Q4 2020 Diodes Inc Earnings Call
[music].
Okay.
Good afternoon, and welcome to diodes incorporated fourth quarter and fiscal 2020 financial results Conference call.
At this time all participants are in a listen only mode.
At the conclusion of today's conference call instructions will be given for the question and answer session. If anyone needs assistance at any time during the conference call. Please Chris the Starkey followed by the zero on your Touchtone phone.
As a reminder, this conference call is being recorded today Tuesday February 16th 2021.
I would now like to turn the call over to Leann fevers of Shelton Group Investor Relations Leanne. Please go ahead.
Good afternoon, and welcome to diodes fourth quarter and fiscal 2020 financial results Conference call I'm Leanne Sievers President of Shelton Group diodes, Investor Relations firm joining us today are diodes, chairman President and CEO, Dr. Kashi Lu Chief Financial Officer, Brett Whitmire, Senior Vice President of worldwide sales and marketing Emily Yang.
And director of Investor Relations Armaro before I turn the call over to Dr. Lu I'd like to remind our listeners that the results announced today are preliminary as they are subject to the company finalizing its closing procedures and customary quarterly review by the company's independent registered public accounting firm as such these results are unaudited and subject to revision until the company.
All of its form 10-K for its 2020 fiscal year ending December 31, 2020. In addition, management's prepared remarks contain forward looking statements, which are subject to risks and uncertainties and management may make additional forward looking statements in response to your question there.
Therefore, the company claims the protection of the Safe Harbor for forward looking statements that is contained in the private Securities Litigation Reform Act of 1995.
Actual results may differ from those discussed today and therefore, we refer you to a more detailed discussion of the risks and uncertainties in the company's filings with the Securities and Exchange Commission, including forms 10-K and 10-Q.
In addition, any projections assets company's future performance represent managements estimates as of today February 16th 2021 diodes assumes no obligation to update these projections in the future as market conditions may or may not change except to the extent required by applicable law. Additionally, the company's press release and management statements. During this conference call.
Will include discussions of certain measures and financial information in GAAP and non-GAAP terms included in the company's press release are definitions and reconciliations of GAAP to non-GAAP items, which provide additional details also throughout the company's press release and management statements. During this conference call. We refer to net income attributable to common stockholders as GAAP net income.
For those of you unable to listen to you Didnt caught tire call at this time, a recording will be available via webcast for 90 days in the Investor Relations section of diodes website at Www Dot diodes Dot com and now I'll turn the call over to does chairman President and CEO. Dr case, you lose Dr. Lee. Please go ahead.
Thank you yeah.
Welcome everyone.
Thank you for joining us today.
We ended the year at.
Achieving the highest quantity.
In company's history.
Even fun.
Excluding share.
<unk> from our a condition of diodes.
Semiconductor.
GAAP gross on November 13th.
Total organic revenue grew seven 8% sequentially.
And 10, 7% year over year.
Demonstrating the continued success of our product.
And the customer expansion and it sticks.
What do you mean from our telecom products.
In the automotive market.
Also reached record levels.
Wake automotive revenue.
In 24% sequentially.
And the 40 per cent year over year.
Bolt on free each contributed to our solid market share gains in the quarter.
All Rosa accomplishments.
Notable achievements.
Specially considering the ongoing global Pandemics.
Fortinet first full completion of it always here quickly.
The integration process has to be an intervention smoothly.
On December 1st.
We initially announced the new alteration structure.
For the combined companies.
And the NAV scare you.
Senior Vice President.
Who is in charge of older Bitches School.
And also has been tested with all integration activities.
We have been ex U.
Walk into qualified tile product in it always see factually.
We expect to begin making production.
Stuck in the middle of this year with expectation of.
Ex in 'twenty 'twenty, one with significant momentum in this day.
In regard to reporter.
Customer and market synergies.
Gross are multiyear efforts that spend the port out to Belmond caused this by working closely with our customer and.
And serving them with our combined product portfolio.
As Dick mentioned in all of them being released today.
I only see Pichet news was immediately accretive to our results.
Earnings per share on a non-GAAP basis in the fourth quarter.
As I mentioned.
We'd be D. C also offers future opportunities for synergistic growth.
