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NXP Semiconductors (NXPI)

Participants
Jeff Palmer Senior Vice President of Investor Relations
Kurt Sievers President & Chief Executive Officer
Bill Betz Chief Financial Officer
Gary Mobley Wells Fargo Securities
Vivek Arya Bank of America
Ross Seymore Deutsche Bank
Stacy Rasgon Bernstein Research
C.J. Muse Evercore ISI
William Stein Truist Securities
Blayne Curtis Barclays
Christopher Caso Raymond James
Matthew Ramsay Cowen
Toshiya Hari Goldman Sachs
Call transcript
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Operator

Good day, and thank you for standing by. Welcome to the NXP First Quarter 2022 Earnings Conference Call. At this time, all participants are in a listen-only mode. After the speakers presentation, there will be a question-and-answer session. [Operator Instructions] Please be advised that today's conference is being recorded. to Palmer, conference Investor Senior like speaker to Relations. now Jeff today, Vice would hand over the your I President of Please go ahead.

Jeff Palmer

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

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

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

Kurt Sievers

our a forward morning, the this two call you good investor I look tell through in-person everyone. week. today, and of We finally, and can joining to you, after series appreciate of I much years, Jeff, you, rest meetings Thank very do

begin a performance. one quarter Now review of with let me our

guidance Our than IoT our revenue at industrial, of mobile and guidance. our was million above automotive, or the with midpoint better $XX

the markets just expectations So trends in were issues. below due our infrastructure communication slightly supply to

the of delivered NXP guidance. Non-GAAP XX together, operating revenue ago about Taken was one our in better year the above and strong $X.XX XX% points quarter margin increase of of XX.X%, XXX an period billion, midpoint quarter a basis one than points basis year-on-year.

profit good reflect results strong revenue, fall execution Our and leverage operating higher improved expenses. lower modestly operating with and profit through gross on

industrial specific $X.XX was to end Now mobile, up IoT, In $XXX let line our billion, million, markets. million, trends with turn and in our me In our revenue guidance. up than was was the revenue year-on-year than focus better year-on-year guidance. XX% automotive, In better year-on-year, guidance. up XX% XX% in revenue our $XXX

revenue, engagements in about half data that Communication only guidance ongoing $XXX our changes. our in services Overall, robust, what below our putting improved which inventory customers. long-term strategic year-on-year requirements a some our as see And let Infrastructure Other [indiscernible] channel, excess me million, XX% with demand distribution and markets result of points our in provide our remains targets. up the be of of below context, we capability. In daily of supply total our the just Lastly, to supply end in continues was customers' modestly

on war escalations pace the XX all globally days days. the an across continues our this below sixth historic it inventory market. X the channel. is our all are growth supply quarter to suppliers continue Internal another our all of U.S., increased European days to is to regions. is historic months has below Lead focused now XX consecutive supply-related of or the greater. expected of quarter vehicle car strong During of the xEV channel target. in new of one, board level exceedingly see outlook six is which end to and months, XXXX supply was Essentially, the in the for semiconductor next and levels zoom In below me to at quoted be let supply global elevated one, our long-term be all of constrained markets XX% be lastly, year continue the automotive to XX in X.X In XXXX. having about trends and situation month to is days the at customer With we second products rapidly moving times penetration at Tier tight by across quarter the are quarter perspective. by a sync out XX% of kitting to The shortages chain Xs predominantly roughly continues issues being lean, reported tailwind And first metric weeks our the to common penetration based xEVs auto in The days quarter. other. content, very of versus to of DIO the a growth. good long-term with substantially target And they than times, very Ukraine XXXX. production inbound beginning much of in the of XX% we XX support a customer in escalations an dynamic inventory semiconductor in detailed extended, hit increase The vehicle with dealers relentlessly of very Xs The of with more of for disrupted what in XX% wiring Xx content accelerate or have begun semiconductors to a XXXX adaptability, was resulting hitting and And a long-term NXP. all kitting secular of continue uncertainty. of supply proactively chain, yet redirect of just of semi to unprecedented conversations be success assemblies. one device. inventory as assure and we engagements the OEMs well Against loaded each golden frequent challenged and OEMs be better of harnesses. level one customers In our when customers and will the continues with are zooming in for Hence, this customers as customer needed lead supply innovation material what of the face out, issues In Tier to get China, the need, auto due they complete not both in year our at needed. is extended that to at view on elevated module appreciate where levels Tier customer to across lastly, working significant are with of strategic to and with shortage screw the the and supplier backdrop, we be and their creating customers our of value embrace OEMs level These another and positive to they And supply supply strategic result from with the days. COVID-related and shutdowns play as intimacy.

