The following is excerpted from the question-and-answer section of the transcript.
(Questions from industry analysts are provided in full, but answers are omitted - download the transcript to see the full question-and-answer session)
Question: Christopher Danely - Citigroup - Analyst
: And I guess I want to ask a couple of philosophical questions first. You guys had this special off-cycle capital management call, where you detailed
some of the changes to CapEx. So I guess I'm just curious, and I've had a lot of people ask, what brought about the decision to do that?
Question: Christopher Danely - Citigroup - Analyst
: Sure. Thanks. I guess, number one, what surprised me was the emphasis on the flexibility like you talked about CapEx, where you gave a bunch of
different scenarios. And I think Rafael said, yes, I mean we could literally take CapEx to 0 if we need to. I've never heard that.
I've never seated in practice maybe for a quarter or something like that, but that was pretty interesting. Are you -- is this like an effort to be a little
more transparent going forward or a little more responding to different questions or opening up the kimono, so to speak?
I know you guys used to not really comment on gross margin. Rafael actually talked about gross margin, gave some gross margin guidance, which
I can tell you, I liked. I think most investors like. Is this the Haviv stamp on TI?
Question: Christopher Danely - Citigroup - Analyst
: Yes. Well, you guys are growing mid-single digits both quarters. I wouldn't say, your market is in a down position, and we'll get to that in a second.
I did have a few of your holders and potential holders ask me this to ask you, does this mean you will be on the earnings calls?
Question: Christopher Danely - Citigroup - Analyst
: Great. And I'll throw in my vote for maybe restarting the Analyst Day every once in a while. I know Dave probably turned stark white, I heard that.
But it was a great TI vest. Another one that came out was, Rafael and I actually talked about gross margins and gave some growth.
Was this a conscious decision on your part, on his part? Is this much to do about nothing? Can we expect some more talk or some more information
on gross margins? This has pretty much been absent from TI guidance for more than a decade.
Question: Christopher Danely - Citigroup - Analyst
: We just want the breadcrumbs, we don't need the whole bowl but breadcrumbs are great.
Question: Christopher Danely - Citigroup - Analyst
: I'm curious, we haven't had a chance to catch up since you made this announcement. What's been the investor reaction to that? Any surprises,
good, bad, anything in between?
Question: Christopher Danely - Citigroup - Analyst
: Yes. I think that's one of the main appeals of TI in an industry with a lot of volatility, the consistency, not to mention the high margins and returns
and all that, but the consistency that you guys have had. It's like a Procter & Gamble on steroids, I always say. So now that you've been in the seat
for, I think it's 1.5 years. And change things around. What's the Haviv stamp going to be on TI? What do you want to be known for or known as in
your tenure in the driver's seat now?
Question: Christopher Danely - Citigroup - Analyst
: Let's talk about that, the playing offense, and you talked about share gains. Can you give us any insights into what TI is doing? Or has anything
changed in terms of progressing to share gains? I mean I keep hearing if I had a nickel, if I had a shackle for every time that I heard from someone
over in Asia that TI is cutting price or getting aggressive. I mean, it's been going on for like 20, 25 years, and your margins keep going up.
So clearly, you're doing something right. Yes, maybe just give us the playbook on offense and share gains going forward? Is anything changing?
Or what are the main --
Question: Christopher Danely - Citigroup - Analyst
: You said you don't think that the inventory depletion is done in auto and industrial, but your industrial business, I think, is growing this quarter. So
why would you say that if the industrial business is going to be up?
Question: Christopher Danely - Citigroup - Analyst
: Great. Okay. I wanted to touch on another thing you said 300-millimeter and moving more towards internal. How much of an advantage of this is
it to you on the cost perspective? And are you able to offer better pricing to competition by virtue of bringing more in-house and using 300-millimeters,
maybe talk about the positives there?
Question: Christopher Danely - Citigroup - Analyst
: Yes. We like higher margins for sure. So if we list the drivers of your, you can call them gross or free -- we'll put it in TI terms, free cash flow margins
going up. Clearly, higher utilization rates are going to help more 300-millimeter. Lehi, more in-house. Could you maybe list the margin drivers over
the next, I don't know, five to seven years as far as getting those back to the previous peak?
Question: Christopher Danely - Citigroup - Analyst
: Making sure, I'm not missing anything.
Question: Christopher Danely - Citigroup - Analyst
: Yes. Let's talk about revenue growth. For all those folks out there that say TI is losing market share, a funny thing happened on the way to share
loss. You've had by far the best performance this year in terms of revenue growth of any of the peers. Why has TI done so well this year? Do you
think it's part of the whole playing offense? The analog industry doesn't lend itself to large swings. Why is TI doing so well this year?
Question: Christopher Danely - Citigroup - Analyst
: Something I used to ask Rich all the time, and now I'll ask you, in terms of China is, they have this big program to try and take everything internal.
How do you view your China business longer term? Would you expect them to slowly take more products to internal sources? And do you think
that your China growth will slow? Or how do you view that from a TI perspective?
Question: Christopher Danely - Citigroup - Analyst
: That's a good perspective. Last question for me, I think. You talked about the product portfolio. You guys have spun out or proven down other
product lines, sensor and control most famously, which worked out for both sides. When you look at, say, the calculator business or the other
business or the embedded business.
Are there any changes up, down, add, subtract, you think could happen or you look at or possibilities there?
Question: Christopher Danely - Citigroup - Analyst
: Great. Thanks, Haviv. Thank you, everyone.
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