Diodes Q4 2024 Earnings Call Transcript

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Provided by Quartr
February 11, 2025

Key Takeaways

  • Returned to year-over-year growth: Q4 revenue was $339.3 M, up 5% from Q4 2023, with automotive and industrial sales holding a 42% mix, reflecting improved market momentum.
  • Declining profitability: Q4 GAAP net income dropped to $8.2 M ($0.18 EPS) from $25.3 M ($0.55 EPS) a year ago, and full-year 2024 revenue fell to $1.3 B from $1.7 B in 2023.
  • Optimistic outlook: Q1 FY2025 guidance targets ~$323 M in revenue (down 4.8% sequentially but up 7% year-over-year) and a GAAP gross margin of 32.5% ± 1%, underpinning expectations for stronger 2025 growth.
  • Inventory headwinds continue: Automotive and industrial markets remain in inventory rebalancing, which management expects to persist into the second quarter despite improving end-market demand.
  • Robust R&D pipeline: Diodes introduced 755 new part numbers in 2024—including 330 automotive products—boosting average selling prices and positioning for content expansion in AI and automotive applications.
AI Generated. May Contain Errors.
Earnings Conference Call
Diodes Q4 2024
00:00 / 00:00

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Operator

As a reminder, this conference call is being recorded today, Tuesday, 02/11/2025. I would now like to turn the call over to Leanne Sievers of Shelton Group Investor Relations. Leanne, please go ahead.

Leanne Sievers
Leanne Sievers
President at Diodes

Good afternoon, and welcome to Dyode's fourth quarter and fiscal twenty twenty four financial results conference call. I'm Leanne Sievers, President of Shelton Group, Diodes' Investor Relations firm. Joining us today are Diodes' President, Gary Yu Chief Financial Officer, Brett Whitmire Senior Vice President of Worldwide Sales and Marketing, Emily Yang and Director of Investor Relations, Vermeet Dallawal. I'd like to remind our listeners that the results announced today are preliminary as they are subject to the company finalizing its closing procedures in customary quarterly reviews by the company's independent registered public accounting firm. As such, these results are unaudited and subject to revision until the company files its Form 10 ks for its fiscal year ended 12/31/2024.

Leanne Sievers
Leanne Sievers
President at Diodes

In addition, management's prepared remarks contain forward looking statements, which are subject to risks and uncertainties, and management may make additional forward looking statements in response to your questions. Therefore, the company claims the protection of the safe harbor for forward looking statements that is contained in the Private Securities Litigation Reform Act of 1995. Actual results may differ from those discussed today, and therefore, we refer you to a more detailed discussion of the risks and uncertainties in the company's filings with the Securities and Exchange Commission, including Form 10 ks and 10 Q. In addition, any projections as to the company's future performance represent management's estimates as of today, 02/11/2025. Dowdes assumes no obligation to update these projections in the future as market conditions may or may not change except to the extent required by applicable law.

Leanne Sievers
Leanne Sievers
President at Diodes

Additionally, the company's press release and management statements during this conference call will include discussions of certain measures and financial information in GAAP and non GAAP terms. Included in the company's press release are definitions and reconciliations of GAAP to non GAAP items, which provide additional details. Also, throughout the company's press release and management statements during the conference call, we refer to net income attributable to common stockholders as GAAP net income. For those of you unable to listen to the entire call at this time, a recording will be available via webcast for ninety days in the Investor Relations section of Diodes' website at www.diodes.com. And now, I'll turn the call over to Diodes' President, Gary Yu. Gary, please go ahead.

Gary Yu
Gary Yu
President & Director at Diodes

Welcome, everyone, and then thank you for joining us on today's conference call. All above seasonal revenue results in the fourth quarter reflect the improving momentum we have seen over the past few quarters. As the market in Asia gradually improved, especially in China and the Southeast Asia region. We achieved 5% growth over the fourth quarter twenty twenty three, which makes a return to year over year growth following the multiyear market slowdown. Even though the overall global demand environment remains challenging, especially in Europe and the North America, we're able to maintain our automotive and industrial mix percentage at 42% of total product revenue, which is a testament to the progress we have made on our new product and the content expansion initiatives.

