Ladies and gentlemen, welcome to the STMicroelectronics Fourth Quarter and Full Year 2023 Earnings Conference Call and Live Webcast. I am Moira, the Chorus Call operator. I would like to remind you 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 * and 1 on your telephone. For operator assistance, please press * and 0. 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, and good morning. Thank you everyone for joining our Fourth Quarter and Full Year 2023 Financial Results Conference Call. Hosting the call today is Jean-Marc Chéry, ST's President and Chief Executive Officer. Joining Jean-Marc on the call today are Lorenzo Grandi, Chief Financial Officer, President of Finance, Purchasing, ERM, and Resilience, and Marco Cassis, President of Analog, MEMS, and Sensors Group, and Head of STMicroelectronics Strategy, System Research and Applications, and Innovation Office. These 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'd now like to turn the call over to Jean-Marc, ST's President and CEO. Thank you, Céline. Good morning, everyone, and thank you for joining ST for our Q4 and Full Year 2023 Earnings Conference Call. Let me begin with some opening comments. Starting with Q4, our net revenues of $4.28 billion decreased 3.2% year-over-year and 3.4% sequentially. Gross margin was 45.5%. Revenues and gross margin were slightly below the midpoint of the guidance, with higher revenues in personal electronics offset by a softer growth rate in automotive. Operating margin was 23.9%, and net income was $1.08 billion. Looking at full year 2023, net revenues increased 7.2% to $17.29 billion, driven by strong demand in automotive and, to a lesser extent, industrial, partially offset by lower revenues in personal electronics. Gross margin was 47.9%, up from 47.3% in full year 2022. Operating margin was 26.7% compared to 27.5% in full year 2022. And net income increased 6.3% to 4.21%, sorry, to $4.21 billion. We invested $4.11 billion in net CapEx, while delivering free cash flow of $1.77 billion. During Q4, our customer order bookings decreased compared to Q3. We continued to see stable end demand in automotive, no significant increase in personal electronics, and further deterioration in industrial compared to Q3. We have a solid backlog for the year, both in automotive and in whole our engaged customer programs. In industrial, where we are seeing a strong inventory correction, we have a much lower backlog than when we entered in 2023. On Q1 2024, at the midpoint, our first quarter business outlook is for net revenues of $3.6 billion, decreasing by 15.2% year-over-year and 15.9% sequentially. Gross margin is expected to be about 42.3%. For the full year 2024, it will be impacted in the first half by the significant inventory correction in industrial, with an expected significant sequential revenue growth in the second half. We expect this will be driven by a strong rebound in industrial and in computer peripherals, c ontinued growth in automotive and in communication equipment, and the usual seasonality in personal electronics. In 2024, we plan to invest about $2.5 billion in net CapEx, and we will drive the company based on a plan for full year 2024 revenues in the range of $15.9 billion-$16.9 billion. Within this plan, we expect a gross margin in the low-to-mid 40s. Now, let's move to a detailed review of the fourth quarter. Both revenue and gross margin came slightly below the midpoint of our guidance by 40 basis points and 50 basis points, respectively. This was mainly due to higher revenues in personal electronics, offset by a softer growth rate in automotive compared to expectation. On a sequential basis, Q4 revenues decreased 3.4%, with ADG increasing 1.7%, IMS stable, and MDG decreasing by 13.3%. On a year-over-year basis, net revenues decreased 3.2%. ADG revenues increased 21.5%. IMS revenue decreased 25.8%, mainly reflecting lower revenues in personal electronics. But this includes the impact of the change in product mix in an engaged customer program in personal electronics that I first mentioned last January. MDG decreased 11.5% on accelerated demand deterioration in industrial, mainly impacting our general purpose MCU business. Year-over-year, sales decreased 0.4% to OEMs and 9.2% to distribution. Gross profit was $1.95 billion, decreasing 7.3% on a year-over-year basis. Gross margin was 45.5%, decreasing 200 basis points year-over-year, due to higher input manufacturing costs, unused capacity charges, and negative currency effect, net of hedging. Partially offset by the combination of sales price and product mix. Fourth quarter operating income decreased 20.5% to $1.02 billion. Q4 operating margin was 23.9%, down from 29.1% in the year-ago period, with ADG at 31.9%, IMS at 14.8%, and MDG at 28%. Q4 2023 net income was $1.08 billion, compared to $1.25 billion in the year-ago quarter. Both Q4 2023 and