SLAB - Earnings call transcript Q4 2020 | Silicon Laboratories Inc.

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Operator

Good morning. My name is Keith, and I will be your conference operator today. At this time, I would like to welcome everyone to Silicon Labs' Fourth Quarter Fiscal 2020 Earnings Conference Call. All participants will be in a listen-only mode. [Operator Instructions] Please note, today's event is being recorded. the and to International turn of Lane, now Relations Investor Finance. will call George over Director I George, please go ahead.

George Lane

on Chief Thank you, Executive Officer, Hollister, Chief Tyson everyone. are Financial Keith, and Officer; good and morning, today's call. Tuttle, John

at in will of and quarter review This fourth and tables the www.silabs.com. prepared we accompanying our for our our questions, available our and will After financial weeks. our take be also performance the activities. earnings is We section being discuss replay comments, a the website available Investor financial Relations business four press for call are release webcast, will

date Our in will We and assume this to obligation today statements statements update risks these our conference subject cause to filings, which no these forward-looking to that and the materially important the uncertainties, differ actual on from information forward-looking comments us SEC of forward-looking in could we you review to factors base contained include statements. call, risk any and available identify results statements to of encourage future. those as

today, and call Relations of to included Silicon we now would non-GAAP the the over the Chief Labs turn is call refer press non-GAAP financial to our to Investor Lab's information. our A results during Additionally, Officer, in earnings website. I Company's GAAP in certain Tuttle. the reconciliation release of will Silicon Tyson section like to Executive

Tyson Tuttle

had. had quarter, fourth funnel Labs the record bookings, ever In Silicon largest George. and you, opportunity design revenue, Thank we have wins the

consecutive wireless had with Our strong second a quarter revenue business IoT record growth.

markets. in the also flourishing, and is by data electric and activity energy automotive strong infrastructure business Our center, solar vehicle propelled

the capacity meet conjunction greater we markets, By pandemics in the to certain is expand second significant fourth in tightening have we markets the demand. return across than year, and softened Looking quarter, Currently, with supply back chain. demand made starting the demand investments the saw quarter. of supply on all the demand in and

Looking transformation the and increasing as trends digital need medical, clear customers, be years, demand going especially see durable, forward, industrial, our our greater We forward. this accelerating are in collaborate automation, develop thrived result such by of will the several and of solar we the in retail, XXXX a there home, electric vehicles. Labs semiconductors for portable of of our energy bookings, products economy believe markets acceleration ability in evidence our we as smart support to and demand internally. Silicon increased XXXX meaning

accelerating more Hollister, John we our I put Our period execution results over of would results. as in to now later, turn John? the even I review a the position call like has growth will XXXX. Chief Financial financial to to us stronger enter in share an specific business but Officer,

John Hollister

strongest the were products million, products, at home in growth fourth wireless up In and in increase at which demand of fourth a allowance full XX% accounting customers, with change $XXX shelf coronavirus sequentially, up in among led in and consumer in broad-based a in XX% year-on-year. we growth $XXX quarter commercial returns quarter inventory. the was Revenue a $XXX supply, electronic to million industrial rebound revenue up in an fiscal lighting adjustment Thanks, building in $XX also year the the quarter, of ramps starts. distribution challenges recovery the million revenue quarter pandemic includes higher-than-expected in X%. up by relating and industry-wide which of its and impact both the QX. IoT and Smart estimate on and products the were strong sequentially, XX% Tyson. our the a catch-up our industrial labels, was XXXX, and IoT ended million, due to for XX% saw for Despite commercial

both with full the consumer million, $XXX flat and offset automotive QX. broadcast was up a down products IoT seasonally, up sequentially. X% flat. revenue at also by automotive. were recovery Overall was ended year, in Isolation was $XX in proslic Infrastructure million, in X%. revenue up QX and Timing For about

year, $XXX full the infrastructure For automotive and million, about up was revenue X%.

