MX - Earnings call transcript Q2 2024 | Magnachip Semiconductor Corporation

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Operator

Thank you for standing by. Welcome to the Magnachip Semiconductor Corporation Second Quarter 2024 Earnings Conference Call. [Operator Instructions] As a reminder, today's program is being recorded.

And now I'd like to introduce your host for today's program, Steven Pelayo of The Blueshirt Group. Please go ahead, sir.

Steven Pelayo

everyone. Hello, joining ended Magnachip's June for the results to quarter second XX, us you financial discuss for Thank XXXX.

company's be The was second call afterwards. on will can website on of issued that website. the found shortly today after be webcast quarter the market today's earnings replay Investor Relations release our The archived closed

business YJ provide Officer; Q&A remarks. overview, prepared the operating Park, our Young me are today Shin recent will Young YJ Joining Shin the be the quarter company's Financial and Kim, quarter. will Officer. review and performance for a the Magnachip's will following There and guidance Chief Executive results third discuss Chief session financial for and

business outlook expectations. of course and conference the may this Magnachip's make we During about call, forward-looking statements

based and described are subject Our harbor the our today Except all date developments. facts reflect hereof as that as any update Such statements subject not the and are as law, statement and, in company future are for does therefore, these SEC other uncertainties historical upon company the in are to statements the change undertake beliefs and to required and filings. not predictions of our safe of by as found obligation risks to forward-looking available statements. to information statements

Magnachip's accordance useful of of YJ During in YJ? second the over GAAP measures in accepted generally financial with are to turn will that, measures most non-GAAP comparable discuss can as investors. measures be we principles Investor supplemental our are quarter the Kim. to accounting to I'll With release our call the that also now reconciliation earnings non-GAAP the call, not website. the performance in financial measures measures. prepared Relations may section of A intended found directly non-GAAP but operating The be

Young-Joon Kim

percentage sequentially. This us year-over-year, Hello, Consolidated $XX was was guidance million. revenue of profit previous XX%. down to The Magnachip's X.X was to previous was X.X% of welcome of QX midpoint down Young but $XX.X details gross overall previous range Earnings margins will MSS XX.X% XX% result Shin more million, section. everyone, higher PAS up the guidance for thank and XX.X% than above to gross X.X in of points And Both the you year-over-year, Call. up our and points gross range today. sequentially. were percentage margin million joining her QX QX $XX above guidance. margin provide but

XX.X% down comprised Business, Standard year-over-year but our points is up Product in nearly Business gross was X PAS margin X.X% Product MSS sequentially. Revenue sequentially. $XX.X percentage and was of up Standard million, which businesses, XX.X%,

me comments of let provide more Business our lines. Standard each for Now detailed Product

sequentially. end Beginning to but QX high due OEMs China quarter-over-quarter panels. XX.X% with IT TV as smartphone well revenue guidance OLED demand increased X.X% our was The the of slightly up was automotive down year-over-year, IC LCD million, for $XX.X and MSS. and OLED Power growth revenue from at above for as DDICs

with market. smartphone panel targeting OEMs We and several the continue China collaborate to OLED makers

of development stages segments customer as other well spectrum as wearables automotive span mass as entire market such to As watches. various the smart and and tier smartphone DDICs tier a the display premium These multiple have market we the evaluation. reminder, markets, in designs like from

Magnachip officials. broad chain MTC. event IC or China and managers, representatives attracted existing the company's and the held ceremony various subsidiary, new launch in customers, audience, a businesses Technology supply we Ltc. members driver Company, expand to The of The IC is display prospective mark China. portfolio and to strategic government including in from Power formal investment owned under our opening of MTC goal wholly QX, During our a operations of

industrial he industry, over diverse With as phones, Mr. has China hired automotive, the Lu of spanning Lu brings sectors. background in look and China. enterprises forward a experience the XX marketing drive Mr. held Lu's a and Instruments wealth new to Co-President PC, MTC. leveraging recently of key business We years InvenSense/TDK, IoT, mobile appliance, We businesses. He expertise home management semiconductor Bing has scaling and to Synaptics, Semiconductor. roles growth in Mr. sales NXP at in Texas