Q4 2022 included one-time non-cash income tax benefits of $191 million and $141 million, respectively. Earnings per diluted share were $1.14 compared to $1.32. Let's now discuss our full year results, starting with the business dynamics. In automotive, we again saw strong demand across all geographies, driven by increasing semiconductor pervasion and structural transformation. The year was also positively impacted by inventory replenishment and a high level of capacity reservation fees. In 2023, we continued to execute our strategy supporting car electrification. With silicon carbide products, our revenue for the year was $1.14 billion, a growth of more than 60% versus 2022. We finished the year with around 160 awarded projects spread over about 100 customers. This continues to give us confidence in our silicon carbide growth ambitions toward $2 billion in revenue in 2025. Wins included important supply agreement for automotive, as well as a collaboration with Airbus for aircraft electrification. We progressed as planned on our technology roadmap. In car digitalization, we saw continued design win momentum with our latest generation of automotive microcontrollers across applications such as software-defined vehicle architectures, and car electrification systems. In ADAS, we continued working closely with our long-time customer and partner, Mobileye. In industrial, during 2023, demand was still strong, especially in power and energy, factory automation and robotics, and in industrial infrastructure. Towards the end of Q3, we saw a progressive weakening of demand accelerating during Q4. In power and energy management applications, such as electrical vehicle charging stations, renewable energy systems, and factory automation, we had a broad range of design wins. We further strengthened our embedded processing solution leadership with our STM32 microcontrollers and microprocessor families and related ecosystem, introducing many new products and tools. We were again ranked as the number one choice in the AspenCore survey of embedded processing solution developers. During the year, we had a strong focus on Edge AI. We announced and provide updates on multiple hardware products, including microcontrollers, microprocessors, and smart sensors. We announced the world's first microcontroller Edge AI developer cloud and held our first ST Edge AI Summit online, with over 2,000 attendees and participation from many customers and partners. They will announce the ST Edge AI Suite, a comprehensive ecosystem for Edge AI using ST hardware, including our NanoEdge AI Studio. We progressed with sensors for industrial applications, introducing new MEMS and optical sensor suites. In personal electronics and computer peripherals, market demand remained weak in 2023, while communication equipment demand remained solid in our focus areas. In personal electronics, we continue to be successful with our focus approach, winning sockets in flagship devices with sensors, wireless charging, touch display controllers, and secure solutions. In communication equipment, our radio frequency communication business delivered strong results. We continue to progress well with engaged customer programs in satellite and cellular communication infrastructure, including with the next generation of products for SpaceX Starlink. Let me now share a summary of our main 2023 manufacturing initiatives. We continue to transform our manufacturing base to enable our future growth and drive higher profitability, with the expansion of our 300 mm capacity and a strong focus on wide bandgap semiconductors. In silicon carbide, we continue to ramp our front-end device production in our Catania and Singapore facilities, and we increase back-end manufacturing capacity in our sites in Morocco and China. We also started production in our new integrated silicon carbide substrate manufacturing facility in Catania as a significant step in our silicon carbide vertical integration strategy. We also announced a joint venture with Sanan Optoelectronics for high volume, 200mm silicon carbide device manufacturing in China. Production is expected to start in Q4 2025. These are important moves to further scale our global silicon carbide manufacturing operation, and they will be key enablers of the opportunity we see to reach above $5 billion silicon carbide yearly revenues by 2030. We advance also with our 300 mm capacity expansion plans. In Agrate, Italy, our new 300 mm wafer fab was qualified for production and capacity of slightly more than 1,000 wafers per week was installed as planned. In June, we announced the conclusion of the three-party agreement for a new 300 mm semiconductor manufacturing facility in Crolles among the state of France, GlobalFoundries, and our companies, as approved by the European Commission. These initiatives are aligned with our sustainability strategy and our