NXP Semiconductors NV (NXPI.US) Q3 Earnings Call: Raises Data Center Target to US$1 Billion, Expects Double-Digit Growth and 60% Gross Margin by 2027

NXP Semiconductors NV (NXPI.US) reported its Q3 2026 financial results after the U.S. market close on October 27 (early morning Beijing time October 28). Quarterly revenue was US$3.786 billion, up 19% year-over-year and above the market consensus; non-GAAP diluted earnings per share were US$4.20, up 35% year-over-year, also beating expectations. Non-GAAP gross margin was 58.6%, with an operating margin of 37.1%; quarterly free cash flow was US$1.21 billion, representing 31.9% of revenue. By segment, Automotive revenue was US$2.07 billion, up 13% year-over-year; Industrial & IoT was US$802 million, up 39% year-over-year; Communication Infrastructure & Other was US$503 million, up 54% year-over-year, with the company saying data center infrastructure momentum continued; Mobile was US$411 million, down 4% year-over-year. The company expects Q4 revenue of US$3.75 billionUS$3.95 billion, with a midpoint of US$3.85 billion (up about 15% year-over-year), below analysts' expectation of US$3.87 billion; the non-GAAP operating profit midpoint of US$1.44 billion was also slightly below expectations. CEO Rafael Sotomayor said the company's company-specific growth drivers in automotive and industrial are accelerating their contribution, and that software-defined vehicles and trusted physical AI open up long-term space. The company also announced a new US$5 billion share repurchase authorization. Notably, NXP's largest competitor, Texas Instruments Incorporated, last week issued a strong revenue forecast, saying there would be "broad-based growth in industrial, automotive and data center." Texas Instruments Incorporated said it plans to expand capacity to meet growing orders and may reach a high level in its 2026 budget for new factories and equipment. The following is the full transcript of the NXP Semiconductors NV earnings call (translated with the assistance of AI tools): I. Executive Remarks Rafael Sotomayor, President and Chief Executive Officer Thank you, Mike, and good afternoon, everyone. In the third quarter, we exceeded expectations across all end markets, with double-digit year-over-year growth in every region. Growth was led by our company-specific growth engines in automotive and industrial, which grew 30% year-over-year and together accounted for about one-third of total company revenue; at the same time, data center infrastructure remained strong. Revenue was US$3.79 billion, up 19% year-over-year, or up 22% excluding the MEMS sensor business. Non-GAAP operating margin was 37%, up 330 basis points year-over-year; non-GAAP earnings per share were US$4.20, up 35% year-over-year. These results are translating into strong free cash flow, enabling us to invest in the business and return cash to shareholders. To that end, the board has approved an additional US$5 billion for share repurchases, bringing total repurchase authorization to approximately US$6.3 billion. Now turning to end market performance. Automotive revenue exceeded US$2 billion for the first time, growing 17% excluding the sensor business. This growth was driven by content per vehicle gains led by our software-defined vehicle (SDV) portfolio, while the automotive production environment was roughly flat. Third-quarter SDV revenue has exceeded US$1.5 billion on an annualized basis and is well on track toward the US$2 billion target for 2027. We believe the transition from domain control architectures to zonal architectures and central computing is a multi-year upgrade cycle that will enable physical AI and autonomous driving capabilities in vehicles. These new architectures create demand for system-level solutions, thereby increasing content per vehicle for the NXP Semiconductors NV portfolio, including additional processing end nodes, connectivity and power management. This drives a 2x to 3x increase in content per vehicle compared with existing architectures. This evolution is still in its early stages. In 2027, we will begin shipping our next-generation SDV processors, including the S32K5 zonal platform and the S32N central computing platform. We are beginning to see tangible evidence of the SDV transition. RV Tech (the Volkswagen-Rivian joint venture) announced yesterday that its zonal platform has been unified across both companies on NXP Semiconductors NV's S32K5. This is a clear indication of the leadership of the NXP Semiconductors NV SDV portfolio and the direction of the industry. Our new platform engagements continue to expand globally, and we now expect first shipments of the S32K5 in China as early as the first quarter of 2027. Software-defined vehicles are among the first deployments of physical AI, and the opportunity extends well beyond the vehicle itself. The foundational building blocks of central computing, sensing, connectivity and safety control are extending into Siasun Robot&Automation and other edge intelligent systems. This quarter, we won our first S32K5 design win in humanoid Siasun Robot&Automation at a leading U.S. global technology company. Now turning to Industrial & IoT. Revenue was US$802 million, up 39% year-over-year. The