NXPI - Earnings call transcript Q4 2019

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Operator

Ladies and gentlemen, thank you for standing by and welcome to the Fourth Quarter 2019 NXP Semiconductors Earnings Conference Call. At this time, all participants’ lines are in a listen-only mode. After the speakers’ presentation, there will be a question-and-answer session. [Operator Instructions]

I would now like to hand the conference over to your speaker today, Mr. Palmer. Jeff begin. may you Sir,

Jeff Palmer

you, Chrystal. Semiconductors’ to NXP everyone. Good quarter XXXX morning, fourth Welcome earnings the Thank call.

Peter With me CEO; our President; NXP’s Rick is CFO. Kelly, on the Kurt call Sievers, today Clemmer, NXP’s

copy a found our be section available and be Company at obtained not This our website. you’ve of earnings is it at Investor press the under from will call for corporate our website nxp.com. replay can release, Relations recorded If being

for uncertainties and and could forward-looking management’s limited statements statements XXXX. specific but sale the end for that results call regarding the operate, differ the cause are Our existing will to risks NXP’s the impact of today include we current the on involve markets new expectations. in uncertainties expectations products, not that materially financial first macroeconomic from results quarter which These to, and risks our include, and

update statements. be that revise NXP undertakes no to obligation forward-looking publicly or Please any reminded

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

call our make are events impact non-GAAP core measures, accounting, today, will during primarily merger-related that does and discrete management performance. Additionally, to consider driven related not directly to certain other restructuring, NXP’s the by purchase price costs, charges which of compensation, that reference financial be operating impairment, exclude to stock-based we underlying

press in directly at G, Form on NXP’s will has which on most in Relations is Regulation the GAAP available comparable non-GAAP the XXXX release, Investor section the provided to NXP to measures earnings to fourth financial and Pursuant reconciliations of website be nxp.com. measures the X-K SEC our furnished quarter

call over turn to Rick. to like the I’d Now,

Rick Clemmer

market XX our year of operating semiconductor previous improved successfully decline than billion, year-on-year, performance we operating a the of downturns. by NXP in Even margin throughout basis our delivered our challenging by to Thanks, volume, Jeff, $X.X XX gross non-GAAP points, sales everyone lower clearly and basis conference backdrop year. very revenue against the X% full industry points and call welcome today. margin non-GAAP in better

$X.X billion free of flow return follow owners. Our strategy, billion on through free cash our XX% nearly flow to $X.X or continued we our was to generated and at solid capital cash conversion returning

billion cash As over by a shareholders the diluted $X.X last returned dividends we buybacks and have the and our two share to share shares. XX by have years, reminder, reduced million count

and trends Kurt Notwithstanding few quarterly our the more XXXX, on market strategy markets. within during the in environment invest will moments. provide execute details target semiconductor we continued a our to

new on we introduced have engaged believe which We many adopting long-term targets. growth customers products. will been We’ve support these solutions our with actively

If new you will our processors, happened electric vehicles. of enable to included Open attend world a applications. glimpse quad-core used automotive of our improved some in products multi-display family of House trade at innovative driver CES saw radar you i.MX be real solutions how our safety; These Investor management the hybrid show, digital for which clusters; battery and providing solutions, and full these

a automotive our demonstrated device and smart solutions. smart localization secure also building home for mobile with and latest We solutions for access ultra-wideband

offering the i.MX neural-net ASIL applications secure the family automation per including first computing Plus, i.MX control. and automotive SXXG processor integrate XM and i.MX domain the edge showcased we compliant, Additionally, families for fully quad market, family crossover home for for the higher GPU multiple than to processing, network RT The new core D high-end industrial the solutions. dollar performance X high-performance

merged it’s and come many when is innovative introductions Freescale the more to associated the envisioned and to position we impressive, years new Taken most together, over and just there XXXX. engagements periods. and synergy NXP the customer in fully wave The in NXP is its portfolio coming the of truly product and across beginning reflect is product Company competitive in

begin into ramp significant production, the products top that volume flow. markets targets, cash We will end growth, margin our to to business, provide end will Then, longer are see, we rebound, we new healthy which underpin they industrial and markets, gross growth. line yield automotive beginning also term in core our improvement both are a which anticipate will as our our confident to positive especially initially in tailwinds as and

In summary, and is new begin as engaged. a team we year, fully invigorated the

to to response the very yield Our customer strategy continues encouraging. product positive is and new results

deliver differentiated QX. to pass the on I’d be current and our quarter like year provide laser-focused solutions. now the with over superior will results end to of call to an continue highly engaging strategic markets full to the We the and discuss customers to for and Kurt outlook

Kurt Sievers

much, very review to call XXXX We our morning, as four want today. Today, Rick, full you and everyone. both, I year the results. appreciate as good Thanks quarter well our joining

comm’s QX the automotive and demand results IoT of infrastructure as our performed midpoint the contribution above mobile, Overall, industrial with all guidance the the from were our stronger anticipated. than market while the planned, in markets,

below contributed $X our of closing of transaction a guidance Marvell assets as of $X.X in million about million the did midpoint assets range. guidance. revenue was which our about of connectivity margin revenue December. quarter acquisition strong delivered NXP XX.X%, XX to billion, operating December, early the not together, was Taken about our $XX Non-GAAP in in the basis Marvell the a of We connectivity four The results. guidance early above close points included result

