DIOD - Earnings call transcript Q4 2021

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Operator

00:02 Good afternoon, and welcome to Diodes Incorporated Fourth Quarter and Fiscal 2021 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. [Operator Instructions] As a reminder, this conference call is being recorded today, Wednesday, February 9, 2022. 00:36 I would now like to turn the call over to Leanne Sievers of the Shelton Group, Investor Relations. ahead. go please Leanne,

Leanne Sievers

and results Diodes’ Sievers, conference Diodes’ Shelton afternoon fiscal President quarter XXXX Group, firm. Relations financial call. Investor welcome Good fourth to and of XX:XX I’m Leanne

Investor Officer, Before President today us Dr. Chief and Vice Marketing, Sales are Yu; of Chairman, Emily Vice of Brett Joining Business and Yang; Groups, Senior Whitmire; Gary Relations, Senior Diodes’ Keh-Shew XX:XX CEO, Lu; Worldwide Gurmeet and Dhaliwal. President Financial Lu, President Director Dr. preliminary I’d to turn subject the review to I company’s registered results closing are over listeners by our today to its independent the quarterly public as like that and finalizing call remind are customary accounting procedures the the firm. announced company they of

and risks discussed market addition, by the including law. obligation in extent no from of make Commission, subject In except the in the and and as represent therefore, statements to that may uncertainties for X, uncertainties, to forward-looking performance XX:XX remarks and a Diodes Private Safe a Actual forward-looking XX-Q. February the the Exchange for conditions of unaudited are to statements, management results revision Form the the In prepared we applicable of are files December response and assumes required Harbor Act today, protection not results contained risks these XXXX addition, or these subject of may forward-looking future such, the its estimates in change, claims XX, discussion company in XX-K contain which update year its Reform as Securities projections to may and Therefore, filings fiscal question. today, may company’s more management’s Securities projections ending XXXX. is management’s until future those the the company As and refer XXXX. as you your the to XXXX. Forms detailed additional Litigation to differ any statements XX:XX company’s to XX-K with

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

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

Keh-Shew Lu

for a Leanne. of well quarter five joining you as growth. of and you, year seven earnings execution XXXX, consecutive Thank sustained reflecting thank record consecutive today. as of quarter revenue, adjusted everyone had Diodes Welcome in XX:XX us that consisted record

$X.X per improvements, the and full X:XX the of quarter points XX% earning XX:XX improved share our Also a first share leverage first our and quarter in margin completing expanding manufacturing gross per XXX% grew $X.X profit revenue targets which record Semiconductor combination to was fact, revenue billion revenue of profit XXXX. to from and the and for grew XXXX, as earnings our automotive XX% GAAP by on contributing This of consecutive well represented of year a LITE-ON achievement the consecutive of gross of loading. reached $X significant driven XXXX expansion efficiencies demonstrating billion, of five full record ongoing full basis with XXXX has been $X.X Pericom margin XXXX XX% the quarter in after the acquisition, record increase revenue six year. quarters XXX in consecutive fourth quarter operating expanding quarters XX:XX and grew XX% mix of of revenue, total billion a toward of product billion adjusted gross With XX% three year of record In expanded significant XXX%, gross and revenue, as revenue full the step industrial margin. the the Additionally, profit gross model.

discuss customers expect to and by over margin the revenue more call year fourth markets With first in the provided gross past realize we our additional and manufacturing this results product Brett synergies detail. quarter years, XXXX synergies now to In to drive coming our LSC to financial the in quarter turn to portfolio, our over growth expansion. acquisition and XX:XX across me expanded that, addition let end guidance

Brett Whitmire

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

year-over-year my part on a fourth the was review for refer focus XX:XX XXXX in results, X.X% line the you will As $XXX.X comparisons. of of to our increase $XXX.X of of sequential million, record I for review financial third our my from Revenue today, release change comments items the the will and quarter well XXXX. quarter a detailed as for an million more each as the press

for quarter X.X% year of revenue revenue billion, also a a $XXX.X points in the at fourth million, basis record XX.X% was XXX For record billion XXXX, million or from $X.XX a an XXXX. the prior third increasing XX:XX $X.XX revenue from or year. XX.X% Gross record $XXX.X quarter of in the full increase the of or profit was XX.X%

