Texas Instruments (TXN) 21 Apr 202020 Q1 Earnings call transcript

Good day, ladies and gentlemen. And welcome to the Texas Instruments first quarter 2020 earnings release conference call. Today's call is being recorded.

At this time, I would like to hand things over to Mr. Dave Pahl. sir. ahead, go Please

thank call. joining and XXXX first earnings conference you afternoon our for quarter Good

of who This any can will on broadcast For be you over be our find you live the website. website it accessed can available through at A web through ti.com/ir. the call our being missed is and the replay release, web.

you statements to to for uncertainties description. that expectations. TI's results differ This forward-looking from in and We the statements call well SEC complete could the published review risks TI's encourage will notice regarding earnings filings that involve most recent more include today current materially forward-looking as management's contained a cause as release

for significant recession we of call. to likelihood a the Given economic quarter's this earnings the due format COVID-XX, are changing

will approaching Rafael by quarter a then environment. will with first be provide second and to Lizardi, joined Rafael wrap of our and of we our quarter. the frame the first summary are broader up financial of CFO, our how CEO. details be Chairman for addition we outlook current covering Rich quarter Templeton, and Rich will In I a

a Our be hope cover usual questions. longer range of as prepared to anticipated we than will remarks

over to me Let it turn Rich.

have would are a a we proud understand are, all second, changing you as proud At I ambitions neighbor. recession third, decades in like approach world ever a for that resulting who ambitions decisions and Dave. remind three of These be how have from will inside part act TI. to succeed first, you own highest be Thanks will driven that the level, we and to will and decades, be a owners adapt the company we is for to company that COVID-XX, will of we likely significant will of the

times guiding because enormously benefit. for we customers, these these and many simplify decisions valuable they decades, they uncertain but are pursue served environment. These owners will our well ambitions, have in in ambitions an communities When all employees, help us

aggressively Like many families. people companies in and safe the acted to their COVID-XX able we keeping our have crisis, support

have the financial We on special around have provide running And our where world, provided operate support with customers list our and in kept some we emphasis the medical we supplies of direct medical is operations The support communities relief. action to lengthy. customers. to

revenue starting and are identical, the decisions XXXX So to two inform the spending recessions crisis investment is recent example plans, and best framework. financial therefore provides economic and with the plans. recession significant study economic forecast No most and us the operating on but

quarters. and snapback level years XXXX start then two quarter XXXX. sharp six of the next the reminder, of a XXXX orders September As sequential sequential look in you quarter to of This a for if back and above of the a XX% led of overnight. the first the second new the XXXX By off additional in revenue decline, to quarter of the decline moved rapid quarter fourth of to XXXX, back XXXX, within an drop specifically XX% revenue turned third of the or all

and we not we of are a of that overcorrected trying ensure customers spent want with back can that in With have and successfully With to economic year-and-a-half so the recovery, we degree recession benefit the mind, to hindsight, the support downside to this any our predict outcome. deal to we up we optionality chasing but this demand. instead then highest

limited of and the the during level in quarter plan, XXXX. our pre will quite looking factories inventory customers Therefore, forecast. of but second they XXXX, a be post and quarter third likely about important running quarter and support of from likely XXXX our this will we This will have an quarter to the in regarding result first patterns our to the they second operating increase during ability at be time the XXXX in when ran at the

makes primarily this decision of long-lived maximizes and portfolio product an Our our easy products optionality.

customer Regarding transitions second a mentioned quarter XXXX revenue that guidance, used of reduced demand, visibility seasonality. minute, and I historical the have we elaborate will Rafael from in adjusted with for

We are but explaining not precision assumptions. implying the

using are range current account to for We the expanded uncertainty. an

Regarding spending and investments.

and be development horizon First, research are essentially spending unchanged XX-year these as to decisions. time will five

ongoing to unlikely these will to We levels. portfolio are continue make investment meaningful changes to but make adjustments

these to maintain minimize expense, investments ground. will in Where critical gain we continue strengthening are are we to capabilities, because do we and SG&A, times as new such will so. On certainly ti.com can important we

generally are by our capital is XXXX of plans time to XXXX spending bulk needs On in capital unchanged the because driven the spending, capacity roadmap frame.

underway with We fab for are analog next construction the wafer announced continue millimeter XXX previously Richardson, that in plans Texas. generation will

because how We the that unforeseen lead term is robust We regarding inventory, our in operating invested current we the that and manufacturing unchanged invested This continuity to and short Lastly, has respond could presented. remain updated have we fortunately were diverse are internal in COVID-XX for demand. environment. footprint. in disruptions we plan in late business March our prepared times that short geographically customers and

are the world, including restrictions operating throughout countries local where teams like resulted partial have the in Philippines, manufacturing operations. Malaysia Our and

disruptions. keep to and We have safe adopted people any protocols our quickly minimize

comfortable getting and Our is done our team remotely. work was prepared

processes actively design ago. to years virtual via wins instituted customers selling we several new work that We with continue

