Hey, good morning, good afternoon, and good evening for wherever you are. We're just gonna wait a few minutes so we can allow all participants to enter the call. In the meantime, welcome to Infineon Technologies Automotive Division call for 2023. Just to confirm, the format will be a presentation followed by a Q&A. Just a reminder to please use the Raise Hand function for any questions. Okay, I will now pass you over to our Research Analyst, Janardan Menon, who will begin the call. Hi, good afternoon, good morning, and good evening, to all of you from my side as well. Thank you very much for joining us today on this Automotive Division call for 2023 of Infineon Technologies. We're very fortunate to have with us Mr. Peter Schiefer, President of the Automotive Division of Infineon, and Daniel Györy, who is Senior Director, Investor Relations. I will now pass over to Peter to run through the presentation, which is already on the Infineon website. And as Megan said, once the presentation part is over, we will move on to the Q&A session. Over to you, Peter. Thank you, Janardan, and also from my side, a very good day to all of you, and I'm very happy that you dialed in today, giving me the opportunity to give you an update about the Automotive business. I prepared quite some updates also to the structural growth drivers, but before we go there, I want to start with an overview on the automotive semiconductor market. The position Infineon is in the stickiness of our products also across all the regions. And I also want to give you an insight to, why we grew our margins strongly in the past years, and, why we will keep the profitability at the similar levels. Yeah, looking on the long time, performance, we have outgrown the automotive semiconductor market by, three percentage points over the past two decades. And with that, we moved gradually from the number three to the number one position. And I would say we are also well on track to keep the things in this way. And this is due to the fact that our goals, you can see that on the different product segments, is very much broad based. So we are not limited to only a few particular categories, and we really can use our overall system expertise and the corresponding products to really sell many products into the applications and not just a few ones. This is good for our goals, but it also helps us to become more resilient. So this number one or number two position in the product category, for sure will really be leveraged in order to make sure that we can really address all the market segments. And this also means that we will continue to invest in the capacity that we can realize all these major growth segments. And you will see that in the later section of my presentation, the figures from our highest revenue contributors, and you also will see here how we will double our revenue in the next five years in each of those segments. So in the automotive semiconductor market, I think you all know we see structural growth drivers, and the market is driven by the growth drivers you see on the left-hand side of the slide. Let's take EVs or HEV as an example. Even if you assume a flat to slightly growing vehicle market, the number of electric cars are showing double-digit growth over the next years. So if you take this year as a reference, round about 12 million electric cars, and we expect 16 million next year, that means this alone would be a 30% year-over-year growth. Even if you take a significant year account of the, of that number, still will be double-digit growth in the target market. Similar, the penetration for the ADAS/AD, and also the evolution of this new E/E architecture, and I will explain it a bit later, show similar development trends like the EV part. Yeah, basically, you can say that the growth of the automotive semiconductor market is, to a certain extent, kind of, decoupled from the vehicle market. That means that the total vehicle growth has a lower impact than the penetration rate of the structural trends. All of them, so the xEV, the ADAS/AD, the comfort, the premium, are topics we talked in the past about, and they are well understood, and therefore I pick today a focus on the E/E architecture, as I believe that the positive impact so far is underestimated in the community, and there will be some slides on that. Before we go there, let's have a deeper look on the semiconductor bill of materials per car. You know, from the past presentations, that this is strongly increasing, also in line for sure with the strong growth on the electromobility. And, already today, battery electric vehicles are almost doubled the semiconductor content compared to a plug-in hybrid, so a gasoline or a diesel car. And here, still today the majority of the BoM growth in electric cars comes from the drivetrain, so that means that all the known applications like the inverter, like the onboard charger, the battery management systems, these are the main applications in the drivetrain. At the end of the decade, so by 2030, the semiconductor BoM of such an electric car may even increase up to $2,000, very much driven by those cars which have much power, more complex drivetrain. And also in that car, you will see an increasing share of wide bandgap, with its silicon carbide for the main inverter or gallium nitride for the onboard charger, and this also will increase the semiconductor content. Yeah, and I think here I'm really convinced that Infineon will benefit very strong from this, semi BoM growth. You know, we are the market leader in power semiconductors. We have an excellent market position in all types of the power semis, silicon, silicon carbide, gallium nitride. And this will really help us to fuel our growth there. But also the other trends are the increasing level of the autonomous driving, this new E/E architecture, the higher safety standards, the needed security features, the comfort and premium applications. All that will in addition to the E/E drive