Today, we retire than Solutions, Mixed our WM also decided Lee, company. of decade announced general to the has a more Signal with manager after

years grateful of him deeply best. very are exceptional for service WM's We wish the

that manufacturer. commitment leading referenced commitment a purchase smartphone The our design-in in Chinese In earnings for targeted from the QX, is premium we call. at QX we secured smartphone a smartphone OLED

potential production mass initiate technology to the by year. XX-nanometer is with on the and incorporate panel built of currently is expected transistor X of chip win contributions The features. the plan revenue LTPO advanced Our end to begin design

In to in make another continue addition, Chinese currently final progress validation phase. OEM with we design are smartphone leading the and

also next-generation upon chip. we mentioned, XXXX this we maker's of consumption And proceed samples with we have been power on completion, incorporates supplier. brightness OEM. panel featuring model, our improved previously chip, validation QX, As design smartphone In control collaborate lower the this winter will upcoming which to selected and provided to smartphone at

and as as larger, sampled increasingly China, we driver designed in functionality power with previous be as color more important than broad in than is makers expected generation. and smartphones more power-efficient In OLED key OLED refined which array SPR; for adapt next-generation believe enhanced color be brightness enhancement; high-performance will targeted This integrate feature-rich sub-pixel filter; rendering, taped-out consumption XX% DDICs well to a panel uniformity IP, smartphones June, AI to flexible in chip, QX. the including We of control; reduction is foldable screens.

high-growth OLED our markets. strategy DDIC. out QX, first expand adjacent to into in QX we sampled This our Finally, new, smartwatch opportunity after in showcases taping

activity customers. for With regard automotive coming to our in from revenue European a quarter end increased is business, DDIC strongest the row. The second

with saw panels sequential as earlier for notebooks major in Our monitors Power notable sequential models strong a to wins OLED business, launch OLED and customer, with due QX. MSS, maker IT LCD display. design we is growth global which Further, IC increase TVs saw from continue included new Korean during to a

we models, developing customers. both panels this and We TV for to new for customer OLED are continue potential and for collaborate upcoming products with LCD

summary, drive and working top-tier we making panels. MSS, executing from smartphone wearables, also with major revenue to strategy steady OEMs, and inroads while makers panel In IT adjacent within our are TV and markets automotive, in

we forecast from display QX, driven For previously smartphone OLED MSS, by growth well refurbished as design growth wins and markets. sequential revenue as the in smartphone automotive announced

PAS. by to year-over-year on up million, Revenue quarter-over-quarter. up X.X% $XX.X X.X% Moving and was slightly

in with excess customer a share so resolved. As China inventory I said now distributor as broad-based, was some appear by industrial strong application. solar increase in issues and rebound the will before, The I details segment sequential largely saw

production design XXA/XXXXV has in new and Our a year. the IGBT in second the should of half begin solar mass applications opportunity

doubling E-bikes we and and also approximate see scooters QX an of for compared motorcycles, well the grew e-bike. materials are positioned we to in market traditional content to where e-motor bill from benefit high-speed of the a

other and sequential such lighting tools, power markets, growth. saw as Lastly,

battery various heaters and MOSFETs end steering, pumps, widely to application relatively mass and systems. cooling for automotive PAS, as past success automotive water the smaller rebounded we and fans, for powertrains sequentially see targeted as functions to management IGBTs vary customers The as and compressors, design ramps contributor well While automotive in wins in for build windows relating additional include now production China. Japan segment a automotive Korea on and and medium-voltage our seats,

communications for leading-edge driven high-end The AI for sequentially, LV-MOSFETs foldables smartphones by Korea. segment increased continued demand in and

seeing are wearables also and for opportunities We incremental win design tablets, China smartphones.

