Q3 2024 STMicroelectronics NV Earnings Call

will begin shortly, thank you.

[music].

Moira: Ladies and gentlemen, welcome to the STMicroelectronics third quarter 2024 earliest release conference call and live webcast.

Ladies and gentlemen, welcome to the STI Microelectronics third quarter 2020 earnings release conference call and live webcast I am Moira the chorus call operator, I would like to remind you that.

Moira: I am Moira, the chorus call operator. I would like to remind you that all participants will be in listen-only mode and the conference has been recorded. The presentation will be followed by a Q&A session.

All participants will be in listen only mode and the conference has been recorded the presentation will be followed by a Q&A session.

Moira: You can register for questions at any time by pressing star and one on your telephone.

Register for questions at any time by pressing star one on your telephone.

Moira: Operator Assistance, please press star and zero.

Speaker Change: Operator assistance, Please press star and zero the conference must not be recorded for publication or broadcast.

Moira: The conference must not be recorded for publication or broadcast.

Moira: At this time, it's my pleasure to hand over to Jean Marcheri, President and CEO. Please go ahead.

At this time, it's my pleasure to hand over to Joe Maas shipping President and CEO. Please go ahead.

Jean Marcheri: Thank you, Moira, and good morning, everyone.

Joe Maas: Thank you <unk> and good morning, everyone.

Jean Marcheri: Before starting this call, I am very pleased to announce the appointment of Jerome Ramel. as Executive Vice President. Corporate Development and Integrated External Communication. Jerome has been associated with our company for many years as a recognized European Semiconductor Analyst. and has had 24 years of experience. and Sergio Rolls in various finance institutes. He brings in-depth knowledge of the semiconductor industry and capital markets. which will be extremely beneficial to support the company in the way we interface with investors, analysts, and external stakeholders.

Joe Maas: Before starting this quarter I am very pleased to announce the above.

Joe Maas: Mental foreseeable Ahmed.

Joe Maas: As the executive Vice Presidents co.

Joe Maas: Opioid development and the intake that is an external communication.

Joe Maas: <unk> <unk>.

Joe Maas: Associated with a welcome Peggy for many years as.

Joe Maas: Eco designs that youll be at Semicon, you John that east.

Joe Maas: And at 24 years of experience.

Joe Maas: In such awards in values finals institutions.

It breaks in depth knowledge of the cervical you've done your street and capital market.

Joe Maas: Which would be extremely BDC shore to support the company.

Joe Maas: The way, we just faced with Invesco.

Joe Maas: At east and extend the oldest stakeholders.

Jerome Ramel: I would now like to briefly turn the call over to Jerome. Thank you, Jean-Marc, and good morning. I'm very pleased to join ST and excited by this new channel.

Speaker Change: I would now like to briefly turn the call over to Sheila.

Sheila: Thank you Mark and good morning, I'm very pleased to join ESG and excited by this new challenge.

Gianmarco Bonacina: So thank you, everyone, for joining our third quarter 2024 financial result. Hosting the call today is Gianmar Chéry, ST President and Chief Executive Officer. Joining Jean-Marc on the call today are Lorenzo Grandi, President and CFO, and Marco Cassis, President Analog, Power & Discrete, MEMS & Sensor Group, and Head of STMicro's Strategy, System Research & Application & Innovation Office. This live webcast and presentation material can be accessed on the SG Investor Relations website. A replay will be available shortly after the conclusion of this.

Speaker Change: So thank you everyone for joining our third quarter 2020 full financial retail Coca Cola.

Speaker Change: Hosting the call today as you'll note Shelly S T President and Chief Executive Officer.

Speaker Change: Joining Jean Marc on the call today are Lorenzo Grandi, President and CFO and.

Speaker Change: And Marco Cassis, president of analog and power and discrete Mentum Tencel group instead of fish Microstrategy, She's still research and application and innovation of fees.

Speaker Change: This slide with gas and presentation materials can be accessed on <unk> Investor Relations website.

Speaker Change: A replay will be available shortly after the conclusion of this court.

Gianmarco Bonacina: This goal will include forward-looking statements that involve risk factors that could cause ST-results to differ materially from management expectations and We encourage you to review the Safe Harbor statement contained in the press release that was issued with the results this morning, and also in STMO's recent regulatory filing for a full description of this risk.

Speaker Change: This call will include forward looking statements that involve risk factors that conclude ESG related to differ materially from management's expectation and guidance.

Speaker Change: We encourage you to review the Safe Harbor statement contained in the press release, that's what you should be the result, this morning and also in <unk>. Most recent regulatory filing for a full description of each respective.

Gianmarco Bonacina: Also, to ensure all participants have an opportunity to ask questions during the Q&A session, please limit yourself to one question and a brief follow-up.

Speaker Change: Also to ensure all participants have an opportunity to ask a question during the Q&A session. Please limit yourself to one question and a brief follow up.

Jean Marcheri: Now I'd like to turn the call over to Jean Marcheri, ST President and CEO. So thank you, Jerome. Let me begin with some opening comments. Starting with the Q3, so third quarter net revenues of $3.25 billion were in line with the midpoint of our business outlook. Compared to our expectations, revenues were higher in personal electronics. decline less in industrial and were lower in automotive. Q3 gross margin of 37.8% was broadly in line with Geiser. Q3 Net Revenues Decreased 26.6% Year-Over-Year mainly driven by a decline in industrial and, to a lesser extent, in automotive. Looking at our year-over-year performance, gross margin decreased to 37.8% from 47.6%.

Speaker Change: No I'd like to turn the call advantage on luxury if you put enough into you.

Speaker Change: Yes.

Speaker Change: So thank you Sheryl let me begin there with some opening comments.

Speaker Change: Starting with Q3.

Speaker Change: Third quarter net revenues of three point $25 billion.

Speaker Change: Well in line with the midpoint of our wealth business outlook range.

Speaker Change: Compare that to our expectations, leaving us well.

Speaker Change: In personal <unk> clinics.

Speaker Change: <unk> declined less any new steel and oil low oil in automotive.

Speaker Change: Q3 gross margin of 37, 8% was broadly in line with guidance.

Speaker Change: Q3, net revenues decreased 12.

Speaker Change: <unk>, 6.6% your wholesale Yale may.

Speaker Change: Mainly driven by a decline in industrial.

Speaker Change: Add that to a lesser extent eagle to achieve it.

Speaker Change: Looking at our what we'd all go Youll get false gross margin decreased to 37.8%.

Speaker Change: 47.6%.

Jean Marcheri: Operating margin decreased to 11.7% from 28% and net income came in at $351 million. On a sequential basis, net revenues increase 0.8%. For the nine-month period, net revenues were down 23.5% year-over-year to $9.95 billion. Decreasing across all reportable segments. and particularly in microcontrollers. which is impacted by the continuing weakness in the industrial market. We reported gross margin of 39.9%, operating margin of 13.1%, and net income of $1.22 billion. during the quarter. Customer order bookings were slightly up versus Q2, but were below our expectations. This reflected a continuing delayed recovery in industrials. and a further deterioration in automotives.

Speaker Change: Operating margin decreased to 11, 7% from 28% and net income came in at 351 billion.

Speaker Change: On the sequential basis net revenue was increased 0.6 systems.

Speaker Change: Posted nine months' failure.

Speaker Change: Net revenues were adult 23, 5% Chicago Yale.

$9 95 billion dollar.

Speaker Change: Decreasing it across all reportable segments.

Speaker Change: And particularly in my Cold-cock hotels.

Which is impacted by the continuing weakness ease of induced field market.

Speaker Change: We reported gross margin of 39, 9%.

Speaker Change: <unk> margins of 13, 1% and net income.

Speaker Change: Of $1 22.

Speaker Change: <unk>.

Speaker Change: During the quarter.

Speaker Change: Christopher although bookings were slightly up versus Q2, but well below our expectation.

Speaker Change: This reflected a continuing delayed equally into sealed.

Speaker Change: And our first sale of Italian <unk> towards you.

Jean Marcheri: As a result, we now anticipate Q4 2024 overnews at the low end of the range. Previously indicated. and well below normal seasonality in Q1 2021. Pork you for 2024 Our fourth quarter business outlook is for Metrovenues of about $3.32 billion at the midpoint. declining year over year by 22.4% and increasing sequentially by 2.2%. Gross margin is expected to be about 30 heads.

Speaker Change: All right.

Speaker Change: As a result, we know anticipate Q4 2020 foot with us at the low end of Suraj.

Speaker Change: <unk> indicated.

Speaker Change: And well below the amortization that EG, Inc, Q1 2025.

Speaker Change: Both Q4 2024.

Speaker Change: Our fourth quarter business outlook is for metal the use of a boat.

Speaker Change: But does the $2 billion.

Speaker Change: At the midpoint.

Speaker Change: Declining year over year by 22 point focuses.

And increasing sequentially by two 2%.

Speaker Change: Gross margin is expected to be about 38%.

Jean Marcheri: What a fool you are, twatty-twatty-twat! The midpoint of our Q4 guide on translates into full year 2024 revenues of about $13.27 billion. Representing 23.2% Decreased zero barrier at the low end of the range indicated in the previous quarter with a gross margin slightly below that provided in that indication. 4Q1 2025 Based on our current customer order backlog and demand visibility, we anticipate... A revenue decline between Q4 2024 and Q1 2025, well above normal seasonally. I would like to highlight that today we have also announced the launch of a new company-wide program. to reshape our manufacturing food grid.

Speaker Change: For the full year of 2024.

Speaker Change: As a midpoint of about two four guide those.

Speaker Change: Pulp slates into full year 2024 who've been use of about $13 27 billion dollar.

Speaker Change: Representing a 23, 2%.

Speaker Change: <unk> at the low end of Xerox indicator, these who produce brookdale with a gross margin slightly below.

Speaker Change: <unk> provider in that indication.

