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NXP Semiconductors (NXPI)

Participants
Jeff Palmer Vice President of Investor Relations
Rick Clemmer President and Chief Executive Officer
Peter Kelly Executive Vice President and Chief Financial Officer
Steve Owen Sales & Marketing
William Stein SunTrust
Vivek Arya Bank of America Merrill Lynch
Stacy Rasgon Bernstein Research
Craig Hettenbach Morgan Stanley
Tore Svanberg Stifel
John Pitzer Credit Suisse
C.J. Muse Evercore
Toshiya Hari Goldman Sachs
Rajvindra Gill Needham & Company
Matt Ramsey Cowen
Romit Shah Nomura.
Vijay Rakesh Mizuho
Harlan Sur J.P. Morgan
Mark Lipacis Jefferies
Call transcript
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Operator

Good day, ladies and gentlemen, and thank you for standing by. Welcome to the NXP Semiconductors' Second Quarter 2018 Earnings Conference. At this time, all participants are in a listen-only mode to prevent background noise. [Operator Instructions] We will have a question-and-answer session later, and the instructions will be given at that time. And as a reminder, this conference may be recorded.

to call pleasure Mr. my it's turn to the Now Investor Jeff of Palmer, VP Relations.

may You begin.

Jeff Palmer

and everyone. NXP's appreciate good NXP Carmen, today our today. you, Thank morning CFO. the on CEO; quarter on short call earnings and With us Kelly, me Semiconductors' Rick Welcome XXXX call. and joining We Clemmer, you is such notice President second the to Peter

many we of XX months analysts to since will call, extend been earnings today the it’s possible. As accommodate as last as the questions session Q&A our

it If section our you've website not second quarter obtained Relations be a nxp.com. at copy XXXX of earnings found press can Investor company our on under the release,

our efforts. be available Relations being a our website. Additionally, we will summary on This recorded have assist and from replay supplemental website posted in your financials call historical to document is modeling presentation corporate our Investor of for earnings and a

which today in existing and cause for statements the to obligation expectations and and publicly forward-looking sale we but of statements update any products be macroeconomic will These risks not results that uncertainties Our to of new forward-looking on the management's impact expectations. the statements. risks from the NXP to for limited and financial XXXX. quarter results materially no NXP's undertakes operate, our third Please markets are that involve include and current call reminded could regarding include revise that specific uncertainties or differ

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

and on by management release related events impact restructuring, to to in driven provided which directly certain I'd core exclude G, make second performance. quarter Regulation charges to cost has GAAP press measures we Investor call financial to XXXX non-GAAP Form consider NXP the the furnished be measures Relations stock impairment SEE X-K of does website to discrete our turn directly today, Rick. primarily and related over the price most measures the is to comparable are our other purchase during in non-GAAP on underlying the to call merger section. reconciliation NXP's that NSP's accounting, to will operating that not will based available to compensation Additionally, financial which be Pursuant the like and reference

Rick Clemmer

and Jeff, all Hopefully, decided outcome call to has announcement It of all process to not Qualcomm purchase the proposed everyone the NXP. of Thanks understatement to agreement the the disappointed extend welcome not in our China. did today. conference is that and forward an are regulatory we you've approval with acquisition say move seen in

powerhouse. semiconductor two portfolio NXP portfolio for have Mollenkopf acknowledge executive we process. the companies employees and today, Snapdragon industry EMC portfolios the The represented of Qualcomm all Before and team NXP would complementary in involved team plan market his leading true to particularly, highly The product to start I'd in processors addition auto Steve and combination Qualcomm the the the including portfolios. strong like integration and connectivity in to the in of the the

share gotten would operations were before communicate two which limited. visibility has able in I'll performance, shareholders to there last can months key last expand years. four to and quarter questions turn have to we our going second to we're time our believe messages period Therefore it's to focus We that Instead, last of do is not any do forward leadership. value on realized and the to like years. what two could with that been since what XX the our we've the been over and strategy we to the spend However, been. need continue we look dwell we we events review of on our to and execute over the discussing actively any our accelerate of

First, of I the commitment executive NXP about management level team. we've understand been the of asked

the including the team the business. XX our further the in general businesses course of This last the engaged organization. months, running both also entire managers have Peter Over includes actively of the executive been down security and fully in myself

the level deal when stronger transaction of have organization IoT fatigue, basics in strengthened the the XX While announced core has business is a experienced the ago. now actually and position months by than of auto we

Peter our and future success to announced to recent board, fully With committed team management NXP. decision decisions overnight with of continue in drive myself the the the the are including

of company. been during approach, model the operating potential the to in the not like believe shareholders quickly one would prior we we on three will and into Secondly, year transaction review reference targets which we provided towards our any I future term the have insights have our for quarter performance with success. we provide discussion. longer guidance future basis model Consistent should our judge

During provide third he guidance Peter's remarks, the for will quarter. specific

announcement consistent to transaction October is model Qualcomm presented prior we what Our with the in XXXX. long term

is addressable we a from perspective, words, focus TAM, our memory to compounded than three other approximately optimal market. Specifically, growth removed. believe In X%, can achieve greater X% [ph] the NXP XX% with which of of growth a rate year revenue which discrete our WTS focused

margins level operating will our gross We how investments range unusually which deep our strong goals of we non-GAAP the will to XX% X% businesses we opportunity our of present of Day in an based the XX% target XX% in revenue those to margin on dive our strategic we continue markets. focused the an target of to specific focused investment Analyst in to XX% continue and into SG&A our September have an are R&D to which a XX% update on we range on achieve in and including X%. At will XX% make is drive which will will XX, announcing, we non-GAAP to a now of

Qualcomm October where the XXXX, since announced return Thirdly, was capital our suspended program. transaction in we

flow be just We authorization prior $X a yesterday program. repurchase consistent initiate with excess returning will periods procurement for and free shareholders. at policy obtained board aimed capillary to from our forward, share is Going cash billion our all

balance nearly even billion from with after include does gross position Qualcomm. billion and sheet. not due Our is the of $X.XX the is QX on $X accumulated strong fee determination debt retire, we in amount current very The tax

remains term as the is prior strong. target quarterly below continues few our with flow leverage moments, plans. leg as program very well of our Our cash breach a free long In discuss the our be and generation Peter is will target which consistent to funding

would reflect Lastly, trends over to the business I last like months. on XX the

growing to result see the very We were be for in that revenue look We each $X.XX grew focus markets. completed solidly integration our and anticipated the the billion, Now began and good. our Freescale successfully XXXX We HPMS at revenue synergies. see general adoption market microcontroller business the adoption kinetics our LPC in well, business, of automotive mass our as in and strong performed well both i.MX the products. apps as synergies processor did apps purpose very for performance continued processor, solution MCU high the to