sustainable manufacturing commitment in terms of energy consumption and greenhouse gas emissions, air and water quality. We are on track to achieve our carbon neutrality goal on Scope 1, Scope 2, and partially Scope 3, and our 100% renewable energy goal by 2027. To further this goal, we announced in November the signature of a 15-year power purchase agreement for renewable energy for our operation in Italy with ERG, a leading European independent energy producer. We also continue to work closely with external bodies and to maintain our strong presence in the major sustainability indices. Looking now at our full year 2023 financial performance in greater detail. Net revenues increased 7.2% to $17.29 billion. On a year-over-year basis, automotive revenues grew 33.5%, industrial was up 11.4%, communication equipment and computer peripheral decreased 4.2%, and personal electronics was down 25.1%. By end market, automotive represent about 41% of our total 2023 revenues, industrial about 30%, personal electronics about 9%, and communication equipment and computer peripherals about 10%. By customer channel, sales to OEMs and distribution represented 66% and 34% respectively, of total revenues in 2023, similar to the split in 2022. By region of customer origin, 37% of our 2023 revenues were from the Americas, 30% from Asia Pacific, and 33% from EMEA. Looking at the sales performance by product group, ADG grew 31.5% on growth, both in automotive and in power and discrete. AMS revenues decreased by 18.7%, with lower revenues in the three subgroups. MDG revenues increased 3.9%. Revenue grows in radio frequency communications and were substantially flat in the microcontroller subgroups. Gross margin increased to 47.9% for 2023, compared to 47.3% for 2022, principally driven by the positive impact of the combination of product mix and pricing, partially offset by higher input manufacturing costs and unused capacity charges. In 2023, operating margin decreased to 26.7% compared to 27.5% in 2022. By product group, ADG operating margin increased to 31.8% from 24.6%. AMS operating margin decreased to 17.3% from 25.2%, and MDG operating margin decreased to 33.8% from 35%. Net cash from operating activities increased 15.2% in 2023, totaling $5.99 billion. After investing $4.11 billion in net CapEx in 2023, compared to $3.52 billion in 2022, our free cash flow increased 11.3% to $1.77 billion. Inventory at the end of the year was $2.7 billion, compared to $2.58 billion in 2022. Days sales of inventory at year-end was 104 days, compared to 114 days at the end of Q3 2023, and 101 days at the end of the previous year. Cash dividends paid to stockholder in 2023 totaled $223 million. In addition, during 2023, ST executed share buybacks totaling $346 million under our current share repurchase program. ST net financial position of $3.16 billion at December 31, 2023, reflected total liquidity of $6.08 billion and total financial debt of $2.93 billion. Now, let's move to our plan for the full year 2024. On Q1 2024, at the midpoint, our first quarter business outlook is for net revenues of $3.6 billion, decreasing by 15.2% year-over-year and decreasing 15.9% sequentially. Gross margin is expected to be about 42.3%. For the full year 2024, we plan to invest about $2.5 billion in net CapEx, and we will drive the company based on the plan for full year 2024 revenues in the range of $15.9 billion-$16.9 billion. Within this plan, we expect a gross margin in the low-to-mid 40s. As mentioned earlier, the first half of 2024 will be impacted by a significant inventory correction in industrial. In the second half of the year, we expect significant sequential revenue growth, driven by a strong rebound in industrial and computer peripherals, continued growth in automotive and communication equipment, and the usual seasonality in personal electronics. At the midpoint of our full-year 2024 revenue indications, we expect mid-single-digit year-over-year growth in automotive. Excluding the impact of capacity reservation fees and a specific customer 2023 inventory replenishment effect, this would correspond to low double-digit year growth. We expect industrial to return to high single-digit year-over-year growth in the second half of 2024, after a significant decline in the first half. In personal electronics, we expect to grow revenues sequentially in the second half, in line with the usual seasonality. In communication equipment and computer peripheral, we expect to grow revenues both sequentially and year-over-year in the second half, driven by our engaged customer programs in both the communication and computer markets. To conclude, following several years of revenue growth and increased profitability, we see 2024 as a transition year. We are adapting our plans according to market dynamics, while continuing to execute on our established strategy and operating