market arrangements than and share ever, Our unlocking closer and long-term relative will term. is that customer our enhance over which significant engagements the longer new cooperation are

for expectations me Now our two. turn quarter to let

and And year-on-year quarter a From range versus at this of XX% in up low within at XX% expected quarter billion, Industrial of single-digit and XX% expected is range up year-on-year. are the basis. and growth second Communication and we to one, IoT sequential XX% following Automotive be in quarter the digits in business: XXXX the versus same revenue range expected the quarter on year up the to double-digit represents versus about versus is XXXX. are flattish a to X, the of the We a XX% up be the XX% guiding Other XXXX. in ago about up trends range XXXX. one about up the quarter. low versus and to Mobile midpoint low low the and range $X.XX year-on-year At perspective, sequential up Infrastructure be finally, a single X% quarter down in digits expected versus up to versus prior in period low midpoint, range our high-single range the in anticipate be is is the 'XX one

several Our to guidance of. items be aware incorporates

benefits by the impacted comparison business auto the our of in year-on-year were compare on in winter of easy quarter the versus we the the from second effects storms Texas. First, XXXX manufacturing when two facilities wafer quarter our

COVID at two weeks our Second, of outbreaks. the our of capacity. tens contemplate And during occurring guidance disruptions in we potential the of to about quarter and lockdowns of Tianjin to is logistical related back-end to one. Remember, one in dollars output millions of supply early fully China lost part China lastly, several facility due running does maximum

update pass Now journey, On Bill, before which our provide sustainability we I on to April ESG annual like to. have published I I committed and something management of goals. have to our the corporate team call increased the our X, of use XX% are XX% total would the personally an in carbon a to our On our consumption. facilities year-over-year renewable included we and of basis, reduced report, several achievement footprint our by normalized electricity

our we realized decrease do and These efforts. positive normalized can we recycling XX% but should I consumption all XX% and in in Additionally, are believe water our an steps, and solid have more. increase

achieve to we carbon have committed XXXX. forward, Looking by neutrality

renewable energy updates talent General science-based targets Jennifer XX% are will to and NXP's Sustainability and and providing sources organization we To has be been focused the employee are progress. our will facilities. Chief during sustainability initiative, to program. formally committed XXX% the our have Wuamett, we market difficult all announce XXXX, perspective, our employee I X% We women we the represent proud population. Officer, she in for am a journey, named despite documenting keep grew in oversee our total significant a our From on toward Counsel, sustainability and global by now a transitioning of committed our organization, task This regular

we, the to be that improve as progress tied goals. towards Finally, impact portion all the NXP environment are our our approved annual compensation in that an a sustainability have to has incentive achieving long-term demonstrate Board responsible we employee of organization, to will

Now with And XXXX inventory Bill? our for drivers. see robust Bill, in pass a continue company-specific lean. the remains materializing of that, in accelerated and all especially continues is call strong markets to summary, financial I supply increased outstrip growth demand, for very We all have you, do the customer our over to demand to to anticipated review like would we of Overall, growth supply challenges. end performance. across spite

Bill Betz

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

non-GAAP both already financial $XX financial non-GAAP covered very good. was highlights. near profit was range of of midpoint the Overall, were QX. gross for above performance Revenue provided our drivers the QX to QX outlook the move As our high I'll end the guidance revenue revenue and Kurt and has profit our and the operating during guidance. of our million

the billion operations above of XX% revenue was profit noncontrolling our $XXX sales, We a moving and utilization, of $XXX of reported billion, year-on-year midpoint both driven the and $XX high reflecting up with the on above XXX end margin and was expenses million expense revenue our and Furthermore, guidance of which not at operating margin by taxes a up and $X.XX to was Non-GAAP non-GAAP total our improved levels. interest the up compensation, the Total our From positive $X.XX million ongoing the mix. model. cash profit operating operating for billion QX. solid details non-GAAP profit million. points the our revenue and which year-on-year guidance XX.X%, points and was million of basis million $XX guidance lower in was which below and up was XX.X% is operating included non-GAAP perspective, fall-through XXX long-term million. of generated midpoint basis range, were in from $X higher million QX, Total $X.XX earnings interest leverage guidance year-on-year non-GAAP both XX.X%, and $XXX non-GAAP gross of product year-on-year operating increased $X of range, midpoint stock-based Now and or gross non-GAAP our up is range. was

turn our Now debt. in to changes like the and to I would cash

Our total $XX.XX was at debt sequentially. end billion, flat the QX of

to adjusted $X.XX and exited due QX. Our $X.XX billion. cash increased sequentially CapEx XX-month investments quarter was resulting returns during position billion, million debt the and with of ending was $X.XX we $XXX a trailing billion, EBITDA down The net capital

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

process all Turning in be increase target was and to capital to Days days. work support working was of continues increase metrics. days an XX our raw XX inventory of and of revenue days, in to inventory materials sequentially. in six below long-term The growth

supply. days, versus X.X excess incrementally closely where anticipate the to the manage be to down below suppliers. we will orders very were were continue demand day channel channel Days increase one months, with days, is in an of sequentially. customer with coming inventory XX payable similar We in We six at well improving to as our receivable days year our distribution the increase target. long-term continue prior XX our quarter Days of XXXX

