ON Semiconductor Corporation

Good day and thank you for standing by. Welcome to the On 71st Quarter 2023 Earnings Conference Call. At this time, all participants are in a listen-only mode. After the speaker's presentation, there will be a question and answer session. To ask a question during the session, you need to press star 1-1 on your telephone. You will then hear an automated message advising your hand is raised. To withdraw your question, please press star 1-1 again. Please be advised today's conference is being recorded. I would now like to hand the conference over to your speaker today, Parag Agarwal. Please go ahead.

Thank you, Kevin. Good morning, and thank you for joining Aon Samy's first quarter 2023 quarterly results conference call. I am joined today by Hassan El Khoury, our president and CEO, and Thad Trank, our CFO. This call is being webcast on the investor relations section of our website at www.AonSamy.com. A replay of this webcast along with our 2023 first quarter earnings release will be available on our website approximately one hour following this conference call, and the recorded webcast will be available for approximately 30 days following this conference call. 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 and the GAAP financial measures are included in our earnings release, which is posted separately on our website in the Investor Relations section. During the course of this conference call, we will make projection 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 risk and uncertainties that could cause actual results or events 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 10Qs, other filing with Securities and Exchange Commission, and in our earnings release for the first quarter of 2023. Our estimates, 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 errors that may occur except as required by law. Now, let me turn it over to Hasan. Hasan?