the semiconductor BoM, and also that areas. I'm highly convinced we are really in an excellent position with this broad product portfolio. We'll talk about later, but you know, we have microcontrollers, we have smart powers, which has most sensors, memory, connectivity, and many more. And in most of that product categories, we are already leading today. We have a lot of innovations going on, and we have a very strong design-in pipeline, which really make sure that the growth will continue. Yeah, and that means at the end, for the semiconductor growth means that the revenue will continue to grow even when the overall light vehicle production levels are basically leveling out. And I think very important, also, this is valid for next year. So there will be growth in the automotive division from 2023 to 2024. Going a little bit deeper now in the profitability. And you see in this chart that over the last 2-3 years, we have strongly improved the segment result margin. And this is driven by factors, and most of them will stay. So for example, you may remember that in the previous years, I discussed about the xEV products, which have not been in scale yet. Now, they are surely running at scale, and there is volume ramps in both the silicon carbide world and the IGBT world going forward. Microcontroller, we have rapid share gain, so we just reached in 2022 number two market position. And, microcontroller, as you know, is a very much sticky business, and we have a very broad base of customers. So this helped over the last years to improve the profitability. Last year, we made a long-term binding supply price agreements with all the eight, I think, months with Tesla. And then not to forget the former years, we had done quite some portfolio decisions and product mix improvements, and they are all now kicking in, and we see the positive impact, this will also last. And we also will see in the next years, due to the strong growth, additional OpEx scale. So therefore, on the long run, the long-term margins will be substantially higher compared to the past years. So higher chunk of base and also higher business resonance. And as of today, if I look for 2024, and if I assume a flat car production, as mentioned, still you will see a nice growth. I would assume that the segment result margin would be anywhere between the Infineon, which is at 25%, and the 28%, which you see as a consensus for the 2023 year. So anywhere between 25% and 28%. I think, if you look a little bit to my colleagues in the other divisions, this is somehow in contrast to the other divisions, they are, except the renewables. We see as of today, a weaker development with no trust achieved yet. And for automotive, as mentioned, the yearly margin will be in the range I have given, even though we may see some quarter ending quarters, maybe there is some idle cost in the next one or two quarters. But as mentioned, the yearly margin, it will be in the range I have given. Yeah, on the next slide, I wanna give you a little bit of an insight on the geographical situation of the automotive business. This should show and address a little bit the topic of how we're doing our businesses across the region and from a geographical perspective. You see this split here that we have across, able to participate in the worldwide growth in the region. We are really number one in China, number one in Korea. We are number two in Europe and Japan. We have quite some success now with new design wins in North America. This will strongly increase our growth there, and we think we will see over the next years, and we see it on the chart, that the share of the revenue of which we do in North America will increase. Contrary in Europe, we see there's a lot of relocation and offshoring going on that will either decrease the revenue share. Important to mention is that also in Europe, we will see a solid absolute revenue growth. It's a reduction in relative share of the overall revenue, but it's absolute growth still in the Europe region. Yeah, and then we will also continue for sure to grow strongly in China. But keeping the China revenue share stable, it means what we factor in, yes, there is competition in China or coming from Chinese competitors. But despite this, we will see strong growth, and we factored in that Chinese local players will take share of the automotive in the market. Why is there still growth? Because, here again, what mentioned before, semiconductor content and the strong benefit on, the system expertise, and also the high quality awareness of the Chinese OEMs, especially those who wanna export their cars, outside China. And then going a bit deeper on this, China, topic, I think we, as mentioned, see China as a key market for with the biggest market, strongest growing market. So the market will add growth and value for us. And, there are some very nice examples, which show that we have, a significant content in the cars of the key, Chinese OEM players. And, this is based on many, many products, and, even if you would exclude the HEV topic, which is very hot with cars, even if you would exclude that portion of the business, it would still grow. Because we have strong growth in the MCUs, we have strong growth in silicon carbide, and there's many, many more products you need to do a system. And And that's a key driver for our success, is holistic solution competence, which we have. And on the time to market, I'll say that China may be quite fast. So that's why the innovation can bring on the table, helps also to keep the pace. And even though you see some Chinese coming in now, it's fair to say that for the most of our solutions, there is simply no local equivalent. And it's development, we are also part of the developing that and are working already on next generation products. There is also for certain components quite some, I would say, platform related stickiness. So take the microcontrollers. Once the microcontroller family is designed in, typically, this