Q4 2021 Power Integrations Inc Earnings Call
Yeah.
Good afternoon. My name is Emma and I will be your conference operator today at this time I would like to welcome everyone. The power integrations fourth quarter earnings call all.
All lines have been placed on mute to prevent any background noise. After.
The speaker's remarks, there will be a question and answer session.
If you would like to ask a question. During this time simply press star followed by the number one on your telephone keypad. If you would like to withdraw your question again Press Star one. Thank you Joe Shiffler director of Investor Relations you May begin your conference.
Thank you Emma and good afternoon, everyone and thanks for joining US with me on the call today are bothered by the Chrisman, President and CEO of power integrations, and Sandeep Nair, our Chief Financial Officer.
During this call we will refer to financial measures not calculated according to GAAP.
non-GAAP measures exclude stock based compensation expenses amortization of acquisition related intangible assets and the tax effects of these items.
A reconciliation of non-GAAP measures to our GAAP results is included in our press release.
Our discussion today, including the Q&A session will include forward looking statements denoted by words like will would believe should expect outlook forecast anticipate prospects and similar expressions that look toward future events or performance such.
Such statements are subject to risks and uncertainties that may cause actual results to differ materially from those projected or implied.
Such risks and uncertainties are discussed in today's press release.
And in our Form 10-K filed with the SEC on February five 2021.
This call is the property of power integrations and any recording or rebroadcast is expressly prohibited without the written consent of power integrations now I will turn the call over to Bob.
Thanks, Joe and good afternoon.
We concluded an outstanding year with another quarter of strong revenue growth profitability and cash flow.
Revenues for the fourth quarter was $173 million up 15% compared to the strong fourth quarter of 2020.
Gross margins approached the high end up our model and our non-GAAP EPS grew 38% from a year ago.
For the full year non-GAAP EPS grew 92% on revenue growth of 44%.
Well about the revenue growth rate of analog semiconductor industry, which was on track to grow about 30%.
Over the past three years, we have averaged 19% topline growth almost three times the rate of the analog sector.
The revenue growth in 2021 was broad based and diversified with all four revenue category is growing at least 75%.
We gained share across a broad range of end markets, including appliances smartphone Chargers notebooks and a range of verticals in the industrial category.
We have strong momentum coming out of 2021, and we could not be more excited about the opportunities ahead of us in 2022 and beyond.
The secular trends underpinning our growth last year remain in full effect, including energy efficiency electrification smart homes and appliances and advanced mobile devices.
Dan was a significant contributor to our growth in 2021 with revenues tripling from the prior year and we expect strong growth again in 2022.
Yen based industries products and complementary products like many cap are driving an evolution in charges and we have a wide range of impressive smartphone and notebook designs coming to market in the months ahead.
We also have new revenue streams coming online this year, some motor drive as a breakthrough products begin ramping and appliance customers and from automotive with multiple EBIT design wins going into production later in the year.
Our unique foundry model and timely investments in capacity, which enabled us to win market share in 2021 will help US again in 2022 as lead times remain stretched across the industry.
Our team executed beautifully last year under challenging conditions assessing genuine customer needs building, the right mix of parts and keeping customer lines running and guarding against the inventory bills and excess of it.
Our inventories are lean.
Lead back to our target level and we are in a great position to support strong demand in 2022.
We will also introduce new products. This year that will extend our lead over the competition by expanding our addressable market.
We have a pipeline of products incorporating industry, leading technologies, such as our proprietary Gan switches flex link isolation technology.
The bridge switch architectures for motor drive and our scale gate driver technology for high power.
In all we expect to double our addressable market to more than $8 billion or.
Over the next five years with the expansion.
Primarily coming from the appliance industrial and automotive markets.
We announced one such product.
This week, a new member of the industry's three family of Ics qualified for automotive use.
Our <unk> products are rapidly gaining acceptance in EV power supplies, thanks to their efficiency and their high level of integration, which saves such as board space, while enhancing reliability.
This latest switch device designed for next generation 800 volt EV platforms incorporate 1700 volt silicon carbide MOSFET.
The challenges of high voltage are new to the automotive market and customers are eager to tap our expertise.
As noted earlier, we have multiple automotive design wins going into production later this year, including an emergency power supply for a tier one automotive supplier.