VPN execution. TI, than forward things focused about getting look across the days we day, per and meeting all to most are million averaging normal. back a times we four normal, in minutes to peak are On connections on two We higher but of meantime XX,XXX

to Let me Dave. things back hand

Rich. by will first the light in I additional some revenue quarter end standard add Thanks quarter of of insight then some and COVID-XX. about comments will market I provide

factory bag. declined due ago. digits, against Communications comparison customers' shutdowns contrast our low while equipment mid declined quarter on was a on digits, improved highlights compared by enterprise digits was quarter Communications single first declined very fourth phones decelerated double for ago up First, sector and a Personal demand. single by but quarter. strong from increased year impacted mid digit electronics quarter a end a a to digits year double XX% Mobile versus and PCs revenue single the And quarter market sequentially. Industrial data double increased strong Automotive in it as first XXXX. to low by increased as center lastly, systems digits. about demand. declined mixed expected mid

increased out For markets from expected as to back secure to saw the the but as to we struggled COVID-XX. was supply as able quarter additional due In to concerns factories chain being about disruptions slow Year, early insight, supply. ran Chinese come most in first of into Chinese orders holiday New March, pickup a customer coming led

This assumes demand March. reduced of with in in steadily continued the that increase to of into The manufacturers' closures April March customers experienced automotive the This had in abated quarter in reduced but range has in we end-demand. to consumption. decline midpoint early plant exception through returned continues early our that levels saw visibility orders increase April have this we as as

review Rafael and management capital profitability, our outlook. will now

points. revenue. billion Thanks Gross good afternoon everyone. Gross of Revenue $X.X profit profit $X.X basis decreased to decreased lower a and revenue. year due from From gross quarter Dave was was year profit margin ago, XX ago. the X% XX% billion, in or down a

revenue. trailing a $XXX million, were about quarter XX-month XX% Operating operating of and expenses ago expenses from about On the basis, as even in were a year expected.

per in in Operating of was which last was XX% or billion included $X.X share, Over revenue. we was invested twelve year-ago the discussed. $X.XX down as we from Operating months, R&D. profit our the billion, $X.X or the not for billion income items $X.X quarter were have Net outlook, have $X.XX benefit in profit XX% that a prior quarter. first

Let the comment quarter. was from our with starting million in now generation. on results, Cash management me flow $XXX our capital operations cash

$XXX reminder, Free is for point on trailing flow million payout bonuses. operations typically low Capital basis profit and $X.X a from expenditures quarter As first in of quarter. the was a billion. flow sharing cash cash due XX-month seasonally to the were

billion $X.X we the total in dividends owners $XXX $X.X repurchased stock a months, in $X.X have of returned to with past for the our total, In billion. our return flow. to cash In free return paid of consistent strategy billion all we XX quarter, and million

their dividends flow, same period, free the Over of underscoring our represented cash XX% sustainability.

with have we due This in X.XXX% years. then, and with Since at quarter. debt of the term total remains first the due no $X.X have short we of we the a debt billion of coupon investments balance resulted million of issued $X.X coupon cash $XXX second quarter, million in debt strong this of billion further a and of Our weighted five quarter of X.XX%. $XXX due In end sheet in with repaid year. debt average

debt due in of million $XXX have We XXXX.

$XX of weeks about planned of were we more declined quarter channel flat million, inventory, to the quarter strategically, XXXX. Regarding consecutive again distributors inventory in sixth four and customers the inventory XXX. distribution We Distribution-owned pleased. have reductions, and fourth of days about to very third first we inventory, our Tactically by lowest quarter TI were transition and since are the fewer bring had as continued dollars of direct. quarter

while short We an of places. availability, environment increasing important visibility and will inside where total and is to decreased lead us This which the high our demand limited. for have percent be times steadily inventory customers TI concentrated therefore maintain dollars in fewer inventory enables in end critically

the we financial inform are our quarter With upon the XXXX a To mentioned likely have reflect to second Rich uncertainty, increased we recession earlier, outlook. expanded us, also range. as using crisis the

to range to share of in the $X.XX and For TI revenue second in $X.XX. the earnings $X.XX we $X.XX billion to of be billion quarter, expect per range the

an expect Regarding will their past levels our demand lead we and the be this to times that advantage believe recession, overcorrect offer will We high in important customers for our to of of availability. in as to term short their drops. end product it operating consistent factories, customers visibility running plan maintain similar recessions,

level will TI the parts affords a of first will have be drain. to long-lived approximately at hand. we in quarter likely us during inventory Our factories second grow product will same quarter, XXXX. second running them in portfolio we mostly quarter the our inventory while likely Therefore, of ran steady distributor-owned

our continue in making us stronger. progress. invest most is advantages this, times can competitive shown the make strategic business In like in in to when History closing, has that our we we

turn me Dave. to With back that, it let

opportunity to now a Operator, And question. many Thanks after up the as In an response, you ask for please to your opportunity possible limit you will can open for an lines provide single order we a to follow-up. questions, Operator? as our questions. provide yourself of you Rafael.

