Ladies and gentlemen, welcome to the STMicroelectronics Q4 and Full -Year 2020 Earnings Conference Call and Live Webcast. I am Moira, the conference call operator. I would like to remind that all participants will be in listen-only mode, and the conference is being recorded. The presentation will be followed by a Q&A session. You can register for questions at any time by pressing star and one on your telephone. For operator assistance, please press star and zero. The conference must not be recorded for publication or broadcast. At this time, it's my pleasure to hand over to Céline Berthier, Group Vice President, Investor Relations. Please go ahead, madam. Thank you, Moira. Good morning. Thank you everyone for joining our Q4 and Full -Year 2020 Financial Results Conference Call. Hosting the call today is Jean-Marc Chery, ST's President and Chief Executive Officer. Joining Jean-Marc on the call today are Lorenzo Grandi, President of Finance, Infrastructure, and Services, and Chief Financial Officer. Marco Cassis, President of Sales, Marketing, Communications, and Strategy Development. This live webcast and presentation materials can be accessed on ST's Investor Relations website. A replay will be available shortly after the conclusion of this call. This call will include forward-looking statements that involve risk factors that could cause ST's results to differ materially from management expectations and plans. We encourage you to review the safe harbor statement contained in the press release that was issued with the results this morning, and also in ST's most recent regulatory filings for a full description of these risk factors. Also, to ensure all participants have an opportunity to ask questions during the Q&A session, please limit yourself to one question and a brief follow-up. I now like to turn the call over to Jean-Marc, ST President and CEO. Thank you, Céline. Good morning, and thank you for joining ST for our Q4 and Full -Year 2020 Earnings Conference Call. Let me begin with some opening comments. Starting with Q4. As announced on January 8th, net revenues at $3.24 billion were up 21.3% sequentially, significantly above the high end of our guidance. Our engaged customer programs in personal electronics, as well as continuous acceleration in demand, especially of automotive products and microcontrollers, were the main factors that contributed to this result. Q4 2020 gross margin was 38.8%, 30 basis points above the midpoint of our guidance. Our operating margin was 20.3%, and our net income was $582 million. Moving to the full year 2020, net revenues increased 6.9% to $10.2 billion for 2020, progressively strengthening versus the expectations we provided during the year. This was due to the stronger and faster-than-expected restart of demand during the second half. Full -year 2020 gross margin was 37.1%, operating margin was 12.9%, and net income $1.1 billion. Free cash flow for the year was $627 million, and CapEx was $1.28 billion. Our net financial position increased to $1.1 billion at December 31st, 2020, from $672 million one year earlier. On Q1 2021, at the midpoint of our first quarter business outlook is for net revenues of $2.93 billion, representing a year-over-year increase of about 31.2%. The gross margin is expected to be about 38.5%. For the full year 2021, we plan for solid revenue growth outperforming the markets we serve. Smart mobility, power energy management, the IoT, and 5G are driving demand for semiconductor content, and these trends have accelerated during 2020. ST strategy stems from these long-term enablers, and we are very well positioned to support our customers across them. We plan to invest about $1.8 billion- $2 billion in CapEx in order to support the strong market demand as well as our strategic initiatives. Let's move to a detailed review of the fourth quarter. During Q4, market demand accelerated sharply versus expectations. As we pre-announced on January 8th, net revenue came in 580 basis points above the high end of our outlook range. On a sequential basis, net revenues increased 21.3%, with all three product groups performing above expectations. AMS was up 42.4%, ADG up 12.1%, and MDG up 5.3%. On a year-over-year basis, Q4 net revenues increased 17.5%, driven by whole product subgroups, with only RF communications decreasing as expected, affected by the U.S.-China trade war. AMS grew 30.8%, MDG grew 15.7%, and ADG saw a return to a year-over-year growth increasing 3.2%. Our gross profit was $1.25 billion, an increase of 16% year-over-year. Gross margin was 38.8%, 30 basis points above the midpoint of our guidance. In comparison to the year-over-year quarter, the gross margin decrease of 50 basis points was mainly due to the usual price pressure and negative currency effects, net of hedging, partially offset by improved mix and lower unloading charges. Net operating expenses were $598 million. Included in this amount, other income and expenses improved to a net income of $131 million compared to a net income of $54 million in the year ago. Mainly due to a non-recurrent favorable impact of some R&D grants catch-up. Q4 operating margin was 20.3%, up 80 basis points sequentially. On a year-over-year basis, Q4 operating margin was up 360 basis points, with an improvement in AMS and MDG, partially offset by a decline in ADG. Net income was $582 million, and diluted earnings per share were $0.63. Let's look now in more detail at our full -year results, starting with a recap of the market and business trends we saw during 2020, which was clearly an unprecedented year with a material swing. During the first half of the year, our business continuity plans enabled us to support our customers and to continue