Gary Yu
Gary Yu
President & Director at Diodes

Diodes entered a new year having strong POS in Asia for 2024, improved level of channel inventory and a solid balance sheet combined with a committed focus on expanding growth in our target market, especially the automotive and industrial markets and capitalizing on new opportunities in AI related applications. Based on current data available, we expect 2025 to be a stronger year for Diodes than 2024. In addition to our past effort to lower manufacturing costs and further develop our process technology and capabilities, we're qualifying and are running more product in our internal facilities to minimize near term underloading costs until demand improves. Our focus remains on prioritizing investments in the automotive and industrial markets with our analog and power district products to further improve the quality and the mix of our portfolio. With our revenue contribution from auto and industrial remaining consistently above our target model, we are well positioned for growth and margin expansion as market recovery broaden across our end markets in 2025 and beyond.

Gary Yu
Gary Yu
President & Director at Diodes

With that, let me now turn the call over to Brett to discuss our fourth quarter and fiscal twenty twenty four financial results as well as our first quarter twenty twenty five guidance in more detail.

Brett Whitmire
Brett Whitmire
Chief Financial Officer at Diodes

Thanks, Gary, and good afternoon, everyone. Revenue for the fourth quarter twenty twenty four was $339,300,000 compared to $350,100,000 in the third quarter twenty twenty four and $322,700,000 in the fourth quarter twenty twenty three. Full year 2024 revenue was $1,300,000,000 compared to $1,700,000,000 in 2023. Gross profit for the fourth quarter was $110,900,000 or 32.7% of revenue compared to $118,000,000 or 33.7% of revenue in the prior quarter and $112,500,000 or 34.9% of revenue in the prior year quarter. For the full year, GAAP gross profit was $435,900,000 or 33.2% of revenue.

Brett Whitmire
Brett Whitmire
Chief Financial Officer at Diodes

GAAP operating expenses for the fourth quarter were $99,000,000 or 29.2% of revenue and on a non GAAP basis were $95,500,000 or 28.1% of revenue, which excludes $5,000,000 amortization of acquisition related intangible asset expenses, $600,000 restructuring charge, $300,000 in acquisition related costs and $2,300,000 for insurance recovery for a manufacturing facility. This compares to GAAP operating expenses in the prior quarter of $96,100,000 or 27.5% of revenue and in the fourth quarter twenty twenty three of $91,800,000 or 28.4 of revenue. Non GAAP operating expenses in the prior quarter were $91,700,000 or 26.2% of revenue. Total other income amounted to approximately $400,000 for the quarter, consisting of $4,900,000 of interest income, $1,200,000 of other income, $3,700,000 of foreign currency loss, $1,600,000 in unrealized losses from investments and $500,000 in interest expense. Income before taxes and non controlling interest in the fourth quarter twenty twenty four was $12,300,000 compared to $18,800,000 in the previous quarter and $27,900,000 in the prior year quarter.

Brett Whitmire
Brett Whitmire
Chief Financial Officer at Diodes

Turning to income taxes, our effective income tax rate for the fourth quarter was approximately 16.6. For the full year 2024, the tax rate was approximately 18.9%. GAAP net income for the fourth quarter was $8,200,000 or $0.18 per diluted share compared to $13,700,000 or $0.3 per diluted share last quarter and $25,300,000 or $0.55 per diluted share in the prior year quarter. Full year GAAP net income was $44,000,000 or $0.95 per diluted share compared to 227,200,000 or $4.91 per diluted share in 2023. The share count used to compute GAAP diluted EPS was 46,400,000.0 shares for both fourth quarter twenty twenty four and the full year.

Brett Whitmire
Brett Whitmire
Chief Financial Officer at Diodes

Non GAAP adjusted net income in the fourth quarter was $12,500,000 or $0.27 per diluted share, which excluded net of tax $4,100,000 for amortization of acquisition related intangible assets and $1,300,000 non cash mark to market investment value adjustment, $500,000 restructuring charges, $200,000 of acquisition related costs and $1,900,000 of insurance recovery. This compares to $20,100,000 or $0.43 per diluted share in the prior quarter and $23,400,000 or $0.51 per diluted share in the fourth quarter twenty twenty three. For the full year, non GAAP adjusted net income was $61,000,000 or $1.31 per diluted share as compared to $222,800,000 or $4.81 per diluted share in 2023. Excluding non cash share based compensation expense of $5,300,000 for the fourth quarter net of tax both GAAP earnings per share and non GAAP adjusted EPS would have increased by $0.11 per diluted share. For the full year, excluding GAAP and non GAAP non cash share based compensation expense of $18,000,000 and $17,400,000 respectively, net of tax, GAAP and non GAAP diluted earnings per share would have improved by $0.4 and $0.39 respectively.

