Financial Data and Key Metrics Changes - The company reported Q2 revenue of $1.47 billion, exceeding the midpoint of guidance and increasing by 1.6% from Q1 [8][18] - Non-GAAP gross margin was 37.6%, above the midpoint of guidance, while diluted non-GAAP earnings per share (EPS) was $0.53, down from $0.96 year-over-year [19][20] - GAAP operating expenses decreased to $359 million from $396 million in the previous quarter, reflecting the benefits of restructuring efforts [18][19] Business Line Data and Key Metrics Changes - Automotive revenue was $733 million, down 4% sequentially, but expected to grow in Q3 due to continued electric vehicle (EV) ramps [9][18] - Industrial revenue increased by 2% quarter-over-quarter, while revenue for AI Data Center nearly doubled year-over-year, indicating strong growth in this segment [10][18] - Power Solutions Group (PSG) revenue was $698 million, up 8% quarter-over-quarter, while Analog and Mixed Signal Group (AMG) revenue decreased by 2% [18] Market Data and Key Metrics Changes - China revenue grew 23% sequentially, driven by silicon carbide products and new EV ramps, highlighting China as a growth driver for the company [9][10] - The automotive market outside of China, particularly in North America and Europe, remains weak, contributing to the overall decline in automotive revenue [41][44] Company Strategy and Development Direction - The company is focused on strategic investments in automotive, industrial, and AI data center sectors to enhance competitive edge and deepen customer relationships [6][8] - Ongoing transformation includes exiting non-core businesses and repositioning the image sensing portfolio towards higher value segments like ADAS and machine vision [12][24] - The company aims to rationalize its product portfolio to shift towards higher value and higher margin products, with expectations of a $200 million revenue impact from exits in 2025 [22][100] Management's Comments on Operating Environment and Future Outlook - Management noted signs of stabilization in demand across end markets, with cautious optimism for recovery, particularly in automotive [28][29] - The company expects Q3 revenue to be in the range of $1.465 billion to $1.565 billion, with non-GAAP gross margin projected between 36.5% and 38.5% [22][24] - Management remains focused on operational efficiencies and disciplined capital allocation to enhance long-term shareholder value [16][24] Other Important Information - The company has increased its share repurchase target to 100% of free cash flow for 2025, having repurchased an additional $300 million in Q2 [17][20] - Capital expenditures in Q2 were $78 million, representing 5% of revenue, with expectations for continued investment in next-generation technologies [21][23] Q&A Session Summary Question: What are the current cyclical trends and headwinds? - Management noted stabilization in the automotive sector, with expectations for growth in Q3, but remains cautious due to uncertainties in the market [28][29] Question: What is the outlook for gross margins? - Management indicated that margin expansion is tied to utilization rates, with expectations for improvement as the market recovers [33][35] Question: What drove the softness in industrial revenue? - The decline was primarily due to traditional industrial sectors, which have stabilized but are experiencing fluctuations [39] Question: How is the automotive recovery progressing? - Management highlighted weakness in North America and Europe, but expects growth in Q3 as the company moves past the trough [44][45] Question: What is the impact of exiting non-core businesses? - The company anticipates a $200 million impact from exits in 2025, with a focus on higher value segments [100] Question: How is the company preparing for potential tariff impacts? - Management emphasized maintaining flexibility and focusing on controllable factors within their manufacturing footprint [107][108] Question: What is the status of the East Fishkill facility? - The facility is operational with qualified products, contributing to the overall utilization and production capacity [102][103]