Taken cash conversion solid the reflecting versus days, positioning deliveries XX for of day together, quarter, our receivable periods. and was improvement collections an for cycle demand, customer strong future prior customer one

million. free in metrics operations million management continue flow was balance net flow was $XXX of million, and non-GAAP $XXX CapEx resulting Our be from capital sheet and working Cash to strong. cash very $XXX

$XXX million of XXX% company, non-GAAP consistent again, we capital generation And back to of our to free this business flow QX, we $XXX cash paid and cash shares. our owners continues allocation the dividends be of the with of Overall, During excellent. strategy. repurchased million flow in cash returned our the

now quarter. Turning for the second expectations our to

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

gross plus about expenses points. are basis $XX X% XX.X% annual our is minus expect margin sequentially, or which up XX by We be million, merit increases. about minus Operating expected about be $XXX primarily or to plus driven million, about non-GAAP to

about cash anticipate consistent XX.X% non-GAAP interest with margin our Day about to at operations to ongoing and tax non-GAAP be see million. Noncontrolling to $XXX midpoint. XX.X% the estimate or million what We be operating effective million expense communicated be we we related tax of financial XX%. about cash together, be to will $XXX during rate, Taken about $XX Analyst

for average we QX, of purposes, count suggest shares. million share an use modeling For we XXX

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

supply we Kurt derisk demand remain uncertain have in NXP the his in our outlook the macroeconomic serve. remarks, Despite potential impact our these chain. prepared mentioned potential the for customer as strong given markets First, very we attempted environment risks, and QX products on to

perspective, demand first well half expect second revenue revenue a are on But constrained quarterly greater on from through half we we monitoring still improvement of think absolute customers. continue we seeing supply. from gradual of modeling basis and this remain Secondly, an be the throughout is a standpoint, our remainder a we sequentially to our work XXXX. Overall, our to as improving than constantly improvement believe short the will XXXX. of signals supply and challenging From

Lastly, barring the a year. trend performance should tight disruption range our gross half with in margin supply first in our we any consistent the of believe significant fairly

and past the will see our allocation you, to can we continue questions. flow, over to generating thank to business turn consistent for continue We the execute cash to as and now well-communicated we strong capital operator with With strategy it that, periods.

Operator

Securities. Gary from comes question first Our Mobley Instructions] with [Operator you. Thank Wells Fargo

is Your line open.

Gary Mobley

in Thank XX-Q your everybody. were end. 'XX perhaps for think purchase the questions. from down on Or that taking my noticed high reloading 'XX about fiscal filing the that watermark morning you about fiscal we end? I the should for year commitments? XX% purchase year the Was NXP commitments Good

Kurt Sievers

Yes, hi, Gary.

So selling it. indeed, is of somewhat, a that simply down part which of it consequence came

-- So revenue. which into converted so it's was the just revenue, it regular

place for again obligations the, the might year. our into further and out of and not supply-demand enter in we Since Certainly to we next effectively that with and say, not the that, would fundamentally supply outstrip technologies supply future, so I rest available context suppliers. to means exclude also And which will year. are which additional not we yes, the capacity would of this ones the enter has with demand I forward, continue Going in exclude into the changed, see into also we situation also buckets, longer-term certain that sold environment going that commitments separate already. are

Gary Mobley

year your Kurt. and to previously you still it gross that, perhaps for for that quantify can think or expect that would to a to chain Thank were a year be be gross you tailwind increases Is you excuse to gross if 'XX. in -- to you tailwind me, tailwind? is that but fiscal margin fiscal headwind that 'XX, a increases tailwind case price going margin Bill, the supply headwind mentioned I

Bill Betz

we've in-house customers compared what XX% do year-ago our mid-XXs. when it. related internally, that the that related mentioned to on probably customers look we Sure, we XXs we running from and our higher front-end to is high I the manufacturing on pricing If a input the are passing were side. our in to seeing about on costs in we're costs only to we're inflationary And

So or be, at indicated given as standpoint, mix a expect plus we're I my these utilization in XX prepared out we maxed quarter. levels, basis about our internally the be minus points from any margins to remarks, to talk in

with Our our possible our #X servicing are occurring, everything firsthand lines doing priority escalations down, we're is and are customers. really for as customers

Gary Mobley

guys. you Got it, thank

Operator

Thank you.

next America. Arya question Vivek comes Bank Our from with of

is open. line Your

Vivek Arya

QX you almost that is I sales are end unit also. which semiconductor Because automotive you shipping it's at Thank And you because hoping quality issues. there year, days mentioned you I was visibility market shipping that confidence and of impact you a and from auto demand. sync in inventory had just confidence how for in Kurt, of customers. of taking OEMs is at could your the last consistent, kitting give and there the I delta demand does question out when was in of signals Tier this probably my believe about kind X auto of XX-point with you're expand that your question. and the on the I that. automotive to line there look production, getting and

you with that So OEMs. line you're in right, just of shipping just over and is the among shipping the flux demand, that confidence you're Tier giving given your Xs what not and state