Brett Whitmire
Brett Whitmire
Chief Financial Officer at Diodes

EBITDA for the fourth quarter was $40,700,000 or 12% of revenue compared to $46,900,000 or 13.4% of revenue in the prior quarter and $58,400,000 or 18.1% of revenue in the fourth quarter twenty twenty three. For the full year, EBITDA was $177,100,000 or 13.5% of revenue compared to $404,200,000 or 24.3% of revenue in 2023. We have included in our earnings release a reconciliation of GAAP net income to non GAAP adjusted net income and GAAP net income to EBITDA, which provides additional details. Cash flow provided by operations was $81,800,000 for fourth quarter and $119,400,000 for the full year. Cash flow was $62,100,000 which included $19,700,000 for capital expenditures and for the full year free cash flow was $46,400,000 including $73,000,000 for CapEx.

Brett Whitmire
Brett Whitmire
Chief Financial Officer at Diodes

Net cash flow was a negative $2,400,000 which includes the net pay down of $3,800,000 of total debt and for the full year net cash flow was a negative $3,800,000 which includes the net pay down of $7,600,000 of total debt as well as total net consideration of $52,600,000 for the acquisition of Fort Media, a global company which operates in Asia that develops high quality solutions and semiconductor products to enhance human to human and human to machine voice communications. Diodes acquired Fortmedia to expand our product portfolio and enhance the company's footprint in advanced voice processing technologies, primarily targeted at automotive and compute markets. Turning to our balance sheet, at the end of fourth quarter, cash, cash equivalents, restricted cash plus short term investments totaled approximately $322,000,000 Working capital was approximately $849,000,000 and total debt, including long term and short term, was approximately $52,000,000 In terms of inventory, at the end of fourth quarter, total inventory days were approximately 193 as compared to 187 last quarter. Finished goods inventory days were 82 compared to 79 last quarter. Total inventory dollars decreased $7,100,000 from the prior quarter to $475,000,000 Total inventory in the quarter consisted of $18,300,000 decrease in raw materials, a $9,700,000 increase in work in process and a $1,500,000 increase in finished goods.

Brett Whitmire
Brett Whitmire
Chief Financial Officer at Diodes

Capital expenditures on a cash basis were 19,700,000 for the fourth quarter or 5.8% of revenue and $73,000,000 or 5.6% of revenue for the full year, which were both at the low end of our targeted range of 5% to 9% of revenue. Now turning to our outlook. For the first quarter of twenty twenty five, we expect revenue to be approximately $323,000,000 plus or minus 3%, representing a 4.8% sequential decrease at the midpoint due to Chinese New Year holiday, but slightly better than typical seasonality. Importantly, the midpoint of guidance represents 7% year over year growth and extends our momentum in support of our expectation of growth in 2025. GAAP gross margin is expected to be 32.5% plus or minus 1%. Non GAAP operating expenses, which are GAAP operating expenses adjusted for amortization of acquisition related intangible assets are expected to be approximately 30% of revenue plus or minus 1%. We expect net interest income to be approximately $1,500,000 Our income tax rate is expected to be 18.5 plus or minus 3% and shares used to calculate EPS for the first quarter are anticipated to be approximately $46,700,000 Not included in these non flat estimates is amortization of $5,800,000 after tax for previous acquisitions.

Brett Whitmire
Brett Whitmire
Chief Financial Officer at Diodes

With that said, I now turn the call over to Emily Gang.

Emily Yang
Emily Yang
Senior Vice President-Worldwide Sales and Marketing at Diodes

Thank you, Brad, and good afternoon. Revenue in the fourth quarter was above the midpoint of our guidance and slightly better than typical seasonality. Our global POS decreased in the quarter, but the good news is our channel inventory was lower both in terms of dollars and weeks. I will also note POS in Asia for 2024 was strong, especially the second half of the year where we saw double digit growth over the same period in 2023. Looking at the global sales in the fourth quarter, Asia represented 80% of revenue, Europe 12 Percent and North America 8 Percent.

