安森美 (ON) 2023 Q2 法說會逐字稿

Good day, and thank you for standing by. Welcome to the ON Semi Second Quarter 2023 Earnings Conference Call. (Operator Instructions) Please be advised that today's conference is being recorded. I would now like to hand the conference over to your host today, Parag Agarwal, Vice President of Investor Relations and Corporate Development. Please go ahead.

美好的一天，感謝您的支持。歡迎參加安森美半導體 2023 年第二季度收益電話會議。 （操作員指示）請注意，今天的會議正在錄製中。現在，我想將會議交給今天的東道主，投資者關係和企業發展副總裁帕拉格·阿加瓦爾 (Parag Agarwal)。請繼續。

Thank you, Liz. Good morning, and thank you for joining ON Semi's Second Quarter 2023 Quarterly Results Conference Call. I'm joined today by Hassane El-Khoury, our President and CEO; and Thad Trent, our CFO. This call is being webcast on the Investor Relations section of our website at www.onsemi.com. A replay of this webcast, along with our 2023 second quarter's earnings release will be available on our website approximately 1 hour following this conference call. And the recorded webcast will be available for approximately 30 days following this conference call.

謝謝你，莉茲。早上好，感謝您參加安森美半導體 2023 年第二季度季度業績電話會議。今天我們的總裁兼首席執行官 Hassane El-Khoury 也加入了我的行列。還有我們的首席財務官薩德·特倫特 (Thad Trent)。本次電話會議正在我們網站 www.onsemi.com 的投資者關係部分進行網絡直播。本次電話會議後大約 1 小時，我們將在我們的網站上提供本次網絡廣播的重播以及我們 2023 年第二季度的收益發布。錄製的網絡廣播將在本次電話會議後大約 30 天內提供。

Additional information is posted on the Investor Relations section of our website. Our earnings release and this presentation include certain non-GAAP financial measures. Reconciliation of these non-GAAP financial measures to the most directly comparable GAAP measures under GAAP financial measures are included in our earnings release, which is posted separately on our website in the Investor Relations section.

更多信息發佈在我們網站的投資者關係部分。我們的收益發布和本演示文稿包括某些非公認會計準則財務指標。這些非 GAAP 財務指標與 GAAP 財務指標下最直接可比的 GAAP 指標的對賬包含在我們的收益報告中，該報告單獨發佈在我們網站的投資者關係部分。

During the course of this conference call, we'll make projections or other forward-looking statements regarding future events or the future financial performance of the company. We wish to caution that such statements are subject to risks and uncertainties that could cause actual events or results to differ materially from projections. Important factors that can affect our business, including factors that could cause actual results to differ from our forward-looking statements are described in our most recent Form 10-K, Form 10-Q and other filings with the Securities and Exchange Commission and in our earnings release for the second quarter of 2023.

在本次電話會議期間，我們將對未來事件或公司未來財務業績做出預測或其他前瞻性陳述。我們希望提醒您，此類陳述存在風險和不確定性，可能導致實際事件或結果與預測存在重大差異。我們最近向美國證券交易委員會提交的表格 10-K、表格 10-Q 和其他文件以及我們的報告中描述了可能影響我們業務的重要因素，包括可能導致實際結果與我們的前瞻性陳述不同的因素。 2023 年第二季度收益發布。

Our estimates or other forward-looking statements may change, and the company assumes no obligation to update forward-looking statements to reflect actual results, change assumptions or other events that may occur except as required by law. Now let me turn it over to Hassane. Hassane?

我們的估計或其他前瞻性陳述可能會發生變化，公司不承擔更新前瞻性陳述以反映實際結果、變化假設或可能發生的其他事件的義務，除非法律要求。現在讓我把它交給哈桑。哈桑？

Thank you, Parag. Good morning, and thanks to everyone on the call for joining us. The executive staff and I are thrilled with the results, following another successful quarter for ON Semi with Q2 revenue of $2.09 billion and non-GAAP gross margins of 47.4% both above the midpoint of our guidance. Our worldwide teams are firing on all cylinders. Well, maybe I should start saying there are spinning all motors now. Our approach of disciplined, consistent and reliable execution continues to be the winning formula for ON Semi quarter after quarter.

謝謝你，帕拉格。早上好，感謝所有參加電話會議的人加入我們。我和高管人員對這一結果感到非常興奮，繼安森美半導體又一個季度取得成功之後，第二季度營收達到 20.9 億美元，非 GAAP 毛利率達到 47.4%，均高於我們指導的中點。我們的全球團隊正在全力以赴。好吧，也許我應該開始說現在所有的電機都在旋轉。我們嚴格、一致和可靠的執行方法仍然是安森美半導體每個季度的製勝秘訣。

We have again exceeded our targets despite the current market environment, all while delivering best-in-class performance for our customers. The most recent example is our silicon carbide performance. We ramped a new and highly complex technology while continuing to surpass internal manufacturing and financial metrics, and we are all very proud of everyone that contributes the success daily.

儘管當前的市場環境如此，我們仍然再次超出了我們的目標，同時為我們的客戶提供了一流的性能。最近的例子是我們的碳化矽性能。我們開發了一種高度複雜的新技術，同時繼續超越內部製造和財務指標，我們為每天為成功做出貢獻的每個人感到非常自豪。

Given our progress in Q2 silicon carbide revenue growing nearly 4x over Q2 '22, we remain on track to achieve our first $1 billion revenue year and remain on track to have more than 50% of our substrates coming from our internal production by the end of Q4. EV is the fastest-growing part of this business, followed by energy infrastructure. Customers are excited to work with us. Our successful capacity expansion is creating an opportunity for ON Semi to gain share in silicon carbide by supporting new demand amid ongoing supply uncertainty in this space.

鑑於我們第二季度碳化矽收入比 2022 年第二季度增長近 4 倍，我們仍有望實現第一個 10 億美元的收入年度，並有望在 2019 年年底前超過 50% 的襯底來自我們的內部生產。 Q4。電動汽車是該業務中增長最快的部分，其次是能源基礎設施。客戶很高興與我們合作。我們成功的產能擴張為安森美半導體創造了機會，在該領域持續存在供應不確定性的情況下，通過支持新需求來獲得碳化矽市場份額。

In Q2 alone, we signed more than $3 billion of new silicon carbide LTSAs, bringing our total lifetime silicon carbide revenue committed through long-term supply agreements to over $11 billion. One of our largest wins last quarter was with Vitesco, a leader in modern drive technologies and electrification solutions who signed a $1.9 billion agreement to support their growing need for silicon carbide in electric vehicles. They are co-investing $250 million as part of this 10-year LTSA to ensure capacity for the ramp.

僅在第二季度，我們就簽署了超過 30 億美元的新碳化矽長期協議，使我們通過長期供應協議承諾的碳化矽生命週期總收入超過 110 億美元。上季度我們最大的勝利之一是與現代驅動技術和電氣化解決方案領域的領導者 Vitesco 簽署了一項價值 19 億美元的協議，以支持電動汽車對碳化矽不斷增長的需求。作為該 10 年期 LTSA 的一部分，他們共同投資 2.5 億美元，以確保坡道的容量。

We also extended our silicon carbide engagement with BorgWarner to integrate our EliteSiC 1,200 and 750-volt power devices into its power modules to deliver increased power density and higher efficiency, which increased the range and overall performance of EVs. We have had a long-standing relationship with BorgWarner, and this extended LTSA now amounts to $1 billion of committed silicon carbide revenue.

我們還擴大了與博格華納的碳化矽合作，將我們的 EliteSiC 1,200 和 750 伏功率器件集成到其電源模塊中，以提供更高的功率密度和更高的效率，從而增加了電動汽車的續航里程和整體性能。我們與博格華納有著長期的合作關係，此次延長的 LTSA 目前承諾的碳化矽收入達 10 億美元。

Finally, with Magna, 1 of the world's largest automotive suppliers, we have signed a silicon carbide LTSA to expand our strategic collaboration, which has long included technologies across our intelligent power and sensing portfolio. Together, we will integrate our 1,200-volt intelligent power devices into Magna's traction inverter solutions to improve the performance of electric vehicles over the next 10 years.

最後，我們與全球最大的汽車供應商之一麥格納簽署了碳化矽 LTSA，以擴大我們的戰略合作，該合作長期以來涵蓋我們的智能電源和傳感產品組合的技術。我們將共同將 1,200 伏智能功率器件集成到麥格納的牽引逆變器解決方案中，以提高未來 10 年電動汽車的性能。

By integrating ON Semi's industry-leading EliteSiC technology, Magna eDrive systems will deliver greater cooling performance and faster acceleration and charging rates that will help improve efficiency and increase the range of EVs.

通過集成安森美半導體業界領先的EliteSiC技術，Magna eDrive系統將提供更好的冷卻性能以及更快的加速和充電速率，這將有助於提高效率並增加電動汽車的續航里程。

In addition, they will co-invest $40 million in new silicon carbide equipment in our Hudson and Czech Republic locations to ensure access to future supply. LTSAs have become an integral part of the way we do business with our strategic customers. LTSAs continue to provide us with extended visibility, stability in pricing and volume commitments while allowing us to plan for long-term capacity.

此外，他們還將共同投資 4000 萬美元在我們的哈德遜和捷克共和國工廠購買新的碳化矽設備，以確保未來的供應。 LTSA 已成為我們與戰略客戶開展業務的方式中不可或缺的一部分。 LTSA 繼續為我們提供更廣泛的可見性、定價和產量承諾的穩定性，同時使我們能夠規劃長期產能。

In terms of market dynamics, both Automotive and Industrial remained healthy in Q2 with quarter-over-quarter growth of 8% and 10%, respectively, and now account for 80% of our total revenue. It was the first time that our Automotive revenue surpassed the $1 billion mark in a single quarter, driven by strength in intelligent power for electric vehicles and intelligent sensing for advanced safety applications.

就市場動態而言，汽車和工業在第二季度保持健康，環比增長分別為 8% 和 10%，目前占我們總收入的 80%。得益於電動汽車智能動力和先進安全應用智能傳感領域的實力，我們的汽車業務收入首次在單季度突破 10 億美元大關。

New regional regulations will require that vehicles be equipped with both a wider field of view to detect vulnerable road users such as pedestrian and cyclists as well as high-speed electronic braking for highways. These new standards can only be met with higher resolution image sensors like the 8-megapixel device, which we first introduced 2 years ago and is now widely adopted by top carmakers for production in their 2024 models. With this accelerated adoption, we expect our 2023 revenue for our 8-megapixel image sensors to more than double year-over-year.

