Earnings call transcript Q2 2023

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Operator

Good afternoon and welcome to the Diodes Incorporated Second Quarter 2023 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 Tuesday, August 8, 2023.

I would now like to turn the call over to Leanne Sievers of Shelton Group Investor Relations. ahead. go please Leanne,

Leanne Sievers

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

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

to as the listeners that finalizing the announced they I'd are and to preliminary subject registered public procedures by remind our closing accounting like review firm. the company independent today its results quarterly are customary company's

As company unaudited files such, fiscal and the XX-Q Form revision for its until XX, are these its June quarter subject results ending to XXXX.

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

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

non-GAAP measures non-GAAP financial include which statements in provide details. are release company's terms. discussions press and GAAP information during additional in Additionally, of this conference and and to press of call reconciliations management the definitions release items, the Included GAAP will and certain company's

management GAAP Also attributable income call, this stockholders net to refer as common throughout release company's conference during press to income. the statements and we net

days Investor to Diodes' recording at to at section via the in listen this unable of those XX the www.diodes.com. time, call a of available Relations be for will you For entire website webcast

to And now, I'll please President turn Diodes' Chairman, go call CEO. Lu, ahead. the and Dr. Dr. Lu, over

Keh-Shew Lu

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

quarter, especially second than China. pleased market with But recovery Asian team's was deliver margin. the slower in we During record the in the our execution to expected gross I'm

total product our revenue and in initiatives. content Automotive the markets achievement approach expansion and to Industrial testament record our of is solution the Additionally, continued success strong sales of

consecutive model sixth This was of above consecutive the quarter sixth of Industrial as increased target quarter quarter margin gross Automotive the XX%, and and percent our was revenue. a

let for With some Diodes' over it on the Yu, Officer to Operating that, Chief quarter. Gary comments additional me turn

Gary Yu

in second recovery of record you communications the computing quarter The Thank strong. and in reaching had expected, Dr. consumer the Revenue revenue. million, was whereas originally margin slower XX.X% a the market relatively gross remained was market the automotive much with Lu. we $XXX.X trend in than

in record margin. record line During guidance, the revenue also revenue product and and flat Automotive us XX% and to a of revenue with Industrial delivering reached quarter, our product enabled gross sequentially maintain total our while

to notable continued debt we of operations as $XX to us reduce cash by Also in million that June $XX.X our the to of generate $XX.X quarter, strong XX. enabled from total million million

decreasing early the see POS revenue. increase Looking improvement in with of worldwide second to have indication in days begun coupled forward, we quarter market the with inventory

margin growing long-term product mix growth inventory Although, improve including sales reduction we revenue channel strategy Industrial expect quarter the achieving in a third Automotive ongoing and targets. continue from contribution us our and Diodes' and to markets further to position into

to call results, guidance and more financial our third detail. the Let over now to in our quarter quarter turn discuss Brett, me second

Brett Whitmire

$XXX.X million, with from $XXX.X first was afternoon good of everyone. second $XXX of and and in the million Thanks the Gary decreasing for quarter in quarter flat quarter X.X% XXXX million Revenue XXXX. second XXXX the

the for profit the $XXX.X revenue second XX.X% or of in year million quarter or prior the million or $XXX.X quarter. was XX.X% revenue Gross and to XX.X% of quarter in $XXX.X revenue, million of compared prior

GAAP the acquisition-related basis amortization million second $XXX.X $XXX which asset XX.X% million XX.X% operating intangible expenses or million for on of And excludes a quarter $X.X revenue. or revenue non-GAAP were expenses. of were of of

and compares $XXX quarter revenue $XXX.X million the Non-GAAP revenue. GAAP expenses of XXXX operating XX.X% million of or XX% of to second expenses in of the in prior million quarter the operating XX.X% This quarter. $XXX.X or were or in prior revenue

million of $X.X on gain income, million million Total to and expense $XX.X approximately other million income, interest quarter consisting unrealized of $X.X currency $X.X million interest other of of investments, $X.X for the foreign loss. of amounted $XX.X million income,

