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NXP Semiconductors (NXPI)

Participants
Jeff Palmer VP, IR
Rick Clemmer CEO
Kurt Sievers President
Peter Kelly CFO
John Pitzer Credit Suisse
William Stein SunTrust
Stacy Rasgon Bernstein Research
Vivek Arya Bank of America Merrill Lynch
Ross Seymore Deutsche Bank
Blayne Curtis Barclays
Craig Hettenbach Morgan Stanley
C.J. Muse Evercore
Matt Ramsay Cohen
Toshiya Hari Goldman Sachs
Harlan Sur JPMorgan
Call transcript
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Operator

Good day, ladies and gentlemen, and welcome to the Q1 2019 NXP Semiconductors Earnings Conference Call. At this time, all participants are in a listen-only mode. Later, we will conduct a question-and-answer session and instructions will follow at that time. [Operator Instructions] As a reminder, this conference is being recorded. I would now like to introduce your host for today’s conference Mr. of President Vice Palmer, Investor Relations. Jeff may you begin. Sir,

Jeff Palmer

CEO; Welcome Thanks, call. Semiconductors NXP our good CFO. Clemmer, With Peter President; everyone. Meteras, morning to NXP's Rick first is on call the Sievers, Kelly, the NXP's and and me today Kurt quarter XXXX earnings

available release, This and website If Investor under obtained press Relations of replay call found recorded be for section our copy not can corporate be at nxp.com. is our the will being you've earnings at website. a it from our company

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

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

release, section be available website the to directly financial during make certain GAAP first financial of that not core Form to the comparable are reference underlying on on quarter operating which earnings events Pursuant management our nxp.com. we today, to NXP discrete non-GAAP is that reconciliations which impairment, Investor impact furnished our be in and restructuring, does NXP's to purchase consider measures measures exclude and to the stock-based performance. accounting, Regulation other to G, charges will call most measures, Relations the price directly NXP's SEC compensation, provided Additionally, press costs, at will non-GAAP merger-related the X-K has primarily in of related XXXX by

would the like call turn to Rick. I Now to over

Rick Clemmer

we to today. who finally, provide longer Sievers, financial are is new a some welcome remarks. conference revenue review approach that term And will expectations going Thanks, prepared then the our and to and And Today details take guidance commentary, Jeff, enlightening Peter off review opening. our QX. President Kurt of company end of call provide the strategic everyone for to for Kelly start market some the for quarter the of will details revenue QX. and QX the I'll

long-term a very and our of to sticky us relative our assuring we've a our Now - of spend at themes true efforts if that company times. chosen outgrow reflect followed a market from which development our is lot If for should make those have product few segments. X.X we result high the that will achieved look for while, We consistently this the Day application major in decisions they leadership, no customer the traction. allow of needs XXXX September right share to progress Analyst by the the believe portfolio all aligned the product market we positive the in we positions and clearly

one just was automotive the And XXXX. billion over sales automotive continue $X.X be to ranked our First, number in supplier. we semiconductor global

material at to in which to the XX% grown growth high and has expect to businesses XX% at compounded on NXP and We our XX% ADAS digital the size. infotainment processing, focused rate auto leading in auto of like becomes continue since electrification and strategic grow XXXX clusters. sectors applications automotive have in is which growth solutions XX% - ADAS we and strategy According areas processors. processing share business as compounded gained radar rate strategic of is growth the nearly to supplier analytics, of both the XX% more

We entry. core auto entrenched core automotive the a XX% other and business market. to our semiconductor grow represents will a business overall The barriers with to very our large anticipate modest of hot at business premium

as relationships, us expand which as allowed relationships world Tier suppliers, X with OEMs in the class It Our growth enable these solutions. combined is to both to has deep our into new us gain with application IP customer well high the long-term requirements. insights

on As D subsystem, the - the an ADAS shipping XXXX a growth XXXX. currently see [ph] we business emerged beyond. of our growth major XX% all which revenue tied range Based currently software. the automotive have represents example, ADAS in supplier our about short one over its is with annual transceivers, to the rate we this radar are the are and speed have times front-end the high XX% We still processing has the grow the about XX% designs is X.X complete faster years, since with through we power radar infancy. interconnect, been our which in we grown rate at gigahertz management continuing high believe overall market, engine, including OEMs, business and design relative than and compliant wins, as together that for number vacuum In total we XX compounded ISO few awarded

battery excited that the ability What combination Management to System, the basis. To the action achieve analog safety automotive time Another BMS efficiency and new required is is expertise monitor a and is for functional subsystem. and of and auto our requires business capability by our products to on real Battery to know-how. battery able the cell range of which precision take trains, health is be we deep particularly the cell need battery ISOD on the the about process have of are the customers, electric from manufacturers very learned increase actual resulting we power

truly a which unique developed capabilities. has combines team solution these Our

on are doubled We current is subset XXXX year, in an in small actively and awarded at $XXX engaged today we business XXXX. existing auto million easily in think rate winning control a beginning vehicle it a offerings we at dollars dollars several We ship, overall we emerging and suppliers. last a business is about XX% leadership designs versus position annualized expand global market their we think about to are expand While million and $XX relatively more as the hundred OEMs revenue the has expand designs run electric about basis, over If growth BMS rate. of be the could have of compounded million market. power the this been the anticipate

