Diodes Inc (DIOD) 2019 Q1 法說會逐字稿

Good afternoon and welcome to Diodes Incorporated First quarter 2019 Financial Results Conference Call. At this time, all participants are in a listen-only mode. At the conclusion of today's conference call, instructions will be given for the question-and-answer session. (Operator Instructions) As a reminder, this conference call is being recorded today, Tuesday, May 7, 2019.

下午好，歡迎參加 Diodes 公司 2019 年第一季財務業績電話會議。此時，所有參與者都處於只聽模式。在今天的電話會議結束時，將對問答環節做出指示。（操作員說明）謹此提醒，本次電話會議將於今天（2019 年 5 月 7 日星期二）錄製。

I would now like to turn the call over to Leanne Sievers of Shelton Group Investor Relations. Leanne, please go ahead.

我現在想將電話轉給謝爾頓集團投資者關係部的 Leanne Sievers。莉安，請繼續。

Good afternoon and welcome to Diodes' first quarter 2019 financial results conference call. I'm Leanne Sievers, President of Shelton Group, Diodes' Investor Relations firm. Joining us today are Diodes' President and CEO, Dr. Keh-Shew Lu; Chief Financial Officer, Brett Whitmire; Vice President of Worldwide Sales and Marketing, Emily Yang; and Director of Investor Relations, Laura Mehrl.

下午好，歡迎參加 Diodes 2019 年第一季財務業績電話會議。我是 Leanne Sievers，Diodes 投資人關係公司 Shelton Group 的總裁。今天加入我們的是 Diodes 總裁兼執行長 Keh-Shew Lu 博士；財務長布雷特·惠特米爾；全球銷售與行銷副總裁 Emily Yang；和投資者關係總監 Laura Mehrl。

Before I turn the call over to Dr. Lu, I'd like to remind our listeners that the results announced today are preliminary, as they are subject to the company finalizing the closing procedures and customary quarterly review by the company's independent registered public accounting firm. As such, these results are unaudited and subject to revision until the company files its Form 10-Q for the its first quarter 2019.

在我把電話轉給盧博士之前，我想提醒我們的聽眾，今天公佈的結果是初步的，因為它們取決於公司最終確定的結算程序和公司獨立註冊會計師事務所的慣例季度審查。因此，這些結果未經審計，並且在公司提交 2019 年第一季的 10-Q 表格之前可能會進行修訂。

In addition, management's prepared remarks contain forward-looking statements, which are subject to risks and uncertainties and management may make additional forward-looking statements in response to your questions. Therefore the company claims the protection of the Safe Harbor for forward-looking statements that is contained in the Private Securities Litigation Reform Act of 1995. Actual results may differ from those discussed today and therefore we refer you to more detailed discussion of the risks and uncertainties in the company's filings with the Securities and Exchange Commission, including Forms 10-K and 10-Q. In addition, any projections as to the company's future performance, represent management's estimates as of today, May 7, 2019. Diodes assumes no obligation to update these projections in the future as market conditions may or may not change, except to the extent required by applicable law.

此外，管理層準備的言論包含前瞻性陳述，這些陳述存在風險和不確定性，管理層可能會針對您的問題做出額外的前瞻性陳述。因此，該公司聲稱受到 1995 年《私人證券訴訟改革法案》中包含的前瞻性陳述的安全港保護。實際結果可能與今天討論的結果有所不同，因此我們建議您參閱本公司向美國證券交易委員會提交的文件（包括表格 10-K 和 10-Q）中有關風險和不確定性的更詳細討論。此外，對公司未來業績的任何預測均代表管理層截至今天（2019 年 5 月 7 日）的估計。由於市場條件可能會或可能不會發生變化，Diodes 不承擔在未來更新這些預測的義務，除非適用法律要求。

Additionally, the company's press release and management's statements during this conference call will include discussions of certain measures and financial information in GAAP and non-GAAP terms. Included in the company's press release are definitions and reconciliations of GAAP to GAAP items, which provide additional details. Also throughout the company's press release and management statements during this conference call, we refer to net income attributable to common stockholders as GAAP net income. For those of you unable to listen to the entire call at this time, a recording will be available via webcast for 90 days in the Investor Relations section of Diodes' website at www.diodes.com.

此外，本公司在本次電話會議期間的新聞稿和管理層聲明將包括以公認會計原則和非公認會計原則術語討論某些措施和財務資訊。該公司的新聞稿中包括 GAAP 與 GAAP 項目的定義和調節，其中提供了更多詳細資訊。此外，在本次電話會議期間公司的新聞稿和管理層聲明中，我們將歸屬於普通股股東的淨利潤稱為 GAAP 淨利潤。對於目前無法收聽整個電話會議的人士，可在 Diodes 網站 www.diodes.com 的投資者關係部分透過網路廣播提供為期 90 天的錄音。

And now I'll turn the call over to Diodes' President and CEO, Dr. Keh-Shew Lu. Dr. Lu, please go ahead.

現在我將把電話轉給 Diodes 總裁兼執行長 Keh-Shew Lu 博士。盧醫生，請講。

Thank you, Leanne. Welcome, everyone, and thank you for joining us today.

謝謝你，莉安。歡迎大家，感謝您今天加入我們。

Diodes once again had an exceptional quarter of solid financial results achieving record net income and earnings per share on both GAAP and non-GAAP basis. Revenue for the quarter grew 10% over the prior year period on continued market share gains and it was down 3.9% sequentially, which was better than typical seasonality. Notably, gross margin increased 90 basis point from the fourth quarter 2018, exceeding the upper end of our guidance range and reaching the highest level since the fourth quarter of 2010, and we expect a further increase in the second quarter. Contributing to this margin expansion was the achievement of record revenue in Europe combined with record revenue in the automotive and industrial end markets.

