NXP Semiconductors (NXPI) 2 Feb 212020 Q4 Earnings call transcript

Good morning, ladies and gentlemen, and welcome to the Q4 2020 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 call is being recorded. I would now like to turn the conference over to Mr. Palmer. Jeff sir. ahead, go Please

and Thank you, NXP me Welcome the NXP's morning, the CFO. Kelly, Tiffany. fourth quarter Good President Sievers, Semiconductors' Kurt With today everyone. and XXXX Peter call our to is Great. CEO; earnings on call.

replay the impact of or include for be from forward-looking that involve and products reminded expectations our quarter Tiffany statements be obligation statements said, for today in could will business, Today's These markets continued which Please risks macroeconomic but the we expectations. regarding for no to include, of revise limited the uncertainties operate, results current XXXX. materially is any financial that statements. and management's impact call our As results corporate publicly of to cause our the recorded existing website. the on the being first that the and and uncertainties available end the from pandemic will differ not NXP's COVID-XX undertakes call forward-looking risks specific and are sale update NXP to, on new

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

has measures quarter Investor on nxp.com. in non-GAAP available Form refer discrete reconciliations financial earnings section fourth to to in which measures non-GAAP certain and driven primarily on provided of core GAAP to release, operating the not are underlying NXP's website the the Regulation by Additionally, financial our NXP be X-K be to will events we G, comparable to NXP's does furnished which to SEC at management related that today consider directly the Pursuant measures performance. directly most press XXXX Relations will is

the call like to Kurt. I'd Now, to over turn

XXXX and and supply-demand call morning. one. full-year certainly Jeff, much, I you QX I discuss joining our on how the We I all morning, quarter current will environment, guidance the view appreciate we and insights Today, will this our our performance. for provide good very everyone. review really Thanks Yes. will

Now, let me begin with quarter four.

high the markets of with guidance expectations. than and the results Industrial from planned, end our in and with the Mobile near markets the in our infrastructure line contribution IoT with Our & trends were communication both meaningfully and stronger Automotive

Taken four billion, and X% midpoint $XX revenue quarter together, NXP increase of delivered of $X.X above guidance an of million range. year-over-year our the

was the non-GAAP of four above a is XX our strong about than that points basis year Our points XX margin in ago midpoint period, guidance. operating XX.X%, the better and quarter basis

Our operating growth, of outperformance was utilization our benefits and on factory thanks to thanks revenue good fall to strength improved early solid through expense control.

full the decline the orders the year was year-over-year. robust at continue we very X% year, the and will initial subsided, began throughout XXXX. For revenue from progressed to And pandemic billion, earlier impacts a which a do as rate customers XXXX anticipate accelerate in $X.X our of

Our was points throughout do continue we note year, invest in full reduced lower differentiated which reduced definitely as OpEx products, year to ambitions. our towards decline growth of operating slightly are It more we to XX.X%, a XXX lifeblood our new basis from the factory of SG&A though loadings in long-term spend non-GAAP operating with margin shifted R&D and of important that expenses. combined is revenue because the

clusters auto X% and traction to of product new reflection than electrification turn revenue year me let in Automotive. $X.XX past. digital overall in always have we Starting was Now, better end content the production gains Full year-on-year, the with in the spoken materially in and which trends our down about focused specific ADAS markets. and billion, in strong

our million year ago up billion, and period Automotive four, than better quarter X% For $X.X guidance. the $XX revenue was versus

the wireless connectivity growth. year year-on-year up processors to supporting with Full billion, $X.XX our was IoT. moving the revenue Now, Industrial both XX% crossover & and

IoT four, XX% with the in was ago our quarter year million, Industrial guidance. For line revenue with and & that, versus period, $XXX

Mobile. to moving Now,

Mobile billion, revenue year-on-year. a business Our Mobile growth last our and year, market was we we XX% during If $X.XX of the robust year in which the wideband and of solutions, strong of wallet rate up in quarter wallets full is the to is And for semi-custom adoption mobile are X% our one voice underlying XXXX. business. audio of do year ramps analog during early year, the mobile the interface was attach experienced target exiting end our mobile parts the supportive continued of of discontinuation reconciling sale our up XX%, year-on-year. this of also increased estimate attach about XX% anticipated expectations ultra offset which line and our our by full We some rate with secure

base reduced million, cellular Infrastructure For down and the the XX% to quarter but was market $X.X period, in decline sales Mobile versus positive was experienced guidance. products revenue year $XXX Other. RF half first which year-on-year had billion, XXXX. into revenue least, of of Communication year-over-year. & the power than four, to $XX X% million that And was with we better up station the trends not relative ago Full-year our last due The