component lasts for many years. And there's also need for a more stable when it comes to more sticky and complex product applications. You may ask why, but the Chinese OEM has such a high semiconductor content, and why we also have the same combination of all electric best. They all come with a Level 2+ automotive driving function. They all come with capabilities, typically, that they have a very cool hard, allowing data on can upgrade user with the low value. So it means the semiconductor hardware content is designed already to... Most of the unique coming in the next years. And this is really an opportunity for us, like, you know... Switching to the part, the areas which we have now are covering around about the same, so this automotive value from Infineon. And you will see that most of these parts are basically exposed to one or the other of the structural growth driver, and they will continue not only to grow the business, but to a very profitable level. And in the next part, you will see a typical picture of this, what I call new E/E architecture. So, why is the car industry migrating towards this new E/E architecture? And it's basically a core enabler for what you can read a lot about now, which is the software-defined car. So the OEM must decouple hardware from the software in order to keep the software complexity low, and to be able to manage that. This move in the architecture has certain consequences. If I look to the different examples I see at OEMs, they are all very much similar, like in this picture. So you have a certain number of high-performance computing zones. You have varying number of zone controllers. You still have then so-called real-time control ECUs. They are needed to make things like the braking, the steering, so they're very much safety-relevant application. And underneath that, you have multiple families of complex or simple cables and integrators. So this kind of hierarchical structure we see throughout most of the OEMs, the target structure, and there's a lot of growth opportunity. So as an example, in the high-performance computing, you will pretty much see in most of these reference designs, the Infineon AURIX microcontroller as a companion MCU monitoring the safety and the security aspect of the SoC. And when we talk about the zones and the other functions, I have two more slides which go a little bit more in detail, and which are basically the reason why there is a great opportunity for Infineon. So starting first with the microcontroller. So as mentioned, you find the AURIX in the high compute part, is the companion chip and microcontroller for the SoC. But you find the AURIX microcontrollers pretty much in all the zones and in all the real-time ECUs. So that's the home turf, and this is the success story of Infineon on the microcontroller part. We increased our market position. We came from number three in 2021, achieved number two in 2022, and we have the clear target to become the number one in the next few years. In order to do so, we collected almost EUR 10 billion design wins the last four years, and this will lead to a growth of a factor of two based on around EUR 3 billion revenue number in calendar year 2023. And very much important also to mention, many of these major design wins are covering minimum mid, if not end of next decade. So these platforms are very long-lasting and very secure. So the second example for this E/E architecture is the power distribution. The power distribution in this E/E architecture becomes very critical, so it's driven by the software-defined cars, but needed. And there are two, yeah, I would say two main drivers. First one is the so-called replacement of electromechanical relays, and there's a product family, we call that PROFET, which is a key component for that. And if you take innovator OEMs or fast followers like Tesla or Volvo, you will find that they do not have any relay, relay any longer. So all relays are replaced, and this means that there is anywhere between 170 and 200 electric loads, where you need intelligent power switches to drive that. If you now compare that to a volume OEM, they today may have 50-55, and in the next generation, they may go up to 150 of that load. So you see there's a strong growth opportunity for these smart switches as relay replacements. There's a second driver. This is replacing the fuse. So for a software-defined vehicle, as mentioned, you need this new E/E architecture. And there, on the one side, there's a clear trend to have the data processing and the signal processing more central, but at the same extent, you have a decentral power supply. So from one wire net surviving on it to a decentral power supply. The challenge now is that in each of that cables or wiring, there may be failures. Therefore, the decentral power supply solution need to be able to detect such a failure immediately. They need to be able to isolate the failure, and then very fast to reconnect the backup supply, that the car can still operate. And you can imagine that this is not possible with the mechanical fuse, so you need to have smart power switches to replace all of the fuses. And this is a great example why the overarching trend on this new E/E technology will drive a lot of this smart power switches, which is a new growth area we see very much coming now in the next years. Yeah, e-mobility, I think one of the key topics we also discussed in the last years. Let me also today talk a little bit about e-mobility and give an update there. Here you see one example which shows that we are the clear leader in the automotive semiconductors when it comes to electric mobility. We as a have basically all the active components you need for an inverter design, and also for the convenience of our customers, we have ready-to-use reference designs. You see one on that picture here. There is a wide range of application areas and power classes where this reference can be used. And you see that all our components