XXXX positions low-voltage mentioned call, towards of PAS products requires screens smartphone MOSFETs our and the company on-chip into AI for and believe design pipeline LV the last in industry We foldable positioned increasing than As the to from late power before. next our are integration, generation consumption coming which much well XXXX. earnings on lower benefit well for we latest trends smartphones

XX% latest generation. power than less Our devices LV previous consume

TV such induction from share. In increase appliances, IGBT consumer, home refrigerators up junction products as and our increased brands seen cooktops. gear to Further, demand we market as in and China saw MOSFETs super have growth

Power expectations will in wins half products We during PAS in well XXXX, recovery QX, in inventory with channels distribution summary, as business and the by QX and of driven demand first earlier the the In for overall existing part our leaner new gradual channel. of the in were in breadth design results for as reductions continue our believe line by driven seasonality.

markets product similar We new are to strong many new pipeline in in continuing and performance us Power penetrate OLED computing XXXX. Tier allow premium will to of delivering have We believe for class will and a in execute new to products TVs. X these

Gumi the Service to the business. begin Transitional new help fab of capacity XXXX, products Additionally, fill Foundry the by will created phaseout idle in

and quarter you will the our provides call I Young? after the Shin financial performance guidance. more Shin back gives come of in second wrap to Young QX details up

Shin Young Park

Thank everyone, on you, the YJ, welcome, and call.

midpoint Total financial of key the in down our $XX.X which revenue QX above $XX QX. with was start the to guidance million, XX.X% $XX MSS X.X% down of was from million million. This XX.X% was Let's year-over-year, above but up range of million. for metrics X.X% sequentially. up business $XX.X high range guidance but was million of $X.X slightly our the $XX.X Revenue end sequentially. This million, to year-over-year, came

explained was from our down This as declined million. year-over-year $X.X $XX.X and wind continue million previously. up Transitional million, revenue of X.X% Services to was sequentially. guidance $XX below service, Foundry the of midpoint we've Revenue as slightly $XX million PAS up to business this X.X% to range we

margin XXXX. end and XX.X% QX was XX.X% from XX% end in XX%, Consolidated from in gross the gross above high range XX.X% the in was QX down XX.X% of in but QX guidance of from up of year-over-year, QX sequentially. upper MSS our XX%, range profit XX% the of margin profit XX.X%, down XXXX to above to down XX.X%, guidance from

engineering The mostly to revenue we QX a mix. unfavorable decline XXXX. As was product due nonrecurring reminder, recognized in year-over-year

due in down decline Services. guidance in inventories XX.X% to PAS XX% but was wind above the XX.X%, XXXX, mainly of gross down due up rate XX.X% solar to range stronger-than-expected the U.S. from won upper fab XXXX. Korean of a dollar year-over-year The for was XX%, versus QX margin mostly the upside QX The and Transitional in guidance QX of profit end the reserve Gumi was from utilization sale applications. lower Foundry of to primarily against from

compared to $XX.X $XX.X in million $XX.X million million last QX QX Turning QX compared $XX.X in QX million year. was was expenses. million to XXXX R&D as as QX and XXXX and SG&A XXXX. in in QX now $XX.X million to $XX.X operating

set timing product development, R&D QX line year to As a quarter-over-quarter expense fluctuates of mask in our due this expectation. had reminder, the was higher costs, which and with

in adjusted compensation QX $XX.X basis, of expenses, operating $XX.X million an to QX loss compared QX loss loss last including loss $X.X million operating Stock in $X.X operating QX XXXX. million operating was in On non-GAAP QX and QX QX were loss year. $XX.X This in and of QX of and in to compares charges, $X $X.X operating million adjusted QX last loss million million. operating operating million $XX.X year. of to was million in $XX.X a in compared million adjusted

