Good morning, ladies and gentlemen, and welcome to the Q4 2020 NXP Semiconductors Earnings Conference Call. At this time, all participants are in a listen-only mode. Later, we will conduct a question-and-answer session, and instructions will follow at that time. [Operator Instructions] As a reminder, this conference call is being recorded. I would now like to turn the conference over to Mr. Jeff Palmer. Please go ahead, sir.

Great. Thank you, Tiffany. Good morning, everyone. Welcome to the NXP Semiconductors' fourth quarter 2020 earnings call. With me on the call today is Kurt Sievers, NXP's President and CEO; and Peter Kelly, our CFO. As Tiffany said, the call is being recorded today and will be available for replay from our corporate website. Today's call will include forward-looking statements that involve risks and uncertainties that could cause NXP's results to differ materially from management's current expectations. These risks and uncertainties include, but are not limited to, statements regarding the continued impact of the COVID-19 pandemic on our business, the macroeconomic impact on the specific end markets in which we operate, the sale of new and existing products and our expectations for the financial results for the first quarter of 2021. Please be reminded that NXP undertakes no obligation to revise or update publicly any forward-looking statements. For a full disclosure on forward-looking statements, please refer to our press release. Additionally, we will refer to certain non-GAAP financial measures today which are driven primarily by discrete events that management does not consider to be directly related to NXP's underlying core operating performance. Pursuant to Regulation G, NXP has provided reconciliations of the non-GAAP financial measures to the most directly comparable GAAP measures in our fourth quarter 2020 earnings press release, which will be furnished to the SEC on Form 8-K and is available on NXP's website in the Investor Relations section at nxp.com. Now, I'd like to turn the call over to Kurt.

Yes. Thanks very much, Jeff, and good morning, everyone. We really appreciate you all joining the call this morning. Today, I will review our Q4 and our full-year 2020 performance. I will provide insights on how we view the current supply-demand environment, and I will certainly discuss our guidance for quarter one. Now, let me begin with quarter four. Our results were near the high end of our guidance with the contribution from the Automotive and Mobile markets both meaningfully stronger than planned, and with trends in the Industrial & IoT and communication infrastructure markets in line with our expectations. Taken together, NXP delivered quarter four revenue of $2.5 billion, an increase of 9% year-over-year and $57 million above the midpoint of our guidance range. Our non-GAAP operating margin in quarter four was a strong 30.5%, that is 60 basis points better than the year ago period, and about 80 basis points above the midpoint of our guidance. Our outperformance was thanks to good fall through on strength revenue growth, thanks to early benefits of our improved factory utilization and solid operating expense control. For the full year, revenue was $8.6 billion, a decline of 3% year-over-year. And as 2020 progressed and the initial impacts from the pandemic earlier in the year subsided, our customers began to accelerate orders at a very robust rate which we do anticipate will continue throughout 2021. Our full year non-GAAP operating margin was 25.9%, a 310 basis points decline because of lower revenue reduced factory loadings combined with slightly reduced operating expenses. It is important to note though that throughout the year, we shifted more of our OpEx spend from SG&A towards R&D as we do continue to invest in new and differentiated products, which are definitely in the lifeblood of our long-term growth…

Thank you, Kurt. Good morning to everyone on today's call. As Kurt has already covered the drivers of the revenue during the fourth quarter and provided our revenue outlook for Q1, I'll move on to the financial highlights. Overall, our fourth quarter financial performance was very good. Revenue was near the high end of our guidance range with an improvement of both non-GAAP gross profit and non-GAAP operating profit. I'll first provide full year highlights and then move on to the fourth quarter results. Full year revenue for 2020 was $8.61 billion, down 3% year-on-year. We generated $4.4 billion in non-GAAP gross profit and reported a non-GAAP gross profit margin of 51.1%, down 240 basis points year-on-year because of the significant deceleration of revenue and the associated lower factory utilization during the year. Total non-GAAP operating expenses were $2.17 billion dollars, down $8 million year-on-year. Total non-GAAP operating profit was $2.23 billion and non-GAAP operating margin was 25.9%, down 310 basis points year-on-year. Non-GAAP interest expense was $357 million, cash taxes for ongoing operations were $103 million, and incidental taxes were $45 million with non-controlling interests of $28 million. Stock-based compensation, which is not included in our non-GAAP earnings was $384 million. Full year cash flow highlights include $2.48 billion in cash flow from operations and $388 million in net CapEx investments resulting in $2.09 billion of non-GAAP free cash flow, or a very healthy 24% of revenue. During 2020, we repurchased $627 million of shares and paid cash dividends of $420 million. In total, we returned $1.05 billion to our owners, which was 50% of the total non-GAAP free cash flow generated during the year. Now, moving to the details of the fourth quarter. Total revenue was $2.51 billion, up 9% year-on-year at the high end of our guidance…

[Operator Instructions] Your first question comes from the line of C.J. Muse with Evercore.

