GLOBALFOUNDRIES Inc. (GFS) Earnings Call Transcript & Summary

Thanks for coming, everyone. Chris Danely, semiconductor analyst here at Citigroup for the 27th consecutive presentation seemingly. Next up is GlobalFoundries. It's our pleasure to have John Hollister, I guess sort of newly minted CFO, not so newly minted CFO? John, thanks very much for coming.

Thank you, Chris. Thanks for having us.

Yes. We appreciate it. So -- you recently reported your earnings, I guess, a few weeks ago. Maybe give us the GF view on the industry and maybe like the key puts and takes, maybe [ just ] start with overall industry and then dig into the end markets.

Sure. Yes. So we've been pleased with our execution in the first half of this year. We've been delivering results that have been above the midpoint of our guidance ranges and generating significant free cash flow in the first half. We've generated more than $500 million in free cash flow that puts us well on track to achieving our goal of roughly a 3x increase in FCF for 2024. We did a touch over $300 million in 2023. So we're looking to generate roughly $1 billion of free cash flow this year. So that's on track. As far as the industry overall, it's -- we believe we're hopefully at the bottom of this down cycle and moving along the bottom of this, and -- even though we are growing sequentially throughout the course of this year, and the big question is what's going to be the rate and pace of the recovery. And as we look at manufacturing in general, the health of the macro economy, the labor market, what the Fed is going to do, these are obviously all open questions for all of us to consider. But we think that this feels like the bottom of it overall. And hopefully, we'll be looking ahead to a recovery as we head into next year, but we'll have to wait and see how the demand signals ultimately bear out. If you want me to touch on the end markets in particular, the -- taking them in turn, smart mobile devices has seen some accumulation of inventory, and we've seen some drawdown there. That's varied by customer. Qualcomm, in particular, you can see their inventory days have come in better. And we see forecasts of roughly mid-single-digit recovery in the smart mobile device market. Given the inventory levels that exist out there and the need to draw that down, we see for 2024 the opportunity to have flat, maybe slightly up year-on-year growth for the year for smart mobile devices in 2024. We have a very strong position with the RF front-end technologies as well as our RF transceivers. We're also expanding and diversifying our content into areas like OLED and display technology and look for a future where this is a very solid piece of our business. It may not be the fastest-growing piece of our business as we move forward, but a very strong market position, and we expect that to continue to be the case. Next, I'll talk about automotive, which has been a fantastic story for us and really plays very well for our strengths as a company, both in terms of the analog mixed signal and microcontroller technology that we offer, that are abundant in vehicles, as well as our reliable defendable supply chain characteristics with our global footprint in North America, in Europe, in Singapore. This is important for automotive manufacturers and has been a key part of our long-term agreement frameworks -- I'm sure we'll get into that here in a moment -- but that business tripled in 2023 from around $300 million to just over $1 billion in 2023, and we look for continued growth. Even with the inventory dynamics that are happening in the automotive industry, we still see the opportunity to grow that business meaningfully in 2024, and we see that as mid- to upper single-digit growth in '24 and a very bright future as we look forward into the next several years of continued growth in automotive in both internal combustion platforms, autonomous connected electric vehicle platforms. Again, the diversity comes into play across microcontrollers, our 22FDX technology that's relevant for radar applications, for example, and other technologies that are permeating the vehicles. Next, I'd talk about the IoT market, where once again we have very well suited technology -- I'm thinking 22FDX, which has very low power operation, great RF performance, ideally suited for battery-operated wirelessly connected devices in the Internet of Things. We've seen some wins in blood glucose monitoring, for example, as a good proof point there. This market has been impacted by inventory to a significant degree. And we've seen that definitely affect the -- our business performance, our customers' business performance. We are starting to see that improve some. It's a bit mixed across our various customers, but we saw some -- in some cases, some pretty good movement of inventory in the second quarter to bleed that off some. So longer term, very excited about this market. It's greenfield, it's a new market, it's nascent, and the long-term opportunity is robust. And then finally, looking at the comms infrastructure and data center market, that's our fourth end market, we've seen some processing intensive applications migrate from our 12- and 14-nanometer FinFET technology to sub-10-nanometer technologies where the power and the cost are worth it given the processing capability that those applications require. We think that story is largely behind us, and we've reached a stable level of business now in what we see. And longer term, really good opportunity in areas like silicon photonics as well as our gallium nitride technology that will be useful for power delivery in data center applications. And in satellite communications, we have some new wins there, both in the ground terminals as well as the satellites themselves. So again, looking at the silicon photonics and the power, that's really an AI play for GlobalFoundries as a derivative, if you will. We're not going to be competing in the highly processing-oriented portions of that application, but the analog mixed signal enablement around it is a strong play for the company.