QX a million in net in $XX.X QX $XX a was and QX was net negative compares $X.X loss loss loss EBITDA last last million in of as million and million. Net QX in to adjusted QX a compared year. of QX This negative million million $X.X in $X.X year. with $X.X negative

share $X.XX loss in GAAP loss year. as $X.XX share last QX diluted of per diluted $X.XX QX diluted QX per was and in loss compared share Our in per with of

and share in $X.XX Our of compares per share QX per year. loss QX This per diluted $X.XX. non-GAAP was share QX of last in loss diluted a with $X.XX in loss diluted

diluted million purchase for repurchased of XX, we X.X XXXX, million our outstanding shares were $XX XXXX. the program leaving stock shares. million remaining XXXX XX.X as in authorization about aggregate Under June price authorized Our quarter shares approximately in buyback of million, weighted $X.X QX for July average million $XX

have million, balance instruments. also in maturity financial balance investment classified XXXX. million, sheet Moving QX $XXX.X to date financial short-term short-term on cash which We sheet. the an additional of has This our as a November with of nonredeemable $XX ended and is we amount

X.X% from Net end of accounts which an XXXX. million, increase represents totaled QX the of quarter receivable the $XX.X at

for QX. was XX and day in QX to days Our XX outstanding sales compares days

totaled inventory in days and average quarter, was QX the compares and million XX at in days $XX.X end in QX. XXXX. Our Inventories, million to for QX days $XX.X net XX the of

CapEx QX $X.X million. Lastly, was

million PAS to million million our XXXX, fab. This spend prior CapEx $XX For $X for primarily includes operating of in our to established CapEx newly we Gumi approximately for year entity the full million, $XX business onetime and $X China. to reiterate our

Now full moving third to and year guidance. our quarter XXXX

million, the million, million revenue million expects the equivalent actual Services. vary, While of range to to year-over-year QX be up and XXXX. of up XX.X% XXXX, of results sequentially including sequentially XX.X% Transitional at $XX.X revenue in million to Foundry XXXX MSS in $XX.X $XX.X midpoint. in in the $XX.X in to million QX MSS QX be to This the million, Magnachip with year-over-year equivalent $XX.X $XX.X in approximately XX.X% revenue $X.X in may range compares of million for currently revenue with the QX revenue at and $XX of million PAS consolidated compares million to be and QX PAS XXXX. range and $XX.X $XX.X This midpoint. XXXX of $XX.X million XX.X%

the QX Consolidated be with the margin in XX.X% gross This in QX This margin in equivalent range XX.X% to profit QX QX XXXX. the XX.X%; XXXX in in XX.X% XX.X% XXXX. range MSS equivalent compares range MSS in and margin be profit with and XX.X% XXXX of to gross compares of gross to PAS XX.X%. XX.X% be profit profit gross of profit margin XX.X%. to to XX.X% of of margin to in gross PAS

compared to XXXX beginning For decline we year we $XX.X the at XXXX, Transitional to PAS revenue year-over-year what Services beginning the with with consistent equivalent million the with at currently compared expected. full the grow of will communicated revenue double digits as in Foundry year. in expect as revenue year-over-year of digits XXXX, in the of we grow with MSS what of equivalent revenue year; $XXX.X communicated as MSS million XXXX, consistent double revenue PAS

by the of year. out the We end revenue phase to expect this

flattish to Consolidated XX% of XX% prior margin prior the XX%, consolidated of year-over-year. slightly up to with compared XX%. revenue, compares gross flat gross slightly XX.X% our This to profit expectation in margin Consolidated profit down between to above XXXX. of expectation to

you. Thank

over for YJ? call I'll Now remarks. his YJ the to final turn back

Young-Joon Kim

course undergoing X are business we of years. will of unfold know, that the you transformation As our a over

display the major China expansion first for The involves OLED transition primarily our in priorities to our in shift be laser-focused business.

the idle The fab a second disclosed filling of the involves of Foundry business. Gumi Service Transitional major previously as in our capacity transition down result wind

with We've company creating our strategies. of the OEMs owned better MTC product our align China streamlining recently, already makers panel businesses separate are wholly China. design MSS realize and the to taken and in with accelerating a goal formed subsidiary pursuing initial to by by currently PAS objective our structure steps there. the smartphone business We of More we multiple in OLED opportunities