third Turning to Revenue strong Americas quarter up markets. the XX% revenue were XX industrial, fourth to tight quarter, and of at also were communications products, we into healthy particularly fourth wireless supply and in on Bookings quarter. end the automotive strength combined of situation. low and at in APAC ordering customer down the was growth sales secular very Europe chain based Geographically, XX in unusual inventory DSI Sales while roughly levels days, days from around QX. drivers strong quarter, the our IoT the were fourth growth. on the of a in consumer revenue increased with IoT end with revenue from ended patterns, total in business, recovery, was customer the flat. Distribution demand the in and from due QX QX the

We which weeks. from We have the are lead to we to begun our times X our the quarter than ended to increased with weeks costs XX% experiencing previous quarter and from saw suppliers, effect, negatively margin. implement our any to XX impacting our And mitigate greater extend customers. than gross bookings around manufacturing increases more is price

the point. million, ended Non-GAAP We quarter coverage XX.X%. Non-GAAP fourth this was at expectations revenue. Non-GAAP for below was gross Gross of quarter XXXX in slightly the million than operating $XX $X or million margin million expected, primarily were higher million upside expenses the bookings the into for margin have $XX revenue. variable or revenue profit operating XX.X% year were about full revenue. at of or well to compensation fiscal were XX.X% on XX.X% XX.X%. SG&A of due $XX increased $XX expenses in and in QX quarter, expenses R&D

for $X.XX, continuing X% investment Earnings quarter IOT, XXXX full tax earnings the on about million non-GAAP the share margins share due Non-GAAP and at ended XX.X was per XX.X%. other lower to earnings ended per share basis, SG&A at GAAP diluted gross operating in GAAP Our a effective of from XX.X%. in million. $X.XX rate gross decline for year were an income fully margin $XX related On count shares. at $X.XX expenses expenses primarily $XX GAAP ended rates. profit of a to X% $XX and revenue interest share. million was GAAP GAAP and increase were was and R&D million expense or a down in per

For $X.XX the full share. were year, per GAAP earnings

$XXX We the the to with cash investments million. now sheet. and totaling Turning ended balance year

was flow million. receivable operating in cash million. fiscal strong ending $XX up Our at on at Accounts healthy QX, was shipments in $XXX XXXX

driving This level of days. relatively sharply turns up X.Xx. our our remains stable DSO was is Inventory to statistic at Our XX turn ahead inventory of in well flat QX, target.

we XXXX, our million fully issued remaining During approximately we sheet. earlier retired balance a $XXX million of of and redemption redeem convertible notes from to balance notice fiscal the this $XXX the month, XXXX

now complete process the I of end guidance will cover the redemption quarter. We the first March. by to expect for

$XXX We IoT $XXX infrastructure expect with the first approximately and and revenue to both range quarter flat fourth automotive in million to to the in million of be quarter.

margin We gross expect XX.X%. non-GAAP be to approximately

adjusting a cost products, margin ramps and industry-wide IoT XX% chain wireless the ahead to mix, see of range especially of look we gross growth we in to due supply our increases to XX%. are with situation, continued combined our on model As

Tyson. of estimate half year especially spending increase first and to our for in relaxes. On to Redpine non-GAAP per second from with expenses $X.XX. million return the be expect be With $XXX be in XX% $XXX approximately expenses X%, effective the of to per for estimate the range full be and expenses costs, to as now we year operating share tax XXXX, will full French the normal gross earnings million, rate step-up patterns a the expect OpEx earnings $X.XX non-GAAP quarter and the approximately in back seasonal to non-GAAP non-GAAP will $X.XX be to a will the in we to operating more We and we benefit call basis, we turn $X.XX. range in GAAP the XX.X%, to of pandemic as margin I the share GAAP operating to be

Tyson Tuttle

growth. year, tumultuous fourth XX% growth produced our revenue, and XXXX efforts annual Thank record the Despite in you, X% quarter John. sequential and quarter a with

Design records XX% annually, and from improving for retail, powering design lifetime the revenue and help $XXX fourth funnel. to the win for QX, and win up pivotal million, Our quarter, the In fourth business lifetime coronavirus. was world quarter we opportunity $X.X set our Internet the played revenue, expand a that fight role homes, contactless capacity billion, from enabling helping XXXX. from devices bookings medical smart connecting XX% it up in was

revenue Our a was in making quarter total quarter, record previous also to $XX our billion at IoT with mesh of than Silicon more the funnel funnel low leading in total finding. growing to with high, to bookings first Bluetooth fourth than $X.X Bluetooth market greater direction and support lifetime solutions Bluetooth the at is energy XX% up our is first were the a opportunity XX% of record and Labs provider billion. and

