NXP Semiconductors (NXPI)

Jeff Palmer VP, IR
Rick Clemmer CEO
Kurt Sievers President
Peter Kelly CFO
Ross Seymore Deutsche Bank
William Stein SunTrust
John Pitzer Credit Suisse
Blayne Curtis Barclays
Stacy Rasgon Bernstein Research
Craig Hettenbach Morgan Stanley
C.J. Muse Evercore
Chris Caso Raymond James
Call transcript
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Ladies and gentlemen, thank you for standing by and welcome to the NXP Semiconductors Third Quarter 2019 Conference Call. At this time, all participants’ lines are in a listen-only mode. After the speakers’ presentation, there will be a question-and-answer session. [Operator Instructions]

I would now like to hand the conference over to your speaker today, Jeff Palmer. you. Thank sir. ahead go Please

Jeff Palmer

you, Daniel. Semiconductors’ to NXP everyone. Good quarter XXXX morning, third Welcome earnings the Thank call.

Peter With me CEO; our President; NXP's Rick is CFO. Kelly, on the Kurt call Sievers, today Clemmer, NXP's

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

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

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

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

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

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

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

Rick Clemmer

call And details. for conference those Thanks, welcome everyone informative to Jeff, today. our

billion third $X.X quarter. the NXP delivered revenue of for

our good and range. end near of We guidance. successfully improved above end the expense were the delivered of our sales profitability operating Our guidance control, high we high demonstrated

this Peter million provide flow resulted and in of later. will Kurt together, detail $XXX cash generation. free specific Taken

requirements. customers’ We are believe stabilized. declines the behind of We see portfolio customers be industrial demand that the Looking our our initial markets environment somewhat long-term year-on-year to our of forward, we have addressing automotive product from us. signs strategic worst investments optimistic continue to and are appear our in the

Specifically, for year-to-date. to year-on-year a high single decline we've the versus single guidance decline low digit our digit automotive points QX experienced

Additionally, points our industrial for a decline business decline single the guidance seen mid mid-teens digit to versus year-to-date.

uncertain. we're encouraged the improved some shape in significant recent timing any the and of clearly stabilization demand, While by and market reacceleration cases is

focus of resumption be our company, to and What demand. consistent we as Regardless is while enabling manage in believe and continue to the expenses differentiated delivering well-positioned are demand costs current their target environment, customers do markets. for a our unique we our and in solutions, on successful is

attaining success which drive markets result long-term competitive high the We solutions. leadership, by based principal franchises our market in positions true RMS share in to target or truly measure our relative on should and innovative

are this decisions regard, rewarded we us our enable insight in into valuable requirements customer optimize and to which successful relationships, with and As gained lasting R&D we investments. long-term we are

enable us will virtuous continue results our product to to that shareholders. Ultimately, and customer this deliver a creates to of alignment cycle solid

of course with product reviewed underpin investment process. strategic and last the the Over that initiatives year, you reflect several new our we've

and level discussed in level As an example, business. goals our automotive, for we've X ADAS X

projected and next over Specifically XX% customer increasing years. which growth to the our to rates in we continue annual rising XX% radar, several order compounded see engagements, our reinforce

commitments a our investments supplier, great ramp several along over front-end RFCMOS customer with validation North and begin in This QX, market-leading American we solution to connectivity gigahertz years. Additionally, transceiver system the we and of software a solution. a processors, radar will leading in our made last complete to XX is

the of for to stage our we already chip seen the have processor we've radar undertake. a transceiver into multi-chip the begun and radar solution the success sets investments with solution, integration The single in which

solutions secure than the a we DSRC and of to in see technology our had invested anticipated in Wi-Fi based longer on vehicle-to-everything, technology, portfolio. we material years few our ago, ADAS transaction taken Additionally, use It's this VXX another case. offering

that pleased come highest we're equipped solution. Volkswagen announced the RoadLINK However, NXP Golf, with has Europe, in XXXX which new vehicle selling VXX will their standardly secure

VXX with are Currently European kilometers being of roads through planned X,XXX equipped XXXX. DSRC-based the technology end the with

point enable of customers is leader, which in their NXP it terms as save of new another number a making that reduce VXX clear to and not material is and success the long-term automotive accidents the investments yet generation, proof to While is revenue thought our right lives.

