NXP Semiconductors (NXPI)

Jeff Palmer Vice President of Investor Relations
Richard Clemmer Chief Executive Officer
Kurt Sievers President
Peter Kelly Executive Vice President and Chief Financial Officer
Craig Hettenbach Morgan Stanley
John Pitzer Credit Suisse
William Stein SunTrust Robinson Humphrey
Stacy Rasgon Bernstein Research
Ross Seymore Deutsche Bank
Vivek Arya Bank of America Merrill Lynch
Blayne Curtis Barclays Capital
Matthew Ramsay Cowen & Co.
Toshiya Hari Goldman Sachs
Call transcript
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Good day, ladies and gentlemen, and welcome to the Second Quarter 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.

to conference like to now would turn over the Mr. I Relations. Vice President Palmer, of Jeff Investor

You begin. may

Jeff Palmer

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

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

macroeconomic which on that markets Our NXP's call for today involve new impact from sale of the risks will risks differ are to end include, uncertainties include specific third we XXXX. the management's cause existing for forward-looking not the quarter the products, could uncertainties our expectations. to, These statements and in and the that of materially current and financial results but statements and expectations operate, regarding results limited

be or statements. update obligation publicly to reminded revise forward-looking no any NXP Please undertakes

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

performance be impact Additionally, related stock-based purchase driven today, during make the will to the price directly underlying non-GAAP discrete events charges of by operating our primarily company. not financial costs, exclude to which to accounting, does we certain restructuring, and merger-related consider compensation, measures, are impairment, reference other call of that core management that NXP's

which section furnished available website non-GAAP the measures comparable measures quarter Form the GAAP on to a press XXXX second nxp.com. Regulation has directly is will Investor most in and to Pursuant to in the of be NXP Relations NXP's on reconciliations release, financial at G, SEC X-K provided our the earnings

I'd like Rick. call now, to to And over the turn

Richard Clemmer

conference QX provide details market commentary. expectations review for Today, long-term of the revenue quarter. details our of third QX. And our and today. Thanks, start Kurt provide Kelly and mid-and and will Then revenue to will quarter the financial call I'll end the strategic some finally, Peter with welcome Sievers, everyone Jeff. And president, for guidance review

quarter, As end most share our wins markets additional the new in Today, details engagements remember, IOT. I'd company-specific of industrial design to you like in momentum we which some we and our and discussed of last provide target and automotive exciting focused markets. reflect have

one automatic our braking that facilitate of areas groups, regulatory Initially, NCAP which multiple in our vehicles. level by Europe. like focus will radar and Within solutions is market, we level emergency X is mandated automotive key X for ADAS discussed radar being

control, dependent making cases new will cross radar equipment adaptive of These ultimately, Eventually, radar features detection. alerts be blind on our are cruise brand, or tier all car, the use traffic OEM become enabling key safer. all of function regardless and, the lane and solutions driving will as change standard assistance, spot

For XXXX. NXP, XX% radar the complete subsystem, supplier with in we revenues almost have emerged as representing our for auto the of number radar one

who while services market represents date, of processor been OEMs overall been have To X, European success by globally. the several largely a broad-based, transceiver large about has radar on our side the driven major and tier single shipments XX% the

North We're overall based ramp of have expand radar X will who initial design up about ultimately excited from American the to most of win XX% expect shipments market. that on the the our one suppliers innovative momentum we tier of

dozen X global service aligned leaders the market We a OEMs. of auto which tier the are with now largest

SiGe solutions the and integration due Our success supported XX and the complete both in the printing transceivers, multi-generation portfolio end-to-end broadest ecosystem and roadmap to of industry's performance, by processors market-leading GHz is RFCMOS. product and

outgrow years. underpin we'll wins next over XX% and design to auto XX% expand two NXP our in thought leadership. engagements radar ongoing annually of our engagements X planned with growth continue will to and the invest and These our tier market to continue market overall additional to the compounded the confidence have we that and area

to and low we mode years This Now, investing of precision area with advantage, enables believe very stealth latency. turn has have is and very unique new relative I'd UWB. and distance UWB like a secure degree is a to exciting location high been category leadership. a first mover in or a measurement solution, technology an several for NXP yields that ultra-wideband a which

mobile clear in smart the automotive, smart markets. see retail interest participants from IOT, and We home, industrial,

will One next revolutionize secure access to the car of applications the first solutions. be use generation case of

areas and of two a X.Xx NXP have automotive true of We mobile number solution the relative and access NXP player is secure both at application – intersection with share the where the undisputed payments, X.Xx market respectively. existing secure two that system-level market car IP leader leverages foundation areas

The NXP's technology. market connectivity, leverages overall secure management leadership and in solution credential element embedded digital

