Q4 2022 Texas Instruments Inc Earnings Call

January 24, 2023

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Welcome to the Texas instruments fourth quarter 2022 earnings release Conference call.

Dave Pahl head of Investor Relations and I'm joined by our Chief Financial Officer Raphael was already.

For any of you who missed the release you can find it on our website at Ti Dot Com Slash IR.

Call is being broadcast live over the web and can be accessed through our website.

In addition, today's call is being recorded and will be available via replay on our website. This call will include forward looking statements that involve risks and uncertainties that could cause ti's results to differ materially from management's current expectations. We encourage you to review the notice regarding forward looking statements.

Contained in the earnings release published today as well as Ti's. Most recent SEC filings for a more complete description.

You likely saw last week, we announced that have evil on will become president and CEO on April one and that rich Templeton will continue as our chairman.

I'm sure you'll want to join me in congratulating both of them.

Secondly, let me provide some information that's important to your calendars.

Next week on Thursday February 2nd at 10 Am Central time, we will have our capital management call similar.

Similar to what we've done in the past Raphael and I will summarize our progress and provide some insights into our business and our approach to capital allocation.

This will include an update of our 300 millimeter capacity expansion plans to support the increasing confidence that we have in our long term growth.

Moving on today, we will provide the following updates.

First I'll start with a quick overview of the quarter.

Next I'll provide insight into fourth quarter revenue results with some details of what we're seeing with respect to our customers and markets.

I'll then provide an annual summary of our revenue breakdown by end market and lastly, Raphael will cover the financial results and our guidance for the first quarter of 2023, starting with a quick overview revenue was $4 $7 billion, a decrease of 11% sequentially and 3% from the same quarter a year ago.

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As expected our results reflect weaker demand in all end markets with the exception of Automotives.

A component of the weaker demand was customers working to reduce their inventories.

In the first quarter, we expect a weaker than seasonal decline with the exception of automotive as we believe customers will continue to reduce inventory levels.

Turning to our segments fourth quarter analog revenue declined 5% year over year and embedded processing grew 10%. Our other segment declined 11% from the year ago quarter.

Now I'll provide some insight into our fourth quarter revenue by end market I will focus on sequential performance again this quarter as it is more informative at this time.

First the industrial market was down about 10%.

The automotive market was up mid single digits with strength in most sectors.

<unk> was down mid teens with broad based weakness.

Next communications equipment was down about 20% and finally enterprise systems was also down about 20%.

Lastly, as we do at the end of each calendar year I'll describe our revenue by end market for 2022.

We break our end markets into six categories that are grouped by their life cycles and market characteristics.

The six end markets are industrial automotive personal electronics, which includes products such as mobile phones Pcs tablets and Tvs.

Communications equipment enterprise systems, and other which is primarily calculators.

As a percentage of revenue for 2022 industrial was 40%.

Automotive about 25% personal electronics <unk> communications equipment seven.

Enterprise systems, 6% and other was 2%.

In 2020 to industrial and automotive combined made up 65% of Ti's revenue up about three percentage points from 2021 and up from 42% in 2013, we.

We see good opportunities in all of our markets, but we place additional strategic emphasis on industrial and automotive our.

Our industrial and automotive customers are increasingly turning to analog and embedded technologies to make their end products smarter safer more connected and more efficient.

These trends have resulted and will continue to result in growing chip content per application, which will drive faster growth compared to our other markets.

Raphael will now review profitability capital management, and our outlook Raphael.

Dave and good afternoon, everyone as Dave mentioned fourth quarter revenue was $4 7 billion.

Gross profit in the quarter was $3 1 billion or 6% to 6% of revenue from.

From a year ago gross profit decreased primarily due to lower revenue and great capital expenditures and the transition of elfa related charges to cost of revenue.

Gross profit margin decreased 320 basis points.

Operating expenses in the quarter were $863 million up 9% from a year ago and about as expected.

