NXP Semiconductors N.V. (NXPI) Earnings Call Transcript & Summary

Great. Good morning, everyone. I'm really glad you're here. I'm Jeff Palmer, SVP of Investor Relations at NXP, and I'll be your host for today's event. We're really glad to have you here at the NXP 2021 investor event. First time in about 3 years, we've been with you and first time in about 2 years that we've been on an actual in-person event. So we're really excited to be here with you today. So we've got a few housekeeping items, and no, I'm not going to read this slide, so don't worry, but I've got to make a few comments. So first off, this event is being simulcast on our website, both audio and video. And after the event today, I will post the slides to the website so you can download them for reviewing later on. Today's event will contain forward-looking statements. Those forward-looking statements do reflect NXP's strategy, NXP's new products, the revenue and financial performance we anticipate from those new products and our strategy. Remember, NXP undertakes no obligation to revise or update any of our looking statements. Today's presentations and Q&A will also reflect non-GAAP financial metrics. In the appendix of the presentation is a reconciliation of these non-GAAP metrics to their closely correlated GAAP metrics. You can find that in our appendix and more details on the NXP Investor Relations site. So we've got a good agenda today. And it's kind of pack tight, but I think you'll enjoy it. So I hope you're excited to be here. So we're going to kick off today with Kurt Sievers, our CEO, who will give you a sense of how we anticipate to accelerate profitable growth over the next number of years. And then for the morning, we'll have the general managers from the automotive team to come up and give you their insights to the major drivers in their businesses. And then we'll do a group Q&A with the auto team. We'll take a short break, and then we'll come back and we'll review our industrial and IoT business, our mobile secure ranging technology and our communications infrastructure business. Then Bill Betz, our new CFO, will come up and give you a new financial model, which I'm sure you're all excited and can't wait for. And then we'll have some closing remarks and some more Q&A, and then we'll break for an informal buffet lunch, and we'll hope you stay and join us and do some -- dine around with everyone. And with that, let's start the event. [Presentation]

We are NXP, and we welcome you to our Analyst Day 2021. A very good morning and a very, very warm welcome. I can tell you, I'm truly excited to be here because I'm here live and on stage. And it's a bit special because it was just Monday this week, that the travel ban for EU citizens to the U.S. was lifted. And my colleagues and I, we were jumping on a plane on Tuesday, and we are here today. So I'm really excited. It makes such a difference to not do this over Zoom. And still, I'm happy that the room here is full. And I know we have a couple of hundred more participants remotely and virtually joining the meeting. So also a good morning, good afternoon to all of you seeing and hopefully hearing us well on the phone and over video. When I say we, I am very proud to have the complete management team of NXP here, including Peter Kelly. And I know that Peter has been a good friend and a great CFO for many years, more than 10 years, actually, with NXP. And just a few days back, I announced that Bill Betz will take over as CFO from Peter Kelly. Now it's nice that Peter is here. So you will have time in the breaks to shake hands and chat with Peter. And it's even nicer that Bill is here. And Bill is -- as the new CFO of NXP is going to speak about our financial model in a few minutes. Now what are we going to talk about today? It's all about accelerating profitable growth for NXP. Now at -- profitable growth doesn't drop from the sky. A lot of that has to do with what we've done, what we've created, what we've architected through our history. And just a little reminder, we are a leverage buyout from Philips in 2006. That is the year when NXP was founded, and actually, we celebrated our 15th anniversary this year. We did IPO here at NASDAQ in 2010. And ever since then, we've been extremely focused and very busy with working our portfolio, optimizing our technologies, improving the team performance in order to become more profitable and to create the foundation for growth. A key step on that journey our merger with Freescale. Back in 2016, we put Freescale and NXP together to create what we used to call the powerhouse in high-performance mixed signal. And the real idea was to combine the processing leadership of Freescale with the RF analog and security leadership of the legacy NXP. And you remember well, a little bit later, we had the attempt of Qualcomm to acquire NXP, which we exited in summer of 2018. And I was actually here on stage in Wall Street in September 2018, so just a little more than 3 years ago, I was named President of the company, and we laid out the future for NXP as a stand-alone company. And the one piece which we were missing out of the failed deal with Qualcomm was connectivity. In order to build complete edge processing solutions, and you will hear much more about complete edge processing solutions. We needed connectivity, which is why we did close the deal of acquiring the connectivity assets from Marvell in 2019. Now let's have a look on how we've done since September '18, and I would call that solid performance. We delivered growth in the range, which we had talked about 5% to 7%. We improved our gross margin performance. We actually returned USD 12 billion to our owners. And probably most importantly for the future, we spent more than $6 billion in R&D. And we spent that R&D to create our future, to create sticky accelerated growth drivers, which we will speak about in the next couple of hours. But when I think about the last 3 years, there is more than just the numbers. The last 3 years have actually exposed us to a market in turmoil. In 2019, we saw a pretty sharp and unexpected decline in car production in China for the first time since China has been producing cars. Early 2020, we and everybody has been hit hard by the pandemic, both relative to the ways of working, but also relative to how the economy came down rapidly. But even faster, it came up again in the later part of 2020. And since then, are seeing a very fast unprecedented rebound in all of the markets we are serving. But I think this is much more than just a short-term cycle rebound. I believe it is a transformation of the value of the semiconductor industry, of the way how the downstream industries are looking at semiconductors as an incredibly important and critical part of infrastructure. And I believe it is a value reset for the semiconductor industry, which is here to stay. It is not going to go away. It's a reset, and it puts the semiconductor industry at large in a very different light. Now what it means to us is that, obviously, given the supply shortages, we have been and we keep going through very stressful times in order to continue to optimally serve our customers. Stressful is one way to look at it. The way how we look at it is it gives us the opportunity to create relationships with our customers, deeper, more intimate and more strategic than ever before. I can tell you, I've had a higher frequency of customer meetings by a factor of 5, easily 5 as compared to any year earlier in my career, and the same holds true for anybody in NXP. And thanks to an outstanding performance of the entire NXP team when it comes to responsiveness, accessibility, resilience, lean and attitude and execution capability. I think we are building out of this, we are leveraging this situation better and stronger customer relations than we've ever had, not only with our direct customers, but in many cases, with the customers of our customers. We gain much more insight in their plans. We get much closer to their future designs. And in the end, that comes back in a design win performance and customer loyalty, which I think is a great, great achievement and presence out of this current situation. Now what is that opportunity going forward when we speak about growth. I look at the semiconductor industry as an industry, which has been driven by mega applications in 10-year cycles driving the growth. Think about 2000 to 2010 laptop computers, desktop computers, game consoles. 