MX - Earnings call transcript Q3 2024 | Magnachip Semiconductor Corporation

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Operator

Hello, everyone, and thank you for standing by. Welcome to the Third Quarter 2024 Magnachip Semiconductor Corporation Earnings Conference Call. [Operator Instructions] Please be advised that today's conference is being recorded.

Now it's my pleasure to turn the call to Steven Pelayo, Head of Investor Relations.

Steven Pelayo

Great. Carmen. you, Thank Hello, everyone. to ended third September us Magnachip's results joining financial discuss XX, the for quarter for you Thank XXXX.

company's be The was third 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 fourth 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

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

Young-Joon Kim

million. Consolidated was earnings at up margin Magnachip's up X.X Hello, revenue welcome percentage Revenue with everyone, end of our year-over-year XX% down of call. the up in of her of X.X% and us percentage $XX.X of you QX for today, results million, provide thank to to gross sequentially. overall guidance and more points range Shin was XX.X% will QX X.X line $XX.X $XX.X QX joining to Young and high profit was XX.X% section. was range guidance XX.X%. points our The margin gross the details sequentially. year-over-year, in midpoint million but

down expertise. mixed products Transitional Service standard industry-leading wind we business, will on company and As Magnachip exit signal the be a based Foundry pure-play

XX.X%, businesses, was include comprise margin year-over-year Product for Standard Our and points sequentially. Product X.X consumer $XX.X DDICs which standard offerings and QX in OLED our up million, gross up Standard products was discrete business advanced power computing the power ICs, of business communications our PAS and products sequentially. for percentage MSS in automotive, applications. Revenue XX.X% and XX.X% industrial, up

We track XXXX. our growth double-digit given in the are MSS for with the at for PAS on guidance year beginning and of

We XXXX will in year-end as guidance done on the past. call QX and our we've provide

Standard of more business lines. provide let Now comments me each our detailed for Products

excess segment in to revenue us strong in Product issues Reported in and see I'll $XX.X broad-based, details The in of now solar. year-over-year customer up continued behind Industrial by some this PAS a is million, of QX. sequential inventory segment. share so application. The XX.X% was rebound and China distributor The business Standard represented quarter-over-quarter. XX.X% revenue terms contribution, PAS In increase of revenue was XX.X%

design growth from solar solar segment additional also are to inverters, devices. wins the address. The addition of China expanding In demand Super lighting we market Junction the our saw in pumps with applications range sixth-generation Industrial for

bill-of-material to content stronger increase the scooters in motorcycles for leading an and Finally, growth. potential the shift to carries high-speed and e-motors is for

to smaller contributor continues segment relatively PAS, to strength. Automotive show a the While

for with Japan applications automotive Korea in applications More subsystems success past and vehicle. The our continue a to production China. upon many widely ramps building customers wins such in outlets vary design for design AI Korea. in across high-end and driven foldables in for idle/stop/go low-voltage are and We additional obtained improvement we end continued wins as MOSFETs recently, and shows functionality. The power for by leading-edge demand additional slight smartphones Communication sequential segment

from and as home also to We opportunities and Super Junction we and driven for induction refrigerators tablets, IGBT design strong cooktops. incremental seeing are saw seasonal continue smartphones. In TV for by demand our steady growth products appliances see in wearables such Consumer, we China from Further, MOSFET demand Korea.

Additionally, to design-in we into win expect QX. air for purifiers recent in a transition a design

he strong QX, driven growth his for semiconductor company He power the will development first greatly share to contribute his Korea. we than MOSFETs Assistant PAS. into China design develop Junction driven power Hyundai is road to demand small of XX laptop product in ahead and expert experience. and our achieving IGBT rich products. MOSFET was segment of more strong a the in hired new overall channels PC ability semiconductors patterns for field to products leaner the market at seasonal where summary, wins and Super by years Planar His sequential typical proven insight relatively Computing for time the growth contributor, existing to led from Chief and semiconductors, the and by experience PAS QX distribution of of and and technology GM the Magnachip, market power in automotive for markets in of the made of knowledge maps with company's contribution a largest and competitiveness. In and was seasonal a significant SiC he a the by Technology and Mobis, worked joining Prior to saw Mobis, adapters. In While power products for applications. Prior he Hyundai entering automotive and Officer

