Q4 2022 Mobileye Global Inc Earnings Call

January 26, 2023

Any forward looking statements based on the business environment as we currently see it.

Dan Galves: Please note that today's discussion contains forward-looking statements based on the business environment as we currently see it. Such statements involve risks and uncertainties. Please refer to the accompanying press release, which includes additional information on the specific risk factors that could cause actual results to differ materially. Additionally, on this call, we will refer to both GAAP and non-GAAP figures. A reconciliation of GAAP to non-GAAP financial measures is provided in our posted earnings release. Joining us on the call today are Professor Amnon Shashua, Mobileye CEO and President, and Anat Heller, Mobileye CFO. Thanks, and now I'll turn the call over to Amnon.

Such statements involve risks and uncertainties. Please refer to the accompanying press release, which includes additional information on the specific risk factors that could cause actual results to differ materially. Additionally on this call. We will refer to both GAAP and non-GAAP figures, a reconciliation of GAAP to non-GAAP financial measures.

<unk> in our posted earnings release, joining us on the call today are professor unknown sure mobilized CEO and president and a not Heller mobilized CFO .

And now I'll turn the call over to <unk>.

Thank you Dan Hello, everyone and thank you for joining our earnings call.

Amnon Shashua: Thank you, Dan. Hello, everyone, and thank you for joining our earnings call. 2022 was a really important year for Mobileye. We executed a successful IPO at a time when this was only possible for very unique companies. I see many benefits to being public again, but most important is we have already seen a big increase in visibility of Mobileye from our customers and partners, driven by more focus and attention by the broader media and analysts. This drives incremental business opportunities by amplifying attention on our advanced solutions, and we think this plays into the incremental momentum we are experiencing. Financial results in 2022 were clearly very good. Revenue grew by 35%, adjusted operating profit grew by 25%, and we generated almost $550 million of operating cash flow.

2022 was a really important year for mobility, we executed a successful IPO at the time when this was only possible for very unique companies.

I see many benefits to being public again. The most important is we have already seen a big increase in visibility of mobilized from our customers and partners driven by more focus and attention by the broader media and analyst.

This drives incremental business opportunities by amplifying attention on our advanced solutions and we think this plays into the incremental momentum we are experiencing.

Financial results in 'twenty, two we're clearly very good revenue grew up by 35% adjusted operating profit grew by 25% when we generated almost $550 million of operating cash flow.

More important than those headlines is the source of our growth started to shift from pure volume to a combination of volume and higher content per vehicle.

Amnon Shashua: More important than those headlines is that the source of our growth started to shift from pure volume to a combination of volume and higher content per vehicle. Our advanced products carry much higher price per vehicle than our historical products, and we saw a clear evidence of that in 2022, where one-third of our revenue growth came from higher ASPs. In terms of future business generation, 2022 was a record year. Just in that year alone, we generated new business representing $6.7 billion of estimated future revenue at about $105 per unit on a content per car blended basis. This is about 3.5 times our actual revenue in 2022 and double our current ASP. Overall, we estimate that our current book of business represents over $17 billion of total future revenue through 2030.

Our advanced product carry a much higher price per vehicle than our historical products and we saw a clear evidence of that in 2022, where one third of our revenue growth came from higher Asp's.

In terms of future business generation 2022 was a record year just in that year alone. We generated new business represented six $7 billion of estimated future revenue at about $105 per unit on a content per car blended basis. This is about three and a half times our actual revenue in <unk>.

2022, and double our current ASC.

Overall, we estimate that our current book of business represents over $17 billion of total future revenue through 2013.

As long as our new business wins continued to outpace our actual shipments in a particular year. This number will continue to grow.

Amnon Shashua: As long as our new business wins continue to outpace our actual shipments in a particular year, this number will continue to grow. Also, to be clear, this number excludes our consumer AV and mobility as a service backlog. Beyond the high level numbers, we saw positive business trends across all business lines. The front-facing camera, single chip, ADAS business continues to run like a machine. We grew revenue with every one of our top 10 customers in 2022 and continue to win significant new business in this segment. A key development in 2022 is that many large volume ADAS platforms now have a variant that includes Cloud-Enhanced ADAS through our REM map. This volume will drive higher ASP and recurring revenue from the maintenance of the map.

Also to be clear this number excludes our consumer and mobility as a service backlog.

Beyond the high level numbers, we saw positive business trends across all businesses.

The front facing camera.

Chip Adas business continues to run like a machine.

We grew revenue with every one of our top 10 customers in 2022 and continued to win significant new business. In this segment a key development in 2022 is that many large volume Adas platforms now have a version that includes cloud enhanced <unk>.

Through our ramp through our <unk>.

Mmm.

This volume will drive higher ASP and recurring revenue from from the maintenance of the map.

We also saw a very significant uptick in interest in secured volume an hour supervision product in all regions from both traditional and startup Oems really across the board.

Amnon Shashua: We also saw a very significant uptick in interest and secured volume in our SuperVision product in all regions from both traditional and start-up OEMs, really across the board. There are many reasons for the increased traction. There is a big difference between a development product and a launch product. Launching SuperVision with Zeekr in China was a major catalyst in driving interest from other OEMs. A program like SuperVision is a major commitment from an OEM in time and capital. Offering a solution that is already in production means that the investment will result in a valuable product with high probability. This is very important in the current environment. Number two, we now have the ability to demonstrate the full feature set of SuperVision anywhere, not just in Israel. Our REM maps now cover nearly all roads in the US and Europe.

There are many reasons for the increased traction.

There is a big difference between the relevant product and launched products launching supervision with Zika and China was a major catalyst in driving interest from other Oems a program like supervision is a major commitment from an OEM and time and capital offering a solution that is already in production means that the investment will result.

And a valuable product with high profitability. This is very important in the current environment.

Number two we now have the ability to demonstrate the full feature set of supervision anywhere not just in Israel.

OEM maps.

Now covered nearly all roads in the U S and Europe as a.

<unk>, we have been able to execute long distance expedition with carmaker with carmakers customers covering thousands of miles in both U S and Europe with little human intervention. This ability to show that the technology truly works everywhere has been critical in moving discussions to the decision feet.

Amnon Shashua: As a result, we have been able to execute long-distance expeditions with carmakers, customers covering thousands of miles in both US and Europe with little human intervention. This ability to show that the technology truly works everywhere has been critical in moving discussions to the decision phase. Mobileye's EyeQ Kit software development tool is another important development. The ability for an OEM to take Mobileye's truly differentiated assets like surround computer vision, REM mapping, and our decision-making software as is, but then customize the consumer-facing parts of the system with their own software, is something we couldn't offer until recently. It has served as a catalyst for strategic partnership discussions for SuperVision and beyond with many of our OEM customers, particularly ones that began their own software development at the earliest.

Mobilized IQ kits software development tool is another important development the ability for an OEM to take more mobilized truly differentiated assets like surround computer vision.

Mapping and our decision making software as is but then customize the consumer facing part of the system with their own software, it's something we couldnt offer until recently.

It has served as a catalyst for strategic partnership discussions for supervision and beyond with many of our OEM customers, particularly ones that began their own software development at the earliest.

In the meantime, the competitive environment, among Oems has ramped up with Chinese automakers and Tesla benefiting from surround camera based systems, both in profit and technology prestige.

Amnon Shashua: In the meantime, the competitive environment among OEMs has ramped up with Chinese automakers and Tesla benefiting from surround camera-based systems, both in profit and technology prestige. This is creating an overall sense of urgency among other OEMs to invest in wide operational design domain, eyes-on, hands-off, systems that have high probability of success in terms of performance and validation. We expect SuperVision to be a very large growth driver in 2023 and beyond, and shared our expected volume forecast in our CES presentation, which is available at our IR website. This product also serves as a launch point for our eyes-off consumer AV product, Chauffeur. Because SuperVision operates across a very broad operational design domain, it makes the transition to a series of eyes-off ODDs an incremental and modular step instead of a series of moonshots.

This is creating an overall sense of urgency among other Oems to invest and wide operational design domain is on hand off the system.

The high probability of success in terms of performance and validation.

We expect supervision to be a very large growth driver in 2023 and beyond and shared our expected volume forecast in our CES presentation, which is available on our IR website.

But this product also serves as a launch point for our eyes of consumer product chauffeur.

Because supervision operate across a very broad operational design domain. It makes it transitioned to asterias.

<unk> of OLED, and incremental and modular step instead of a series of mantra.

In other words, all the heavy lifting of describing the environment in great detail.

Amnon Shashua: In other words, all the heavy lifting of describing the environment in great detail, the driving policy required to maneuver the car in any traffic scenario, and the requirement for high-definition maps covering all types of roads are all done in the SuperVision system. From here, adding redundancies to the perception system to take eyes-on to eyes-off becomes incremental work. The successful productization of SuperVision with Zeekr and this concept of modularity to eyes-off has created a lot more interest from our customers to develop consumer AV products. Essentially, every SuperVision discussion we're having now is also including scope for a follow-on Chauffeur eyes-off program. We saw recent evidence in this with a premium European OEM, which kicked off a SuperVision program in Q4. During discussions, the scope of the program expanded to include a Chauffeur program that will launch in 2026 timeframe.

Rubbing policy required to maneuver the car in any traffic scenario and the requirement for high definition maps covering all types of roads are all done in the supervision system.

From here I think redundancies to the perception system to take ayes onto eyes off becomes incremental wins.

Yes.

The successful productivity of supervision with Zika.

And this concept of modularity to ice has created a lot more interest from our customers to develop consumer product essentially every supervision discussions we're having now is ultra including scope for a funnel onshore for either of the program.

We saw recent evidenced in this with a premium European OEM, which kicked off a supervision program in Q4.

During discussions the scope of the program expanded to include a software program that will launch in 2026 timeframe. The <unk> portion of this program alone represent an expected $1 $5 billion opportunity through 2014.