Speaker Change: Well Q1 2025.

Speaker Change: Okay.

Speaker Change: Based on our pure customer order backlog and demand visibility we anticipate.

Speaker Change: <unk> declined between Q4, 2024, and Q1 2025.

Well above normal seasonality.

Speaker Change: I would like to highlight that today. We are also adults the launch of a new company wide pro rata.

Speaker Change: So he said Oh, well manufacturing should breed.

Jean Marcheri: Accelerating our reinforcement capacity transition to 300 mm silicon. and 200 mm silicon carbide. Resizing Our Global Cause Base Now, I will move to a detailed review of the third My statement on a year-over-year basis. Analog products, MEMS, and sensors was done 13.3% mainly due to the decrease in imaging and in analog. Power and discrete products decreased 18.4% with a decline in both power and discrete products. Microcontrollers revenues declined 43.4%. mainly due to general purpose microcontrollers. both power and discrete and general purpose microcontrollers of a new decline. Digital ICs and radiofrequency products declined 29.7%. mainly due to HEDA and Infotainment.

Speaker Change: I would say that overall wafer fab capacity, causing should <unk> silica.

Speaker Change: And two other luxury metro LCD could come by.

Speaker Change: And the.

Speaker Change: <unk>, our global cost base.

Speaker Change: Now I will move to a detailed review of the silk loved it.

Speaker Change: By segment on the year over year basis.

Speaker Change: Other products mix and sense of what's done 13, 3%.

Speaker Change: Mainly due to the decrease in imaging and in Nevada.

Speaker Change: Boyle, a discrete products decreased 18, 4% with the decline in both power and discrete products.

Speaker Change: <unk> declined to 43, 4%.

Speaker Change: Mainly due to general proposed make local treehouse.

Speaker Change: Bruce power and discrete and Julian I'll propose microcontrollers revenue declines.

Speaker Change: Well largely driven by Ian just field.

Speaker Change: Digital Ic's and agile frequency products declined $29 seven Gibson.

Speaker Change: Mainly due to Adas and infotainment.

Jean Marcheri: by NMarket. Industrial declined by more than 50%. Automotive by about 18%. Persona Electronica by about 9 persons and Communication Equipment. and Computer Peripherals by about 5%. Your viewers says to OEM decreased 17.5% and by 45.4% to distribution. Overall, Q3 Net Revenues increased 0.6% sequentially, with an increase of 1.7% in analog products. memories, and some source 7.9% in power and discrete products. and 3.6% in microcontrollers. While digital ICs and radiofrequency products decrease 17.4%. by El Marquez. Industry Hall was down about 12% sequentially. Automotive flat personal electronics up about 20% and Communication Equipment and Computer Peripherals, Dawn, about 8 p.m.

Speaker Change: By end market.

Speaker Change: <unk> declined by more than 50%.

Speaker Change: Automotive by about 18%.

Speaker Change: Yesterday clinique by about 9%.

Speaker Change: In communication equipment.

Speaker Change: And computer peripheral horse by about 5%.

Speaker Change: Yes.

Speaker Change: Sales to Oems decreased 17, 5%.

Speaker Change: And by 45 that focuses to distribution.

Speaker Change: Overall Q3, net equivalent using treason, 0.6% sequentially, we saw an increase of one 7% in analog products.

Speaker Change: And some thoughts.

Seven 9% in power and discrete products.

Speaker Change: And people like 6% in Microcontrollers.

Speaker Change: While digital Ics and audio FICO C products decreased 17 focuses.

Speaker Change: By end market industrial was down about 12% sequentially.

Speaker Change: Automotive flat.

Speaker Change: Personal electronics up about 20%.

Speaker Change: In communication equipment, and computer market, he filtered down about 8%.

Jean Marcheri: Gross profit was $1.23 billion, decreasing 41.8% year-over-year. Gross margin decreased to 37.8% compared to 47.6% in the same quarter last year. The decrease was mainly due to product mix. and to a lesser extent. Self-Price and Higher Unused Capacity Chart. Operative margin was 11.7%. compared to 28% in the Eurogroup period. On a year-over-year basis, Q3 net income decreased around 68% to $351 million. compared to 1.09 billion dollars in the Eurocopa. Earnings per diluted share decreased to $0.37 compared to $1.60. Net cash from operating activities decreased to $723 million in Q3 versus $1.88 billion in the year ago quarter.

Speaker Change: Gross profit was $1 23 billion dollar decreasing 41, 8% shibuya.

Speaker Change: Gross margin decreased to 37, 8% compared to 47, 6% is the same quarter last year.

Speaker Change: The decrease was mainly due to product mix.

Speaker Change: To a lesser extent to satisfy an IL unused capacity charges.

Speaker Change: Opacity gloss it was 11, 7%.

Speaker Change: Compare that to 28% in the yogurt group valuation.

Speaker Change: On a year over year basis, Q3, net income decrease around 68% to <unk> video.

Speaker Change: Compare that to one zero diet videos dynamic the Yahoo, Google Hotel.

Speaker Change: Buildings built diluted share decrease it to zero point Dusty seven dollar copay.

Speaker Change: Compared to $1 16.

Speaker Change: Okay.

Speaker Change: Net cash from operating activities decreased to 701 and $23 million to treat netsuite $1.88 billion in the year ago quarter.

Speaker Change: Yeah.

Jean Marcheri: Net capex in the third quarter was 565 million dollars. compared to $1.15 billion in the year ago. The cash flow was $136 million compared to $707 million in the year ago quarter. Inventory at the end of the third quarter was $2.88 billion compared to the $2.87 billion in the year ago quarter. Dave's sales of inventories at quarter end were 130 days. similar to the previous quarter, and up compared to the 114 days in the year-ago quarter. During the third quarter, ST paid $80 million of cash dividends to stockholders and were executed a $92 million share buyback under our current share pre-purchase ST's Net Financial Position of $3.8 billion as of September 28, 2024.

Speaker Change: Net capex in the third quarter was five.

Speaker Change: 565 billion got all.

Speaker Change: Compared to 115 billion dollar in the year ago quarter.

Free cash flow was $136 million compared to seven of the HUD and fitbit.

Speaker Change: In the Johan <unk>.

Speaker Change: Inventory at the end of the third quarter was $2 88 billion dollar.

Speaker Change: Compared to the 2.87 billion dollar in the yellow Google Seo.

Speaker Change: David says of inventories at quarter end, well, one ordered 30 days similar to the <unk> Scottsdale.

Speaker Change: Compared to the one of the blood and 14 days is the yellow goop water.

Speaker Change: Doing the self quartile SD paid $80 million of cash dividends to stockholders and well executed a 92 billion dollar share buyback adult I'll walk through all the shifts you've got the church program.

Speaker Change: <unk> net financial position of three.

Speaker Change: <unk> 80 billion dollar as of September 28, 2024.

Jean Marcheri: reflected total liquidity of $6.3 billion and a total financial debt of $3.12 billion.

Speaker Change: We think the total liquidity of $6 3 billion dollar and the total financial debt of $3 $12 billion.

Jean Marcheri: I will now go through a short update on some of our strategic focus areas. in Automotive. We saw some further deterioration in customer backlog and order entry during the third quarter. In our view, this reflects a change in the plans of our customers. with some shifts from full battery electric to hybrid and from premium to economy vehicle. as well as dot-sized production at carmakers to control inventors. All will go. We do not anticipate significant changes. in the long-term electrical vehicle adoption by consumers. and we assume their concerns. Residual Value, Charging Stations, Price will gradually elevate.

Speaker Change: I will go through a short update on some of our strategic focus areas.

Speaker Change: In automotive.

Speaker Change: We saw soft film Zelle, They say you always should E gifts to build backlog and although it's Sri joined the theft Rockdale.

Speaker Change: It is all of you.

Speaker Change: This reflects a change in the blood of a ruckus Davis.

Speaker Change: We some shift.

Speaker Change: Electric to hybrid and from <unk> two it could be vehicles.

Speaker Change: I swear to either the size of that project should account makers to control inventories.

Speaker Change: All waiver.

Speaker Change: We do not anticipate significant change.

Speaker Change: In the Lockdown electrical vehicle adoption <unk>.

Speaker Change: And do we assume that they are good sales.

Ladies insured value charging stations highs.

Speaker Change: Casually edited.

Speaker Change: Yeah.

Jean Marcheri: During the quarter, we continue to execute our strategy on car electrification. We introduce our fourth generation of silicon carbide MOSFET technology. This brings new benchmarks in power efficiency, power density, and robustness. and is particularly optimized for traction inverters in electrical vehicles. We add multiple wheels with both silicon carbide and silicon devices and modules for new traction inverters and onboard charger designs. We also want additional business with our automotive smart power technologies for electrical vehicle battery and power management systems, as well as our smart shoes solution. in car digitalization. We gained further traction with our portfolio of automotive microcontrollers.

Speaker Change: During the quarter, we continued to execute our strategy of guy because vacation.

Speaker Change: We introduced a well first generation of Silicon carbide MOSFET technology.

Speaker Change: This breaks new benchmarks in boiler efficiency <unk>.

Speaker Change: It is particularly optimized for stock should investors in electrical vehicles.

Speaker Change: We added multiple ways with both silicon carbide and silicon devices Edward use for new traction inverter and onboard charger design.

We also won additional business with notable achievements snuffbox technologies for electrical vehicle battery.

Speaker Change: <unk> wealth management's he steps as well as our.

Speaker Change: Our slots shoes solutions.

Speaker Change: And Kathy degradation.

Speaker Change: We gained further traction with our portfolio of ultra which is micro copolymers.

Speaker Change: Okay.