– by attacks Forbes, fobs relay As by or prevent car that mentioned can security from announced new leading by of station the today signal. authentic distinguishing signal newspaper the UWB related to the and German spook adds fab level key the a

within UWB take its few enables decision-making these high the a is technologies. contextual of place with UWB real to management ranging distance anchor, This to with the ability with devices radio granularity. devices to an the allows technology centimeters, and coexistence unprecedented that process will to such as and information and other most position precise, give time of a movements precision which the existing secure various applications

a or the and their secure As doorlock to home an opening new share the building before localization through person credentials access phone consumer example, secure where door. remotely from the identifies could

services, as more have systems cases. and In envisioned many to such indoor access, gaming our addition use the secure virtual customers location-based highly immersive door applications

science a not engaged developed very We've with target for and project customers clearly segments to a products solve. a are actively various is complete looking problem This in ecosystem. leading in

foundational with production the equivalent an by is end and our million exciting customers automotive XXXX. start be volume to across with and with system will several developing approximately first share We have market key in positions. mover high This mobile We IP, the market won $XXX new for unique our NXP. incremental believe designs We advantage, XXXX. RMS opportunity markets knowledge to and see opportunity

market. to turning and the XX, acquire Marvell's the to IOT connectivity On we assets. Now intent announced industrial May

the $XXX roughly revenue expect of We run XXXX, current to million rate. by times two incremental business add about its

executed spur an This we moment. of assets acquisition in We the in a all was connectivity the at the not spent looking the nearly market. year

history a the IP complementary engineering Our Marvel that conclusion fundamental a strong development. was of connectivity provides an portfolio industry-leading with team NXP product successful and team,

Wi-Fi complement automotive. our industrial of strategic and well immediately set product especially connectivity end in IOT as the as offerings markets portfolio The our X disruptive and processing, security will key, and

looking a history in all have sourced of crossover the be in recent solution processor had to of nearly point vendors. IOT design wins, reference, at and applications two-thirds a from we other which included connectivity industrial the market, have As been awarded

channel Connectivity strong is offering, clearly will growth go-to-market our processor broad becoming a leading product must-have highlighted. We our for the inflection IOT functional underpin X by believe solutions. we Wi-Fi market have and capability the directly all

very transaction the and excited to team welcoming the about We look to forward are NXP.

efforts Lastly, a our the quick comment on mobile market. in

transit mobile remember evolution focus mobile will and aimed the on the adoption at markets and from primarily services you is wallet ticketing. our of like Day, associated the Analyst our As

attach attach to We not of all said XX% to be a this rate We XXXX. XXXX fundamental phones our targeting by increased and handset market function of XX% the about growth in in rate, mobile would are mobile we believe growth. unit was the expand wallet the about

adoption I'd report been the like models. now only in deployed aggressively a large handset whereas solution Chinese had to portfolio, mobile has the past across that entire on wallet OEM premium deployed limited our its

plans. in both as This customer is share build strategically has a the its market, market launch its global XXXX domestic, focused handset significantly and and China on increasing increased result and

Chinese during and of experienced this how the is access. in As in Kurt will ramp mobile market for transit review are specific mass wallet, value demand especially a a of proof customers moment. a example QX, significant the the point, in NXP's details perceiving NXP a great domestic

In to results. continues positive summary, our strategy yield

focus the customers differentiated superior, We demand. end with to engaging fluctuations regardless in strategic in markets, to drive will short-term of deliver our highly products continue

to to the call quarter. now discuss the results pass to the I'd over like current Kurt of

Kurt Sievers

Thanks, with morning, to good to I'm Rich. able all really glad And today. be everyone. speak you

with were the was markets slightly demand somewhat midpoint weaker. while than guidance, markets auto results from the QX planned, contribution in the about strong the mobile our of our Overall, the

together, us to Taken enabled higher end revenue NXP deliver successfully control delivered of which combined profitability $X.XX expense good with operating the guidance our above range. billion, of

markets. in line to turn revenue me guidance. the $X.XX our down focused with Let trends year-on-year, specific was XX% QX in our billion, in end Automotive

weaker-than-anticipated shipment slowed on the auto be two North to revised QX American car NXP. IHS manufacturing the for most the modestly. especially and Based data, had production global China largest the trends market year-on-year slightly Europe, down, of continue effect This in while recently markets, in available

anticipated, a continued the Revenue line as product from just of ago. double-digits, for a except categories traction, strong revenue radar, in with very in especially year-ago declined minute all it ADAS, major customer up Rick offerings our how which product much out versus was period laid and differentiated our NXP's reflection

China very in IOT, broad products market and be million, with to revenue weak. industrial MCU down In as based general demand continues our the the was $XXX in line year-on-year, XX% expectations for purpose

customers, on global However, and and through we to appear which primarily overall thousands by the small processor be tens albeit effective IOT today. industrial of expected is products, tension. growth saw business Remember, our cross-over US-China double-digit of the smaller our our a of trade partners year-on-year base from particularly relies serviced continued distribution

was XX% year-on-year, our to expectations. me million, $XXX Revenue mobile. Let up than turn better

broader customers volume and our to the continue As mobile Rick see we of attach way mentioned, just grow feature premium of a the moving set rate solutions and transaction all from with phones. to to

globally we ramped his QX, we us, and anticipated. a and is more than what handset large in market share who focused touch on saw Specifically, customer increasing had on locally Chinese orders a

drive XX% communication with segment, associated lines with guidance. power solutions to the up line our grew versus QX growth year-on-year, during All $XXX million, product year-ago Lastly, in revenue strong infrastructure RF double-digit period. continuing and our was

annual power global quarter, high-powered, spread both base across with massive MIMO demand growth our station we OEMs. amplifiers, the RF with and shipments all strong consistent last And increased our for the in nearly experienced single-channel

turning infrastructure of the markets, pause combined trends ongoing and quarters. subdued with In Now, the uncertainty, communications growth due the macro anticipated expectations pace industrial three. last for the to blistering auto to ordering the IOT quarter guidance after market over in our our and reflects

