Ladies and gentlemen, thank you for standing by, and welcome to the NXP Q3 2020 Earnings Call. At this time, all participants are in a listen-only mode. After the speaker presentation, there will be a question-and-answer session. [Operator Instructions]. Please be advised that today’s conference is being recorded. [Operator Instructions]. I would now like to hand the conference over to your speaker today, Jeff Palmer. Thank you. Please go ahead, sir.

Thank you, operator, and good morning, everyone. With me on the call today is Kurt Sievers, NXP's President and CEO; and Peter Kelly, our CFO. The call today is being recorded and will be available for replay from our corporate Web site. 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 fourth quarter of 2020. 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 today. Additionally, we will refer to certain non-GAAP financial measures 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 third quarter 2020 earnings press release, which will be furnished to the SEC on Form 8-K and is available on NXP's Web site in the Investor Relations section at nxp.com. Now, I'd like to turn the call over to Kurt.

Thanks very much, Jeff, and a very good morning and a very good afternoon everyone. We really appreciate you joining our call today. As most are aware, we did preannounce our quarter three results on October 8 with our revenue growth significantly stronger than the midpoint of our guidance across all of our end markets, but particularly in automotive and mobile. From a channel perspective, we began to see a return to more normal contribution between our direct and distribution sales, especially in the automotive end market. In our auto business, predominantly the U.S. and European car OEMs with Tier 1 suppliers are biased towards direct fulfillment with restart production on a broad basis, resulting in strong sales in the European and American regions as well as continued momentum in China. Only the Japan automotive region appears to be slightly later to rebound, which is primarily fulfilled through our distribution partners. In our mobile business, a combination of new product ramps and market strength anticipated by specific customers ahead of their new platform launches contributed to better than anticipated results. Taken together, NXP delivered total revenue of 2.27 billion, which is 267 million above the midpoint of our original guidance range. Our non-GAAP operating margin was 25.8%, about 360 basis points above the midpoint of our guidance. We experienced good fall-through on the significantly higher revenue with our gross margin also better than guidance. In a minute, Peter will provide more insights into our gross margin in his commentary. We also continued to tightly control operating expenses. So we did increase expenses relative to non-executives incentive compensation. Now, let me turn to the specific trends in our focused end markets. In automotive, revenue was $964 million, down 8% versus the year ago period and showing a 43% sequential increase. This…

Thank you, Kurt. Good morning to everyone on today's call. As Kurt’s already covered the drivers of the revenue during the quarter and provided our revenue outlook for the fourth quarter, I'll move to the financial highlights. In summary, our third quarter revenue performance was significantly better than planned. Relative to our guidance, we experienced material improvements across all of our end markets. We are pleased that the third quarter has also returned to improved year-on-year revenue performance, providing a solid position to build from going into 2021. Now moving to the details of the third quarter, total revenue was $2.27 billion, flat year-on-year and $267 million above the midpoint of our guidance. We generated $1.14 billion in non-GAAP gross profit and reported a non-GAAP gross margin of 50.1%, down about 360 basis points year-on-year and up 110 basis points above the midpoint of our guidance. Gross margin was better than expected because of the higher revenue, more normal environment given the impact of running our fabs at low utilization levels and a slightly unfavorable mix. Total non-GAAP operating expenses were $550 million, up $19 million year-on-year and up by $34 million from Q2. This was $15 million higher than the midpoint of our guidance as we increased expenses associated with non-executive variable compensation. From a total operating profit perspective, non-GAAP operating profit was $586 million and non-GAAP operating margin was 25.8%, down about 450 basis points year-on-year but 360 basis points higher than the guidance due to the increased fall through on higher revenues. Non-GAAP financial expense was $100 million, essentially in line with guidance. Cash taxes for ongoing operations were $29 million and non-controlling interest was $4 million, slightly better on a combined basis than our guidance. Stock-based compensation, which is not included in our non-GAAP earnings, was…

[Operator Instructions]. And our first question comes from the line of Ross Seymore from Deutsche Bank.

Hi, guys. Thanks for letting me ask a couple of questions and congrats on the strong results. First thing I want to talk about was the automotive side of things, obviously very strong rebound for you and everyone else. But I guess if I look at it as a longer term basis, inclusive of your fourth quarter guidance and beyond, can you just talk about that delta versus SAR? It looks like you guys are going to do the better part of 10 points better than SAR for this year. You talked about robust growth next year. Can you just specify down what's specifically to NXP is occurring in that to allow that outperformance?