Jean Marcheri: Our STELR microcontroller was selected by a major European carmaker in a new platform for traction inverter and onboard charger management. Another significant Stellar win was with a Japanese shareholder. as part of an electrification platform design that integrates multiple functions in a single MCU. This approach is generally called X-in-Y. and is an important thread for the next generation of car architects. A further win saw Stellar chosen for an active safety application in a new electrical vehicle platform from an emerging player. We also continue to have important design wins in traditional applications, like braking, where we are the leader in smartphones.

Speaker Change: Our stellar microcontroller Hill was selected by you Badger European carmaker in the new platform.

Speaker Change: Auction inverter and onboard Changzhou management.

Speaker Change: Although some significant state a week, whereas visa jeopardy is shell what.

Speaker Change: As part of the electrification that felt design that indicates people function.

To see good interest you.

Speaker Change: This approach is generally called X either one.

Speaker Change: Ed is I Love Boston trade for next generation option.

Speaker Change: How should take Jos.

Speaker Change: It fills a weakness so stayed up shoes.

On active safety application in a new electrical vehicle platform.

Speaker Change: At MFC player.

Speaker Change: We also continue to have important these eight we'd see traditional applications like braking, where we are the leader in smartphone.

Jean Marcheri: Each cell source, we have the number of which with our automotive grade motion map. for Smart Keys, Telematics Unique. and for our innovative rotating card. Our design wind activity here continues to position STWell to leverage the structural growth in this key market. et l'Industrie Auteure. We are seeing continuing inventory correction at OEMs and along the value chain. Preventing any significant recovery in semiconductor... In this context, we continue to work with customers to design in today's products while investing in R&D to create the next generation of solutions. We had design wins across a broad range of applications for our Power & Analog portfolio.

Speaker Change: Each said source and we had a number of wins with our automotive grade bushel beds.

Speaker Change: Smart keys telematics units.

Speaker Change: Before I used by achieving what they think obviously.

Speaker Change: Although these angry that TVT ear continues to position. This T whaler too literal agent just put to it goes in these key buckets.

Speaker Change: He didn't do sealing.

Speaker Change: We are seeing at Gucci, you, we invent delete collection at Oems and along the value chain.

Speaker Change: Preventing N E cig, if he can't see covertly is somebody called <unk> W. Baird.

Speaker Change: In this context, we continue to work with customers to design them in two days products, while investing in R&D to create the next generation of solutions.

We had design wins across a broad range of applications for whether the loan portfolio.

Jean Marcheri: This included a design with silicone and silicone carbide products. for a leading provider of power supply units. for AI Server Infrastructure. A Fast-Growing Application Requiring Very High Power Efficiency in Embedded Processing, our STM32 microcontroller. continue to be the most familiar MCUs for developers. We have a recognized software ecosystem with over 1.2 million. Unique Users going more than 30% Eurovision. and one of the fastest-growing and most active microcontroller technical communities. with over 500,000 unique visitors each month.

Speaker Change: This included a desire, we do with silicon and Silicon carbide products.

Speaker Change: <unk>, a leading provider of bogus supply units.

Paul Silva: Paul Silva.

Paul Silva: Server infrastructure.

Paul Silva: With first buoy applications requiring <unk>.

Paul Silva: In the Alberta processing O S. T F 32 by Copel players.

Paul Silva: <unk> to be the bus IBD, all mcu's fall developed barrels.

Paul Silva: We are a recognized software ecosystem with over one 2 million.

Paul Silva: Unique users.

Paul Silva: Gui Malden dose Epo says your failure.

Paul Silva: And one of the fastest growing and most active by Coca Cola technical.

Paul Silva: Yes.

Paul Silva: With over 500000 unique visitors each month.

Paul Silva: And 40%.

Jean Marcheri: Unknown Speaker 0 . This growth in STM32 adoption will position ST to capitalize effectively on the next industrial market upcycle. Additionally, we have over 50,000 active development projects on STMicroelectronics NV. Artificial Intelligence. This activity has been also boosted by our STH-EIS suite. that we were launched at the end of the last quarter. During Q3, we also announced a new strategic collaboration with Qualcomm Technologies. for the next generation of industrial and consumer IoT solutions. Together, we will integrate Qualcomm's leading wireless connectivity technology. with our STF32 microcontroller. We will start with the Wi-Fi Bluetooth Thread Combo System on the chip.

Paul Silva: Yeah, although young girls.

Paul Silva: This growth in the SDN thirty-two adoption with Boise showed S. T to capitalized effectively adds index into steel bucket of cycles.

Paul Silva: Additionally, we have over a 50000 active development projects.

Paul Silva: <unk> of Citi.

Paul Silva: T cell division stores.

Paul Silva: This activity has been also boosted by U S. G H E suite that.

Paul Silva: We will not should at the end of the last quarter.

Paul Silva: During Q3.

Paul Silva: So those unused strategy collaboration with Qualcomm technologies.

Paul Silva: The next generation of industrial and consumer Iot solutions.

Paul Silva: Together, we would even take I'd call it copes, leading wireless connectivity technologies.

Paul Silva: With our well STM substitute local total ecosystem.

Paul Silva: We will start with a Wifi Bluetooth thread cabooses stemmons cheap.

Jean Marcheri: Thanks to the Developers will enjoy seamless connectivity software integration into STM32 microcontrollers. Moving now to the other two end markets. Persona Electronics was slightly better than expected. and Communication Equipment and Computer Peripherals was in line with expectations. for all our engaged customer.

Paul Silva: Thanks to these develop reserves with Australia.

Paul Silva: Seamless connectivity software integration into STM subject to Microcontrollers.

Paul Silva: Yeah.

Paul Silva: Moving now towards the Ozark to end markets.

Paul Silva: Personal electronics was slightly better than expected.

Paul Silva: And communication equipment and computer peripherals was in line with expectations, so or Oh, well I'll gauge customer pull ups.

Jean Marcheri: To conclude on this Q3 update, I would like to mention a new step in our company organization. Since the beginning of 2024, ST has made significant changes in the way it is structured and operates. including the reorganization of its protocol. Since October 1st, 2024, Lorenzo Grandi, President and CFO. Hashtag additional responsibilities with a perimeter now also covering supply chain, corporate development, and integrated external communication. In addition to final Global Procurement, Digital Transformation, and Information Technology, Enterprise Risk Management and Resilience. The Company's Executive Committee remains unchanged. and continues to report to me as President-Elect. Now, let's move to our fourth quarter 2024 Financial Outlook and our plans for the full year 2020.

Paul Silva: To conclude on this Q3 updates I would like to learn showed a new step in the local Peggy organization.

Paul Silva: Yeah.

This is the beginning of 2024 S T as bad that CEC could change in the way. It is produced and operates.

Paul Silva: Including Sohail utilization of each product group.

Since October 1st 2020 for Lorenzo <unk>, President and CFO.

Lorenzo <unk>: I expect additional responsibilities.

Lorenzo <unk>: With a very detailed though also covering supply shed gulfport develop bud.

Lorenzo <unk>: And indeed, the external communication.

Lorenzo <unk>: In addition to finance.

Lorenzo <unk>: Global procurement digital transformation.

Lorenzo <unk>: And information technology, Ultra police case management and resilience.

Lorenzo <unk>: The company's executive Committee and he beds unchanged and continues to be both to me as president and CEO.

Lorenzo <unk>: Yeah.

Lorenzo <unk>: Now, let's move to our fourth quarter 2020, Schwab financial outlook and the work that's for the full year of 2020.

Jean Marcheri: Thank you for watching. representing a year-over-year decline of 22.4% and a sequential growth of 2.2%. Q4 gross margin is expected to be about 38% at the midpoint. impacted by about 400 basis points of unused capacity charges. For 2024, our Q4 guidance at the midpoint translates into 2024 Net Revenues of Amount. $13.27 billion This represents a decrease of about 23.2% year-over-year in the low-end of the run. is located in the previous quarter. Within this guidance, we expect a gross margin of about 39.4% impact on about 290 basis points of unused capacity charges at the midpoint of our 2024 Foulier Initiative.

Lorenzo <unk>: For Q4, we expect net revenues of about 332 billion dollar Jimmy Buffett we.

Lorenzo <unk>: We present <unk> year over year decline of 22 focuses.

Lorenzo <unk>: And the sequential growth of two 2%.

Lorenzo <unk>: Okay.

Lorenzo <unk>: Q4 gross margin is expected to be about 38% as of a point.

Lorenzo <unk>: Impacted by about 400 basis points of unused capacity charges.

Lorenzo <unk>: For 2024, our Q4 guidance at the midpoint of.

Slates into 2020 before they pull the use of our bonds.

Lorenzo <unk>: $15 27 billion.

Lorenzo <unk>: This represents a decrease.

Lorenzo <unk>: About 20 peer to peer social they'll go into low Ed of the lunch <unk>.

Lorenzo <unk>: Kicked in in the Clearview Scottsdale.

Lorenzo <unk>: Within this guidance, we expect our gross margin of about subsidized focus it is back to a double.

Lorenzo <unk>: Throughout the world and 90 basis points of unused capacity charges at the midpoint of our 2020 for full year indications.

Jean Marcheri: This $13.27 billion is in the low end of the revenue range indicated in the previous quarter. The difference compared with the midpoint of the edge relates mainly to lower revenues in automotive. and to a lesser extent, lower revenues in industries. partially offset, but slightly better of a new impersonal. We confirmed our 2024 Net CapEx plan of about $2.5 billion. for Q1 2025. At this time of the year, we usually do not comment two quarters ahead. But based on our current customer backlog. and Holder H3 Dynamics. We anticipate a revenue decline between Q4 2024 and Q1 2025.

Lorenzo <unk>: The starting point 27 billion dollar easy zero and absorb what would you urge indicated these are plugged in Scottsdale.

Speaker Change: Did you say holdco bill with the midpoint of the edge due dates bad knee.

Speaker Change: Two lobo when he was in the queue.

Speaker Change: And to a lesser extent low levels of uses in this field.