新的地區法規將要求車輛配備更廣闊的視野，以檢測行人和騎自行車者等易受傷害的道路使用者，以及高速公路的高速電子製動。這些新標準只能通過更高分辨率的圖像傳感器來滿足，例如 8 兆像素設備，我們於 2 年前首次推出該設備，現在已被頂級汽車製造商廣泛採用，用於其 2024 年車型的生產。隨著這種加速採用，我們預計 2023 年 8 兆像素圖像傳感器的收入將同比增長一倍以上。

We have further expanded our intelligent sensing portfolio with the newly introduced Hyperlux family of image sensors for Automotive and Industrial markets, designed to eliminate flicker, all while delivering the highest dynamic range available in the market. For industrial applications, such as surveillance and machine vision, our new products also offer very low power with intelligent wake on motion to even further extend energy savings.

我們通過針對汽車和工業市場新推出的 Hyperlux 系列圖像傳感器進一步擴展了我們的智能傳感產品組合，旨在消除閃爍，同時提供市場上最高的動態範圍。對於監控和機器視覺等工業應用，我們的新產品還具有極低功耗和智能運動喚醒功能，可進一步節省能源。

Another significant milestone this quarter is the sampling of our automotive-grade image sensor out of our East Fishkill fab to leading global ADAS customers and partners making ON Semi the only image sensing supplier with a U.S.-based 300-millimeter fab and both internal and external sources across every step of the imaging supply chain. Customers value the investments ON Semi has made to improve supply resiliency.

本季度的另一個重要里程碑是我們從東菲什基爾工廠向全球領先的 ADAS 客戶和合作夥伴提供汽車級圖像傳感器樣品，這使得安森美半導體成為唯一一家擁有美國 300 毫米工廠以及內部和外部工廠的圖像傳感供應商成像供應鏈各個環節的來源。客戶重視安森美半導體為提高供應彈性所做的投資。

With evolving vehicle requirements and consumer behavior, automotive design cycles are getting shorter and continue to get compressed, therefore, we must remain at the forefront of the latest trends and regulations and ahead of our customers' needs. We are innovating with the best in the world and being recognized for the value we provide.

隨著汽車要求和消費者行為的不斷變化，汽車設計週期變得越來越短並繼續被壓縮，因此，我們必須始終走在最新趨勢和法規的前沿，並領先於客戶的需求。我們與世界上最優秀的公司一起進行創新，並因我們提供的價值而受到認可。

Most recently, we received a prestigious Volkswagen Group Award for innovation for our strategic partnership on future electric vehicles with our broad portfolio of intelligent power and intelligent sensing technologies, along with our focus on establishing vertically integrated silicon carbide production capabilities. We are grateful for partners like VW as well as our other strategic customers who trust ON Semi's packaging expertise, scalable manufacturing capabilities and problem-solving approach to deliver joint innovation in the rapidly evolving Automotive market.

最近，我們憑藉廣泛的智能動力和智能傳感技術組合，以及我們對建立垂直整合碳化矽生產能力的關注，在未來電動汽車方面建立了戰略合作夥伴關係，並獲得了著名的大眾汽車集團創新獎。我們感謝像大眾汽車這樣的合作夥伴以及我們的其他戰略客戶，他們信任安森美半導體的封裝專業知識、可擴展的製造能力和解決問題的方法，以在快速發展的汽車市場中提供聯合創新。

In Industrial, our revenue grew 5% year-over-year and 10% sequentially, with continued strength in medical applications as well as energy infrastructure, which increased nearly 70% year-over-year in Q2. Our growth in the industrial segment is driven by the accelerated adoption of high-growth energy infrastructure applications like solar inverters, energy storage inverters and EV fast chargers.

在工業領域，我們的收入同比增長 5%，環比增長 10%，醫療應用和能源基礎設施持續強勁，第二季度同比增長近 70%。我們在工業領域的增長是由太陽能逆變器、儲能逆變器和電動汽車快速充電器等高增長能源基礎設施應用的加速採用推動的。

Solar is forecasted to surpass coal and gas and installed capacity by 2027, and ON Semi has the #1 market share position with a full suite of silicon, silicon carbide and packaging technologies to deliver the most highly efficient and system optimized solutions to customers. We have now secured $1.95 billion in long-term supply agreements for power modules with leading global manufacturers of solar inverters, among which are 8 of the top 10 solar inverter suppliers. These customers are securing supply assurance to support their growth.

預計到 2027 年，太陽能和裝機容量將超過煤炭和天然氣，安森美半導體憑藉全套矽、碳化矽和封裝技術佔據第一的市場份額，為客戶提供最高效和系統優化的解決方案。目前，我們已與全球領先的太陽能逆變器製造商簽訂了價值19.5億美元的電源模塊長期供應協議，其中包括排名前10的太陽能逆變器供應商中的8家。這些客戶正在確保供應保證以支持他們的增長。

Highlights in medical include market expansion for continuous glucose monitors or CGMs, driven by the reimbursement of monitoring therapies. We are #1 in CGM, which we support with our sensor interface portfolio, and we expect this market to continue to grow at a 20% CAGR over the next 5 years.

醫療領域的亮點包括在監測治療報銷的推動下，連續血糖監測儀或 CGM 的市場擴張。我們在 CGM 領域排名第一，我們的傳感器接口產品組合為其提供支持，我們預計該市場在未來 5 年內將繼續以 20% 的複合年增長率增長。

In hearing aids, we have partners with innovative customers who will push accelerated adoption in the market with over-the-counter solutions, improving accessibility and lowering cost of ownership. Lexie Hearing is 1 of the world's game changers in hearing aid and uses ON Semi's intelligent sensing technology at the heart of their solution, earning them recognition as 1 of TIME 100's most influential companies in 2023. Once again, I want to thank all our employees who work on our incredible silicon carbide effort around the world as well as those who remain focused on all of our other strategic growth areas of intelligent power and sensing.

在助聽器方面，我們與創新客戶合作，他們將通過非處方解決方案推動市場加速採用，提高可及性並降低擁有成本。 Lexie Hearing 是世界助聽器行業變革者之一，其解決方案採用安森美半導體的智能傳感技術作為其核心，使其被評為 2023 年《時代》雜誌 100 強最具影響力的公司之一。我再次感謝我們所有的員工他們致力於我們在世界各地令人難以置信的碳化矽工作，以及那些繼續專注於我們智能電源和傳感等所有其他戰略增長領域的人。

We have a unique opportunity as a company to accelerate our investments in areas where we believe we can outpace the market with the capital generated by our mature and growing businesses. The size and scale of our operations have allowed us to leverage our infrastructure and expertise inside the company to tackle complex problems and drive increased output to support the growing needs of our customers. And now let me turn the call over to Thad to give you more details on our results. Thad?

作為一家公司，我們有一個獨特的機會來加速我們相信我們可以利用我們成熟和不斷發展的業務產生的資本超越市場的領域的投資。我們業務的規模和規模使我們能夠利用公司內部的基礎設施和專業知識來解決複雜的問題並提高產量，以滿足客戶不斷增長的需求。現在讓我將電話轉給泰德，向您提供有關我們結果的更多詳細信息。泰德？

Thanks, Hassane. We're pleased to report another stellar quarter for ON Semi. Our Q2 results and our Q3 outlook clearly demonstrate our consistent execution outpacing the industry while navigating the soft macro environment. We are uniquely positioned as our business is being powered by multiple secular growth drivers in the fastest-growing end markets of Automotive and Industrial.

謝謝，哈桑。我們很高興地報告安森美半導體又一個出色的季度。我們第二季度的業績和第三季度的前景清楚地表明，我們在應對疲軟的宏觀環境的同時，始終保持著超越行業的執行力。我們處於獨特的地位，因為我們的業務受到增長最快的汽車和工業終端市場的多種長期增長動力的推動。

All our Q2 financial metrics exceeded the midpoint of our guidance. We grew revenue 7% sequentially, expanded gross margin by 60 basis points to 47.4% and delivered a 12% quarter-over-quarter increase in earnings per share to $1.33, which exceeded our guidance range. Our global teams have transformed the business to deliver predictable and sustainable performance with above-industry growth at attractive margins. Revenue for the second quarter was $2.09 billion, roughly flat compared to the second quarter of 2022 and increased 7% over Q1. The sequential increase was driven by growth in the Automotive and Industrial end markets with accelerating demand for electrification and renewable energy.

我們第二季度的所有財務指標都超過了指導的中點。我們的收入環比增長 7%，毛利率提高 60 個基點至 47.4%，每股收益環比增長 12% 至 1.33 美元，超出了我們的指導範圍。我們的全球團隊對業務進行了轉型，以提供可預測和可持續的業績，並以有吸引力的利潤率實現高於行業的增長。第二季度收入為 20.9 億美元，與 2022 年第二季度大致持平，較第一季度增長 7%。這一環比增長是由汽車和工業終端市場的增長以及對電氣化和可再生能源的需求加速推動的。

Even without silicon carbide, our revenue increased at an impressive pace sequentially. Turning to silicon carbide. Hassane mentioned, our continued execution and increasing number of LTSAs with Automotive and Energy infrastructure customers. We are ramping our silicon carbide production to support the increasing demand and remain ahead of our internal plans.

即使沒有碳化矽，我們的收入也以驚人的速度連續增長。轉向碳化矽。 Hassane 提到，我們與汽車和能源基礎設施客戶持續執行並增加了 LTSA 數量。我們正在提高碳化矽產量，以滿足不斷增長的需求，並保持領先於我們的內部計劃。

Over the past 2 years, we have made strategic brownfield investments to expand capacity and ramp production much faster by leveraging our existing manufacturing footprint and expertise. These industry-leading ROIC investments are now contributing to our financial results. In the second quarter, our silicon carbide business nearly doubled gross margin sequentially. And I'm proud to report our silicon carbide business achieved its first profitable quarter, delivering high-teen operating margin on a fully loaded basis, which includes all start-up costs.