And better premium our we we discussed. mobile step sequential handset by what rates order our Chinese the offset from would a than down customer is sequential consider customer QX normal handset from largest guidance previously

seasonality together, of is this this our business year. of would consider mobile [indiscernible] some Taken analysts into what QX

to this is range, range our of midpoint $X.XX We revenue up anticipate sequentially of X% sequentially. will in billion. an total currently or a of be At increase the flat X%

the versus period the ago, which X% From decline a of is MSA a same the represents perspective, elimination year-over-year about points period. this a of the XXX basis year versus year-ago

Automotive digits Industrial At anticipate expected low-single the low-single our finally, up on be is digits a we to a be basis. on Infrastructure versus the upper the percentage be percentage IOT up the to is on in in the basis. is do a sequential expected and expected following percentage in low-single to Other to in Mobile down and range is midpoint, expected And, be single-digit digits down business. QX. trends Communications basis.

assumed a continues prior anticipate believe be the yet, lesser the of view. to greater do incrementally this than the than first challenging versus half be environment at to has our still second we rate demand We weakened year. and year half, short-term the earlier so And

In introductions, to areas potential about very and continue the levels our summary, long-term to of momentum And engagement focus in very positive. strategic new be continue win be product optimistic we design NXP. our customer

you, performance. pass to like call would our And of financial I with a to Peter, that, review the for

Peter Kelly

Thank you, to Kurt. call. And today's everyone on good morning

move As for drivers covered and revenue outlook the highlights. provided Kurt quarter during our I'll financial the of to has the revenue already the QX,

QX combined summary, our the above revenue guidance, resulted expense a profit. was control In with strong midpoint non-GAAP in operating which good performance just of very

MSA down QX, versus detail the total basis billion, which year-ago $X.XX the was X% period. of of the XXX the was elimination for on points year-on-year, revenue Focusing

$X.X generated non-GAAP in and of margin gross XX.X%, a in We XX gross reported points year-on-year with guidance. up billion midpoint line the basis of non-GAAP and profit our

$XXX of guidance. the better were year-on-year million expenses $X down from midpoint million operating $XX QX. This $XX non-GAAP and down million was our than Total million,

$XX million From a $XXX margin total points was in XX.X%, and period. revenue profit basis operating a profit was XXX despite operating non-GAAP operating the same up non-GAAP drop perspective, year-on-year million over

not our million. midpoint expense million. which $XX earnings, included of Cash all for Interest in ongoing guidance. was million. were were the than interests $X was taxes modestly our operations better $XX And compensation, $XX is Stock-based million, non-controlling non-GAAP

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

$X.X issued billion up Net of was sequentially of debt. slightly at Our existing billion, $X.XX and QX new we $X.XX million was retired the Cash as was end billion of debt total billion, $XXX debt on up QX. billion. $X.XX debt $X.XX

And We our trailing quarter a times. trailing And non-GAAP exited billion. XX-month end of at XX-month adjusted X.XX was our with EBITDA to $X.XX was coverage QX ratio XX.X the EBITDA net of debt interest times. the adjusted of

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

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

a capital Turning XXX was working sequentially metrics, days of $XX days inventory decline million. days, to decrease XX and of a quarter-on-quarter of

our months manage channel. targets. inventory aggressively And channel distribution our within We X.X very the in continue was at healthy long-term to

of was And X a decrease sequentially. a X days Days days XX, prior decrease receivable quarter. of XX versus payable were days days, the

conversion XX of nine was versus an days, prior together, improvement the quarter. Taken cycle our days

Cash was in cash was net million, flow flow free $XXX from million $XXX and operations $XXX CapEx million. resulting of

billion, Turning or our we X% is mentioned, the minus third sequentially. At quarter, $XX the about to midpoint, $X.XX expectations plus up to for quarter this anticipate as Kurt revenue be million. third

We XX gross or margin expect XX.X%, minus be to about points. non-GAAP plus basis

we or Operating about minus about basis expected minus XX.X%, to to $XX or operating million, plus about taken $XXX see million. expenses points. together, And are plus non-GAAP be margin be XX about

will operations be related $XX be million, million. interest anticipate SSMC. reflecting $XX interest about at expense and to $XX be estimate Non-controlling ongoing loadings cash We about to about million tax improved to

share like our I'd program. repurchase update an to on provide

our beginning previously the total of a repurchased billion. we we've brought owners QX cost As approximately of returned our back to XX have period. for mentioned quarter, during over billion we've million dividend, shares the XXXX, with at cash $X.XX over just million. shares second a Combined X.X Since $XXX this $X.XX quarterly million

while return excess net maintaining to times leverage cash capital all of owners our Our target month XX strategy continues X EBITDA. trailing to be to ratio to a debt adjusted

we will for quarter, program this our to the the repurchase Marvel second announced we for asset, of billion. the pay likely $X.XX cash XXXX. balance as During pause for acquisition connectivity share And build assets we of

third the that, share we for purposes, an average million for of So, count use suggest modeling XXX you quarter, shares.