model, continuing to strongly focus on automotive and industrial as a broad range supplier, and being selective in our approach in personal electronics and communication equipment, and computer peripheral. Well, finally, before answering your questions, I would like also to mention that on January 10, 2024, we announced that we are reorganizing our product groups. ST will be organized in two product groups, split in four reportable segments, and the existing sales and marketing organization will be complemented by a new application marketing organization, by end market, implemented across all regions. This new organization implies a change in reporting, which will apply from January 1, 2024. We will now report revenues and operating income for the four new reportable segments. Thank you, and we are now ready to answer your question. We will now begin the question-and-answer session. Anyone who wishes to ask a question may press * and 1 on their touchtone telephone. You will hear a tone to confirm that you have entered a queue. If you wish to remove yourself from the question queue, you may press * and 2. Participants are requested to use only handsets while asking a question. Anyone who has a question may press * and 1 at this time. The first question is from François-Xavier Bouvignies from UBS. Please go ahead. Hi. Thank you very much. I have two quick question, if I may. The first one is on automotive. You mentioned that you expect mid-single digit growth for the full year versus, you know, production flattish. And versus three months ago, Jean-Marc, I think you were forecasting high single digit or significant growth for automotive. So it seems that you see some sort of this, you know, deterioration on the automotive side. My question is, you know, what kind of inventory correction do you assume in this plus five number, +5% or mid-single digit? Because, you know, when we look at TI, you know, two days ago or yesterday, they were talking about, you know, correction in automotive with no growth, basically, in even negative in 2024. We had Tesla last night, you know, not giving guidance for 2024, and we had Mobileye, obviously, with a significant inventory correction. So in other words, you know, is it conservative, this +5%, or, you know, the inventory correction could be far more, you know, as we look into 2024? And the second question is on the silicon carbide. Could you provide some guidance for 2024, by any chance, in terms of revenues? What you ended up in 2023 and what you expect for 2024 would be very helpful. Well, the change, okay, between October and January for automotive is about one important customer communicating about inventory in ADAS. So this is the change. That the reason why, okay, to give color on automotive, I really would like to confirm that we have to read the 2024 year, let's say, cleaning from this effect of, let's say, inventory replenishment we had in 2023 in ADAS and the capacity fee reservation. Because on automotive, yes, I confirm to you that year 2024, year 2023, as reported. We will grow mid-single-digit, but cleaner from this effect of strong inventory replenishment for ADAS in 2023, and the capacity reservation fee that are decreasing in 2024, because, okay, we are exiting capacity overloading. The growth on automotive will be low double-digit, which is basically consistent with the indication we have about the production of light vehicle, which are slightly above 90 million vehicle in 2024, which is consistent with the number of electric vehicle worldwide that will be produced in the range of 14 million-15 million vehicle. And of course, okay, the continuous penetration of, let's say, semiconductor electronics. Well, this in a year where clearly we have no more booster linked to inventory replenishment or capacity fee reservation. Again, I would like to repeat that for ST, the only difference we see October, January is related to ADAS. Well, then about silicon carbide. About silicon carbide, okay, our work plan, we will drive, ourself in 2024, is between $1.5 billion-$1.6 billion revenues. That's great, Jean-Marc. But just a quick follow-up if I may, on the, you know, when you laid out the underlying growth of the automotive, which is really well understood. But isn't it, like, don't you think to have an inventory correction buffer would make sense at this point of time? You know, I'm talking about inventory correction at the semiconductor level, for example, because obviously last year they all wanted to, you know, increase inventory significantly from a low base. So obviously it makes, you know, the base effect technically, you know, negative, you know, from a semiconductor inventory point of view. Do you see what I mean? Yeah, yeah, I exactly know. We absolutely don't see on automotive what we are seeing on industrial. Because on industrial, this is what is happening. Again, on