XXXX intangible million on prior excludes from income, of on basis This XX:XX Total a which XX.X% revenue full XX.X% were unrealized were XX.X% $XXX.X of or full and or XXXX. costs. were of million expenses investments, GAAP XX.X% other for or non-GAAP $XXX.X record $XX.X asset year $XX.X to million XX.X% expenses gain income, expenses in to of a XXXX. amounted income a quarter, of the the expenses for $X.X or million of profit XX.X% $XX.X or million $XXX.X year, gross million million $XXX,XXX million for of revenue, losses, million approximately in revenue the compared non-controlling XX:XX acquisition-related of to to other XX.X% compared XXXX $X.X amortization $XXX.X of to and XX.X% consisting foreign in or operating quarter of million million in non-GAAP million $XX.X taxes. and taxes $XX.X million $X.X in expense. fourth the compares income of fourth interest was of acquisition-related GAAP operating or interest before revenue operating revenue. the For $XXX.X million Income currency $XXX.X in $XXX.X quarter. Turning of to million quarter in increased the quarter $X.X the and million XX:XX previous interest

of $X.XX per million GAAP or XX.X%, fourth third $X.XX net fourth $X.X $XX.X in XXX% record fourth XX:XX a XXXX the costs, share XX.X a to used quarter the XX:XX improvement $XXX.X million million the non-GAAP for the to net or per XXXX. share or from The for quarter the a non-GAAP million or diluted income $X.XX the diluted or $X.XX XX.X%. items. diluted On in in non-GAAP from year income net quarter share for per quarter share was diluted $XXX.X manufacturing improvement the adjusted in a taxes costs, of fourth related diluted increased diluted diluted quarter per of X.X% per was quarter year quarter million XXX% $X.XX income in full XXXX. income or record On was XXX% This to million approximately related fourth a in share sale $XX.X XX:XX approximately basis, was $XX.X Net or quarter EPS $X million share, which a of includes shares. XXX% investments, share which full the $X.XX per of million XXXX per tax income Our GAAP a million a to or the tax million effective a XXXX fourth the and $X.XX $XX.X per fourth diluted income diluted the diluted $XX.X million for On diluted share subsidiary. $XXX.X asset compared represents per intangible the acquisition net tax a the share, rate rate for to XXXX. a the third compared acquisition net non-GAAP fourth per XXXX an improvement on net was of count GAAP from $XX.X million year-over-year share, GAAP a LSC compute $X.X related compared was certain $XX.X costs share, gain or adjusted $X.X XXXX. $X.XX income diluted record quarter for a quarter in the and $X.XX improvement of XXXX million a was per XXXX. related to million share excluded the

year. diluted per earnings and quarter the XX.X% have quarter $X.X EPS $X.XX both $XXX increased XX:XX full for for for quarter. share-based further the Excluding share, or fourth fourth a year. adjusted of the GAAP in XX.X% XXXX the the fourth basis, $XXX.X EBITDA expense of operating full the the million $XXX.X record share million for was and by compensation for per million or for year $XXX.X quarter $XX.X would of record the a in prior from to past to full in On or compared XXXX, or XXX.X% over a million million increased $XX.X EBITDA quarter from XX.X% year-over-year XXXX. revenue of increased XX.X% significant improvements revenue highlighting fourth XXXX XX.X% EBITDA year million non-GAAP and $X.XX revenue our the million

sheet. $XXX totaled short-term included $XX.X the included our approximately income release year. fourth for and provides $XXX.X net which debt, debt cash million generated million million full fourth cash, Net was and end which long-term full $XXX.X to earnings in the million to in the revenue. and to was capital for expenditures which $XX.X for Free EBITDA, Cash cash the a XX:XX flow of Turning At non-GAAP year. positive capital million $XXX for X.X% $XXX $XXX.X balance full and income included GAAP restricted operations flow XX:XX of million the income $XX.X and which long-term XXXX $XX the quarter was of equivalents, including have We fourth million net the net details. $XX cash approximately was GAAP of short-term $XXX.X or positive for adjusted fourth reconciliation quarter, included a million a the a of total and was from for quarter, year, million the during flow year, capital Working million. plus expenditures of million. cash million investments pay-down additional quarter