Just to unpack some of those comments, one thing you said about rates. We've got a few other CFOs and CEOs mention that. You've been doing this for quite some time, so you remember the last time rates went down. Obviously, most people believe rates are going to start to go down here fairly quickly. Can you just talk about the impact that that will have on the business, on the confidence, before we dig into some of your comments on the end markets?

Yes. I mean I think we've seen demand globally impacted by 2 critical phenomena. In the Western economies, we've seen high interest rates impact consumer demand. That's pretty clear. In the AsiaPac market, I think in the China market in particular, we've seen the property market lag demand in China. The rate and pace of that recovery is a bit to be determined, I would say, but on the Western economies, interest rates coming down should facilitate stronger consumer demand across a range of applications, of vehicles being less expensive to buy, consumer borrowing being more readily available, corporate borrowing being more readily available. So we think that's bullish for demand overall, and then the related leg to that whole track is what's going to happen in the labor market. And ideally, we can execute a soft landing, get the rate relief that we need, and not have a negatively impacted jobs market along the way. And of course, that's what we're all hoping for, and we'll see what the Fed does here in a couple of weeks.

Great. And then taking all the near-term stuff, as we look into, say, calendar '25, how would you rank the end markets in terms of what you feel best about or what you're a little more concerned on? And by the way, your comment on comms has basically been echoed by every other semiconductor company here in comms, it's either flat or starting to slightly improve. So I think we're through the worst on that area.

Yes, Chris, I think the automotive market and the smart mobile device market are most exciting to me right now. I think the IoT market is -- remains a bit of a wildcard, and that can become really exciting if, again, the rate environment can stimulate more demand, activate housing starts, remodels for home automation, those types of applications, and consumer demand on next-generation IoT devices. So that could quickly become very exciting, I think, if you get both a demand stimulant and an inventory clearing phenomenon happening in IoT, that could turn quickly. And then on CID, I think it's going to be a bit of a longer-term road map. I don't see that so much in the '25 horizon, hopefully some, but it's really looking beyond '25 as we see Gen AI continuing to take off and next-gen communication kicking in over time here.

Great. I want to ask about inventory as well. But I guess, from a broader perspective, you've been doing this for a while, what's your sense of like the underlying demand for semis? Do you think we're just sort of bouncing along the bottom? Is it getting a little better, a little worse, somewhere in between, no one can tell, we're just throwing darts? What's your -- you've been there for a little bit now and you've been doing semis for a long, long time, so any insights there would be appreciated.

It feels to me like we're bouncing along the bottom and waiting for the recovery. I would say the recovery is a little bit long in the tooth relative to prior cycles, but that's not -- it's not all that surprising given the amplitude up in the '21/'22 time horizon of what happened post COVID. We had the shortages, we had a lot of inventory accumulation as companies around the world were really concerned about having reliable supply. So we've had high amplitude up, and now we're seeing the high amplitude down. And again, if we could get some macroeconomic recovery throughout this inventory, it should be quite positive. I think our fundamental thesis on semiconductor content continuing to grow, continuing to permeate both existing applications and higher content and new applications, that remains very much intact. And we see this becoming a trillion industry over the course in the next several years.

