NXPI - Earnings call 4 2023 | NXP Semiconductors N.V.

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Operator

Good day, and welcome to the NXP 4Q '23 Earnings Conference Call. [Operator Instructions].

As a reminder, this call is being recorded.

I would now like to turn the call over to Jeff Palmer, Senior Vice President of Investor Relations.

begin. may You

Jeff Palmer

Bill and for Fourth Michelle, call everyone. to and CEO; Welcome is today The Thank being from is Earnings good our Call. Semiconductors' recorded and and President Quarter Sievers, be the our With NXP CFO. Kurt call available you, will NXP's morning, Betz, replay me today website. on corporate

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

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

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

measures are directly measures our certain release, on NXP's directly comparable quarter Additionally, Investor section. by the related to be has performance. we non-GAAP underlying the in that will to to Relations discrete SEC Pursuant refer press to measures, furnished which XXXX X-K GAAP earnings NXP's non-GAAP to be and available of the fourth will the G, core driven does financial consider Form provided NXP Regulation events most on operating primarily management not website to in which reconciliations financial

over Kurt. Now I'd like to to turn it

Kurt Sievers

with quarter then quarter X. guidance our than our year the Infrastructure with than line expectations, with of IoT our you, quarter X, guidance you market better both with morning. really better performing the will joining and and trends appreciate expectations. and million Beginning performance our our slightly full guidance everyone. our and this morning, in Automotive below in our and & Communication I the for discuss revenue We performance Thank call review XXXX our mobile Industrial Jeff, good X $XX our was midpoint

guidance. quarter X% revenue $X.XX basis delivered and was operating NXP year a solid of above growth expenses XX.X%, performance the as midpoint of result together, by year-on-year continue margin in an increase development. The of higher the billion, was offset gross new XX of below Non-GAAP period Taken basis ago our we points X profit to invest product about in points quarter XX X year-on-year. operating

maintained below target distribution X.X From a inventory well long-term level, a months our we months. X.X channel perspective, tight at of

to the continue on-hand direct normalization inventory. on their partner our In with customers addition, of we

revenue For was increase of the full year, about $XX.XX year-on-year. billion, an X%

we believe We intentionally growth, our revenue higher build X% the our percentage. down the end to XXXX. through at undershipped our And our view X% maintain at unit approximately gross channel approximately time, that volumes offsetting limit inventory pricing XXXX, in fundamental demand were Passing by have in our our in underpins customers. by this profit same costs input increased direct the we order and to

ago year XX.X%, Full innovation basis offset the gross performance point system result improved year product expenses, a in operating profit margin investments. the increased versus as period non-GAAP XXX was primarily operating a and compression of by

end reflection lower by up X% turn year of billion, which trends $X.XX specific growth year offset to drivers XXXX shipment in Automotive, a volumes. company-specific focus me let strong the higher Now full was pricing, full our In revenue year-on-year, markets. is

with period revenue X, versus was For in year the line guidance. X% our and quarter up billion, Automotive $X.XX ago

XXXX. increases. end a back IoT Industrial X the offsetting & revenue to channel market IoT. Full the Turning & business Industrial price We tight $X.XX in down in cyclically of XX% billion, was year-on-year, reflection trough our year quarter saw a weak for management

versus X% For period year our quarter X, ago up guidance. the $XXX million, and Industrial & IoT line revenue with in was

billion, the In and year XX% because of was weak digestion inventory year-on-year marketplace. trends $X.XX handset down Mobile, revenue in full

Mobile better million, X, guidance. and quarter revenue For was $XXX year ago flat the our than versus period

Communication $X.XX that a Finally, pricing billion, revenue of products Infrastructure year year-on-year. tagging base The due the solutions, was station card RF by increased year-on-year network Other, of markets. growth X% for offset declines solutions. legacy processing was combination power & of buys secured and up full to last-time and of sales higher in And select cellular was

year-on-year was our below revenue X% X, million, For guidance. quarter and $XXX down

Now the XXXX. growth Analyst software-defined drivers to annual SXX processor our which provide Automotive, the for vehicle. electrification drivers, are X we family in update growth like every highlighted like with would November and radar, Starting I Day accelerated during year, progress on accelerated our the our

the strong Looking are and processor at plan to digesting customers solutions performance family XXXX, is in our inventory. who both to shipments we took actions from our of plan. ahead tracking tracking Revenue are SXX as electrification limit Radar below

core [ underlying The business in Africa tracking with are in longer-term drivers growth above accelerated automotive line the ] together, auto expectations. our grew Taken plan.

underperformance and believe IoT, disciplined of Industrial we range. managing the to approach is of expected below channel. our our & Within significant end are cyclical distribution reflection the a growth tracking We market weakness

to Asia majority So Industrial of the tens small Greater are China end of the of distribution and region. thousands XX% serve Pacific the the whom efficiently customers, in IoT approximately address remember, the markets we through of & of channel our needs

Within due Android Mobile, growth below weakness we range the well-documented Ultra-Wideband revenue in are to accelerated driver market. the for our handset growth the expected

been automotive and another at handset evaluating the of in well-defined platforms platforms use platforms is is stream XX automotive However, Ultra-Wideband as driven traction first have Ultra-Wideband about case the point by premier And progressing is X NXP NXP in XX market, revenue which to being Ultra-Wideband out for well. awarded this a automotive we XX speak. very time, and few solutions are the OEMs.