On a trailing 12 month basis operating expenses were $3 4 billion.

Or 17% of revenue.

Restructuring charges were $48 million in the fourth quarter and were associated with the <unk> factory production costs at.

As production started at the beginning of December discuss them transition to cost of revenue, where there will be reflect that moving forward. In addition, depreciation has begun on these assets.

Operating profit was $2 2 billion in the quarter or 47% of revenue operating profit was down 13% from the year ago quarter.

Net income in the fourth quarter was $2 billion or $2 13 per share earnings per share included <unk> <unk> benefit for items that were not in our original guidance.

Let me now comment on our capital management results, starting with our cash generation cash flow from operations was $2 billion in the quarter capital expenditures were $1 billion in the quarter free cash flow on a trailing 12 month basis was $5 9 billion down 6% from a year ago.

In the quarter, we paid $1 1 billion in dividends and repurchased $848 million of our stock.

In total we have returned $7 9 billion in the past 12 months to owners.

We also increased our dividend per share by 8% in the fourth quarter, marking our 19th year of dividend increases.

Our balance sheet remains strong with $9 1 billion of cash and short term investments at the end of the fourth quarter in the quarter, we issued $800 million in debt total debt outstanding was $8 8 billion with a weighted average coupon of 293%.

Inventory was up $353 million from the prior quarter to $2 8 billion.

And days were 157 up 24 days sequentially.

Next to summarize the benefits of the chips Act, we accrued about $350 million on our balance sheet under long term assets in fourth quarter. In addition to the $50 million of crude in the third quarter.

These accruals are due to the 25% investment tax credit for investments in our U S factories.

This will eventually flow through our income statement, that's lower depreciation and we will receive the associated cash benefit in the future.

Now, let's look at some of these results for the year in 2022 cash flow from operations was $8 7 billion.

Capital expenditures were $2 8 billion or 14% of revenue.

Free cash flow for 2022, well, it's $5 9 billion or 30% of revenue.

Our cash flow reflects the strength of our business model as we have said, we believe that growth of free cash flow per share is the primary driver of long term value.

Turning to our outlook for the first quarter, we expect Ti revenue in the range of $4, one 7% to 453 billion.

Earnings per share to be in the range of $1 64 to $1 90.

We now expect our 2023 annual effective tax rate to be about 13% to 14% in closing we will stay focused in the areas that add value in the long term, we continue to invest in our competitive advantages, which are manufacturing and technology, our broad product portfolio reach of our channels and diverse and long live.

Positions.

We will continue to strengthen these advantages through disciplined capital allocation and by focusing on the best opportunities, which we believe will enable us to continue to deliver free cash flow per share growth over the long term with that let me turn it back to Dave. Thanks.

Raphael operator, you can now open the lines for questions in order to provide as many of you as possible an opportunity to ask your questions. Please limit yourself to a single question.

After our response, we'll provide you an opportunity for an additional follow up operator.

Thank you if you would like to ask a question simply press the star key followed by the digit one on your telephone keypad also if you are using a speaker phone. Please make sure. Your mute function is turned off to allow your signal to reach our equipment. Once again press star one at this time.

We will first hear from Chris Caso of credit Suisse.

Yes. Thank you good evening.

I guess the first question is if you could just maybe characterize.

What youre seeing going into Q1, you are talking about that being worse than seasonal.

Is that also broadly based in terms of the decline as <unk> seen in Q4 and beyond.

Guide by segment, but any kind of color you could provide by segment as to what Youre seeing and the extent to which customers are burning inventory as you launch in the first quarter.

Yes, Chris Thanks, Thanks for that question.

Say that the trends that we saw in the fourth quarter will continue.

<unk>.

Meaning that.

We expect our.

End markets to decline with the exception of automotive so automotive is.

Continuing to be resilient.

And we do believe as you just said that the customers are continuing to.

Work to get their inventories.

Lower power.