We have additional design scheduled for production in 2023 and 2024 and.
And a strong pipeline of design activity involving seven of the world's top 11 automakers.
While revenues will ramp gradually given the length of the automotive design cycles.
Excited about our progress and we are investing in products people and facilities to make automotive a significant part of our business in the coming years.
Another new revenue stream for 2022 is motor drives.
Our breakfast products drive brushless, DC motors, which is being adopted by appliances appliance makers.
Keep pace with the efficiency requirements, such as China's new standards for air conditioning as well as the recent updates to European efficiency standards.
The expedited offer a higher efficiency than incumbent solutions.
Pounding the energy saving benefits Brushless motors.
They also enable faster time to market by reducing component count and integrating safety features that are normally implemented in the system software.
This fits that alone can say months of delay.
The need for a new safety certification asset any software update.
Our leadership in our plants power supplies.
Our strong relationship.
Relationships at appliance makers around the world puts us in an excellent position to sell bridge switch and expand our content in appliances.
We expect our first material revenues in 2022 with two designs going into production in the first half at a major air conditioning customer followed soon thereafter by a dishwasher design at another top tier appliance maker.
In all we expect to be in production this year with at least half a dozen appliance customers and that number should expand significantly next year.
The current suite of bridge switch products addresses motors up to 400 watts.
Competition opportunity up about half a billion dollars.
Which is growing along with adoption VLDL C motors water pumps compressors fans and other applications.
A significant portion of our Sam expansion over the next several years will be in motor drive applications with follow on products addressing higher power levels.
While we are excited about these two new revenue streams, which will be an important part of our growth story in the years ahead. We are equally excited about the continued growth in our core markets.
We grew our consumer revenues, 40% last year through a combination of share gains and expanding dollar content in appliances.
China's new efficiency standards for air Conditioners were a key contributor and we will see a fully as impact of those standards in 2022.
Our delivery performance also continues to be a key advantage in appliances as competitors allocate scale capacity to other end markets.
Industrial revenue grew 35% in 2021, driven by a diverse set of applications, including metering.
Home automation lighting battery power tools and broad based industrial.
Our growth in industrial market reflects not only the attractiveness of our products, but also our success in reaching smaller customers with online design resources and our efforts to drive higher productivity in our distribution channel.
Okay.
Revenues from the communications category grew more than 45% in 2021.
By advanced charges for smartphones, while computer revenues nearly doubled driven by again based notebook adapters and high power aftermarket charges.
As anchors nano tube products.
In May we announced that anchor was the exclusive launch partner for our Gan based in dosage for chipsets last month.
<unk> CEO would reveal that his company had shipped more than 10 million units of nano products in 2021 and offered a strong endorsement of our products and customer support.
We expect strong growth of advanced charges again in 2022 as the market continues to move away from Commoditized looked at designs in favor of fast as smaller more versatile designs that required advanced semiconductor technologies.
We have several high volume design is scheduled to go into production.
Over the next few months, including our high power Gan based inbox charger for a major Chinese smartphone OEM.
As well as new compact notebook adapters at multiple customers in the PC market.
And later this quarter, we'll introduce new products targeting ultrafast Chargers with power levels in excess of 100 watts as well as a range of other mid power applications like desktop Pcs power tools and E bikes.
Since I'll demand charges typically feature multiple charging ports and required a sublet power Packer stage they offer a substantially increased.
<unk> content and acquired high levels of both integration and efficiency.
To summarize 2021 was an outstanding year for power integrations, and we are confident in our prospects for 2022 and beyond.
Gan represents one of the most important opportunities ever in power semiconductors, and we are the clear market leader.
Smartphone and notebook Chargers are transforming from throwaway accessories to high Tech appliances.
That help our customers differentiate their products.
Transportation and tools are growing electric and appliances are adding more electronic features while needing to use less power.
Iot and smart home devices need power supplies that are reliable.
And compact with minimal standby power consumption.
And with governments and private sector pushing for lower carbon emissions our products have a critical role to play in the generation transmission and efficient consumption power.
Our eco smart technology saves NFL city to power more than a million and a half homes and we have been doing this for over 20 years.