OEM in of to the gallium base Communications was technology. Finally, for nitride growth LDMOS within challenge below Infrastructure, from deployments we faster-than-expected expected combination RF weaker globally revenue power amplifiers we are the and The range. transition station faced our XXXX

underlying cards including secure labels. the and demand result well serving in for portion solutions intelligent Infrastructure Communications of a performed However, for XXXX tagging of various core very pent-up as RFID

for Taken together, we ahead of plan Infrastructure the Communications segment. are

me for expectations to our quarter let XXXX. X turn Now

are the guiding about XXXX. the mid- at revenue consistent our quarter, first quarter X in We single-digit billion, perspective, to flat X% of $X.XXX to down original about be versus high a of prior represents the quarter quarter with deceleration the outlook versus range. sequential X From which is to this a for midpoint

we hold channel a enable continued on-hand customers tight for outlook tempered inventory continue quarter to Our desire the typical inventories will of range. to X in seasonality, compounded our direct by and normalization our reflects at

we us pricing, versus previous see pricing years, flat XXXX. Regarding which improving allow assume for input trend cost to

we versus XXXX following the Automotive down during XXXX. trends midpoint, the percent quarter range is So and quarter be down to single-digit the in business in mid-single-digit at quarter X low our expected range in X anticipate versus X. percent the

in be the versus Industrial XX% & IoT year-on-year low quarter X the expected in range to percent up down down the mid-teens up range is versus percent low mid-teens is in X XXXX. quarter percent in be double-digit and and range expected to the year-on-year Mobile range XXXX.

year-on-year the Other & range Infrastructure and Finally, quarter double-digit in be percent mid-XX% down low in is expected down the versus X Communication range to XXXX.

semiconductor the of company-specific variations of parts our XXXX, market In portfolio. at review, experienced of for exposure, time cycle the end we the different during to distinctly points our various thanks

hand, the one Industrial our of IoT was in consumer-oriented underwhelming. year On full and performance more segments revenue Mobile &

we a after businesses improvement. growth in However, these experiencing And XXXX following throughout quarter have X should we gradual since back our already these tight dramatic seen think do trust channel reset. trends Ever continue management, post-COVID XXXX. a

in of XXXX. have first In entered phase the also XXXX, should we segments continue Automotive with of and second a to On growth. other Core starting end direct the XXXX. resume the Industrial, the part to the XXXX, the early multi-quarter second and demand in inventory but of within expect experienced our and through Industrial half solid customers This hand, quarter Core in we of Automotive shift trends half correction

call. business, Other to our view XXXX we consistent over XXXX, expect earnings Regarding revenue shared Infrastructure we our QX decline Communication prior the on & with

the view now the direct first XXXX half our digestion expect ahead at So of do the as versus think longer-than-anticipated XXXX due deteriorated our decline we automotive has look of will to days We from ago. macro half inventory first XX we customers. XXXX, to

end we in believe demand the expect as to company over then. by the be will However, revenue our second of grow XXXX, half first again we shipping will of XXXX we half

have and control manage soft landing we will for Overall, everything our a to business. our navigate in continue to

advantage the of inventory have on to channel, direct cyclical such, very appropriate. as I our potential modest This And soon and decline. growth take us As based are supporting materializes should we as customers kept distribution annual it we a or handle enables on facilitate set tight of outcome digestion as XXXX segment. for our in to be the everything improvement a revenue per the range have

for So now our financial you, review like Bill, pass a call the to would of I performance. to

Bill Betz

everyone and call. today's Thank you, Kurt, to good on morning

the will highlights. has the Kurt drivers provided of to QX, As move the our already during covered revenue outlook financial I for revenue QX and

of into a Overall, from the driven our the in supply guidance and even at financial range the channel distribution of weeks. flat midpoint gross above as performance our midpoint X Revenue QX of profit by above or was was X.X months was slightly guidance channel about mix good. non-GAAP our remained sales range, months higher

long-term $XX.XX will generate to profit Full non-GAAP We slightly year was we a XXXX $X.XX non-GAAP basis and highlights our financial as gross XX.X%, of X% reported provide invest of profitable points XX billion full billion revenue above in results. QX our were year in for up non-GAAP or I up gross the to strategy, year-on-year. first Total and growth. billion supporting $X.XX move expenses then or long-term XX.X% operating model continue year-on-year. revenue, margin

a with of million, earnings, $X.XX our non-GAAP reflects X% and effective $XXX compensation, a down million. year-on-year stock-based operating $XX tax which was This model. taxes long-term financial year-on-year. related profit margin were Non-GAAP billion, current million, interest Total expense Noncontrolling XX.X% million included line rate. and to was operating $XXX XXX down were in non-GAAP ongoing basis $XXX points our non-GAAP in or is non-GAAP operations interests not XX.X% was

and operations $XXX cash from We CapEx to generated Turning or of net year performance. full in in flow X% million invested billion $X.XX flow revenue. cash

this $X.XX revenue. resulted XX% together, cash flow billion in free of or of non-GAAP Taken