Emily Yang
Emily Yang
Senior Vice President-Worldwide Sales and Marketing at Diodes

In terms of our end markets, industrial was 23% of Diodes product revenue, automotive 19%, compute 25%, consumer 18% and communication 15% of product revenue. Our automotive industrial revenue combined totaled 42% of the product revenue, which is the same as last quarter. Maintaining our product mix above our target model reflects our ongoing contact expansion and design win initiatives, even though both of these market continue to undergo inventory and demand adjustments. A key component of Diodes' successful increase of contact as new and existing customers has been our focus on technology and product development over the past several years. In 2024 alone, we introduced seven fifty five new part numbers with three thirty of this specifically for automotive market, where we have increased our addressable content per car over 30% this past year from approximately $160 to $213 Now let me review the end market in greater details.

Emily Yang
Emily Yang
Senior Vice President-Worldwide Sales and Marketing at Diodes

Starting with automotive market, we maintained the product revenue at 19% even though the inventory rebalancing continues throughout the quarter. We expect inventory adjustments and slower demand to persist into the first quarter. Our focus continued to be on content expansion and market share gain to position Diodes for the growth as the auto market recovers. As I mentioned earlier, Diodes introduced a high number of new automotive compliance products during the year. These products are targeted at our key focus areas of connected driving, comfort style safety and electrification applications.

Emily Yang
Emily Yang
Senior Vice President-Worldwide Sales and Marketing at Diodes

In terms of product adoption and demand creation, we're seeing strong momentum for our small income PCI Express packet switches, USB Type C redrivers and active cross boxes for the rear seat entertainment and smart cockpit applications. Our LDO product family received solid demand for ADAS, infotainment and wireless charging applications and our SBR product is being design wins in auto display applications. We also experienced strong growth in the quarter from our switching power DCDC products for connected driving applications. Additionally, our power discrete product, including MOS power, TVS, SBR and bipolar junction transistors are seeing demand growth across multiple auto applications. We have also been ramping up new design wins for our high voltage hall switches being used in the tailgate lift, door harness, electric steering control across multiple customers around the world.

Emily Yang
Emily Yang
Senior Vice President-Worldwide Sales and Marketing at Diodes

Also in automotive, our LED driver business continued to see strong demand in various lighting applications, while our bus LED drivers and multimode LED driver controllers gain traction in applications such as front, high, low beam as well as rear and exterior lightings. In the industrial market, the inventory correction continues similar to automotive end market. We expect this may last into the second quarter. Despite the demand softness, we continue to make progress in our design in, design win initiatives. Our high voltage hot switches are seeing design wins for window openers, DC fans and motor applications, while our photo couplers and LDOs are seeing traction in e meter industrial equipment, motor control fans and power tools.

Emily Yang
Emily Yang
Senior Vice President-Worldwide Sales and Marketing at Diodes

Additionally, our protection devices are being designed into battery backup units as well as programmable logic control units. Our bridge rectifier had multiple design wins in the switch mode power supply for SERFR power, we also saw several new silicon carbide SDD designing activities in rear power supply and electric motor as well as Tier one energy storage applications. In the computing market, we continue to see strong growth momentum for the PCI Express packet switches, USB signal conditioners and ultra low jitter crystal oscillators in AI surfer and data center applications, including 800 gs and 1.6 T switches and optical modules. Our high speed serial interface logic crystal oscillators and PCI Express clock are being adopted in the NIC card and GPU card for the system reference clock. Our addressable content in the AI Surfer today is approximately $90 per box, which compared to $53 per box last year for traditional surfers.

Emily Yang
Emily Yang
Senior Vice President-Worldwide Sales and Marketing at Diodes

Also in the computing market, we received solid demand for our LDOs across various applications as well as our ideal diode controllers, MOSFET and Compaq power switches for input power O ring and Power Path sequencing control applications. Additionally, our bus switch solutions for enterprise SSD and next generation portable gaming consoles are being well received as they have helped SSD customers double the supported capacity without redesign of their storage controllers and also protect against software piracy for gaming console customers. Lastly, high bandwidth cameras in the notebook are driving demand for our MIPI D5 redrivers, and we continue to achieve momentum for our Shockey and Protection products in notebook and docking station applications. In the communication market, our eUSB2 repeaters has become the standard interface for CPUs and SoC processors in the mobile communication, where our one and two channels of eUSB repeaters are gaining traction. Diodes LDO is also seeing solid demand and our production devices are winning new designs in the smartphones.