Amnon Shashua: The Chauffeur portion of this program alone represents an expected $1.5 billion opportunity through 2030. Finally, on mobility-as-a-service, our plan continues to develop relationships on the supply and demand side, and then use our self-driving system to enable supply and demand to come together into a scalable business. We have many relationships on the demand side with transportation network carrier companies and public transit operators. We also have engagements with three vehicle builders, which are developing purpose-built vehicle platforms that integrate our Mobileye Drive self-driving system. We expect to generate our first revenue in this business in 2023, and our supply side relationships have orders for self-driving systems that total an estimated $3.5 billion of future revenue through 2028.

Finally on mobility as a service our plant continues to develop relationships on the supply and demand side, and then use our self driving system to enable supply and demand to come together into a scalable business.

As many relationships on the demand side with transportation network companies and public transit operators. We also have engagements with three vehicles builders, which are developing purpose built vehicle platforms that integrate our mobilized drive self driving system.

We expect to generate our first revenue in this business in 2023, and our supply side relationships have orders for self driving system that total an estimated $3 5 billion of future revenue through 2028.

So overall 2022 was the year, where traction for supervision really accelerated and this led to an increase interest from Oems for ice off systems as well.

Amnon Shashua: Overall, 2022 was the year where traction for SuperVision really accelerated, and this led to an increased interest from OEMs for eyes-off systems as well. Continuing the productization process of these solutions and supporting testing and launch, of course, requires resources. This is why our operating expenses growth in 2022 was unusually high, and it will be again in 2023. This growth is supporting areas like growth in terms of teams to support SuperVision launches with OEMs, radar and lidar productization, and expansion of mobility-as-a-service validation and testing sites and development work of our next generations of EyeQ chips. I would note that approximately 70% of our R&D expenses is related to products that are either just beginning to generate revenue like SuperVision or are still pre-revenue like Chauffeur, Drive, and the active sensor product.

Turning to productivity mission process of these solutions and supporting testing and launch.

Of course requires resources. This is why our operating expenses growth in 2022 was used unusually high and it will be again in 2023.

This growth is supporting areas like growth in terms of <unk>.

And teams to support supervision launches with Oems radar and Lidar for the activation and expansion of our mobility as a service validation and testing site and development work of our next generation of IQ chip.

I would note that approximately 70% of our R&D expenses is related to products that are either just beginning to generate revenue like supervision or still pre revenue like chauffeur drive and the active central ready product.

Thank you and I'll now turn it over to <unk> to go through the results.

Amnon Shashua: Thank you, and I now turn it over to Anat to go through the results.

Thank you Alan and thanks for joining the call everyone before I begin please be aware that all my comments on profitability.

Anat Heller: Thank you, Amnon, and thanks for joining the call, everyone. Before I begin, please be aware that all my comments on profitability will refer to non-GAAP measurements. The primary exclusion in Mobileye's non-GAAP numbers is amortization of intangible assets, which is mainly related to Intel's acquisition of Mobileye in 2017. We also exclude stock-based compensation and IPO-related expenses. Starting with a few words about the full year. Revenue growth of 35% year-over-year in 2022 continues our consistent track record of top-line growth. Compared to 2018, our revenue is up 170% and global production is down 13%. As Amnon mentioned, our advanced portfolio made a meaningful impact on average system price, which rose to $53 in 2022, up from $47 in 2021. That alone drove about 13 points of revenue growth in 2022.

Certain non-GAAP measurements.

The primary exclusion immobilized non-GAAP numbers is the amortization of intangible assets, which is mainly related to interest acquisition of montblanc in 2017.

We also exclude stock based compensation and IPO related expenses.

Starting with a few words about the full year revenue growth of 35% year over year. In 2022 continues our consistent track record of top line growth compared to 2018, our revenue was up 170% and global production is down 13%.

As I mentioned, our advanced portfolio made a meaningful impact on average system price, which rose to $53 in 2022.

$47 in 2021.

That alone drove about 13 points of revenue growth in 2020 to the.

The increase in average system price was mainly driven by supervision.

Anat Heller: The increase in average system price was mainly driven by SuperVision as well as, to a lesser extent, the rise in chip costs which we passed along to our customers. The addition of SuperVision to our product mix led to a certain decrease in gross margin as we deploy a full system solution which contains higher hardware content. More importantly, SuperVision generates much higher gross profit per unit than our core EyeQ product. As a result, EyeQ and SuperVision combined gross profit per unit rose by 9% in 2022. Turning to Q4, revenue grew 59% year-over-year. Our EyeQ-related revenue was up 48%, with the SuperVision product driving most of the remainder of the growth, despite being less than 1% of our overall volume. Q4 operating margin was 38%, up from 34% in prior year.

Well as to a lesser extent, the rising cheap cost, which we passed along to our customers.

The addition of supervision to our product mix led to a certain decrease in gross margin.

Plenty full system solution, which contains higher hardware content.

But more importantly supervision generate much higher gross profit per unit than our core Iq product.

As a result, I can supervision combined gross profit per unit.

9% in 2022.

Turning to Q4 revenue grew 59% year over year.

<unk> related revenue was up 48% with the supervision product driving most of the remainder of the growth despite being less than 1% of our overall volume.

Q4 operating margin was 38% up from 34% in prior year. This was above our guidance expectation due to a better than expected revenue growth.

Anat Heller: This was above our guidance expectations due to a better than expected revenue growth, but also due to about $14 million of R&D expenses that we expected in Q4 but shifted to 2023. Turning to 2023 guidance. We are pleased that the midpoint of our guidance remains in line with internal expectations at the time of our October IPO, despite overall macro assumptions for 2023 coming down since then. On the revenue side, I'll give you a sense of our assumptions. Focusing on the high end, we are assuming EyeQ volume that is somewhat below the commitment that we've received from our customers for 2023.

But also due to about $14 million of R&D expenses.

We expected in Q4, but shifted to 2023.

Turning to 2023 guidance.

We are pleased that the midpoint of our guidance remains in line with internal expectations at the time of our October IPO. Despite of our macro assumptions for 2023 coming down since then.

On the revenue side I'll give you a sense of our assumptions.

Focusing on the high end, we're assuming IQ volume that is somewhat below the commitments that we've received from our customers for 2023.

We want to remain conservative and acknowledge that the macro uncertainty remains elevated.

Anat Heller: We want to remain conservative and acknowledge that the macro uncertainty remains elevated. That volume level corresponds to about 1% global production growth, 4 to 5 points of ADAS adoption growth, which is somewhat lower than the prior few years, and consistent market share. On the SuperVision side, we are assuming a bit more than 100% growth versus 2022, which was about 96,000 units. Demand is higher than this, but we are still experiencing some supply chain constraints in one particular component of the ECU. On the positive side, we have commitment forms from our suppliers at the level we are forecasting, including a H2 run rate that supports our 2024 forecast as well. In terms of quarterly cadence, historically our revenue has ramped up over the course of the year.

That volume level corresponds to about 1% global production growth.

Four to five points of <unk> production growth, which is somewhat lower than the prior few years and consistent and consistent market share.

Yeah.

On the supervision side, we're assuming a bit more than 100% growth versus 2022, which was about 96000 units.

Demand is higher than this but we are still experiencing some supply chain constraints in one particular component of D. C.

On the positive side, we have commitments from our suppliers.

The level, we are focusing including a second half run rate that supports our 2024 forecast as well.

In terms of.

Quarterly cadence historically, our revenue has ramped up over the course of the year.

<unk> is expected to be even more pronounced.

Anat Heller: This year is expected to be even more pronounced with around 41% of revenue expected in H1. On both the EyeQ and SuperVision businesses, volume and revenue are expected to be lower in Q1 2023 versus Q4 2022. This appears to be general conservatism on the part of our customers, as well as some impact from elevated purchases ahead of the EyeQ price increase that went into effect on 1 January. On SuperVision, the lower volume in Q1 and Q2 versus Q4 2022 is related to the key ECU component mentioned earlier. On the average system price side, we expect Q1 and Q2 to be a bit lower than Q4 due to the SuperVision constraint, but we expect to exit 2023 in the low $60, which is an excellent trajectory.

With around 41% of revenue expected expected in the first half of the year.

On both the IQ and supervision businesses volume and revenue are expected to be lower in Q1 2023 versus Q4 2022.

This appears to be general conservatism on the part of our customers.

As well as some impact from elevated purchases ahead of the IQ a price increase that went into effect on January 1st.

On supervision the low the lower volume in Q1, and Q2 versus Q4 of 2022 is related to the key steel component mentioned earlier.

On the average system price side, we expect Q1, and Q2 to be a bit lower than Q4 due to the supervision constrained, but we expect to exit 2023 in the low $60, which is an excellent trajectory.

Okay.

On the operating operating income side, there's a few things to point out.

Anat Heller: On the operating income side, there's a few things to point out. Gross profit per unit will increase again year over year, but the percentage gross margin is expected to be down due to the higher mix of SuperVision revenue mentioned above. On the OpEx side, as Amnon mentioned, we will continue to invest heavily in our high ROI advanced portfolio, which is only beginning to impact our results. We estimate operating expenses to grow in the low 30% range in 2023 versus 35% growth in 2022. OpEx growth rates are expected to moderate in 2024, which combined with operating leverage, is expected to lead to higher operating margin during that year, also consistent with our internal expectation at the time of the IPO.

Gross profit per unit will increase again year over year, but the percentage of gross margin is expected to be down due to the higher mix of supervision revenue mentioned above.

On the Opex side as Anil mentioned, we will continue to invest heavily in our high our advance portfolio, which is only beginning to impact our results.

We estimate operating expenses to grow in the low 30% range in 2023 versus 35% growth in 2022.

Opex growth rates are expected to moderate in 2024, which combined with the operating leverage is expected to lead to higher operating margin doing that to you all.

