Vishay Intertechnology Q3 2023 Earnings Call Transcript

Quartr
Provided by Quartr
November 8, 2023

There are 7 speakers on the call.

Operator

Good day and thank you for standing by. Welcome to the Vishay Intertechnology Q3 2023 Earnings Conference Call. At this time, all participants are in a listen only mode. After the speakers' presentation, there will be a question and answer Please be advised that today's conference is being recorded. I would now like to hand the conference over to your speaker today, Peter Henrici, Investor Relations.

Speaker 1

Thank you, Josh. Good morning, and welcome to Vishay Intertechnology's 3rd quarter 20 23 earnings conference call. I am joined today by Joel Smikal, our President and Chief Executive Officer and by Laurie Lipkaman, our Chief Financial Officer. This morning, we reported results for our Q3. A copy of our earnings release is available in the Investor Relations section of our website at ir.vishay.com.

Speaker 1

This call is being broadcast live over the phone and can be accessed through our website. In addition, today's call is being recorded and will be available via replay on our website. During the call, we will be recording the slide presentation, which we also posted at irvishay.com. You should be aware that in today's conference call, we will be making certain forward looking statements that discuss future events and performance. These statements are subject to risks and uncertainties that could cause actual results to differ from the forward looking statements.

Speaker 1

For a discussion of factors that could cause results to differ, please see today's press release and Form 10 ks and Form 10 Q filings with the Securities and Exchange Commission. We are including information in our press release and on this conference call on the various GAAP and non GAAP measures. We have included a full GAAP to non GAAP reconciliation in our press release as well as in the presentation posted on ir.vishay.com, which we believe you will find useful when comparing our GAAP and non GAAP results. We use non GAAP measures because we believe they provide useful information about the operating performance of our businesses and should be considered by investors in conjunction with GAAP measures. Now, I turn the call over to President and Chief Executive Officer, Joel Smecom.

Speaker 2

Thank you, Peter. Good morning, everyone. I'll start my remarks on Slide 3 with a review of the demand trends for the Q3, and then Laurie will take you through the highlights of our financial results. After that, I'll come back to give you a progress report on the near term initiatives we're implementing to improve all customer facing aspects of our business as we set the stage for faster top line growth and margin expansion. Then we'd be happy to answer Today for the Q3, we are reporting revenue of $853,700,000 which is within our guidance range of $840,000,000 to $880,000,000 As expected, Revenue declined both quarter over quarter and year over year due to inventory adjustments by our distribution and EMS partners in response to softened demand among industrial customers and also our contracting lead times.

Speaker 2

Looking at our revenue mix, 1st by end market, automotive, which accounted for 37% of total revenue, was 2% higher than the 2nd quarter and grew 10% versus the Q3 last year. Our sales supporting the further electronic content of internal combustion engine vehicles continues to be strong. Design activities related to increasing electronic content in EVs, hybrids and internal combustion engines are accelerating. Industrial, representing 35% of total revenue, declined 9% versus the 2nd quarter and 18% from last year. Macroeconomic uncertainties and higher interest rates curb demand in all regions.

Speaker 2

And in China, the economic recovery has yet to find solid footing. As a result, channel and end customer inventories are at a higher level, which will take longer to burn off. Nevertheless, design activity in the areas of industrial automation, smart grid infrastructure, EV charging infrastructure, among other applications, has not slowed down. In addition, a shipment of our largest capacitors to support an electrical grid project was pushed out to the 4th quarter. In Aerospace and Defense, revenue was slightly below the 2nd quarter, but grew 19% versus the Q3 last year on continued strong demand from commercial aviation and from weapons system contractors in the U.

Speaker 2

S. And Europe. Defense orders have been increasing at a faster rate now since the war in Israel began last month. Revenue from medical customers came in 14% below 2nd quarter and 10% in the 3rd quarter last year due to the timing of orders and product mix. Here we build the customer forecasted demand and have increased our inventories based on strong demand signals from our medical diagnostic equipment and implantable devices customers.