Income the million in previous and year second taxes the in million, interest $XXX.X before prior was and XXXX $XXX compared non-controlling quarter $XX.X million the to in quarter. quarter

XX.X%. XXXX. to in quarter effective second approximately second for or $X.XX million net our and $XX.X diluted per the taxes, $XX million compared was of share the $XX.X or diluted for was the rate tax Turning the XXXX $X.XX income diluted per $X.XX million per quarter in share, GAAP XXXX income quarter first to second or quarter income share

$X.XX of second XXXX Non-GAAP the investments. to million to quarter million of Share adjusted the asset and for compute $X.X $XX.X diluted GAAP $XX.X of which net count acquisition-related used related income, XX.X in intangible million second quarter equity was excluded amortization tax per net or was share shares. diluted million EPS

to $X.XX diluted or $XX.X or the in second compares million diluted quarter. prior $XX.X million per share per and in share the This quarter $X.XX XXXX

both of by earnings non-GAAP EPS would quarter of share-based tax adjusted second net $X expense $X.XX have non-cash per million GAAP share. the diluted increased and share for compensation per Excluding

$XXX.X XXXX, in or million of quarter quarter of million EBITDA second for second XX.X% to in the $XXX.X or was revenue $XXX.X prior XX.X% the quarter. million revenue of revenue the and compared or XX.X%

to reconciliation additional provides net details. a GAAP GAAP income of earnings income EBITDA to release net which net adjusted in our We have non-GAAP included income and

Cash million Net expenditures. was operations including million $XX.X from cash was which paydown a quarter. debt. flow second of $XX.X was Free million, capital for flow the cash for the flow included negative of million $X.X $XX.X million, generated total $XX

balance approximately Turning investments $XX at to cash plus million. the long-term short-term Working was capital debt, second $XXX and totaled restricted cash, of $XXX end and equivalents quarter the including short sheet cash term the total million. was million

approximately days total on $XX.X dollars million XXX the X%. in were our In consisted XX in second decrease cash decrease the million. of Total inventory quarter. $XX XX to to and terms million from inventory of compared days of to to inventory quarter of $X.X prior process the as approximately XXX, $X end target goods, materials. the goods million million decreased Total a at last raw $X a inventory Finished inventory for compared million a quarter, quarter. second last were were Capital and X% $XXX.X in or model expenditures finished in in within X.X% quarter revenue basis a decrease of work quarter

our markets. continue in to or turning we the revenue XXXX approximately to consumer, and outlook to communications minus $XXX inventory the million of channel we third for quarter expect due slower plus as the reducing recovery Now, expect X% computing be to

our to minus expect X%, due gross or target sequentially We manufacturing GAAP our XX.X% to margin service impact model. plus of the remains primarily decrease agreements to at but

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

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

is to are to Our for anticipated of previous tax amortization be minus the income or in is quarter after estimates EPS acquisitions. expected to calculate and million third million. plus included $XX.X tax X% be rate XX% Not shares non-GAAP $X.X used these for approximately

said, I Emily to over that will call the With now turn Yang.

Emily Yang

the reflecting was slower-than-expected the second recovery mentioned, Revenue XC in China market in product total reached revenue. as while you, a quarter-over-quarter, the Thank good the and flat Brett, market XX% afternoon. record Automotive/Industrial Gary the quarter and of

revenue this POS Europe mainly quarter The at more growth a increased our the in terms over from revenue worldwide the Distributor was Asia. Looking record. closely inventory decreased sequentially. was of in and news is revenue, weeks first good quarter's

future be to the to as especially goals. very is market, which strong operating long-term Overall, in key towards XXXX pipeline a our our outlook Automotive design serve to driver continues expected our