And expansion across our in market pull.
Our offering.
Customer and.
The manufacturing footprint.
In addition to real synergies.
The repurchasing of 14 point some percent of share that.
Worse Pro versus Inc.
I'll buy you always see.
With drive additional and empowers when combined with.
Solid operating day Leach.
As we look to the first quarter, we expect to further extend this strong momentum.
And once again set a new revenue and gross profit Rick.
Sequential gross profit.
Adjusted both organically and on a consolidated basis in what has previously been I seasonality.
Quarter for our business.
This anticipated growth.
It's convenient driving by rig P O S.
In the fourth quarter.
We look forward to reporting our ongoing progress.
We remain focused on integrating the LSE pitches file.
File capitalizing on the opportunities.
For continued growth.
Expansion.
With that let me now turn the call over to Brett to discuss our fourth quarter financial results and our first quarter 'twenty 'twenty one guidance in more detail.
Thanks, Dr Lu and good afternoon, everyone.
As part of my financial review today, I will focus my comments on the sequential change for each of the line items and would refer you to our press release for a more detailed review of our results as well as the year over year comparisons.
Revenues for the fourth quarter 2020 was a record $354 million, which included $16 $9 million of one month of revenue from LLC, an increase of 13, 2% on a consolidated basis and seven 8%.
On an organic basis from the $309 $5 million in the third quarter of 2020.
Gross profit for the fourth quarter was also a record at $122 $7 million and included $2 $5 million from L. S C or 35.0% of revenue on a consolidated basis and 36.0 per cent of revenue for diodes only.
This compares to $111 $1 million or 35, 9% of revenue in the third quarter 2020.
GAAP operating expenses for the fourth quarter, 2020 were $82 $9 million or 23, 7% of revenue.
On a non-GAAP basis were $75 million or 21, 4% of revenue, which excludes $4 million of amortization of acquisition related intangible asset expenses, $2 5 million restructuring costs and $1.5 million of.
Other acquisition related costs. This compares to non-GAAP operating expenses in the prior quarter of $73 $2 million or 23, 7% of revenue.
Total other expense amounted to approximately $3 $7 million for the quarter, including $4 million in interest expense $3 $7 million in foreign currency loss, partially offset by $3 $5 million of other income and 487000 of interest income.
Income before taxes and Noncontrolling interest in the fourth quarter, 2020 was $36 $1 million compared to $33 $3 million in the previous quarter.
Turning to income taxes, our effective income tax rate for the fourth quarter was approximately $16 seven per cent.
GAAP net income for the fourth quarter, 2020 was $29 $7 million or <unk> 59 per diluted share.
Which included <unk> <unk> per share from LSC and compared to GAAP net income of $27 $2 million or 51 cents per diluted share in the third quarter 2020.
The share count used to compute GAAP diluted EPS for the fourth quarter 2020 was $50 4 million shares.
Which reflects a reduction in the weighted average share count due to the repurchase of approximately $7 8 million diodes shares from the LLC for the one months since closing.
As mentioned in our press release today, we expect the share count for the first quarter to be approximately $45 7 million shares.
Non-GAAP adjusted net income for the fourth quarter was $37 $3 million or <unk> 74 per diluted share, which excluded net of tax $4 million of acquisition related financing and other acquisition related costs $3 $3 million.
Noncash acquisition related intangibles expense $2 million of restructuring costs, and a 1.7 million dollar gain in value of certain LLC investments.
<unk> contributed <unk> <unk> per share to fourth quarter non-GAAP earnings.
Non-GAAP adjusted net income in the third quarter, 2020 was $32 $8 million or <unk> 62 cents per diluted share.
Included in the fourth quarter 2020, GAAP net income and non-GAAP. Adjusted net income was approximately $5 $1 million net of tax of noncash share based compensation expense, excluding share based compensation expense both GAAP earnings.
<unk> per share and non-GAAP adjusted EPS would have increased by 10 cents per diluted share for fourth quarter 2020, and nine cents for the third quarter of 2020.
EBITDA for the fourth quarter was $67 $1 million or $19, one per cent of revenue compared to $63 $3 million or 25 per cent of revenue in the prior quarter.
We have included in our earnings release, a reconciliation of GAAP net income to non-GAAP adjusted net income.