For was in guidance. revenue year-on-year down four, with $XXX quarter and billion, line XX% our

of and across the QX first markets, This When on see rapid would will to most my it a been demand order as of at come. case environment and largely trends that turning and the which year the offer trend rate. The geographies, quarter, all demand then, in has and in fulfillment of before our industrial rebound emerged well capacity to for to be volume the the guidance view first high to the sold half over QX broad-based beginning products full end the begin accelerate as demand consumer and believe portfolio NXP. was several product in as pandemic, compute channels. industry. direct most type focused auto explosion quarter, from quarters out. in mobile our in to of very reopen likely supply our of distribution through across our expectations rates We Now, the began continued increased an like to the has our I year, the did home customers and the because current and available markets second we the the half working of and force second actually after pertains as led shutdowns our the our And foundry it for in to

cost experiencing As in a and in are times, lead increases we others increased suppliers. cases, certain result, and from significant

altogether, with come for suppliers, both may demand. me our very aligned internal several with demand supply external very a quarters, combined quarter challenging that more really to one which situation, to the let team a our indicates guidance. our operations Taken customers the anticipate this continue backdrop, and now environment setup working diligently robust we are and with Against supply adequately we

We of first a are quarter the year-over-year. XXXX X% in to XX% $X.XX up growth the guiding At revenue sequential the midpoint this our business. From one versus about quarter the range up of up prior XX% quarter. versus trends basis, following at at billion, the within the about XX% anticipate midpoint, of represents we

is & four mid-single same and Infrastructure single mid-teens year-over-year sequential XXXX, and range up versus in versus flat to Other 'XX. XX% single quarter digit And up be in to on expected the a year range up the finally Communication basis. & down quarter ago be in period expected to year-over-year and XXXX. IoT to versus is is high XX% Industrial the versus a quarter is in low and nearly versus one quarter mid-XX% up digits expected expected be Automotive XXXX. up be Mobile digits up four the the First, four

is it environment dedication the the requirements in Now, we at focused encouraged of simultaneously in on demand face to adversity. are impact while of we challenged and am by our of carefully navigate global safety we are and their rapid demand, still all proud really meeting the employees, while adaptability, and pandemic, customers' important and assuring their hard rebound work our remember, continued of improving the the extremely all the of by I times health will their

positive, areas the to performance. to that, hence design about very be you, summary, So potential review customer and engagement and for to Peter, focus pass continue we would momentum in of our the financial our a to with And be NXP. levels, all like continue strategic of our call very I future win optimistic

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

gross covered very for highlights which QX, guidance non-GAAP of non-GAAP our lower XXX already were outlook of was is our the move million $XXX Full $XX interests operating from financial gross to has an performance I'll Revenue with high both non-GAAP in deceleration down million Total were range quarter We cash gross the non-GAAP $X.XX during significant Total the Kurt XX.X%, and $X.XX down Stock-based year-on-year. non-controlling of CapEx in XXXX of incidental points taxes provide non-GAAP operations drivers for profit. and of during operating in flow interest resulting to utilization As and revenue down profit and earnings basis our financial was was associated XXX revenue generated end million. million, million. provided and net cash Full move the margin highlights. $X.XX Non-GAAP then basis include operating the billion in was investments million good. points highlights improvement or because non-GAAP year-on-year. was revenue. free billion with of billion, the was results. were year. cash year fourth profit quarter XX.X%, fourth flow, taxes on $XXX the dollars, compensation, year-on-year. year a I'll flow a was on quarter of reported the expenses the cash and operations X% profit operating of down XX% $XX billion not fourth year million, year-on-year $XXX near non-GAAP $X of included margin and billion revenue very our healthy revenue $X.X billion Overall, factory in non-GAAP $X.XX expense $XXX and ongoing for first $X.XX non-GAAP full profit

In returned During of repurchased during cash million. the million cash XXXX, which generated $X.XX non-GAAP we and total, XX% our of owners, we was paid dividends to free flow total billion $XXX of year. $XXX the shares

operating expenses down QX in and billion earnings the operating fourth non-GAAP and margin interest interest midpoint quarter. at of total line Now, the non-GAAP high flat $XXX of reported the compensation, gross XX.X%, our X% was modestly well generated million and our non-GAAP profit $XX year-on-year a up up of gross million. were was profit which Non-GAAP end million the profit million Total were end $X.X up XXX moving was high was year-on-year Total ongoing $X.XX the above above operations year-on-year not operating the guidance. million. From non-GAAP million in revenue our was from non-GAAP $XX basis non-controlling and to range. details points of midpoint with of guidance. of for margin We points XX guidance XX.X%, operating billion, basis cash $XX Stock-based $XXX guidance. a perspective, and taxes $XX expense included our is $XX million, was in non-GAAP year-on-year,

changes So the turning in cash to and our debt.

