ON - Earnings call transcript Q4 2021 | ON Semiconductor Corporation

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Operator

Good morning. My name is Rob and I will be your conference operator today. At this time, I would like to welcome everyone to the ON Semi Fourth Quarter 2021 Earnings Conference Call. [Operator Instructions] Thank you. Parag Agarwal, Vice President of Investor Relations and Corporate Development, you may begin your conference.

Parag Agarwal

Rob. you, Thank thank ‘XX and joining Semi’s ON Good results you conference quarter quarterly call. fourth morning for I am joined CEO; today by Hassane El-Khoury, Trent, CFO. and our our Thad President and of on This being the our website Investor call at webcast Relations is www.onsemi.com. section for with this and A XXXX earnings will the on website recorded fourth available conference following hour available our approximately replay webcast be webcast, X will approximately this quarter following this our of call. XX along days release conference be call

segments, business the markets, channels, end of our to related calendar on information and count posted our fiscal Investor geographies, XXXX Additional share section website. is Relations

Our release, financial certain non-GAAP measures which on our is earnings included the measures financial non-GAAP most presentation the are these comparable posted Relations directly separately of release and in section. to under website this earnings measures. Investor our include GAAP Reconciliation in

cause other from XX-Qs to that can described Form Exchange Commission. our that or the uncertainties our statements words could differ we from forward-looking During make the events the the actual XX-Ks, wish are future will forward-looking financial regarding results materially cause with identify or are intended intend, similar plan, projections to most Form expressions should We and or events are could in The estimate, conference risks of our subject Securities of future this such forward-looking to statements may, business, projections. and results statements expect, that that or factors believe, to course factors performance caution recent will, statements. project, anticipate, call, Important other actual company. affect filings including and to differ

quarter release earnings of XXXX. Additional factors are described our for the in fourth

obligation may forward-looking forward-looking company assumes except or to that as to assumptions by events actual or statements the reflect occur and may change other change results, update required law. estimates other statements Our no

Hassane? over Now, Hassane. me let turn to

Hassane El-Khoury

thank and for joining you, Thank you Parag everyone us today.

progress with XXXX, journey. our am extremely of up transformation wrap we pleased I the As

intelligent in focusing power ecosystem. leader a enabling sustainable as Semi ON on by and positioned have We sensing

the financial megatrends and and performance. focus We structural record to implemented infrastructure electrification, have this vehicle changes by automation of and on is our evident ADAS, resources energy our investments factory

As the improved we automotive our the price-to-value efficiencies, of have the focus of margins of shifted we high-value post target industrial, and manufacturing to and our expanded discrepancies ahead have model stated timeline. to achieve markets

our the customers market. Our carbide multiple acquisition by long-term as and To the the Semi better partner, this silicon agreements provides investments it. support supply expands end, visibility evidenced execution and which to supply view in strategic of for capacity as rapidly that ON leadership a our demand planning support customers growing provide to GTAT of of required assurance

operating Xx exiting volatile non-core sustainable leverage businesses challenges the market. faster, and We approximately journey. our had as and our flow chain the are revenue continue we the a amid supply increased Additionally, increased demonstrating performance. on model our transformation income year pandemic highly XX%, growth focusing operating and in while ongoing affect our we to successful that continue XXXX, cash on In free financial competitive and and profitable

and only work. thanks to dedication opportunity the them has teams possible, been thank like our hard performance their worldwide Our to to for the I’d of take

market-leading our fourth execution example quarter, and exceptional to and our environment fourth worldwide demand power of products. quarter intelligent for our on yet strong Moving was the by a another teams sensing

with expand to margins margin consolidation ramp we optimization, further of manufacturing we expect that targets we coming the mix the of headroom our ongoing met we new have years. our have continued begun and the ahead over products, Although schedule,

to long-term have win product funnel positioned with performance, margin quarter The year-over-year design non-core grew and driven low free from strategic supply goal sustained XX% of an products. We existing growth XXXX, long-term win and additional focus accelerated our our the products. exiting capacity stated continue consistent along to in in our new growth. XX% our This our to was year for up from see coming strong And by investments demand grew capacity agreements fourth design revenue for service XXXX. the earlier online over company markets revenue our with

for We selective internal in making operations are to expand investments our internal are in operations. the we relieving products. bottlenecks same And at capacity our strategic time, manufacturing

in through in stretched East the semiconductor the Long-term, with We persist believe manufacturing products ADAS, we energy successful from on are have been additional while external millimeter to partners. in likely XXXX low industry the fab interactions the times demand network, efficiency increase in increase are the we continue of Based compounded Fishkill the capacity and XXXX. also semiconductor qualifying factory channel our will facility for the gross securing our our the XXX constraint fab benefits. our strategic demand partners, both in executing applications. over throughout electric strategy. current our for for The and vehicles, these markets given to lead of products our and supply expand further remains cost supply time customers and capacity margin This into infrastructure lighter and us will allow that supply is accelerating and by chain inventory content industry. imbalance automation This further the

the growth run-rate for To carbide a of end-to-end as committed $X our billion existing revenue increase silicon year-over-year to over this silicon our XXXX committed continue electric carbide of of our XXXX. approximately advantage. over expect committed current as on to $X.X than begin supply and an quadruple our the competitive efficiency saw our module per exit substantial our our to is making products, we and intend double more in our operations through customers expanding we more silicon silicon of quarter, revenue device steep we few fourth remain vehicle traction silicon year. under than exiting our on for XX% Over $XXX investments carbide substrate in the In products applications carbide the LTSAs. and market-leading with capacity next XXXX support of capacity. revenue the bringing XXXX, revenue to to new revenue in shipments chain plan carbide customers integrated with ramp During million billion We track with we to and our years,

we XXX-millimeter on received program silicon addition, were wafers using all XXX the fabs. full own In wafers GTAT. meeting we development from boards our through thick from finished to the to In targets. carbide January, we [ph] way that millimeter our These with continue make progress production acquired substrate device our yields manufactured capabilities

on chain recently modules our research this modules secured electric across silicon of are around superior performance clearly carbide single a powering has XXX leadership on This based thermal platform, Our We and and efficiency, switching. carbide. for our miles which Mercedes prototype end-to-end announced of capabilities vehicle a charge. range EQXX conduction supply demonstrates the silicon win all design technical