I do thank you I wonder if you could speak about the pace of depreciation expenses as you go through next year.

You spoke about our fab I know it started production and it's hitting depreciation now is there additional incremental depreciation coming from our fab as we go through the year.

L Fab as you I guess, maybe the timing of that when that starts production and start hitting depreciation and then how should we think about some of the benefits that come from chipset that tend to decrease depreciation over time I'm sure you can speak about that.

On the capital day coming up as well.

Yes, let me take that and we're going to go through.

All of that both the Capex depreciation and ICC and Zach in great detail next week.

Now what I would tell you is as you said RFS II OEM production Lehigh is in production. So both of those are running that caused now is.

Cost of revenue and they are both depreciated.

They are both the depreciating in that that is a function of the.

When the equipment is placed in service it started depreciating right.

So it's both of those ramps equipment goes in service start depreciating, but big picture, what we told you last year.

On depreciation was that it would ramp roughly linearly to about $2 5 billion in 2025.

And again, we will give you an update on that next week, but I do want to say just as I said 90 days ago. That's been since we've talked about this last year, our confidence surrounding our long term growth prospects have only grown and as you alluded to we've had the chips that also since last year.

Inflation pass in August .

So next week well give you the all the puts and takes between between those trends and I will paint a clearer picture at that point.

And maybe just to add a small piece that linear ramp will go from about $1 billion of depreciation that we had this year add about a half a billion dollars a year until we get to two 5%. So just kind of doing the math right. So thanks, Chris and we'll go to the next caller. Please.

Okay.

Next we'll hear from Chris Danley with Citi.

Alright, Chris Brothers.

Hey, guys.

Dave I believe you said that your confidence in the long term growth rate has only increased maybe just share with us what you've seen in the last three to six months.

Giving you that confidence do you expect the I guess non auto markets to bounce back this year and Conversely would you expect auto to cool offered remained strong all year.

Yes.

Again.

Thanks for the question Chris.

The longer term growth rates are really <unk>.

Speaking to how things are going to grow over the next three and five and 10 years.

And that higher confidence comes from the higher semiconductor content growth that we're seeing particularly in industrial and automotive.

And the fact that that those two markets now make up two thirds of our revenue.

So just as that structurally grows faster than the rest of the market.

We are convinced more than ever that that will continue to drive our topline.

And.

Also the products that we have inside of those markets.

And I would say also the strong customer response, we're getting to our geopolitically dependable capacity so.

Since we've shared publicly our plans.

Last February capital management call.

The response has been very very strong.

Really the three things that are adding to our confidence.

Sure.

Yes, one on inventory.

It's bouncing up towards your your long term target can.

Can you talk about when you would start to ease back utilization rates.

Maintaining that inventory and then maybe spend a little bit of time on the mix I know theres still shortages out there how do you think how long do you think it will take to I guess balance out your inventory this year to achieve some sort of ideal mix.

Yes, So let me take that first Big picture, Let me point you to our scorecard to one that we use for capital management, when we talk about the objectives.

And when it comes to inventory is to maintain high levels of customer service keeping stable lead times, while minimizing inventory obsolescence.

Our strategy in our portfolio.

Todd said, it's long lived.

A very diverse customer base or the risk of obsolescence is very low. So that's part of the equation and the other part is the upside that we gain by having that inventory both short term and long term to support support customers. So that's why we were comfortable holding higher levels of inventory I've been talking about.

From current levels.

We could add 1 billion to $2 billion of additional inventory and the timing that all depends on revenue trends. So.

If there are higher then it will take longer.

Certainly it depends on a little weaker than it will be a little faster to get there.

There's a number of angles on that chip stock versus finished goods, we have a mix of both of those and in some cases.

It makes sense to have more one than the other but they're both very low risk.

So that's how we think about.

Great. Thank you.

And we'll go to the next caller please.

So shire Hari of Goldman Sachs.

Hey, How's it going thank you so much for taking the question.