2010 to 2020, smartphones, tablets, and cloud computing. Now the next 10 years, other 10 years for NXP because it is the 10 years where we will see the rise, we could even say the explosion of smart connected devices for the secure edge. So I am deeply convinced that edge computing is going to be that mega trend for the next 10 years, growing the overall semiconductor market. And it's not just a future projection, but we see it live and happening right now. There are projections about 75 billion smart connected devices by 2030. And now think back to what I said about the merge with Freescale, the acquisition of the connectivity assets from Marvell. All of that was geared to build the best portfolio in the industry for connected edge computing. Now let's go a little bit deeper into this edge computing. What is it? It is all of these applications which are connected to the cloud, but close to people. Spanning across the smart home, industrial automation, personal electronics and certainly, last but not least, transportation, formally labeled automotive. And you might want to say that car is probably the ultimate edge device when it comes to complexity. One of my colleagues is going to speak later about the factory on wheels, which I think is a very nice way to speak about cars. Now about all of these edge devices and edge applications have in common is they collect data, they process and take decisions and then they do some form of actuation because it's the bridge to the human and to the physical world, while they are connected to the cloud. And there is lots of great numbers, how things are evolving. We will speak about electrification in cars, where this year, I think we come close to 20% of the cars being electric, going to like 60% in 2030. Automation levels of cars, 5G is spreading. The smart home volume is finally really taking off with a 20% volume growth. But what matters to NXP here is the fit to our capability. And here is the result of the portfolio which we have crafted architected over the last 5 to 10 years. All of the edge applications have a signal path, which starts with some sensing of the environment. And don't think now about historical sensors, think more about voice recognition, face recognition, secure ranging, that kind of sensing now. Then it takes a great deal of processing performance -- local processing performance at the lowest power levels possible, given that a lot of these applications are wireless. Machine learning is going to an ever-increasing role to take the right decisions. Connectivity is clear. Connectivity to the cloud, I mean there is no debate about this. And finally, actuation because that's the bridge to the physical world. All of these edge devices, they will actuate, they will do something in the end. But those pillars are not enough. And now comes where NXP has an unrivaled position. It also takes cybersecurity and functional safety. Cybersecurity, I guess, is intuitively very clear since all of these applications are connected to the cloud. So for privacy concerns, for making sure they cannot be intruded, they need to be secured at the highest levels. Functional safety might be a little bit more -- less known to some of us. What this is all about is resilient system performance, resilient system performance for robotics applications. Many of these applications go into higher levels of automation. And it's not just the automated car, the autonomous car, which is always the prime example. It's also about the vacuum cleaners, which are doing the job on their own. And what they all need is -- since they are robots, they have to be designed on a system level in a way that nothing can go wrong. Now cybersecurity is in the genes of NXP. You know our history of mobile payments, of EID technologies, but it's the same for functional safety. We have been leaders in automotive safety systems, like ABS systems, airbag control systems for many, many years. And that know-how, that engineering know-how at NXP, we are spreading now to those applications. And then there is a last element, which is a significant differentiator in doing this right, which is scalable system solutions. We are serving 10,000 of customers with these applications. And many of these customers have absolutely no way to cope with the enormous complexity of these applications, connected applications, cybersecurity. This is truly complex stuff. So the best thing we can do at NXP is give them turnkey solutions, reference designs and a perfect software enablement. And it is those 6 factors, which you find on this slide, which put NXP in a very prominent and special position relative to differentiation to our competitors in this rising edge computing opportunity. So we have the muscle, we have the capability. And again, it didn't fall from the sky. We've been building towards this for many years. Now the other lesson I have learned in semiconductors is the opportunity is always bigger than what you can actually do. So the name of the game is focus and sharp choices. And we have a very rigid system in the company how to prioritize our R&D investments. And it's following something which in principle is simple. We want to get as much as possible from our R&D investments on growth segments, which are offering an opportunity which is above market growth. And secondly and equally important -- we have to have a tick mark on both of them, we have to have a fair chance in our plans to hit a relative market share leadership position in those segments. Relative market share leadership, meaning we are -- don't want to be just #1, but we want to be #1 by a distance to the next competitor in order to be financially able to out-innovate our competitors to build a sticky position with a road map, which is better than any competitor because we can spend more absolute dollars in the space than anybody else. Now we've done that very rigidly. And it's a really brutal process because that also means saying no to many things. And we can say today that 75% of the R&D NXP is spending currently is going to segments which offer growth opportunity, which is above market. Secondly, more than 60% of the current revenues of the $11 billion, which we make this year are actually from relative market share positions above 1. So in more than 60% of our business, we are not only #1, but a #1 by a big distance to the next competitor. And my colleagues will give you many great examples for this in the next hours. Now if we put this all together, the opportunity of the rise of the secure edge, the capability from a portfolio and technology perspective, then you get to our growth plan. And we project to grow to $15 billion in '24. And the way how we want to speak about this today in much more detail is actually by segmenting it into 2 pieces to start with. We have a very strong set of core businesses with high relative market share positions, which we will grow at market 5%. And then we have a very fast scaling set of accelerated growth businesses, which are growing at 20% to 25% CAGR, and they will grow to almost 40% of the company by '24. And in the next couple of hours, almost all of the focus of our presentations are geared to those accelerated growth drivers. So we will make sure you get a better understanding what are we doing in that part of our business, which sits on a very strong core business. Now my colleagues will do this in the next hours, but I want to give you a sneak preview on each of our 4 segments. And I want to get started on automotive. There -- especially this year, there is no more doubt that there is an accelerated content growth opportunity. And that accelerated content growth is a result of 3 megatrends, electrification. Further levels of safe driving