of Yes.

end, pressure. at some, modeling, in pricing significant are a of I terms is quite said, microcontrollers, we some that also not overall, we change bit maybe see, little we look say, true this is the we as XXXX, the that But the stable. I on In As a let’s evolution significant today, have product we products say, there low-end of a pricing. let’s let’s It’s line, have in terms said, to price let’s can at say, say, when say element, don’t more in particular. that

improvement stable say, we pricing, with don’t maybe small let’s less also but the we respect well this this today. we product to value say, for little let’s we profitability – product where significant say, that not of the products are, sure, a in areas, will yes, increasing. think in mix. we of a is profitability stand actually We is been in this is sure, of demand When this under-evaluated our is has in stronger say, The is more, look, constantly more some year. some bringing the And that let’s which be say, a of line. terms a business, the reflected let’s component, increase of there – than our the price say, let’s in relatively of In during and maybe as be has dynamic let’s bit said, the decline, for

I and demand. say two go that So, would components the

in definitely, from we has the price, here contribution mix also say, been not a definitely line that and the in had terms the profitability yes, product pricing. in that Let’s the contribution positive of it’s negligible. definitely saw But we top true

have step be coming think flattish So, let’s important. not is let’s we take And will it’s would here consideration, maybe continue, innovation say, we to be will into say, customers. next say, I quite mix from decline. up our positive let’s where or to product a are year But price bringing positive mild the impact the and that element that will our more, we

Jean-Marc. you Thank you, Thank clear. Lorenzo. That’s very

Thank you.

question Next please Moira.

from Menon Janardan question is ahead. from go Please next Jefferies. The

your Hi. In at taking us what the you give elsewhere. about how in China bit evolving and seeing questions. have now, be of in would any just Can distribution just talked coming is microcontrollers when far? that, you And And channel you of Thanks that be follow-up could you. in helpful. can always impact past, margin, level that small the morning. weakness channel both that on the and so the would that very about exactly Good into the and from I currency impact the of on a a QX predominantly right is general. will your in about what you then would are you QX? channel? for wondering evidence you dynamic was be some And QX gross positive POS limited you talk areas, be currency, little Thank the assume pockets give on have seen in us happening guidance,

in is Lorenzo terms will in – distribution a China say, first answer very the similar of of overall the a than let’s last question. coverage company. distribution backlog overall in No, situation all,

backlog the is distribution we have representing, on QX between quarters quarters to means it okay, revenue from of So, it. eight six

of distribution the the market. profile. then is same exactly the And So, copy-paste

very I high the automotive, okay, addressing allocation are when terms terms market, are we very so, decreasing okay, have fully are turn and industrial, okay, distributor. more addressing carefully and know consumer stabilizing you controlling okay, say distributor have device. you okay you PCs monitoring inventory capacity. both POS because So, okay, clearly, electronics, of when and pushing. POS is let’s allocation electronic are personal are we have, are distributor generalist, Yes, is And say, standardizing. consumer and inventory have that And and industrial of we the the we of growing. the we high of infrastructure you industrial, When POS distributor addressing small a have the pure industrial, When the

situation So, verticals. of okay, world in paste a this and the And is of in market fact the dynamic today, overall copy we situation are China of seeing. in distribution the the really of is the okay, the and

which And cases, to are often the that well? in up market. have XXX,XXX segment? small reasonably presume about MDG, up in businesses, still industrial of particular and I customers, are sort is What Is you in seeing that but you many your holding talked medium-sized dynamic the that having in

them shortage all, know And between, a there confirm clearly, of well programs, we a the this medium-sized the company. customer okay, I they we strong distribution okay, can is in for that in And is to up there conflict microcontroller, okay, they in the were industrial face terms of to okay, about support through customer. set set medium-sized medium-sized programs, push we to okay, address capacity. automotive grow XXXX, And above And continue we you grew okay, is On BXB up okay, XXXX, in a there specific order OEM. the lot customer, you medium-sized to average in OEM. we of customers, XXXX. that specialist first we a from will and call what because, microcontroller with okay, In protect OEM XXX,XXX

okay, and the some not managed for main business industrial is capability those, in the lost We the main China. see microcontroller okay, our at have OEM local, whatever on part market cost some okay, pressure to using against, have very small the we definitively say, especially business. of is we and mature the low-end are okay, microcontroller personal compete the okay, the and price okay, a technology, market effective. of Yes, OEM our important allocation. part the addressing because we here, certainly personal best the share have course, of definitively, let’s customer provider. of Of electronics the electronics. Again, Again, it we But market in Asia

an We okay, are at compete. the providing using here, the right And now, important can foundry price. right capacity we

content, okay, see situation. specific this So, any to we don’t

in end the growing was sequentially the At than year-over-year. both POS quarter,