cover the needs and for the application. You have three structure, and you have the module, the driver, IGBT, the MCU, the communication components, sensors, and many more. And overall, the broad product portfolio allows us to cover around 95% of an inverter solution, and you can imagine that this is really maximizing the value we can provide to our customer. But I think as mentioned before, fair to say that out of that, the power system is the biggest growth or the biggest share of that semiconductor form. That's why it's also very much important that we are competing with this power system. I think it's fair to say that nobody has a broader portfolio than us. We cover basically all the classic silicon applications. We have discrete packages. We combine this with our strong module competence, and the know-how on the system. And in this picture on the right upper side, we are already now developing first, what I would call fusion modules, so that's a module that we combine in one module, silicon IGBT, and silicon carbide power switches. I think this will have also a good opportunity for more affordable electric cars. And, basically, whenever the market ups, we will be there and ready to have the right solution for our customers. Maybe for those who are interested in this, chart, on the left-hand side, a couple of remarks. So if you would add all these gray bars, you would, come up to round about 8.5 million electric cars in 2022. The green bars would add up to 40 million units in 2030. You see that there is a sweet spot in this area of 150 kW-174 kW going the fastest, but there is also a sweet spot in 100 kW-124 kW. That is, we feel this will be a power class for the more affordable cars to scale up, the electrification of the cars. And, also, interesting data point, which, we have from S&P Global, the power range per vehicle is still increasing. So where we had around 126 kW in 2022, it's estimated to go up to 149 kW in 2030. And I think that's very clear that this growth of the total, wattage of a inverter, for sure the demand for power, switches and power modules also goes up. So there is continuous growth into that segment as well. We are coming to the manufacturing part of the silicon carbide. I think as you know, we have recently announced the significant expansion of our upcoming facility in Kulim. Here, this will allow us to provide an estimated annual revenue run rate of about EUR 7 billion by the end of the decade. You can expect that round about half of that would be automotive. In Kulim, we construct the first world-scale wide bandgap facility, and we really are believing that this will give us an edge on the productivity and the cost. And together with our broad supplier network for the broad substrate, the boules, this will bring us in a very nice spot to capture a big share in this growing market. And at the same time, it's capacity, but at the same time, also our strong designing momentum continues, covering not only section in there, but also onboard chargers, and with this new customers, but for sure, also existing customers. And we will make sure that then we will ramp the capacity inside the fab very much synchronized with the projected customer needs. So here we are in good dialogue with our customers, and as you know from our announcement, we also are to receive about EUR 1 billion as in fee for prepayments for our customers for the same tool pull in. I would really say this is a very strong sign for the relationship we have with our customers, with the OEMs. We are very grateful for that support. But on the other side, we're also looking very much forward now to build our part of the deal and create the capacity that we can support the customers accordingly. And not to forget, when we talk about EV, BMS (Battery Management System), definitely one of the strongest markets we are currently seeing. There's a lot of innovation, a lot of new products coming online. We did quite some nice design wins with OEMs in the automotive area. But not to forget, there is also additional businesses in the non-automotive area. So energy storage is one, which should grow significantly over the next years. The need for more battery management systems comes also from bigger batteries. So if we take the battery capacity per car and view that over time, we see that this is increasing. So we have round about 60 kW of average battery capacity in 2022, and there is market forecasts which say that this may go up to 75 kW in average for the end of the decade. As mentioned, of course, if the battery capacity is increasing, this for sure will drive a semiconductor content increase in the BMS, and this also will help the growth on top of the overall number of systems. At the end, one more category which I want to stress a bit further today, MOSFET. So now you would say that's more like a commodity product. Why, why would we be interested in hearing about it? And I think it's underestimated how well this MOSFET business is doing. And it's not only about strong growth, it's also very profitable and accretive. And there's many, many different categories. So it's not like a single component which is commoditized. It's a very broad and complex product portfolio. Also here, nobody has our scale from the production point of view and from the broadness of the portfolio. So whatever the application is, you can say we have always the optimal fit. So we don't need to, or the customer don't need to take a product which is only partially fitting. We have such a great variety that the customer always will find the optimal fit. We just recently introduced the seventh generation, so competitors in China are maybe two generations after us. So that means there is a two generation advantage. And there's many applications where you, for example, not only have one product in the application, you may have many, like in an electric power steering. So the seventh generation offers you half the chip size compared to the fifth