NXP Semiconductors (NXPI) 27 Apr 212021 Q1 Earnings call transcript

Good day, and welcome to the Q1 2021 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 your host, Mr. NXP. from Palmer Jeff

expectations recorded which be cause risks CEO; and current macroeconomic and operate, expectations. quarter or and the involve management's financial any COVID-XX everyone. is materially me XXXX is Please These be President not website. include, call sale the Ron, risks that The replay of existing the on our NXP could corporate call the the results on pandemic to available quarter uncertainties Semiconductors today impact and NXP's no regarding our Sievers, first undertakes earnings Kurt and on update from revise Peter to good to, you, NXP continued and products Kelly, the obligation from of -- for we being Welcome second impact limited CFO. in today new morning, the to publicly reminded XXXX. the statements for and results the business, Thank call. call that are will include for specific our statements. NXP's differ of our Today's include but and forward-looking will that forward-looking markets statements uncertainties end With

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

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

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

I updated today. an will joining quarter will our appreciate for very, I very morning, everyone. really recovery will Austin-based perspective sustainability. and winter We which the the discuss call our good February. we Thanks our I additionally, supply-demand efforts current provide one two Yes. by were results and our Today, severe for including you guidance review hit the how And facilities, Furthermore, discuss much, view Jeff, QX. our storm on environment, in of

started Now one. me let get with quarter

generally Our our with the from and the results trends of Mobile slightly infrastructure expectations, guidance, in and with At markets, time, were the the same were industrial Automotive planned. the winter better line the than being by with stronger Texas. both in our in midpoint end than just storms communication the markets Auto contribution severe impacted

in quarter million $XX increase Taken of revenue. about basis was margin XX.X%, and one guidance mix both above above of XXX $X.XX improved range. together, QX our Non-GAAP revenue XX% NXP XX operating the the strong basis billion, a of driven delivered additional guidance, better by points year-over-year and than of period, the midpoint midpoint an and year-ago points

was guidance. underlying mobile XX% our our $XX guidance. X% of $X.XX In XX% revenue up up period, million $XX quarter million, better year-ago year-on-year end me was year-ago and sale for line a and XXXX, million up which year-over-year. actually in And the specific and million, versus & than was quarter our guidance. our & up closed quarter markets. period Infrastructure revenue billion, Communication lastly, one the than in about growth revenue better $XXX the revenue guidance. audio was robust Industrial one versus $XXX voice our was $XX Mobile, $XXX XX% IoT, and In quarter in Other, period end one about with Automotive, market quarter trends let and focus during Now up about one In the the Reconciling million, one versus the XX% below to year-ago the our turn million business,

to outlook. Now, move our me let

is one quarter up up And the midpoint flat versus versus this up quarter is XX% Mobile versus XXXX up a to one quarter mid-XX% expected billion, Industrial in And range percent quarter. midpoint, to one XX% to within be range the the to at the and and XXXX. we a Infrastructure up period single low-teens down a XX% in $X.XX XXXX two be in low down IoT is prior quarter in Other & the & to XX% be We in Communication versus quarter up of be digits are the perspective, revenue year-over-year from up guiding is versus flat our following in the range expected business. At XXXX. versus trends the at sequential finally, about anticipate sequential range about versus year-over-year. range upper Automotive second the in low XXXX. mid-single-digit two ago and XX% expected flat quarter the a is same and on range year the basis. the expected of

point, to update supply/demand on let an current me Now at this the turn environment.

the sold you call, very QX rate as supply customers of to As production many customer a our very full our to out started I balance versus last XXXX, not situation. had a faced if were of wafer during we earnings of tight, shared challenge resume accelerated with orders on with

levels XX% year. seen very we anticipated pre-pandemic in the which low insightful When car trends, with rebuilding products, supply going compared content in the wins. the increase of very half the revenue in while inventory, at partners not we And XXXX, XXXX. very period. XX% current quarter of And a also of environment more levels half actually trend XXXX and our we half of medium-term, XXXX. than not compare of which through foundry being We In first face stronger quarter one. attempted in for has enough, to supply XXXX. continue expectation of same at have to is total were in we our now This current been continue address against in nearly our we anticipate do in the more forward, production that to tight over we our is a consistent to suggests see the more our least half note will the design these we levels low channel the specifically, context, XXXX the XXXX. half overall significant really would of needs, to two. least remainder demand is And this will this supply versus in our have And first And it gains first constrained for really of pre-pandemic look XX% and to at and to in we While revenue a it is plan on-hand first our plan versus first year. of the ship ship IHS have half automotive, the we this second XXXX drop that