In focus. has business and bank of the again terms in bottoming which of seen growth into power our card clearer base of business XXXX in networking we the market recently RF challenges, came business see station slow the also in issues digital weakness

at mark the halfway are XXXX. We in

the same of to trends. continue see We some

after ebbs the XXXX. digital auto in The station even of business. expanded to and RF to our mobile did related Our including of within opportunities. we China growth see new the to deal our the customers continue strategic some challenge transitions our the the power some months, seen business of impacts market in base and trajectory flows became And more in microcontroller severity networking the the XX continue business of positive disengaging apparent begin

our opportunities more products, the hurdles excel the Based the we overcome. high customers, balance, right and strategies in we Quite customers. markets a regard talented on combination. far our we see on lead target go-to-market need right in to from very in impact winning However, are employees direct held have who and best which to than of

also about the auto a continues strengthen to business vehicle timeless We the unique on from growth way from moving growth, had our we portfolio incremental three position or to previously. where lead technology is have auto electric market which four safer through our to with actually driver what we provide driving. can we address level now driving to to our talked an hear unique customers, Our

live. and Our edge processing facilitate smart to as is everything the of work of the LoT the use capabilities a increasingly make good we to world allow to cloud in a to of as explain our the facilitate are and full we place position refer the world and providers better to connection like of to more productive through all smarter the cloud to

assumed. have a of periods quarter our performance to which give guidance be relative the was Now few in not we quarter. performance did items out our albeit second in turning with comments QX, prior in in revenue my headwinds. caused pause what good lesser were for not automotive our Since analysts shipments components demand to shortages The an overview the on of to to disruption a of our power term digital our a control ban somewhat creating in and automotive ZTE and discrete industry a networking our businesses. MCU degree to business RF In other caused short modest modest products. for Overall,

in to In capacity customer behind wins in design have support to upside our upside of manufacturing kinetic put issues our continue as has capacity our their addition, ramping family us we requirements. microcontrollers

really of revenue up in revenue within all growing $X and product dollars, X% billion, the was billion increase HPMS QX our automotive, perspective, which record just high with revenue segment X% specifics, total categories at is operating our billion From an focused year-on-year at year-on-year. Looking $X.XX $X.XX was was nicely. X% a up over segment, year-on-year an

trends business seen our the One has of entire cross in of increasing portfolio. encouraging the selling the been most we auto have

in propose opportunity by most Our customers NXP level across NXP's having security expertise the which high automotive our solutions safety. a to be partner elevated with in leverage our we more view and entire to market. processing, consultative from portfolio. engagement view performance system products probably functional The that clear provides and have a customers the solutions with is complete automotive true for complete analog,

supply. building or driving. ultimately towards up a due core revenue were Micros SCD, OEMs to wafer the versus with continued lead first XX% Connected experience timeless microcontrollers auto and year-on-year. family the have general both blocks our tightness made kinetic transactions As of mobile $XXX the Secure journey XXXX. providing Devices long up Within in driving for times The of million, areas growth safer and quarter of to the purpose

India. adoption shipments down beginning transaction accelerate Infrastructure a period. mobile expanding business continue from dollars, was to with in and SI&I, million ago versus Our X% to revenue large the year benefit customer $XXX Interface OEM Within Secure to or

The ZTE. both the Department's of segment The performance performance While digital power was networking down materially a into digit interface do material lesser shipments quarterly ban up RF to U.S. impacted extent XX%. power a and with single networking. impacted the high high Commerce were percent products the RF was business over digital

the together ban us the that ZTE Taken million cost quarter. $XX in about

or revenue and the trends were our access year quarter MIFARE of solutions. Lastly with driven reflecting the a retail within tagging to nature Identification versus for this up demand by X% UHF and mobility versus continued was Solutions Both second $XXX a million, project banking Secure down good lumping strong due ago and revenue growth market SIS, the period both government of market. XXXX, in

as of also We We range distribution XX revenue our channel. or to X.X month stayed a in inventory to at as The use the thousands the half business percentage A XX%. minus the channel require over Distribution X.X. months maintain customers. prior for NXP end plus position percentage months customers our is we target peaks. channel are material like strategic to our to products within to also just at channel. channel grows, of to is quarters. consistently for distribution that. business had held of general rate the through The than has total Turning this which sold total which MCU address in higher mass the by steady Overall a of distribution supply of market leveraged seasonal purpose increased

or minus inventory good shape in target X.X month. to months supply will half channel plus we Our and continue is

our impressed call employees quarters, our few on rose know We their issue and hard to we the all we will preparing for a the an but journey to has have our last focus they them. all fatigue which want and it shown our deal result genuinely is often. I integration and integration. time in presented years and to our Freescale the the of work as short lot over the thank focus how am the I been future over the of forward employees the completed Before Qualcomm and strategy ask Peter, leadership last employees move markets. for task the for grateful ask in to of We now industry our to focus driver turn to I the dedication, several and laser

of I success. and and has of the them think each proud organization person contributed all I'm towards

of I'd like a the over review pass performance. our to Now financial Peter for call to

Peter Kelly

On all really to Thank able you, I’m you call, again everyone. great like future. the near you today’s to Rick. it’s in Good say of forward to morning, be person to in looking meeting to speak and a most today I

be the XX% As of their revenue ZTE in Rick adversely highlights. impacted operating by and as already In the strong. flow the move continues and cash covered quarter, summary, to was shortages was the financial and auto the components. other profit to and drivers managing during customers the Non-GAAP revenue ban profit I’ll quarter

is a our target. substantially X.XX term ratio sheet in with leverage times, which condition long is of balance Our excellent below

points the on dollar year-on-year, non-GAAP $X.XX million revenue reported and non-GAAP operating the made profits $XX was our operating earnings total cash year-on-year. based items. $XXX a included operating and Total the million, million. We points million, in margin is XXX was margin profit year-on-year. were $XX XX a not million was million. which down were expenses reflecting total of non-GAAP up From QX, $XX million in impact $X.X year-on-year, non-controlling business. non-GAAP gross investments Interest profit Stock and XX.X%, basis a taxes strong operating $XX details non-GAAP billion down basis perspective, up $XXX non-GAAP we’ve was was X% XX%, Focusing compensation expense mentioned above billion, $XX of gross interest generated reflecting of was and in

quarter net turn $X.XX changes Total billion. QX We to trailing the cash and cash to $X.XX billion. and like EBITDA exited debt $X.XX XX was our billion, was billion, was a debt. of the with at the end I’d in Now $X.XX month debt approximately of

coverage XX month at net the of and Our interest end said of trailing nearly times. I QX XX was debt earlier times, ratio was X.XX to adjusted non-GAAP EBITDA as our

of XX the an Turning days, receivable days was XX payable to quarter. X increase sequentially. was of X working days, And versus metrics. XXX days, Days day capital was prior days inventory up days