Also consistent with our internal expectation at the time of the IPO.

Before taking your questions I just wanted to thank my team and many other that mobilized for supporting what is a pretty accelerated earnings timeline for a newly public company.

Anat Heller: Before taking your questions, I just wanted to thank my team and many others at Mobileye for supporting what is a pretty accelerated earnings timeline for a newly public company. Thank you, and we will now take your questions.

And we will now take your questions.

At this time, we will be conducting a question and answer session.

Operator: At this time, we'll be conducting a question and answer session. If you'd like to ask a question, please press star one on your telephone keypad. A confirmation tone will indicate your line is in the question queue. You may press star two if you would like to remove your question from the queue. For participants using your speakerphone, speaker equipment, it may be necessary to pick up your handset before pressing the star key. One moment, please, while we poll for questions. Our first question comes from the line of Itay Michaeli with Citi. Please proceed with your question.

If you'd like to ask a question. Please press star one on your telephone keypad.

Can you accomplish in tone will indicate your line is in the question queue.

You May press Star two if you would like to remove your question from the queue for participants using.

Equipment, it may be necessary to pick up your handset before pressing the star Keith.

One moment, please while we poll for questions.

Our first question comes from the line of each of them.

<unk> with Citi. Please proceed with your question.

Great. Thanks, Hello, everybody.

Just two questions one financial and one on supervision I'm a financial need maybe.

Itay Michaeli: Great, thanks. Hello, everybody. Just two questions, one financial and one on SuperVision. On the financial, maybe for Amnon, hoping you can maybe talk about what you're expecting for gross margins, just in the kind of core ADAS and enhanced ADAS business in 2023. On SuperVision, hoping you could talk about what portion of customer engagements there are perhaps looking at a camera-only solution for SuperVision, as well as what you're seeing for the SuperVision Lite offering versus the full ODD SuperVision offering. Thank you.

Hoping to maybe talk about what youre expecting for gross margins just kind of core HR, some enhanced ddos business in 2023.

And then on supervision.

Hoping you could talk about what portion of customer engagement there.

Perhaps looking at it camera only solution for supervision as well as what Youre seeing for supervision light offerings versus the full ODT supervision offering. Thank you.

Yeah.

Yes, so on the Ikea site and we are seeing consistent gross margin.

Anat Heller: Oh, yeah. On the EyeQ side, we are seeing consistent growth margin through 2023. On the SuperVision side, we're seeing approximately 35% for this year.

Through 2023.

Supervision side, we're seeing approximately 35% or 400 this year.

Okay, I'll add a bit more that with supervision that too.

Amnon Shashua: Okay. I'll add a bit more that with the SuperVision that there are two drivers to increase our gross margin there. One is efficiency of pre-production. We're creating a new version, an Evo version, which with the lower cost to increase our margin. Second is the customer bundle. The launch of the SuperVision in China, at the moment it's highways. The urban and arterial roads will be unlocked during 2023, and that would also increase our revenue per content per car, and of course, naturally will increase the gross margin. We are targeting reaching between 50% to 60% the gross margin of the SuperVision kind of in the long run. In terms of your second part of the question about camera-only, SuperVision is a camera-only plus a front-facing radar.

There are two drivers to increase our gross margin. There one is the efficiency of production, we're creating a new version.

An evil.

<unk>, which was the lower cost to increase our margin second is customer bundles.

The launch of the supervision in China at the moment, it's a highways the urban and arterial roads will be unlocked during 2023 and that was also increases our revenue for content for cars and of course naturally will increase the gross margin, we are targeting reaching between 50% to six.

The percentage gross margin of supervision kind of in the long run in terms of your second part of the question about camera on the supervision is a camera only plotted front facing a radar. So for example in the Zika vehicle, there's a front facing radar as well, although we can.

Amnon Shashua: For example, on the Zeekr vehicle there's a front-facing radar, as well. Although we can satisfy all the functionality without the radar, but having a front-facing radar adds another element of redundancy which can improve the MTBF of the system. In terms of SuperVision Lite, this is a product offering which has been done very recently, so we don't yet have the traction for it. All the traction that we have and is growing is for the full SuperVision with two EyeQ, EyeQ6 and the full camera suite.

We can satisfy all the functionality without the radar because having a front facing radar.

Add another element of redundancy, which which.

Which which can improve the MTBE as well.

The system in terms of supervision light this is a product offering.

Which is which has been done very recently, so we don't yet have the traction for adult attraction that we have and it's growing is for the full supervision with two IQ <unk> IQ six.

And the full the full camera the full camera suits.

Perfect. That's all very helpful. Thank you.

Itay Michaeli: Perfect. That's all very helpful. Thank you.

Thanks for your time.

Amnon Shashua: Thanks, Itay.

Our next question comes from the line of Mark Delaney with Goldman Sachs. Please proceed with your question.

Operator: Our next question comes from the line of Mark Delaney with Goldman Sachs. Please proceed with your question.

Yes.

Thank you very much for taking the question with respect to the opportunity for mobile I was familiar with more advanced solutions like supervision can you elaborate a bit more on the breadth and depth of the discussions you're having with Oems who use those products relative to say 90, or 180 days ago, and if youre seeing that traction improve with just a few programs in Oems or perhaps as part of base.

Mark Delaney: Yes, thank you very much for taking the question. With respect to the opportunity for Mobileye with some of your more advanced solutions like SuperVision, can you elaborate a bit more on the breadth and depth of the discussions you're having with OEMs to use those products relative to, say, 90 or 180 days ago? If you're seeing that traction improve with just a few programs in OEMs or if perhaps it's broader based?

As we said we have now.

Supervision.

Amnon Shashua: As we said, we have now SuperVision, you know, design win into six car makers, nine brands. The scope is expanding towards Chauffeur, the eyes-off system. Additional SuperVision traction we expect to come out in H2 of the year.

Design wind into six carmakers nine nine brands.

The scope is expanding towards chauffeur that the eyes off the system.

And the additional the additional supervision traction we expect to come out in the second half of the.

The year.

Okay.

Most of that we haven't that we have customers that we havent named yet.

Dan Galves: We have customers that we haven't named yet. I think, yeah, the additional traction in H2 would be ones outside of those six OEMs.

Amnon Shashua: We have customers that we haven't named yet. I think, yeah, the additional traction in H2 would be ones outside of those six OEMs.

I think yes.

The additional traction in the second half would be what would be one is outside of those six Oems.

That's very helpful. Thank you and one more for me. Please if I could the company say the supply chain limits, including for supervision and you called out ICU component Java, It a bit more on the steps that mobile on your supply chain partners are taking to alleviate that.

Mark Delaney: That's very helpful. Thanks. One more from me, please, if I could. The company said there's supply chain limits, including for SuperVision, and you call that a ECU component. Can you elaborate a bit more on the steps that Mobileye and your supply chain partners are taking to alleviate that and your visibility and potentially having that supply chain constraint alleviated in intermediate to longer term? Thank you.

Or your visibility, but actually having that oh, we'd be.

That's the budget constraints alleviated.

Intermediate to longer term. Thank you.

So we have an.

An issue with one component.

Amnon Shashua: We have an issue with one component in the SuperVision motherboard. This is why we have out of the full volume of the SuperVision, it's really tilted over to H2 of the year rather than H1 of the year. It's one component from a particular supplier, and we are confident that in H2 of the year that, you know, that constraint will be alleviated and we can deliver the rest of the volume.

And the supervision.

Motherboard.

This is why we have.

Out of the full volume of phase II provision, it's really tilted towards the second half of the year rather than the first half of the year. It's one component from a particular supplier and we are confident that in the second half of the year that.

That constrains will be.

Litigated and we can deliver the rest of the the rest of the volume, yes, maybe if I could just add a couple more words on this so in 2022, we delivered every <unk>, we could possibly produce.

Dan Galves: Yeah, maybe if I could just add a couple more words on this. In 2022, we delivered every ECU we could possibly produce. In Q4, it was a little bit more than we had expected to be able to access. We have you know so much additional demand in 2023 that you know in order to satisfy that, the supplier really needed to sort of take down the production for a period of time in order to install more capacity so we could get to you know much higher levels.

And in the fourth quarter.

It was a little bit more than we had expected to be able to access.

We have so much additional demand in 2023.

In order to satisfy that the supplier really needed to sort of take down the production for a period of time in order to install more capacity. So we could get to.

Much higher levels, and just really reiterate what <unk> said in the second half we have commitments to be at a run rate.

Dan Galves: Just to reiterate what Anat said, in H2, we have commitments to be at a run rate that would satisfy not only the 2023 demand, but also get us to a capacity where we could satisfy 2024 as well. Thank you, Mark. Next question, please.

Would satisfy not only the 2023 demand, but also gas to a capacity, where we could satisfy 2024 as well. Thank you Mark.

Next question please.

Amnon Shashua: Thank you, Mark. Next question, please.

Our next question comes from the line of Joshua who will talk to you with Cowen and company. Please proceed with your question.

Operator: Our next question comes from the line of Joshua Buchalter with Cowen and Company. Please proceed with your question.

Hey, guys. Thanks for taking my question and congrats on the results I guess I wanted to ask first about the premium European automaker that you announced for supervision any way you can give us sort of a kind of a scope versus what you're currently doing with Zika in <unk> and in particular, how much does moving to it sounds like hands off.

Joshua Buchalter: Hey, guys. Thanks for taking my question, and congrats on the results. I guess I wanted to ask first about the premium European automaker that you announced for SuperVision. Any way you can give us sort of a, I don't know, a scope versus what you're currently doing with Zeekr and Geely? And in particular, how much does moving to, it sounds like hands-off, eyes-off with that program, how much can that be a material needle mover, the potential for that program? Thank you.

Hands off either off with that program, how much could not be a material needle mover.

The potential for that program. Thank you.

With respect to two eyes off we announced with <unk>.