Our Gan technology will save even more power as it replaces silicon and our gate drivers are used in solar and wind power as well as high voltage transmission lines that deliver clean energy to the grid.
Having surpassed the 500 600, and 700 million revenue milestones in all in the same yet we are looking ahead to the 1 billion Mark.
Our addressable market is large and growing and we are investing in the R&D resources sales reach and capacity to become a $1 billion business and.
And as Sandeep will explain in a moment. We are also underscoring our confidence in the future by investing heavily in our own shares.
Sandeep. Thanks.
Thanks, Pablo and good afternoon, we had another excellent quarter from a financial perspective with revenues above the midpoint of our guidance gross margin near the high end of our model healthy cash flows and a significant return of cash to stockholders.
Our capital allocation decisions reflect our strong balance sheet.
Our expectation of continued cash flow growth and the recent divergence between our share price and our financial results.
Specifically, we took advantage of market volatility, including the turbulence around our promotion to the S&P Midcap index to buyback, 2% of our outstanding shares between November and January .
In January our board allocated an additional $100 million to the buyback.
<unk> has also increased our dividend for the second straight quarter of bumping it by 20% to <unk> 18 per quarter.
Looking now at our Q4 results revenues were $172 $7 million down 2% sequentially.
The communication category was down high single digits, driven by year end inventory reduction in the distribution channel.
Sell through for the communication category was up more than 15% sequentially, indicating that the end customers' inventories have returned to healthy levels. Following the overbuild that took place early last year.
Computer revenues were down mid teens, driven by softness in Pcs, while consumer and industrial revenues each increased slightly from the prior quarter.
On a year over year basis total revenues were up 15% compared to last year's very strong Q4.
The industrial category was our fastest grower up more than 40% driven by metering.
Home automation and broad based industrial applications.
Consumer revenues were up 30% on continued strength in appliances, driven by share gains content increases in end market demand.
Computer revenues were also up 30% year over year, driven by penetration of the notebook market.
Communications revenue were down mid twenties compared to a very strong quarter a year ago. When Oems began building aggressively in an effort to capitalize on the Huawei sanctions.
Revenue mix for the fourth quarter was 35% consumer, 32% industrial 23% communication and 10% computer.
The higher margin industrial and consumer markets accounted for a greater than expected, 67% of our mix in Q4, helping drive non-GAAP gross margin to the higher end of our model at 54, 5%.
Also contributing to the increase in margin odd manufacturing efficiency, including improved yields and desktops.
non-GAAP operating expenses for the quarter were $38 8 million up $1 $8 million from the prior quarter, reflecting increased head count.
non-GAAP operating margin for the quarter was 32%.
The non-GAAP effective tax rate was 8%.
non-GAAP earnings for Q4 were <unk> 83 per diluted share up 38% from a year ago on revenue growth of 15%.
Cash flow from operations for the quarter was $47 2 million.
Diluted share count for the quarter was $61 4 million flat compared to the prior quarter.
We repurchased 423000 shares during the fourth quarter from $38 million.
Repurchases were heavily weighted towards the end of the quarter. So the impact on share count will be seen primarily in the March quarter.
As noted earlier repurchase activity continued after end of the quarter at an accelerated pace, reflecting a price sensitive approach in fact within the month of January we exhausted the $67 million remaining under plan buying back an additional 820000 shares.
As noted in our press release, our board has allocated an additional $100 million for repurchases, which.
Which we would begin to deploy next week should the stock price remains in the range of a price volume metrics.
Other uses of cash during the fourth quarter was $17 million for Capex and $9 million for dividends.
Cash and investments on the balance sheet totaled $530 million at quarter end down $19 million from the prior quarter.
For all of 2021, we returned nearly 60% of our free cash flow to stockholders, including $74 million in the form of buybacks and $33 million in dividends.
Looking now at inventories as Bob noted, we are pressing our advantage on product availability and delivery performance.
Our unique foundry model and our investments in backend capacity have enabled us to build inventories back to a 114 days at year end up 15 days from the prior quarter and within sight of our target level of 125 days.
Channel inventories fell to $6 three weeks down from six <unk>.
Seven weeks in the prior quarter, reflecting sequentially higher distribution sell through mainly in the communication category as well as our preference for keeping inventories in house to be responsive to customer order patterns.