[Operator Instructions].

question America. first of our from take Bank will Vivek We Arya, today

Thanks for taking my question.

For you one, same way what understand far crisis? Does now it that as bookings are a actually and better did visibility quarter program you visibility understand seen get few way outlook that I the played But provide orders handle the into last your just QX, curious so time? consignment can weeks during so you my the predicting you the I the or I have we a is first low just QX. out have than better your on am giving? in financial

Yes.

So remarks, of Chinese April that. the let we but want New Year. will the you March to I in has, than in not very start and March. Dave, But was differently have only strong XXXX chime as in behaved comparison, in April out on said me, fact, coming

in we April prepared that half the customers the concern things we due second little But then have on out things the said remarks, a abated strengthened many disruptions. think to the have we of into slowly April. came is supply that As in and but

expectation midpoint of their that low internalize to the So range and are our particularly an frankly demand going will they demand our customers better visibility. drop very implies have and end as range

keeping We this process, optionality demand. so expect low have point snapback, of high why here we important the very support support on them that visibly is the this. that. side of that can We throughout things that if are other we That's to can

Dave?

to Do said. I follow-on well think a that? that's you have

Thank you. Yes.

dollars of around you mentioned QX to your I us curious You days run if loadings are some in QX. your terms level in inventory Is there QX? the have of at taking days to or modeling inventory amount continuing what that before to you maximum factory build of color am you be same as you give the that or certain willing can to to actions? a limit start exiting

as just framed Vivek, I so a allocation glad decision. am is that capital it way, you question. that for them, Thanks framed you it Yes.

we allocating form on are the our products inventory very it customers' and expect to the that's to us mentioned, going to time of Capital product increase, know a They The live places inventory the increase vast majority what going shelf inventory gives diverse. you long-lived. I into the having go capital likely the and lifecycle They and key sell many So to of quarter. to optionality highly other are long second into that remember instead on is They very that hand. thing will But inventory. of long. the we well, customers. very many, are in are

go So that inventory will back. not

option. it's So an

We have option. low-cost a fairly have that upfront to

you Vivek. great. Thank That's

to go the will next We please. caller

Next Rasgon, up, Stacy Bernstein we from Research. will hear

Hi guys. my taking question. Thanks for

a For the QX you peak the be XXXX, QX peak XXXX trough, first guide to I I if your cycle This XX%. been was go the about But to XXXX if decline QX XXXX lot if I fell was look revenues XX%. maybe take one, down XXXX, to would longer, I back think QX quicker. but has about in

decline And of still peak little that suggest the be the peak guess, there maybe the being off longer? also So go that compare trough that increase does if to suggests you thinking two about the longer, is trajectory? a kind following to more how from also is for Like do same situations? the I we might that

Yes.

will I take So --

Stacy, this is Rich.

And are XXXX was first were the of a cooler It's that Given and pretty I markets. precision you I recollection that in the and not this of know but do well reasonably, reasonably comparison XXXX you XXXX, where be history, compared think clearly that careful semiconductor quarter much and is too hot. heat half first trying draw very think I are we to overheated, XXXX, the XXXX to. the from of of XXXX. and XXXX XXXX valid to hot would

to think the you to try we to more and get was put what look just when what plans. trough, that a did years a and helped operating couple doing tried set little prior complex. that's where peak basically inform was We through So demand we help for of

it. Got

can of But tons follow-up, right might end forward it's gauging seeing pace doing. I of Is to might like how of generally any there rush us try now my forward you the into the else? just that? near term don't what have pull you visibility to demand give anything be you strong versus demand For that given whether pull or orders that do anything amount we true know gauge to way of is gauge much anything the be

Stacy, Yes. I would on think have that. don't you we as imagine, any precision

that strength. concerns. that to around we we due We precision Chinese New of saw was of to after have degree was accuracy. as Year I think is what to percentage any customer hard that any believe that saw It's that the due concern with

to But, that? add yes, want you Rafael, to

in would drained is Yes. because I the clean, district channel, more on only I so we we is agree. $XX are plan The to weeks, $XXX go we thing about said, that drain know, million next and is channel channel four to we about as or direct. so we another million quarters add the continue for or we draining plain as convert the the more three customers and

as when continue will pull, and up versus clean is really true they know we customers to that Dave much we the be don't to, is know demand of stocking potential end channel, for end disruption. the alluded So how clean. But

might you I And know Stacy, on XX% that, revenue too XX%, add of as is our consignment. Yes.

plans So not as but those they turning our see that have are all we visibility, are we updated. reduced customer' not But factories. are plans backlog in

to what build are are being in they updated slowly, deciding So factories. they as those

creating those imagine. the are uncertainty and as updated plans rolling that's would So through what's you

caller we you Thank And go Okay. the to Stacy. will next please.