to execute our R&D programs while maintaining the most stringent health and safety measures. From Q3, we saw a much faster and stronger than expected restart of demand for our products, which further accelerated in Q4. In automotive, the negative impact on demand was particularly strong in Q2, especially for legacy automotive in Europe and in the U.S., with many car makers and tier ones shutting down for a period. Importantly, even at that time, we didn't see any substantial slowdown of customer activity on long-term strategic smart mobility projects. After the summer, global demand started to pick up sequentially, much faster and stronger than the industry had anticipated. We then saw a further acceleration during Q4, driven by car production volumes, replenishment of inventories across the automotive supply chain, and more broadly, semiconductor content increase related to electrification and digitalization. In industrial. During the first half, we saw a demand slowdown in some applications so appliance, lighting, while others, such as healthcare, remained positive. From the end of Q2, we started to see improved dynamics in key application areas for ST, such as power-related applications, renewable energy, motion control, and factory automation. This continued in Q3, and during Q4, the situation improved strongly across all geographies. Distribution is a key element of our go-to-market strategy in industrial. Here, we saw different regional dynamics. China was hit first by the pandemic effect in Q1, but started to recover as soon as Q2. While the slowdown in Europe and in the U.S. came a bit later in Q1, but continued during Q2. From Q3, we saw improvement in Asia overall, with healthy levels of inventory in our distribution channel across all product families, and recovery in the Americas and Europe. In Q4, this positive trend accelerated. Inventories of our products at distributors are currently very lean across all product families and geographies, with very high inventory turns. Now in personal electronics. During the first half, consumer demand for devices like smartphones was clearly impacted by retail lockdowns. The demand for our key products remains strong. Thanks to our engaged customer programs. From Q3, there was a strong restart of consumer demand for smartphones, driven by the introduction of 5G devices. This trend accelerated in Q4. Demand related to accessories was strong throughout the year, with healthy dynamics related to wearable, tablets, wearables, and true wireless stereo headset and game consoles. In communication equipment and computer peripheral, we saw solid demand from the year for products related to home working and enterprise servers, while the overall market for hard disk drive was softer. This was also valid in Q4. The 5G equipment rollout went through a significant slowdown in China during Q4. Looking now at our full -year financial results. Net revenue was $10.2 billion for 2020, increasing 6.9% year-over-year, progressively strengthening compared to the full year expectation shared in April and the regular updates we gave during the year. Sales to OEMs represent 73% of total revenues, while distribution represented 27%. By region of origin, 42% of our 2020 revenues were from Americas, 34% from Asia Pacific, and 24% from EMEA. In terms of revenues by product group, two groups grew while one declined. ADG revenue decreased 8.9%. Revenue from automotive product subgroup decreased, mainly due to a decline in legacy automotive, partially offset by growth in ADAS. Revenues for the power discrete subgroup saw a lower decrease, with soft market conditions for industrial in Europe and in America, partially offset by growth in car electrification. IMS revenues increased 18%, mainly driven by imaging and analog products for personal electronics. MDG revenues increased 14.9%, driven by strong growth in microcontrollers at both OEMs and distribution, partially offset by the strong decline in RF communications products in Q4. Gross margin was 37.1%, 160 basis points lower than 2019, principally reflecting higher unsaturation charges of about 150 basis points compared to about 70 basis points in full -year 2019. Our operating margin for 2020 was 12.9%, in line with the double-digit target we had shared. IMS posted an operating margin of 20.8%, MDG was 16.6%, and ADG was 5.5%. Net income increased 7.2% to $1.1 billion, translating into diluted earnings per share of $1.20. Moving now to the other financial indicators. Net cash from operating activities increased 12% to $2.09 billion. CapEx was $1.28 billion, substantially in line with updated investment plan we announced last April and further refined in Q2 from the initial expectation of $1.5 billion. Free cash flow in Q4 was $512 million, bringing the full -year free cash flow to $627 million, up 26%. Cash dividends paid to stockholders totaled $168 million. As part of our existing share buyback program, we repurchased shares totaling $125 million during the year. During Q3, ST exercised the call option for the early redemption of its $750 million 2022 tranche A of the convertible bond issued in 2017. Simultaneously, with the exercise of the call option, ST issued a new $1.5 billion dual tranche, senior unsecured convertible bond due 2025 and 2027. Our net financial position exiting the year was $1.1 billion, up from $672 million at the end of 2019. Now, let's move to our first quarter 2021 outlook and our perspective on the full year 2021. For Q1, we expect at the midpoint net revenues of $2.93 billion, increasing year-over-year by about 31.2% and decreasing sequentially by about 9.5%. On a year-over-year basis, all product groups will contribute to the growth. On