Tower Semiconductor Ltd Q4 FY2024 Earnings Call

Good day and thank you for standing by. Welcome to the Tower Semiconductor Fourth Quarter and Fiscal Year 2024 Earnings Conference Call. At this time, all participants are in listen-only mode. After the speaker's presentation, there will be the question-and-answer session. Please be advised that today's conference is being recorded. I would now like to hand the conference over to our speaker today, Noit Levi, SVP, Investor Relations. Please go ahead.

Thank you and welcome to Tower's financial results conference call for the fourth quarter and fiscal year of 2024. Before we begin, I would like to remind you that some statements made during this call may be forward-looking and are subject to uncertainties and risk factors that could cause actual results to be different from those currently expected. These uncertainties and risk factors are fully disclosed in our forms 20-F and 6-K filed with the Securities and Exchange Commission as well as filings with the Israeli Securities Authority. They are also available on our website. Tower assumes no obligation to update any such forward-looking statements. Please note that the fourth quarter and fiscal year 2024 financial results have been prepared in accordance with US GAAP. The financial tables and data in today's earnings release and in this earnings call also include certain adjusted financial information that may be considered non-GAAP financial measures under Regulation G and related reporting requirements established by the Securities and Exchange Commission. The financial table includes a full explanation of these measures and the reconciliation of these non-GAAP measures to the GAAP financial measures. We have a supporting slide deck that complements today's conference call. The presentation is accessible on our company's website and is also integrated into today's webcast for your convenience. Now I'd like to turn the call to our CEO, Mr. Russell Ellwanger. Russell, please go ahead.