Morgan from Craig up is Hettenbach. Next Stanley

of Any additional as the side terms And mitigation kind comes, you. quarters? Thank just next the of OpEx couple the EPS in color thoughts variable of some impact revenue appreciate Yes. over of on I around things. compensation?

Sure.

the relatively in will said general, be we unchanged. remarks, as prepared in OpEx So

there long So to but some we we R&D, we tightly them those have places, SG&A, are tighten investment investment. the frankly also run ti.com. term areas with begin pretty we can do. wherever other In more, with company

Profit a specific question to profit-sharing be very and sharing your to bonus. tends according On it's a formulaic. moves formula, variable That compensation. so on

on And metrics. what several by determined on on is the to years that on depending one happens, three adjusts. routing Board So bonuses performance depending

Craig? follow-on, a have You

different just things expecting back America weak, are just I understanding and your cadence terms China and Europe maybe for geography now. in But And QX to get love how from North do. within Thanks. was came would guidance thoughts kind your then perspective? by of weaker the geographic you a of

Yes. I always give caution when asked about geographical revenue.

see rarely we know. can where distinct it's our Sometimes patterns, you ship we but actually consumed, is as product where

built up a we China, So ends ship phone it end that may in product up a in but in Europe.

there that something specific guidance geography, share in anything with by we don't was our we And now. impacted if to have that. So that was would distinct right share

But go will to we And please. Craig. caller thank the you next

is question Seymore, Deutsche Ross next Our Bank.

for a additional is especially your for you template about the use comments fair that Hi these one as imagine said earlier, as template you with guys. all could Rich wanted as details, In Maybe Thanks to well. I Rich. line. on a as and XXXX

a out also fall, the steep rise You how a about pattern then was back. laid steep

are different are cetera, you short your that different, side being et simply because you any keeping Given the are very that time where as same of matching the to of flat, are view the this behaving, actions maintain? the cycle you utilization is Or this trying optionality the decade you day ago? is at equation end that it one duration a just as

me have Rafael. Let

ways. Ross, covered just Rafael this on to think in help that, some I

had re-profiling know, you we to you If folks were large a We had to We much business. and very do. XXXX a wireless portfolio different. know we and back think bunch of had

high a that have custom. but a behaved had custom, of wasn't it We like exactly product our percentage lot

And today products. a we high the game. beauty difficult pointed out, inventory of are was about is much percentage Rafael as that So portfolio long-lived is, more the building is a where

the wonderful well in R&D October be in we puts to XXXX. particular our low We actually is in back pretty in that it resources areas the where versus and long maximum case that's have where optionality And our position the have XXXX really cost what want term. was deployed to us our on got

I thinking follow-up, as just biggest the you Thank a you you Can Okay. about know XXX% cash? couple return by you well. to It free maybe cash pretty of this just in how single guess you switching flow that. that of generated equation. the are ability what the in long cash even my on a as just it's cash guys looks I have in like But not single dictated had and of to any flow. your you returning free second quarter in for I had decade. policy of much And your above us term was over side guys of quarter. the remind quarter a guys a quarters and single significantly buyback return appreciate

sheet talk you about below it's when put a opportunistically stock willing are value? take just to your leverage So balance I on what view intrinsic you your advantage be much how to the of pullback to in guess

Sure.

to to remind comes the of objective So first, let that dividends. return owners cash do on through when alluded it but it just return buybacks our the you and call, me everybody cash the all We free let to me that company. is flow to

and returned $X.X trailing $X.X billion we a billion. on XX-month example, for generated So we free of basis, cash

So flow free obviously returned. there all been have cash

$X.X on finished. sense. to we call, But we have balance basis, with of a makes billion and $X.X it sheet. it debt the $X.X because some of the use sheet return as on said have And on mentioned debt billion we we billion, increase cash when On leverage balance rates the then their you we is debt net

talked debt we as many, years, management. the on So we view for that's have how capital about many and returns the

Thank Ross. Okay. you

next to caller We please. will the go

up Next Pitzer, John Suisse. Credit is

center been Thanks afternoon question. end you ask for behaving kind the is in I just can particularly about? this like your Good about industrial And swelling a talk go Yes. we any coming your to data the things of auto am letting interested pandemic want versus have and there Dave, prepared PC, back booking April. in to remarks to comms? market beginning I guys. and of distinction at Was how me comments as maybe understanding end

talked strength. would I I last with orders in as a was the say we the that auto. strength and John, relative distinct of slowing but at was when in We that happened slowing, broad-based. center. broad-based board quarter We We and saw in March PCs. Yes. very we we then about. saw would distinct that And in it I it saw saw auto say continued looked strength is also in data strengths exception generally that as the we quarter, say was the would in into that the saw April across the we

You have follow-on? a

Yes.