inventory increase in In to expenditures for $X.X Finished million Now of $XXX.X X% in terms million. fourth million $XX in and of compared the days compared as model on Total quarter increased the quarter. XX cash approximately work a a last $XX.X in of inventory raw total approximately materials, process. million is XXX inventory our an XX:XX turning goods, XX last year, XX Capital for of goods $XX.X end inventory or to $XX were days quarter XX.X% consisted to fourth and dollars XXXX in Total finished our were increased outlook. to in to X%. at quarter of X.X% quarter. to quarter, which inventory, the million the the a full decrease basis revenue target million within the increase

approximately revenue down For the million typical be the to of than which X%. first seasonality at X%, or is quarter plus midpoint minus XXXX, we better expect $XXX

plus approximately to We XX.X% plus We assets operating acquisition-related XX% adjusted are expenses, Non-GAAP be be basis minus GAAP expense a interest million. revenue, X%. be expected to which expect expenses, on of $X.X net GAAP minus are expect of intangible margin to X%. amortization XX:XX gross approximately for operating or consolidated or

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

Emily Yang

Brett you, good afternoon. XX:XX Thank and

the slightly across America Distributor Dr. weeks below Asia still in in of the demand XX%, As revenue, which sales inventory increased all which quarter quarter-over-quarter, due quarter, our revenue the and quarter of and fourth XX:XX fourth of fourth the terms at XX midpoint to Europe defined North XX% better to Lu XX and is than of guidance our normal quarter-over-quarter, X%. is strong represented regions. weeks. range the revenue Looking increased X.X% global continued Brett mentioned, in record

driver LED raining responders, focus product Automotive has limit end began the and XXXX, the line XX%, XX vehicle Industrial, traction success charging switching Newly first Industrial ADAS of our strong across released In continued Volt represented automotive and oscillators, of lighting telematics, full of and been annual from initiative seeing terms design units daylight segments. our DC-DC XX% eight-year our front XX%, win when Shifters, control Computing and Consumer achieved end revenue. an revenue, markets increasing light and of our system. to set XX:XX Similarly Consumer design particularly record all automotive content driving, to and Since of the are XX:XX seeing has expansion indicator applications. Level Express into In growth in communication and anomalous have household charge system demand momentum new the with automotive connected converters, would safety revenue product switches market, records. for three growth plugging and and We of continue new compounded detail. efficiency greater areas drivers LDOs application infotainment expansion areas, telematics, markets, style One wins current year-over-year XX:XX Communications in let PCI for linear and and we review expand and ADAS, LED clocks revenue in into the XX% and momentum drivers signed in achieved XX rear market, Now, and EV emergency comfort, the XX%, to Volt crystal target me year LED strong XX% lighting units. lighting, to high be Automotive, we SBRs Pericom LED power for XX% Powertrain. that rate key XX%. has buffers LED continued mode been our we see initiatives

door recovering manage as search being also are motor well revenue USB MOSFET Assistance. was XX% lifters, and USB and charging Additionally of seeing the its system, well and mirrors. for applications. new ESV protection including design in-vehicle being window reach as also pumps regulators great the full lock lens, and brushless fuel, charging MOSFETs, trans Advanced Our into ICs designed success the automotive high-voltage IO We rectifier in continued ABS record. from intelligent driver applications electric key and capacity oil XX:XX industrial including suppressors, applications the voltage switching applications and charger water in converters protection seats Hall load including XX:XX for controller view core high-voltage electric for Fast electric steering, also applications and vehicle battery fans, accepted to are brush devices automotive products Omni-polar also into pumps and designed motors motors, controllers. wireless and ports. power gate are network of year-over-year for In in-vehicle protections Driving for far market, and cameras increased XX% year exchanger

security PCI gaining [indiscernible] recovery in video and X ReDrivers continuing and XD to intelligence, are artificial XX:XX DisplayPort switches switch modules growth sensing rectified products the applications. of see display analysis in commercial camera and the adoption We Our ultra-fast HDMI and Express electric, applications. are Gen packet traction

recovering system, specific application DC We blood body PCB XX:XX for win automated the with product bar momentum document lottery Lite-On line also pleased and in for test demand strong supplies, brushless multiple by multi-chip diagnostic metering, seeing including Semiconductor drivers, rectified being flow also applications applications driven image power applications. used such energy and strong lighting scanners smart circuits are as the products electrico-medical have We scanners, in sensor motor inspection analyser. and been design standard