Gumi new to are Services execute will the performance idle fill XXXX. We to us penetrate will for give markets capacity X businesses. and Transitional to an pipeline continuing have by strong in phase-out Foundry product fab suppliers, believe We a products XXXX delivering tier in created of these in the new many of new help opportunity Power similar which

QX million product near was Turning was million, to the The XX.X% of and high year-over-year $XX.X end up range to and up revenue for increased sequentially. for automotive XX.X% XX.X% revenue $XX.X $XX.X smartphone revenue as DDIC. of IC DDICs China as was of our and guidance quarter-over-quarter OEMs power growth demand for OLED due results OLED represented from well MSS. to standard million. The

smartwatches. In extend at and a These we market. with of and market several QX, continued to from During stages designs we on customer broad evaluation QX, automotive the including original to and expectations, other in purchase China different have display markets model premium we leading high in from make OLED spectrum smartphone OEM. makers shipment smartphone started wearable mass-market production panel line China and production with a specifically, a DDIC received tech, inroads a OEMs production. in premium smartphone smartphone X into DDIC More our the development, At now QX have cover for focusing order to level, initial we the and models. segments for following moved like on QHD+

DDIC primary this customer throughout shipment for expect supplier the model, increased we and QX. growth are We to this

an positions received commenced relationship another smartphone believe supplier for initial During a We from future in us well order and shipments source smartphone our a gives as and second purchase this opportunity October. leading us OEM win China models. QX, we deepen to also

previous China advanced the mid- DDIC our more October. including in mentioned incorporates to control. is XX% and targeted in models compared power brightness for sub-pixel in smartphone As our This than call, by refined OLED to sampling SPR, this chip and rendering, high-end QX next-generation generation. reduces we color driver IP, uniformity enhancement began Notably, consumption

We We our high-growth panel Europe. forward to to expect new a a regard year. Evaluations relationship a driven begin for from our the this targeted revenue makers and increased automotive maker to primarily China expand chip market. Business markets. With to for OLED in a in this in new increased multiple look panel evaluation the that into XXXX. to in model DDIC smartwatch supply QX at to maker to plan further third multiple China diversify production DDIC by quarter are We into with business, China automakers maker introduce row. was base next underway move demand adjacent customer panel leveraging to a

We also LCD. saw DDIC for automotive growth

which for by notebooks. Our primarily is including saw MSS, driven and demand growth, Power DDIC, and year-over-year business, tablets increased OLED IC sequential

build making inroads and both potential and summary, TV LCD DDIC panel customers. In applications We our OLED top-tier executing Power continue new for and for strategy new are with IC major products within to OEMs. makers MSS, we smartphone

to was markets drive right Our revenue and act same working adjacent strategy decision we IT. the China. the At for time, in from automotive, to also are TV business wearable, in locally OLED our

by It flattish and consumption trend currently is For sequentially, in believe of overall of can a power the of see that seasonality power revenue market. In display from smartphones major we QX, the where few the this reduce power typical is OLED on areas rise. to and than better consumer crucial is PCs, usage which to with significantly The LCD growing the switching systems. one conclusion, these reduced AI-enabled is power we panels. be

the smartphones capabilities OLED DDIC flexible for As adapt displays, increasingly foldable need AI larger become and incorporate important. power-efficient high-performance has and

and DDIC technology. previous reduction power same OLED advanced over of newest most process the the using Our a generation XX% offers to compared

details power use are Young the the screens. I our now technologies FET over Shin PAS the turn of offset financial of smartphone battery guidance. in features Young? alongside OLED to the of those QX to the give rising utilizing our Shin and Additionally, like more third you growing demands advanced looking provide segment, AI in to OEMs will by performance quarter call