Hello, everyone. Thank you for joining our call today. During today's call, we'll provide our financial highlights for the fourth quarter and fiscal year of 2024, reviewing strategic developments of the year, and outlining our vision for the future, including steps we are taking to ensure sustained growth now having entered 2025. Please find the 2024 financial details in the supporting slide deck. At the onset, looking back at 2024, I take this opportunity to express gratitude to our employees for their dedication and hard work, to our customers and supplier partners for their collaboration, and to our shareholders for their continued trust and support. Together, we have built a strong company, enabling us to capitalize on the great opportunities that lie before us. We concluded 2024 with an annual revenue of $1.44 billion, a net profit of $208 million and a fourth-quarter revenue of $387 million, representing a year-over-year revenue growth of 18% from Q1 to Q4 and a fourth-quarter to fourth-quarter year-over-year growth of 10%. We guide the first quarter of 2025 to be a midpoint of $385 million, plus/minus 5%, which midpoint represents about 10% first-quarter year-over-year growth. We target year-over-year growth for 2025 with sequential quarter-over-quarter revenue increases within the year, with an acceleration in the second half of the year as our capacity investments continue to progress through customer qualifications with ensuing production shipments. We will now present the 2024 revenue breakdown for major technology platforms and the expected trend for 2025. Later in the call, we will provide summaries of the technical advancements achieved in 2024, which continue at this time in order to not just maintain, but grow these specific market shares. The revenue breakdown by technology and by end market application is shown in Slides 5 and 6, respectively. RF Infrastructure revenue was about $241 million or 17% of our corporate revenue in 2024. In 2025, we target strong growth in RF Infrastructure revenue, quite significant, as this is on top of a near doubling in 2024 over 2023, with a more than tripling of SiPho revenues in 2024 to $105 million for that year. RF Mobile revenue was approximately $418 million, 29% of our corporate revenue in 2024. After achieving strong growth in this segment in 2024 over 2023, we anticipate some decrease in RF Mobile in 2025, mainly due to the present Android market as forecasted by our customers. However, within this context, we target growth in our more advanced 300-millimeter platform, signifying market share wins for us and our customers, promising continued growth as the market recovers. Power management and discrete revenue was about $426 million or 36% of our corporate revenue in 2024, broken down evenly between IC and discrete revenue. Based on the current customer forecast, we target growth for the Power Management business unit in 2025 with the highest growth for advanced 300-millimeter platforms. Due to the impact of having discontinued Fab 1's lower margin legacy 150-millimeter activities, discrete business is expected to decrease in 2025 versus 2024. Sensor display revenue was about $221 million or 15% of our corporate revenue in 2024. Based on the current customer forecast, we target moderate growth for this business unit in 2025. Mixed signal and CMOS revenue was about $105 million or 7% of corporate revenue in 2024, targeted for moderate growth in 2025. Now we will provide additional color for our major business platforms. RF infrastructure was our fastest-growing segment in 2024, riding on the megatrend of scale-up and scale-out of cloud computing and AI clusters. Even before the announcement of the Stargate program by the US President last month, several hyperscalers had committed to significant investments driving strong demand for electronic and optical components that require advanced silicon germanium and silicon photonics technology. To that effect, our silicon germanium platform has seen rapid growth throughout 2024 and is forecasted to continue so in 2025. We take pride in being the foundry of choice for leaders in this industry, building components such as CDRs, drivers and TIAs for optical transceivers and pluggable and re-timers for active cables. While we have recently received a reduced forecast for active copper cable silicon germanium components, we have at the same time received upside orders for silicon germanium optical transceiver components. As such, we see continued growth in silicon germanium without interruption. To support all customer growth in 2025 and beyond, we are bringing our high-demand silicon germanium platform up in both our San Antonio and Migdal Haemek factories, while adding incremental tooling to the Newport Beach factory as part of our announced $350 million investment in capacity. In addition, we have released 300-millimeter silicon germanium PDKs in our Uozu, Japan factory, and have a lead customer already in product design. 300-millimeter tools will add additional silicon germanium capacity at larger wafer form factors. Our silicon photonics platform continues to gain strong market share at 400G to 800G and is now in volume production at 1.6T. We are working closely with our partners, including six out of the top 10 leading optical transceiver module makers in the world, of which the top two, namely InnoLight and Coherent, announced our multi-generation co-development partnerships. We highly value these customer partnerships, which yield continuous world-leading best-in-class technological advancements. To support the strong growth, we are bringing up our SiPho platform in our San Antonio factory and have also released a full PDK for 300-millimeter Uozu factory. The 300-millimeter enables our SiPho customers to more easily address the future potential needs of CPO architecture that combine advanced SiPho technology with 2.5D integration of optical and electrical compliance. The added capacities mentioned for SiGe and SiPho are in various stages of customer qualification with expected shipments resulting in high-value incremental revenues in Q3 and Q4 of this year. Finally, we continue to work with our customers to bring to market next-generation 400-gigabit per lane technology, targeting the upcoming 3.2T standard. We have already demonstrated with a lead customer bandwidth consistent with the 400 gigabit per lane speed requirements needed for the 3.2 standard. We see further application of our leading SiGe and SiPho technologies outside of the optical transceiver markets. For example, we announced our partnership with Renaissance in the emerging SATCOM market, where phased array ICs for terrestrial disk antennas built using SiGe technology promise strong growth with the proliferation of satellite-based Internet services. With SiPho, we are working with several customers in emerging areas of automotive, LiDAR, photonics-based gyrometers and photonic quantum computing. In our RF mobile market, despite some headwinds with weak customer forecasts in 2025 versus 2024, particularly for Android-based devices, we see a strong positive trend towards higher-end 300-millimeter RF SOI technologies, which not only offer improved performance to address higher performance markets but also die shrinkage, allowing both Tower and the customer to maximize margin. In addition to existing markets, we continue to invest in new technologies, such as the triple play process announced with Broadcom for WiFi 7, which offers industry-leading integration of a power amplifier, low-noise amplifier and switch onto the same die in a single die form factor to support high-end WiFi functionality, thus allowing for a much smaller footprint than previously possible. Looking at our power management business, during 2024, we executed the transfer of our flagship advanced 65-nanometer BCD platform to Albuquerque to take advantage of the large capacity available to us as part of the previously announced agreement with Intel. In the fourth quarter, we delivered successful prototypes to lead customers, and based on the success, have received our first production PO, a major milestone achieved ahead of plan. We have extreme customer interest in these flows well beyond what could be supplied in Uozu, Japan. Additionally, in Q4, we announced the release of our next-generation 300-millimeter power management platform, which promises as much as 60% lower conduction losses versus prior platforms critical for power management ICs used within lithium-ion battery-operated products such as smartphones, tablets, and wearables, which is a large and growing market, presently at about $6 billion. Turning to sensors and displays, several trends are shaping this market that have given and continue to give impetus to our priorities and investments, among which industrial sensors are transitioning to 300-millimeter platforms, enabling denser logic, smaller form factors, and higher resolution pixels. We demonstrated 100-megapixel and 300-megapixel high-speed global shutter stack sensors with 2.47 micron charged domain pixels. Medical and dental sensors, where some 200-millimeter CMOS products are shifting to lower-cost eXo platform, while high-performance applications, mammography and extra-oral x-ray drive demand for 200- and 300-millimeter stitch CMOS. Hence, our development activities in medical and dental are focused on next-generation CT detectors, 200-millimeter extra-oral X-ray, and 300-millimeter X-ray, including having released a 300-millimeter more cost-effective layer reduced lean flow PDK, enabling our customers to compete on price as well as performance. OLED on silicon is a significant large incremental business growth opportunity for CMOS backplane for high-resolution micro-OLED displays, known as OLED on silicon for AR, VR, XR applications. Our expertise and long performance history in large-format images position us as a leader. The first OLED on silicon prototypes are targeted to ship in the second half of this year, featuring unique ultra-low leakage transistors combined with high-K capacitors. Looking at utilization, we are strategically repurposing certain capacities across multiple fabs to further enhance our SiGe and SiPho capabilities. While this may result in a lower overall utilization rate in the near term, it is a crucial step towards aligning our production with the evolving needs of our customers. By focusing on these advanced process technologies, we are positioning the company for sustainable long-term growth, ensuring we meet increasing demand. This initiative optimizes our production portfolio and underscores our commitment to innovation and fast execution to maintain market leadership in a rapidly evolving industry. In the fourth quarter, Fab 1 operated at 70% utilization with all activities now fully consolidated into Fab 2. Fab 2 and Fab 9, where we are driving SiGe and SiPho capability/capacity activities operated at approximately 55% utilization. Fab 3 was at 70% utilization, Fab 5 at 60%, and Fab 7 300-millimeter at 90% foundry utilization with the highest process layers to date. Non-CapEx projects are ongoing in Fab 7 to maximize shipments from fab mix changes and with the agreement with NTCJ utilizing some of their capacity. To summarize, in 2024, we've shown our commitment to innovation, excellence, and growth. We've made significant progress and built a strong foundation for the future. Looking ahead, our investments and focused efforts are already delivering positive results positioning us to target year-over-year growth with significant quarter-over-quarter growth in the year. We're actively engaged in seizing new opportunities to grow our served markets and provide continued leadership. Thank you for your continued trust and support. We look forward to sharing with you our achievements throughout what will be an exceptional year ahead. With that, I'll turn the call to our CFO, Oren Shirazi. Oren?