Yes. NVIDIA alone might get there at this rate. How about overall inventory in semis? Maybe give us your sense on like channel inventory first and how you think that evolves.

Yes. I think as I see channel inventory, and really thinking about the distribution network from our customers, that has gotten a lot better. That had gotten very high, and has now been the first shoe to drop of seeing a drawdown and normalization. And now it's down to the companies themselves pulling down those inventory levels to allow the more normalized demand curve to resume.

Do you see inventory as being any better or any worse in any of the particular end markets between wireless, auto, IoT, et cetera?

Yes, I would say most pronounced in IoT for sure. That's where we see the highest inventory levels. And we've seen some emergence of inventory in auto, in automotive. Again, smart mobile devices had shown that, or has some high inventory, but has really been the first to get better, so to speak.

Yes. That was kind of what I was angling at, is would you say that it's in the best shape in the wireless space?

I would say so. Yes, I would. And to me, Chris, that's not all that surprising given that there's been consolidation in the industry. There's fewer players, they've been at it for a long time. The smartphone industry has been in place now for decades, so they -- of these markets, they may understand their demand and supply signals the best.

Yes. And you guys do have one fairly large customer there that's been putting up a few good quarters. That always helps. Maybe just talk about pricing. Your ASPs went down slightly in the most recent quarter. Why was that? And what can we expect going forward?

Really mix. It was a very modest change. We were flat year-on-year. You'll see mix affect our ASP level some. But the meta point here is ASP pricing is very stable. We're seeing that, and we're actually seeing our competitors with similar commentary of fairly stable pricing. And the reasons for that are clear as well. I mean, semiconductors are a valuable asset in the world. Customers want to have reliable supply chain. They want to maintain a robust source, et cetera. So overall, we see ASPs as fairly stable.

Would you say -- I mean, I know you haven't been in this industry for that long, but would you say we're, I guess, in sort of a normal type of pricing environment? However the heck you can define normal in semis.

Yes, it's a good question. I think we're -- it's a really good question because it really does beg the question, what is the new normal?

We're all ears.

I think as demand resumes, as semiconductor content continues to grow, as we continue to see discipline among foundry operators, yes, I think we can expect a stable pricing environment overall.

So you talked about mix. Can you just provide a little more color there? And then how should we think of mix as impacting pricing going forward?

Yes. So you see more advanced technologies may have a somewhat higher price than older technologies. That's a mix dynamic. End markets don't necessarily price exactly the same. That can have a dynamic. I won't get into too much detail there. But overall, it's been pretty stable. I mean our rough price per wafer is approximately $3,000 a wafer and that's been pretty stable.

Okay. How about the competition? So you talk to certain foundries, Samsung, for example, they talk about aggressive pricing. TSMC the total opposite. Every customer there seemingly is seeing their wafer prices going up. Who knows if that's them just jawboning. Where are you guys seeing -- how is Global doing on the pricing versus the competition? .

Yes, generally stable. I mean, not a lot of change relative to ourselves and our competition.

And then it seems like every week there's a new foundry sort of popping up in China. Do you see this? Is this like vaporware, are they mostly going internal? Is this impacting GF at all?

No. It's really not. I mean -- and it's multifaceted. China, we don't see a lot of customer sort of migration toward China, for obvious reasons, right? I mean when we think about having a resilient supply chain and a dependable foundry operator that's not going to be impacted by the geopolitics of the day, et cetera, that's very counter to that, is point #1. Point #2 is, as you think about -- it's one thing to open a fab in a particular technology, something else to have a fully functional, robust, multidisciplinary foundry that has a wide range of product offerings and many of which are automotive qualified. That takes a while to build that up. That's a strong capability that GF has -- so yes, really not seeing an impact.

On that note, besides the big kahuna, TSMC, now that you've been in the driver's seat or, I guess, the front passenger seat next to Tom, who do you view as your main competition or who pops up the most besides Taiwan Semi? Is there any particular name on the foundry side?

Yes, sure. I mean UMC, clearly, would be also a major foundry operator based in Taiwan. So yes, it's really UMC.

