ON Semiconductor Corp (ON) — Q3 2024 Earnings Call Transcript

Thank you, Tanya. Good morning and thank you for joining onsemi's Third Quarter 2024 Quarterly Results Conference Call. I am joined today by Hassane El-Khoury, our President and CEO; and Thad Trent, our CFO. This call is being webcast on the Investor Relations section of our website at www.onsemi.com. A replay of this webcast along with our 2024 third quarter's earnings release will be available on our website approximately one hour following this conference call, and the recorded webcast will be available for approximately 30 days following this conference call. Additional information is posted on the Investor Relations section of our website. Our earnings release and this presentation include certain non-GAAP financial measures. Reconciliation of these non-GAAP financial measures to the most directly comparable GAAP financial measures and the discussion of certain limitations when using non-GAAP financial measures are included in our earnings release, which is posted separately on our website in the Investor Relations section. During the course of this conference call, we will make projections or other forward-looking statements regarding future events or the future financial performance of the company. We wish to caution that such statements are subject to risks and uncertainties that could cause actual events or results to differ materially from projections. Important factors that can affect our business, including factors that could cause actual results to differ materially from our forward-looking statements are described in our most recent Form 10-K, Form 10-Qs and other filings with the Securities and Exchange Commission and in our earnings release for the third quarter of 2024. Our estimates or other forward-looking statements might change, and the company assumes no obligation to update forward-looking statements to reflect actual results, change assumptions, or other events that may occur except as required by law. Now let me turn it over to Hassane. Hassane?

Thank you, Parag. Good morning, and thanks to everyone for joining us on the call. Our third quarter results once again demonstrated the structural changes we have made to the business with revenue, gross margin, and earnings per share all above the midpoint of our guidance. With a sharp focus on execution and operational excellence, we have delivered on our commitments, amid continued softness in the market. Over the last several quarters, we've talked about an L-shaped recovery, and as expected, the demand environment remains muted with ongoing inventory digestion and slow end-demand. Our outlook for all markets remains unchanged as uncertainty persists among our customers. Automotive continues to be soft with slowing EV sell-through. Industrial, which slowed first, has not broadly recovered except for pockets in utility-scale solar and aerospace and defense. Regionally, China and Japan are recovering with strengths in XEVs, but North America and Europe remain soft in both automotive and industrial. Despite the current slowdown, we are confident in our strategy. We are in the markets that matter, the fastest-growing segments of the automotive, industrial, and AI data center that will continue to outpace the growth of the semiconductor market overall, and we are committed to delivering value to our customers through product and system-level innovation. The breadth and performance of our portfolio continues to be a differentiator enabling us to optimize energy efficiency for our customers' applications as a one-stop source for intelligent power and sensing solutions. In Q3, our silicon carbide revenue increased sequentially, driven by utility-scale solar and share gains in China BEVs. Outside of China, although programs went into production, the sell-through is expected to be below our forecast for the second half of this year. We will continue to cautiously monitor demand to avoid building inventory on our customer shelves that would impact 2025. For the full year 2024, we don't expect meaningful market growth as third-party reports would suggest. We expect our silicon carbide revenue to be in the low to mid-single digit growth over 2023. On the technology development front, we have qualified our 200 millimeter M3e silicon carbide ahead of schedule. Our 8-inch wafers are running in the fab at 350 micron thickness and yields are equivalent to those on