And GAAP net income to EBITDA, which provides additional details.
Cash flow generated from operations was $68 million for the fourth quarter 2020.
Free cash flow was $33 $5 million for the fourth quarter, which includes $27 $3 million for capital expenditures.
Net cash flow in the fourth quarter was a negative $319 3 million, which included the purchase of lite on semiconductor during the quarter for approximately $453 $4 million.
Turning to the balance sheet at the end of fourth quarter cash cash equivalents restricted cash plus short term investments totaled approximately $327 million.
Working capital was $514 million and total debt, including long term and short term was $451 million.
In terms of inventory at the end of fourth quarter total inventory days decreased to approximately 114 in the quarter on a consolidated basis and 110 days for diodes, only as compared to 120 last quarter.
Finished goods inventory days also decreased to 31 from 32 in the third quarter 2020.
Total inventory dollars increased $45 $1 million to approximately $305 $4 million, which reflects the addition of LSC.
Total inventory in the quarter consisted of $17 $1 million increase in work in process of $15 $7 million increase in finished goods and a $12 $3 million increase in raw materials.
Capital expenditures on a cash basis for the fourth quarter 2020 were $27 $3 million or seven 8% of revenue, which remains within our target model of 5% to 9%.
Now turning to our outlook.
Building on our growth momentum in the fourth quarter and record POS results. We expect revenue in the first quarter of 2021 to increase to approximately $400 million plus or minus 3%, which represents a record on both an organic and consolidated basis.
For a combined increase of 14% sequentially at the midpoint.
This guidance represents organic growth significantly better than the typical seasonality of sequentially down 5% on average in the same prior two year periods.
We expect GAAP gross margin on a consolidated basis to be 33, 6% plus or minus 1%, which includes an approximately 3% impact due to a full quarter of LSC.
Non-GAAP operating expenses, which are GAAP operating expenses adjusted for amortization of acquisition related intangible assets are expected to be approximately 22% of revenue plus or minus 1%.
We expect net interest expense to be approximately $3 $3 million.
Our income tax rate is expected to be 18% plus or minus 3% and shares used to calculate diluted EPS for the first quarter are anticipated to be approximately $45 7 million shares.
Please note that purchasing accounting adjustments for <unk>.
A $3 $3 million after tax preparer com and previous acquisitions is not included in these non-GAAP estimates.
With that said I'll now turn the call over to Emily Yang.
Thank you Brett and good afternoon.
Fourth quarter revenue increased 13, 2% quarter over quarter on a consolidated basis, and seven 8% organically, which is at the high end of our guidance, primarily due to better than expected demand in Asia, followed by North America and Europe.
Looking more closely at the fourth quarter revenue U S.
Revenue reached record level with stressing our expectation well the continued growth in the first quarter.
Net inventory in terms of weeks decrease quarter over quarter, which is slightly below our define normal range of 11 to 14 weeks, we expect distributor inventories to return to our normal range in the near term.
Let's see how the global sales in the fourth quarter Asia represented 81% of revenue Europe, 11% and North America eight per cent.
In terms of our end markets computing represented 23 per cent industrial 23 per cent consumer 22% of revenue communications 20 per cent and automotive 12 per cent of revenue, we achieved record revenue in automotive and computing end markets.
I went to computing being driven by record quarterly revenue for our per account product.
Now, let me review the end market in greater detail.
Starting with automotive volume continues its strong growth momentum achieving record quarterly revenue and reaching 12% of the total revenue. This represents a growth of almost 24% sequentially and 40 per se year over year. They are three application areas, where diodes continue today.
<unk> significant traction, including connected driving which consist of Adas telematics and infotainment system.
First diet and safety, including lighting, and brushless DC motors as well as powertrain coffers conventional hybrid electric vehicles.
In connected drive Inc. We saw demand for our new products and infotainment lighting control system speedometer whore alarm systems, more specifically diodes automotive grade switching TD, Ed Diener diodes, and Crystal oscillators contributed to the growth in this application.
Income for starting in safety, we had strong success with our MOSFET brushless DC motor controllers. The next dry first and bipolar transistor Inc.