Speaker 2

However, toward the end of the quarter, some shipments were held up as customers faced supply chain issues. Weekly polls now have resumed in Q4. Consistent with weak demand trends during the first half of the year, revenue from the other end market segments declined 5% versus the 2nd quarter and 26% versus last year, mostly on volume declines. In terms of channel sales, increases in OEM revenue both quarter over quarter and year over year were overshadowed by the declines in distribution sales and to a lesser extent declines in EMS sales. During the quarter, Distribution revenue fell 10% compared to the 2nd quarter and was 18% lower than the Q3 last year as a result of both inventory adjustments and pauses in buying through the channel primarily by industrial and EMS accounts.

Speaker 2

Distribution inventory at quarter end was 24 weeks During the quarter, we intentionally increased distribution inventory as part of our strategy to expand our participation in this higher margin channel. I'll come back to this topic after Laurie reviews our Q3 results. POS decreased 7%, reflecting weakened industrial demand in all regions. OEM revenue grew 4% quarter over quarter and 11% year over year driven by strength in demand from automotive customers in each region. EMS revenue declined 6% quarter over quarter and 14% year over year, reflecting inventory adjustments by EMS customers as lead times are now mostly inside of 10 weeks and demand from their customers softened in all regions.

Speaker 2

Before turning the call over to Laurie for a review of our financial results, I want to comment on the situation in Israel. As you likely know, Vishay has 3 manufacturing locations and 1 office in Israel and 2,400 employees. In the face of daily challenges and the emotional toil toll from the October 7 attacks, each of these sites continues to operate normally and ships parts without interruption. In fact, For over 50 years Vishay has shipped product from Israel to all regions of the world without interruption. We're in communication with those customers who have expressed concern about our ability to deliver products from Israel.

Speaker 2

Since Vishay is classified as an essential business in Israel, we're able to operate with a high attendance, typically greater than 90%. I have the utmost admiration for our employees in Israel for their fortitude and their resilience, we are extremely grateful for their steadfast dedication in this difficult time. Globally as well, I would like to thank all of our employees for their continued contribution to transforming We'll now go to Laurie for the financial results.

Speaker 3

Thank you, Joel. Good morning, everyone. I'll start my review of our Q3 results on Slide 4. Revenues for the Q3 were $853,700,000 Compared to the Q2, revenues decreased 4.3%, reflecting a 3.2% decrease in volume with a 0.8% reduction in pricing. Pricing was essentially flat with our OEM, automotive and industrial customers under contract and impacted somewhat by price pressure on high inventory products primarily in Asia, so through distribution channels and to EMS to Industrial End Markets.

Speaker 3

By reportable business segment, revenues of MOSFETs, diodes, opto and inductors were essentially stable. The decrease was mainly attributable to resistors and capacitors. Compared to the Q3 last year, revenues were down 7.7%, reflecting a volume decrease of 10.2%, primarily related to last year's spike in MOSFETs volume following the Shanghai shutdown of quarter 2, and particularly and partially offset by 0.9% increases in price. At quarter end, book to bill for consolidated Vishay was 0.63 and backlog at quarter end was 5.5 months compared to 6.4 months at the end of the prior quarter as lead times continue coming down in all product segments. We returned a total of $31,100,000 to shareholders compared to comprised of dividends of $13,900,000 and stock repurchases of 17.3 million dollars The next slide presents income statement highlights.

Speaker 3

Gross profit was $237,600,000 for a margin of 27.8 percent compared to 28.9% for the 2nd quarter and in line with our guidance. Compared to the 2nd quarter, gross margin decreased primarily due to lower volume. SG and A expenses were $122,500,000 dollars 400,000 in the Q2, slightly lower than our guidance due to foreign currency effects. Operating income decreased $19,500,000 versus the 2nd quarter on lower gross profit. Operating income decreased $68,000,000 versus the prior year due to lower volume related gross profit and higher SG and A expenses, primarily reflecting annual salary increases, general inflation and equity incentive compensation.