Thanks, Ross. Let me take that one. Clearly, automotive disappeared quickly in the second quarter and came back now very hard in the third and continuing in the fourth quarter. Looking at it from the perspective of comparison against SAR is exactly what we do. For this year, I'd agree with you, Ross. It looks like we probably come out with maybe a – I don't know, 9 to 7 – 9 to 10 percentage points decline on the full year while the SAR, according to IHS, probably declines by 18 percentage points. So we will be about 8 percentage points at least better than the SAR. Now that's not totally out of the world, because we continue to see our long-term growth in the auto business to follow the algorithm of SAR plus 3 to 5 percentage points of semi-content growth, and then we want to outgrow that. And if you compare that to how it's going this year, we are on the high end of that but I think that works and we definitely believe with the content increases where we also strongly participate with our growth businesses. Take for example radar or the eCockpit business or the battery management business, we are participating in this. So the algorithm on the long-term stands SAR plus 3 to 5 percentage points content increases what we think the auto semi market is doing and that's what we want to outgrow by a factor of, say, 1.5.

Thanks for that color. I guess my follow up just moving over to Peter and into the gross margin side, very helpful color with a couple of headwinds you have in the fourth quarter, even though you've hit the 2.4 billion side of things. How do we see those rolling off going forward? Underutilization charges seem like they disappear. I know mix can change on a quarterly basis. But what does the trajectory look like between now and even if revenue stays 1.4 billion and change and getting to that 55% marker that you're targeting going forward?

Yes, sure. In Q4, we're down to 52.7. So let's say we had exactly the same mix going forward and the same level of revenue, you would expect that to improve by 150 basis points pretty much off the bat. We're bringing the fabs that aren’t quite back to normal in fourth quarter, but they're pretty close getting up to the 85% level. So that would take us to, say, the 54.3, 54.5 level. The issue I think we have in probably the first half of next year is the drop off in comm infra and how quickly auto direct has come up. So it feels like that's about 100 basis points of mix impact. So I think there's two things, Ross. One is utilization. I think we can pretty much forget about from Q1 onwards. I think we'll suffer in the first half from this hit if the mix doesn't change. And of course, we have to hit those revenue numbers. You do have a few things that move around in any one quarter. I’d remind you that Q1, we usually have our annual price reductions, particularly in the auto space and that can hit us by about 40 basis points. But I’d say from an underlying perspective, I still feel very confident that we should be running 55% to $2.4 billion of revenue. I've been shocked versus where we were three months ago about the speed at which auto came back and the reduction that we've seen in our overall potential for comm infra. But certainly, utilization shouldn't be an issue after the end of this year.

Thank you.

And your next question comes from the line of C.J. Muse of Evercore.

Good morning. Good afternoon. Thank you for taking the question. I guess first question was hoping you could elaborate a bit more on Huawei. What percent customer were they into Q3? And then as part of that question, can you discuss how the embargo there is impacted, if at all your ramp of your new GaN facility?

Hi, C.J. Yes, I think that is an important event for us. So Huawei, just to clarify this very stringently, Huawei is not anymore in our guidance for Q4. So the Q4 guidance which we just gave is completely excluding any revenue to Huawei. Historically, we said Huawei has been and I mean that's never been the same in any given quarter, but say a low-single digit customer for the company. For next year, we had actually a very clear view to get to Huawei being a high-single digit customer and that is actually there it relates to the margin and mix impact, which Peter just spoke about to the question of Ross before. Now the matter of the fact is, of course, that we have applied for licenses with the U.S. government and we have to see what they will be and when granted relative to these license requests for different products we would be shipping into Huawei.

And just to follow up on that, does this impact how you think about ramping your new GaN facility? And as part of that, is there a margin headwind associated with simply under utilization of that factory?

Let me take that answer. If you look at our two fabs – if you look at our utilization for next year, we have two fabs that are not running at 85% early on. One is our [indiscernible] and the other is our Chandler fab. But in terms of what we plan, because we talked on the last call about how we were kind of a bit behind where we expect it to be. As Kurt has said, we don't expect to see any additional impact from the ramp of the fab.

Great. Thank you.