our 6-inch wafers. We are sampling from both internal and external sources for substrates. We remain very deliberate with our silicon carbide strategy. We are focused on vertically integrating where our advanced packaging solutions deliver system optimization for our customers. We will participate where we are differentiated and where our margin levels match the value we provide to our customers. In automotive, China is driving the pace of innovation and leading the transition to 800-volt architectures where silicon carbide is critical to enabling faster charging, extended range, and better energy efficiency in vehicles. Our 1200-volt M3e silicon carbide is well positioned to be used in China's extended range electric vehicles, as they transition to 800-volt architectures where a small internal combustion engine can recharge the battery. We expect to exit the year with approximately 50% of China's best silicon carbide market share based on our design win activity, as we continue to broaden our penetration with the top OEMs. In industrial, we lead the market with our silicon carbide portfolio. Our industrial SiC customer count over the last four quarters increased 17% as compared to the previous four quarters. Beyond silicon carbide, we have been investing in the performance of our power portfolio to address emerging trends in renewable energy. Global solar installations are expected to reach 552 gigawatts in 2024 versus 433 gigawatts in 2023, a 27% year-on-year increase, and global energy storage system installations are expected to reach 178 gigawatts with a year-over-year increase of 69%. We continue to gain momentum in these markets based on the leading performance and power density realized using our high-density F5BP IGBT and hybrid SiC and IGBT modules we announced in the quarter. We are designed in with four of the top five utility-scale manufacturers with our latest generation of Field Stop 7 modules delivering application optimized solutions that increase power density and efficiency with voltages ranging from 650 to 1200 volts. Our intelligent sensing business grew 11% quarter-over-quarter with strength in ADAS and industrial imaging across a range of applications, such as machine vision, robotics, and scanning. We are proliferating our portfolio to access new industrial applications, enabling our customers to select and optimize the feature set for their needs. Over the last year we have released 10 new image sensors across four product families and we are getting traction in applications that include medical imaging, biometrics, autonomous mobile robots, and automated guided vehicles to name a few. Our 5 and 8-megapixel Hyperlux LP image sensors, for example, are an excellent choice for entry-level 4K video surveillance cameras, with industry-leading low power, low light sensitivity, and wake on motion. In 2025, we plan to introduce a new family of image sensors to further broaden our offering. We've also received positive feedback from our customers and channel partners on the SWIR technology we acquired last quarter. This differentiated technology enables us to expand our industrial offering into agriculture, medical imaging, inspection, and aerospace and defense applications. In data centers, we have a tremendous opportunity as we expect the power delivery market for enterprise, cloud, and AI servers to double from $2.2 billion in 2024 to $4.4 billion by 2028. As power requirements in racks continue to scale from 40 kilowatts to 120 kilowatts, we expect our addressable content per rack to continue to increase. We have invested in this space through the downturn, delivering a silicon and silicon carbide portfolio capable of meeting the ever-increasing demands of AI data centers across the entire power tree. We have released multi-phase controllers which combine with our industry-leading smart power stages to deliver full VCore solutions to power NVIDIA and ARM-based CPUs. We continue to gain traction with our T10 PowerTrench MOSFETs, eFuse, Point of Load, and VCore products, securing design wins with three of the top four hyperscalers in North America, which are expected to contribute to revenue in 2025. We have also been investing to broaden our portfolio of analog mixed signal products and we look forward to Electronica next month when we plan to share more details about our new portfolio. Let me now turn it over to Thad to give you more details on our results.