Our for XXXX. modules in on funnel applications focus energy delivered alternative a power design our year-over-year XX% in growth

signed including in inverter leaders. market, solar players top have with key market the two We the share LTSAs

expect fuel-based related plant grow in We revenue long-term power impact to the year-over-year XXXX plants. be driver over expect energy climate installations renewable our worldwide reduce to utility for energy market a by are our and fossil to alternative scale power grow of the expected to as XX% business

revenue With we in year-over-year experience, consumers’ PMICs. including the we time, On of safety driving grew the with safety improved an ultrasonic sensing. sensors image each intelligent cars, content car seeing and same are increased one is sensing camera attached our penetration per to At growing and XX% more of to for features as by continue momentum quarter-over-quarter and design desire additional our see imaging advanced with approximately front, automotive wins. than XX% in sensing new

revenue are efficiency in grew We and our and demand and products also and inflation an wage shortages, seeing volatility XX% approximately mandates. in by distancing XX% quarter-over-quarter improve onshoring automation industrial at accelerating to customers year-over-year. reduce social investing due for Industrial automation, labor and to for operations pace which are imaging increased factory to in

market high and to have our most high our sensors demanding image experience applications. offer the in customers industrial We the rugged, resolution leveraged for quality industrial automotive

to and to extremely our execution the dedicated discrepancy, with costs increased effort operations our to growth our of manufacturing strategy with ahead changes strategy. schedule making on Throughout the accelerated initiatives, we consistent margin operational new are at This delivered efficiencies strong deliberate expansion, team exceeding in execution our in and margin engineering drive for operational of markets significantly a price-to-value and year, margin shift end robust products, focused markets that our the to hard ramping our gross material by to cost for gross strategic a more some in a on offset the industrial Day. all XX% footprint, execution was to channel our All margin partners across ensure margin Analyst schedule. expansion of improvements vectors worked in consistent pull accelerated target incurred. driven to automotive closing refining these have we and products performance reduction Along the are driving with focused outlined capacity drive intent our a

We have XX% that revenue away which of importantly, automotive into we support from quarters compared mix quarter-over-quarter and to help quarter, XX%. fourth this of from to delivering from with automotive margin of record end supply-constrained could $XXX we average margin customers’ more In and an business more units an came yields of increased worked demand. grew walked industrial ship In markets, $XXX the business environment, million respectively. XX% to improve deliver both and the intended and for low industrial strategic we exit. in the the margin XXXX, and away non-core million more non-core, of growth million as profile our to our units and shift improved XX% business from our quarter, third $XXX a ship gross In the

the financials Thad turn and our to Thad? provide to guidance. on additional will I Now, over details call

Thad Trent

quarter out through start and guidance the update company was model. as year an year for of QX Thanks, an with then of exceptional to up I performance the and our results value. an for ‘XX full the XXXX, XXXX to of drive step shareholder the sustainable transformed Hassane. providing first with long-term overview results wrap we will our and

flow. align margin, and changes, cash we implementing structure. our as capturing high-growth our financial and annual translating footprint optimizing initiatives in improve to gross increase We differentiated industrial, results have our our value and achieved pivoted margin are and the investments into record automotive to and revenue, megatrends These manufacturing efficiency portfolio operating to quarterly our cost while for the structural

XXXX XX.X% XXXX. $X.XX revenue over was billion, Our increasing

XX% XX% segment in increased business advanced safety. driven automotive electrification increased content see year-over-year automation, as and our by industrial to and we Our continue gains each revenue

for cash XX.X% improved exited our XX% we target QX. non-GAAP a journey gross our in to the flow cash gross free non-GAAP ago, approximately improved XXXX XX.X%, have Since operating operating year transformation non-GAAP and margins points of exceeding to margins faster Xx XXX to free flow billion increased by income our the Our points. with improving X,XXX embarking on revenue, increased year than revenue. $X.X long-term while basis margin year XX% and we or basis

we have over of we front the the While achievements significant in year, are opportunities about excited last us. had

Our design lighter external strategy from securing partners intelligent with and win drive to funnel From is further support products. expansion. to expect for we rapid for at expanding rate growth a investments a mix additional and strategic perspective, internal capacity optimization we our and are and fab selective sensing margin power our

while rationalizing long-term manufacturing visibility are with consistent first X-inch Semi sustainable fab growth an solidified providing and fab we our provides orderly structural a efficient entering have expansion our for allow in year long-term. allowing the transaction employees the manufacturing to within agreement network, for into towards to our we manner. Our agreements lighter the the sites to supply transitioning transition that deployment continued definitive eliminate decisions while strategy, taken our are ON a This of fixed to unit and for production supply by customers. confident cost products increased steps we our Consistent lower product in growth made footprint baseline we opportunities, changes of over our will margin last our other to and Belgium. cost more and fabs sale By with revenue ensuring

the over the and Belgium will X We savings we the exit expect quarter site. to in divestiture X as this be first XXXX to years close realized of

the total Auto Turning markets. end fourth XX% revenue all for increased at while was quarter automotive and and across pricing the results of power units XXXX respectively. shipped and X.X% XX% XX% quarter, sequentially fourth sensing revenue strategic was to in by as mix industrial billion, end in XXXX. intelligent favorable quarter fourth noted, XX% from from was revenue was increase record over X% levels, both sequentially The record markets QX and X%, was quarter-over-quarter. another revenue Revenue $X.XX for our of an and of increasing of intelligent and as driven sequential to results. of increase the the the industrial quarter I fourth quarter compared Total and of

PSG units, for and year-over-year. business year-over-year. margins key quarter GAAP was mix higher strategic have the XX% products, portfolio of contributors was was million, the efficiencies improved favorable million, to $XXX.X XX% XXX quarter of expansion Solutions the in gross point manufacturing Advanced improvement price-to-value shift quarter-over-quarter. discrepancies gross margin of operations. Power to and elimination ASG, fourth our the Sensing of or XX.X%, revenue was non-GAAP year-over-year. fourth XX.X% been for increase Turning a and to The our Revenue was margin ISG, our basis an in an Solutions Group, Intelligent increase Group, XX% Group $XXX.X an for million, or the for Revenue $XXX.X for or increase margin

Over at an accretive to non-core strategic million gross of gross last this we margins. and approximately year, exited margin allocated revenue have of products average XX% the $XXX capacity with

utilization slightly to factory at QX. level remain up Our approximately expect in this level from we XX%, XX% of utilization and was QX the

in and fourth of quarterly per EPS QX. for to XX.X% also operating was $X.XX of and $X.XX share long-term our model. quarter, $X.XX respectively, and again GAAP quarter GAAP earnings non-GAAP achieving and margins fourth non-GAAP share quarter, compared diluted the the XXXX We record per achieved fourth as $X.XX in in was the XX%

having the ever EPS We our are achieved company. very highest proud teams by of reported the for quarterly

you in a for your the Variable by expenses fourth compensation for were as numbers million compared some were ago. $XXX the increase measures, strong performance, optimization partially to GAAP in quarter million year-over-year give by the driven XXXX. million as additional in Non-GAAP operating expenses. compared to contributed $XXX models. now $XXX cost me to million expenses $XXX of let offset operating So, quarter quarter year operating our fourth

operating consistent higher model. We through efficiency expect approximately XX% the to target wage reallocation of offset expansion. to of to on revenue, inflation growth margin expenses of expenses We non-GAAP maintain our intend our and drive with impact resources of and operating

million. an count Our our count XXX.X and calculating our table share you count various GAAP non-GAAP diluted was diluted XXX.X Please shares diluted Investor with have section that reference of website our was on share share in share updated note assist Relations million the we to prices.