industrial portion of this end market grew nearly 50%, led by data centers, factory automation and healthcare, and now accounts for about 70% of the Industrial & IoT business. As we mentioned on our Q2 call, AI-enabled processors will account for about 15% of Industrial & IoT processor revenue in 2026, more than double last year. Given market adoption of intelligent systems, we expect growth to continue in 2027. Ara (our discrete NPU, neural processing unit) is a key component of the AI portfolio. It continues to gain traction in industrial automation and automotive AI applications, and we expect volume production in 2028. Now an update on the data center business. Given strong year-to-date performance, we now expect revenue for this business to exceed the US$500 million guidance given earlier this year. Given the new products we are developing, plus expanding customer engagements, we now expect this business to exceed US$1 billion within a few years. Turning to Communication Infrastructure and Other. Revenue was US$503 million, up 54% year-over-year, driven by data centers and secure cards. Finally, Mobile revenue was US$411 million, down 4% year-over-year. Turning to the Q4 outlook. We are guiding revenue of US$3.85 billion, up 2% sequentially and up 15% year-over-year, or up 18% excluding the sensor business. This will mark the fourth consecutive quarter of double-digit annual growth. At the midpoint of guidance, we expect the following trends in Q4: Automotive is expected to grow low double digits year-over-year and low single digits sequentially. Excluding the impact of the MEMS sensor business divestiture, our guidance implies high double-digit year-over-year growth. Industrial & IoT is expected to grow in the high 20% range year-over-year and low single digits sequentially. Mobile is expected to decline mid-teens year-over-year and rise slightly sequentially. Finally, Communication Infrastructure & Other is expected to grow in excess of 50% year-over-year and low single digits sequentially. I would now like to turn the call over to Bill to review the financial performance. Bill Betz, Executive Vice President and Chief Financial Officer Thank you, Rafael, and thanks to everyone joining today's call. Rafael has covered the revenue drivers, and I will turn to the financial highlights. Q3 was another strong quarter, with record revenue, operating margin and non-GAAP earnings per share. Revenue grew 19% year-over-year and 8% sequentially to US$3.79 billion. Growth was led by our company-specific growth engines in software-defined vehicles, electrification, connectivity, radar and industrial edge processing, while the emerging data center business continued to gain momentum. Non-GAAP gross margin was 58.6%, up 160 basis points year-over-year. Gross margin performance reflects improved factory utilization and good fall-through on higher revenue. Non-GAAP operating expenses were US$810 million, or 21.4% of revenue, reflecting strong operating leverage. This drove a non-GAAP operating margin of 37.1%, up 330 basis points year-over-year. Below the line, non-GAAP interest expense was US$85 million. The tax rate was stable at 18%. Non-controlling interest was US$15 million, and equity-method investee results at joint ventures were a US$4 million loss. This resulted in non-GAAP earnings per share of US$4.20, up 35% year-over-year, roughly 2x the revenue growth rate. Now turning to the balance sheet, cash flow and capital returns. The balance sheet remains solid, providing flexibility to invest in strategic growth priorities, advance the hybrid manufacturing model and return capital to shareholders. At the end of Q3, the company held US$3.94 billion in cash and US$10.98 billion in debt, with a net leverage ratio of 1.3x. Inventory days decreased from 156 days in Q2 to 148 days, including about 13 days of pre-build inventory related to the planned front-end fab consolidation. We expect about 15 days of pre-build inventory by the end of 2026. Operating cash flow was strong at US$1.26 billion for the quarter, net capital expenditures were US$50 million, and free cash flow was US$1.21 billion, or about 32% of revenue. In Q3, we invested US$218 million in VSMC and ESMC in the form of equity and access fees. Detailed breakdowns of joint venture investments are available in the historical financial model on the investor relations website. We expect to complete more than 75% of joint venture investments by year-end. On a trailing 12-month basis, free cash flow was approximately US$3.5 billion, or 25% of revenue, in line with the long-term target. Over the same period, we returned US$1.7 billion to shareholders through dividends and share repurchases. Recently, shareholder returns have been below the long-term target as we prioritized deleveraging, strategic acquisitions and investments in manufacturing joint ventures to support future gross margin expansion. Looking ahead, we plan to accelerate repurchase activity in Q4 and 2027. Consistent with this commitment, the board approved a new US$5 billion share repurchase program, bringing total authorization to US$6.3 billion, or about 10% of current market capitalization. Overall, we remain committed to returning 100% of excess