A a business idle in capacity pipeline is with XXXX our high As sign have a of Longer that we in of products expected is sequential Gumi the the to we've Power again contribute filling products QX of said new leaner channel because Gumi previously, course term, inventories. over and wins new Power to priority begin a positive impact as is wafer growth show to to on that margins. Power design of and we beyond. result starts expect in

digits Power XXXX. over Our grow in is forecast to XXXX double currently by business

our I'm objectives, our to achieve And to ahead drive committed us pointing but direction. necessary work any business much in are to the steps value. shareholder I'm have right strategies We take encouraged that

turn to Steven. will call I Now the Steven? back

Steven Pelayo

section you. concludes remarks call open Thank up Operator, the for our today. That questions. the may you of prepared call now

Operator

[Operator first ROTH of from comes Instructions] the Our question from Suji line Desilva Capital.

Sujeeva De Silva

customers how talk to on many Congratulations OLED and The your growing that many progress are products fulfilling pipeline. the are of again give we models, maybe business a nicely. you are supporting and Similarly, here. how to YJ, in sense Can about, just where come? on is still

Young-Joon Kim

good Yes, Suji, question. very

engagement see you development. have well in products as we multiple design So as obviously, multiple

design-in And will includes speak, in that X next are Obviously, are in we models design model and also disclosed. that about we there that also smartphones model more watch. that So go X smart we we market quarters. and the are in about the opportunity, few products X after-service to discussing production heavily terms of more as

previous smartphone power the and a rendering, terms out be than have And In makers. that that than next-generation the where multiple next-generation panel taped be management reduction expect products smartwatch. IP, to color we of broadly color -- just new less that OLED product products, one broadly sampled for the and QX: uniformity in new such X one we has XX% sampled for as generation, sub-pixel to the enhancements, we will

that have. the So pipeline those are and we stages

Sujeeva De Silva

Okay. for target the what take the there. and to correct gross remind And side. importantly, Very is I more helpful. improve drivers again. what us math your If margin the my the margin make would I the then 'XX? gross year are ones sure And margin on is to key quarter. guide, for margins just gross it full And want declining like gross in seem fourth then

Shin Young Park

Suji, year-over-year million had phase due to first for the those margin decline the, because in Services, half revenue in also we of the was out and the the gross the Foundry and full So the year $X.X Transitional QX. mainly

coming that's down. So

Foundry Transitional Services Gumi approximately the capacity. our to of So XX% comprised XX%

So portion idle. becomes that

So that's our full year. gross margin of the for kind impacting

So decline. for that's main driver the the

actually, called -- mainly favorable inventories reserve QX that, But some of little we was the impact during some us. higher to that a on due came improvement, we kind of product the mix call we and were and reversal in of of FX the out

So of guided for And PAS almost flat so we midpoint. at of the that. QX, we also kind flat, the kind have

by top. So full XXX at year, we range and raised basis the points bottom our guidance at the

we XXXX. the what seeing, are year that's for the improvement full So

Young-Joon Kim

new that power. the is LV more I draw think power, today smartphone with XX% also the And mention the This less our features that also most less forgot said -- see I critical power. and we is -- will next-generation is IC as of XX% MOSFET Suji, in to script, the we AI-integrated very OLED

is next-generation needed for really smartphones. this So reduction of kind power

Sujeeva De Silva

the Gumi the drivers refilling in there are up? gross Young, it? 'XX, improvement that Shin freed YJ, is fab elements Or then, And the margin Okay. capacity that of to other key

Shin Young Park

-- is are we That That's out. going as correct. the transformation, pointed we through

capacity XXXX. to idle trying the are in fill We

new products, generation new So products rolling are out.

to that so us going And fill beginning help our XXXX. capacity will like in idle

Operator

question Martin our the comes from line from And Oppenheimer. of next Yang

Martin Yang

That's recruiting a Lu. his background. Bing China? talk congratulations very First, with his responsibility on and about hire solid maybe in priority strong you Can

Young-Joon Kim

seasoned Lu said, good, you executive. Thank very Bing very in you. as is record he proven Yes, And China. has

is So the the he the and he's IC responsible the MTC, driver is IC. and of MTC, marketing so focus OLED, business the of Co-President sales the Power where