facilities non-cancelable I pleased had in back underlying making Notwithstanding this the requests. strategic recognition, share drive flow. growth performance at assure a on also to supply demonstrate lot And and time. unexpected Our we gross added long responding gross in partners to the process validate our Austin. undertaken target. fully strong XX% long-term which am And online our long-term teams The team S&P to growth, and entire results today we in positive very our the their objective and to hard was challenging commitments a supply environment cash be business. future and a supply. of very is our and year clearly are non-returnable the getting our back of improve job order note our profitability that margin furthermore, these next disasters by profitability natural commend to will customers Against on are it wafer We dedication a been supply validation two enhance And acknowledge the are effort XXX NXP manufacturing, of like we environment, or faced, for margin long-dated, now the to Index, in winter would unfortunate facilities and two well line. deliver facilities our free storms superb Austin on done. record has of our work operations to Truly full and guidance has challenging NXP committed a the And to target. placing order I to

At communities corporate our just the our before sustainability Corporate we how I our out the journey. highlight, call all investors stakeholders goals, improve of few we like to Peter, need are support have and suppliers annual lessen the And attention recently I to At is In achieved destination. governance would and a pass in an efforts, paying personal company just with employees, we proxy how we our NXP believe commitment. starting to sustainability social a more environment. I social annual All for our our discuss has our attempt and progress both our to important our impact customers, goals level, Now our which set our like to which a to operate not embrace areas statement, on company has over towards to demonstrated I undertake. are all finite of importance. to very We the our there minute previously And NXP, and history the forth to dedicated we take environmental within continuous of lay are complements vision a our commitment and long and to stated future. we do area products sustainability it's Sustainability would the the of hence, our which long-term and to our the published metrics, utmost Report responsibility. are develop believe responsibility a

commitments ensure Inclusion, our Vice environment diversity, our of directly we Human clear working and made to Equality equality, of Resources. opportunity, Executive equal Diversity, have workplace and order and me inclusion. access President to appointed our We a Head In provides to to reporting and

in to creating dedicated operate. NXP and an appropriately are we environment and society to where diverse which communities We inclusive mirrors work

ongoing workforce capital our management to demographics. governance. our improve and have refine and disclosures, We we commitment have XXXX, corporate detailed an expanded enhanced which In human

committed company's are to improving but the leadership diversity especially We organization, within the gender teams. throughout

environmental reducing by XX%. our XX-year footprint we our of Now, goal turning carbon to In impact. XXXX, met

in on from a by Nijmegen, factory achieved led recycling XX% rate we electricity have which We running XX% purchased our renewable is water XXX% sources, of energy. our renewable and

employees. and are spirit definitely Finally, our least, at believe innovation and of certainly the the employees our We NXP. not lifeblood

on very measure will employee future. dedicated survey this innovation. company early a annually called building views a the and in survey. who That the success workforce push multiple culture, global strategy, are of long-term highly of boundaries well to at indicators innovation, a a proud we as to as early environment. highly engagement. the our the employee indicator best execution It looks global and in for XX%-plus as We winning XXXX, a participation say I'm includes We rate. collaboration supportive view engaged as company employee had workforce work survey And engaged factors continuously potential that leadership through of We culture

very, rebound a end by encouraged customer Now, conversations the order of on in is Based are cycle. the very we it rapid growth our NXP across markets. appears demand stages our longer-term rates, company-specific summary, in in early and

comment customer for win Our truly our Their make optimism like of and a to a potential and drive financial face we underpin operations, I'm like today, innovative teams and engagement, our proud the NXP. assuring all would hard challenging a in focus manufacturing, of especially our robust design for big pass customer I very our the Peter future and would success. new customer-facing the of engaged about difference. our employees, relentless I supply products; energy employees while momentum call work are to to but highly dedication their and pipeline our performance. a now, Peter? to environment have review success; extremely our response And of of all