I always there. good about return. couple returning a arrow curious follow-on, you to capital sort relative call, in is strategic my Rich, been environment is next zigging the are and when what kind everybody longer sort that of as an Ross' much about how guys quarters, else allocation have the And of you as on you duration M&A? of question zagging current Just and am recession? at we were then through the to since got go out you in clear quiver of you are viewing your have

it us long if watched you you even, think John, time. for you can a about and have

then right at if you R&D capital capability XXXX, allocation, ti.com, expenditures, keeping stepped look XXXX XXXX, think and go about. where investments, excited through can making like things that the and XXXX very you get investments I the right about the back keeping the we on did on what And to right things through, clearly that's capital You just such. out

We as in will will be growing. us and help during stronger strengths the those life more getting of even period secular your are trends semiconductors this

opportunity or with an capital allocation. M&A, used to as on have equipment degree or anything buy potentially factories used the To that we

comment, it meaning a just downturn. more that the one think it to depends I have be would goes to prolonged probably down type

had to long certainly, be over the just term. became we mood think you be the we in XXXX, while try available. before about are to opportunities that there wise a what XXXX, If But was XXXX mood for and

Thank John. you Okay.

will caller, the please. next go We to

Citigroup. to go Chris will we And Danley,

Hi. you of Thanks looking think do business, longer thanks this as at guys. term changes of first And Rich, cameo. structural markets question. in or or a anything for making do end any anticipate Rich, either the pandemic? are My you in terms you the result

Chris, I it's think early.

trying to do trend will come see PCs secular in products, as make on long home are industrial for people working I semiconductors tries going continues. the what secular will ahead general, that term have happen, market inside longer and guess be on you it great to SAAR I, get at even think seen even I think the equipment trends in know and to I your world we from But think semiconductor the with that term semiconductors well in look of coming John lives, server people's more I continue, just his as near to in into automotive, to And industrial somewhat automotive down. alluded going it's obvious going are to question, The okay. term. to but sales numbers think and is on the near term, a though growth

no, a So that big of structural from I change. think have got think structural don't I a having will be great advantage. advantage do channel we point there

of advantage the where to that's can is that of a reach the of of customers, with with trend hands our out things through in going be building So our industry. breadth fantastic you well a to closer, higher towards to playing channel that have years higher being of more inventory now we working take be direct with percentage number and relationship efficient, for and we that see a prepared TI changes been

Thanks.

I can So follow-up?

Go Sure. Chris. for it, Yes.

to guys it, are guess and in this there? yet? What place are that sort give out Okay. seeing about big then of extent asking? Thanks. about conversations concerns? into talked you thought us like? are happening? the their fall Has you everybody And we the can, frozen What I if any off kind aren't what could Why And just of you Rich, they in why I the at is this, root insight orders of customer

of very what we rise, I direct second Dave, with orders think and at to was he peak Chris, if as week you described I thought starting first, saw March.

up. rise You saw them

You February that saw down. March. seen have at ending start They are approximately in trend still we level early them and

through. to starting filter that's think I

us, have on consignment a especially, get takes consignment. Dave will to got those feeds For that getting better because for to we really XX%, start front. while are number It numbers updated companies the have XX% where

through will as have customers their them It's range. be we what that from we April and play see versus customers for down So telling made are I processing the June assumption think why April the that still the are through. well and would just May down

Thank Okay. Chris. you

We go next please. the to caller will

Svanberg, is Stifel. Tore up Next

the of the And range you. the can this what I Thank on a wide Yes. appreciate high the the at of bit guidance and low in assumptions sort end little of maybe environment. elaborate But you end are at range? the

Yes.

science on will I So there that. no give you my is take. Frankly

model Again, just that we precision, for use. it similarity. imply about we As that earlier, using are most recent the exogenous the doesn't it's can as that. not XXXX we even It's talked event

are we of What So is see seeing thing range the that XX% to we midpoint the or on the the a have to you you closest range But reflect seasonality. widened the is widened second transition, reason the our first, uncertainty and midpoint. the are we entire going using at that. other And adjusted on. that that great reason level negative we now normally for quarter would

us, customers, many to have to are actually them now update still haven't heard right. their mentioned, what's Rich feeds right able been and happening they we As some of processing

that through process. got have they go all to So

we running biggest optionality going to are how we that that range. embedded we are to And made of I factories, right. The in already make get so is want that's and wide the point it based on times a couple the

the So strategically, quarter and optionality we third quarter forth. the and can we have of quarter. the and second are this second both end are the build for and running tactically, and business, inventory the go just so type beyond. But factories we thing we in product way parts multiple great ways running way But the

a follow-on, Tore? Do you have

Yes. Thank Dave. you

what goes question you just other back there. The to mentioned

are building have be customers they how able thinking be an a case, that your than optionality willing and eventual inventory to about sure this or should to I probably So this little the bit too perhaps am to respond maybe some you to longer demand. are normal? would inventories the long run be If perhaps too

the today unnecessary. it's know, think and know, then depend will of weeks factors that the the world learn industry we don't number an right. and months a I over we and we and adjust will going to And coming You on

the way and think of advantage we we we the type have is customers set end we to have the build with I afford type we the type and have are optionality, not bad. parts right. part It markets That's parts structured that with going the in the of not can of of case strategically, we type to is custom in different electronics the the centric centric with very world. this These personal way world up company. a are in go

we great to through So optionality have beyond this second quarter. go

Tore. you Okay. Thank

to We will caller the next go please.