free cash flow to shareholders over the long term. Now turning to Q4 expectations. We expect revenue of US$3.85 billion, plus or minus US$100 million, up 15% year-over-year, up 18% excluding the impact of the sensor business divestiture, and up 2% sequentially. We expect non-GAAP gross margin of 59%, plus or minus 50 basis points, driven by higher revenue and manufacturing utilization. We expect operating expenses of US$830 million, plus or minus US$10 million. The sequential increase is primarily driven by new product tape-outs supporting the trusted physical AI strategy. At the midpoint, this corresponds to a non-GAAP operating margin of 37.5%. Below the line, we expect non-GAAP financial expense of US$79 million and a non-GAAP tax rate of about 17.5%. Non-controlling interest is expected to be US$14 million, and equity-method investee losses at joint ventures are expected to be US$5 million. This implies Q4 non-GAAP earnings per share of US$4.36 at the midpoint, up 30% year-over-year, demonstrating continued profitability. Turning to Q4 cash usage. We expect capital expenditures of about 3% of revenue, equity payments of US$86 million to VSMC and US$60 million to ESMC. Looking ahead to 2027 for modeling purposes, we will continue to deliver double-digit revenue growth and plan to expand gross margin to 60% in 2027. We expect operating expenses to be about 23% of revenue in the first half, driven by new product launches, and below 23% in the second half. Assuming a non-GAAP annual effective tax rate of 17.5%, we now expect full-year joint venture investee losses of about US$80 million, and recommend modeling losses of about US$10 million in Q1 and about US$20 million in Q2. Capital expenditures of about 5%, as we plan to bring more back-end capacity online in 2027 and build a new assembly and test facility in Malaysia, ready for production in 2028. Finally, we will continue to generate healthy cash flow and plan to accelerate capital returns to shareholders. Next, to better understand our business, we plan to reclassify end market revenue starting in 2027. In addition, we plan to host an investor day in Boston on March 3, where we will update our strategy and long-term financial model. II. Q&A Session Goldman Sachs Group, Inc. analyst James Schneider: Signs of customer restocking and lead times Q: Focus on whether OEM customers are showing more aggressive restocking signs than in prior quarters, as well as changes in lead times and how customers are responding. Rafael Sotomayor: In automotive, the company has not observed any clear signs indicating broad restocking. Visibility has improved significantly, and although lead times have lengthened, this has also brought better visibility. Another trend in the automotive market is that OEMs are increasingly providing guidance directly to suppliers, customer relationships are closer, and the company has good visibility into the volume of supply needed for the full year and the types of products that need to be deployed. Goldman Sachs Group, Inc. analyst James Schneider: Sources of confidence in 2027 guidance Q: By end market, where the company is most confident of exceeding the overall double-digit growth guidance, and where uncertainty is relatively greater. Rafael Sotomayor: What worked in 2026 will continue in 2027. What drives confidence in double-digit growth in 2027 is precisely the areas the company continues to focus on. SDV adoption continues to advance and is just beginning, with multiple ramps set to occur in the second half of 2027, and there is significant ramp in the SDV portfolio. The same is true for Industrial & IoT, where AI adoption continues to drive content gains and is quite strong; deployment of data center control planes is also just beginning and continuing to unfold. Barclays analyst Thomas O'Malley: Drivers of Q4 gross margin improvement Q: For the December guidance, gross margin is guided at 59%, a significant improvement in incremental margin versus September (nearly 85% sequentially, nearly 70% year-over-year). Besides volume, what other factors are driving this increase, since it is a large step-up versus the past three or four quarters. Bill Betz: Gross margin performance is in line with expectations and continues to expand in Q4. The gross margin improvement is inherently highly structural, driven by both higher revenue and higher utilization. Utilization is now running in the mid-80% range, remains in that range in Q4, and is expected to run in the high 80% range in 2027. Product mix also plays a role, along with improvements in operating efficiency. Gross margin is not related to current price increases; price increases are only used to offset higher inflationary costs passed on to customers. Gross margin is expected to continue expanding, reaching 60% in 2027 and further expanding above 60% in 2028 as the VSMC joint venture ramps. Barclays analyst Thomas O'Malley: Q4 seasonality in automotive Q: On seasonality, by market measure, September automotive was slightly above seasonal levels, while guidance is for low single-digit sequential growth, differing from the mid-to-high single-digit traditional seasonality in December. Is this difference due to strong performance in June and