progressing all that rate and compounded XX% growth In initiatives anticipated. our grow environment. include global have other belief clusters, our even reinforces automotive MEB by subset we automotive ultra-wideband a in growth as Volkswagen challenging more This to XX% are BMS, production addition our can success the with as total, shared in the VXX, you witnessed digital new we've product radar platform, to with and

nearly nice the market, In our rate doubling product, the multiple in XXXX solid early million following cycle are several an revenue performance to of years. traction processors our for we're of revenue tracking days in & and the with to customers, which new continuing result $XX run per in and see crossover a at should a innovative design run the business year crossover with IoT industrial rate, very

an rate interest Volkswagen secure recent NXP-based broaden. continues. secure the base continues access, most customer in to continues increased wallet Within our end-market, market, for the the of access the as our for and quarter and new mobile the cases. use protection, threat mobile announced other attach the ultra-wideband during Both And of BMW auto products, solutions which mobile intersection the support and really enables

a area lot of networks. the market, transition not in the time towards Now, spent infrastructure the around that about efforts specifically one and on our we've end communication XG

of several have build out the in networks. We opportunities XG

on head cellular in frequency subsystems which solutions. the up radio remote towers. in are unit is first a The power are These installed radio

between customers mobile handsets. analog and signals amplify take products In frequency enabling provide a the of communication increased generation developed power MIMO XG highly towers offer high the transmitter our massive we frequency power amplifiers domain, RF base for stations, signals Our systems. and systems. low-power of cell LDMOS range X radio in power in for we've with to X integrated wide a products spectrum, To bandwidth radio fixed

can the with be some providing distinct This XX of paths, radio or as thought XG of XX but physical to same arrays systems. rate footprint, in XG heads, XX of transmit versus nearly upwards times data the as amplifiers remote up

massive standard sub-X either or leveraging gigahertz transitions solutions. XG As the the complete with solutions our industry MIMO across higher bands, spectrum, leading towards LDMOS GaN-based developed the we've frequency market

need our required Interestingly, XX% technology X.X our while be process with higher technology, power until we to environments, efficiency. Furthermore, to able have outs the late don't though dense process we developed millimeter up delivering a for to have urban wave early than gigahertz reporting XXXX. stay LDMOS versus global frequencies array-based in innovated about build proprietary SiGe millimeter XX still greater and XXXX output generation, wave broad-based we or to frequency solutions, XG earnest operate gigahertz, begin roughly to

for RF Taken across most amplifiers footprint spectrum. base of XG innovative frequency applications together, has broadest, entire NXP station the the power

to for in perspective, this market a stations XXXX one of relative a player. two by points RF holding NXP five-year cellular with position the or about compounded share rate. the annual With market number to $X.X for market From market growing XX% power serviceable billion our number a growth position analysis base systems X.Xx,

other the Additionally, build have for out opportunities we in XG NXP.

complement areas. Our designs will dense also mile leverage and urban team with to out repeater and build equipment, deploy which digital has CPE of last in been networking awarded OEMs a few the solutions

leverage performance power which or unique unique we are market consumption. software ARM for which which also begin solutions, believe years, developed These market programmable engines. production base NXP These global the It's to hardware and baseband rollout, our and will low offer capabilities on perspective, XXXX early service macro VSPA XXXX. in deployments XG result build a in mile over out we multi-core tied last Layerscape solutions and purpose-built bring optimized late with many innovative the our few This focus estimate processors, competitors differentiation. which volume a and station solid high [ph] From embed of are broad-based XX-bit proprietary, solutions focusing the and we programmable provider a market, market. solutions, is our

to on a customer a bases for to these compounded to development. growth Our our capitalize five-year of in solutions and belief serviceable product analysis further market mile points last highlights We XX% and XX% a believe solutions rollout fundamental from rate. these at an mile annual opportunity growing last IP the has NXP

to In results. positive summary, our yield continues strategy

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

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

Kurt Sievers

you this Rich, everyone. Thanks We morning. morning, very really call much, and appreciate our good joining

the our industrial anticipated. above QX from the of the midpoint stronger were mobile just as was contribution in Overall, automotive performed results markets slightly and while communication the guidance, deeper demand planned, the IoT than our and infrastructure business our markets with

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

trends down our turn in markets. me automotive. was year-on-year, with billion, Revenue our Starting focus in with guidance. the specific QX line to Let in end X% $X.XX

showing period, as decline lesser declined the than the a our quarter, quarter year-ago and revenue in of X% sequential growth. the During previous automotive X% versus anticipated, rate at

core reflection Our associated automotive lines chain year-on-year, a the supply rationalization. of lower and production declined product auto

quarter. automotive the single from during the digit growth product the range of in grew our year-on-year revenue high However, subset lines