Yes, good morning, good afternoon, and thank you for taking the question. I guess, first question, on gross margins, Peter, you talked about the 55% still clearly in play. Curious if you can speak to how utilization will play a role in that, how mix assuming comps recovers through the year? And then, I guess, probably most importantly, how to think about rising input costs and your ability to pass on and whether there is a timing difference there?

So, great questions. Let's talk about Q4 to Q1, first of all. So, Q1, we go from 52.9% to 53.5%. I think, I said last quarter that utilization -- on the utilization rather would impact us about 150 basis points in Q4. So we'd have that level of benefit in Q1. As it turns out, because of these, the need to self-isolate, and instead of again a 150 basis points of improvement from Q4 into Q1, we've only got about 70 basis points. So that 52.9% to 53.5%, the 60 basis points is really made up of three big things C.J. So we pick up 70 basis points from improved factory performance, 20 basis -- sorry from the utilization, 20 basis points from improved factory performance above and beyond what we were expecting, and at about 30 basis points of headwind because of our annual price reductions. So that's from Q4 to Q1. Then if you say, okay, well in Q4, you did 53.5% why aren't you running -- sorry, from 52.9% to 53.5%, why aren't you running 55%. That 150 basis points is really made up from two things. There's about -- in period there is about 50 basis points of underutilization very roughly and about 100 basis points of mix. And the issue in mix really is one of our comm infra business. So our comm infra business in the first half is relatively weak. And auto and mobile are relatively strong. And then we think as we move through the year that -- and as kind of 5G progresses, we'd see an improvement in -- we'd see an improvement in our mix over time. Did I -- and right your other question was about pricing, right. So pricing is really mixed, okay. So we're seeing some suppliers trying to put up the prices to us. But we'd -- in the same way that we have long-term contracts with our customers, we have similar contracts with many of our suppliers. So it's a bit of a mixed bag really. Having said that, we however seen price increases. And where we have them, we will endeavor to pass those on to our customers. You made an interesting comment actually about how quickly you can do it. So I think what we will actually see is hopefully we'll be able to pass them on pretty quickly, but you could always have a month or two when -- or I guess even a quarter when you can't really pass them on that quickly. So, it's the disturbance rather than a fundamental issue. We would like to say that we don't see the current environment as an opportunity to structurally improve our margins. We are now a commodity business. We don't increase our prices when times are tight and reduce them when times are good, but did I manage to cover everything there? I know there was [indiscernible].

Yes, Peter. Yes. No, that was great. And I guess, Kurt, if I could just follow up with a quick question, considering the supply constraints on the auto side and considering your and NXP's focus are really providing complete solutions, curious about what impact kind of the current supply constrained environment is having on your level of engagement with your automotive customers?

Yes. Hi, C.J. So I think actually and that might sound ironic, but that's not what I mean. It actually improves the engagement because I have probably never spend so much time with our customers as of today. And while certainly this is a challenging moment for everybody in the chain, there is a lot we speak about the future in terms of how do we best deal with this on a go forward basis because everybody recognizes the enormous relevance of semiconductors in building cars. So thinking about trends, thinking about aligning forecasts on a more mature basis is definitely a positive result out of this. So, I don't think this is a negative. I think, it is actually something we as an industry altogether are learning from how to avoid these things from happening in the future. And the way to do this is just a much closer collaboration than we've had along the chain. And what I mean is really not only with our Tier 1 customers, but also with the OEMs directly. And that is obviously great for innovation at the same time.

Very helpful. Thank you.

Your next question comes from the line of Stacy Rasgon with Bernstein Research.

Hi, guys. Thanks for taking my questions. So my first question, I wanted to ask about the trajectory for the year. I mean, like normally Q1 is the trough of the year, usually down, well, I don't know, 7% or 8% sequentially from Q4 to Q1, you're obviously up a little bit this time. Given your commentary on sort of like sustained demand through the year, do you still see Q1 potentially is the trough?

