安森美 (ON) 2010 Q3 法說會逐字稿

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  • Operator

  • Welcome to the ON Semiconductor third quarter earnings call.

  • All lines have been placed on mute to prevent any background noise.

  • After the speakers' remarks, there will be a question-and-answer session.

  • (Operator Instructions)

  • I would now like to turn the conference over to Mr.

  • Ken Rizvi to begin.

  • Ken Rizvi - Corporate Development, Treasury & IR

  • Thank you, Tamika.

  • Good afternoon, and thank you for joining ON Semiconductor Corporation's third quarter 2010 conference call.

  • I am joined today by Keith Jackson, our President and CEO, and Donald Colvin, our CFO.

  • This call is being webcast on the investor relations section of our website at www.onsemi.com and a replay will be available for approximately 30 days following this conference call, along with our earnings release for the third quarter of 2010.

  • The script for today's call is posted on our website and will be furnished via a Form 8-K filing.

  • Our earnings release and this presentation include certain non-GAAP financial measures.

  • Reconciliations of these non-GAAP financial measures to the most directly comparable measures under GAAP are in our earnings release and posted separately on our website in the investor relations section.

  • In the upcoming quarter, we will be presenting at the Credit Suisse Technology Conference on November 30th and the Barclays Technology Conference on December 9th.

  • During the course of this conference call, we will make projections or other forward-looking statements regarding future events or the future financial performance of the company.

  • The words "believe," "estimate," "anticipate," "intend," "expect," "plan," or similar expressions are intended to identify forward-looking statements.

  • We wish to caution that such statements are subject to risks and uncertainties that could cause actual events or results to differ materially.

  • Important factors relating to our business, including factors that could cause actual results to differ from our forward-looking statements, are described in our Form 10-K, Form 10-Q's and other filings with the SEC.

  • The company assumes no obligation to update forward-looking statements to reflect actual results, changed assumptions or other factors.

  • Now, let's hear from Donald Colvin, who will provide an overview of the third quarter results.

  • Donald?

  • Donald Colvin - CFO, PAO and EVP

  • Thanks Ken, and thank you to everyone joining us today.

  • ON Semiconductor Corporation today announced that total revenues in the third quarter of 2010 were approximately $600.7 million, an increase of 3% from the second quarter of 2010.

  • During the third quarter of 2010, the company reported GAAP net income of $87.8 million or $0.20 per fully diluted share.

  • The third quarter 2010 GAAP net income included net charges of $20.0 million, or $0.05 per fully diluted share, from special items, which are detailed in schedules included in our earnings press release.

  • GAAP gross margin in the third quarter was 41.0%.

  • Non-GAAP gross margin in the third quarter of 2010 was 41.3%.

  • During the third quarter external factors such as currencies and commodity prices negatively impacted GAAP and non-GAAP gross margin by approximately $7 to $8 million or approximately 130 basis points.

  • Third quarter 2010 non-GAAP net income was $107.8 million or $0.25 per share on a fully diluted basis and includes stock based compensation expense.

  • During the third quarter of 2010, our GAAP and non-GAAP operating expenses included approximately $5 million of acquisition expenses related to our M&A activities.

  • We exited the third quarter of 2010 with cash and cash equivalents of approximately $562.9 million, an increase of approximately $96 million from the previous quarter.

  • We also exited the quarter with the lowest net debt position in the company's history at approximately $223 million.

  • At the end of the third quarter, total days sales outstanding were approximately 48 days, down approximately two days compared with the second quarter of 2010.

  • ON Semiconductor's internal inventory increased slightly from second quarter levels on a days basis to approximately 90 days.

  • Included in our total internal inventory is approximately $13 million of inventory related to our acquisitions, and bridge inventory related to our announced closures of front-end manufacturing lines.

  • Net of the bridge inventory and inventory from recent acquisitions, our inventory days would have been approximately 87 days in the third quarter.

  • Distribution inventories remained low at approximately 8 weeks exiting the third quarter.

  • Cash capital expenditures during the third quarter of 2010 were approximately $52 million bringing year-to-date capital expenditures to approximately $146 million.

  • We currently anticipate total capital expenditures for 2010 of approximately $ 200 million of which approximately $35 million will be for buildings.