Shin Young Park

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

slightly million, was our Let's guidance $XX.X near was revenue margin wind of X.X% guidance year-over-year, start XX.X%, above million, of metrics year-over-year $XX.X range sequential at was XXXX XX.X%, from explained million. business end key XX.X% $X.X XX.X% up business revenue of of and The high XX.X% continued slightly to XX% profit in a due was of million XX.X% XXXX. of in million up the year-over-year year-over-year QX $XX.X from XX.X% XX.X% Total $XX.X midpoint gross XX.X%, QX previously. Consolidated in and range sequentially. Revenue in gross to of the fab up up the range $XX.X in above down QX sequentially to Transitional sequentially. MSS came gross Services. XX.X% to guidance from QX Services and in to the $XX.X to as rate was XX.X% QX. MSS primarily QX QX for of up than up our our but XX.X% up This QX in XXXX from Transitional wind with up of was mainly to This midpoint QX service the million mix. PAS down XX.X% the $X.X Foundry below was was was year-over-year at a million, $XX.X this margin high of of we've the The the in XX.X%, from range down and in product as improvement from from midpoint margin This was up and sequentially. PAS the we guidance from midpoint sequentially. Revenue range year-over-year down lower QX was of flattish to guidance million. was favorable profit $XX.X attributable guidance of XXXX. XX.X% to the XX.X% in XX.X%, and Gumi from and million million. the end XXXX XX.X%, million range Foundry financial lower utilization XX.X% profit slightly $XX.X below decline down which

primarily $XX.X $XX.X to million million million compared QX was and of the R&D operating stock increase million to QX grant. QX in compensation that last by QX QX timing in now driven with $XX.X in compared in charges as to million $XX.X the stock coincide as Turning $XX.X in and expenses. XXXX, XXXX $XX.X SG&A year. QX XXXX million was the

QX timing compared products to including $XX.X net As XXXX. to million in and a adjusted charges QX of charges, EBITDA in of a fluctuates million. $X.X QX of in $X.X million depending QX year. QX net QX was fluctuate million an the operating of in $X.X $X.X million. million $X.X last adjusted operating compares grant. QX operating QX and year. $XX.X $X.X quarter-over-quarter year. Net loss loss size QX with loss in QX a year. operating loss loss QX number a expenses On compensation compared to to R&D quarter $X were was reminder, million in of This million $XX expense basis, and million QX in a million operating of million in of and $XX QX and and stock $X.X adjusted of in negative operating QX to These non-GAAP on last This development. Stock due as loss was every compared negative and million loss loss in $X.X million in in $X.X adjusted QX operating million was $X.X negative last in last the timing million compares loss

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

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

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

financial sheet on the accounts million, balance of quarter short-term ended end, a XXXX. quarter investment on transition November amount cash with but $XX the decrease upon instrument, sheet. X% had balance $XXX.X We $XX.X X, is million, mature as at additional will XXXX. as the which QX of an totaled short-term receivable And back cash from of nonredeemable will financial classified to QX to we last which of our million. end Moving maturity. Net This same represents

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

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

CapEx was Lastly, million. QX $X.X

now and entity includes now prior expect end $XX China. million to of CapEx forecast in fab, for and amount $XX the onetime for established high business million PAS operating spend primarily newly was XXXX expectation full $X.X to the closer we Gumi year for be the to our Our our This range. the million of to approximately CapEx

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

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

For revenue the what in throughout Services we the revenue double as XXXX, equivalent consistent throughout revenue by compared be as double what expected. compared full XXXX, million of MSS the will we end communicated with as year-over-year equivalent consistent MSS XXXX PAS expect in year of Foundry digits down with grow digits communicated $XXX.X with of to wound revenue million year. Transitional to currently XXXX, year. PAS grow with we $XX.X year-over-year

compared gross flattish margin the to profit expectation slightly of our expectation XX.X% profit of to immaterial XX% We expect gross to XX% prior between XX%. QX to of prior as compared our with you. Consolidated consolidated in be beyond any XXXX. Consolidated down. remaining This XX% XXXX. Thank as to flattish amounts revenue to margin compares

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

Young-Joon Kim

outlook a QX better-than-seasonal In focus on business for drove strategic conclusion, core Standard QX. and Products Magnachip's its

with We on MSS of PAS. year beginning double-digit for the growth track both at set our the are in expectations and

signal our continue power mixed us standard ICs, efforts position applied products industry-leading well DDICs ongoing transitioning focused advanced OLED into to discretes. future. leveraging on company, As we are the These expertise we and a pure-play for Power

outlook We leading am the confident direction. our for We in business that our the remain us call, strategies I XXXX will provide dedicated shareholder possible. value next to but on right way in are enhancing every

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

Operator

Steven, please check button. your mute

Steven Pelayo

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

Operator

[Operator Instructions] with And Desilva line Suji it the Capital. One comes first for from ROTH of moment our question.