or automation and connecting the car, and achieving a software-defined car. Those 3 trends are massively driving the semiconductor content in cars going forward, yielding a market opportunity of 7% to 13% growth. This is ahead of what the market did in the past years. Now NXP has been for years a very strong leader in the automotive semiconductor market. And we will focus today on 3 elements in our accelerated growth businesses, which are really leading the pack to achieve this 20% growth of what you see, what is a very significant part of our overall automotive business. And those are radar, which is a key element for safer driving, a key element of Level 2, Level 3 ADAS system. And Torsten Lehmann, the General Manager of that business is going to speak about how we are leveraging a 40-plus percent market share position, which we have today. So we are #1, 40%. We are extending that position, and Torsten is going to explain you how we grow the business to more than $1 billion by '24. That's one of the strong pillars in the growth drivers for automotive. The second one is electrification, and we've had a lot of discussions with you in the past years about battery management solutions and what success we've been driving there. Now I kind of anticipated in earlier calls with many of you that NXP is actually having more under the kimono than just battery management solutions. So Jens, Jens Hinrichsen is going to speak about adding e-motor control systems to our position of strength in battery management solutions. He will put the 2 together and will lay out the plan which gets us to $0.5 billion revenue in electrification from these 2 systems alone in 2024, which is a 30% CAGR and way, way above market. And thirdly and probably most fundamentally, we are helping the car industry to transform the architecture, the electronic architecture of the car. And this is where we speak about our S32 microcontroller and microprocessor solutions for domain structures and solar structures. It's actually just this week, and I'm really proud of this, we made a nice press release together with Ford Motor Company where we laid out, and Ford testing us, how they are using for the new F-150, for the new family of Broncos, for the EMAC, how they are using our processors for their network performance and for the infotainment. This is big business for us. It will grow above $3 billion in '24, and we're going to grow it between 10% and 12%, and Henri is going to give you more insights in a few minutes from now. So all in all, the automotive opportunity is growing. The market has accelerated, and we keep outgrowing it by a factor of 1.2. The next segment in order is industrial and IoT. And it is probably the showcase segment for what I said earlier about system solutions, about leveraging our processing leadership to pull through analog attach, connectivity and security. And I mean the numbers speak for themselves, Ron Martino, the GM of that business, he's going to lay out how we outgrow the industry here by a factor of 2.3 going forward, 9% to 14% growth based on those solutions, but also based on very, very good customer intimacy. And in that market, the customer intimacy is actually twofold. We have a very, very leading position in the channel. A lot of that business is going through the channel where we have a prime position. But we are also building very strong relationships and that is helped by the current supply situation, to be honest, to the big OEMs. So Ron is going to speak about recent success with Microsoft, recent success with Schneider Electronics, which are giving great evidence on what we are doing in this segment. So Industrial and IoT, 9% to 14%, just like automotive. Third segment, mobile. Very different characteristics. We have a laser sharp focus in mobile. And we've been building this over the years by driving leading and now exploiting the ecosystem for the mobile wallet and for mobile transit ticketing. And the way we've done that was all about building the ecosystem. Based on a tripod of competence, the hardware secure element, the NFC radio and the associated software. And we've done that very successfully on the leadership of Rafael, Rafael Sotomayor, to an attach rate of the mobile wallet of 50% by this year. We laid this out as a target, I think, in 2018, and we hit the 50% mark this year. Now this is going to continue growing. But what Rafael is going to focus on today is what we call secure and mobile ranging. And it has characteristics which are similar to the mobile wallet. You could actually say it's an extension of the mobile wallet. And the whole idea is just like in the mobile wallet where we took the coins and the credit cards out of your pockets into the mobile phone. Now we want to take the keys out of your pocket. We want to facilitate mobile access solutions. We are in great shape. This business is going to go across IoT and automotive. So it's not just mobile, but it's also going to sit in IoT and automotive, and it's all based on the technology called ultra wideband. The mobile side of it is going to grow by 70%, as you can see here. If you put automotive and IoT into it, and Rafael is going to present it that way, it's actually an 80% growth business, landing us at $400-plus million in 2024. And that gets us within mobile to an 8% to 10% CAGR over the next 3 years. Now last but not least comms infra. The focus today is going to be on RF power. Our RF power business is under leadership of Paul Hart. And here, it's really about a range of technologies for a range of frequencies in order to cover applications for the 5G super cycle from the macro over MIMO, all the way to millimeter wave applications. 1 megahertz to 100 gigahertz or from a technology perspective, LDMOS, gallium nitride and silicon germanium. And we have all of them. And it's not only that we are capable design in all of them, but we also have the manufacturing capability inside NXP to do all of these technologies. And that puts us into a #1 position in the RF power for the network infrastructure market. And Paul is going to lay out how he will outgrow that market by a 15% growth rate over the next 3 years. In that segment, we also have legacy business. We talked about them a little bit in the past, the multicore processes, the banking card business. And if you then put it together, we projected 2% to 6% growth for the entire segment. The focus today is going to be on the RF power part, which is growing at 15%. Now let me sum this up. If you map out the segments altogether, we actually do accelerate the growth of NXP. I can go that far to say we almost doubled the growth of NXP going forward to a range of 8% to 12% from '21 to '24. And that is being led by automotive and industrial IoT. Each of the 9% to 14%, and together, almost 3/4 of the company's revenue. Mobile, 8% to 10%; comms infra 2% to 6%. Again, taken together, 8% to 12%. And that gets me to the investment thesis of NXP. Clearly, the core and the bottom of this is accelerated strong growth. And that's going to be the focus of today. But obviously, we are complementing that with what I think is a proven, reliable financial model, which does deliver a very robust and very resilient profitability. And I think the last years in the market in turmoil gave good evidence of our capability for that execution. And thirdly, we do stick to our capital allocation policy, or in other words, all excess free cash flow is returned to our owners, so long we stay at 2 or under 2 net leverage. And at this point, for me, it's time to actually let my colleagues speak and deep dive into the accelerated growth drivers. I just want you to keep in mind, everything we will discuss in the next few hours is focused on that portion of our business, which will grow at 20% to 25%, and which will be almost 40% part of the $15 billion revenue of NXP in 2024. And the first one, we want to get started with is actually inside the automotive segment. It's Henri Ardevol. That's the microcontroller and microprocessor business for automotive. And Henri, I ask you on stage. Thank you very much.