在過去的兩年裡，我們進行了戰略性棕地投資，利用我們現有的製造足跡和專業知識，更快地擴大產能和提高產量。這些行業領先的 ROIC 投資現在正在為我們的財務業績做出貢獻。第二季度，我們的碳化矽業務毛利率環比增長近一倍。我很自豪地報告，我們的碳化矽業務實現了第一個盈利季度，在滿載的基礎上實現了高雙位數的運營利潤，其中包括所有啟動成本。

I'd like to take this opportunity to thank the 33,000 ON Semi employees across the globe for their commitment to success in delivering outstanding results quarter after quarter. Turning to end markets. Our Automotive revenue hit a new record of over $1 billion in Q2, growing 8% quarter-over-quarter and 35% year-over-year, driven by the accelerating adoption of electrification and the continued need for sensing in vehicles.

我想藉此機會感謝全球 33,000 名安森美半導體員工的承諾，他們每個季度都取得了出色的業績。轉向終端市場。在電氣化加速採用以及車輛傳感需求持續增長的推動下，我們的汽車收入在第二季度創下了超過 10 億美元的新紀錄，環比增長 8%，同比增長 35%。

In Q2, Industrial revenue grew 5% year-over-year and 10% sequentially with continued strength in EV charging, medical applications as well as energy infrastructure, which increased nearly 70% year-over-year and is now a meaningful part of our overall revenue. We continue to exit volatile noncore businesses, which included another $57 million in Q2 revenue, bringing our total year-to-date of exited revenue to more than $100 million and nearly $400 million since the start of our transformation. We will continue to be opportunistic in noncore markets where margins are favorable and engagements are strategic with our customers.

第二季度，工業收入同比增長 5%，環比增長 10%，電動汽車充電、醫療應用以及能源基礎設施持續強勁，同比增長近 70%，現已成為我們的重要組成部分。總體收入。我們繼續退出不穩定的非核心業務，其中包括第二季度另外 5700 萬美元的收入，使我們年初至今退出的總收入超過 1 億美元，自轉型開始以來已接近 4 億美元。我們將繼續在利潤豐厚且與客戶進行戰略合作的非核心市場中保持機會主義。

We now expect to exit $350 million to $400 million in 2023. Looking at the split between operating units. Revenue for the Power Solutions Group, or PSG, was $1.12 billion, an increase of 6% year-over-year, with more than 60% year-over-year increase in Auto and nearly 70% year-over-year increase in Energy infrastructure. Revenue for the Advanced Solutions Group, or ASG, was $650 million, a 9% decline over Q2 '22, driven by deliberate exits and continued softness in noncore markets, offset by strength in Automotive and Industrial.

我們現在預計 2023 年將退出 3.5 億至 4 億美元。看看運營部門之間的劃分。動力解決方案集團（PSG）收入為11.2億美元，同比增長6%，其中汽車業務同比增長超過60%，能源業務同比增長近70%基礎設施。高級解決方案集團 (ASG) 的收入為 6.5 億美元，比 22 年第二季度下降 9%，這是由於有意退出和非核心市場持續疲軟所推動的，但被汽車和工業領域的強勢所抵消。

Revenue for the Intelligent Sensing Group, or ISG, was $325 million, a 4% increase year-over-year, primarily due to the automotive shift to higher-value sensors in our portfolio such as 8-megapixel image sensors. Our GAAP and non-GAAP gross margin of 47.4% improved 60 basis points quarter-over-quarter, driven by silicon carbide and despite the significant headwinds from EFK we disclosed last quarter.

智能傳感集團 (ISG) 的收入為 3.25 億美元，同比增長 4%，這主要是由於汽車轉向我們產品組合中的更高價值傳感器，例如 8 兆像素圖像傳感器。儘管我們上季度披露了來自 EFK 的重大不利因素，但在碳化矽的推動下，我們的 GAAP 和非 GAAP 毛利率為 47.4%，環比提高了 60 個基點。

We continue to improve the cost structure of the fab, but we expect EFK to be dilutive to gross margins by approximately 250 basis points for the next several quarters. We remain committed to maintaining our long-term gross margin trajectory as we execute our Fab Right strategy of driving efficiencies and further consolidation in our internal as well as our external manufacturing network.

我們繼續改善晶圓廠的成本結構，但我們預計未來幾個季度 EFK 的毛利率將攤薄約 250 個基點。我們仍然致力於維持我們的長期毛利率軌跡，因為我們執行我們的 Fab Right 戰略，以提高效率並進一步整合我們的內部和外部製造網絡。

Now let me give you some additional numbers for your models. GAAP operating expenses for the second quarter were $318.7 million as compared to $453.1 million in the second quarter of 2022. Non-GAAP operating expenses were $305.5 million as compared to $317.7 million in the quarter a year ago. GAAP operating margin for the quarter was 32.2% and non-GAAP operating margin was 32.8%. Non-GAAP operating margin increased 60 basis points quarter-over-quarter.

現在讓我為您的模型提供一些額外的數字。第二季度 GAAP 運營支出為 3.187 億美元，而 2022 年第二季度為 4.531 億美元。非 GAAP 運營支出為 3.055 億美元，而去年同期為 3.177 億美元。本季度 GAAP 運營利潤率為 32.2%，非 GAAP 運營利潤率為 32.8%。非 GAAP 運營利潤率環比增長 60 個基點。

Our GAAP tax rate was 15.3% and our non-GAAP tax rate was 15.8%. GAAP earnings per share for the first quarter was $1.29 as compared to $1.02 in the quarter a year ago. Non-GAAP earnings per diluted share was $1.33, flat year-over-year and above the high end of our guidance. Our GAAP diluted share count was 448.7 million shares, and our non-GAAP diluted share count was 438.7 million shares.

我們的 GAAP 稅率為 15.3%，非 GAAP 稅率為 15.8%。第一季度 GAAP 每股收益為 1.29 美元，而去年同期為 1.02 美元。非 GAAP 攤薄每股收益為 1.33 美元，與去年同期持平，高於我們指導的上限。我們的 GAAP 稀釋後股票數量為 4.487 億股，非 GAAP 稀釋後股票數量為 4.387 億股。

In Q2, we repurchased $60 million of shares at an average price of $86.49 per share, and we remain committed to our long-term strategy of returning 50% of free cash flow to our shareholders.

第二季度，我們以每股 86.49 美元的平均價格回購了 6000 萬美元的股票，我們仍然致力於將 50% 的自由現金流返還給股東的長期戰略。

Turning to the balance sheet. Cash and cash equivalents was $2.6 billion, and we had $1.1 billion undrawn on our revolver. In Q2, we proactively downsized our revolver by $500 million to $1.5 billion and extended the maturity to 2028 to align to our long-term needs and projected cash flow.

轉向資產負債表。現金和現金等價物為 26 億美元，我們的左輪手槍還有 11 億美元未提取。在第二季度，我們主動將左輪手槍規模縮減 5 億美元至 15 億美元，並將期限延長至 2028 年，以滿足我們的長期需求和預計現金流。

Cash from operations was $390.8 million and free cash flow was negative at $39.8 million due to timing of investments in capital expenditures and growth in strategic inventory in the second quarter. We expect free cash flow to return to positive for the remainder of the year. Capital expenditures during Q2 were $430.6 million, which equates to a capital intensity of 20.6%. As we indicated previously, we are directing a significant portion of our capital expenditures towards silicon carbide and enabling our 300-millimeter capabilities at EFK and expect our capital intensity to be in the mid- to high-teen percentage range for the next several quarters.

運營現金為 3.908 億美元，由於第二季度資本支出投資時機和戰略庫存增長，自由現金流為負數 3,980 萬美元。我們預計今年剩餘時間內自由現金流將恢復為正值。第二季度的資本支出為 4.306 億美元，相當於資本密集度為 20.6%。正如我們之前指出的，我們將很大一部分資本支出用於碳化矽，並在 EFK 實現 300 毫米產能，並預計未來幾個季度我們的資本強度將處於中高百分比範圍。

Accounts receivable of $944.4 million, increased by $63.5 million and DSO was 41 days consistent with the first quarter. Inventory increased by $149.5 million sequentially and days of inventory increased by 4 days to 163 days. This includes approximately 54 days of bridged inventory to support fab transitions and the silicon carbide ramp. Excluding these strategic builds, our base inventory declined 7 days quarter-over-quarter.

應收賬款為 9.444 億美元，增加了 6,350 萬美元，DSO 為 41 天，與第一季度一致。庫存環比增加 1.495 億美元，庫存天數增加 4 天至 163 天。這包括大約 54 天的過渡庫存，以支持晶圓廠轉型和碳化矽產能提升。不包括這些戰略構建，我們的基礎庫存環比下降了 7 天。

We continue to proactively manage distribution inventory. Distribution inventory increased $20 million sequentially with weeks of inventory at 7.7 weeks in Q2 versus 7 weeks in Q1. Total debt remained flat at $3.5 billion and net leverage is 0.27. Let me now provide you key elements of our non-GAAP guidance for the third quarter.

我們繼續主動管理分銷庫存。分銷庫存連續增加 2000 萬美元，第二季度庫存週數為 7.7 週，而第一季度為 7 週。總債務保持在 35 億美元不變，淨槓桿率為 0.27。現在讓我向您提供第三季度非公認會計原則指導的關鍵要素。

A table detailing our GAAP and non-GAAP guidance is provided in the press release related to our second quarter results. Our business continues to strengthen with improved visibility, and we expect to recognize approximately $6.4 billion of committed revenue from our LTSAs over the next 12 months in addition to our noncancelable and nonreturnable orders. Given the soft macro environment, we are taking a cautious stance in our guidance. We anticipate Q3 revenue will be in the range of $2.095 billion to $2.195 billion. We expect Automotive and Industrial to increase quarter-over-quarter with other markets down mid- to high single digits as we plan further exits in our noncore markets. We expect non-GAAP gross margin to be between 46% and 48% due to lower factory utilization, EFK headwinds and the dilutive impact of silicon carbide, which remains ahead of plan. This also includes share-based compensation of $4.4 million.