Okay. Interesting. And so let's jump into the LTAs. how are these going to evolve for GF going forward?

Yes, it's a great question, and kind of -- go back to why we got in this in the first place. Our activation of long-term agreements really began with customers asking us to secure capacity for them. And in order to do that, we had to invest in additional capability. And with that investment, we ask the customers to join us in that journey and essentially demonstrate their commitment to the partnership by agreeing to a long-term agreement, which they also wanted. They wanted to have known capacity, known price for a fixed duration, so that they could count on that supply. And that remains in place. So we signed up about $30 billion worth of long-term agreements. Of that, there remains roughly $20 billion still outstanding. There's been some tail-off and some renegotiations and such as the downturn has come in, and we've had some underutilization payments materialize as a result of that. But that's really an offset to the utilization in the factory that would have otherwise been the case. And that's precisely the reason for those. There's learning along the way. I think going forward you'll see us continue to enter into long-term agreements. We refreshed a long-term agreement with a major automotive customer earlier this year, we announced that. We did another one after that, which we haven't disclosed who it is, but that's yet another one. And that's the type of market where the need for a resilient supply chain very much lends itself to this type of framework. And so I think you'll see more of these in the automotive market. And given the importance of the automotive growth to our overall strategy, you're going to see more of it. That said, in some of the more faster-turning consumer markets, I expect you may see less of these going forward -- and each era has its own unique characteristics, and what could have made sense in 2021/2022 may not make us much sense going forward, and there's learning along the way, but these long-term agreements have served their purpose -- and we remain in it with them, and I think we will continue to sign up new ones.

And you said there's $20 billion left, right? .

That's right.

So I guess, how much is your like typical quarterly coverage from the LTAs. And does it vary?

It varies, because you've got -- remember, those are lifetime contract values that can span from 3 to 4 years all the way out to 8 to 10 years. So it's a mix of duration on how much that may result in coverage, Chris, the way you described.

By the way, so you were at another company for a long, long time. Did you guys have LTAs there? And how much of a learning curve has it been for the CFO? Are you the one negotiating these? Or is it like a big powwow that everybody gets together? How does it work?

Yes, we do. So I won't comment there, but -- I'll leave that to Silicon Labs to comment. But the -- it's very much a team effort. It's led by sales. It's led by our product lines who are in the driver's seat of those customer relationships. And then yes, it comes back to us at the executive level to agree to those and get on the same page about what we're doing with those.

And you mentioned that some are being renegotiated. Maybe give us some insight into -- is it unit? Is it price? Is it both? What does that depend on?

Yes. Yes, it varies. There's -- each situation is unique and a customer may decide they would like to extend for a further amount of time. We may ask for some concessions related to that on either design wins or volumes, price, et cetera. So it just depends on the situation.

And is everyone, I guess, are all of these renegotiable, or are some of them like ironclad and say tough noogies if you want to try and renegotiate...?

Look, I mean, the key, Chris, is to try to find a win-win situation with customers. I mean we understand that industry dynamics change, demand is down in some cases, not everywhere, but in some cases demand is down and customers are not going to be able to meet their volume commitments. We understand that. And so we come to the table with a win-win attitude. We put these in place for a reason. There's a certain economics on the table that are important to us. But at the same time, we want to seek to find constructive win-win outcomes for both parties.

Is there a preference between changing price or changing units? Or does it all depend? Like in general...

Not really in general, I would say. I'd pause to generalize about it. Just look at each situation.

And then on the positive side, you guys have seen some benefit from the, I guess you'd call it, penalty payments or something like that.

Underutilization charge.

Yes, the utilization charge. Is there any way to sort of predict this? Do you expect this to -- I mean, you can only renegotiate so much. So will this go away at some point? Or has it already gone away?

Yes. I mean we did -- there were roughly $60 million of underutilization payments in the second quarter that we recognized. We pointed to approximately half that level for both third quarter and fourth quarter of 2024. Based on what I see on the table right now as we head into 2025, it's not going to go to 0, but will be at a level that won't be as relevant.