some We microcontrollers it to looking in this the compounded address security for business, see the audio the IoT XXXX market. from processing industrial about along billion We rate. to and is which attach. XXXX, microcontrollers in a about processing which Now increased our addressable five and requirements application unique portfolios, at up in market. functional is XXXX, to in in edge position for of levered primarily IoT higher a is our crossover term visual which - NXP processor demands our in million trends about capabilities business the with found market $X.X market made crossover This growing $XXX by of performance $X.X billion with are just normally and is analog the growth is secular applications processors. processors year under the broad features combined XX% of

will approximately by transaction that business to we've by exciting shares from multi space secure yielding outstanding scale on the home of to I'd that down enabled Dolby are current ultra our devices. Clearly traction NXP are enabling on opposed termination last the our XXXX. areas our previous years. long-term range and smart for anticipate multi-core just based is Qualcomm our capital. now coming or class solutions believe be three Dolby low very span through DSPs. results our of early the the based LP of our shares solutions like building our the powered return crossover To traction specific, the number and over million report crossover ULP a of will strategy processors results, reduced from and these differentiate in X.X business volumes, audio total of into billion of control XX XX% $XXX our to us product Since aggressively as full power pass seeing AI automation shareholders. End We families certification about flow the in to positive based wearable our the grow application just a business aggressively These home million over which today, factory strong multi quarter. decisions. cash A seeing to float great creates, good Atmos already type Kurt families discuss high to of business to - call M the we Atmos the returned products on industrial support, and processors. on received $X the week the strategic testament this the RT, processor, We're to free we in to

Kurt Sievers

the were $X.X NXP able be to Overall blessed am guidance, midpoint of all I as our you billion. results talk And above today. of QX revenue of Rick. Thanks, to to just delivered

combined a to profitability we richer good successfully delivered range. control, due towards higher guidance of end However, our the mix, sales expense with

our achieved customers. Looking have with which our quarter successful design forward, and guidance traction we reflects win momentum second the

However, in especially the China. half while we still the continue the versus XXXX improve should uncertain, second is environment half, the believe to in environment demand macroeconomic of first

versus from the very solutions be portion a million, China. U.S. the period same the year-on-year. in line weak. which for the be service This appear China of from billion, trade microcontroller $X.XX the year space. except All that environment, attraction our QX products X% especially trends $XXX affected challenging through of end up our reflection purpose revenue That our continues was major in based down ago. solutions business thousands China particularly given Let product broad turn to market is the Remember tensions. expected, our categories guidance. distribution continued were industrial on of declined XX% quarter the customer who as and to in to very me our was customers, revenue It strong in Automotive. smaller was by double-digits as of this dependent down in Revenue for ADAS year-on-year, the with a macro general IoT was below In demand expectations markets.

custom than Mobile. our predicted in million, of normal to interface year-on-year a broader Revenue set reduced turn we the demand in seasonality $XXX of are X% better market. the as see me products. solutions see rate Overall, with transaction Let did for at we accelerate. this attach customers we September expectations. experienced we was Day market smartphone our premium Yes, down XXXX, mobile Analyst to In beginning

double-digit million, XX% Solutions year-on-year communications was strong and ago up a Power with period. infrastructure revenue RF Lastly, up other versus the year $XXX

this single We are is station power high for and our power currently seeing OEMs. strong global think will RF station channel in of the amplifiers. based both we for order China. outs, massive across Based year That translates base on spectrum big the a the base broad our customer into especially XG rates demand MIMO conversations build most be profit From believe XXXX infrastructure perspective, millimeter a early phase out sub we and XXXX so high which is for and build processors digital with then begin family the just to deploy cycle see frequency carriers to portion of stabilization In approach wave we networking, XXXX continue will contribution of the and landscape see to design XG ARM interaction driving gigahertz products multi-core X beginning. product. in positive, the revenue is

we on to XX%. ago up same for range of two. our low digit expected midpoint, percentage increase businesses. the mid this the the X% MSA other the anticipate elimination the the specific communication Industrial up is versus ago perspective, period our this a expectations on decline the sequentially, lastly, or is companies reflecting $X.X rates And total Automotive range, is be anticipate to our At to sequential currently of up and to year a be in with year-over-year be X% turning quarter billion. in be IoT about Now Mobile X% is is is of a the midpoint the At revenue of the up year will improved trends drivers. range essentially expected following range expected X% a of flat. percentage do From order in which a X% expected We represents to infrastructure basis. and sequentially associated increase in versus single basis. of period. to teens an

financial Now, call like I to Peter? for pass performance. to our would the review of Peter a

Peter Kelly

And Thank to morning on todays Kurt. everyone you, good call.

above provided with quarter As to combined performance outlook our financial the of has of the covered during guidance richer just control, mix first revenue the drivers revenue summary, the profit. our quarter I’ll better In sales QX, highlights. and delivered already Kurt non-GAAP than move midpoint revenue was expense anticipated good and for operating we the and

