DIOD - Earnings call transcript Q2 2020

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Operator

Ladies and gentlemen, please continue to hold.

Your conference call will begin momentarily. Good afternoon, and welcome to Diodes Incorporated Second Quarter 2020 Financial Results Conference Call. At this time, all participants are in a listen-only mode. At the conclusion of today's conference call, instructions will be given for the question-and-answer session. reminder, X, call XXXX. a today, being As August Thursday, Instructions] this is conference recorded [Operator Relations. I call Sievers Investor over now to would like Leanne of to Shelton turn the Group, Leanne, please go ahead.

Leanne Sievers

Leanne second and afternoon, financial call. Shelton Relations welcome Diodes' Diodes' Sievers, Good quarter of President to results XXXX conference Investor firm. Group, I'm

Laura are and President, Officer, Relations, and today Vice President Marketing, Whitmire; of Brett Yang; Mehrl. of Dr. Director Keh-Shew us Joining Sales CEO, Diodes' Chairman, Worldwide Emily and Financial Lu; Chief Investor

turn that today I subject our as firm. Lu, by its over I'd like Dr. Company's review Before quarterly finalizing are the the accounting to the closing independent call to there customary public procedures to Company remind are listeners the announced and results preliminary, registered

unaudited to Company subject these As revision for second are such, its files quarter results the its XXXX. XX-Q Form until and

XX-Q. we forward-looking Securities management's the is the detailed you filings Act Litigation forward-looking Actual and therefore, XXXX. may to for may from Securities and in that the contained Private with Forms those and prepared management remarks addition, risks forward-looking Safe to in and and In questions. which response contain risks to today, protection statements a including are of of differ more and the uncertainties, claims XX-K the discussion discussed Company's of results uncertainties in Reform your additional refer subject make the Harbor statements, the Commission, statements Company Therefore, Exchange

obligation these in market or to performance August required change, XXXX. as may today, the as any In X, update conditions applicable represent Company's to projections no management's assumes not projections law. addition, estimates future, by may except future as the extent the Diodes of to

Company's the of press Company's in financial measures and as non-GAAP press common which press discussions and statements provide call, reconciliations throughout in certain to call Additionally, release during to additional income. include terms. this release definitions net conference management GAAP conference refer to details. Included the we stockholders and management during GAAP Also, Company's are release attributable information statements non-GAAP will this the of items, GAAP and income net and

you of this to now, days over be and Diodes' Relations And the webcast to section will call a via available in Keh-Shew Dr. at Lu. please entire time, website XX recording at call President for the those the go For to I'll unable Investor listen ahead. Diodes' CEO, Dr. of Lu, turn www.diodes.com.

Dr. Keh-Shew Lu

everyone. Leanne. us for And Thank you you, joining today. thank Welcome,

quarter improving across trading Second groups, increased all the gains due than momentum. design product revenue by sequentially, was better market X.X% key share to expected, demand and win

traction our storage, market gain in Additionally, automotive for and applications. sequential high-end in to and the Pericom strong IoT computing IC from notebooks, our well data as products consumer the continued growth year-over-year centers, and devices, in well consoles as gaming quarter market, server as benefited in as

In Pericom products the highest acquisition. revenue our quarter fact, second achieved the since

Our delays despite solid maintain of the disruption ability a and productivity, level team's efficiency and by COVID-XX pandemic. to reflect the high caused results our market

with our solid tier to end portfolio testament diversified as Our markets, a performance also product as a serves customers. well positioning as and one long-standing

provides these in our In financial performance note is during It third another is market to against the build important shifting to surprise distributor share quarter, we demand disruption positioned also expected the internal inventory sequential assurance flat and believe pandemic. In the of times. I'm market within well target and in results consistent took of to of our global to Although the was our quarter channel proud and gaining quarter. growth, due are in level the customers the uncertain, achieved that summary, requirements a the this general inventory, remains to continue and all to which we're third possible growth. forecasting we range supporting quarter be of initiative unprecedented

momentum, to dividends to now design the sales that, with past quarter our guidance customers. to Brett continue let and of Our our pay our products more quarter our the over combined for turn total With a detail. third to call our approach, second me financial in solutions win discuss trusted business supplier XXXX results as

Brett Whitmire

Thanks, Dr. Lu, and good afternoon, everyone.