Turning now to the outlook, we expect revenues for the March quarter to be $180 million, plus or minus $5 million the.
The implied year over year growth year over year increase of 4% at midpoint reflects the exceptionally strong quarter, we had a year ago when revenues grew 15% sequentially.
I expect non-GAAP gross margin for the first quarter to be similar to the fourth quarter level of 54, 5%.
End market mix should be less favorable with the communication category showing relative strength, though we expect offsetting benefits from manufacturing efficiencies and higher volumes.
non-GAAP operating expenses are expected to be $41 million in Q1, plus or minus half a million.
The sequential increase reflects head count growth as well as seasonal factors, such as FICA taxes, and the year end shutdown that lowered expenses in Q4.
The non-GAAP effective tax rate for the quarter and the year should be 8% to 9%.
Finally.
I expect diluted share count for Q1 to fall by at least 1 million shares compared December as a result of a buyback.
And now operator, let's begin the Q&A session.
Your first question today comes from Karl Ackerman with Cowen <unk> Company. Your line is now open.
Yes.
Good afternoon gentlemen.
Two questions if I may.
First on the guidance your guidance, particularly strong both in terms of revenue.
And gross margins.
There is nothing normal about this environment, but you are growing well above what is typical seasonal for March.
So my question is is the growth mainly coming in March coming from non communication markets.
And as you address that question are you seeing channel inventory now balanced there or our orders, it's still well ahead of your ability to supply.
So for the <unk>.
In terms of relative mix, the communications will be relatively strong, but as we just mentioned in Q1, but I would say because of our share gains and content increase and our ability to supply we are seeing a significant growth across all four markets.
And that's one of the reasons why we are growing sequentially in Q1, whereas historically.
Q1 has been a slightly down quarter.
And.
We had expected communication to start coming stronger after that in Q4, but as you can see the sell through was great, but they manage the yearend inventory. So the sell in as a result was lower which value we'll see because the inventories are balanced power Q1 will be stronger and communication, but you could see that the sell through and communication was even stronger.
In Q4, but as <unk> indicated I think what we are seeing a positive sign.
For the full year, even looking ahead is the share gains that we have got.
And the ability to supply product to our customer has been a real positive and I think that trend will continue into 2022.
Okay. That's helpful. I appreciate that that dovetails into my second question, which is share gains on.
On the topic of share share gains.
How large of a revenue opportunity do you see bridge switch being over the next few years I asked because.
I was under the impression. This is one of the products that is allowing you to gain share from.
Two competitors that have deemphasize that market. Thank you.
Well the addressable market for our current product that we have introduced is about a half a billion dollars.
As we mentioned earlier, we plan to introduce higher powered versions of bridge switch, which will allow us to expand that addressable market significantly.
And so it's a pretty large addressable market and we are very well positioned in that market not only because our products are more efficient, but also they have a lot of safety features built in hardware, which is very very.
Useful.
In the monitoring the health of the motor, which a lot of customers life.
And more important is that we have eliminated heat things altogether.
The incumbent Technology uses was called what's called an IPM integrated power module and typically has a significantly large heatsink audit.
With our solution. We are so efficient that we don't need any heat sink it all up to 400 watts with the current solution and we plan to extend that power level without using significantly in the future.
Thank you.
Your next question comes from the line of Ross Seymore with Deutsche Bank. Your line is now open.
Hi, guys. Thanks for let me ask a question congrats on the strong result in the guide.
You talked a lot about the share gain side of things and the additional supply, allowing you to be a lot more aggressive than the peers. So I guess, if I thought about 2022 as a whole will that will actually allow you to grow your communications business. Just given it started really strong last year, but ended I think down mid twenty's year over year, how do you expect that to.
The trend for 2022 as a whole.
I think we will grow in all four categories previously as you know as we have guided we thought the communication and computer category would grow faster, but considering the share gains that we have had in consumer and also the strength. We are seeing in industrial it clearly appears to us that the mix for us next year.
<unk> is going to be more favorable than what was in 2021, but having said that I think all four categories will grow.
And I guess as a cyclical question for you there's concerns about behavioral change supply catching up to demand. The fact that you guys have shorter lead times than most because youre proactive inventory management gives you a more real time look at what's happening on the demand side.