Exactly.

half effects for in data I million terms mean and profit rate say, let’s rate, always – I let’s times, effects exchange growth. gross how change in say, profit About [ph], and less in margin the the operating between split remaining is in expenses and our it in of, a companies thumb the or the the let’s our in equally was So, profit. the our many between – dollar, range the point. exchange operating by same. every half gross difference of profit, our rule giving translates gross euro-dollar the say, – profit more about our operating of X% the this modeling in X% of on substantially translates $X.X

in effective if QX in QX, will in including the be exchange end, computation the range at the was the of our X.XX make X.XX. hedging, you So, rate

we end, on to points, QX the that is in gross from QX at impact. margin the impact range estimate like moving something positive the of XX our So, positive basis

let’s impact continued by, I before, increase saying our favorable offset was is say, in this cost mix less and course, Of by, as the of cost.

margin XX gross basis So, declining at points. is the end, overall, our

very Thank Understood. much. you

Thank you.

please. question Next

Credit is go Adithya from Please Next ahead. question Metuku Suisse. from

you question. Thank for my taking guys. morning Good

just I MDG. firstly, So a clarification on quick had

said I OpEx You Lorenzo a QX understand R&D and firstly, your demand And the that. secondly, question clarity just the And grants give secondly, catch how something do bit gross and I you this that more by you softening you OpEx, the if R&D specific grants XXXX, about in driven could customer. if expect OpEx color possible? didn’t us on Act to model lot receive? to on wondered we a all wanted can impact quite CHIPS you. then into there? give and I some us a for just a Thank you should

Okay.

that maybe OpEx will So, simple the I directly on to take this is one answer.

respect increase previous an current one of the OpEx quarter, in of terms In to for the see we definitely the quarter.

where are accounting in basis favorable plays the on of mind terms the we to our of that positively seasonality have keep Europe, impacted in OpEx. in QX, vacation You by OpEx in

the the end, the the for So, of $XXX is other the impact at grants the let’s we including range see quarter, income expenses, million, something in say, the and including it what quarter. that will of be $XXX in million

net R&D, say, the of have in the grants, that for I we at to the rate. in – driven the a that. do moving higher would be in sense of expenses range in grants of not had little are an the will impact total expect If already overall say respect We difference less the of between do a just but million, all the divided on of the expenses the not the QX, or by and at already see be, is guided to significant you more QX anticipated, you end, give something we let’s in will the we by take that will as respect this $XXX terms we In in the math, or expect question you income four. idea, have positive make the million forward, quarterly to the expenses year it that in end, was the if $XXX in significant – million, year, range change change. past at let’s expenses That is what let’s $XXX exchange the mainly and bit less what you say, more end, like other say, something the over the

are let’s general, say, similar to beginning procedure been visibility here, the say, grants government the announced his – as with when that the this bodies, of convention more silicon say, like And level you carbide administrative remain have Of also say, the some introduction providing end, in forward stable. conclude difference difference let’s R&D fab, speech, with fab for due kind concluded of could Catania in instance, let’s silicon today, past. partially through million are in it in been instruments for our to that depending October. in course, the of volatility these the grant grants some moving these there stake of that may happens various the need available new the the let’s investment in financing maybe than that is the has is this in when the board. let’s the down, the quarter-after-quarter But the is say, a respect there at financed And mentioned of has that now trends be of to have the like and Jean-Marc to or in fact you final kind sign past, The investment renovation in will $XXX grants. the investment we which, really, And for the the finance you is semiconductor.

Yes.

on you question - microcontrollers, couple everywhere, generally okay. the coupled have microcontroller, of have So, you coming back to your

where say, automotive have have in automotive, system system. But you non-critical, in need real-time, control. let’s to you have okay, it You some

infrastructure. You have it in industrial robotics, automation,

electronics, with customer it, have important okay, computer in Everywhere, selective. we important and personal it in You equipment form. communication peripheral, in and are customer sometimes programs have you okay,

change because, the device. either that For softening. in distribution automotive part okay, business, softening personal and behavior the the the purchase not of known this a market on consumer, because it’s electronic, okay, versus I it through all program, their is softening, we consumer there is this is is industry of consumer know we they pure address the well demand Where customer engaged demand repeat, the as

purpose repeat of So, address between book-to-bill we with capacity but weakening dynamic want demand manage we have growing our clearly very strong. positive. distribution. on allocate. microcontroller the I right very we well market at to coverage a level. some All we sign pure still here, eight-quarter above we area, inventory suctioning the where address still we versus the not high to okay, is okay, the is for six-quarter the the seen overall general the bookings so through the distribution, ST, is as Yes, through for one, well have And consumer. But backlog

it. Got

one one on like was but customer of the remains comment previous that softening your seeing rest consumer distributors of softening, the business very the some So, strong?