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

Good morning, guys. Congratulations on the really solid results. Peter, my first question is just on OpEx. This has been anything but a typical year and clearly some of the calendar Q3 upside allowed you to raise OpEx for sort of the non-execs. I'm just kind of curious as you look at the calendar fourth quarter run rate, I'm struck by the fact that revenue is well above seasonal. And if there is a seasonal OpEx to cadence, OpEx is actually slightly below. So are we now looking at the right OpEx level? And as we go into calendar year '21, how should we think about the puts and takes of COVID related expenses both on the plus and the minus?

I think you can never really pick one quarter, because we always have a bunch of masks either moving in or moving out. For 2021, I’d go back to our comments from last quarter, John. We think 575 plus or minus 10 million in any one particular quarter is probably pretty close. Clearly, if our revenue was to grow very substantially, we might be talking about a different number. But from what we can see at the moment, we'd say 575 plus or minus 10.

That's very helpful. And then as my follow up, Kurt, you were very clear in your prepared comments that despite the Huawei headwind, you still feel very good about growth for calendar year '21. I'm wondering if you could just help us understand kind of in order of strength, what gives you that confidence level and specifically with Huawei business that you now can't ship to, is there other opportunities shipped to other comm OEMs or where those very specific Huawei programs?

Yes, John. So certainly, the confidence into next year is a carry forward from the company's specific strengths and the rebound we are experiencing right now. So clearly, with the high impact on the total company from a revenue perspective from automotive, we continue to be very confident into next year that our growth pockets where we have those leadership positions in radar, eCockpit and BMS, they will continue to play out the way we have talked about them in the past. So there is – we have the design wins on the books. We see actually the end consumer demand for these specific systems, be it in ADAS, be it in electrification, we see that absolutely coming through. So I think the automotive side of things does stand very firm on top of the rebounds, which is certainly being forecasted for the SAR. So, I talked about the negative side of things earlier that the SAR probably is going to be down like 18% this year. IHS is currently prognosing something like 14% up with SAR next year. And on top of that, we have the content increase in our market share gains in those leadership positions. Secondly, certainly mobile and as we started to experience now in the third quarter and what continues into the fourth quarter, we see continuous very strong traction with our secure mobile wallet, which is also a function of the pandemic ironically, because the use of contactless payments is something which even in countries which have been a bit shy so far, is now getting much more traction. And secondly, with the kickoff with Samsung which I mentioned the secure ultra wideband, certainly in the mobile space is now also seeing a lot of traction. Now if you speak about industrial IoT, I think we are seeing this year already an amazingly strong year in industrial IoT, which is also a function of China, because we have a large exposure to China. And actually COVID-19 impact in China, if you will, was history already in the second quarter. So we see their continued growth and that said momentum, which rides on our crossovers together with our new connectivity portfolio, they will continue well into next year. So all of these growth elements, John, we really see fully intact into the next year such that we of course, miss that revenue to Huawei, but we don't really think this is a big negative. Now, how much of that could be compensated by other mobile customers? I really don't dare to say, specifically since some part of it was in the infrastructure side of things where there is much less competitors.

Perfect. Thanks, guys.

And your next question comes from the line of Craig Hettenbach from Morgan Stanley.

Thank you. You guys continue to do a good job of controlling inventory and in the channel and internally. So, can you just maybe talk about any signals you're getting just from a sell-through perspective and your ability to kind of keep inventory at equilibrium, despite what's a pretty volatile supply chain?

Hi, Craig. On the distributor side, as you have seen and as we – I think both Peter and I reiterated again, we are absolutely disciplined to the target of 2.4 months. Now, if you ask from a lead time perspective, then I would tell you that clearly the current demand – the strong demand which we started to experience in, say, middle of – started middle of Q3 has extended lead times a little from, say, typically 16 weeks to now maybe 20 weeks with a few exceptions above that. But no, I think we feel ourselves in a good position and we also believe given the environment, it is exactly the right policy to stick to the 2.4 months of distribution channel inventory.

And can I just add a comment on our internal inventory. Clearly, we came down pretty dramatically in Q3 to 84 days. Given we will be kind of shipping everything we think in Q4, we’ll probably stay at the low 80s in Q4 and it will take us a couple of quarters to get back up to 95. And we think 95 is about the right level for internal inventory.