X% to year-on-year, than our Moving $XXX XX% down and sequentially, IoT. up was industrial & slightly Revenue million, expectations. better

quarter, trade to general to products. serviced to particularly it U.S. the & continued in our partners, business and purpose our industrial weakness customers be distribution the global affected source in primarily by heavily IoT the industrial tensions. continued is IoT Remember, primary microcontroller During the markets, is appear which China through indexed Asian our & of be

up Turning up sequentially, of X% to our Revenue the $XXX was million, end X% high above and guidance. year-on-year mobile.

largest technology underpin cases amongst driven in business Chinese view trends order like our will from transit be our see use by that taken premium During seasonal ordering as Chinese robust rates handset new as other OEMs, ticketing patterns wallet of we customers. the despite rates reduced QX, continue mobile well mobile customer, together with associated did Both handset handset at to our both, secure others. attach growth increasing our

so, expectations. growth below with other. the was RF came little less and line a Lastly, a business secure Revenue see our trend line solutions, and year-on-year continue with year-on-year our guidance. communication, cars robust we down to power $XXX million, perspective, our down just below business was X% sequentially infrastructure networking plans. our associated in than The digital little expectations From trends a while product X%

are believe includes do notable me highlight several nitride-based as communication towards solutions, shift both, MIMO products. infrastructure trends continued markets, we benefiting massive here NXP. leveraging gallium the truly This Let as in which LDMOS well the

urban wave also We see dense tailwinds with infrastructure communication traction robust. millimeter our engagements early positive for areas. The business our are for

let our Now, four. to me for expectations quarter turn

prepared reflects the believe earlier a do We the guidance demand, outlook appears basis. worse stopped Our stabilization mentioned remarks seasonal getting in on Rick. by have ongoing in our to

is it reflective of So, to return growth. still not

guiding the same revenue We XXX versus elimination within period X%. decline is the billion, of a points basis ago, of perspective, year quarter the third about this which period. the quarter to at of MSA X% year-ago From up X% about four the versus represents the the year-over-year are down $X.XX flat range a on of sequentially

single trends we in is & low a digits in versus digits Automotive mobile finally, and single midpoint, low basis; on sequential percentage to four percentage are and digits expected IoT basis. mid-single-digit slightly following be expected down range the industrial on expected be the to on expected is QX; up single down is the other basis; be in down is anticipating in At mid our be communication, the percentage to infrastructure a to businesses. a the

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

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

Peter Kelly

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

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

good the of profit. performance in third very was combined our our strong high summary, In with guidance resulted non-GAAP end which revenue near range, expense control, operating quarter

a midpoint third non-GAAP non-GAAP of billion the basis of quarter. in generated $X.XX the reported year-on-year, Now, and focusing which on with details the up of our period. basis revenue billion, guidance. was in line gross year-on-year XX.X%, Total profit gross XXX the versus of was points $X.X XX the the X% and margin MSA year-ago down points We elimination of

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

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

Non-GAAP was operations cash and was cash $XX interest and not million, than interest of tax better with tax non-controlling interest included expense ongoing $XX million, was our in $XX million million. $XX which expense guidance. Stock-based compensation, for non-GAAP earnings, is was the midpoint modestly

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

billion, $X.XX solid a $X.XX QX quarter. decline down remaining the of of retired portion generation billion, was $X.XX the a loan our Cash billion; million XXXX was Our the during at of cash June debt because total net debt we end of as $XX sequentially sequentially debt. third

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

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

million quarter, XX% the dividends the announced in and paid increase in dividend annual third we During the $XX cash rate.

we back continues to our return capital would XX% remind July you policy share count. diluted since excess Our to returned of cash I shareholders, all XXXX to be, buying that including to billion the $X.X return shareholders.

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

target, And months normally the is in to channel channel. distribution term run. we below within months X.X our inventory manage aggressively and healthy, long very to slightly continue the our We X.X expect

increase days, Days the days, an days XX prior receivables sequentially, versus flat seven were days XX was and of quarter. payable

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

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

expectations Turning for quarter. to our fourth the

Kurt minus about billion, at $X.XX flat be we the As revenue or mentioned, to is this anticipate midpoint, And fourth million. plus quarter sequentially. $XX