Now, revenue our order lower production as of let auto the down me turn year-over-year result rationalization Starting billion, focused specific and X% end chain. was with global of $X.X industry-wide a Full-year to automotive. in the markets. supply trends

radar to the group products year-on-year, management and battery Our solutions. system growth due of ramp automotive primarily

year-ago assets. automotive results at $X X% guidance our of showing quarters, than versus than period automotive billion, Marvell lesser the and down rate our growth decline Included and newly was by the in $X.XX quarter million better the associated in million. acquired X% previous was four revenue a in sequential $X about four, quarter with our During wireless

demand Full purpose general The was application i.MX MCU on flattish year industrial revenue trade as segment. $X.XX IoT for billion, concerns broad-based year-on-year & products. for XX% industrial our demand a our basis. to were year-over-year down Turning impacted processors trends global

X% IoT better $XXX was four IoT million versus year-ago our industrial sequentially, down the $X industrial down million, X% revenue $X wireless four, were results period, quarter about our than for with associated quarter During in newly guidance. & million assets. Included and Marvell the acquired

to billion, revenue X% up Turning Full-year was mobile. $X.XX year-on-year.

very semi-custom partially During rate the our with XXXX. in targets, interface estimate about transit adoption in rate solutions, analog experienced of strong We attach increased do and by and of mobile declines XX% our which the of to XX%, exiting year, mobile line anticipated we offset our attach continued our secure wallets business. mobile wallet supportive was expectations

During quarter was up and X% down period, four, than $XXX X% mobile sequentially better revenue million, year-ago versus million our guidance. $XX the

and business. Full-year up year-over-year. infrastructure $X.XX comms our to X% turning revenue billion, other was Lastly,

the adoption to processor Company’s as we experienced station station of efforts the in complemented the for growth During increase cellular associated strength year, mobile Company’s future business. began by stabilization markets NXP’s XG densification the in massive communication solutions MIMO cellular deployments. robust The products, was carriers market with ahead power of the due RF base base the network to cellular

offsets Company’s secure were trends the by businesses. cards in declines e-government and bank positive year-on-year these However,

down in our million, $XXX line was year-over-year, guidance. sequentially, X% with revenue four, quarter down During X% and

our for turn quarter me expectations let to one. Now,

better rationalization customers what It quarter. last than have channel out, our played number we’ve witnessed is served those with reflects an over view global improved we of that guidance through both seen throughout Our direct demand essentially as we trends the the does appear environment moderately ‘XX distribution. that and

From first sequential quarter a versus this the guiding midpoint the quarter. at represents billion, versus up $X.XX about quarter of at X% one revenue the X% within about are a We X% prior up of range X% year-on-year. decline of to XXXX, the perspective,

is quarter Automotive mid the our single ‘XX is be expected in double versus period Please business and versus QX the XXXX, in the down XX% anticipate single high trends to was single VAS, expected is percent mobile $XXX up range digits business quarter be in versus versus and for ‘XX. solutions and versus in we to quarter million. the down remember, Mobile midpoint, and digits digit four one. up up one up digits to year-over-year the audio low Industrial versus teens range high At voice expected QX. year-ago a ‘XX the the low ‘XX. QX in following be IoT

finally, to in infrastructure expected year-on-year down on both on basis, well the percentage other a on and a be And a as is range high communication basis. single as digit sequential

excludes guidance of the include Lastly, mobile divestiture quarter And it business about our the yesterday. does acquired assets. Marvell $XX at the VAS disclosed aggregate time, same the from we which one contribution million

VAS the $XXX For contributed mobile business your XXXX. in million a reference,

about be we the summary, focus engagement NXP. win very design areas continue And be new to very to optimistic momentum to positive. potential customer product and long-term In introductions, levels, in of strategic mid our our continue

Peter pass financial for I’d review of to now, the And to like our performance. call

Peter Kelly

to everyone morning call. Good on today’s

the revenue the drivers during financial As provided quarter move Kurt of highlights. already the QX, revenue for the a outlook to I’ll covered and

fourth our first quarter the and I’ll of was highlights with operating provide to the quarter high above non-GAAP fourth guidance gross non-GAAP year revenue results. in profit and performance improved our summary, end range then profit. In line full move

XXXX year-on-year. Total non-GAAP non-GAAP which Total year-on-year. MSA margin $XXX basis and points operating year-on-year, reported the XXXX. non-GAAP were was We XX.X%, versus gross XXXX $X.XX gross non-GAAP $X.XX for points expenses $X.XX a despite and margin million non-GAAP drop basis up points in billion XXX profit was was XX%, down in revenue down operating XXXX. billion profit X% $XX of year-on-year, in billion, of billion, was the XX up XX Full-year generated elimination revenue versus $X.XX operating a basis of million