Hi, Stacey. First of all, you are hinting to seasonality in a way. I think in the current environment, none of the historic seasonality patterns is really applicable. So certainly this is a very strong Q1, if you did hold it against historic patterns, but let's not forget that we are coming off actually two kind of disturbed and weak years. I mean everybody talks about the impact of the pandemic on 2020, but also 2019 was not a strong year in semiconductors. So from that perspective, I think we are just really coming out of a longer-term down, which indeed hints to what I said on the -- in the prepared remarks earlier, we do see a pretty robust demand environment all through the year also beyond Q1.

Got it. Thank you. So my follow-up, I want to follow up a little bit on the comment that Peter said. He said, that you still feel confident delivering on your margin improvement plan in 2021. I just wanted to clarify exactly what is that margin improvement plan? Is that the 55% gross margin target or like specifically what do you mean by delivering on margin -- on your margin improvement plan in 2021?

55%.

Okay. Are there any like -- is that -- it's still at that $2.4 billion sort of threshold revenue level or do you just basically see yourself maintaining it?

I think the levels of business we are at the moment, we should be running at about 55%. I mean we think it will get a little bit carried away, because it's not many dollars that moves that 50 basis points either way.

Yes, I get that. Do you have any idea when in the year you might hit it tough, is that like a second half kind of target or...

I think it's definitely second half, Stacy. And one of the single biggest items is our comm infra being a bigger percentage of our overall business than it is today, yes.

Okay, got it. But without the COVID impact, you would be running over 54% right now in this -- in Q1, correct?

Yes, yes. I think so, yes.

Got it. Okay. Thank you, guys. Appreciate it.

Yes. It would be like 54.2% or something like that.

Yes. Got it, got it. Thank you, guys.

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

Thank you for taking my question and congratulations on the strong growth and execution. Kurt, I'm curious, what's your baseline view of Automotive unit growth in 2021 as you see that at the start of the year? And also last year, when I look at your auto semiconductor sales, which were down 9, they were like 5, 6, 7 points ahead of auto units. So that's -- that was very impressive content delta. And how should we think about that similar content delta for this year? And I asked those questions, because it seems like the industry is off to a very strong start, but can this kind of strength be maintained? Which is why just some -- just kind of help less align on models on what unit and content market expectation should be this year?

Yes. Sure, Vivek. So, let me start with what IHS is telling us. For this year in units for auto and that would be around 85 million units, which if that comes it's like 14% year-on-year growth in units. This is the IHS number. We've always used that internally. I would tell you from my very, very frequent discussions over the past couple of weeks and also at the ending of last year, I think the sentiment in the auto industry is possibly even above that. So maybe more 85 million to 90 million units in what the car companies thinks to achieve. But a lot of that is obviously based on the assumption of, say, the second half of the year being fully vaccinated, society coming back to more normal lives and that actually being another push for auto production and auto sales. Again, the former number of 85 million units, which would be a 14% growth. But you were hinting to the other half of this discussion, which is actually content, because clearly the fact that we've been 7 points faster than the SAR last year is thanks to content growth and thanks to our specific play in our high growth areas like radar and electrification BMS, digital clusters, which actually did not decline. So our growth businesses, and you know that's about a quarter of our auto business. Those parts of our auto business did not decline last year. They actually had growth even in a year where the SAR was, I think, last year down by something like 16%. And we see the content growth certainly going at the same rate going forward. One really strong element is the CO2 targets, which translates then often in electrification. But this is not just about the -- say…

Got it. Very helpful. And for my follow-up, maybe Peter one for you, you mentioned that the plan is to return all excess free cash flow to investors. Last year you generated over 2 billion or so in free cash flow. And I think the dividend only takes quarter of that. How should we think about buybacks this year. I know you gave a number for the start of the year. Should we assume that based on the expectation of stronger free cash flow that most of it will be devoted to buyback, so we could be back in some of the strength we have seen in some prior years or do you still expect to use some of that to delever the balance sheet further? Thank you.

Okay. Vivek, we've been amazingly predictable. Okay. So our stated capital allocation policy is we will return all excess cash to shareholders up to a level of 2 times net debt to trailing 12 months EBITDA. The reason we didn't return even more in 2020 is because for most of the year we were above 2 times net debt to EBITDA with the weak performance in Q2. So depending on what your model is, you should assume that all excess cash up to a level of 2 times net debt that's [ph] returned to shareholders. So, yes, it will be substantially higher in 2021 than it was in 2020. Same way 2019 was substantially higher than 2020, and we definitely would not use it to delever the balance sheet.