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

revenue, of product XX% our was Industrial of markets, end of communication record XX% a product was XX%, and terms automotive Diodes' revenue. In consumer XX% XX%, computing

ongoing Automotive Our XX% product above combined at markets content success XX% is share and above the revenue our of Industrial points consecutive fifth This end gains. our expansion and market of underscores represented achievement quarter percentage XXXX target. X strategy the

the details. in let market our growth Now of market, end revenue a review record Automotive the In me XX% year-over-year. represented greater

design ongoing multiple up wins across We continue maintaining ramp applications. design to win momentum while

distribution clock in and design ADAS battery new vehicle transistors systems, vehicles Our units control cockpit management SBR and control in electric smart a for buffer oscillators bipolar and applications. plug-in used junction battery units. control units, and electric Also being the our EV for are won and crystal both

also design within data EV control line and protection domain We plugs TVS charging wins line protection for saw products for power units. in the

to C and wireless and as And diodes power being inverter and our circuits wireless in see controllers. solutions. are controllers delivered into Rectifier charging well USB continue designed automotive power Our drivers Zener car body circuits, modules gate chargers growth as conventional

audio/video to DC-DC controllers and Additionally, are in while display our and transistors seeing LED and lighting, cluster drivers see linear navigation and demand systems. instrument continue traction from infotainment solid up LED heads converters buck

we Also channel electric converters in quarter, inverters silicon parts telecommunications with for MOSFETS. designed applications. onboard infotainment chargers, vehicle management of new compliance These solutions growing silicon carbide address XXX demand end carbide chargers, MOSFETs the and systems, WiFi hybrid are in high-efficiency during introduced and a series the motor subsystems automotive DC-DC including MOSFETs traction voltage lower battery such drivers as and battery along to

industrial high the as factor are voltage in correction MOSFETs traction improve our Schottky regulation well carbide which as power along capacity. market, the silicon seeing with diodes current helps system and increasing applications In transistors

industrial Our motor well are in as being supplies drivers, products as converters. used solar inverters DC also power

focus gauge to rich energy wins storage high continues current energy, Renewable for transistors, drivers into ICs and energy key us area with wind for design a systems. be rectifiers

as diodes to generation see to Our also and energy applications control distribution power metering smart renewable backlighting, systems. systems rectifier LED growth ranging high-efficiency continued as well in automation, Zener green products factory building ESG from

using in automation for strong point-of-sales controls modules saw growth and terminals. quarter the computing rectifiers also robotic during embedded from We the

automation AI-driven power have mode to control for into rectifiers generator data power high-frequency homes recovery are and devices systems while that drive our ever-increasing been expanding control server being transmission and IntelliFET in designed into systems. applications modules. over vehicle power as are factory adapted switch bridge SBR smart also automated and as connected well demand control continue Ethernet Our supplies ultrafast The rates power Diodes'

buffers and monitor In market, secure servers we design continue AI datacenters and including to the generators into our MOSFETS for PCI and servers. wins ICE current clock computing Express products

and hall our While demand low-voltage sensors combos. in Schottky are seeing notebooks TVS and products

start one high-efficiency grid In for fact is switching PC signs. we growth end with solid server computing adapters products application. rectifier and experienced area the high-efficiency in seeing supplies, Also recovery along PCs, some across desktop market power power notebook multiple mode products high-voltage where

Type image design sensor products Additionally, and in momentum continues switches and desktops, power source scanners while and USB docking saw power new applications in notebooks, contact A stations, wins printer for applications. C our

switching wins market, the and and buffers new oscillators design Ethernet cards including communication notebook our clock interface for are differentiated timing In products seeing crystal applications.