recovery Similarly, and notebooks the ReDrivers switches we continue market, wins ultrafast sensors, gaming full the in strong USB cable station, switches, rectified expanding to including during for for smoke We're XXX% applications. are power X.X and controllers year. XX:XX MOS revenue transistors, high location gain hall seeing has workstations. gaining keyboard, docking Schottky, as tracking real-time Hall as interest year-over-year applications. video, XX:XX tractions bipolar Medium dual dongles, enables voltage MOSFET the TVS, up and sensors, in products the in and USB drivers was which products low density been holder buck HDMI new DC-DC output applications increasing SBR LED synchronized Type-C, for our Type-C in ReDrivers in Additionally, inverter power power XX% seeing converters the computing and GPS momentum DC-DC detectors platform voltage supplies compute and transportation. DisplayPort, unit Omni-polar and In monitoring well design are HDMI active

MUX, strong and also for We demand continue oscillator SSD to SSD crystal see datacenter in the server enterprise product applications. modules and story

and In devices. SSD momentum We shifter Additionally market, have full and for LED also applications server, and various to to new applications set scanner and several SBR including mobile wins family laptop quarter product year the storage, in rectified XX% the design revenue and including continue in products and recover revenue to increased for design gain high level strong wins machines. see digital coffee growth the Semiconductor new continue XX% universal standard Lite-On the Diodes image year-over-year modules with projection, vacuum the in of consumer sensor product efficiency for record the year. cleaners. XX:XX consumer light backlit gaming,

lighting, for ultra-high density a for XX% from see design Bluetooth year-over-year revenue as rectifiers charging Mobile a and XX% phone market, well in the USB and has have Design display small full also drivers PSA transistors products as also panels, record demand as increasing Lastly We demand our [indiscernible] applications. applications. and been CPE strong wins with continue line MOSFET see IoT product CSP home monitor, this smart securing new momentum utilizing growing and in to for wearable for demand in AC-DC LED XX:XX Pericom and MUX the amplifiers, Diodes fast Class the the for application. audio We applications. Type-C XX:XX well was SBRs primarily Communication TV adaptor driven to ReDrivers, recovery for and exercise doorbell XG strong C devices market LED also as also the voltage grew and generated USB protection LED quick for and by and year. for for speakers, as low USB bipolar power continued high-power continue products USB MUX growth momentum There equipment.

financially. our design LDO base applications. strong doorbells. package across PSR high from SBR and to saturated We for approach scale our and content sales design chip solution year end saw station, as was Additionally, low wins routers, XXXX for multiple with initiatives, cameras We automotive, smartphone expansion product strong margin small Pericom in especially industrial size both for operationally network family and transistors demand markets, our summary, revenue and wins exceptional total in product for an In Diodes continue the family. growth expansion well achieved XX:XX as applications the

successfully for markets with and XX:XX the and With that to the the opportunities from product, to through quarters questions. synergies Lite-On floor synergies we open the integrated years. also now We benefited Semiconductor expansion additional and acquisition that, manufacturing Operator? customers realize we the end over expect and coming growth

Operator

XX:XX Our from Thank [Operator line go ahead. Please from you. comes Cowen. of Instructions] Matt the first Ramsay question

Matt Ramsay

much. some acquire great fortunate provide if the wonder been you and and has Diode’s led where Lite-On capacity? the about think And to afternoon, some do over commentary next Lu. from or very you thinking and your additional growth very you a from I might to you versus capacity? of add constrained two an Thank the results, pricing on supply are half I much I plan and coming as capacity so, that Congrats or and XX:XX capacity to Dr wonder Thanks. growth. job have -- that's enough how opportunity growth the Good year remarkable units don't was versus did know more you the amazing everyone. the company pretty you filling in the last, executing and industry year

Keh-Shew Lu

XX:XX Okay.

your So I several of just answer question.

Okay.

talking are is coming much how growth increase okay revenue is coming about you expansions. from from the growth, the First, price capacity much how and or

did based very cost but only of on price wafer our our we So or separate increase that number not we clearly, really material increase. the

to customer So to support the you by to design asking more give them opportunity. us we opportunity, but take only, know our we increase retract customer additional material greater

customer our So some in touch -- of past. area, not us allow the to would that

to or Now the ask for support and with us. customer, design of this opportunity can great our demand in open them up we to

talking just on up what expect what loading about future is you December expect that to we it fully the today year We that so year always ramp we up the open to. then, growth of doing by ramp two are we Now we capacity to both inch. are And if constrains last more to our been features advantage listen X the you'd XX:XX have year, up using talking opportunity. and whole last about have