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

generated We of midpoint the Total range. details a gross of modestly above revenue $X.XX reported midpoint $X.XX in points above margin driven year-on-year, guidance up was primarily to non-GAAP X% billion and gross our basis points moving basis and of our non-GAAP up range, of year-on-year Now QX. the profit mix. XX.X%, by billion, XX the XX guidance

Total within XX basis our year-on-year, and non-GAAP $XX and of points year-on-year, were operating XX.X% above operating revenue, the expenses non-GAAP guidance profit midpoint guidance range. was total $XXX million non-GAAP or our though of margin operating million $X.XX was perspective, up down $XX a profit QX billion, down million range. from operating From XX.X%,

million. with XX.X% was interest not compensation, tax our stock-based non-GAAP taxes included Noncontrolling $XXX in expense non-GAAP ongoing or and for million, $XXX is were a interest million rate. $XX Non-GAAP million, operations which earnings, was $X was effective

the Now I and to our changes turn to debt. in would like cash

debt QX of Our flat billion, total essentially sequentially. the $XX.XX was at end

QX. ending CapEx short-term net returns, capital $XXX resulting the debt up billion, including we with trailing was a The investments billion, the and due million EBITDA Our $X.XX effect cumulative of balance, billion. and cash was to XX-month during adjusted deposits, generation of $X.XX exited quarter cash $X.X sequentially

of EBITDA end Our net EBITDA was XX-month and our QX adjusted X.Xx, XX-month to XX.Xx. interest coverage ratio adjusted debt of trailing was at ratio the

shares. million in we During $XXX and dividends, QX, cash million paid our $XXX we of repurchased

at XXX capital X.X decrease months while maintain working X days, or of distribution X about channel inventory days was metrics. inventory weeks. Days we to Turning of a sequentially,

on year, As throughout choice sheet given have our flexibility the demand uncertain balance limit to the greater continue we in previous make inventory the the enable inventory we to keeping to channel, highlighted intentional and environment, day while to of external were days days XX were product XX needed. down sourcing. due days, receivable payable prior X quarter to an the days, versus sequentially as redirect increase increased material XX Days

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

first Turning now to our expectations for the quarter.

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

or related gross non-GAAP be we X.X our XX or margin as minus expect to months at points We maintain below. in XX%, distribution lower sales plus of basis to about sales driven the primarily channel

Operating plus $XX expenses million, $XXX or are expected minus to be million. about about

non-GAAP Taken $X million. anticipate together, XX.X% million. We rate we be will about be before profit of Noncontrolling estimate margin midpoint. XX.X% to tax other We financial non-GAAP operating be $XX to about be see the interest at to the non-GAAP expense and tax.

For you shares. share count purposes, use of suggest modeling million QX, for average we an XXX

continue as included higher driven compensation, in $XXX than is our refine activities normal, the in which we portfolio. restructuring QX We non-GAAP million stock-based not by expect be our to to guidance taken

to capital expenditures, expect we around X%. For be

midpoint, a per this non-GAAP earnings at of Taken share together implies the $X.XX.

we XXXX around the basis high plus margin of our normal gross the For XX be to non-GAAP end purposes, long-term full or year of expect model points. modeling minus

We our operating expenses compensation actual expect fluctuate movements by in and and by to annualized quarter, occurring quarter pending merits stay second variable long-term the model driven performance. within

XX.X% tax for rate use a to suggest range XX.X%. between We non-GAAP

stock-based the we QX suggest compensation, million is use to $XXX for year. the For where peak

For million. suggest interest, we use $XX noncontrolling to

of we expenditures, long-term X% stay the model expect X% sales. capital of For within to to

focus In ahead a highlight closing, like XXXX, for to looking NXP. into I'd few areas

be long-term performance disciplined a cyclical to what will continue from is and our we a within to control environment. model. stay soft landing standpoint, manage and continue financial First, Therefore, our will to navigate through a challenging in demand we

we the low utilization inventory until to to internal factory assumes level expect in internal operationally, to Second, be hold guidance normalizes. QX will continue range, the mid-XXs a

when on on will we the cash Lastly, comes March due X XXXX debt with retire $X it billion hand. tranche

to will free Finally, capital continue we to allocation back no there all return our change flow is strategy owners. excess cash where our to

repurchased the of program. $XXX XXbX-X QX of XXXX, our we shares since beginning addition, existing In under million worth

it Overall, I'd turn we will operator active our back shares. repurchasing to now questions. the remain to like for