$XXX interest interest which taxes earnings, were of expense non-controlling for our million. non-GAAP taxes not cash million in included $XXX compensation, $XXX $XX incidental was Stock-based operations were and with Non-GAAP was is million. $XXX ongoing million, million

include in billion highlights CapEx cash cash $XXX in free net $X.XX flow. investments, in from and resulting non-GAAP flow cash of million Full-year operations flow billion $X.XX

of million. total of during repurchased free cash we generated billion and paid to billion During XX% $XXX In was which our of owners, cash shares we XXXX, total, $X.XX year. our flow the non-GAAP returned the dividends $X.XX

Marvell acquisition amount the We also on spent of similar a assets. the

early the in the a of Now, the billion The elimination revenue $X.XX high Total details included gross of of in closed at up in assets, This small basis was by $XXX were expenses quarter. $XX the the and the million, line basis $X the up $XX year-on-year our XXX points gross the was December, MSA. year-on-year to with headwind billion, of of anticipated points above with about of the quarter. new million this the operating of our acquisition down and due end was Marvell our We non-GAAP up decline introduction $X.X and Marvell of and product than the the the non-GAAP associated included expenses. range, and operating was million XX.X%, from revenue of guidance, greater $XX guidance and associated which generated moving profits, million Total of the fourth to guidance. which not midpoint million quarter non-GAAP margin year-on-year to was guidance asset which XXX midpoint cost of majority in our the with reported $X acquisition created X% remainder the despite Marvell of million acquisition. third

profit non-GAAP operating $XXX million total driven profit by basis points XX perspective, a down operating and was was lower margin operating non-GAAP revenue. year-on-year, XX.X%, From

was ongoing cash million in was earnings, non-controlling operations our interest million. expense non-GAAP was interest Non-GAAP Stock-based $XX included is comp, which were not and for taxes $XX million, $XX million. $X

and to turn debt. cash the like our Now, to changes I’d in

Our at December. as we at billion, the fourth retired convertible billion total sequentially $X.XX down $X.XX notes $X.XX quarter of maturity early billion the debt end the in was

exited with due the Our fourth and billion the $X.XX net resulting The $X.XX down adjusted $X.XX position a XX-month a repayment, trailing ending of cash Marvell previously to was of quarter debt offset and during cash we $X.X billion, the closure by was assets the of noted billion. combination generation EBITDA debt quarter. billion, the

XX-month and Our at X.X debt ratio our trailing non-GAAP was of times, end was EBITDA interest net coverage quarter the to X of adjusted times. fourth the

balance Our excellent be and strong. very is continues our to liquidity sheet

million $XXX $XX cash our paid dividends million and the repurchased shares. in During we fourth quarter, of

continues all return to to Our be to cash policy shareholders. return capital excess

to a Turning XXX inventory capital an the was acquisition. working of increase of was of days, Marvell metrics. sequentially, which four result Days days

X channel and our target, continued linearity XX X.X months, we manage months We X.X on slightly closely Days improved days down of the the days but with to distribution run. receivables to expect versus payable in normally inventory within channel days XX, the quarter. long-term sequentially below were days, prior increase an were our X at sales

free quarter. prior $XXX an net non-GAAP million, in days, resulting versus Taken XX was flow $XXX of the of together, our X million. and was days flow from a cycle million Cash cash was improvement cash conversion CapEx $XXX operations

the first our to expectations Turning for quarter.

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

non-GAAP expect about margin to minus expected gross plus We are expenses and XX.X%, about or operating plus $X $XXX be we to plus minus XX.X%, bps. million, Operating or together, or minus margin to be about about non-GAAP be bps. XX million, see XX about taken

non-GAAP estimate interest about We and be tax will $X expense million. related Non-controlling cash financial ongoing operations about about $XX anticipate be to to be million $XX to million.

of average As that you for purposes suggest we share million use count for QX, modeling your XXX.X shares.

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

exception improving demand performance From the across of XG Rick a revenue and quarter. fourth out, the both in we end market. are station Kurt with pleased beginning we with perspective, the moderately As see base a our markets environment our the of pointed

Our for with revenue guidance than all bit a mobile, auto expected. industrial than the slightly is better markets, stronger contribution a and

Our were results communication market within essentially expectations. in with our the line infrastructure

Our navigated a environment. top we’ve GAAP challenging year, demand gross improved even has over margin steadily the as non last line

improved lower we as fourth agreements in Our revenue. gross previously on signaled, have and price and non-GAAP modest quarter first gross see we based expect again annual margin the in margin quarter, to compression

the We to of level billion be be our on intermediate XX% this with to achieved we and continue range. achieving believe gross margin continue target the in can revenue laser-focused non-GAAP $X.X

of to between an And January the repurchase. third. with our additional January Directors early began shares in Marvell the and X.XX has a share noted, shares million the As deal closure cost we of and approved second again $XXX Board bought repurchase previously have in December, February million of at the

your I’d So, for to back now questions. like the it turn operator with that, to

Operator

comes of Thank Instructions] from Securities. Our question first America Bank Vivek you. from [Operator Arya

is line Your open.