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

and our first above midpoint Kurt already the on and I'll was financial covered the second As was the for during our drove move of the profit. and of both has provided we our quarter profit quarter quarter, Revenue good. an highlights. financial revenue range revenue very performance operating improvement outlook the to first non-GAAP drivers non-GAAP the guidance Overall, of

of of billion taxes and performance. was XX% end first Moving total an our margin operating details first of points operating our midpoint operating and our driven year-on-year was the end and compensation, of non-GAAP was guidance Non-GAAP interest operating year-on-year XX.X%, profit to the profit gross above than points up We up $XX the basis was range. profit high which a Total From ongoing Total non-controlling and the interest million; half at $XX non-GAAP million, $X.XX cash by perspective, non-GAAP million; guidance. up above midpoint non-GAAP basis and million our million up for were the quarter. $XX not generated year-on-year $XX variable of This and Stock-based above expenses XXX was was earnings, taken improved the in increased XXX billion, included of fourth operations $XX our comp, non-GAAP expense $XXX $XX due guidance. million margin our $X.XX high million the revenue was $XXX from million. reported a were and non-GAAP better guidance million together, year-on-year in up to gross quarter. was guidance. $XX million $XX is XX.X%,

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

quarter debt at flat quarter. the essentially $X.XX versus end total was fourth the billion, Our of fourth the

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

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

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

During the the a of cash paid in and first total our shares quarter, to owners $XXX our of of billion during return million repurchased $X dividends million capital quarter. $XXX we for

increase days X XX and of an sequentially of inventory days. XX significantly be target Turning days, to was below days our to continues of long-term metrics, capital working

It payable Both levels. channel We an continue be and to to strong suppliers. long-term a to continue days, continuation our X and and inventory reflect days sequentially with we days of the increase to before prior our metrics in rates continue are on-hand able orders of channel was receivable closely material manage X quarters several to quarter months, sequentially inventories we target. we the our XX days position. order take increase up rebuild in were target Days to days, at the versus customer our X.X distribution XX flat supply-constrained channel long-term below will and as

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

Turning for to quarter. our second expectations the

plus As Kurt sequentially. year-on-year mentioned, minus midpoint, the million. we up anticipate QX flat XX% is revenue to be about about and this $X.XX or billion, At $XX

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

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

demand to and Firstly, customer our our newest across interest robust. continue markets trends and continues be be products strong in target

order address timely requests with diligently suppliers manner. are in working customers our to our and We a

margin our non-GAAP model, growth fall-through, quarter second as clear the guidance level. enable will to Our target to us of gross terms significant of the business XX% our reflects well potential drive the as revenue which in both

sorry, our any play, be do XXXX. envisaged note, the it company for increase cost and corporate many lower to in for new place, this cash interest. at thirdly, more expect in a place, With is point Unfortunately, than can income just to time, potential of seems US until the forecast. more large it topic with too in we potential variables makes the increase On for we originally speculate administration taxes new the the there positive impossible it taxes – Therefore, get clarity. to in pointless administration the slightly United States are a

be cash past, is said the So return XXXX will as capital to our all XX%. likely excess flow our to policy previously Fourthly, we've the free owners. in indicated X% return versus

Board quarterly buyback $X as a During the our quarter, as increase cash a dividend. the billion first well approved in authorization XX%

During environment And notwithstanding the at is Kurt year. colleagues second quarter, half believe first constraints, truly and we the we believe we to unbelievable dedication like incredible policy. all demand half a returned stated supply for I'd executing $X the environment. of to our and to execute capital billion job the shareholders we return will the as continue than the mentioned, finally, strong. greater XXXX my in and NXP will be the the of thank Sixth, Fifthly,

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

poll we'll Renz, for questions.