XX non-GAAP operating non-GAAP given of year-on-year reported points QX. versus compensation in is $X.X down down We our basis $XX X% margin fourth below $XXX generated of was non-GAAP mix. which quarter revenue million modestly was million XX profit Non-controlling guidance gross despite was perspective, of From interest down the guidance. of better and XX.X%, basis $X billion, better $X XX expense expenses million, was the details earnings a to $X.XX the drop ago of over the and the in ongoing profit on non-GAAP Stock billion which year-on-year Focusing of a operating but taxes points midpoint XX.X%, the based basis midpoint operating was million. was Interest $XX due Total the This $X million the operating were million, included of of million. $XXX cash the was not X% was year non-GAAP operations gross the year-on-year period. the our and MSA period. points million in million and revenue above year-on-year, than profit midpoint $XX million was $XX margin total same Total $XXX non-GAAP bonus expenses. down from elimination for guidance. and

in Now, I'd like and to the turn our debt. to cash changes

interest [ph] to QX our was month end the trailing $X.XX our $X.XX of EBITDA essentially a of EBITDA QX billion end was $X.X of times. exited $X.XX XX nine at $X.XX net the billion, debts at and debt was times trailing flat net and and with adjusted We Cash quarter total the was of Our non-GAAP adjusted XX month was billion. sequentially. debt ratio billion coverage

continues Our sheet liquidity be very to is and our strong. balance excellent

$XX During million to dividends. we in $XXX million returned paid million about the for first bought cash quarter, we shareholders as million X.X $XXX and

basis to days sequentially, Turning days of although dollar XXX million. metrics, declined on capital inventory a inventory $XX of days, was increase XX working an

Days aggressively in days, of manage our XX of prior continues long-term distribution XX, a versus days X with were channel increase an and days continued decrease a be the receivable inventory line very our and X.X We targets. in to healthy channel the to months sequentially days quarter. were payable X

$XXX lower was XX cash days, deterioration was due million in our conversion a resulting free million XX was cycle and to sales. prior versus net flow quarter operations million. flow together, $XXX the days Taken CapEx $XXX Cash of from of cash

second quarter. to expectations our the Turning for

million. provide expenses billion, or million As be to to sequentially plus revenue non-GAAP anticipate X% - QX be will interest expected like XX.X% program. expected Non-controlling SSMC. or we about to share this tax We At are be see $X expense And about minus update in an is to million Kurt million. be XX plus basis XX XX% of plus midpoint about points. operations mentioned, loadings minus about the to $XXX $XX expect interest about be to would together, estimate about we plus to non-GAAP or minus Operating points. and up reduced I anticipate be basis $XX we million. and taken be gross about our $X.X cash our margin repurchase about a to minus are about $XX to or million, about be $XX operating ongoing reflection margin related on

of repurchased during about suggest that our a As XX, $XXX purposes we have you million. previously at back under X.X an the at of share XXbX we $XXX Since million for million. first bought cost count million a QX program. X.X March shares $XXX additional mentioned, modeling use of cost an We average million approximately quarter for shares

to some have comments make. closing like Finally, I I'd

see secular play trends multiple market years. Rick to all the and will unique of over from the evolution to We way ideally automobiles, of connected out portfolio generation next multiple positioned growth product securely our has address devices. as the coming highlighted, drivers As NXP IoT which edge

anticipate target operating to intermediate exiting slightly Kurt have our do our better achieve QX, guided good the better in while margin. to But with of non-GAAP control, improved our revenue was mix improvement we guidance XX% continue our achieving of an for we in a than we out combined and fourth still together As with quarter long-term a And in the richer margin pointed first sales than work XXXX. taken anticipate expense quarter QX targets. to gross resulted

continue XXXX operations We X%. ongoing cash our to be rate related for tax about to believe should

We all returning to excess continue – under free excess million to all our be committed currently cash flow authorization. have to the free approximately and current remaining we X.X owners shares

any to operator like might I'd now the with have. for back you to So that, it questions turn

Operator

Suisse. [Operator you. Our Pitzer Thank Credit Instructions] comes John question first from with

You may proceed.

John Pitzer

Yeah, guys. Thanks.

in the question all the team. pursuit Let me ask

sentiment bit the So for about IoT little industrial quarter. the the I wanted a ask expectations second and calendar to

just off you sort single up sort up you modestly of perspective where as and aren't question for you all uncertainty coming could from level you this understand help I remind macro in of guiding seasonality is confidence the business digits. am that but growth QX? QX what given a answer if the expectations, missed You're bottoms your normal wondering could it us why that of sequential

Peter Kelly

Well, to the of half we're year, going really John. guide second the not

that, would a is second normal to QX say more we'll don't say I we that. think you window might hidden much likely stronger all, book been out Rick the really, QX QX than would in seasonality believe hard as of difficult and industrial thought know, we has you beyond - terms QX in first be certainly China what's as and XXXX market certainly your 'd than normal particularly will our you But really I we strong in and the I backlog say, in QX half. of revenue based what is stronger half the always what beyond guess throw First there QX. our happen, it's on But and will I know was, third the is question seasonality? -

Rick Clemmer

I the a our of to So continues rebound the be key continues which frozen. large frankly, will John that in clearly us somewhat perspective we marketplace, the kind to specific stabilization. an about of expectation think revenue design China increase, market wins a industrial know, is is a be you drive from of not its more have but And for an

distributors know, customers that the but those outperform ramp what's the becoming place. about really outlook are the or take on wins partners trade of and designs us uncertainty to general customer based allow encouraged, – still general environment going we reticent up are will end with somewhat is our what's quite You But new us that specific the in me design give confidence the a market. the have to the