Vivek Arya

my generation. flow Thanks question, great on job for taking a and cash free the

ongoing first question, China think perhaps us a affects impact, impact about could curious demand it’s the I’m supply how think, that My related or any if shutdowns seasonality And coronavirus record or outlook on QX? QX if there remind you I delayed your of the QX a industry result. we on you do think instead? from the for be bakes impact could

Rick Clemmer

it. to also associated us in we any employees manufacturing actions taken coronavirus monitoring continues just out for we’ve orders, uncertainty. seen the So, forced forefront on clear, impact it more lunar to Year of of operations impact to no although At thanks additional to sure closely. to protect the Vivek. this just some closures New trying our the holiday. with by be in have But, on of be our coming situation impossible as support and today, to the to and our of the add that of we’re implications provinces very-fluid China be and spread. And very time, the Clearly, the it’s the speculate We’ve the general are mind, our in on been the and travel we employees at containment

potential today coronavirus. Our does any impact guidance not from contemplate the

Vivek Arya

right. All

or are influencing your anything that that there look is so, manufacturing working target giving margin. Because things analog And making thanks on your or middle XX% and is markets market of follow-up about end your XX%, it revenue on XX% it level. the I at competitors BMS that product like the in cost billion side, on, you’re it? competition range, gross or the XX% gross is gross Peter, or or your, most my is automotive, largest they’re to when for margin main to $X.X What driver to so get margins, of will just so take, us that

to BMS from direction. at be So, I right me, when it trending seems should XG and margin mix autos or that -- gross look that perspective, the in

Peter Kelly

I think, are there things. few

the decline is probably from -- QX came another And all, And at agreements volume agreements, obviously the basis the that’s pitches. change number, -- it and QX then, of is XX.X; to price roughly low XX we quarter revenue First really XX very is QX have a points. points. off the fourth XX.X, basis contractual annual

that’s have offset continuing processing manufacturing we and performance. improvement the So, in by

XX, need to billion of go to a So, to revenue to up I our about $X.X a XX.X from rate we grow just run think quarter.

number XX takes which go to years, but around a I’ll mix, -- Now, Vivek. to it, from potentially XX, of think of and highlighted call I you it really is it some

in products we’re said the we a traditional in we What now, XX% more also gross and crossover well think margin our like. to Our hope company in products -- particularly real coming XX growth. to as that are that don’t place the think I with is, look. targeting our I runs type analog we’re but into think new And run the is realistic company model of XX, that market. of no of to excess XX have automotive,

XX So, introduction mix based on we new based is of it’s on XX our but get a probably out, the to of years couple products. and XX the to volume,

Operator

Thank you.

question Stacy Our comes from next from Bernstein Rasgon Research.

is line open. Your

Stacy Rasgon

wanted follow the margin. gross on again I to up

we So, is to divestiture that on estimate X.X, guess, or is you’re wireless target? how ballpark still with think even additional in this us, Like, gross the maybe I the some of mobile that’s And of Marvell. you margin the a XX% impact saying that? itself? give about offsetting of by Marvell dilutive of Marvell how Can do context

Peter Kelly

has ability we said gross revenue an part perspective, XX it, impact get to a $X.X billion. significant low We’ve of to error. rounding. mean, our sort it’s not our a that I of always it about runs Stacy, don’t mid-XXs, to it’s a margin rounding talked really a I -- what or From think It’s it’s on yet. just

Stacy Rasgon

corporate mobile closer margins also gross that was as divested not? was of well, kind to businesses, that or the also average And

Peter Kelly

memory, million little regular might $XXX of a That’s it ends bit being revenue. rounding up a below but margins, kind our again, really. From be gross it of

Stacy Rasgon

to I little follow-up, wanted a improvement. the just talk demand my So, bit about

said just think have like So, kind the customer especially is auto you pull, an balance, real you -- you customer would or end-demand, seeing Do way what are channel? just this tell industrial of IoT this like and any to or you rebounding. are like inventory in

Rick Clemmer

So, China, seeing, Stacy, of what is out really it’s we’re POS.

POS partners. it’s the distribution business business our of distribution majority the shipped business. -- taken China So, is our and through is shipped customers through actually the this have in But, through requested where

just space as sell-through. as micros said inventory, to implications, just possible of primarily for not business. be earlier, not But, the it’s based replenishment what far actually again in and the run strong orders the the focused are we see or orders, what strong industrial from But, used as our well their So, it’s not it’s through increased us we before on improvements, rates and track for for. POS automotive New sure coronavirus. to as lunar as I’m impact the will continue Year, being

Stacy Rasgon

very you Thank it. much. Got

Operator

you. Thank

Our next from Suisse. question Credit John from comes Pitzer

open. is line Your

John Pitzer

everybody Yes. you say asset Marvell when for the through business. Rick, distribution but targets deal, know, just calendar out Congratulations year-over-year of for you’ve to Rick, a sort just feel is I set Marvell results. rev the deal. how get the in growth even I it’s pretty, level as get wouldn’t when sort that about on growth the and the you talked March $XXX of about that you’d But, Marvell put to guys announced to my million levels you if the of solid back first quarter, But, acquisition. guys. growth question the to a on should call long-term sort guys you aggressive asset Kurt, yearly guidance of nice given to Good that significant revenue morning, of acquisition. we how wonder see target first you first could some quarter. excluding your the think about the on announced targets, you specific I