And is BMO next from Ambrish Srivastava.

question nobody or kind going Hi. you at back voice. XXXX, Rich, am XXXX to on hear forum. of this had sure template to that capital I playbook. a to back wanted Thank the hear you. I a good and your really allocation

it raised was was fourth You then dividend was percentage on quarter, but it pretty person, the a meaningful. the a basis in back small

are any comments you right on back, to like Based sounds we had compare going about quarter divvy it as free be, Rafael making, to I think what change nobody XXX% no capital am we buyback, plus Dave where was way and So to what's the change flow and in versus the no that. now heading allocation? are cash next sure idea

that a lead understand a Rich? So near might you you are thinking have follow-up. through the that, which out just kind us to of help on scenarios I term then that modification And are or thinking playing

Yes.

and set So is, to because The will summarize will for think Ambrish, answer I term cover no have helpful those thoughtful very Rafael plans. really long some of plan. to I up But I it's a tried let change, Rafael it. have we

Yes.

confirmed capital yes, our Ambrish, as said comment you change think way the objectives. we So there of and and just in to management long our just Rich and that, term is

specifically, was dividend sustainable now. XX-month free broader cash to as of all free a to, on trailing you cash dividend reminder, appeal alluded set return, flow a earlier, owners. cash as is growing On So dividend the as of I our return objective flow. XX% a basis, provide and said And to a our a

But metric, start. as place course, in Frankly, that. to and that understand in backwards-looking few Of industry are it's companies level I at great S&P XXX. a the our

it's been very a providing of us. be for objective that a to it important to place and But and start. growing So dividend, has continues sustainable great

Follow-on, Ambrish?

to think Chris a I is did structural question I good on Yes, this do, changes. and more asked

at home, from who afford working design are how impacting in those of we it right customers, geos, it engages the least And work that when for are from multiple can think world"? the way that us get that end multiple more home, about the to poorly is in, Given TI to portend odes What's so we ultimately changes markets? many activity a "normal there? seeing you to

these operating deals it's And bunch Ambrish, and a techniques that, about internal. we instituted one is quote my explained, telling on got gosh, people had selling, selling process. place we I mass-market update virtual of And meets really things. And we standard it's there for why great is what remarks produced happens in preparation an ago. included It's years luck of an this put how this when starting me, I basically, lucky are comments in opportunity. three some we

people Our work at comfortable with sales teams customers. work applications, at

customers. do of like They the working all And been so it it's anyhow. has almost want and our changed between the where nothing spend we to phone time terms in on ourselves

that. Our group products in connecting on

everybody had to high. is as working on to support able call the it's we bringing So online are hours performing the in comfort people the as do we of watching we this engineers is be customers' collaboratively groups, to do to another, always our think more actually support ti.com enormously have people to sure more to because decisions this into direct, and more capable what work that and is because customers one world But done. Having I team commerce very operate to to the experiencing. very hours really product that watch getting I unchanged. design readiness and just had it's am tend impressive are days blend

be all point will of customer at that where virtual those next visits visits the set well. customer are even We even where week as

way. just So we operating are of well into way the this

one slightly which for of spirit program just course want the strategy, and technology. related it just meeting our during of manufacturing our of want topic, competitive different we on our but manufacturing but of to the business inventory to talked in we advantages continuity and opportunity. combination the a of unforeseen our disruptions geographically preparation were is part remarks, with a footprint, our comment of about diverse and I I highlight prepared prepared

to So of it and will able need and when quarters be continue inventory together, those be our this now and with of visibility coming not were all when in short the availability we lead to customers times able most, time they provide impaired. have their in we

say the are actually that we can are rather product they customers us Yes. have And they would need. times surprised lead that had contact stable get our I and they and that

that. very So with they are happy

So thank you, Ambrish.

to the please. next caller We go will

Harlan is Sur, next JPMorgan. And

Good taking commentary know out pandemic and China domestic roughly throwing rates starting your don't percentage afternoon. domestic Thanks quite like to it. at geographies. forecast being I additional talk customers? your of question today matter and the Rich on consumption? But bit for the is, specific China consignment is appreciate you of Are you of reflected sort coming the or of order And comes business up my what and this today. about open their this guys being a from stimulus seeing China of call in your fact to economy and for

you like. start in, if please will Rafael, I chime would and Yes.

product it's So the but the from. products where will again the actually where that the I always box of ship offer give of we caution ships numbers

back talked into as as coming there is creating have And remarks. in come be may be in product think prepared there, And uncertainty. how that we in back online about got those as factories as designed built ships we be So our those our demand seeing Europe factories Yet, I you uncertainty China. that's yes, will I online. that and actually what's much example the think XX% cellular end may California example. phones of know, are up we an But like an again,

have So you follow-on? do

Yes. Thank you that. for

lower drop So is almost global the XX% year-over-year IHS for the just this content partially inventory correction in is in of auto drop experienced offset in the your normalize maybe year? to the is vehicle twice to in XXXX, its this about production term significant the potentially forecast as decline Outside to near year. most thinking production calling XXXX how to growth This recent TI little team trends, production kind financial crisis.