year whose GFAB, So XXXX. the we five our us into every this to for or additional so and year remember okay? bought to So you they committed owner is that requirement would GFAB greatly use. back we be component if our our capacity so we would loaded, that to fully GFAB the are that production product glorified load-in years. originally and original technology, have XX% And use by our another And owner actually we

we bring we than go XX%. give so to when for enough more going that even look time this that going at because we definition still continue -- capacity to And capacity fab the down continue able of to say the demand the XX%. the can bought up. ramp their will wafer higher But loaded And that or fully to said if wafer that, if are we or in still up At -- are XXX% our that they they opportunity you more we we capacity load-in is have need and fab is be fully time they're bring already because some same to we And to we it growth. us take can loaded.

for or bit our with still there other can get room to us in are asking our here, effects little supplier have external we additional -- the every relationship a we quarter Then more more. we give GFAB continue more to So growth. think, I still be

then capacity this the enough in year. believe take support up, start demand we And to can have year our we the when opportunity or continue our path. So loosen growth to next we growth still

Emily Yang

on XX:XX Matt. that, All right. top of And then

We also mix will improvement. continue to drive the product

better utilize capacity well. want we to available as to focus better support So business to

Matt Ramsay

XX:XX Thank for both you the there. Got it. commentary

follow-up my you're target. up not guess, to against XX% question, long-term bumping mention be remiss As right margin I that your I'd gross

slightly and run planning $X your to you in billion revenue billion of were hit think that rate under XX%, $X.X I revenue.

So if could the just of Thank the puts takes additional through drivers $XXX walk we you on margin of revenue go sustainable, million margin new towards that and forward. me kind floor model? a that margin as and kind of the Is gross target add are you incremental and as in you. what

Keh-Shew Lu

is Well, goal that really I the so okay. to to are billion XX:XX gross we EPS what that profit And profit, that really is for really $X because billion when said goal. is fall $X looking gross the through

$X gross say billion billion. do if $X up then XX% say, And that [indiscernible]. can to profit GP Now, make our $X.X we that when gross revenue, billion I how margin we we it, say make be

billion we -- get of our We $X and that margin ready yet, to gross Then the we'll the we are profit. so goal then achieved we too but I'm to quite start improve close are not after next that our next X.X not target gross billion result earlier. to target, target continue announce will that but we to get

Matt Ramsay

you. get queue. Congratulations the XX:XX Got it. on back the Thank in I'll progress.

Keh-Shew Lu

you. XX:XXThank

Operator

of Truist Stein go Please line William you. from Thank comes from Securities. our show I question the ahead. next

William Stein

outlook, right down my what do both call question. my think have the the the the guidance results XX:XX and and to or great. market. I I a for comps to but think tend outlook I'll is communications. question and little QX congratulations, especially add a Thanks Normally, Great. that bit about end the the you are I by markets Cs -- three end they consumer, taking

little well, I down and typically think are sequentially those a are up bit. automotive industrial typically

think more more So markets if all there the a different that is see each the that typically spread some, delta or you're all of it or some going bit do the Is or better growth explanation? is than little this in to across difference we they're it sequential about end end to a little going in markets or QX?

Emily Yang

This hi. William, Okay. XX:XX is Emily.

seeing all So overall is strength I actually we across what end market. think are the

specific I we demand really and, think look have we if to segments. the down all-in-all, strong

have we automotive a growth growth year. of So momentum And continues. design in actually the continue are full for XX% see example, lot of we And lot for that also again like full-year for seeing XX%. industrial, to of a We pipeline the a grow.

t we where about On But cloud PC, the itself. low-end seeing the strength definitely are computer talk of [indiscernible] XX:XX kind is as the Tier the side, there that little seeing, right. computing we balance side softness. I bit on a the also side, diversified very we that consumer demands, the definitely you the X from consumer we softness see or say little impact a have side, see we and would Absolutely, Diodes. other applications overall again we China strong strength bit have XX:XX well super I since not quarter manufacturer continue communication are the to right. more QX there a is little in is smartphone, that some but lot actually of usually care a whether think to are much the softness, about a into a we a the On the but bit consumer other not news it's of China, overall all home lot of smartphone On

say would but all continue on lot I the momentum, applications. of XG a base stations, XG So related in drive to not just all,

all say strong. I very, still in very all, would So yeah,

William Stein

or what address? you'll an can, what and Thank follow-up Well, Diodes you. maybe opportunity dipping think I market if recently saw you to my Can able developing envision? first, toe you I be its what into about And XX:XX capabilities I announcement development. clarify silicon you you're believe carbide