$XXX sheet, after for undrawn of was Cash the cash was the $XXX intensity was QX or billion expenditures were approximately million to Capital payment from operations in the acquisition of million Turning balance equivalents quarter to free equates million, We which XX% a revenue. of $XXX cash and flow $X.XX $XXX.X capital QX. GSAT cash $X.X had and revolver. during X%. billion million on our fourth

intensity capital For the X.X%. XXXX, full year was

net X.X transition. to days. additional the support in increase XXX East to of with X.X enabling line we weeks driven capacity. are primarily fab shipments first This weeks and of silicon late slight increase now days inventory in Fishkill DSO XX from $XX QX. The million, under the the to in levels millimeter Analyst to increased build portion As and a inventory leverage $XX million weeks in mentioned Accounts of to bridge was expenditures Xx. sequentially our higher increase billion capital Day. $XXX inventory previously, Total fab QX. indicated capital Inventory Distribution the is by increased billion in inventory carbide the was QX resulting was driven intensity in inventory capabilities X $X.X This of by in million at our increased of the expansion of of timing we debt is directing of significant receivable within was days. days weeks towards our X quarter, and returned the XXX our near-term $X.X as

detailing Turning guidance our to our related the in is press and for guidance fourth quarter table release the the quarter, non-GAAP to fourth GAAP provided results.

our customers the our supply continue trends believe guidance current uninterrupted demand will fourth booking for XXXX non-GAAP we elements me provide Let long-term you work levels, to of we for Based supply. on with of key strategic much quarter. to and ensure and now outpace market

capacity obtain external efficiencies, We partners trends, investments we backlog continue of quarter by working to increase and current operational products strategic additional bookings billion billion. $X.XX the to supply for our be to first capacity. that anticipate Based will levels, through and revenue selective on with in range the for $X.XX

million. expect gross XX.X%. of compensation and $X.X non-GAAP share-based includes We margins between XX.X% This

including share non-GAAP $XX million of $XXX $XX to total million, OIE will compensation $XXX non-GAAP per of million, earnings of expect million. this in We $X.XX. range $XX.X to to in be operating We expenses our results million $X.XX and anticipate share-based the non-GAAP

guided our increase As past, midpoint X% the our starting first in utilized of the have as of have approximately for will This we in for historical substantially at tax $X.XX change our our attributes. of the XX.X% from NOL accounts rate we quarter. non-GAAP guidance to QX approximately EPS

expect $XXX million to first $XXX in quarter. the capital million expenditures We total of

Analyst higher indicated and in Day, silicon XXX-millimeter we be production we at in carbide our capital invest near-term capabilities. up intensity our will As the ramp as

share non-GAAP shares. quarter approximately Our million count diluted be the XXX expected for first to is

address to wrap gears like long-term model. As I up, to I’d shift our

gross non-GAAP of our exceeded gross anticipated through target initiatives an margin margin time line our of acceleration ahead and Our QX of expansion XX.X% structural our changes.

and targeted strategic primarily as driven XXXX to will our ramp end low-margin by products gross our markets. new to XX% of which raising out phase products are mix we favorable such, we in As margin XX% be non-core

on provide the expansion, based range gross To overall XXXX multiyear expect fixed executing visibility margins structure portfolio exit to a to continue XX.X% our a framework this in XX.X% our subscale we today. of as and fabs costs the will strategy We we on cost across also lighter over period. reduce for our product fab

to line for follows: expansion. the and exceptional to points to basis ON model These as new long-term Semi margin believe turn of to So on previous possible the our for to has growth call XX%; delivery With sustained early the model transformation XX% of revenue to that, increase questions. and an results to long-term in of are worldwide execution is our and like customers. positioned focused margins our outlook start of and value our I’ll dedication over non-GAAP gross and XX%; of our team drive Q&A. Rob success XXX XX%, income OpEx operating only the I’d initiatives XX% of of We with XX%. over open back our XXX

Operator

And the from question Instructions] Bank. [Operator Deutsche your comes first from of line Seymore Ross

line Your is open.

Ross Seymore

morning, Thanks Thad, I question, let for guess side. is question. the guys. Good is me revenue on first Congratulations asking the on the on results.

You exceeding walking talked the and from. into a lot to of demand wins away design lot things the about I a dive etcetera. good you’re wanted supply, LTSAs,

like I you think more million $XXX got you is said there last $XXX of out of about business. seems about It million coming. year,

So gross and you’re going outlook quarter process that? Thad, good year. the for this then the revenue to we exiting margin thinking pace But year. how is on you not I to every gave kind be incremental that hit at a for know going wondered I what guide should of

Thad Trent

Yes.

in with of the question start exit. exited $XXX million on me the your XXXX. Let there We’ve second part

think see we today. in that we of So into the will as we exit half ‘XX, more year that the just of environment on the based second look we

as of we completely another piece. plus will loaded. think entire But back-end X exit we take So that we there out to said this we XX% But it’s XX% that exit. to get is really think said, we years

Ross Seymore

news, guide think, to day, the of the update. was the I And for news quarter model it Thanks long-term it. or the then the Got whether is gross margin color. the

It the just target. wanted more Were you’ve August? was just that hit and to bit back ago long little a you I surprise? guys conservative what deeply, understand wasn’t So already in the

that, seem is better breakdown how I might disagree going tailwinds helpful? and than will some to with there that what’s much people some a think you And be but I So what structural expected? is surprised of not know believe might that persist? you cyclical

Hassane El-Khoury

shift happened tied the plan operational Hassane. Yes. a to it a able we a thought. self-help This environment. our of in the products. We done. than that were able The demand Obviously, the we given our had lot much lot to efficiencies plan of was plan. to faster to were strategic faster we’ve We is Look, pull and

capacity saw, and have as sequentially higher As margin industrial, mix of strategic are markets that part outpaced of you other our price-to-value trajectory discrepancies. us to walking course, able we the a that of allocate we’ve shift and a bridging auto year for away to And the and have been from the to for markets. which on the grown to the drive growth of be

mostly close So a that, in rise costs. to we’ve able to offset lot been our of

them. have of walk these macro to allowed the aligned the better of business strategy. to all demand mix to from stated with are move able shift environment, but So been plan, away Because of we and part capacity the the accelerate us a our

together, So about about disruptions the improved whether pulled the and what yield conservative. XXXX, been from It’s that’s more unknown team drove in seeing it’s that It’s that units. the accelerated. we’ve but not

All beyond are we these those those and shift choosing next visibility not us extend agreements of market. to what supply up, because gives aligned and are years, to but the the results. few our and the related All long-term sustainable with support sustainability of that a the is are markets mix

Ross Seymore

Thank you.