  • Now I would like to turn it over to Keith Jackson for additional comments on the business environment.

  • Keith Jackson - President and CEO

  • Thanks, Don.

  • Now for an overview of our end-markets.

  • During the third quarter of 2010, our end market splits were as follows.

  • The Computing end-market represented approximately 25% of third quarter 2010 sales.

  • The Automotive end-market represented approximately 19% of third quarter sales.

  • The Industrial, Military and Aerospace end-market represented approximately 18% of sales.

  • The Consumer Electronics end-market represented approximately 18% of sales.

  • The Communications end-market, which includes wireless and networking, represented approximately 17% of sales and the Medical end-market represented approximately three% of sales.

  • On a direct billings basis, no individual ON Semiconductor product OEM customer represented more than 5% of third quarter sales.

  • Our top 5 product OEM customers during the third quarter were Continental Automotive Systems, Delta, Hella, Motorola and Samsung.

  • On a geographic basis, our contribution from sales in Asia represented approximately 62% of revenue.

  • Our sales in the Americas represented approximately 23% of revenue and Europe represented approximately 15% of revenue during the quarter.

  • Looking across the channels, direct sales to OEMs represented approximately 44% of third quarter 2010 revenue.

  • Sales through the distribution channel were approximately 46% of third quarter revenue and the EMS channel represented approximately 10% of revenue.

  • During the third quarter, ON Semiconductor revenues broken out by our product groups were as follows.

  • The Standard Products Group represented approximately 34% of sales.

  • The Automotive and Power Group represented approximately 24% of sales.

  • The Computing and Consumer Group represented approximately 23% of sales and the Digital & Mixed-signal Product Group represented approximately 19% of sales.

  • We will publish the quarterly revenue, gross margin and operating margin break-out of these segments in our Form 10-Q for this period.

  • Now, turning to our end-market and product line results.

  • The Communications end-market revenues â‚" which comprise both wireless and networking â‚" grew sequentially in the third quarter by approximately 12%.

  • In the wireless segment, revenue growth was driven primarily by strong ramps in smart phones.

  • ON Semiconductor has secured content in multiple industry-leading smart phone vendors.

  • Our success in this breakout product category is a result of the ongoing market acceptance of our expanding suite of products - including our protection and filtering devices, audio amplifiers, LED drivers, dc-dc converters, USB switches, MOSFETs and medium scale subsystem IC integration.

  • In the networking segment, quarterly revenue growth was positively impacted by continued penetration of our custom ASICs and array of precision clock and timing products, as well as the build-out of networking infrastructure in China and India.

  • The Consumer end-market experienced revenue growth of approximately 12% sequentially.

  • Growth in this segment was driven primarily by strong customer ramps of gaming consoles.

  • While the LCD TV end-market softened during the third quarter, ON Semiconductor has continued to expand our product portfolio.

  • We have started to ramp a custom LED driver for backlighting large LCD TVs in addition to our circuit protection devices and content enabling efficient power supplies.

  • In the Computing end-market, as expected, we saw muted seasonality with revenues up sequentially by approximately 1%.

  • Power management revenue in the computing end-market was up sequentially by approximately 9%.

  • This growth was driven by continued penetration into the notebook segment.

  • Looking forward, we continue to anticipate strong design-in momentum for our Vcore controllers for next generation desktops and notebooks.

  • At the Intel Developer Forum in September, we introduced the first platform solution for CPU power management and high-speed switching optimized to support the upcoming 2nd Generation Intel Core Processor Family, otherwise known as Sandy Bridge.

  • Additionally, we made headway into the high growth tablet market securing both MOSFET and filtering devices with a leading tablet supplier.

  • We also see opportunity for additional market penetration in the tablet market with our efficient power supply solutions.

  • Overall, we believe we remain well positioned for ongoing holiday production ramps.

  • In the Automotive end-market, sales were down less than one% sequentially in the third quarter which was less than normal seasonality.

  • We continue to see strong demand from customers for our body, powertrain and safety solutions.

  • Our custom ASIC designs with leading vehicle manufacturers in Europe and Asia have continued to gain momentum.

  • We recently won our first custom ASIC design in a park assist system for a key Asian automotive customer.