Got it. Thanks for that. And then just a follow up on the growth drivers, Kurt, any update? I know you mentioned crossover MCUs, but just curious kind of the type of traction you're seeing for that products, how broad based is it and just anything you're doing versus other competitors that you stand out for that product?

Well, I'm saying now with a cordial smile what really stands out is that we have that product category, Craig, because I continue to not really see any competitive solution which is coming close. So, by the sheer power of heading it and by the sheer power of heading it now in conjunction with the WiFi portfolio, especially now on the WiFi 6 standard, which – and I think we talked about that earlier, which we have now software integrated, so the software development environment for all our customers is actually one now for the crossovers together with the WiFi. We do definitely see continued strong traction. Now, this is on a design build level at this perspective, Craig. So, I should also be clear that the revenue from this is, I don't know, half a year out, a year out, one and a half years out depending on what specific industrial segments we are designing it into. So my measurement point at this stage is clearly the design win traction which we are seeing and that is really good. I should maybe also mention that the strong performance of industrial IoT has also been carried in the past quarter by our general purpose MCUs and by standalone connectivity products. We got that Marvell connectivity portfolio in and of course we also sell it as a standalone solution and also that is seeing good traction.

Got it. Thank you.

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

Thanks for taking my question. Guys, really impressive quarter and guidance both ahead of expectations. There's this cyclical rebound that you're seeing and I understand the practice of guiding one quarter at a time. But during these times when we see these sorts of strong recoveries, sometimes they can be driven by customers’ interest in building a little bit of inventory. And I guess the point I'm trying to make is sometimes we overshoot to the upside. Notwithstanding your comments about confidence in 2021 generally, should we be thinking about Q1 as sort of normal seasonal quarter or do you think because of the dynamics we're seeing in Q3 and Q4 that maybe we should tap that down a little?

Hi, Will. Maybe Peter also wants to say a few words to this. So first of all, we don't guide Q1 at this stage. This is clearly a Q4 guidance. Secondly, I think the language of normal seasonal in the current environment is just not applicable. I wish it was, but I don't think there is anything like a moment seasonality in the current environment. So I think that doesn't really help for Q1.

Yes, we were talking in kind of preparation for this, Will, and we thought one of the questions we’d get is kind of how much is inventory restocking versus the market overall? Clearly, Q3 has to have had some impact from inventory restocking. And maybe there's even a little in Q4, but we wouldn't say what our expectation for 2021 assumes that continues to be the case. Q1 is typically a lighter quarter. But it's really, really hard to say what seasonality may or may not be. It's just such – as you pointed out, it's such a weird market. And we're loathe [ph] to try and speculate on what the four quarters of next year might be sitting where we are today. But it definitely feels a lot better than it did three months ago.

Fair enough and --

I’m sorry. Let me maybe add on the question of restocking. Of course with ramps and rebound of the industry, there is always a certain level of repriming the supply chains. That's perfectly normal. But given the fact that we have a large exposure to distribution business, I think our continued discipline on the 2.4 months, which we had just discussed, gives you also a strong handle that in that area at least we don't overdo. We stick to this and that makes it a very – that makes it very clean I think. On the direct account side, it's of course in the end for us harder to measure what the stock positions could be. But if we look at the end demand at the constant increase of our product speed in mobile or be in automotive, we think we have a pretty good view on this that this is not really about restocking, but it's true demand which we are seeing.

Yes, idiosyncratic rather than cyclical or maybe more than cyclical. One follow up, if I can. You have talked about mobile wallet adoption getting to 50% I think from the last Analyst Day through the end of a three or four-year period. It seems to me that that might be tracking well ahead of expectations. If you can provide any update on that? And then now that we have ultra wideband shipping into handsets, maybe you can comment on the pace of adoption you're expecting there? Is it similar to get to 50% over some number of years or is it a different view?

Yes, that's fair. So, on the mobile wallet, indeed I think the guidance we gave was 50% adoption rate by the end of next year, so calendar year '21. And yes, we are well on track. Let's leave it here with saying this. We will deliver on this promise. On the secure ultra wideband, clearly early days but I think with Samsung, which is very – they are very strong and very – they are very determined in building the ecosystem together with us, I think we have a great kickoff in the Android space now. And certainly we want to see that they will not be the only Android OEM. And that spreads much more broadly quickly. I don't think we are yet in a position to talk about specific adoption percentages by specific times, because it's also not only mobile. The adoption is going to start also in automotive next year. And we are now working with a lot of focus also into IoT, which is adding another wave of volume. But again, it's too early days to put firm percentage numbers behind that.