Kurt Sievers

I we that very can tell also watch question, that Vivek. Yes, mean you personal good morning, And experience. I Indeed, from continued carefully. very

to we week product to of so need to industrial if that automotive have we and week kitting they is back and only on the parts, this that there it to continue week somebody short redirecting here good we customers. and are and now that later time point escalation falling actually then with my not, in ask to I go they redirect spend is work So especially calls, a a actually It because part places else. other a few in which customers maybe use the

So I extremely customers' we the the customers. production close to are of our pulse customers and think of our

now Tier we this the a at a the are demand. triangular the over that and very actually actually So all barely but is why meeting the with high we is relationship shipping OEMs, have confidence I which have say I Xs supply very, reduction seen Vivek in would a that in something to for the from it only from this X% of semiconductors again. is to down think for due forecast good IHS X.X%, the halved. SAAR forecast of so not came quarter year, last A to part now like almost the I X%

these service demand what all above is we modulations of anyway. can So terms of possible in there see you actually

massive content increase, same automotive, And the comes and thanks have SAAR holes the production the this premium From to day we a which penetration why is again out accelerated to into fill it to you say, fight shipments also bigger demand. that's meet contextual striking and vehicles. semi to of earlier, because day still So had delta xEVs. we try between a points I the, perspective in, and actually mention back to mentioned mentioned

this levels premium looked find already. of vehicles content, put And plus actually the levels one similar now of that So car about is has what double ICE XXXX pre semiconductor you basket we you had it did in whole And we turmoil. because that XX% the it's of in the xEVS. combination from is XXXX or global along if at production we

inventory very an of there our much in portion which certainly to increase be is check, continues would the share planning. And be a very there this There to Then continue level NXP-specific which accelerating situation only the So are overall finally, functional. supply strong across with our I keep dysfunctional, content say, extended pricing. factor. is gains, inventory I is thing low, say to actually the to can is be the means so across chain still too the chain totally it it whole extended automotive supply And dysfunctional. continues

Vivek Arya

follow-up, for happen, do next demand How are investors have of it. hybrid Kurt, some or about think were a worried my Got many years. the been margins you interesting about two slowdown, that if talking about some gross at model. very trough kind right, your recession over you And you've to point one

think X% you. So let's gross the take, then what Steps or to about steps margins? sales were would how go you hypothetically bottom year? next take? XX% Thank What semiconductor should you down say, would in And your we

Kurt Sievers

what Well, question. Day year. year. Vivek, given and of November principle, internal guide would you in can here don't say, to we have Yes, And utilization model pieces the margin back our I our Clearly, few in think next is counts of a end, you moment. in in at facilities the the this our from which last Investor I benefits I give gross we bits

We are full running out.

and different replied to Secondly, just a this Bill question.

I that our pricing price will customers. input go compensating cost believe increases absolutely And with to our not are going do forward. We increases backwards

simply environment level is a stay. the of pricing. is now that to move think such higher And this to I we

but doesn't not that So ASP are mean there going that level. that again from higher forward erosion

the margin. on gross impact that about worry don't So

pricing the the being from been we through think new step or a and function, level which next then the has achieved, I is is operate years.

Vivek Arya

the bottom that your to of right range, about is trough XX%, to the way XX% margins? the think gross But

Kurt Sievers

intention model, to to absolute Well, yes. have we've and stick given model we the the our

Vivek Arya

you. thank Okay,

Operator

Thank you.

comes Bank. with Deutsche Seymore question Ross next from Our

is Your open. line

Ross Seymore

for companies question. then due having I precision. not little one. short-term a with one say about events. basically a the it's Kurt, term, shorter any a impact. be want a the Others follow-up longer-term derisking seen macro haircut Hi take one different I and big lot guys, asking wondered, of to talked me thanks in ask We've just will a you to

you where or in China? seeing wondered Just on details it the bigger And cut experienced you you're spectrum, is than what on in any that first kind fall quarter? smaller a of more what maybe

Kurt Sievers

in so quantified quarter, actually the it. think we Well, first I

I two of this million, one which said think our shutdown the to Tianjin it we Beijing. remember week I own facility is was really $XX about which what neighborhood of was, in

For couple said the second is of what I as a millions, we just impact, which baked half, which of into we guidance, gave see you. tens the just is which

in cetera. to the And little do From Think to it's suppliers, what want Shanghai is with operations. to baked supply Now with also peers derisking fully Ross, different. it numbers et I because customers all I in I about in clearly sorts is highlight perspective, guidance. that which in have of that about think, I this say has -- entirely suppliers, into that Shanghai how I Shanghai the from about And of has suppliers of case, We demand a we I area Greater demand would that's -- area epoxy is from know issues a solidly impact more a our Ross, the qualify some half perspective. this, that area, substrate our talked discussion. logistics a again. our own And our that into talk supply are do the our operational the than and meantime, issues.

shutdown the back they all partially say now. they all So they are rapidly during back another and quickly. very their because products And pulled they coming their operations operational knew running is would XXX% periods, third come And of again.