Speaker Change: Partially offset led to slightly better.

Speaker Change: That said at a clip.

Speaker Change: We called our 2024 net Capex plan of about $2 five videos.

Speaker Change: Okay.

Speaker Change: Both Q1 2020 sites.

Speaker Change: At this time about the Yale we usually do those comments to kratos.

Speaker Change: Beth.

Speaker Change: Based the other walk jocasta built backlog.

Speaker Change: At a holdup entry dynamics.

Speaker Change: We anticipate the revenue decline.

Speaker Change: Between Q4 of 2024 and Q1 2025.

Jean Marcheri: Well above normal, she's usually. Fair to say this also includes a significantly lower number of calendar days in Q1 2025 versus Q4 2024. A six-person second shorting. which is the highest sequential decrease in the number of days in the last three years.

Speaker Change: Well above the onboard season damage.

Speaker Change: We have to say this also includes a significant global dumbbells calendar days in Q1 2025.

Speaker Change: Versus Q4 2024.

A 6% sequential decrease.

Speaker Change: Which is a sequential decrease in the number of days the last three years.

Jean Marcheri: Finally, Today, we have announced the launch of a new company-wide program. to reshape our body's factory. We are accelerating our WAFORFAB 300mm transition. Isaac Ratté, Ed Kohl In particular, in Agrathe, reaching a scale of about 4,000 wafers per week exiting 2020. In cation, in silicon carbide, we will accelerate our transition. Moreover, we will resize our global cost base. This program Strengthening our capability to grow our value, but with an improved operating efficiency. resulting in annual cost savings. The I triple digit million dollar hedge exiting 2037.

Speaker Change: Finally.

Speaker Change: Today, we have.

The launch of a new company wide courtyard.

Speaker Change: To reshape our manufacturing footprint.

Speaker Change: We are accident, Oh, well worth of appeal does BD better position.

Speaker Change: Either cut the cord.

Speaker Change: In particular on the dichotomy Chico's scale of about 5000 wafer per week exiting 2026.

Speaker Change: It kept a yacht each silica Cal baidu will accelerate.

Speaker Change: He showed two two automobile unit sales.

Speaker Change: Although we will re size of our global cost base.

Speaker Change: These programs.

Speaker Change: Should the reserves.

Speaker Change: It's tightened taking a walk capability to all of you, but with an improved operating efficiencies.

Speaker Change: This is T E I do valent cost saving in the digital.

Speaker Change: Digital video are all hedged exiting 2037.

Speaker Change: Yeah.

Jean Marcheri: to conclude. As I said last quarter, the current market cycle dynamics, coupled with the ongoing transformation of the automotive and industrial end markets, are bringing both opportunities and challenges in the short, medium and long term. And this is true for ST and for our customer equally. In the short to medium term, we are adapting our operating plans to this situation. And we are launching our company wide reshaping and Resizing Program. while continuing to invest in innovation and in our strategic manufacturing. Medium to long term, we continue to be convinced. that this will provide the basis for our sustainable growth ambitions and for delivering value to our stakeholders.

Speaker Change: To conclude.

Speaker Change: As I said last quarter, the kyowa bucket cycles, Dw's copper Louise outgoing tell somebody should.

Speaker Change: Automotive and industrial end markets.

Speaker Change: Lead ingot, both opportunities and challenges in the short medium and long term.

Speaker Change: And this is true for S G and forecast about equally.

In the short to medium term we.

Speaker Change: We are adapting it oh, well, okay batching plants to this situation and we are launching a local by you either reshaped.

Speaker Change: And the resizing cohort.

Speaker Change: While continuing to invest in innovation.

Speaker Change: Well you know works publishes manufacturing shifts.

Speaker Change: Mitchell too low that we continue to be cold leads that Z suite provides a basis falloff assisted able growth of the shows.

Speaker Change: For delivering value to awhile stakeholders.

Jean Marcheri: We look forward to updating you on our strategy at our Capital Markets Day on November 20th. either in person in Paris all via our live webcast. Thank you for your attention and we are now ready to answer your questions.

Speaker Change: We look forward to updating you on our wealth strategy at our capital bucket today, although they're built with juice.

Speaker Change: The impact said in Paris.

Speaker Change: A live webcast.

Speaker Change: Thank you for your wise that should and we are ready to answer your question.

Speaker Change: Yeah.

Moira: We will now begin the question-and-answer session. Anyone who wishes to ask a question or make a comment may press star and 1 on their touch-tone telephone. You will hear a tone to confirm that you have entered the queue. If you wish to remove yourself from the question queue, you may press star and two.

Speaker Change: We will now begin the question and answer session anyone who wishes to ask a question or make a comment make press star and one on the Touchstone telephone you will hear a tone to confront that event I think Keith if you wish to remove yourself from the question queue. You May press star two.

Moira: Participants are requested to use only handsets while asking a question. Anyone who has a question or a comment may press star and 1 at this time.

Speaker Change: Participants are requested to use only handsets were asking a question.

Anyone who has a question or a comment May press star one at this time.

Francois Bovigny: The first question is from Francois Bovigny from UBS, please go ahead. Thank you very much. Jean-Marc, I wanted to come back to Q1 comments. Obviously, you mentioned less calendar days, but you know, the sharp decline in Q1. Could you, you know, highlight maybe some drivers? And importantly, you know, it is the first quarter of the calendar year, which is the pricing reset. And you know that we have a lot of fear on the market right now, especially given the oversupply and the demand environment that pricing could fall significantly into next year. How should we think about that as negotiations started and you guys did, you know, a weaker Q1?

Speaker Change: The first question is from Francois <unk> from UBS. Please go ahead.

Francois: Thank you very much.

Francois: Mark I wanted to come back to Q1 comment obviously you mentioned.

Speaker Change: Less calendar days, but you know that the sharp decline in Q1 could you.

Speaker Change: Highlighted maybe some drivers and important to see the first quarter of the calendar year, which is the pricing resets.

Speaker Change: And you know that we ever let a few on the market right now, especially given the oversupply in the demand environment that pricing could fall significantly into next year.

Speaker Change: How should we think about that as negotiations stuff that you guys did you know a weaker Q1.

Francois Bovigny: What is the pricing impact here and how should we think about next year's pricing environment?

Speaker Change: What is the pricing impact here and how should we think about next year's pricing environment.

Jean Marcheri: On the pricing, I let Lorenzo comment, but here he is not a warning about pricing. Absolutely not. It's more a warning about the customer backlog and the order dynamic. And the fact that, okay, you know that in Q1, we have the usual seasonality of personal electronics. and including on personal electronics potentially this year could be worse. Well, unfortunately, it will be. Significantly this year, amplified by the fact that the quarter will be shorter, 88 days compared to 94 days in Q4. So this impacts also significantly the run rate of the organization. Well, so, so usually...

But on the pricing led to billings will commend but.

Speaker Change: Is that too wildly here what I see.

Speaker Change: Absolutely Doug.

Speaker Change: Is more.

Speaker Change: About the coastal El Black Lager and Oh.

Speaker Change: The old Belgian damage.

Speaker Change: And the fact that to get you know that in Q1, we have the user usual to.

Speaker Change: Seasonality of personal electronics.

Speaker Change: And including a peso the clinique potentially issue could be worst.

Speaker Change: Ah well unfortunately.

Speaker Change: Each will be.

Speaker Change: Seeing if he cookies ECL uplift fire by the fact that the quarter, we'd be shocked over 88 days.

Speaker Change: Compare 94 days in Q4, so it was just a impact or Susan if you can please or otherwise of the overview.

Speaker Change: So saw usually.

Speaker Change:

Jean Marcheri: We have a low hand double digit sequential growth. This year will be amplified by the 6%. is more related to the customer order dynamics and backlog.

Speaker Change: We have a let's say a little had double digit sequential growth.

Speaker Change: This year will be amplified by <unk>, 6%.

Speaker Change: Is it more related to the customer all the dynamics and backlog.

Jean Marcheri: uh maybe work specifically on personal electronics rather than something triggered by a...

Speaker Change: Maybe will specifically of SMA tweaks.

Speaker Change: So zander.

I'm seeing a T go bye bye.

Speaker Change: Pipes.

Lorenzo Grandi: So, Lorenzo, you want to come in? Yes, good morning, everybody. Well, you know that when we look at the price dynamic... Today in this quarter, substantially the pricing is similar to what was expected, I would say low single digit decline. Next year, as was Gianmarco remarking, we don't see a dramatic price environment. Yes, it's a little bit, let's say, there is a little bit more pressure than this year, but we still are talking about mid-single-digit decline overall. So, of course, we are in the negotiation phase now, but as I said, overall for the company, on average, we see something that is more in the mid-single-digit.

Speaker Change: So the ideal you want to Kevin, Yes, Hey, good morning, everybody, Yeah, Bob E on all that and when we look at the price dynamic.

Today in this quarter.

Speaker Change: Substantially the pricing gate, you see me laugh too.

Speaker Change: What was expected there I would say low single digit decline.

Next year, as Washington, marking <unk> coding marking.

Speaker Change: We don't see a dramatic.

Speaker Change: The price environment that yes that easily beat that let's say there is a little bit more pressure on that.

Speaker Change: <unk>.

Speaker Change: We still are talking about them meet their single D. G decline overall so weak.

Speaker Change: Of course that we are in the negotiation phase now.

Speaker Change: As I said that overall for the company name about Asia, we see something that this morning.

Speaker Change: Mid single D G SEC.

Lorenzo Grandi: that is a little bit higher than this year, but not dramatically changing.

Speaker Change: That is our lead that'd be dayan ban UCI, but not based on a market can be changing.