Rick Clemmer

it. about feel the fact have talk associated we business the about business of with as our is think, really good as is connectivity we apps So, that I confident about, still It John. XX% as processors

we will broad our That we well. those to channel, also to designs of own channel us position. us as that be make street all solutions, with The quite ramp think that obviously place, feet reference take additional a we place positions in base the have, have the going it’s in provide as on a that connectivity fruition. puts which So, we means distribution can comes that good we

million some $XXX that out in it year. will growing the it we’ll So, rate And the feedback and and of Kurt make I’ll period next quarter We about let at of had the think important a all about at good than been feel faster is. be business this be time, customers end from clearly how positive extremely the comments.

Kurt Sievers

Rick. have in at you ago, Yes. I possibly of who me John. of into a reference let Vegas light I booth the connectivity at seen Thanks, of assets have for turned CES And couple think at our design. add, Los availability just mean, we weeks Marvell the those speed

So, the that to as infotainment we combined big just did as the already IoT for were able weeks, the both and on interest which customers actually former applications. solution anticipated. I level just deal into couple would and And connectivity our that is closing of with we reference from tell Marvell, Wi-Fi you number the product well designs engagement designs, include automotive at the as a industrial the reference CES after had as show of a

John Pitzer

next quarter, business of significant historically as And have, only a with you SAARs of the I wondered then, to the peers which down kind helpful. core as if your follow-up, to your be it’s just outperformance. as of drivers business how what my look some the out growth multiple from couple slightly years you product-specific That’s just rate do you about fourth the the quarter relative calendar the fourth looking think in calendar versus improves auto performed segment? could in And you been? of over growth year-over-year, comment at appears Kurt,

Kurt Sievers

John. Thanks,

was much only a over our has rates last percentage earlier the year. decline improved rate decline significantly in So, on higher I the quarters QX, yes, think, point

I say, have is mean, into say growth growth said, good with said rationalization And being and yes. carries what anticipated, clearly, supply just year that’s of which of much hit we what in the I’d continued that what solid revenue. function what a careful line chain. all along So, of our we what elements, reflected I our a of core absolutely, have that And in is business, a given of also mainly, BMS one, China, a key of the a improvement that been ending quarter product would trends, very would the POS is which forward point. especially we with Rick that’s has where that core part radar

totally based the John, model X% outgrowing stick a our of on to XX%, forward, Going the based content X% of semis. of to to gave gains clearly X% guidance SAAR. We on that we SAAR,

we towards flattish SAAR last year. this to initially So, X%, and getting if on is well, coming so. time, But, might between given environment is Over when is higher growth a are And slightly core year a normal, we environment minus it more same. what just then have we portion maybe principal, bigger is the the the now the SAAR say, still the that flattish, ratio the X% getting from anticipated, are probably from stays a I’d perspective, back growth which seeing core into the in X% toll. at growth X%, or relative

Rick Clemmer

to tier look in in which just we automotive. where if business, earlier had market our and in digit customers back [indiscernible] high if year, the thing, And significant that, automotive in really automotive our partners actually flat. the at our the we you the distribution single were to one mass was decline I in kind go could add saw of John, was and top mid

So, beginning such to decline rest and together. beginning negative we’re rebound where the a we that, see the to in see that’s of where with business the then those, associated come had

a decline to with tier to that has really automotive But this significant during combination. it’s out top do didn’t customers but in that were really I actually time. see our period point important thought of it So, flat

Operator

Our next question William comes SunTrust. from from Stein

open. is line Your

William Stein

two. Hey, great. Thanks for questions, taking my

First, the the billion similar raising free the so, net about conferences tuck-in cash coming for expectations additional your up the in relative I in acquisitions to for year. Rick, or like in $X for you times, at appetite on appetite in maybe last your leverage repurchasing that Can of at some debt quarter coming talked frame you’ve to any maybe keep shares think flow Marvell? year, and horizon X order plus

Peter Kelly

Hey Will, it’s Peter.

I think, it as billion. Board’s describe authorized of $X I’d First the all, follows:

So, the first technically, but that of basically wasn’t we spent we in million quarter. just much year, $XXX spend a in the this weeks full forecast how of six

net So, once on months return we our will will started all have we we up debt we get to these and is things, What X manage times said don’t we cash tease. excess shareholders, trailing XX EBITDA.

maintain for I give the the take absolute for exciting But, on of bit to won’t I forecast what you extra leverage. number So, think year an to because it depending really us full us. And a on your want forecast you on debt to little require we’re company. that depends an

shareholders. very that growth which drive cash I back, very, market comes significant us significant we’ll return to our flow generation, think, will once see the will from

Rick Clemmer

And the put in M&A the transaction important think into the Clearly, open quite Marvell leadership position We we assets had Will, when have would connectivity, element actually to us. missing the be the which the thing from asked was we’ve about, it the broke, for a about being relative us really And element other Qualcomm the about a some to missing were connectivity. transaction. that fact us for we to element I that been Qualcomm actually for realize going you critical connectivity talking talked is, time. about

small but period and this size we’ll relatively do shareholders cash of we’ll focused And how think be I time. our of yes, to nothing return So, acquisitions scope at technology, during on the Marvell. tuck-in we clearly, for