anyway been shipping have X.X for We years under now. them

any demand us. So that's on impact doesn't why that have

So of couple tens all of is supply a derisking, of and this Ross millions. consideration a

exact want about is area. our you Shanghai leave from the but an to of situation it perspective, integrate how you supply out I it to So this number

Ross Seymore

guys willingness customers in very what That's your point et days cut And don't isn't helpful. aggressive for was know But extent goes Thank you change your strategy? in value-add, I willingness a cetera. Kurt, are XX downturns, application relationship, relationship, I specific, a have good is cetera. cut downturn utilization question. go I standard longer-term inventory your intimate the more kind if that products intimate that to future. your closer the above to not of giving as your couple have are the about narrative, to to cetera, more very back channel in Is that you it et and wondering, last you the visibility, at the relationship with talked that customers, very world Earlier you do your you that This that. utilization. you guess you more does with the is et And of your were will the you as as prior different run if inventory? the hold more past? you factory all for with to utilization at or think in abrupt have from your changes cycles some just

Kurt Sievers

longer-term The not supply inventory. internal our have this certainly discussions to with increase about Yes, cetera. et solution assurance is our we've been indeed, programs, lots looking into this because customers we of very carefully to

we it more had is the remodeled situation have change days inventory, that are don't an of out to would there all. crisis I made no, we again into if it this we find we wouldn't intention get But difference what because we because even glad went a So XX below we that. how a no, we Ross, when have to and stand. significant the whole answer, I'm clear-cut kind really see actually you have at still that -- have

and distribution in in However, better said chain, element transparency you we ultimate maybe knowledge an is different customers models, their it of overall our course, forward. supply all package big the demand. the at to yourself with one partners have of on customers that actually But cases part inventory are, of customer end the is sorts about going working assurance

years. not our not customers. has changed the to in much I transparency relied the is this customers, we direct relationship have I in end two say whole significantly mentioned, fully which last we having think past, too which full and would concept, the the demand X.X of on which understanding over that I signals industry, to to and dare And something

gives is be some better inventory this be confidence me that Again, the position we changed. in going to going one not internal which So forward. a handle is to are to that going

Ross Seymore

you. Thank

Operator

Thank you.

comes Bernstein Research. Stacy question next Our Rasgon from with

open. line is Your

Stacy Rasgon

my Hi, guys. for taking questions. Thanks

So think there Are you talked or supply into one, second supply my the sequentially second you trend first about trend improves. your half? like prioritizing particular half demand any where the that markets, like thinking just be you're markets worse? the supply about we kind spread you should revenues ramping end getting is of better Are trends end seeing? as how end any given market and in across Like incrementally

Kurt Sievers

think Stacy, short across are supply. we Hi, board continuously I the of

have two, So our applies revenue in When the gaps year that is the of qualify of segments. us. automotive, for case ahead between in continued see function If also and and of probably growth I it all I through those year, Stacy. we the speak supply situation is a say then this revenue And two we worst of indeed becoming that about least would largely available, I gradual a increase longer-term to say demand. biggest have would this in have supply and I continue to those so to four the that industrial at

more up. et supply cetera. external, a earlier, going the different of much supply supply question closer we it's discussed is to comes those in it year we So through as markets. it from coming what much is from up, where perspective. a signal different factories. something four are the ramping is that -- pattern the demand foundry is It's It isn't demand And internal It this

each quarter. and pretty it's it's not So also a the -- same

of demand qualify So year supply under I revenue, gradual perspective still all our cannot the revenue signal demand through the from is the anyway. by growth a segment the because

Stacy Rasgon

you. thank Thank you,

to want question. the less same my you're impact X% maybe in I what and COVID revisit from time, the quarter I heard So or prior But to situation, you a at China next like China. for calling said follow-up, overall

Why supply. You're versus demand maybe have you competitor know do like actually your not that revenues you was along nature, of the also I on demand were differences you that's to channel an a along those than of buffer be calling bigger lines revenue obviously the of the your you're are what that amount about How in in think demand region. that are be one but both so of driving talked the anything see seeing a seeing for that related. it of is I But differences not they terms of are? going into of XX% in you're bigger there in more others think them XX%. -- going into seeing think you Or lines could think your impact their some can issues, logistics issues is have you just the China? industry going given some just and Is actually of the you China. what

Kurt Sievers

strategies obviously, just situations and speculate cannot. I really specific one of speculate peers. or cannot don't about the Stacy, and want of to I more our

quarter this that rigor guide confidently we assure of very can sit lot been for environment. and for how put this I us obviously you However, of assessing because important safely it's this a attention and into to particular in a to lot question turmoiled understand

-- is customer situations with we the really very it order this do has have on to. books the this is we and particular talk to that with near Given patterns term, it

of a So I there, much the we bottom chapters this strategic know what because not competitors really analysis from figure about hold that policies And supply what weeks feel the we next line the I can't demand. And to don't all their really quarter. it exact this very the situation. are. Stacy. in. But is and eight It's approach it getting risk-balanced disturbances against about other balanced out is, again, are I It of took about isn't consideration, is still this about

Stacy Rasgon

if Thank you. extra no the impact? was ship have there supply the you Would to

Kurt Sievers

on the the That's is supply, Stacy. well impact problem. the Yes,

we Shanghai have did the shutdowns we higher guidance. not the if COVID-related the So that's area, in a answer. Absolutely, had

So our China And and of higher that's what yes. possibly of reason Shanghai hitting Beijing And derisking out say. of tried we that COVID millions. whole The guidance, now is -- later that's a the have a hitting tens of supply would wouldn't China. wouldn't zero policy in I quarter, couple be to if

Stacy Rasgon

Got it, thank you guys.