Diodes 再次取得了出色的季度穩健財務業績，在 GAAP 和非 GAAP 基礎上實現了創紀錄的淨利潤和每股收益。由於市佔率持續成長，本季營收較上年同期成長 10%，但季減 3.9%，優於典型的季節性。值得注意的是，毛利率較2018年第四季成長90個基點，超過我們指導範圍的上限，達到2010年第四季以來的最高水平，我們預計第二季將進一步成長。歐洲創紀錄的收入以及汽車和工業終端市場創紀錄的收入促成了利潤率的成長。

In the automotive market, revenue grew 7% sequentially and 23% year-over-year as we continue to benefit from past design win activity. Together, these two end markets represented 39% of total revenue, which place us well on track to achieving our long-term target of 40%. Additionally, our Pericom business, excluding frequency control products, reached record revenue levels in the first quarter and contributed to our strong margin performance.

在汽車市場，營收季增 7%，年增 23%，因為我們繼續受益於過去的設計獲勝活動。這兩個終端市場合計佔總收入的 39%，這使我們有望實現 40% 的長期目標。此外，我們的 Pericom 業務（不包括頻率控制產品）在第一季達到了創紀錄的收入水平，並為我們強勁的利潤表現做出了貢獻。

More recently, on April 1st we announced the closing of the transaction to acquire Texas Instruments' wafer fab facility and operation located in Greenock, Scotland, GFAB. The ownership transfer has gone very smooth with no interruption to production. We are in the process of aggressively installing Diodes' processes to fully utilize the additional 8-inch capacity and capability of the fab, which will support our growth expansion initiatives and future cost reduction. As part of a five-year wafer supply agreement, Diodes is providing foundry services to TI, which is not material to Diodes overall revenue.

最近，我們在 4 月 1 日宣布完成收購德州儀器 (TI) 位於蘇格蘭格林諾克 (GFAB) 的晶圓廠設施和營運的交易。所有權轉移非常順利，生產沒有中斷。我們正在積極安裝 Diodes 的工藝，以充分利用晶圓廠額外的 8 英寸產能和能力，這將支持我們的成長擴張計劃和未來的成本降低。作為五年晶圓供應協議的一部分，Diodes 正在向 TI 提供代工服務，這對 Diodes 的整體收入並不重要。

As we look to the second quarter, we expect to extend our growth momentum and market share gains, while further increasing gross margin and lowering operating expenses as a percent of revenue. Together, these factors will contribute to driving higher profitability and cash flow for Diodes and our shareholders.

展望第二季度，我們預計將擴大成長動能和市場份額，同時進一步提高毛利率並降低營運費用佔收入的百分比。這些因素共同將有助於為 Diodes 和我們的股東帶來更高的獲利能力和現金流。

One final comment. As announced in February 22, Rick White retired as CFO as of March 1. And Brett Whitmire, who has been with the company over eight years has assumed the CFO role. I would like to take this time to thank Rick for his many years of service to Diodes and our financial organization while also welcoming Brett into this new position. Rick will remain with Diodes part-time and serve as Corporate Secretary as well as an adviser to the company.

最後一點評論。2 月 22 日宣布，Rick White 自 3 月 1 日起辭去財務長職務。已在公司工作八年多的布雷特·惠特邁爾 (Brett Whitmire) 接任財務長一職。我想藉此機會感謝 Rick 多年來為 Diodes 和我們的金融組織提供的服務，同時也歡迎 Brett 擔任這一新職位。Rick 將繼續兼職 Diodes，擔任公司秘書兼顧問。

With that, let me now turn the call over to Brett to discuss our first quarter financial results and our second quarter 2019 guidance in more detail.

現在，讓我將電話轉給 Brett，更詳細地討論我們第一季的財務業績和 2019 年第二季的指導。

Thanks, Dr. Lu, and good afternoon everyone. I look forward to meeting and speaking to each of you in the coming quarters. As part of my financial review today, I will focus my comments on the sequential change for each of the line items and would refer you to our press release for a more detailed review of our results as well as the year-over-year comparisons.

謝謝盧博士，大家下午好。我期待在接下來的幾個季度與你們每個人見面並交談。作為今天財務審查的一部分，我將集中評論每個項目的連續變化，並建議您參閱我們的新聞稿，以更詳細地審查我們的結果以及同比比較。

Revenue for the first quarter 2019 was $302.3 million, a 3.9% decrease from the $314.4 million in the fourth quarter 2018, which is better than normal seasonality. Gross profit for the first quarter was a $112.4 million, or 37.2% of revenue, compared to a $114.2 million, or 36.3% of revenue, in the fourth quarter 2018. The sequential increase in gross margin was primarily due to the record revenue from the automotive and industrial end markets as well as from Pericom products.

2019年第一季營收為3.023億美元，比2018年第四季的3.144億美元下降3.9%，優於正常季節性。第一季的毛利為 1.124 億美元，佔營收的 37.2%，而 2018 年第四季的毛利為 1.142 億美元，佔營收的 36.3%。毛利率環比增長主要是由於汽車和工業終端市場以及 Pericom 產品的創紀錄收入。

GAAP operating expenses for the first quarter 2019 were $70.3 million, or 23.3% of revenue, and $65.8 million, or 21.8% of revenue, on a non-GAAP basis, which excludes $4.5 million of amortization of acquisition-related intangible asset expenses. This compares with GAAP operating expenses in the fourth quarter 2018 of $70.3 million, or 22.4% of revenue, and $65.8 million or 20.9% of revenue on a non-GAAP basis.