Operator

question [Operator Bank. Ross Seymore first Instructions] Our from Deutsche comes with

Ross Seymore

side inventory in a about, channel you've the the like a Can but it into great gotten on has a job Kurt, management general, done the on lot sounded OEM First, little you excess side, category. the talk bit just still for side, And XXXX, in channel the coming that you when do million do think the the any year? into side, throughout number? I OEM that on you have guess $XXX plans plan on if the the that's normalizes

Kurt Sievers

I think I what color this you Indeed, Ross. Thanks, the Yes. put on concur with. would is

channel feel On inventory. the and very much to the we relative side, safe under control

put me way. it that Let

we the hover absolutely X.X% X, will range. no go beyond quarter to between For It intention X.X% and X.X%. have

X.X% we I X the had quarters. think past

the not consider an hold a So but maybe for that's more can QX, It's increase. precision that. X.X%, we

increase So general quarter. no first to in intention inventory really the

quarters. the it of couple in this different past year, we of much the rest For Ross, put to the how isn't

to start the justify that. when momentum to market only in replenish sufficient will We we see

year, any hectic a our is nor by long-term hit of the guarantee that steps means target, or which the inventory, end the fast X.X% is we that there here. we will So do neither

we because of we that do come to some possibly half this So the expect we the later start in I recovery do call, and will second market in year. there back the is assume

will But revenue replenish indeed for -- which again, we function necessarily our discussed of that movement. that which again, environment. is part it of before. considerations makes $XXX we to likely start market a a is the that have something channel of the is the it annual size by million more The not the them. So to really just it's But

to one inventory customers, the last at excess the and correct we year. indeed, of inventory I quarter in direct started think or try second Now that back the

excess is talked I fact different with is and that on construct, have think are we we case, We about the inventory. already, way, our customers having our which, to Tier that by the see we few earnings the of was these our the to sitting first Ross, the also Automotive a been by And NCNR them some system. of using. that NCNR time I call which X where thanks -- peers the did that in knew majority orders. discussed

to Annual annual. tied year. were calendar means the Ours

NCNR we very be to have explicit, So currently no orders. more

that at up was year we see all for out And good and reasonable a is inventory. call running because orders see were of second the So of let very normalize try the been quarter end in which the this we customers last problem, NCNR to calendar financials. of But our us those say, in also building XXXX. cadence, hindsight good a year, since and we've busy they

to with and this I back would still will we question, that year almost busy exclusively yes, through your say in coming And of be think Automotive. middle mainly, the we

have in this behind of is under So in shipping second that something demand which only Automotive move demand to customers middle direct from should end us. shipping with we the then we the end should to And year, half. in Automotive. that be again By

Ross Seymore

this in EV expectations focusing guess about on But X what Automotive, the my growth below and second side, fiscal I about those Radar in the auto above question, just SXX are 'XX? to it the your was drivers you for talk is can above, hear And plan, helpful drivers growth overall.

Kurt Sievers

X% includes performance excess Well, in in specified Ross, 'XX. stick our back growth then Analyst November to we in I be long-term which the which in XX% if Day of there world, we would inventory, would principle, the said we and a normal growth, say, drivers, was those no to

gave the I really was the think transparently have past did exercise So pending the was to is on actually of it easier that inventory range -- easier color Radar was it's a might they control It's on the to that's control. are not customer just that I target. little, non-fragmented with that where you Radar has handle speed here much customer performing base. specified where say it's just because and to a very base, customers relatively And a noticed reason The almost product for concentrated get moving inventory a year, direct we control. very a why this inventory around

So is which say 'XX, inventory make Radar much I behind control will us, in year. to already obviously, a have better completely

the back X-year longer targets they we -- on to November 'XX. in but term, specified assume just So on horizon, Ross, all which the the come

Operator

comes Arya Vivek of next America. from question Bank with Our

Vivek Arya

Kurt, up, good just little bit think full us of then kind last quarter, hoping sort And ahead. you up, I the of And sequentially. back I you I down color growth you were the kind on your still a QX was generically shaping overall flattish flat, quarter half. to how see you year, enough one give your take could thoughts when share that suggests in growth about double-digit of commentary mentioned of

so realize is be that but half you you that confidence about I the other back and sort limited growth would visibility So any very of can gives the useful. in color share forth, double-digit that market

Kurt Sievers

I apparently, relative a was the yes, good Vivek, So next man quarter. last time to

think I reiterated bit but those. around color you, give you gave we which you pieces the happy a to just more I'm

they exposed being see to. really So revenue dependent the our of on we are the different parts cycle

in the the grow continue that large will through part to other left all and quarter anyway seasonal that think of the us -- consumer-oriented to behind of the Mobile, way calendar supplied and fluctuations, year So year which than Industrial has some IoT and businesses, channel. XXXX, the first the we of we last throughout is & they a part that's trough IoT do