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

Interface sequentially. quarter. to expected range, the our from our up be is approximately Also be flat currently sequentially. Secure expected about Identification expected be We up of Infrastructure third to at And double digits. XX%. high-single is Turning and down up for be Connected be and $XX is Secure Solutions other range will low expected to the to of total the expectations be anticipate to to revenue anticipate million. is Secure Devices We we a digits corporate revenue the sequentially. in following in And X% to anticipate trends midpoint X% business.

final structure cash repurchase and owners. with XX tax to returned its about margin plus capital points. its We of to be are Operating about gross interest million, $XXX our $XX about estimated million minus minus announced together $XX to the point. non-controlling XX to Taking XX.X%, at be operating expense comment be or transaction, about excess on see a about million. minus margin non-GAAP of to consistently about basis program. expenses plus expected $XX or We cash basis interest non-GAAP be anticipate to million. all Prior plus I’m XX.X, million, expect to $XX we about share or NXP

are of Directors. believe this supported by to in view Board this our and continue We

on and cash believe significantly current our the end from the see an requirements, X.X of before is repurchase we board combination be $X the fund free, executed We’ve the terminations current we’ll authorized from the a the leverage excess of tax Given price the sheet, this our shareholders. with the our of market short we’ll flow cash after To balance of year, well appropriate to times. operations as fact method about the cash we that leverage XXXX And in the the end billion company, it at value as term believe from to end, program. a cash our buyback this debt. existing the balance proceeds return with

by in specifics complete subject payable of deem purchase dividend estimate, will to debt approximately As of any of the the and million stock that company third new shares our a interest quarter be expenses about please a XX%. of note quantities above XX

So to I’d questions. your the operator to like now for turn back

we’re to Q&A I think you going have an mentioned extended session. Jeff

Jeff Palmer

to get Q&A We correct. everyone Operator? today. That’s

Operator

Instructions] Stein And [Operator William from SunTrust. first you. our Thank question with

is open. line Your

William Stein

much all if I questions. my Nice again. Great. can. Two taking you so with for to Thanks engage questions

wondering Qualcomm a In discussed we am can a that there’s aspect? a were I us when leverage beyond if a you discussion, right level also capital when you start buyback. sense get was dividend further I and discussion M&A. allocation update the got discussion past you of you’ve to you’d that on First, think incremental the pre- of still there Can

Rick Clemmer

Yeah. Sure.

year dividend, do year to we only our the will buyback would the – we’re discussing, the we of back can before the end to end certainly and only one. be of whole at actively end of afford year the the On it, will X.X the we execute if be be of leverage next below

we’ve discussions you guess in what Day decided. our Analyst with update on we’re I board the and we’ll So so

William Stein

Thanks.

Rick Clemmer

dividend. on There the

terms of In M&A… incremental

Peter Kelly

we kind equal consider just you’ll process merger went trying bottom China. think with to us with we clearly line what big do has I what unfair is in the, now Well, to I creating that’s of proven challenge any through transactions think or that priority regulatory think quite be see don’t as a to the being value. we that I and process I be we not quite Freescale. a something like perceive did mean the with

to technology like more So acquisitions merger complete will that within any solution but to of to transactions unique us do trying our don’t think I are or us product reason a you huge clearly small that see allow provide provide some customers equals.

William Stein

recovery X% should appreciate that. that see wondering to X% should those SIS markets. the stage for more to it be I should relative two example looks I’m The you the you. Secure the that ones we and Devices? or prior that Qualcomm had less Connected to that read for one growth a and Thanks X% to target I read relatively if is as we we will and automotive to then SI&I more It growth weaker will or update. markets if X% same transaction. suggest somewhat those And the more security weaker Thank in the part MCU of outsized can.

Rick Clemmer

Absolutely.

We will definitely.

Our through with stronger growth of couple well in than automotive would is we rate with a this years have balanced plan growth micros. in as X.X ago as the had what

weakness small issues total through point Our growth some portfolio business of which a at working of areas, business. at our network portion certainly of in the and is SIS to so lot RF a drive continues and this we’re those in relatively the digital continued power

it than set it’s much those years to we that ago the rate before. strength three growth plays So it’s have what even same growth half, a when number, targets we I more rich think at when and our fuller the you two would on had look though rate

Peter Kelly

it where a be small be out business is businesses years numbers. figure but for about that. way doing of mentioned, as Will two tends all were to relatively similar well a and – talk we I tends all to coming for cyclical. started to Rick There's of to versus our RF it's The And is are we except that ago.

that... So

Rick Clemmer

went 'XX. some probably Very we definitely profitable. and down, 'XX is through issues SIS in bottomed

had years you So investing it's thing actually ago. well. of core is than know certainly we are links most our from we different the our But the perspective companies that two doing very really were of

William Stein

leave I'll floor. thanks. Great, the

Operator

comes Lynch. Merrill question of Vivek Arya from next Bank America our And with you. Thank

Vivek Arya

in the need guys Thanks for with you one, to and Are perhaps NXP first Rick you year-on-year. model to first you in there areas you that half to your was again. taking where for estimates way, a own think when can OpEx my different be margins? to and X% good get operating to up your talk your were question X% on paused my have you for target restarted asked do growth now go know and or in

Rick Clemmer

diametrically think I going to opposed. are Yeah, those

But the you in in invested anything that about think think in to talking that on R&D, areas that are we do invest our we I don't not bottom opportunities and rate actually leadership as have come level saw lot the with were was where continue anything there's we've critical a to the was of focused growth a and we it opportunities drive grants to of as account thought investment. technology paused. line with associated we customer been into to the that currency you some re-accelerate, I We to And et as expanded factors need saw. making well is funding there's our cetera. good

consider the on we of OpEx the we're have of to of bit those side sure our for reinvest think I I one little anything, to cost savings a think bit drive break-up the perhaps future in to in company. for we really the cost couple expanding internal opportunities fact to on that using that for will is reignite some reduction little next do continue things investments the our and perhaps be But not that making capacity a strengthening can our the to we a CapEx drive years of strength.

Vivek Arya

complete Thank for QX Alright. them? of gets my you And clarification, onwards? plan is the in And you. which Peter timeframe buyback, from on you there in are terms then a in follow-up, back to assuming ZTE just

Peter Kelly

ZTE me part. again. started do the let has So

would in normal continue company as going and a that QX hopefully be So forward.

know timely that would complete other go basis know our we will out activity, and and and in buyback, we the to But to extent don't historical As that to the don't expect kind the announce think them. you you I we of from opportunities buyback fashion. a the on at markets daily you know regards look buybacks the

Vivek Arya

Thanks and good luck.

Rick Clemmer

is for us regulatory was a the was approval process. interesting, know considered discussions be It interesting important to the it one from pretty relative Chinese an because with it viewpoint, you factors it's the clearly to in revenue the of

quite that brought Chinese the transaction made approve And back was U.S. given life it's they Congress. not ZTE so to by the the did actually surprising decision that Administration in to the

Vivek Arya

Thank you.

Operator

Thank you.