Exactly.

Okay, got it. you. Thank

time last We question. one have for

Gardiner Andrew from from Citi. Please is question ahead. last go Today’s

Good for morning. Thanks Hi. squeezing me in.

to really. clarifications what between $XXX two just million the $XXX quite were answered guiding for comment you that back Lorenzo, then Just if One to you the at I year. and OpEx million per go on said you quarter clearly XQ, average on

well below you that. are Now,

prior capacity, that you of also answer XQ savings, but you environment your it on on already moderate suggesting of what to characterize with you told the the where would previously. are And think shift? particularly inflationary results, some sort based I you then feels given seems also a have more significant finding change, have acknowledged. these And terms helpful? terms you fourth us foundry us moment your increased of gave to wafer Just the how your sense in capacity that would are of partners? Thank quarter, get an as How supply your be update wafer growth internal that that supply. to the a kind the on of seeing is ability relative you in you. to growth from at – How foundry

understand the Do you first question?

OpEx. on was question the first So,

for to you the On Yes. indicated. than just prior statement, have what OpEx budgeted back we a level year just this much had higher going

if can much, I because was write [ph]. it $XXX down, that Not million

remember, driven for – quarter programs that or my I than a would say, let’s I entering range $XXX guidance that. actually, in the by something something I today, This lower. Yes, when, was change was is remember any higher don’t say average, in like expenses it think in not little the bit million, what on of OpEx say. came indication visibility significant, you let’s really $XXX but million I up. the that my little bit think our is a exactly if QX,

there and supposed there let’s fine. say, maybe not other And level But the end bit higher the was positive some expected, QX, normal income technical. this in on a this in didn’t we also, that little detail One respect quarter was was and entered actually, had in came some was FX was There was I and positive lot a effect and the also a related is higher in QX. to occasion bit our say, position, two for expenses to what be answer, Now of a recurrent. seasonality. than of grants but bit little positive effects. go, positive let’s to little if At is you

lower came So, let’s bit at of the little exchange than a end, rate. effect expected, positive apart, we say,

are say, we said, normal at level. $XXX between let’s QX, be $XXX will to million Indeed, Moving million. a I we and back, as

done yes, respect to at end the to numbers. not what that if program want million, of $XXX ability the our little remember months that It’s to to by to But we but mainly honest, these the in It’s or you end, of really our we precisely and maybe be it ago. a driven by if are coming was have terms that, objective was I bit million like down at it’s project driven I related you a there. forecast things so more in respect in significant changes that. and less So, few Yes, you is not well But $XXX little the guiding brings the right. month, a are bit lower. at end,

capacity, well about I if So question. your capture

capacity our to between confirmed why That’s $X.X plan. our CapEx, the okay, range according We $X.X are increasing to our billion have reason billion. we

plan, that, year, maker are own deliver want to put many next their their their commitment. on next facing according news demand, are billion partner, scrutiny to sense year, plus expected of will is XXXX increase one under If to we our we during increased our by that increase that And many will I revenue with I good okay, for hide better with decide. limitation. XX.X% at earnings, manufacturing. struggling is manufacturing our supporting confirm we don’t our mainly okay, business. driven us consistently that share very QX the operating are increase by their capability issues our the revenue Clearly, it’s support is to XXXX will They equipment microcontroller still with the completely level clearly, with facing foundry the capacity consistent, $XX we supply complex, okay. will some you foundry supporting and you our yes, for okay, QX XXXX, it sales in equipment And value on partner the consistently. used About our there versus clearly, which especially it remember objective be now are QX, much And a production Well, and consistently QX From because us, more they we clearly. to is I we they than versus increase. increase other time in well, to of to in chain. issues And because capacity side,

guys. much very you Thank

Q&A Thank will much. call. This you so conclude our of End

Thank you.

Thank you. Bye.

in the conference. for the gentlemen, choosing over. now and Ladies Call, you participating Thank for and conference is thank you Chorus

your lines. disconnect now may You Goodbye.