Amnon Shashua: With respect to eyes-off, we announced with the Zeekr we streamlined the hardware. At the time when we announced it was with 6 EyeQ5 chips. We are now streamlining it to 1 piece of hardware called EyeQ6H, so 3 EyeQ6. That will be in the 2025 timeframe. We have additional OEM with an eyes-off and an additional one, this European, which is not yet named, for a 2026 timeframe. There's a potential additional one, which I believe that could be announced in the H2 of the year for an eyes-off system based on the 3 EyeQ6.

With the Zika.

We streamlined the hardware.

The time, when we announced it it was six <unk> chips, we announced streamlining it to one piece of hardware called CHF 60, threes or three IQ with six that will be in the 2025 timeframe.

We have additional OEM with an IV and an additional one this European.

Which is not yet named <unk>.

<unk> 2026 timeframe and there is a potential additional one which I believe could be announced in the second half of the year for an ISR system based on the three iclusig.

Thanks, I appreciate the color and then I wanted to ask you about your R&D and Opex spending.

Joshua Buchalter: Thanks. Appreciate the color. I wanted to ask about your R&D and OpEx spending. You know, you called out, it was helpful color giving the 70% number on forthcoming products, but you have a lot of irons in the fire. I was wondering if you could rank order, you know, where your spending priorities, which ones are the ones that you're particularly focused on, excited about between, let's say, MaaS, consumer AVs, but even, you know, bringing your own internal lidar and radar to market, as well as just broader software adoption like mapping. Thank you.

You called out it was helpful color, giving the 70% number on on forthcoming products, but you have a lot of irons on the fire.

And I was wondering if you could rank ordering of where you're spending priorities, which ones are the ones that you are particularly focused on and excited about between let's say.

Mass consumer ABS debate, but even.

Bringing your own internal lidar and radar to market as well as just broader software adoption like mapping. Thank you.

Our expenses.

It's very diverse and you mentioned a number of them. We have we have the expense on active sensors the rigor leather.

Amnon Shashua: You know, our expenses is very diverse, and you mentioned a number of them, right? We have a expense on active sensors, the radar, lidar. There we are working on productization middle of the 2024 timeframe, both of the radars and the lidars. So this is ongoing. We have expense on mapping, on the REM mapping. This is mostly compute. The headcount is not much increasing. It's really the compute that is increasing based on more and more programs that require mapping. We have expense in R&D as we go forward from SuperVision to Chauffeur to Drive, which is the Mobility-as-a-Service. That's another source of expense.

We are working on productivity <unk> middle of 2024 timeframe both of the radars and <unk>.

And the others. So this is ongoing we have expense on mapping on the Rem mapping. This is mostly a compute the head count there is not much increasing its really the computer is increasing based on a more and more programs that require required mapping.

We have the expense in R&D as we go forward from supervision to show floors too to drive which is the mobility as a service.

That's another source of expense.

We have the expense on supervision to support those six the carmakers.

Amnon Shashua: We have expenses on SuperVision to support those six car makers. This is very diverse. It's hardware, just like as a Tier 1. It is, you know, software. Not algorithmic software, but more infrastructure software. There's a lot going on there to support six car makers with the SuperVision all coming around the same timeframe, starting from 2024 till 2026. This creates also a need for investment. Our investments are very diverse. We think that, you know, last year, 2022, we made a jump on investments. This year, another jump. It will taper off from 2024 forward.

This is very diverse.

Hardware, just like as a tier one it is.

Software not algorithmic software of more infrastructure software.

There's a lot going on there to support six car makers with supervision all coming around the same timeframe starting from 2020 forward till 2026.

This creates also a need for investments.

Our investments are very.

Our very diverse.

I think that last year in 2022, we made a jump on investments this year another another jump.

And it will taper off from 2024 years forward.

I'd just say the.

Last thing I'd say on that at all.

Dan Galves: I'd just say, you know, the last thing I'd say on that is it's all supporting the portfolio that we've talked about for the last few months, with so much value, and additional content per vehicle.

According to the portfolio that we've talked about for the last few months with so much value.

And additional content per vehicle.

Got it thank you.

Thanks, Josh.

Chris McNally: Got it. Thank you.

Joshua Buchalter: Got it. Thank you.

And our next question comes from the line of Chris Mcnally with Evercore ISI. Please proceed with your question.

Dan Galves: Thanks, Josh.

Operator: Our next question comes from the line of Chris McNally with Evercore ISI. Please proceed with your question.

Thanks, so much.

Quick one on the numbers and one on order so just on the on the timing for.

Chris McNally: Thanks so much, team. Quick one on just the numbers and one on orders. Just on the timing for gross profit progression in 2023, it looks like you're gonna be down something like 400 basis points, and I think you've explained that that's the STMicroelectronics increase on the chip side. Could you just help us through? Does that pass-through happen as early as Q1? Q2 obviously doesn't matter for gross profit dollars, but just for the gross profit margin walk, could you just help us on the timing?

Gross profit progression in 2023.

It looks like Youre going to be down something like 400 basis points and I think you've explained that that's the STM increase on the chip side could you just help US do does that does that pass through happen as early as Q1 Q2, obviously doesn't matter for gross profit dollars, but just for the gross profit margin.

Walt could you just help us on the timing.

Yes, so the timing is from January 1st.

Amnon Shashua: Yeah. The timing is from 1 January. We are passing over this cost that was increased at the beginning of the year to our customers without additional margin. This is the reason for a slight decrease in our margin for Q1.

Anat Heller: Yeah. The timing is from 1 January. We are passing over this cost that was increased at the beginning of the year to our customers without additional margin. This is the reason for a slight decrease in our margin for Q1.

We are testing.

Testing already said he thought that we are.

And it was increased.

At the beginning of the year with passing it over to our customers.

And without additional margin that this is the and this is the reason for it.

The slight decrease in our margin for Q, yes.

And then the second thing that we mentioned in the prepared remarks was supervision, becoming a bigger mix.

Dan Galves: Yeah. Then the second thing that we mentioned in the prepared remarks was, you know, SuperVision becoming a bigger mix of our revenue, you know, has a kind of a mathematical effect on the percentage margin. You know, gross profit per unit is much higher, but gross margin is lower. That'll be a bigger effect in H2 because the volume of SuperVision is

Amnon Shashua: Yeah. Then the second thing that we mentioned in the prepared remarks was, you know, SuperVision becoming a bigger mix of our revenue, you know, has a kind of a mathematical effect on the percentage margin. You know, gross profit per unit is much higher, but gross margin is lower. That'll be a bigger effect in H2 because the volume of SuperVision is

Our revenue.

As a kind of a mathematical effect on the percentage margin gross profit per unit is much higher but gross margin is lower but that will be a bigger effect in the second half because of the volume of supervision is significantly higher in the second half.

Amnon Shashua: Exactly.

Dan Galves: Significantly higher in the H2.

Okay, Great and then on the show floor when obviously congrats.

Chris McNally: Great. Then on the Chauffeur win, obviously, congrats if it's, you know, the scale of OEM that a lot of us think that it's a huge deal. Can you talk a little bit about just the timing of some of these SuperVision walks into Chauffeur? I mean, if you're talking about launches in SuperVision in 2025, what's a typical sort of conversation around that transitioning to Chauffeur? Is it 2027? Is it 2028? Then any idea of, you know, are we starting with level three and then working up to level four? 'Cause it's obviously such an important sort of part of the later half of the decade. Just curious, you know, when these programs may launch.

The scaled OEM, you've got a lot of us.

Huge deal, but can you could you talk a little bit about just the timing of some of these assets.

Supervision walks into chauffeur.

If youre talking about launches and supervision in 'twenty, what's the typical sort of conversation around that transitioning.

To show far or is it 27 28 and then.

Any ideas, we talked we starting with level three and then working up to level four.

Because it obviously such an important part of the later half of the decade, just curious when these programs may launch.

Yes.

Our taxonomy Theres no difference between level, three and above forwards and eyes off or ice on the system that this is what I spoke about.

Amnon Shashua: Yeah. In our taxonomy, there's no difference between level three and level four. It's an eyes-off or eyes-on system. This is what I spoke about at the CES. An eyes-off system with OEMs, except Zeekr that starts in 2025, the rest of the OEMs are starting in 2026. We have quite a nice traction. As I said, three OEMs and the fourth one should be closed H2 of this year for eyes-off systems for 2026.

So on eyes off system with OEM, except <unk> that started in 2025, the rest of the Oems are starting in 2026.

But we have quite a nice traction as I said, three Oems and the fourth one should be should be close to the second half of this year for eyes off systems for 2000 22026.

Yes, because to prevent damage it Brooks.

Because supervision really surface of the baseline.

Dan Galves: Yeah, because SuperVision

Chris McNally: And, and just-

Dan Galves: Because SuperVision really serves as the timing gap between a SuperVision launch and a Chauffeur launch doesn't have to be, you know, a significant number of years.

The timing gap between the supervision launched and a chauffeur launch doesn't have to be.

A significant number of years.

And just to confirm it in the prepared remarks, you said that most of your supervision conversation you are having discussion of this this walk the chauffeur.

Chris McNally: That's right. Just to confirm, in the prepared remarks, you said that most of your SuperVision conversations, you're having discussion of this walk to Chauffeur.

Yes, yes, it's not most all every every customer.

Amnon Shashua: Yes. It's all. Every customer that bought into a SuperVision, we have a meaningful and deep discussion about expanding to Chauffeur.

That bought and into his supervision and we have a meaningful and deep discussion about expanding to chauffeur.

Thanks, so much.

Thanks, Chris.

Chris McNally: Thanks so much.

Our next question comes from the line of Antoine.

Dan Galves: Thanks, Chris.

Operator: Our next question comes from the line of Antoine Chkaiban with New Street Research. Please proceed with your question.

With New Street Research. Please proceed with your question.