a sequential basis, the decline will be lower than the usual seasonality. We expect a decline in AMS due to the seasonality in personal electronics, stable revenues in MDG, and a mid-single-digit increase in ADG, driven by strong demand in automotive. Our gross margin at the midpoint is expected to be about 38.5%, representing a sequential decrease of about 30 basis points. Year-over-year, the increase of about 60 basis points is mainly due to the much lower unloading charges. For the full year, we plan for solid revenue growth, outperforming the market we serve. The broad long-term trends in electronic systems that we are focused on have accelerated during 2020 and are driving demand for our products. These trends are smart mobility, power and energy application, and IoT and 5G. We are also facing an unprecedented market situation. Semiconductor demand is increasing across the entire industry, driven by car production volumes and replenishment of inventories across the automotive supply chain, very lean inventory levels at distributors, and stay at home effects boosting demand of personal electronics and communication products. In terms of CapEx, we plan to invest about $1.8 billion-$2 billion in 2021 in order to meet the strong market demand and also to advance our strategic initiative. This amount includes mainly the addition of capacity for our existing Crolles 300-millimeter fab, mixed evolution for our most advanced 200-millimeter fabs, and silicon carbide strong capacity expansion. It also includes about $400 million of investments for strategic initiatives, as well as the support of R&D activities and the maintenance required by our manufacturing operations. These strategic initiatives are continued investment in our new Agrate 300-millimeter fab, R&D for gallium nitride power technologies, and the fabrication of silicon carbide substrate. To conclude, on 2020, we return to solid revenue growth, outperforming the market we serve. We maintain our profitability with an operating margin at 12.9% and net income at $1.1 billion. We strengthen our net financial position with strong growth in operating and free cash flow. ST demonstrated both resilience during the first half of this unprecedented year and the ability to support the strong and sudden upswing in demand during the second half. Working alongside our customers and partners, here, I am thinking about distributors, OSAT, foundries, and of course, various vendor, during all the different phases we had to go through together in 2020. For 2021, we are determined to continue to make ST stronger. We are convinced that we have the right strategy and resources to do this. Our balanced market position, our focus on high growth application, and our solid product IP technology portfolio. These are supported by our operating discipline and agility, now more important than ever in such a dynamic market, and by the improvement programs and transformation programs we are engaged in. This will translate into solid revenue growth and improve financial performance. Thank you. We are now ready to answer your questions. The first question is from Andrew Gardiner from Barclays. Please go ahead. Good morning. Thanks very much for taking my question. Jean-Marc, I was hoping you could perhaps sort of compare and contrast some of the statements you had made in December at the final CMD session compared to what you're saying this morning. If we look at how you outperformed in the fourth quarter and the very strong guidance you've given for the first quarter of this year, plus back in December, you gave what I think, if I remember rightly, you referred to as sort of prudent or conservative guidance of calling for $ 12 billion by 2023, hopefully a bit sooner, but certainly by 2023. Like I said, it feels like you guys are already annualizing there, and the solid growth expected for this year, it could be very well near that in 2021. Have things changed since you gave us that outlook in December materially enough to drive that kind of upside? How do you see the balance of your business, and why still be so cautious on that long term? Thanks very much. Thank you for your question. Clearly, what we are seeing is, let's say, an accelerated path, okay, to our trajectory to deliver $12 billion of revenue. It is clear that with the backlog we have, the current dynamic of the market we have, I would like also to recall that in December, what I told you, that basically, by fact, we have lost one important customer due to the implication of the trade war between U.S.A. and China. Our visibility at this time was that the other vertical we address, so industrial and automotive, with data point, okay, we own at this point of time, would not certainly offset, okay, this customer lost. It is clear that after, let's say, a very strong order booking in Q4, which has accelerated, okay, in November and in December, on automotive and industrial market. Yes, I confirm today that we are clearly on an accelerated path versus this trajectory. We are working, we update every month our sales and operating plan for rolling 12 months. We see clearly this accelerated path. That's the reason why we have decided to increase our CapEx plan versus the model we have in order to fulfill the strong market demand and to continue our strategic initiative. Another point is important to mention is personal electronics. It is clear that something happened in the overall personal electronics, which is the same time, the 5G deployment of device. We know that our major customer is very successful in this area. We see all the accessories, wearables are very successful, and this is certainly one of the effects of the work at home, stay at home, which