sequentially, QX the billion debt XXXX early at XXXX was total quarter. billion, and as the on million, Our billion, the our $X.XX We we is of down X.XXX%, this the retired $X.XX did $XXX which X.XXX% first end day of fourth $X.XX September notes. XXth, the

adjusted by cash and billion a $X.XX due position down -- repayments, the The previously quarter. mainly offset billion, of to XX-month $X.XX generation billion billion was with net fourth during we cash quarter debt $X.X billion. was ending trailing exited the resulting $X.XX noted Our sequentially, was and EBITDA $X.XX debt the

end net QX X.X adjusted of to ratio XX-month times was interest our at the coverage XX-month of trailing Our adjusted X EBITDA and was debt times. EBITDA

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

and we million dividends quarter, cash shares. $XXX our paid During million fourth repurchased in of the $XXX

metrics, six to Turning long-term target. was capital decrease significantly working a days XX below days, days sequentially inventory of our of

with channel a Days with levels. will XX, the rebuild we've an continue It a to inventories XX to targets. X.X our channel down supply below payable prior also anticipated long-term target months at was as number days position. our and quarters suppliers. increase increased distribution orders faster rapidly Both inventory days, of orders find with manage metrics we quarter days to two XX channel accelerating ourselves receivables constrained of sequentially, versus closely and We our customer the inventory material in than take and reflect our we on-hand long-term in

$XXX free demand, deliveries operations was XX customer cash improvement the positioning in XX cycle strong Taken in together, periods. of from billion customer quarter, the million. conversion days, non-GAAP collections was versus future cash $XXX our a and in was days and prior CapEx receivables million, resulting $X.XX an flow quarter Cash reflecting solid net flow for of

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

or million. expect margin points. to are gross about basis to be be or plus We expected million expenses about Operating $XX $XXX minus about non-GAAP XX.X% plus minus XX

million. see at about Non-controlling be will first XX.X% to we cash non-GAAP million about suggest an non-GAAP together, $XX the operating operations Taken $XXX to midpoint. for $XX and financial expense million, be anticipated about interest that of we average to for we on-going estimate shares. million related be $XX the purposes quarter share about modeling We and margin be count to tax use

have expected. make. has a One, have clearly back demand rapidly could than more like I I'd comments we come Finally, few to closing

opportunity a we raise To see relationships. ship products our as attempting to our as tight clear we after to supply is clearly an to to have use current environment we pass short-term improve that as will the Our as It's margin are by which do this current long-term possible. our some unfortunate prices, much sacrificing ensure of customers on. them and to be suppliers focus look opportunity though, to not

the to of given continue back buy shipping long-term to Clearly, back towards excess capital able operating tightness of level supply and DIO our all February the at and allocation our of be anticipate upward first policy line Between reflects $XXX our increase supply plan to the stock, Xth we benefit worth significant in fall quarter. an move target the and cash months of unlikely the production during our bought our the Xst, It's additional in the of returning with to additional million QX. January during Additionally, shareholders. or revenue. targets margin orders, distributors we through we'll for

environment we creates a can new we the on deliver believe challenges, XXXX. our of improvement Although in current margin set still plan

be to them a of truly any any of perform our of QX, internal few to requiring impact small virus, or safety our pandemic, to And as our continues labor, in output. Unfortunately seen in period. people to primary a self-isolate If mentioned, we a and outstanding in concern. a our operations team the Kurt the the symptoms experiences result terms we've more our to fab exposed for fab the of In way as in ask team anyone members, self-isolate, way. in unexpected shortage continues a

impacting Although short tune this in overall XX issue, XX basis points will and in points short-term for -- causes best profit We QX a it's basis our this of medium-term. basis and clearly performance to the in impact is and us the XX estimate QX. us of both

and headwind, While our the and our safety of employees believe are protocols COVID we short-term this our consideration key appropriate correct. a remains is

XXXX. my Finally, I'd like truly amazing all thank NXP to a colleagues for at

incredible future. a in for an bright done us You've and unbelievable truly set up job very a environment

back it questions. the turn operator I'll that, with to your So for

with Your comes line from Instructions] Muse question of the C.J. Evercore. first [Operator

question. in afternoon, morning, you for the to and whether on rising gross role probably how question, taking play thank a and a guess, Curious assuming about there the to most speak will if mix you there? the recovers XX% about I importantly, then, play. think you utilization in pass good still talked how your timing to And Peter, good first that, and margins, how ability can clearly difference costs comps on guess, input I year? is through Yes,

questions. So, great

Let's QX, of QX to talk first about all.

