Cypress Semiconductor Corporation (NASDAQ:CY) Q4 2016 Earnings Conference Call - Final Transcript

Feb 02, 2017 • 01:30 pm ET

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Cypress Semiconductor Corporation (NASDAQ:CY) Q4 2016 Earnings Conference Call - Final Transcript

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Operator
operator

Good afternoon and welcome to Cypress Semiconductor's Fourth Quarter and 2016 Earnings Release Conference Call. Today's conference is being recorded. If you have any objections, you may disconnect at this time.

I would now like to turn the call over to Ms. Melanie Solomon, Investor Relations. Ma'am, you may begin.

Executive
Melanie Solomon

Thank you. Good afternoon and thank you all for joining us on our Q4 and year-end 2016 conference call. With me today are Hassane El-Khoury, CEO; Thad Trent, CFO; and Mike Balow, EVP of Sales and Applications. Hassane will make some introductory remarks, Thad will provide a financial overview, and then we'll take your questions. All information discussed in our press release and on this call is based on preliminary unaudited results, and we encourage you to review our 10-K once filed. (Forward-Looking Cautionary Statement)

I'll now turn the call over to Hassane.

Executive
Hassane El-Khoury

Thank you, Melanie, and thank you all for joining us. This is now our fifth consecutive quarter of meeting or exceeding our guidance and is actually our highest quarterly revenue ever reported since the SunPower era. Looking at 2016, it was an exciting year. We drove growth in our automotive and industrial segments. We acquired and integrated the Broadcom IoT business, and are seeing growth exceeding our expectations.

I spent the last quarter talking to our customers and investors, and I'm pleased to report that Cypress 3.0, my vision for Cypress, and our focus on selling complete solutions for embedded systems in markets that are growing faster than the overall semi industry, is now deployed internally and externally across all of our partners and channels. We have fully aligned our go-to-market strategy with our target markets.

Our focus, moving forward, will be to provide our customers with combinations of our MCUs, wireless connectivity, analog, USB and memory solutions, along with the software that enables everything to work together seamlessly. We've constructed our product portfolio to contain everything our customers need for a typical embedded system, with the goal of becoming a single source for them, consolidating their supply chain and accelerating their time-to-market.

I want to highlight a few examples of progress in our target markets. First, automotive is a key growth vector for us, as connectivity in cars is growing and we are in a strong position to capitalize on it. For 2016, automotive grew 37% over 2015.

We're now in 19 of the top 25 auto OEMs globally and we are shipping revenue in 10 of the top 15 Tier 1 suppliers. We are just starting to grow our presence with Chinese OEMs, as shown by our robust design-in activity. We are maintaining our leadership position and instrument clusters and gaining in automotive body electronics, securing competitive wins with two major auto suppliers for our Traveo 2 MCUs, thanks to our low power and advanced security advantages. In terms of connectivity in the car, seven of the top eight automotive OEMs have integrated Cypress Wi-Fi and Bluetooth combination technology into production vehicle development programs.

Lastly, a