與我們第二季度業績相關的新聞稿中提供了詳細說明我們的 GAAP 和非 GAAP 指導的表格。我們的業務隨著可見性的提高而不斷增強，除了不可取消和不可退回的訂單外，我們預計在未來 12 個月內將從我們的 LTSA 中確認約 64 億美元的承諾收入。鑑於宏觀環境疲軟，我們對指引採取謹慎立場。我們預計第三季度營收將在 20.95 億美元至 21.95 億美元之間。隨著我們計劃進一步退出非核心市場，我們預計汽車和工業市場將環比增長，而其他市場將出現中高個位數的下降。由於工廠利用率下降、EFK 不利因素以及碳化矽的攤薄影響（仍提前於計劃），我們預計非 GAAP 毛利率將在 46% 至 48% 之間。這還包括 440 萬美元的股權激勵。

As we have previously stated, 2023 will be a transition year for our gross margins, and we expect to maintain our trajectory as we manage these temporary headwinds. We expect non-GAAP operating expenses of $300 million to $315 million, including share-based compensation of $29 million. We anticipate our non-GAAP [OIE] will be negligible for the quarter. We expect our non-GAAP tax rate to be in the range of 15.5% to 16.5% and our non-GAAP diluted share count for the third quarter is expected to be approximately 439 million shares. This results in non-GAAP earnings per share to be in the range of $1.27 to $1.41. We expect capital expenditures of $440 million to $480 million, primarily in brownfield investments in silicon carbide and EFK.

正如我們之前所說，2023 年將是我們毛利率的過渡年，我們預計在應對這些暫時的不利因素時能夠保持我們的毛利率軌跡。我們預計非 GAAP 運營費用為 3 億至 3.15 億美元，其中包括 2900 萬美元的股權激勵。我們預計本季度的非公認會計原則 [OIE] 將可以忽略不計。我們預計我們的非 GAAP 稅率將在 15.5% 至 16.5% 之間，我們第三季度的非 GAAP 稀釋後股數預計約為 4.39 億股。這導致非 GAAP 每股收益在 1.27 美元至 1.41 美元之間。我們預計資本支出為 4.4 億至 4.8 億美元，主要用於碳化矽和 EFK 的棕地投資。

To wrap up, the structural changes we've been implementing since the start of our transformation have improved the resiliency of our business and enabled us to better navigate the soft market environment. We have delivered another quarter with results above expectations, reinforcing that consistent, reliable execution is our path forward to achieving our long-term model. We have reduced the volatility in our financials and held to our commitments while navigating short-term market dynamics, and we plan to continue to deliver for our shareholders 1 quarter at a time. With that, I'd like to turn the call back over to Liz to open for questions.

總而言之，自轉型開始以來我們一直在實施的結構性變革提高了我們業務的彈性，使我們能夠更好地應對疲軟的市場環境。我們又一個季度的業績超出了預期，強化了一致、可靠的執行是我們實現長期模式的道路。我們減少了財務波動，並在應對短期市場動態的同時恪守了我們的承諾，我們計劃繼續為股東提供一個季度的回報。至此，我想將電話轉回給莉茲，以供大家提問。

(Operator Instructions) Our first question comes from the line of Chris Danely with Citi.

（操作員說明）我們的第一個問題來自花旗銀行的 Chris Danely。

Guys, my first question is just on the overall cycle, Hassane. How would you compare taking silicon carbide out, just pure semis now versus 3 months ago. Would you say it's gotten a little better, a little worse? Any comments on visibility and just the overall semi cycle now versus last quarter at this point?

伙計們，我的第一個問題是關於整個週期的，哈桑。您如何比較現在取出碳化矽（僅使用純半成品）與三個月前的情況。你說是好一點還是壞一點？目前與上季度相比，對可見性以及整個半週期有什麼評論嗎？

Yes. I mean I'll tell you Auto and Industrial remains healthy. Even if you take out silicon carbide, that business is up. And that's really the way we position those -- both of these businesses in a lot of the mega trends that are underlying it with the EV and energy infrastructure. So when you put both of those, without silicon carbide, that's also supporting growth in general for our, what I would call, the silicon business. So strength in these markets is sustained.

是的。我的意思是我會告訴你汽車和工業仍然健康。即使你把碳化矽拿出來，那生意也做起來了。這確實是我們定位這些業務的方式——這兩個業務都處於電動汽車和能源基礎設施背後的許多大趨勢中。因此，當你將這兩者放在一起時，如果沒有碳化矽，這也支持了我們（我稱之為矽業務）的總體增長。因此，這些市場的強勢是持續的。

And how about non-auto and industrial?

那麼非汽車和工業領域又如何呢？

Non-auto and industrial, we'll see it slightly down -- flat slightly down. And that's a lot of our peers that are more exposed to those businesses are seeing and we see the same thing.

非汽車和工業領域，我們會看到它略有下降——持平小幅下降。我們很多接觸這些業務的同行都看到了這一點，我們也看到了同樣的事情。

Yes. And for our non-auto and industrial was up slightly, but as Hassane said, we expect it to be down mid- to high single digits in Q3.

是的。對於我們的非汽車和工業來說，略有增長，但正如哈桑所說，我們預計第三季度將下降中高個位數。

Yes. Great. And for my follow-up, any changes in -- on specific lead times and shortages quarter-over-quarter? Has your lead times gone down, gone up, stayed the same; shortages up, down, stayed the same versus 3 months ago?

是的。偉大的。對於我的後續行動，具體的交貨時間和季度與季度之間的短缺有任何變化嗎？您的交貨時間是縮短、延長還是保持不變？與 3 個月前相比，短缺量上升、下降還是保持不變？

Yes. On the lead times, if you look at our average lead time, it's very consistent quarter-on-quarter. There's been pockets where lead times have decreased, a few pockets where they've increased. But on average, they're relatively flat quarter-on-quarter.

是的。關於交貨時間，如果你看一下我們的平均交貨時間，就會發現季度環比非常一致。有些地區的交貨時間有所縮短，有些地區的交貨時間有所增加。但平均而言，季度環比相對持平。

Our next question comes from the line of Vivek Arya with Bank of America.

我們的下一個問題來自 Vivek Arya 與美國銀行的聯繫。

This is Blake Friedman on for Vivek Arya. So first, I just want to start off with that ON Semi has signed a number of silicon carbide LTSAs. So I was hoping you could provide the mix of autos versus non-autos? And then looking further into the industrial market, your growth is up 5% year-on-year, which is certainly well above other peers down 10% to 20%. I know silicon carbide is a partial contributor, but I was hoping you can describe maybe what you're seeing versus what peers aren't?

我是維韋克·艾莉亞 (Vivek Arya) 的布萊克·弗里德曼 (Blake Friedman)。首先，我想先說一下安森美半導體已經簽署了許多碳化矽長期協議。所以我希望你能提供汽車與非汽車的組合？再進一步看工業市場，你們的增長同比增長了5%，這肯定遠高於其他同行下降10%到20%的水平。我知道碳化矽是部分貢獻者，但我希望您能描述一下您所看到的與同行沒有看到的？

Yes. A couple of things. On the silicon carbide, it's still within the same mix we've talked about before. About 90% is auto, about 10% is industrial. The LTSA that we talked about in Industrial are the $1.95 billion, that's for the whole market. So that includes silicon and silicon carbide or IGBT because we talked about the hybrid modules, we're able to provide, that's driving that $1.95 billion. On the industrial side, specifically, what really breaks us apart is the fact that we are extremely focused on the growth markets within industrial.

是的。有幾件事。在碳化矽方面，它仍然屬於我們之前討論過的相同混合物。大約90%是汽車，大約10%是工業。我們在工業領域談到的 LTSA 是 19.5 億美元，這是針對整個市場的。這包括矽和碳化矽或 IGBT，因為我們談到了我們能夠提供的混合模塊，這推動了 19.5 億美元的增長。具體而言，在工業方面，真正讓我們與眾不同的是我們極其關注工業領域的增長市場。

We talked about energy infrastructure, which includes renewable and includes charging all of that, that is driven -- those are mega trends underlying the industrial and in my prepared remarks, I talked about our focus on the medical side of the business, which is also under the Industrial. And that's seen its own transformation from the hearing aids going over-to-counter to CGM being part of the reimbursement scenarios.

我們討論了能源基礎設施，其中包括可再生能源，包括所有這些驅動的充電——這些是工業背後的大趨勢，在我準備好的發言中，我談到了我們對業務醫療方面的關注，這也是在工業下。這使得助聽器從櫃檯櫃檯到連續動態監測（CGM）的轉變成為報銷方案的一部分。

All of these are driving underlying growth, but they're very specific to where we have chosen to put our strategy from a company perspective, that's where our investments have been and the growth is coming specifically. So that's the reason I can pinpoint exactly what is specific to ON Semi versus the general peers.

所有這些都在推動潛在的增長，但它們非常具體於我們從公司角度選擇實施戰略的地方，這就是我們的投資和增長的具體方向。這就是為什麼我可以準確地指出安森美半導體與一般同行相比的具體特點。

Got it. And then as a follow-up, I was just hoping you can provide an update on the progress of in-sourcing silicon carbide substrates and your time line to be fully in-sourced. And I understand the strategy has been focusing on brownfield investments, but with industry silicon carbide supply expected to trail demand for the foreseeable future, would management ever consider building its own greenfield facility down the road?

知道了。然後，作為後續行動，我只是希望您能提供有關內購碳化矽襯底的最新進展以及完全內購的時間表。據我所知，該戰略一直專注於棕地投資，但在可預見的未來，工業碳化矽供應預計將落後於需求，管理層是否會考慮在未來建立自己的綠地設施？

So I'll answer both of these separately. So the progress is still on track. I reiterated the fact that we're going to be exiting this year with majority coming internally. So we're still on track. That business is actually -- that operation is actually performing better than we expected. So high confidence in our commitment that we've made about 6 to 9 months ago. So we're going to exit this year with majority internal.

那麼我就分別回答這兩個問題。所以進展仍然在正軌上。我重申了這樣一個事實，即我們今年將退出，其中大部分來自內部。所以我們仍然在正軌上。該業務實際上——該業務的表現實際上比我們預期的要好。我們對 6 至 9 個月前做出的承諾充滿信心。因此，我們今年將退出，其中大部分是內部人員。

As far as brownfield, greenfield, we have a lot of runway with the brownfield. We have a great fab and back-end exposure. And what we're doing is we're going to utilize it. We don't see that needing to go to greenfield at any time in the future. Of course, that's dependent on business and economic sense.

就棕地、綠地而言，我們有很多跑道與棕地。我們擁有很棒的晶圓廠和後端曝光。我們正在做的就是利用它。我們認為未來任何時候都不需要去綠地。當然，這取決於商業和經濟意識。

Right now, with all the wins that we have disclosed, those are -- we are able to support those with brownfield, specifically as we embark on our Fab Right strategy that Thad described in our Analyst Day. That's going to be supporting all the LTSAs that we've disclosed. And look, if business is even better than what we are talking about today, and we have to go to greenfield, then that's a really good reason to do it. But for now, brownfield is the path and we're able to support it. And that really highlights the good ROIC that we've been able to deliver.