September, or are there other factors worth noting. Michael Lucarelli: The question is confirmed to be about Q4 automotive. Automotive has been quite strong this year, coming in above seasonality in almost every quarter. Looking ahead to Q4, automotive seasonality is roughly flat to slightly up, so 2% growth is above seasonal, and strong trends in the automotive market continue. TD Cowen analyst Joshua Buchalter: Pricing environment and price resets Q: On the overall pricing environment; looking ahead to 2027, in some past years annual price resets led to periodic gross margin declines. Will there again be a sequential decline in Q1 2027. Bill Betz: Entering 2026, the company expected low single-digit price declines; near the end of 2026, it expects flat pricing for the full year. Looking ahead to 2027, input costs continue to rise in multiple areas, and these costs will be passed on to customers to ensure gross margin is not affected. Revenue is also supported by product mix, especially in the SDV portfolio, where new solutions will drive higher average selling prices, as the SDV portfolio is worth 2x to 3x the traditional portfolio. In the near term, pricing is in line with expectations: roughly flat in Q3 (about +1%), with pricing contributing 1% in Q3 and another 1% in Q4, remaining flat for full-year 2026. Rafael Sotomayor: To add at a higher level, aside from variable input costs, the industry is undergoing a structural shift in pricing. Unlike the past decade when annual price erosion was the norm, semiconductors now account for a larger share of the value of system innovation, creating better value capture opportunities. This is unrelated to input costs but reflects a shift in value at the semiconductor and ultimately system level. Competitive pressure always exists, but the historical pattern of annual price erosion is expected to moderate over time, reducing the drag of pricing on revenue year by year. TD Cowen analyst Joshua Buchalter: Industry observations on restocking Q: On the statement that no broad restocking signs have been observed, industry views on whether restocking is occurring have been quite divided over the past few quarters. To what extent is the current judgment an intentional conservative stance (similar to how the last cycle was handled), or are there differences in product mix, products or exposure that make the restocking pace different from some peers who say they have seen restocking. Rafael Sotomayor: The company indeed has not observed restocking. Core products are at the heart of software-defined vehicles, and if restocking were occurring, it should be visible. At present, some OEMs have discussed building safety stock given tight supply, but this has not happened; despite relevant comments from leading OEMs, the company has not yet seen restocking. Given that the products are at the core of core vehicle functions, any restocking would be observed. Bill Betz: To add, automotive distribution accounts for about 40%, and the company has good control over that channel. Jefferies Financial Group Inc. analyst Brian Curtis: Automotive electrification trends Q: On the automotive segment. Besides the structural drivers from SDV, what is the situation in electrification; Texas Instruments Incorporated has shown a recovery, and oil prices are also a factor. Bill Betz: All company-specific growth engines in automotive are performing strongly. Last year electrification was in an inventory digestion phase with slight delays in new products; this year it has performed well and caught up, growing faster than the growth rates given at investor day, especially in electrification. Overall SAAR (seasonally adjusted annualized sales volume) declined slightly, but xEV (electrified vehicles, including hybrids) penetration rose. This year, about 47.5% of full-year production is expected to be xEV, and next year it is expected to cross the 50% threshold to about 55%. This year's 47% compares with 41% last year, up 12%, and penetration is expected to grow another 15%. xEV continues to grow globally, with semiconductor content per vehicle 2x to 3x that of traditional internal combustion vehicles. Jefferies Financial Group Inc. analyst Brian Curtis: Trends in Q1 next year Q: On the preliminary outlook for Q1 next year (March), by segment or overall. Bill Betz: It should be noted that this is not formal guidance, the expected range is wide, and the usual disclaimers apply. Typically, Q1 declines about mid-single digits sequentially: Mobile declines mid-teens sequentially; Automotive, Industrial & IoT, and Communication Infrastructure decline low-to-mid single digits sequentially (about 3%, 4%, 5%). This is the overall trend of the past 5 to 10 years and is not formal guidance. JPMorgan analyst Harlan Sur: Book-to-bill and backlog Q: Besides automotive, the company also has drivers in edge AI, physical AI, data centers and other areas. Was the Q3 book-to-bill ratio above 1, did backlog grow across all end markets and regions, and is customer expedite demand continuing to rise in a tight supply environment. Bill Betz: All signals continue to improve versus 90 days ago. Book-to-bill is well above 1 across all end markets and regions. Backlog continues to grow