automotive, where we see a pocket of inventory corrected is on ADAS. That has been pretty well communicated. Great. Thank you so much. I have to confirm to you that we have a very solid backlog covering the plan I mentioned to you on automotive. Very helpful. Thank you. Thank you very much, François. Next question, please, Moira. The next question is from Jérôme Ramel from BNP Paribas Exane. Please go ahead. Yeah, good morning. Thanks for taking my question. A quick question, Jean-Marc, on the guidance you gave for the full year, and the guidance for Q1, it kind of suggests that second half of this year could be maybe 20% above the first half. So I'm just wondering why the gross margin should be at 42.3% in Q1, and not significantly improve for the average of the full year, because you said, I mean, mid-range would be 42.5. So despite the strong revenue expectation, a growth in the second half of this year. So if you see what I mean, what I don't try to reconcile is, why with such a low revenue in Q1, you are at 42.3% gross margin, and despite the very strong recovery, revenue recovery in the second half of this year, the average for the full year gross margin is only 42 points or mid-forties, between low forties and mid-forties. Thank you. Thank you, Jérôme. So I pass the question, okay, to Lorenzo. Good morning, everybody. About the gross margin, but for sure, the first half of the year will be impacted in our gross margin by a material negative impact for the unloading charges. So this is clear. Already this quarter, the impact will be in the range of above 200 basis points in our gross margin. You have also to consider that we have in during 2024, the impact of our ramp-up in 300 mm in Italy, in Agrate, that is impacting especially the first part. On the second part of the year, definitely, let's say, when we look at the midpoint of our indication of the revenue, there will be a material increase in our gross margin. Anyway, we think that we will not be still at the optimal level in terms of manufacturing efficiency. Even if the unloading will move down significantly, moving in the second part of the year, and so the gross margin will increase, then at that point, we will not be actually at the best of our efficiency. Anyway, we do expect exiting the year above the midpoint, definitely, of the, a round the, let's say, the 40s. So we will be higher than the 44%-45%. But yet, this year will be, let's say, a year of transition for our gross margin. Okay, thank you. And maybe a follow-up on cost. How should we model OpEx for this year? This year, we think that our OpEx will stay substantially flattish when we look at the sequential in Q1. But the increase, there will be some increase because definitely, you see, there is some inflation. As usual, there will be some salary increase. This is obvious, but we think that we will increase our revenue in the year in the range of between 3%-4% compared to 2023. To OpEx. OpEx, yes. Okay. Okay. For the full year? Yes. And, just to. Okay. That usually we, we talk about a net OpEx, so including also the other income and expenses. And here, our other income and expenses will help somehow to keep our OpEx increase not too, too much high, because we forecast at this point to be well above $100 million, around $140 million-$150 million positive impact on our other income and expenses. Okay. Thank you. Thank you. Thank you very much, Jérôme. Next question, please. The next question is from Gianmarco Bonacina from Equita. Please go ahead. Yes, sir, good morning. Just a little bit more color you gave in an outlook for the full year on the verticals. If you can give us an outlook on the first quarter, in particular, if you expect automotive to show year-over-year growth in Q1, and then I have a follow-up. Thank you. The outlook for year, now, let's say, give a very simple summary of how we perceive the full year 2024. If, okay, we correct, let's say our year 2023 from clearly the optical module that I already shared with you many time last year. And this specific contractual inventory replenishment for ADAS that we have done in 2023, having capacity available. And the capacity fee reservation that are decreasing in 2024, as expected. Overall, if we have to clean 2023 as a reference, okay, we have about $800 million of revenue that will not be repeated in 2024. So that's the reason why, at the midpoint of our indication, so 16.4, okay, we have to compare not with 17.3, but with 16, let's say, 0.5. And how is the dynamic? The dynamic is very simple. Automotive will grow 13%, so about $750 million-$800 million, completely offset by the inventory correction of industrial in the same range of amounts. And then personal electronics and computer equipment and communication, okay, will be basically flattish, which is coherent with a very soft increase of a smartphone market in 2024, as