will remain definitively whatever is the pandemic evolution during the year. Yes, I confirm to you that the megatrend we are accelerated more than expected. Certainly, this megatrend in automotive, in industrial, in personal electronics will offset, okay, the fact we lost, okay, this important customer due to the trade war. Today our current view is clearly, yes, we are on an accelerated path. Thank you very much, Jean-Marc. Just one quick follow-up, if I may. As we look forward throughout this year, based on what you've just said, can we expect sort of somewhat normal seasonality? I know things are, as you said, unprecedented in some end markets, would you still say that second half should be up on first half? We try to be quite disciplined, okay, in the way we drive, and we give indication to you, the best indication, okay? In January, okay, we give our Q4 earnings, the guidance of Q1, we give important information about the CapEx, okay, which is, of course, linked to the expectation we have on the full -year revenue for 2021. Then in April, okay, we will provide to you, let's say, the full visibility of 2021. Yes, most likely, we will have a different, let's say, breakdown between H1 and H2 in 2021. Because today, we have a very strong demand in automotive. I think everybody well aware about the automotive, let's say, supply chain situation. The demand is very strong, which will boost definitively the first half of the year, and this is valid as well for personal electronics and industrial markets. Thank you very much. Thank you. Thank you very much. Next question, please. The next question is from Jerome Ramel, from Exane BNP Paribas. Please go ahead. Yeah. Good morning. Two quick question. The first one, how should we model the OPEX for Q1 and maybe for the full year? A follow-up question on automotive. Jean-Marc, you mentioned the disruption in the industry. Could you shed some light on what's going on, where is the bottleneck, and what is STMicroelectronics doing to address this issue? Thank you. The OPEX, Lorenzo, you start with OPEX. Good morning to everybody. I will start to talk about our OPEX. What we do expect for Q1 in terms of OPEX. You have seen, usually when we guide, we guide including other income and expenses. I know as you remember and as you have seen clearly in this quarter, the number of other income expenses has been quite significant. Here we have a catch-up that was expected on our R&D grants in one jurisdiction due to the change of one law, and we were in the position to recognize that this is for around $100 million. Q4, for sure, we benefit of this in our overall expenses. What we do expect for the next quarter. For the next quarter, for sure, there will be some headwind for our expenses. One is definitely the exchange rate. The guidance we are going to give, we gave for Q1 is a Euro dollar exchange rate of 120, Q4 116. The level of other income and expenses are much more normalized in respect what we see in Q4. The expectation is to have expenses that will range in the quarter Q1, between $ 705 million and $715 million, something in this range. This is our expectation. There not should be significant change moving forward. Let's say some up and down in the year, let's say, the expectation will be substantially to be in this range moving forward. Jerome, it's a question about industrial automotive. What we are doing to support the current demand. It is clear that the demand for automotive has been quite sudden. I don't want to repeat myself each time, but it is clear that coming after summer with this strong acceleration definitively has put under stretch the supply chain. As far as ST is concerned, clearly, we are supporting our customer very closely, in a daily contact with them. In order to be sure that each single PC we produce go directly to a production line. We are under emergency task force mode, with close relationship between the tier one, ourself, and car makers. The second action is the capability of the company to synchronize for Q1, Q2, and H2 all our manufacturing assets, supply chain, and the foundry to make the best triangulation between all the manufacturing sources we have in order to really maximize the amount of wafer we can deliver to our assembly plant and OSAT to support all this demand. It is clear that this is what we are doing. There is no too much flexibility because all the foundries are basically fully saturated, whatever they are 8-inch or 12 inch. There is no more equipment available on 8-inch. It's impossible basically to increase an 8-inch capacity now. The situation is quite similar on OSAT, so assembly and test. Here and there is also some type of shortage of material, like substrate. This is a situation which is very stretched. As usual, the recipe is the following. All the actor has to increase, let's say, timely and steadily their capacity to support their customer, with best visibility, okay, we can discuss with them, and cooperate in order to fairly balance the capacity across all the verticals we address. Means automotive, industrial, personal electronic, and communication equipment. It's a pure, let's say, operating job and process that we are, let's say, pretty well equipped to do. Thank you. Thank you very much, Jerome. Next question, please, Moira. The next question is from Matt Ramsay from Cowen. Please go ahead. Yes. Thank you very much. Good morning. Happy New Year, guys. Jean-Marc, I wanted to, I guess, dig a little deeper on the first question that Andrew asked to kick off the call. I think a lot of us in December and a lot of investors were sort of struggling to square the circle of the strength that you're seeing in the business with pushing out the