Thank you, Parag. Good morning, and thank you all for joining us today. As we continue our transformation, I'm pleased to report another quarter where we've exceeded expectations with revenue of $1.96 billion and non-GAAP gross margin of 46.8%, both above the midpoint of our guidance. The current market environment did not deter us from our goals. We have teams around the world who are committed to operational excellence, and I am proud of the results they have achieved in this first quarter. Over the last two years, we centered our transformation around the structural changes that would enable us to better navigate the uncertainty in the semiconductor industry. We streamlined our product portfolio reduce price-to-value discrepancies, double down on silicon carbide, and improve the overall operations of the company. We have incredible talent in the company, and we have been all hands on deck to solve some of the world's toughest engineering problems to accelerate the ramp of this next generation technology. Thanks to our team's relentless efforts, we are seeing greater than anticipated silicon carbide results ahead of our internal plan for manufacturing output at every stage of the process, from bulls to die to modules. In Q1 alone, these results allowed us to ship nearly double our Q4 revenue and more than half of our 2022 full-year revenue. We are on track to grow our revenue to $1 billion in 2023, and that's approximately 5x the revenue of 2022 setting ourselves up for leadership in the silicon carbide market with the majority of the substrate sourced internally. Demand for electric vehicles, ADAS, and energy infrastructure remained healthy amid a broad-based macroeconomic slowdown. While our automotive revenue increased 38% year over year, it was flat quarter over quarter. We are still supply constrained across several automotive technologies, While in some other technologies, we are cautiously monitoring inventory digestion. In Q2, we expect to see quarter-over-quarter growth in our automotive revenue. In Q1, we shifted our mix to energy infrastructure, where there is high demand and high growth. Our industrial revenue, in turn, increased 1% sequentially instead of the decline we had anticipated, driven by the need for our total energy sources and accelerated by global geopolitical issues, installation of energy storage systems is increasing along with our content that includes silicon carbide and silicon power solutions. Pricing across our business is stable and we don't anticipate any changes in the pricing environment. A significant part of our business is secured by long-term supply agreements and pricing in these agreements is fixed for multiple years. Also, As part of our business transformation, we have walked away from price-sensitive businesses in non-strategic areas to drive predictable financial results. In Q1, automotive and industrial accounted for 79% of our total revenue as compared to 65% in the quarter a year ago. When we started our transformation, we targeted 75% of our business to be automotive and industrial by 2025, and we have achieved our desired end result two years earlier. We also improved our demand visibility across all markets with commitments from our customers, new and existing, in the form of LTSAs. These LTSAs also help reduce our exposure to the volatility in the consumer and computing markets. Volkswagen, as an example, signed a three-year agreement for more than 100 current production devices giving them the required supply chain sustainability with a major semiconductor partner. Our committed revenue through LTSAs increased again in Q1 by $1 billion. We are supporting our customers today while working closely with them on next-generation designs for their intelligent power and sensing needs. In addition to the LTSA we announced last quarter, we were recently honored with the 2022 Supplier of the Year Award from Hyundai Motor Group, which recognized OnSemi as a trusted provider for key technology in its ecosystem, offering supply chain resilience and manufacturing sustainability. Customers also recognize us as a strategic partner that provides high value through the entire design cycle, which gives them a competitive edge over their peers. In March, we launched our new elite power simulation tool to bring complex power electronics applications to market faster through system-level simulations, saving design engineers from expensive, time-consuming hardware fabrication and testing in the early stages of development. This tool will also allow us to get a broader customer reach through our distribution network with a low-touch model to design in our products. Global automotive OEMs are choosing to partner with Onsemi for the superior performance of our end-to-end silicon carbide solutions. Just last week, we announced an LTSA with Zeker, a leading all-EV manufacturer in China, who has selected Onsemi's third-generation 1,200-volt ELISIC MOSFET to increase the electric powertrain efficiency and extend the range of its expanding portfolio of high-performance electric vehicles. These EliteSIC power devices deliver improved power and thermal efficiency, which reduce the size and weight of the traction inverters to deliver improved performance, resulting in extended driving range and faster charging speeds. BMW Group has also selected OnSemi's EliteSIC to support range extension for their next generation electric vehicles. They secured an LTSA with us to equip their future electric drivetrains with our silicon carbide technology to increase efficiency and system level performance. We also continue to invest in silicon power. And as auto OEMs move to a zonal architecture, we deliver intelligent power solutions that meet all voltage range requirements from 12 volts to 48 volts and beyond. Through these strategic partnerships, we are enabling our customer sustainability efforts while also working on our own. We committed to the science-based targets initiative and pledged to set near-term science-based emission reduction targets in line with SBTI criteria and our decarbonization journey to achieve net-zero emissions by 2040. Our Q1 revenue for intelligent sensing increased 26% year-over-year. We introduced our new HyperLux family of image sensors to support the transition to 8-megapixel devices where ASPs can be up to 2.5 times that of one or two megapixel image sensors. Our traction for image sensors in automotive has proliferated into industrial automation and smart retail applications. Our newest eight megapixel image sensor achieves stunning 4K video quality with optimized near infrared response necessary for industrial applications with harsh lighting conditions such as security and surveillance, body cameras, doorbell cameras, and robotics. The shift out of lower-value commodity applications coupled with capacity expansion in differentiated products and packages reduced the supply-to-demand gap and is driving margin expansion and revenue growth in our focus markets. Automotive and industrial now account for more than 95% of our intelligent sensing business. Beyond image sensing, our intelligent sensing penetration is expanding with other sensing solutions in our portfolio. We shipped our 1 billionth inductive position sensor IC to Hella, one of the largest automotive suppliers, who uses our technology in their drive-by-wire systems, such as accelerator pedal sensing, steering, and torque sensors, as well as actuators for pressure boost and turbos. We also lead the market in automotive ultrasonic sensors with more than 20 sensors in one of the latest EV models from a leading European OEMs. In Q1, our intelligent power and intelligent sensing revenue accounted for 69% of our total revenue as compared to 64% in the quarter a year ago. As we get ready for the next chapters of our journey, we are applying what we know, operational excellence in controlling what we can and executing to our commitments. We have positioned ourselves to lead in our focused markets with superior technology to offer our customers, and we have the agility to pivot and adapt to change as required by the business and market environment. And more importantly, we have the team to execute. Now, I will turn the call over to Saad to provide additional details on our financial and guidance. Saad?