Speaker 3

Operating margin was 13.5% compared to 15.1% for the 2nd quarter and 19.8% for the Q3 of 2020 Adjusted EBITDA was $159,600,000 for an adjusted EBITDA margin of 18.7%. Our normalized effective tax rates were 26.9% and 28.0% for the quarter and the year to date periods respectively. Our GAAP effective tax rates were 31.7% and 29.3% for the quarter year to date periods respectively, reflecting the non deductibility of most of the loss on early extinguishment of debt. For 2023, we expect a normalized effective tax rate of approximately 28.5 percent for the full year and approximately 29.5 percent for the 4th quarter. GAAP EPS was $0.47 per share and adjusted EPS was $0.60 per share compared to $0.68 per share for the 2nd quarter.

Speaker 3

For your convenience, we have included in the body of the presentation a chart depicting revenue, gross margin and book to bill ratios for each of our reportable business segments. Turning to Slide 7, we present cash conversion cycle metrics. DSOs were 48 days, 2 days higher than the Q2 and DPOs were one day higher than 33 days. Inventory was $643,500,000 at quarter end, down compared to $660,000,000 as of the end of 2Q. Inventory for the sales outstanding were 96 days compared to 94 days for the 2nd quarter, bringing the cash conversion cycle further to 111 days.

Speaker 3

On Slide 8, you can see that cash flow from operations of $122,300,000 for the Q3 was higher than the second quarter, which included the annual installment of the transition tax. Total CapEx was $66,800,000 for the quarter and $38,100,000 for the total was invested in capacity expansion. On a trailing 12 month basis, capital tax was 9.7% of revenue compared to 7.8% for the same period last year, primarily due to our enhanced capacity expansion program related to our growth initiatives. Free cash flow for the quarter was $55,500,000 compared to $36,300,000 for the 2nd quarter, which included the annual installment of the transition tax. Stockholder returns for the 2nd quarter amounted to 31 point $1,000,000 consisting of $13,900,000 for our quarterly dividend and $17,300,000 for share repurchases.

Speaker 3

We repurchased 600,000 shares at an average price of $27.38 per share during the quarter. Total liquidity at quarter end was $1,900,000,000 including cash and short term investments of $1,200,000,000 and our undrawn $750,000,000 revolving credit facility. As mentioned in past earnings calls, We use the revolver from time to time to meet the short term financing needs. Turning to Slide 9, we present a summary of our debt related transactions in Q3. We wanted to get ahead of the due date of the existing converts in a rising rate environment.

Speaker 3

We use the proceeds primarily to repurchase a significant portion of existing converts, effectively refinancing them for an additional 5 years at the same coupon rate. One of the benefits of these transactions for Vishay is that we are enhancing our U. S. Liquidity position to support growth initiatives. Turning to Slide 10 for our guidance.

Speaker 3

For the Q4 of 2023, revenues are expected to be between $770,000,000 $810,000,000 Gross profit margin is expected to be in the range of 25.5 percent plus or minus 50 basis points and we still expect full year gross profit to be in the range of 29% plus or minus 50 basis SG and A expenses are expected to be $125,000,000 plus or minus $2,000,000 for the quarter and $490,000,000 plus or minus $2,000,000 for the full year at current exchange rates. For 2023, we expect a normalized effective tax rate of approximately 28.5 percent with a 4Q rate of approximately 29.5%. Finally, we remain committed to distributing at least 70% of our free cash flow to shareholders in the form of dividends and stock repurchases in accordance with our shareholder return policy. I'll now turn the call back to Joel.

Speaker 4

Thank you, Laurie. Let's turn

Speaker 2

to Slide 11 for a review of our key near term initiatives. As you may recall on my first Call as CEO of Vishay last February, I laid out the broad outline of our 3 year plan to expand capacity to support our highest Growth and highest return product lines and to position Vishay to be ready for the next phase of the megatrends in e mobility, Sustainability and Connectivity. 2023 is the staging year for this plan and all elements of the plan are progressing throughout the organization. To be ready for the next phase, we are investing a total of $1,200,000 between 2023 to 2025. Our plan was to invest approximately $385,000,000 in 2023.