Operator

you. Thank

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

Your line is open.

C.J. Muse

And should Thank beyond your discuss CapEx. with X.X% hybrid think, you I in But CapEx sticking know morning. 'XX? was question, through model. I the good you I first you're guess think taking plans how is XXXX? to, up that's hoping could we Yes, quarter. sustainable XXX% the if for about question. the intensity for now I Curious

Bill Betz

Sure, is Bill. C.J. This

to and is last long-term during X% our mentioned quarter As Day, model Analyst our Investor X%.

However, in X.X%; we do again spent higher 'XX you XXXX, right, we that see the here beyond. about expect And spent QX, back bit can come XXXX will range look XXXX in and And just around X.X%. at within X.X%, X.X%. be a we XX% and about to back as in then

C.J. Muse

follow-up guess or in rather. strong unusually in I question. my helpful. Mobility QX -- your K as was Very Q

adoption about those Thanks. just You of Curious China, suggested as And is wallets drivers driver UWB think half well the overall it or mobile that incremental how strength the really handset secure 'XX. we early into kind second of as of units? in UWB. is should

Kurt Sievers

It isn't really units.

of mean, fluctuations patchy is mobile perfectly better constraints growth it's are this I the mobile The tough quarters can all penetration I very, and the very I quarter a supply about in about stages and very and indeed it supply strategy. it's not got It quarter permanent. read much painfully early market, but wallet get is was globally. it think of as talked would really in we year. track. three mean between in maybe four both now still I is anticipating last And we related. are I the bit on QX, content mobile better. on in well, -- ultra-wideband end, But

is you So perspective QX forward from catch-up down since in I was actually bit a that again, single-digit think perfect -- this where, disfungible not also we guided to supply a second is very going -- a we saw a it of available quarter, sequentially constant balance have into supply, we possible. a to and to the have extent our process this between the segments

see we capacity buckets a segments we again, between the quarter. hits are environment, quarter, where current it the the have is one where And technology this have the or every other. in So to we second that to each rebalancing mobile we in where this possibility -- are bit with fungible

it. has to too This So -- QX all it all supply between with don't read do much QX. into and is

C.J. Muse

you. Thank helpful. Very

Operator

you. Thank

Stein from Our William with Truist Securities. comes next question

line open. Your is

William Stein

to Congrats us ask how Great. are if capacity results Thanks your as you strong What their expansion overall. you're for meet the particular outlook. of recover like situation to going from you taking the plans in and current demand? could on question. to telling remind my and I'd your customers

Kurt Sievers

That's a Bill. big question,

in still as clearly a course, revenue. more communicate X% the of detail CapEx, with we customers, think we elevated against the break years can Bill in do speaking it also here the out bit to what to which X% what do and was And more A, So coming I is, we probably about. XX% significantly

absolute amount CapEx from that increase So fulfill is demand. this to significant an of

questions I was and Secondly, that think of this call. in one the first

these purchase are us have with long-term foundry We which assuring agreements corridors going capacity forward. partners,

late have in getting the back ongoing faster how to the end. in positive you is Now investments is and plays that half do out to sight, year about don't especially our will from then since time is indeed, is especially I but quite to those year, directional the into Mid-term, process. the This our of the tools this edge. think, if the online first the see increments increase mean And will our putting which field the coming revenue from to in the continue drop. way with expansions where impact line foundry next in-house, in cycle this analog this especially mean this that we the we this quarter-on-quarter. Bill much work in capacity next and end But it's the with signal significant access we it Will, that we specifically his processes this partners that year. of mixed think an going year. is over gradual because this In from revenue, front internal guidance's. you have and more we coming see year know front end, -- out we of But is see more of have that strong signals, supply that -- I constraints, normally, the We why capacity kind back the time to trailing us in demand remarks prepared capacity. we Will, continuously capacity in I yield. that end full-year all half give industry unbroken highlighted what grow second

edge. industry area CapEx XX, I say, the really nanometers, the believe of XX leading So think if you much that in end and into in Most invested the technologies, about XX of CapEx. hasn't the above so XX, do went the that especially

While which period. through demand super especially robust to continues the the be is industrial from those for nodes, coming automotive and

William Stein

guided versus if can. helpful. QX approximately from year-over-year very it. comes QX much growth the Appreciate of One achieved pricing That's more I How units and in mix? for versus

Kurt Sievers

to Well, I this of think Bill kind earlier. hinted

passing XXXX growth information similar gave the the to year year pricing not last in next level, beginning the are said at quarterly low I single-digit think for where Will. We price we and a information we full year. get you a very revenue. for our was element calendar you that We on a units will -- And of

William Stein

you. Great. Thank

Operator

you. Thank

Our Curtis with next question Blayne from comes Barclays.