現在，憑藉我們所披露的所有勝利，我們能夠支持那些擁有棕地的人，特別是當我們開始實施泰德在分析師日中描述的 Fab Right 戰略時。這將支持我們已披露的所有 LTSA。看，如果業務比我們今天談論的更好，並且我們必須去綠地，那麼這就是這樣做的一個很好的理由。但就目前而言，棕地是一條道路，我們能夠支持它。這確實凸顯了我們能夠提供的良好投資回報率。

Our next question comes from the line of Harsh Kumar with Piper Sandler.

我們的下一個問題來自 Harsh Kumar 和 Piper Sandler 的對話。

Guys, can you hear me okay?

伙計們，你能聽到我說話嗎？

Yes?

是的？

Okay. First all, congratulations. This is yet another fantastic quarter and guide from you guys. So congratulations. And I had 2 questions, Hassane. I'm seeing a little bit of a change in your business. I used to see sort of transactional business in silicon carbide. You get orders, you get customers, but now we're seeing really large orders, really large customers, multiyear, multibillion-dollar deals. Is this happening because of the competitive environment more recently? Or is this happening because you are much more comfortable taking on these orders? And if so, why are you more comfortable taking on these kind of orders? And then I know you've said that you never want to sell wafers, but I just want to clarify, are these orders strictly all 100% chips? Or is there a portion of wafers you're involved as well? And then I've got a follow-up.

好的。首先，恭喜。這是又一個精彩的季度，也是你們的指導。所以恭喜你。我有兩個問題，哈桑。我發現你們的業務發生了一些變化。我曾經看到過碳化矽的交易業務。你得到了訂單，你得到了客戶，但現在我們看到了非常大的訂單、非常大的客戶、多年的、數十億美元的交易。出現這種情況是因為最近的競爭環境嗎？或者發生這種情況是因為您更願意接受這些訂單？如果是這樣，為什麼您更願意接受此類訂單？然後我知道你說過你永遠不想出售晶圓，但我只是想澄清一下，這些訂單嚴格來說都是100%芯片嗎？或者您也參與了部分晶圓的製作嗎？然後我有一個後續行動。

Yes. So let me answer the latter part because that's straight forward. We're still not interested in selling what we call substrates. We're not in the business of substrate. Our focus on the substrate manufacturing is for internal consumption. That has not changed. And look, the demand that we've been talking about utilizes all of our substrate operations. So we're increasing that capacity in tandem just ahead of our revenue or the ramp from our customers. That remains unchanged, and that remains our focus.

是的。所以讓我回答後一部分，因為這很簡單。我們仍然對銷售所謂的基材不感興趣。我們不從事基材業務。我們對基材製造的關注點是用於內部消耗。這一點沒有改變。看，我們一直在談論的需求利用了我們所有的基材業務。因此，我們在收入或客戶增加之前同步增加產能。這一點沒有改變，仍然是我們的重點。

And, look, that operation is performing ahead of plan. So I'm very, very satisfied with what the team has done there. As far as the strategic engagements with the customer, it's not our -- it's not only our willingness to take that business on. We've always been willing, and we've talked very confidently about our capabilities and what we have been ramping. What is changing is if you think about the landscape, we have -- we are the only 1 that's scaled very quickly and is a silicon carbide supplier at scale.

而且，看，該操作正在提前進行。所以我對團隊在那裡所做的事情非常非常滿意。就與客戶的戰略合作而言，這不是我們的問題——這不僅僅是我們願意承擔這項業務的問題。我們一直願意，並且非常自信地談論我們的能力和我們一直在努力的事情。正在發生的變化是，如果你考慮一下形勢，就會發現我們是唯一一家擴張速度非常快的公司，並且是一家規模化的碳化矽供應商。

And that is now very, very clear to our customers and their customers, whether it's Tier 1 or an OEM and that ability to scale and really deliver exactly on our commitments to all the customers who had LTSAs with us have gotten what they want, no hiccups in ramp, no hiccups in technology, no hiccups in expansion. So they're coming back and expanding those agreements because they're winning more business with our products and they want to secure more of their future. So it's a win-win, really. And it's how you want it to be.

現在，我們的客戶和他們的客戶都非常清楚這一點，無論是一級供應商還是 OEM，以及能夠擴展並真正兌現我們對所有擁有 LTSA 的客戶的承諾，他們已經得到了他們想要的，不坡道上不會出現問題，技術上不會出現問題，擴張也會出現問題。因此，他們回來並擴大了這些協議，因為他們正在通過我們的產品贏得更多業務，並且他們希望確保更多的未來。所以這確實是雙贏。這就是您想要的樣子。

Fantastic. And for my follow-up, I know investors always look forward and kind of want you to deliver on the next thing. So the question is that 8-inch wafers. We hear a lot from investors about the cost disruption that, that might bring, supposedly lower costs. Curious if your customers bring this up with you at all at this point in time, and then I know you have plans for 8-inch wafers. Maybe you could update us on those while you're at it.

極好的。對於我的後續行動，我知道投資者總是期待並希望你能夠實現下一步的目標。那麼問題就出在8英寸晶圓上。我們從投資者那裡聽到很多關於成本擾亂的消息，這可能會帶來成本降低。很好奇您的客戶是否在此時向您提出這個問題，然後我知道您有 8 英寸晶圓的計劃。也許您可以在這期間向我們通報最新情況。

And then Hassane, I also had a clarification on your previous question. Are you shooting for more than 50% internal by the end of the year for silicon carbide or the vast majority?

然後哈桑，我也對你之前的問題進行了澄清。您的目標是在今年年底前實現超過 50% 的內部碳化矽還是絕大多數？

We're -- okay. The latter one, we are expecting over 50% by the end of the year, but that's not what the goal is. The goal is above that, and we'll reach that in 2024. So we're going to exit above 50% this year. And we're going to keep going into 2024, and we'll update you on kind of where we see that depending on the market and the dynamic there.

我們——好吧。對於後者，我們預計到今年年底會超過 50%，但這不是目標。我們的目標高於此，我們將在 2024 年實現這一目標。因此，我們今年的退出率將超過 50%。我們將繼續進入 2024 年，我們將根據市場和動態向您通報我們的最新情況。

The first part of the question...

問題的第一部分...

8-inch...

8寸...

8-inch. So we're still consistent and on track with what I've described in the past. We are running 8-inch currently. We are running it for what we -- what I call building the baseline, baseline yield, baseline, all of that. So we're -- we have been producing 8-inch wafers in order to kind of flush out all of the manufacturing. So when we go to ramp, we are able to ramp as fast and as successfully as we have done in 6-inch.

8英寸。因此，我們仍然與我過去所描述的保持一致併步入正軌。我們目前正在運行 8 英寸。我們運行它是為了我們——我所說的建立基線、基線產量、基線，所有這些。所以我們一直在生產 8 英寸晶圓，以便淘汰所有的製造過程。因此，當我們進入斜坡時，我們能夠像 6 英寸那樣快速、成功地斜坡。

So our customers don't ask for that. What our customers care for is delivering the cost structure to be competitive, delivering the capacity to be able to ramp and be in there when they need to ramp. We're able to deliver on all of these commitments, both on 6-inch today and 8-inch moving forward. Our customers looked and audited our manufacturing capabilities on site. They feel as comfortable as we are and look -- and you see it with when somebody signs a 10-year LTSA, you know it's got 8-inch in it. And that's the confidence that they have in our business that we're able to deliver.

所以我們的客戶不會提出這樣的要求。我們的客戶關心的是提供具有競爭力的成本結構，提供能夠提升的能力並在需要時提供支持。我們能夠兌現所有這些承諾，無論是現在的 6 英寸還是未來的 8 英寸。我們的客戶現場查看並審核了我們的製造能力。他們感覺和我們一樣舒適，看起來也一樣——當有人簽署 10 年期 LTSA 時，你就會知道裡面有 8 英寸。這就是他們對我們能夠提供的業務的信心。

Our next question comes from the line of Gary Mobley with Wells Fargo.

我們的下一個問題來自富國銀行的加里·莫布里 (Gary Mobley)。

Guys, can you hear me?

伙計們，你能聽到我說話嗎？

Yes.

是的。

Yes.

是的。

We're cutting out here at the end of the introduction, I apologize. I appreciate the fact that you're probably going to increase your silicon carbide revenue for fivefold this year. Then maybe if you can speak to a preliminary view for fiscal year '24 considering supply constraints. It sounds like you're not demand constrained, but maybe focusing primarily on the supply side?

我們在介紹結束時剪掉了這裡，我很抱歉。我很高興您今年的碳化矽收入可能會增加五倍。那麼考慮到供應限制，您也許可以談談對 24 財年的初步看法。聽起來您並不受需求限制，但也許主要關注供應方面？

Yes. We're not going to guide for 2024, but you can basically, when we get to Q4, you can take the exit rate, which is going to be healthy and then project forward. But we're not projecting into 2024, it will be substantially higher.

是的。我們不會為 2024 年提供指導，但基本上，當我們進入第四季度時，您可以採用退出率，這將是健康的，然後進行預測。但我們並沒有預測到 2024 年，這一數字將會大幅提高。

Okay. And maybe if you can give us an update on any sort of government subsidies, chipset funding, equivalents, elsewhere, specific to the silicon side of the business. And then as well, silicon carbide, I understand there really weren't a chip support for silicon carbide, but I think you had an opportunity to comment on that. Maybe if you can give us an update on where that stands?

好的。也許您可以向我們提供有關任何類型的政府補貼、芯片組資金、其他方面的等價物的最新信息，特別是針對芯片業務的方面。然後，碳化矽，我知道確實沒有碳化矽的芯片支持，但我認為您有機會對此發表評論。也許您能給我們提供最新情況嗎？

Yes. Look, we're engaged in all parties, not just in the U.S., but of course, in Europe, and we have a big operation in Korea, which has their own or variant of The CHIPS Act. So we're engaged in all 3. We've announced a $2 billion investment for an end-to-end silicon carbide manufacturing, which will be the only 1 in the world really from substrates all the way to wafers on the same site.