Patients such as day like many light styling instrument lighting as well as Gaye driver Ic's interior wireless charging R. L E D dry foods and our power transistors are also gaining market share in this space Hotel life interior elimination and exterior lighting applications.
Our unit cold or hot Fat switch family is also gaining strong market traction with female superstition fan growth as well as truck and window open their application.
In vehicle powertrain diodes supplies into conventional internal combustion engine powertrain as well as for hybrid electric vehicles. Our SBR rectifier has been designed into many of this application. We have also secure multiple design wins and opportunities plus switching.
<unk> diodes, and rectifier and discrete MOSFET in battery many system.
Hey vehicles as well as emerging applications like many electric vehicles.
Micro mile Heartbreak and E School day system.
In the industrial market revenue increased 18% sequentially as we continue to extend our momentum in applications, including solar power Inverters power distribution systems, and smart metering system, all of which were the main contributors in driving growth of our products we offer.
So continue to see strong demand for our high voltage rectified province in smart infrastructures Moshe.
Well as adoption of our PCI Express packet switch in the industrial applications to come that multiple pcie endpoint with the CPU.
Yes.
Also during the quarter, we began to see increasing new design, Inc. L. E D driveways, and UV lighting application as well as numerous pcie and design wins for our Y V. L. D. L product family. We also saw Revpar growth for our newly released D. C. D C converter.
L E D lighting you need.
Per power tools and charging application.
Additionally, our series of voltage regulators and SBR devices continued to gain traction in DC fan applications with the MOSFET demand increasing for both discrete based inverters and module basing fire test.
In the consumer market shipments for the adapter power IC continue to growth throughout the year. We also saw high demand in the gaming and high resolution display market as end user increasingly require high quality P. V deal provided HDMI and display twice as a result of this trend.
HDMI anticipate while we drive for a gain traction with key chipset vendor F&B side. We're also seeing an increased number of decent Titan Inc. For LCD drivers as well as demand for larger monitor continues to growth.
Also in the consumer we continue to see strong interest for our discrete products, including bipolar transistors ultra small sized transistors and Schottky barrier diodes, Inc. Applications like amplifiers, Bluetooth headphones and drums.
Turning to communication market wireless communication applications continue to expand driving revenue generation was Dino TBS Diodes, Inc. Bluetooth.
Smart speakers and smart lighting as well as point to point and point to multi point links.
Hi, search TV ads for smartphone power line protection <unk> strong growth momentum in new fast charging applications, along with video cameras assets control panels and audio broadcasting system.
We're also seeing more decile, Inc, and design wins in mobile phone cable modem optical network terminal five D. CPE routers radio remote unit and these stations applications for our MOSFET low saturate at high voltage transistors, low voltage hall sensors, and our F. L D.
<unk> products.
Bipolar junction transistors, SBR and Schottky product are also gaining traction in applications like <unk> outdoor at this point.
At this point routers power over Ethernet switches cable modem Wi Fi routers, Iot gateways and mobile battery applications.
Lastly in computing, we reached record quarterly revenue driven by record quarterly revenue for per account product.
Due to COVID-19 shelter in place continue to drive demand for new and upgraded laptops tablets and other related products.
Also seeing strong demand for our power management LDL Hall sensor DC to DC converters, low switches and audio amplifier product in the notebook and monitor application.
C protection for USB type C. In the notebook and portable devices also continued to be strong area for TBS SBR and schottky products.
Also during the quarter growth momentum continues in surfer application.
Along with good momentum in our timing products family to support PCI Express Gen. Four and Gen. Five requirement. This provides flexibility to our customers with seamless migration from PCI Express Gen. Four PCI Express Gen four in the future without changing the tiny pasty sign.
In summary, we ended 2020, achieving the highest quarterly revenue in the company's history and arthritis other quarter of growth in the first quarter, both organically and on a consolidated basis to set a stage for strong year in 2021. This.
Growth reflects the success, we'd be achieving with our total solution sales approach and demand creation effort to increase the content and share across new and existing customers and applications.
We look forward to the capitalizing on the synergies and opportunities that lie on semiconductors offers to diodes across our end markets product offerings customers and manufacturing footprint.
With that we now open the floor to questions operator.
Thank you.
Ladies and gentlemen, if you have a question. Please press Star then one on your telephone.