Got it. And you're already at 1.9. So you are below that range right now?

The difference between 1.9 and 2 is not a big number.

Understand.

But the issue is the EBITDA. So you need to look at how Q2 and Q1 fall off, and Q3 and Q4, which is better come on, which gives us more capacity to buyback stock.

Understand. Thanks very much.

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

Yes. Good morning, Kurt; good morning, Peter. Congratulations on the solid results. Kurt, my first question is on the comms infrastructure business, given how important it is to mix in gross margin leverage as we go throughout the year, what's the visibility in that business? Why do you think it recovers in the back half of the year? Is this a view that the U.S. government's stance on Huawei changes or do you see other design wins with other OEMs that will drive that business throughout the year?

Thanks, John. Let me take away the Huawei thing first of all. We are here conservative and we don't assume any moves on the licensing, et cetera, with Huawei, so that's not part of the plan anyway. What makes us actually optimistic for the second half is mainly our portfolio. I think we talked about our gallium nitride, both product as well as production capability, getting online at the end of last quarter. And I can actually probably say that in the meantime, all the products are qualified, and more importantly, they are qualified at this handful of important customers. And since this is new for us because we haven't had this gallium nitride capability really in the first place, we absolutely see that we will gain share on that basis with the further rollout of the infrastructure in the -- in this coming year. And yes, we believe this is kind of back-loaded more towards the second half of the year versus the first half, but the driver is really the gallium nitride penetration which we are foreseeing.

That's helpful. Then as my follow-up just in your prepared comments, you pointed out that if you pro forma for the sale of the auto business, the mobile business last year was up significantly, I'm kind of curious as you think about the mobile wallet, the ultra wideband penetration, are you preparing calendar year '21 to be another growth year in mobile? And is there any rule of thumb you can give us on how we should think about your content from 4G to 5G?

Well, I mean we only guide the first quarter here, John. So I will not provide guidance for the full year in mobile. But certainly our focus on further driving penetration with the mobile wallet, where I think I spoke about the -- hitting the 40% attachment rate at the end of last year, and we think we are perfectly on track to get this to a 50% rate through this year. And secondly, we have the emerging ultra wideband, and you've probably followed the most recent announcements of Samsung, who actually brought now another couple of phones out which are carrying ultra wideband, and that is now also spreading into associated ecosystems, which I think makes it even more attractive. I think Samsung spoke about digital car keys for a couple of car companies, and they also spoke about actually their first move now into the IoT world, which is a product which they call the Smart Tag Plus which is like a small finder device, which you can attach to something, and then you will find it with your phone. Now, all of that is going to help with Samsung, but of course also with the other OEMs, drive further and speedy ultra wideband adoption in line with what we did in the Investor Teach-In some time ago. So those two pillars are standing firm, and I'd say, certainly some of the big OEM customers also have good run rates, John, but I would say for us, it continues to be a content growth story. Secure mobile wallet, secure ultra wideband, and then you know, we also had the eUICC which is coming in, so there is a number of very specific content drivers which make us actually quite optimistic in mobile on a continued basis beyond the unit rate.

And Kurt, do you have enough data yet to think about how your content trends from 4G to 5G? I'm assuming that these new applications are more broadly adopted in 5G firms.

Yes. Sorry, I didn't respond to this in the first place. I think actually in principle this is not dependent or required as an association with 4G or 5G, specifically. Clearly, 5G will be about high-end phones in the first place, where the early adoption of these features might be first. But it is not necessarily something which is dependent on 4G or 5G, so which is good actually. So, we are kind of agnostic to that.

Perfect. Thank you.

Your next question comes from the line of Ross Seymore with Deutsche Bank.

Hi, guys. Thanks for letting me ask the question. First, Peter, congratulations on your retirement announcement. I know you're going to be with us for another year or so, but congrats nonetheless.

Thanks, Ross.

I guess, just my first question, overall, everybody knows that there are supply shortages, but I hope to get a little more color on it from a somewhat higher level. Could you size in any way, shape or form the impact on what you couldn't ship, and so what you're revenue impact of the supply constraint was in the fourth quarter, the first quarter. Any color about which end market is more acutely hit as you split your business? And then in the timing wise, when do you think you'll be able to catch up?