Thank you, Kurt. So I'm going to take you on a short journey in terms of how vehicle architectures are advancing and what are the kinds of problems that we aim to resolve, what that means for our product portfolio and most importantly, how we're working with customers and what are the results that we plan to deliver out of all of this work. So from all of the conversations that we have with the OEMs, clearly, they are facing significant challenges, right, significant complexity. They have to integrate, handle more processes. The data is buried into single ECUs. They want to have faster software innovation cycles, but it's tied to this very long hardware cycle. And so they need to evolve the architecture. It's not going to happen just with an organic continuation of the way of working. And that evolution of an architecture, it's very costly, it's highly complex. And it's a long-term decision for any OEM. And so they are thinking of it in terms of platforms. And the core of those platforms are the 3 domains that you see there on the top, vehicle dynamics, vehicle networking and body and comfort. And vehicle dynamics means how do you organize all of the functionality around how a car moves, so your powertrain, your braking, your steering, your suspension, your chassis management. Vacant networking is how do you organize the flow of that, all of the control signals and the connectivity to the cloud. And body and comfort is the broad interface of how the car reacts to passengers, crash detection, airbag, all kinds of motor control pumps and switches, HVAC, interior and exterior lighting. So these 3 domains form then the core infrastructure in this evolution of architecture, how the arms are thinking about on which you can plug additional functionality that is either with a faster refresh cycle or that is more scalable. And so things like infotainment in the cockpit or ADAS, and indeed Torsten will be speaking shortly about our play in radar. So that core vehicle infrastructure needs to be rooted in the core attributes of automotive because it's what makes the car -- an object that moves, right? It needs to be functionally safe, it needs to be secure, it needs to be reliable, it needs to be robust. That's our know-how. That's the core of what we do. However, it's also clear, and we recognize that 4 years ago that the evolution of requirements of software and networking are going to outpace the traditional MCUs. And so 4 years ago, we started to refresh our portfolio and develop this S32 family of products, which is the core of what we're going to discuss today. So this slide kind of qualifies a little bit the challenge, right? I mean OEMs are adding all of these boxes and laying all of these wires, you have 45 processes per car on average now, and remind you, that's average if you take North America or Europe or the higher-end vehicles, you easily have 100 processes. And they're all driving their own network and networking requirements and so you have CAN and LIN and Flexray and Ethernet and gigabit Ethernet and multiple of those, and you end up with kilometers of wires inside the car, and you end up with this very complex harnesses, very costly that weigh as much as a couple of passengers. So clearly, there is a physical side for the OEM in the requirement of evolving the vehicle architecture in terms of simplifying and reducing the cost of the topology of the architecture. On the software side, the growth is exponential. And so it's very clear, you're not going to be able to follow that path if you continue with the traditional approach. You need a new category of processes. And to get to this level of complexity, you need to move from the development of single functions to the development and the deployment of entire applications that occur across the vehicle. And for that, you then need a platform of products, which are scalable, which offer consistent services across the vehicle, so your safety, your connectivity, your security, how you manage over-the-air updates of the different systems within the vehicle. And most importantly, that allow parallel execution of real-time applications such that you're able to not only coordinate those different domains, but you're also able to up-integrate the functionality into single processes. So OEMs start from this flat architecture. And then there are 2 transitions that they are thinking, domains and zones. So domains is all about how do you simplify the software. It's about how do you move the management of the strategy for that set of functionality from the edge to the center. Zones is about simplifying the network. It's about reducing its cost and it's about making the data more accessible. So there is a requirement both logically and physically to simplify the architecture. And a good example would be the work that we're doing with Bosch on the next generation hybrid powertrain and transmission control -- domain controller. And so if you take this example of a hybrid vehicle, you have multiple sources of torque generation and battery storage, right? And what you really want to get to is a place where you can coordinate the strategies of your internal combustion engine, your inverter, your battery management system, your chassis control, torque vectoring for each wheel. You want to have predictive gear maintenance, predictive control, you want to react to changing terrain and traffic conditions. You want to have the ability to do data mining. And for that, you need to have a platform that is then able to support these multiple real-time applications in parallel that has powerful isolation features such that on the chip, every application is accessing their own resources, but they are protected in hardware and has an efficient framework for data and resource sharing. On the [ solar ] side, it's all about simplifying the floor of all of this data. And so you install 4 zone controllers, one on each corner of the vehicle, you deploy even at the backbone. You are then able to connect your domain controllers to each of these 4 zone controllers, and you can run much shorter wires from the sensors and the actuators from all of the end nodes to those zonal controllers. And in this way, you dramatically simplify your network, you reduce the cost and the wage. And again, these zonal controllers are another class of processes versus the traditional MCUs, and this is why we developed our entire S32 portfolio of products with this in mind, how to address the transition to domain to zones and to end nodes with the evolving requirements that OEMs are facing. And by having this scalable and consistent portfolio with a consistent software architecture across the entire portfolio, we offer a lot of reuse opportunity to the OEMs, but also a lot of flexibility in how to develop their software and where to place their application at different spots in the processing architecture. So how do we do this? We have this portfolio of processes that has a consistent architecture, which is the same across the entire product range, which is the same and consistent across applications and across technologies, whether you talk about microcontrollers with embedded nonvolatile or high-performance 28, 16 FinFET and now 5 nanometers. And you see in this simplified block diagram 2 classes of compute, application process and real-time processing. And that real-time requirement of automotive, that real-time control of the vehicle is a key differentiator of what you need to do in auto. And so the entire fabric of our system on chip is designed for that freedom of interference to have virtualized containers on which you can develop your application, but all of the resources, whether it's the cores, all of the IP blocks of all of the interfaces are protected in hardware to ensure that your compute happens in a deterministic manner. We put a set of dedicated application-specific accelerators. So whether it's communication accelerator to virtualized tens of CAN, LIN FlexRay interfaces or whether it's high bandwidth Ethernet, whether it's a radar coprocessor, whether it's flexible timer for motor control. And those accelerators then are able to offload the processors, the cores such that you can have that guaranteed deterministic operation in real time. The same for function and safety. The entire fabric of the chip is built for ASIL-D execution. So all of the services across the chip, whether that's your research, your ports, your clock, your memory, your buses, everything is designed to run in ASIL-D. And on the microcontroller side, there also it's about running lots of application in parallel but you have additional requirements, which are very fast wake-up time and ultra-low power. Because on the end node, very often you have the requirement to be always on, to have an immediate reaction time towards the user. And so you can see that this SR2 portfolio becomes very different from your traditional MCUs, where on the high end, you have this really powerful virtualized real-time machines; and on the low end, you go to ultra low power, a very fast wake-up time, much simpler microcontrollers that then enable the proliferation of functions. On the software side, as mentioned, we have exactly the same software interface, all of the services and the same user experience for our customers, which gives them a lot of flexibility, a lot of reuse. And software is becoming a much larger part of our product. And so it's giving us opportunity to add more value. And a good example would be you take one those powerful multi-core processors, it has those multiple cores that are going to be running some of them Linux applications, some of them real-time applications, and you can have different units of those processes within your architecture, how do you coordinate all of those cores. So we are developing middleware for inter-core processing to allow exactly that seemless operation across cores and across chips to create a more virtualized complete unit from which again you can either coordinate the functionality of your own domain or you can up-integrate the functionality. And so we, of course, refer to this analogy, right? You often hear the analogy a car is going to be a server on wheels because everybody thinks about the explosion of data, and that's correct. But it's flawed in depicting the challenges being virtual, as being something that you can simply resolve by software. Much better analogy is a factory on wheels because the fundamental desired outcome is actuation, and