To withdraw your question press the pound key.
And our first question comes from the line of Gary Mobley with Wells Fargo.
Hey, everyone hope, you're staying warm and bridges Dallas I wanted to start out by asking some questions about light now that you've had a couple of months with the company under your belt.
I know in your prepared remarks, you talked about qualifying some of your existing diodes products on some of the light on manufacturing facilities, but could you just speak about the timeline for some of the sales synergies to be wrung out of the acquisition.
Yeah.
Hi, Terry.
Well we are.
We're sorry to qualify deployed out in the we call C K fab okay.
The current 30, we all almost.
Dang.
And probably one more quarter, we should be completed finished qualification okay, but.
It takes time to do the PCN to notify the customer to get customer assets.
The site change and so we.
Looking that probably.
Ramp up.
Current <unk> is about 50%, though we are looking at somewhere around 70 per se.
Third quarter, and probably 80 per se by entered the year because.
Customer to us.
Good.
Change notice.
For the.
And.
Well some of them pick up even much in doing so we are looking at that kind of sketchy.
Right.
Emily.
Just to add little bit color related to the sales per Vinci I think this is really depends on the market sentiment and also the customer qualification qualification schedule.
Thank for that area of synergy is probably going to take somewhere between I would say six months the best in your area to maybe a couple of years right. So again, it's really down to the market sentiment and also the customer specifics.
Okay I wanted to I had a follow up question as well related to light on in our industry with the niche you backdrop, where a lot of your competitors you're capacity constrained in what ways could diodes benefit from having this underutilized manufacturing capacity at line I'm, assuming all of the qualifications go.
All according to plan in other words.
How easy given those circumstances will be for you guys take some market share from from your competitors, who are who have got capacity constrained.
Okay.
Gary Let me address that question I think overall rate the current global short flow for semiconductor supply.
Actually help diodes right. If we just look at a four two.
We did have a record revenue with seven 8% sequentially and 10, 7% year over year growth, which is really a strong evidence of our continued success in the product content and customer expansion initiatives right. So if we just look at the first quarter guidance, we actually guided 14%.
Quarter over quarter growth at the midpoint.
And compared to our seasonality slowdown in average we talk about you know for the last two quarters about 5%. Bob. This is again a significant sign of the continued success right. So we do see you know some other constraints so other than the MOSFET.
We actually see some of the tightness, but what we've been doing it's actually aggressively working with our customers and understand their true demand and we're able to resolve some of the bottlenecks right I think for the MOSFET, we've been very aggressively working with our foundry partners to really kind of resolve the other balance problem and at this moment we are working.
Also you know if you remember the S fab two eight inch expansion as well as the chief App that we acquired more than eight years ago to expand our capacity in both of the SAPIEN sales with this areas right. So I think longer term, we do have enough wafer fab capacity.
That's actually again the G fast rate majorities eight inch also some of the six inch fab capacity.
And also with the Lite on semiconductor acquisition that we recently closed in November and that will also give us additional six inch capacity at the JK fat that Dr. Lu mentioned.
So you know I think with all of this right. So I think we are well positioned for our future growth and this is really focusing on the.
Additional business with.
With our internal capacity to support it.
I appreciate it thank you.
As you know to what and when you're talking about.
Actually ramp it up.
Shanghai Fab.
Yep.
H.
Amp up the age capacity in Shanghai Fab.
Thanks, Dr. Lu.
Thank you.
And our next question comes from the line of Matt Ramsey with Cowen.
Hi, This is Josh buchalter on behalf of Matt. Thanks for taking my question and congrats on the great results.
I guess asking the previous question a little differently.
Are you able to help us understand a little bit how much of the significant above seasonal first quarter guidance is being driven by you guys being in a pretty unique situation of having some slack in your own internal capacity and able to fill orders that some of your peers arent.
Well I think that's exactly right some of that seasonality strength that we have is a couple of things one. It's the fact that we have capacity that we're continuing to be able to take advantage of through the all the various.
Avenue's, meaning the LSC G fab expansion as well as S fab.
Top of that it's the continued strength, we're seeing across the broad market and actions we've been taking across time to make sure and be prepared for that so I think it's a blend of those things that allow us to enjoy the above seasonal growth in the first quarter.