foreign of expense, Income interest income. million non-controlling the to X.X compared revenue, of % expenses the a the sequential XXXX. the interest quarter my million each for $XX.X $XX previous in to or XX.X% to $XXX.X related as second was million before first of XX.X% taxes and by and compared the million as million second $XXX.X you million, and revenue, Total million and offset our was and compared will review other XX.X% year-over-year were or operating for $XX.X we comments excluded quarter basis, costs X.X%, today, million points, or of the quarter of release of refer which basis the non-GAAP $X.X more an XXXX items, $X.X the as the of for prior As an revenue. partially XXX quarter quarter, Revenue I $X.X quarter $XXX.X $X.X of million, of my or of currency $XX.X Board increase million quarter. retirement part $X.X operating interest our XXXX for or of and review $XX.X was of approximately in expense in to the and in of results, quarter a the This income of $XX.X and Gross other million XXXX including increase to or second $X.X of compares expenses press were change costs. line amounted financial focus of on for to on $XXX,XXX quarter revenue, well revenue. loss million of XX.X% comparisons. profit million XXXX million first for non-GAAP detailed of GAAP the XX.X% acquisition second

second quarter quarter XXXX or tax second the million income income $XX the The revenue quarter non-GAAP used compared $XX.X EPS to $X.XX income was adjusted per retirement second quarter. of per compared Board share, first Non-GAAP $XX.X XX.X% quarter XXXX. which net and in per compute quarter our share in million GAAP $X.X of This $X.X share, was XXXX income or the second count million XX.X% first diluted EBITDA quarter shares. effective the was to million net income diluted XXXX. $X.XX share quarter the the adjusted net taxes, the approximately XX.X related $X.XX Turning for GAAP rate for to million GAAP $XX.X XX.X%. for or in in revenue, or million income share compares prior was $X.XX excluded per second diluted diluted million or net million $XX.X was or costs of of of million diluted of the net of for tax costs. $XX.X to to acquisition

the million was million. included expenditures. income operations a flow GAAP details. second and net flow of cash release was $XX.X $XX.X $XX.X Net flow income quarter which XXXX. quarter positive non-GAAP Free for capital the net the second provides for GAAP have the earnings net generated additional reconciliation $XXX.X cash adjusted was We to quarter, income for from includes million second million Cash in a to which EBITDA, for

and was the balance $XXX portion, second long-term million. $XXX and Turning of to of Working cash sheet, debt as in approximately million, our result we half including close cash at quarter, is took to totaled equivalents Both cash capital and the Lite-On $XXX increased the second plus was pending prepare debt investments actions to this of quarter the current in end the acquisition expected million. of short-term a our balances which for year. Semiconductor,

the we were and $XXX very As a on $XXX to pleased for revolver. We the favorable reminder, acquisition, terms secured financial of the to in the midst secure May million be financing the crisis. consisting COVID term million million facility XX, at $XXX credit loan a able of Lite-On

advantage quarter, will Taiwan the to second against a hedge since low interest Taiwan drawing dollars transaction started the environment During rate U.S. the dollars. as the and on natural be line credit funded New of in took New purchasing dollar, our begin we

end the quarter, As million, equivalent $XXX our cash the debt had and the we converted borrowed resulting balances in accordingly. of of and of increasing

$XX.X $X.X dollars XXXX. to and of raw at to inventory approximate increase $XXX.X million days $X.X which XXX XXX a increased end were reflects compared the Total in In $XX.X increase goods million Finished million XX million materials. a inventory the quarter approximately compared work-in-process, XX, increased quarter. terms goods, quarter, first inventory million, last in slightly finished the total in in quarter, to increase inventory days in second of the to

related disruptions mentioned, to the XXXX level uncertainty Lu of the internal our low we initiative also the basis model quarter, our customers during to associated while were or X%. expected inventory $XX.X growth third end a in a build quarter support assurance of to the revenue, of the possible target Dr. against the X.X% million at supply providing As pandemic. global to on quarter took X% with cash for which of expenditures Capital remains to second

our outlook. turning to Now,

XXXX, plus to revenue X%. approximately we quarter third or the minus expect to For million, increase $XXX

We be intangible adjusted of GAAP operating operating revenue, approximately or XX% expenses, amortization X%. are plus for to expect expenses which minus XX.X%, GAAP assets, of expected acquisition-related gross are margin plus or be to Non-GAAP minus X%.