Francois Bovigny: Thank you, François-Xavier. Thank you very much. Do you have any follow-up? Follow-up or just one, yeah? Photo, yeah. Yeah, yeah, the follow up would be on the on the microcontroller side. I mean, obviously, it has been, you know, a big decline through the year. I mean, Q4 might be so declining a lot. I was wondering where, where are you inventory in the channel? I mean, you know, where are you in this inventory correction, you know, versus your normal level where you think you should be? And do you see any light, you know, in the in the tunnel here, with regard to microcontrollers, industrial particularly?

Speaker Change: Thank you Paul and thank you very much.

Speaker Change: Follow up on just one yeah.

The photo.

Speaker Change: Yeah, Yeah, the follow up would be on that on the microcontroller side I mean, obviously it has been a you know a.

Speaker Change: The decline through the year, I mean Q4 might be a slow declining a lot Tim I was wondering where where are your inventories in the channel. I mean, you know where are you in this inventory correction.

Speaker Change: Versus your normal level, where you think you should be and do you see any light you know in the turn it over here.

Speaker Change: We've really got two microcontrollers industrial, particularly.

Lorenzo Grandi: Well, for general purpose, it is clear that it is a very significant decrease this year. above minus 50 percent and 24 versus 25. We have to say that. About more than half of this decrease for microcontrollers is really connected to an inventory correction. But the point is that this inventory correction is lasting more than expected because the hand demand of our customers moving along the year was also decreasing. So, we also accept that 30-35% of the decrease of microcontrollers is ultimately linked to the end-demand weakening of the customer, of our customers. It is true that we have lost some market share in China, linked to the fact that during the shortage of semiconductors, okay, we squeezed some Chinese company, okay, to support, let's say, Automotive and other big OEM and industry also.

Speaker Change: Bob.

Speaker Change: <unk>. Okay here. It is clear that it is a very significant decreases shale.

Speaker Change: A both of them by minus 50% at 2012 as she's trying to treat.

Speaker Change:

Speaker Change: We have to say that.

Speaker Change: About more than <unk> of these decreases for microcontroller is really connected to an inventory correction.

Speaker Change: Yeah.

Speaker Change: But the point is that just Golar inventory collection is a is lasting more than <unk> six.

The expected.

Speaker Change: Because it hasn't been of a raucous dumbbell, okay moving along do you always are also decreasing.

Speaker Change: So we also I said that <unk>, 35% of the decrease of microcontroller L is ucci lately.

Speaker Change: To that end demand.

Speaker Change: Weakening of the of a customer of our customer.

It is true that we have lost.

Speaker Change: Some market share in China.

Speaker Change: Linked to the fact that joins a shortage of semiconductor L. King we squeeze.

Speaker Change: Some Chinese completely okay to support.

Speaker Change: Let's say.

Speaker Change: Automotive in <unk>.

Speaker Change: Big OEM and industrial so we squeeze distribution in China.

Lorenzo Grandi: We squeezed distribution in China in 2021 and 2022 and now we have lost this market.

Speaker Change: In 2020, you went in 2022 and no we apoptosis bucket.

Lorenzo Grandi: I was doing a bit of toolie collection. in the channel. It is not decreasing at the expected speed. And why? Because decreasing our POP, we didn't see, unfortunately, globally I'm spoken, there is a value dynamic by region, the POS is not behaving sufficiently to decrease inventory faster. So we expect that in Q1, the inventory correction will continue, especially in Asia, amplified by the Chinese New Year vacation impact. should continue to decrease a bit in Q2. And discussing with our distributor, we should expect a normalization in H2, 2025. So this is where we are today.

Speaker Change: I was oh.

Speaker Change: But until he got shut.

Speaker Change: In the channel.

Speaker Change: It is not a decreasing exit expected speed them.

Speaker Change: And in Hawaii, because decreasing our walk T O P. A.

Speaker Change: We didn't see unfortunately, nobody ever spoken to there is our values in America by erosion is a few ways.

Speaker Change: Yes.

Speaker Change: He is not let's say be a V a.

Speaker Change: Sufficiently to decreasing went to leaf lifestyle. So we expect that each one.

Speaker Change: Is there anything until he got you should and will continue.

Speaker Change: And especially in <unk> amplified by.

Speaker Change: These new yellow that gets shut in impacts.

Should continue to decrease the beat in Q2 and discussing with our distributor.

Speaker Change: We should expect a normalization in 2025.

So as this is where we are today.

Speaker Change: Thanks for that.

Lorenzo Grandi: Thank you.

Moira: Next question, please, Moira.

Thank you next patient Piedmont myeloma.

Sandeep Deshpande: The next question is from Sandeep Deshpande from J.P. Morgan. Please go ahead. Yeah, hi, thanks for letting me on. I have a question on the automotive market. In the first half of the year, you saw slowdown from your big EV customer as well as you saw slowdown due to Mobileye. And now you're saying in the fourth quarter, you're seeing further slowdown.

Speaker Change: The next question is from Sandeep Deshpande from JP Morgan. Please go ahead.

Sandeep Deshpande: Yeah, Hi, Thanks for letting me on I have a question on the automotive market.

Sandeep Deshpande: In the first half of the you saw a slowdown from your big customer as well as you saw slow down did grow mobile ly and now youre, saying in the fourth quarter. You are seeing further slow down can you quantify where the slowdown is that cutting is it in legacy box is it in a silicon carbide, so where is the slowdown occurring in the.

Sandeep Deshpande: Can you quantify where this slowdown is occurring? Is it in legacy parts? Is it in silicon carbide? So where is this slowdown occurring in the automotive market? And associated with this slowdown, are you seeing the tier one suppliers reducing their inventories now given that they have been holding such high levels of inventory in the automotive supply chain? Are we now seeing that correction in the automotive supply chain in terms of inventory?

Sandeep Deshpande: Automotive market and associated with this slow down are you seeing the tier one suppliers, reducing that inventory is now given that they have been holding such high levels of inventory in the automotive supply chain Avi now seen that correction in the automotive supply chain in terms of inventory and is that what what are the reasons why of course.

Sandeep Deshpande: And is that one of the reasons why, of course, there's the consumer angle as well, but or the personal electronics angle, but is that continuing into the first quarter of the year?

Speaker Change: The consumer angle as well, but all the personal electronics angle, but is that continuing into the first quarter of it yet and I have one quick follow up.

Sandeep Deshpande: And I have one quick follow up.

Marco Cassis: Unknown Speaker So, thank you. If you don't mind, I will share the answer with Marco Castro. Yes Sandeep, good morning. So yes, what you say is correct.

Speaker Change: Well. Thank you if you don't mind I would shallows yelled sale with a bulk Lucas.

Speaker Change: Yes M deeper with modeling so yes, what you say is correct, let give me some color. So first of all the reduction in automotive ease.

Marco Cassis: Let's give me some color. So first of all, the reduction in automotive is related with an overall reduction in terms of light vehicles. 24 will be lower than 23. And going specifically on battery-operated cars, we see a reduction in the battery-operated cars, giving space, let's say, to an increase in the hybrids and plug-in hybrids. We are able to quantify this decrease in terms of battery-operated car in the range of 15%, not equally distributed, much less in China and more in Europe and in the US. So clearly this has an impact considering that battery-operated cars has a higher content in terms of silicon and has, of course, an impact also on the silicon carbide.

Speaker Change: Related with an overall reduction in terms of light vehicles.

Speaker Change: 94 would be lower than 20, threep and growing specifically on the battery operated cost we see action in the battery operated gas gaming.

Speaker Change: Space, let's say to an increase in the hybris and the lagging hybrids. We are able to quantify is the slight decrease in terms of battery operated drought in the range of 15% not equally distributed.

Speaker Change: These figures did much less see China and more in Europe and in U S. So clearly these as any impact considering battery operated the cost is a higher content in terms of silly content is of course, an impact also on the silicon carbide.

Marco Cassis: We believe, and this is what analysts are saying, is that 25 will be still not growing the overall number of light vehicles. So it's a situation that will proceed during 25, at least for the first half.

We believe <unk> is what the analysts are saying is that 25 will be still.

Speaker Change: Not to growing the overall number of light vehicles. So.

Speaker Change: A situation that will proceed during 25, if you saw the first out and clearly visa has created of course, probably some excess of inventory.

Marco Cassis: And clearly this has created, of course, probably some excess of inventory at carmakers and along the supply chain, which has an impact as we have seen in our overall numbers. Now, saying that, if we extend a little bit the time horizon, we do believe that electrification is going to come because it's linked to factors that will be in place and it's going to come at a lower pace than what we were expecting. 25 for a start would be not easy, but as you said, yes, it's a combination of the factors that we were highlighting. I hope that this answers your question.

Speaker Change: Gotta make us.

Speaker Change: Sure.

Speaker Change: The supply chain, which is which.

Speaker Change: And in fact, we have seen it.

Speaker Change: Now I will say that if you.

Speaker Change: Extend their it services.

Speaker Change: Time, where either we do leave that electrification is going to come because it's linked to two factors that will be in place and it's going to come at a lower pace that we were expecting 25 to start would be not easy, but as you say, yes, it's a combination of the effects of it.

Speaker Change: I hope that these assets no question.

Marco Cassis: Thank you.

Thank you and then I.

Sandeep Deshpande: And then, I mean, you mentioned earlier on the pricing environment at the moment.

Speaker Change: I mean, you mentioned earlier on the pricing environment at the moment can you just comment on what you're seeing in terms of in the automotive space in particular, what do you like you're adding in the current negotiations that are happening for pricing into next year.

Marco Cassis: Can you just comment on what you're seeing in terms of in the automotive space in particular, what you're hearing in the current negotiations that are happening for pricing into next year, given how difficult the environment is for your customers, and given also that they are holding quite high levels of inventory. The negotiations are ongoing. For sure, let's say this year, the price pressure in automotive was there, but quite mild. I would say that at the end, let's say it was in the low single digit. It's true that starting negotiations, we see some more price pressure in automotive than in the one that we see in 2020.