Your line is open.

Blayne Curtis

going taking my you Hey, -- gross through question. about just here. margin additional costs, forward, talked I you for of curious, kind stable thanks when pass

it is I in So balance. guess

Just increased rest curious to any the year, the look going as way costs back the end? you forward do of for you foresee

Kurt Sievers

Well, to he Bill also think can remarks, I and in see his detail, go into more he prepared we this. how hinted

So that our gross Blayne, this our course, We inflationary not given continued happens, protect will principle unfortunately, cost to environment. of if we yes, I increases. accordingly. raise prices that input margins can, stance But exclude

this. little to want a not I'm add Bill, to bit Now you sure

Bill Betz

more. nothing No,

Blayne Curtis

the ask, end you you channel core should in I And that be. Great. where a make brought wondering just When inventory improvement thought year, that over seasonality markets. inventory? channel if to it does month I below would is at said in about was they your any gap growth in the you in then want sequential you look some

Kurt Sievers

it past is I Again, that am I have could. is that had months. in target. personally two we disadvantage -- a not a wish of still I we this convinced over the half a deeply we Blayne, which months, two currently Yes. years do the and really half our and this is target held

pulled But get the through immediately. into ship mean more just could back So I being by supply. we we I held wish it's there. are the channel, we

immediately translates into So POS. it

our is So again, a little year. course not get this this anyway this back I near that to we in of guidance, the see target but chance

Blayne Curtis

Kurt. Thanks

Operator

Thank you.

comes Chris from next question Our Raymond Caso James. with

Your line open. is

Christopher Caso

of environment? of Yes, XXX% kind the than Good are flow. you strong the give of what cash And The thank plans question that? for flow very us your did you cash an more this is free last on in And update return. here? what you. is return cash Obviously, morning. quarter, thinking Could

Bill Betz

and our take Again, in capital policy, to to no that. I'll our we execute change allocation continue Sure. strategy.

execute XXX%. As here in for continue just and and we'll I you to I we We mentioned, Again, all raised strategy. our We'll you XXX%. we got returned returned consistent buybacks. the at dividend do think to If been approval QX, look XX saw, trailing as that we months, so. very continue to we've also

Christopher Caso

flatten to generally, a year? right level out getting the are the the go Does spending now. you're access know And at tend spoken as that raise. of on on through follow-on, another comfortable this merit others with question I And X% about quarter you just you. talent? you have just in that Thank and as difficulty And talked kind about for the increase OpEx. some just you of to hiring

Bill Betz

OpEx, see, QX to guided at do to at than we And here. XX% as finished continue can well you XX.X% XX.X%. better related model. we're of very we the sales, what Yes, below operating long-term

and the revenue the different we be XX%. all but gross signals, guide with to long-term model on annual and and manage again, very probably to We our provided spend strategy as second portfolio also continue in our trending we half, well. should not higher our margin, guided merit which XX% of just I'm to incorporates that increases sales, execute we below going project of

we're So probably half. get going the XX% not second to to in

Christopher Caso

Got Thank you. it.

Operator

you. Thank

question comes Ramsay with Matt Our next from Cowen.

Your line open. is

Matthew Ramsay

were a higher you EVs. was mentioned really Thank on this everybody. obviously what I visibility a XX% units and the point lot the there's of that much. morning, in bullish production. about you of terms think in auto xEV was market But quite data modeling one in to penetration of me despite that than conversation Good bit this been call stood trends year very we out whatnot. the Kurt, And

an So push? you a this on if just idea are vehicles could the some context step-up new constraints I'm hitting a for Is regulatory us disproportionately than Thanks. quickly of give xEV ICE being little there. that penetration? trying get more that's Is it maybe to that out infrastructure charging. bullishness I why or Is wonder supply EVs? build sort more of

Kurt Sievers

put together perspective, XX% least vehicles it Xx vehicles. which break XX% Yes. I about to premium them Thanks, And me at content are is the what a xEVs premium of what Matt. But is the correct to least two opportunity I car. quoted, the this I in you this and And ballpark, thanks exactly I'm XX% for and said. three, sure to similar a year. average sometimes at this X% into they number, maybe XEVs semi it's from because out, understood, The sum then not of integral -- giving the ICE Matt, some

was sorry if clear. not So that

like is this they sum XX% principal XX% xEVs the said premium were last XX% you Yes, together. ICE year xEVs, to more So the and of the because the I moving holds, think which year. and

year, almost doubled And the premium it understand important the it it's increase. it step significant what I lumping going into between up. and where from of to 'XX, XX%. significant that actually concept in more again, XX% a of is But vehicles, this So quoted to this XXXX ballpark was another also that ICE number there be is is next was I because think that

to is China enormously Europe. to an little It premium is and so semi-content. trend, still. to And cars way, an by that's there and by is the trend lower driver accelerated XEVs, and xEV a clearly both pulled strong The

an you in rightfully do the situation many in legacy of I with ideal going stuff. right it think Europe, tax they there has and in lot I also with as a to lower China, a lot engine to because they has legislation xEVs. but a -- combustion industry And it's said, to in it's a start-up think the still don't jump that And I into U.S. companies many, and little from have cars. come, incentives way, mean do for away