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

of will domestic US be of decided as to that directors we domicile , August will the previously but board XXXX, Firstly, a NXP Dutch continue has NXP company. a become filer as

February will we a result, As quarterly in first our October, we submit being XX-K broad-based believe will lead our XX-Q and in various financial equity the in ultimately this US XXXX. NXP included We indexes. annual of will statements to

approvals will termination We've a the highlighted, be be Marvel remaining now could Rick and early Federal XXXX, submitted we've Trade that of the Commission about regulatory the positive approvals of the earlier. all very first quarter XX with an July received expect on all complete acquisition continue as possibility that regulatory to by the obtained and Secondly, assets the pre-merger notifications. we're required clearance US from connectivity

are Kurt pleased QX. As in our we out, performance with pointed

guidance revenue bit from while contribution was Our automotive and better slightly with a stronger-than-expected, the was market the than mobile weaker. slightly the markets

are Our in the the revenue the will be the of half expectations year of greater first second half than year. that in

for or we end beginning However, the the weaker than last the of to of year absolute that likely is anticipated performance the at – originally at be matter, quarter.

year-on-year QX work on in we we revenue. our and QX XXXX of target in again as exiting improved QX margin intermediate non-GAAP Our XX% improvements continue further towards anticipate to to flat

cost under in regards I particularly improvements our control, to to our deliver control. confidence as continue ability to have the

for environment, margin quarter impact the its However, fourth the what the be. current might to predict final gross and on it's revenue difficult given

the I'd turn back that, like call with your to over So, the now to for operator questions.

Jeff Palmer

now for questions we'll poll please. Sonya,


[Operator Instructions]. you. Thank

Stanley. comes first Our Morgan question from of Craig Hettenbach

line Your open. is now

Craig Hettenbach

Thank Great. you.

First question.

see just distributors talk still period Rick, here seeing during the a of this perspective. said, have a about things you're time. you curious worse current But Like Just, to environment. gotten macro bit from act how

than I mentioned XX shipped and could've kind more last quarter you held into of you back. think you you did distribution

look and quarter this you it managed as QX? you into how So,

Richard Clemmer

Yeah, thanks.

the market I significantly. hasn't think environment changed

have at When the do pushed improvements time, it. have anticipated at out. in would would associated them Europe not China, at the of their down And look clearly, our are same to they half some of where second the of the they are clearly one results, see US improvement levels – down to that We see their be we supply we've been preannouncement you the just announcement distributor seen We when comes even a And say. have of little their order to I in year. However, those.X weaken able I orders, look having that bit weaken. that's the that with performance fact think we've partners, inventory they product and as levels you same doing seen they a were to with now

large after quarters. I our XG infrastructure definitely broadly stay of uncertain. had of base. we show clearly, The a mobile then customer, they are automotive the little on is improvements last requires the we out, based over It been in We've the filled fortunate the So, couple deployed as quite still anticipated that the they adjustment environment had their more QX. of and up have in strength moved QX we we supply deployment bit Clearly, And slightly that improving. continues chain. think to although from been improving

this at little say, uptick environment, going on have comes basis the kind anticipated we continuous would together create and yet. for uncertain to of So, and point QX a forward of that not bit that a I all of an

Craig Hettenbach

about on you're seeing in particularly for just BMS, BMS? what Rick. the a And design follow-up of perspective, the feeling a for Okay. for around the context side, market Kurt how you're new designs kind just from Appreciate automotive there,

Kurt Sievers

Yeah. Thanks, Craig.

Now, and levels of vehicles. of from side electric clearly, traction the all traction BMS see hybrids mild function do we penetration to on the electric since of all fully XXX% continued design way strong the hybrids is over vehicles,

in see the shipments is win on significant And do design of year, now the side this going. traction we more Our first half good. the second

the with OEM serve talked into of large production that is we which year the half a second we this vehicle, going think in European earlier I a XXX%. fully-electric about full fact

BMS little have we different silicon with the So, different perspective, on to much levels and on vehicles. track, give detail more the bit we from a want different the that levels content sorts you very are I what on expected might Craig, – silicon side. of levels the in

we electric So, mid-voltage now success full-hybrid are vehicles. hybrid the especially in have focused vehicles. a mild rate and high This contains and low very and

In more the of those and it analog microcontroller battery $XX to range from the all silicon car. the batteries, give the higher larger content. vehicles, range why on That's per the That contains Obviously, the we more the cells, contains front-end silicon $XX. of cells. the I each do in front-ends NXP $XX the content this the and to you see of $XX analog chips

to particular continues our in win say, a design For vehicles, be those XX% I hit rates range of, would rate.

from design win into open we XX%, the is truly high. continue So, about we to win visibility which have all funnel,

this European quoted fully high-voltage OEM, to I the Those we system. to electric we cars, BMS next as call is just speak. into we This production large that, are going you vehicles. with

They way volts. go typically XXX So, somewhat up a the silicon content. all higher they have to

vehicle. the $XXX our for $XX voltage between low-to-mid and Here there, quoted as And as cars. we traction high which also, not I good, the can but XX%, is per cover

was of expected, more little you bit area is since felt might went than that have a So, you a Craig, granularity I interest, bit know appropriate to this high I here. give it but an such deeper

Craig Hettenbach

Appreciate that. you. Thank

Jeff Palmer

caller the take please. we'll Operator, next


comes John you. Pitzer, next Suisse. Thank question And our from Credit

open. Your now line is

John Pitzer

first managing Yes. and one quarter part balance if own in own of again your looking actions to I Good My good XX% were sort curious inventory us morning, think will on management, kind the Congratulations did that you days inventory were how you And of June channel headwind you've there both a sheet. inventory target on as year, some really question, trend? a your the that give guys. importantly, that margin into as thought become you you can your of of gross utilization guidance a taken inventory of inventory? the started results. solid about I'm tailwind Peter, just with guys in September any guess, that job