Emily Yang
Emily Yang
Senior Vice President-Worldwide Sales and Marketing at Diodes

Also in the communication market, our bipolar junction transistors, Shokian SVR product are seeing new design ins for five gs CPE and five gs modules. We also saw strong momentum for USB power delivery and ACDC PWM controllers product in smartphone charging applications. Lastly, in the consumer market, our SBR and SBD products in chip scale package are securing new designs in power delivery charger and battery pad applications. Additionally, our bridge rectifiers are being designed into gaming applications, while our high voltage buck converters are being adopted in the smart home IoT applications. We also have new design wins for bipolar junction transistors product in personal care devices.

Emily Yang
Emily Yang
Senior Vice President-Worldwide Sales and Marketing at Diodes

In summary, we're pleased to achieve the first quarter of year over year growth in the fourth quarter following the multi year market slowdown. Although we have not yet seen a broad market recovery, especially across the automotive industrial markets, we continue to focus on demand creation and executing on our new product initiatives to drive increasing content opportunities as the global market recover. With that, we now open the floor to questions. Operator?

Operator

Thank you. We will now begin the question and answer session. And your first question today will come from David Williams with Benchmark. Please go ahead.

David Williams
Equity Research Analyst at The Benchmark Company LLC

Hey, good afternoon. Thanks for taking the question and congratulations on the revenue growth here.

Emily Yang
Emily Yang
Senior Vice President-Worldwide Sales and Marketing at Diodes

Thank you, David.

David Williams
Equity Research Analyst at The Benchmark Company LLC

Emily, maybe you could speak a little bit to the seasonality that you're talking to and how that's impacting you in China, especially with the Chinese New Year? And maybe as it relates to automotive and industrial, kind of what you're seeing there? Are you expecting that to be down maybe further than some of the other segments? Or just any color around the demand trends in China would be helpful, I think.

Emily Yang
Emily Yang
Senior Vice President-Worldwide Sales and Marketing at Diodes

Yes. So first of all, I think Chinese New Year, I think is pretty much within our expectation. We didn't see anything abnormal. I think there are some customers with extended shutdown, but not all the customers. I think overall, it's actually within our expectation.

Emily Yang
Emily Yang
Senior Vice President-Worldwide Sales and Marketing at Diodes

I think we actually included a new year, Chinese new year return of employees and overall market, everything together. We actually guided a 4.8% down for the Q1, which is actually slightly better than our usual seasonality. And Q1 never was a strong quarter for us because Chinese New Year impact, I would say, all in all, is actually within our expectation.

David Williams
Equity Research Analyst at The Benchmark Company LLC

Great. I certainly appreciate that. And then maybe Brent on the gross margin, the sequential improvement there feels a little stronger than I would have anticipated. What are you kind of seeing on the gross margin, I guess, just given the nice bump sequentially there?

Emily Yang
Emily Yang
Senior Vice President-Worldwide Sales and Marketing at Diodes

Yes. So I think from the gross margin point of view, and usually revenue goes hand in hand with the gross margin. So I think what we really try to do is really more on the product mix initiative improvement overall. We continue to focus introducing new products. As an example, I think I just talked about it.

Emily Yang
Emily Yang
Senior Vice President-Worldwide Sales and Marketing at Diodes

We released more than 700 new part numbers in 2024. And out of that, more than three thirty is actually automotive parts. So you can actually see the commitment and driving of the new product and new technology continue to expand our available content market expansion overall. So that will continue to be the focus, right? So a couple of things is really drive the margin improvement.

Emily Yang
Emily Yang
Senior Vice President-Worldwide Sales and Marketing at Diodes

So one is on the product improvement product mix improvement initiative. The other side is actually on the underloading situation. So like Gary mentioned, right, we continue to actually minimize the impact, continue to pour additional products into our own internal fab as an alternative, right? Unfortunately, that takes time, but slowly we're going to see some of the results. So I would say that's the reason you're actually seeing probably better than your expected margin gross profit margin overall based on the guidance.