long-term revenue target. You addressed some of the things about conservatism and around the challenges at Huawei, but maybe you could just confirm for us or address if there have been any changes to your key customer program visibility with a few folks, namely the large smartphone customer, the silicon carbide programs, and also what's going on with Mobileye. If you could kind of confirm that there is no changes there, in your view, I think that would help a lot of us in our forward modeling. I have a follow-up on gross margin. Thanks. Coming back to the 2021 accelerated path, I would like to mention a few points. Clearly, the production of car in 2021 now is expected to be between 85 million-90 million vehicles, with also an amplification related to inventory replenishment. Because it looks like the industry in Q2 and early Q3 put the inventory close to zero. Clearly, the run rate of what we are seeing today in terms of semiconductor demand for the automotive market is more aligned with 98 million vehicles rather than 85 million-90 million. There is clearly an inventory replenishment, which was not the data point we have in November. In November, we were more around 80 million vehicles to be produced, and without this amplification factor about inventory replenishment. This is point number one. About our, let's say, major engaged program on the high-growing application we address. First, smart mobility. Smart mobility, I would clearly confirm to you that our programs with Mobileye, our program on silicon carbide, are running very well. On silicon carbide, okay, our plan for 2021 is to generate a revenue between $450 million and $500 million. Mobileye, I will not comment because we never comment specifically on the customer, we will increase our plan. About imaging and Face ID. Again, okay, you know that I never comment on customers and customer programs. However, I can confirm to you that we do not plan any material or significant change in our revenue in 2021 with our imaging business. I hope I am quite clear. Thank you, Jean-Marc. I really appreciate the candor there and don't shoot the messenger, had to ask the question. I guess in my follow-up question, Lorenzo, I wanted to talk a little bit about gross margin. Obviously, there was an inventory correction in 2019, and then all of the turmoil that happened in the supply chain around COVID and demand in the automotive sector, and you've been kind of chasing unloading charges in your margins for a while. Maybe you could talk a little bit about what your expectations are for gross margin trends. Tightness in the industry seems to indicate that the unloading charges would go away. Additionally, we've heard some rumblings of potential pricing increases for ST and other vendors. Anyway, the puts and takes on gross margin would be really helpful. Thank you. Yes. Maybe I can comment on that. Yes, it's true that during 2020, the combination of lack of demand in the first half, let's say, and lower workforce, has impacted significantly our gross margin. We said that there is around 150 basis point impact on the gross margin with the combination of these two elements. What happened now? In Q4, we already started to see some reduction in respect to the original expectation of our unloading charges. This is one of the main factor of having exit the Q4 slightly better than was the expectation of the 30 basis points, and mainly driven by the fact that the unloading charges are a little bit lower. When we look at Q1, now Q1, I would say that unloading charges are substantially, let's say, gone. We have a really no material residual unloading charge that is mainly driven by the fact that we are not yet ready to fully utilize, to change, let's say, fully the mix in some of our plants. We are talking about 10 basis points of unloading charges in Q1. The expectation is that definitely for this year, unloading charges will not be any material number. Already in Q1, contrary to what was expected. On the other side, there are two, let's say, headwinds for us. For sure, one is the exchange rate. This doesn't play in our favor. It's negative. You see that now we are guiding in the range of 120. You see how is the spot rate. Means that we are at this level of exchange rate. Last year, the average of the year was 113. Q1 in 2020 was 111. It means that definitely there is a significant change in this respect for what concern the impact of the effects. I was modeling this, if you remember during the Capital Markets Day, as impacting our cost and our COGS. Definitely, there is also some impact related, let's say, to the cost of our materials, the cost of precious material that is another important component of our cost. True that on the other side, this is, in term of revenue pricing, fairly share somehow with, let's say, our customers. There is, for sure, and this is visible in the guidance of this quarter, let's say, less seasonality in term of price. In respect was our usual situation. Indeed, when I look at the gross margin, there's a combination price mix, substantial neutral. We do not have the usual negative impact, significant negative impact that we normally have at the beginning of the year. There are all these ingredients that are combining together. Moving forward, we will see, let's say, the evolution. I do expect some improvement, it's a little bit early now to really size the level of improvement. Thank you very much, guys. Appreciate it. Thank you very much, Matt. Next question please, Moira. The next question is from Sandeep Deshpande from JP Morgan. Please go ahead. Sandeep? Mr. Deshpande, your line is open. Hi. Can you hear me? Can you hear me? Yes, we can hear you. Yeah. Hi. My first question is