Kurt Sievers

The product one - the million thing thinking, could was shipped to that are $XX comment partners out just going terms quarter about of what at end end of Rick's on end for. John another our the is interesting there probably the what we distribution - is of it have not worth to distribution were the we of in customers. them asking ship their seeing But at

take So we we've not allowed them product that yet. to

it a the importantly interesting little in strength POA, the of see So haven't POS we but more or strength yet. bit we in seen is additional but that,

John Pitzer

what's potential your helpful. overall And company relative like That's then to to you industry around of you of drive relations. sort guidance rate for and I'm kind QX about specific flat you revenue production growth can versus about look conversation if some? thinking follow Q-on-Q trade at U.S., NXP of about How Europe maybe And wondering going for on mission. are lot talk around U.S. tariffs my on, autos China as

Kurt Sievers

which think IHS our deteriorated Let little the had car this. since look really when a last we bit take the - we production, at mainly, forecasts me of call. We about

by which X.X great so the X.X%, XXXX talked a in forecast we the was did think in over almost I for ‘XX. global China. IHS X% now start clearly have reduction minus like not minus minus about

minus So the actually China in production number XX%. QX was XXXX

And only in China Now basis the if the year. take the a both obviously as our means for forecast. being and second forecast at does that's you in for look that rebound Europe minus we X.X% quotes full of largely year IHS project half the what in the

on radar second believe the half to rightfully independent half first And also of Europe over is be we radar, the our seen to here in rest is track QX business relative say which to the prepared this high year be to yes, business, stronger prominent year. is the that we've our notes of so it range going in part XX% past growth We QX for in the year to certainly of factor, perfect with already. and a in trends which were XX% that, that business. the also the largely the of we did of earlier, we continuation year-on-year most of and So you in see are which the years XX% in also pointing the the growth,

John Pitzer

Thanks, guys.

Rick Clemmer

Thanks, John.

Operator

with William from And next our Stein question comes SunTrust.

proceed. may You

William Stein

too Hey. Thanks the side. my on for taking questions. Also demand

being to handset regard QX the in especially Can little bit - seasonality. infrastructure think really? with them, you. look think into well guidance, I above your business both I and guided they're trends, Thank a in your each like dig of you

Rick Clemmer

continued In on very key QX. period the we a a that XG go think we've deployment that a see positive offering come contribution. the early growth. a really the for applications growth positive acceleration. of we to the past. to really we'll see deployment countries of of communications we some the in We're down with customers and it to talking the that referring near-term the new comes for of and the side where we're about drive in beginning that been think to Mobile clearly continued mobile wallet, lull But rates the little developing QX it fruition really then in that being opportunities won't through for And I bit which a is clearly Well, us to

Kurt Sievers

that's earlier. in longer which me term this. the it you falls called trends we ask This so let really with Yes, line

forecast that's XXXX mobile on about from actually wallet a in XX% for you growth in see year, X% to we of the that's tax the and rate of and tax mobile. track last do behind going So well rate

William Stein

about dig some we getting those first I here challenged Rick, is mentioned time, of I one forward and DN turnaround reacceleration a been expect that wins, could business of something sec you for of design sort just should with think going has new growth business? sort If into this

Rick Clemmer

that, to try didn't the we we was control. did Well, what say is we decline think say under

some had to design through of been wins And to time. this just we those declines the period created is what of as increases design you're had associated faster wins much the we the be well getting so growing of new those than are think see revenue years fair beginning the It's revenue pressure that from last older which delayed. ramp been few legacy business, the I now with aware. over

and are full networking applications. DN though that the we in participate business with we to different wins to innovative of design networking our really and differentiated areas gets radio in new operate our into the some technology software customers defined and the where a have opportunity our of expand ability We encouraged engagement number about the technology

William Stein

detail. the for Thanks

Rick Clemmer

Thanks, Will.

Operator

Our next from Bernstein Stacy comes question Rasgon with Research.

You proceed. may

Stacy Rasgon

questions. my taking for Thanks guys. Hi,

rest going go as thoughts wanted So the you just you're on guess a first still margin and the hit in on, one, on said QX I your get to we little Can the then of about holding operating the through the rest XX%. as well know the there, rate to year? bit margins talk you year to drivers? of you and through exit as of gross margins, that's OpEx I

Peter Kelly

on flat QX year I illustrates got know, bunch from go it any a is our quarter test gross I to of have best you bunch because to that a last volume yields what – margin, savings a largest ‘XX. sale-held ’XX of exactly that we one think the because test I from and to It's just where up individual item I'll we things to pricing. of XXX QX said times not going revenue flat supplier it's there's basically points and tied with Well, - basis single we've of back part and guess in are on last on

quarter-to-quarter, know, [ph] big are typically hiring, around really you we've is changed not critical full And for But - X.X% a given I and I at you XX% saw number should revenue your we're costs to that R&D said perspective really all. what not on our annual OpEx, replacements expense in what difference that year hasn't Right to a to portion max you of cap the keep of So our our we're and there and place. on we're Within that now you terms QX OpEx QX pretty the QX we're doing take changes think number a you, think see we that SG&A anything I given how guess we clearly - you QX the of in is over and whatever number, able what think based some you number in put manage more really we're from trying than you - we're from actually. think in is well know, else. now for happening.