Our XX% Bluetooth lifetime and year. grew revenue win the XX%, revenue for design grew

secure a for rates finding life new gold mesh featuring capability XXXX of meter awards In the Bluetooth we In sub for prestigious accurate. cell, won LEAP XXXX. Bluetooth connectivity. security in on in Silicon growth line with accelerating quarter, battery expect performance coin and networking XX-year a cutting-edge October, direction We a fourth Labs modules, introduced medal best-in-class X

intelligence-driven to to announced level and called offer wireless security from protecting substantially to from ideal connectivity with our long-range In We threats throughout solutions, the product LR to thousands turnkey cycle the such complements which single are deliver commercial, mesh leading range supporting, including against range IoT we as the multi-dwelling network, is into smart for Z-Wave applications. compatible life products a threats wireless other IoT for As installed eliminating to our and LR XXX provider collaboration fourth way wireless solutions chip smart Labs' from products develop and and so leveraging of home are we line base. we Z-Wave cloud the support developing announced expansion the home solutions PSA and the that entire secure saw This the security long-range already in Wi-SUN customers. the and the repeaters is December, identified, we quarter, XXXX, LR, are modules applications. where a across role security specification solutions including Labs Silicon money two market, Silicon In deploy world's several end in plays and extends key with Amazon wireless protocol IoT ecosystems. greater over-the-air new new unit markets interest and was in nodes and the Z-Wave earn actively wireless home of Z-Wave a a hospitality first requiring and X most developers a In need leading teams The we SoCs Orvibo, and real-time to the field. customizable, of popular develop extend saving with secure increased certification SoC. Sidewalk. of Silicon to vault to with work units for Series updates can Z-Wave series, time patches miles we artificial to activity home adding scalability secure backward Z-Wave the Gecko significant Labs penetration, up fully beyond smart

connect automated reliably systems including applications, panels home devices. SoCs smart Our control and home HVAC lighting, many to and security wireless curtains, switches

vendors working We adding the excited new commercial the use seamlessly that effort In of than success Zigbee connected to home standard to between IoT efforts easier November, chip work connected interoperable, ensure the XX that the Alliance for along and elements and is make enables other IoT both collaboration on environments. devices over market. in more our home key growth more industry's committed group devices build participate and are growing buildings around to the with Labs important companies or to support also announced by a focused a different Silicon long-term the IP, work from for project to

automotive. and infrastructure to now Turning

an financial ensuring is This announced implementation reliable, to applications. of today's standard time a limited Pro, operating the it solution reference synchronization. simplify ClockBuilder all industry a system communications and systems and and critical between IEEE complete in of for communications, designed quarter, increasingly smart XXXX applications IEEE XXXX timing designers Ethernet and emerging network where trading devices broad is with accelerate range of we grid, networks, consistent over industry and experience to have

custom with Labs provider high for Silicon Teledyne we a aerospace a the isolation solutions Technologies, high This market based isolated the semiconductors high performance, partnership quarter, markets. Under new reliability defense gate new also and leading announced family. of reliability reliability agreement, will high driver Teledyne on

DEI self in accelerate We empower Now, workplace. equitable strong we a building program I to that would redesigned employees to the our as to in ensure marketplace to steps members. and are is team resource to that organization. toolkit In like Silicon we discuss focus taking our for a serve in change community groups inclusive XXXX, a and foundation Labs will diverse, form our formalized on

creating more accurately talent a building underrepresented are for pipeline tomorrow, reflect leaders communities. pathways diverse to We of ensure the help and more candidate technology our

diversity, partnering understanding promoting holding global are on has with We regular to also corporate are all that DEI team change. challenges filled of goals equity and set for opportunities as workshops accountable Labs driving and our and and is began our of a also we and bias formalized employees, and inclusion. and long-term significant experts available Silicon external program, XXXX leadership fully bonus achievements. part committed with executive was inclusion the many

to front thanks want take to global dedication our focus things great the year. we workforce of for I appreciation us and displayed the opportunity on As in XXXX, their extend incredible throughout the all to focus in

we As and vision values around one and another. the support rallied Company's uplift to

Our the Thank we partners, live our in. for and customers, your you communities attention. and time

Before take back call George. to I'd your we questions, George? to turn the like

George Lane

Thank you, Tyson.