Hello, everyone. Earlier today, we released our financial results for the fourth quarter and for the full year and also released our balance sheet. For the fourth quarter of 2024, we reported revenue of $387 million, a 10% increase over the same quarter of the prior year, thereby achieving the target we provided one year ago, demonstrating quarter-over-quarter revenue growth for each quarter in 2024 against the previous 2024 quarter. This resulted in an 18% revenue increase from Q1 '24 to Q4 '24. For Q1 '25, we guide $358 million revenue, plus/minus 5%, which represents a 10% year-over-year revenue increase. Gross profit for the fourth quarter of '24 was $87 million, higher compared to $84 million in the fourth quarter of the prior year. Despite being impacted by the headwinds resulting from added fixed costs and depreciation that the company took on for the first time following the commitment of operations in the Agrate 12-inch fab facility that the company and STMicro share in Italy. Operating profit for the fourth quarter of '24 was $46 million compared to $45 million in the fourth quarter of the prior year. Net profit for the fourth quarter of '24 was $55 million or $0.49 basic and diluted earnings per share. Net profit for the fourth quarter of the prior year was $54 million or $0.49 basic and $0.48 diluted earnings per share. For the full year 2024, revenue was $1.44 billion. Gross profit was $339 million. Operating profit was $191 million, and net profit was $208 million or $1.87 basic and $1.85 diluted earnings per share. Tax expenses recorded in our P&L for the full year '24 and for the fourth quarter of '24 were at a low all-in tax rate of 5% and 4%, respectively, much lower than our long-term financial model, mainly due to tax benefits recorded during '24, following a statute of limitations expiration and other tax-related benefits, which impacted 2024. However, please note that for long-term model planning needs, one should continue to assume 15% will be our all-in effective tax rate as previously communicated. For the full year 2023, revenue was $1.42 billion. Gross profit was $354 million, and operating profit was $547 million. This high operating profit included $314 million net from the Intel merger contract termination and $33 million of net restructuring income from the reorganization and restructure of our Japan operations. Net profit for the full year 2023 was $518 million, or $4.70 basic and $4.66 diluted earnings per share and included $290 million net income from Intel due to the merger contract termination and $11 million net restructuring income. Moving to the balance sheet and future CapEx and cash plans. As of the end of December 2024, our balance sheet assets totaled $3.1 billion as compared to $2.9 billion at the end of 2023, primarily comprised of $1.3 billion in fixed assets net of depreciation and predominantly comprised of fab equipment and $1.8 billion of current assets. The current asset ratio, reflecting the multiple by which current assets are larger than the short-term liabilities, is very strong at about 6x. Additionally, shareholders' equity reached a record of $2.64 billion at the end of December 2024. Our strong financial position enables us to plan the following investments in strategic opportunities that support our corporate vision. One, we have committed to invest up to $300 million to acquire equipment and other CapEx that Tower will own in Intel's New Mexico fab facility, enabling us to ramp up fab capacity and capabilities for our customers. About 15% of this amount has already been paid, and the remaining 85% of these CapEx amounts are forecasted to be paid in installments during the upcoming two years. Two, additionally, $500 million of total cash has been allocated to make investments in equipment that Tower is to own in the 12-inch fab in Agrate, Italy, following the previously announced STMicro partnership. To date, we have already invested 80% of this amount, placed purchase orders for all the equipment and other CapEx required, and the remaining amounts are expected to be paid in the upcoming year. In addition, we are executing a $350 million investment plan to expand 5G capacity and capabilities for the qualification and ramp-up of those technologies in our 8-inch and 12-inch facilities in Israel, Texas and Japan to serve our growing customer demand. Payments towards this CapEx investment plan are expected to be made in installments during the upcoming two years. Lastly, I want to note that all of our investments, including the SiPho and SiGe CapEx investments, are included in the business strategy and financial model previously presented by the company and are required steps to achieve it. In this model, we outlined a revenue target of $2.66 billion per annum that could be achieved by fully loading our existing facilities, including the above-mentioned and 3G CapEx investments and our newly built and to-be-built capacity at the Agrate and New Mexico facilities, which revenue level could result in $560 million of annual operating profit and $500 million of annual net profit.