Speaker 2

For the 1st 9 months of the year, we spent $34,000,000 $113,000,000 of which was spent on expansion projects. As Lori just reported, We have adjusted our planned CapEx for this year to $350,000,000 due to some delays in installing equipment related to construction projects. We intend to carry over the remaining $35,000,000 into 2024. During the Q3, in addition to continuing our advanced To meet the growing demand of our automotive and industrial customers, we opened our 2 new facilities in Mexico. At the La Laguna campus, where initially we will focus on mass production for power inductors, equipment and production lines have been set up, Qualification of commercial products is underway and we have the ability to ship commercial products by the end of this year.

Speaker 2

We will qualify and begin producing automotive grade products in 2024. The Juarez facility is dedicated to increasing output of with our trip resistors and to meeting the growing demand for these products in all market segments, but with the fastest growing demand in automotive and industrial applications. We completed qualification of most package sizes and expect shipments from this facility in the Q4. For MOSFETs, to To meet the increasing demand of our automotive and industrial customers, we have 4 initiatives underway. First, construction of the new 12 inches MOSFET fab in Germany is on schedule for completion in 2026.

Speaker 2

2nd, we recognize that we need to bridge capacity before 2026 and expand our MOSFET capacity much sooner. For this reason, during the quarter, we signed a long term supply agreement with Korean based Key Foundry to supply wafers for multi power MOSFET products. Qualification of commercial MOSFETs is underway with mass production of these products in 2024. 3rd, as mentioned last quarter, we expanded our supply agreements with 2 of our existing foundry partners to gain more wafer capacity. 4th, we are moving ahead with the next step toward commercialization of Silicon Carbide MOSFETs.

Speaker 2

As announced this morning, we have entered into a definitive purchase and sale agreement with Nexperia to acquire its Newport Wafer Fab located in South Wales for $177,000,000 in cash. Newport was put on the market in November 2022 when the UK government ordered Chinese operated Nexperia to divest its stake in the fab due to national security concerns. Vishay will acquire a 100% interest in the legal entity, which owns and operates this facility. With Newport, we will add an automotive qualified 8 inches semiconductor fab staffed by highly skilled and dedicated employees that is located in the heart of a compound semiconductor cluster in South Wales. We plan to make Newport the home for Max Power and our silicon carbide and GaN technology developments.

Speaker 2

Leveraging relationships with the local scientists in the universities. For our customers, we'll have the entire silicon carbide and GaN manufacturing process under one roof. Closing is estimated to take place in the Q1 of 2024 after securing the UK government's approval among other closing conditions unique to this transaction. With respect to developing our silicon carbide capabilities, We met our plan to provide samples of 1200 volt planter technology MOSFETs to customers in the 3rd quarter and are on track to deliver them into production in the Q4. We're continuing to advance the development of 1200 volt trench technology and samples will be available in the Q2 of 2024.

Speaker 2

1700 volt planner development is moving forward with samples also available in the Q2 of 2024. And the 650 volt planter technology will also have samples available in the Q2 of 2024. Both die and finished packages will be available in each voltage. We are introducing our silicon carbide technology roadmap to many automotive OEMs and Tier 1 automotive design companies. We have peaked their interest in the technology differentiation of our MOSFET structure.

Speaker 2

Darren will be evaluating samples for EV hybrid automotive programs. For our subcontractor initiative, we also continue to engage in developing partnerships with subcontractors to outsource some commodity products and create incremental capacity for our higher growth and higher return products. We have qualified 1 subcontractor for thick film chip resistors and have shipped product in the Q3. These products are both commercially and automotive qualified. For inductors, we bring on additional capacity to support a widening of our product is helpful.