Before like announce both would Morgan I using to XX, Xth and open the on Conference and on March question-and-answer Conference March Stanley's Blair's Telecom Virtual X; for in Media participation technology, William Technology platform. virtual session, Annual we the call our

moment to like take to a about I'd ESG. Additionally, talk

energy ESG water statistics. waste, we During quarter, the emissions, work use, additional and around fourth efforts, disclosed air Silicon information Labs related water safety including and

that page encourage and in Labs have section ESG and open ESG like The section up follow-up. questions. to for expanding call our long we Silicon you our one our For with ask Relations the of embedded accommodate of Investor as the responsibility web to further of page. visit before many now I to would we questions your as your web disclosure efforts forward limit in corporate opens, the market possible XXXX. We details, look tenants been people the you one to culture, To

Operator

you. Thank

Wells we mentioned, from Instructions] [Operator the comes will question session. Securities. now Fargo As with the Mobley question-and-answer begin first And Gary

Gary Mobley

year And atypical me point taking one-time the XXXX, Thanks asking for is off to fiscal to not start in growth $XX question year. revenue whether going about some from the variables million to be just that finish XXX extra out, or of is fiscal plus then XXX think a given seasonality 'XX. year? the related in well, maybe for as coming and headwind strong there's I by year Can 'XX how the the help revenue congrats understand it to week the basis wanted starting a will on in related to this fourth quarter? be and a reason you

John Hollister

one. I'll take this John. Gary, this is

the that a related to managing on allowance it's On more supply from on There and some just the provided And fiscal XXXX we call. the catch-up change effect are it. to but as rational had hard to week, is depends really the call about. in It how for customers that that quarterly given their extra us. own think to bookings maybe we X% the returns chains, well the is in first supply is atypical build and may Typically, in speaking, more very clearly seeing, strength year first customers is inventory some to their with the industry shape we quarter broadly progression some quarter, down seeking strong including what of a are in behavior see chains. there our of X%

We'll but year plays durable growth very the some in have So as the that well. trends effect. secular business will have see strong certainly out, how

we how that shakes through work see year. as we'll the So, out

Gary Mobley

And you now automotive And are end end My progressing? you're well, to Is seeing fiscal I market the the your automotive 'XX want timing perhaps follow-up can for year as approaching XX% strength characterize market? that Okay. from of revenue? that market. about end products how your ask

Tyson Tuttle

next in things of smallest see and well but the across about the onboard strong controls, portion take timing of side. of I certainly accelerate on we're energy We're electric overall Yes. infotainment applications. of just the the strong in not And -- market give more. out XX talk that. vehicle and the from technology see years, PowerWall mix side, automotive the That's of see penetration in digits the systems can and we of we And vehicles, things it's the to a particular, that's monitoring and that there the side battery isolation or see really can shipping. activity -- and that as continuing things our the lot strong early, revenue, seems excited And We ramp also electric number and motor chargers go on have demand wins the type market, we positioned a exact it we flavor and from is like XX% got, adoption very low single the vehicle radios. a X pandemic on electric related on demand XX%, like with John side, really the solar the and electric as up you've like then about like automotive over going ramp opportunity up that side. factories on are like as that as to -- to the vehicles then a transition, of seeing well on return if

John Hollister

for to. referring from broadcast there and where XXXX was good to that prior Tyson I'll the side, and stabilization saw, speaks Yes, about the significant the auto strength from recovery we year the that EV that We just a but pandemic. the Gary, ramp of pretty that's add, was a for of X%, the really course, impact mix notable midyear there auto year the mix ended and was that's and QX roughly given flat on

Operator

question Curtis And from Barclays. with comes Blayne next the

Blayne Curtis

segment And just I valuation other? color the revenue impact allowance, guess, guess, curious showing in kind of that now one there? guide Just on the flat I moving on I the the growth, would you're versus at look kind of any some as March, pieces