Speaker Change: Given how difficult the environment is for your customers and given also that they are holding quite high levels of inventory.

Speaker Change: No I think the point I am making negotiation on our own Guardian for sure, let's say D. C. The price pressure and also Mark you was there, but quite Mike I would say that at the end of let's say it was in the low single digits.

He stood at that starting negotiations that we see some more price pressure in ophthalmology by banner in that that's the one that that we see in 2024.

Marco Cassis: Of course, as you can imagine, it is different in respect to the various customers, but I would say that, assuming that at the end, the negotiations that are ongoing will end like the one that we are close already, we may say that in automotive now, the price pressure will be meet a single digit, let's say something in that rank.

Speaker Change: Of course, as you can imagine <unk>, Frank de respected with their various <unk>.

Speaker Change: I would say that that is.

Speaker Change: Assuming that at the end of the negotiations that are ongoing we landed like they wanted it back.

Speaker Change: We are close or a D.

Speaker Change: We may we may say that in the market now that the price pressure would be.

Speaker Change: Meet the single D. G said, let's say something in that range.

Marco Cassis: Hey Matt! We may have some more and less, but at the end, this is what we see today.

Speaker Change: Hey, Matt.

Speaker Change: We may add some.

Speaker Change: Some more and less about but at the end it easy so what we see today.

Marco Cassis: Maybe if I can compliment. It is clear that also it has been assessed in the perspective of a regional view. It is clear that today that what is happening in China, especially on the fact that Chinese car makers are really have excess of capacity, the price pressure in China, specifically around the ecosystem of passenger vehicles or light vehicles, is definitively high. So this is a different behavior compared to the Western world.

Speaker Change: Maybe if I can complement.

Speaker Change:

Speaker Change: It is clear that although it has been assessed.

Speaker Change: Assessing the best breakeven or collision that issue.

Speaker Change: It is still that two days that what the opening in China.

Speaker Change: Especially.

Speaker Change: Of the fact that the Chinese economy girl.

Speaker Change: Of excess of capacity.

Speaker Change: Hi space sure each shiner specifically.

Speaker Change: Overall, the ecosystem of <unk>.

Speaker Change: Is it definitively.

Speaker Change: Hi.

Speaker Change: So this is a DCF on the vehicle Bell.

Speaker Change: The wisdom of our Hudson.

Marco Cassis: Maybe if I can add just the last comment here, Sandeep. What we see, let's say, yes, this pricing environment and then you have also to consider in terms of capacity reservation fees, let's say in 2025, there will be a further reduction because clearly, let's say, it's acknowledged by the market that now capacity is available. This will be an element that will be there definitely in 2025.

Speaker Change: Maybe Frank and I have to address the last comment here some deeper.

Speaker Change: What we see let's say, yes visa visa these pricing environment. There and then you have also to consider and Panama capacity reservation fees that lets say in 2000, bringing private repeat a further reduction because that clearly, let's say acknowledge there might be a market. That's now capacities available. These there will be an element.

Speaker Change: We began back in Q2.

Speaker Change: 2000, correct.

Sandeep Deshpande: Thank you so much. Thank you, Sandeep.

Speaker Change: Thank you so much thank.

Thank you Sandeep.

Moira: Moira, next question, please.

Speaker Change: Next question please.

Lee Simpson: The next question is from Lee Simpson from MS. Please go ahead. Great. Good morning, everyone. Thanks for squeezing me in. I'm just wanting to ask around the R&D number, I think 492 million, look to slow that gap down maybe about 10% relative to some of the expectations out there. So just trying to get a sense for, is this a sustainable level? Do we think this is the right level going into next year? And whether or not related to this, there was any change perhaps in the spend structure around silicon carbide as a strategy? Thanks.

Speaker Change: The next question is from Lee Simpson from Pam <unk>. Please go ahead.

Lee Simpson: Great. Good morning, everyone and thanks for squeezing me in I just wanted to ask around the R&D number I think 492 million look there's still that gap down maybe about 10% relative to some of the expectations out there. So I'm just trying to get a sense for is this a sustainable level do we think that's the right level going.

Lee Simpson: Into next year.

Lee Simpson: Whether or not related to this there was any change perhaps in the Spanish structure around silicon carbide as a strategy.

Lorenzo Grandi: Now, I would say that when we look at the expenses in the quarter in Q3, you have to keep in mind that there are a few elements. First of all, the expenses came lower than expected. for a few reasons. One reason is, we know, let's say, is the impact of the vacation in Europe. This was expected. We're a little bit higher than what we were modeling entering the quarter, but this is not the main reason.

Speaker Change: No I would say that when we look at the expenses in the quarter in Q3, and you have to keep in mind that there are a few elements.

Speaker Change: First of all the expenses came at lower than expected.

Speaker Change: For a few reason bought one rezoning USA, we know all I'd say is impact of deprecation in Europe. It is was expected there were a little bit higher than that than what we were modeling entering the quarter, but this is not the main reason Iraq, one, let's say one one item at one time.

Lorenzo Grandi: There are one, let's say, one item, one time item in the cost of labor that was decreasing our expenses, and this was not expected in respect to entering the quarter. But then there is also, let's say, some more control during the quarter on our discretionary expenses. So that's the combination of these elements combined together where driving our expenses lower.

Speaker Change: I mean in the cost of labor that was decreasing our expenses and this was not expected.

Speaker Change: Do you expect that to entering the quarter.

Speaker Change: Then there is also let's say Ah so more drawdown during the quarter on our discretionary expenses. So that said the combination of these elements combine together where.

Speaker Change: But I mean, all of our expenses are lower.

Lorenzo Grandi: It's not something structural. We have not, let's say, especially when we look at our R&D, change our effort in terms of R&D. So we continue to invest in the silicon carbide, and we continue to invest, let's say, in the development of our products. It's true that, let's say, the new organization is bringing some efficiency in our, let's say, ability to follow our programs and somehow be more efficient in the way that we drive our expenses. This is also driven by the fact that we have reorganized our groups in a way that, let's say, today we are avoiding overlaps between the activity in the groups, and this is a portion also that is impacting our ability to have a better control of our Thanks, Lorenzo, very clear.

Speaker Change: He is not the <unk> structure and we.

Speaker Change: We have not lets say, especially when we look out R&D change our effort into Amazon.

Speaker Change: So we continue to invest there we continue to invest in our in the silicon carbide.

Speaker Change: And we continue to invest in let's say in that email in there in the development of our problems is through that let's say the new organization is bringing us some efficiency in our let's say our ability to Florida, our programs and theyre somehow be more efficient in the way that we do.

Speaker Change: Driver a lot of our expenses.

Speaker Change: This is also driven by the fact that we have reorganized our our groups in a way that the let's say today, we are avoiding overlaps between the F. D. BC in the groups and easy Sad portion also.

Speaker Change: It is impacting our ability to drive a better control of our expenses.

Speaker Change: Great. Thanks, Lorenzo very clear.

Marco Cassis: Really, if I could just turn to, I think somewhere in the commentary, you mentioned wins in AI servers. And so just trying to understand, you know, which part of the server power semis architecture are you addressing, you know, there's three major parts with power supply units, voltage handling across the rack, and of course, the delivery accelerators or GPUs themselves. Is there a specific area where you're winning? And could you tell us anything about the the architecture of the power semis that you're using? Thanks.

Speaker Change: If I could just turn to I think somewhere in the commentary you mentioned wins in AI servers, and I was just trying to understand you know what which part of the server power Sami's architecture are you addressing you know there's three major parts with power supply units voltage handling across the rack and of course the delivery to accelerate.

Our Gpus themselves is there a specific area, where youre, winning and could you tell us anything about the architecture of the power Sami's.

Speaker Change: We're using thanks.

Marco Cassis: Thank you.

Marco Cassis: Obviously, I will pass the question to Marco Cassis, he's now in charge of this fantastic product line. Yes, so good morning.

Speaker Change: Ooh abuse via with positive Glacier tobacco cases is all of our shareholders for the steel product line, yes. So.

Marco Cassis: Now we are going to address all the three main blocks. So I'm speaking about the power supply units, I'm speaking about the down to the 48 volt or whatever and down to drive. which means we will address silicone carbide, high voltage MOSFET, a GaN-to-GaN, and phase switching. Phase Change Voltage Regulators and SPS. So the SPS is the low voltage MOS which is the part in which we are now really focusing. It will take a little bit of time clearly to come with a strong offer but our offer is going to go through all the chain because we do believe we will have the portfolio and we have the capabilities to serve all the content inside the AI servers.

Speaker Change: Good morning.

Speaker Change: We are going to address all the three main blocks I'm speaking about the power supply units as I'm speaking about.

Speaker Change: Down to the 48 volt or what they have learned to drive the Gpus, which means we will address.

Speaker Change: She can come by high voltage MOSFET began to come and.

Speaker Change: Phase phase change.

Speaker Change: Voltage regulators.

Speaker Change: Yeah.

Speaker Change: In Sps So STS is.

Speaker Change: Low voltage more switches the path in which we are now really focusing it will take a little bit of bank clearly to come with.

Speaker Change: A strong off of that.

Speaker Change: Australia is going to go through all the chain because we do believe who led the portfolio and we have the portfolio and we have the capabilities to serve all the contents inside.

Marco Cassis: Surely considering the maturity of the products the first big target is going to be in the power supply units and down the voltage and the scale through the AI servers. That's very clear.

AI servers surely considering the maturity of the products. The first target is going to be in the power supply units and.

Speaker Change: Down download the voltage and the scale of fruit.

Speaker Change: I can picture.

Lee Simpson: Thank you very much. Thank you, Lee.

Speaker Change: That's very clear thank you very much thank.

Didier Scemama: Moira, next question, please. The next question is from Didier Scemama from Bank of America. Please go ahead.