generation. It means in an application where you have two MOSFET, you simply can replace it with one. And that's on the system side, a lot of cost saving for the customer, despite the fact that the product is more expensive compared to the old one. So that's a win-win for both. And for those who may have heard about 48V as the power net in a car, and there are some OEMs now going into that direction. Alone for that new application, we will launch around about 70 new products in the next months to come. And this also shows the innovation level which we have in this category, which maybe is underestimated in the market. Yeah, to summarize all that, I think I'm really convinced that Infineon is better than ever positioned to be the number one in automotive, the automotive area, and also to build on that and leverage that. We have more than 70% of our business exposed to accelerated structural growth areas, which I mentioned today. We continue to see strong and profitable growth in those areas, and for the entire business. And we also will foster and balance our regional footprint and really shape the future of the car, worldwide with our customers. And with that, Janardan, thank you. I think I give it back to you. Thank you very much, Peter, for that great presentation. It really gave us a brilliant overview of the business, and what we are seeing, what you're seeing going forward. Maybe I'll kick off with a couple of questions, but in the meantime, if anyone wants to ask a question, please press the raise your hand button on your screen, and we will take the questions in the order that they're received. So first, perhaps, you know, you said that you expect to grow in FY 2024 in the automotive business. As you're aware, there are some concerns in the market of inventories, you know, potential slowing of cars demand, et cetera. And obviously, at the same time, there's very strong momentum in the EV ADAS side, and you talked about market share gains. So would you be able to give us some kind of an idea of what kind of growth, sitting, you know, where you are today, that you expect for FY 2024? And you know, what are some of your assumptions behind your expectation for growth next year? Yeah. So I expect low double-digit growth, assuming a flat car production. And this comes via strong growth in all the products which go in electromobility. It will come through a strong growth of the microcontrollers. This is due to the fact that there's more content, more projects ramping up. And also, like, we demonstrated last year, there will be also market share gains. In the more classic business, the growth will be a little bit smaller, for sure, but overall low double digits. Understood. So, I mean, so you're really not seeing any kind of a slowdown in your automotive revenue at all, given that expectation. But let me just narrow a little bit into China. One of the concerns in the market is that Infineon is losing some market share in China, as are many of the Western and Japanese semiconductor suppliers because of the concern on of the trend towards localization. But your numbers suggest that that is not the case. You've just said that your China revenues grew 35% last year and you should be growing about 25% this year. Which seems to suggest that you may even be gaining market share in China rather than losing market share. However, there is some evidence to suggest that, especially in IGBTs, you are losing share in certain OEMs. So just, can you put this into perspective into China? You know, are you losing market share in some of these product categories? And is it that the big growth that you're seeing in, say, microcontrollers, where you talked about getting to almost EUR 3 billion of revenue, you know, is that happening more in China, where cars are very advanced and require more microcontrollers? And is that, you know, is that the sort of thing which is helping you achieve these kind of growth rates? And do you expect China to continue to be a sort of a strong growth area for you in coming years as well? Yeah, first of all, for sure, there is local Chinese semiconductor companies which are in competition with us. And you mentioned IGBT, that's, and you see also market reports on that. That's an area where they are gaining momentum. So here we may lose share, but still we would see growth because the overall market is growing so much. So yes, the share would go down, but the absolute market or absolute revenue there still has a growth momentum. But it's not only the IGBT, and, and, I mean, there is so many hundreds of products we have in Chinese cars. The new modern car models have 20 and more microcontrollers there. You have not only IGBT, the silicon carbide also coming in Chinese cars, and there's many more products. So even if you would lose or if you would eliminate the IGBT portion of the semiconductor content we have in those key players in China, then there still would be growth. So it's basically that the answer is right for both, is a relative share in some of the categories we lose. But overall, we will have a strong growth driver, leading to the fact that the revenue share compared to the other region will not go down in the next five years. Understood. Megan, can we now take some questions from the audience, please? Yeah, no problem. So the first hand raised is François. François, if you want to unmute yourself. François, can you hear us? Hello, can you hear me? Yes, we can. We hear you, yes. Yes? Can you hear me now? Yes, we can. Yeah. Okay, great. Thank you for the presentation, Peter. So I just wanted to ask you about the underlying assumptions on the pricing front. So I think you showed us, you know, the strong fundamentals of your business. And one area of concern as well is if we look at going forward, how should we think about the pricing in your business? And I'm asking because we see evidence of kind of a oversupply today. I mean, if you look at the underutilization of many players