So from we are suffering inventory digestion. not excess

positive that, pretty company are that of we part grow. the So will

Comms & from said same time, the Infra I reiterate will I perspective. the what Other a last business year-over-year time, decline At

'XX other year for calendar Comms Infra down So 'XX. & revenue will and Other be the versus

I it discussed there at bits we length why the pieces think and in is.

the do the between of of the Automotive, and with ago, half block the there direct Core year is Automotive middle is turning And discussed to minute where digestion is do first digested. inventory, is -- something inventory I that with just the still to the being where a Ross, believe where which at come then around which which point somewhere indeed, question over you customers second in sitting Industrial, we and the there has half, the of

year. to X full together, put you If then indeed. to year, pieces is it this Vivek, puts going Obviously, X flat than the against obviously, be X bigger for year in somewhere half range half plus/minus be down the of last that of And all these going X. this of half half XXXX is of

which on digestion the really So have Industrial on Automotive view the we the the confidence from and comes Core inventory side.

gradual This given have very where at from. same excess is continued businesses consumer-oriented where the really management, the At improvement in time, tight end, the we channel it the comes inventory. our no

Vivek Arya

your your All right. are are industrial Industrial in follow-up, IoT my trends trends peers. & to -- And big in for contrast

get So you spot did, what I right? early You it. to were

industrial such that you're peers You were Industrial their you that But comparison? now? kind your under it now. who now Is When is seeing right, terms last a IoT XX% in do and NXP XX%, what think is these reporting correction in strength not much, peers, your of the growing their declines of year first are versus there between maintain with how much contrast convergence you can the long half XX%, of right & of seeing in doing somewhat apples-to-apples are business? a better

Kurt Sievers

conceptually, almost X it even never that the that's Look, alive keep Vivek, the That's very But channel started ago, We and XXXX, will 'XX. in as their because contrast exactly channel. to of control I, first the of they trust of they second digest don't course, in we years that, quarter level. have what build and We We with judge second and do. long don't need actually in cannot the it. we at back as know quarter to simple. you, be quarter months -- X.X them over-inventory of the mind we XXXX, the X.X

steady. we down from then, this. it very And went even since kept we So

some correct is our just have meantime, they at shipping they of that And peers to moment kept them. overshipment hard the the this. behind need contract will actually and disappear that In done there

I mean, NXP year, grow you Vivek, pricing number, our puts last was gave we very year -- you also another this as maybe perspective, told company, in a that revenue. up by transparency intentionally. and that Last X%. in X% did which I I

So that we year feel significant gives you a that pretty last a from perspective. decline volume had supply a

price So I then you peers against last plus a decline, the now a X% time, shipping, at plus least which think from who demand, revenue, just take hard if under end you the X X% clearly shipped a same the more having we gives of harder of many volume first is first bit them X% -- numbers of are peers. but certainly year. mean they quarters against through just

it's the a the reduce going ship do need shipments. thing. and you be to to under So curve when when the end, did in It's same matter of you

than other think difference, there is don't I fundamental a Vivek. answer. my that, that's So

better want I So much industrial have business. don't to we a claim

think I more a had just we earlier. on it disciplined handle

Operator

question next Rasgon Stacy comes with Our Research. Bernstein from

Kurt Sievers

we'll Stacy, go caller, the don't are there? around with we next Operator, you to and why Stacy? circle

Stacy Rasgon

Hello.

Kurt Sievers

you, I can hear Stacy.

Stacy Rasgon

question IoT I the had trend. a on

if Industrial. it and the year. consumer I recovery the last out between the was QX parse you could Core bottomed So trends in wondering obviously piece

started recover those to what Has better. ago pieces? those been well? consumers consumer Like from as a across purpose know getting IoT the two or year trough the all off little we trends has the increase a So are general all

Kurt Sievers

below segment, the because, indeed, two differently. by a IoT are means the question That's since trough before it last Stacy. but that better is the the fair better, getting and peak. improved had still Thanks, I'd piece, the has way, quarter the of Yes. and indeed about calendar XX% of which, Gradual in gradually levels year. trending better X the it's say it's

is not it's used there where while So it be it gradually improving. to way

our of think before, that In revealed in that we good a is I and portion case, China. very

of from So last distribution as -- year, trend But through and think year. of the improving largely bottom we and continue the to the IoT what yes, we QX starting about this what gradually it largely that's so a see business. calendar rest China-oriented continue

different has The weakness. Automotive, a now and much inventory, more Core end shape. it which somewhat Industrial indeed more from about is market a not like taken bit over part Think suffering

speaking, IoT So industrial is somewhat I just face is portion. would say still, relatively the which good core shifted a less shape to

a what we similar So see Automotive. in Core think to about Industrial bit more

Stacy Rasgon

it. got ask lead lead times? wanted times. follow-up, pricing starting you better normalized about have you flat? come I like is about levels? pricing what's have Have lot pre-COVID control that to Or of a Do to talking part control to they to you of pricing keep because of that better of a now. Got One enabling just You've competitors are down