Kurt, I think you are on mute.

Peter?

Okay. Right. I guess, I'd say a couple of things really, Ross. You can look to really big numbers in the fourth quarter and the first quarter, just if you do some change our math [ph] on our months of supply and -- sorry, months of inventory and distribution, but I'm not sure how relevant it is really. So in theory, we could have shipped hundreds of millions of dollars of more, but then I don't know to what extent you be then pulling that out of Q3 and Q4. We're seeing strength across our businesses. Obviously, there's a lot more reporting in the automotive sector, because they are having real supply issues and having to maybe close down factories in certain cases and you talked about people not being able to work for weeks at a time which is maybe different than you see in some of the smaller customers who don't have the same megaphone. But even in those areas, they are seeing problems. So I would say it's pretty general, and I'll go back to one of Kurt's comments, which was 2019, the supply chain really got -- really got empty, demand was very weak. We really forgot about '19 in the context of COVID. And then in the first half of '20, we had absolutely the same issue. So we're looking at pretty empty supply chains across the board. To some extent, it's exacerbated by maybe people moving into the big Taiwanese foundries outside of China buy the -- the fact that people thought maybe they would not be able to buy product out of China. I think trying to pass it to really individual situations is absolutely very difficult. I would say, in theory, we could have shipped a lot more. Effectively, we're sold out for Q1. And we're just spending huge amount of time [indiscernible] customers, making sure that they keep their factories going, which is why Kurt made the comment that we don't think anything we're shipping at the moment is going into inventory. We think it's all going into building products, and we think it's going to be quite some time and we wouldn't speculate exactly when. So when we get to a point that that becomes more balanced and everyone can start to breathe normally.

Thanks for that color, Peter. I guess switching gears somewhat completely over to the OpEx side, you gave a lot of details on the gross margin side and the profitability why that's -- where it is and how it can improve. How are you approaching the OpEx side of the equation? Obviously the revenue sounds like it's going to be very strong throughout the year. Will you be spending to that? How should we think about that $590 million level in 1Q trending for the rest of the year?

We want to run 16% of R&D and -- 16% of revenue for R&D and 7% for SG&A. In actual fact, the increase in dollars from Q4 to Q1 is essentially -- in fact it's nearly all non-exec variable comp. So it's just incentive. So we're keeping a tight hand on OpEx. We won't spend ahead of revenue really. But we would like to run 16% of R&D and 7% of SG&A. And in the very short-term for Q1, the increases all -- increases in compensation -- in variable comp accruals.

Okay. Thank you.

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

Great. Thanks for taking my question. I'm wondering if you can discuss the competitive landscape today a little bit, in particular as it relates to pending M&A. You have ADI buying Maxim that consolidates the analog market a little bit. You have Nvidia buying Arm, which is an important supplier of yours. I'm wondering if you can comment as to whether either one of these or any other transaction might have any influence on your competitive positioning and perhaps your own plans from the perspective of consolidation?

Hey, Bill. So I mean, you know, we just don't comment on M&A in these calls. But what is relevant is that as it relates to our strategic focus and our say belief in our power of differentiation, we continue to be super -- really super confident that with the portfolio which we have actually largely achieved, or to a good extent also through M&A achieved, is in a very good position. I mean, let's not forget that these trends in secure edge processing solutions which we have is a result of the free scale acquisition a couple of years back, and then further complemented by the wireless acquisition from Marvell about one year back. We are proud that we've been able to successfully integrate all of this and actually are now in a position to come out with solutions, with products, which are building on the IPs from these different former deals. And from anything I've seen relative to the deals you mentioned, we don't see this as a threat to that competitive decision, which we have. So while I don't want to comment in general on M&A, I would say, it doesn't touch our trust and our confidence with the strategic focus which we have. I continue to believe that full steam execution on what we have is a very, very high value endeavor.

Great, appreciate that. And maybe if I can follow up with another question about the supply-demand imbalance, typically when this happens, you have this behavior of over-ordering by some customers that stimulates capacity additions, and sort of there goes the cycle. This behavior is typically what sort of paints the peak of the cycle. I've argued that I think that the lean inventory through the supply chain and really the breadth of demand, what perhaps will make this cycle extend a little bit longer, but I wonder if there's anything else that relates to the insight that you've all shared with us already suggesting that we continue to see this imbalance favoring growth as we go through the year?