reported by some analysts. As you know, there is no impact, okay, from the 5G because ST is not present on radio frequency. Well, and then communication and equipment and computer peripheral for us, we have, okay, a clear strong growth, with our engaged customer program in the satellite communication, and this is offset by a legacy exit, of our business. So, so this is the overall takeaway for the company. So I repeat, we have to clean by $800 million, with clear revenue that will not be repeated. Automotive will grow $800 million, 13%, offset by a strong inventory correction in H1 by industrial. Personal electronic and communication equipment and computer peripheral, basically flattish. Well, if I go more in detail, but automotive, I confirm, is mid-single digit, overall. Clean is, low double digit. Industrial, will decrease about, mid-teens, in 2024 versus 2023. Personal electronic will decrease, okay, by, let's say, low teens in 2024, but like for like, it's basically flattish if we remove the optical module. And basically, okay, as I said, communication, equipment and, computer peripheral will be flattish. So this is, okay, the, all we can classify, at the mid-range, midpoint of the range we indicated our revenue in 2024. I hope I am clear. Okay, thanks a lot. Just a quick follow-up on your midterm model. Can we assume that, especially on the gross margin side, the current transition year doesn't have any impact on your ability to achieve the 50% gross margin in the midterm? Thank you. Oh, but it is clear that looking at our market positioning, our strengths, our operating model, we confirm the model clearly. Well, we have just to have a look in detail of the implication of this transition year, but we confirm the model. Thanks. Thank you very much. Next question, please, Moira. The next question is from Joshua Buchalter from TD Cowen. Please go ahead. Hey, guys. Good morning. Thank you for taking my question. I was hoping you could maybe expand on your visibility into the back half ramp. I mean, in particular, in industrial, generally, when you're in an inventory correction and lead times are coming down, you know, it's hard to get a great grasp. So maybe you could provide some anecdotes of, you know, what you're seeing that's driving the sharp rebound in industrial in the back half. Maybe any details on how cancellations or bookings are trending underneath in the near term? Thank you. No, but clearly, the signal now we see after having seen in 2023, in the first half, as I mentioned, the acknowledgment of customers that the lead time of semiconductors are reducing. Well, clearly, and in October, we share with you that when we have seen September bookings not at the expected level, we discuss with our customers and all of them say, "Well, we are revisiting our sales and operating plan because our own end demand is weakening." Well, except power energy for infrastructure, but what was related construction, residential, including factory automation, robotics, and of course, what is consumer, all the customers and distributors were really assessing their end demand that was weakening and their inventory level. Well, clearly, the signal of Q4 bookings show that we are in an inventory correction mode. Well, by experience, inventory correction lasts four-five quarters. We can say that it has started in Q3, end of Q3. That's the reason why, we expect that this inventory correction will end end of Q2. Could be slightly extending Q3. Let's monitor it, okay? It's possible, but we are convinced, discussing with our customer that this inventory correction will end end of Q2. So that's the reason why, we have built a plan that is backloaded for industrial, H2 versus H1. Well, and that's the reason why also today, our backlog visibility on industrial is pretty low. That's the reason why, okay, we have given a range of $1 billion between $15.9 billion-$16.9 billion. But at the end, the feedback we are receiving, that we are facing an inventory correction that should end in Q2 and expecting a rebound in H2. Thank you for all that color. I guess as we go through this period of digestion, any way to quantify where the channel's at and where it needs to be, and any changes in the pricing environment with your customers as you go through the digestion? Thank you. No, pricing is going back to what we classify normal, is a low, low, low single digit, okay? We don't see, okay, price pressure special. Going back to normal. No, it's an inventory correction. I think, okay, we can classify that many customer in the field of industrial market have overestimated, in a certain extent, their end demand dynamic in 2023 and, and, and restart in 2024. They continue to order, okay, at the level of the backlog we receive end of 2022 and first half for 2023. Well, and now they acknowledge that they have to adjust because the end demand is not