Speaker 2

We are progressing in our qualification of 23 new products by the end of the year and expect to have volume available mid-twenty 24, which will help build our distributor business. Each passive business unit is evaluating subcontractors. Each semiconductor business unit adds semiconductor capacity to support their front end capacities. In terms of enhancing channel management, we are focused on maximizing the profitability of each channel. During the Q3, We continue to work on expanding participation with our distributors and regaining their trust in a more reliable machine.

Speaker 2

Due to our capacity constraints since 2017, we have been playing in a narrow band of partners where we can only support a portion of the distributors total SKUs. We underserved this market. With capacity investments from last year and incremental capacity being qualified through subcontracting and foundry agreements and our new facilities in Mexico ramping up, We're in a far better position now to engage with distributors to identify the broader part number mix by technology and widen our presence on the shelf. We are committed to ensuring that we are a reliable supplier to our distributors as the industry moves past the current inventory correction. We also continue to develop our promotion of Vishay's solution selling.

Speaker 2

This quarter, we continue our strategy to build automotive reference designs for engineers to evaluate our broad portfolio of discrete semiconductors and pass In most power applications, we can populate 80% of the components on the circuit board. In addition to the high voltage intelligent battery sensor we made available for testing last quarter, we released a 48 volt eFuse circuit breaker in the Q3. We plan to reduce a bidirectional 48 volt, 12 volt DC to DC converter during the Q4. Also at Elektronika India, in the Q3, we showcased a few solutions, including the 48 volt eFuse circuit breaker and the onboard charger and traction inverter for low speed EV market, which we are developing with the Tier 1 supplier. Let's go to Slide 12.

Speaker 2

This is a review of the goals we set for ourselves in 2023. In terms of Expanding external capacity, we are progressing well to qualify and have signed agreements with a number of subcontractors by the end of the year. Our evaluation of where to build Vishay's next manufacturing facility in Europe is on hold, excuse me, a bit pending the acquisition of Newport. We're adding incremental capacity to support growth in our 30 key product lines and developing go to market strategies for each of them. We have shipped samples of 1200 volt planter technology MOSFETs and are on track with the development of the 6 50 volt and 1700 volt planner technology.

Speaker 2

Finally, we remain committed to holding an Analyst Day in 2024. We will provide an update on the timing of this Analyst Day following the Closing up the Newport transaction. Our customers keep telling us they want more product from Vishay, and we are working hard to meet and exceed their expectations of the new Vishang. Our final note, I want to share with you we are planning to attend the Needham Annual Growth Conference on January 18, and we look forward to meeting you there. With that, I'll turn the call back over to the operator to start the Q and A session.

Operator

Thank you. One moment for questions. Our first question comes from Joshua Pechelter with TD Cowen, you may proceed.

Speaker 4

Hi, good morning, everyone. This is Sam on behalf of Josh. First and foremost, we wish the best for your Israel colleagues.

Speaker 2

Sam, thank you. Nice to speak with you. At this point, we're not able to share the historical details of the fab until we get through the closing process. What's in the press release is what we're able to share at the moment. Capacities and those things, we'll be able to Get into much more detail after the close which we foresee in February.

Speaker 4

Understood. Thank you for that color. And then as my follow-up, Laurie, I think you mentioned that you had a comment about pricing, but My signal cut out. So historically price erosion and competition has been limited to the commodity product lines that you have. Are these pricing pressures still contained to commodity SKUs in the quarter?

Speaker 4

Or are you seeing it expand to impact to the parts of your non commodity portfolio that aren't anchored to long term Auto contracts, for example.

Speaker 3

No, they remain with the commodity cost.

Operator

Our next question comes from Ruplu Bhattacharya with Bank of America. You may proceed.

Speaker 5

Hi, thank you for taking my questions. Hi. And my prayers are with the families in Israel as well. With respect to the Newport wafer fab that you're acquiring, Can you give us some more details like how many employees are you taking on and how does this change your annual CapEx and OpEx spend? Is this part of the prior announced $1,200,000,000 over 3 years or is this in addition to that?