Operator

line question from Danely comes from the Citi. Chris Your next of

Your line open. is

Chris Danely

it going be also And and up? Is the a them? or for on Thanks, time it guys. flattish takes? being. gross and Congrats guidance. going kind I the guess result the talk looks another on material cost puts be just Can lid of something what’s on good to forward, keeping the else? margin you guidance about to going then the What’s those pushing

Thad Trent

Yes, you Thad. of there, it. and kind in elements number a hit on is There of Chris, this is

up. So going we are expecting additional input costs

there a passing lot those margin in we to the the as expect more is think said Hassane of but initiatives. on pulled in the happening. that been And acceleration We have of gross We do here. customers, in the we previous successful response,

throughput see our operational here. more of a efficiencies just is of do manufacturing we’ve we biggest I we And can our get challenge lot footprint? gotten improvement. But out think

at improvement I that we’re think the our guidance the And done. to of model look XX, through the with don’t for you year, you long-term the If XX see put obviously, we year. out

Chris Danely

and you my of just be a for a, little impact And as guess, the specific capacity from timing I well? impact a fab follow-up, Fishkill more can the and on impact the margin

Thad Trent

Yes.

So early we At time, running there. have take production in that we ownership ‘XX. been in

will time and We continue production then a there ramps we of GLOBALFOUNDRIES is where And there. period increase to down. in continue up to ramp

So of foundries up. during headwind ramp that time, some there providing is to a services we we’re a as little bit foundry until global

transition So you the but for can years little of of there a headwind think of orderly a bit them. couple two is about an there, a between

So that well, all baked our and long-term into plan long-term model. is as

Chris Danely

Thanks, guys. it. Got

Operator

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

Your open. line is

Vivek Arya

industry that way what seems think production industry Thanks I’m and perspective, what’s conceptually, the there delta be from OEMs my shipments. auto there? right, at when what this your seeing an Hassane, a pricing? we out right the production Just and for look auto still semiconductor inventory improving to Xs? curious, taking about the Is automotive delta question. is year? Tier visibility are components And of you sustainable all at content Just between mix to of semiconductor or

Hassane El-Khoury

constraint building. are supply constraint, XXXX. in pretty same remain straightforward. is the semiconductor When XXXX the that a purely we’ve Look, delta shipped supply delta between been units in we throughout – mix is our in in The customers and based automotive into through XXXX Yes. that on

X to historically biggest have healthy see the have semiconductor does. So of between always That’s vehicles of Xx doing. driver being we’re XXXX for discrepancy the today, and of That’s what customers much the more therefore, about When SAAR content regardless more that. exactly what their doing the vehicle. because higher discrepancy content product the to talked of production us is content. are you translate even level our per into kind strategic moving premium which content I’ve They a two. semiconductors high-value they for to built, are you and what line, being

being and long-term talk always being of happening. SAAR because that’s automotive don’t related implications I guided is than see that any can Now you about the what different. higher We’ve this. much electrification

down announcements and where and lot talked is more today. vehicles, seen the You’ve OEMs, That our of sensing as PMIC. future are going drives in more those drives they a on that higher even sensing much doubling our into Safety. than I a for EVs. of the and well our us lot about from content cross-selling it between

So, driving of your these SAAR. are growth growth all of semiconductor unit than a was higher

So the XXXX. looking we’re and reasonable what what results year it’s are this for very of at

that So I X don’t see short-term as the next a extend beyond years. just the thing because macro trends

Vivek Arya

Alright.

successful the tide, Is kind around hear European large pipeline? arms be curious, suppliers? you a it what X going the is to Thank suppliers get you some reporting X, and same. ON’s your my us forecast, of be on change Because forecast pipeline so between margin and also investors but lot there that you of of so case U.S. were some competitors, flow can having there to interested I’m because from gave And cash follow-up, silicon long-term numbers updated differentiation you. for a we opportunity, Is some of trying does get competitors. a are you differentiation? this is carbide your long-term views a big X, So just about is so agreements run few in free of the their the And the exit I your where forecast? saw signing very rate numbers CapEx and rising everyone the of

Hassane El-Khoury

more and I label fully of game or is some talk of talk some my about what output want about Committed what talking funnel between difference it. whatever funnel disclosures. certain more is yielded. is I which me funnel That labeled of the funnel peers pipeline. what I’m want revenue, visibility numbers of let the highlight I to or I pipeline to than committed So – big about just and it. the we don’t talk about. revenue disclose I don’t or

on we doubling to the are our LTSAs be and I comments said XXXX. more comes big are service committed the I in committed That’s So in revenue that to starting chain building – than numbers in. we going gave under we’re supply XXXX, numbers, order the revenue where the exited

supply performance the and way have the competitive also the all And closed When the but GTAT going of able look as of a Now into demand top industry, on far there electric to going the I not your on you want to customers and as we our for we’re vehicles. supply silicon advantage. is And in we’re going on be lot to results lot our customers. we’re to you double well. wafers six more what having assurance our from claim are carbide be out give Is a rolls investments assurance that the flagship of technology there, like the lot is players a can know. that’s efficiency, don’t so? customers and the depending I based to going importantly, a it and to that. I’m controlling in or based investments that very on performing revenue know our look, happy

to that order expanding those We’re the XXXX committed revenues support GTAT I in capability going be mentioned. to throughout

Vivek Arya

you. Thank

Operator

line the Sachs. from comes question Hari Goldman from of next Your Toshiya

line open. Your is

Toshiya Hari

guided undergo market strong how the supply still full Hi, months taking this you results. to are where I the the the us guys point? year year that revenue to the Thank on a ‘XX backdrop. you revenue design and thinking growth win congrats guys at X portfolio QX the is case? you the think given had talked you just two Curious asked well. had ‘XX some about your take about obviously, of ago, morning. good think question And question funnel, of I as for strong from dynamics as ongoing Is optimization we midpoint up the the standpoint. QX And guidance, if improving because about XX%. be a that I you’re going

you are year? So just thinking the curious about how full

Thad Trent

I’ll of for Yes, to year. give Toshi, though. framework guide you bit full we on, don’t a the work little a

back-half the One previous business loaded. around answers exit would was in that of calls the of said questions or I be the

that consideration, taking growing into look we’re at when around we probably maybe I year, full market, think slightly the above.