Thanks. Congrats again.

And your next question comes from the line of Blayne Curtis from Barclays. Tom O’Malley: Hi, guys. This is Tom O’Malley on for Blayne Curtis. Congrats on the nice results. My first one is about the buyback. You indicated that since the trailing 12 months that EBITDA metric was now a low 2, you guys were going to start buying back. Can you talk about what your mindset is around the framework there? Are you going to continue buying back where you kind of left off before the pandemic or just any sort of framework going forward would be helpful given you’re restarting that?

Yes, that’s really straightforward. We'll buy back the level which keeps us from the actual just below 2x net debt to trailing 12-month EBITDA. Tom O’Malley: Simple enough. I just wanted to walk through a bit more complicated one than that, I guess, but you mentioned a couple moving parts into margin, the gross margin. You said same mix, same revenue, 150 bps off the bat benefit, but you also pointed to 100 basis points potential mix impact and then some annual price reductions in auto. I understand that you're not counting Q1 and totally understandable. But could you describe a scenario in which you saw revenue down in Q1 and gross margins still improved? The reason I ask is just that's a bit unique given your history. Can you walk through if there's any other moving parts in the gross margin we should be aware of?

Okay. So I think there's – you have two slightly different questions. So my comment was really about can we hit 55% or 2.4? Okay. And I basically said in the first half, a 2.4 level of revenue with the current mix, we’d probably be more like 54% because of the mix. Okay. So that's one question. A different question is, okay, going forward from Q4, what's likely to move? So, if we do 52.7 in Q4, I'll get 150 basis points straight off just because I won't take the utilization which would take me to 54.2. But that would assume the same mix. The comments I made and I think the thing you have to watch out for is Q1 typically as our annual price reduction, which can be 30, 40 basis points. So our growth – to answer your question, even if revenue was slightly down in Q1 over Q4, we'd probably still see a slightly better margin because we get rid of the underutilization headwind in Q4 of '20. Okay. But that's a pretty unusual situation. But at the moment, we’re just really heavy on the utilization. Does that make sense? Tom O’Malley: That’s really helpful. Thanks a lot.

And your next question comes from the line of Chris Caso from Raymond James.

Thank you. Good morning. First question is related to auto market and some of what you said in Japan. It sounds like Japan's recovery is lagging a bit. How much of a headwind has that Japanese part of the business been? And presumably, if that normalizes like the rest of auto next year, how much of a benefit would that provide?

Yes. Hi, Chris. My comment was really related to Q3. We see Japan already catching up in the fourth quarter actually. So I'd say when you then think about the full next year, and now I can only look at what IHS is predicting for the SAR, then actually Japan is on the same pace and is quite normalized with the other regions. It was more that this year in the third quarter where we saw all this very sharp return, especially in U.S. and Europe. It started a little later in Japan such that it sits more on the fourth quarter than it was already sitting in the third quarter. But I don't think that there's any reason to extrapolate this into next year.

Got it. Thank you. As a follow up, I just wanted to dig into the commentary about the potential for some inventory restocking and where that may be. And I guess is it safe to say if that were happening, the industrial market would be the most likely area and obviously that area is harder to get visibility. And I guess follow up from that is, do you suspect that there was any restocking in the automotive area? And I presume there that they were coming off of some pretty low inventory levels earlier in the year when the factory shut down. But again, they're on hubs. So I suppose there's probably better visibility there.

Yes. Let me start with auto. Indeed, we have made sure that inventory levels wouldn't be too big, because we really had a lot of attention this time in the second quarter when things were falling down to not over ship. So even with our direct accounts, we had a lot of one-on-one discussions to make sure that their order pattern would be somehow compliant with the end demand. So I guess I'd agree with you there that probably wasn't too much of inventory sitting there which is exactly why I said earlier, some restocking now is just normal to prime the supply chains for significantly higher production rates. They have to do this. There is nothing strange about it. The industrial side of things is a little harder to tell because a lot of the business goes through distribution for us. There we do control, as explained, the distribution of entry in a very transparent way. We have all the systems and all the discipline in place to do this. But we, of course, do not have the visibility into all of the thousands of end customers behind distribution. So it's less easy to say what they possibly are restocking or not restocking. My early take at this stage is it isn't that much because most of it is anyway in China. And in China it’s not like now suddenly a Q3 or Q4 effect. We have seen growth in China industrial starting with the second quarter. So Q4 is now the third quarter in a row that it’s growing.