the fundamental constraints you have is real time. And so a car is not an app. A car lives in the virtual world -- in the physical world, not in the virtual world. And so it's not about how many software engineers you have or how do you make them work better or do you have the right kind of software engineers. For us, the kind of challenge that we are trying to solve for our customers is how do we integrate the software development with the SoC architecture and with their design of the network and of the architecture. And so it's really a system-level question that we're trying to address. And we have such a breadth and such a long history of application and deep partnerships that we are in a pretty unique position actually to contribute to those conversations. And this is why we developed this road map, which is integral across all of those transitions. And so this focus on software -- of course, leverage is also the broad strength of the NXP portfolio into complete solutions. So Jens is very shortly going to be talking about electrification. This is an example on networking. So you see a board here, which is a reference design that we have shipped in the hundreds. It's a networking board. It's providing a production-grade basis for our customers to go into production. It has all of the pre-integrated software drivers for all of the elements on the chip. But back to adding more value, we provide concepts like a functional safety concept, which is at the entire system level. And that really solves the pain point for customers in accelerating time to market. Of course, we also work with Jens in terms of optimizing the bill of material and having more of an analog companionship to all of these processes instead of having disparate units. And so that represents for NXP. On top of the processor opportunity, another $40, right, another 29 chips that we can sell on to -- next to the processors. So every networking board would be at around $60 opportunity. And I can tell you that the first designs that we have won there, we are very close to capturing that amount of value and which is commensurate to what we offer to our customers. We also try to expand into the ecosystem. And so you see a set of partners there, where we are working with them to go to the new use cases that OEMs want to get to. And so I want to highlight this Amazon Web Services. We have a very strong partnership with them, where we have pre-integrated the stack -- the cloud connectivity stack on our network processors such that you can enable new applications for data integrity or intrusion detection by streaming data through the cloud. And this kind of use case is at the heart of the software-defined vehicle that Kurt was referring. And Hyundai Motors Group has selected the S32 to be the basis for their software-defined vehicle architecture. And what our S32 product is going to be doing is managing the cloud connectivity as well as managing the networking inside the vehicle. And so what you want is you want to have the ability to access all systems inside the vehicle such that you can download firmware updates from the cloud and be able to securely told them inside the vehicle. And this is a process where the protocols, which are being used can -- for example, are extremely time sensitive. And so you need to have dedicated accelerators in order to guarantee that over-the-air update in a failsafe way. The same in terms of the connectivity with the cloud, you then go to Ethernet and you need to manage the latency of those with dedicated accelerators. You need to have data compression engines. You need to have AI engines on the chip in order to do intrusion detection, for example. And in this way, you're also able to manage the bandwidth, which is connected to the cloud. And this data intrusion and vehicle data analysis is just one of the examples. There are many more that we're working with partners here on the slide in terms of predictive maintenance and vehicle health. So this is happening in real time. As we speak, you have a few more examples here on the slide with the time lines also as to when these are coming into production. So at the top, you have Hyundai Motor Group that we just discussed. And by the way, Ford is exactly on the same kind of use cases of using our family of processors to manage both the network inside the car as well as the cloud connectivity. Now this software-defined vehicle architecture, how does it look like on the end nodes? You can take the example of BMW. They selected the S32 among others to manage their lighting solutions, their interior lighting solutions based on a protocol called ISELED, intelligence smart-embedded lighting, which allows for the creation of dynamic, ambient and functional lighting. So it starts with the BMW iX. You have 4 lights under each window where they are visible both inside and outside. And that creates the possibility for new scenarios, like welcoming when you get towards the car. And we expect this kind of applications to have a very strong uptake, not just within BMW, but on a broader basis. What we offer here is not just the S32 micro, but it's also a production-grade software stack. So it's a complete solution, which is then managing the synchronization of all of these LEDs, the color matching as well as the ability to cut across physical boundaries to connect one window to another window or the dashboard to a door when you open it. And so that's one of the examples where on this end nodes, you need ultralow power, you need security and you need networking. Why? Because when you put your hand on the of the car. When you swipe your foot under the bumper, when you want to sit with the seat already in the right position, our new applications like precise ranging and location that Rafael is going to about with ultra wideband, you want to have an instant reaction, which means you need super fast wake-up time and you need very low power consumption because these devices need to be powered and you want to save your battery life and you want to have a cost effective power supply and thermal management, ultra low power. Security. There's going to be many more features that are going to be developed after the car has left the dealer. You don't want to return there. And so to do these updates, you need to have security on the chip, such that you can have a consistent over-the-air architecture. And finally, networking, these updates, they need to be friendly for the vehicle architecture, right? I mean no downtime. And for this, you need to more advanced protocols, and that's at the core of what we do with the S32. Now these products are also super versatile. If we go back on the processing side, right, I mean they have this core functional safety. You have the capability of running applications. You have this powerful real-time parallel processing machines that we see them being used as a kind of a Swiss army knife of domain control for new use cases. And so Audi selected the S32 for their next-generation ADAS. And there, in the higher end, the S32 is managing the communications and the safety for the big AI engines. On the lower end, it's actually running all of the assisted driving management. On the infotainment, in the cockpit, that field is developing fast. So our i.MX has a strong position, 19 out of 20 OEMs are using the i.MX in production today. Some of those are still in the early phase of the ramp, like the Ford that Kurt was talking about. These are only starting. And there, we manage the 3D graphical interface and all of the displays which are around the car. And that trend of the proliferation of touchscreen sensitive displays to replace mechanical switches and new applications like in-car vision, driver monitoring system, telematics, V2X, they are great opportunity for our portfolio of vision and display-based processors. And so they are going to be a focus for our i.MX road map moving forward. Next, of course, is the continuation of low-end IVI -- low, mid IVI and clusters and will be a great fit not just for automotive applications, but also for industrial. And then finally, on vehicle dynamics, the Bosch example, and we talked about that already. And so a great partnership, and they really intend to make full use of the capability of running 8 parallel applications with these powerful isolation features as well as dedicated AI accelerators that we have put this solution for powertrain, for machine learning geared towards predictive maintenance. So in summary, very healthy market growth in the coming period, 9% CAGR, driven, number one, by electrification and hybrids. That will still largely be a traditional MCU market in that period before the integrated domain controllers start to ramp materially. Two, networking and gateways with both the acceleration of penetration of simple gateways to a very high number by 2024. And within the period, the beginning of the ramp of the network domain controllers, and you've seen some of the dates on the previous slide. And finally, the acceleration of electrification adoption by end users is definitely driving the acceleration of digitalization, which is driving our acceleration in end nodes. So NXP with decades of application know-how, with the world's best functional safety with a tremendous focus on execution where we benefit not just from digital networking, but in the last 3 years, we have had an outsized focus on bringing SoC execution capability. We have built a scalable and complete portfolio that is compatible in software and that really offers the opportunity to our customers to make a decisive step in these next generations. And our large size allows us to make decisive investments for automotive specifically. And this is why we've been able to transition our portfolio to 16 FinFET. And this is why we are able to now fund the first automotive grade 5-nanometer and in close partnership with TSMC. We have deep partnerships with OEMs and Tier 1s and those that enable us to have a coverage of 75% of the projected revenue that you see here of $2.3 billion by 2024. That represents a 10% to 12% CAGR, that represents the opportunity for NXP to capture an outsized share of that significant market growth that we have here. In our portfolio, we are very confident we'll continue to fuel growth much beyond the horizon that we have here. So with this, I will now hand over to my colleagues who will deep dive into specific applications and start with electrification. And Jens, thank you very much.