in dollar terms and extends further into 2027. Lead times continue to lengthen, with about 80% of lead times exceeding 16 weeks, compared with only 25% a year ago. Customer expedite demand continues to increase, rising significantly sequentially. JPMorgan analyst Harlan Sur: Progress on 300mm wafer capacity expansion Q: On the supply side, 300mm wafer capacity expansion mainly comes from the ESMC and VSMC joint venture projects. VSMC mainly targets analog power and mixed-signal products, has just started risk production/qualification, and targets volume shipments in the first half of next year; ESMC targets MCUs and embedded products, targeting volume production by the end of next year. Please describe project progress, and the 300mm projects are timely in a tight supply environment. Bill Betz: Capacity expansion is occurring in both front-end and back-end. On the front end, VSMC has been completed and is ahead of schedule, with the partner side's interposer ramping first; the company side is qualifying the first technologies, starting to load materials in the first half, and expects to ship in the second half. Some output is ahead of schedule, but the real volume ramp is in 2028, which will help expand gross margin. This brings a dual benefit: moving from 200mm to 300mm, and no longer paying stacked gross margin to external foundry partners. On the back end, capital expenditures are being raised to about 5% (about 2% this year) for two reasons: first, adding back-end capacity in Q1 and Q2 to support revenue; second, and more importantly, the brand-new Kuala Lumpur facility, which broke ground in August, will start production in early 2028, serving substantial revenue and supporting gross margin expansion. Cantor Fitzgerald analyst Matthew Prisco: SDV design wins and ramp cadence Q: On SDV, as engagements increase, what is driving current design wins, what is the ramp cadence and potential inflection point, and is this more of a 2027-2028 story; the Volkswagen engagement seems concentrated in MCUs, so what system component opportunities are there beyond the core. Rafael Sotomayor: What is driving design wins is the large-scale adoption of software-defined vehicles, a revolutionary concept that is changing how vehicles are built. The two major architectures are zonal architecture and central computing architecture (briefly explained here). The Volkswagen press release centered on its zonal architecture, adopting the high-performance S32K5. The company also has substantial engagements on the S32N central computing architecture: there have been design wins in North America, recently a design win in South The Pacific and Asia, and multiple proofs of concept (POC) in China and Europe. The early ramp of central computing S32N is expected in late 2027, with the full ramp of K5 and S32N expected in 2028. Through SDV, not only is content gain being delivered, but as transparency improves over the coming year, content gains will compound with share gains. Cantor Fitzgerald analyst Matthew Prisco: Quantifying the physical AI opportunity Q: On physical AI, the last call discussed the project pipeline and system-level approach. How will the physical AI opportunity be quantified going forward, as a percentage of processor revenue in 2027 and beyond, and how fast is that market growing. Rafael Sotomayor: Physical AI is at the core of the discussion, and AI is the main DRIVE of content gains in Industrial & IoT. As mentioned on the last call, AI-enabled processors (excluding discrete NPUs) account for about 15% of total processor revenue, are expected to more than double from a year ago, and will continue to be strong in 2027. On the discrete NPU Ara, significant progress is being made through multiple proofs of concept in Industrial & IoT and automotive, with early volume production expected in 2028. BofA Securities analyst Vivek Arya: Data center strategic positioning Q: One criticism of NXP Semiconductors NV is insufficient data center exposure. This year's target of more than US$500 million is only a low single-digit percentage, and even US$1 billion would be less than 10%, while many peers have data center exposure of 10% to 20%. Is data center a strategic priority for NXP Semiconductors NV, can it be advanced through organic growth, will more cash go to buybacks, and what is the strategic positioning and target exposure of the data center business. Rafael Sotomayor: Previously guidance was about US$500 million for data centers, and this year will likely exceed it; with new product development and existing engagements, that revenue is expected to reach US$1 billion in 2028. The strategic logic is that as data plane performance continues to improve, the control plane also needs more performance, involving not only performance and processing but also more connectivity, security and reliability, which is precisely NXP Semiconductors NV's core competency. Because there is zero tolerance for downtime, reliable industrial-grade control processors are needed. The portfolio includes: top-of-rack switches (beginning to ramp), processors for board management (including secure elements, processors, microcontrollers and interfaces). The company is developing more products to expand the