Speaker 2

It is an addition to that $1,200,000,000 It's been part of our strategy since the Max Power acquisition last October to bring in house the capability of silicon carbide. As we've met with a number of automotive customers, This is a very important requirement that they're engaging suppliers that have the in house capability of the process. So we like our technology For Max Power, we need to find a home for it and we see that this Nexperia fab, Newport, is a great home for this with the Universities that surround it, there's quite a technology group at 3 universities that develop wideband gap technology. So we see this as quite a benefit for us going forward. The details of the fab, the employee count, the Capacities, we're just not able to share at this moment.

Speaker 2

It is a working fab. It is in silicon technology today. It is an 8 inches fab. That is about as far as I can go with describing the fab. And we're quite excited, Quite excited and Vishay about what this is going to do to accelerate our silicon carbide product.

Speaker 5

Thank you for the details there. The press release said that you are intentionally increasing inventory with distribution partners as you broaden participation in this higher margin channel. So I was just looking for some more details on that. Are you specifically partnering with new distributors or are you now selling more product lines through distribution or are you increasing the inventory of existing products at distribution? So if you can give us some details on what exactly this entails.

Speaker 5

And then in terms of implementing go to market strategies, do you think this is more or less done or do you think You'll be done by the end of 'twenty three or will this carry over into 'twenty four as well?

Speaker 2

Okay. With the distributors, It was always a large part of our business, about 55 percent of Vishay's annual sales. The distributors are asking more from Vishay. As I travel and meet with Now what is that product? We've had the standard part numbers.

Speaker 2

I say we provided them over the last 5 years through the last two up cycles that they put on the shelf. We had limited capacity, so we weren't able to really support a broader SKU mix. We had limited capacity which was allocated to automotive or other large direct customers. The distributors had to find other suppliers to take care of the customer base and the market. Part of our strategy was to reengage all business channels, distribution is one of them.

Speaker 2

So we are broadening our SKUs. We're adding part numbers. Each of the business units is traveling to the distributors in all regions, having product mix discussions to understand the part number demand that we were not supporting. So when I say the intentional or this is by design, we are raising our inventory dollar at the distributor because we're adding part counts. 1 of the distributors that we have been working with, we've added 8,000 part numbers this year that we were not participating in.

Speaker 2

And we have more work to do with that distributor. That's just one example. So Vishay can be a much, much broader supplier. We have the technology. We have the print position.

Speaker 2

With the customer, the distributors see this print position, but we didn't have the capacity or the part numbers in their system to support that demand. So that explains why we say it was intentional, it's part of our growth strategy and we expect to be an even bigger contributor to our distributors' customers.

Speaker 5

Okay. Thank you for the details. Yes. That's helpful. And maybe for my last question, if I can ask one of the near term initiatives that you have is to fill gaps in technology and market coverage.

Speaker 5

So just if any details there like what would you like to add in terms of technology and which markets And would that be through internal investment or is this something that you would consider M and A for? Thank you.

Operator

Okay.

Speaker 2

Filling gaps in technology, the silicon carbide we had a gap. That technology was in development with many of our competitors for a decade. So MAX Power is that first filling of The technology gap, GaN. GaN is a technology that we need. We're in development of GaN.

Speaker 2

We're talking to universities to help us create this technology for Vishay. We're also looking outside for M and A in GaN. Circuit protection is another technology we don't have in Vishay. So we look to broaden our portfolio by including circuit protection. As we sit with customers, As we sit with engineers and with the distributors in EMS, they point Vishay directions.

Speaker 2

They say, Vishay, look this way. Look to support this technology. So we appreciate those comments and M and A will be a part of this For sure, as well as our own internal R and D.

Speaker 5

Okay. Thanks for all the details.

Speaker 2

Yes. Nice to talk to you.

Operator

And our next question comes from Matt Sheerin with Stifel. You may proceed.