Yes. I mean, indeed, well, we've all seen that movie before. I couldn't agree more that there is this element, which is creating a bubble eventually. But I would really highlight, and I said it from very, very hands on practically experience currently, everything we ship goes into production that it isn't piling any inventory at any place. And I can also again emphasize it is broad. I mean, you'll read and see a lot about automotive, as Peter said, because that is very prominent, when it comes to publications. But it is much broader. We have that same surge in demand in our other markets. So that makes me believe that at least at this point in time, this is not about inventory building. Now certainly we will continue to watch this very carefully, because again, we've seen this before, we have our controls, we know what to look after, but now is not the time to be worried about that. So we clearly see this demand continuing for a couple of quarters without building unnecessary inventory. The only -- I wouldn't say exception, but the one thing specific, which I believe could become a growth trend which is then nothing wrong but something to be conscious about is possibly the fact that the auto industry will want to have along the supply chain higher inventory levels than they used to have. Just learning from the current experience and trying to mitigate any future disruptions. That would be then building inventory, but it wouldn't be a bubble, but it would be a very conscious and very say targeted building of inventory. But again from anything we can see with our product, this is -- we are far from this at this point in time, but it could become something which happens maybe later in the year.

Great. Thank you.

Your next question comes from the line of Blayne Curtis with Barclays.

Thanks for taking my question. I just want to ask on the Industrial & IoT business, we obviously talked about the auto segment in depth. Obviously in that business, seasonality is typically down. You guided it up. I think have an easy year-over-year compare, but it still seems up pretty robustly. So maybe just talk about the drivers within that segment?

Blayne, did I hear you right? Industrial & IoT? Is that what you asked?

Yes.

Yes. Now, absolutely, I mean we are actually quite proud about our performance in Industrial, since -- even last year, which clearly was a very difficult year for the industry, our industrial business on a full year basis did grow by 15% year-on-year. And as you've seen from the guide, we have the confidence, we continue this. It's really carried by the solution capability made up by the cross-over processors. I mean, it's the whole processing portfolio, but specifically the cross-overs are delivering on the promise coupled with our WiFi capabilities. And you might have seen just in -- in Q4, we launched our first, and what I think is really an industry-leading 2x2 Wi-Fi 6 solution, which is a result of the Marvell acquisition. But getting this altogether into solutions is actually doing what we wanted to see. Now there is one other element with this, which I think is a driver for the growth for NXP particularly in that segment and that is our exposure to China. That's also I think the background for last year's strong performance because China left the pandemic from an industrial performance perspective behind them already in the second quarter. So, if you will, China had three strong quarters last year, and our industrial business has a quite big exposure to China. So we've been benefiting from this and we see this continuing into this year.

Thank you. And maybe as a follow-up to that, could you just talk on the supply side? Is this a segment that you're also being impacted by tightness, and any kind of view on kind of lead times within that segment?

It's across the Board, Blayne. So yes, we are also impacted by the tightness of supply in our Industrial business. I can't really talk about lead times, because it really differ. I mean we have a number of products with very normal lead times, but we also have a couple of products with 52 weeks lead time. So there is not one answer to this question. The only thing I can say is that, yes, Industrial is also impacted by the tightness of supply.

Thank you.

Thank you for the question.

Tiffany, I think that would be our last call, maybe pass it over to Kurt.

Thank you. And I would now like to turn the call back over to Mr. Sievers. Please go ahead.

Yes. Thanks very much, operator. Yes, I think, in summary, it is fair to say that if we just for a minute look back to last year, last year has really been a year with two phases; a very grim and very difficult year in the first half, and then a definitely faster than anticipated recovery in the second half. And given all the discussions which we've had about supply and demand, it is fair to say that we believe it's only the start of the recovery. This will continue through the calendar year 2021 and we see that our specific end market focus of NXP with a lot of strength in Automotive, with a lot of very specific strength in the Mobile and in Industrial & IoT gives us actually a very good opportunity to benefit from this continuing recovery into this calendar year. The one segment we've certainly been less happy with is the comms infra segment, as we discussed, but also there, given the new product introductions in gallium nitride, we are optimistic on the second half of the year, which is a strong driver for our mix when you think about our margin targets. And with that, I thank you all for dialing into the call, and most of all, please all stay safe and stay healthy. Thank you very much.

Thank you.

Ladies and gentlemen, this concludes today's conference call. Thank you for your participation and have a wonderful day. You may now disconnect.