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

about we estimate Operating to non-GAAP or we be taken to together, or $X about interest around operating expenses plus margin $XX to expense minus minus $X Non-controlling XX million, of XX.X%, an and million will million. purposes, are fourth expected about cash be about see interest XXX million. basis about to operations shares. $XX suggest related modeling ongoing be use for tax count average million anticipate be We plus And million. non-GAAP And about $XXX to the be about quarter, share that points. for

regulatory although for few have billion a debt. sheet. cash to waiting anticipate close cash on Finally, balance we our have this to I assets, we December billion One, the currently down And using plan pay transaction our that use convertible $X.XX comments to the Marvell we're I'd our still from of Xst, we make. of On $X.X final to Taiwan. billion like closing for $X.X approval

our with in pleased out, the pointed we're Kurt performance quarter. As third

and than in slightly IoT a was expectations, our and the better automotive bit a the expected, market weaker. line both than infrastructure guidance mobile market, contribution from the market with stronger with industrial was comm was revenue while Our slightly and

and under at on The is which our Company. are improved to stage we the we’ll in to control demand gross positive those decidedly when the expenses a challenge including keep inflection a working to will see aiming performance operating predict tight continue a items, maximize occur. margin, demand this environment, Until of control, capital,

challenging we margin environment. even Our improved as the over demand non-GAAP has last navigated a steadily top-line gross year,

fourth and into margin gross further quarter, in the anticipate we the quarter. again improvement improved non-GAAP Our third

we and by reflects, is disappointment, the in resulting costs. will goal However, to achieve our our drives it we do significant volume guidance a top-line of visibility, not This driven XX% lack QX. given believe our as under-recovery the

our in costs However, control. I continue which are manage to under confidence the to our have ability

certainly signs, to And would be Kurt positive comments. further, uncertain. like a to we're The some not yet I although declare So, Rick's reiterate we’ve continues victory. ready to market and seen

move of that QX generally revenue on a of first of environment. an bonuses after QX would flat would fact, all our remind impact quarter you quarters for uncertain like positive year-on-year declines, In five year-on-year to from in operating XXXX as benefit feel annual we expenses Equally, feel achieving fringe resets. the the I market increase

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


[Operator from Instructions] Ross Bank. comes question Our Seymore Deutsche first with

Your line is now open.

Ross Seymore

to focus Hi, on the see good me guys. for Thanks to first. side quarter. that’s want sequentially that question. up in It's a ask the I automotive letting

you How offsetting fourth year, conceptually getting SAAR of about So, relative about up gains to share well SAAR. driving NXP's a auto closer just in have very And full talk the you you what versus quarter? that can inventory you did can as in thinking for rate then, growth bunch the what's and in are XXXX be potentially to vectors?

Kurt Sievers

Kurt. Hey. is Good This morning, Ross.

take Let me question. that

Let latest me maybe saying start market with insights are. our what

So, published and are this and where annually X% for they estimate ‘XX, we about XXXX next the they for forecast year. numbers for year decline have. HIS see impact That's latest year SAAR the saying they SAAR their for flat just latest for over a next the

that So, unfortunately, indicates has this deteriorated that year. indeed further it

the minus defined X% and end in for at ‘XX. we minus they up had So, X%, minus now X%, earlier year

automotive are is point the per I QX have we annual, become that the to is indeed into so where all our thanks outgrowing becomes And it business, And in then X SAAR, to believe revenue we look QX. think, how a from appears our say growth, going the the supply performance increase said minus that and effects basis, reflective OEMs. and clearly We against see rate given true continue in our you all to growth between. do at or which cannot supply benchmark chain X we time, minus clean, on more have always quarterly minus leading the QX, and less that's the of a really the same more in quarters, you At earlier our is demand the versus only much chain in reason annual that the car. business should at SAAR, like to that now content that we electronic QX declines higher in which XX

again content guide growth yes, once don't chain next supply And that SAAR. we numbers for be say our should year, reflected the that against Ross. expect the by We I is clear, really should would our in

with going forward optimism clean return should our So, here SAAR. based we that supply there chain is growth more on some flat to

Ross Seymore

my for margins follow-up then, for And wanted question, one hit on just to Peter.

think bit have people would comp. it a done discretionary revenue just the sequentially? And OpEx talk going as throughout so why understand Can about the good seen is have surprised, well fourth job the to the that side, otherwise increase year. you quarter, the are about guys that's overall, in is I I gross little given the you which tightening, in up -- tough you margin in as little a was first in the a much fourth quarter control guys doing the of a up? does increase diminish quarter we the size going

Peter Kelly

is Yes. a thing. positive The biggest single item actually

really a have We significant number.