regarding what we've been hearing in the automotive market, that there have been shortages in the market. Maybe STM can give a view on this market. Is STM able to supply this market, or there are other suppliers who are not able to supply to the market? Secondly, again, reverting to that question on CapEx and revenue guidance in your CMD. If you look at your CapEx figure at the moment, or then you had guided 6.5% CAGR growth on the plan at that time. Your plan now looks to be much bigger for this year, although you're not guiding to this year. Maybe you can help us understand what new customer programs or what kind of customer programs have been engaged, why suddenly the CapEx has gone up to this even higher than what was guided in December at this point. Will this be sustained? Otherwise, this huge spending at this point could later on hurt ST. Thank you. I will take the CapEx. There is a CapEx question. Automotive. The CapEx and the automotive guidance. Automotive. I will answer both, and, of course, Marco and Lorenzo will complement ourselves. Automotive, first point I would like to mention, about ST view, is that on the electrification of the car, silicon carbide. We see a total different situation than on the legacy automotive. Despite the tremendous growth of our key customer on the silicon carbide, we are supporting them steadily. As I mentioned a few minutes ago, we plan to have this year revenue between $450 million and $500 million with a strong growth in H2, and silicon carbide rate of $300 million on an annual basis. Here I answer partially both question. Here, ST do not generate at any moment shortage on silicon carbide, and we will grow very strongly H2 versus H1 and full year 2021 versus full -year 2020. Coming back to the legacy. Well, to the legacy, clearly, yes, there is a gap, important gap today between the short-term demand of the automotive industry, so car makers and tier one, versus the capacity installed in the semiconductor industry. You know also for wafer fabs and assembly, okay, this capacity are shared with other verticals. Clearly the other verticals, personal electronics, servers, computers, but industrial as well, and industrial especially, in Asia since Q2 and now in Europe, in America. All this, let's say, this market, okay, request a capacity. Unfortunately, the car industry wake up very late, and lead time of semiconductor are what they are, and you cannot, okay, overnight, okay, increase the capacity in like a direct pulse. Yes, okay, it is an industry problem. There is an overall industry problem showing an important gap between the demand and the capacity. ST in the past, has always pretty well managed this kind of situation, delivering and supporting our customer at best and fairly balancing our capacity in all the verticals, in order to protect customers from the automotive market, from industrial, personal electronics and computer peripheral. I have. I must not mention a specific bottleneck from a company on another one. I think it's not my job to do it, but it is an industry problem for sure. Is it another question, Sandy? For the full -year. The contribution of our revenue for the sales and operating plan of 2021, as usual, will be pretty well-balanced between engaged programs. I confirm to you that the silicon carbide will be one of the main ones. Ongoing one on personal electronics. Definitively, Huawei will be a strong decrease 2021 versus 2020, because up to now, we have first not received any other license, especially on custom design product and technology. If tomorrow we receive, we will be ready to support this customer, but with the lead time we have today, no more, no less. Today with the capacity saturation, our lead time are increasing. Huawei will be a detractor definitively in 2021 of the revenue. Then, we will have a well-balanced increase of our microcontroller, of our analog product, power and discrete on top of the silicon carbide, and definitively the legacy automotive. ASIC based on BCD technology, on vertical integration power technology and the ADAS with Mobileye. Thank you. About the CapEx. To be clear. About the CapEx, now, you know our work model again is well-known, okay? For $1 gross, we invest at least $0.8. We need to keep 6%, 7% of our sales for the maintenance, for the R&D, for the corporate sustainability. We need to invest to go to zero carbon neutrality and our strategic initiative. Yes, our model was 1.6 to 1.7. This is what we said at the Capital Markets Day, which was spread with $400 million for, let's say, the strategic initiative. Around $300 million, $350 million for the maintenance. The rest, which was, let's say, $800 million for capacity increase. We have increased the CapEx for capacity increase. Now the CapEx for capacity increase will be between $1.1 billion-$1.2 billion in order to support the automotive industry, the industrial market, and the personal electronics. We will, let's say, continue to maintain a high level of ratio of outsource production with our main foundry partners. TSMC, Samsung and other, let's say, specialty foundries. This is the view of the CapEx. You know last year, entering the year, we announced $1.5 billion before the COVID effect. ST has always the capability to modulate the CapEx and capacity, adapting us very fast on the business dynamics. What will remain is a steady execution of our strategic program, because we are convinced we need to set up a new 300-millimeter fab, and we will increase the capacity of this fab timely with our business plan. We need to set up internal capacity for raw silicon carbide in order to have a partial production of our needs to support the $1 billion target we have by 2025. I guess you have