2019 年第一季的GAAP 營運費用為7,030 萬美元，佔營收的23.3%；以非GAAP 計算，營運費用為6,580 萬美元，佔營收的21.8%，其中不包括450 萬美元的收購相關無形資產費用攤銷。相較之下，2018 年第四季 GAAP 營運費用為 7,030 萬美元，佔營收的 22.4%，非 GAAP 營運費用為 6,580 萬美元，佔營收的 20.9%。

Total other expense amounted to approximately $89,000 for the quarter, including $2.1 million of interest expense and $64,000 of foreign currency loss, largely offset by $1.2 million of other income and $0.9 million of interest income. Income from taxes and non-controlling interest in the first quarter 2019 amounted to $42 million compared to $42.8 million in the fourth quarter 2018.

本季其他費用總額約為 89,000 美元，包括 210 萬美元的利息費用和 64,000 美元的外匯損失，大部分被 120 萬美元的其他收入和 90 萬美元的利息收入所抵消。2019 年第一季的稅收和非控股權益收入為 4,200 萬美元，而 2018 年第四季為 4,280 萬美元。

Turning to income taxes. Our effective income tax rate for the first quarter was approximately 24.5%. GAAP net income for the first quarter 2019 was a record $31.7 million or $0.62 per diluted share compared with $29.5 million or $0.58 per diluted share last quarter. Share count used to compute GAAP diluted EPS for first quarter 2019 was 51.5 million shares.

轉向所得稅。我們第一季的有效所得稅率約為 24.5%。2019 年第一季 GAAP 淨利潤為創紀錄的 3,170 萬美元，即稀釋後每股收益 0.62 美元，而上一季為 2,950 萬美元，即稀釋後每股收益 0.58 美元。用於計算 2019 年第一季 GAAP 攤薄每股收益的股票數量為 5,150 萬股。

First quarter 2019 non-GAAP adjusted net income was a record $35.4 million or $0.69 per diluted share, which excluded net of tax $3.7 million of non-cash acquisition-related intangible asset amortization costs. This compares to non-GAAP adjusted net income of $33.2 million or $0.65 per diluted share in the fourth quarter 2018.

2019 年第一季非 GAAP 調整後淨利為創紀錄的 3,540 萬美元，即稀釋後每股收益 0.69 美元，其中扣除稅後 370 萬美元的非現金收購相關無形資產攤銷成本。相比之下，2018 年第四季非 GAAP 調整後淨利潤為 3,320 萬美元，即稀釋後每股收益 0.65 美元。

EBITDA for the first quarter 2019 was $69.9 million, or 23.1% of revenue, compared with $70.5 million or 22.4% of revenue in the fourth quarter 2018. We've included in our earnings release a reconciliation of GAAP net income to non-GAAP adjusted net income and GAAP net income to EBITDA, which provides additional details. Cash flow generated from operations was $69.9 million for the first quarter 2019. Free cash flow was $51.2 million, which included $18.6 million of capital expenditures. And net cash flow in the first quarter was a positive $60.5 million.

2019 年第一季的 EBITDA 為 6,990 萬美元，佔營收的 23.1%，而 2018 年第四季的 EBITDA 為 7,050 萬美元，佔營收的 22.4%。我們在收益報告中納入了 GAAP 淨利潤與非 GAAP 調整後淨利潤以及 GAAP 淨利潤與 EBITDA 的調整表，其中提供了更多詳細資訊。2019 年第一季營運產生的現金流為 6,990 萬美元。自由現金流為 5,120 萬美元，其中包括 1,860 萬美元的資本支出。第一季淨現金流為正 6,050 萬美元。

Turning to the balance sheet. At the end of the first quarter, cash and cash equivalents plus short-term investments totaled approximately $307.9 million. Working capital was $524.8 million and long-term debt, including the current portion, was $215.8 million. We are now in a positive net position with cash exceeding long-term debt. At the end of the first quarter, inventory increased $1.2 million from the fourth quarter 2018 to approximately $216.6 million. The increase in inventory reflects a $5.1 million increase in work in process, offset by a $3.7 million decrease in finished goods and a $200,000 decrease in raw materials. This is the fourth consecutive quarter of finished goods inventory decreases, reflecting our focus on reducing finished goods inventory. Finished goods inventory days were 27 in the quarter compared to 28 in the fourth quarter of 2018. Total inventory days were 102 in the quarter compared to 100 last quarter. Capital expenditures on a cash basis for the first quarter 2019 were $18.6 million, or 6.2% of revenue. We expect CapEx for the full year 2019 to remain within our target model of 5% to 9% of revenue.