William Stein

I That’s one have helpful. you. can can growthy -- opportunities. various follow-up, in I’m hoping the If you Thank up automotive, really frame more of the timing

management and be emerging growth domain or stuff the the by more into the network so For XXXX, battery driven should we radar much. looking expect Thanks to new controllers? maybe XXXX the solutions,

Kurt Sievers

This is Kurt.

it stage auto me by our From to little. with size a being annual to this is radar, XX% the perspective, XX% here absolutely we compound Let try growth. continue a revenue. see midterm of And segment to total revenue less XX% about growth

similar fastest So, about cluster one, from that’s those. digital the and business. size, The the next biggest growing

they So, modern in of smaller are the growth multi-screen the where mid number much a growth then, of earlier cycle. are in trends and you cabin environments the have that teens. the passenger in follows they see of we ones, And the smaller cars, a because

we You and solutions. high-growth, also into but the This did than SXXG, And mention growth. XXXX already battery But, significantly you the is is contribute what it does management XXXX the mentioned smaller others. only fully ASIL think the is network for car. is up great into launching at which our which D actually show That really processor in compliant market CES, the had a new XXXX.

are I’d into a contribution at getting in. from growth So, late the it’s say are now now. we and sampling end But, XXXX, kicking we traction

Rick Clemmer

in in And ultra-wideband to begin half. second as well the will kick

Kurt Sievers

amount is reminder. but between Yes. are fully indeed put we auto, for which now small now it is Rick, and mobile our, in why say didn’t auto. the already shipping Ultra-wideband into I auto, thanks into

into see the revenues years. year, extending this of we’re from the mobile segment and half lift in material to then through few in first ultra-wideband Second going the more auto next

mid-teens. growth; the summary again, clusters, revenue, digital to order and total radar about XX% two radar XX% So is, both clusters, digital ones, large the of XX%

William Stein

Congrats reminders. those for again. Thanks

Rick Clemmer

you, Will. Thank

Operator

Thank you.

from question Stanley. Craig next Hettenbach Our from comes Morgan

open. line Your is

Craig Hettenbach

different kind I on see comments you. follow in, you you them how of applications, kind fits to and up just ultra-wideband the and want Thank NXP just of ecosystem, where think ramping. about as the Yes.

Kurt Sievers

Thanks, Yes. Craig.

the actually coming and the to side. initiators which applications, really car leadership we mobile our leaders formal and hybrid earlier, which now had a say, of continue security the between about And as these we is mobile-based is side in including which use auto software I’d have which access, historically. first as ultra-wideband two case, we talked using major positions, leadership the secure the convergence one up the as for perfect, well see I entry and ecosystem, stems wallet the from as think, on of applications us I see mobile on keyless

the has ahead attention very allows CES, around access, I’d everybody’s to Now, really access localization any now dynamics, this judging technology mobile say secure at ultra-wideband technologies. a other relative precise the competitive technology, hit of a from mobile traffic possible which

now. the it’s in really light So, spot

solution good to and in conversion ‘XX, it for say, also revenue cases ‘XX solutions see use range, initially start mobile probably our this IoT would very with more access see But property We further between and portfolio comes traction the going traction, I continue space indoor when auto. into actually navigation. to from application very, now, we to

Rick Clemmer

solution our differentiates technology really the that that things and to our secure key ability the and we that is leverage of ultra-wideband. element provide software the One with

mobile So, and we’re really about. that a in that to leveraging we talked for installed base bring the unique in wallet as have that position ultra-wideband Kurt

Craig Hettenbach

one in as then, follow-up themes the that. for a pause this Thanks infrastructure. through has it. Got earnings just of I And XG common think, the been season

there of and you’re could what so, Rick, just geography? trends hearing terms seeing, is of different out kind any you’re sense if by there what And a give us in

Rick Clemmer

infrastructure, their on not only right and the of and with of with is China the going in clearly, also different real strong there China. from combination The carriers now, the the suppliers, standards growth technology. And different a comes XG churn but expectations

a haven’t if strong yet. in like be deployment. you that it’ll growth growth it’s We So, And from of see in we we’ll lot last XG out used deployment before of it that we or coming. for XG we’ve MIMO so, be quarters the a see couple ultimately still through But, will clearly that, so We the resumption for talked the quarter seen massive saw really And got of will. that a the pipeline, was about pause. a a looks the it XG. year actually strength then, of

it see the near don’t Just in term.