XX what I tape-outs just third bit a it's the in we item, the single actually excess And, Ross. biggest in million quarter. that's think, saw of of over

Rick Clemmer

So, of those shipping a our we're thing. good [ph] and -- But, customers. NPAs it’s to out getting some

customers, put if Ross. and a there's those And move we and obviously towards engagement cost those so those with take


Stein from question William SunTrust. next with comes Our

is now open. line Your

William Stein


us bit understand price margins following bit. we're help a Peter, on I little think, expecting us customers can Just as you in that deteriorate we and give to know, in up to then you have a to QX you as side. automotive little we -- we accruals Any think incur as that to qualification the go and effect year? -- abate, OpEx might incremental will that sequentially help how we abate some QX, might through that on modeling out as the

Peter Kelly

I mean, guide to at clearly, this QX I don't want stage.

price have a margin single annual biggest increases. bonus. the reset sense from in -- right And perspective, you gross from you item that you're think, I have OpEx is the the on that

hit our example, an we year, target. this as didn't So,

a about maybe Whereas a million XXXX, for quarter. So, an full our if the average kind And to set -- small. we of $XX more accrual is a haven’t we bonus assume $XX XXXX, like of probably and be quarter. relatively targets million talking you're were talking in bonus

You’d QX $X cost think benefits. much -- they see high will fringe we an were as don't be for in increase roughly But, million as as should QX. I

give sure not number. OpEx you not I'm I’d than But, ready I'm QX. So, lower forecast absolute to QX the in an yet

William Stein

It’s of in that. Thanks to a still just the that more really quarter. unit a for your that concentrated. expectations helpful, like sounds a it demand relative at can. a provide And And follow-up fair? was the I content Is thing Maybe it QX, than if strength more one little sounds like The mobile dispersed Peter. -- it's is you start of the bit thing color? than could

Rick Clemmer

content. Well, I the the guess, unit comes from

So, linked. they’re directly

can't So, separate the really you two.

into I strong think, And in QX, base, mobile portfolio. OEM broader our well they a in the the had good increased all as Chinese had point customer QX we was, if QX, clearly, showed Tier customers the that volumes in a Chinese as also. you wallet other largest But, well. deployment strength the their the of of our broaden uptake had more recall is X as we

it think I strong for we it couple really all deployment years it the bode the a with had we project continue where mobile wallet the yes, can quarter and we as think it, associated into in smartphones. with of well continued associated And next QX. be uptake does XX% So, the to going


Suisse. question John Credit Our comes from next Pitzer with

Your now line open. is

John Pitzer

think bands. you there's to that's in forward other that Chinese I keep concern pulling well. sort resolution? some you will But, on a revenue point second There's bands customers think U.S. whether investment And the there's little of trying suggest you been to how suffering of you your as derivative I’d on inventory do that curious would is effect I'm or bit China, trend, business kind sort community issues? have business. vantage might a unique be curious on think been wanted trade of are if of Rick, trade there from checks your they're lean. Clearly, not ask inventory, that the whole any impacting to -- a you're perhaps how kind not

Rick Clemmer

I if it’d resolution, Well, be a positive. trade think, very there's

any don't doubt about that. I So, think there's

really of I as place. QX, associated being they ramping it associated we Chinese I've portfolio supply broaden John. though a it I we lot the the going relationship we with in -- inventory; positive for chain put to and a with In above Chinese inventory continues will really think, There well. we where about like as lot the place. But, has concerned other Chinese FPGAs see handset, at think that us, inventory were customers that of some But, Clearly, we think supply to was And it. guys talked of don't their put adequate see clearly supply see chain. having that the with it, their didn't largest that been heard lot in areas forward. the about and have of be serve we all, technologies been were our comments they continue don't in about a positive

John Pitzer

Rick, prepared space. on just comm and and about then, of follow-up a And your infrastructure comments the some XG

might that what three-year kind of say power have RF put in to Is out for opportunities have today about it target? kind CAGR X somewhere fair wave the to not? that if guys a as your that's go target wave, X between millimeter revenue it's there out how of up impact there side, is CAGR to and that and sub you talked contemplated And case, on of but a that we X. that, millimeter you You as the in space

Rick Clemmer

of set a when we John, Clearly, RF the with million time, both Freescale so business. out $XXX more the at of we from around and networking like business to in were of a going with several power in period years merger networking coming the we down the digital million $XXX range. targets, digital Well, did those declines the

set So, conservatively. we did those

growth should industrial rate. downturn clearly X% automotive don't change in we talking growth increase achieving opportunity, and rate it'll the we've XG But, been gives have what that cover in to because total think us compounded confidence the think I going our and still through forward. just that it the we're with really X% to the room about,

leadership for some making the I opportunity, our RF mile end of up the next talked deployment, that a could a well in as years, And with position. business we're too the in think XG and good real position about, revenue a growth power engagements puts last us and low-teens few hundred in do we with just there's future. the investments rate year distant over in as well early dollars bode of customer some couple not the that a very million with with

by a of this that's So, and of rates positive, said point, we changing year John. growth kind or intact all at a but, we're those our just piece leaving that half so ago, and really not