All right. Thank you, Henri, and also, a very good morning from my side. I have the honor to guide you through our electrification business in the next 30 minutes, and let's get started. If you look at the light vehicle production market, you can see that the amount of electrified vehicles is constantly increasing. And as already mentioned by Kurt, we expect that by 2030, approximately close to 60% of all the cars being produced have some sort of electrification. This is partly driven by legislation, demanding strict CO2 emission reductions, motivating carmakers to entirely electrify their fleets. But it is also increasingly really truly consumer demand driven since the performance of these cars are getting continuously better as well as that the cost structure of the cars are getting more attractive. If you look a little bit on the regions, you can see that explicitly China is leading the EV adoption. More than 50% of all the electric vehicles being produced are coming out of China. Europe is leading for the plug-in hybrids but also rapidly scaling the EV adoption. And then in the U.S., of course, Tesla leading, not only in the U.S., they lead worldwide. And also the large U.S. big 3 OEMs are increasingly focused their xEV activities. If you look a little bit more detailed into the market and basically look at the years 2020 as well as '21, you can basically see that the EV launch did not slow down in the COVID-19 pandemic crisis. You also do see that in the current supply environment, a lot of carmakers, and this is a tendency we see, really prioritized the electric vehicles over other models. This is constantly increasing the demand and the growth of the electrified vehicles. And not only that the market is attractive and hot but the market is also at an inflection point, maybe even already beyond an inflection point. And what I mean with this that the market is moving from a niche low-volume market towards a true high-volume automotive mass market. And for the carmakers to be successful in this environment, they continuously have to optimize the total cost of ownership. They have to improve the performance of these cars. They need to basically shorten the innovation cycles as well as have to be really ready for the true high-volume mass market automotive production. If we zoom into the semiconductors behind this market, the market looks like this. And as I have mentioned already in the Investor Day in 2018, we are not focusing on power discretes, like the MOSFETs or the IGBTs. NXP is focusing on the power control solution. So we are leveraging our strength of precision analog, processing, monitoring and control, which is controlling the power of these applications. And the market we are addressing is in 2021, approximately $1.5 billion in size, growing with a 23% CAGR towards $2.7 billion in '24. And the applications which are supported by the semiconductors are outlined to the right. And NXP has a very focused approach, also like mentioned by Kurt, we are starting our electrification activities. Or better to say we started our electrification activities, with a sharp focus on the battery management system, which has got the largest part of the market. But I will show you in today's session on how we are also rolling out structurally and systematically, our electrification scope along the applications outlined to the right. Let's leave the market for a minute, and let's have a look into the technology. So this is a powertrain of an electrified vehicle. And this is actually a hybrid car. And as this is a hybrid car, it still has got a combustion engine and, of course, an electric motor. And accordingly, you still need an ICE motor control unit, but you also do need an e-motor control unit, which is basically the so-called inverter platform. It has got an onboard charger, which is basically charging the car, so translating the AC into DC. And then accordingly, you need a DC to DC converter, which is connecting the low-voltage network with the high-voltage network. And in the middle, you find the propulsion domain controller. This is what Henri was referring to. So this is a central compute engine, which is basically orchestrating the entire functionalities of the powertrain. And then, of course, you need the high-voltage battery. And the high-voltage battery needs a sophisticated battery management system, which is constantly monitoring and balancing the battery cells as well as the entire battery pack. Let's move a little bit more detailed in these applications and see what kind of semiconductors are needed for this. And you see here that across all the applications in this powertrain, a lot of semiconductors are required. As mentioned before, there are, of course, also power semiconductors needed like the MOSFETs and the IGBTs or silicon carbide modules. We are not doing these activities. So what NXP is doing is everything outlined here in green, leveraging our expertise in power control. So these are the NXP automation, automotive electrification solution for electrification. And they, across the applications, basically consist out of processors, which are explicitly tailored for electrification purposes. And these are precision analog front-end solutions such as the battery cell controllers. These are functional safe power management solutions supporting the processors as well as in-vehicle networking, sensors and driver solution. And NXP is providing all these solutions in a very sophisticated approach. I will update you today on the battery management system, building on what I have presented in earlier sessions. But I will also outline today on how we are expanding our scope in electrification. I will give you an idea on what we do related to the e-motor control unit, the so-called inverter. Along with the update on the battery management system, I will also show you on how we are constantly doing innovation in this field together with the carmakers as well as the battery makers and Tier 1s. And I will, therefore, reflect also on the propulsion domain controller, along with this building on what Henri has presented early on. So after we have looked now at the market and the basic technologies being needed, let's have a look on what kind of challenges the carmakers are facing in this very dynamic market environment. The carmakers have to constantly reduce the cost, so they have to simplify the architectures and reduce the bill of material. And they need to find ways to do truly an automated assembly of the complicated battery pack. The other critical element is they constantly have to improve the performance of these cars because the performance is increasing the consumer confidence in these kind of cars. And that basically resonates in a further extension of the range and even faster charging capabilities. So how do they do this? They need to put even more power into the battery and find ways to completely unleash the full potential of the battery power into the performance of the car. They need to find ways to introduce even higher voltages and we see systems now up to 800 volts, which is a critical factor for driving the charging capabilities. So the faster charging is enabled by this. So if they do this, you can imagine the more power you put into it and the more you want to unleash this power, you need to have really increasing requirements under control regarding functional safety as well as accuracy and diagnostic features. The carmakers are requested based on the strict CO2 emission reductions to upgrade their entire fleets. To do this, they need to find ways to do this in a very modular approach or in a very scalable approach for the hardware as well as for the software platforms. And last but not least, not to be underestimated, we are expecting that there will be more than 30 million electrified vehicles being produced in 2024. So the carmakers needs to be ready for true high-volume automotive mass production in this environment. And this is basically where NXP comes into the game. So NXP is a top automotive semiconductor vendor with true automotive expertise. We do know what it means to ensure highest level of automotive quality, including longevity programs as well as high-end operational excellence. So our easy-to-use system solutions are scalable across all the electrification platforms from 14 volts up to 800 volts across all the brands and all the models of the carmakers. And on top of this, our high-precision analog capabilities as well as the high-end processing capabilities really enable highest leverage of