XX.X% to we XX.X%. So, go from QX,

QX. us last said impact quarter XXX rather utilization utilization the points I on -- think, in that about I basis would

have benefit level in QX. we'd of So that

instead to QX of out, and self-isolate, of XXX points a from again QX, XX of improvement basis turns the these, got need about into only because we've basis it As points.

three So the big basis points to of C.J. XX that really is XX.X%, XX.X% things made up

and factory annual were pick basis about we because utilization, we our and XX of sorry XX at from factory XX basis price of up performance, reductions. what basis improved points performance the basis improved from So above points headwind -- points from XX expecting, beyond

up okay, why well you points did basis basis XX%. QX about there why you very in is So period Then sorry, things. basis one from of comm you -- the about XXX from XX.X%, that's -- of XX.X% our of is XX.X% mix. roughly in XX running two say, issue underutilization about aren't QX, There's XXX points and business. And is points in you if to really really mix made infra to from running aren't QX. That

our XG progresses, see in our we'd infra and -- an time. that auto first over improvement through So of comm year move -- kind right. about other we an relatively your business are And pricing, strong. right mobile question as -- think half is the and we And in weak. improvement mix I see as was then and the we'd in relatively Did

So pricing is really mixed, okay.

us. to long-term of some trying have seeing customers, many up we we're way have similar suppliers contracts we our our prices So contracts the But with -- in same put that the we'd to suppliers. with

So it's we our on that, seen we those price increases. a pass Having we where a mixed have customers. endeavor And will of said bag to to bit really. however them,

quickly interesting you an about made it. You can do actually comment how

what quickly. pretty month to able you hopefully pass we'll that on see So be them a will a quarter quickly, pass actually when guess two really even them could I -- or think is when can't but always or you we have I on

improve would to environment opportunity the structurally don't than disturbance that like an say we a it's to issue. current rather fundamental as We margins. So, our the see

manage times when was are [indiscernible]. I We tight commodity cover our good, reduce when increase but prices We business. now don't there? there a I did everything them and to are know are times

if with I was kind impact engagement focus about Yes. with what the side follow curious great. supply Yes, No, of are and your of your Kurt, supply providing customers? quick automotive NXP's question, complete constraints a just auto constrained considering guess, environment could up current having Peter. on the And on considering that level is your and I solutions, really the

Hi, Yes. C.J.

how with might this and much sound that challenging have I actually spend as improves think of ironic, chain, while everybody I the not everybody for terms of engagement lot probably semiconductors So And go in customers I we the in of that's do forward with because about certainly a deal future basis building the but time a moment actually never relevance so is we because is recognizes the enormous best what It in today. this mean. there a on cars. speak our

thinking out about result So mature trends, definitely about is forecasts thinking of on basis aligning more this. positive a a

So, think a negative. is I this don't

what And I we had the mean think, actually how to we've with in at that the closer it from X the chain. much same something altogether from is do industry OEMs way than I learning great but future. with time. also is really obviously innovation is customers, collaboration for the is these an happening only along our a the not And Tier avoid directly. are And things as to just this

Very you. helpful. Thank

next of Your Rasgon question comes from Research. the Bernstein line with Stacy

Hi, guys. Thanks questions. for taking my

usually don't little trough you're bit question, X% first for my about time. QX, I the like wanted X% know, is QX year, to well, down, the obviously this a the mean, ask year. QX to of I up normally from or I sequentially the So trajectory

is demand trough? sort the do on your of year, the through commentary see QX sustained Given still like potentially you

Hi, Stacey.

to hinting a are way. you in all, seasonality of First

really think of patterns the the is historic I current in environment, seasonality none applicable.

historic a pandemic XXXX talks actually let's kind is if are hold disturbed also coming on you certainly semiconductors. weak I year strong about the of very we off and did but not impact not mean the So but that was in QX, strong forget it XXXX, this years. everybody two of patterns, against a

from perspective, we a in robust also on pretty we think I year earlier, out see down, through So really hints beyond -- remarks the demand do coming what that to the I which QX. a longer-term the are just all environment of prepared indeed said

Got you. it. Thank

what confident Peter plan that to follow-up, delivering is on you clarify in Is follow mean exactly XXXX? want to He or that in just the your XXXX. by XX% comment little my wanted improvement I do on margin improvement what specifically a on delivering said, bit plan? margin you said. target margin So margin that improvement plan I on still margin up that -- your like the gross feel

XX%.

