Diodes Incorporated (NASDAQ:DIOD) Q3 2023 Earnings Call Transcript

Gary Mobley: Okay. Brett if I can sneak one in. You’re essentially guiding your OpEx to decrease roughly $10 million sequentially. Is that anything structural or permanent or is it just lower bonus accruals and some other variable items?

Brett Whitmire : Yes. So basically you have if you look at some of our trend across the year, as we start to see some of the revenue trend you can see the actions that we’re taking to bring our employee spend in line with that. We’re also you can see some restructuring charges we took in third quarter, as we consolidated some stuff and various actions we’re taking and I think you’ll continue to see things we’re doing to drive and be stronger as we work through this cycle and continue to stay focused on kind of the when you look back a year ago when we were hitting $500 million, we were right on top of our model. And as we think about going forward, we’re going to tighten the belt during this cycle to be stronger and then get in a better position as we go forward and continue to work to enable ourselves to grow back into that.

Gary Mobley: Thank you.

Operator: Our next question comes from Tristan Gerra with Baird. Please go ahead.

Tyler Bomba : Hi. This is Tyler Bonbon for Tristan. Thanks for taking the questions. You touched on some of the near-term dynamics on pricing. Could you talk about maybe what your expectations for pricing are into next year?

Emily Yang: Yeah. So I think Tristan, I think pricing is a dynamic. There’s different product categories, there’s different competitors that we are facing and each of the area can be a little bit different versus the other. I think the end market is also a key factor. So in general you’re seeing more of this kind of price pressure coming from the maybe consumer more on the computing area, because the volume demand-driven So I think in general, we believe with the new product introduction and with the focus of the compact expansion in auto and industrial and together with the manufacturing efficiency can help us to weather better from the price pressure and with the long-term margin improvement So, I think in general that’s what we see overall in the market.

Tyler Bomba: Great. And then before this current quarter that you just reported when was the last time that you had underutilization charges and what does that tell us about where we’re at in the cycle?

Gary Yu: Yeah, actually, we do not dispose of too much information about those kind of underutilization charges to our client at this moment here. But we do see that underutilization situation happening since like the third quarter and then we again emphasizing the previous question here, so we really cannot control that demand from our client. But what we can do here is try to continue to do the driving or process in the product qualification in that waiver file that we can load it up, and avoid this kind of underutilization situation happening again and again.

Keh-Shew Lu: Well, if you are looking at the underloaded problem or unloaded, I need to separate from two aspects. One is underloaded due to our service agreement due to when we do the acquisition for the operation then we have a service agreement and that what we are doing is develop our own technology and putting our own product to continually speed up the underloaded effect. So that’s one direction. The other direction due to the underloading is our own manufacturing and due to our own loadings. Then we slow down the capacity extension. So you can see that’s why the CapEx for the manufacturing capability or capacity was reduced. That extension was reduced. That’s the way that’s why Brett mentioned, we cut down our CapEx. But at the same time, I think dropping the price may not be a good solution, because if the market slows down and you know you cannot just drop the price and try to gain more loadings, okay?