well noted that in 2021, we will have achieved already half of this target. We have also initiative on gallium nitride for power device, which will be the next generation of technology important to address the power energy sector. For the rest capacity, we adapt ourselves to the market dynamics. Which market is strong, we invest, and we increase the production externally. When market decrease, we correct immediately. This is what we have done in 2020. Thank you. Thank you very much. Next question please, Moira. The next question is from Stéphane Houri from ODDO BHF. Please go ahead. Yes, good morning. I have a clarification to ask and a question about diversification. The clarification is when you talk about your main customer and the engaged program, and you said that basically that the relationship is unchanged. Does it suppose that you expect growth on this aspect? The following question is about diversification. You've been talking during the CMD about the fact that now the game with your main customer was also to diversify your revenues. Can you highlight some of the initiatives there? Same question basically about silicon carbide, because there's going to be some growth this year. So far it was only on one customer, basically. Is the diversification this year? Thank you. About silicon carbide, it is clear that as I said, during the various opportunities we have to discuss all together, 2021 will be the year when we will start to see, let's say, enlarging our customer base and they will started to, let's say, to contribute to the revenue. Well, I guess, with this order of magnitude of revenue at $500 million, I will not communicate the breakdown, because you can make after correlation with our main customer, and I think it's not fair for me. For sure, it will be still one of the main driver of our revenue goals. Clearly in 2021, we will enlarge our customer base and they will really start to contribute to the revenue. Well, about the diversification. I confirm to you that, when we see what happened in 2020 and when we look at the revenue we have generated with our main customer in personal electronic, ST address in a balanced way all the major platforms of this customer, means, okay, the personal computer, the pad, the phone, the accessories, the watches and our product consistency, okay with our strategy. Remember, okay, we want to be selective on some custom design in imaging sensor, secure solution, analog product. We leverage our, let's say, general purpose portfolio like microcontroller and power. Yes. Now, ST is very well-positioned and spread in whole platform of our this major customer. Which by the way, was the same strategy we had with unfortunately with Huawei, which has been, let's say, destroyed by the reason you know. This is really a good diversification and a very good leverage of our product portfolio definitively. I would like to correct what you say. I have not said that there is significant change in the relation with our customer. I repeat what I said a few minute ago. I say we do not plan any significant change in revenue in 2021 for our imaging business. I love relation. I prefer revenue. Thank you. Okay. I understood. Thank you very much for the clarification. Thank you very much, Stéphane. We are running now close to the end of the timing. We will take two more question and apologize for the ones that have any other. Next question, please, Moira. The next question is from David Mulholland from UBS. Please go ahead. Hi, guys. I'll keep it short from my side, but obviously one of the discussions we had when we were talking in the past about the headwinds of Huawei was what opportunity you might have to gain at other OEMs that might benefit volume wise from the challenges Huawei faces. I just wonder if you could give us an update on how you feel about your design win traction and penetration into, I guess, the range of other Chinese OEMs that are hoping to gain on the back of Huawei's challenges. Well, yeah. Okay. Our strategy for the personal electronics with the various OEM was the following. Two important OEM, which was, let's say basically, Apple and Huawei, well-known. Our approach was to cooperate, okay, on R&D, on product development, on system development and develop custom design solution, but being very selective again in the field of, let's say, optical sensing solution, in the field of secure solution and analog one. On another side, having demonstrated, okay, the high efficiency and reliability of our, let's say, supply chain to leverage our general purpose portfolio to proliferate and productize, okay, our product across all the platform of this customer. On the other player, so Samsung, Vox, so OPPO, Vivo and Xiaomi. Well, the approach was a bit different, okay, complementary means it's more application specific standard product. Here, for this customer, we do not develop custom design solution, but we offer in the field of all the subsystem I have described, sensing solution, secure solution, analog, charging, all this kind of stuff, power management, application standard product. This is, okay, the way we work with them. Here, okay, clearly, today we are, let's say, leveraging the strong demand with this customer as an example with our MEMS. We are very successful with our MEMS with this customer. This is, okay, the way we address this personal electronic. On top of that, it is clear that across the board, accessories, true wireless headset, wearable and so on, are very demanding. Here we address this market either, okay, straight with the OEM, when it develop their own solution, and through the distribution channel, when we address more the mass market. That's great. Just a quick follow-up. Obviously, you've