Speaker Change: Thank you Lee Mono next question please.

Speaker Change: Yes.

Speaker Change: The next question is from <unk> from Bank of America. Please go ahead.

Lorenzo Grandi: morning and congrats, Jerome, for your appointment. There's a couple of questions first on the on the Q1. Commentary, should we assume that your gross margins are going to take another leg down? A, because obviously your volumes are going to be lower and you're going to lower your factory utilization to lower your inventories on the balance sheet that are lingering at a high level. That's my first question and I've got to follow up. Thank you. But you see that in this quarter, our, let's say, the impact of the unloading charges is very material because it is impacting our growth margin by 400 business points.

Good morning, and congrats Joe on your appointment.

Speaker Change: Of questions to ask on the on the Q1.

Speaker Change: Commentary should we assume that your gross margins are going to are going to take another leg down a because obviously our volumes are going to be lower and you're going to lower your country utilization to lower your inventories on the balance sheet, a lingering at a high level.

Speaker Change: That's my first question and I've got a I've got a follow up thank you.

But you see that and disclose our let's say the impact of the unloading charges that he is very material because they are impacting our gross margin by 400 basis point, we stopped already let's say to take us some measure in front of a weaker Q1 as we say.

Lorenzo Grandi: We start already, let's say, to take some measures in front of a weak Q1, as we say. This will be well below our normal seasonality. There is the impact of the calendar, but there is also the impact of the pandemic. But for sure Q1, yes, we do expect early at this stage to give a precise guidance, but definitely will be a difficult border in terms of gross margin, also because we will continue to have a significant impact for the unloading. We wanted to keep under control our inventory, and this is something that for sure, let's say, will have an impact.

Speaker Change: Before let's say these would be were below our one of our not much seasonality at ease the impact of the calendar, but there is also the impact of Iraq.

Speaker Change: Backed up.

Speaker Change: <unk> Q1, and yesterday, we we we do expect a early at this stage to give a precise guidance about definitely would be a difficult quarter in Panama.

Margin also because we will continue to have a seat.

It can be positive towards yellow, we wanted to keep under control our inventory and this is something that for sure. Let's say, we lack we lag will have any impact in Q1.

Lorenzo Grandi: It is clear that our manufacturing activity in Q1 will not follow the usual activity profile. But in Q4, okay, we have to follow a strict process of discussion with...

Speaker Change: But I appreciate it thank you.

It's clear that the law.

Speaker Change: Manufacturing activity in Q1.

Speaker Change: We did not follow.

Speaker Change: As usual activity profile.

Speaker Change: But in.

Speaker Change: In Q4, Okay, we have to follow the process of distribution that was.

Lorenzo Grandi: Representative of Personnel and People to plan this Q1, but again we will come back later on.

Speaker Change: All personnel Thirtyfold specimens and people okay.

Speaker Change: So that's again, we will come back later on.

Lorenzo Grandi: On the restructuring program, thank you for highlighting the FAB resizing and perhaps OPEX cutting.

Speaker Change: And on the restructuring program. Thank you for highlighting the fab to fab.

Speaker Change: Resizing, and perhaps opex cutting I think one of the questions. We got this morning was is the high triple digit millions of dollars.

Lorenzo Grandi: I think one of the questions we got this morning was, is the high triple-digit millions of dollars a net number or is it a gross number? This is the expected savings that we will have, let's say, as a combination of costs and expenses. Of course, this is not including the possible, let's say, costs related to severance or, let's say, something cost-like. Because it's a gross number. I mean, okay.

Speaker Change: Number or is that a gross number.

Speaker Change: This is the expected savings that we will land, where let's say there is a combination of our brand.

Speaker Change: Roxanne and expenses.

Of course, this is not including the possible, let's say cost related to seven OXXO.

Speaker Change: Let's say something like that.

Speaker Change: I guess, it's a gross number.

Didier Scemama: And maybe just a quick one.

Speaker Change: Okay.

Lorenzo Grandi: Last time, Gianmarco asked you if you were still looking at M&A. You said I think you're actively looking. So can you just give us an update on that? No, but we continue to operate within our organic growth strategy with Bolton Acquisition. OK, we have activity in our radar screen, which are pretty active today. So we'll come back to you as soon as conclude on the.

Speaker Change: And maybe just a quick one last time, if I'm off to ask you. If you were still looking at M&A, you said I think proactively looking.

Speaker Change: Can you just give us an update on that thank you.

Speaker Change: Nobody we continue to operate.

Speaker Change: Within the overall organic growth, but as you as a bolt on acquisition, we have a we have activity in our downstream.

Speaker Change: Which are active today, so we'll come back to you.

Speaker Change: A suit us conclude on it.

Didier Scemama: Thank you. Thank you, Didier.

Speaker Change: Thank you.

Gianmarco Bonacina: Moira, next question, please. The next question is from Gianmarco Bonacina from Banca Acros. Please go ahead. Yes, good morning. A couple of questions for me.

Speaker Change: Thank you D. J Martin next question. Please.

Speaker Change: The next question is from Tom macro, but not sooner from Banca <unk>. Please go ahead.

Speaker Change: Yes. Good morning couple of questions for me. The first one is if you can.

Gianmarco Bonacina: The first one is if you can specify what is the one-time charge related to your cost-saving plan. The second one is more strategic mid-term. Given that we are seeing especially in Europe some change in the platform and factory closures, so what makes you confident that in the mid- to long-term we will see still a significant ramp-up in the penetration of EVs? Thank you.

Speaker Change: Specify what gives the one time charge of accretive to your cost savings plan.

Speaker Change: One is more strategic midterm.

Speaker Change: Given this we are seeing especially in Europe.

Speaker Change: I'm changing the platform factory closures, social what makes you confident that in the mid to long term.

Speaker Change: We see a significant ramp up in.

Speaker Change: Our penetration of Evs. Thank you.

Speaker Change: Yes.

Gianmarco Bonacina: Hi, good morning. You refer the one-time that I was referring for Q3 or something different? Sorry, I'm not sure.

Speaker Change: Eight.

Speaker Change: Hi, good morning, Uli fat they they one time at <unk>.

Speaker Change: Every filing therefore for Q3 or something different.

Gianmarco Bonacina: No, assuming you will have, let's say, 800 million dollars of cost saving in 2027, assuming that this will be partially related to, let's say, lower headcount, how much will be the one-time cost associated with the cost saving plan? But I would say that at this stage, it's a little bit early to enter in those kind of details, let's say, of course, kind of things I think will be better clarified moving ahead on our capital market day and entering, let's say, more detail on this.

Speaker Change: No.

Speaker Change: Assuming you re lever, let's say 800 million dollar of cost saving here in 2027.

Ashwin that these will be partially related to lower.

Speaker Change: Head count.

Speaker Change: How much would be the one time cost associated with the.

Speaker Change: Cost saving plan.

Speaker Change: I would say that at this stage is a little bit early to entering in those kind of days, let's say of course.

Speaker Change: That being said.

Speaker Change: I think we'd be better driving by moving the hamper on our capital market day.

Speaker Change: Entering into let's say more daily onto on display if you don't mind at this stage I would prefer.

Gianmarco Bonacina: If you don't mind, at this stage, I would prefer to stay. OK? OK.

Speaker Change: Okay. Okay.

Gianmarco Bonacina: Well, for the second question... If I want to simplify... It is clear that for any semiconductor company to continuously improve its competitiveness and especially facing an ultra-competitive marketplace that we are facing now due, among many reasons, some capacity that has been triggered by government incentive here and there, everywhere. And unfortunately, as well, with some, let's say, trade constraints. The only way is to increase the wafer size and to shrink the product. But then, okay, you know that when the industry is facing and our customers are facing this kind of down cycle. Each time, okay, the exit period is asking for new products and new technology.

For the second question.

Speaker Change:

Speaker Change: If I want to simply site well.

Speaker Change: It is clear that for any semiconductor company.

Speaker Change: To continuously.

Speaker Change: Improver.

Speaker Change: Competitiveness.

Speaker Change: And Sharon.

Speaker Change: Stacey.

Speaker Change: Uh huh.

We will cut competitive market place.

Speaker Change: We are facing though.

Speaker Change: You among many reason.

Speaker Change: Some capacity that has been a three year old they are.

Speaker Change: It grew out of the month and some T. The E R and D I b well.

Speaker Change: And unfortunately, as well with some of the let's say a trade.

Speaker Change: Trade constraints.

Speaker Change: With these.

Speaker Change: Is to increase the Russell size and to shrink the product.

Speaker Change: That will get you know that when the industry is facing.

Speaker Change: And oh of customer facing kind of down cycle.

Speaker Change: Each time, okay. The exit valued is a scheme for new products and new technology.

Gianmarco Bonacina: So that's the reason why for ST there is no other option to accelerate our 300 millimeter. And the reason why I have mentioned, okay, Agrate specifically, and we have to accelerate to reach as fast as we can, the right scale, in order to have benefits of the cost of goods sold about this 300 millimetres. Well, I would like to recall that basically the benefits we can expect are moving to 300 millimetres, it's at least a 20% productivity increase. Directionally, this is what ST has engaged. Of course, we will update you finally.

Speaker Change: So that's the reason why for ASC. There is no also have shown two accelerates.

Speaker Change: Our 300 millimeter.

And the reason why you you have mentioned, okay I got it specifically.

Speaker Change: And we have to accelerate to reach.

Speaker Change: As fast as we can.

Speaker Change: So high skill in order to our benefit.

Speaker Change: Ah is a cost of goods sold abroad.

Speaker Change: About this <unk> 300 millimeter, well I would like to recall that basically.

The benefits, we can expect a movie tutorial doesn't mean tomato at at least 20% productivity increase.

Speaker Change: But do you make sure that is S. T. A what does he is engaged.

Speaker Change: Of course.

We will update you.