That's good. So the renegotiations are really dropping off.

That's right.

Okay, good. So one of your customers announced a joint venture, NXP doing a joint venture with Vanguard. There's some worries out there in the market because NXP obviously is a customer. Is there going to be an impact to GF from this? And was this a surprise to you?

Sure. No, and I don't think so. I mean this was a type of technology that's not really relevant for what we do across multiple dimensions in terms of those designs themselves as well as the nature of those technologies. We don't really see that as a particularly relevant.

So was this a technology that you guys don't do? Or is it low margin, or you're deemphasizing? Or can you just give a little more insight as to what you just said?

Yes. It's not something we offer. It's a piece of the market that's not margin attractive, I would say, and not at the differentiated specialized nature of what we do.

Well, that makes sense. If it's low margin, and you don't do it, then yes, why bother. TSMC has also talked about putting more emphasis on trailing edge capacity. Who knows what that means or if it's even competing with you guys. Any potential impact to GF? Have you seen them get more aggressive in the market out there?

No, not particularly. I mean, look, they're a great company, a tough competitor and all that, but I haven't seen near term or near run evidence of that, I would say.

Great. Let's do a little bit of a shift to manufacturing. Maybe talk about your manufacturing footprint, what's going to happen over the next year or 2 years, expansion, contraction, et cetera, et cetera.

No. We have an excellent footprint. We have foundry operations in Dresden, Germany, in Singapore, and in Malta, New York, and Burlington, Vermont. So we're in Europe, Southeast Asia and North America. That puts us very well positioned to meet our customers globally where they are, and that's really part of our customer value proposition and strategy. Where we're at right now is we have factories that are underutilized, where our factories are running roughly low to mid-70s in terms of our factory utilization given the downturn in the overall market that's taken place. So the good news there is we have the ability to significantly grow our revenue without an associated level of high CapEx to fuel that because the capacity is in. We have the footprint now globally to operate roughly $9.5 billion to $10 billion top line company. It's really around just continuing to activate more design wins, which we're maniacally focused on, ramping customers, working through the inventory burn, et cetera, to get the utilizations back up into the low to mid-90s. And then at that point, we can begin talking about additional capacity, new 4-walls, new equipment buys to really drive us beyond $10 billion of revenue -- but that's going to take a few years, Chris, to see that all play out. So it's exciting from the perspective of we've got it. It's just about scoring the design wins and ramping it up.

So a couple of things to dig in. East Fishkill gone. Any additional margin benefits from that? Or is that already like baked into the [ cake ]?

That's pretty much already baked in.

And then on the Dresden side, I remember that you guys have been trying to bring the margins up there. Is that all done? Maybe give us an update on what's happening over in Dresden.

I mean it's globally it's a matter of improving our utilization, looking at our input costs, which I have actually seen really amazing work at the company on that, including this year, if you think about how much our utilization has come down from, say, the first half of '23, when we were around 90% utilization, to now in the low 70s, we've actually held margins quite well in light of that. And yes, the underutilization payments have helped, but it's also been really strong focus from our operations team on looking at our input costs, renegotiating our own inbound contracts with suppliers, et cetera. So a lot of good work already done and will continue to try to improve our gross margins. But yes, I think overall, we saw this year and anticipated, hey, if we can hold in the mid-20s gross margin in light of this downturn, that's not a bad outcome. And it's happening. We're executing pretty well.

Do you think more restructuring is needed? Could we see more restructuring if we bounce along the bottom for another couple of quarters? Or how do you feel about that?

No.

How about on the CapEx plans? Maybe give us a sense of CapEx last year, this year, and then going forward?