Rick Clemmer

when control we're have clearly really our it we environment Stacy, we I look under at expenses think as that's with keeping We fairly the and up we're important, a see them current constrained. to that see, will today. line something of need keeping that return we you marketplace. know, investments But clearly completely the that's ramp that not sight that's the in we to have robust we -

wins about up, revenue in ramp and as than design more specific customer we the As talked market general we specific see the improvement.

Stacy Rasgon

the I understand, are I additional guys But not how seeing, outlook you. cautioning shift. to but channel said on Unless through glad monitoring to general Thank this how has see inventory could I'm the want revenue in uncertainty that $XX do that My your chose have be tightly, taken channel, the just… for you to up, channel don't an the it. second about uncertain. truly take ask to they're that the you some that the additional viewing so reconcile half, I that so is truly with follow environment you distribution the comments other why market, implications would if in looking Got million

Rick Clemmer

that. Stacy, you – don't much don't think into should I I too read

is additional not driven would had that point distis that had the from need the out a around our that inventory us. the maintaining pickup focused distributors, range. they we confidence, the the without in months $XX increased that on in the shipments million X.X very think that for to will requirements orders of chose I seeing the have [ph] we're But from that ship they would and revenue we actual have because obviously

really you significant them their in in think materializing are customers encouraged than the - it's more shipments to fashion. a months, few I've a know, but I distributors a not seen in into out

I think general it's in clearly business So resulted but a yet. indicator, it's more of hasn't improved

Stacy Rasgon

I or do driving what with them. is is don't sort don't asking improved seem this seeing in that you be like I'm half most it it better that what of second just what? Or from be confidence general it fun that from yet. places - just in a to improved outlook seeing you to seem guess, think other whole is, Because

Rick Clemmer

and levels. that distribution, I as in that they've we based our it they to driven would which plans just what think increase have orders are, it's their have look do would obviously business shipments further their not had impact planning, on on inventory the go into at and placed through chose

Peter Kelly

from wasn't But order to It be one right. one across distributor, the was distribution. clear, it

Stacy Rasgon

Got it.

it. guys. Thank you, Appreciate Okay.

Rick Clemmer

Stacy. Thanks,

Operator

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

You may proceed.

Vivek Arya

for my Thanks question. taking

were that perhaps that sense China kind peer among to in for my because the all the Kurt, surprising of or QX about market. exposed who The Rick the sales is group seen that you best complaining have is more outlook weakness first relatively know, we one which is your is NXP the

us seeing. some So trends sense maybe you're could give you of

mentioned I frozen. think you of is kind China

of better know, your China. of So a seeing own in or you is China? us of in QX Can just seeing outside seeing the measure design activity give company trends are just you you outside trend you win some that and specific quantification are you're of what

Rick Clemmer

Yes.

give our is that on it's I the wins design that understand that about our think customers specific So important with really us have revenue QX company we to guidance based outlook. confidence

concern of pretty There's activities it. relative and associated If be trade a great we to a and you to market, the frozen coming yet. in continues the robust market don't still the China with at deal recovery see the uncertainty look

you know, a bit kind if It's US maybe fine. not but a Europe, quite softened even operate improvement. clearly robust has think And been recently. look of continues okay, at actually to you it's I Europe little

increase on comes clearly on that to beginning that specific that we've of period of wins had. we've is the now company our together, all which think been see working long revenue and design but we're time I design activity based results of a So for

Vivek Arya

for business you a two my been on automotive basis I'm years have in point revenues think what billion billion, range up, last new so X% all get $X.X you this had into mentioned BMS at follow And a at $X you the curious radar do whether activities it's the on target now. a quarterly the on an think growth your or can business ADAS Thank longer overall back to perspective? CAGR which automotive XX% help term or rate you. I a the

Peter Kelly

which - terms the because Well, is revenue I total right above of way say would XX% of in they have which about growth. do average it's now,

other on the striking XX% for the once through to you growth this a SAAR So will total. normal comes rate see back the based

this far with obviously XX% the become average the the time. years. these digital XX% percent and course, BMS, period above gaining above total take average higher or growth since the coming - material more share against will grows This and all more engines, So they'll in in course radar of it today like share a is the a clusters of or

Rick Clemmer

growth the our because total the in seen general thing market the I clear think and the of real is we declines haven't production. is reason automotive

able shipments new based to production levels market it more a product come of to fact will us areas. kick growth automotive on company. drive in the our been that as So those And clearly normal is a basis, on level back as hold the and general revenue we've for

Vivek Arya

Thank you.

Operator

from our And question with Bank. Seymore Ross next Deutsche comes

proceed. may You

Ross Seymore

like stick down guys. for a question. the questions. it tough automotive couple XX% me in on relative But the given auto of for answering outperformed years year-over-year X%, guys want and SAAR. prior between Hey, have letting first all I about in looks that SAAR, think second side understand if reasons to and you're I the we a you of your it's report market you've ask and quarter Thanks to the things, guide quarter last

inventory simply we it as be half, through to expectation automotive still the and the the the in outgrow XX%, Can have your XXXX the is is You it et get semi doesn't SAAR beyond? half then XX% drivers, you the happening in side burn of the talk and some the seem first but year. even in able cetera. you first to of outgrow of things driver and it about peers even that's those like