Dave I'm, hoping you guys could talk a little bit about trends in China. What you saw in Q4, if there was any choppiness toward the end of the quarter and more importantly, how youre thinking about Q1 and beyond.

I guess, there is hope out there that China as an economy bounces back in 'twenty. Three are you guys seeing any early signs of a recovery in terms of end consumption of your of your product.

Yes, I'd say.

Some of the disruptions that we saw earlier in the year, but we didn't see any of that.

Here in the in the fourth quarter.

And so nothing exceptional to report.

With China as a region versus.

Versus the other regions and we have long held the practice that we.

We call it out if there is something going on so really none.

Nothing exceptional.

And certainly as that economy comes back and consumption increases in China.

Obviously, helping the world GDP, but that would obviously help us as well.

What we would expect so we have a follow on.

Yes, I do your analog business in the quarter was down 5% year to year end.

Obviously you guys are the first to report so it's hard for us to compare and contrast, how you guys did relative to your competition in your peer group, but.

It feels like.

You may have underperformed in the quarter and I realize it's only one quarter.

Whats the competitive landscape like today, what kind of pricing trends are you seeing as demand patterns start to soften. Thank you yeah.

Yes.

I'll take that question and <unk> like to add but I think.

Certainly looking at.

Any particular quarter as we've talked about before.

Our performance is best measured over time.

That's the way that the markets.

Behave and.

Even looking at.

One year, even even longer you've got to look at three and five and 10 years of performance, especially when you go through choppy times like we've been through in the last.

18 months or so.

And.

So pricing.

Just a comment on that I'd say that there's nothing unusual going on with pricing.

As you know pricing doesn't move quickly in our markets.

Our practices and pricing.

I know that they've changed with many of our peers our practices have not changed.

We just continue to price.

Aggressively in the marketplace.

But that pricing isn't the reason why customers.

Choose our products, that's usually not the top few reasons why they choose our products. So so really no changes on that front.

Thank you for those questions.

Harlan sur of Jpmorgan.

Hello. Good afternoon. Thanks for taking my question in the last earnings call. The team talked about seeing an increase in cancellations.

Cancellations continued to increase to Q4 that they level off and then.

Base business, what are the aggregate trends, you're seeing within your customer six to nine month sort of a rolling forecast.

Yes, Harlan so the first question is.

In a weakening environment not too surprising that cancellations that were up in the quarter. So we did see an increase there.

And not from a consignment versus classic backlog customers really not much difference there their visibility, even though we will get visibility out six months.

Their visibility to their demand can change as we know very rapidly within 90.

90 days or certainly even within 30 days is as that.

Now those windows move a long time, so I.

I would say that there is not.

Much change in that.

And oftentimes if customers aren't canceling orders, what theyre doing is rescheduling them back out in time. So we're certainly seeing that that happened as well you have a follow up.

Yes, so embedded or 10% year over year growth in the second half of last year had also a slight sequential growth in the fourth quarter.

The business is holding up relatively well versus analog and I know that.

<unk> seems to have moved past some of the headwinds in this segment as you've sort of focused investments on selective markets and opportunities right is that we are focusing like helping the near term trends and embedded with all of the restructuring how do you think about the Florida opportunities and growth outlook for embedded over the next few years.

Yeah, Yeah. Thanks, Great Great question and thank you for it.

First I would just say that our efforts having impact they are.

And I would just say that.

We're pleased with the progress that we're making there with embedded.

And we believe that progress and those results just need to be measured again over time.

We take it to work on that business.

And we will continue to do that when.

When we think about the market opportunity for embedded and analog we think that both of those markets have about the same growth opportunities.

In time.

The growth rates will converge.

It could be you could see differences in any given quarter, but.

Longer term we believe.

They can grow it at the same rates. So thank you and Heartland will go to the next caller. Please.

Next we'll hear from Timothy Arcuri of UBS.