Instructions] Thank you, line the from of [Operator Our sir. C.J. first is Muse. question

is line Your open. now

good the months? morning, be on view, NXP. drivers ages the great. in could commentary the changed Thank would for the the but your good growth understand that taking of your around walk us through by growth -- Kurt, say, And afternoon. you intrigued of you early all all we I behind would that, in call what's to long-term if guess, story, question. the being hear And think for Yes, I three last in love cycle

many C.J. thanks, Yes, Yes, absolutely.

we be to drivers strong, environment. this longer at the changed year has, is better see some of to So, but and also half only the do being the three I do first that What to beginning that the understand has over months I last sustainable term of continued cycle. say the we half growth we demand I in respect, over would just think, the tried of started a second growing again of better And not the the environment see us that clarify year. of demand

Now, understand that increases reason with or no how very where the do us are content should this away. automotive robust where one is market, contributing we off end now why see this being to absolutely XX% place to very, exposed ease we demand clearly should environment significantly go

So, the possible with at place. what in out to these of better Also, double deeper our that, ruling tried ordering totally of become better we I that has and is it. inventories say piling demand any believe of and environment and fears understanding any here

very segments see do that for key built and product that but explicitly immediately do and in being we is know mobile, being place. automotive, industrial, can into we say our in also out So, what I for inventory built we for and ship no is any

margins helpful. Very curious, I every but the have get or So, the If you thing, hold always model great true XX%-plus revenues, trajectory reaching XXX does a next Peter. going bps increase in forward, should X% up, for Obviously, question how is be about thinking me from the in could follow here? lately? gross is we what a uptick done you

way. on to as happen No, could explain We XXXX, is run kind said wasn't XXXX what rule utilization. about continually In go I trying thinking we to full always around use we thumb we were might struggling it now we that X.X, good that and The utilization. of XX%. of that news were to

XX.X%. that internally of a little we're at pretty So, at utilization. much high of bit X.X our kind now end the above We're

about we're where this for and we are. year. full we'll good X% in we XXs of year up We XXs not are amount -- probably to we CapEx margin CapEx the ends in cope we've kind to the move So, low gross we the over adding last And our see feel the need externally numbers particularly percent. two, need, back buy revenue start product you'll the or the I capacity, with high But number, about do pretty year, adding or from the seeing. the of additional also, to seen

at think performance which things new will at few they're consistently that improving more that from the very a to XX% over very, XX%, about then perspective, our to I products. the and gross can comfortable feel so the product demonstrate challenge, margin is revenue, we say, So, of we the years introductions moment, not us about. And run I'd clearly, move much and next cost the up the

helpful. Very Thank you.

Thank you.

Our line question the Ross Seymore. is of from next

now is line open. Your

to segments the Thanks in first that quarter Can for a Good in strong the you morning significantly. results. term. congrats second discuss want contributing near the impressive second considering I ask between me letting margin on and little appears guys. the and upside quarter quarter, dive into what really Peter, it tactically gross just isn't and drove bit is the the question the especially the mix more

on the in of a you how and and just color bit then quarter beat So guide? little raised

Yes.

XX less mix. So margin. XX the $XX was IoT. auto in or quarter, the first We million shipped to more basis for coming be and an move gives Ross, proportionately biggest And points honest, of you

numbers. we're not we it's And from really huge to about as QX, QX utilization. in So all go talking about

obviously, in able only out. But ends. now not really to but not getting we're So full great we're utilization Austin, also, fabs our run; our other back

that's think QX, So a was things But to different small me better, sorry, helped there's wrong the beat in confidence forward, that's mix, QX on QX utilize able few is things about – that lot a certainly beat what margin utilization is really us helped optimize going But which maybe guidance. I was always and utilization the gives QX – it us directions. really. our about word, moving now that but to we've about gross been

I guess follow-up, my as Great. Kurt. one for

expanding. ordering in half. demand, talked second double if it the You of SAAR. I over your half a business, the And that, content confidence we've had typical about to above historically, guess, lack down delta it of that like delta is narrowed I automotive confident you're sounds actually the first

changed design in have that really, business. pretty there? sort guess, I cycles long of what's So You

to outgrow arise short something it's your do to that that have so, term the right you surprising appear now. SAAR rapidly a would in that -- that to me as little And would ability you as would increase

be on confidence helpful? would what guess just a color little I you gives that So more

building you that the especially the all It this if period would all the factories. not more of by under as seen snowed been of year. was thanks doesn't first through sudden you it a you much already it, look because crazy then think the last half that Ross. obviously, portray content in I Yes, But actually actually, we’ve to it's is why made in will increases of about normal time, a at comparison all. that's XXXX, the that which if and But over year, shutdowns,

is So by of X been that's not quarters, -- one but But much all really building statement. X last by sudden, gradually more there the a but it's X it's of so very period already disrupted COVID. over the the to