net non-GAAP approximately $X.X to million. expect be interest We expense

these Pericom for call costs. to minus X%, Emily $X.X EPS to not over to million third not acquisitions for plus $X.X included acquisition-related of turn used said, and rate of tax are or anticipated in million. tax adjustments now non-GAAP the are expected the diluted that Lite-On note be I approximately Please previous $XX.X included financing purchasing is income Also Our quarter is With be that after million XX%, and estimates. to calculate Yang. shares accounting

Emily Yang

quarter, good revenue better end the due the X.X% afternoon. Thank primarily in of which In Brett, Asia. at than our you, high guidance, expected was demand second recovery to quarter-over-quarter, and increased

of was our targeted Europe revenue, but quarter up normal largely within XX range more slightly inventories our XX% to weeks, demand in more closely North in the of terms Both in place. POS Distributor Asia, remained to in the POS factory expect quarter at still from and mandates be second due to last weeks than and strong distributor down we flat that above increasing XX to closure are America quarter-over-quarter. near due inventory and Looking term. shelter-in-place was range was

revenue, Asia Europe sales quarter, global America and the second of XX% X%. at Looking XX%, represented North in

end industrial of automotive our of revenue. terms revenue, XX%, computing markets, XX%, represented XX% XX%, consumer communications In also and XX% of

to automotive in the Now, markets the the reflecting revenue which represented make though our total down broader revenue great the to momentum factory to and last was market. Beginning XX% the end in this is of This review X% the America sequentially, greater we continue products. detail. compared less especially due partially pandemic. than of still in even end closures decline impact XX% Automotive in market, North far Asia, demand revenue temporary quarter, the increased me was Europe, let with in by the automotive market, offset the progress Pericom

continue products data-line reference the and regions. for ReDriver, and second grade our communication on Infotainment USB chargers. for increasing the products automotive released We we both quarter, in additional to device is equipment, Qualcomm's Infotainment released Type-C, tractions with all saw the applications. body focus Diodes systems, industry's mode. systems, we USB designs systems More on demand systems, into application, Infotainment shares Type-C for and automotive new first designs expanding products, for building control new capitalize which specifically, overvoltage USB is This battery for of train supporting demand designed number and an modules, manage USB capturing and existing an Power In new lighting alternative Delivery power protection To on in controllers.

design recharging like e-bikes, equipment in release in-vehicle to transistors, continue console new mobile see management for for car DC-DC and our wireless modules and drivers the battery that phones. also LED systems, We charger wins for converters, lighting, reside personal

primarily new automotive-grade strong sensor in wins Schottky growth Europe. of the and industrial design-in In in multiple continued we greatest rectifier seat saw Rectifiers, momentum momentum impact the customer the region. our North shutdowns, pandemic products number the power and America in with Hall the design Additionally, factory across customers from with have and diodes market, applications, Super-Barrier solid large while of shown automotive

can provide delivered in switching used also adopted factory testing providers, with and effort rectifiers, to of our support especially whilst global Diodes systems, as machining monitors, ongoing applications, equipment making customers including diode applications, still improvement scanners, applications health those are by and including rectifiers, personal automation our the supporting number to cell monitors. crystal many and bridge and crystals, systems, imaging protective a equipment by fight fully automated diagnostic pleased been against healthcare responders medical We're every assist in tomographic initiatives, X-ray to COVID-XX equipment and MOSFET We effort medical safety. in to ultrasound efficiency customers on pulse they green care, ventilators, first to oximeter Similarly, diodes, their such protection our including ranging systems, and own COVID-XX. vehicles oscillators fight for so products conversion have Diodes and products excellent solar electric and generator, numeric green various power controlled wind robotics. QR computer energy supported and our maintaining systems. the from

many In LDOs DC supplies, and in such products discrete metering, addition, VIN security we traditional systems, as and for elevators, wide saw strong momentum fans. applications, power

in to strong achieve DC-DC Asia automation also gaming converter cleaners growth for In like released consoles intelligent consumer building due IoT continued market, and for primarily the smart We vacuum saw newly to and speakers. we solid devices, growth projects. solid XX-volt for

to applications, and market secure function, wins slowed. new supporting quick for Type-C high-end capable fast the they Delivery, charger are Type-C positioned, USB other even protocols. fast increasing charger USB charging continue AC-DC are Diodes' chargers of also well as has Power mobile though design and We phone solutions

appliance machines, rectifier, have cleaners, and rectifier, products and vacuum audio machines. logic We washing standard dryers, espresso home and and dishwashers, conditioning, systems, automated linear bridge demand strong like seen for smart air in also applications,