Gary Yu

carbon year part starting time a the with we wafer to like to Okay. for with wafer from like and OBC that automotive activity [indiscernible] you related design inverter we vehicles going outside on. is have module this those and with in-house we we trend we area put module, our we're going and as JV This part we venture Charger are and news actually, it’s ago we have the design development, the the market. inverter And that's go micro a And [indiscernible] technology [indiscernible] that and and to and the that a to we've On design joint that’s have use into our are Board do dial -- we team OBC, to electronic have set, been and inverter, our that XX:XX the and of the using to EV we strong talk Gary. that’s see fabrication export the motor nice the using, to and we our the very focus that particularly

William Stein

XX:XX to area discuss in yet revenue all. or it Any that is

Gary Yu

XX:XX not No, yet.

engineering bit is for it end looking year. the middle probably the this by because one looking related, of are revenue probably forward be deliberate year year we automotive going that or first come probably to longer we should little of in simple, and Our are and next

William Stein

XX:XX Great. Thank you. Congrats again.

Gary Yu

XX:XX problem. No

Operator

Please next from from XX:XX Securities. show Thank you. ahead. of line Wells question Fargo comes go the Gary Mobley I our

Gary Mobley

wanted majority China. manufacturing to congrats everybody. XXXX of start current I to the employees for XX:XXGood a about in your strong to my the are footprint in good ask China. and based I afternoon, realize taking your Thanks calendar question year. and a

any impact China's COVID seen facilities or you policy? have from in So maybe production past present future your the zero on or

Keh-Shew Lu

China, wafer is Europe okay. see [indiscernible] -- FAB in wafer one. Well, the we but And Actually, and GFAB we me in of in the in have and majority not FAB in always Taiwan. XX:XX this FAB wafer total, our let external they internally answer

we China, only in have today – expect okay. So two,

our in majorities date. have don't we So

big we careful the too. Now COVID-XX for the Park in government which two very Central have -- is very, again problem in on extemporary is Gen that virtually and don't site China major X Shanghai but yes that

problem shut So COVID-XX. we don't see the actually year for to go you because, us And home Year. its typically Year, New because due Chinese to we helping example, lot going every Chinese down the going a New and during worker the of are the for have

in either XQ, in year, in government working, encouraged where don’t or have is we actually the people So but Diode down. is cannot production the that output, our year, okay. actually enough go reason early Year local That's get Stay in this continue home. our why off the like Chinese productivity one the month last or the this slow we China of pack New and the

is output Chinese year therefore, our to support. great our that domain not or are we are not New able of able effected that critical. because And Year by that's So but this to support we enough, still

build So -- our in output from we some slow At really to XQ, not (ph) XQ. that Fred therefore for our is time, XQ much. down revenue we going do support for XQ inventory same the get have try our guide to XQ

to not So [indiscernible] due offer, really many are is China, we effect effect overall, do do in the pace we actually the by COVID-XX really better home. than in but go not

Gary Mobley

expect opportunity last an product quantify XX-week particular any of to that, exiting And having, to that And you're Dr compete year normal that it? have one in range. perhaps in competitors, hundred I impact categories and color inventory. QX the dollars is Appreciate In to you. way quantify, me, Got million presume I getting the than QX to normally X%, the excuse it. you're XX is XX:XX to back few would some be in follow-ups Lu. have is because a replenish next there, related Emily perhaps you year of you there up a the going couple to directly that for your seasonal distributor but Thank down better

Emily Yang

right. All XX:XX

maybe than So right. expected with that's we about I quarter, the than This right. Dr. slight the is are better which you little better usually guidance bit absolute a reason down X% a -- output like Gary, think provide QX in mentioned

closely opportunities feel customers us, front of with review all in the do, aggressively we So and the all working right. we what

right a drive ago, I just for mix a strategy not and more and every likely our are is this on we after we we Diodes few change total good as growth if improvement aggressively is really again But product there to well going strategy, we strategic business, right. focused overall So merger right. continue more it business fit after create that as initiatives like into time years the Diodes that from acquisition solution my And some peers will strategic pursue earlier, to overall our sales any mentioned pursue. opportunity further for or always