Peter Kelly

good questions, John. always, really As

really, First all, in distribution, less ship of managed really on inventory the more or they're proven out. past we don't that shipped and just they've in until we talked the tightly distribution

In internal marketplace, of from suffered X revenues a X improvement last in inventory, it's or challenge quarters to show terms we inventory kind an demand been the of in of as lighter the the the kind but not in quarter, of target inventory sure kind finally internal this caught expect I not days. to coming can days. this there I up terms quarter. My would go XX is of but in I'm up our get

So, between somewhere it XXX XX days. should be and

have relief some you issues utilization QX. suggesting the and of We QX some we'll were see hit in QX in that as by from been and QX,

there yes, you go. So,

Richard Clemmer

probably worthwhile you inventory, can point I think manufacturing our very out, particularly tell been John, our cautious with operation. we've as from it's to

So, our try up we to understand we product some in inventory put competitors of would them have. load to as not

John Pitzer

a about or wonder or you directly And, side? quarter mobile ban if and follow-up, comment as September I issues indirectly maybe the or little infrastructure Huawei quarter whether helpful. June the either or on the your can just Rick, not the my impacted That's either trade US-China either

Richard Clemmer


the to specifically, the trade really the to Huawei trade they think we quite source most policies. We and China, I So, knowledgeable continue be not follow US information. continue of issues unclear. guidelines between the US and to are Relative

really There Huawei de areas time, at are technology current impact, US we it's have limited been not we've sourced that QX. We the to to where for not able again pretty NXP. a impact have will some been and ship shipping in minimis but product significant a ship financial

John Pitzer

it. Appreciate guys. Thanks,

Jeff Palmer

John. Thanks,


you. William of question our Stein And next SunTrust. from Thank comes

now open. is Your line

William Stein

Great. Thanks taking questions. for my

OpEx. on comment margins or, you can said way, hoping I'm another First,

I to that's but provided posts I get spent you by slower demand revs think be assume slightly little a Thank the there sort bit XX.X% of QX. OpEx update would out you. goal to on helpful. any owing to pushed of you've highlighted,

Peter Kelly

to continue X.X% on R&D and get SG&A. tightly. going to pretty OpEx We're for We manage out to full XX%

have on You've flexibility replacing and is seen in very, our do. and – talked QX we've as I on QX past can any some And not do think we both we hiring what certainly forward do new attrition positions for our we actual we in guidance, that been the go Rick very limited.

So, that's helped flexibility our us. compensation. some We do incentive have with

So, of reflecting continue the we the drive has we impact lack our businesses the But, aggressively an future compensation. hand, programs in had think of invest the growth in on incentive success other on our will the company. to that

So, that year up mask talk from well. in usually this on we've or quarter cost close, think, the get Will, Absolutely, are particular around there quarter. as and about charges XX% and big to item and very a can we'll move X.X%, future for given I either not you see get years and

Richard Clemmer

to probably several cost base it's also add talked addition low that as tried hundreds that had to performers attrition our manage Will, we've to Yeah. in about. the low we performers, Peter worthwhile of non-replacement taken out

is relationships investments all. customer be kind that to of but we the required, in we jeopardy to any of we're that relative strategic at our or in tight risk not plans of putting any of want So, the yet sure to any ensure growth through are timing and to the very lot of go making a we be our review absolutely continue investments

William Stein

region Are you of If wallet great. at or follow on off I China the – seeing there's last either had growth quarter I correct I That's you a sort that other quarter, subsequent did to? thought and Very referred just least the it. they outside more up, that, vendor helpful. this that in fall handset than in mobile were inter-quarter, and the there you coming anticipated of highlighted strengths one appreciate you China. than can one where Am I quarter? of broader adoption were see of

Richard Clemmer

as We've as very has is. where in India, There the definitely as phones mentioned, deployed $XX been mobile successful actually we low phone. on been wallet

and the achieve built their trying their in deployment up absorb quarters, the and Now, of they've to kind that they're current supply market. already chain to

So, impact it earlier, outlook has it's as represents significant not QX significant definitely QX nearly in even point. but the it proof or as an been another

more smart success very China But in the been ease the the him getting encouraging and much in of deployments. we've thing systems a their And use position effective aggressive manner, mobile in up. we're increasing they've entire intent in them. end their And to goals able support QX and about they their China, because on their very But and portfolio. this now phone and they market, of had the are deployed of with successful Transit with transit across on this high customer so encouraged was, specifically, being ramped we've passengers in

up process we in to their a portfolio, had we and then go supply normalization decision quarters. entire go they future chain their the made to ramp As across through

have customer us ramp for that in QX China. that didn't So, fall the did a specific in off with QX that associated

William Stein

It's very helpful. Thank you.


question of next Bernstein comes Thank you. And Stacy our Research. from Rasgon

Your now line open. is

Stacy Rasgon

a about where guess, was, from? XXXX in little going up through years. two few the that all? the at guess, does How growth to I model weakness for in comes – I XXXX I the ask for to for in first than growth does last Thanks my years starting three-year That model. XXXX and guys. question. be forward wanted But Hi, a obviously taking weaker the is going where two, the additional And does would your that to make to have in affect the model weakness come anticipated.