TV LED increasing, Additionally, expanding applications. larger Diodes for phones switching optimized IP demand result, TVs, monitors, as drivers, and seeing and monitor for for and a backlight SBR, size Schottky, smart controllers, is diodes, tractions is and

Turning the of year-over-year. the as sequentially has being I result as market, mentioned smartphone previously, a the revenue both pandemic, slowed demand contributing communication to to considerably, down and

business being expansion concerts, and switches endpoint X.X PCI and video, needs hardware networking AI, travel, area, globally. associated conferencing as as video institutions, become However, educational and are has conferences, virtual In Express has exhibitions dramatically, demand design increased processors. deployed the with Packet

conferencing also We demand switching for range wide video saw and video USB the of a Type-C switching hardware.

saw Speed networks Additionally, a increase the TVS XG products. for with demand and bandwidth create increasing also upgrades demand XG for global areas our to XX-volt to substantial beginning to consumption. is these rollout XXX-volt PMOS ultra-low are driving and NMOS both MOSFET Rdson Diodes in momentum needs and stations save the power in XXX-volt power to XXX-volt performance in in quarter. of

our performance components for packages efficiency since smartphone with we the density DFN Ethernet requirement. Our key packages packaging is are small-size XXXXBASE-T provide suited high and launch power low capacitance applications. a with CSP Diodes' products DFN the to in best-in-class continue products thin in well that high design surge performance combined POE and TVS small leveraging products for the Similarly, Gigabit these new offer market wafer technology. requires requirements,

the state-of-art for are Our MOSFETs protection design-inactivity. applications and load battery seeing increasing switch

during further packaged In experienced uptake addition, quarter. the CSP Schottky in packs battery SBR products

application. design Our for products amplifier audio multiple market Class-D audio also the has family received wins monitor in

phone and in and Additionally, we increasing new are switch, high-performance, applications. seeing PPA wins cell for production design with demand volume load

timing, like in switch, Newly power RF are antennas. router, bipolar applications transistors wins released networking and XX-volt TVS, capturing DC-DC design and converters,

Lastly, the our particular increased, motherboards, work-from-home revenue as stronger market, Pericom demand family. applications, servers, notebooks, in and for drove computing in product storage for mandates

Pericom As reached highest Lu mentioned, quarter Dr. the since the revenue our products second acquisition.

our ASIC fact, IC record products highs In in clock the connect reached quarter. and

also and The in products wins display TVS, and secured SBR, bridge segment to new results power The again drive design once rectifier demand these our and LDO computing power the demand the family, along revenue a and with in of demonstrated supply team's number resilience to picking In product ability and ATX power block continued rectifier, manage PC, significantly, XXX-volt our also business Schottky quarter a summary, uses switches, We power PD, USB for MOSFETs, solid effectively our is up second environment. MOSFETs. the packaged products of from for high-current applications. also PDXXXX projector, for applications. current devices through

portfolio across broadened a that, positioned We our for well and design growth operator. that questions, have to strong drive the business. win open consistent floor to now with momentum increasing we'll continues market product With are customers share and

Operator

question show Please from the first I from Fargo ahead. ma'am. of line Gary comes our Mobley Securities. you, [Operator go Wells Thank Instructions]

Gary Mobley

everybody. Thanks some taking with question. first afternoon, everybody's Hope to my questions well. start for about Lite-On. Good wanted I

trending And of then second expectation? this in for that year, close to so, some perhaps you're a in the a were of think your announced this is are your might is acquisition as originally later the COVID the had acquisition that most but month, regulatory close still the obviously – then taking if revenue – indicate get the see and I'm profitability maybe still company, still originally comments approval, obviously original Is nicely And timeframe. we you the acquisition final steps so wondering But October been maybe has when would other the your that publicly half that In as I recent can that quite approval, in words, that that intact. you you environment. assumptions Lite-On expectations? traded there it accretive

Dr. Keh-Shew Lu

– me the the security antitrust let approval review two agency first and status the the Gary, mention Well, of in from China. talking about

question, give And go survey. agency, more generate the again, for then them back ask First ask by so then the survey And answer, typically, to far, will give two will or they give Then to then and review, then come were which back survey We'll they will a have then they they meeting, they back. have agencies. answer, the raised LSC questions, them all the come they will we have answer answer the they typically we the questions these us. and agents.