轉向資產負債表。截至第一季末，現金和現金等價物加上短期投資總計約3.079億美元。營運資金為 5.248 億美元，長期債務（包括當前部分）為 2.158 億美元。我們現在的淨部位為正，現金超過長期債務。截至第一季末，庫存較 2018 年第四季增加 120 萬美元，達到約 2.166 億美元。庫存的增加反映出在製品增加了 510 萬美元，但被製成品減少 370 萬美元和原材料減少 20 萬美元所抵消。這是產成品庫存連續第四個季度下降，反映出我們對減少產成品庫存的重視。本季成品庫存天數為 27 天，而 2018 年第四季為 28 天。本季庫存總天數為 102 天，而上季為 100 天。2019 年第一季現金資本支出為 1,860 萬美元，佔營收的 6.2%。我們預計 2019 年全年的資本支出將維持在收入的 5% 至 9% 的目標模型內。

Now turning to the outlook. We expect revenue in the second quarter of 2019 to increase to approximately $322 million, plus or minus 2%. At the midpoint, this represents growth of over 6.5% sequentially and 5.9% increase over the prior year period, and reflects continued growth from Diodes' organic business as well as revenue contribution from GFAB. We expect GAAP gross margin to be 38%, plus or minus 1%. Non-GAAP operating expenses, which are GAAP operating expenses adjusted for amortization of acquisition-related intangible assets, are expected to be approximately 21% of revenue, plus or minus 1%.

現在轉向前景。我們預計 2019 年第二季營收將增至約 3.22 億美元，正負 2%。從中間值來看，這意味著比上一季成長超過 6.5%，比去年同期成長 5.9%，反映了 Diodes 有機業務的持續成長以及 GFAB 的營收貢獻。我們預期 GAAP 毛利率為 38%，上下浮動 1%。非 GAAP 營運費用（即針對收購相關無形資產攤銷進行調整的 GAAP 營運費用）預計約為收入的 21%，上下浮動 1%。

We expect net interest expense to be approximately $2 million. Our income tax rate expected to be 24.5%, plus or minus 3%. And the shares used to calculate diluted EPS for second quarter are anticipated to be approximately 52 million. Please note that purchase accounting adjustments of $3.7 million after-tax for Pericom and previous acquisitions are not included in these non-GAAP estimates.

我們預計淨利息支出約為 200 萬美元。我們的所得稅稅率預計為24.5%，正負3%。用於計算第二季攤薄每股收益的股份預計約為5,200萬股。請注意，這些非 GAAP 估計中不包括 Pericom 和先前收購的 370 萬美元稅後收購會計調整。

With that said, I will now turn the call over to Emily Yang.

話雖如此，我現在將電話轉給艾蜜莉楊。

Thank you, Brett, and good afternoon. As Dr. Lu and Brett highlighted, first quarter revenue grew 10% year-over-year as we continued to gain increasing market share. Looking more closely at first quarter revenue. POS revenue was down slightly, mostly driven by the Chinese New Year and weaker demand in Asia. We started to see a recovery for Diodes business in March. Europe had record high results and North America remained strong. Distributor inventory, in terms of weeks, increased sequentially in the first quarter but is within our normal range of 11 to 14 weeks. We expect distributor inventories to remain within our normal range of 11 to 14 weeks in the near term.

謝謝你，布雷特，下午好。正如 Lu 博士和 Brett 所強調的那樣，隨著我們繼續獲得不斷增長的市場份額，第一季營收年增 10%。更仔細地觀察第一季的收入。POS 收入略有下降，主要是受到農曆新年和亞洲需求疲軟的推動。三月我們開始看到 Diodes 業務的復甦。歐洲業績創歷史新高，北美依然強勁。經銷商庫存以週數計算，第一季較上季增加，但在 11 至 14 週的正常範圍內。我們預計經銷商庫存近期將保持在 11 至 14 週的正常範圍內。

Looking at global sales in the first quarter, Asia represented [74%] (corrected by the company after the call) of the revenue, Europe 13% and North America 13%. In terms of our end markets, industrial was once again our largest representative end market at 29% of revenue, consumer 23%, communication also 23%, computing 15% and automotive 10% of revenue.

從第一季的全球銷售額來看，亞洲佔收入的 [74%]（由公司在電話會議後修正），歐洲佔 13%，北美佔 13%。就我們的終端市場而言，工業再次成為我們最大的代表性終端市場，佔收入的 29%，消費者佔 23%，通訊也佔 23%，計算佔 15%，汽車佔收入的 10%。

Now let me review the end markets in greater detail. As Dr. Lu mentioned, our automotive end market had a record quarter, growing 7% sequentially and 23% year-over-year and reaching a record 10% of total revenue. This continued growth is a result of our past design win activity and momentum across an expanding customer base in all application areas, particularly in our three focus areas of connected driving, which consists of ADAS, Telematics, and Infotainment system, comfort, style and safety, including lighting and brushless DC motor control, and Powertrain covering conventional hybrid and electric vehicles.

現在讓我更詳細地回顧一下終端市場。正如陸博士所提到的，我們的汽車終端市場季度創歷史新高，環比增​​長7%，年增23%，佔總收入的比例達到創紀錄的10%。這種持續成長是我們過去的設計贏得活動和所有應用領域不斷擴大的客戶群勢頭的結果，特別是在我們的互聯駕駛三個重點領域，其中包括ADAS、遠端資訊處理和資訊娛樂系統、舒適性、風格和安全性，包括照明和無刷直流馬達控制，以及涵蓋傳統混合動力和電動車的動力總成。

From a product perspective, both our analog and discrete product family continue to be strong for us in the automotive market. PCI Express has become the interface of choice for the backbone transmission of engine control unit, ADAS, navigation, telematics and infotainment systems. Diodes is well positioned to address this need with a variety of products designed to support PCI Express protocol. In fact, Diodes is the only supplier to offer PCI Express 4.0 Clock Generators and Clock Buffers with AECQ Grade 2 105 C ambient temperature support.