Operator

Our next from Ross Bank. question comes Deutsche Seymore from

Your is open. line now

Ross Seymore

Hi, share know, very China That you guys. Congrats you exposure. I XXXX wanted just to in versus quarter? as in from of cycle the how perspective, the business there that cycle is to volatile growth. organic? up shaping about Are think heading is well do its But, industrial to question cyclical has turning I a been I corner. XXXX? own ask much putting think business can and just IoT heavy one return that about a XX% disty How the and it’s into of the a Marvell very you on talk business. has the volatile. And

Rick Clemmer

be will So, about QX. $XX Ross, we clear, you talked thing that million Marvell should about that be one in

We ways year-over-year. the been five that last in half we’ve see it’s industrial and feels what IoT nearly primarily from XX% and said, that it’s through quarters growth that it’s see IoT. and And for good. of four POS So, ship or industrial ship in U.S. and the the in the the like or but XX% growth in the But China is where through China. year-over-year in in. of POS don’t strength be in XX% more really real from we We’d a probably or without again, so long Europe really, Marvell and really being

XX basis, we’d a basis are it when more the be like of for this -- that that basically, we else? probably some a anything to on factor is Now, be a the sequential XX% deployment thing, on probably with you standalone wins of versus design it. that is key Kurt, than us a will the flat include Marvell. and company-specific But be X% other the -- associated contribute and factor

Kurt Sievers

say, I’d we growth support going of X% full XX% target see our Yes. to forward. clearly,

perspective, then midterm So, normal hopefully the and the that’s should look this somewhat maybe in in future. is more at you quarters what near

clearly talked is mean, the synergy, designs design very the in helpful I we Marvell On wins, the a element. about earlier specific reference which

continued great on crossover traction the see we Secondly, products.

that we So, think year, have it about more confident run this should double last from we year. a million rate which XX

proud a XM we ever which and finally, NXP about That’s XX the first track time earlier. which Vegas. with Las has really i.MX first on how personally processor, that’s the about launched. neural-net talked neural-net So, product, we in Plus actually I’m excited And showed processor, it nanometer

the and CES silicon which AI just on really Vegas, you value got factory on team a done to dollar at from people GPUs. far much Christmas. back running a much, have say a get done from to the demo than edge at it what before And on would so has job We superb the get higher would performance gets I

breakthrough performance combination the cost secure a perspective So, a call IoT. from I would that’s what into product think edge I really and

I that and mean, cannot I number early. there interested just the say from very a course of yet very, wins showed is -- of we it’s the from design for it gains processing, exciting. because edge delivers So, secure product promise now. But, the

Ross Seymore

side, for wanted over head for the Thanks just one Peter. And follow-up, my for onto OpEx to details. all those and I

you helpful some and the side to intensity. really with levels OpEx margin levers if framework to of and the operating eventually gross sort You’re XX on margin to XX. the or get revenue around see the the put could want the to maybe I

the the you about the out, of is operating in targets sales how business I talk OpEx just divestiture about and takes forward? with and puts your margin think, past, about talked in coming XX% intensity. mobile think and/or Marvell roughly of we especially of that you’ve the going OpEx should acquisition of going Can

Peter Kelly

Yes.

Marvell quarter, that it about think fourth Marvell’s revenue to X. revenues in disclosed way we was is, one the -- think, from I about

about X, I month. less just which think was the than OpEx a was full

a from what be. a of quarter, idea run I was in fourth income hit would about an quarterly million. you rate of And it the think perspective, gives that So, $X

you So, into as Marvell in forward, would first go add quarter. the we

a additional big that’s chunk of costs. So,

maybe want I not million. being a it’s IP. million I don’t I got Company. for $X You’ve relatively of to pops small, say amount -- a the out money The huge that OpEx know or mean, $X associated with

important more we’re think, your I be. SG&A. of run in but it, we’re our -- R&D where market to plan back to the see retargeting and of where revenue. kind think, in get goal very Ross are to has to to XX% and X% question it be some a growth hard normal is, is still And you normal I I and But, we part in planning getting this. we growth admit it hate maybe a more

we question it’s how So, a Thank get quickly that. you. of

Operator

Thank you.

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

open. is line Your

C.J. Muse

a I the to question, guess, side. follow-up OpEx on Ross’s

biz. March So, divested like it including Marvell for excluding the you’re quarter, sounds the mobile

think the trajectory push we beyond quarter, forward how of March of we As OpEx? should the

Rick Clemmer

it. revenue our we a it and we’ll to targeting the I of as be and way of that next in be Peter think, have still actions we about work have achieve can revenue to that quarters you to R&D we -- back normalized trough we that be that through talked been able comfortable in. couple We I won’t for about. for think there the gets X% of SG&A that a think the about we’ve should more the the sure because XX% our basis, growth, to be achieve But, objective feel clearly as place we the

Peter Kelly

XX over want think in I to mean, I totally don’t like I to linked and and that, the revenue. XX.X Yes. something we fourth But, it’s SG&A. we just quarter were X.X say on X.X, were,

numbers want we once kind close get we’re getting OpEx level, of think to to to I the hit. So, $X.X we billion pretty

C.J. Muse

my I two-part guess I as again, guess, And Excellent. here. follow-up,

XX%, year, that second cash yet helped target cap. XX% in half to you the though bit flow about free by think of a XX% talked margin the of little near-term was job hit the a On working I did side, you’ve a and great

in as kind update then, curious, quick where goal So, thinking any of terms and S&P Thank inclusion? is your there follow-up, XXX ‘XX, the you. into a ‘XX just and of