Kurt Sievers

also normal. is The world the them about normal. We've Stacy, cost. of mean, be mainly past double There relative part yes, lot all just quoted a the and function which lead our because flat just visibility perspective. year, Stacy. this first been now is to to looks a the input consider pre-COVID back pricing, So these us input it to the behind end need that and of no from of are And of supply X from to for have which helps of normal forget more all absolute, for of times to that the the years. living real question over pricing, I sharply of back in I times, all about correlation constraints, costs rising ordering that we things normal more times NCNRs lead

that as it's Stacy, this we buy-in and say. input for that with and the not around view for times. would lead correlated X, have put -- really I we not acceptance pricing is 'XX the for that's So cost and And on which with handle we any why year forward that's our found customers, also

that question really I if don't we more have doesn't exist. a correlation portfolio of understand since your had commodity we

Operator

with Our Securities. Fargo comes Gary next Wells Mobley from question

Gary Mobley

fiscal it Is largely at Kurt, called half appear on pretty first function of 'XX. largest of in out that gains you mobile Is last some growth of Ultra-Wideband function some to better-than-expected in customer. the side, Mobile year-over-year Mobile for significant or the a year a traction revenue it in your poised function a the some content and maybe you of Android being bad? is be market

Kurt Sievers

transparency, out. at all, in pull a it's I was to it full a most just year, the as comparison horrendously of in Gary, low So last you ] our QX XX of I everything if last minutes. of look year. I weak explained function it of last the function have mean [

weak very, of So a very function comparison. mainly clearly,

that inventory thing, Android other However, which behind you one already was would us. QX, I at mentioned digestion clearly least certainly is We almost completely the is it largely see claim behind us. the in case.

Android, we could be end forward. hopeful are to So market demand about going somewhat Android the also shipping and development in you

So it. certainly case say, would in, handset is a shape to customer also our relative development. that volume in But premium I that's decent and a is

suffering is then get to that mean, the So into trying as helps us on possible demand again, as back it the also inventory. where other very quickly a much to of you function example equation come side excess not from quickly true of and of end a good I to that's growth.

Gary Mobley

and offsets give quite the of of allowing additional color which 'XX, you to basis XX% terms mix those a be resiliency. in margin prior like seem year out And what's down on considering whatnot. can and you headwinds to utilization is year. to for gross from for that's headwinds Maybe And commendable industry some lot points what's the Bill, it this gross headwinds fiscal you going in if have and And us the margin gross margin only from XX calling seems whatnot.

Bill Betz

Sure.

talk example both in and tailwinds about some Let me then QX those headwinds. QX just use an as of more and levers,

you better, XX know, of distribution slightly It driven really, basis represented did QX. XX% our from sales we that in points. mix. was QX, as in by And that So up XX%

Now sales. in again points, adjusting the slightly doing we're guiding is this lower QX, XX we're there basis what down distribution And distribution primarily and lower lower -- mix we're on fall-through driven because seasonally by sales.

better be year than mix that So probably ago will down, but standpoint. a a still from

is and remember, distribution a then QX, about I that, in think underutilization. offsetting the bit we'll sales you If than XX% was better which be

year XXs. low we running and ago, the in were a from If you QX XXs running now recall, we're low in the

quarter-over-quarter year-over-year you the some mix. from moving it's by a compare, got from So compare, really but driven parts a

our that. you're headwind for Now internal headwinds, utilization factories, internal XXs, becomes We talking this right. the you wafers. can been of And it our represent that source see We're which below current the we managing our last to and if running us. go levels about level. of XX% know low quarters, we've a Clearly, X for tailwinds

again, revenues, fall-through so is cost Another lower your see far, fixed structure. have lower do pricing, you -- obviously, see If we're cost obviously gains. headwind a to we to have the year-over-year and that lower stable do we're we able productivity lower over you we from keep standpoint. with it's that offset pricing, and comparison our job flat if lower But again, have

the over term, we new think you longer more cause timing. is higher of based the structure product about again, the this this through tailwinds on obviously, that Again, any from that But if our revenues, something so million. a a we levels. quarter then fixed richer delay an the And a if impact XX% our tailwind. we that falls It's to to quarter that, if decide XX% in utilization internally, have, introductions is improve channel when could or cost $XXX Kurt we normal about talked Again, that utilization, more we becomes and going back to mid-XXs, mix. replenish back that's tailwind do have

as like that of good something a mass customers. job we don't think about is is one reach market some distribution expand we plan to our we're as and Another peers. talked We our doing

and something product ramp our to we're continue going going that's to importantly, most to introductions, up clearly, longer which we're focus reach to do So customers. are term our is margins And the And execute on at to productivity gross accretive more new gains. better and that on today. corporate

these all types maintain revenue and high what levels. the headwinds of So I do it's and our as we're and best the at to all, going tailwinds model how I end in you quarter in the to quarter said manage out, think the near of