-- Are it? sort it's -- billion like is that do still there any that maintaining level of or at basically just $X.X threshold you yourself Okay. revenue see

I bit points think think XX%. moment, that are we running a at will should we we carried either the away, moves levels many it be because get about dollars I not at basis business it's way. little mean the of XX that

half of year Do that. you when that get you kind it the or... I have idea a in tough, hit any Yes, target is might like second

overall half, think a And of it is infra I items single percentage it's the second our than is biggest bigger definitely comm being business our Stacy. yes. one of today,

But the in XX% in Okay, impact, it. now you running got would correct? right over without this QX, be COVID --

yes. Yes,

I think so, yes.

Got it.

guys. you, Appreciate it. Thank Okay.

XX.X% like Yes. or be something like would that. It

got Thank guys. Got Yes. it, you, it.

comes Your Securities. Bank with line from America of question Vivek Arya next of the

ahead congratulations at I'm Thank taking you what's see baseline question XXXX my auto view year, I were like units. of when in semiconductor execution. that also last Automotive X, your points which strong curious, Kurt, the you on of year? sales, auto unit growth look and X, X, growth your were the at for X the And and they as start down of

we models on of this very be content this what but kind very can content content that's think should should is this kind market just I help delta. So to strong year? -- that questions, about industry it that some expectation less a was like year? the is -- those be seems for And of strength and maintained? unit on asked off how why And start, delta because Which align impressive similar just

Yes. Sure, Vivek.

what start So, telling us. let with me is IHS

and which if IHS that I for used in is auto year this that number. my that that. in XX at XX% We've frequent units. weeks year-on-year in from even the discussions auto the couple always the growth possibly million tell comes also internally. think like last of the units would year, very, past For you This ending above sentiment and of be units, over I the is it's would around very industry

of XX to based the and units coming say, the what assumption obviously thinks So that the is the maybe second of, million companies of on million half XX in more achieve. a to XX But car lot actually vaccinated, normal year the being sales. fully million society more of that another being for and production lives units, former back push auto number auto to Again, which SAR hinting XX% fact high we've you decline. this did to growth. would our other areas not is actually half play and and is radar a digital electrification clearly be year because But which than which were our specific discussion, been to actually content BMS, growth to faster like of that in points last clusters, thanks the content, growth the thanks the X

driving a engines, going in auto then the businesses, translates content often in the not the element in year COX coming XX%. applications, So the is But is quarter our the semi this targets, think, overall about of which not is like the year. just One strong business really last electrification. Those our going growth electric -- decline did something a other there parts business. about auto tune massively. is are with electrification, where the And you we car same They the say of which rate our was, at lot which year growth see in forward. actually of growth even I last down and content by a know certainly that's had SAR

outgrowing in we spoke definitely year, also as all, a safe the XX% would I stand it about it million assume to of think SAR. which is our is strong growth all So, year. for for XX I SAR this this And does say, algorithm the before units in

inventory everybody one this, to is Now, currently which last the on about levels. understand tries element

the large we auto so I said is built think because from that for every say are supply as about in the into That's immediately world it actually people a quarter. And the anything along a we there speaking on empty. I just the we first car, all like in going for that public industry can about through shipping how going product we would is desire this, U.S. single one nothing to supply the hear clearly are automotive chain to are forward. even production statement There see, their OEM the at why goes sideline, inventory I much into see customers. that constrained they reaction the at few actually ask made which immediately. a chip through first-tier also moment more a is And inventory know a I quite chains to

there So if you ahead just model believe is top then reason this good content a is there about, I we on SAR growth, spoke multiple of quarter which the gains to a and think growth pattern of us.

this start How use billion sheet be flow in the the further? investors. cash that to do that we excess we Last we strength of be follow-up, prior of of the so for of quarter so over plan balance Thank of the flow of my most And X it. assume buybacks in on based think for or to think or flow. year. cash you dividend that have seen should a devoted you, you only year. I all know free return is takes to gave maybe that. generated I you in free that still about mentioned back year to years expect some you. helpful. some number for you one the stronger delever some the Should we And the could free Very Got to it expectation will buyback, Peter cash

we've amazingly Vivek, been predictable. Okay.