Toshiya Hari

in my $XXX I the margin helpful. as the That’s the How or years. should last exiting, part think couple that point, And profile the on on Thad, over we of you’ll million gross of be it. Got follow-up business. that then next that guess, about revenue so

gross I given that Should strong already you million think the XX% margin be a the gross you’ve about backdrop? Thanks. profile we talked exited $XXX thinking about higher margin a market profile.

Thad Trent

XX%. we it XX%, about million at at we is talked that’s quarter, up gross today. million margin Yes, $XXX $XXX that to combined a the of now Last exited

about think about gross million, $XX you if incremental it’s today. margin XX% that a So

that. the going walk So maintain continue the the away piece drop that’s that we if slightly we’re that’s but is to next is back, challenge comes market the margin from is when going range fast in that higher, to

So slightly exit that we that accretive out as swap XX% about. just or of that yes, we that, today, will ahead for margins. above it’s But more slightly talked I

Toshiya Hari

Thank you. Got it.

Operator

Ramsay of line Matt Your Cowen. comes from next from question the

open. is line Your

Josh Buchalter

Matt. mix margins, of growth. is give us question outlined? wondering there help mean we is asked for unit to the I congrats was behalf pricing And previously on helpful I the you Thank that the pricing, as Buchalter think you about on market. prepared Josh on versus is color much gave you and by you. In anything about can This results. Thanks overall taking guys. for when remarks, the Hi, some the being lifted how I understand the shifts us my

Thad Trent

Yes.

mix, manufacturing is forward to think margin. what and if continue driver terms the gross our industrial will That’s And as of the reduce increasing on we of kind improvement. see expansion. and We what go the favorable driving in that’s low-margin, which we business, the primary auto in non-core manufacturing swap the down Pareto, the a more be about and we think margin higher manufacturing piece. you to That’s forward. So next obviously, of capacity we just remarks, the gross we broke mix, drives pricing costs. prepared more focus footprint our of favorable really optimization going as this sequence of getting out then it really margin into our And gross out

Josh Buchalter

to your been Europe some of share within I strong, of seeing That’s by your you. have Thank IGBTs, then business in continue you within are silicon dominated very high-voltage your also over was your and carbide gains the design thank peers come your typically And wins helpful, broader in wondering you. Asia? in portfolio, size which

Hassane El-Khoury

Yes, this is Hassane. The answer yes. is

the a our that IGBT. from that long-term share would for supply Therefore, I have are an uptick. have is gains increases mentioned, focusing are market. on those net some that baseline. seeing Those LTSA from consider Obviously, We I long-term supply peers our of agreement away carbide. agreements do silicon dominated We

our we do both the see in So in LTSAs. uptick

ramping those think over can you the into years So as few it next well about as LTSAs.

Josh Buchalter

Congrats, again. guys. Thanks,

Operator

Sandler. Your from next from of Kumar line question the Piper Harsh comes

Your open. line is

Harsh Kumar

Hi, guys.

Hassane, be a curious, on pretty First X been congratulations year. ones. it? good the carbide very bad all, carbide it, silicon X Have on color on on silicon months a gotten there turnaround, market, was the whether surprises, curious the of but acquisition call for, stunning GTAT. making emphasis any into have ones I I’d deep to you to or of about your now

Hassane El-Khoury

have surprises. positive say I side. surprises the there the Look, on are would been

door. If with earnings, our we’ve or competitive silicon carbide, surprise called years what providing That GTAT walking our you carbide was surprise XXX-millimeter pull silicon to on solidifying at in GTAT the had to providers road but capabilities my closing the positive X the on capabilities our not customers. roadmap the recall I acquisition, next in is, on for the conversations and a very first company’s quickly importantly, so. that one, would number reaction favorable we’re more the getting remains. map, I as customers’ back very into just a a And I And our say baseline the which bullish to today, the acquisition

both favorable that doing in talk me gets a we’ve to honesty, technology quadrupling XXXX capabilities All the of down our order carbide – all we’re strategy double And heard very about the been in have these about year ramp reason of the revenue that with starting side. in XXXX. our aggressive to is silicon GTAT And you exiting me from the support every bullish carbide. of that doubling on silicon our very development it, that’s

where the business. All is bullish are, carbide outlook of coming This these of positive very our on our investment silicon remain developments. in, our and say, and is would I capabilities I

Harsh Kumar

the of into getting Hassane. growth, Thanks, you look high getting then some to guys Great. that on And the ON new business, how changes focusing silicon you are into areas some as at structurally have the made carbide should not term longer rate think the How would x we but near-term or think number plus that the as percentage, of growth midterm we that growth about should be? company. industry the maybe rate what

Hassane El-Khoury

We’re talking about.

moving next over industry about think EVs the can content getting, given the You of also long-term, gains content the years but and the that mega trends more the like towards being that we’re Xx it the few about ADAS. over are and more driving

That’s where period. to the seeing our All growth over investment of multiyear in term the to remain Xx business, XX% alternative we of also that more EV. There a more content I these Thad about just going over as are in in we some ‘XX. the we exit going energy are is market a not importantly, lot drive But growth that about. talked talked growth it’s businesses those longer – just

us new are those for they are revenue because of All increases net markets.

So to fueling that’s growth. that going keep

investment to keep on and can going. the and both course, it of cloud business automotive going you So see industrial the is where that

to our these growth because going those of are megatrends. all fuel our So, to of exposure

Harsh Kumar

Thanks, guys. again. Congratulations,

Operator

Mizuho. comes next from of from the question Your Rakesh line Vijay

Your line open. is

Vijay Rakesh

and Great – Yes. margins. Hi, quarter sorry Hassane. guidance

question Just know in side, you revenue. carbide a on mentioned $X.X silicon basically I the quick committed billion

and – that give for on that? you wondering as how if well? profile know would that can incremental said billion the I But should be you some margin business that Thanks. what $X contribution a Just from should XXXX what be year. is to XXXX

Hassane El-Khoury

Yes.