Richard Clemmer

XXXX Stacy, through XXXX. So, was it actually

we that don't see XXXX. year a was material base being So, the Really, impact.

really, long associated this more very continue we the But, X in to add and a slowdown revenue we with categories, in encouraged the where in for automotive opportunity is go representing crossover areas is that the on and the were will that to to wins and in associated the XG forward the in continue ramp could the go somewhat, growth changing believe depends that, on we're some that. the of and future processors contributor but through revenue it with specifically with we the we more I have, And in actually see radar continue above as what design time. we the strong we level we about, key think near But continue. for this be X. term had obviously in have to we how growth guidelines quarters industry the that be to at have track. that in The areas and an company clearly, that still total, process we what talked increased of specific that

clearly I ballpark think with to how Stacy. to still this it but it, through in to we do and to takes long be understand that, us able we're some work actually slowdown have industry the associated confirm So, get

Stacy Rasgon

Thanks. to it. year the of on I the auto, and in part that around it guidance quite of strength of are single than down, guess, three even implies like for business the with with and high the traditional that. growing is bit, others the sort worse so Got radar of the the more follow-up auto to that And, mid first some the BMS a call it, portfolio and quarters digits

correction? be that year, to as reasonable next we this? is inventory Would of this it it into rebound off down could expect do going the think that's So, just drive to obviously, SAAR year? assume sort we year better to don't down but flush of normal that much. inventories coming is if case, than next this that to Is not out reasonable be I it's And as the

Kurt Sievers

Kurt. is this Stacy,

me try answer and that. Let

you latest So, again. know IHS that has deteriorated SAAR unfortunately typically first of the yes, all, and use – – forecast we

talked we quarter we ago a think just latest this SAAR XX days was about minus I year. The a decline ago, IHS got X% forecast So, X%.

decline. big you report the And like So, Aaptiv, X% more so through look actually, like if estimate the from X%. Xs, Continental, and others, they Bosch tier

minus area. still but the is third to deteriorated. somewhere Now, on X% our sits Obviously, has model indeed it X% party which source, from in IHS, minus

change bouncing back question, stronger is when stronger to the cycles something Now, is forecast. this the to direction, out into moment which past coming we've semi I The question market that declines through back is your of the going don't and it. which effect this of obviously going dare of too, inventory auto seen means yes,

two, tell a an The minus the growth basis would a quarters, into I just And decline X quarter X%. automotive. now on minus gave is you guide quarter we that, in only if in then you report look is we you XX% annual thing did our which

least – better. QX from against perspective at see annually, it's slightly we QX comparison getting So,

certainly growth first the is but other be half first true, to If slightly moving is out, better a the reported half know, is that thinking things changing China half really don't than second directionally in least half better of led but China to in is the this indication production has about if because by much this China. second half. always first SAAR over I And in half a don't IHS IHS seasonally XX% that half. should is by it get the I also know second at now right second

Stacy Rasgon

Got it. Thank you.

Jeff Palmer

Right. Thanks Stacy.


from Thank you. Bank. Ross Seymore of comes question Deutsche And next our

open. is line Your

Ross Seymore

do guys. guidance things. you about Hi, down growth guys I line But, in that to to how third a refill. you your is starts just and there reacceleration done, the overall, expect as Can of that I about similar of to the is quarter focus you what's it's me super-sized a year-over-year. question, bit is anything inventory and burn question. XX% channel on last letting seem are source last and else? kind or the growth crossover side the it still seasonally weighing channel IOT in to for there with once be of Thanks have resume? Is industrial talk the accelerating the in you want inventory processors in Somewhat been And ask the a know that? the on quarter. little great to burn

Richard Clemmer

right. So, absolutely you're Ross, think I

that If same year-over-year. you for inventory still last been level our up down of would around and IoT around be year-over-year. in guidance, had levels. I QX, think be the don't on we look industrial XX% couple specific our the at down that it, quarters can while And X%

to goes of to probably remember and that IoT, got channel. XX% industrial the You've on that distribution

I in a kind improvement weakening we of perception not that a about of inventory. happening I going any Europe, ongoing fear last a see in customers. we've to so, said really the offsets to the and tensions we in with distribution mercy, do if significant specifically in the will, quarter, that. our what's see what's trade China, with in although market And China, you US of time of the What same improvement It's happen of There's quagmire. the think of don't overall, frozen, understand kind little bit kind at seen this really partners the we're at is but the

kind industrial and So same of in the IoT. in we're position total, in

as get revenue rate at the look as that, better quarter. move Now, to to but of should you contribution, we positive clearly wins contribution quarters. areas see of in the impact at few be how design It's the a a those but in market, a which be on any and should at a as same us needle and crossover the ramp, significantly deployed design cumulative from out going slow position have the it that's individual those they begin won't wins that put we more point, we a go it'll in new the

Ross Seymore

com infrastructure other That's over just I to for and follow-up, helpful. to switch want my segment. And the

side about of different You just roughly kind a XG talked segment XX%, side represents? that percentage revenues that you of the of see in com the XX% infrastructure that through and what you Can XG truly the for total us remind out maybe of walk pausing rolling your bit. how stages

Richard Clemmer

On of Yeah. a that, percentage it's…

Kurt Sievers

Probably, and two-thirds networking business. the between digital RF power

Richard Clemmer


It's associated deployment to But, to move power the based growth half deployments, XG. networking that MIMO was able future, upgrade XG probably capacity Ross, can massive expanding we've be seen. And with a they has where in software they the with facilitate digital just the they're now, If deployment the to their the in seen, a or growth we've for RF that really, it slightly two-thirds. associated, on under been about half you the include infrastructure. when installed

appear would creating really So, MIMO MIMO. a been se. has massive significant XG weighted We've impact, increase towards been deployment some really, significantly what MIMO XG And massive the in we're of this to depends the we and it revenue see but next out the per would pull XG more some through have in area. going pause China in year kind they when their XG their much that strongly anticipate massive seen successes happening it in very basically pauses, after And more of we clearly, that a much base accelerate on rest what's ramp is seeing up itself We've year supply and, anticipate XG we deployment the a ramping of been gets rolled on our in deployment. chain. in positive customers saying still rollout and as our in XXXX. we've then, seen quite to positive And not are want of believe We seeing and that's China. it's continue in as scenario stations

Ross Seymore

you. Thank

Jeff Palmer

Thanks Ross.