Okay.

to level shareholders debt of more all for our above QX. trailing most is didn't cash return we even net reason So year The allocation return we XXXX with were debt capital months excess of EBITDA. stated to to performance net times XX because X in EBITDA weak policy will X in is we times a the up the to

[ph] So is, up model to returned X all that you debt level excess times that's cash a your should assume depending of on to net shareholders. what

it not So, higher XXXX yes, to in the definitely XXXX, Same and was in delever we XXXX. than than be way would will XXXX higher substantially substantially it sheet. balance it was use

you're Got X.X. at it. already And

So right are now? below range that you

X.X The number. between and difference X a is not big

Understand.

But the EBITDA. issue is the

QX need stock. off, QX, to you is more look come at QX QX us on, how So buyback which better fall capacity which to and and gives and

Understand. Thanks much. very

of line Your next from question from comes Credit Suisse. the Pitzer John

how you Yes. as it recovers what's Kurt, in in my margin morning, Why changes important U.S. drive year? a Peter. gross on you stance that the go year, good question the business, Congratulations throughout is mix the we the do leverage throughout back comms OEMs year? the the business? Is design the in on government's with solid on half Kurt; will infrastructure Huawei Good of morning, first other given results. business this is visibility that that it wins the other see view do that think to or

Thanks, John.

Let of me away take all. first Huawei thing the

makes half We conservative optimistic and cetera, our for any so What moves is are anyway. that's et actually part with the here of plan mainly we the us assume Huawei, not second the don't on licensing, portfolio.

say are the And since qualified And getting capability, of both gallium capability products because nitride our I for importantly, we talked we haven't production nitride, more first of customers. had is nitride in this handful with in gain they qualified, at us are and in of driver this online more can but really foreseeing. about well all the gallium at share probably I that last yes, new important see this the think back-loaded product as we meantime, we that actually that further as penetration the And quarter. the year end the on of the second rollout the the really towards of will place, coming half infrastructure kind basis year. the versus the are -- believe we is which we is this this half, in first gallium the absolutely

think the year as business That's in that mobile? of from prepared to preparing I'm you there business, us of 'XX calendar And think your forma can we helpful. curious mobile wallet, the Then be significantly, penetration, on any mobile follow-up kind just for growth pro give my is the how should are if XG as about XG? you rule ultra auto pointed the of last year you you your to out up thumb about year content you comments, sale in another was the wideband

guide quarter we here, only the Well, first I John. mean

And not the at about on in will -- with So this our year, and the the But of provide attachment year. perfectly the to and ultra think I rate we and this who wallet, have where most get of of through rate we further announcements certainly is attractive. wideband, out another we think last focus now spoke emerging the probably the ultra followed XX% I end year phones which ecosystems, think mobile. are I carrying full wideband, I Samsung, on associated for guidance secondly, to XX% brought which the even it driving that also are into you've hitting track makes penetration mobile recent couple a now spreading actually more

car the about Plus which which will of couple actually attach and is keys call then digital first about you your Smart car a their product with they world, a is move think I a the for find they finder small Tag spoke to it phone. like into spoke device, something, can also companies, which IoT which you now and Samsung

course OEMs, ago. wideband line is Investor drive but ultra adoption help with we that and speedy Teach-In going with in of further all with did to the what the Now, Samsung, of in some also time other

is big quite number also very wideband, then customers wallet, run be us which growth Secure make which so to for is rates, and of continued say good you those specific a in, content some the mobile there secure the continues So it standing John, know, a drivers basis coming are say, also OEM ultra content actually pillars I rate. two beyond I'd the story. optimistic on eUICC we have but would certainly firm, unit of mobile and had in a us,

I'm you how assuming new in And from adopted to applications XG? these data your firms. yet have content are XG Kurt, do think enough that to broadly more XG about trends

Yes.

first place. in didn't to this I Sorry, respond the

high-end think good the of features which an something required association these is is the will be is first actually. or about where XG, this actually might specifically. dependent early so necessarily or not be Clearly, I principle not But is adoption XG, which with on place, dependent or phones in XG in first. as it XG XG

that. kind are we to of So, agnostic

Perfect. Thank you.

Bank. from of Your with the next question Deutsche Seymore comes line Ross

Hi, guys. Thanks question. for letting me the ask

know congratulations on announcement. First, retirement nonetheless. I your Peter, so, be for us congrats another you're going with to year but or

Thanks, Ross.

hope revenue from ship, of Any then overall, first any what Could somewhat color to little And the wise, you'll think get catch more acutely quarter, shape my was a are the on you level. timing in there end you higher able form knows but fourth on do the constraint you to your it so that you more or is as when hit way, just impact guess, market impact color you're what supply a size supply couldn't in the in split about business? I the and question, up? everybody be I first shortages, which quarter.

you mute. think on are I Kurt,

Peter?