So the guiding in of through the to double we layering than that not it’s going we’re customers I’m XXXX. LTSAs XXXX in top than go ramp silicon XXXX from have as on other carbide plus the and more we in ‘XX – existing saying that, start the XXXX

to run on So with rate. ‘XX get exiting foundation a we carbide $X LTSAs multiyear that visibility silicon our the That have billion ramping. will is us

ramping. We started have

‘XX in the be the ramping – XXXX. be more the heavily what for in was half of and than second It that’s in will it year. will We full Xx

for profile, is margin carbide. our our loaded, to margin silicon is margin Today obviously, meaning Difficulty] and into expansion our ramp costs fully we guide all that obviously [Technical CapEx going profile our as it be accretive. profile For includes of margin start-up

the long you a carbide of kind accretive gives time. over that So silicon nature of our

Thad Trent

Yes.

because the accretive be dilutive over the long-term, clear, we silicon so Just short-term, costs. the to margins average. to is ramp carbide corporate But to start-up in it have the is our

Vijay Rakesh

markets. can the how how it. us addressed of side. that much just obviously to Obviously, translates to see GTAT very the the pivoting And it. And there. capacity your EV Got you’re will you quadrupling capacity, quadrupling? are that are and Thanks. wafer your quadrupling on capacity carbide revenue translates guys some color silicon on silicon how But that. that It’s internally you of That’s be or good with to give carbide carbide silicon huge

Hassane El-Khoury

think about ‘XX, Obviously, capacity that majority we next the the GTAT also of are our from are supported think have Yes, in of end over our flex the a demand bumps during years. the if I have can you about for by we we quadrupling ramp. more – output partner able in But of to by few to our about sources intent capability. internal ‘XX. our as talked doubling supply it putting than you infrastructure that outside

to ‘XX. in We again that are by from going double –

still ramp mix. capacity As – more of to capability and and quarter, going our substrate I that’s by this But more But what’s and the GTAT do our supported really GTAT. as be quarter up expansion have about I we the last mentioned moving in a remarks my we the is today, prepared internal. talked

Vijay Rakesh

Got it. Thank you.

Operator

of Raymond the from from next James. question line Chris Caso comes Your

open. Your line is

Chris Caso

Yes. Thank you. Good morning.

into you shift Just that guess of what’s go been XXXX? I how of pricing there elements products. going and the speak tailwind two ASP pricing. happening much been a The see you and on as that’s where because then and about Can of individual a you on increases pricing there question mix is and

Hassane El-Khoury

Yes.

we you yield incurring, be a operational going are cost are increases mix look at price Most – or through of if absorbing majority So, is improvement to of XXXX the that efficiencies. shift. we or

already mix we going mix that exiting be going profile QX, keep on course, we be XXXX given to going driver shift maintain the new shipping a to margin are that going is being our know of the really to the that’s we shift baseline sustaining primary based and have product. going So, new And mix keep have minimal. that booked. we is shift achieved to based to in it’s But be that profile on the on – fully

gross the our of The have supply in that comes That’s the the not only we some value strategic will pricing non-core we – sustainable value products The that that on we make. sustainable. the will markets exiting discrepancies of seen points the couple I will of a actions is today. In online new is that that have So, in our price-to-value I margin. Thad – guess, about that’s business a be baseline as talked be that peers. from that

has Today, but price been favorable But historically, plan on that dilutive, not still chase more more down. favorable. We that going business. maintaining to it’s don’t it are we than

exiting be will that. We

about. a So, that all that our to that’s mix would sustainable – be the we and drag we our with on I shift where is mix plan expect I don’t price, guide margin going exiting, business profile Everything that because of And that see part portion that be. that’s is our that Thad call forward-looking what to of price and on being as profile. remains talked sustainable where not

Chris Caso

Thank Got it. Helpful. you.

benefits when those cost some margin question, that time? do us So, give you we Belgium layering in? sale, around numbers follow-up And on fab and of some for over could what’s impact start a the the if

Thad Trent

Yes.

is We – fully So, won’t the until this benefit we Thad. exit fab. we won’t the see

see to about basically takes a of it will of will have In year we coming benefit have over said, million buyer company. X you the When equivalent will - we fixed the years. over take I the as you think off X So totally are annualized when But that fab out what period. can cost exit, $XX paying short-term, cost that that today. time fab, over the we as that timeframe of

Chris Caso

you. Thank it. Got

Operator

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

John Pitzer

Yes. me Thanks the ask Good questions. on results. for solid guys. the letting morning Congratulations

might weeks help you inventory, normalized six and take going it’s on channel eight normalized a end about, are that back weeks the back us a linearity guys to to quarter. of that after how Can it pop of what’s you said long to understand at thinking the fourth get level? kind to Just the level back you to

Thad Trent

Yes.

in we has seven-week today, that constraints. about of been normalized kind level supply six-week think range So to given the

balance on As you inventory we channel. are sheet holding than into our rather know, the shipping

to holding direct. where making can we goes. sure are whether We our inventory it’s going channel that we that strategic is customers, or through inventory, and allocating the control it are By it’s whether appropriately, it

up we to from So, popped think I the short-term, X.X% X.X%. in

going I think remainder for of that’s to year. of be what this are at of the kind we looking range probably normal the

this think it’s would I kind probably weeks. where looking there, of to when what be around weeks you we shakes that. to seven XX further the have I plus look we think see minus obviously, out when think weeks, are we I doing. six for market got is and or I we something mean out foreseeable future, do will But

John Pitzer

growth a most businesses because sounds kind square gave what just exiting of am drove the little that Got just margin you XX utilization And that It it you it. you And driven. of kind I that heard up. walk know I cyclically was volumes quarter. that by that December true? of of only you of kind curious then the incremental us say is, like I through me unit math, bps. was I Can it if and about in is of help the also One, can the if my help sequential drove thought leverage circle unit most the bit?

Thad Trent

Yes.

up was X.X%. Units X%. were revenue – we So, up

You are right.

additional mix units the primarily end came obviously higher the being margins. then So, from shift revenue shipped in a top and

that shift strategic markets. is our sequentially, cost which – think you about operational when said, shift customers pricing did So, And is I increase that we favorable to reducing manufacturing the a on well. are was as of in been seeing as the additional the there are efficiencies, into market well more as gross margin the we we get it more then improvement have passing as into slight seeing. as our cost kind We

Hassane El-Khoury

have the exited, higher that a perspective. I non-core, that the favor just And and markets the mix – it, business also just strategy was from market from that those drives that’s also the that we ASP the about why a recipient of industrial we we mix, of think because and where the shift auto

So, higher it’s the a unit at ASP.