Kurt Sievers

yes, quarter-by-quarter its I auto and really just clearly outgrow been basis a We will quarter continues term historically, is X% to X% auto to be the XX% yes, single work. expectation to is It the work the doesn't really percent also like was outgrow bit one little clearly to and doesn't for at basis a - continue longer have mid overall and swinging just to on a X% on That started SAAR. So long by you to But the has doesn't basis. to based on we a mean, the say SAAR forecast X%. continue which which look time. this SAAR.

clearly. it of a outgrown we management at the or Now know clearly like fields of rate. all if back space, X% battery be train that outgrow normal clearly, radar we but also of focus also the to I peers power we our mentioned peers peers, I it's very also very to to chosen we have our to a growth print within call rates returns SAAR more the the that continue ADAS mean, beginning are to what quarters be which will don't in for electric Relative time, zero and believe couple in the

Ross Seymore

million up the logistics the program beyond Can that's as that just currently how you for going you forward we for authorization. and to And is couple balance buy about cash have return a dividend share this cast returns, share planning repurchase that Kurt. the shares one the I to my talk you're between the Thanks of know think repurchase and and expand follow Peter. about in probably expire? to left to approved

Peter Kelly

Yeah, annual is we general about which can June. buyback our shares another million in - can now we and meeting actually between X.X

But pocket. stock. back the for we're we’re is normally have in I this a one kind it's its a saying Rick - before spends to going general Dutch in So at last company authorization think ever about which basically XX%. that capability of point shareholders the no of the in just But as buy June of to XX% X% That buyback spent mean it six our - runs we we'll doesn't months mentioned unusual. with allowance request

flow So in up. June more we'll return commitment our all excess shareholders. topped our cash get generally But that to is to

will have it. a we'll potentially that we chance We year. - of we living next commitment that to continue continue we'll possibly to dividend know and as do you that have dividend a to forward get and And to we'll increase go to history continue and

Ross Seymore

Thanks, Peter

Operator

comes And our Blayne next from Curtis Barclays. with question

may proceed. You

Blayne Curtis

just of your this question. Thanks revisit on of on kind re-acerbating helpful? perspective just be maybe guys. [ph] maybe loading, looks get and There's it's your you It so curious segment. kind your then I been trajectory talk next. the perspective a Hey, for taking any there some front my would to year GaN just Thanks. the product little that like and of about curious RF ahead Chinese June, want view positioning tenders, customers in

Rick Clemmer

Yeah.

a of So we're solutions What are which by MIMO that. of our I with we frankly marketplace our seeing limited up don't quite really in think we had ramp is manufacturing and the a of we've capability success deployment see right a now. massive pre-ordering associated lot

a of the our factor instead It's - the MIMO think that's think But the don't that in term used really for significant I results. associated see us. guidance. massive QX We Chinese. you I was kind about contributing not So factor pre-orders with being as

be GaN solutions continue market. in well-received Our to the

continue a associated with win to able challenge We wins ramping GaN. this facility do requirements to associated the our internal be supply design have and we customer year all later And to it's be to frankly manufacturing it. with

technology years and we're think But up clearly the to of RF LD into has in what that changed leadership specifically much reasonable in able take the I a GaN. we represents moved and number converts higher the believe think I in significant - market associated has transition growth would half market MIMO base year So we more than even so a position performance opportunities opportunity several really a the shape GaN move the in frankly quite as or more last the [ph] and over of with people quarters continue massive to our timing few the section and next to can believe clearly anticipated and have then ago. GaN. the we GaN years the been to Moss

Blayne Curtis

Thanks. you and talked happen up of And any $XXX potential design BMS, then just million now anything that in between several Is on follow want in of you else program? the has as to you XXXX. comments terms that color on there Thanks. in about in wrap know any sort geographic terms to of XXXX, view

Rick Clemmer

positive perspective a from really focus the Well, is companies. the battery

and in but the So in in the be Asia Tier U.S. much definition Europe battery more automotive companies we to X tend with with companies they classic do work not the that and by or

even have which battery from make U.S. and they car just Korea, between a design China, programs. would perspective I into European, Asian single Japan geographic doesn't or in programs and any wouldn't I ship do to are the the a technology, lithium ramping technology they that that ion do do there I but that's are we mean, a in say in transparency that globally the have mean local absolutely differentiation this we some global. that So has with from It's box a consumption leaders not battery there.

Kurt Sievers

And the quite platform. production initial is exciting

Rick Clemmer

Yeah.

large has solution. which a cars And all that again have cars very empire car But which out I to to to a step as late in company. as because very they out way that's our vehicles I it and mean, high still of platform sold is by So launch the electric end first it's a which that its nice lot is far OEM two about I'm German I on will then trying the year. based summer this power just electric launch, love for out platform actually the know, it the going we'd think years spread will they sports are train I while off - win go very, is into which actually which but to are say battery car next

that So exist doesn't a be Asia. again that mean happens German done the that but actually company doesn't company, which all been with battery but of work battery a the has to German rest in

a it's business. very So global

combination function on we approach based continues as position in in so I us all unique know market. stand microcontrollers that a have, very of strong we that if how position system give to you which the [indiscernible] of analog think the our of our

Blayne Curtis

thanks. Helpful,

Operator

comes from Craig Hettenbach with And our next question Morgan Stanley.

proceed. You may

Craig Hettenbach

then kind have thank I attach and update Yes, talk with you. lines? of the core with on just rate industrial a question trends about some on you're a the microcontroller can of if IoT, seeing those you along connectivity