Thanks, Hassane. Our team's focus on execution and operational excellence in the face of ongoing market challenges delivered another quarter where revenue, gross margin, and earnings per share were above the midpoint of our guidance. Q3 free cash flow increased 41% sequentially as we achieved our CapEx target ahead of schedule, with our capacity expansion largely behind us. The consistency of our results demonstrates the resilience we have built in our business model. We remain focused on high-growth megatrends, optimizing our manufacturing footprint, and we're investing to lead the market where we can add value for our customers. These structural improvements continue to deliver better results than the company was able to achieve in prior downturns. If we dive into revenue for the third quarter, we saw broad-based softness offset by silicon carbide growth, which resulted in a 2% sequential increase to $1.76 billion. As Hassane mentioned, inventory digestion persists across our business groups in automotive and industrial, which accounted for 79% of our revenue. Automotive revenue was $951 million, which increased 5% sequentially, driven by silicon carbide and ADAS image sensors. We continue to see softness in end-demand, but content gains driven by silicon carbide in China are driving our growth in this market. As compared to the third quarter of 2023, automotive revenue was down 18%. Revenue for Industrial was $440 million, down 6% sequentially and 29% year-over-year. We saw pockets of growth in utility-scale solar and our aerospace and defense business, while the traditional industrial segments remained relatively stable in the third quarter. We have recently received trusted foundry accreditation at our East Fishkill fab, which will allow us to expand our aerospace and defense business. Looking at the split between the business units, Revenue for the Power Solutions Group, or PSG, was $829 million, a decrease of 1% quarter-over-quarter and 23% year-over-year. Revenue for the Analog and Mixed Signal Group, or AMG was $654 million, an increase of 1% quarter-over-quarter and a decrease of 16% year-over-year. Revenue for the Intelligent Sensing Group or ISG, was $279 million, an 11% increase quarter-over-quarter driven by ADAS. ISG revenue decreased 15% over the same quarter last year. GAAP gross margin was 45.4% and non-GAAP gross margin was 45.5% compared to 45.3% in Q2 and 47.3% in the quarter a year ago. We have maintained our gross margin above the mid-40% and improved it by 20 basis points over Q2, with utilization remaining flat at 65%. As a reminder, in prior downturns, our gross margin had been around 30% at these utilization levels. As we continue to drive efficiencies across the company through our Fab Right strategy, we are well-positioned to benefit from gross margin expansion once the market begins to recover. As I mentioned earlier, our investments in capacity expansion are largely behind us. We now expect our capital intensity target to be in the mid-single-digit percentage range for 2025 and beyond, as compared to our previous target of 11%. This is the result of the excellent work our manufacturing teams have done to improve our efficiencies across our network. This new CapEx target includes the brownfield investments in the Czech Republic we anticipate making over a multi-year period. Lowering our capital intensity will increase free cash flow margins towards our targeted 25% to 30%. We also remain committed to our long-term target of returning 50% of free cash flow to shareholders. Over the last 12 months, we have returned 75% of free cash flow with $200 million in share buybacks in the third quarter. Since initiating our $3 billion share repurchase program in February of 2023, we have returned just over $1 billion to our shareholders. Now let me give you some numbers for your models: GAAP operating expenses for the third quarter were $354 million as compared to $344 million in the third quarter of 2023. Non-GAAP operating expenses were $304 million compared to $322 million in the quarter a year ago. Non-GAAP operating expenses were lower than the midpoint of our guidance due to active cost control and lower variable compensation. GAAP operating margin for the quarter was 25.3%, and non-GAAP operating margin was 28.2%. Our GAAP tax rate was 11.5%, and non-GAAP tax rate was 16%. Diluted GAAP earnings per share for the second quarter was $0.93 as compared to $1.29 in the quarter a year ago. Non-GAAP earnings per share was $0.99 as compared to $1.39 in Q3 of 2023. And GAAP diluted share count was 432 million shares, and our non-GAAP diluted share count was 428 million shares. Turning to the balance sheet: Cash and short-term investments were $2.8 billion with total liquidity of $3.9 billion, including $1.1 billion undrawn on our revolver. Cash from operations was $466 million, and free cash flow increased 41% sequentially to $294 million, representing 17% of revenue. Capital expenditures during Q3 were $172 million, which equates to a capital intensity of 10%. Inventory increased by $18 million sequentially and decreased by 1 day to 213 days. This includes 100 days of bridge inventory to support fab transitions in the silicon carbide ramp. Excluding these strategic bills, our base inventory decreased sequentially by $32 million or 4 days to 113 days, which continues to be within our target range of 100 to 120 days. Our mass market customer count grew 15% year-over-year in the third quarter, as we have been increasing inventory in the distribution channel to support this growth. Distribution weeks of inventory were 9.7 versus 8.9 weeks in Q2, and we expect distribution inventory to increase to 10 weeks plus or minus in Q4, as we continue to see this long tail of high-margin customers. Looking forward, let me give you some key elements of our non-GAAP guidance for the fourth quarter. Given the current macro environment and our demand visibility, we anticipate Q4 revenue will be in the range of $1.71 billion to $1.81 billion. We expect non-GAAP gross margin to be between 44% and 46% with flat to slightly down utilization. This includes share-based compensation of $7 million. We expect non-GAAP operating expenses of $300 million to $315 million, including share-based compensation of $31 million. We anticipate our non-GAAP other income to be a net benefit of $12 million, with our interest income exceeding interest expense. We expect our non-GAAP tax rate to be approximately 16%, and our non-GAAP diluted share count is expected to be approximately 427 million shares. This results in non-GAAP earnings per share to be in the range of $0.92 to $1.04. We expect capital expenditures in the range of $130 million to $170 million. And as a reminder, today's press release contains a table detailing our GAAP and non-GAAP guidance. While we are cautious about the near-term macro, we remain committed to our long-term strategy. We've remained disciplined and continue to invest for the future, both in new generations of intelligent power and sensing products and to position the company to scale efficiently for a market recovery. To wrap up, we are investing in the fastest-growing segments of the industry as the world shifts towards renewable energy, electrification, automation, and AI. The breadth and performance of our portfolio address the growing need for energy efficiency and the proliferation of sensor-driven ecosystems. Our employees continue to be the foundation of the resiliency of onsemi, and I want to acknowledge the hard work of our teams across the globe, as we remain committed to unlocking shareholder value. With that, I'd like to turn the call back over to Tanya to open the call for Q&A.