questions additional that's to And the process. have weeks typically any answer. several we without So, today, until

sure for so we no questions other surveying have they we make answered issues have still they of the consolidation; agency the But that's raised. they we continue the So, they believe are. – where all to today, until

Now, will haven't agents, don't we approved that have to can they weeks say had back when we ask they we questions several questions be review the now. But more they're come know the to generated go thing going any other if for only is us. really to back to they'll because then same by loop. Then more answer

So, don't is a check, that but know. final we we hope

approval, the they about after Taiwan – process go delist us and takes it [detailed] the give delist two of weeks to the back two even for sorry, process. months I'm Now, you then

say, give end they October. until deal let's if even by still end we – cannot of close we of month, us the cannot the answer, So, this the

So why we're that's will end the second of year. and of that's process, it by half we say or we hoping this close this year

that's the where business, So think the talking is. were the status revenue, second you And I right? the about question,

Gary Mobley

So Lite-On just that the more might profitable, Diodes accretion or if I'm from profitable expected to is most underpinning original accretion retiring less curious assumption. of come But shares. be

Dr. Keh-Shew Lu

Okay. the business In past, On-Bright is the they actually and business, money. making On-Bright consolidated

at all when consolidation, look And be facility. not So But on the entity, On-Bright, entity, an accretion if corporate then we'll we the get their and corporate later when we're They that you as too. have I say not we synergy, at, underloaded would On-Bright sold are profit assumption not having manufacturing one, so the that acquisition, LSC some can the think And they based results – able will They old make corporate number we'll therefore, only will assume we that, by to from financial already we will – loading looking consolidate show by not not their the cost. go they're to And we off. on their money. have have by the accretive the ball. making don't make use publications, we synergy. mix we

LSC one outside, and some Diodes, as their of basically – do year, pull major Then profit of the should day year. the not That is LSC. the can we we propose since by accretive products, when the goals. we in accretive term, from to products loading Then immediately, synergy from to loading one purchase accretion think one able one product we be synergy the make Diodes the from from we as from then short or we currently we say by can the customer. And generated long-term, to corporate over we within year, pull of their we loading we increase loading So long-term, any factor. put can in rid sell we the can on-site, design-in LSC,

And there is kinds We have so use in of different synergies. many their product.

addressed already that. I think I

We of kinds can we have synergies four it. different get

view and that, a back, of the by on based we is for Regardless financial of us. another So, LSCdeal believe XX% of accretive positive pretty is us. to that taking point stock

Gary Mobley

a that, bit Okay, Dr. on the press Lu. want I you to I little OpEx. guys appreciate

guidance the decline. in might be single-digit And your the third first looks like be could percent the what so, non-GAAP despite your what this maybe of based done on you've revenue it year, far for quarter, half up so a year, mid OpEx

to And to what quarter. so, of speak the you're if quarter-over-quarter could doing what you to some you up, third OpEx that why might maybe in it's and in rein doing trending the can sources be and be what specifically

Dr. Keh-Shew Lu

OpEx, operational of R&D, and of look Actually, by you product up TSMC the using R&D, Foundries Pericom is because at Global is reasons the or it affected for out. really one major expense, a tape down the using if and lot

our discrete out, products. It's tape you regular very not expensive. If it's like

well, Emily talking very more, use that is is out tape products, and to Pericom, our Pericom to discrete products continue and because highest do million quarter The having merge is process, Pericom $X.X second you down or revenue quite we R&D a cheap. Pericom actually we like out the consolidate after if very the – company. after second the at or we slow the not grow to advanced want tape Our each highest about, or for look

is by for new out that is see quite really by product and cost well this all you the Group. And products, expensive. tape done generated new each the So Pericom is those the quite can growth the

really do R&D SG&A cost us because affects quarterly, to any have It's is increase. So, it the From same we just a not thing. issue. up, sometimes that still portion, sometimes plan the other it's down, major and

we do, growth. the only grow revenue half we of what As

like down last going revenue the if the two quarters. Now,

lay to We a question? your are Therefore, the we not up, tried answer any keep the taking as our cost, be salary. a but to flat. action Did to may people, reduce percent off it as total that SG&A

Gary Mobley

the you. thank time, so I'll floor. I've relinquish And Yes, taken the up

Operator

Thank you.