Yes.

to. And you I term remains longer will as afterwards, comments jump automotive want in us automotive. inside as make different is invest the that think and more important for unchanged. think five what's opportunity you sectors of to content a feel I Harlan, And to couple vehicle, per in in know, you I continue free Rich, if to. be pointing of There we are Harlan, just will

growing will something that that We to be be we That's support will not as it know those operationally. to steady arrives. demand opportunity we our able to that but will and we prepared respond do in care keep that investments control, how and to tactically take and changes

have you anything that? So to to add Rich,

theme to to Harlan, that. growth drop Yes. in and They They SAAR earlier okay. any with in offset I year automotive secular would embedded know are like are are you industrial things us. amplify not one suggested embedded or well, be that I as are going and that the alive XX% in a just, going

everybody Dave upper growth term think we looking as to long will our six continue to very well, you making does. it But got said automotive think and be have great a five comes when And to years out. investments, I be of average and outperformance.

Harlan. you Thank Okay.

please. next the to go will caller We

Hari, Sachs. is up next Toshiya And Goldman

over one, the for just have talk was landscape embedded analog? afternoon. competitive little very Good I in are get you for be Thanks as thoughts years. going guys Rich. think like this today, XX, XX are positive had pretty I probably would share processing the the through You equal, a going gainer bit hoping I about which growth as guys taking Hi. seeing on for you been could that all share potential five, both industry your question. much you would forward. else leaders consistent a well wanted I Obviously, past yourself. recession to

going also go-to-market are through You strategy change. the

U.S. got between You trade tensions have also China. and the the

helpful. Thank next, to So five we three that your over level can call the about items, you. you those around three it, confidence if be growth think talk years, to share would

have think the Yes. Toshi, answered you I almost question.

but we well, described that. job if if the even job you of our our think secular of depending I think we where on secular can tensions, tailwinds I trade we headwind do there, a some couple well do mitigate

this I right is also am I you is and and the you smiling, over years. four you got two, think three look have to Dave context, got which sure to at

everybody all I think time. remind we the

both in and gained we And certainly is analog and And were out going into products, we and get plans so weekly our the basis that and gained downturn better energy the you now. look And that in at what daily where we it's are on capability that our And all the that. momentum put that customers, the about about of position XXXX the going right share we that on. then and the coming ti.com technology, embedded. the focus at like place. It's markets is we it's to a

Okay. Thank you Toshiya.

will to We go caller next please.

Next up is UBS. Timothy Arcuri,

I guess lot. one, think those I two. evolve, Rich, first -- the another And I move a sort how is I to another around. have guess, about things how Thanks [indiscernible] of

Hello? Tim? Hi

Yes.

Yes. we Could having start you please? trouble are hearing you. over

Sure.

Okay.

that's to is effect at than at that magnitude, near the that really others your sort back term cycle supply hard understand the But earlier boost that demand, about of have to of So to look for I that, And consignment is about the guess I concerns first trough around think near that. it? the like question you term and is little look XXXX beginning peak because sort to of a and chain how how it the magnitude maybe like to the seems seems boosting customers that or model. wane it evolves

is, side the or if you And does to frankly, you well? the that it guess that seeing it are that So that that as the question that first consignment with out I model? argue would agree and does you see other first maybe it agree wonder relates I

what know, so we don't others they what have Tim, have haven't seen yet of first I some. reported so seen Yes. or all,

it's and late, seeing do early it and let just that weigh and have of us have it debate on rather others early to had not So that debate too facts it, we right. probably in just And that. seeing we the report theories

before, talked by and what sure much like. we they about that pulling as demand look will customers are to we But that believe going cleaner do is their signals. now, inventory, our controlling not We get right

telling are yet. updated they been what so hasn't us And

are us they completely isn't even what So clear. telling

before So take bit time stuff updated. a to going of all is little that it's

follow-on? a have you So

I do, yes.

Rafael. For

I on So guess inventory.