XG being applications. SBR traction server into and are seeing and are access in or also Our point routers Earth low products orbit designed

Hall gaining air conditioners, in consumer and home our switches, are applications refrigerators. like appliance and machines, Lastly, rectifiers, bridge in washing the TVS market, traction latch products

diodes panels. home LED for TV circuits as carbon see sensors, well appliances, XK rectifier growth fire monoxide and to Our continue lighting and from as

SBR, momentum headsets, in piezo-sounder drivers, for reality tracker and and drivers the TVs, While LED virtual applications. continues

POS see summary, an improvement days the early with have second in we of with worldwide quarter begun In revenue. to decreasing indications coupled inventory market increased

focus going growth to quarter be third the on inventory. continues and into POS channel depleting Our

mix our to sales achieve Diodes' long-term targets. ongoing to and and strategy us continue to industrial improve growth product positions revenue growing automotive including margin and markets contribution from

the With to now open we questions. that, floor Operator?

Operator

time which from Mobley question-and-answer [Operator the will Instructions] begin question now first will come we At will We Wells Fargo take this our session. Securities. with Gary

Gary Mobley

maybe a down everybody. I sequentially for while afternoon trying to the inventory get my above calendar question. And headwinds the seasonal face Good expect taking Emily the the one year. normal because direction that targeted level. I'm presume in the or of Thanks I other? the you a the still decline quarter of question Would you'll seasonal ask sense balance atypical that throughout distribution fourth something or

Emily Yang

than slower recovery Yes. recovery mention Gary the I did is China our and unfortunately expectation. XG

some seeing news think especially good that start I segment. the signs in we the computing

I it's our and unfortunately range, reported increased than right? earlier, POS normal still inventory higher As channel And QX the decreased.

We'll really depletion really driving really the this revenue. growth. key dynamic third based the POS quarter. revenue the in The continue at drive weak is POS is the inventory on and to the inventory the market calculated Since is moment

continued I think information. definitely posted we'll will be just see focus quarters some that as for when and the our I said we updated keep coming you

Gary Mobley

you Okay. these for margin by manufacturing you headwind what understand the over help Appreciate agreements? Emily. the recently me specifically? that mean gross Are took color Can fabs agreements sellers of your that specifically manufacturing TI on with you

Gary Yu

and is be supporting know to you have in year loading OEM really we do in to decrease our But however able testing I it. contract much manufacturing can disclose to place the slightly. our Yes I all about assembly And talk detail won't this our by about this That's agreement Gary, of Gary. customer service and a both service. revenue too foundry kind the impact have quarter for for the this third and net due that. soft

Gary Mobley

All Gary. right. thank you,

Gary Yu

No problem.

Operator

our Ramsay with Cowen. question come go Matt from ahead. And Please TD next will

Matt Ramsay

Yes. much. Good afternoon. Thank you very

on to question question, wanted asked. first that first Gary For build maybe I my the

hoped maybe As but that some inventory. haven't September had in the the in trends of revenue they some or of as down channel markets it quarter you we the softness end China like recovered for guide these drawing expected would, see some contemplates seems that also guys

the give like by your that quarter And revenue inventory? on shipping to feel you much? Maybe Do you in you've you what are a trends could bring markets. color actually you -- in under how guys guided end your like third if think sell-through versus down little could looks channel where sell-through you're

Emily Yang

Yes Matt.

we're if I the really the sell-through globally of reported, POS, definitely, QX the POS growth We and actually majority end revenue, you growth of right. seeing think look by because, it's than of what coming at the from really mentioned, is expected. Asia actual of the us slower Also some the like right. is even which gives there market, recovery a good signs really are but indicator recovery definitely we the I

lower as the It would revenue. inventory of guided say quarter. I time, slower So our lower, depleting the distribution than a number reason through That's we at shifts is well. the channel the increasing for the expectation same into POS third the

the are from with signs There's about talked in signs business the US recovery actual not PC smartphone, so talk the the we especially But manufacturer everybody the so signs, I of there market. also even also leading in equal it. about

we deplete as short with to believe to or inventory the demand. much inventory to our continues channel continue us the are We minute what the the to customers' or the position a helps in we also business continue that support customer That's inventory recover, actual as believe. pretty confident last