Earlier in the year in 'twenty. One you are cautious because of that and then you got more optimistic as the year progressed. So what's the update as of Tonight as far as the cyclical views.
Well. The reason we are more optimistic now is the level of share gains we have gotten in all of the markets is very well diversified which is the.
The best part of it I think and in terms of cyclicality.
I would say Q1, obviously, a stronger than normal cyclicality, but our expectation right now is a little bit early but we think that we will come back to that.
Normal cyclicality from Q2 onwards. It means that we will have some increase in revenue in Q2, and Q3, and then probably a slight reduction in Q4, that's our best guess at this point.
Got you thanks, guys congrats.
Thanks Scott.
Your next question comes from the line of David Williams with the Benchmark Company. Your line is now open.
Hey, good afternoon, and congrats on the quarter lots lots to unpack here, but I guess the first question is really on the automotive side.
It seems like that has been pull forward and I know, it's been an area of opportunity for you all but I think in the past you've kind of looked out and said this will be a little time out but it sounds like you've made a lot of progress just can you maybe give some color around that.
Automotive space in particular, and maybe what some of the newer products and the cadence of products that <unk> been releasing what that means in terms of the overall revenue profile for the year and then maybe for the longer term.
Thanks, David.
What really has surprised us is the level of interest in our automotive products that we've recently introduced over the last year.
Year or two.
Normally automotive it takes a long time to get designed in especially if youre not an automotive supplier people.
Make you go through a lot of steps to even get qualified.
But what we have seen.
Recently over the last year or so is that our products are so compelling.
Just give an example inno switch.
Switch for an emergency power supply.
If youre not familiar with what that means is that electric cars have an emergency power supply that makes sure that one of the batteries, where theres, a 12 volt battery that supplies the control systems.
The main battery the 400 or 800 volt battery gets damaged are disconnected.
<unk>.
Our required that the Cosby maneuverable and can be brought to the sales staff and to do that they have what's called an emergency.
Our supply and that requires the power supply to work all the way from 30 volts to overpower the enrolls input.
And illustrates perfectly suited for that and trying to implement that any other way requires so many external component as it's such a <unk> solution that when they look at in US which isn't my God. This is a perfect.
Solution for that and it takes plotless space I mean, it takes typically like one half to one third of the space on the on the PC Board, which is an expensive space. When you think about it in the automotive terms. So many of the customers have actually shorten their design cycle, especially in things.
Things like commercial vehicles and.
And also <unk>.
Non core type applications, where the design cycles can be completely compressed and were actually very impressed that we are going to have several designs going into production. This year.
And the same is true for our linked switch products. They are being used as auxiliary power supplies, while many subsystems like for example seat heaters.
Air Compressors. This is the air conditioning compressors.
And there are many alike onboard charges equate in Australia power supply the DC to DC converter request and ultimately a power supply.
Are you finding is our product is so well suited faithful have now trying to power many of the subsystems directly from the main badly rather than from the 12 volt battery.
And Thats a trend its very exciting to us so we think.
The noncore business will start growing from this year onwards.
A small amount of revenue this year, even though many of them are going to production, but it will gradually grow over the next several years, but the <unk>.
Car manufacturers will really jump in somewhere in the 25 2025 engineering Youll get a much bigger increase in revenue driven.
Driven not only by inno switch any links rates, but also by.
Gate driver products, which goes into the drivetrain and therefore, it takes longer to qualify.
Thank you for that it is an impressive leap in terms of when we thought you would be designed in there so definitely great to see.
And then maybe if you had talked about the new revenue stream within the appliance market. Obviously, you've had a strong market share there, but I guess are these new revenue streams from existing existing clients or customers or are there opportunities I guess to move into new areas or new customers that you haven't previously served.
Well the new revenue stream from motor control is from existing customers Thats appliance manufacturers, we have very good relationships with them.
And the air conditioning manufacturers and so that is.
That is a relatively easy market, because we know them, we know the customers data loss and so on but automotive is entirely new this will be our new automotive and this switch product is really opening doors for us, especially the latest one we announced which is a 1700 volt silicon carbide based switch which allows you to.