Sujeeva De Silva

Can off drives that's here? -- the with rolled I that's it what off? being progress the kind the target it I margin. products gross -- to talk for start the guess, usage And the Is PAS? frame, for I'll utilization maybe on of time MSS foundry mean, Congrats utilization about taken getting what's recovery new you the foundry is here. into capacity

Shin Young Park

So you you're rate... about the probably talked utilization about PAS margin gross because talking the

Sujeeva De Silva

Correct.

Shin Young Park

capacity? idle For

Sujeeva De Silva

Yes.

Shin Young Park

Yes.

margin the power to you million million. I down as next We're $X Like kind -- -- of to $XX well. the revenue million if at this we of million quarter used mean, $X.X kind $X it of be size, foundry. Foundry quarter, had our to have going per So quarter, look Transitional came

down by to be of it's end year, it's XXXX. going be almost going So kind of -- to wound this

product. So portion going that for we'll into convert the XXXX, have power to

products. like use X/X product of and equipment as the So approximately our products. can for used of a efficiency depending foundry for do the the capacity kind on We probably power of better the mix, with some we said, I to use little

So maybe XX% after XXXX. idle can be

to I not gradually So like overnight. mean, are going conversion we the that conversion So happen doing will

that take it going a -- the take some switching power the with time. PAS kind I product will new for that to product, mean, and fill So of product,

happen will it quarters. in it not but So will going take some to QX, like

So the it's kind happening throughout XXXX. of

Sujeeva De Silva

Would ramp-up time YJ, having offset switching China then would on with ramps with Any be be more and lumpy a customers would of And the -- the helpful. The growth program here? business. 'XX, perhaps that? that it over to in outlook would seasonal MSS X programs? be Or from kind like color Okay. would your impact? XQ it you are is steady that Or be MSS --

Young-Joon Kim

Yes.

that are going we products product said going we but And that this to we we quarter. we fourth previous generation. earnings That's said, production what guide than quarter. also So have next this power new X less going to increase throughout sampled. 'XX a call, we have to to repeat said that's just XX% We are

that We use multiple into And and production 'XX. go expect panel markets expect to chip to we to makers.

that in very beyond don't an well can direction. crystal but right ball -- give and we positioned to we be 'XX say the So we the at have are moment, a outlook in we'll

as to And PAS as that's guiding but fab. Our pipeline MSS. currently also Gumi And we well improving both the help is not product are fill in optimistic, going XXXX. cautiously

Sujeeva De Silva

one Okay. customers about quick -- one talk you your you question. them. think about I talked of Very And then When last good. X

vendor. can ramp DDIC as what I'm those And kind heard other curious primary I models up? the imply that the You're source, a just one, difference right. share you're that of if second

Young-Joon Kim

secondary good. then really -- The a are second. the that's means major. you primary and And It's

have you share. much a less So

So that's done. typically how it's

Operator

Needham Company. next & [Operator with Instructions] is Doyle Nic question from Our

Nicolas Doyle

we're a a getting quarter. the revenue the first of I'll year-over-year time. next margins gross congrats bit also, surprise, long revenue specifically growth $X million a foundry on guess I echo in on the in

I for but a finish of not the So gross we to would shaped are that margin does accelerate XQ margin. out around XQ, into of but kind really bottom you're guiding maybe bottom and XQ, kind of 'XX, XQ this gross into XQ kind push in hopefully thinking transition understand 'XX? that

tell So maybe that? could you anything us else about

Shin Young Park

we've to well. So them as the I notice, the the mean, foundry given -- customers they've I given that end-of-life, mean, and their

clients' using mean, automotive are our for product Some their of applications. I of our they kind customers,

time orders of purchase kind were end-of-life they slowly cautiously. their the So our more or last giving rather customers orders,

in -- revenue initially in we but kind thought material. to we of are that, X to million-ish to going QX, So be it's probably beyond going revenue see $X QX. have some going almost not we are But