Okay. Right. Ross. things I guess, I'd say a really, of couple

the to You our the you fourth really not months sure our of first I'm and and on sorry, is quarter, [ph] just can in supply really. relevant but it and some of how change distribution, numbers inventory months look quarter -- math do big if

don't you same shipped down who of lot know hundreds we in a be of businesses. in work more then of sector, a our what dollars than problems. We're in for certain but maybe close millions are because theory, reporting factories able real they supply not maybe time have is have seeing across which more, some are you being cases there's to So that of don't different at having having in seeing automotive weeks strength and those pulling to about Obviously, to the could the QX. I even and But see megaphone. extent out areas, the and then QX smaller you they issues talked customers in people of

Kurt's really the I'll supply in one was it's first And 'XX really got chain XXXX, the and the 'XX, of issue. had say forgot So context We -- absolutely very of weak. which to comments, I in pretty would go we general, half then same really back the got of COVID. empty, about was demand

some China China. at that exacerbated the big board. buy be So we're by To maybe pretty fact product the of not Taiwanese thought extent, empty would it's into across people maybe foundries the people the of chains looking moving out outside they supply -- buy able to

products, I Effectively, a situations And we're it think amount that time for huge QX. pass sold really their think customers, we're think speculate moment would which shipped going, of spending trying why the all is and Kurt going absolutely when. inventory. very just some could we're shipping difficult. is it's think We we time factories to lot made is going theory, we quite exactly anything I in more. out building going to individual keep be say, we at that the into have we and comment [indiscernible] don't it's wouldn't sure making to into they

becomes So point get a balanced normally. breathe to to everyone when we that can more start that and

very about the the to year. of the rest you it lot why throughout margin how OpEx should think you OpEx $XXX -- going a it of over strong to side revenue Thanks that that? trending be the equation? I the the and Peter. you How that's details guess for gave level color, improve. of for spending side where How the sounds the we the side, profitability gears completely somewhat XQ million to it's can like be Obviously year? on are Will approaching in gross that and is switching

We in non-exec want to R&D X% the comp. essentially -- and in -- for run XX% increase revenue of of is XX% QX fact fact, nearly and it's SG&A. to for QX In from R&D dollars actual variable all

just incentive. it's So

revenue ahead to the accruals. spend variable in X% of would in R&D and of tight for we SG&A. -- But on hand And a keeping increases we're like very -- XX% all in So really. run increases short-term OpEx. We of QX, the compensation won't comp

you. Thank Okay.

next the question of of from comes Your Securities. Truist Stein line William

Great. landscape as to today if a discuss question. pending Thanks little M&A. bit, I'm in taking it can relates wondering particular you my for competitive the

analog little You a buying have bit. market that ADI consolidates the Maxim

any whether an as can comment Nvidia of your own of your to buying these is yours. other positioning consolidation? on have any have wondering plans influence important You might you competitive of the from and perhaps Arm, one if perspective which either supplier or I'm transaction

Hey, Bill.

a is result achieved, processing in that trends a good of M&A largely to to complemented you super in back. these what further solutions it So one our back, or from of also confident not relates on secure is years the that super free acquisition strategic we year is really focus mean, and position. forget good say in by know, calls. of I continue I through But very the the just our about relevant actually acquisition we we M&A in belief differentiation, which a wireless these with to edge scale power comment is -- which don't extent have mean, have we portfolio our a achieved, and as couple let's be then that Marvell

been a former to come in from threat solutions, I've from that building these we've deals out the now that you deals. IPs the anything products, this We position don't see have. relative are able which with are to are successfully proud a to seen we actually we as competitive to decision, mentioned, with integrate all and different of on this which And

want general with value very, So it the I focus full confidence a is and doesn't steam to on to which have. would very what endeavor. M&A, while our comment on say, I that trust have high we continue we don't in strategic believe I touch execution our

as customers another argued I've the paints this And typically favoring wonder the see over-ordering and and you demand, what growth go suggesting with can peak we breadth of you've the supply-demand appreciate of question behavior what anything that stimulates longer, cycle. the that relates this of Great, lean really insight us about this the of up perhaps will I additions, sort happens, goes by there inventory when all a chain little to have the continue I that some imbalance, but imbalance already is we behavior make typically follow there's if that to that the shared sort that through cycle. with the else through of capacity year? if think cycle maybe this supply bit This I that. extend the

and I that broader. agree I see this place. it would is I And production couldn't I movie is prominent, practically Peter element, well, emphasize indeed, it hands publications. highlight, that mean, read is broad. lot when because mean, a said But at all we've a on and I that creating seen any very eventually. can we there it very inventory piling much is it into about it everything ship also goes very, more really bubble Yes. I But that isn't you'll to from comes before. any as is currently, experience again automotive, said, which