Now there suggested. than really faster story especially increasing is things rates which probably forecast the I makes one vehicle two have believe are The do the that more production which a are than is, electric it richer here. initial believe I content important anticipated, would yes,

penetration the of now, faster, especially was electric is this So drivetrains going it year, than forecasted.

over past design fruit Thirdly, the of all the been we wins so are think the we've areas bearing working and most in actually focus years. hard now I from importantly, on

what saying in is focused becomes this like are battery ahead I'm I those clusters, management, at obvious specific. some the If rates growth growth. of the digital very our pulling businesses then So it our that clearly look really company radar, is ADAS, Ross, that

of momentum meaning a is NXP. this an gains I there So good think but for share is on gains company-specific, part underlying also stronger content

you. Thank

you. Thank

Our question go Vivek is Please ahead. next line from the of Arya.

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

above gross any, if QX else on two margin? role of your And playing, sales, gross your curious, your gross margins those equal, I'm quarters? say, let's in is QX margin. also Peter, and what QX can XX% being pricing all then exceed each more in one sales Just if are

last whatsoever, were suppliers advantage on being not that. situation, having take of anything would we that on to although we our it's no our increases in even of trying we tactical some impact our certainly any our to remotely that of But pass strategy. We no have that we're said and no We impact customers. very and or terms definitely pricing, there's And Vivek. have, In able trying that said call was profitability intention through of QX improve gouging cost QX. like to do the

said Sure. second here small terms impacts driven Yes, could revenue. as margin not before I gross is In the some there really Ross, half, from of by here? to be additional

is margin two think One I I'd – the of we I say the a moment. gross level are confidence have at level things. strong that of the

that's good we forward, thing. we think bring a new our existing And how our think products be I focus versions on as go our to has So of out new I that's definitely products I profitability. But XX%, to years the us. past over I run of really debate improve our can at we on the after all few whether think think most behind and

cycle Got that it. And what might you this auto differently. that the the you XXXX? went and right, for extend are think So industry much given automotive to in demand do have of example, into they mentioned through the customers, year I how help unfulfilled my follow-up, your on Kurt, I'm this for things curious seeing I cycle, can when look at

deficit cycle usually look that's when to then that So the X.X and autos, you distribution months, do outside still can now. helps X.X I about to, hoping could So think, on your right, right? they side, of at extend differently demand close I was months what talk I visibility? and your it's And months X.X right

So, addressed? doesn't that year. when is it the can addressed to it possible And that be next get

the next think you. how just about you year? into do conceptually extending overall, cycle Thank So,

Yes, that's great a question.

elements, both to answer me Let Vivek.

difficult me the one, Let take latter first. one the

-- first at sell-through up, QX. did so from I level So, which the which if supply a quarter if yes, distribution also we've no, I historically X.X some in selling it up the but wouldn't just anytime we that mean, sell-through. the million. just level. record more But strong that back ship had, pull of in low actually away. don't I perspective more this just we like would a bringing that stayed into months, indeed like you strong which level back And go to I is yes, we chainsaw is X.X it is reached $XXX an we -- really don't months indication to that now, a do normal the that get is just anticipate very probably that right year. math, this mean, through be -- think you we for And here, would gives this inventory

side, -- having is discussion, yes, are indeed across significant On the but a that's we the this also I which think exploration, industry. automotive

I'd our all all, non-commodity are say if not products, in First of most automotive, product. of

car At cannot anything, next that, or there a say. or it which diligently, as the away. just So, we Tier with if be with go matter the the demand, built is a and doesn't with are that but the next companies time, demand fact into very, very quarter it our very both then then customers, mean, prudently of future I eventually here indeed patterns. it's it car the possibly moves into also because working on same Xs, understanding year, directly you is shifted

map I two application this are how much not think about content one quarters, the and is just of which the more current increases, of they out. situation in out out next often the next module-specific, two learnings manufacturing we over which short eight going biggest to and build for cycle too is have that's to to to far more quarters one order map us, that understand but actually time XX how over to quarters, the a of transparency knowing

same of in suppliers, mainly of extensions, with world. So, can say our with certainly as time, do but OEMs suppliers, our that doing that with also the same part ramp time. than XX this I top in ship At we said order wafer we the mean I and year, we in the quickly is hard is mentioned, back-end the half second already, course, our higher reason Peter this at has earlier first half. this we up all car revenue of why work very supply capability of levels the also the the to at I will And underway work, in are

think I robust it But satisfying second it's of but long a doesn't But lot a more story. long-term are -- of demand term So, bottom demand most it of a very out already really at the have more that's year. important, a situation. some move that yes, into and A environment. of to we understanding half learning and it's diligent of of the next year, in obviously, it this this

you. Thank

Thank you.