Thanks, a lot Dave I had a question about just the analog business generally both with respect to share and margins, but the margins are quite a bit lower than in early 'twenty. One on quite a bit more revenue I guess is that all just still supply chain related caution do we get that back at some point and then on share just just in that same point.

Sure.

We don't know what.

All of the calendar fourth quarter, it looks like but it's pretty clear that the share is going to be down about 150 basis points. This year and you kind of back to 2012 levels. So I just wonder what kind of what's going on there is there some.

Is there some pricing issue that might explain why that share would be down so much. Thanks, David and then I have follow up.

Let me go ahead and start and yes.

Yes, let me address first on the on your margin question.

<unk> is a huge portion of the company so anything youre seeing in analog is what youre seeing at the company level and when it comes to gross profit. We're very pleased with the results came in.

About as expected.

Any decrease as we said in the prepared remarks, the decrease primarily due to lower revenue.

Transition of alpha related costs to cost of revenue as well as the cost related to increased investments over the last several quarters that are now flowing through the P&L and those are long term investments that are going to position us very well for top line growth for many many years to come.

And the second part of your question I think they've already answered you got to look at this over a long time not any one quarter.

Particularly the rain during choppy times so.

Stay tuned on that and I'll, just add that I think our approach.

Building closer relationships with customers.

<unk> has served as well as you know we've.

And taken more of our revenue direct.

As well as providing services through <unk> through.

Ti dot com. So it's provided a lot of advantages including.

Us being better able to see and respond to changes in demand.

And.

As customers are reducing their inventories now we haven't employed any long term sales agreements are noncancelable non reschedule contracts.

We just focused on on customers and trying to meet their needs.

And service them well for for the long term I think all of those things has.

Yes.

In a position where we do believe that we're <unk>.

April two.

Grow the top line faster over over the next few years and as we talked about will give you some insight into that next week and how thats going to change some of our plan and stuff.

Was that Tim's follow up for <unk>.

Tim.

Thanks.

So just to comment that auto is grow in Q1 is that a year over year comment or you expect auto to be up on a.

Q on Q basis also in Q1 thanks.

Yes, so year on year automotive was up.

About 30%.

Just put that in context from fourth COVID-19, I just picked that because.

Pre pandemic levels, our revenues in auto are up.

In the mid seventies, so we.

We continue to see.

Strong strong growth there. So that's the year on year the comment that we made before that it was up mid single digits.

A sequential comment.

Thank you we'll go to the next caller please.

Next we'll hear from Ambridge Srivastava of BMO capital markets.

Hi, Thank you very much Dave I'll, just take the volatility.

Thats interesting data point.

Versus the pre pandemic, but im just looking at.

The auto business and the rest of the business everything is decelerating as you would expect and auto seems to be if not accelerating kind of in that high 20% 30% range.

Wanted your perspective on.

What's your sense as you see all these things are pretty interconnected and maybe it's a quarter or two quarters before everything.

Follows the same cadence so would just love to get some perspective.

Some some from you guys on the disparity between autos on the restaurants.

Roger businesses.

Yes.

I am Bruce Thanks.

Say that as we.

You almost have to go back to the.

At the beginning of.

Of the pandemic and how revenues behaved as we went through first quarter and into the second and third.

And if you remember.

As the pandemic pandemic spread in the third quarter, we saw wide.

Very deep.

Cancellations across the all of the markets.

Including automotive.

But as we all went home to set up our home offices either bought out.

New monitor printer RPC, so very quickly.

Personal electronics customers.

Came back and came back very strong if you remember.

The other markets began to follow but automotive was was the last to respond in people early in the pandemic weren't shopping for cars, they werent going out of the house.

So they had that issue and as manufacturers tried to reopen.

<unk> had more issues with Covid protocols.

Working.

To bring their plants back online so.

It's not too surprising that.

Is it a synchronously.

Came out of eastern critically going down so.

<unk>.

All of these markets, we believe over the long term will behave the same.