From 800 volt batteries, which is the trend in the in the marketplace. The cars are going to go from 400 to 800 volt batteries and when you go to 800 volt. This problem gets far more complicated and we have the expertise in high voltage to be able to provide a very very simple and elegant solution that is very reliable and <unk>.
Very little space and of course, very efficient, which they care about the especially cared about standby efficiency.
Which we have very very low standby, which is at <unk>.
The advantage to make sure that batteries don't discharge on their own.
So the automotive revenue is completely new to us and we are very.
Impressed that customers are coming to us there.
They are very open minded about using our products.
Thanks, so much and one more for Sandeep. If you don't mind real quick just maybe on the gross margin is there any component to the pricing or anything that we should be thinking about that may come out later or is this purely driven by by the mix shift.
Well I think the way to look at it is.
Obviously, the mix came in much more favorable than what we expected and the manufacturing efficiencies were better than what we thought if youre looking to what will happen in the next year, it's hard to predict but.
We expect that trend to be a gradual decline from the starting for the guidance that we've given for Q1. The mix is going to be more favorable than this year as I talked earlier, but we are continuing to see further input cost pressures, which I think will slow as the year goes by.
The best guitar half for next year is at this point of time that I can model is somewhere in the 53, 554%.
Thank you.
Thanks, David.
Your next question comes from the line of correspond Berg with Stifel. Your line is now open.
Yes, Thank you and congratulations on another great quarter, maybe I can start on that last topic on gross margin.
So on the 53, 5% to 54, that's still that's still higher than kind of what we were thinking before so.
Is that a function of.
<unk> products or are you still expecting that contribution to be mainly mix driven for the full year that is not not just Q1.
I think so.
The mix is going to be favorable next year, which is kind of helping us very nicely and when I was because previously we were talking with our communication.
Bureau will overshadow the other but because of the share gains we think.
The consumer is going to do real well and Youre seeing really good strength in the industrial side.
We've also made good progress in manufacturing and the volume growth is also going to help us with.
Initially we thought we may have a little headwind, but the capacity expansion, but that is going to be less because of the manufacturing efficiency and the volume growth and lastly, the pricing environment is favorable in vitro value pricing. So I think that helps also as part of this whole thing, but I really think it's a combination of effect and the execution we have done.
Sure.
Very good and below.
Just to clarify when you talked about the seven of the top 11 auto Oems with those design wins or is it that you're working with seven of the top 11.
We are working with them.
A design win at all of those.
Companies.
Very good and then the last question you talked about ultra fast and introducing a 100 watt plus product late this quarter.
I mean, we've seen the market wanting to eventually move to 200 watts and things like that so.
How far can you go with the technology.
Gan technology that you have right now.
Well, we can go to very high power levels, but the products. We are targeting right now will easily color.
What has been anticipated.
If you.
You can following USB PD, they have an extended power worsen.
Which can deliver up to 240, <unk> and we will be ready with that solution.
Before people need it.
And Thats again, we will do that without thinking by the way.
Very good congratulations again.
Thanks Bill.
Your next question comes from the line of Gus Richard with Northland. Your line is now open.
Yes, Thanks for taking my question and pronouncing my name correctly.
Just real quick I wanted to talk a little bit about supply.
Remind me how many foundries you work with these days.
Lets say our biggest foundries are.
Absent and LAPIS in Japan.
We have a couple of smaller foundries in addition to that but within each.
Company, we are using multiple of their locations for foundries.
Okay.
These guys have.
Spare capacity or are they getting full as well.
Well, they're all running full but because we have contractual agreements.
We have some debt.
Dedicated capacity and we have managed the capacity extremely well so we had run it all the time.
So when there is a softness in the market, we don't stop running wafers, we build vapors and build our inventory and keep them mainly in wafer form so it doesn't show up as too much in revenue in the instance of one dollar terms and so we did that in Q2 of last year not last year 2020, and that was very helpful and.
You can see now we are building inventory.
Because we can we can believe mentioned, our we expect to get to our targeted inventory in the near future and that will be very helpful for us to handle any upside that might show up this year.
Yes, I was actually thinking more the $1 billion target.
Or are these foundries is going to have to.
<unk>.