is Rasgon. Our of next from Stacy go ahead. question line Please the

Hi for questions. guys. Thanks taking my

stuff to nothing you inventory the industrial product, mobile, to you your my situation going into said and everything industrial that about also think I question, you an wanted end I only especially on you're is confident in. the across that in deal shelf, is going auto, margins but So, nothing know first core channel shelf mobile, shipping know the ask you're confidence? know the sticking in and end do industrial your think instead? not not are you and gives you get that mobile, it, of shelf? how level into going auto, how it's of that going would product the on an I on I What customers but and you in kind that

It's really exposure, direct customer the we which have there.

that of end big. how mobile probably distribution? would that can customers through you the say, isn't number in you yes, have that but You know mobile, mean, I

very I So specific a there direct mean, and is contact. very

mean, customer demand So about situation. personally, they build big which because we is are their behind much our would some also contact direct a and it I have in I they I is space, In larger arguably how But direct much know very there can distribution. very is this to love and a tell chain. also you. more, the need exactly frequent with customers there, and industrial are who base, me know product

gives the and product not that to that NXP, our just personal of it's it's direct almost the through. fleshing directly is in So here a about on I me exposure based but really exposure, what know team, me, all would very say, leaders

Got it.

I drill on a So the auto little into to bit wanted guess, comment trajectory. I your my follow-up,

versus like versus Can up that in first even how some us 'XX, in you XX% like-for-like the much units the of XX% actually half first 'XX it's like said You down terms for units down. half content view increase with increase just of units? end -- is of of with give an

saying was we is I that have at What say. indeed will XX%. least to hard actually That's

content at to increase. X look half 'XX. the find if the is be the were by the coming be was content, to over much guidance year, was think stop very least mean rates. last which the mean, production because to at clearly, you about years will but XX% that in that growth include of introduced first I down, sure this If results, doesn't that anyway, the at was lower it's car models content driven maybe a content you of you build QX But the

maybe So stack per a a XX% increase adjustments year years. years a perspective. increase say, if a realistic gives X is up XX% you from before and already I'd XX% over is X difference content price content compare those the 'XX that -- to 'XX, you And it of

Got it.

fair burning. it's guess like like-for-like, don't good a say like it's you think I So to

characterize So it content, it? to mostly coming the that sounds like is right from way it's

if build down the year XXXX. half and certainly the than numbers, probably in QX that I XX% half because of production look the the almost you IHS would rates car believe XX%, were are they I the is first this first of if lower itself by at then say in

must it So be gains. content share and

it. you. Got Thank

question the ahead. Pitzer. next Please is of John go from Our line

Thanks guys. set strong just Kurt, kind morning of Good around is ask first a shutdown the reopening. result. question. me for the and detail Yes. more questions bit on the my of little Congratulations around Austin get letting

any? as $XXX because to there insurance And to it into at that million vis-a-vis that model Austin. bled be you the about You happened, business were impact exactly do Is last more was it Were I'd incremental to And about quarter there year curious, time out being the it them expect you a hard costs talked recoup figure if of unfolds? saw? the what QX.

Yes.

let me side take me John. let the first, about – speak revenue So

both because course, have is that anybody event, an current wished for customers have. not the NXP, in all, consequence that first would our I for something environment and of of So really to unfortunate in of have consequence say clearly this, to interruption first the place, also in a extremely unexpected was but as clearly, supply

so all of did XX, happen Now on February. to frame mid February this of it,

running released operations. eight March And about fact we have we on press think can I initial to fully release after tell been you our again. both in I XX, after nine XX, the that facilities and or Feb. up we weeks that had resumed

by again would have very, $XXX the and storm running pre-storm great – at Yes, XXX% say, talked very we we impact challenging now, pre-winter this situation. a impact difficult the we QX. So factories on the moves which about – QX. levels, in which in still is both are million I great revenues and had John, is achievements on the

sequentially Now flat. guided that you see we

really $XX perspective QX are I was in $XXX maybe very products, impacting first it's in the in up earlier, be other the areas, very means make we had bit more we end and a we of for that that automotive. of that in would little second at the I of the quarter found bit, the other obviously, loss factory So other to end this tiny half confident with range already impact say little like will automotive. that in absolutely the up made Furthermore, said year. ways further shutdown. million million from a shipment a of the from already the