  • We also continue to make inroads into infotainment for vehicles as well as LED lighting for rear and front lighting systems.

  • Exiting the third quarter, ON Semiconductor believes it is well positioned to capitalize on a number of end-market growth factors including ongoing network infrastructure upgrades, green initiatives in Asia for energy efficient power supplies in white goods, and continued growth in market areas such as LED lighting, medical and energy efficient power solutions that enable the smart grid.

  • LED lighting in all market segments remains a targeted focus area for ON Semiconductor.

  • In September we launched four new LED lighting devices that address LED landscape and solar lighting, general illumination, automotive applications, and portable medical devices.

  • To help support our LED lighting customers we have also developed and introduced our GreenPoint Design Simulation Tool, an interactive online design and verification tool to assist our customers in accelerating their design of solid state lighting solutions.

  • Now, I would like to turn it back over to Donald for other comments and our other forward-looking guidance.

  • Donald?

  • Donald Colvin - CFO, PAO and EVP

  • Thank you, Keith.

  • Based upon current product booking trends, backlog levels and estimated turns levels, we anticipate that total revenues will be approximately $565 to $585 million in the fourth quarter of 2010.

  • Backlog levels at the beginning of the fourth quarter of 2010 were down slightly from backlog levels at the beginning of the third quarter of 2010 and represent over 90% of our anticipated fourth quarter 2010 revenues.

  • We expect that average selling prices for the fourth quarter of 2010 will be approximately flat compared to the third quarter of 2010.

  • We expect cash capital expenditures of approximately $55 million in the fourth quarter of 2010.

  • For the fourth quarter, we expect GAAP and non-GAAP gross margin of approximately 40% to 41%.

  • For the fourth quarter of 2010, we also expect total GAAP operating expenses of approximately $137 million to $141 million.

  • Our GAAP operating expenses include the amortization of intangibles, restructuring, asset impairments and other charges which total approximately $10 million.

  • We also expect total non-GAAP operating expenses of approximately $127 to $131 million.

  • Also included in operating expense guidance is approximately $6 million of SANYO related transaction costs.

  • We anticipate GAAP net interest expense and other expenses will be approximately $18 million for the fourth quarter of 2010 which includes non-cash interest expense of approximately $9 million.

  • We anticipate our non-GAAP net interest expense and other expenses will be approximately $9 million.

  • GAAP taxes are expected to be approximately $4 million and cash taxes are expected to be approximately $3 million.

  • We also expect stock based compensation expense of approximately $12 to $13 million in the fourth quarter of 2010 of which approximately $4 million is expected to be in cost of goods sold and the remaining in operating expenses.

  • This expense is included in our non-GAAP financial measures.

  • Our current fully diluted share count is approximately 445 million shares based on the current stock price.

  • Further details on share count and EPS calculations are provided regularly in our quarterly and annual reports on Form 10-Q and Form 10-K.

  • With that, I would like to start the Q&A session.

  • Operator

  • (Operator Instructions)

  • Your first question comes from the line of John Pitzer of Credit Suisse.

  • John Pitzer - Analyst

  • Yes, guys, thanks for letting me ask the question.

  • Donald, on the September quarter gross margin hit of about 130 basis points, you talked about currency and commodity prices.

  • What percentage came from each one of those buckets?

  • And I guess is that an isolated incident, or can we expect more headwinds going forward?

  • And I guess if you could just give us a little bit of color of what exactly happened in the quarter?

  • Donald Colvin - CFO, PAO and EVP

  • Sure.

  • Well, there's two questions.

  • I think basically about 80% of the hit came from currencies.

  • The issue is that we have costs in places like the Czech Republic, Malaysia, the Philippines, where we don't have any revenue.

  • So there's no revenue offset.

  • And then the remaining 20% came from commodities.

  • We saw an increase in price of copper and gold, and we're heavy users of both of these.

  • So that gives you essentially the Delta in the gross margin.

  • Looking forward, there is still a little bit more to come because unfortunately, the dollar continued to depreciate against most currencies in the third quarter, but that is fully baked into our guidance, John.

  • John Pitzer - Analyst

  • And my follow-up, Keith, the PC market is clearly going through some sort of inventory correction in the back half of the year.