Matt Ramsay

but to that, Emily. Got on revenue couple my you for it. ask I Thank the question, of not on P&L. the I as guess wanted follow-up rest a

come affecting it. rule mean there some how we these How that think gross understand recovery? there of model out that about would on are going recovering better. I revenue of as of little are should be at margins that margin to certain But some level? that margins return as obligations growth is things as you this? to we I'd is there -- of like, Are a permanently discussed recovering? drive some margin how would to bit long guided just the a and revenue like kind thumb we a You do obligations of

something what I'm going little might to just come to with trying know part OpEx have guys talk that how is close second you down, XX% this invest to given OpEx. take or philosophically a understand to continue I Brett you're Maybe Thanks. control you want on revenue is through? you to bit the about the actions And could revenues down, don't year-over-year.

Emily Yang

The more the coming answer market the in XC me little we little let price soft, a do right. price Maybe part, bit really bit especially from is de-commodity see pressure. When the pressure Yes. the the is first of area, area. majority a

QX away margin like major mentioned to is strategically in service just we you some manufacturing the really the we impact to also We said, And from agreements. try walk there. due

ramp that's capacity the same to would up continue internal improve. at internal say going we As Diodes' or time continue to our I to product,

pressure that mind But drive initiative actually the… that a improvement margin and help product margin product that Diodes continue the want to will and new introductions to the to us improvement, price the focused some key to mix offset in do of term. in improvement the right. that the is cover including We keep with the continue from Brett, longer initiative you will on lot of believe mix product

Brett Whitmire

Yes.

perspective, Matt, think we to new I continue what of is OpEx invest the to expect we And SG&A back you think, in continue work that our there area broadly. us think about we think to our step we new I expect more would kind what that continue to see you model. forward, an I into R&D way within and kind would is as that we the tightly our to go to terms then And from our And do. products, processes. model manage very advertise the of

Matt Ramsay

detail. you for Thank appreciate it. very right. the All much I

Operator

question next Tristan with Please will Baird. come go And our ahead. from Gerra

Tristan Gerra

afternoon. Good Hi.

the your that to the gross bit Just core decline on in follow-up little on utilization QX questions go embedded lower how terms to business? some versus referenced is of margin, service guidance a much you the wanted in agreements of due rates

How quarters? you the what you for that linger presumably also long last? next that sense with gross line customers, from agreements few And service had Could margin Will end volume? if of a headwind foundry and is of renegotiating be would demand? give it in us lower kind can shipped

Emily Yang

Yeah.

to me question. try let the Tristan, answer So

due agreements. margin service majority the think the Brett the is of I impact guidance, to in like mentioned

to As up to continue we product improve. will internal the continue ramp utilization our

period ongoing and then, internal to think the right? to this do an be related And overall, We progressing time. take? depends going expect a to on I is issue, qualifications of it's to long some going not of going short really And be It It's progress. really how we're well.

Keh-Shew Lu

Yeah, to issue. slow us the noticed under I talk our if was agreement long storage we that about want the loading timing, such caused market think you

our to We to capacity. qualify manufacturing that working takes own putting on occupy product are ramp. to into And it aggressively time our and

can a about We talking not six start ramp probably are we it in year, months. two years. But up to

Tristan Gerra

Yes.

Keh-Shew Lu

to from partner that agreement competitors due capacity our service there, we start this. to can under-loaded And occupy our who then, our or

Our OEM ramp the our customer, I due we're a notification but and product market working don't taking PCN think we long-term on that that how our shorter to probably under-loaded six we foundry customer it's they are problem. It is actually or depending capacity. that months customers how toward situation, to stepping.

Tristan Gerra

pricing very a is from useful. deemphasizing. function you're level obviously question segment more that my for time China-based in that's pressure business supplier? competitive it And a Great some that you've contracting, Is function lead then or and the higher supply/demand you. Thank of mentioned commoditized of of follow-up your purely

mean your the that's if to product if presumably that to case, portfolio evolve continues, your Thanks. to emerging trying relative in what And continues does from which analog products? that in toward understand terms China, trend margin higher of the mix competitors overlap those and

Emily Yang

Yeah.

