ams Osram AG Q3 2024 Earnings Call Transcript

The following is excerpted from the question-and-answer section of the transcript.

Question: Harry Blaiklock - UBS - Analyst : The first is just on the cost saving program. You've made some good progress already this year. Can we expect to see further savings in Q4? And then what are you expecting in terms of the phasing of the remaining EUR155 million in savings or I guess, slightly less than that? Will it be more front-end loaded in 2025 or evenly distributed across the next few years?

Question: Harry Blaiklock - UBS - Analyst : Got it. Very helpful. And then my second question is just on the sale and leaseback. Obviously, kind of you're taking a time given where we are in the cycle. I'm wondering if you could provide a bit more color on that. Are you still having positive conversations with how many kind of interested parties? What's the realistic time line on it now?

Question: STbastien Sztabowicz - Kepler Cheuvreux - Analyst : I've got one question on inventory and notably in the automotive and the industrial market. Where are you standing today in terms of inventory into your channel or at your largest customer versus the normal level? This is the first question.

Question: STbastien Sztabowicz - Kepler Cheuvreux - Analyst : Okay. But you mentioned still some inventory correction in the industrial end market, capital goods and so on. I'm just wondering, it seems like you have some excess of inventory. And the second one, in automotive, do you see normal level of inventory there?

Question: STbastien Sztabowicz - Kepler Cheuvreux - Analyst : Okay. And the second question is on the prepayments and the NRE. Can you comment a little bit what are the technology behind that on LED? And do you expect any other sizable prepayment down the road? Or is this a kind of specific project kind of one-off? Any further detail on these prepayments would be very interesting.

Question: STbastien Sztabowicz - Kepler Cheuvreux - Analyst : Is this linked to microLED or not that much if one?

Question: Janardan Menon - Jefferies - Analyst : My question is more on your first question is on your 2025 outlook. In an environment of relatively low visibility, you're saying that sort of Q1 will be the bottom, and you will see a gradual improvement through the rest of the year, a steady gradual improvement with core semiconductors growing 6% to 10%. I'm just wondering how you have that kind of visibility? Is it that you're making an estimate on the industrial inventory correction ending by Q1? And to what extent is that 6% to 10% based on additional design-wins, both automotive and consumer ramping in 2025, either in the first half or in the second half?

Question: Janardan Menon - Jefferies - Analyst : And you had a material design-win on consumer ramping in the second half in Q3 of this year. Do you have any further design-win which could ramp in the second half of next year to support that growth outlook?

Question: Janardan Menon - Jefferies - Analyst : And my second question is on -- again, on the prepayment. You've said that the NRE is on LED technologies, but you've not specified the prepayment. Is the prepayment also LED? Or is that on the sensor side?

Question: Didier Scemama - Bank of America - Analyst : My first question is on the Q1 commentary you sort of given us. Can you remind us what's your historical seasonality for Q1 for the various business units? And any qualifier around that would be helpful, whether it's consumer, lamps and/or the automotive LED business at a high level? And I've got a follow-up.

Question: Didier Scemama - Bank of America - Analyst : Okay. And so I'm not sure what the message is. I mean, do you expect well below normal seasonality for Q1?

Question: Didier Scemama - Bank of America - Analyst : Okay. Got it. And then the follow-up is on the Kulim 8-inch fab disposal process, I think as you mentioned, unfortunately, from a cyclical standpoint, there are a lot of factories that are under loaded at the moment. I think a number of your European peers are probably about to shut down some

Question: Robert Sanders - Deutsche Bank - Analyst : A big theme of this result season has been that China for semi-cos is becoming a sort of lower-than-normal margin region, having been a higher-than-normal region. So are you seeing more price pressure in response to tariffs on these Chinese vehicle companies that is leading them to be more aggressive, for example, using auctions and that kind of way of squeezing suppliers? And I have a follow-up.

Question: Robert Sanders - Deutsche Bank - Analyst : Got it. And then just in terms of the convertible, the '27 convertible, it's quite a large principal amount. I mean, as I look into '26, presumably, if you do refinance that convert at the end of this year of next year, sorry, your interest expenses are going to go up at the same time as when this prepayment is going to unwind. So into '26, how do you offset some kind of cash pressure either from higher interest expenses or the prepayment unwinding? REFINITIV STREETEVENTS | www.refinitiv.com | Contact Us consent of Refinitiv. 'Refinitiv' and the Refinitiv logo are registered trademarks of Refinitiv and its affiliated companies. NOVEMBER 07, 2024 / 9:00AM, AMS.S - Q3 2024 ams Osram AG Earnings Call

Question: Jnrgen Wagner - Stifel Financial Corp. - Analyst : I have a follow-up on Android demand. You mentioned strong design-wins, but also this reporting season, we had other companies complaining about a pronounced mix shift to the low end within 5G phones. How do you see that impacting you over the medium term? Or are you not seeing that at all?

Question: Jnrgen Wagner - Stifel Financial Corp. - Analyst : Okay. Clear. And then a follow-up on China automotive. How do you see your competitive positioning in general in China as we hear from others that Chinese competition seems to grow up a bit?

Question: Sandeep Deshpande - JPMorgan - Analyst : My question is regarding your long-term guidance. I mean you've raised your long-term growth guidance. I want to understand what is it that makes you confident on growth in the longer term at this point, given the short-term challenges being seen in the auto market and other markets as such? And then secondly, regarding the existing fab in Malaysia, which you've been dealing with the situation there. Can you give an update on what's happened on that fab at this point?

Question: Sandeep Deshpande - JPMorgan - Analyst : Sorry. Just to clarify there, is that that you have one party which is negotiating with you? Or is it still in multiple parties and multiple negotiations occurring?