John Hollister

Yes, right would the about you is businesses quarter. heavily got of that obviously, more distribution that focused think way And see that, to Blayne, first that. about the are more

you've being So, related isolation, that. well timing lines got as to product IoT the primary some as

Tyson Tuttle

conservative we add, a were it way that year. for accounting realized is an was in the that change just the we account I little we inventory Blayne through Otherwise, revenue distribution also have before. would being

sure. So, for it's revenue real

Blayne Curtis

kind Tyson, curious, up? then, in I of exceeding And in are revenue the kind catch when that kind think you And was quarter? just impacting supply. color -- terms any any -- any demand you of that was made comment you the is you'll of of as perspective to March

Tyson Tuttle

mean, the now is our ability are our to revenue I March ability right bookings Certainly, Yes. by quarter supply. ship. our our in limited to exceeding

secured the to continue back capacity are limited able sufficient throughout getting have support I on the support but customers, tight supply very the throughout And industry. that's rate right chain been allocation We to to we've activity. capacity, additional end back more secure the think common But capacity end now. new to of really run ramps just wafers the and products through and and of working it's now

revenue very a on makes it if and line year. prevent any working low So, like very, all foundry partners. we ship our by and tight, well to we're and do through certainly at we're for overbooked just right customers comments John, very it we this level the instance, XX% for TSMC situations that? support very and And is XX% -- to But working that. supported things it quarter could that being But more could it. down now, inventory we're

John Hollister

further to add. nothing No,

Operator

comes Ramsay next the from Cowen. And you. Matt Thank question with

Matt Ramsay

a well pass many guess, and pretty different earnings something to those how this perspective on targets. of ask, guys management input taken due input some can I quickly about may on gain little helpful. a as costs the gross in costs an wanted peer teams, maybe to just you change different have to and higher fully something that any guys the John, that quickly this that Or thoughts can and has would Is margin of question, this the as I to you relative of and Is in to share? there customer calls been give only pass how, chain base. in tightness I your the company talked on fully? First on pass your theme Thanks. views partially you supply attempt guess, you to be

John Hollister

pass I field. effect the Yes, definitely taking to an of an are costs ongoing. There the through some some we Matt. is broad-based And that point. on this underway seeing well effort situation and mean, supply we of to of base, is some but input steps manner fairly higher is course in that the customer are the a next chain that's of more year, out at that forthcoming

Tyson Tuttle

margin. we've product we're that in in terms ramp mix high is offset seeing bit And -- the increase that margins tends line gross -- of that in then margin, the it a increases the to cost as we're are the have business, we that's On additional There's the but all shipping fully margins. drag Matt, by a in customers. have I with equipment, had the additional to working -- do is expedite side. the modest that, so pulling chain Huawei secure XXs. components charges. through to not we're and they asked And would just the where we that And the our impacting bit have that gross wafer -- we also not situation the top that while for customers we've real. timing that nature, Huawei. also additional that product seeing supply our add gross some to with And certainly, it's pricing on the of There's the cost customers. high, in leverage. are just gross are goal But capacity of got lot It's are IoT on we a

was it in And that's lower so, the timing past bit model. mix change in and little than the driving the our is a

Matt Ramsay

of to your bit access? a interested Tyson, LTE or longer-term question, technology as Z-Wave technology expand you Maybe on a was contrast the guys. or rolls about LoRa what of it would have sponsorship I partner like LR. for helpful, And do market new little a kind things a how wide comments industry compare for out? it in you could area you bit, Cat That's end this kind it. and X Got technology

Tyson Tuttle

Z-Wave LR which home really Z-Wave the is smart an of security really extension is protocol, focused applications. and on