So let the me address question.

of more a and rebalancing, inventory markets also, high We area. about the demand customers more pricing inventory key Consumer the a hand, especially Computing, with supply Smartphone is it's then the in side. the on on And of mainly Communications really three on right? pressure think the on lot I talk

see from I situation is interact with. what which the not we lot playing suppliers that really walk the this top-tier really don't say We seen strategy also see. the overall really That's also in with more our this then area. China-based we're once We've supplier would a to Chinese-based that we going away area. believe are improves We demand improvement

values walking commodity, supplier, but That's of not much. that lot say away. That's Chinese-based really For impacting not I really the see would some a really our talk this very also about area deep might you is we interest.

Keh-Shew Lu

we Well, technology the from type deflation have focused of look our if new product in several at the new you years, product. past driving

that not to to competitors. get It's situation So China us is Therefore, market situation. evidence to is current the from of due due our China away the commodity the competitors.

focused for from past, at If are on the consumer communication are business. and for XC you look and smartphone server the area IoT we talking even about computing the the for we more

of our can you commodity we we even XX%. continue of continue we see believe If the already model the differentiated new see had direction, type quarter, at type that's And gross why and are maintain this quarter, improve. And of into to we we product to margin to And if more this we get margin able the our business result toward our should moved our working technology second product. record XX.X%. gross be enhancement

Gary Yu

Yes.

And and think is product are other two automotive increasing us industry by product, than also focusing keep a we I good the very a these new for signal applications introduction those relatively the Dr. quarter. that that's stable two from for I pricing which quarter our in stable our to the of point Diodes. you the think on Lu's pricing can grossing see lot areas

Tristan Gerra

Great. Thank very again. you, much,

Operator

go Truist Please our William with question go ahead. from come ahead. will And Securities. next Stein Please

William Stein

see didn't direct. I'm I revenue from but if filed what document Q And can that was in yet, channel was you the the the in if always wondering, that Thanks. tell us Great. disclose versus you quarter?

Emily Yang

from direct roughly revenue we Usually from the we But really coming of percentage significant double about have the one-third in me can expect I the double don't the have can front ratio. don't of I actual at but change. check. moment and distribution I check this and two-thirds

Brett Whitmire

was quarter around Yes. Will, direct XX%. the this so portion

Q that as that well. just we have in see filed You'd and the

William Stein

we've that just this it sort companies -- with it that I'll channel whole of been through. that of highlighted flush this in you're than to inventories continue various seen slower But dynamic take approaches out. we've unusual the Okay, cycle that sort you've check that me reminds semi expected of

place a Was sort change not or in saw accept a looks that could of over wondering, delay there short and faded driver or demand transitioned all you last fairly total long-dated I'm orders? quarters of It cancels or a QX the these surprise, -- customer can being lead so this there look they customer time all waved have they relative you. they've revenue weakening, abrupt just in about and the QX? Some you're but has willingness sort companies seeing very mean -- you're in others next to eight of in of seven from looks later. And orders Thank lead put times lead dynamic quarter. once and and big they there? like short to talk cycle they're agreements managing early these if how cancel like growth push them then the and requests to accepted time a is take. another Is the guidance, to have it's very I

Emily Yang

I we with talk resets push-out think I customer working cancellation been adjustments Will, to demand. we the say certain their working as mean, demand, it and case-by-case make about right? reflect customers. their true Depends or on with always closely So, have their the understanding whether it's we

support the with at want to the ongoing the nimble structure customers end long-term build and have sure to are we effort make of So, have we day, customer and relationships. that a working we

it I to like definitely us effort continues relationship we're that's ongoing. help grow and to the to that So, style say would that the they going or push There's to ongoing not not. whether throat the drive down continues next we to level. their

sure the true long-term the to their coming backlog, slowly customer so definitely time towards and demands backlog on Lead That's make also working place the customers the that. we're usually reason lead also based down. understand time with adjustments that to we make the

Diodes creation been talk blending that demand has the in an just price the of continue that working we didn't when increase So different. about expanding and philosophy the really ongoing return the will and market on be strategy but We to business even overall. effort is the

William Stein

Thank you.