  • You talked about your socket win at Sandy Bridge; I'm kind of curious, as we look out into the first half of next year with that new product launch, is that a content market share story for you that could help to offset some of the normal seasonality we usually see in the calendar first quarter?

  • Keith Jackson - President and CEO

  • Yes, we do believe our, you know, equivalent market share by the content change will continue to boost us into next year at rates greater than the market will be for PCs overall.

  • So, again, I think it's very positive for us.

  • John Pitzer - Analyst

  • Great.

  • Thanks, guys.

  • Operator

  • Your next question comes from the line of Parag Agarwal of UBS.

  • Parag Agarwal - Analyst

  • Thanks for taking my question.

  • Just a question on guidance, could you please add on your guidance, in terms of end markets, and how do you see the fourth quarter playing out?

  • And also, you talked about your backlog in the end of the previous quarter.

  • Any update on order trends thus far would be really helpful.

  • Keith Jackson - President and CEO

  • So I think it's -- I would describe the fourth quarter, our view as seasonal.

  • You're going to start seeing some softening in the consumer segments.

  • We see continued strength in automotive and the communications sectors, and a bit of the industrial sector as well continue to hold up.

  • So really it's a consumer softening, as we head out of the fourth quarter.

  • And I think, you know, color-wise, it's going to play along what we would call traditionally seasonal lines.

  • Parag Agarwal - Analyst

  • Okay, and the second question is about the Sanyo acquisition.

  • Any update on the integration process?

  • Are you still trying to close it by the end of the year?

  • And also, has your idea about potential synergies of $30 million for the quarter heading into 18 months changed?

  • Any update would be really helpful.

  • Donald Colvin - CFO, PAO and EVP

  • I think the current plan is we close early in the first quarter, and we are confident that the basic financial case that we presented in July remains intact, and that was to generate from my memory $30 million of operating income after six quarters.

  • I would say that management is comfortable that that remains a very valid hypothesis.

  • Parag Agarwal - Analyst

  • Thank you.

  • Operator

  • Your next question comes from the line of James Schneider with Goldman Sachs.

  • James Schneider - Analyst

  • Good afternoon.

  • Thank you for taking my question.

  • Can you give us an update on where lead times are for the ones where you do have standard lead times quoted, how much you're able to improve on them at all, and what you expect heading into Q4 in terms of further improvements?

  • Keith Jackson - President and CEO

  • So lead times did not improve noticeably at all in Q3.

  • They remain extended, with very little change during the third quarter.

  • As we get into the fourth quarter, we're starting to see some of the standard products easing a small amount, but again, I would not expect dramatic contractions in Q4 as well.

  • So we continue to fill the pipeline up about as fast as we can fill it, and things have stayed quite stable for the last three quarters.

  • James Schneider - Analyst

  • Fair enough.

  • Thanks for that.

  • And then just as a follow-up, on the Sanyo acquisition, is there any reason for the pushout into Q1?

  • I think you previously expected it to close pretty much by now.

  • What are the reasons for that?

  • Is it just getting the costs and reductions in line and the terms in line, or is there something else to that?

  • Then I believe in the press release, you talked about not needing access to capital markets, and not needing to raise debt or issue stock.

  • Does that mean you're going to do it with cash on hand, or is there something else there?

  • Thank you.

  • Donald Colvin - CFO, PAO and EVP

  • Well, two parts to the question as usual.

  • As far as the date is concerned, I think the original contract anticipated five days, I believe, and the official date we announced was the earliest date, but for those of you who follow public disclosures and things, you know, you would have to be on a kamikaze mission to want to close something at the end of the year if you can close at the beginning of the next year, simply because of the onerous reporting and auditing issues that you would embrace.

  • So the seller was very cognizant of that, and we agreed it was better to do this on a natural break, which is our year end, just after our year end, their quarter end, and the beginning of a new fiscal year for us.

  • So I think it makes sense that early in January is our target date.

  • That's not liable to move, from what we can see now.

  • So I think it's for good reasons, and makes it more straightforward, the integration process.

  • As far as the financing is concerned, it is clear that we have made progress.

  • We listened to the shareholders' feedback and we worked with the seller, so I think it's fair to say now that at this period in time we not anticipate that we will have to issue any public debt, or will have to issue any stock, and at the confirmation of the transaction, there will be a minimum amount of cash required, as in the original transaction.