Hi, everyone. I appreciate the opportunity to ask a question. My first inquiry is regarding the silicon carbide business. I understand it's not a major contributor to your overall revenues, but it holds significant strategic importance. When Hassane mentioned that it is experiencing low to mid-single-digit growth, do you perceive this as merely an indication of cyclical weakness? Or do you think there are fundamental changes occurring, given the growing concerns about the pace of EV growth, increased competition, and potential commoditization?

Yes, Ross. We do still believe it's cyclical. Therefore, that's why I made the comment that the long-term trend for electrification and EV in general has not changed. And it is very important to note that the designs or the models that we expected to ramp did go into production, they just didn't ramp to the level that we expected, which says that it's a short-term demand, but back to the lumpiness of EV adoption and not a change in strategy or a megatrend type. Otherwise, those models would have been canceled or not even launched. So customers did launch the sell-through, as we expected, and you saw during the quarter is not coming as expected from the OEMs, and therefore, we're cautiously monitoring Q4 for that. But nothing changes in our long term; nothing changes the strategic importance of SiC and the importance of plays in EVs, as EVs in China, followed by the US and Europe, will continue to be adopted.

Thanks, Hassane. And I guess for my follow-up, one for Thad on the gross margin side of things. Has anything changed in your ability to hold the 45%? Obviously, in your guidance, it didn't. But as you look forward, you said utilization is going to be flat to down on one hand. You also talked about demand continuing to be weak. But the CapEx is also coming down. So lots of moving parts, it seems. Is the net conclusion anything different than what you've said before on both the 45% floor and the 53% peak?

No. I think if you look at where our utilization is today at 65%, plus or minus, that's where historically we've been at a low point. Holding that mid-40% margin has been kind of a major initiative for us. As we look forward, you obviously get some mix in Q4, which is why our guidance is slightly lower. But no, as we look forward, we are optimizing that manufacturing footprint. We are focused on Fab Right, and we're continuing to take cost out. So at these levels, we can hold.

Thanks for taking my question. My question is, if we look forward, Q1 is when you tend to have some of these pricing discussions with your customers. And I imagine at some point, right, some of the benefits of long-term supply agreements tail off. So Hassane, I'm curious, what's kind of your early preview on how these pricing discussions will take place? Just how we should think about Q1 seasonality given all the comments you made about the macro environment?

Yes. We don't provide guidance two quarters ahead, but I can share our strategy. I don't believe the industry will revert to a steep decline like in Q1. Negotiations and ramps occur throughout the year, and design wins, which influence pricing, can happen at any time. I don't see Q1 as a period historically tied to pricing changes. Our consistent approach over the past four years has been to price based on value rather than chasing market trends. We have walked away from many opportunities that did not align with our value-based pricing strategy. Our focus remains on achieving a 53% margin model that Thad mentioned earlier. We aim to create products that differentiate and provide value to customers, allowing us to maintain margins without engaging in frequent price negotiations.

Thank you. And for my follow-up, if the macro environment is softer, why is ON deciding to expand distribution inventory? I thought the prior thinking was that you would keep inventory, I think, around nine weeks or below nine weeks, but it is going up in Q3 and the assumption is that it goes up in Q4. So what's the thinking and the trend behind that? And can that create an overhang as we go into the first half of next year?

Yes. So that's a very good question. So a few quarters ago, we mentioned that we are going to start seeing the distribution inventory, which we really have started over the last few years, servicing the high-volume customers or a lot of the key customers for us. The strategy behind that is to expand the mass-market customers and expand the mass market in general that we have started, and that's typically a high-margin business. So what we've done two quarters ago is we started putting very strategic products into the channel. And the customer count, the mass market customer count has been very favorable. Therefore, our strategy has really been executed properly and yielded the results we wanted, which is mass market, higher customer count, and higher margin mix into that channel. So we will continue to do that. What we monitor is of course, the FIFO level, meaning products that we put in, are they POSing out? And over how many quarters are they POSing out? This means we are not building inventory in the distribution that just stays there and creates that overhang. So we have a very tight process. We started that strategy with the intent of growing that mass-market customers. We have done that. Hence, we have a pretty good recipe to be able to do that while not building the overhang that you typically would see in distribution inventory in a slow market environment.

Yes. And Vivek, the mass market customer count has been up 15% year-over-year. So you can see that the strategy of moving that inventory in there is working. For that customer base, you just need inventory on the distribution selves. Our distributors would still take more inventory than we're willing to ship them, but we are controlling it tightly.