Operator

David come will from question with next go Our Benchmark. Please Instructions] Williams [Operator ahead.

David Williams

the Hey, wanted strong. if me on good segment. letting I touch the said relatively particularly the I of And just the the curious to Thanks for Tier that ODMs guess or anything automotive remains any just there are level ask inventory question. And you the it earlier they're afternoon. But on first, think to demand the general changes you willing in demand change you're seeing the carry? just there? in Xs posturing seeing in

Emily Yang

Yeah.

quarter really then automotive of in know record general, especially new previous designs. we're since the as XX% from from automotive a a compounded tracking think of talked we from as still the percentage it XX% demand the some the second annual increased started design ramping I for seeing momentum strong on about of the is actually even well XXXX, And you have To quarter. rate we automotive XXXX. XX%. growth I

QX represented XX% year-over-year growth.

do I every adjusting also see but the not varies equal it really a We automotive customers because been So, some some inventory. strong yeah, part talked of effort it about it's before. than everything openly customer’s, still maybe a ongoing less an has momentum. XX% shows little little. kind a bit That of

action. do and doing like any it. So, the It's customers not not they're waiting adjust

continue that actually that to second XXX I as shows to just with automotive momentum help quarter releasing and in the this will commitment us from to the products QX new on in focused products outgrow aside, putting market XX Diodes. market as continue gain But well share. the We think believe new

the So, one number that years continue the to to come. focus for will for Diodes be

Keh-Shew Lu

type they're design-in, the two point And therefore, new more takes in one we the three from product the it know we introduced three their stable to automotive of past business. it is, the From to more ramped. years. ramp new two announce new how to a ramp product be is to product the going takes to business years Well, time, and much when we

won't business consumer. much Emily are past, than When we're like of shorter It year-over-year are We time. we CAGR. above affected builds kind continue. of computer customer since our more continue more that our XXXX, those won't Even talking will momentum. that in will much be because effort it by Therefore, much that the takes stable the kind we believe be variance since quarter-over-quarter. And business, real tracking type car believe about of long-term communication, XX% the our too much obviously, CAGR trend or

Emily Yang

think number in on I to shipped the consumer, We're not expansion. counting to is per cars other contact really expand but year, different the continue Yes, of the only the safety focus area, expansion. growth comfort all applications. Like this high as areas different the with driving, focus, content connected connected and cars. well the as key is the There's lighting we and very

David Williams

trough side, we I very revenue And Excellent gross much. it. the margin, decline. Dr. the gross a secondly, some as about more segments on those longer curious upbeat dynamics the the the we is is this that of third showing margin on much, should kind think not the about XX% the up of to so correction you've kind then recover and The about of of And think pressure thinking but margin the given margin given sustainability just there. here down or progression a appreciate been basis guidance, be maybe magnitude coming certainly, But term? on about, how back? should quarter and points certainly of should XXX color the Thanks in little Lu maybe there. think other of and kind we just these maybe resiliency too the quarter

Emily Yang

can right. and Well, Dr. maybe color, Lu some add me address the question let first

we that the with to in you drive XX%, the which confident we mix product confident right product strategy the introduction, with about ahead we we continue total shared our agreements. talked the the But up, model direction. that margin the our our direction solution with right. term, model the XXXX that of service is and sales are Short-term, guys, are we longer With new is initiative,

improve. We to continue

is, back the key point XX% The but time. retraction, that's actually improvement know improvement X.X% which it believe We longer the significant the we other continue if is From back but the XX% over concern, XX% our XXXX, a term. sounds range, quarter the to second like to to go I I still guidance XX% you -- drive have understand was over really like believe we we'll I that term short in revenue range range. think margin similar