Our Research. Rasgon comes with from next Bernstein question Stacy

Stacy Rasgon

Hi guys. Nice Thanks taking my you for gross questions. My is with first speak on leverage. to margin question again.

leverage, the forward? and it's of do obviously margin also think range get of is structurally had normalized up margin But I kind do you still little than where gross stopped not target any revenue running how of like need guess businesses you below So into of bit what so that's mixes a And the of going model? a model? kind guess I on to forward going is we're bit what's seeing get Interfaces your we to am get so play I and some to more margin that a you When about because that I your growing drivers Secure function much growing of do there? back is margins was a going the do higher back you gross you're think headwind. surprising Business really of

Peter Kelly

than a you range… say normalized more When

Stacy Rasgon

to is of of some margin was running and it kind really XX whatever got high XX the got to XX% XX like which flattish gross margins Secure ranges down XX and next you so you and yet are was Interface the and up. going revenues stuff up What’s

quite there are wrong don't understand, utilization you high because know if I something So with inventories or your is what? you

Peter Kelly

that's be Having there's is there basis, First thing a things to right said like where XX sort increases. of improve. the we'd of now current move needs that obsess on the to the that not around. not hitting this it any to and quarter we Probably of of And about and is is biggest on margin all points pricing over on look annual it our the basis all an year going single at targets kind quarter. gross margin we're single gross

Rick Clemmer

the things. of a I like has certainly on gone whole gone of products people into we don't you there's the range. think You've to would other And that's I We up, clearly get to frights current mix expect had a quarter, better, but But a length bunch role do depends no. headwind. bunch say of nothing causes and need but structurally quickly up, know

Stacy Rasgon

Thank you. helpful. it. That's Got

my about follow-up, some I because capacity you talked that know to tight and For obviously microcontroller. the about missing talked cost you point increases guess of and revenue you've is

So on prior tight when long lead can same model? just And missing a actually year, next not and much those gave are you for the question, times of how your this tax you give view rates see only revenue of I you're because guess and year capacity us supply they you those constraints even? housekeeping still the as what

Peter Kelly

huge. are taxes capacity a of given be tightness it's We've quarter. previously we I it's me we've quarter-by-quarter of and don't I XX% think do so impact said one. XXXX cash let and good a tax dollars a The you tens using tax, in would that's So of that. millions few think

Rick Clemmer

I were we where it until you we which at know those sure them up family take weekly have you Stacy, wins, be month is time. want clearly lying even to XX look down ago, you when you customers kinetics at to our a don't work guess be. with have those and lead you you extended design to And when not lead Yeah, time know maybe with

slightly been back back where should year to what that end some we and line in long a have us you limitations. the wins extremely it and the that achieve So drive manufacturing in down that gone even capacity those and had than capacity continue the we've lead faster to the And unacceptable is reasonable have based we'll clearly of going time, haven't come we know on a the times with And the able our lay excited we're more design that keep been on as we about limitations position we've get we forward. we ability to be we'll We've the to reduced in to though weeks what basis and under those of allow able see approach where in we lying they actually line. customers as growth get begin to of last thing to think we've can few drive out.

Stacy Rasgon

That than weeks XX still likely so more probably? it's would be

Peter Kelly

lead bringing know it's period can. think we hard as time You we're certainly even Stacy, micros. is weeks I over say, reasonable And quickly times not of as XX associated to past a the with

down we range more hope would opposed year. to get as that in early know getting into of XX kind that we even you anticipate and of next teens a as we'll into So the reasonable

Stacy Rasgon

Thank it. Got guys. you,

Peter Kelly

Thanks.

Operator

you. Thank

Our comes with Morgan Craig next from Hettenbach question Stanley.

Craig Hettenbach

Yes, thanks.

First doing X.X, inventories remarkably to now months, the at distribution? question on so inventories anything channel, manage the just just price anything pretty in are just X.X the tight because differently are things you for consistent cycles particularly been versus

Peter Kelly

we revamped a doesn’t But number say X.X do do I'd tightly, the know shipping manage problem completely make our manage you that at continue in years out, into our systems. had plus we what it's it really ago, it which that you we Craig, it but not to time on the control about what or like to shelves. to quarter coincidence, sure what's biggest look us three just we And and minus And have months. badly. pretty that if one up ability shook we this go

Rick Clemmer

to less a drive be we’d dusty to sure on and inventory their be always inventory to want our achieve. sure little they of war trying that growth customer turns to we’re have tug have focus houses, more and like support is, this a in are the a to truth and we actually and nerds channel base the with be is The able big they

bit see arm So of little a that’s it always is. to wrestle where

in range may the prefer range. to the still than slightly And We’re X.X that X.X during more of to that quarter, we’re at below that but closer I’d frankly it be X.X. go it

Steve Owen

Sales. of Head I actually They of substantially shelves. that’s Steve, mix I’m Yeah. the the products work on am on

terms in as inventory the of So the inventory of good the the how product. and now is I ever as it’s in think challenges of one been quality distribution good is this is our

Craig Hettenbach

just market? the I has in any appreciate you kind perspective and kind for for playing just from of the update that or Rick, how call a Can there. radar us of things been are time. some out anecdotes around a ADAS, And progress follow-up design you on then

Rick Clemmer

Absolutely.

we major So with portfolio the of radar broadly products strongest in the all working and have customers. car

well a so of to bring with as family the factor the of to drive the that. that win continue have grow solution us supporting that. to one pleased autonomous will continue been But at solutions our and The to exceptions with our safer Day driving talk and in able it. platform, to some as has in is really been drive requirement and a solutions we security technology support has their vehicle really that together, ability very the overwhelming And of key capacity been ramping think customers. vehicle be portfolio able we our design to our well growth strength associated success safer technology get total has complete look clearly allow to a factor And the contributing our Also to driving about as the we more in more radar the Analyst our microcontroller we’re But and more we’re only above to side. we the entire that communications to challenge driving, of radar automotive marketplace. really be with with is

Craig Hettenbach

Thank Got it. you.