是的。看，我們參與了所有各方的活動，不僅在美國，當然也在歐洲，而且我們在韓國有一個大型業務，韓國有自己的 CHIPS 法案或變體。因此，我們正在參與這三項工作。我們已宣布投資 20 億美元進行端到端碳化矽製造，這將是世界上唯一真正在同一地點實現從襯底一直到晶圓的製造。

And we're considering all 3 of these regions because we have brownfield capabilities in all 3 of these regions. We talked about a decision made between now and the end of the year of where it's going to be. And part of the decision is -- well, the main decision is purely economic and financial. Therefore, the funding from the government plays a big role in swinging it 1 way or another for depending on which site we're in the process and the discussions of all of these, but that 1 is specifically related to silicon carbide to comment on your question.

我們正在考慮所有這三個地區，因為我們在這三個地區都擁有棕地能力。我們討論了從現在到年底之間做出的決定。部分決定是——嗯，主要決定純粹是經濟和金融方面的。因此，政府的資金在以一種或另一種方式搖擺方面發揮著重要作用，具體取決於我們處於哪個站點以及所有這些的討論，但是 1 特別與碳化矽相關，以評論您的問題。

As far as in general, we have made comments on silicon carbide, specifically in The CHIPS Act, but that's really up to them to what they do with it, and that's part of our decision-making progress. We're going to go where it makes sense to get the best ROIC for our investments, and that's how we create shareholder value. That remains the top of our priority, and we're going to make that decision between now and end of the year of where it goes.

總的來說，我們已經對碳化矽做出了評論，特別是在《CHIPS 法案》中，但這實際上取決於他們如何處理碳化矽，這是我們決策進展的一部分。我們將去那些有意義的地方，為我們的投資獲得最佳的投資回報率，這就是我們創造股東價值的方式。這仍然是我們的首要任務，我們將在現在到年底之間做出決定。

Our next question comes from the line of Christopher Rolland with Susquehanna.

我們的下一個問題來自克里斯托弗·羅蘭與薩斯奎哈納的對話。

Thanks for the question and great quarter. So my question is around your strategy, your thinking around co-investment on SiC. Some of your competitors are looking for $1 billion almost financing through these commitments. I know you did well with like Vitesco and Magna here for smaller amounts. But I'm really wondering about the strategy here. Are they investing in new capacity? Are -- what are they getting out of this? Are they getting a haircut on wafers? Or is it just dedicated capacity? And how are you thinking about this? And the amount you want to take in overall from your customers as well to help finance this?

感謝您的提問和精彩的季度。所以我的問題是圍繞你們的戰略以及你們對 SiC 聯合投資的思考。您的一些競爭對手正在通過這些承諾尋求近 10 億美元的融資。我知道你們與維特斯科（Vitesco）和麥格納（Magna）等公司的合作規模較小，做得很好。但我真的很想知道這裡的策略。他們是否投資新產能？他們能從中得到什麼？他們正在對威化餅進行理髮嗎？或者只是專用容量？您對此有何看法？您希望從客戶那裡獲得多少資金來幫助籌集資金？

Yes. Look, I will start at a very high level. One, what differentiate ON Semi? We can afford our own investments because of the cash flow from operations. So we're not looking at funding as a way to help us grow the business and help us build capacity. You look at our balance sheet, you look at our cash position and you look at the cash from operations, and our CapEx investments, all of them are able to be supported by our operations.

是的。聽著，我將從一個非常高的水平開始。一、ON Semi有何區別？由於運營現金流，我們可以負擔得起自己的投資。因此，我們並不將融資視為幫助我們發展業務和建設能力的一種方式。你看看我們的資產負債表，你看看我們的現金狀況，你看看我們的運營現金，以及我們的資本支出投資，所有這些都能夠得到我們運營的支持。

So a very different financial posture when it comes to capacity expansion. Where it comes strategically from a customer is really, it's a win-win. It's the commitment. There is no higher commitment on an LTSA than one where the customer co-invest with us. And that co-investments have multiple scenarios with it, depending on the customer and what problem or what opportunity they look for.

因此，在產能擴張方面，財務狀況截然不同。如果它來自於客戶的戰略，這確實是雙贏的。這是承諾。對於 LTSA 來說，沒有比客戶與我們共同投資的承諾更高的承諾了。聯合投資有多種場景，具體取決於客戶以及他們尋找的問題或機會。

So it's not a haircut. It's -- basically, it's an offset of depreciation. It doesn't change our cost structure for the value that we provide. It just offsets depreciation, whether it's depreciation on our book or their book based on the ownership of the equipment and how we apply that investment. And again, those are strategic in nature, which means everyone is specific to what that specific customer is trying to solve for and we work constructively with all of these customers. But it is not a -- we must get that money for us to ramp.

所以這不是理髮。基本上，這是折舊的抵消。它不會改變我們提供的價值的成本結構。它只是抵消折舊，無論是我們賬簿上的折舊還是他們賬簿上基於設備所有權以及我們如何應用該投資的折舊。再說一次，這些本質上是戰略性的，這意味著每個人都針對特定客戶想要解決的問題，並且我們與所有這些客戶進行建設性的合作。但這不是——我們必須獲得這筆資金才能擴大規模。

This is a -- we are able to ramp and those are strategic investments. So it's a very different field we're playing in. And the reason for the delta in dollars that you see is, again, goes back to brownfield versus greenfield. We're investing in brownfield, which Thad at Analyst Day talked about a 40% better CapEx than a greenfield. So that gives you kind of the delta why we're able to ramp so quickly much higher in output for much lower cost.

這是——我們能夠擴大規模，這些都是戰略投資。因此，我們正在參與一個非常不同的領域。您所看到的美元增量的原因又可以追溯到棕地與綠地的對比。我們正在投資棕地，泰德在分析師日談到，其資本支出比綠地高 40%。這讓您了解了為什麼我們能夠如此快速地以更低的成本提高產量。

Yes. We definitely understand the efficiencies there. I also wanted to talk about solar. I wasn't expecting $2 billion in LTSAs from solar, which is, I believe, part of industrial. Are you expecting industrial SiC now to ramp faster? And then just as a follow-on there, just talking about gross margins for SiC overall. You said they doubled first profitable quarter. Talk about this progression? Is this all moving faster than you would expect? And is it in part because of these industrial as a percentage of SIC as well?

是的。我們絕對了解那裡的效率。我還想談談太陽能。我沒想到太陽能會帶來 20 億美元的 LTSA，我相信太陽能是工業的一部分。您是否預計工業碳化矽現在會加速增長？接下來，我們只討論 SiC 的整體毛利率。你說他們第一個盈利季度翻了一番。談談這個進展？這一切進展得比你想像的要快嗎？部分原因是這些工業佔 SIC 的比例嗎？

Yes. So on the revenue ramp for Industrial, specifically on the energy infrastructure, the $1.95 billion is both silicon and silicon carbide. Remember that market is being serviced by a very unique value proposition we have. Simon talked about at the Analyst Day, the hybrid module, where we're able to put the best technology required into a single module to provide those customers. So that $1.95 billion is on both power technologies, IGBT or silicon and silicon carbide.

是的。因此，在工業收入增長方面，特別是在能源基礎設施方面，19.5 億美元都是矽和碳化矽。請記住，我們擁有非常獨特的價值主張來服務市場。西蒙在分析師日上談到了混合模塊，我們能夠將所需的最佳技術放入單個模塊中來為這些客戶提供服務。因此，這 19.5 億美元用於電力技術、IGBT 或矽和碳化矽。

As far as the ramp, look, they'll be ramping in tandem together. But the automotive number, given the TAM in automotive, we'll just ramp up to a higher number. But as far as percent ramp, they're both going to be a ramp. And if you recall, last year, we talked about how that business ramps 70% growth for the last 2 years. So it's pretty healthy growth. But from a dollar, of course, it's going to trail the automotive purely because of the TAM of the market that we're addressing. But both growth, both CAGR are very healthy and will remain healthy over the next 5 years as we execute those LTSAs.

就坡道而言，看，它們將一起同步坡道。但汽車行業的數字，考慮到汽車領域的 TAM，我們只會增加到更高的數字。但就百分比而言，它們都將是一個斜坡。如果您還記得，去年我們討論過該業務如何在過去 2 年內實現 70% 的增長。所以這是相當健康的增長。但當然，從一美元來看，它會落後於汽車，純粹是因為我們正在解決的市場的 TAM。但兩者的增長、複合年增長率都非常健康，並且在我們執行這些 LTSA 的過程中將在未來 5 年內保持健康。

Yes. And on the performance -- the financial performance of the silicon carbide business, look, we're extremely proud of what the team has accomplished there, doubling gross margins quarter-over-quarter. Achieving the first profitable quarter, again, on a fully loaded basis. And operating margins in the high teen percentage is very impressive for the performance there. What I would tell you is we have line of sight to that. It's ahead of schedule because we are ramping well. And on all metrics, we're ahead of plan.

是的。在業績方面——碳化矽業務的財務業績，我們對團隊所取得的成就感到非常自豪，毛利率比上一季度翻了一番。再次在滿載的基礎上實現第一個盈利季度。較高的營業利潤率對於那裡的業績來說非常令人印象深刻。我要告訴你的是我們已經看到了這一點。這比計劃提前了，因為我們進展順利。在所有指標上，我們都領先於計劃。

So -- although we have line of sight to profitability, we've achieved it quicker than what we was in our original plan. So I think as we go forward, we'll continue to see that expansion. And as revenue grows, that will continue to contribute to the bottom line.

因此，儘管我們的目標是實現盈利，但我們實現這一目標的速度比我們最初的計劃要快。所以我認為，隨著我們的前進，我們將繼續看到這種擴張。隨著收入的增長，這將繼續為利潤做出貢獻。

Our next question comes from the line of Joshua Buchalter with TD Cowen.

我們的下一個問題來自 Joshua Buchalter 和 TD Cowen 的對話。

I did want to follow up on the last one. So you mentioned in the prepared remarks, I think it's high-teens operating margin for silicon carbide. Any way to disaggregate the levels, internal substrates versus external and should we expect, as you ramp internal substrates over the coming quarters, should that continue to move higher? Because I would imagine, at least initially, it would be -- it could be a headwind to margins.

我確實想跟進最後一件事。所以你在準備好的評論中提到，我認為碳化矽的營業利潤率很高。有什麼方法可以分解內部基質與外部基質的水平，我們是否應該預期，隨著您在未來幾個季度增加內部基質，該水平是否應該繼續走高？因為我想像，至少在最初，這可能會成為利潤率的阻力。

Yes. Look, we're not breaking up as what it is. You can take it as an aggregate, totally mix adjusted is what the number is. And it's going to keep going up, of course, as that business absorbs the start-up costs because look, there's still start-up costs in that business. So as we scale that business, start-up costs will be more absorption, and that is how we will be continuously improving the gross margin trajectory, which consequently will improve the operating margin.