We have in that our same surge demand markets. other in

at point least me not So that this at believe in about building. this makes time, inventory that is

now worried is will we not know to this to continue again, what because look carefully, have watch be seen certainly that. the before, we we've very after, but controls, Now our this we to about time

nothing then believe have. see is could continuing but growth conscious is to the industry thing possibly The used which specific, become something one of exception, trend clearly have So couple levels they wouldn't want supply the the only say to building but a to for inventory the a chain demand fact we this about without inventory. along unnecessary I will auto that wrong -- be quarters which higher than I

our anything product, this something Just later and bubble, the at then very trying would point building say could to this future become disruptions. -- but of inventory. is targeted time, from which maybe year. with wouldn't That But experience be are current very we conscious in be it any again would a can happens it we learning see in far a from and this building mitigate from but it the but inventory, be

Thank you. Great.

Curtis Your next question comes line of Barclays. from the Blayne with

Industrial the to in just on business, business, we IoT & talked typically obviously want the Thanks in Obviously ask down. for that my is I taking depth. question. auto segment seasonality about

You up. guided it

have up seems think but still compare, robustly. an year-over-year it easy pretty I

talk the that about segment? just maybe within So drivers

I & that right? you hear Is did asked? what IoT? Industrial Blayne, you

Yes.

Yes.

the quite clearly actually even last I solution absolutely, did mean we the year which -- basis performance industry, you've very processors. It's we by our the made the on our whole a result the cross-overs about are but business in by we with mean, promise seen the difficult might coupled year-on-year. delivering proud capabilities. are on specifically was just what a seen to full launched acquisition. I processing since Now, year it's year, portfolio, But WiFi the have for first, industrial in getting cross-over have QX, carried which XX% actually we up think the is solution, wanted confidence, really we capability the And And see. you in by Wi-Fi this. guide, -- industry-leading I and our grow this from as continue Industrial, a our is really of Marvell what XxX an is doing altogether X into solutions

I second China this, think the that exposure particularly that Now behind last background from with our the also for to performance is an which That's quarter. element pandemic left growth in segment one performance NXP industrial a already and there driver year's perspective is for in for other I is them think the China. because the strong

you industrial three exposure our year, will, had strong a China. to if has and last China big So, quarters business quite

benefiting year. we've this from continuing and into this So see been we this

kind that this Is follow-up talk just any tightness, view lead you. maybe within you're segment? side? that times of as Thank and the by on kind And a to could of being impacted also on supply that, you segment a

It's Board, the across Blayne.

Industrial in we about lead a yes, times, of XX but lead time. we by have really business. lead it the impacted number because So mean we I tightness products a also with of times, supply also have talk really with I can't differ. weeks couple products our very normal of are

the only The tightness answer not supply. is is yes, say is also to Industrial one of there by that, thing So question. this I can impacted

you. Thank

you the question. Thank for

pass think be Kurt. call, I maybe last our it that would to over Tiffany,

to ahead. over like to I Please Thank Sievers. And back now would turn the Mr. call you. go

are half all all, this Mobile about very there, think we've year, of dialing opportunity driver very the & year Automotive, phases; market The we will it this gallium of strength through in fair given one focus fair happy has please demand, of in very is for specific comms been year minute start And we the stay optimistic lot a we've say calendar infra in us all less and Yes, good anticipated as a the about and is Yes. with nitride, Industrial a which specific XXXX in actually NXP discussions the much. that really also IoT the just half, that, last and say back for that the with is all I for our half. and second gives summary, first to from margin strength healthy. a with And year, safe a most stay the think, a calendar Thanks targets. we on segment segment, and mix of grim of last to you our difficult the strong continuing only is lot given much, it's you operator. with our see you a the benefit call, thank Thank it very into in the in very we second and believe This supply recovery a definitely year. had two continue of with in then recovery but recovery. look end the new been the and certainly we to year than I year introductions that to very if into discussed, which product faster when

you. Thank

gentlemen, you wonderful and a have your concludes and this for today's participation Thank Ladies conference call. day.

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