  • So that's about all that we are able to reveal as of today.

  • We are working on making these contractual amendments with the seller, and we should complete that over the next few weeks, but it is management's belief that the evolution of the financial conditions are favorable to the deal.

  • James Schneider - Analyst

  • Great.

  • That's helpful.

  • Thanks very much.

  • Operator

  • Your next question comes from the line of Chris Danely of JPMorgan.

  • Chris Danely - Analyst

  • I think that might be Chris Danely.

  • Hopefully you guys -- maybe he knows something that I don't.

  • Sorry.

  • Things are a little fuzzy on the phone line.

  • Actually, just a quick question, or a quick follow-up on the lead time comment.

  • Do you expect lead times to come in in Q1, or do you think they will remain extended?

  • Keith Jackson - President and CEO

  • I do believe we'll start making headway in Q1, just from enough capacity coming online.

  • We're actually not seeing significant changes in the demand picture.

  • So the extra capacity should start to see some shortening as we get into Q1.

  • Maybe not completely back to normal, but certainly lower than where we're running.

  • Chris Danely - Analyst

  • Sure, and then it sounds like we're going from a period of replenishment back to normal seasonality.

  • Assuming normal seasonality in Q1 and Q2, what would your gross and operating margin trends look like?

  • Donald Colvin - CFO, PAO and EVP

  • Well, you know, as I've said many times, Chris, we only give guidance one quarter at a time, for good reason.

  • I think it's fair to say that you could see -- we don't see a huge amount of seasonality.

  • Modest seasonality, it would be the normal pattern in the first quarter with the recovery, stronger second and third.

  • That's the pattern, and a flattish fourth quarter next year.

  • That's the normal pattern.

  • We have seen a little bit of pressure on the margins from the currency and commodity movements that we referred to.

  • That is baked into our guidance.

  • So basically we see a return, as you suggested, a modest seasonal first quarter, which historically because of our exposure to the consumer, and the wireless end markets has been a bit weaker, offset by what we still believe will be strength in industrial and automotive, as Keith mentioned, that business remains resilient.

  • So that's all we see, and I've never seen any good reason to give more details than that.

  • Chris Danely - Analyst

  • No, that's fine.

  • Thanks a lot, guys.

  • Operator

  • Your next question comes from the line of Ramesh Misra of Brigantine Advisors.

  • Ramesh Misra - Analyst

  • Good afternoon, gentlemen.

  • You didn't talk much about the industrial segment, but sounds like that segment is down for you; and, you know, we've been getting some mixed kind of data points about the industrial segments, some companies are talking about pretty strong trends over there, so I mean, are you -- do you think you're losing share or maintaining it, or what's going on from your perspective?

  • Keith Jackson - President and CEO

  • We think we're maintaining share, and it was really kind of flattish more than anything else, and we see that pattern kind of continuing through the end of the year and into the beginning.

  • Clearly, there is a difference between which part or which segment that you're in; industrial is extremely light for us.

  • We include things like capital equipment purchases, as well as building-related expenses as well.

  • So there's some shift quarter to quarter in that, but in general remaining relatively robust, but I would call it more flattish than significant growth.

  • Ramesh Misra - Analyst

  • Okay, and this probably is for you, Donald.

  • Wanted to clarify, did you say that you don't anticipate needing to use any stock for your Sanyo acquisitions?

  • And then just as a first part, what should we be thinking of, you know, how gross margins over there are?

  • And I think based on public statements, they have been kind of running cash neutral.

  • So basically, I mean until 18 months or so post-acquisition, do we expect kind of minimal impact on your P&L?

  • Donald Colvin - CFO, PAO and EVP

  • Well, we did say that we do not believe we need to use any stock for Sanyo.

  • So I will repeat that, and I think that's certainly a clarification to the initial deal.

  • So I think that is a positive.

  • As far as the gross margin from Sanyo, we did state in the past that the business -- on the margins, the business was running approximately break-even.

  • We have no reason to believe that is not the case.

  • We did say that we intend to improve it, and we believe that that is totally possible.

  • As far as the gross margin, what we have stated in the past for it is we believed we were getting some very good products that potentially would be a gross margin close -- close to the corporate average, maybe not quite as much, but close to, not a major Delta away from, and again, we still believe that's the case.