是的。聽著，我們並沒有像現在這樣分手。你可以把它當作一個總量，完全混合調整後的就是這個數字。當然，隨著該業務吸收啟動成本，它會繼續上升，因為看起來該業務仍然存在啟動成本。因此，當我們擴大業務規模時，啟動成本將被更多地吸收，這就是我們不斷改善毛利率軌蹟的方式，從而提高營業利潤率。

So that financial milestone that we have achieved is not the destination. It's just a milestone. We have always had line of sight to it, like Thad said. We achieved it earlier than we expected, but the ramp or the, call it, the slope of that improvement will just continue from here, and we'll continue to improve on all financial metrics as that business scales and as that mix changes.

因此，我們所實現的財務里程碑並不是目的地。這只是一個里程碑。正如薩德所說，​​我們一直都能看到它。我們比預期更早地實現了這一目標，但這種改進的斜坡或所謂的斜率將從這裡繼續下去，隨著業務規模的擴大和組合的變化，我們將繼續改進所有財務指標。

Got it. I'm going to try to ask a question that involves the other 80% of your business now. East Fishkill headwinds for 2 quarters in a row have come in higher than anticipated. Can you walk us through just what's going on there? Why are they higher for longer? And should we expect it to sort of trough in the beginning part of 2024? Is that the right time frame?

知道了。我現在要嘗試問一個涉及您另外 80% 業務的問題。東菲什基爾的逆風連續兩個季度高於預期。您能向我們介紹一下那裡發生了什麼嗎？為什麼它們會持續更長的時間？我們是否應該預期它會在 2024 年初陷入低谷？這是正確的時間範圍嗎？

Yes. I think if you go back to what we disclosed and what we announced last quarter, it's very consistent, right? We got a surprise in the cost structure there. We've now been spending 6 months really getting our arms around it and understanding what we need to get that cost structure back in line. Look, we've got a large manufacturing footprint. We know how to run fabs efficiently. We benchmark. We know exactly what we need to do. As I say, this is like locking and tackling of what we need to do to take the cost structure out, but it takes time. it's hard to take costs out when you're running a fab at full capacity.

是的。我認為，如果你回顧一下我們披露的內容和我們上季度宣布的內容，就會發現它們非常一致，對吧？我們對那裡的成本結構感到驚訝。我們現在已經花了 6 個月的時間來真正解決這個問題，並了解我們需要什麼才能使成本結構恢復正常。看，我們有很大的製造足跡。我們知道如何高效運營晶圓廠。我們進行基準測試。我們清楚地知道我們需要做什麼。正如我所說，這就像鎖定和解決我們需要做的事情以消除成本結構，但這需要時間。當晶圓廠滿負荷運行時，很難降低成本。

So the time horizon is a little bit longer than we expected. It will be for the next several quarters. I think you can think about this as being probably a year, maybe slightly more than a year of headwind for us as we continue to take the cost out. But we expect, by the time we exit 24, we've got that fab at parity and running efficiently.

所以時間範圍比我們預期的要長一些。這將是未來幾個季度的情況。我想你可以認為這對我們來說可能是一年多一點的逆風，因為我們繼續削減成本。但我們預計，當我們退出 24 時，我們已經讓該工廠處於同等水平並高效運行。

But one thing I would also highlight is, yes, the headwinds are higher than we expected. But to use your words, if you look at all the other operational metrics that we've delivered reflected in the reported gross margin and the guide, we're able to absorb it and then some, given the beat this quarter and the rates for next quarter. So back to Thad's point, we know how to fix this stuff. We've been fixing it for the last 2 years. That's just another thing we're going to work on. We have line of sight, which is going to take time.

但我還要強調的一件事是，是的，阻力比我們預期的要大。但用你的話來說，如果你看看我們在報告的毛利率和指南中所提供的所有其他運營指標，我們就能夠吸收它，然後考慮到本季度的表現和費率下個季度。回到泰德的觀點，我們知道如何解決這個問題。過去兩年我們一直在修復它。這只是我們要做的另一件事。我們有視線，這需要時間。

But of course, the rest of our business is operating in stellar, including the underutilization that we had to do. So our margin is structurally very different from what it used to be. And that, I can say, I'm very, very comfortable, happy and confident about.

但當然，我們的其餘業務都在出色地運營，包括我們不得不做的未充分利用的事情。因此，我們的利潤率在結構上與以前有很大不同。我可以說，我對此感到非常非常舒服、快樂和自信。

Our next question comes from the line of Quinn Bolton with Needham.

我們的下一個問題來自奎因·博爾頓和李約瑟的對話。

Hi, Hassane, and congratulations on the nice results. Thad, I guess I just wanted to see if you could give us a little bit more color on the gross margin. Revenues trending up, sounds like SiC margins are moving higher. So I'm just wondering, are there any particular headwinds in the third quarter for the 40 basis point decline in gross margin at the midpoint?

你好，哈桑，祝賀你取得了不錯的成績。泰德，我想我只是想看看你是否可以給我們更多關於毛利率的信息。收入呈上升趨勢，聽起來碳化矽利潤率正在走高。所以我只是想知道，第三季度毛利率中點下降 40 個基點是否有任何特殊的阻力？

Yes. Look -- so we've got a number of things, right. We just talked about EFK. So clearly, that's a headwind. You've got utilization. Utilization dropped down slightly in Q2 from 71% to 70%. As we look forward, we think about utilization being kind of in that flat to down category. So we may have a little more headwind on that. But the key contributor to that margin stepping down just slightly is the ramp of silicon carbide. So even though the margins have doubled, it's still dilutive to the corporate average. So as revenue increases, you have more of a dilutive impact on Q3. So I would think quarter-over-quarter, really the delta is a little bit more underutilization charge and then this impact of the ramp of silicon carbide.

是的。看——所以我們有很多東西，對吧。我們剛剛談到了 EFK。很明顯，這是一個逆風。你有利用率。第二季度利用率略有下降，從 71% 降至 70%。展望未來，我們認為利用率處於持平到下降的類別。因此，我們在這方面可能會遇到更多阻力。但導致利潤率略有下降的關鍵因素是碳化矽的增長。因此，儘管利潤率翻了一番，但仍會稀釋企業平均水平。因此，隨著收入的增加，對第三季度的稀釋影響會更大。因此，我認為，按季度計算，增量實際上是未充分利用的費用更多一點，然後是碳化矽產量增加的影響。

Great. And just a quick follow-up. Do you expect quarter-to-quarter the SiC margins to improve, understanding they're still below corporate average?

偉大的。只是快速跟進。您預計 SiC 利潤率逐季度會有所改善，因為它們仍低於公司平均水平？

Yes, absolutely.

是的，一點沒錯。

Our next question comes from the line of Timothy Arcuri with UBS.

我們的下一個問題來自瑞銀集團的蒂莫西·阿庫裡 (Timothy Arcuri)。

Do you have any update to the $4.5 billion LTSA from 2023 to 2025 and kind of anything to help us think about what silicon carbide could be next year and into '25?

您對 2023 年至 2025 年 45 億美元的 LTSA 有什麼更新嗎？有什麼可以幫助我們思考明年和 25 世紀碳化矽的情況嗎？

Yes. No, we're not giving an update. Our focus right now is obviously this year, we'll be giving an outlook on 2024 as we get for reporting of the fourth quarter, given the run rate and where we are. Of course, we have the number in LTSAs, but we're not talking about it yet. We're not guiding for it. It will be substantially higher than where it is in 2023, given the LTSAs and the ramp. But right now, we're focusing on the execution in the short term.

是的。不，我們不會提供更新。我們現在的重點顯然是今年，考慮到運行率和我們所處的位置，我們將在第四季度報告中對 2024 年進行展望。當然，我們在 LTSA 中有這個數字，但我們還沒有討論它。我們不會為此提供指導。考慮到 LTSA 和坡道，這一數字將大大高於 2023 年的水平。但現在，我們關注的是短期的執行。

Great. And then, Hassane, how do you think about the captive versus external mix? You did say you're going to be more than 50% this year. But when you sort of lay this out longer term, how do you weigh where you want to take that number to longer term, given some of the investments that some others are making, particularly in China. Is there like an upper range of where you want to push that 75%? Or how do you sort of think about balancing that?

偉大的。然後，哈桑，您如何看待自營與外部混合？你確實說過今年會超過 50%。但當你把這個數字放在更長期的角度時，考慮到其他一些人正在進行的一些投資，特別是在中國，你如何權衡你想把這個數字帶到更長期的方向。您希望將 75% 提高到什麼程度，是否有一個上限？或者您如何考慮平衡這一點？

Yes. Look, there are multiple factors of how we balance it. Our focus is to be able to support our customers. When we have LTSAs and we look at supply resilience and supply assurance, we have to be able to manage the two. We're not going to be -- we don't want to be 100% internal. I've said that in the past. You can think about it 80%, give or take, and that's going to be dependent on, of course, supply assurance, especially as you can't ignore the geopolitical aspect of it when you say sourcing out of China, right? That is not a supply assurance path as we stand today with the geopolitical environment. So that, of course, has to play a role.

是的。看，我們如何平衡它有多種因素。我們的重點是能夠支持我們的客戶。當我們擁有長期安全協議並考慮供應彈性和供應保證時，我們必須能夠管理這兩者。我們不會——我們不想 100% 內部化。我過去曾說過這樣的話。你可以考慮80%，給予或接受，當然，這將取決於供應保證，特別是當你說從中國採購時，你不能忽視它的地緣政治方面，對吧？從我們今天的地緣政治環境來看，這並不是一條供應保證途徑。因此，這當然必鬚髮揮作用。

And more importantly, it's the cost. We have a factory, we have a factory at scale, and we have a factory that is performing very, very well. So for us to want to get supply from the outside, it has to make also economic sense compared to what we are able to do internally. So all of these, we always consider that we always look at what the scenario is going to be. But you can think about it as 80%, give or take, depending all of these factors that I mentioned.

更重要的是，這是成本。我們有一家工廠，我們有一家規模化的工廠，而且我們有一家表現非常非常好的工廠。因此，對於我們來說，想要從外部獲得供應，與我們能夠在內部做的事情相比，它還必須具有經濟意義。所以所有這些，我們總是認為我們總是關注場景將會是什麼。但你可以將其視為 80%，給予或接受，具體取決於我提到的所有這些因素。

Our next question comes from the line of Tore Svanberg with Stifel.