in the field, it's now not fully booked, and we can assume that there is some sort of oversupply. And with the level of investment that the industry is undergoing, what make you feel, you know, that the pricing should be resilient? Just trying to reassure the market on that front would be very helpful. And then you showed the margin side, this may be related to that, but the margins are increased significantly for the automotive division, specifically. And can you help us understand the drivers of this? Is there any product mix that we should be aware of, that is impacting significantly this and how sustainable it is, basically? Thank you. Yeah, thanks for this question. Yeah, first of all, on the pricing. So, a significant share of our automotive business is negotiated with customer in the last one or two years, with multi-year agreements. So that means two things. That means that like in the previous years, or in the past, before the crisis, this multi-year agreements have small steps year over year. So there is a small step price decline built in, in the contract, but it also means that we have that is binding agreement, but there is no really negotiation of that, if there are price agreements, and also supplier agreements. There's also a certain point that some portion of the businesses has, where we have locked in customers with long-term orders. That is, I would say, already in the plans in terms of what the pricing is expected. And then the rest is maybe a mix of some products staying flat, some products going a little bit down. But I would say the predominant factor is the multi-year agreement and booked orders for the long term. Yeah, your second question was on the margins, and first of all, yes, I don't say that the price is flat or stable, but the prices will not go down significantly because of this factor. And in addition to that, we have drivers which did lead to this margin improvement over the last years, which will not go away. In the earlier discussions, which we had two or three years ago, when I was asked about why is the segment size of automotive below the industry average, I always mention two things. One is, we pre-invested a lot in a broad base of products in the electro mobility and all that, products did not have been produced in scale at that time, and this changed now. We are outgrown there. All of these products are now running at scale, and there's more volume runs coming out. This structural problem is solved. And as we grow significantly in xEV and also the market demand is very much strong, so I don't even see oversupply here. And we have much more customer expectations compared to what we can produce. The second answer I gave three years ago also is that we are not at scale in the microcontroller. The R&D investment in microcontroller is significant. It is very complex products, hundreds of millions euro s of R&D you need for this product. And we didn't have the revenue at that time to basically benefit with our OpEx. So the product price was okay, we also improved on that one, but we did not run at scale from the OpEx. Now, with achieving number two position, that's the clear evidence that we are now big enough for that investment. And as mentioned, we will not stop at number two, we will further go. So these are two examples next to the long-term agreements with price for our customers, which help us on the profitability, and also a little bit will come. We will not grow in our resources as fast as we grow in our revenues. Also here, some open scaling can be expected. Great. Thank you very much. Very clear. Okay, thank you. So we'll move to the next hand raised. That's Andrew Gardiner. Andrew, if you unmute yourself. Good afternoon. Thank you for taking the question. I had one on silicon carbide. Peter, if we compare the slides you've shown us today with the one you showed us last year, just sort of adding up the different OEMs and Tier 1s on there, you had 12 shown on the slide last year. You're at 26 this year, so clearly you've won a lot of business. Can you put that in perspective with sort of the amount of, let's say, RFPs that are out there? I mean, how would you categorize your win rate at the moment? Do you feel like it has you're taking more share within the silicon carbide opportunity relative to where you had been? Thank you. Yeah, thanks, Andrew, for the question. Yeah, answer is clearly yes, compared to the late start we had, because you know that we from the beginning focused our silicon carbide technology on trench, because we have strong believe that at the end, trench will be the technology which you need in order to drive cost performance down. By the way, we are now entering the second generation, and we are developing already the third generation. So we are well in the market with trench technology. But due to this late start, we didn't have the share like we used to have in IGBT, and this current decisions really demonstrate that we increase that share. All these decisions where all the customers help us to finance the capacity will lead to the fact that the market share which we had in the past will be increased compared to—or using the new signings and adding them to what we had already. Are you able to help us at all in terms of what that means for silicon carbide revenue this year or, or next year, or type of growth? Just help us quantify it a little bit. Good question. Do you have a number there? Yeah, I mean, as Daniel here, I think, all the information we gave here is up to date in the last three weeks, so it will be more than EUR 1 billion in 2025. And you know that for the end of the decade, we are aiming at EUR 7 billion of revenue. Understood. Thank you. Okay, so the next caller on the line is Sébastien. Sébastien, if you want to unmute yourself? Sébastien, can you hear us? Okay. Yeah, I've got it. Ah, okay. Yeah, I've got it. Thank you. I've got one question on the competition in China. We are seeing growing competition