Blayne Barclays. from comes with Our next Curtis question

Blayne Curtis

on want the just segment. back to go auto I

the growing is You think mentioned area I teens. growth

you SAAR December, kind I seeing curious components growth is seeing. growth any you of Just of are with mentioned the that seeing Are -- the outperformance and or in by seasonal, restocking of with you're core stabilization, you're next year, improving led also the the than the area? kind the better the guess

Kurt Sievers

let all, slightly of me said. correct you what First just

at say I was I which end the think, the SAAR talked improvement I didn't year. year. that level this next in flat of a an achieved low just see They about on SAAR

it's that probably a at is When detail. but down the consumption that not again. we the I to more improvement now, real not. I over which end demand marked was and to say maybe inventories. distribution, back with business careful least you're think, demand. restocking appears means There indeed, be And minor just would by through be that's earlier, say smaller already see it's accounts restocking, think you probably building the reflects that I'd important seeing possibly us about the our it but just coming in

Rick Clemmer

of If be ‘XX. just up ‘XX add projections, look I could half it think, one half Yes. something, from IHS look things, at first you Blayne slightly I if second at of of and will the

little on growth basis. resumption it. So, we've I that way to see of of minimum a But, little worked places uptick, see then, perspective kind at serve in I when you projections run a through now. look think our we're China says, do we beginning based beginning half a they'll that so. they’ve of think distribution, see And some other with their kind means a to which through inventory positive the to their of more associated second an of rate, gotten that their ‘XX, and we customers a of in more of that And are

Blayne Curtis

I just QX might on the you're It thought you’d close could And to wanted transaction, or sounds earlier. waiting do transition, like for WiFi ask little Taiwan. you a but targeted

you December, anything's guidance that? if expect close if in curious, in Just from the out and to

Kurt Sievers

nothing second don't guidance, fact to there's would And in first us that for how the a anticipate the clear in timing. we be guess would we it it inappropriate in than closing have is really the it the sooner process guidance. nothing's the quarter. There actual take, into will really given that Taiwan But, long insight


Stacy Rasgon with Research. Our next question Bernstein comes from

Stacy Rasgon

release. I in language talk [Technical to wanted the about the Difficulty] first, just

Rick Clemmer

really can't Stacy, you're out. you. kind We cutting hear of

Stacy Rasgon

sorry. now? I'm you me Can hear

Rick Clemmer

Yes, perfect.

Stacy Rasgon

that try Let's again.

have things demand have this now bit the seeing demand bottoming. flush? little improved environment we're that in representative a of improvement of I to the distb at hearing more or in At are point? amount end a any just just statement of for we're actual actually of [ph] in fair Is the language same statement is time. the channel a sort end heard So, short-term challenges about haven't a you sort release that demand, talk you this about the time, extent stabilizing obviously while. terms And visibility, this you bottomed purely customer inventory

Rick Clemmer

IoT We've we've orders. quarters if of Stacy, is, trying the is at increased you will think, midpoint I the if seen three kind mid-teens be segment, our of projection, what we're we're it this mid-single-digit. the So, -- we industrial of were of seeing some is year-over-year fact things when first you our look And decline through year. and at improvement pockets point that look to really, stabilized. seen or what to But,

definitely look through And a a improvement. we're at of significant quarters. X% we're of if first the what the been And kind automotive, midpoint, decline. decline that's at year-over-year -- at So, high-single-digit kind three you it's

we're are the It's trying things rates we have their I So, see have based customers our and indicator that that's we really the talk we about. on That's what to from the that improving. think run basic improving. that demands,

mid-single-digit we'll communications Now, infrastructure the with you the we QX total. changed mobile and that. in adjust a exception be been we'll little total, to downtick the with a couple communications bit little where QX. if the -- in And we've the improvement kind less we of have even to been and than you look kind the for MSA a of at mobile and of -- in also our in have of counting, total, we've And that to get were in points

a about us So, really to robust that some I a and and demand, not seen think lead this anything we at point. stabilization improved demand talk underway would of pockets clearly have recovery increased but

Stacy Rasgon

maybe the Difficulty] And term Can that This me Okay. follow-up on is hear on you very strange. now? longer the [Technical

Rick Clemmer


Stacy Rasgon

is your target on follow-up to you're strange. To that, growth being articulated X% X%, still long-term to holding Very it.