Operator

question from next Our comes UBS. Bouvignies with Francois

Francois-Xavier Bouvignies

have I follow-up a to maybe question. the two, previous

you in I summarize. year-over-year. managing the I was that it would at to cycle. cars the right if obviously basically channel undership the you more clear when be which revenues, demand, was much are a Automotive. I The basically go half you look on picture much But of The helpful. X mentioned wondering had moment I higher. your of Auto way quantify under how is quarters? if soft you down year, on have the production quantification wondering the the up do Automotive of if the shipping with mean Because was was Can in how first X% -- second last you was of any would much maybe your very have that one maybe intelligence now, I under and any you into you shipping a at the are

Kurt Sievers

pointers. think I Yes. few that us, where our quarter. can the also It Francois, by view, grow I calendar I at 'XX is increased year my pricing individual useful guess I the year X%. a to at now think did in one isn't look business full no the quantification, you but behind But Auto by exact said look full X%. company has since

just for increase that almost a price Auto, also line puts Automotive. let's a year you X of in that in increase on So magnitude, last supply order did we minute which basically in assume

a to increase what end, in Automotive growth units, Automotive last I the in year rocking would and call goes the So in bullish supply electric SAAR X% And super year against last say units. fuel that cars. XX million with, I increase in X think,

by I last xEV year, we're growing cars think XX% year-over-year. the

which same mean we But often I that X. good through a obvious. we X% time, year. a we've view ship discussed at I very that the content undershipped significantly SAAR. have gives for on arguments, the of why strong mean we mean, So so top all feel you of a And all it's already lot last the increase of I

It's overshipment it We believe time started with very that controlling a overshipped we handle and have early on just I throttling and back. in that taking the that before.

the through the which Automotive, side think to yet. one which I'd action of of last distribution we've And in the started have done that's undershipped all is to last more year we control the shipments take over But -- we quarter year, the side. I not say direct stringent in completely of in revenue. also second is XX% take the of

you So they individual semiconductor know not customers the how targets don't it's very X not on weeks size want often. keep a of we in very terms Tier hard -- of I many long inventory with keep. it's mean steady inventory to to Francois them discussed And what run. want of qualify target. because that to these And it's a also

over And First widely all, here I It's of different all changes also between they time. are and it Tier range could ranging between Xs. weeks. over really weeks the place. quote X a XX

reason is soon offs again, to grow business inventory they the see believe grow getting to want means OEM their they As their going to as call then are which again. that they

So moving of that's us, why But middle we the behind it's year I the bit that think synthesis is a us. a that calendar have we target. by believe for of 'XX,

Francois-Xavier Bouvignies

I obviously, understand better flattish down. coming in the and it mean you peak input cost, than That's coming also follow-up and the input be great is wafers the seems is second 'XX mean, you And and part the said pricing the I I cost. the the from electricity at to pricing. the have down, look If silicon like answer. peers, obviously, commodity on we

under foundries. for how is XXXX of X, if coming through input mature is you see was the if Tier tracker foundry we about cost the have cost or your the I the main at pricing, I You what many, nodes year mean? think many should pressure Tier coming as the level is we just also input pressure, see X wondering under that

Kurt Sievers

Look, a couple of things, Francois.

'XX, to can't little that's get all, honest. I early, get through 'XX. I'm First be of glad a well we my head around

relative X you I lipped the good put one tight are it the a biggest is them. same the you the put you X input still X these Industrial trends at And need is mentioned ambitious X business. costs, together the because to cost the decreases. Tier Tier there, Tier for that part we pieces fact as our Core and as are which Tier is Now foundries of And think not when quite foundries, and our to Tier didn't input time, foundries X bit Automotive up unfortunately, foundries not

reasonable application-specific mid- that assume Over think time, to ASP Francois, in in future. return the in happen believe, that, mid to will we pre-COVID erosion longer industry going the low I That what do And longer-term to to like the ours. term, is is the had is business that single-digit year-over-year. period say, also to I it

clearly. inflationary to input input However, the levels is transition as yet pre-COVID. the but past. yet and this the year very be does environment not falling not important, a know used mean probably it's year in to I And very the that level because is I just the not and that just clear, had reiterate back very want which is it This cost at we to

single-digit levels from scenario no pre-COVID. see the have the this now, we falls but of future, longer-term very we absolutely that that to which low in mid- back ASP levels What the we saying possibly to achieved erosion have I'm is per year,