Hi, yes. Thank you for taking my question, maybe a quick one first.

Chris McNally: Hi. Thank you for taking my question. Maybe a quick one first. I was wondering where you stand on deploying the key mapping-based features via the OTA update to Zeekr users in China and what features that will unlock exactly what additional features we should expect in the upcoming updates as well.

Antoine Chkaiban: Hi. Thank you for taking my question. Maybe a quick one first. I was wondering where you stand on deploying the key mapping-based features via the OTA update to Zeekr users in China and what features that will unlock exactly what additional features we should expect in the upcoming updates as well.

Was wondering where do you send them deploying the key mapping based features of it.

The update to the users in China, and what features that will look exactly what additional features we should expect in upcoming updates as well.

So in China with Zika.

Three months ago, we otas.

Amnon Shashua: In China with Zeekr, about three months ago, we OTAed Highway Assist. Recently, we OTAed to a leading customer the full SuperVision limited to highways. This is including the REM maps as part of it. We believe that in the next month or two months, we'll be able to do the OTA for the entire fleet with full REM capability of SuperVision for highways. Then throughout 2023, together with Zeekr, as our map coverage will increase, we'll start unlocking additional road types like arterial and urban.

Highway assist.

Recently, we OTI two leading customer.

<unk> supervision limited to highways this is including the Roadmaps.

As part of it and we believe that in the next months or two months, we'll be able to to do the LTA for the entire fleet with a full ramp with full capability of supervision for highways and then throughout the 2023.

Together with the Zika as our map as a map coverage will.

We will increase we will start unlocking additional rote types like arterial and urban.

Okay. Thank you and maybe.

Hello.

Antoine Chkaiban: Okay. Thank you. Maybe as a follow-up, a broader follow-up. I think one important differentiating factor that Mobileye has is that you offer an end-to-end solution, while your main competitor today offers really like a reference platform. Can you help us better understand how in practice the integration work differs when you kick off a development project versus when your main competitor does? I am assuming that in the case of the other offering out there is still some significant development work that needs to get done by the OEMs themselves. Anything you can tell us on how things typically happen in practice would be very helpful.

Our brother and photo apps I think one important differentiating factor that <unk> has is that you offer an end to end solution.

While we remain competitive today offers really like a reference platform can you help us better understand how in practice integration work differs when you kicked off the development project versus when your main competitor doesn't.

I am assuming that in the case of the other operating out there the receipt of some significant development work that needs to get done by the Oems themselves, but anything you can tell us.

Housing typically happen in practice would be would be very helpful.

Mobilizing the supervision is not offering an end to end.

Amnon Shashua: Mobileye SuperVision is offering an end-to-end system. The Zeekr is an end-to-end system. All the other SuperVision launches that I talked about, the six OEMs, nine brands, is still an end-to-end system. Vertical handle of an end-to-end system, I think is crucial because you're talking about perception, you're talking about integrating with a map. You know, the map is built together with the teams that are building the perception. If you try to separate the map from perception to two different suppliers, you get into a sea of issues. Either it will be over-engineered or it will be under-engineered. Cost-wise, it could be crazy.

System, so the Zika as an end to anticipate all.

All the other supervision.

Launches that I talked about the six six Oems nine brands is still an end to end system.

Vertical handle of an end to end system I think it is crucial because you're talking about perception I'm talking about integrating with the map.

The map is built together with the teams that are building the perception.

If you try to separate the map from perception to two different suppliers you get into a sea of issues either it will be over engineered or the under an engineered.

Cost wise it could be it could be crazy. The fact that now the same team is integrating both the sensing both the perception and the way the math is being built and served in.

Amnon Shashua: The fact that, you know, the same team is integrating both the sensing and the perception, and the way the map is being built and served is crucial. You have driving policies. The driving policy is also integrated with the perception, right? Again, if you try to separate that into a supplier doing the driving policy and another supplier doing the perception, you end up with an over-engineered system, and in some places it will be under-engineered, be too conservative, too slow. I think in such a complex system an end-to-end where everything is done by one supplier has a lot of advantages and has also not only performance advantages but also cost advantages. Everything under one house, under one chip, is it offers incredible cost advantages.

Is this crucial than you have driving policy. The driving policy is also integrated with the perception, but again, if you try to separate that into a supplier during the driving policy and another supply during the perception you end up with an over engineered the system and in some places it will be under engineered be too conservative too slow.

Yeah.

So I think in such a complex.

Complex.

<unk> an end to end, where everything is done by one supplier has lots of advantages and has also not only performance advantages, but also cost advantages everything under one house under one chip.

Is it.

Offers incredible cost advantages.

But we are not shy from cooperating.

Amnon Shashua: We are not shy from, you know, cooperating in other ways. For example, there are OEMs that would like to take control of the driving policy where Mobileye provides only the perception. We're open to that. This is why we offer the EyeQ Kit, which enables the OEM or a supplier to write code onto our chip on top of our software, whether it is fusion with other sensors, whether it's a driving policy, we don't resist that. Having an end-to-end system, you know, can be much more efficient than breaking it down to different suppliers.

In other ways. For example, there are Oems that wed like to take control of the driving policy were mobilized provides only the perception.

We're open to that this is why we offered the IQ kit Which's enables the OEM or in a supplier to write code onto our chip on top of our software whether it is fusion with other sensors, whether it's driving policy.

We don't resistant, but having an end to end system.

Can can be much more.

<unk>, then we can get down to different suppliers.

Very helpful. Thank you Anton.

Thanks, a lot next question please.

Antoine Chkaiban: Super helpful. Thank you.

Dan Galves: Thank you, Antoine. Thanks a lot. Next question, please.

Our next question comes from the line Vijay.

Vijay Rakesh with Mizuho. Please proceed with your question.

Operator: Our next question comes from the line of Vijay Rakesh with Mizuho. Please proceed with your question.

Yes, hi, guys, great quarter, and just a quick question on the on supervision just to go back to that.

Vijay Rakesh: Yeah. Hi, guys. Great quarter and guide year. Just a quick question on SuperVision, just to go back to that. In terms of the six OEMs outside of Geely and Zeekr, can you give us some idea of, as they ramp in the H2, and you talked about significantly higher SuperVision volume there, what kind of volumes are you looking at at the OEMs outside of the two, Geely and Zeekr, for the other OEMs?

Those are the six Oems outside of GBM Zika.

Give us some idea of.

The ramp in the second half and you talked about significantly higher supervision volume there.

What kind of volumes are you looking at.

OEM, so I would say that the <unk> Zika.

Other Oems.

This is amit.

Yes, but do we say the number until the bottom that we said.

Amnon Shashua: Yeah, but did we say the numbers of the volume? No. We said we did not reveal the actual volume, but I think, what did we reveal there? Anat? Sir?

We did not reveal the volt the actual the volume, but I think.

What did we feel there.

With me.

Okay.

Et cetera et cetera.

Antoine Chkaiban: Yeah.

That will more than double volatile.

Amnon Shashua: Well, what did we?

Dan Galves: We said that will more than double volume in 2023.

Amnon Shashua: We said that will more than double volume in 2023.

For the overall year.

Yes.

Antoine Chkaiban: For the overall volume.

Anat Heller: For the overall volume.

First half will be much weaker than that.

Dan Galves: For the overall volume. Yeah.

Amnon Shashua: For the overall volume. Yeah.

Antoine Chkaiban: The H1 will be much weaker than the H2.

Anat Heller: The H1 will be much weaker than the H2.

In the second half.

We're not a BLA specifics for early.

Dan Galves: Yeah. We're not revealing.

Amnon Shashua: Yeah. We're not revealing.Numbers No specifics quarterly. You know, we talked about revenue being about 40-41% in H1 versus H2. That's a combination of EyeQ and SuperVision. The H2 ramp up of SuperVision is significant because of the new capacity that's coming online.

But.

Antoine Chkaiban: Numbers

Dan Galves: No specifics quarterly. You know, we talked about revenue being about 40-41% in H1 versus H2. That's a combination of EyeQ and SuperVision. The H2 ramp up of SuperVision is significant because of the new capacity that's coming online.

We talked about revenue being about 40% 41%.

In the first half versus the second half Thats, a combination of IQ and supervision, but yes, the second half ramp up of supervision is significant.

Cause of the new capacity, that's coming online and in 2020, the provision will be more than double of.

Amnon Shashua: Overall

Dan Galves: Overall

Vijay Rakesh: Got it.

Amnon Shashua: 2020 SuperVision will be more than double of 2022. More than 100% year-on-year growth.

Vijay Rakesh: Got it.

Dan Galves: 2020 SuperVision will be more than double of 2022. More than 100% year-on-year growth.

2022.

Percent year on year growth.

Got it and then as you have these Oems accelerating to 24, we should probably expect.

Vijay Rakesh: Got it. As you have these OEMs accelerating to 2024, we should probably expect, you know, and you talked about kind of building capacity for that. We should expect that site to kind of grow pretty nicely into 2024 as well, right?

You talked about kind of.

Building capacity for that and we should expect that safe to kind of grow.

Pretty nicely integrated core as well right.

Yes, so 2020 forward there will be additional Oems, it's not on the zika or zika or it's not.

Amnon Shashua: Yeah. 2024 there will be additional OEMs. It's not only Zeekr. Currently it's Zeekr 001. That's one brand. There's another brand of Zeekr coming to launch throughout end of 2023, beginning of 2024. There are additional Geely OEMs that are kicking in in 2024. 2025, we're talking about OEMs outside of the Geely group.

Currently it's 0001, that's one brand there is another brand of Zika coming.

Coming to.

Coming to launch.

Throughout end of 2023, beginning of 2024 and then there are additional.

Gili Oems.

Our kicking in in 2024, and then 2025 hour talking about the Oems outside of the Julie outside of the JT group.

Got it.

Just quickly on the I know in 'twenty two you have on the core IQ side.