David Williams
Equity Research Analyst at The Benchmark Company LLC

Okay. Is there a way to think about how far you are through that porting over process? Is there a threshold or maybe just a way to think about the magnitude that's happening to the gross margin at this point?

Emily Yang
Emily Yang
Senior Vice President-Worldwide Sales and Marketing at Diodes

I think that would be ongoing quarter by quarter effort, right? I think not only we need to qualify the process, the technology, the devices, we also need to work with the customers to qualify that device onto their board. So I would say it's an ongoing process and it's probably going to take other number of quarters continue to improve over time. But I we strongly believe that with the belief 2025 is actually going to be a better year. So that also going to drive some of the revenue, at the same time driving some of the loading.

Emily Yang
Emily Yang
Senior Vice President-Worldwide Sales and Marketing at Diodes

So we're actually pretty confident that overall you're going to see improvement throughout the quarters within 2025.

David Williams
Equity Research Analyst at The Benchmark Company LLC

Great. Thanks so much.

Operator

And your next question today will come from William Stein with Truist Securities. Please go ahead.

William Stein
William Stein
Managing Director / Senior Analyst at Truist Securities

Great. Thanks for taking my question. First, I'm hoping you might give us some clues as to how you expect revenue to perform in each of the end markets in Q1.

Emily Yang
Emily Yang
Senior Vice President-Worldwide Sales and Marketing at Diodes

Okay. All right. So, automotive still going through inventory rebalancing and coupled with weaker demand overall, right, especially from the Europe territory. So, we think Q1 is still going to be a challenging quarter overall. As you can see, I mean, even with the Q4 challenging, we try to maintain the 19% overall of the product revenue.

Emily Yang
Emily Yang
Senior Vice President-Worldwide Sales and Marketing at Diodes

So I think that will continue to be the focus. It's actually focused on the content expansion and the market share gain overall. So, over industrial market, we're still seeing ongoing inventory rebalancing. Some customer situation are worse than the others. Definitely some are better, so not everything equal.

Emily Yang
Emily Yang
Senior Vice President-Worldwide Sales and Marketing at Diodes

But all in all, we see that will continue probably linger through the second quarter. And compute market segment for Q1, we expect it probably to be slightly down because also Chinese New Year manufacturing, a lot of that is in Asia, so that will be impacted overall. And the consumer was never a strong quarter in the first quarter, So we don't expect consumer to be a growth quarter as well as communication. I think on the communication side, on the enterprise traditional networking, we are actually seeing some of the inventory rebalancing improving overall, so that might give us some of the upside. But the smartphone is actually going to probably be challenging in the first quarter.

Emily Yang
Emily Yang
Senior Vice President-Worldwide Sales and Marketing at Diodes

So I would say all in all, it's still going to be a down quarter. So as a conclusion, right, so we guided 4.8% down for the whole quarter.

Gary Yu
Gary Yu
President & Director at Diodes

But that's still the better than the seasonality first quarter.

Emily Yang
Emily Yang
Senior Vice President-Worldwide Sales and Marketing at Diodes

Yes.

William Stein
William Stein
Managing Director / Senior Analyst at Truist Securities

Okay. Let me ask about operating leverage. Compared to the December of twenty twenty two quarter, it was two years ago, but your revenue is down 32%. Your OpEx is only down 10%, which is fine. I assume it means there's significant fixed cost in your OpEx.

William Stein
William Stein
Managing Director / Senior Analyst at Truist Securities

But as your revenue recovers, assuming we even if we don't get back to that exact level, but as you grow, should we think there's going to be sort of similar positive operating leverage on the way up? Or have you added costs that make the that might make the leverage less severe or less significant as it was on the way down?

Brett Whitmire
Brett Whitmire
Chief Financial Officer at Diodes

I would say that you will that we have there's no real structural things that we've added across that window. We basically had picked up the On Semi and the TIX Instruments factory across the last number of years. And then what we've done is you saw that across the last couple of years, we brought down overall OpEx spend, you know, and from 22% to 23% and then 23% to 24%. I think what you'll see is there's a good bit of leverage to that as we go forward. I think we get a lot of that will we've talked about the leverage we get in our margin not only as we start to grow, we get the benefit of pulling those some of the sourcing of those products inside versus out.