Thank you.

Your next question comes from the line of Gary Mobley from Wells Fargo Securities.

Hi, everyone. Thanks for sneaking my question in. Most of the questions have been asked, but I do want to ask one about your battery management system. Now your win with Volkswagen sounds very impressive as obviously they're the largest OEM in the world and seem to have the most aggressive EV platform in terms of rollout schedule. So I'm just curious to know where you stand today with BMS sales? If I'm not mistaken, it's somewhere in the tens to millions. You may have maybe 10%, 20% market share. So I'm just wondering if you can give us an assessment of where this business may be in 12 months, 24 months, just given this Volkswagen win. Thank you.

Yes. So, Gary, the best way to think about it is, is think about the 50 million run rate this year roughly. And what we did say is that we will grow this with twice the sum. So we want to grow twice as fast as the markets, which would translate in something like 60% CAGR over the next couple of years; so 50 million this year growing with 60% CAGR over the next couple of years and we think the associated market is growing at about 30%. Now just as a rule of thumb, this Volkswagen win, there of course, there is a high variation of how big it's going to be depending on their success and how quickly they bring the next models and models and models out. But that's maybe half of it, right? So that's why we are super proud of this. I think it's a great testament to the scalability of our system solution to the function and safety of the solution. But this is only 50% of their business going forward, so it's just a part.

Thank you. That’s it for me.

Operator, we’ll take one more question today.

Yes, sir. And your final question comes from the line of Rajvindra Gill from Needham & Company.

Yes. Thank you for taking my questions. I appreciate it. Congratulations on the auto recovery. On the communications infrastructure side, wondering how you're thinking about that next year given the issue with Huawei, but also kind of your traction? Again, you're a little bit late in GaN product. It seems to me you're kind of catching up in Arizona. How do you think about your GaN portfolio relative to the competition and adoption in calendar '21 and how that would positively affect your comm infrastructure business next year? Thank you.

Yes, we feel very good about our GaN competitiveness. It's only the starting issue, as you rightfully pointed out, that we are coming out a little late and that's actually a consequence of – we thought and we were aligned with our customers that that would only be needed next year and that's also what we are delivering, but then they put in the requirements. The competitiveness of the product in terms of power efficiency looks very, very good. We did announce a few weeks ago that both the factory as well as the product is being released as we speak. We start shipping small volumes in the later part of this fourth quarter and will really ramp up in the first quarter of next year. I am quite optimistic on this for next year because if you think about the main customers for this, so think about Ericsson, think about Samsung, think about Nokia, CTE, we – with all of them we have had historically already very leading positions with our product, be it with LDMOS or be it with massive MIMO. So I think we are in a great position actually once we start shipping to wrap it up with gallium nitride. So yes, a little late but now coming in strong.

And just for my follow-up question on the ultra wideband kind of moving to other markets outside of mobile, I wanted to see what your thoughts were in terms of what do you think the next kind of biggest market for UWB will be and why do you think that?

Yes, we have good visibility into the automotive side because the design win cycles are pretty lengthy, so we are working and have been working this for quite a while already where we see mid-second half of next year the first OEMs coming out with ultra wideband secure access solutions based on NXP. The IoT world obviously is much more complicated because it's more smaller customers, a lot of opportunities. But I also assume that it is fair to say that through the next year, we will see the first applications being picked up in the IoT space. And think about smart locks, for example, indoor navigation, et cetera, etcetera. So automotive, a lot of visibility but it goes the typical automotive pace starting mid of next year. IoT, somewhat more complicated because of the multitude of opportunities, but also there we believe next year is – we see the first volumes.

Great. Congrats again and excellent momentum. Thank you.

Thank you.

Thank you everyone for your attendance to the call today. And we'll look forward to speaking to you next quarter. Thank you very much. This concludes our call.

Ladies and gentlemen, this concludes today's conference call. Thank you for participating. You may now disconnect.