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

is line open. You're now

Vivek Arya

taking for I question. well. as my Thanks had two

targeting you're I believe, mentioned XX% of that exiting margins, gross you still Peter, kind QX. on First

assumptions What up. XXX that? basis curious, Because revenue are or kind points the been your of QX, underlie that or sequential that around would I'm So, about that? improvement. so usually puts of and has mix what takes be

down. been it's years, Some

Some assume that some year-on-year if years I – decline. it's would sales signal flat,

the revenue curious just that to gross understand I'm what So, sensitivity of to profile. is margins of kind

Peter Kelly

revenue in I some talked QX said they to normal XX%. based be we we about move saw would talked price, would ASP, so flat about QX I've headwinds the I've from XXXX, from from XXXX – mix. And what up to past, Well, XX% by on offset and

points I over think had of or just XXX and basis was of maybe half. supply pricing we just So, about half self-help that in less than

moment? on at I'm part. self-help So, the really, I am really moment, the at where the So, confident

the think from see bag I QX in into the started of QX. and QX and impacts to we into of QX that's that some So,

I up where on don't revenue. At the know moment, really we'll end

in As we strengthened, worse, said uncomfortable situation did we gotten comments, more then if a XX ago, little hasn't hasn't then. bit than where versus we our although days we were feel it the

a is and said external. – is But would say So, rough basis on change it's in about is guideline, bag. the of flat of mix XXX what really it of QX, margin. gross to impact is XX% not revenue, we've revenue depends very previously drop internal and points then the is it a very, I the revenue in X% flat If or

serving. absolute not it's an So,

I confident three I I will see how wait our and guess put back. than to we've structurally right come was need done I out QX. terms the thing think for of ago. good shape very it But in revenue plays very, in when under things have months more things Definitely control, the for incrementally and confident, us we'll

Vivek Arya

XX% XX% aspect to past, original think and environment impacting second a it my the Thanks. Thank And there is of that secular I you macro to or targets? target, Do curious – your do growth trends where business the your in business you. I'm continuing part the for and are is for about follow-up, is of the in the that autos you growth still ADAS half? what tied XX%, and think the electrification in QX did set automotive at breaking how that

Rick Clemmer

I'll I'll talk. Kurt and make let a couple of comments

demand, the They would as auto clearly as in the see think a it is, some significantly, areas still fast They're not those anticipated on as been thing originally. we fact fast. very as are quite impact not have I growth well. that quite softness we – ramping have growing does but as up

So, it but see radar. growth impact, clearly areas does specifically some a have we those and associated strong with

Kurt Sievers

Yeah, Rick.

plus for being impact. versus zero then more in confirm is as SAAR of do Rick area that functionality, in the But expected. mid relevance radar in dependent term X%, longer obviously, out the on remarks. achieve penetration still any But with we for prepared a clearly, this So, the as maybe his because some of rents is laid We there the minus or QX the nothing double-digit to very did growth. much had are X%

radar, business. digital business. to ADAS again very just today that expect I somewhat over battery portion mainly and are the and base, XX% comes clusters that three to over later, in we want you the remind XX% to to confident next a because of So, it And continue management it's revenue years above, smaller from the growth auto

Craig Hettenbach

Thank you.


our Barclays. of And Curtis next you. comes Thank Blayne from question

now line open. You're is

Blayne Curtis

Hey, two. guys. have my questions. Thanks for I taking

moved I on just one, small. to $XX noticed it's million sale. held about you for assets Just OpEx the I know side, fairly

if comment if of just strategically, that. wondering maybe comments – Or just on can't, kind that could any on you Just you initiative.

in And that then, market. the that that'll you on for kind some market? like when side of Thanks. just you ramping, see mentioned maybe adoption sounds get you the you, year of anyway maybe kind curious size this UWB, I'm can mobile

Kurt Sievers

So, our wrap diligence and we're it doing held specifically very a at the of moment part of year. what before but we end small dispose for sale, hopefully that business you to we due of asset is, the tell the can't will up the

held moved we've to asset that for So, sale.

Richard Clemmer

the year. was it's opportunity that we And non-strategic shipping ours. till in better like extremely business off it And somebody than else's start we're in On just this felt won't hands XXXX, really not excited a being there. about ultra-wideband,

let going some I'm Kurt comments make fact, to that on In as well.