Brett Whitmire
Brett Whitmire
Chief Financial Officer at Diodes

And then that infrastructure obviously is inside the company now versus outside in terms of some of the manufacturing footprint. But I think you're going to see the leverage is good. There's not I don't expect that to scale back up. I actually think that what you're going to see is that OpEx as a percentage of revenue start coming back down, kind of plateau and then start coming back down as revenue starts to grow, which we feel strongly that fourth quarter was year over year growth, first quarter we're guiding year over year growth and we expect that to continue. Through the year we don't guide out further officially, but that's our feeling, that's our expectation and that's what you'll see on the OpEx side is it will continue to kind of come down across the quarters.

William Stein
William Stein
Managing Director / Senior Analyst at Truist Securities

Great. Thanks guys.

Emily Yang
Emily Yang
Senior Vice President-Worldwide Sales and Marketing at Diodes

Thank

Operator

And your next question today will come from David Williams of Benchmark with a follow-up. Please go ahead.

David Williams
Equity Research Analyst at The Benchmark Company LLC

Hey, Thanks for taking the follow-up and forgive me if I missed if my line dropped out. But I wanted to ask maybe on pricing trends, what you're seeing there? Have you seen erosion greater than you would typically see or does that seem to calm down a bit just from a pricing perspective?

Emily Yang
Emily Yang
Senior Vice President-Worldwide Sales and Marketing at Diodes

Yes, David. I think the pricing is pretty stable within our remember I talked about 1.5% to 2% bill in per quarter. It's still within that range. So I wouldn't say the overall environment changed a lot. We see more price competition from the decommodity and commodity area.

Emily Yang
Emily Yang
Senior Vice President-Worldwide Sales and Marketing at Diodes

That's also the area we have been strategically defocusing. And so I would say all in all, it's actually stable.

Gary Yu
Gary Yu
President & Director at Diodes

And another important thing is we probably can emphasize a lot on our product portfolio enhancement on that. We introduced a lot of new product, not only limited automotive, but also for the different kind of segment. So we can enjoy the much better ASP and GP percent on those kind of new product we introduced to the market.

Gary Yu
Gary Yu
President & Director at Diodes

So we can balance in those like the commodity loss in some markets.

David Williams
Equity Research Analyst at The Benchmark Company LLC

Okay, great. And then just one last thing, if I may, on the AI side. You're seeing some really nice growth this year per box, as you mentioned. Is that driven more by just trader sockets available or is it your product portfolio or what's really driving that opportunity within that server kind of market for you?

Emily Yang
Emily Yang
Senior Vice President-Worldwide Sales and Marketing at Diodes

I think it's a combined of all, right? So we are expanding our product portfolio. We're having some of the newer products overall supporting the Surfer or the AI Surfer applications. We also see with the AI Surfer applications with certain chipsets, there is additional PCI Express port required. And we actually have this PCI Express packet switch portfolio that's very well suited to really support this kind of application with the requirement of additional PCIe ports.

Emily Yang
Emily Yang
Senior Vice President-Worldwide Sales and Marketing at Diodes

So I would say combination of quite a number of different things of course, the volume and the change overall market is all beneficial to our overall growth.

David Williams
Equity Research Analyst at The Benchmark Company LLC

Great. Thanks, Gansley. I appreciate it.

Operator

This concludes our question and answer session. I would like to turn the conference back over to Gary Yu for any closing remarks.

Gary Yu
Gary Yu
President & Director at Diodes

Thank you, everyone, for participating on today's call. We look forward to reporting our progress on next quarter's conference call. Operator, you may now disconnect.

Operator

The conference is now concluded. Thank you for attending today's presentation. You may now disconnect your lines.

Executives
    • Leanne Sievers
      Leanne Sievers
      President
    • Gary Yu
      Gary Yu
      President & Director
    • Brett Whitmire
      Brett Whitmire
      Chief Financial Officer
    • Emily Yang
      Emily Yang
      Senior Vice President-Worldwide Sales and Marketing
Analysts
    • David Williams
      Equity Research Analyst at The Benchmark Company LLC
    • William Stein
      Managing Director / Senior Analyst at Truist Securities
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