Vijay Rakesh: Got it. Just quickly, I know in 2023 you have on the core EyeQ side, you have Toyota ramping. Can you talk to what drove the win? How were you able to kind of, you know, displace incumbent? What really drove that win? Maybe that help all of us. Thanks.

We have cleared a ramping can you talk to what drove the win how you were able to kind of displace an incumbent.

Really drove that win.

All of us.

When we switch with Toyota with Toyota that was designed with us.

Amnon Shashua: Win? With which?

Amnon Shashua: Win? With which? With Toyota.

Dan Galves: With Toyota.

Amnon Shashua: With Toyota. That was a design win of two years ago. I don't think we displaced anyone. It was a bid, and we won the bid. The program is ongoing. It hasn't launched yet. Got it. Thank you.

Amnon Shashua: With Toyota. That was a design win of two years ago. I don't think we displaced anyone. It was a bid, and we won the bid. The program is ongoing. It hasn't launched yet.

Two two years ago I don't think we displaced anyone it was a it was a bit and we won we won the bid and the program is ongoing hasnt launched it.

Got it thank you.

Vijay Rakesh: Got it. Thank you.

Thank you Vijay.

Our next question comes from the line of Adam.

Dan Galves: Thank you, Vijay.

Operator: Our next question comes from the line of Adam Jonas with Morgan Stanley. Please proceed with your question.

Jones with Morgan Stanley .

Proceed with your question.

Hi, everybody.

I was wondering if you could give a little bit of guide on Capex, where is it going even directionally in.

Adam Jonas: Hey, everybody. Was wondering if you could give a little bit of guidance on CapEx, where is it going, even directionally in 2023. I'm curious if operating cash flow can keep pace with growth and operating profit or does that kinda lag as well, given some of the expenses?

In 2003, and I'm curious if operating cash flow can keep pace with our growth in operating profit or does that kind of a lag as well.

Some of the expenses.

Yes, so we expect capex to be similar to the investment in 2022.

Anat Heller: Yeah, we expect CapEx to be similar to the investment in 2022.

You accomplished is planned to be completed.

Adam Jonas: Mm-hmm.

Anat Heller: Our new campus is planned to be completed during Q2.

Completed during the second quarter.

Additionally, the investments require complete for conversion is about $60 million.

Adam Jonas: Mm-hmm.

Anat Heller: The additional investment required for completion is about $60 million. The remaining CapEx investment relates to storage, data centers, and computer equipment and such.

The remaining capex and investments related to storage data Center, then computer equipment and such.

Thanks for that and just a follow up could you could help quantify the shifted engineering expenses that shifted from <unk> into 'twenty three either in margin or dollars dollar terms and the same I guess if you could.

Adam Jonas: Thanks, Anat. Just to follow up, could you help quantify the shifted engineering expenses that shifted from Q4 into 2023, either in margin or dollar-for-dollar terms? The same, I guess, if you could, if it's possible to quantify the pull forward of volume ahead of the price increase, but mainly the engineering expense is something I would hope you could just help quantify for bridging purposes. Thanks, Anat.

Possible to quantify the pull forward of <unk>.

<unk> ahead of the price increase, but mainly the engineering expense or something I would hope you could.

Just help quantify for for bridging purposes. Thanks.

Yes.

So it's about $14 million that shifted from Q1.

Anat Heller: Yeah. It's about $14 million that shifted from this year-

One 414.

Okay.

Amnon Shashua: One four.

Anat Heller: 14.

Amnon Shashua: 14.

Be clear.

Dan Galves: Fourteen.

Anat Heller: Fourteen.

Anat Heller: 14. Yes.

<unk> the next year.

Amnon Shashua: To be clear.

Anat Heller: To be clear.

Adam Jonas: Mm-hmm.

Anat Heller: From this year to next year. It's mostly about the NRE expenses, but it's not a very significant number, you know, out of the total OpEx in 2023.

It's mostly about the <unk> expenses.

But it's not a very significant number.

Aldo.

Total opex in 2023.

Thank you goodbye.

Thanks, Adam.

Adam Jonas: Thank you.

Amnon Shashua: Thanks, Adam.

Dan Galves: Thanks, Adam.

Our next question comes from the line of Cemig Chatterji with J P. Morgan. Please proceed with your question.

Operator: Our next question comes from the line of Samik Chatterjee with JP Morgan. Please proceed with your question.

Yes.

Hi, Thanks for taking my question I guess for the.

Samik Chatterjee: Yep. Hi. Thanks for taking my questions. I guess for the first one, I was just wondering if you can talk about what you're seeing on the enhanced ADAS solutions vertically in terms of being able to upsell customers, when it comes to sort of basic ADAS and layering in premium. On that, you talked about the ASP increase you're expecting for 2023, but how much of that is going to be driven by being able to sort of sell enhanced ADAS solutions related to the basic ADAS? How are you seeing OEM adoption at this point? Is it really more of a high-end sort of adoption or are they looking to move a bit more down market? I have a quick follow-up. Thank you.

First one I was just wondering if you can talk about what you're seeing on the enhanced data solutions.

So being able to upsell customers when it comes to sort of basically that.

Morning, Brian .

On that how much you talked about the ESP increase you expect.

How much of that is going to be driven by being able to sort of sell data distributions alright music.

Hi, how are you seeing Oems to adopt it at this point is it really more of a high end.

The adoption date.

Hello, Good morning.

And a quick follow up.

Beyond the folks, though again that launched a year ago, the thrombosis to five.

Amnon Shashua: Beyond Volkswagen that launched a year ago with the Travel Assist 2.5, we have now two additional OEMs with big programs with Cloud-Enhanced ADAS, and it's ramping up. I believe at the end of the day, every car maker with a front-facing camera would include also as an option, maybe a higher trim option, an enhanced ADAS because it doesn't add any hardware to the mix. It's just a software update, and it makes a lot of sense.

We have now two additional Oems with big gave programs with the women with cloud enhanced.

A desk and it's ramping up I believe at the end of the day every carmaker with a front facing camera will include also the option may be a higher term option.

And in the end the Adas because it doesn't add any hardware to the mix is just a software update and it makes it a little sense about by increasing significantly increasing the adas capability by having that data from the from the cloud about where the landmarks are the drivable paths location of traffic light.

Amnon Shashua: By significantly increasing the ADAS capability by having the data from the cloud about where the landmarks are, the drivable paths, location of traffic lights, association of traffic lights with drivable paths, all of this creates new opportunities for enhancing driving assist at quite a reasonable cost of, you know, a few tens of dollars per car per year, something like that.

Association with traffic lights will drivable paths all of this creates new opportunities for enhancing driving driving assistance at quite a reasonable cost of few tens of dollars forecast per year or something like that.

Okay.

Although we cannot know questions about sort of how to think about.

Samik Chatterjee: Okay. For the follow-up, we get a lot of questions about sort of how to think about performance in a recession if, and if the macro was to get worse. I know you talked about sort of haircutting some of the OEM demand that you're seeing in terms of volumes. But how are you sort of thinking about the likelihood of pushouts, particularly of programs supplying towards the end of the year, pushing out timelines in terms of launches or adoption of certain programs? Also, how would you sort of flex your OpEx in the scenario that macro does end up being a bit worse? Thank you.

In the recession.

Okay.

You talked about sort of getting some won't.

Yes.

So Paul.

But how are you sort of thinking about.

Push out, particularly a program to blackboard.

Pushing all the time.

Oh I'm sorry.

Programs.

And also how would you sort of flex.

Alright. Thanks.

Thanks.

Yes, so I mean.

This is Dan.

Dan Galves: Yeah. I mean, this is Dan. You know, obviously, we're susceptible to swings in global production a bit, but you know, as you've seen, you know, in the past years, you know, we're growing so much faster than overall production that it's not as big of an impact to us as probably to others. You know, we acknowledge, you know, kind of the risks around production, and that's why we set our forecast to basically flat to 1% global production growth, even though, you know, and set our volume forecast below the orders and commitments we've gotten from our customers. We're definitely not hearing about any kind of, like, pushout of programs or anything like that.

Obviously, we are susceptible to swings in global production a bit but as you've seen in the past years, we're growing so much faster than overall production that is.

It's not as big of a of an impact to us is probably to others. We acknowledge the risks around production and Thats, why we set or our forecast.

Basically flat to 1% global production growth even though.

<unk> set our volume volume forecast below the.

The orders and commitments, we've gotten from our customers. So we're definitely not hearing about any kind of like push out or programs or anything like that and also we have the driver of adoption growth.

Dan Galves: you know, we have the driver of adoption growth that you know that wouldn't impact us too much as well. Not hearing, just to be clear, not hearing anything about that. you know, overall, like, we've you know done well in all kinds of environments over the last 10 years. In terms of flexing operating expenses, I don't think we would, you know. I think that our business is built you know for the long term to drive content per vehicle growth, to drive new solutions you know for the next 10 years plus. I don't think we would pull back on operating expenses.

It wouldn't impact us too much as well, but not not hearing just to be clear not hearing anything.

About that so.

Overall like we have.

Don well in all kinds of environments over.

Over the last 10 years.

And yes that's.

So that's and in terms of flexing.

Operating expenses I don't think we would.

I think that our business is built.

For the long term to drive content per vehicle growth to drive new solutions.

Further for the next 10 years, plus so I don't think we would pull back on.

Nonoperating expenses.

Got it thank you.

Okay.

Samik Chatterjee: Got it. Thank you. Thanks for taking the question.

Thanks Tommy.

Our next question comes from the line.

Dan Galves: Thanks, Samik.

Luke junk with Baird. Please proceed with your question.

Operator: Our next question comes from the line of Luke Junk with Baird. Please proceed with your question.

Good morning, Thanks for taking my questions.

Anat Heller: Morning. Thanks for taking the questions. First, wanted to ask, so we've talked about SuperVision quite a bit, Cloud-Enhanced ADAS as well.