Now, obviously XXXX was forth and CAGR, to a we've put XXXX in a as got it we’ve XXXX. decline that was -- got originally

and growth is be would that starting to of we've from? case, think think of XXXX this what what XXXX, drivers something right the we context that? Difficulty] if the in think do imply X% So, the And given you what about to guess, we do can how off in which we're XXXX, would base of of XXXX? [Technical long-term model, to X% seen get that the that model growth CAGR closer Like, the about still growth or in way that's three-year the more I the

Rick Clemmer

what we've out thing downturn. The us fact end committed X% is end the the can turn have we accomplish the be to different next that and Stacy, nicely high-single-digit and year could mobile be mean, the X% half we that. growth rate. total, we the gone increased be at well is And that So, upside. what we committed I with achieve ultra-wideband think, be of talked at deployment kind is, different are drive potentially. the sure the about a positive high rate. wallet not deployment on or a think achieve in gives than quite I to to of look that to We ago, I to we growing this that. is to year We said clearly, But still in And that we laid shipping as high of what to X% categories beginning mobile growth is, some may to through two the that might we're knobs X% that and as key is now quite to XXXX. industrial, able zero XG as to the based automotive growth


comes question from Morgan Craig next Hettenbach with Stanley. Our

Craig Hettenbach

a on from the think and would doing feature some highlight incumbents in question of a that that you Kurt. for Any set you’re particular, just BMS perspective? Just you update things versus

Kurt Sievers

good to as which of is relative not OEM And European out. signposted vehicles kind across in coming Well, one update a news. board. this, model, very their track, quite seen about commitments, we actually making large in are a And the we’ve in a that the is all we definitely but think, on are electric we have bit major QX I involved earlier, new announcement

into electric you most, evidence from will, over speak. clear car we say building shipping commitments very a would as this with if And I company the incumbents starts So, a on our that success one of vehicles. is bullish

of couple the So, that we future, speak. models I actually the but as out their in this whole of across fronts is fleet somewhere OEM are shipping mean, not of a just first

below on means it rollouts. line we to what the our are track is So, BMS

growth years. earlier, next into it discussed have was we pretty As the high rate few

be Let OEM, me the and of well a in we as [ph] safety convenient while against system of on to to broader one about we microcontrollers significantly Craig incumbents sustainability, function speak this highlight design B level, analog wins very about front-ends. lot a Differentiated as public have high-precision speak too. just that it’s A announcement, remains base performance to it, for given our us the approach with since

Rick Clemmer

is at the time personally of we Craig, it, follow and a track announcements think incumbents of I the announcement that. -- guess, would and I superior that some go performance always the the I that, thing we add a we we have to some making. And And, by that back than look every and still only they're better product

Craig Hettenbach

the been on And a just you've improve call margin, talk of months? to you is some revenue also gross gross the some pulling maybe then, Understanding over from levers benefits Peter. can about margin follow-up just headwinds still there some line, next XX the of and mix for the

Kurt Sievers

are the I they things. think same I mean,

the in over years, long-term mix few think, next helps definitely our I us. the

going margin coming In at is, XX have XX making see kind test full long-term year moment I look not and a pricing, about right honest, we like see issue long-term. be get XXXX. you'll jump, To in the for sure to of really of give kind terms to sure yields, short-term, out, we're managing all of to you're but partners the I'd model the making XX. As it's to us in we the blocking stuff. at that gradual are suddenly the MPIs our us all the improvements tackling, gross have

say lack see with It's have. QX. And saw visibility to So, that of hard the visibility I'd we you environment, current really. we do in the market how rather than that

need I to to level. but able get it, to do So, -- pickup hate admit a need be the in I to volume to do XX% I

test test QX, the improve the anticipating from weaker of surprised higher than was we thought assembly above QX. but we the And you guys margin is, given the our that of XX.X%? and the and -- in I'm question, to was didn’t gross you of utilization didn't revenue bit end guidance is, guidance little questions were towards one why a And in answer internal ask assembly the

be points million. to honest, is XX Now, basis $X

So, the it's the to But, number believe we'll of to upfront. anyway. it levels back, really get market makes it running the I does in get come that really, be not big able there. environment, a revenue tough have, current the as we revenue

Rick Clemmer

Speakers]. XX% term. I We I to element just will [Multiple specific, be that's our think be improvement. long-term to the think, near talked is Craig, important utilization about gross that in key And But XX% our continued well. as margin target an of to XX%.