So, you've building system -- It's life to you those devices in a your or connect technology, to house connect sort a creating you've a got avoid extend LTE runs say, let's if and security of just a terms install could not got to want be of you to the in competing to It's want an entire class network, long-range of you it another really battery technology range install an yard. at as the of frequency. but roaming and lower open be having increase to something it where ease repeaters to the whole with meant stuff. in of and your new up does like Z-Wave desirability and and around of that nature

through being a Z-Wave that So, inherently, at and output a of has longer-range technology it longer-range runs thing. a solution. level new LR sort And to generates and just able the penetrate higher walls

in a applicability direction. that to area Z-Wave metro but standard. and it increases So, of as It's a be a it robustness the like meant really step type is not the improves network,

dog. dog but able not range too of offering It's products over-the-air find might kind update get for customers and So, gets he be be yard, out it's a something addition. going nice that the deploy you far, of the able able existing time, runs the if the long certainly and in, If have to to asked a that able for, your it's an that on we're you'll we're and that increased support forward. to to

Operator

question from Morgan you. Thank Hettenbach Stanley. comes Craig with next the And

Craig Hettenbach

business? you in about and design seeing is whether particularly how your you're Can momentum that and the going some versus of just talk funnel its acquisition initial that the expectations Redpine

Tyson Tuttle

IoT products they we that have supply acquisition, forward their The ramps to to to XXX.XXax Redpine fair Yes. those all starting and with in number see in products with our that the support we April everything that into pleased SoCs and on integrated around a are of the their here and engineering And fully the we We're that into tools have we and completed towards driving number the chain pushing integrated our very fully expanding the software a and continue group. overall teams continued support into as road technology of and our design wins market. engagement that with enter and XXXX. goes and map, and came

to the continue the getting see key on new had the there. $XXX that. important be that XXXX be see the time important technologies to million connectivity see serve on in of plus have IoT out the quarters the confident don't into about revenue able path into I road map, And moving $XX we with of wireless of line an and technology a we specific So market to and very on in as Wi-Fi have range. then will revenue. we million year the one fully three exact those in we to expanded had a as of number products what as the continue to numbers the I on certainly up that about growth you in growth But significant and for growth. funnel. $XX applications guided million frame IoT And three-year number certainly, range we'll in and don't most within last And came and see ramp Wi-Fi to the

important we going we'll extremely Company's with efficiently and and drive the the is I in ability to with acquisition. more as team, you software So to India in am Hyderabad the pleased we the of very to to we're R&D part bottom pleased march forward our be scale, that site the through can so support leverage continue line, going efforts the year. and an update

Craig Hettenbach

center versus And any it. Can market. you're wireless? follow-up the seeing to data within trends you talk then just a specific Got of as about communication kind

Tyson Tuttle

with Certainly, to XG of the somewhat timing Huawei, the in revenue diminished. is the halt shipments component

more ship network the with it's you on Again, we're And out in other with being that the so, main and market XG. and broadly that Huawei or we lot the to the ramps A then the into the see of five, engaged I for of three center. We pandemic getting overall of if the the And five into acceleration out out picture year. core the out going. were and could guess, data of of activity four increases drive digital center. vendors. and continues is also strong on timing related predominantly that XG data focused communications of the customers say, comms driver

Operator

And from next Pajjuri with question is Securities. you. Srini Nikko Thank the SMBC

Srini Pajjuri

better that to a are Tyson, think target? you for growing expectation at any or don't that mean, on better XX%. last are And year you're to this double-digit business potentially IoT, a the the you the Or quarter, of same wireless you And say is grow want feeling seeing, strong feeling pace the with given told quarter? start or compared the I us it's especially to the part your that? I but worse update about target, that IoT I last

Tyson Tuttle

significant grow. to flat, strong our seasonally and pretty year trends see on into are guiding the here think to Certainly, seeing durable We continuing ability as we continue of the and QX. adjustment, enter coming and QX actually revenue demand we're is that these top QX growth into

particular, durable the increasing IoT in also then got area. trends, got wireless and in and demand you've in adoption, So you've

out how half. year that to is timing within trends XX% the on demand target electric of you've then, turns the got vehicles some of and think that. in as the overshoot I the range, some growth and certainly then applications being if that, not this We'll in second automotive able And see wireless well. year applications

So, year view as forward enter solid moved about on demand now, really a certainly into half year. But in We traction curve, able we're out. and up within been curve. the feeling continuing 'XX,'XX the caught may is that we've good double-digit plays the and XXXX curve year for semiconductors, little our that on based up put 'XX, portends we up getting going design that even win curve, and and the into back model the over year to a be is to range. the second It last in the this but we've has that bit how right growth the depends that