從產品角度來看，我們的類比和分立產品系列在汽車市場上仍然表現強勁。PCI Express 已成為引擎控制單元、ADAS、導航、遠端資訊處理和資訊娛樂系統主幹傳輸的首選介面。Diodes 能夠透過各種旨在支援 PCI Express 協定的產品來滿足這項需求。事實上，Diodes 是唯一一家提供 PCI Express 4.0 時脈產生器和時脈緩衝器並支援 AECQ Grade 2 105 C 環境溫度的供應商。

We are also seeing a lot of activities from automotive customers for our DC-DC converters, timers and USB switches for USB Type-C, infotainment and charging applications. Our sensor business also continues to grow in applications like power windows, doors, seatbelts, pumps and [gearshifts] (corrected by the company after the call).

我們也看到汽車客戶對我們用於 USB Type-C、資訊娛樂和充電應用的 DC-DC 轉換器、定時器和 USB 開關進行了大量活動。我們的感測器業務在電動車窗、車門、安全帶、泵浦和[變速桿]（公司在通話後更正）等應用領域也持續成長。

We also continue to gain traction with MOSFET design-ins across a number of auto applications as well as strong revenue growth in battery management system applications for our automotive-grade Zener diodes and rectifiers.

我們也繼續透過多種汽車應用中的 MOSFET 設計以及汽車級齊納二極體和整流器的電池管理系統應用的強勁收入成長來吸引人們的注意。

As a result of our automotive expansion initiatives, over the past five, six years, we have increased our potential semiconductor content per vehicle to $85 per vehicle, an increase from our prior estimate of $70, which will continue to drive further revenue upside towards our long-term targets.

由於我們的汽車擴張計劃，在過去的五六年裡，我們已將每輛車的潛在半導體含量增加到每輛車85 美元，比我們之前估計的70 美元有所增加，這將繼續推動我們的收入進一步上升。長期目標。

We also saw strong growth in industrial end markets with revenue increasing almost 12% sequentially and 39% year-over-year to reach a record 29% of total revenue. Our momentum continued with new design win activities across applications such as metering, DC fans, power tool and power supply, as well as home appliances, including e-lock applications.

我們也看到工業終端市場的強勁成長，營收季增近 12%，年增 39%，達到創紀錄的總收入 29%。我們的勢頭繼續保持，新的設計贏得了計量、直流風扇、電動工具和電源等應用以及家用電器（包括電子鎖應用）的活動。

With our newly introduced low-power PCI Express 2.0 Packet Switch, we continue to expand our market position in industrial PC with expanding design-in activities. Our products low-power performance gives Diodes a leading position in the small-lane and port expansion application. We are also seeing USB Type-C adoption into medical equipment with our HDMI over Type-C Crossbar Switch designed-in for transporting video image to the monitor over our USB Type-C interface.

憑藉我們新推出的低功耗 PCI Express 2.0 資料包交換機，我們透過擴大設計活動繼續擴大我們在工業 PC 領域的市場地位。我們的產品低功耗效能使 Diodes 在小通道和連接埠擴展應用中處於領先地位。我們也看到 USB Type-C 在醫療設備中被採用，我們的 HDMI over Type-C 交叉開關專為透過 USB Type-C 介面將視訊影像傳輸到顯示器而設計。

In the consumer market, we continue to see growth for our SBR and Schottky products for new applications like smart speakers, handheld portable devices, wire and wireless chargers, gaming, vehicles, OLED TVs as well as USB EOS and data line protection.

在消費市場，我們的 SBR 和肖特基產品在智慧揚聲器、手持式便攜式設備、有線和無線充電器、遊戲、車輛、OLED 電視以及 USB EOS 和數據線保護等新應用中持續成長。

Additionally, we have seen significant design win activities with DC-DC products, driven by IPTV, over-the-top TV and set-top box applications as well as bipolar transistor design-ins for TV and monitor applications. We're also seeing strong demand for our Hall Sensors in applications like wireless earbud and IoT. And our audio products are gaining traction in monitor and gaming applications.

此外，在 IPTV、OTT 電視和機上盒應用以及電視和顯示器應用的雙極電晶體設計的推動下，我們還看到了 DC-DC 產品的重大設計獲勝活動。我們也看到無線耳塞和物聯網等應用對霍爾感測器的強勁需求。我們的音訊產品在顯示器和遊戲應用中越來越受歡迎。

Also in the first quarter, we saw increasing content growth in TV panel applications across a broad range of products, including switching diodes, Zener diodes and transient voltage suppressors. We're also beginning to see revenue growth in augmented reality applications on low-profile small form factor switching diodes products.

同樣在第一季度，我們看到電視面板應用中各種產品的內容成長不斷增加，包括開關二極體、齊納二極體和瞬態電壓抑制器。我們也開始看到薄型小尺寸開關二極體產品的擴增實境應用的收入成長。

In the communications end market, we're seeing new design wins in 5G applications like base stations, CPE, small cell and data centers for many of our products including PCI Express 2.0 Packet Switches, I2C/SPI port expanders, level shifters, MOSFETs and timing. We're also seeing an increasing need for sensors in smartphone applications with a demand for high-speed, low-loss MIPI switches continue to grow in mobile applications as display resolution and the number of camera modules increase.

在通訊終端市場，我們的許多產品（包括 PCI Express 2.0 封包交換器、I2C/SPI 連接埠擴充器、電平轉換器、MOSFET 和定時。我們也看到智慧型手機應用中對感測器的需求不斷增加，隨著顯示解析度和相機模組數量的增加，行動應用中對高速、低損耗 MIPI 開關的需求持續增長。

Power density in particular is a key concern for smartphone manufacturers. And Diodes has been actively engaged in this market with its comprehensive small footprint DFN and CSP MOSFET portfolio as well as our AC-DC products in charger and adapter applications. The mobile device and smartphone market continue to be a key growth area for our protection products, especially in support of the latest trend to replace a 3.5-millimeter audio jack with a USB Type-C connector.