Gary Mobley

one market? impact your the the XX:XX of it. from exiting And Got competitors

Emily Yang

impact. think, or XX:XX I my didn't think I really but how how of the publish there's it's but say changes. may really others statements, of also one small making hard to peer be a also really big also lot that local,

billion So as achieve to after to Lu the long long-term long as going again going gross with $X into we our profit mentioned aggressively that's help long as us after plan, monitor all this earlier it. very closely definitely as as fit

Gary Mobley

Emily. Thanks, XX:XX

Operator

of from Thank Gerra I the ahead. go next our Tristan line comes XX:XX you. question Please Baird. from show

Tristan Gerra

to absorption. Hi, trajectory gross on like XX:XX to mix further the quarters next It going fixed this margin the year. you further expand cost Quick What's component sounds room rates. for guys. have be the few question versus utilization for

put of we should year? margin that how mix So in expanding in this terms the

Emily Yang

Well, XX:XX think yeah. -- I

a more. and comment So maybe maybe Lu let me you some others some and Dr. can make add

is important, think really I all consists margin they improvement the of and things very right. few

improvement biggest mix the and while. we've a talking of one is been for about product One this

X-inch So to solution we believe is and the or to drive. to sales whole equipment three more the total like, better years something within this some this continue of some And And existing efficiency think that. like will products I as of life the of with we for add is XX:XX more old capacities. actually mentioned, two, expanding stuff strength X-inch to with Dr. adding improvement the initiative. improvement. about really beginning some well. always margin, continue ago newer And replacing we additional legacy drive ASP manufacturing can better just we of Diodes. for This actually the be from or a one, probably This has is equipment Lu new start this with to been even the we'll replacing established continue

that will we cost, also and of improve our continue some improvements. will continue in And [indiscernible] talked XX:XXAnd that right. to capacity then synergies to manufacturing that the continue drive Semiconductor to drive I about. our result So have Lite-On a

seeing synergy we few are actually years. of customer but market that the synergy, next can we the synergy, products the and benefit start over manufacturing see still they continue to and synergy end synergy, benefit So markets

drive say continue will areas continued to guys Lu mentioned would like I this all help going it results we not direction to as the all and this the definitely So to is stop want and margin. few definitely XX% continue deliver to in to Dr. we us at And is well. you just to XX.X% or

Tristan Gerra

about a then channel. inventories the to from going And it's in follow-up, Great. Okay. be XX:XX

So that mentioned you've [indiscernible] very you, the also that slowdown mentioned well-advertised you diversified. in China you're

So, level in are then you out the of work that could despite you diversification? are seeing chain any the this in of And inventories. pockets because outside high inventory rebalancing seeing you of of point supply inventories that process also,

So, are books, they're choosing and basically the of they seeing picking because for component? some can you close last to what that customers waiting so you're going order kind

Emily Yang

XX:XX Yeah.

Tristan, think we channel seeing overall, lean. the are inventory I still very

timing and lean. all Chinese the either very our Year customers of see in New by a that's some driven for actually of we in the still of shipments. channel So extremely also the slightly end increase inventory But QX, all, the support

XX as a expect that range. to or actually XX think, I expect, to a do normal define return is we in don't the XX range question, weeks the period probably normal I it back weeks asked the time. it, short really didn't we to Gary that We address of

that direct with the we actually we all we that with. visibility that all So communication customers have, with have believe a the

the lot on have opportunity no moment. at one view this far to a of inventory So shelf up an

of apply will have And the I for to closely contact. they all direct monitor a X X with that definitely this Tier partner Tier an issue we that monitor Tier believe very at and come don't Tier pretty to moment. much closely. X that that as so closely the very with that each and quarters to few monitor very So we'll see also continue continue actually That's Distributors then our X a customers we and we as

Tristan Gerra

XX:XX Thank much. you Great. very

Operator

[Operator line go of David our comes you. show from Williams Instructions] Benchmark. ahead. question Thank Please next XX:XX I the from

David Williams

and XX:XX afternoon Hey. Good thanks.