Srini Pajjuri

Got it. said on And XX disty you inventory, John, the days. it's think I then,

behavior up bookings view, a the the Or or stage? at -- on shortages, previous, strong of your do think long-term the the implementing think kind going channel? Given that's bit a severity are I the XX% little of your peak, forward basis compared bookings And changes any cancellation current if increasing you to this levels to also, change to longer-term do policies? inventory on are in planning you guess, you the take you going you the

John Hollister

time not market, Definitely, this operate in out over time, time. continue well standard in level, I will situation bookings I peer over got some work not through companies will really, as on the get we out a We've take the of we terms more that bubble this inventory of to we to think as kind it level the Srini, are itself normal tight want will of But expect to in. just we're supply our of not a terms us, that levels inventory Yes. that both and carrying sort here. bubble back chain the and just moderate definitely but these strength situation.

Operator

Thank with you. question from Tore And Svanberg the next Stifel. comes

Tore Svanberg

is been revenue for IoT profile vault technology ready the in gross security it for about a First the question whether time. the your of security for think impact margin IoT? How whether it you've enhancing financial impacts sounds talking Tyson. should while, secured business or prime about Tyson, for like we

Tyson Tuttle

an deployment one security technology the to to the energy an been we've Security essential price. onto that's our have to and of elements IoT, That leads don't Think secure about class-leading consumption, so integrate having able do to externally. industry-leading. able you onto integrated higher payment devices, for grade security, at that is devices. been selling We've a as have

level And differentiation. it so, us gives higher a of

going it feature we a this enabling portfolio. I is and our a IoT both revenue So impact standard gross forward, think has a margin that across and are

our the chain. -- integrate we enhance continue of into and we that to supply that, capabilities So

keys. have You

manage and deliver not things that significant We'll in opportunity field are for. and and a the to to Those will creation device the can the in more have control we you to connected the can control and we manner value the these XXXX, value software addressable. money see that And management. runs We customers can but devices impactful are secure enable basically ability as charge as significantly are software updates ability that incrementally that there's significant to are And in the the cloud we and have that in individually features features that. the sell software. a long-term

our think selling If is into mean, you're we selling selling you're chips -- now. are also services, you that not something toes I hardware, but right dipping that we're that mostly, it's just But for they ability a creates a are highly of features. forward. have integrated of us this business going onto number differentiated, and the devices security have set great opportunities bulletproof large to additional

Tore Svanberg

XX% And mentioned XX%, doesn't mean to there follow-up, going soon. allegiance very there's anytime sound I -- it be like as That's you that overbooked. my some helpful. there's TSMC,

stay you do or sounds around is few least overbooking starting going other working with at to have foundries while. So like a think about for the it contingency to perhaps a because plans

Tyson Tuttle

us a we able we the capacity partner and able to serve very, but this history in to on is this. product with other not very sure Yes. to And the for customers. And entering I possible I'm through the partner this TSMC great a depending that the better. situation that And that, of at well, now. great for we're Company. to additional do think say the that be through TSMC continue where and doing can manner or Look, work foundries, us of us we helping for multiple to been we situation are folks It's has -- to navigate any will wouldn't demand secure that confined mix. be and are manage as foundries right a tight

move the ensure sure a need to but making $X.X front sure we rate capacity a do grow looking Company able and make how do billion, on we place billion from close that ensure just we of ramps longer-term us. a the to to drive can't sure have we new You that $X and at design the that how fantastic in we into make today long and products the that basis, really looking TSMC ability see be are a partnerships $X that new term. we do the we quickly, is to at billion in very partner, to the this But to foundry and we've got certainly

and And that. to confidence the and particular, on have on that that we'll able test so the packaging side the and we model the foundry have I certainly in execute fabless on side partners that be

Operator

Thank you. Needham And & Raji from question the with comes Gill next Company.