Hi, good morning, thanks so much for taking the question. Hassane, I guess my first question is on the silicon carbide business. I'm curious what your application mix or customer mix looks like today and going into 2025 versus what it looked like a year ago? I think a year ago, it was something like 80% auto, 20% industrial. And then within auto, you were very over-indexed to one North American customer. I think on prior calls, you had talked about that mix broadening out to companies in Europe and customers in China, particularly on the automotive side. So I'm curious what that looks like today, and more importantly, how it broadens out into 2025?

Sure. So the mix overall between auto and industrial is about the same. You can think about 80%-20%, give or take, depending on the quarter and the ramps that we talked about. We don't expect that to change because, look, the industrial softness and the automotive softness both kind of happened, which means there is not an over strength in one market or over softness in the other to change that mix on a quarter-on-quarter or even year-on-year basis. So we expect that to be the same, about 80%-20%, which matches the total addressable market of that market. So we're indexed to the market mix as it stands. As far as diversification, yes I talked about ramps in China EV, which is really the strength that we've seen in silicon carbide. We've seen share gains in key customers already. We always talked about penetration and gaining share within those accounts. That's been happening. I talked about Europe ramping in the second half. That also did happen. The difference is, the end volume is not what we expected. So from share gains from design wins that are actually going to production, everything is happening on schedule and we're in these sockets. But the end units are not where we expect them to be, which goes back to Ross' question earlier. When the market does recover and that volume goes up again, we are going to see that benefit on the upside because we are already all in these sockets and it's qualified. So that's what we have to look forward to, and that's what we're staging for.

Thank you for that. As a follow-up on capital intensity, I understand your medium to long-term target is now mid-single digits percentage of revenue instead of 11%, which is a significant shift. You've mentioned reasons behind this, including capacity expansion being behind you and identifying some productivity gains. However, have there been any changes in your approach regarding SiC, specifically concerning internal substrates versus external silicon, as well as the balance between foundry and internal operations, whether related to wafer processing or packaging and testing? Are there any structural adjustments in your thoughts about your footprint?

Yes. And Toshi, just to be clear, the 5% is now our new long-term target, right? So we've achieved our target. Our original target was 11%. We achieved that, and we talked about that last quarter coming down below the fact is our manufacturing footprint is just getting optimized here, right? So now we've moved into a phase where we are still going to invest in the Czech Republic. But a lot of this now starts to become maintenance capital on the footprint that we have as we continue to focus on the Fab Right strategy. I wouldn't say there is a structural change here as much as the performance has exceeded our expectations.

Yes. On the silicon carbide, obviously, we're going to keep expecting the growth on silicon carbide as the market kind of recovers and goes on the uptick, as I mentioned in my prior comments. A large shift of capacity is going to be going from that 6- to 8-inch, where you are going to get more output with an already installed CapEx on the 6-inch as we convert it with a very CapEx light. It is purely a conversion. We are not building new furnaces or new sites. As we convert from 6 to 8, you're going to get a boost in capacity just from the number of die. That's going to keep supporting our growth and then follow that up with the Czech Republic investments. But we also do procure externally. We never said it was going to be 100% internal. We have an internal and external mix. The mix will change as we go over time based on our CapEx and our internal expansion. And our 8-inch internally has been performing very well, already at 350-micron going into fab, which is basically best-in-class today. So we expect that to continue with the CapEx level that Thad mentioned. So very efficient, forward-looking expansion to support a revenue growth. So you're going to see a lot of it going to the bottom line.

Hi Guys. I think that's me, Chris Danely. Maybe I should put on my Sopranos accent again. A couple of longer-term questions. So Thad you mentioned that CapEx is peaking and going down. Can you just talk about depreciation for 2025 versus 2024? And then what you expect depreciation to do for the next several years as it tails-off?

Yes, it's really consistent with where we are today. If you think about what we're bringing on and what we brought on in the last few years, it is already hitting the P&L. And then you've got some roll-off as we continue to bring on that capacity in the Czech Republic. So it's roughly in line to where it's going to be. As we look into '25, I don't see it as a headwind. It is roughly kind of in that 7% revenue range. And I don't expect that changing for '25 or '26.

Wouldn't depreciation go down with the lower CapEx?

Yes, eventually, it will, right? But you've still got some capacity that is coming on this year, right? So I don't think that has it. But when you look out into '26 yes, it should start coming down.