Thank you. And now we're going to take our first question from Cody Acree at Benchmark Company LLC. Your line is open. Please ask your question.

Thank you, guys, for taking my questions and congrats on the progress. Maybe if we could start, Russell, with your thoughts about the mobile market, your comments there. If you can maybe help to size your expectation for contraction. And then just you mentioned Android, you didn't specifically talk about your Apple customers. And just comments recently from Skyworks that they lost about a quarter of their dollar content. I wonder if you have had any impact or if that was factored into your thinking as well?

No, specifically, for what we believe that we're supplying into Apple, we don't see any reduction. As far as serving into Android, predominantly, we have customers that are serving multiple markets within Asia and their forecasts are down. It's not wildly down. As stated, we have within a 300-millimeter portion of it, we do see growth this year for high-end activities, but we see that some of the 200-millimeter having been reduced. If you're asking for to what degree it would be reduced, I don't like giving yearly guidance, but it's not overly substantial. It would be somewhere probably in the upper teens that I would say we would have a reduction in the RF Mobile business.

All right. Thank you for that, Russell. And then maybe Oren, if you could talk about the incremental margin, just the contraction that you saw this quarter. If you can maybe help to frame how much of that was the Agrate ramp? And then what is that impact for the rest of the year?

Yes. Thank you. For the rest of the year, we don't expect any additional headwinds because, like we explained previously, from this new baseline that we presented in Q4 '24, we expect the incremental model to work according to the past with the 50% incremental margin because all the headwinds were already included in this report. If you ask how much, so you see that if you compare Q4 '24 to Q3 '24, you'll see an increase of $16 million in the revenue, which by the 50% incremental model should have resulted in an additional $8 million gross margin. However, there is a minus six. So the difference between plus eight and minus six, most of that is attributed to Agrate headwinds.

All right, thank you very much.

Thank you, now we're going to take our next question. And the question comes from the line of Mahwish Mahbub from SIG. Your line is open. Please ask your question.