Harrison ahead. Our from Capital. Loop go Shawn Please next question comes from

Shawn Harrison

everybody, Good the that the on comment my Dr. in Emily of able IoT in of related the congratulations and you'd to consumer saw the electronics strength kind home and I solid results. afternoon, Hi. it. hope side or connected work from on computing device you Lu, strength be the and quarter. Strong growth

Just the customers terms of what hearing back are demand of in that you year? from your of the sustainability this half in

Emily Yang

Shawn well, to nice to you. – talk So, I think

also from of definitely also, strongly. down for continue so like And be consumer we see quarter or expect confidence stronger the at think PC we I grow in but tracker IoT instead strong we're talking it's so health is that going QX about we growth the bit, an other QX. upside. might good And usually to quarter first the look consoles we a that think consumer be quarter we consumer QX stuff, probably expect so related in QX, the quarter-over-quarter have sports area, working little computing slow a flat see more expect we for if to home, and the of related, so for game I market, definitely all, will we area, the another

Shawn Harrison

gross would then if into little inventory maybe here I Very Brett, seen affecting the I gross September quarter? of or the a sequential you kind the uplift of on anything in or affecting the quarter other uplift stronger question is you always that, are a helpful. or wonder have product thought dynamics some mix, June September as the And here pricing, into the maybe that's built of margin. there margin quarter. such

Brett Whitmire

in from the one quarter a we're the of second that's Coronavirus are we are and things in thing our extended was driving test continuing first the that see the seeing assembly – improvement consistency after utilization, is perspective, impact Well, that second about big we our recovery to especially that, improvement in in of a pricing the encouraged of quarter. the quarter of

gradual that, what So seeing and anticipating. improvement a quarter, we're we're and third we're that's seeing into

things One were levels really revenue year, to mind driving still that were significantly of higher. mid-year we the keep the is last in

we're although still term we back that anticipate at peak not so, but And the do at just in not point, that level, some near

Shawn Harrison

and once much, again, so you Thank my congratulations. great. Okay,

Emily Yang

Thank you.

Operator

you. Thank

next of Ramsay the from comes go Matt from Cowen. line Please ahead. Our question

Matt Ramsay

much. you've a afternoon, China Yes, terms Dr. peer strength, might that the work their and and heard wonder up rationale consumer for strength very of companies thank from from Good Asia, of Lu, you out from about end everyone. particularly the talk drivers I We've if ramping the your strategic mentioned. lot you about inventory. in of and markets demand, obviously, home

that. we imagine you work questions Some – be of that lend those environment taking inventory, I But the Asia if in demand in just earlier, that some in you may other to debate. see that might something might can were steps markets from strength asked home build the do sustainability of you're some that to

appreciate the if Thank environment you. you So, just would could I Asia, in really demand it. talk about

Dr. Keh-Shew Lu

have the the you then operation, – me so is just home. else, you several most answer one from It's our by I most just if fortunately, to to Maybe working people not of of one. is repeat the And can working Europe something by home. in And And well, all manufacturing do working people even of in our or engineer point not view, Taiwan. type and from let today, that effect operation answer really Okay. only at Asia. from in questions, it. manufacturing China forget home From affected

lot still meetings. of to they're customer it yes, have by China, time. fortunately a see face affected do fortunately, most is limited working the That customer still with But long are from majority our – to of want to U.S., they customer yes. Europe, them of for face. by and But Now, they're and and travel And a because from does allowed non-manufacturing affect not people been working coming Taiwan home. just our worker allowed

the up phone, by pick by communicating they're our So, product. knowing

the really the second we what that from other Then question much home. by don't the is effect is one? – see So working

Emily Yang

segments Maybe let address market me in Asia.

I your think second right. that's really question,

Asia, smartphone strong going talk and recovery little in In momentum we example, So momentum, the the seen PC market, QX. market in for we've communication is and drive some to especially, XG bit of definitely already. really definitely a consumer good, and the the about

be China. we Asia, momentum growth. recovering in automotive the So seeing then for we're And also market, segment will in seeing expect this good strong especially

signs for we've industrial, seen improvement well. believe also of the some We as

So that's pretty much in Asia.

have in mandate also we capacity, Europe, the to we some, as recover, think place, also and of definitely But slowly America shelter that well. in if I factory a but North of of see full the in even an area, that area automotive not in the improvement seeing we're factories the and some for especially shutdown. lot

Matt Ramsay

That really a Got my I time. question follow-up Brett gross side, you to go on to back it. both Thank for I margin. did Whitmire, the was want helpful. guess as

next the margin expansion Thank quarters? If we increase fourth that inventory think quarter pace the gross of some And to you up utilization the we guys that about increase through are that just the ramping year? here and should next the in few model term, over nearer you. come into in do might in how