Rick Clemmer

Craig. Thanks

Operator

Thank you.

comes Tore question next from Our with Stifel. Svanberg

Tore Svanberg

you. thank Hi, Yes.

more I a positioning know NXP’s I’m the think term, there’s thinking bit NXP we And part of NXP especially in Qualcomm expertise, just lot so obviously more in should Qualcomm the things? a side, longer about but about mix in the the side digital processing strategically on How think in more probably about also I terms really we forward was digital long NXP strategy has the term automotive. First question automotive? should automotive going on in merger how appealing think

Rick Clemmer

with center the know fusion with and we think moving you autonomous the capability automotive you not had performance have about will when have So especially processing driving, Qualcomm. that that we would high combination to

about capability growth. is broader something and to that But work So be of learning to the cars, the those to to process drive at it. drives when that to the for frankly, get the more take what figure a about and really strong really the our on an with really fill able that after basis will a to be how able to continue provide really customers that really that companies NXP intelligence, partner drive positioned to to solutions of basis place it’s consistent have microcontrollers affordable And artificial takes clearly provide array you safety. out and think improved extremely we advantage solutions we with is well

ago. we’ve So a is on the interesting portfolio through we what vehicle electric automotive that the solid very really over is well thing last the of towards years more The in in think side couple the analog X.X I that of some the years made even we our progress bought market think portion we’re position.

will industry. XX% portfolio great But So a driving safer facilitate across really process the think moving NXP that driving in electric autonomous see that leader to vehicles of the a about our or in position. we talk more the Day, will roughly serve driving saver to will that associated driving we’ll in with key towards Analyst TAM be continue the technology and

Tore Svanberg

for housekeeping very both just ’XX It’s what’s a CapEx use And and helpful. for please? for Peter. ’XX as calendar calendar Peter, your

Peter Kelly

just Normally CapEx. way about We past the would we’ve this. – to X% the I’m trying talked describe think to best in in

got high breakup on we see we up probably and X in to this the of run as we let and before, Rick can in fly, margin funding the given return a think XXXX, I’m in as about as take it X.X. I And to and we the very gross years fee. mentioned saying significant go XXXX might

So we fee the gross back margin. the in reinvest of some breakup

the model use about it’s exactly. think maybe year X.X say going I about your I’d year think So after, be to it’s this check X% and right year next I of the

Tore Svanberg

Thank helpful. you. That’s

Operator

Thank you.

from with Credit Our Suisse. next question Pitzer John comes

John Pitzer

my September June going for couple a come back. the that you Peter, the to what think ZTE and Good back guide to embed guys quarter. quarters question. tell welcome revenue taking impact all take us back? I quarter to or is Does Thanks the that morning, are coming was to kind enough

Peter Kelly

think revenue comeback quarter. million in into $XX the $XX exactly year. It’s not do million literally like we quarter that. it’s like million, is sure expect in let’s that seems would a QX disappear say comes most a not were million $XX back, It’s be for example but the – not to QX. this $XX we’ve of of we But would least the we I’m at our lost it’s a most

Rick Clemmer

with management market probably be it we’re this in as John go that and addresses them a working look they to ZTE at how at Yeah at in be we working they team wanting run and but completely support position back do to getting and rate place. the new close full QX in to to really the

John Pitzer

turning they’re out comps is discrete rate you’re growth And Is just have. to helpful. at of think of solid peers of you Or businesses I’m key by below just then Year-over-year about it the That’s is fobs there exposure? shortages? relative your there. kind of me you’re X.X% understand and under – you hurt wondering kind that more your auto to going are something you growing? this on your help these still kind core kind looking is how Is within of that where was that? one do peers which of the the disproportionately growth business but really which some

Rick Clemmer

forward mean reduce the have we John, But auto process we inability on through some strong The was than of towards some in that quarter. the it to all little because one business time you to still our bit know microcontrollers lack have they warehouses as the quarter for have really was in customers. in automotive indication portfolio continues rest went their at years those is in had end going some very about we with the discrete and key a the and automotive. levels that excited the the if in three little about products pool our a I give it of perform would that the of discrete to as board much be a the of of the place. continue customers. lower probably growth growth And sufficient based surprising than a by ago. our of they was didn’t the what But very well of just rate thinking headwind higher pull us area and of across early were in we quarter, rate anticipated very we

John Pitzer

as balance Peter, wonder we’re better the thinking are success, apples-to-apples? what reason I And asked, transition, understanding, impact in sheet. revenue the to that I cyclicality an a the impact as was you year-over-year the am and think through I we rates growth just release I I look fully it at talked on helpful. make about just on guess – you counting why that want I sort the press I of That’s get to sure

Peter Kelly

of favorite I My think amount just of not the it’s a work I second have crazy topic, a for one that the ridiculous news. things most for I one think implementing run even just mind Yeah. can most of to for like much us

John. in level, $X benefit. memory this think noise from of QX mean is $X is, I But think I impact million have an I million and it’s a

John Pitzer

guys. Helpful. Thanks,

Peter Kelly

John. Thanks,

Operator

Thank you.

Our next question Evercore. with comes Muse from C.J.

C.J. Muse

for my Thank hear Hey, good question taking good to morning. all and your and again. you voices

basis generated target LTM curious model, cash kind your closer as an XX% there? of are flow free on start you margin, you getting percentage thinking question guys what First you to

Peter Kelly

margin I That’s the our time to that about Really proxy. is numbers get trying you really. asked. EBIT me EBIT But very a approximates that I give to fill end margins. think about think about maybe good just the think But but think a in it guys

C.J. Muse

year? a as annual a grants buyback, That’s And we about talked I each think fashion. about Okay. question on completing share helpful. the a offset then in guess you How should partial timely

Peter Kelly

only less less granting not than than we’ve been, we’ve well been What X%.

in be So the annual a that’s all at I them do at keep we of think grants we company. some of look looking we grants. of the our retrain things in with basis, regular of I share should that’s normal to additional certainly employees – kind handcuffs should moment the On – provide do at way think would I’d some them our what on terms how

what I we generally. grant be normal go our forward think is would with

Rick Clemmer

think handcuffs Analyst a Day bit need to reboot, and our when additional specifics into through a in that employees that as I we the you of some through give survive gets see through as equity a we keep little I reset really know you you go September. and going our probably in board more Actually, do here want get we’ll in will

C.J. Muse

line and the about thought of talked you trajectory over should process Excellent. you speak could I next SCD other speak you X one. that the the puts on of haven’t your takes one And to given you. we so growth Could quarters for some of last for kind what to If aware segments. spoken be Thank and item to we X long? for

Peter Kelly

SCD. So feel on very this three the year we good about bases

could actually been think we limited there really – of share is good growth on is side bring business by the that I online. the that and it’s we lion our and the micro extremely capacity

there. a and is years. solid strong I that’s which or Secure be to be going position. perspective continuing the a our few strong and Devices, think the micros extremely to don’t see position So continue for on which XX% next Connected we we continue In And know SCD, customer growth perception to so of I in is in very

large we a with mobile associated strong toward a in the have it’s position in and continue very it. term clearly near very factor wallet move a continue be ramping, India, We to the positively. in that’s OEM on But basis to

Peter Kelly

the you and think of very been has one the business strong has micros I Analyst targets Day. for I and strong to this think transactions bright has And individual But been will operating Rick’s well. the provide been growth real C.J. comments, microcontroller kind segment of of the spots very mobile at business, guys as support there the

Rick Clemmer

and to the at as the security drive in to not as of Internet ensure to edge really really really is users. be hacking business ability the provide think able we customers And there us to we the Things, able processing cloud if for we portfolio a solutions key and we and of the the all well that offers look realizing that be basis to the growth and to the of support it take go it year value facilitate three the the world really to area this to as we’re to to one the of will that is capability pull well and positioned the basis, with product significantly the over contribute

C.J. Muse

you. Thank

Operator

Thank you.