Yes. Again, we had a pretty heavy CapEx cycle in the upturn, and now that's installed. That's an installed base of capacity for us to fill. And so there's less of a need for us to invest in new capacity. That -- all that said, that doesn't mean it's $0. We estimate roughly $700 million of additional CapEx this year in 2024. Some of it is maintenance, but some of it is also activating technology transfers between our fabs to get a common -- even more of a uniform footprint of technology across our fabs, for example. And that's roughly, just big picture, about 10% of our revenue. Going forward as we can look to refill the factories, get the revenue back up to that full promise, then we can look at more CapEx to drive even onward growth from there.

Do you think that $700 million is sort of a near-term peak for now unless we take off to the races? It sounds like you guys feel pretty good about it.

Yes, Chris, I would describe that more as a stable level, 2025 could be roughly the similar amount, perhaps a little more, but roughly a similar amount as we look ahead.

And I don't know if you have these numbers off hand, but when should we think of depreciation as peaking? Because I know some of it, I believe, is a 6-year straight line for you guys, and then some of it...

So we depreciate equipment over 10 years.

10-year.

Yes, 10-year life.

6, 10, what's a few years among friends?

So as we progress through 2025 and get into 2026, we should anticipate some depreciation roll-off beginning to happen starting in 2026, really.

So depreciation should peak in 2025?

Yes.

That's good. And then how does -- first of all, should we think of -- I know you guys have this big project in upstate New York -- does most of the increasing leading-edge capacity -- or maybe not leading edge, but most of your increasing capacity going to go through New York from now on, or will we see it at other...?

You'll see it globally, worldwide. But certainly, particularly with the support of the government and the CHIPS funding, we have specific projects in upstate New York and Vermont that will be supported by the CHIPS funding.

Excellent segue to my next line of questioning is on the various CHIPS Acts. Before we get to the one in the U.S., there's European CHIPS Acts as well. Maybe talk about anything going on over there?

It's early days there. I mean, we have existing frameworks in the European area, but there -- potentially some new things coming, but that's -- it's early to comment on that. And of course, the government of Singapore has been very supportive of our capacity expansion there, and now with the U.S., and the chips is right front and center right now.

Yes. So let's dig into the U.S. CHIPS Act maybe, especially since we're here in New York. Talk about the -- how much you guys are receiving, how much you've gotten so far? Is this all like some -- like Publishers Clearinghouse, check in the mail coming in Q4? It's going to be spread out? Is there a time line? Is there...

Yes, Chris. No, it's -- the announced amount was $1.5 billion, and that is spread across really 3 themes, if you will. One is to diversify the footprint of the multifab. The second is to modernize and establish next-gen technologies in the Burlington fab. And then the third phase of that would be to expand the multifab overall. So first is to diversify within the existing footprint of Malta and then further out in time is to expand Malta. We haven't announced a finalization of the agreement, no funding has been received at this point. And with all of these frameworks, they're oriented around project milestones and actual activation of the company's CapEx that would then be supported and reimbursed and co-funded from the government. So that's going to be further out in time. Long story short, I wouldn't expect actual chips money until towards the end of next year and heading into 2026.

Really. End of '25. Okay.

Yes.

So -- and then the $1.5 billion, is that straight grants? Or is there some loans in there?

That is all grant money, and it is over a multiyear period of time.

And then can you talk about the impact to -- because different companies seem to be thinking of this in different ways. What's the impact to P&L? Does this just like straight up offset depreciation or offset CapEx? Is it free money?

We will report that as a contra to our CapEx, and it would be depreciated in a similar fashion.

And then how about the investment tax credit? Is that benefiting you guys now, later?

Later on the CapEx side, but we are benefiting from the -- from the investment tax credit on support costs. That's the AMITC credit that you see in our P&L SG&A, both in 2023 and also during the first half of 2024.

So CHIPS Act end of 2025. Europe maybe later than that, depending on what happens.

We'll see. Yes, it's early for me to comment on.

And then you also mentioned Singapore, that's the old chartered facilities. So is there some sort of CHIPS Act over there? Or is that just the general government loans -- incentives, excuse me?

There's been incentives associated with that. We do have a loan with the Singapore government of about $1 billion that remains outstanding at an attractive interest rate.