in IGBT in China right now. How do you see the potential competition building up on silicon carbide in China? How many years are we from, I would say, the beginning of the ecosystem around the silicon carbide there? And the second question is on the inventory level in the automotive market. Where are we standing on the inventory today? Do you see any kind of build up or we are still quite clean? Thank you. Yeah, thanks, Sébastien, for the question. Yeah, silicon carbide is, indeed, a very, very, good one. So as you mentioned, the IGBT, the hybrid drive, China competition. When I was the first time meeting one of these Chinese competitors, this was back 2009. That time, they started this activity, and I would say the volume production was starting in the late 2019 or 2020. So for the IGBT, it took them more than 10 years to really qualify, they started earlier in industry, but to qualify that in automotive. So I don't necessarily say that each and every product will take 10 years, but it tells a bit that it's now, what I see on silicon carbide. I think the good part here is that most of this investment at the moment goes into the substrate, the raw wafer. Always had a paradigm that want to produce that always said that we want to have the very and quite many of the suppliers already, two out of them coming from China. And I see a lot of investment going in China into this substrate fabrication. So therefore, the Chinese supply of raw material will be, I would say, the first step that China goes into it. This will be not competition to us, but will be competition to those silicon carbide players who make their own wafer. Then fair to assume that in the next step, maybe they go into the device manufacturing and then silicon carbide chips will be there. But again, here, this will take some years before you see that coming, and then you need to make it automotive grade and automotive qualification. Then you need to a good yield, because if the yield is not good enough, then you throw away very expensive converter modules. That's an issue. And then what we see here is that more and more Chinese OEMs want to export their cars, for example, to Europe. And what I hear and see in my discussions with the OEMs is very much that they want to make sure that the cars they export are having the automotive standards from the north, from the western world. And you may even can foresee that there are two grades, but there may be versions where they use Chinese suppliers for cars remaining in China, and they may use, for example, Italian products for those cars they do export. But this also could be future to see. Yeah, on the inventory, I would say now, I mean, if I look to my business, first of all, a big portion of my business goes into the distributors, into the channel. When I look into the channel inventory, I would say this is at target range. I do not see an inflation in the distribution inventory. And for the last three months, the inventory also was stable, was not increasing. I even saw now in China, distributors that the inventory is a little bit declining. And when I look into the direct customers here, I would say that most of our business with the direct customers is on the vendor managed inventory. That means here we have daily updates, where we see what the inventory is doing. And in addition, in the last weeks, we checked the situation with our biggest customers to see what they see in their inventories when it comes to Infineon, and I did not find any alarming signal there. If you link that a bit to the product segment, then I think it's fair to say that the classic power semiconductors, they see inventory corrections now for four quarters, and the trend is declining. So here I would say that on these classic products, which are out of allocation now for a year, and where we see corrections ongoing now with a declining trend, that I don't expect that there will be big risks in this. Microcontroller, still in allocation. Here, we very likely will be out of allocation in quarter one fiscal 2024. That means then we finally can start to build a strategic inventory for our customers. And the area where I see not at all inventory build up is on the electromobility, because here, the total demand of my customers is still exceeding my capability from a production. Then you mentioned—or I mentioned that I expect a year-over-year flat car production. Maybe some of the Tier 1 still plan for an increase in car production, despite the fact that this flat prognosis is out now for many months. So therefore, maybe there is some Tier 1 which plan on a growth, and there may be some smaller correction coming. But as mentioned, from an order book and inventory, all in all, no alarming signals from my side. Thank you. Okay, if we want to quickly move on to the next question, Lee Simpson. Lee, if you want to unmute yourself. Okay, Lee seems to have dropped on the line. Gianmarco, would you like to unmute yourself? Yes, good afternoon. A couple of questions from me. On China, still, can you confirm how much roughly is China domestic for the ATV business? And, in particular, did you heard any political risk in the sense that we know there is more capacity being built, but we read also that, for political reasons, there may be some bans on using foreign products. So is this something you are seeing already? And the other question is about margin, because you clearly alluded to good visibility on revenues within the backlog. On the margin side, you gave a kind of range between 25% and 28.6%. What kind of visibility you have within the range? Because you mentioned you have visibility on the pricing. So what would make the low end or high end of the range more likely? Thank you. Thanks, Gianmarco, for the questions. I think the China domestic share, and I hope I interpret the question correct. Did you mean, how much of that revenue we do in China remains in China, or is it exported? Yes. So for the cars, which are basically