And at some point, we believe that we will see a correction in automotive it may not but we don't we just don't know and we will continue to.

Ship product to customer demand, obviously very strong theres lots of reasons why.

Besides us gaining share theres more content, there is mix and other factors inside of that but clearly there is inventory built across all markets is inclusive of automotive so give pharma.

It did.

Just a quick one on the on the cash side of the chipset.

And whatever it may be incorrect, but Mike.

The collection is that Jim.

Q1, Q2 timeframe the government will delineate kind of the guidelines and what's your expectation of when the cash starts to come in.

Yes so.

So the tips that has both an ITC investment tax credit and grant so youre asking about the grand.

We're still working through those details we do not have an update to share right now.

Does the applications opening February so we are actively we're going to actively seek funding on those in whatever for whatever we could quantify it so we're going to submit our application in February .

But right now we don't have any information to share on that.

The all the accruals that we have taken so far the $400 million.

And we have taken are all for the ITT for the investment tax credit of 25% investment credit.

For U S based manufacturing.

And the timing on that Rafael you will.

Let us know about when that flows through the cash flow later on.

Yes in fact, let me take a second and kind of walk through how we flow through their financial so.

You can actually look at our balance sheet on page four of our release the other long term assets that is up to $1 1 billion.

You can see the increase year on year, that's the 400, Thats, where the 400 million receivable is Florida for that ITC.

Not taken the ITC that 400 million would've gone through property plant and equipment. So you can see property plant equipment $6 $9 billion that would have been seven three so instead. He is on a long term asset a receivable. Therefore, it's not going to depreciate that 400 doesn't appreciate because it's not part of PP&E and eventually we will get the cash now to your question.

Right now <unk>.

Our interpretation of the law, we're not going to get that cash.

Until a lot of late 'twenty four.

And then every year it would be like one year in arrears right. We've got it you're going to kind of one year late but that could change clearly thats something that companies are are advocating forward to get that cash earlier, but right now we're not planning to get that until 24. So again.

That's how you see it on the balance sheet lower PP&E Youll see our receivable. Instead, then because of lower beginning you have lower depreciation over the life of the asset and then that receivable because theyre reasonable eventually you'll get the cash. So it goes from a receivable due to the cash line item. Then eventually we will return to the owners of the company we use it up.

For other corporate purposes, hopefully that answers. Your question, yes, maybe just quick. Thank you very much 2004 timing is tied to when we file our taxes for 'twenty three right. Yes. So yeah, so not to add more confusion, but we get the cash flow that through.

Filing their taxes. However, this will not affect the tax rate because the accounting will put that as I just described.

Lower PP&E.

And you actually see the cash and the cash flow statement investing section.

But but the actual receiving up the guys happens.

Tax filing time in.

October or so of September of every year.

We just pay less taxes, though that but again not to confuse you.

Tax rate will not change great.

Thank you guys.

Okay. Operator, we have time for one more one more caller. Please.

Thank you and our final question. Unfortunately, it will come from Joshua bus shelter of Cowen.

Hey, guys. Thanks for squeezing me in.

You mentioned customers getting inventory lower in the quarter.

Youre more direct than many of your peers that you'd have a better view into end demand theoretically and so.

Can you help us understand are we close to bottoming do you think we're getting to healthy levels and were there particular end markets that saw more acute inventory correction in the short term. Thank you.

Yes, Josh.

Maybe just quickly obviously when customers begin reducing inventory.

One one quarter phenomenon it usually takes several quarters for that to happen.

Have insight and obviously, we will also depend on what happens to their end demand.

<unk>.

Which which we can't predict.

And but yes, we do believe that we get better visibility because we do have more direct relationships with the with with customers. Overall. So you have a follow on.

Yes. Thank you.

A lot of attention gets paid to your capex for obvious reasons, but R&D grew.