First wanted to ask so we've talked about supervision quite a bit caught enhance it asks as well I'm wondering about IQ kit, if we could discuss the evolution of those conversations with customers. How that's developed over the past six plus months, let's say and could add or has it been intersecting with supervision at all at these customers.

Luke Junk: Morning. Thanks for taking the questions. First, wanted to ask, so we've talked about SuperVision quite a bit, Cloud-Enhanced ADAS as well.

Luke Junk: I'm wondering about EyeQ Kit, if we could discuss the evolution of those conversations with customers, how that's developed over the past 6+ months, let's say. Could it or has it been intersecting with SuperVision at all with these customers?

Yes, indeed, all the advanced systems for <unk> and <unk>.

Amnon Shashua: Yes, indeed. All the advanced systems, Chauffeur and SuperVision, EyeQ Kit comes as a critical component, especially when you talk about Chauffeur. Some of the SuperVision programs include also an EyeQ Kit, some do not. EyeQ Kit is becoming a major component in our discussions of advanced systems. Advanced system is something beyond the SuperVision and beyond.

Supervision.

IQ kit comes.

Critical.

Components, especially when you talk about the initial four.

Some of the supervision.

Graham include also IQ kit, some some do not but the IQ kit is becoming a major component in our discussions of advanced assistance, so advances to even something beyond the supervision and beyond.

Thank you for that and for my follow up I just wanted to ask a question on near term expectation. So in light of the component issue that you said with supervision, which sounds like it's just timing and timing of expenses are there any additional guardrails, we should be keeping in mind when it comes to near term, especially first quarter.

Luke Junk: Thank you for that. For my follow-up, I just wanna ask a question on near-term expectations. In light of the component issue that you cited with SuperVision, which sounds like it's just timing and the timing of expenses, are there any additional guardrails we should be keeping in mind when it comes to near-term, especially Q1 expectations? Thank you.

Expectations. Thank you.

Can you repeat the question Luke sorry about that.

Dan Galves: Can you repeat the question, Luke? Sorry about that.

Yes, so sorry about that so the question is in terms of the first quarter on the financial side of things so.

Luke Junk: Yeah. Sorry about that. The question is in terms of Q1 on the financial side of things, so you know, clearly wanna be looking at timing around SuperVision and component availability, expense timing as well around R&D. Just wondering if there's any additional guardrails or things that would be specific to Q1 we should be keeping in mind, beyond just the revenue weighting H1 versus H2, let's say. Thank you.

Clearly, we want to be looking at timing around supervision and component availability expense timing as well around R&D, just wondering if theres any additional guardrails or things that would be specific to the first quarter, we should be keeping in mind.

On just the revenue weighting first half versus second half, let's say thank you.

Yes, I mean, I think we covered that we think Q1 revenue will be below Q4, we're not going to get more specific than that and kind of talked about the reasons. I mean every year, we have more revenue in the back half versus the first half we do think it's going to be a little bit more pronounced.

Dan Galves: Yeah. I mean, I think we, you know, we covered that, you know, we think Q1 revenue will be below Q4. You know, we're not gonna get more specific than that and kinda, you know, talked about the reasons. I mean, every year, we have more revenue in H2 versus H1. We do think it's gonna be a little bit more pronounced this year, you know, because of the constraints on SuperVision supply in H1, as well as, you know, we do think that there was, you know, some additional buying of EyeQs before the price increase, which I think is natural. We don't think it was major, but, you know, that's our read of why Q1's a little bit below Q4. But hopefully that gives you enough information.

This year because of the constraints on supervision supply in the first half as well as you know we do think that there was.

Some additional buying of iqs before the price increase which I think is natural we don't think it was <unk>.

Major but.

That's our read of why Q1's, a little bit below Q4, but.

Hopefully that gives you enough information.

Thanks Lou.

Operator: Thanks, Guy. Thanks, Luke. Our next question comes from the line of Rajvindra Gill with Needham & Company. Please proceed with your question.

And our next question comes from the line of Rajiv Gill with Needham <unk> Company. Please proceed with your question.

Yes, Thank you and congratulations on great results.

Rajvindra Gill: Yeah, thank you, and congratulations on great results. A question on the ASPs. You mentioned that, you know, a third of your revenue growth last year came from higher ASP growth, and this appears to be a very strong kind of investment thesis as your ASPs kinda move higher. How do we think about the balance between kinda unit growth versus ASP growth as you kinda ramp up more of the SuperVision products?

A question on the ASP you mentioned a third of your revenue growth last year came from from higher ASP growth.

This appears to be a very strong kind of investment thesis.

These kind of move higher how do we think about the balance between kind of unit growth versus versus ASP growth as you kind of ramp up more of the supervision products.

<unk>.

Take care.

Dan Galves: I mean, I think, Guy, you wanna take this?

Amnon Shashua: I mean, I think, Guy, you wanna take this?

So.

There is a big difference between AFP of IQ and supervision therefore.

Amnon Shashua: Again, there's a big difference between ASP of EyeQ and Supervision. Therefore, when you're going with the volume of Supervision, you don't need to grow a lot in order to produce these or generate these really high revenue. There's a big difference there, and we think that as we go, you know, further with a higher Supervision in the mix, you'll see this ASP continue to grow.

Anat Heller: Again, there's a big difference between ASP of EyeQ and Supervision. Therefore, when you're going with the volume of Supervision, you don't need to grow a lot in order to produce these or generate these really high revenue. There's a big difference there, and we think that as we go, you know, further with a higher Supervision in the mix, you'll see this ASP continue to grow.

When you're growing with the volume of supervision you don't need to grow a lot in order to produce.

This generated higher revenue.

So there's a big difference there and we think that as we go.

Further with a higher supervision and the mix you'll say this.

ASP.

Continue to grow.

Exactly I mean, I think we have a lot of visibility on content per vehicle growth. The design wins that we achieved in 2022 came in at $105 per unit on a blended basis right. That's a mix of base IQ cloud enhanced Ada supervision.

Dan Galves: Exactly. I mean, I think we have, you know, a lot of visibility on content for vehicle growth. You know, the design wins that we achieved in 2022 came in at, you know, $105 per unit on a blended basis, right? That's a mix of, you know, base EyeQ, you know, Cloud-Enhanced ADAS, SuperVision. You know, SuperVision was definitely the biggest contributor to the year-over-year growth in ASP that we saw in Q4, even though it was 0.5% of the volume.

Supervision was definitely the biggest contributor to the year over year growth in AFP that we saw in Q4.

Even though it was zero 0.5% of the volume.

And like we said in our prepared remarks, we see a trajectory to the low <unk> in the back half of <unk>.

Dan Galves: Like we said in the prepared remarks, we see a trajectory to the low 60s in the H2 of 2023, you know, still with really one customer, plus, you know, an additional Geely brand in the H2. It's a very powerful driver and, you know, the fact that Chauffeur is becoming a bigger part of the discussions, you know, with OEMs, you know, brings even more potential upside in the future. It takes time to play out, like everything in this business, but, you know, we're feeling really good about the content per vehicle trajectory.

2023.

Still with really one customer plus an additional jewelry brand in the back half. So it's a very powerful driver and the fact that chauffeur is becoming a bigger part of the discussions.

With Oems.

Brings even more potential upside in the future and it takes time to play out like everything in this business but.

We're feeling really good about the content per vehicle trajectory.

I appreciate that and for my follow up a lot of the questions. We received from investors is trying to analyze the evolving competitive landscape.

Rajvindra Gill: I appreciate that. For my follow-up, a lot of the questions we receive from investors is trying to analyze the evolving competitive landscape with, you know, very large semiconductor suppliers, as well as some niche competitors that are developing certain types of computer vision applications. I'm wondering, as you are increasing the content, you know, per vehicle, as you're adding and kinda upgrading and upselling your customers to higher levels of autonomy, you know, how do you currently see the competition, and how do you foresee it evolving as OEMs kinda adopt higher levels of autonomy? Thank you.

With very large.

Semiconductor suppliers.

As well as.

Some niche competitors that are developing certain types of computer vision.

Application. So I'm wondering as you are increasing the content per vehicle as you are adding.

Upgrading and Upselling your customers to higher levels of autonomy.

How do you <unk>.

Currently see the competition and how do you.

Foresee it evolving as Oems kind of adopt higher levels of autonomy.

Thank you.

I think Bob when you go to note that those high level of complexity assistant the semiconductor is really a small part of the mix.

Amnon Shashua: I think, well, when you go to, you know, those high levels of the complexity of systems, the semiconductor is really a small part of the mix. You have so much on top of the semiconductor. You have the perception software, the driving policy software, the control of the car software, the mapping, and the integration of all of them together. It is way beyond the semiconductor business. Even when you talk about the basic ADAS, which is the front-facing camera with a chip behind it. Now, the optimization and the economies of scale over the last decade of this particular product, you know, makes it very unlikely for a newcomer to gain market share. It's highly optimized. The validation is very expensive.

No.

You have so much on top of the semiconductor youll have the perception software the driving policy software the control of the car software.

<unk> the integration of all of them.

<unk>.

It is way way beyond the semiconductor business.

Even even when you talk about the basic Adas, which is a front facing camera with a chip behind it.

The optimization and the economy of scales over the last decade of this particular product.

It makes it makes it very very unlikely to a newcomer to gain market share it's highly optimized.

<unk>. The validation is very very expensive requires hundreds of petabytes of data to properly.

Amnon Shashua: It requires hundreds of petabytes of data to properly validate. If you don't have any disruptive new idea there, being able to take market share in that particular highly optimized business is very unlikely. Unless the incumbent, for some reason, stops to deliver, and I don't see us stopping to deliver. The really big gain in terms of market share is on the complex systems, SuperVision, and beyond. I think there, Mobileye is clearly at a very leading position. A SuperVision type of product, I don't see anything outside of the Tesla FSD that even comes close to it. We are having very strong traction for it, more and more car makers, more brands. Chauffeur is another step-up.