Yes. So there is no concern in pricing. When we talk about the bridge and the strategic inventory build on silicon carbide, we are talking about substrates only. So we can basically build it to whatever customer demand comes in. So we hold it purely in substrates. Most of it doesn't even have epilayers in it, so voltage is not even defined yet. So it is at the most common denominator of our whole customer, whether it is auto or industrial, and launching from that is where we create finished goods. So there is no risk to obsolescence, no risk to pricing. We will build to demand based on when we get it and based on the outlook. And that's why we don't add value to that inventory and hold it anywhere closer to finished goods just to keep that optionality.

Hi, thank you for taking my question. I want to focus on the auto segment. I believe you mentioned that the sequential growth in auto was influenced by silicon carbide. Could you provide more details on what you're observing by geography? There seems to be an expectation that China will increase its share in EVs. Can you elaborate on which geography contributed to that strength? Additionally, if China EVs do capture a larger global market share, how does that position you? I noticed you mentioned a 50% share in design, but I’m curious about the implications if that share materializes now. Is that favorable or unfavorable for you?

Yes. So the strength obviously, for us, in auto and in silicon carbide was driven by China and the share gains we've had in China specifically. When I talk about design wins or the share based on design wins, I refer also to my comment, I think last quarter about the Beijing Auto Show and 800-volt kind of platforms that we are in, where I would say, it is further from design win. It's actually in vehicles today. So as these vehicles ramp, which they started now and they will ramp into '25, that should start seeing extended strength. But we did see the strength in China, both from a total market and our penetration in that market with the designs that we already have. We expect that to continue in '25.

Thanks. I was curious about the data center you mentioned. Could you provide some timing on when you expect the first revenue? Also, since you've been working on it for a while, what is the right time frame for achieving design wins?

Yes. We already have design wins and revenue in that segment, although it's early-stage revenue. The products we launched now are expected to generate revenue in 2025 as they get qualified and customers ramp up. For instance, we announced the T10 Trench Pad last quarter, and we have design wins for that which are being qualified at the hyperscalers. While we anticipate revenue from these products in 2025, we already have revenue from existing products this year. We are actively in the market, developing new platforms and designs. Our new product introductions are really going to enhance the portfolio we can offer customers.

Hi, Hassane, I just wanted to follow up on the AI data center wins that you just mentioned. I think you said you had wins at three of the four hyperscalers for multi-phase controllers and individual voltage rigs. I just wondered, one clarify? And two, if that's the case, is that more for CPU power? Or does it also include GPU or AI accelerator? And then I've got a follow-up.

Yes. We didn't – we are not specifying exactly which product specifically. I rattled off the portfolio because when you go into an account and we target the power tree, you need to be able to show coherent or cohesive power distribution from the beginning to the end. That's why we started with SiC, with the PSU all the way to the course. That really is the general approach that we have, both for the NVIDIA and the ARM.

Yes, that's correct. It still represents about a 100 basis point dilution to the corporate gross margin, and this will continue into the fourth quarter. Looking ahead to 2025, we expect this to improve in a fairly linear manner. By the end of the year, most of that 100 basis points will be eliminated as we have exited that business for GLOBALFOUNDRIES.

Hi guys. Thanks for taking my question. Good morning. I apologize for focusing on silicon carbide again, but I believe you are accustomed to it. I wanted to ask about the guidance for low single-digit growth once more. It was helpful to discuss the differences between auto and non-auto sectors, as well as commentary on your lead customer. Can you provide any specific details on the growth in each of those areas? I'm trying to understand how the ongoing market share gains in China align with what seems like a stabilized outlook for your lead customer amidst the low single-digit growth. Thank you.

Sure. So look, we are not breaking our growth by industrial and auto. In general, we talked about the diversification as we get more and more of designs, both regional diversification and within a customer diversification, as we get into more platforms within the customer to offset the lumpiness that you see model to model. North America is up for us. And that's based on the commentary I made before, both on ramp and share gain. I will leave the guide and outlook to our customers' earnings and our customers' commentary. But North America for us was up, China was up. So you can see everything was up, as expected, just not at the level that we expected for the second half of the year due to end-demand, which is very well-publicized by the OEMs themselves. But being up regionally gives you a little indication of where the shares are as far as design wins and ramp and the penetration within these accounts.

Thank you for joining us on the call this morning. I want to thank all our employees for pushing through this prolonged period of uncertainty. We'll continue to navigate the market environment and deliver value to our stakeholders by focusing on our execution and operational excellence. Thank you.