for the domestic market, because you mentioned- Yeah. Some Chinese customer, maybe they want to export, and so I guess this business will not be at risk. But clearly, if they produce especially cheap car from the domestic market, it seems also from a political point of view, there is a pressure for them to use domestic supplier. And maybe just to conclude, we are one of their competitors, maybe a JV with local foundry. So you're also thinking about maybe this as a defensive move. Thank you. Yeah, we, thanks for the question. Yeah, we also have a joint venture, a joint venture now for five or six years already with SAIC, for the IGBT modules for the electric cars. And, and this is all for, domestic, models. And we basically, this is not even included in my numbers, because it's, the joint venture revenue. So they do, the IGBT module business for the China domestic market. They are growing, they are growing. They invested also now in a additional line, and they are clearly seen as a, as a local, player, being a joint venture with SAIC, which is one of the biggest and most important OEM. So it's basically, from that perspective, this joint venture is seen as a local partner also for the, the local, domestic, products. And, your second question was on the margin in terms of visibility and where we would end up. I think, the drivers for the margin, which will stick, we clearly align. There is some topics which will not be stable. Like for sure, you know, that we had, expediting fees in the allocation. So this is a portion which was there in the 2023 fiscal year and will not be there until 2024. So there is some smaller pockets, which will disappear because simply there's no allocation, so you don't get a premium fee on that one. But all the other drivers, which I mentioned, I'm pretty confident that they will stay strong. Okay. Megan, I think we can take our last question. We're already over the hour. If Lee Simpson is- Yes. Back on the line with us, we'll take that, otherwise take somebody else. Okay. Yeah, Lee has appeared back on the call. So Lee, if you want to unmute your line. Yep, you can hear me now? We can, yes. Thank you. Welcome. Perfect. I just wanted to ask maybe a slightly longer term question around the implications for software-defined vehicles. And it's clear that you've got, you know, a class leading family with AURIX. You have the TC4 ready now, but you're standing up to competition, it looks like, certainly in the zonal compute area, there are others looking at where they can be companion or where they can be even more relevant in co-development. So could you maybe just paraphrase again the strategy for how your microcontroller division will cope with that decoupling and the introduction of SoCs in the car? And maybe related to that, I thought it was quite curious, but perhaps interesting also, that you entered into a JV with a number of players around the development of RISC-V. And that seemed to have ramifications for the car, perhaps on a cost basis, or maybe it was an insurance policy. I wasn't quite sure, but maybe you could round that out for me as well. Thank you. Yeah, thank you, Lee, for this question. So first of all, there's two main areas which we shoot for, for the next generation MCU. So after TC4, the TC5, or however we will call it that time, one is for sure continuing on, partnering with the SoC makers for this, varying number of high compute platforms as the safety companion. But, more important is then, this zone controllers. And what you need in this architecture for software-defined cars, the zone, the zone ECU, is basically transforming the service-based world, coming from the high compute, it's all about services there, into the signal base. So transforming to the real analog car part. And what you need in this multiple zone controllers, you need new families of microcontrollers. They need to have more data processing power. They need to have more connectivity because it's all internet-based. You need to have more security aspects because it's all connected, so more robust and advanced security concepts are needed. You need, because some of the real-time controlling from the past will be transformed in model-based design. What you need is, inside the microcontroller, you need also hardware accelerators, which are able to make AI inference, because part of this real-time control function will not be controlled anymore, it will be model-based. These four ingredients, we will take into the next generation of AURIX, and that is why we decided also to move to PSOC, but memory based, so with Arm, and we also moved to the RISC-V. So the reason for that, this was your second question, I would say if you take the evolution in the car or in the microcontroller, so in the beginning it was the interface world, and it was more on the data, data center, data programming. Then in the automotive, it moved to the real-time world, and this was the time of the TriCore. In silicon microcontroller, we had our own core TriCore in the AURIX microcontroller, because the Intel world was not optimized for real-time control, and we made a dedicated core for real-time control. And this is why AURIX is so successful. Now we are moving from the real-time control in the service and model base. Here you need again, it's time for a different controller because the TriCore is not maybe too heavy for overdesign from a core perspective to that environment. You need different architectures, and that's why we decided for this climate, that's a good momentum now for this model-based microcontroller approach, and that's why we did pick the RISC-V as the key core. That's great. Thank you. Great. I think that brings us to the end of this call. Thank you very much, Peter, for a great overview and for answering all our questions. Thank you very much, Daniel, for joining as well. And thank you all of you for joining this call. With that, we end it and have a good rest of the day. Thank you. Bye-bye.