comes Our Hari Toshiya Sachs. next Goldman with question from

Toshiya Hari

to Great. given share question. XXXX. guys follow-up on what share market Thanks so little much According bit I you in so delivered for automotive your in in taking like guys the wanted XXXX semis I lost of broadly. to think Gartner, you a far

lose the you design a think what some might this improve revert given might seeing – year upside? as Rick, at positioning from perspective look and point your expect we you I to just well. you’re today to one should

Rick Clemmer

good and solid. You very is our position very

growth. overall specifically we’ve as growth. the in our to seen is e-vehicles growth to analog China automotive a see begin in grow particularly positioned of that lot area e-vehicle we to where think which drive well contribute portfolio And on I

right win rapid ship. automotive where I revenues is design begin continue actually of think a great it than I share it. and two we’ll growing but begin the years associated The our business achieve more four kick at see years, a overall designs I is to wins gaining position customer in we’ve those that to think with one basis before design in been really if you we you those wins facing to you over position. last have which of much our a in few quarters that in on But to some able to at growth when look the anything

wins, share we positioned So design well at continue gain the growth and by we going look for market to forward.

Toshiya Hari

what on Rick, or groups shared pretty NXPI disciplined you you would today today? from any you and Great. are things market deemphasizing have management Okay. a potentially or Thank there historically product you’ve And portfolio with share. that Are you. been comfortable consider views you’ve perspective within relative you businesses selling very or your like

Rick Clemmer

technology critical there’s and strategic – investments the our year don’t businesses businesses to and step that two acquire I the at to to going always after up some pause portfolio, think want or are in try that Well forward. that portfolio you

went say for that us waiting Qualcomm. the integration for always would pause as couple through associated I a went we and we through So the clearly case with year

opportunities are we strategic that positioned they the to would So that for for market we there think I us premature customers basis and and in best we’ll can some areas. continue will a think can of about. solutions forward those. be going do drive be driving discuss in It support how that Operator? to things perceive the the portfolio those think to we best be do I But

Toshiya Hari

you. Thank

Rick Clemmer

Toshiya. Thanks,

Operator

Needham And Rajvindra Thank you. next & with our Company. question from is Gill

Rajvindra Gill

appreciate Yes, thanks. I it.

take follow-up color you there resolved? Wondering if said auto, believe us would it Why was a the you that specific year-over-year happen? The can in of other view, in of shortages? the a with give When shortages any going did dynamics decelerated anymore rate on we the be the helpful? growth Is has affecting Just the if it lot were be and XXXX, again average what as I competitors due rate helpful. that your would around of to X% to XX% you clarity growth there discrete get that is and you components. that kind on think

Rick Clemmer

the all affecting think automotive in I it’s micros. competitors

that space. are in that the all. anticipate at are But one we don’t unusual leaders of clearly we I So

We position overall have auto really micros. has that resolution us So I they we think can’t going more move in to their more The that that basis, impact companies be address impact an micros it going as discrete are of because of on I as that’s don’t on think area being a of as that shortages our of an the forward. to auto basis a we to see back prolonged basis. get normalized

Peter Kelly

pretty $X of cool. about a year X%-X% is have X. to XX you mean years-to-date, really. auto pretty, the at I it’s parsing it’s I if trailing months is X.X, especially when look – at probably be numbers I running probably to midpoint I I’ve about QX, look If XX auto months the think business grew If at at XX%. I careful look we about trailing billion X.X%. know QX

Rick Clemmer

designed few being at And the but we’re over I next if look to achieve. we on years, based the going see able with to think increased associated maybe nothing wins growth

Rick Clemmer

in look Peter really as you really a I what’s annual we’re to in an at of in a basis going just se. market look think So get little can’t in in the on And per on said great automotive quarter-by-quarter automotive. you position reflect at bit

Rajvindra Gill

became significant second in And helpful. demand IoT follow-up, that in the devices, my for microcontroller the growth a as That’s the Freescale suppliers a can amount of can controlled market the what’s largest the bit largest market about the you. driving of you general years, Yeah. well? couple in talk one supplier you drill a over IoT world world. maybe purpose has you that. microcontrollers, With deeper from terms you Are in as of of last Thank now or significant seeing developed maybe

Rick Clemmer

base. it broad I think we seeing are

position. leadership a in we’re think I So

portfolio our that plays well. think I

really crossover of look processors. higher go really the to in have position just the processor. announce you in we it when marketplace, really high can that between even we the drive to core kind of associated to products portfolio. for network it’s then think end And have the strongest I don’t portfolio, with that and to the unique our the to of apps micros but solution processors go kind There the have micros from customers they opportunity and at we in that micros breath ability the apps to some

overall that. of the real well capability take of we as forward it’s when move applications the to at in are high well the think you great capability capability, portfolio continue market, to win share. business look the we’re I the market positioned end, really drive that and have job the advantage So positioning our extremely and fusion plays not And center that a volumes I and portfolio think to of processing high doing they a well really well plays there team the that

Rajvindra Gill

you. Got it. Thank

Operator

you. Thank

Matt with from is Ramsey Our Cowen. next question

Matt Ramsey

some bit and and of let with against I your transaction a ask I guess company much. question very accretive that you there but diligence that businesses there of and that sentiments this in you. customers other’s company cross long sort is business a we solutions both of think wanted about work that Qualcomm potential is amount partnership sort of and for through, that Thank each I opportunity assume how the you your during I of for Qualcomm strategic the period you guys powers have didn’t the done for little given together think an time, to to Thank should Rick be the around of go any? might to term echo if

Rick Clemmer

Yeah.

think I in years clearly where we potential some NFC associated the is last that have think for there few with working actually been Qualcomm with like it.

us think get overhang. a through I bit time have the you of give to little to

both be transaction. working I through to think we diligently to midnight and night Qualcomm close were able the last

going about think I rule if have to out. really together work a wouldn’t to think opportunity forward. us there’s us give time any it So to you for little I

look complete market, some that drive we more to since about automotive processing to solution with capability the as about Qualcomm. it’s combine with we I a to think high you don’t to end talk if I our for think able the are premature the that we really going But to at partnerships specifically. customers, be associated think clearly have have

create would that have believe significantly shareholder to I have. be with out, really to about drive well think what the have above We into been the leadership power to since going place. value think really in we combined loved significant didn’t connectivity growth we’re that growth have excited and market I leadership continue our can that would industry had we’re regulators combined security We opportunities positioned but forward. take the processing and

Matt Ramsey

quick here things and so things Yeah appreciate Thank happening color. that. to realize happened night you the midnight just for officially, I last I are

how investment a relied communications IoT have little had a interface Qualcomm bit the you in like, the might obviously guys as IoT the technology update you wondering technologies in air big that shifting a of and if and the a you. peripheral the sort the been there place on business? IoT, to follow-up, Thank taken to MCU an around investing levels have Just in gears portfolio just one business, on been merger different had the how