A shell if you will or you're going to have to add another guy to to hit that goal or our existing partners sufficient to reach a $1 billion revenue.
We're doing all of that.
Trying to expand within the existing partners. We are in negotiations with them to get more capacity, but we are also adding new foundries. We are discussing new additions. So all of that is going on we are pretty confident we can build enough capacity to get to $1 billion.
<unk>.
Whenever that happens.
Got it. Thank you that's super helpful. And then just on the automotive market.
In your early designs for the.
Emergency backup.
What's your your revenue content.
In the first designs and then once you get into the powertrain.
Or do you think that can grow when you get into 2025.
I would say with the product.
Excluding the powertrain our dollar content will be.
Tens of dollars per car.
Sure.
It just depends on how many power supplies that are and then given the car and that seems to be increasing all the time.
But when we get to the drivetrain.
With the board level products for example, it will be over $100 a car maybe a couple of hundred dollars a car.
It's still in a flux because.
The things are changing quite fast in EV I would say the higher the voltage like they go to Asia levels, we have more content than had fortinet bowls.
Good news is the <unk>.
Most of the vehicles are going to 800 volts, because there are a lot of savings when you've got 800 volts.
And when you go to eight and evolve our product shine, even better because we can handle high voltage better than anybody else.
Yes.
Got it and then are you primarily focused on evs or youre doing internal combustion engine.
Vehicles as well.
We don't play in the internal combustion vehicles, because the voltages are too low even the hybrids are only 48 balls, we only play in pure electric vehicles and.
And when I say, let vehicles not just cars, but also all commercial vehicles buses trains.
You name it.
Other types of commercial vehicles that I've used.
But for transportation.
Goods.
Got it got it alright very helpful. Thanks, so much and congratulations on the front.
Thanks, Chris.
Your next question comes from the line of Christopher Rolland with Sig. Your line is now open.
Hey, guys I also want to Echo my congrats.
Just given the strong guidance for next quarter I was wondering if you could.
Provide maybe a little bit more color as to.
Sequential changes or force shrank.
The segments, how do you see them playing out.
As Bob indicated I think the.
The biggest driver will be the communication segment and the other segments will be flat or slightly down, but the communication segment will be the biggest one as I said the sell through was very very strong in Q4, and they managed to keep the inventories low and as a result, we now feel that the overhang that we've had through the year.
What started in the beginning of the last year is now cleared through and Thats why we feel we have a good Q1 for communication, yes, just quickly add he is talking about Q1, yes for the whole year. We think all four end markets will do very well request.
And the mix is going to be if you look at the whole year the mix will be more favorable on a whole year basis than it was this pixel.
It'll be more favorable meaning that on a relative basis.
Consumer and industrial.
Computer will grow faster.
Excellent.
I might have missed it but did you.
Reiterate gross margin at 54 for the whole year.
I was just.
No what I, what I said is that the best modeling I can do because the mix will be favorable but there is further input cost pressures that the best guess I had right now at $53 $5 54.
For the whole year for the whole year, but I also said from Q4 Q1, it will gradually taper down as the year progresses.
Okay, and what exactly were those manufacturing efficiencies that we.
We get yield first time, one of the advantages of running very high volume is there are always ways to improve efficiency and one of the things we have done it.
Is moved to a new test platform, which is a much more capable.
Vertical tester and reviews as our test time and test cost. So that's one of the subtleties around the second one is it has given us the opportunity to fine tune our products to improve the efficiency and yield of the product so that we get lower cost overall.
And we got to do this because we continue to see input pressure on our cost. So that's why we have to balance that out and that's why it's helping us.
I would also add is that.
When you run a higher volumes utilization is better utilization of your test stores, yet assembly equipment all of that is better.
And that also helps.
Great job.
Sandeep you can run my stock portfolio anytime you want nice nice purchase this quarter.
Thanks, a lot thanks Christopher.
At this time I would like to remind everyone in order to ask a question Press Star then the number one on your telephone keypad, we'll pause for just a moment to compile any last minute Q&A.
There are no further questions at this time and Joseph I'll I'll turn the call back to you.
Alright, thanks, everyone for listening there will be a replay of this call available on our Investor website, which is investors that power dot com. Thanks, again and good afternoon.
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