at the expected level. Well, this kind of adjustment, again, last three, four quarters, started in Q3, should end in Q2. Thank you. Thank you very much, Josh. Next question, please. The next question is from Lee Simpson from Morgan Stanley. Please go ahead. Great. Thanks, good morning. Thanks for putting me on. I just want to carry on from the last question. When we look at the, you know, the inventory correction for industrial, a lot of this, I mean, and correct me if I'm wrong, a lot of this looks as though it's general purpose microcontrollers. And a lot of this looks as though it's going through a distribution channel. So in many ways, it. I take the comment that it's, that it's a normal inventory correction, but would you say there may be scope for this to pull, you know, nearer the end of Q1 rather than the end of Q2, and that we might see scope for a modest improvement for that business into Q2? I guess I just wanted clarity on the outlook for the market. I think you said that there was a high single-digit improvement for industrial in the second half. Is that half-on-half? That, 'cause that doesn't look like it could be year-on-year. Well, first of all, the over inventory is, let's say, of course, impacting the general purpose microcontroller, because this is the key semiconductor device in any industrial system. But as well, sensors, MEMS, as well, general purpose analog and some power switch or power driver, so discrete. So this is, okay, a bit more than that. Well, why maybe it is a little bit, let's say, more visible on the microcontroller? Because do not forget that, industrial customer in 2022 has been heavily hit by the automotive. Okay? Many semiconductor companies has been forced to allocate more to automotive, because of fantastic growth of automotive at the detriment of industrial. So it is clear that, industrial market in 2023, they maybe cover them a little bit more than usual, and that's the reason why, okay, the inventory correction of MCU now, in an economy which is impacting the industrial market, is a little bit, amplified versus the other semiconductor, let's say, device. To your question about, inventory correction, lasting, in Q1, or, in Q2. Well, very honestly, now the, the key parameter we have to monitor is the order booking. Yes, if we see a strong acceleration, during the course of Q1, we should expect that early Q2, the market will rebound. But if we see, let's say, a, a softer restart in Q1, then accelerating in Q2, we will be in the scenario that I described but a few minutes ago. Great, that's very clear. Yes, yes. And maybe just if I just could add on. Hi, can you hear me? Yeah, yeah, we can hear you. Sorry. Thanks, Céline. I'm just curious also, you made mention there about the Edge AI ecosystem. I think none of us can deny that there's been some great acquisitions, bolt-ons, to backstop some of your ambitions there. But if we broaden this a little bit to include not just Edge AI, but TinyML, I'm just very curious to understand your readiness and where the design wins are leaving you for a tick up late 2024, or is this more of a 2025 story with Edge AI and TinyML? Thank you. No, it's more 25 story in terms of volume increase. Okay, now we are sampling, okay, our MCU that are embedding hardware accelerator and neural network. But okay, it's a great success when we see all the demand we have. And of course, we are preparing ourselves to have a solid booster in our revenue in 2025 and onward. Many thanks. Thank you very much. I think we have time for two, two more questions, Moira. Next question, please. Next question is from Sandeep Deshpande from J.P. Morgan. Please go ahead. Yeah, hi. Thanks for letting me on. I'm trying to understand, Jean-Marc, what you said about autos growth for the year. I mean, you said year-on-year it is about 5%, but then excluding something in 2023, it is 13%. Can I understand what you're excluding in 2023? And then, actually, after you answer that, I have a quick follow-up. No, to be very clear, what I exclude in 2023 is a delta of capacity fee reservation, 2024 versus 2023. Why? Because, okay, as expected, in 2024, we have a decrease in the capacity reversion fees from OEM because we are exiting, okay, progressively from a, let's say, capacity shortage. Well, this must be, let's say, removed, because it is not product related or production capacity related in ST. So this is the first delta. Then the second delta is the following: in 2023 for ADAS, okay, one of our customer contractually has to build a certain amount of inventory to secure the car OEMs. We have not been capable to do it in 2021 and 2022 for all the reason you remember, frame shortage, wafer factory capacity limitation, and so on and so forth. Yes, in 2023, ST had the capability with the investment we have done, to fulfill this, let's say, significant amount of device piling, okay, the