我們的下一個問題來自 Tore Svanberg 和 Stifel。

Yes. This is Jeremy on for Tore. I guess a couple of follow-ups on the earlier questions on the co-investments. Can you help us understand what the mechanics of this are, the impact potentially to gross margins, maybe cash flows? Just wondering how the $40 million or the $250 million co-investment is going to be played out in the financial statements?

是的。這是托雷的傑里米。我想對之前有關聯合投資的問題有一些後續行動。您能否幫助我們了解其機制是什麼，對毛利率（也許是現金流）​​的潛在影響？只是想知道這 4000 萬美元或 2.5 億美元的共同投資將如何在財務報表中體現？

Yes. So as we -- this is Thad. So as we receive the cash from customers, obviously, that goes on the balance sheet. The way that it gets accounted for is it gets amortized over the life of the agreement. So if you think about an LTSA that maybe have 5 to 10 years, you can think about that dollar amount getting amortized over the life as those products are shipped, it actually is recorded through revenue. So actually, it's a bump in margin over that time frame. But you can think about the cash coming in, in advance as we make payments going out, hopefully, it's favorable from a cash flow standpoint. That's the intent that we get cash before we make the commitment to the equipment.

是的。這就是我們——這就是薩德。因此，當我們從客戶那裡收到現金時，顯然，這會出現在資產負債表上。它的計算方式是在協議有效期內攤銷。因此，如果您考慮可能有 5 到 10 年的 LTSA，您可以考慮在這些產品發貨時在生命週期內攤銷的金額，它實際上是通過收入記錄的。所以實際上，在這段時間內，利潤率出現了上升。但你可以在我們付款時提前考慮現金的流入，希望從現金流的角度來看這是有利的。這就是我們在對設備做出承諾之前獲得現金的意圖。

And again, just as a reminder, all of the capacity that we're bringing on is to support these LTSAs on those committed revenue. So we're not building capacity on the hope that we can fill it. So in these situations, as Hassane mentioned earlier, these customers are co-investing for assurance of supply with us. But the accounting works that actually hits the revenue line over time.

再次提醒一下，我們提供的所有能力都是為了支持這些 LTSA 的承諾收入。因此，我們建設能力並不是希望能夠填補它。因此，在這些情況下，正如哈桑之前提到的，這些客戶正在與我們共同投資以保證供應。但隨著時間的推移，會計工作實際上會觸及收入線。

Great. And just a quick follow-up to that. Is the -- so this is like a revenue prepayment. It's not any kind of ownership of the equipment and are there any limitations on -- maybe if it's specific to the equipment, it's not any limitation on to use that for other customers?

偉大的。對此進行快速跟進。這就像收入預付款。這不是設備的任何形式的所有權，是否有任何限制——也許如果它特定於設備，那麼對於其他客戶使用它沒有任何限制？

Yes, every situation is a little bit different. What I just described there is a prepayment rate, if you think about it, a customer deposit. We do have situations where customers will consign product or selling equipment to us. In that situation, it is a little bit different. It's just a lower depreciation off of our books and that sits on their books. But every situation is a little bit different, depending on the customer situation.

是的，每種情況都有點不同。我剛才描述的是預付款率，如果你仔細想想，那就是客戶押金。我們確實存在客戶將產品或銷售設備托運給我們的情況。在那種情況下，情況有點不同。這只是我們賬簿上較低的折舊，而這也存在於他們的賬簿上。但每種情況都略有不同，具體取決於客戶的情況。

Obviously, we want as much flexibility as we can have as we develop these things. So we try not to tie up capacity for 1 customer and have the ability to move our production on any of the lines on any of the locations. So it's designed to have the ultimate flexibility for us.

顯然，我們希望在開發這些東西時擁有盡可能多的靈活性。因此，我們盡量不佔用一位客戶的產能，並且能夠將我們的生產轉移到任何地點的任何生產線上。因此，它的設計目的是為我們提供終極的靈活性。

Great. And 1 last question, if I could. With the slightly different free cash flow results this quarter and the high teens -- and the capital intensity that seems to be consistent with your targets outlined at the Analyst Day, is there any change to that in the very long term, in the 2027 targets? Are you seeing anything in terms of higher costs and also maybe in terms of the ability to achieve the head count you need to ramp this capacity? It seems like that's been the problem with some of the other fab ramp-ups that we're seeing around the world? Is this something that is (inaudible) you guys at this point?

偉大的。最後一個問題，如果可以的話。由於本季度的自由現金流結果略有不同，而且資本強度似乎與分析師日概述的目標一致，從長遠來看，2027 年的目標是否有任何變化？您是否看到了更高的成本以及達到提高產能所需的人員數量的能力？這似乎是我們在世界各地看到的其他一些晶圓廠擴建的問題？你們現在（聽不清）是這樣的嗎？

Yes. No, I don't think we're -- I mean outside the norm, I don't think we're seeing a labor shortage, right? And part of this is leveraging our brownfield investments and brownfield footprint where we have head count. In terms of the capital intensity, no change to the long-term plan. This is more of a short-term. As I said, the free cash flow will go back to positive for the remainder of this year. So it's really just the timing of getting that equipment in as well as the ramping of our strategic inventory to support our fab transitions and our silicon carbide ramp.

是的。不，我不認為我們——我的意思是超出常態，我認為我們沒有看到勞動力短缺，對嗎？其中一部分是利用我們的棕地投資和我們擁有員工的棕地足跡。從資金密集度來看，長期規劃沒有變化。這更多的是短期的。正如我所說，今年剩餘時間內自由現金流將恢復為正值。因此，這實際上只是引進設備的時機以及增加我們的戰略庫存以支持我們的晶圓廠轉型和碳化矽產能的提升。

But longer term, our capital intensity targets all remain the same. We think we'll be in the mid- to high teens for the foreseeable future, but then stepping down over time, as we've outlined previously.

但從長遠來看，我們的資本密集度目標保持不變。我們認為，在可預見的未來，我們的年齡將處於十幾歲左右，但隨著時間的推移，我們的年齡會逐漸下降，正如我們之前概述的那樣。

Our next question comes from the line of William Stein with Truist Securities.

我們的下一個問題來自 Truist Securities 的 William Stein。

Congrats on the great results and outlook. Hassane, at the Analyst Day, you discussed your emerging products in digital power control. I think that is likely related to servers that are focused on AI, maybe you can confirm that understanding and also remind us of your targets and traction towards that?

祝賀取得的巨大成果和前景。 Hassane，在分析師日，您討論了數字電源控制領域的新興產品。我認為這可能與專注於人工智能的服務器有關，也許您可以確認這種理解，並提醒我們您的目標和對此的關注？

Yes. So obviously, part of that focus on what we call, driver and controllers is the server or the cloud infrastructure, which applies definitely to AI. That's the play we have there. But most of it is also targeted towards our primary markets, the Auto and Industrial. With every switch or call it, silicon or silicon carbide switch, we have the opportunity with -- the flywheel effect that Sudhir talked about to increase that content. We're on track there.

是的。顯然，我們所說的驅動程序和控制器的一部分是服務器或云基礎設施，這絕對適用於人工智能。這就是我們那裡演的戲。但其中大部分也針對我們的主要市場，即汽車和工業市場。對於每一個開關，或者稱之為矽或碳化矽開關，我們都有機會利用 Sudhir 談到的飛輪效應來增加該含量。我們正步入正軌。

From a technology perspective, we have already some of the products for internal, I guess, performance. And we will be making progress in sampling come early next year. So very fast progress. It's like what you saw us do in silicon carbide. We're going to -- we decided. We're doubling down. We're starting to run, and we're going to start delivering on that. That's going to be the winning formula for this new business also. So stay tuned for more updates as we get into Q4 or Q1 of '24.

從技術角度來看，我們已經有一些用於內部性能的產品。我們將在明年初的採樣方面取得進展。所以進步非常快。這就像您看到我們在碳化矽中所做的那樣。我們決定——我們決定。我們正在加倍努力。我們正在開始運行，我們將開始兌現這一目標。這也將成為這項新業務的製勝秘訣。因此，當我們進入 24 年第四季度或第一季度時，請繼續關注更多更新。

Great. And then a follow-up, if I can. You've reiterated many of the goals around the ramp of silicon carbide today, but there's 1 I'm not sure. I heard you talk about yet, and that's the margin exiting the year. I think, in the past, you've said it will be neutral to the -- at the enterprise level. Is that ready for an update? Is it possible you could do better than that? Or any reason you're backing off that goal?

偉大的。如果可以的話，然後跟進。您今天重申了有關碳化矽產量增長的許多目標，但有一個我不確定。我聽到你談到了，那就是今年的利潤率。我認為，過去，您曾說過這對於企業層面將是中立的。準備好更新了嗎？你有可能做得更好嗎？或者有什麼理由讓你放棄這個目標？

Will, this is Thad. No, our expectation remains the same. As I was saying earlier, Q3 is the highest dilution impact of silicon carbide just because of the ramp and again, the margins being below the corporate average. We believe by the time we exit the year, we'll have those margins at the corporate average, as we've stated previously.

威爾，這是泰德。不，我們的期望保持不變。正如我之前所說，第三季度碳化矽的稀釋影響最大，因為利潤率再次低於公司平均水平。正如我們之前所說，我們相信，到今年結束時，我們的利潤率將達到公司平均水平。

That concludes today's question-and-answer session. I'd like to turn the call back to Hassane El-Khoury for closing remarks.

今天的問答環節到此結束。我想將電話轉回給 Hassane El-Khoury，讓其致閉幕詞。

Thank you again for joining our call. We plan to continue to put our winning formula to good use with deliberate execution and operational excellence as we continue to navigate the soft market environment. Through it all, we remain committed to delivering value for our shareholders and confident in our long-term outlook of outgrowing the semiconductor market by 3x through 2027. Thank you.

再次感謝您加入我們的通話。我們計劃在繼續應對疲軟的市場環境的同時，繼續通過深思熟慮的執行和卓越的運營，充分利用我們的製勝秘訣。儘管如此，我們仍然致力於為股東創造價值，並對到 2027 年增長超過半導體市場 3 倍的長期前景充滿信心。謝謝。

This concludes today's conference call. Thank you for participating. You may now disconnect.

今天的電話會議到此結束。感謝您的參與。您現在可以斷開連接。