Brett Whitmire

be we to think what we're that on would we've projecting third in that and saying from that's on what terms expected a as increase quarter, second I Well, that. been we of steady go

because the margin third of really, strength pricing line, gross and overall in the into of is year for I top in to like a products, gotten of still – closely and reflection pretty track transition factories. on the verdict utilization the generally, good it's the I that we're fourth seeing said, and out will we've our next the think terms in still

how at how And track so, I would think the the look of in I terms will it revenue stream. that's against margins

Dr. Keh-Shew Lu

Well, running and product because look peak mix automotive. additional the is our our you industrial in and when of we to year, we last automotive almost get at and revenue XX% industrial, if are

picking to they industrial margin if be gradually down. that industrial, quarter, it increased. down you, up, second went then believe quarter, from starting just the gross third or gradually mentioned But automotive, up quarter this now, of Now, picking portion will like and and automotive because go are Emily we

And overall to should margin increase. so, our continue

is this is don't what that's automotive just mix, to One know history, seasonality, then the see continue, factors. XQ we're the seasonality. due yet, improve assume going in product the we portion, two assume hoping to we're – if that, the And you continue loading mix margin. will year. can slow to we even we not if might factor. because But industrial, we're product But So hoping necessarily gross one then and down

Matt Ramsay

clear. both. Thank you Very

Operator

line our [Operator Gerra from of Baird. you. show Tristan ahead. comes next Thank the go I from Instructions] Please question –

Tristan Gerra

good afternoon. Hi,

Dr. Keh-Shew Lu

It's Tristan? Hi.

Tristan Gerra

Can hear me? Yes. you

Dr. Keh-Shew Lu

Yes.

Emily Yang

Yes.

Tristan Gerra

Hi.

see inventories with are point you much your be your expected in that to to pretty should line bit in Given normal distributors sequentially? little that distributor that guidance commentary assume the sale provided of we at that going revenue the different? going that within Or number be a range QX, be to you is is

Emily Yang

Well, I is we mean, – this Tristan, Emily.

especially POS, the the for a see quarter good on definitely second we really from Asia. So, momentum

more So I than XX%. growth, quarter-over-quarter talk XX% about

and we continue And So for growth of reason X% we into guidance, estimate the actually than QX. part we expect, should part POS that's QX, the of are our is guided the more do momentum.

Tristan Gerra

Okay. mix. positive the data duration in other as than and drove Pericom look gain what And that's trying actually know impact Just that recent or next Because to incremental products then the the case, share is in Pericom to products design I wins? for more versus recent? center, the get going ramp, long. year that well? catalyst also if automotive, And of content at is are those the ramp pretty on suppliers? is to automotive the pretty Pericom that that which to be And is And is mix that, cycles designs the for a really

Emily Yang

All Right.

So address question. me let that

has momentum really really right. win design I absolutely the the past the long in quite So been is cycle of strong, you're said, throughout This effort, few like by and is some driven automotive. Design years.

are content new stuff our and excited. are additional that some we most So this of the of actually content is also design generation new the of

and I new think that's I pipeline. or topology content – talking change, it content the of telematic Diodes the some into about really driven next-generation about Pericom and talked the ADAS additional

Dr. Keh-Shew Lu

XX%. automotive market look down you slowed to at XX% even overall our business, the If

at revenue, are XQ If our about revenue, only we automotive you to XQ X%. look down

we the design So long-time the benefit you can this – is have what see from is opportunities. win

Emily Yang

on content expansion Really, the right.

Tristan Gerra

as share terms to opposed market in content incremental expansion of shift? really that's So

Emily Yang

focus the really Diodes We value-add strategy That's and and for the focus on the Right. new carried applications to solution features. customers. always new new on the A years. the through functions and the last few the total

Tristan Gerra

you much. very thank Great,

Operator

the At the Thank Keh-Shaw closing call CEO, remarks. and to I like to Dr. back in Lu, for turn queue. you. time, this no further President I'd show questions

Dr. Keh-Shew Lu

on you business Thank our on looking you call. now an to may today's update participation Operator, We're disconnect. for quarters. providing next forward your

Operator

gentlemen, Ladies thank attending you. and the concludes conference. Thank for you program. This today's

You may disconnect. all

Diodes (DIOD) 8 Aug 202020 Q2 Earnings call transcript