So we add all this up in the soup. Let's talk about the gross margin drivers from here on out. Maybe list them in order of importance.

Yes. I mean, #1 is factory utilization. We need to get the factory utilization back up, that will improve our gross margin significantly. And then you've also got some depreciation roll-off that can happen over time as we normalize our capacity against the CapEx that's been put in already. And then finally, you've got ongoing cost improvements. That's been an ongoing thrust from us. And then you got mix, and we continue to mix toward higher value-add, more differentiated technologies, next-generation technologies that can command higher gross margins that is beneficial as well.

How about on the end market side? You mentioned that certain end markets have different, I guess, margin profiles, and it seems like auto is the one you're most positive on. Is that true? And does the automotive end market have accretive or dilutive or net neutral margins from an end market perspective?

Yes. It's -- again, it's really around the utilization and where can we fill the fastest, so to speak. And I do think there's a good opportunity to see that in the automotive market in terms of incremental growth that can recover those utilization factors quickly.

And then how does pricing factor into it? Or how do you think pricing will factor into it? Is that as much of a driver up or down?

Not as much. I mean pricing is pretty stable. So it's really around optimizing what we're doing internally as far as utilization, controlling our CapEx, and the other factors I mentioned.

And then in terms of milestones to get to the margin goals, is there a certain revenue level? Can you share that revenue level with us?

Yes. I mean our goal is to achieve 40% gross margin. We laid that out a few years ago. That remains our goal. And you can think of roughly a $10 billion revenue level as the right metric to achieve that.

Sorry, I've just got to write all that stuff down. And then, I think you are already proving your worth, the OpEx was better than expected last quarter. Maybe talk about the drivers there what's happening? And then what can we expect on OpEx going forward?

We've been disciplined in our execution on OpEx, and we also had the benefit of the advanced manufacturing income tax credit come through a little stronger than we expected. So that's generally how I'm seeing it, that we anticipate generally stable OpEx, not seeing a lot of change upward or otherwise. And we do need to grow OpEx over time, and my goal would be to grow OpEx at a percentage of our overall revenue and gross margin growth. You can roughly think of it as half. If we're seeing top line growth...

Growing half as much as top line?

Yes, or perhaps a bit less. We just have to see as we move into '25 and can comprehend what the demand curve looks like for 2025.

Great. I just want to make sure, are there any questions from the crowd before I...? Here, wait for the mic...

I apologize if this was already covered, I was a bit late because I waited for the elevator. When you're doing this transition that you guys just alluded to earlier, right, there's like some legacy FinFET getting offset by new auto volumes. How should we think about that evolution? Is it kind of -- is it going to be -- is it going to take longer, you think, for volume utilization to reach the levels that you want? Or do you think it more manifests itself in like lower ASP?

No, I think the FinFET transition is largely behind us. And what we see there is more of a stable outlook in that comms infrastructure and data center end market. And by the way, another important point to realize when we think about FinFET, that's not the only end market that is served by our FinFET technology. In fact, our smart mobile devices is a significant portion of our FinFET mix [ is ] serving the RF transceivers that are going into smart mobile devices. So we can kind of delink those themes. But yes, I think that in the CID end market in particular, we think that's generally behind us, and it has stabilized. There's growth ahead in FinFET. We also continue to add new features to our FinFET offering to, once again, make it even more differentiated. And yes, to your point, we're seeing automotive offset that to a constructive extent.

Great. I just wanted to sneak in one quick one because we do have the CFO here. Balance sheet, debt, usage of cash, anything for us going forward? What are you looking to do?

Yes. I think we're at a reasonable level of debt. We're at about 1x leverage. I wouldn't see us going higher than that without a clear use, like a material M&A event or something of that nature. And as we're a relatively newly public company, we haven't been public for that long, and we're continuing to talk to our Board of Directors about capital deployment and over time what that might look like, but it's still a bit early for that.

Great. We're out of time. Thanks, again, everyone.

Thanks, guys.