serviceable addressable market (SAM), leveraging core competencies to address the data center control plane. The growth from US$500 million to US$1 billion over the next two years, combined with new ramps and products, is considerable. Bill Betz: The buyback should not be interpreted as not investing in data centers. The company generates substantial cash, will invest in data centers, and more information will be disclosed at the March investor day. Michael Lucarelli: Data centers will become another pillar of the company's growth story. The company has a core automotive business, SDV, an emerging data center opportunity, and Industrial & IoT and physical AI opportunities. There are three pillars of growth, not dependent on any single thing, and multiple growth engines are a net positive for the company. BofA Securities analyst Vivek Arya: Communication infrastructure business outlook Q: Communication Infrastructure & Other was the fastest-growing segment this year (or the fastest-growing after two consecutive years of decline). Looking ahead to next year, what are the drivers and drags for this segment. Bill Betz: This segment will be reclassified starting in 2027, making the business composition more transparent. Composition at the end of 2025: about 50% secure cards, 25% digital networking (DN), 25% RF power. Looking ahead to the end of 2026, about half of the data center business comes from DN, and DN is expected to account for more than 30% of Communication Infrastructure; the next-generation RF power business has been exited, and its share is expected to be below 20% by the end of 2026. The secure card business continues to grow well. This business will be broken out at the Q4 earnings release, making the composition more transparent. UBS Group AG analyst Francois-Xavier Bouvignies: Cadence of the US$1 billion data center target Q: On the US$1 billion data center target, from US$500 million this year to US$1 billion in 2028, while most peers expect revenue to double next year, and gigawatt-scale new data center installations suggest it could double in 2027. Does the US$1 billion target imply slower growth in 2027, making it a conservative estimate, or could US$1 billion be reached as early as next year, or are there drags next year. Rafael Sotomayor: The data center consideration needs to be viewed in light of the types of products deployed: the company does not make discrete devices or power, and focuses on the control plane; any MCU or microprocessor in the rack is its market. This business essentially started only this year, and current growth depends on product ramps, qualification, design wins and customers deploying software on the relevant products. This portfolio is stickier. The data center business ramp is worth looking forward to because these are processors, NXP Semiconductors NV's core competencies in connectivity, security and processing, and this will be a business the company does quite well in. UBS Group AG analyst Francois-Xavier Bouvignies: Pricing and supply-demand environment Q: On pricing. Both input costs and product mix affect next year's pricing, and another factor is the supply-demand environment, with the market watching whether tight supply evolves into a COVID-like environment. Reference peer utilizationRenesas 60%, Texas Instruments Incorporated new fab ramp, Infineon new fab ramp, NXP Semiconductors NV new fab rampwhile management did not mention pricing from supply-demand tightness. Is it fair to conclude that supply is not as tight as the market thinks, that substantial capacity is on the way, and that this is a matter of time and lead times, temporary rather than fundamental like COVID. Bill Betz: Back-end capacity is very tight today, and front-end capacity will also tighten in the future; companies bringing capacity online will help alleviate this. Capacity tightness is the next phase of supply-demand imbalance and is expected sometime next year. The investments the company has already made in front-end and back-end enable it to serve this demand. Currently pricing is only related to inflationary costs; whether pricing driven by supply-demand imbalance (similar to COVID) emerges is entirely possible, and we will wait and see. Rafael Sotomayor: The current demand environment is very different from the COVID period; it is real, driven by the SDV transition, the physical AI transition and the data center capex investment transition. Demand will drive value creation, value capture and potential pricing power. III. Summary Rafael Sotomayor: Thank you all. I would like to leave you with three key points. First, our growth is structuralsoftware-defined vehicles, the intelligent industrial edge and data centers are multi-year DRIVEs, and wins such as RV Tech show that we are ready for the next round of growth. Second, this growth is broad-basedevery region is growing, and automotive, Industrial & IoT and Communication Infrastructure all delivered double-digit year-over-year growth. Finally, our growth generates strong free cash flow, enabling us to invest in the business and return cash to shareholders. As disclosed today, we have a new US$5 billion repurchase authorization, enabling us to accelerate repurchases starting in Q4.