Q : The earnings outlook for Q1 shows a significant drop in EPS. Can you provide context on this? A : The drop is primarily due to gross margin impacts from lower revenue, increased depreciation, and reduced factory loadings. We expect gross margin percentage to decrease by a few hundred basis points from Q4 to Q1. Operating expenses will increase 3% to 5% due to normal seasonal increases and ongoing investments. Additionally, interest income is decreasing by about $50 million due to lower short-term interest rates and cash levels.

Q : Can you explain the divergence between the analog and embedded businesses, particularly regarding margins? A : The divergence is due to different cyclical behaviors. Embedded grew in 2023 while analog declined, leading to a sharper decline in embedded now. The embedded business is disproportionately impacted by underutilization at the Lehi factory, which serves embedded more than analog, affecting its margins.

Q : Can you provide an update on the situation in China, especially regarding the automotive and industrial markets? A : Our China business grew both sequentially and year-over-year in Q4, driven by automotive strength and personal electronics. Automotive growth in China is supported by a higher share of EVs, which have higher content. However, we haven't seen a cyclical upturn in industrial markets in China or globally. The strength in China is mainly from automotive and personal electronics.

Q : How do you view the pricing environment, and has it changed recently? A : The pricing environment has remained stable, with pricing declining low single digits per year, similar to pre-COVID behavior. The mix of revenue has changed, with industrial declining and personal electronics growing, but like-for-like part pricing has behaved as expected. We don't anticipate significant changes in 2025 across geographies.

For the complete transcript of the earnings call, please refer to the full earnings call transcript .

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