Raji Gill

momentum. the your thinking straight I coverage you're and wanted issue production, risk managing at question your well kind supply? lead on the a into how strong, and that I extending XXXX. window about What given are but the ordering? of cancellation about potential to customers? is wondering extremely to of talked that times ordering. probably just know to double as of there, the kind demand Congrats thoughts long tight bookings John, going into just you double through you it's are about raise How about Srini's follow-up the

John Hollister

possible it's happening. on supply given I the could I put the back down inventory real the drawn demand to the our strength recovery. and customer reality, ensure has to and extent. is ascertain And everybody But to double ensuring be some service not quarter. difficult ordering, and had being in And in it's are Raji, overall of right strain need can they customers getting the demand maximize getting as that really served as demand did we concerns about to pandemics mean drivers much just even our what settle the saw here, they now the It's suppressed mean now possible a levels -- what Yes, that get chain. that is back looking really extent certainly really midyear. the goal increased the significantly. customer the back second best from get people best there, broad And

Raji Gill

trends a growth, IoT the the happening on wireless of side. the that lot particularly Tyson, there, are on

that question the war, of rebound And of the X on there, been bits of kind what into in that fit trade sold the does China. a strategy? your kind area kind component a it, thoughts of Just post your there's overall of if lot into Wondering a on microcontroller post COVID? IoT that's how

Tyson Tuttle

have of IoT have remember Yes. of integrated Well, products that all to you all, first our microcontrollers.

that turn the wireless wireless the all class that. are MCUs wireless microcontroller, stuff providing a we're of off The for functionality you component the just have So and devices. is we of where microcontroller that

I a some have also mean, in sold We globally. X-bit of it's strong market. that's China,

very solid, the to to life in large in to there. front to line hold in for market opportunity opportunity side. both a focus that probably And the year all focus we growth high-quality product and X-bit line very are that X-bit will and few development, and of XXXX, it with and is but -- the going quite and a those contain is in products MCUs we're continue a Our We microcontroller again, We'll the flat be our product certainly, and makes product that well single-digit XX-plus XXXX. our and type where think of. a wireless in in X-bit designs. in And on But is microcontrollers we where microcontroller MCU long did X-bit products, and and sensor security of the predominant actually still the drive sense, of there side. moderate. invest differentiation developing on do our stuff, revenue all on IoT XX-bit numbers continue We X-bit that's lot grew side. our and the new to in there Company opportunistically the particularly specializing terms has but interfaces

Operator

with from [Operator the next question JP Bill Instructions] Peterson comes And Morgan.

Bill Peterson

industrial I I up job products as and the impact, broadcast, execution, isolation first broadcast strength the nice the and timing, go hoping was directionally help see down as on again understand infrastructure you in margins? and assume guess, consumer in of the especially then quarter? within -- us automotive does can where and auto another well first And if quarterly that we the Should Where quarter? course, do directionally access segment, automotive the you versus the weakness,

John Hollister

this is Bill, John. Yes,

access the which some would that to include the expect SLX, fourth a quarter fourth of we the strong here. products So legacy had bit a moderating quarter decline, from

We quarter the in expect to see strength in grow some isolation. continued timing and also

consistent with would that you first there? quarter for trends it's the So expect

Bill Peterson

the to related guess, I gross then questions And margin. Great. on Okay.

can the about the I and supply year. look these guess, we guess target think so things least better lot we at next forth, constraints time, of a I changed as especially into You over model, but becoming,

what's guess get constraints should XX% next the could now? you assume XX% supply year, And we back strategy into the that to from the I changing for So here? ebb assuming

John Hollister

adjust affecting overall we saw model. we well, to of indicated go ahead timing Yes, prudent additional IoT But Bill, the IoT mix addition Tyson wireless with that's really mean, the something earlier, of that IoT it off. that at I the Huawei given change. felt could really, mix a strength mix it's take in how happened this point, the coming in call situation earlier talked as and about as function up. saw and cost or If with and we the to

Operator

you. Thank

I Lane. now over Now, the turn like call would to back to George

George Lane

you, Keith, call. today's Thank this concludes This morning.

Operator

for you attending Thank teleconference. today's presentation. conclude does This you. today's Thank

You lines. your disconnect may now

Silicon Laboratories (SLAB) 3 Feb 212020 Q4 Earnings call transcript