Martin Yang

And Is OLED your reference question IC with clarifying supplying Power involvement OLED IT. current it. about those to applications? panels driver also for regarding Got for Are IC for IT for products your a you -- your products? panels

Young-Joon Kim

now, The right IC initially it's driver. main Power is the --

Martin Yang

the how maybe it. the XX% Got more comment does give in context savings you around or question regarding of And context your on savings products. that overall that savings? power the DDIC for translates power for next what consumption mean Can your is new power us overall smartphone panel the to

Young-Joon Kim

Yes.

smartphone are foldable So high-end power. that integrated the nowadays So or right? consume more a either lot AI,

you the offset and about many power in driver then like we the MOSFET we consumption talked to IC. ways, today, need So have

need to out much generation as help the save will high-end next that So in XX% smartphone. you And kind on power saving the you of can. giving really

a features. function So the of is saving again, also the

functionality things, talking in the high I the add those end consume significant on-chip a actual So lot the I more quite power. mean, But and you're not if applications. which to think savings were you has integrated, more

Operator

Needham. Quinn of And question the from from Bolton comes our next line

Nicolas Doyle

Nick Doyle for on Quinn Bolton. is This

lowering the revenue fiscal just slightly. You're year target

You are better. point out levels inventory

you expand what slight So accounts change? could that for on

Young-Joon Kim

Yes.

in approximately are -- Power, So on QX, think the QX. we XX% I X.X% growing the

channel. time, and same do a -- seasonality. that's of growth kind so good we very with So see that some the quite leaner at growth, But

fourth would at that's only So on the that we describe thing -- the quarter.

Nicolas Doyle

Okay.

that quarter. more little a just typical seasonality So in than December

Young-Joon Kim

when The yes, December seasonally is before for quarter low Yes. us you to cycle. quarter go a normal the COVID, Yes.

Nicolas Doyle

these PAS Did But that mainly just have are And drive on you touched Is Or you MSS a a it. segment? you you exposed mobile lever? AI trend? think how replacement in also have to whether the on can a I view the cycle? do functions

Young-Joon Kim

Yes.

is In Korean PAS. mentioned that the The about has fact, that going built-in leading -- to the the low-voltage we all AI. MOSFET, smartphone

our than previous So less consumes low-voltage MOSFET XX% generation.

in So we in OLED kind next-generation, smartphone is smartphone requiring win DDI power, the AI-based competitiveness the more or phone, do it's see, or of be foldable component power. which whether to to the the consumes that

Nicolas Doyle

if last sneak then And Okay. could I in. one,

Your higher. are gross moving margins

to about And continue you level? they quarterly thought as have a is in XXXX? So breakeven that improve, possible

Shin Young Park

the margin. mean don't the gross I revenue the function really for we and guide XXXX, really it's but the of

So our compared the improving with is gross previous margin as expectations.

we pieces, up year we XXXX more gross our guidance visibility some basis have like points. moving for So guided margin, so by full so XXX

year of and that fill the into all rolling Going impacting were out in XXXX, are capacity. manufacturing to be gross help and everything, us. this going They cost our the new to going But the definitely Gumi and will XXXX utilization products out rate efficiency margin.

see. business revenue, quarterly-wise quarter-ish, that -- margin. disclosed PAS revenue the we'll breakeven the have million Like all a function gross the So per of it's But kind the for be like the $XX should again, million of previously. as to to and $XX we

Operator

This further like today's Steven session program. hand to for remarks. does of the back program conclude question-and-answer the any to Pelayo I'd

Steven Pelayo

Thank website. Thank of events you. Magnachip's take care. details Relations Investor look and conference Please concludes earnings on our you, QX call. future This our for

Operator

gentlemen, This conclude does and ladies your today's you, for Thank conference. the in participation program.

Good disconnect. day. now may You

Magnachip Semiconductor (MX) 31 Jul 242024 Q2 Earnings call transcript