Got it. Thank you and then I guess, given the above seasonal fourth quarter, and first quarter and I realize you're not guiding the full year, but.
Anything you can provide us on visibility into the second quarter and the rest of the year or how we should think about the.
The seasonality of the rest of the year, thanks, and congrats again.
Yeah.
So this is Emily let me maybe start out making a few comments. So we don't usually provide guidance beyond the first quarter.
Thank you know Dr. Lu mentioned before overall the market is still extremely dynamic right. So we just need to monitor the situation closely I think overall this is not specific to diodes I think everybody expect 2021 to be up market. I think we are definitely not in a position to call it a percentage or provide guidance.
At this moment, but we'll keep you posted as we progress throughout the years.
Got it thank you.
Thank you and our next question comes from the line of William Stein with Truth Securities.
Great. Thank you for taking my question I want to add my congratulations, especially on the very strong Q1 guidance.
There's one aspect of it though that's a little surprising the opex that you're guiding to looks like it's more than what the.
Standalone companies would've delivered combined together sort of almost a dis synergy I think Dr. Lu you've talked about this as related to incremental R&D required.
And perhaps that's to qualify the diode products.
Right on production line.
Can you maybe quantify that a little bit what that investment is and perhaps as a follow up you can talk about what if any incremental costs are required to develop the light on portfolio to a level where it is.
Something that you can effectively cross sell to the heritage diodes customers. Thank you.
Well.
The we the R&D expense in I always see is the all in the variable of diodes. So how do you intend to do it.
Increased.
R&D tool above the San therefore us idle.
Our entity cash.
Net.
That is what we intend.
To do so.
<unk> is we need to start to forecast input into deals.
Differentiate typo.
Current 30 day, Florida most of that most of them is a commodity type of product.
My expectation is driving that.
The focus swipe the.
Product explanation.
Tool.
Produce differentiated type of product.
You will see.
They show a pickup Norwich.
And.
Once it's another question.
Is that.
I was asking about the effort to cross sell the light on product into your traditional customer base. I think you referred to in incremental R&D investment to make that happen, perhaps you can.
Perhaps you can discuss that a bit is it a matter of.
Just proving out the quality of these products to your heritage customers or is it in developing new products altogether.
Well, yes no.
But it's not adjusted that.
Number one is I think.
We are talking about so.
So the synergies we're talking about one is market synergy because they are very weak in the non.
Natural and automotive market segment, so we intend to do.
Introduce Dale Florida into those two markets those markets are combined.
Number two is our customer synergies they typically cannot be.
In two day multinational.
Customers.
A lot of the focus we're going to do to improve.
The focus improve the design.
In those major customers number three is the product portfolio. You know we are focused on solution sale instead of components sales and solution sales.
<unk>.
In the product portfolio through different condition inside titles in the past.
And I always see the dos.
Could you issue, we had and we're going to Inc.
We've got 18 their product line into our total product portfolios and to introduce them into solution.
Customer solution.
So doses, what we intend to do other than 45 day applaud up good.
Now for the major customer that's just one of the action, but the Q1 will be the SUV.
Uh huh.
We are going to go after.
Thank you.
Thank you.
As a reminder, ladies and gentlemen to ask a question you will need to press star one on your telephone.
Our next question comes from the line of David Williams with loop capital.
Pardon me David Please check your mute button.
My apologies there.
I had pressed.
Pressed mute, but congrats on the quarter and thanks for letting me hop on and ask a question certainly appreciate it.
I wanted to ask a little bit about maybe some of the share gains that youre seeing today and how sticky you think those may be just in terms of picking up new customers from maybe where your competitors maybe had been unable to supply do you think that's fairly sticky in terms of those wins or do you see a reversal or maybe some of them.
Returning to the competitor as you can get capacity constraints begin to fall off.
Right. So David I think this is Emily let me address that question Ray. So anytime there is a market change always creates opportunity for diodes right. So one of the key focus for US is really focused on the content expansion and customer expansion that we talked about.
So I believe that you know new opportunity new doors opened to us and that will be a long term opportunity the diodes.