功率密度尤其是智慧型手機製造商關注的關鍵問題。Diodes 一直以其全面的小尺寸 DFN 和 CSP MOSFET 產品組合以及充電器和適配器應用中的 AC-DC 產品積極參與該市場。行動裝置和智慧型手機市場仍然是我們保護產品的關鍵成長領域，特別是支援用 USB Type-C 連接器取代 3.5 毫米音訊插孔的最新趨勢。

Lastly, in computing, power density and efficiency are driving our hardware evolution and Diodes is at the forefront with our comprehensive portfolio of MOSFET power blocks and SGT MOSFET in the DC-DC power conversion.

最後，在運算領域，功率密度和效率正在推動我們的硬體發展，而 Diodes 憑藉我們在 DC-DC 電源轉換中的 MOSFET 電源區塊和 SGT MOSFET 的全面產品組合處於領先地位。

Additionally, our diodes and rectifier products continue to expand in mobile and desktop power applications as well as wireless charging and printer applications with broad range of products, including fast and ultra-fast recovery rectifiers, a high voltage switching diodes and TVS Zener diodes.

此外，我們的二極體和整流器產品繼續擴展到行動和桌面電源應用以及無線充電和印表機應用，產品範圍廣泛，包括快速和超快恢復整流器、高壓開關二極體和 TVS 齊納二極體。

With an increasing adoption of USB Type-C in notebooks and PCs, we have been seeing strong revenue growth for our complete USB Type-C solutions, including switches, ReDrivers, timing, charging and protection products.

隨著 USB Type-C 在筆記型電腦和 PC 中的採用越來越多，我們看到完整的 USB Type-C 解決方案（包括開關、轉接驅動器、定時、充電和保護產品）的收入強勁增長。

In summary, our first quarter once again demonstrated a solid operating leverage in our business model resulting in record profitability despite sequentially lower revenue. Our strong position with customers as well as our past design win activities has enabled us to consistently gain market share and outperform the market. Additionally, our increase in content in both the automotive industrial market, combined with expanded opportunity for our Pericom products, position us to drive continued revenue and profitability growth in the coming quarters.

總而言之，我們的第一季再次展示了我們業務模式中堅實的營運槓桿，儘管收入連續下降，但獲利能力仍創歷史新高。我們在客戶中的強大地位以及過去的設計獲勝活動使我們能夠持續獲得市場份額並超越市場。此外，我們在汽車工業市場內容的增加，加上 Pericom 產品機會的擴大，使我們能夠在未來幾季推動營收和獲利能力的持續成長。

With that, we will now open the floor to questions. Operator?

現在我們開始提問。操作員？

Thank you. (Operator Instructions) And our first question is from Shawn Harrison with Longbow. Your line is open.

謝謝。（操作員說明）我們的第一個問題來自長弓的肖恩·哈里森。您的線路已開通。

Hi, good afternoon. This is Gausia Chowdhury on behalf of Shawn. Congrats on a solid quarter and guidance. First off, can you give the POS versus POP? I think you said POS is down slightly. Could you give more details, please?

嗨，下午好。我是高西亞·喬杜里，代表肖恩。恭喜您取得了穩健的季度業績和指導。首先，您能給出 POS 與 POP 的差異嗎？我想你說 POS 略有下降。能提供更多詳細資訊嗎？

Yeah. So, this is Emily. So, our POS is down slightly compared quarter-to-quarter. POP also down slightly quarter-to-quarter, that's based on our guidance. So that's how we look at the inventory level as well, right? So, still within our range as defined normal between 11 to 14 weeks.

是的。所以，這是艾米麗。因此，我們的 POS 環比略有下降。根據我們的指導，POP 也按季度略有下降。這就是我們看待庫存水準的方式，對吧？因此，仍然在 11 至 14 週之間定義的正常範圍內。

Okay, thank you. And then can you reconcile your view on the auto and industrial strength that you're seeing given the weakness that was cited by some of your peers. And then also your view on Pericom within these markets. Are you still bullish for 2019? Any further detail will be helpful. Thank you.

好的謝謝。然後，考慮到一些同行提到的弱點，您能否調和您對您所看到的汽車和工業實力的看法。然後還有您對 Pericom 在這些市場中的看法。2019年你還看好嗎？任何進一步的細節都會有所幫助。謝謝。

Right. So, if we look at automotive market overall, the consensus is actually from the demand point of view is down. So, where Diodes is actually gaining is really based on the past demand creation effort and also the content expansion. So even though the overall market is down, we're still seeing very good growth rate, 7% quarter-over-quarter, 23% year-over-year growth. So, that's specifically related to automotive. And then related to Pericom, we're also seeing a significant growth contributing to our Q1 revenue and we expect that growth will continue into 2019 and the rest. This is really based on the demand creation pipeline and also the information that we received from the content expansion point of view.

正確的。所以，如果我們從整體來看汽車市場，共識其實是從需求角度來看是下降的。因此，Diodes 真正獲得的收益實際上是基於過去的需求創造努力以及內容擴展。因此，儘管整體市場下滑，但我們仍然看到非常好的成長率，環比成長 7%，比去年同期成長 23%。所以，這與汽車特別相關。與 Pericom 相關的是，我們也看到第一季營收的顯著成長，我們預計這種成長將持續到 2019 年及剩餘時間。這實際上是基於需求創建管道以及我們從內容擴展角度收到的資訊。

Thank you.