Kurt Sievers


secure which cars strong transactions next as see it's really middle perspective as foothold So, from start will mobile year, explained by and security. way, creation Rick think mover market end equal think will a do technology as and impact, an we share ramping. market to And leading leverages, field. this almost well is place our of have an Revenue we ecosystem excellent We system our we a a strong our will XXXX. earlier, foothold first be with of advantage, the market that is which itself, with a billion in in and

Richard Clemmer

Blayne. exciting, very So,

Blayne Curtis

Thanks, guys.


our of Cowen. Thank comes from And Matt question you. Ramsay

Your line open. now is

Matthew Ramsay

it bit are other Thanks. just standards as that are I And are with the last there what there talk are an chipmakers out morning. and out? that there question flip to competing this the a could other UWB? that you Good UWB. Kurt, side, industrywide partners such other standard rolls on then, potentially ecosystem about much. very on could follow-up you involved Thank little wanted be to maybe

Kurt Sievers


So, the first has standardization an for sure chain. product. is underway compatible companies value can by That different a protocol to on very the means the is hardware It that it whole been physical IEEE supported of initiative the vendors standard side, layer while. there all make through underway key ship a for

our experience, needed any which in clearly, from So, is successful a standard connectivity place. is fully for ingredient

technologies doesn't competing it capability, is proximity, Bluetooth ultra-wideband. only which really low there of far get but lacks the standard, to one really somewhere of Relative ranging has the in but the which energy, comes by some directionally precision

are reiterate, relative the where So, key feature it detect it to of measures want the communicating flight just is objects exactly can to ultrawideband I time that through of each and other.

So, distance it's all measurement. about in precision

have Bluetooth bit from and chain it's perspective. low partners but energy value ultrawideband. the a precision can far definitive it clearly clear It's a of key do decided little that, That's that from along a why our choice very, very for field. in

The with clearly, of to this has security. other lot come which do maybe a one across didn't

our access with applications secure we or access are So, which here, we element. together seeing door play in always car

is which unique. the that use case connectivity fly. combination, dare say, And it I makes and the is element So, pretty to combination of the the technology secure ultrawideband

Craig Hettenbach

you. Got for color. that Thanks

of just rate so as the visibility quick it the revenue doubling investors, follow-up, again, Just Marvel run you're the acquiring. the I'll I from a business to towards up get question continue bring

coming pipeline have on color you If design win guys up, so any I on question I'm It's keeps Thanks along. or more focus much. that visibility Wi-Fi it X? just a a relaying guess very just

Richard Clemmer


Marvel more technology in the And and than X, in two-thirds we be unique as X our – portfolio. the have a much supply connectivity of puts of processing business basis. Marvel really distribution that combination customers, wins distribution broad able the grow our And broad-based puts channel while a our Wi-Fi able associated channel, to from better solution Wi-Fi combination to a with comes confidence our us fact has think being had Wi-Fi faster. fine us I about design a talk much They're is, based in processing our with in to it. that's our distribution clearly position position leading

have to us are to things And really relatively combination to a So, I business that and fortunate of critical it meet very offer We're the was we're in the of breakup customers. us to funds can for requirements. to the available able in those complete our that ability we so why be project all fee from able so the doubling the think connectivity so customers' be put closing time. solution to transaction, the gives reason short place, a our to forward to Qualcomm period looking

Kurt Sievers

customer our on complementary Clearly, let very the although Wi-Fi just add with in me and of the way reactions [indiscernible]. very of fit are some nature positive So, portfolio this with we the reconfirming process, maybe X now are into customers. that,

auto. from So, which place, we now to and for in that's very put numbers both theory out. reconfirming we specific as customers, what first get more obviously, have for the well was feedback industrial the It's as


Thank you.

Jeff Palmer

morning this Sonya, please. we'll take question one last


And from Hari Goldman our of Sachs. comes question last Toshiya

Your line is open. now

Toshiya Hari

a dividends and IP like Thanks to guys. that in to between schedule, on closed somewhat Would squeezing your me and assume Thank and the allocation. portfolio After it be Marvell in. one post is play for how critical very I in complete had line fair Hey, you strategy? capital role M&A the much you. Marvell think technology or buybacks? just assuming M&A continue it with about balance acquisition, feel your we should would

Richard Clemmer

Thanks. Yeah.

always that we the significant acquisitions the getting a either a that have pieces to of of were side that critical other is our sure but most we with demand lot components and one that acquisition have connectivity the or some need feel on clearly position forward. we customers. need like that to really think we'll happen, from technical one Marvell was some we I going strengthen do we I'm tuck-in that

So, I the really builds of requirement. most out that think

what I area trying think as to a we that. do improve see That's are look at focus to analog us. we can attach, for we

moving Fortunately, increase our transaction that, right, to it more be on to an of anticipate absolutely up annual line would our normal think post we basis in capability on of the we we And dividend processing have talked I lot on ship move capability the a in complete associated our specifically our plan [indiscernible] the a you're that with with Marvell peers. But drive focus internal most return of or industry alongside solution. will that focused to share and semiconductor we as dividend repurchase we've our forward. about cash

Toshiya Hari

you. Thank

Richard Clemmer

and see So clearly same seen on bit in have morning. anticipated they're the the encouraged you up a this the as and portfolio continue in that improvements have thanks ago to create friction outgrow and had design not uncertainty trade continuing now have world days joining shareholder we and reset we have other rate we like QX well. we value. We of that's us an the that to increase position and about beginning in to for based going a But be base of QX. continuing, while to impact performance at we a the good very in felt regions continued our the as significant marketplace Thank would And the much. little market forward we're wins everyone XX

Kurt Sievers

today. everyone. you, attendance Have a Appreciate your day. Thank good


concludes This conference. in program. today's today's Ladies thank and gentlemen, for you participating

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