me the ask question. Let

how about comfortable you today within past, be late, kind the up landscape channel like isn't aren't we've you kind Lu, is you've excess of wanted channel seems of really think but been how remain So, to that an guess building Do through kind talked Dr. tends I and chain. always just a are the jumped there the I but of been? aren't for apologize through but cycles, some maybe visible. and do think, the, curious inventory you're a got still extremely happen ask excesses little that maybe the, the level lean supply it today we've seeing maybe you the I through pretty and feel bit just that on think to that lot that And you that that in these do of that’s being demand I seen even opportunity the there where as given that to

Keh-Shew Lu

Yes. XX:XX

that. for they exceed previous the [indiscernible] cycle continue this okay. capacity year to an people I familiar the extension go for orders Then through really that In of time to cycles, long But also then time and this shortage. previous is go downcycles. the wait stand I ‘XX, right, XXXX cannot is -- different long the the I'm then a up been are have always say, behind with the Then get take You from XXXX, It and equipment problem they the if in I time. and until capacity. man the deal a you going

capacity So and the get at down cycle. to the that then get same and go there they time down certain everything it everybody you the all Then overcapacity. get time of go

why, ago ahead remember a, if issue strategies timing of years took put of several in demand. capacity the and our the you if you capacity a improvement what we, it's that's So

daytime two grow in to year the downtime actually exceed this the or – we're common this because XX:XX much at We get what a better the time. even able we Now XXXX and you (ph) LSC build time capacity, XXXX ahead we that's up So ramp get one is. before is of shortage. daytime years SFABX the time and GFAB is or then because

deals, move in don't people, the okay. advantage we capacity for think but still all many shortage Everybody what the of if it's shown able prepared So all have crazy, because capacity. the about forward of see are forward, now you you're to and take to talking I and one we move hit that that's [indiscernible] these the this

this will least I I So this don't, shortage think continue be at year.

[indiscernible] boost are of continue the the and that you so up capacity to with past continue catch mid-man see And increase than then start more but actually demand. going it going demand to the to in increase How gradually we strong. Now up ahead very long.

David Williams

I about, demand the for in EV pull-through the still kind in driven of been areas Emily. EV of a the certainly the maybe now happen the quickly one And traditional you really do fairly even seeing side area great Definitely, the that or in had it. vehicle or the growth to ‘XX. into do of that your the and automotive XX guess other all and maybe Are you maybe terms revenue or then maybe. Okay. reflected shakes seeing and appreciate some that's I diversified that I space fairly much you we you've adoption in kind this within here for XX:XX Good, think year how traditional? split you though. in EV how go But do you you as think nice your when one different months primarily XX and, doesn't And within that across But the of it next mix see of is vehicle. base. looks application sort by how does, versus like then think

Emily Yang

XX:XX Right.

the definitely increases volume real So I right. think EV

growth public as to XXXX. I lot a unit well XXXX we think expectations growth, company data increase and and as refer their for ARPU there of that XXXX is can expect

manufacturing up new traditional So lot sort X also are Tier of the start any working of a or EV is some all there on applications. of

to continue area. this in expand So a of to continue that's real, we grow is and think for there Diodes opportunity lot

So well also increase of safety. this traditional focus there volume a content is the comfort what is On as XX:XX really lot actually expansion style for us. on we increase, as side,

content DC expansion about, talking all us I about lightings, of additional to brushless of are We for this cameras talk the motors number after. number and go

traditional, right. EV growing. would well both we say vehicles as the traditional vehicles I from really I So as mean

focus also style electrification the breaks, So management safety battery EV the about and for other three infotainment the system. we talk system. high XX:XX ADAS, connectivity. the the the copper then we as is comfort, remember This Telematic or if right on you as actually And well areas, that is and

have in a all, momentum would applies of to have lot good lot both. news say and continue us. as I the to of a all And And in So for to continue continue Diodes of front we should new opportunity very very market our to automotive and introduction you which that we'll have right. be we confident are the stronger drive product overall strong than the with a been we growth, demonstrated momentum in

and So if growth focus will actually the XXXX, track annual continue be XX% we rate Diodes. for have the compound to a we till XXXX look from of record at that

would ready. we so And definitely

David Williams

Thanks appreciate Great. so help. XX:XX much. Certainly, the

Operator

Thank in for I'd turn to remarks. Dr. you. the closing I'm over no questions any to this like XX:XX call Lu further the At queue. back time, showing

Keh-Shew Lu

now you XX:XX Thank for you disconnect. may Yes. call. today's your Operator, on participation

Diodes (DIOD) 10 Feb 222021 Q4 Earnings call transcript