This is Bastien filling in for Mehdi Hosseini. So, Russell and Oren, thank you for taking my question. The guidance of Q1 of $358 million implies revenue down high single digits sequentially, which is in line with seasonality, but still growing year-on-year. I would assume that your RF infrastructure growth is above seasonality, while the discrete business should be impacted by discontinuation of the Fab 1. Could you elaborate on which segments you expect to be above or below seasonality? And my follow-up is you started the production ramp on the 1.6 terabyte at several lead customers. Could you give us an update on the timing of revenue? And when should we expect material contribution to revenue? Is it still on track for material contribution in the second half of 2025? Thank you.

It's already a reasonable amount of revenue in the fourth quarter. I don't have at this point strong visibility on the specific POs that we'll be receiving for second and third-quarter shipments. So I can't really predict what the mix will be. I have a much greater granularity on overall forecast. As far as your first question on what segments are stronger seasonally than the Q4 to Q1 seasonality. Certainly, if we were to look at it, you would have SiGe, SiPho, and I would say also the mixed signal and the power, as far as the entirety of them. They’re staying about the same. CIS is actually a little bit stronger, where we’re seeing the biggest seasonality is within the mobile.

Very helpful, thanks.

Thank you. Now we're going to take our next question. And the question comes from the line of Richard Shannon from Craig-Hallum Capital Group LLC. Your line is open. Please ask your question.

Thank you for allowing me to ask a couple of questions. I’d like to focus on the RF Infrastructure segment. I’m looking for more specific insights regarding your growth strategy for this business this year. One of your customers mentioned last week that they are experiencing an acceleration in their data center-related business. While this may not completely overlap with your operations, it seems like a relevant indicator given your role as their supplier. Could you discuss whether you are anticipating growth this year that approaches the strong levels seen last year? Additionally, you mentioned silicon photonics in relation to potential market share gains for 400 and 800 gigabit solutions. Could you elaborate on that further?

I don't think I said share gains in 400 to 800 gig. In general, there's certainly share gain in that SiPho really didn't exist very strong at all at 100 gig. So if you were to look at 400 and 800, that's where SiPho first came into play, and it was put in there, although there's some back feet at 100 gig as well. I suppose a corollary there is that SiPho has equal benefits for 100 gig as it does at 400 to 800, meaning the ability to have very high scale by not needing discrete indium phosphide components versus having a SiPho component with germanium and silicon, but the fact that not until 400 and 800 did SiPho really come into the market. That's why you would say that if you were to say share of optical transceivers, obviously, it only started to grow at that level. There were some thoughts and internal speculation that if, for example, large learning model software would be driving a step back in data center speeds, which I don't believe. But if it did, probably SiPho, now that it's proven, would have big growth in 100 gig as well. I don't know if that answers your question, Richard, but...

I'll follow-up on that I clearly made some incorrect notes when I heard that. So let me follow up on that one. Let me touch on RF mobile here. Obviously delineated the dynamic here between the iOS and Android ecosystem. Maybe you can also delineate it in terms of wafer size here. It sounds like we're going to see a fairly strong shift, particularly with the Agrate capacity coming online this year. How do we see your exit rate of this RF SOI capacity towards 300 when you exit this year?

Let me check the numbers to ensure I provide accurate information. For RF SOI, in 2024, about 40% was 200-millimeter wafers and approximately 60% was 300-millimeter. Looking ahead to 2025, the forecast seems to be around 80% for 300-millimeter and 20% for 200-millimeter.

Okay. That is helpful to think about that. Last question for Oren. Oren, if you could help us think about your depreciation load here. Obviously, you had a step-up in the fourth quarter. I expect we'll see some more here going throughout the year. How do we think about the depreciation number for the year?

Just to clarify, what I just gave you was revenue breakdown, it wasn't wafer units, right?

Okay. All right. Thanks for that clarification. Oren, depreciation, how do we think about that for the year as well as the exit rate, particularly as we add in from both Agrate and New Mexico?

In New Mexico, you shouldn't expect any depreciation this year since we are currently qualifying the factory. So far, we have only invested 15% of the $300 million. Therefore, only a portion of that 15% will have been delivered, installed, and qualified to start depreciation. So, there will be no depreciation this year. The depreciation from Agrate is already reflected in the Q4 numbers. Our total depreciation, including amortization of RSUs and everything else, is $65 million per quarter, and this is already accounted for. The run rate for Q4 will continue at $65 million a quarter.