  • So we remain excited about the opportunity of adding new customers and new products that are very complementary to products we make in our factories.

  • Ramesh Misra - Analyst

  • Thanks.

  • Operator

  • Your next question comes from the line of Tristan Gerra with Robert Baird.

  • Tristan Gerra - Analyst

  • Hi, good afternoon.

  • What is your expectation for utilization rates for Q4, and also what's the growth in capacity sequentially that you're adding in Q4?

  • Keith Jackson - President and CEO

  • So utilization rates should be still in the 90s, maybe more toward the middle 90s overall.

  • They are coming down a bit.

  • We are getting some more capacities in place, as you mentioned, but they might, you know, have no more impact than one or two points of utilization overall.

  • Tristan Gerra - Analyst

  • Okay, and then any initial visibility on the pricing outlook for 2011 based on your pricing contract discussions?

  • Keith Jackson - President and CEO

  • They have been generally muted, so not significant breaks at this stage.

  • So I would say the longer term agreements are fairly stable for next year, slightly down a few percent, which bodes generally very well.

  • The spot market, of course, we'll have to wait to see how that unfolds next year.

  • Tristan Gerra - Analyst

  • Great.

  • Thank you.

  • Operator

  • Your next question comes from the line of Terence Whalen with Citi.

  • Terence Whalen - Analyst

  • Hi, good afternoon.

  • Thanks for taking the question.

  • I guess the first question I have is regarding looking across your business, are there any areas where you had seen orders contract and decline to low levels, but then stabilize and bounce back more recently in the past four to six weeks?

  • Keith Jackson - President and CEO

  • I don't know that I've got any significant -- we did see a decline, as we mentioned there, in television-related purchases.

  • I think they dropped, and they are stable at this point, but we haven't seen big bouncebacks.

  • Terence Whalen - Analyst

  • Okay, great.

  • And then the second question is for Don.

  • Don, you referenced a $6 million expense related to Sanyo acquisition costs.

  • Can you explain whether that expense then goes away into the first quarter to alleviate OpEx?

  • Thank you.

  • Donald Colvin - CFO, PAO and EVP

  • Thank you for asking me that great question, Terence.

  • I spelled that out because that's, you know, approximately $0.015 of costs related to Sanyo that will not be there forever.

  • We may have additional deal costs expensed in the first quarter, but you can see that it's not part of our ongoing P&L.

  • And we had that similar penalty in the third quarter to the order of about $5 million.

  • So we will have with all [70] some additional deal costs in the first quarter because we are planning to close then.

  • After that, it will go away forever.

  • So this is a kind of exceptional cost, but the accounting rules changed.

  • Previously, these were capitalized deal costs and amortized over time.

  • Now they are expensed as incurred.

  • So it does penalize the P&L when you're incurring substantial costs with our completing the deal.

  • Terence Whalen - Analyst

  • Thank you.

  • Donald Colvin - CFO, PAO and EVP

  • Or ahead of completing the deal, should I say.

  • Operator

  • (Operator Instructions)

  • Your next question comes from the line of Craig Ellis of Caris & Company.

  • Craig Ellis - Analyst

  • Thanks for taking the question.

  • I'll have to give Chris a call after this one's over.

  • Keith, you mentioned that you're happy with the design win traction you've got on Sandy Bridge.

  • Can you talk a little bit about where you are with the core market share now, and what you think could happen as we move into Sandy Bridge next year?

  • Keith Jackson - President and CEO

  • Part of the difficulty I have giving you precise numbers there is knowing what those ramps will be.

  • Generally the platform change ramps are a little bit tough to call.

  • What we can say is that on each successive generation that we've gone through the last three years, we've picked up market share on each of those platforms, and that number has been somewhere around 10%, 10 -- is it a thousand basis points, let me get that right, or more on each one.

  • Craig Ellis - Analyst

  • Okay.

  • That's helpful.

  • Switching gears, Don, utilization sounds like it will drop a little bit, but because there's increased capacity, how should we think about inventories exiting the fourth quarter?

  • Would you like to take them up a little bit on hand and in the channel, or are they going to be flattish?

  • How should we look at that?