been developing custom RF power amplifier content for Huawei, that can't be sold anymore. Have you found ways to repurpose that? Can that be seen with a bit more development from yourself in more of a standard product over time, that you can still get some benefit from the investment? It's clear that here our strategy was, let's say, in two step. Step number one was, release the cooperation. Okay. We develop across the past years, okay, with Huawei on RF technology. Then to diversify ourself, anticipating, okay, the expansion of IoT, where when the 5G infrastructure will be deployed and the capability of the network to enable millions of nodes, okay, per unit of surface. To have the capability inside ST to offer the full product, part of the system, means microcontroller or microprocessor, connectivity, analog, power management, and the radio frequency. Okay, we do not want to depend on third party to address the IoT. All the investments we have done with Huawei in technology and knowhow, yes, we are reusing it on IoT. Also, I would like to recall that we have acquired a startup last year called Somos, which has a strong capability to design radio frequency device, like a power amplifier or other transceiver. That's great. Thanks very much. Thank you. We will now take the last question. Today's last question is from Alexander Peterc from Societe Generale. Please go ahead. Mr. Peterc, you can speak. Your line is open. Alex? We lost connection with the questioner. Okay. The next question then? The next question is from Sébastien Sztabowicz from Kepler Cheuvreux. Please go ahead. Yeah. Hello, everyone, and thanks for taking the question. On the market demand, the market is currently overheating right now. What kind of visibility do you have for Q2? Do you see any potential risk of inventory correction moving into Q2 and maybe in the back half of the year? Secondly, on the time of flight sensors, could you make an update on your roadmap? Also, how do you see the demand building up in this specific market? Have you seen any slowdown in the adoption of 3D sensors in the market? It seems that Samsung has stopped using time of flight sensors for world-facing application in the latest GS21. Thank you. First of all, the demand is very clear on H1. H2 is really starting to be loaded very healthy. Okay. Again, we don't see, let's say, any overbooking because the inventory in the supply chain is very healthy. Again, I confirm to you that we have a total visibility on the distribution channel, and the turn of inventory are incredibly high, well above four, five, or six. Inventory is very low. We don't see the business, okay, is very dynamic. Believe me, it is very obvious there is no inventory in the automotive industry, taking into account the number of calls we receive. On the other, let's say, verticals, personal electronics, similar. Okay. We know very well the supply chain of our main customer, and we monitor very well the inventory level, and we did not detect any over-inventory. Again, we confirm to you that the current situation are clearly linked to the current demand, where what is related personal electronic, enterprise server, this kind of stuff, are driven really by the stay at home, the work at home, the lack of traveling. This will last in a mixed way, I think, for a very long time. The industrial market in China, in Asia, is very active, very healthy. It is starting to recover in Europe and in America. On automotive, okay, again, this industry is engaged now in a major transformation related to electrification in order to comply with the various norm and regulation, like the WLTP in Europe. This is very demanding in terms of component for, let's say, inverter, onboard charger, the battery management system. Okay, you need to have a lot of control. More and more, all the vehicles will be equipped with level 2 or level 3 ADAS system. This is very demanding in terms of components. The content is increasing. Then there is a specific, let's say, situation where clearly, the overall production of car worldwide will come back to the level of 2019, certainly one year ahead than expected few months ago, with an amplification in 2021 related to inventory replenishment. Why? Because this industry put inventory close to zero in Q2 and in Q3. This is clearly a situation that the semiconductor industry has to manage, let's say, with all the capability of this industry to react fast and to control this situation. Then the other question was about the time of flight. Evolution of time of flight. It's something I will not communicate. Our strategy on time of flight, okay, clearly is a mix to offer the best component for, let's say, the application we target, either on the front side or rear side of the smartphone. We know that sometimes the direct time of flight is more adequate than the indirect time of flight. There is, let's say, the cost of ownership is very important. The capability to put the components as much as we can under the OLED screen display of the phone is also very important. This is okay. On all these aspects, ST is working and want to continue to address with custom design solution our main customer, I guess I have already comment about that, and to address with more application-specific standard solution the other smartphone player. Thank you. Okay, this will end our call now for this quarter. Thank you very much. Thank you. Thank you very much. For your attention, and we keep in touch. Thank you very much. Thank you. Thank you. Bye. Thank you. Ladies and gentlemen, the conference is now over. Thank you for choosing Chorus Call, and thank you for participating in the conference. You may now disconnect your lines. Goodbye.