John Pitzer

being to silicon if then just can to going kind helpful. about That’s silicon you sneak to accretive to have prisoner CapEx your talk extent And you about not carbide just we market. going of the versus demand am the your model, to value curious for in IP to what unique of carbide prisoner sort something thinking kind longer you on could this the global what I that a are add wafers supply how one capacity you where that be extent, table? kind term, I to To to incremental out be the are a bring are When global you bear. to of of kind because bring And model? of figure

Hassane El-Khoury

wins the and advantages. Nobody nobody you take of product ramping support that products. inferior are That’s have kind for EV because how you always product will get bullish your the But customers I am they win supplier which we you just material. at that what’s everybody said Yes. the more a they have and our the to supply. which wins it. is comfortable to look because moving I just assurance us efficiency they their select an roadmap, ramp. comfortable they assurance, and be forward. Nobody like performance, Look, of more will supply have our selected But you going have when because of – competitive going landscape makes what have That’s is we because flagship to have supply

and our closed our remain based of roadmap. of supply that really we we that the that supply the winning and but to aggressiveness fate substrate controlling through assurance GTAT on products our from, efficiency of acquisition we baseline having are gives with our and So, us the able ramp

John Pitzer

Perfect.

Operator

from Rolland Christopher next Your from comes of the question Susquehanna. line

Your line is open.

Christopher Rolland

of and at Cypress. revenue on think describe looking But what guys. you what did guys. your it, congrats you of And revenue for plans missed be there. LTSAs, call Thanks, that first in The margin I to LTSA? question But we XXXX of falls might gross if under are maybe with particular. either details for guide LTSAs LTSAs by, under Congrats percentage some could today? what you I – the then I I kind my out guess of percentage XXXX, guys know what mean of

Hassane El-Khoury

XXXX, covered not am giving Look, I percent in sold LTSA. Yes. tell are you we I in out. can

to we that in is able incremental we we We units from going are efficiencies year are fully that come through booked. Anything get to get ship. the

So, that’s keep of – about you kind referring it. XXXX through XXXX extend how that I can are to think XXXX. LTSAs

Our not under is to are that on focus we is the XX% loss – LTSA on there XX% obviously, the And net obviously, about, strategic. that that are we that’s LTSA. talking always

an replacing are We aggressive product going to ramp. be with that new

been So, in beyond I the LTSAs, – but can And XXXX. the doesn’t company. am extends tell is it about it’s not I it under higher visibility than ever you, percent much talking

Christopher Rolland

you exited did. that Thanks Hassane. my And guys question, then second business for the

at reengage you a needed accounts, with if that ship was were margin. your And that and of million still XX% has think wondering downturn might left. $XXX fabs, those fill guys to think occur gross be I to sailed? I said you or how you successfully much do then could secondly, you

Hassane El-Khoury

that’s strategy. think in the second will If today, favorable way. this important because a to because is you it a that market about I think chase downturn, highly that’s of pricing pillar after are the going part there dilutive. business the XX% to not I margin answer No. an environment. answer XX% can mean is The Look, is we it about

down margin now is it market, can So, that imagine or that worse XX%. way you revenue is a in at that than

plagued after in So, we to manufacturing make our not resizing away – footprint to is we to going the are as are doing under-loading prevent what Strategically, are market answer it is that company. our we manufacturing exiting order the regardless What it. sure our has in does. chase historically is that the the optimization we we from are walking are meantime of those,

give to that going that’s So, are us margin sustainable we that delivering.

to even mix. we a get are gross of downturn, because going the not in from So, margin drag

market going to and are have favorable a sustain to the margin prevent in be in are we the under-loading. does with a talked lighter scaled working And optimization, that fab regardless on mix Fishkill the where what like fab from ramping our Belgium strategy perspective. We of up we fab our manufacturing and then order through about East I

after bad market matter no So, strategically direction. we are not does. what going That’s our to the run business

Christopher Rolland

Thanks Hassane.

Operator

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

line Your is open.

William Stein

orders becomes volume more allocated demand of clear these fashion. into on of do wondering am little outlook. Thanks words, specific specifically, more my about. I just the look volume purchase sort are like committed are can you LTSAs in congratulations other asked where sort will hard a placed the blanket like if and in dig these great more I add as a for of sort my bit taking the or question. results just orders commitments, But

Hassane El-Khoury

committed mix. on us The are and I will I understood if that are they and the correctly. visibility committed answer, gives question the So, volume both pricing LTSAs

bad our order which it’s So, LTSA we days. products. What are blanket the expand in in that’s revenue to our a a blanket some purely or is to is mix want we capacity, It because is just on good decide to using not capacity number. what of strategic don’t on associated expansion where

And plus focusing multiyear as are it we are period the is over it why goes because of mix. efficiencies extend today impacting ‘XX, will in ‘XX is. best on said, like And the the It’s get ‘XX committed down we the is talked year. far say kind really some capacity year is our volume, where capacity I the I of that’s in again, volume, mix we So, that throughout expansion and and and I price visibility about a are. LTSAs putting what fully – it’s LTSAs And as have.

William Stein

a as extended question like weeks that has further during backlog, lead a That times that are quarter? helps. And point Have And around they then beyond last well, sounds this clarification on the just similar XX maybe that… it correct? point, at is

Thad Trent

are weeks consistent. that. be are no Backlog They major what The in very up around This very in demand. of we lead continues have of right minus, terms plus XX supply times now with with so, purely to right game just seen past is or supply. consistent outpacing strong. on It’s the change quarters, catching a couple

Hassane El-Khoury

not to on comment clarify ‘XX. my really supply for and XXXX is through ‘XX really anything impact now CapEx just is demand on that perspective, expansion meaning will And more CapEx, installing in your capacity

William Stein

you. Thank

Operator

from comes Sur JPMorgan. line of question the next Harlan from Your

Your line open. is

Harlan Sur

fab over of more costs have years. you about cost the to fixed to exits been take able I $XXX see fixed still know fixed fixed Good of total guys of $XXX the for and of next that execution. to see reductions? to the million, smaller cost on years Is had actually reductions solid reduction drive opportunities few team? I Belgium from of you morning. going targeted benefits sale believe million ahead this. few And most fab. it’s Good this Congratulations the results a cost the to the find

Thad Trent

Yes. number Thad. are the Harlan, targeted That going we that number it’s still is after.

$XX roughly have about million said fixed of Belgium earlier, As cost. I is that

ahead can got us. of see have lot we a you So,

Day, Analyst lighter fab We laid at are that We we the to are plan. divestitures. plan, that that done still with executing plan fab out not and

Harlan Sur

Intelligent for Great. full year-over-year still a and I XQ bit growth, And very than then year basis, and segments industrial combined. that. Sensing, auto but a mean Thanks strong on quite your lower

expansion power ISG I strong in know business. content versus was in PSG auto demand growth is just the Yet your we think combined and almost fact, In your and industrial as Xx as segments lower QX.