  • Donald Colvin - CFO, PAO and EVP

  • I think we're taking actions to slow down the dollar growth of inventory.

  • That's what we're planning to do.

  • So only a modest increase in inventories anywhere in the fourth quarter, and as we have a soft landing of manufacturing run rates in line with demand, so I wouldn't expect any big increase in inventories from the current levels on dollar basis terms.

  • Craig Ellis - Analyst

  • And what are the weeks of inventory in the channel at present?

  • Donald Colvin - CFO, PAO and EVP

  • We had the channel coming in just over eight weeks at the end of September.

  • Craig Ellis - Analyst

  • Thanks.

  • Keith Jackson - President and CEO

  • And the channel is something we would like to take up a bit, if possible.

  • So as we get, you know, between Q4 and Q1, moving that up another week would be desirable.

  • Craig Ellis - Analyst

  • Got it.

  • Thanks, Keith.

  • Thanks, Don.

  • Operator

  • Your next question comes from the line of John Vinh with Collins Stewart.

  • John Vinh - Analyst

  • Hi, thanks for taking my question.

  • Just a question on com; I was wondering if you could talk about what your mix is between smart phones and feature phones there?

  • Keith Jackson - President and CEO

  • On a dollar basis; do we have some data?

  • Donald Colvin - CFO, PAO and EVP

  • Maybe can we come back to you with that afterwards?

  • John Vinh - Analyst

  • Okay.

  • Keith Jackson - President and CEO

  • We may have to come back to you on the dollar basis there.

  • It -- the smart phone content does go up.

  • It's significantly more per phone, but then the total phones are less.

  • So we probably would have to calculate that and get back to you.

  • John Vinh - Analyst

  • Okay, and then some of the strong performance that you're seeing in that segment, is some of that share gain that you're seeing right now?

  • Keith Jackson - President and CEO

  • Yes, actually it's proliferation of new platforms and the smart phones, as I mentioned, have better content, so to the extent that they outgrow the low end and medium end phones, we get a better [pop] for that.

  • John Vinh - Analyst

  • Okay, and just one more follow-up for me related to that, obviously a lot of interest on tablets; can you maybe just talk a little bit about where you're positioned on tablet platforms going forward at this point is?

  • Keith Jackson - President and CEO

  • We've got, as me mentioned there, some significant design wins in tablets.

  • We're working with the plethora of new ones that coming out.

  • I expect we will have content in all of them to differing degrees, but frankly, there's no one that overwhelms the others and that content remains our focus.

  • John Vinh - Analyst

  • Great, thank you.

  • Operator

  • Your next question comes from the line of Kevin Cassidy with Stifel Nicolaus.

  • Kevin Cassidy - Analyst

  • Thanks for taking my question.

  • And just to follow up on that, what would you say your content is dollar-wise in a tablet versus netbook versus notebook?

  • Keith Jackson - President and CEO

  • So it's going to be more similar to a netbook than a notebook.

  • So, you know, you're talking something that's kind of sub-dollar for the tablets today.

  • Kevin Cassidy - Analyst

  • Okay, thanks.

  • And also on the Sandy Bridge design, do you have a similar design in the works with AMD's Fusion products?

  • Keith Jackson - President and CEO

  • We generally do what I call adaptation of our core process, core controllers to handle the AMD designs.

  • So the answer is, yes, there's a quick spin that comes shortly after.

  • Kevin Cassidy - Analyst

  • Okay, great.

  • Thanks.

  • Operator

  • The last question comes from the line of Steven Smigie with Raymond James.

  • Unidentified Participant - Analyst

  • This is Andy for Steve.

  • Thanks for taking the question.

  • Can you touch on the degree to which capacity streams may have limited some of your growth in 3Q and 4Q?

  • Keith Jackson - President and CEO

  • We have a couple of wafer fabs that remain extremely constrained, 100% capacity, with demand exceeding that.

  • They are products traditionally for the automotive and industrial sectors, the two sectors that continue to have the best growth, and I expect to start seeing easing there as you get into next year.

  • But right now, clearly those two markets have been constrained.

  • Unidentified Participant - Analyst

  • Thank you very much.

  • Operator

  • This concludes the question-and-answer portion of the conference call.

  • You may now disconnect.