$XXX products, second the the it of are other up make we make full up up we in be in half in in will the we'll year million So the and why first with again, shipping will again why made which we second lost the factories because – second phase those it running quarter the we out.

cost was you the question, related maybe of up Now part the impact. which the Peter, pick to

Yes.

ops authorities the So factories John, before down the notice power. just good the of almost had our Texas closing news, with team started no the is

any have to damage didn’t we factory. the So fundamental

So and with thing the water kind obviously, various cold. pipes that of

essentially to insurance have We everything. cover

is of of to our So was dollars the the only millions deductible, dollars. rather of than impact cost which real tens millions

impact. measurable perspective, hasn't it a cost from So really have any

is that 'cycle'. look cycle versus of your sort guess especially point, my trying way this year first how of much I to then, versus you've long-term the growth to us period. of next rate product-specific. of of good since sort the thunder compared kind the because rate you've around model Day. sort growth of kind half And some the historically don't rate XXXX I half to that least out think that there your really from how want drivers comp. growth at as That's seen over like figure to it compare XX% target helps do Analyst you or follow-up, when of X% XXXX XX% first of at to breadth X% But look out really to line, I to out would of growth that at are that have of But trend of And And for variability It's Kurt, when out from that I a X% steal XXXX? that take helpful. you coming to the argue XXXX a two-year the company-specific you there, X%, target about in your

that with Day. I our said, we're rightfully Markets you as John, Well, going model to mean, Capital update next

the long-term a one which out at the we have and we only give So, X% this is will not X%. point, guidance. new to cannot And

are electric of drivers rate which However, have the We a we with trends But some automotive, lot in of Things not earlier about seem market vehicles content stronger about in three think said ultra-wideband that the forget, spoke that I the earlier. years shape, clearly if all some good with of certainly really in a years great XXXX, mobile. John, XXXX, perspective. in not also robust. you from kicking let's were to XXXX, look

So, a it's always to good. two bit looked in which take just tempting years, very

and over this with very to really matters our from where increasingly NXP have term will portfolio, from focus perspective strong do organically years now playing inorganically, which we So, is look clearly, But been nicely. be with drivers a areas should longer out you for again. company-specific those I we've more agree at which building the what

Thank you.

you. Thank

question next of line Our the William Stein. from is

Great. Thanks for taking questions. my

greatest well. market if which a markets Is those and demand. or as do specific or products those helpful. color your be automotive versus within or And it's assume would sub-end Kurt Is channel. broad? it in it then, Any I two? First, follow-up. have is certainly there it more concentrated and a I lags in like or IoT sounds that's industrial in area It end there's product I Peter, to deliver ability wonder the

would I broad. actually quite say Will, it's Yes,

in capacity in some So, because it several buckets, or markets. also, which touch is cases, technology

lot or specific maybe of headlines no, big say across just good that said would markets. specific from I say But impacted. it's the is given also applications, a I to to which for we might earlier automotive So, the distribution is that catching large automotive couldn't on reasons, to -- end complete industrial impact shortages it has there in value a be leverage industry. cars, certainly,

something is which in in is not sharply it only automotive So, markets. no, distribution only or

on to like that. capacity And maybe I'd for hit the Thanks additions.

is So, that are I from from the first $XXX be, shortfall the second there half million revenue the to in half. greater But other fabs. incremental I year? yields Austin across if board should anything coming assume the a online I QX later recovery going wonder step suppose, more there's that of of that's of capacity than plans. Part of this ourselves perspective sort or we if sensitize function sort from to

X Yes. Will, elements. it's really

also catch-up back-end from the one factory The of you mentioned, front-end we capacity. had first have the closures, we million $XXX and which course,

also partners benefits this allocations capacity our yields, NXP. and fundamental the either On mean, are for side, publicly, increasing quite front-end and been I foundry loud about they that they've which

expanding QX closed the short can assembly moves, is all foundries increase supply do levels. and a own here QX our from So NXP, the supply at And can. foundry Peter throughput increases also are and million the hard about we and the we $XXX as CapEx within we back-end factories, NXP. so from mean, perspective our these whatever the done. And the is same wafer as being higher seeing to talked through the in helping X% I revenue and back-end capacity we increased year time are this time the from to better on revenue levels, external

you. Thank

line the Our from next Blayne of is question Curtis.