Rick Clemmer

IoT their solution see solutions complete to with solution but continue we're in for those announced our low customers power facilitate looking accomplish. we've offering, - go Wi-Fi a about to was think announcement talked and to I we one associated of specifically to an with market, partnerships for with Murata they're quarter most the trying from with industrial a in connectivity the recent some and be Cypress what demand to Yeah, the that that the previous associated processing know, requirements connectivity that we high with in our you and capability able

Craig Hettenbach

inventory. And of kind just the around of or choppy on anything right. intra stable you were quarter the the All order updates then is lead then still are. things the to on quarter channel calling how along the through comments those kind lines up, of And it of kind market's know just appreciate just and kind you the follow know overall Any front? times on just how

Rick Clemmer

a the you seen actually we've China. know, partners we bit talk picking on in So the orders, little know I about front from we specifically improvement so in guess see order sell-through an distribution don't up you our as

that the activity through near to that reluctant be thus I'm a we really term have relying little that that sorry we've I we're or revenue we fall your I seen order wins while and expect and customers have think design we're in to the to So increase first. to timeframe able the on forgot bit achieve increased to the QX specific in

Kurt Sievers

We times. We lead basically don't… our maintain

Rick Clemmer

OEMs…

Kurt Sievers

– maybe the of of some around new like guys. Times some the

Rick Clemmer

Yeah, wants we associate to meet we actually times, times, lead about premium we're pretty if evidence him an order within place a requirements. charge someone to being our lead we religious those the with able

Craig Hettenbach

Thanks. it. Got

Rick Clemmer

Thanks.

Operator

Evercore. next And comes C.J. with question our Muse from

proceed. may You

C.J. Muse

Good morning. specific your key again. you Good question as first on theme clearly see look momentum continued afternoon. Yeah. a design where you second is that Or when question. this recovery is half Thank improvements? for at outlook you structurally specific guess, something taking call, my NXPI I so is that NXPI curious for cyclically that

Rick Clemmer

said about half design we're not facilitate being we we what associated to second we're know, we with the be first half as the will I half. as about that. beyond, The confidence have mean, QX, associated able have it talking you and projections with is clearly the Like that far second that wins - not

recovery the half. Although you if pick in in robust a second should nominal not some know, market even there up be there's

C.J. Muse

half into I in of a the surprising teams that mobile then terms rate as follow of how in guess we what should curious will XXXX? seasonally, Well, I interpret like upload The guess bit impact Helpful. and up. run June, the look a second

Rick Clemmer

a of about wallet. improved That's we our wins acceptance design mobile in the that talked

you path of as know from we the XXXX. expect it's same down continues that to about by to kind the XX% from that and So XX% Kurt continue - talked

So be customers it. that with to acceptance course see increase our a confidence continue in able applications of wider to in to more maintain kind to and on we're different

mobile ever You deployed technology market drive niche mobile the We're applications instead in market. plan a mainline player to happen not the market. but know, unique the we're a player, customers. for mainline They a be don't mobile player in just to be can take in and to

C.J. Muse

Thanks, Rick.

Operator

Matt Ramsay from question Cohen. our with And next comes

proceed. may You

Matt Ramsay

semi's XX% has I clarification your than on really a anything, just Thank very ask strong automotive just macro of growth. ADAS have the to the obviously business you Kurt, question much. you that wanted a business as more

wanted commented for The SAAR. for sort between the been is guys make we what could made times are macro SAAR? semiconductor But remind you growth you growth within other few the to semiconductor I distinction Maybe XX% this the forecasting that's Thanks. SAAR us SAAR. sure of market a to tied and growth within

Kurt Sievers

SAAR. outgrow Well, to SAAR, the we let we the first try are me the and say XX% tied when to still clarify

say XX% SAAR, obviously should there the is means be that it of of SAAR, doesn't still to our type that is portion since content closer in SAAR, the I maybe the So the ahead on mean, XX% we about association that X%, matter. with with is made mean really growth the SAAR. to on SAAR year, more When we Radar swings X% at business. what it in SAAR least also it say was the long grows association with actually I the X% year change commentary where

semi the why content or market SAAR board I X% through particularly So thanks don't that's great the increase to of should be and year. to to I through SAAR auto would the some know is cycle what wasn't X% say more the continue mentioned start. the question I a earlier that across the should continue, call on be. the crucial QX going And that is actually ahead The

in are IHS a and minus positive the half forecast pretty market for QX those two year XX%. which And year in was gets should full X% full this on or in minus year year. indicate the in that IHS So minus X% the while factors, production for year the which second still car results semiconductor Europe reporting for China better significant

Rick Clemmer

Yeah, the it's as SAAR really that of important mix to think about well.

the China U.S. like size the the of Europe U.S. you at double it market. look and If market than is larger is

in SAAR fact regions first weak the largest two in production the were quarter. for So quite

Matt Ramsay

the much Got Thank you it. very for clarification.

Just up to cetera. one side BMD Maybe been that's its your for curious charging infrastructure focus on or the strategy a times. whether just as equation quick follow few battery because supercharger up brought of or et the

any there? If Thank you're you. work doing

Rick Clemmer

No we don't.