I think seven 8% in 2022 after being flat for a few years and I think you guys fair or unfair get dinged for under investing on the R&D lines. I was wondering could you walk through some of your priorities for that spending and how should we think about R&D into 2023 recognized it might be a question for next week. Thank you.

Sure No I'm happy to address that so first this are.

Long term investments in nature, the R&D clearly.

That's why we got the continuing to build on the broad portfolio. That's what we have process technology and that will get results over many many years into the future and we're going to protect those investments.

But it's not just R&D even in SG&A, we have.

Areas that are tied to capabilities datacom as days of ethic sample. That's another place, where we're investing and thats tied to our long term topline growth.

The company.

A strengthening the reach of channel.

Dana you could add capex to that picture Thats also obviously, a long term investment to strengthen our manufacturing and technology advantage. If you look at the over the last four or five years, our opex R&D and SG&A. They have been at a very steady $3 2 billion.

Like four or five years this year for the first time, we picked that up to three 4 billion. So we went up a little bit as we increased investments at all Joe.

And impact on <unk>.

The inflation, which we're not immune to that you can expect that to continue to increase a little bit over 23% over the next several years.

We continue to to increase investment there is also the inflation component and.

But big picture our dose.

Those are great long term investment that will fuel the growth of our company over the next 10 to 15 years.

Okay. Thank you Joshua and thank you all for joining US again, we look forward to sharing with you our capital management update next Thursday February 2nd at 10, a M central time and a replay of this call will be available shortly on our website good evening.

That does conclude today's conference. Thank you all for your participation you may now disconnect.

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Welcome to the Texas instruments fourth quarter 2022 earnings release Conference call.

Dave Pahl head of Investor Relations and I'm joined by our Chief Financial Officer Raphael was already.

For any of you who missed the release you can find it on our website at <unk> Dot Com Slash IR.

This call is being broadcast live over the web and can be accessed through our website.

Contained in the earnings release published today as well as Ti's. Most recent SEC filings for a more complete description.

You likely saw last week, we announced that <unk> will become president and CEO on April one and that rich Templeton will continue as our chairman.

I'm sure you want to join me in congratulating both of them.

Secondly, let me provide some information that's important to your calendars.

Next week on Thursday February <unk> at 10 am Central time, we will have our capital management call.

<unk> to what we've done in the past Rafael and I will summarize our progress and provide some insights into our business and our approach to capital allocation.

This will include an update of our 300 millimeter capacity expansion plans to support the increasing confidence that we have in our long term growth.

Moving on today will provide the following updates.

First I'll start with a quick overview of the quarter.

Next I'll provide insight into fourth quarter revenue results with <unk>.

Some details of what we're seeing with respect to our customers and markets.

I will then provide an annual summary of our revenue breakdown by end market and lastly, Raphael will cover the financial results and our guidance for the first quarter of 2023, starting with a quick overview revenue was $4 7 billion.

A decrease of 11% sequentially and 3% from the same quarter a year ago.

As expected our results reflect weaker demand in all end markets with the exception of Automotives.

A component of the weaker demand was customers working to reduce their inventories in.

In the first quarter, we expect a weaker than seasonal decline with the exception of automotive as we believe customers will continue to reduce inventory levels.

Turning to our segments fourth quarter analog revenue declined 5% year over year and embedded processing grew 10%. Our other segment declined 11% from the year ago quarter.

Now I'll provide some insight into our fourth quarter revenue by end market I will focus on sequential performance again this quarter as it is more informative at this time.

First the industrial market was down about 10%.

The automotive market was up mid single digits with strength in most sectors.

Electronics was down mid teens with broad based weakness.

Next communications equipment was down about 20% and finally enterprise systems was also down about 20%.

Lastly, as we do at the end of each calendar year I'll describe our revenue by end market for 2022.

We break our end markets into six categories that are grouped by their life cycles and market characteristics.

<unk> end markets are industrial automotive personal electronics, which includes products such as mobile phones Pcs tablets and Tvs.