Your line now open. is

in is you primarily the year Kurt, then, channel? saw own up year. auto, the well my John's taking that take just sounds March like just that supply to auto where The throughout questions. initial the probably two just you of it impact about is inventory catching would your you supply in million, talked on Hey the was question. and if And terms million in that thanks $XXX within for $XXX your missed chain, question, next in

that do will Just catch you some the on when think auto comments OEMs, up? market

Yes.

the on So $XXX first million, Blayne.

mean, not chain one I There earliest infra The will that – timing just more the it here. reasoning is we why auto is was it So a while dry totally being first. that's because which happened. before supply hit area, was impact auto other decompose our also these already their growth And our hit reason Austin by impact just comms the also is this the the from and then the QX is dependence -- which becomes guidance, that's infra on direct our, That this business. in you saw sequentially factories. is why down.

second but after demand quarter. behind is temporary a you we'll can auto question, that already that's about what tell supply on really thing, absolutely QX. increase quarter, fourth it's third leave which in does do at the side. about I always also It of us I OEMs, Talking increases same So earlier Blayne, the transparency I function long-term that a time. we can't talked demand the the does it don't But answer because further the increasing. and still the the in that have

completely eased easing it totally into this don't next is the I continue off this year. I being off So of by don't it But know. this will somewhat don't carefully think How year. And would I year. I still say, see long? end

Thanks.

Caso. Chris of Our next Please question is from line ahead. the go

a year. it I on, more a the And morning. more Good with comes to say this first on up capacity the a year, both Is about able the year talked at be there's be the in guess, catch you would Does inventories. as it the to be clarity place, demand to of of is which end on the able of to additions will – the right that you think think on the allows is didn't some you. little And in capacity your like customers fully getting it? additions. by well? end next half beginning the until that sounds you of year. think you would internally you little certainly, perhaps that, to your Is replenish thank second next that more customer follow-on year, you that way meeting the about Yes, capacity meant come the in inventory capacity that question coming foundries the fact

Chris. Yes,

is mean, the this this – – hard very So the work constantly on is on work. I

this mentioned of we earlier. towards increase So started, them a to end say, just super I capacity, are and all working year, since on the few hard situation whole levels of last

one by than the Absolutely. firm capacity We billion going yes, suppliers. from into it CapEx, have our So already other supply of I about X% long-term talked perspective. a continue increase now, next give number. you commitments year we is more $X just with to from Peter –

and have to indeed we onetime doesn't increase moving is up. think get there, a it from that, probably the work we our are I is request already getting in next Jeff, to more we non-returnable the I collecting this to with to as this I And supplies perspective, With thing. long-term said, from So non-cancelable It's customers, end enter firmly stop into mean, constant year Chris. and orders order not than help and for not same keep we it and there commitments there, right? going into and committed. a it's timing of for secure But year. over that $X our is suppliers. is supply orders, next like out – session, And billion

Correct. to closing my Would was Correct. like That some last provide Kurt? you question. remarks,

Yes. Thanks much, Jeff.

all So call being the for on thank you today.

clear we our a in this on of and paint all perspective demand continued markets. rebound could we how very see very end rapid across trust I So

to back glad clear capacity now that million $XXX full very part from the time. factor we I your speak attention with a going this. improved that's half Thank are enhance just you. make can the us consistent with above brought cash be confident and continue for And one. much free you that is is hear online and growth We drive not we sure we of and half that, that wanted very We Actually, are And with to closed our to and are this loud factories. Austin next forward. you the shipping. our in smallest profitability going to revenue thank factories two again, you flow levels catch-up

the Thank today. you, the that everybody, be and of end call for your will interest,