Kurt Sievers

we charging do device. side, On for mobile the automotive mobile have

Matt Ramsay

Thank it. you. Got

Operator

Toshiya Sachs. Goldman with from the comes next our question And Hari

proceed. may You

Toshiya Hari

Peter, question on for follow me margins. very had much gross Thanks I up squeezing a in.

related your that, there. drivers. as you long as driving richer Can about they going And upside of for BMS in extensively two You some product grow term talked sales drove forward? product mix of talk talked percentage profitability Rick segments you about profitability speak those to you the as QX. ADAS and a to Can the continue that to areas

Peter Kelly

So we level. margin either gross disclose by profitability don't the segments the operating margin or

- of was you lots moving just there's parts said know previously. it So as I've

different You margin us slightly pretty have but And which the that quarter. sets profiles big different you well. product turned margin groups this have do have out the have for nicely different profiles, groups as within

Rick Clemmer

it mean, we're little the. I conservative a into bit going maybe

Peter Kelly

margins comment that Yeah, I quite guess more BMS on facilitate only the QX say was and mix could helping that. ADAS the focused really thing And we then are nice.

Toshiya Hari

quick Okay. from your X%. long the comps believe That's rate another Day as is follow top I And helpful. growth then flat a the [ph] in term segment Analyst

a call is kind a pretty that the on commentary guide your nature if or given do upside and potential think you at and you. could strength there near-term be of in Thank will? point conservative developments recent there off the Given you that could this one be

Peter Kelly

takes know there it. there's gives you Well, and associated with always

weakness all. the at going on we guidance Clearly and that clearly kind time a and were that we're that our we helps So I near-term pretty back segment of general said growth don't think positive we said we see. changing that contributor and the long term in market it's But us the the offset conservative guidance. at

for really guidance we're any and term our opportunity be all. not it's but always could of some upside, there So at gives changing and takes long

Toshiya Hari

Thank you.

Jeff Palmer

one take more we'll Operator call.

Operator

with And question from JPMorgan. Sur next our comes Harlan

You may proceed.

Harlan Sur

for Morning. question. Thanks my taking

or performance pretty would specific towards things driving understand segment that or segment based IoT like are are specific automation talked and got helpful? just it what applications win or design wireless sequential the industrial automation [indiscernible] insights us help and is any you've is be connected wins, growth factory strong is the home quarter building the biased broad or about companies given On platforms pipeline in the high the this more products you can June analog, a design connectivity

Rick Clemmer

is wearables anything track, significant far seeing the more it's its growth on think So the as as more of the it's the we the on on lot segment crossover the than segment anticipate uniquely else. key where I a kind positioned the growth contribution, segment and we're fitness where driving crossover

immersive I is So have that intermediate among lot of the think automation the solutions there the on differentiate Atmos spread a able that to lot customers. a sound we many Dolby be term over like of thousands factory are to capability,

Kurt Sievers

assist. And maybe voice adding

industrial think [indiscernible] I which So bars four really crossover you say use which variables detection areas the of the and kind where all spoke regularly they automation, is all and it's analog home stuff. I'd different that a mentioned Voice you the finally four the industrial sound about segments lot very an assist those and it's certification. Rick into technology. solutions of but

Harlan Sur

there Yeah. and the insights Thanks platform. for into [ph] crossover RT the insights

Rick Clemmer

So crossover RT. is family of scale RT, not not a M just combination of combination Specific it's ULP [ph] just Harlan, our those processors and it's RT, a

Kurt Sievers

the I and which are which is between It's good would the broad application broadening actually - a say - category we very process. micros almost creating

arty on we we that into a direction think more So started put broadening soft focus have we are the much while I this with because that really it. become so

Rick Clemmer

Basically cost implementations. array reasonable for in could a in bringing broader processor specific of very more you get that a point a some functionality normally a only the apps of down to costly function

Harlan Sur

continues And that, full that's edge example with question XX NX in traction contribution know think and markets, markets? i.MX I and family actually is which family of guys and IoT industrial you the into and which for have about Can design each segway win understand a technology. when good auto, the to that's think actually just i.MX we we don't actually in the traction like nanometer IoT process you us help blown your strong MX your eight industrial family typically [indiscernible] associate I my next

Rick Clemmer

It's significant.

Kurt, traction customers have in applications specific not to the and it's with see associated You don't continue broad individual – solution. know, array we that that I good single any of we but about base and these broad talked a

Harlan Sur

Great. Thanks insights. for the

Rick Clemmer

Thanks, Harlan.

Operator

this Q&A like of portion back concludes I Thank turn over call conference. Jeff the now today’s would Palmer closing you. and of our any now for to to remarks. gentlemen, Ladies

Jeff Palmer

for traction remarks and we're That continue acceptance able and how difference to on have solutions drive our gain and about about really a encouraged we're closing customers able we make pleased term guidance our the quarterly demonstrate few our our make as Maybe with the I'll know, customers encouraged with our the be we make customer comprehensive is long to results to a But with about associated wins strategy you results to Jeff. able to the focused to were to focused in opportunity be a and have us design to I QX. to difference for being that think very that. with QX Win opposed allows customer that Passion

thanks it. lot and for we So a your appreciate support

Rick Clemmer

Thank you.

Operator

Ladies and gentlemen, thank the you for program. attending today's conference. This does conclude

Everyone disconnect. a great all have may day.+ You