To date.

And if you don't have any disrupting new idea there.

Being able to take market share in that particular highly optimized.

<unk> is very very unlikely.

Unless incumbent for some reason starts to deliver and I don't see us stopping to deliver.

So the really the game in terms of market share is on the complex the assistant supervision and beyond and I think they are mobilized and clearly.

At the very very leading position.

Supervision type of product.

I don't see anything outside of the display FSD that even comes close to it.

And we are having a very strong traction for its more and more carmakers more on brand <unk> is another step up. So this is where the competitive game is going to be not on the low end Adas.

Amnon Shashua: This is where the competitive game is going to be, not on the low-end ADAS. There, it's way beyond a semiconductor business.

And there it's way beyond the semiconductor business.

Thank you Rajeev I appreciate that thank you.

John Murphy: Thank you, Rajvindra Gill.

Dan Galves: Thank you, Rajvindra Gill.

Speaker 16: Appreciate that. Thank you.

Rajvindra Gill: Appreciate that. Thank you.

Our next question comes from the line of John Murphy with Bank of America. Please proceed with your question.

Operator: Our next question comes from the line of John Murphy with Bank of America. Please proceed with your question.

Hi, guys just two quick ones.

John Murphy: Hi, guys. Just two quick ones. First, if you could just discuss exactly what went on with the January price hike so we can understand why folks may have pre-bought in front of that, just to understand how big that is. And then the second one, Amnon, as you're making this progress with SuperVision as far as book business and discussions, are the customers just kind of throwing up their hands and saying, "Listen, we just can't do this ourselves or these other partners, so we're just kind of handing the keys and becoming exclusive with you?" Or are they sort of parallel processing other systems? And what, how is that developing?

First if you could just discuss exactly what went on with the January price hikes. So we can understand.

Wi folks may have pre bought in front of that just to understand how big that is.

And then the second one.

As you are making this progress.

With supervision as far as book business and discussions are the customers just kind of throwing up their hands and saying listen we just can't do this ourselves or these other partners. So we're just kind of handed the keys, becoming exclusive with you or are they sort of parallel processing other systems and what how is that how is that developing.

I don't think the story is still dramatic us to want to get into key right.

Amnon Shashua: I don't think the story is so dramatic as throwing in the keys, right? You know, OEMs do what makes the most sense. They want to deliver a product. They want to deliver a competitive product. They need to compete with other OEMs. They need to provide value to the customers. They see what Mobileye is doing. I think the launch of the Zeekr SuperVision created a kind of a significant moment. Because it's one thing to show a development system, another thing is to show a production system doing something very impressive. It's not that, you know, OEMs decided to throw in the towel. It's simply a natural evolution of a competitive landscape.

Yeah.

Oems do what makes the most.

They want to deliver.

<unk>.

They want to deliver a competitive.

<unk>.

They need to compete with other with other Oems they need to provide value to the customers and they see what <unk> is doing.

The launch of the Zika supervision created.

Kind of a significant moment, because it's one thing to show a development system.

And other thing is to show a production system doing something very very impressive.

So it's not that Oems decided to throwing the towel is simply a natural evolution of the competitive landscape you need to be able to.

Deliver our brands with the best technology and to use the suppliers.

Amnon Shashua: You need to be able to deliver brands with the best technology, and use the suppliers for it. I think the EyeQ Kit was a very important moment here. It allows the car makers not to completely tweak our system as a black box, but to add to it their own software and to create further differentiation. Trying to simply replicate what Mobileye has been doing, personally, I don't think it makes sense, really. I know the amount of investment that is being done, and this kind of investment cannot be done just through money. There is a time factor for it, a significant time factor for it.

Alright.

The IQ kit allows the carmaker I think the IQ piece was a very important moment here. It allows the carmakers.

Not to completely tweak our system of the black box, but to add to its their own software and to create further differentiation, but trying to simply replicate with marpol I haven't been doing.

Personally I don't think it makes sense.

Because I know the amount of investment.

That's being done.

And this kind of investment cannot be done just to money. There is a time factor forward a significant time factor for us.

So I.

I think that the <unk> launch.

Amnon Shashua: I think that the Zeekr launch created kind of a reality check in many of our OEM partners.

Created.

Amnon Shashua: I think that the Zeekr launch created kind of a reality check in many of our OEM partners.

Kind of a reality check in many of our.

OEM partners.

And in Belgium.

Anat Heller: Oh, sorry.

In terms of the IQ cost we're talking about two.

John Murphy: Oh, sorry.

Amnon Shashua: Yeah. In terms of the EyeQ cost, we're talking about

$2.

A an increase one to $2 and it's not a significant impact intent in terms of buying ahead now before and if the price increase.

Anat Heller: $1 to 2 of an increase.

Amnon Shashua: $1 to 2.

Anat Heller: It's not a significant impact in terms of buying ahead, you know, before this price increase.

Thank you very much.

Thanks, John .

John Murphy: Thank you very much. Thanks, John. This is gonna be our last question, Shamali.

John Murphy: Thank you very much.

This has to be our it this is going to be our last question from Ali.

Dan Galves: Thanks, John. This is gonna be our last question, Shamali.

No problem and our last question comes from the line of Steven Fox with Fox Advisors. Please proceed with your question.

Operator: No problem. Now our last question comes from the line of Steven Fox with Fox Advisors. Please proceed with your question.

Hi, good morning, and thanks for squeezing me in two.

Speaker 16: Hi. Good morning, and thanks for squeezing me in. Two questions, if I could. First of all, at CES, the conversation around your radar innovations was pretty interesting. I was wondering, beyond just the technology roadmap, what else is gonna drive your ability to start disrupting in that product space? I guess you're talking about, you know, going to market in 2024 to try and win new business. Then secondly, as you sort of right size for the volumes needed on the SuperVision by the end of this year with your manufacturing partner, is that when we should start thinking about gross margins and SuperVision improving, or do we need more volumes beyond like end of calendar 2023 to start seeing that improvement? Thank you.

Steven Fox: Hi. Good morning, and thanks for squeezing me in. Two questions, if I could. First of all, at CES, the conversation around your radar innovations was pretty interesting. I was wondering, beyond just the technology roadmap, what else is gonna drive your ability to start disrupting in that product space? I guess you're talking about, you know, going to market in 2024 to try and win new business. Then secondly, as you sort of right size for the volumes needed on the SuperVision by the end of this year with your manufacturing partner, is that when we should start thinking about gross margins and SuperVision improving, or do we need more volumes beyond like end of calendar 2023 to start seeing that improvement? Thank you.

Two questions if I could first of all on at CES. The conversation around your radar innovations were pretty interesting I was wondering.

Beyond just the technology roadmap what else is going to drive your ability to start disrupting in that product space I guess youre talking about go into market in 2020 forward to try and win new business and then secondly, as you.

Sort of right sized for the volumes needed to under supervision by the end of this year with your manufacturing partner is that when we should start thinking about gross margins and supervision improving or do we need more volumes.

Beyond like end of calendar 'twenty three to start seeing that improvement. Thank you.

Okay, I'll start with the second half.

Your question the gross margin in terms of the cost of production is not volume dependent we simply did another spin off of the hardware.

Amnon Shashua: Yeah. I'll start with the second half of your question. The gross margin in terms of the cost of production is not volume dependent. We simply did another spin of the hardware with better optimized components, so that would reduce our cost. Another part of increasing our gross margin of SuperVision is higher bundles. Once the bundles, you know, software bundles will include beyond highway, that will increase our gross margin. Right? What was the first half?

It was better optimize the component so that we can reduce our costs.

Another part of increasing our gross margin of supervision is higher bundled.

Once the.

Once the bundled software bundles will include beyond highway.

<unk> increased our gross margin.

Hey, Brandon.

Great.

It's important to mention that.

Anat Heller: The radar.

Amnon Shashua: The radar. It's important to mention that our motivation for building those radars is not just to enter into a new marketplace. It was to create a very streamlined eyes-off system where you don't need a 360-degree awareness from lidars, because that is expensive. We want to limit the lidar only for front-facing and the remaining 360 to be handled by imaging radars. Those imaging radars that we're developing are really cutting-edge in terms of, you know, 48 by 48 channels, 100 dB of sensitivity. They can create an end-to-end autonomous driving experience as another layer of redundancy. That would considerably reduce the cost of an eyes-off system.

Our motivation for building those radars is not just to enter into a new market place was to create a very streamlined.

<unk>.

<unk>, where you don't need a 360 degree awareness from leathers and that because that is expensive.

We want to limit the ladder only for front facing and the remaining 260 to be handled by by imaging radars and those imaging graders that we're developing really cutting edge in terms of now 48 by 48 channels 100 DB.

Sensitivity.

And they can create an end to end autonomous driving experience as the another layer of the of redundancy.

And that was a considerably reduced the cost of the of an idea of the assistant I'm talking about an ISO upwards full capability full OLED.

Amnon Shashua: I'm talking about an eyes-off with full capability, full ODD.

Great. That's very helpful. Thank you so much.

Antoine Chkaiban: Great. That's very helpful. Thank you so much.

Steven Fox: Great. That's very helpful. Thank you so much.

Thank you.

Steven Thanks, everyone for joining our first earnings call as a public company and we will see you next quarter. Thank you. Thank you. Thank you.

Amnon Shashua: Thank you.

Speaker 17: Thanks, Steven. Thanks everyone for joining our first earnings call as a public company. We will see you next quarter. Thank you.

Dan Galves: Thanks, Steven. Thanks everyone for joining our first earnings call as a public company. We will see you next quarter. Thank you.

Amnon Shashua: Thank you.

Speaker 18: Thank you.

Anat Heller: Thank you.

Q4 2022 Mobileye Global Inc Earnings Call

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