Run rate will continue. Okay. Fair enough. That is all for me. I'll jump online, guys. Thank you.

Thank you. Now we're going to take our next question. And the question comes from the line of Lisa Thompson from Zacks Investment Research. Your line is open. Please ask your question.

Hi, good morning. My question is about your expectations for revenue growth this year. You said to expect it sequentially. Do you expect to do similar or better than the 18% from Q1 to Q4?

We didn't guide for the exact revenue from Q1 to Q4. We said three things. We said that we target the year to be higher than 2024, we target sequential revenue growth, and we target that H2 will be strong. So stronger, but we cannot talk about specific numbers for Q4 guidance.

Okay. And in the second half, you said revenues would be helped by added capacity. Can you just list maybe in order of what capacity is coming online that's going to be the biggest contribution to revenues?

I think it's mainly the SiGe and SiPho capacity, also Agrate capacity, but mostly the 5G from the $350 million plan, not that everything will be qualified and installed this year, but that's the main driver.

Okay, great. Thank you. That's my only question.

Thank you. Now we're going to take our next question. And the next question comes from the line of Matt Bryson from Wedbush. Your line is open. Please ask your question.

Yes. I have a couple of questions if that's okay. First one is, I think heading into Q4, you said you thought you'd be able to get to roughly $150 million run rate on your silicon photonics business. And previously, I think you targeted doubling that business in total in 2025. Did you hit that target? And I guess, is that assumption still valid for the silicon photonics business?

Yes, we at least hit the $150 million annualized run rate in Q4. So that was definitely the case. What we said that we targeted wasn't doubling against the Q4 run rate; we had targeted a doubling of the 2024 revenue, right? So, it's not that we are targeting at any given point a $300 million SiPho 2025, but yes, that was statements that we made, and that's still within our target, absolutely. But yes, we did achieve or exceed the $150 million run rate.

That's great to hear. And then, just you were talking about SiPho active cables being down a little bit in 2025. There's been some conjecture that as there's a shift to optics, there may be less demand for active copper cables. Is there anything fundamental going on like that? Or do you think it's just inventories or something with your specific customers? I guess, longer term, how do we think about that business?

In the short term, it was mentioned in the MACOM financial release that NVIDIA has shifted from a 2 x 36 configuration to a 1 x 72 configuration, which has affected the ACC. However, I believe there are many other requirements and drivers for the ACC architecture. Therefore, I don't foresee a decrease in the demand for active copper cables or active optical cables in the long run; instead, I anticipate growth. There were reductions in the forecast due to that change in architecture, as noted in the MACOM release.

Awesome. And my last one, Russell, is just you talked about a couple of different places where you're seeing some shift from 200-millimeter to 300-millimeter wafers. I mean how do we think about that impact on your model? Is there, I'm assuming you get some step up in ASP, but there's some required step-up in investment? Or is that production already there? And so, then that's just an improvement in ASP.

I think it's within the model that Oren has spoken with you about in the meetings that you had with other of our finance team. Certainly, the 300-millimeter has a higher selling price, but it also has a higher substrate price. So, the margin impact is very similar. The revenue impact is a bit higher. But the big thing is that a 300-millimeter at this point, we are having greater integration of more advanced components such as the LNAs, which in and of itself can drive higher incremental margin. But those are only within the models that we've given when we give the $2.7 billion model, we did forecast within the next years that the bulk of everything we're doing with RF SOI specifically would be at 300-millimeter.

Awesome. And I guess last one for me is just on the RF side of things. You talked about your expectations related to the downtick in Android contribution. Just want to clarify when you were saying kind of teens down, or I think it was high teens down, is that the entire RF piece or just the Android piece? And then also when you're looking at that business, is that more inventory rightsizing? Is it more customer base? Is it something that's changed structurally in that business? Just trying to figure out how to model it beyond the next few quarters?