Kurt Sievers

inventory that's just managing good impact and of And and all revenue stuff. an that our


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

C.J. Muse

flat sales points your coming distb first while [ph] question, guess, one your of year-on-year XX%. data I guess, is out of the I more were XX-Q, encouraging, sales down that OEM

two, One, standing two-part distb perspective? are see as a OEM least you be at led? today, So, where distb here I a from comfortable or with you then are And do there. question you guess it'll we inventory recovery think

Rick Clemmer

distribution. Well, observation -- weakness that is I out it's we most think, point a that have your the of great of comes

POS inventory which If back months We out months. to allowed X.X be shipments you in late done late able and the on actually some we've X.X go had X.X that we over our to inventory X.X months would the that we've distribution down the at quarters anticipate timeframe, go on to would the QX. look in in QX reduced at to few what actually actually last the the quarter maintain down inventory, significantly to months

an we’ll we think, -- I distribution. in will see that uptick see

than as it as as volatile you tended, far the I more pointed I has good that anticipate it in shape, towards issue points improvement But more and will be would revenue. relevant associated to any there's one think, out, we’ll we're But associated I with that. think And see think where be early don't I in of uptick be with inventories, a the the total think will real that side. I OEM it.

C.J. Muse

think what secure and vector near-term. how wallet, your XXXX so growth guide asking as to and your the look don’t mobile As rate the into about, into does about business my are generally look for But, attach mobile and follow-up at you you visibility know of QX, you just I XXXX? not today increased to you thinking want and like

Peter Kelly

we driving last on we And our are years. well But be attach growth, confident track I I is very very actually next are And actually can reasonably would growing mobile has we indicate like that rate check does continue. wallet attach year-over-year application say, our what we we continue. from year associated we said perspective, is should increase, of track a confident XX% always the to a mobile XX% that we Day in we well which year I mobile the on rate attach did on be it would how a Analyst are that with see that are quarterly lot mean, journey. and growth rate what we three said that increase looks journey. over the the there of think could from And fluctuations, earlier that on seasonality. that

Rick Clemmer

that one ultra-wideband, in the be of with interesting half things wallet. as ship we really position position just will the is second it next begin year to and our the in C.J., mobile think, mobile, solidifies our I solidifies

So, I demonstrate continuing a overall be as think in to us factor that'll our as well position. our for contributing solidifying significant leadership

Jeff Palmer

We'll take one last question here today.


Thank you.

Caso final Raymond Chris from Our with comes question James.

Chris Caso

of the once to think going in to kind that to to of kind we revenue that And a full $X.X Peter, run when billion get you potential quarter, last still level around it about flat get of on forward, Just quarterly the question Is year-on-year we a that on the to XX% the margins. follow-up that which the level. and about basis right way year… obviously gross quarterly about, the suggests talked revenue, getting a getting -- rate

Peter Kelly

Yes, yes.


Chris Caso

Quick right. answer. all That’s

Peter Kelly

rhetorical was It really. kind a question, of

Chris Caso


with follow-on tensions are is, something U.S.? an some your advantage the situations and of supply been there's And to of non-U.S. giving some that with Chinese of tending to and Okay. you provides you're trade Is talk going forward, the being that favor somewhat domiciled the the that perhaps that some in some to the of solutions, business The outside of think trade now? security some such. tending you of customers see do

Rick Clemmer

dealing discussions sourced non-U.S. they technology. source as different the us, IP some seriously, discussions our appreciate of as to of I they No, with with complexities well Yes. a trying I providers. production think, have other think, I of about think, And move lot their customers, to with

overnight of associated that we So, it be positive. that could period Obviously, but time takes with doesn't happen or think immediately, it.


remarks. over Clemmer Thank to any our question-and-answer now would you. like call turn I session. Rick concludes the this to for Ladies and gentlemen, closing back

Rick Clemmer

Thank you very operator. much,

fact for previous and the in thanks today. better reduced and decline with the did us is Obviously, QX puts than significantly quarters encouraged So, drive of year-over-year the are stability guidance us that to we that and to see leadership XXXX in with the in joining a technology ready into we our products to position feel be to our solid will solutions continue with deploying new to get our ramp-up to move differentiate in NXP able customers. show we for

much your have So, for good support. thank very you And a day.

Jeff Palmer

Great. Thank Daniel. you, everyone. Thank you,


for Thank gentlemen, Ladies conference today's concludes participating. call. and you this

You may now disconnect.