Speaker 6

Yes. Thank you. Good morning. I have just a couple of near term modeling questions. So you're guiding gross margin down.

Speaker 6

It looks like that incremental margin is 50%, 55%, and you're also modeling or guiding OpEx up a little bit. So just trying to figure out, are we bottoming here in terms of margins? It looks like your operating margin will be Hello 10% for the first time in several quarters. How should we think about as the cycle bottoms here where margins May bottom. And are there any other cost cutting initiatives in terms of OpEx or other costs that you may take out in order keep margins at higher levels?

Speaker 2

Are we at a bottom? It's actually quite are we at a bottom? We look at the discussions we're having with our channel partners, Our automotive customers, each segment has kind of a different move to it. On the top line, when we look at revenue, we're seeing the Aerospace defense moving up. We're seeing automotive flat to continuing to move up.

Speaker 2

So positive on the top side that we can see some of those positive Markets offset other markets which are flat to sideways. The margins, the margins we are working diligently to make sure that we can establish what we say as a track record for Vishay. We're a Vishay company. We believe that the margins will continue through. We work with cost cutting.

Speaker 2

We work on rightsizing We look at our cost or spending on OpEx and decide if we need it in the current quarter, if we can push it out a quarter. So we're quite diligent here. Laurie, do you have any comments you'd like to make?

Speaker 3

No, I think that pretty much covered it.

Speaker 6

Yes. I'm just trying to figure out where yes, go ahead.

Speaker 1

Sorry, if I may add. So if you look at book to bill, we disclosed the high incremental margin down is partially related to a negative product mix that in that the semiconductors, We assume the semiconductors will be going down further in Q4 than the passives. So that drives the margins down and increases the incremental negative margin.

Speaker 6

Okay. And is that true for the MOSFET business as well? I know I saw the book to bill was very low, but I know You have a strong demand from auto customers, so the MOSFET business will be down again as well?

Speaker 2

I would say sideways, Matt. The automotive poles, the schedule agreements we see continue to represent the demand. We were in allocation with AutoMoss for the product. We've come off of allocation for auto mass in the Q3 and now we're engaging customers and distributors which we couldn't currently support with our capacities. So we're working to engage more customers to not Say automotive products for MOSFETs are down, that's actually broaden our customer base and be able to support more.

Speaker 2

MOSFETs, as Peter said, is one of those higher margin products, but the inventory in the channel is high for semiconductors, and we have opportunities through adding part numbers, which would give us a greater play for the automas.

Operator

One moment for questions. And our next question comes from Joshua Buckhalter with TD Cowen. You may proceed.

Speaker 4

Hi, everyone. Sam again. I just wanted to follow-up on the distribution comments from earlier. I know your visibility is never 2020, but could update on how much work there is to do in restocking the channel with new annual products to target levels if you have any given that disty inventory is 24 weeks Now versus I think 21 weeks last quarter?

Speaker 2

Yes. There is quite a bit of work to do. We have 16 divisions in Boucher Business Units and at this point 4 of them had their meetings with the distributors in the regions. There's meetings going on this week now in Europe for 1 of the divisions. So we are roughly a third, Maybe 30% of what we want to achieve here with the distributors.

Speaker 2

It's a true reengagement. We are showing the distributors a new Vishay, so we got quite a bit of work here yet to do, which is going to span into the early part of 2024.

Operator

Thank you. I would now like to turn the call over to Joel Smachow for any closing remarks.

Speaker 2

Thank you. Thank you everyone for joining our call today. At Vishay, we remain committed to making the necessary investments in capacity, customer facing resources and our innovation to make sure Vishay is ready to take full advantage of the next phase of market growth for the megatrends we talk about, e mobility, sustainability and connectivity. We're moving forward with speed and conviction across the organization. I look forward to talking to you again in early February when we report our 4th quarter results.

Speaker 2

Thank you very much.

Operator

Thank you. This concludes

Powered by Quartr
Earnings Conference Call
Vishay Intertechnology Q3 2023
00:00 / 00:00