It's not going to be a short term. So I think you know again the total solution sales that we've been focusing on and continue to expand our technology what Dr. Lu just mentioned earlier and the continued to drive the content expansion. So we just need to capture the opportunity when his presence.
And make sure we continue to support the customer and build a strong customer relationships. So that will be a long term business instead of short term.
Okay.
Thanks, and then maybe in terms of the gross margin rate. If you can kind of think about how the utilization rates come up in the next couple of quarters. How do you think the gross margin benefit and when can you get the LSC margin profile may be more in line with the corporate average or the maybe the diodes legacy.
Bridge.
Yes, David I think that.
What youll see and I think what Youll see in the guide is that we're consistently improving the diodes organic margin consistent to what we had said and were basically bringing in the LSC business consistent to what we had imagined the impact would be.
Immediate thing we're working on as Dr. Lu talked about a little bit was the qualification of the <unk>.
Diodes products in the OSC factories, which will help.
The LSE margins, we expect to be able to start making those.
<unk> middle of the year, which gives us a decent amount of momentum as we come out of the year.
And then the other synergies that were listed these are more multi year areas of synergy and so the real key as Dr. Lu mentioned invest more in the product line immediately start getting traction with design in and design win and so some of those longer lead time.
Synergies, we can get some traction on that quickly, but I think this is going to be a gradual multiyear activity to bring the LSC margins in line with our expectations for continued growth.
Okay.
Thanks, so much.
Thank you and our.
Our next question comes from the line of Tristan <unk> with Baird.
Yes, hi, everyone. This is Dustin speaking for Tristan today, thanks for taking our questions.
For first question I know you guys talked earlier about some supply constraints and MOSFET.
First just wanted to clarify that that's mostly in automotive and maybe if you guys can just give an expectation on when the supply constraints may disappear.
And then secondarily are you able to tweak mix given the tightness and do you plan on raising.
Raising asp's.
Then I have a follow up after.
Right. So let me address that question I think for the overall shortage.
Sorry. This is really no surprises trip a lot by the eight inch shall I take that we see right. So I don't think we are in precision to pre day. When does this ex going to be ofer, what the Io has been focusing its really expanding some of our internal capacities to support our future growth right. So we talked about.
G fast.
King.
Wired widen a year ago and by the second half day, Yeah, we got to ramp up some significant capacity in both ancient also in six inch Dr. Lu talk a little bit about the S. Fab two eight inch capacity increase as well and with the line all semiconductor acquisition increase more six inch capacity for osprey.
So overall I think what we focused on was really position ourselves to really support our customers through the man and that'd be able to continue to expand from that area.
So.
Second question you have is related to the product mix, so changing the product mix improving margin has been ongoing focus with iOS throughout the last few years and you could definitely see some of the results that we demonstrated to you guys already and that will continue to be the focus. So we want to continue to focus on driving good and you.
New products with better margin profile to really support our customers' needs. So that strategy will not change if it they really well with our total solution sales strategy.
So I think that's really your second part of the question. So again price increase is.
I'm definitely not the key focus for diodes again, we really want to focus on the product mix improvement as well as the total solution sales demand creation and also the content expansion.
Got it great Thanks, Emily and.
Obviously <unk> has been very strong I think you guys. Just said that was a record.
Just wondering overall, how pricing pricing has been axiom recently and if theres been significant changes, maybe you guys could quantify them.
And then finally.
Have you seen any evidence of double ordering at either tier one or tier two customers. Thank you.
Right. So I'm definitely in my Christopher I mean in my speech that we had a record revenue up here.
We've definitely seen strong momentum actually across all the regions, which is the reason, we actually guided really strong <unk>, 14% growth at the midpoint right. So you know when the demand and supply I mean, the demand is getting tight definitely we're seeing our pricing is holding more firm than before which is normal.
That we're seeing overall I think again diodes focus it's really more focusing on working with the customers to understand their true demand. So we can actually provide a better support with them and build a long term relationship with them to continue to expand our portfolio right. So that's always been our focus and will continue.
It would be our focus.
Thank you.
Yeah.
Thank you.
I'm showing no further questions so with that I'll turn the call back over to chairman President and CEO, Dr. Lu for any closing remarks.
Yeah.
Thank you for your participation on today's call.
Operator, you may now disconnect.
Okay.
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