Rick Clemmer

Yeah. question. No that’s great

of I with put Qualcomm. pause with the some the getting and when fair, we and for cloud look IoT the at our To to providing capability well edge, you capabilities be on really Wi-Fi the providers a really really development the we’re associated actually planning merger have business positioned think it. a moving with unique with

array and and really those it we’ve in the and significant platforms able to those been drive really look surprised on see we we frankly growth, factors technology artificial but how companies the one when we’re area little providers that where the and a leadership capability. intelligence of opportunity Wi-Fi with protect at account feedback to edge we’re So architecture our that capability space. we be industrial be positioned get space. really transactions a But what technology weeks customers to cloud peel month and critical can drive which couple focused processing then complete able to the the customers. through in year, and and through guys back we’re facilitate to big have to a unique which with for machine fact we’re considering confirmed how as some to Clearly getting we network edge we when with have really into a connectivity processing relative in think we but well but and where it be understood mentioned they be went the taking the to able was next space provide the the going to were fourth and out And edge in move have from processing the IoT, position some we the the really build one maybe to position to our a the solutions working the space in few and then this were really our a the semiconductor to our positive facilitate cloud cloud smart years about to drive they you bit with came learning capability take onion that to we in the of six me or we out ago over is able broader

Matt Ramsey

Thanks very much.

Rick Clemmer

Matt. Thanks,

Operator

you. Thank

from Our Romit next Nomura. question with comes Shah

Romit Shah

Do guess grow at just you Yes. conservative fair a call, Thank in think you. we to that sort that’s just Rick puts order portfolio needs of when with really just my to it? in get look manufacturing miles. I listening our assumptions to the and be the way conference your business, two odd year after to NXPI around to that the targets profitability you so general and in you at target should pause reinvest takeaway is but the basically

Peter Kelly

No.

marginal the over to to full we’re I the Yeah, good two think excited we is The out run businesses a be say margin some the at core make. what’s little continuing happened we to we’ve is really really manufacturing happen areas investments our been want we continue years, gross whatever capability, see have moment capability to where would that below and our is it’s well. you last happened. to but let’s bit do

I going range. or the we an building the to midpoint hit that going could about get terms drive outsized We’re all it’s profitability. to when are like that return to fabs to capacity of marginal was not anything into not guess I’m about increases talking new in of

find as I running us different Rick think as slightly company. weak, I not or than at think poor that on is this when last be only things the company little Day bit billion But huge of the terminal better. helpful. going would hard has been only a forward to of margin, to over I have the you’re portfolio But get view earlier if powerhouse as $XX move sizable pushing and mentioned for you characterize thing think out I of we’ve been And very, think challenge going Analyst a be to part you a pretty the very things do certainly quickly full we’ll the that’s you’ll two a been can. any we very, years, very to

Rick Clemmer

potential driving taking guess that capacity to in margins that really – doing we that’s customer know of our able investment to good unique in ability to really to things now little That’s manufacturing requirements. have that drive. drive expand we’re investing expansion to And gross SSMC the gross we capacity in included solutions I continue and our in our even talking and bit about are. that our capacity meet expansion our able be be the the in that’s profits significant where other drive and in to is You unique facility think talk venture a joint margins, ability some a priority to get a internal key CapEx that one to a we significantly our and the ensure where the about joint a our one TSMC theism What for with us and and and is fee shareholders. return breakup CapEx we of we’re of comprehended for and venture we’re we have Singapore increasing

Peter Kelly

Yeah, CapEx $XXX additional is for X% million.

Romit Shah

now ago. Peter though basically single How in line? closer do just $XXX that’s OpEx specifically for does or been growing the plus revenues and quarters about similar do and the minus about outlook million year of you out down running do a or on which the top R&D do expect OpEx. at levels to several high million, one R&D come by $XXX is to thing leverage you from sort and digits from creeping generate think numbers that maintain it’s it’s OpEx start we the you up these stands

Peter Kelly

about up things, half investment. half million, is it’s about and that $XXX currency of things of kind I two is million that we’re in year-on-year, of up $XX we’re

that drive viewing part can kind – really has value it’s we you But if back a and of true, you absolutely of were crept that we intend quite is was annual lot on that. get being how think again to you get quarters, stay range range of within the a to an Qualcomm. at it can strategic within hung but basis, can doing we’ve we reflects up portfolio get look and by and up You our bit a say what the of on R&D

years some bottom the And of the the be close to range closer of will more and of will top the other be maybe years range.

Rick Clemmer

go said should Yeah, I not to on is revenues. HPMS the year-over-year. flat revenue we it’s guess up responding in that Actually without let at your you X% statement least

R&D faster OpEx some of It’s on that little product a we’re of our with So than grown not making. has is based investments strategic revenue like revenue. all the

we in market. future X% We outgrow out the the continue think look if are we and up we’ll to

our on So where target lot and making models we target in ensure not off are I more don’t strategic – near Analyst the R&D. stronger our a relative we the go we’re are, investments detail able But September but growth be through that forward total solidify the Day we’ll the in we backing to to it term. to going

Romit Shah

right. Appreciate All color. it. the Thanks for

Peter Kelly

Romit. Thanks,

Operator

Thank you.

next is Our from question Mizuho. Vijay with Rakesh

Vijay Rakesh

guys. Hi,

you You guys back. are look phoenix are like

Just a couple of questions…

Rick Clemmer

not ashes. we from are the raising Hopefully

Vijay Rakesh

right. That’s

wondering you in talked On are already at you just of your fusion, out? guys as have building you the sort how that that about some looking you automotive see do LiDAR also, do side, portfolio,

Rick Clemmer

about the that LiDAR solutions marketplace. of are think the are processing LiDAR, you the a for in When capability we number Yeah.

to how advance technology. providing you have All LiDAR think those radar, include about so in some far those capability – we any complete backbone able about specific facilitate a of significant a to solution LiDAR includes of be the you provide in, on not we look the So when significant capability safer has we really driving, will we solutions and the the we’re of them safer the role individual ability to be participant driving, and bulk the forward. the LiDAR it’s processing built depending making for includes and will that. all need vision solution, able that really play When sensor provide go the those that in investments have really to to have that because driving drive be And of potentially to of you don’t gets. provide as at uncertainty solution those technologies in the a size

Vijay Rakesh

side? And you much how in on just what’s to also wondering XG just have on do it. has Thanks. you SII think do go versus the up XG? step been And in XG but EV, get side, content the you Got content you lumpy, I EV the automotive mentioned guys as

Rick Clemmer

about repeat because you So you was that SI&I. Could time sorry. – you question I to before on that I that talk focused again, as the got distracted sort just XG, just on

Vijay Rakesh

asking side, electric Yeah. EV vehicle wondering Sure. you on side, if I was just content the there. also had

Rick Clemmer

Yeah.

tamers last have think of analog of guess I portfolio, couple we a position. – really We strong at years, over spent XX% the of are that lot opportunities the we vehicle address electric a look saw served EV. we’ll if about market. we in looking We total time our you that So really at very

to than on And so to you really advantage strong a years to And really that. That’s that be growth. electric much in able higher as I in I that that. look position we’re broader talked of good think X able think in to support about we’re we and X.X to percentage be in take China, growth much the a expand we’re planning in specifically, vehicles position marketplace e-vehicle, as at ago

interim we moving you’re talk to an of MIMO it’s capability rollout. we MIMO On I that at the best do the the portfolio in XG when look that of step about to have not SI&I, some XG. think position XG, we’re the our massive as and the kind

how able to is to will the that impact be quarters I We but just and have it growth. overall factor factor a it’s it will whether be contributing solutions will a going forward. think have, when be some to or contributing question The be deployed, that months will much growth drive

Vijay Rakesh

a Thanks lot. Great.

