Release Date: April 29, 2024
For the complete transcript of the earnings call, please refer to the full earnings call transcript.
Q & A Highlights
Q: Ross Seymore from Deutsche Bank asked about the linearity of demand in Q1 and the outlook for the silicon carbide market.
A: CEO Hassane El-Khoury noted a slowdown in demand post-Chinese New Year, particularly in automotive. He emphasized that growth expectations for silicon carbide are based on share gains from specific vehicle platforms and designs, despite early-year uncertainties about market sell-through.
Q: Thad Trent was asked about factors affecting gross margin, including utilization and operational efficiencies.
A: CFO Thad Trent explained that each point of utilization improvement could enhance gross margins by 15 to 20 basis points. He highlighted ongoing efforts to optimize costs and improve operational efficiency, particularly at East Fishkill, contributing positively to gross margins.
Q: Vivek Arya from Bank of America Securities inquired about the outlook for the second half of the year and inventory strategies.
A: CEO Hassane El-Khoury discussed seeing signs of market stabilization but stopped short of predicting a recovery. He mentioned plans to increase distribution inventory in preparation for new product ramps.
Q: Christopher Danely from Citi asked about the performance and expectations around silicon carbide, including gross margins and pricing.
A: CEO Hassane El-Khoury reassured that silicon carbide gross margins are stable and expected to improve as utilization increases and new, more efficient products ramp up.
Q: Harsh Kumar from Piper Sandler questioned the inventory levels at OEMs and distributors and the stability of pricing.
A: CEO Hassane El-Khoury confirmed stable pricing under long-term supply agreements and described inventory levels as healthy, anticipating normalization in the second half of the year.
Q: Toshiya Hari from Goldman Sachs probed into the diversification of the silicon carbide customer base and growth in the data center market.
A: CEO Hassane El-Khoury highlighted ongoing customer diversification in silicon carbide, particularly in China and Europe. He also noted significant opportunities and investments in the data center market, driven by the rise of AI and increased power requirements.
For the complete transcript of the earnings call, please refer to the full earnings call transcript.