the efficiencies of these cars. And on top of it, like I have said, this is a really safety-critical application. Our capabilities and our strengths in functional safety, supporting the software as well as the hardware documentation on system level is a nice supportive element in this environment. So NXP can tick all of the 4 boxes you see here on the chart, and that makes NXP value proposition so very unique and very strong. So let's have a look into the battery management system and let me give you an update on where we are. So this is a typical architecture of a battery management system. Of course, it might vary car by car, model by model, platform by platform, but this is pretty much what you can find. And you see here on this picture that the actual system of a battery management system is even more complex than I've shown in earlier simplified graphs. So you'll find plenty of subsystems in it and all these subsystems require plenty of semiconductors, which do the power control I was referring to. And all the semiconductors outlined there in green are provided by NXP. These are NXP's embedded control and high-end precision analog solution for battery management. If you look at the cell module controller, that's basically the part of the system, which is constantly monitoring each particular individual cell and doing the balancing. They do the voltage and the temperature measurements. The battery pack controller basically does the monitoring and control of the entire battery pack as a total and thus on top of it, the current measurements and the battery junction box is also disconnecting the battery in case of a malfunction. The central brain of the battery management system is the battery pack controller, and this is usually powered by one of the semiconductor microprocessors we have learned in the earlier session, basically based on the powerful S32K processor. They are running all the software and do the monitoring on system level. So they do the state of health check, the state of charge, and the state of function check. They also do the entire thermal management of the battery system as well as they measure the battery pressure as a functional safety requirements. And it is also connecting the battery system or the battery management system to the outside world. The NXP solution is so very successful because it is scalable across all the platforms. And explicitly the analog front-end solution, so the battery cell controllers, which you find in the battery cell module, this is basically providing highest level of accuracy and not highest level accuracy just at a certain point of time, not really truly over lifetime without calibration. And that's the key element for the efficiency of the overall system. As we are providing the entire bill of material, we have a high level of component integration, of course, which is optimizing the system cost. And as mentioned multiple times, we are providing functional safety on system level here because it doesn't bring anything if a component has got a specific functional safety requirements. It needs to be insured on system level. And we provide the system level functional safety support up to ASIL-D. But we do not stop here. So we work with the carmakers as well as the battery makers and the Tier 1s to further improve and enhance the system. And so the architecture you have seen in the previous slide is potentially evolving to something you do see here. And there are basically 3 areas of innovation I'd like to highlight NXP is working on. And that's also the part where I'm building on what Henri has presented in the earlier session. So a, we want to connect the entire battery management system to the cloud. This is why we are introducing connectivity unit, so basically a gateway that enables the entire system to leverage cloud-based services and thus, the over-the-air update of the software needed for the system. Regarding to the software, and this is what we outlined under b, is we are supporting a software app integration. So we are offloading the entire software of the battery management system onto the domain controller, which is basically the central propulsion domain controller. And therefore, this one needs to be a very powerful engine, and this is what Henri was mentioning. So this will be basically powered by the S32S microcontroller or microprocessor which is doing then all the entire processing of the software for the entire powertrain, not only for the battery management system only. So they do the energy and range optimization for the entire powertrain, including basically the battery management system. So this is a perfect example on how NXP is basically supporting the shift towards domain processing. And as this is connected to the cloud, we can even leverage AI-based algorithms to do these optimizations. The way that we are enabling this software app integration is only possible because, like outlined under c, on the battery management system, we are basically introducing a battery gateway with a standardized interface, which is CAN FD. This enables basically to offload the software and creates on the battery management side the so-called software-free battery, which provides a lot of flexibility and simplification to the carmakers on the battery management side. Furthermore, we are also -- this is more related to the connectivity of the cell controllers. We are working on introducing wireless communication technologies. We are basically developing multiple wireless communication technologies, which is simplifying the wiring harness and therefore, enabling the car makers to do a true automated assembly of the battery pack. We have a Bluetooth low energy RF-based solution available. But as a leader in connectivity, we are also developing further more robust and even enhanced communication technologies. So all this will help the carmakers basically to improve constantly the performance of the system and therefore, the entire electric vehicle. It helps to take the cost out of the total cost of ownership. And it basically also helps to simplify and to create a lot of scalability and flexibility. This basically helps the carmakers to be ready for the true high-volume automotive mass production. This also makes us the trusted partners of the carmakers, the battery makers and the Tier 1s in this triangle. And we are designed in 16 of the top 20 carmakers, including SAIC-GM-Wuling for the best-selling mini EV. So let me explain that. So SAIC-GM-Wuling is the Chinese joint venture of GM and the mini EV probably not so known to you or to people in the Western world is the high selling or top selling, maybe even the top-selling electric vehicle in China. And keep in mind, China is covering more than 50% of the worldwide electric vehicle production. So as announced in earlier sessions, since we have won Volkswagen, where we are supporting them on the electrification of their entire fleet this additional win of SAIC-GM-Wuling is a very important win for us because SAIC-GM-Wuling is, in the meantime, the third largest EV maker in the world. So this basically gives you also a lot of confidence that the revenue outlook we are projecting for '24 is underpinned solidly by serious and great design wins. Let me now give you an idea on how we are expanding our scope in electrification even beyond the innovation part I have shown to you. So similar as to what we have done in the battery management system, we are now also focusing on -- we are actually already working on this for several years, on the e-motor control unit, which is the second largest opportunity of the addressable market. And the inverter is basically converting electric energy of the battery into a motor torque. And for this one also, several semiconductors are needed, amongst others, also IGBT and silicon carbide power modules, which we are not providing, as mentioned now a few times. But there are also a lot of power control semiconductors needed as outlined in green. And also this one, we offer in a complete system solution approach. Here, again, a powerful processor is needed based on the S32K platform, which is running all the software, which is supported by the PMIC and the IVN as well as by several isolated gate drivers. And these isolated gate drivers are not just any gate drivers. These are gate drivers tailored explicitly for the e-motor control unit because they have highest level of accuracy and special diagnostic and protection features. And you use in a system up to 18 of these isolated gate drivers. And you can