謝謝。

Thank you. (Operator Instructions) And our next question is from Tristan Gerra with Baird. Your line is open.

謝謝。（操作員說明）我們的下一個問題來自 Tristan Gerra 和 Baird。您的線路已開通。

Hi, Dr. Lu. During the earnings call, I think it was in October of last year, Rick was highlighting the potential for Diodes to reach 38% gross margin by the second half of this year. And then it sounded like your outlook for gross margin early this year was more muted to about 36%. Today, your Q2 gross margin guidance is 38%. That's even ahead of last year expectation. And at the time one could contend that the end demand environment was stronger than what you're seeing today. So, I know you mentioned Europe and automotive but could you go more into details about the catalyst for gross margin? What makes it better than you saw it earlier this year? Maybe quantify how big Pericom is as a percent of revenue and how sustainable you think this gross margin outlook is into the second half?

你好，盧醫生。在財報電話會議上，我記得是在去年 10 月，Rick 強調了 Diodes 在今年下半年達到 38% 毛利率的潛力。然後，聽起來你們今年年初的毛利率前景更加黯淡，約為 36%。今天，你們的第二季毛利率指引值為 38%。這甚至超出了去年的預期。當時人們可以說最終需求環境比今天所看到的更強勁。我知道您提到了歐洲和汽車業，但您能否詳細介紹一下毛利率的催化劑？是什麼讓它比你今年早些時候看到的更好？也許可以量化 Pericom 在收入中所佔的比例，以及您認為下半年毛利率前景的可持續性如何？

Okay. Tristan, you know I've been emphasizing if we grew the automotive and industrial revenue, automatically the gross margin will be improving better than our expectations. And so you can see the result, automotive, while the market went down, our sequential still go up 7% and year-over-year is at 20s high, 28%. So you can see the effort due to the past design win plus the company increase as I have been mentioning to you several times. This strong growth has enabled us to reach 10% -- now 10% of our revenue and we continue to improve the automotive performance. And that is the one key thing to improve the gross margin better than expected.

好的。特里斯坦，你知道我一直在強調，如果我們增加汽車和工業收入，毛利率的改善將自動好於我們的預期。所以你可以看到結果，汽車產業，雖然市場下跌，但我們的環比仍上漲 7%，比去年同期達到 20 年來的高點，即 28%。因此，您可以看到由於過去的設計勝利而付出的努力以及公司的成長，正如我多次向您提到的那樣。這種強勁的成長使我們的收入達到了 10%——現在是 10%，並且我們繼續提高汽車性能。這是毛利率改善好於預期的關鍵一件事。

Another one is the industrial. Now this quarter, industrial is 29% of our total revenue. It is an indication of a significant growth in the industrial area for Diodes. While the market kind of slowed down and that's you're seeing through other people's earnings conference calls, industrial is actually slowed down a little bit, but for Diodes, we continue gaining the market share. So, if you look at my long-term strategy, I've been talking about I want to improve the industrial and automotive to 40% of our revenue. We already reached to 39% and we'll continue our long-term goal of getting higher and higher automotive, industrial -- industrial applications. And this will enable us to continue improve our gross margin.

另一種是工業。本季度，工業收入占我們總收入的 29%。這表明 Diodes 工業領域的顯著成長。雖然市場放緩，你可以透過其他人的收益電話會議看到這一點，但工業實際上放緩了一點，但對於 Diodes 來說，我們繼續獲得市場份額。因此，如果你看看我的長期策略，我一直在談論我希望將工業和汽車業務占我們收入的比例提高到 40%。我們已經達到了 39%，我們將繼續實現越來越高的汽車、工業應用的長期目標。這將使我們能夠繼續提高毛利率。

One more thing, due to our Pericom acquisition, our Pericom products result in the frequency control or those kind of the IC products contribute a significant growth, contribute to our margin. If you remember, our Pericom products typically have a 50% GP or higher. And so, if that sector grows very faster, then it again enables us to exceed our gross margin guidance. And if you look at the Pericom product concentrate on the data center, cloud computing and servers and automotive applications, all those is good and big growth effort for us and contribute better than average growth in Diodes' business. So, I'm still very confident we will continue effort to benefit from these three key areas, reaching high GP and change our product mix towards the high GP products. Even if we get some pressure from the low-end commodity type of product and the price pressure is there but due to our effort on the other market segments I mentioned, then our GP still able to continue improving.

還有一件事，由於我們收購了Pericom，我們的Pericom產品導致頻率控製或那些IC產品貢獻了顯著的成長，貢獻了我們的利潤。如果您還記得，我們​​的 Pericom 產品通常具有 50% 或更高的 GP。因此，如果該行業增長得非常快，那麼它再次使我們能夠超過我們的毛利率指導。如果你看看 Pericom 產品專注於資料中心、雲端運算和伺服器以及汽車應用，所有這些對我們來說都是良好且巨大的成長努力，並且對 Diodes 業務的平均成長做出了更好的貢獻。因此，我仍然非常有信心我們將繼續努力從這三個關鍵領域受益，達到高 GP 並將我們的產品結構轉向高 GP 產品。即使我們受到低端商品類型產品的一些壓力，價格壓力也存在，但由於我們在我提到的其他細分市場上的努力，那麼我們的GP仍然能夠繼續改善。

That's very useful. Thank you. And then as a quick follow-up, the market share gains, we can certainly see that and understand it's in automotive because your ramp started or your exposure in autos have been smaller than some of your peers but in industrial, you do have a very meaningful percent exposure. So what would you say at a high level is driving the share gain? Is that packaging? Is it pricing? Any particular sector that you could emphasize.