XXXX to So I fab, power utilization mean, into I we're margin QX on our those the quarter have, a product the with usually And us. going going mean, are -- demand. foundry soft anyway our I manufacture the slightly we for effect kind in impact, depending to are product going rate, load in also we carryover we're we QX. But -- QX in gross terms can along mean, when to of we But wafers seasonally is manage may XXXX. of our

see. So we'll margin. have to gross kind of the see other impacting that's we'll But factors

Nicolas Doyle

do uptick And to just big guess, expect kind parts. drove I be a as larger-than-expected trying what the spending out level I'm the just lower the going what And quarter? I that figure the EPS we follow-up. forward? third drove EPS. miss in of in R&D of might or one And that think

Shin Young Park

Yes.

I So the R&D, for rather say fluctuation. quarterly would it's a

lowered the did the number we said million the still timing lines, $XXX it time. SG&A, and million, XXXX gave can $XX that So depending that but stock-based to million like on I OpEx, kind guidance development I for in range. when both bigger. and business -- looks with So for to the year like initially I together PAS? finish when But And when out of full products we the had million-ish charges, quarter-over-quarter without of $XX XXXX, we call last $XX R&D MSS we fluctuate think a

for rather kind provision So for also, income the was million. And timing benefit. again, of quarterly annual of tax the we the versus be the by But we calculate EPS, still mechanics to comment stand about depending your million expectation, that's of yes, between kind $XX how $XX our on kind the of the previous that literally distribution a QX quarterly -- it's development. question going to -- of

ETR annual quarterly rate income or to we apply loss. have to the the So pretax

But tax benefit of the and doesn't in a half, means expectation -- take that tax income guidance. we bigger and So again really had our took then in provision annual the a the change little that expense we -- QX. kind income first to actually we for

that are think benefit. still see million-ish income of going kind we of we annually to some $X So tax

EPS So fluctuation, that's of kind tax impacting income kind on benefit quarterly that a expense of basis. whole our

Operator

next Our with Oppenheimer. Yang Martin the question of line comes from

Martin Yang

question customers. on OLED your first is My

we're are getting comparing fundamental leads to improvement, factors ago? any -- XQ, could differently that that China? seeing quarters market seeing to you your you As macro customers markets a any affecting in believe to few Are the you are trend deterioration on OLED

Young-Joon Kim

the -- previous So in any think our our based don't difference for for much fourth and we quarter, than QX. don't our -- businesses, -- And products few we than customers, and years. better on see and guiding are we our see seasonality quarterly we any quarter guided we visibility, QX I

Martin Yang

then to have maybe market looks comment Got that microLED about devices? display and some on those you And how it. technologies can a you also Is already on of that AR/VR And think you programs attractive market, OLED you? for microOLED like targeting emerging do the markets?

Young-Joon Kim

We've a are the been leading that the from manufacturer. TV leader in microLED disclosing TV we

enhanced that that's and product the shipping. the that's So only product we're

anything We microLED the reality about at for haven't mentioned the moment. virtual

Martin Yang

last for MSS. margin gross is My on question

can margin? that additional for than you to is gross share So contributed with product there the other us anything improvement mix our

Shin Young Park

of MSS higher the they had we Power margin. to IC. line, -- of and and business also a segment because YJ out more gross those the product, the Both OLED, that the have kind of automotive mentioned So tend the --

I automotive have like the from Power how and generated from we like on product what the IC much depending the also meant and that's So by mobile OLED, the the revenue mix. OLED

IC, So the gross Power MSS of boosting kind and because our of OLED automotive in the of increase that's margin.

Operator

turn Steven the to his comments. for that, with Pelayo back I final will And call

Steven Pelayo

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

Operator

for Thank all conference. today's participating you in

now may disconnect. You

Magnachip Semiconductor (MX) 30 Oct 242024 Q3 Earnings call transcript