Peter Kelly

let inclusion to the the moment. Well, me S&P talk at

said K for So, filed, by that will in incredibly process. believe be as And We it’s you probably which know past, the we an proxy. opaque waiting our significant be qualify. document, first just and we our as followed quickly believe we to our

to honest, they pretty better and our bankers. and as try to I as But, we S&P. push do, friends a qualify. best be But, on to much -- and family said, we of our we’ve understanding so are opaque, know us despite as we pretty So, us using plan help efforts been you they’re probably get believe the

question a of just time. be to ought it So,

Rick Clemmer

feel to to them reach directly. please free But, them out and ask

Jeff Palmer

cash stated. flow buybacks then, free will we have dividend. out return and We is, free we via target And excess we a of holistically margin flow our Jeff. target operations will said what more pay really have it’s said that in don’t our What cash we is to all dividend. from XX% cash That’s flow long-term. shareholders C.J., And

is there So, margin cash free stated no target. flow corporate

C.J. Muse

Thank you.

Jeff Palmer

Operator, here question last one today, please?

Operator

our we’ll from Caso And sir. you, Raymond from final Thank James. Chris take question

open. is line Your

Chris Caso

Yes. Thank question mobile. you. Good on morning. The is

your that seasonal. out characterize was through is short-term segment roughly the the a of year, perspective, you then, wallet from First, mobile And looks we driver how there? big year. Is the as like mobile look guidance a it last revenue environment

lingering concern with You of about still I last guess attach rate. that year? is this issues some expected talked there of to something any And Thank inventory the mobile? Is growth you. increasing be in year,

Kurt Sievers

track go attach wallet. an stated of Yes, target the ‘XX. on through are mobile mobile earlier rate rate XX% attach exiting me our first, let to we Chris,

which mark from consider I interim we on probably XX%, about last think, is year the track.

is, to So, your the question rate answer There is yes. continued increase. attach

game, are middle there ‘XX. of the come is the We and more to in towards

come very in in And on mobile talked about this, of a that, earlier then, as of mobile, but going questions, again, actually. rate, content is ultra-wideband, driving top to wallet. one similar beyond which complementary I totally to the independent in It’s technology run strongly of

seasonality, inventory think, discussion visibility environment, the on the question, concerning want seasonality. to mobile about any in current of wouldn’t really anything side. we say, particularly go into I I the no on And have no. Now, I’d

is as however it to And single so, important cycle when industry customer our currently game. goes does. the really through it that it’s business to hard is be it used to general, a not say mobile a note In as

of our have in you Chinese probably broadened into past business from have would especially we number seasonality anyway. different of what players, it a expected So, which makes the terms to

Chris Caso

out Is the more on in the number the on more the longer it And of your for term, it’ll -- we side you. you longer said which next longer side, where’s areas the do you little do the Perhaps, that mentioned have side it opportunity IoT which you term exposure, and as applications can over the or and expected areas ask we a on look number think to term? in look a auto year? ultra-wideband. Thank And you for when mobile I impactful more follow-up, on think at are be short a as a maybe and what most of most the

Kurt Sievers

is from in first small it’s so, the actually of auto. very the giving small baseline, evidence Well, which but significant there is size, of is in strength technology, of which all, a

we shipping into as ultra-wideband fobs. are So, we key speak

it classic up mobile attack. about form key used the access. ultra-wideband is not but against applications technology, It’s for fob picked station secure and more which factor, is being that’s So, relay

But, speak. first is we going access. half small. in to is strongly mobile that XXXX then, the second running But, the it’s And So, car focused really as case mobile. lift be meaningful in of is the on use very

of goes I IoT, nice these earlier, what layers the we then volumes into car coming applications of So, in is the in into going course all And counter the years. XXXX. see the case and mobile to other have mobile, on the higher especially revenue side auto area for mentioned use kicking second That’s access. but in half

Rick Clemmer

Great.

support me this been thank take our through this in we’ve let of So, through semiconductor opportunity investors cycle just their difficult XXXX. for to all

back to stabilization as And design the returning well encouraged will strong significantly think we we We shareholders. get on some near-term that we’d clearly growth that amount the our of some to other China of generate Company-specific going focusing that and give at, and position in bode cash outgrow the a been to a which like and place. of improvements, to us of specifically for be to on of market. margin us we opportunity plan forward see in significant that sell-through We’re that portfolio put regions, we’ve on good us in the that level from more kind the a in in puts initial able to wins the the get

us a that at market, going opportunities design will and about that us clearly have normal more So, to ramping continue to wins about will we to excited really future associated are coronavirus, the which of semiconductor don’t with will company-specific yet, a that the into and the grow about be for concerned of the in opportunity XXXX be impact with combined allow somewhat what the albeit XXXX reflected excited the clearly and we’re returning it, significant rate. not but know

very you thank So, much.

Jeff Palmer

you. Thank

Operator

for thank conclude does conference. and today’s participating in Ladies you This gentlemen, program. the

disconnect. wonderful day. all may have a You Everyone,

NXP Semiconductors (NXPI) 4 Feb 202019 Q4 Earnings call transcript