這非常有用。謝謝。然後，作為一個快速的後續行動，市場份額的增長，我們當然可以看到這一點並理解它在汽車領域，因為你的斜坡開始或你在汽車領域的曝光度比一些同行要小，但在工業領域，你確實有一個非常有意義的暴露百分比。那麼您認為高層推動股價上漲的因素是什麼？那個是包裝嗎？是定價嗎？您可以強調的任何特定部門。

Right, I think -- this is Emily, let me address the question, right. I think it's really about content expansion, right? So, even the market may not be growing from the total demand point of view but we've seen significant content expansion within that industrial area, right? The leverage between the Diodes and also the Pericom product line that we've seen are significant push in this area for us.

是的，我想——這是艾米麗，讓我來回答這個問題，對吧。我認為這實際上是關於內容擴展，對嗎？因此，即使從總需求的角度來看，市場可能沒有成長，但我們已經看到該工業領域內的內容顯著擴張，對吧？我們所看到的 Diodes 和 Pericom 產品線之間的槓桿作用對我們來說是這一領域的重大推動力。

Packaging is one of the help, but that right now we are not just -- depend on the packaging. The real reason is to which we start to focus on solution provider. Since through all different acquisitions, our product line now is very complete and has enabled us to provide to our customer a total solution. So, with Emily's drive, we now focus on providing our customer the total solution. And this is the difference from the past.

包裝是幫助之一，但現在我們不僅僅依賴包裝。真正的原因是我們開始關註解決方案提供者。透過所有不同的收購，我們的產品線現在非常完整，使我們能夠為客戶提供整體解決方案。因此，在 Emily 的推動下，我們現在專注於為客戶提供整體解決方案。而這就是與過去的不同。

Great. Thank you very much.

偉大的。非常感謝。

Thank you. (Operator Instructions) And we have a follow-up from Shawn Harrison with Longbow. Your line is open.

謝謝。（操作員說明）我們還有肖恩哈里森和長弓的後續行動。您的線路已開通。

Hi, again. Can you talk a little bit about the TI fab acquisition? What is associated with that within your guidance? And then any details you might be able to provide on the expected accretion or impact to margin or OpEx would be helpful. And then also having to do with the acquisition, how does the fab affect your CapEx profile? Thank you.

你好，我們又見面了。能談談 TI 晶圓廠收購的情況嗎？在您的指導下，這與什麼有關？然後，您能夠提供有關預期成長或對利潤或營運支出的影響的任何詳細資訊都會有所幫助。然後也與收購有關，晶圓廠如何影響您的資本支出狀況？謝謝。

Okay. The TI acquisition, one of the elements is we will provide TI with a wafer supply agreement, but it's immaterial or is not material. So, it's not big compared with our Diodes' revenue. Okay? Second, we keep emphasizing it's accretive, even their margin is not as high as our average, but it's accretive to our business. And we're going to use and we are, like I mentioned, we are aggressive now to qualify our own process because we want to use it to support our future growth. Okay? So we are kind of pretty tight on our wafer supply and we have a lot of wafer need to outside and control by other foundry business, foundry people. So what we want to do is increase, again our own supply. So it's helping us in the future for the growth.

好的。這次收購TI，要素之一就是我們會給TI提供晶圓供應協議，但這個協議不重要或不重要。所以，與我們Diodes的收入相比，這個數字並不大。好的？其次，我們一直強調它是增值的，即使他們的利潤沒有我們的平均水平高，但它對我們的業務來說是增值的。我們將使用它，就像我提到的那樣，我們現在正在積極地驗證我們自己的流程，因為我們希望用它來支持我們未來的成長。好的？因此，我們的晶圓供應相當緊張，我們有許多晶圓需要外部和由其他代工企業、代工人員控制。所以我們想做的是增加我們自己的供應。因此，它有助於我們未來的成長。

The other question is on CapEx. So, this is we think our CapEx model.

另一個問題是關於資本支出。所以，這就是我們認為的資本支出模式。

Yes. I think the equipment is already there. We maybe missing here and there for some of the equipment needed for our process. Okay? But the most of the equipment is already there. So, with the GFAB and therefore is still within our CapEx model of 5% to 9% of our revenue. So, it won't increase our CapEx requirement.

是的。我認為設備已經在那裡了。我們可能到處缺少我們流程所需的一些設備。好的？但大部分設備已經在那裡了。因此，有了 GFAB，我們的資本支出模型仍然占我們收入的 5% 到 9%。因此，它不會增加我們的資本支出要求。

Okay. Thank you.

好的。謝謝。

Thank you. And I'm not showing any further questions in the queue. I would like to turn the call back to Dr. Keh-Shew Lu for his final remarks.

謝謝。我不會在隊列中顯示任何其他問題。我想將電話轉回給盧克秀博士，讓他作最後的演講。

Thank you for your participation on today's call. Operator, you may now disconnect.

感謝您參加今天的電話會議。接線員，您現在可以斷開連接了。

Thank you, everyone for participating today's conference. This concludes the program and you may all disconnect. Have a wonderful day.

謝謝大家參加今天的會議。程式到此結束，大家可以斷開連線。祝你有美好的一天。