Operator

with question next Citi. comes Our from Danely Chris

Christopher Danely

guess, much inventory I little more a the how terms Just is, Any way Kurt, thought? little to getting tougher side tell worsening months. other of either than last is a of bit of versus way or there in any on this the things over which that? we the demand

Kurt Sievers

less is weakened. in Yes, at days of before. first of it almost are would than year-on-year it the end Auto the all, was XX SAAR, got say mean you view to terms clearly, I worse latest down S&P over a X got I data what exposed demand we so that's now confirm last say on percentage our point in has worse. little the what least I or

The but little is xEV slowing. is it is a a slowing. penetration it little still Again, up,

was the the just first through are movements the which I But days to gradual here in down now part just Tier what the somewhat X what are is XX it our with what these half. bigger working a size So positive side excess got ago. inventory is we that better we remaining less of the think is Automotive handle customers, than probably

and But the say of weakening one the at that percentage, which in contributing is in of cannot how Automotive, Industrial is a over it pass combination macro. Core two I So time say, same I'd Inventory much.

Christopher Danely

of in of right? for and sales is QX. that then I sales talked Bill I so last of QX hear And disti Did XX% being think Great. Or my -- wrong? follow-up, that year about XX% in

Bill Betz

Chris. correct. That's

Christopher Danely

So yes, okay.

So grew my XX% I sales guess, is, about, question to QX. your from QX

little was so happen a that into like at least if grew a that mean outside difficult? that. disti sales you would the would lot guys than more And Why environment, your more overall,

Bill Betz

Basically sell-through. it is matching to the

Kurt Sievers

IoT Chris, in last that I is where to one in the the first already that of is & Industrial here exposure think larger year. seen the have trough we the distribution And mainly is quarter our business. the background

part. those and that earlier I So improvement. gradual distribution is distribution the side improvement quarters where XX%, direct as discussed excess Where shows have inventory Automotive, up throughout in I the the is only distribution described, because that are digestion on which that segments now we the have a smaller more customer

exposure of a end think I segments. just different the So it reflection to is our market

Operator

Buchalter Our next question comes with TD Joshua Cowen. from

Joshua Buchalter

pull seeing that of levels. you on and OEMs Tier playing are that that want keep OEMs on? to in -- bit curious, supply that a going on and seeing inventory, some Is between is capital less. Tier In the where Autos, carry to a wanting that a carrying chain, going be some to wants into Tier Xs what's the Xs, with you're of lower trying there's few working your heard are more the X their push I just the from Is you've going their digestion now? manage

Kurt Sievers

with horrendous negotiation often fight the components. size a earlier, the really of that matter for a call X of -- why is business every a the OEMs exact I hard to to new is for enforcing it because is Tier OEM for The with hold landing they are the trend their business of for Joshua. certain piece are midterm That's new customers. their it that's Absolutely. semiconductor final place inventory of specific now amount inventory winning, said and

very only new business. explicit, becomes for that So it's but

of a of way So at handle be about something the it materializing. years the the will wins That's OEMs as inventory as couple over next on Xs. firm want are Tier how the layering get which those size to think in new design

the articulations, At didn't these be contractually because it it's it is West which precise. none over is indeed this also have which Wild and makes all why of a anchored that to because really is old place, bit still it's contracts, the moment, harder

Jeff Palmer

Sure.

one have more, Josh. think I you

Joshua Buchalter

quarters. still that's going would repurchases. -- Yes, I Bill. I for maybe been just running but the know cash okay. return I of about policy it's was you mentioned flow of ask to XXX% free have repurchases business that environment. a after tied more Should debt in up? last that March several pick something below the we the little bit is you expect Or in pay to the it down

Bill Betz

I I the And we changes continue going over to set that over here, on our or continue all X we doing -- And to XX Yes. billion the and right, you're our we the well cash, use small last years, a buybacks, some being the to XX%. retire some current are debt aside we our as again, quarter are $X.X do. mean, flexible what all XX%, we again, we no good and hasn't we're deleverage of M&A, that's X capital and dividends, as you company If to balance years. our of think we're sheet I debt look returned changed. cash and as do trailing know, was of those XXX% stated, just allocation, and going above, months, going as

Jeff Palmer

Thanks, Josh.

Kurt Sievers

call. guess that of the us gets the end I Yes, to

mid Automotive control So, everybody, continue landing takes drive Thank term, Mid to year fully to and relative environment. 'XX take to the drive innovate And be environment growth. say a take of to Clearly, to manner to continues believe and which to internally. focused dare very in customer markets this distribution morning. a in joining tough that to in control, build tough side the inventory be control last for We disciplined soft to any profitable NXP I call second we possible. especially of started continue the side, where for on early we we've on and you and quarter us in inventory externally the management the that and all. started thanks, this landing direct allows the starting safe and longer Industrial a

Operator

does participation. program, day. disconnect. you a This you Thank great have conclude and may Everyone, your now the for

NXP Semiconductors (NXPI) 6 Feb 242023 Q4 Earnings call transcript