Keh-Shew Lu

Yes.

say talk product this. and If solution. offset gross you to new our pressure is total margin, and about product price by The would I want mix

go what this we We with is our we assembly supplier both we especially to do foundry Second get we the foundry to through along when negotiate when directions. go price. foundry, -- or

done. One is the material

is Second new product, product mix.

increase market focus this improve. just segment. all from We that's industrial quarter Emily long tough. continue why gross continue to XX.X%. second is margin term the three directions, Third is on From XC, our said, more and percent, to And which deduce automotive to XX-something our like we these

the due over drop the into service to our is this to agreement. product do left XX.X% ramping our solve from by how XX% in is capacity our that Now own But down service quarter agreement. we by

point We for from able margin. the see believe again all to improve can You continue us. of a directions we're long-term view, that to

exceeded and quarter's remember that. made $X able when still XXXX profit, will billion improve. of continue out if we're this model. to our maintain service even And we the business we already you are this plan actually setting And And XX% to above agreement, I model with gross we

of and of direction our we're the continue exceed business business what going improvement. our that's and are XX% know we working model model work to our So to on we

Operator

ahead. follow-up Please next question from will our be Gerra with And Tristan a Baird. go

Tristan Gerra

Thanks for to in getting queue. back me the

just on follow-up a you mentioned. what Just

of just supply/demand. been year and but from doing presumably this or/and there's next see you of or have balanced more trend away we and even will a some product that later that basis product on switch down service agreements, year And you as the some pruning, qualify products I slow to peers, deemphasizing share gaining your new that recovery share. know in gain either you're those implies demand that As ramp

on you replacing level the can service what's versus So in agreements of plan the that those fabs internal at those with qualifying products how should differential And find those you're that question, between actually look production? confidence at embedded replace demand we agreements? for margin now to gross what you those service that

Gary Yu

Gary. This Okay. is

plug if Let in. Emily color Lu can me speak always or for they that have and first Dr. any

with We a First demand internally acquired peer external wafer we transfer years internally on on the were and those fab or product already confidence running said, very we are is base solid. kinds that for loading the working the been for working we is would into project high. I already of we're identified have project. been customer very loading our internally. second those say from to of second we've demand Which the the Which years. all the products level source want of externally we the our source so-called of facility, kinds the and means, fab process for and a

the is talking we the I'm losing point and not for percent of that kind are this at low hitting moment. under of but GP, As of majority us kind GP view cost about

the As can next mentioned we we that's way GP ramping demands kinds be load long wafer see product Dr. significantly will into recover just internal about as kind up those Lu dollars of like costs. we tell start of probably up And fab the can I those underlying from can the costs early reduced. year, And you internally. can

Emily Yang

Yeah.

market improvement that going with impact improve We're Of the gross percent. to couple minimize continue through directions gains. margin all to actually course, the also to share market will different and

Keh-Shew Lu

Well, lot you experience semiconductor business. have we a know on of the

That's strategies and it capacity of the One They in products the be use fillers. to of a load lot a we buffer it can as role. will one. have the

open improve the as outside Second, -- that reduce and process lot a directions. and using margin. and have and And to about There to up different requirements Gary to the inside we different we of in so ways foundry internally. start talking have like move we second to ways own then we of like underlying OEM said we the capacity and can some manufacturing. can our cost source then we business use many are a and those can toward our the so is is working There many develop gross

Tristan Gerra

again. Great. Thanks

Gary Yu

Thank you.

Operator

question-and-answer Keh-Shew like the back I'd turn closing conference to over any to Lu our session. concludes remarks. Dr. for This

Keh-Shew Lu

may participation Operator your for you disconnect. call. now you on Thank today's

Operator

for very Thank today's now The has attending concluded. much presentation. you conference

disconnect now may You your lines.

Diodes (DIOD) 8 Aug 232023 Q2 Earnings call transcript