Gianmarco Bonacina: We have defined the critical milestone, and of course, we will give more color at the market day next November 20th. Thank you. Thank you, Gianmarco.

Speaker Change: We do so because of that.

Speaker Change: We have defined the critical milestone.

Speaker Change: And of course, we're going to give us more color.

Speaker Change: The market day next November of 2000.

Speaker Change: Yeah.

Speaker Change: Thank you.

Speaker Change: Thank you again Michael.

Stephane Houri: Moira, next question, please. The next question is from Stephane Houri from Oddo BHF, please go ahead. Yes, hello, good morning everyone. You have described the changing dynamic of the EV market. Can you please update us on your vision, on your targets for silicon carbide for this year and the following years? Thank you. Okay, thank you for the question. Clearly, considering, let's say, the change that we've seen in terms of dynamics, or specifically the fact that fully battery-operated electric vehicles has decreased compared to what was the expectation in 2023. And this reduction is going through linearly in the next year.

Speaker Change: Next question please.

Speaker Change: The next question is from Stefan who is from Adobe H F. Please go ahead.

Speaker Change: Yeah.

Stefan: Yes, Hello, good morning, everyone.

Stefan: You have described the changing dynamic of the of the easy market can you. Please update us on your.

Stefan: Our vision on your targets for Silicon carbide for for this year and the following years. Thank you.

Stefan: Okay.

Speaker Change: Thank you for the question.

Speaker Change: Clearly considering let's say the change that we've seen in terms of dynamics.

Speaker Change: Specifically to the fact that that fully battery operated electric vehicles has decreased compared to work towards the expectation in 2020 fleet.

Speaker Change: This reduction is going free linearly in the next ESPN as an impact for us in that 2024 letter as you remember we're expecting to be in the range of $1 $3 billion now expected to land that we are at.

Stephane Houri: This has an impact for us in 2024 that, as you remember, we're expecting to be in the range of 1.3 billion dollars. Now we expect to land the year at 1.15, 1.2 billion dollars. So reflecting this change in terms of mix, in terms of electrification. Now we do believe that the trends going forward, so if you expand the horizon up to 2030, we believe that the trend for education of mobility remains. And as I was saying before, if we go outside we see also opportunity in AI servers or industrial for what is related with silicon carbide.

Speaker Change: 115, one 2 billion soft, reflecting this change in terms of mix in terms of.

Speaker Change: Electrification now we do believe that.

Speaker Change: The trend going forward. So it will expand our eyes on up to 270 <unk>.

Speaker Change: We believe that the trend for a vacation of mobility remains and as I was saying before if we go outside and you see also opportunity in <unk> service.

Speaker Change: Industrial for what is really going to see Youll come back. So we still believe that our ambition to reach to grow all of the $5 billion by 2030 is there because and this is linked to it too.

Stephane Houri: So we still believe that our ambition to reach, to go over the 5 billion dollars by 2030 is there because, and this is linked to a market share that we do expect to be in the range between 30 to 33 percent. So yes, there is a slowdown, but the long-term ambition towards 2030 is remaining at the level that you were expecting. I hope that these answers help.

Speaker Change: The market share that we do expect it to be in the range between 32% to 33%. So yes, there is a slowdown but the long term ambition towards 'twenty certainty easily meaning at the level that you were expecting.

Speaker Change: Hope that these ounces.

Stephane Houri: Yeah, well, in fact, you also talked about 2025. I think you were targeting $2 billion, but I think you decreased this target to $1.8 billion. So that was also the question, what do you see for next year? We no longer expect to grow the $500 million, but due to the short-term uncertainty, we will provide better visibility at a later date. Now it's too early to come to further. Okay, thank you very much.

Speaker Change: Yeah well.

Speaker Change: In fact, you you also talked about 2025 I think.

Speaker Change: Targeting 2 billion, but I think you decrease the target to one eight.

Speaker Change: So that was also the question what do you see for next year.

Speaker Change: We no longer expect to grow the $500 million, but.

Speaker Change: Due to the short term uncertainty we.

Speaker Change: We will provide better visibility at the.

Speaker Change: Later stage now it's too early to come to start the comments.

Speaker Change: Okay.

Stephane Houri: And if I may have a follow-up, it's a specific question on the evolution of the tax environment, notably in France, where you've got significant operations. Have you thought already about a potential impact on the evolution of your tax rate, of the new tax, let's say, increase in France coming? But as you know, in these kind of things, it's always a little bit difficult because there are many ingredients, let's say, that are combining together. Of course, it depends also how the distribution of the profit of the companies is among the various, let's say, countries, jurisdictions. Definitely, yes, you see that today, our tax rate will be in the range of 17% within that more or less the impact that we may have if the law is enacted as has been announced, we need also to look in detail how this will happen.

Speaker Change: Thank you very much and if I may I have a follow up it's a specific question on the evolution of the of the tax environment, notably in France, where you've got.

Significant operations have you so.

Speaker Change: So to already about potential impact on your on the evolution of your tax rate of the of the new tax, let's say increase in France coming.

Speaker Change: But as you know in these kind of things, it's always a little bit difficult because there are many ingredients, let's say.

Speaker Change: Yeah.

Speaker Change: Combining together of course.

Speaker Change: And also how the distribution of the profits of the company is among the various <unk>.

Speaker Change: Hey, guys.

Speaker Change: Countries.

Speaker Change: Sure.

Speaker Change: Definitely yes, so you see that today and our tax rate.

Speaker Change: We'd be in the range of 17% that we aimed at that more or less said the impact that we may add that he said the law is enacted as has been announced that we need also to look in the eights out what he said laughing.

Stephane Houri: But we may have an impact that will be below one percentage point on our tax Okay, that's very clear.

Speaker Change: We may have an impact.

Speaker Change: We will be below.

Speaker Change: One percentage point on our tax rate.

Speaker Change: Okay. That's very clear thank you very much thank.

Stephane Houri: Thank you very much. Thank you, Stephan.

Joshua Buchalter: We have time for a very quick one. The next question is from Joshua Buchalter from TD Cowen. Please go ahead. Hey guys, thank you for squeezing me in. I wanted to ask about the accelerated move to 300 millimeter and the cost cutting. Did we, how should we think about the implications to CapEx from this change? Are you guys shutting down more quickly 200 millimeter facilities and in the short to medium term? Does this bring your CapEx up or should it lower it? Thanks. We will reduce the work apex.

Speaker Change: Thank you Stephane, we have time for a very quick one.

Speaker Change: The next question is from Joshua Buchalter from TD Cowen. Please go ahead.

Joshua Buchalter: Hey, guys. Thank you for squeezing me in.

Joshua Buchalter: I wanted to ask about the accelerated move to 300 millimeter and the cost cutting did.

Joshua Buchalter: Should we how should we think about the implications on the Capex from this this change are you guys shutting down more quickly 200 millimeter facilities and in the short to medium term.

Joshua Buchalter: Does this bring your capex up or should it should it lower it. Thank you.

Speaker Change: But we will reduce our capex.

Lorenzo Grandi: Next year and on the next three year planning horizon, it is of course something that we will disclose during our Capital Market Day, based on the market evolution and our capability, let's say, to grow over the market. That's it. Of course, we will decrease the work capacity.

Speaker Change: Let's say next year.

The next CEO plenty of reason for it is of course something that we disclose.

Speaker Change: Julian your capital market day based.

Speaker Change: Based on the market evolution and.

Speaker Change: I wont capability.

Speaker Change: Set to go or those are market perspective.

Speaker Change: Yes of course, we will decrease our Wolfcamp Bay, if I may add to a market. Let's say you have to incur to can see that the big infrastructure or to go to 300 millimeter not already there.

Marco Cassis: If I may add a remark, let's say, but you have to think, to consider that the big infrastructure to go to 300 millimetres are already there. The effort has been done. Let's say we have already, let's say, put in place the infrastructure. So it means that, yes, of course, we will have some effects, but will be lower in respect to what has been done in the past.

Speaker Change: That's been that they're taking yam already let's say put in place.

Speaker Change: The infrastructure so means at that yesterday and of course that we will have some capex that we see lower irrespective of what this mean.

Speaker Change: Yes.

Marco Cassis: And the second, as we are accurate on this story, I would like to highlight that the concept of our wafer fab of silicon carbide 200mm in Catania is copy-paste of the concept of Kroll. It means, okay, we can increase by getaway. So we don't need to build a big infrastructure to grow. We are building by module. So this is really a smart way to adapt ourselves to the market condition and investing in due time, at the right time, but never in extra time. Thank you, Josh.

Speaker Change: And the singles as we all are accurate adhesives story I would like to highlight that the concept of a Russell fab of silicon carbide to absorb it.

Speaker Change: In Skokie bust of the concept of call. It meets the gay weekend increased by get away. So we don't need to build.

Speaker Change: <unk> plus <unk>, we are building by module. So is this is a really smart way to adapt ourselves to the market condition and vesting you dive at the right time, but never really makes sense.

Speaker Change: Thank you Josh.

Jean Marcheri: I think this is the ending of our call for this quarter. So thank you very much, all of you, for being there. And we remain here to answer any follow up questions.

Speaker Change: I think in DTC are ending our call for this quarter. So thank you very much all of you for being there and we remain here to disposal should you need any follow up questions. So you've got the one that he didn't have time to ask a question here. Thank you very much.

Moira: Sorry for the ones that didn't have time to ask questions here. Thank you very much.

Speaker Change: Okay.

Moira: Ladies and gentlemen, the conference is now over. Thank you for choosing Coruscant and thank you for participating in the conference. You may now disconnect your lines.

Speaker Change: Ladies and gentlemen, the conference is now over thank you for choosing chorus call and thank you for participating in the conference you May now disconnect your lines Goodbye.

Goodbye.

Speaker Change: [music].

Speaker Change: [music].

Speaker Change: Yes.