It's really an excellent question. We really do serve leading customers in the Android market, specifically in Asia. When there's a good year, fortunately, within that year, customers build greater inventory because they never want to be short, and the minute that they're short to a lead phone maker, they open the door to lose market share. And then you have the knee-jerk reaction that if demand goes down for this or that reason, the impact in the short term is a big correction with our customer. So, I believe that there's weakness within Android in Asia, specifically in China. But within that, I think it's not necessarily that the market is as far down as far as what the leading makers are selling. I think it's that it is down, but the inventory of our customers is more than needed for the short term. The expectation internally is that it will recover within this year. But that I honestly cannot forecast. I can only state where we're sitting now with customers, and that's a very honest answer where we sit. So, the output within mobile itself is down about upper teens this year by our forecast. But I speak specifically with our lead customers on a very regular basis. And that's their present forecast. They don't want to give us numbers that they cannot meet. But the general belief and consensus is that numbers can be substantially better.

Maybe, Russell, if I can just get a quick clarification there on mobile, and then I'll look at another one.

What you said Cody, you broke up a little bit.

Just a quick clarification on your statements on mobile into the high teens. Is that just your Android piece or your Android plus your iOS piece?

That's everything. I don't have it broken down right in front of me, but that's everything that we serve.

Okay. And then any help with your comments about first half to second half acceleration, any way to help weight the year?

More highly weighted in the second half; just joking, Cody. Yes, I think Q1 will be reasonable quarter year-over-year, certainly, meeting slightly above expectations, whatever. But in Q2, we said quarter-over-quarter growth. But then we expect very notable, measurable growth in the third and fourth quarters. As Oren had stated, we don't really want to give long-term guidance at this point. As far as revenue increases went into 2024, you were in the same call a year ago, and I was asked if I expected year-over-year growth. And I said I would be highly disappointed if we didn't. Last year was a very tough year. But we expect year-over-year growth and market year-over-year growth. If it's not really a reasonable amount of numbers adding to the revenue this year, I would be more than disappointed. So, the second half should be very strong; how strong, it’s not going to be breaking this orbit, but it will be market increases against the first quarter for sure. And something that I think we'll all be proud of being able to report.

Very good. Very helpful. And then maybe for Oren, if you could just talk about your OpEx expectations, especially as we go into the first half spending, but any comments on the full year would be helpful as well.

No, we expect the baseline of OpEx as was released in Q4 to stay flat during the year; fixed cost. Agrate's already baked in the numbers. So, we don't expect to increase.

Any seasonal increases?

No. It's fixed costs. So they are pretty much linear over the year.

So, no pay raises is what I'm hearing?

To employees, there should be offsets from cost efficiencies, correct?

Thank you. And now we're going to take our last question for today. And the question comes from the line of Richard Shannon from Craig-Hallum Capital Group LLC. Your line is open. Please ask a question.

Great, thanks for taking my follow-up here. It's in the power bucket here. Russell, if I took good notes here, and clearly, I haven't in parts of the call here, but I think you said you were targeting growth in the power management business. Does this include both the Power IC and discrete that you've previously talked about separately or just in the Power IC bucket? I'm not sure what the terminology means here?

No. I said that the discrete business would be down year-over-year, and the Power IC itself will be up year-over-year. That's our target, but the power discrete would be down.

Okay. And if we put those together collectively?

Should be up.

Thank you. There are no further questions for today. I would now like to hand the conference over to your speaker, Russell Ellwanger, the CEO, for any closing remarks.

Thank you for your interest and great questions. It's an exciting time for us, and we believe we are responding well to market demands and changes. Recent developments in data centers and potential architectures have been significant. We're at the forefront in the infrastructure space, working closely with key customers. We expect the market to remain strong, with various initiatives underway to maintain our leadership. Our power management efforts are robust and poised for growth, supported by high demand and ongoing developments at our factory in Albuquerque, New Mexico. We also have baseline technologies that yield good revenue margins, such as the CIS, which may not drive massive growth but don’t require excessive resources. We're looking forward to the new served market with backplane for OLED on silicon, which we anticipate will become a substantial growth driver in the coming years. We are excited about our strong customers and advanced technologies, particularly in RF for mobile applications specific to RF SOI. We have positive updates coming from our Agrate facility, including customer qualifications and high utilization rates this year. Overall, we believe we are in a very strong position. Additionally, I want to mention that we expect sequential quarter-over-quarter growth, with Q1, Q2, Q3, and Q4 all projected to be higher than their respective periods in '24. This insight should aid in your modeling as we anticipate substantial growth in the latter half of the year. In closing, we are thrilled about our current position, the opportunities ahead, and we look forward to sharing our achievements with you this year. Thank you very much.

This concludes today's conference call. Thank you for participating. You may now all disconnect. Have a nice day.