contractual inventory that our customer has to do. Of course, this will not be repeated in 2024, and this was expected. So that's the reason why this very specific and unique case must be removed to compare a fair like-for-like, and to share with you, okay, this market dynamic. When we make the math, clearly, as reported, our automotive verticals will grow mid-single digit, as reported. Like-for-like, it will be low double digit. So this is the math. Understood. So then, maybe a follow-up to that would be on, in terms of margin. I mean, if you got capacity reservation fees last year, that would be very, very high margin, because if the capacity wasn't necessarily utilized by your clients, does that, you know, that number you had in 2023 have an impact on your gross margin in 2024? Because that doesn't exist in 2024. And is it going to have a long-term impact on your gross margin? Yes, it's true that when looking at the gross margin in last year, in 2023, capacity reservation fees were, let's say, of course, making a positive impact on our gross margin. And indeed, if you remember, let's say, in the first half of the year, we had, let's say, a gross margin that was approaching the 50%, let's say. But when we were in revenues well below the $20 billion+. And for sure, this was a little bit an upside in respect to our normal path to the 50% gross margin in our model. Now, what it happened in 2024? First of all, capacity reservation fees are not disappearing because most of the contracts that we have with OEMs are lasting for this year, some of them also in 2025. But what we have embedded in our model is definitely a reduction in terms of dollars. Still are into this year meaningful because there is, let's see, an amount that is still material, but definitely is not at the level of the peak that we had last year. So at the end, let's say this is something that were expected, that the capacity reservation fees, if we look at the contract that we have signed, will not disappear. In 2024 are still there, in 2025 will be still there, but in a reduced. They will progressively reduced. This is a little bit of what we have embedded when we are evaluating our gross margin. Does it answer your question, Sandeep? Thank you very much. Thank you very much. We have time for one last question. The last question is from Stephane Houri from ODDO. Please go ahead. Yes, hello. I'm very lucky. Thank you very much. Question on the CapEx reduction, actually. Can you tell us where you are cutting your CapEx? What you are preserving? I understand that you have been always preserving the strategic project, but I have the feeling that a lot of your projects are strategic now. So, if you can tell us where you are reducing your CapEx, will be very helpful. Thank you. No, they work. We continue to protect what we classify as strategic, basically, which is about silicon carbide, GaN, definitively. So the campus in Catania, the CapEx that we will consolidate in China with the JV we have created for Sanan. Then, all the device which are also related to the battery management system, let's say power, electrical power trains, so advanced BCD technology, this kind of device. All the device and technology related to the great growth we will have on communication equipment for satellite. Well, where we are modulating our CapEx is on all other capacity increase, but as we are doing in a normal way, okay? Clearly. Well, the good news I have to say, that I would like to share with you is our flexibility. So our capacity for to move from a $4.1 billion CapEx now to $2.5 billion. Okay? So this is demonstrating that we can continue to focus, to prepare our infrastructure toward our ambition of $20 billion plus, and we adapt ourself, okay, to the market condition I described during the call. Thank you very much. Any follow-up, Stéphane? Actually, I've missed, sorry, I had problems, technical problems. But, what's your view on the silicon carbide level of revenue for the year? And maybe if you could talk a little bit about the client concentration this year. Thank you. It's $1.5 billion-$1.6 billion. So it's another, let's say, a significant increase in 2024. So we are going on a path to deliver the $2 billion in 2025. Well, I will not comment specifically on our main customer, but as I already shared, progressively, the weight of this very important customer for us is decreasing. Let's say, as far as timely and smoothly, we are introducing all the new program that I report, okay, since many years to you. So yes, okay, it will decrease, but I cannot report specifically the weight of the customer, but it will decrease for sure, according what we expect. Okay. Thank you very much. Thank you. This was the last question. Would you like to conclude the call? Yes. Yep. Yes, I think at the time, I guess. Okay. 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.