Thanks. is duration us just where give of utilization? to might pain of sense So if was I they assume thing? days days just way what are of to thing? Is that wondering XXX I and some I inventory possibly it's of are recovery flat June, is you it or sort point it dollar sort XXX cut they can September. in it like that days are an Or going up go like, obviously in Is maybe the up you in up your dollar again terms, thing? guess

Yes. question. Good

customer target incidental, service, of a and the First, is is let minimize of allocation this you for capital kind end improve right. to of us, the maintain It's that step the of we me asset calculation. obsolescence just back utilization. day, XXX, is XXX to levels frankly The remind manufacturing decision. objective while high inventory At a of

the -- be back would wasn't real $X.X that money it on bucket. billion-some sheet have that's of going owners are We there, inventory. to in the if we That's balance

we sheet, to, like put right. thing, that balance we how going that it we have. when those thoughtful decision And on cash we give That's great right. less potentially more how know, it decisions is management, to So just in any right. to you think inventory going to make it's we throughout very capital But going depend, comes this are to optionality us are

now. decision the are that's making So we

we to in coming on months how that, see the and We based have will develop thing adjust.

time. low. long inventory is thing, inventory a inventory very This that lasts is the important level. This The very, is scrap

to cost So scrap. other going the And it is the highly very gives side. and there's just to be that others, it given a but that capital unlikely an is on it optionality well, it, working low tremendous is opportunity us

Okay.

Rafael Rafael comments. to this said his Tim, Just so it's just and repeating follow-up before, me

The in mind in be spelled other to keep second and inventory this thing our out you growing would is, quarter. well,

drain will yet inventory. again distribution We

and just better have position keeps we So better us putting multiple these doing got to and in just mind we it keep in variables a when that. are

fact one use balance out inventory our be the get will place in the the inventory will where may that of sheet love getting but So show be channel that can we and leaner inventory higher and most it. effective we leaner

the I our very that you with our goes sheet or will of in different or compare us revenue most because go it's all ahead investors and Well, to regard on of is arrangement. customer. add, when through our all distribution through whether XX%, the two-thirds maybe when competitors, balance listening many directly consignment call, consignment we the you have end and

that that have. inventory pressure upwards So that puts level on we

XX% degree, We also maybe about through and our high whereas of own manufacturing including XX% test to output XX% assembly assembly goes have test very our fabs a operation, our too, our operation. or through

also So competitors. that's different very than our

out point think compare me it's why though But let is our and strategic you the apples-to-apples those we a not when levels that's asset. to controlling inventory So our competitors. of inventory that owning make that

to consignment particularly we we really and disruption puts in us Clearly, times continue time, what any we to and but experienced position enabled very much to what better very that us experience our our in just where of those pleased a having So do like with are pleased arrangement. customers. own support owning has it just are manufacturing

Right.

caller. think last one I time we have Okay, for

And we will go to Mark Lipacis, Jefferies.

question. my taking for Thanks Great.

one. had I So

risk reticence the anything Malaysia normal, to around own for fieldwork high I you But to like that components, excess supply guys your hearing a inventories and the understanding as are not any chain shortages indicate is the give wondering virus Are that and Our not and there are world am the in base you had. like own are these your is at And if that downstream are that there of that your to and your That's describe supplier own downstream up that? inventories levels the chain because disruptive you basically spreads range places able on of levels here. indeed from of Philippines, run your lean the at you. is if disruptions? inventories components? And want end at about being shortages. are supply TI you consistent supply you your any be are that capacities supply seeing seeing managing factory not that? to could you seeing to I of seeing customers you consistently what other disruptions Are how all run you going a

can problem. answer is, Remember, worth Little Yes. that anything here call. we and there. on I mentioning things we seeing a Not But that not to not are this short manage. The call, also -- referred that applies on have been to goods our finished we about business we continuity program But multiple we and inventory, have other been mainly in carry. that nothing angles. inventory this

raw carry example, also buffer. material for So we inventory

raw We the in as dual also about diverse we sourcing in Taiwan, of I Philippines, have in China. quadruple And Malaysia, have manufacturing in earlier talked have triple materials. footprint and geographically Mexico, many in key and

them make to we which gives as good It with XX we suppliers those work very us the to leverage don't way, and to our pay So thinking that on that. suppliers a us in puts games just part in really that be play of We days. fair position. also the by

all are that's suppliers. we good those from I term very shape long in think relationship of So a standpoint, also with

like wrap Would up? this you to

Yes.

So is this times most reiterating us let previously. said like shown progress. has it me have we that just strategic what can we wrap up make the by when History

are our market We and products. and which to and in invest continue four reach portfolio long-lived manufacturing competitive breadth, technology, strengthen diverse will advantages and

pursue ambitions mentioned. rich continue We will also the three to

decades. who will on owners like We will act the for company

customers, be a a ever of changing. proud these all to months will will We we have guide owners proud and world decisions will that's a in be weeks benefit. ambitions that personally in part neighbor. and the a And our are adapt company be employees, successful, as we our ahead will are we we It and would When navigate communities that uncertain these to as is times.

Our you your and to best family.

conference. today's your all And you conclude ladies does gentlemen, and for Thank that participation.