Operator

Thank you.

next J.P. Sur question with Morgan. Harlan from comes Our

Harlan Sur

morning Good great hear to team. from the and

some a have digital harvest of team on up does you a obviously follow-up with suction the position great kind RF the portfolio guys the question, mode this still segment to How as the does cash moves here big stuck of XG, or Just interface for part in more the industry sort XG transition? Is of portfolio. there power mix. have it’s networking XG pretty the

Rick Clemmer

the look in is in for at we years the if of lot or network multi-core six those areas. processing capability internally. We some it’s customers, but it I pretty broad those especially moved with arm customers significant five except it portion portfolio the still processing have the of DN, you shift fundamental limited seeing are ago. So, their have DN think base was a solutions not that A driving

XG the driving huge to participant. do parts, allows it’s going how – fundamental in opens in a software significant significant of provide one architecture per will car to some those in that’s and before. really we’re be have are frankly And some looking of processing well spending specific network opportunities that basically significant quite in the we positions that will our taking we use se to will be the DN. our real to that and technology prove I opportunity to to but technology reasons market us On factor seeing the and don’t to upgrades what have area for some and network we time that you growth area that growth our applying that a So the at us for the have technology. looking car bit a we that in a network be this DN, think significant the that really a We of in in there really which in technology processor is automotive of the are leadership hub on size if opportunities able providing communications is a be the capability, but

Harlan Sur

I insights dimensions trends, industrial quite industrial Rick. for production then demand the about a to talk of And I diversified Thanks to know trying think you helpful, there breath trends how be but demand you would appear consumer fairly healthy. of the be the guys that is? even get ship track healthy sense just strong, I geographically, demand just Can especially macro the mean appears appears to quite profile

Rick Clemmer

The areas all half goods the have it. consistent manufacturing for growth demand would applications and we product solid. stronger all area where probably from in industrial in China has able And industrial prove to in strength shipments in going would we is even strength the capacity to been broad based have very very associated applications to place with of see our example the But broad to of across been it. be to if China really micro those covers or double-digit base through the board. areas are represents continues to China consumer continued our the of

Harlan Sur

Thanks, Rick.

Rick Clemmer

you. Thank

Operator

Thank Lipacis you. from Mark question our is next Instructions] And Jefferies. [Operator with

Mark Lipacis

more the really kinetics to should on I’m that said looking Rick, to us alleviate foundry business challenges, or for color be that’s last the you’re of trying on my you’re extent your Thanks second. growth Hi. supply questions. some bring up some would understand quarters taking a ramp there supply your like. a Could give trying in to in you That couple color the kind there for Any you been of you that, what are suppliers just on you’ve pressure? to for control engine Thanks. go or back be to helpful? to the and

Rick Clemmer

own it’s orders foundry right of has Yeah, same capacity outsourced special to process process proprietary in. that inventories next able partner that been in their late They’ve that we’ve come not to year our have early our XX to think we nanometer into bring the customer be have position will basically a stepped we to up year now where actually area. capacity that drained going in this a replenish

even growth growth factor a been with but it’s strong had still that. to limiting we micros So in

to about. and build foundry we that if we The our demands. growth so just design been have have able would And drive support would capacity stronger that have continue all area our with we very capability customer to even the or positive partner manufacturing wins been to in have that

Mark Lipacis

And helpful. you. Thank couple of That’s things. Peter housekeeping a

think Thank You the expected you that repeat ratio your on, receive cash and fees? net you you’re leverage if mentioned mentioned you. could then going get the you –I when to breakup after

Rick Clemmer

billion at tax about be the year pretty so end Leverage received $X.X end billion be wired XXXX the $X us back buy and they’ve X.X will will that one morning. back to funds tax. be the this We’ve from to subject that’s rates full are of to the at after So, below Qualcomm, of be billion, $X that so the the already easily. XX% assuming we

Mark Lipacis

Thank you.

Rick Clemmer

Any follow-up, Mark?

Mark Lipacis

very much. No. you Thank

Operator

Thank further any showing you. the not questions And queue. I’m in

Sorry, there Hudson is Farber Bay. Dani from

open. Your is line

Unidentified Analyst

from Aron Thanks. Hi, Bay. [ph] it’s actually Hudson

the Analyst follow-up you slides it your and Just it your to two I believe recent two that talk when you quickly times think leverage assume most for references question. turn we but this about side sense you Day at can a target us give about is XXXX, are your morning through leverage? two you want would end how able XXXX, are of get term buybacks incur one do target your you quickly a thinking how times more to do Thanks. longer additional to debt, with about times you levered cash structure, to to

Peter Kelly

on. opportunities the upon depends It

on buybacks is made or be for before. that opportunity I would of the will really the the of prove lot M&A Rick But lot excess think – flexibility it a to gives so we we be whatever. what comments given cash, a it have we that first we shareholders, return dividend to depending could says a flexible should of us sheet balance all circumstances, any

Unidentified Analyst

think you about you cash do cash? balances minimum think excess about What when

Peter Kelly

dollars. Billion

Unidentified Analyst

billion? One

Peter Kelly

joint with out XXX is SSMC, in in is actually venture our of there TSMC Singapore. that billion

think one I billion.

Unidentified Analyst

I will good. Very to September. Thanks. look forward

Peter Kelly

Yeah. Great. Thanks.

Operator

you. our Clemmer for this I final remarks. today. turn Q&A for Thank Rick to the will And concludes call back his

Rick Clemmer

operator. you, Thank

lot about very So to excited today. us the got continue be It’s good drive opportunities joining we’ve outgrow significant and frankly market thanks a we’re at going to for shareholder the back. We forward and look opportunity the value. to

City a look time we to and our September lot. all of more Analyst XX York to able be growth. where detail for opportunities the New to you about and into market a significant really make drive Day and solutions for difference our Thanks on go forward So being customers that in happy seeing point

Peter Kelly

operator. Thank today. for Thank the call Thank you, care. everyone joining you

Operator

for conference. and This concludes now you in Thank program everyone participating disconnect. the may today’s you