So, on from and starts is situation foundry in-sourcing actually here? the of partners to this to visibility when you the outsourced meaningfully your part efforts a accelerate improve ISG. capacity What’s big motivating team its

Hassane El-Khoury

given environment Look, we are purely for – supply-constrained is a higher It’s manufacturing. right. not the – so you are external the absolutely sensing this percent of

our on drove and results, to more in supply focused So, we get fourth kind supply the outside able to remain working quarter. were continuously working the more more for with We and partners. secure XXXX. That’s in foundry order what of we are

right, comes of and in, track. a that’s that a our it’s are where you mix, internal focus demand, more it’s supply. And about So, external of on business remains kind not the

Harlan Sur

Thank you.

Operator

line Your next Svanberg Stifel. Tore question from comes of the from

open. is Your line

Tore Svanberg

the on you results. the little congratulations and channel. elaborate bit record you on inventory Thank Could Yes. in a the

it said also said to back but I you up this you went think think in quarter, down. came X.X I weeks, it

actually sell-through did take bit this please. because mainly inventory, an you perhaps a to again or that just is more little opportunity quarter, wanted better hold got there, So, some clarification

Thad Trent

to supply has and from the remains in necessarily QX. very in cranked timing of of channel late here the QX. get channel. in of we the It’s purely a Yes. quarter it purely X.X result X.X into was to not went channel shipments when The timing in up just QX. that in a weeks able It was It Sell-through be inventory in delivery got the weeks and up robust.

range was going weeks earlier, will the six maintain X.X already we foreseeable saying to weeks into as So, weeks I kind of And for returned future. back level. forward, that think we it’s seven

Tore Svanberg

you $XXX capacity? Thank have for is run that. How regular you investments kind CapEx. Understood. that the versus carbon fund to and million And going additional rate the now silicon the CapEx in of much for XXX-millimeter having of

Thad Trent

build-out. I majority There to of is for the more carbide XXX-millimeter and rest vast Fishkill, to it is maintenance going would consider the CapEx it silicon CapEx. East of fab The

Tore Svanberg

Very helpful color. Thanks.

Operator

the Company. Your line & Raji next of Needham question Gill from comes from

Your line is open.

Raji Gill

well. Yes. Thank you and congrats as

industrial, at You might auto and the upon I have XX%. now it’s if of percentage touched But look before. from this coming revenue

markets represent were markets markets, the those other sales. Last ex XX% other the about of So, XX%. year, representing

you When percentage segments? you your to are going auto-industrial this we about margin sales a core us sense, industrial. XX% ramp auto of spread number one, give terms XX% So, XX% margins do terms sense as gross auto to long-term, and time? thinking are of the XX% gross the industrial of over non down can of the kind from other we of And markets, in represent XX%, in what think any against between

Hassane El-Khoury

We auto-industrial Analyst become XX% that stated expect our over in we of next Yes. our total X the to years, about Day revenue.

XX%. are we So, at

we from kind and it’s by the getting to profile more that tied XX%. to is we our But you to mix or the of the So, that’s margin the also have towards XX% because importantly, move it’s better that gives XX% favorable margin more of more that profile. trajectory margin are new as these products are part because expansion trajectory, that Obviously, markets that forward more exposed that is we to being markets. ramping our

markets XX% shift profile. So, have end a it’s of and and for a new margin at markets, products shift historically the it, to run products call mix versus that the other the, mix becoming auto lower rate industrial, had our products, expense

So the and margin get about. net-net, the expansion you we growth that talked

margin, other our want with I have the in for market. play talked favorable segment and we just power XG do XX% that’s In market, That Day. about, bucket, one Now, it’s a and that growth our cloud growing highlight at auto-industrial, we thing. than other Analyst to

market beyond that both So, as where a favorable of also today. drive mix we and expansion margin we that see product from an are

moving these remaining you growth So, the components the and for expansion the that about are margin of Thad kind forward about. think three big can the driving talked company

Thad Trent

gross Raji, margin has a just XX% some it’s gross there. all little that me as It’s very low on not margin. Yes. bit expand in well. got like favorable The let

auto right. our still a XX% and business that That’s we of we business. But Hassane part as margin, the get in other other, is XX% the low exiting. it’s margin So, not It’s are we fast favorable forward and right. industrial, is

that will be accretive XG in But auto-industrial, well. into good margin be accretive. as will our obviously, other well. as bucket high the more more As there we gross is flex And

Raji Gill

a fab That’s strategy is that helpful. to manufacturing And shift lighter follow-up underway. just your to

mentioned XX% how that facilities XX% around and With think you your internal external new a or manufacturing in you expanding footprint of component and capacity? had the versus smaller, manufacturing do through lighter to gross You by internal achieve about maintain that to subscale moving will past larger footprint XX% exiting ones. that want the your to we margin target,

Thad Trent

Yes.

today, internally, manufacture our of roughly So XX% we – own we product.

forward, today. we what the Fishkill, fab, have it X.Xx As capabilities we was have we we the expanding bring capacity XXX-millimeter fast that on of said East by

because model the to further we Now, add out, still we We XX% change. cost will a exiting fabs, efficient moving product CapEx it we But a those look just to able that fab fabs. there as is manufacture own believe subscale will the get add have as in-house And It’s component option our of doesn’t of capacity we and we that. of really benefit more be support into XXX-millimeter it. obviously, that.

Raji Gill

again. Congrats Great. Alright.

Thad Trent

Thanks, Raji.

Operator

CEO, the some and This to for Hassane President El-Khoury, our will turn brings us remarks. question-and-answer back of end the call over I session. to closing

Hassane El-Khoury

for all accelerating thank us over teams I last you in once results Thank our hard transformation our joining for year. the and worldwide today. again outstanding driving work their

engine we With power come. strong many a our years our to for built transformation growth have to of business, the

in and fastest-growing and leadership We factory are infrastructure we as and vehicle disruption electrification such semiconductor have established energy markets enabling the ADAS, in automation.

while expanding margins. We are growth accelerating and driving profitability rapidly

with momentum to We structure expect our cost EV impending ramp business. the you. to the transformational and our of this Thank sustain changes ongoing

Operator

This Thank participation. for you concludes today’s call. your conference

disconnect. now may You

ON Semiconductor (ON) 7 Feb 222021 Q4 Earnings call transcript