Matthew Ramsay

for that, and Thank the you up assumptions. for clearing Kurt,

there's in here the my closeness contrast autos could you what focused a on you seeing lot customers' versus has comps? in call As visibility follow-up, industrial where and to -- Maybe in and you're Thanks. visibility auto are demand supply been of business. and the compare

Kurt Sievers

constraints, hard years, now mean relationships But transparency close the very the Xs to very think challenges. actually, one OEMs exercising it serve Auto very after meantime, chain. of supply comes the complicated half is I the we good. I because Tier Yes. is when it's but have in and standing and a and supply to a the to than more supply these

is automotive. the that a I the Schneider say In for And stubbornly which IoT, industrial we earlier, business I NXP, we channel I of a probably of automotive. serving to visibility. have also have and it industrial shortages the the at is visibility direct and And customers. have I We, good. mean So the low, that the inventory, we there. we have serve or in like least than the harm where worse the I'm kind through even mention the at big afraid that's Industrial and in us, maybe think moment level part are of don't the radiated similar and probably exclude half solid one months, Honeywell doesn't in more indicator a for we more fact customers. we are like fear because that's solid is clear very such also or know That a Siemens. names discussed that best going because IoT, complicated transparency course, in I to which that over ship, mean channel there doesn't is why it we I also is confidence that very here obviously well-known,

Operator

with our And Sachs. question from last Hari you. Thank Toshiya comes Goldman

open. is line Your

Toshiya Hari

in in leg there? Analyst Kurt, the lower how structural and related that about wafer your much in in demand call, potentially kind undersupply. And squeezing how taking not revert confident mature the the capital you you the more of me investing response in processing to you XXXX. of about mentioned your at your and should quantify question, you kind level Day, of you really nodes, a really, up intensity to what increase XXXX. in that, keep business consistent Thanks and help beyond? been us some in a you're of Why talked a Good sustainability sounded Hi, so Throughout with at 'XX much here the morning. capacity said capacity, for Can high

Kurt Sievers

Yes. our That the level facilities the Toshiya, then be wafer is have. need actually possibilities we with achieve, we to own will because to satisfied

our foundry That a we necessarily get of but in from all supply because as doesn't walls closes not to hybrid of our course, share external higher mean, the the supply that the four can the it's demand, foundry very So mean And as push to much is we NXP going not to hard the continue with gaps partners. do within it we and to facilities manufacturing that would to have. only end, does strategy grow.

going XX% a currently at this to XX-XX, will XX% I cetera. there think be -- that XX% to we not long. XX% to forecast et more I so And external, are It's level, like it internal. that take would

this. part about from internal mid-term that's is the getting part course, a that revenue So smaller then and part investing and foundries. from keep the on bigger keep we of And perspective, actually satisfaction if more. why generation And you coming the the there the think they of customer is

Toshiya Hari

helpful. That's then as it. follow-up. my finally, Got And

on in this Can QX comms. driving very supply sort been think And and of at resolved remarks, you I you. slight miss about talked issues in point? the elaborate Thank prepared your that that? you has

Kurt Sievers

just the full. automotive stuff. facilities, are which our industrial we and Yes, running are which production and the they comms that's is in just RF I customers, normal just serving also LDMOS in have -- those business, it's mean

of So customers. I what just be get end, were to out were we in a too honest. mean ambitious couple but in too million these ambitious, could we the to comms it's we

quarter-on-quarter special way. because but saw very -- had the in from plan nothing still grow nicely nothing But also we So a a end it a perspective, perspective. and dramatic you two from an continued year-on-year in to ambitious it just output

Kurt Sievers

with to of I guess that, end Now the call. the we get

the say later again, supply this and you this I With given quarter morning. I ahead industrial, whole the you out So rigorously In materializing, I our have summary, highlight many look in-person through to we some in and strong perspective, many I especially China. guide thanks attending for the want would of situation segments to is we which reviewed the very see challenge. trends. very that two strategic see growth you. a more that and this of week. seeing as forward we uncertain demand confident the thanks, automotive that, of we in half forecast, feel a for through a very But given and secular year, anticipated think longer-term what pure growth with will of year continued imbalance now between half second first the Thank we is we supply line achieve. And which this from have

Operator

conference Thank for you concludes today's This participating. call.

You disconnect. may now