imagine the more efficient and safe you can do the power conversion from the electric energy into motor torque, the better is the performance of the car, and therefore, again, the range of this particular car while we do this in a very safe environment and ensure highest level of functional safety of the safety critical application. So then explicitly, the more accurate you can do this power conversion, the higher is the range of the car. And the NXP gate drivers provide highest level of efficiency in the industry. On top of it, our system is supporting basically the IGBT power modules, but also silicon carbide power modules. And silicon carbide is becoming more and more attractive for this application because of their faster switching and their higher performance. But faster switching also requires faster protection of these power modules and the NXP gate drivers provide 20% faster protection than any other solution in the market. And of course, also here, we optimize on system level, the functional safety as well as the bill of material to make it cost efficient. More and more carmakers are basically bringing the design of the e-motor control unit, so of the inverter, in-house because it becomes a performance-critical application or is a performance-critical application. And our ready-to-use system level tested reference design, which is also outlined here on this slide, is a perfect fit for them to shorten the innovation cycle as well as to improve the time to market. And on this one, we are collaborating explicitly also with Wolfspeed in promotion of their silicon carbide modules to bring basically jointly together the EV performance of the cars of the future to the next level. So we have launched this application around 2019. And already 9 out of the top 20 EV makers are using our solutions, again, including SGMW, so SAIC-GM-Wuling, BYD and NEO. To conclude. The market, both of these applications are addressing together. So the inverter is the e-motor control unit, and the BMS is approximately $1.2 billion in 2021, which is the lion's share out of the entire addressable market of $1.5 million I have presented in one of my first slides. And this market is rapidly growing with a 20% CAGR towards $2 billion. NXP is outperforming the market by factor 1.5. And we are projecting approximately a $200 million run rate of both of these applications in 2021 sales, growing with this 30% CAGR towards $0.5 billion in 2024. All this growth projection, as I have mentioned, is strongly underpinned with solid design wins. And this is what makes NXP so excited about the electrification business. And I hope I could also get you excited about this electrification business as we are in NXP. Thank you very much. With this, I'd like to introduce Torsten, who covers the radar part. Torsten?

Thank you, Jens. Good morning, everybody. In the following presentation, I would like you to take away 3 main items: first, the radar market is very attractive, and it keeps growing very significantly in the coming years; secondly, NXP is in a unique position as a clear #1 within this market; and then thirdly, NXP will keep outgrowing this market significantly and thereby, continue to gain shares in the years to come. And I will elaborate more on all 3 items as we go through the presentation. Now first of all, why do we talk about radar systems at all? Well, every year, about 1.3 million people get killed in car accidents. And another estimated around about 20 million to 50 million people get severely injured in such car accidents. A horrible number. And radar technology is a key technology to make driving safe to avoid accidents and to save lives. And that, by itself is, of course, a very meaningful mission. It drives the adoption of ADAS and radar systems. And that, in turn, of course, drives a significant market opportunity. So when we speak about a radar node, let me explain NXP's view on what is a scalable radar system. Every radar node consists out of a number of key radar components. At the heart of the radar system are the radar transceiver and the radar processor. Both have evolved quite significantly over the past several years. So radar transceivers can be one or multiple in such a system, contain all the received parts, the transmit parts, the VCO, the ADC, et cetera. And also radar processors have evolved big time over the last period, going to deep submicron technologies, integrating thereby vast amount of processing power, combined with dedicated radar accelerators and DSP cores, together with functional safety, together with security and memory. And next to those radar core components, you have very important peripheral or support components or attached components, such as the safe power management and the in-vehicle networking components. All of this together makes a radar node and NXP is really in the unique position to cover the full spectrum, cover the complete system in this space. Now let's zoom out a little bit on the broader ADAS evolution. And you're probably all familiar with the so-called SAE levels of driver automation, where in the past, we had no automation, Level 0. And step by step, we are evolving to driver assistance, partial automation, conditional automation. Eventually, all the way up to Level 5 to fully autonomous vehicles. And as we evolve, you see on the bottom, there's more and more sensor content and more and more radar sensors, radar nodes, coming to the vehicles. Now what is important to note is there's 2 very distinct different segments at play here. The first segment is the classical vehicle ownership. So that's you and me buying a car, and that is where the vast majority of the volume is. And that is primarily happening in the levels 1 to level 3. And then on the far end of the spectrum, you have mobility as a service. So this is where the Waymos, Baidus, Cruises of this world, provide fleets of robotaxis. And while technologically, very exciting and also a great long-term revenue opportunity, it's volume-wise, not so much needle moving in the nearer term as we look to the next 3 years. So if we look at 2024, then about 65% of all vehicles will have some sort of driver assistance or ADAS functionality embedded. And this is progressing from the levels 1 all the way to the level 3. And 99% of the semiconductor value is represented by these levels 1 to level 3. And let me zoom in a little bit why we are pushing towards these higher levels and also the interesting new segment, Level 2+, evolving. So the radar adoption is very significantly accelerated by mandates across the different regions and regional NCAP ratings. You have a number of those, as example, depicted on the bottom. So many regions have, for example, issued legislation or 5-star safety ratings for making features mandatory such as automatic emergency braking or blind spot detection or vulnerable road user detection. And this is really driving the adoption and driving to higher levels of automation. Within that, there's an interesting new segment of Level 2+ evolving. And Level 2+ means it gives safety and comfort features very similar to Level 3. So for example, enabling autonomous highway pilot functionality, but it avoids the liability concerns of the car OEMs because at Level 2+, the driver has to keep their hands on the wheel and the driver has to be able to take over at any given moment, while a Level 3 system would do that fully by itself. The good news is from a semiconductor perspective, you need essentially a very similar, if not the same, perception system to enable a Level 2+ functionality. So that means from a semiconductor content perspective, definitely from a radar semiconductor content perspective, we don't care so much if it's Level 2+ or Level 3. So Level 2+ provides an excellent and fantastic business opportunity for us. Now speaking of the perception system. Every kind of automation needs a complementary suite of radar sensors -- sorry, of sensors around the vehicle. And most widely adopted are combinations of radar and camera sensors. In some vehicles, you might additionally find LIDAR sensors, although this is primarily really at the higher levels of automation to add yet another complementary sensor. Our view is that LIDAR is probably still cost-wise and form factor wise, a bit prohibitive for very high-volume mass adoption over the coming years. And every of these sensing technologies have a key measurement or a key strength of what these sensors are really good at. So if you take radar as an example, radar is great to measure speed, distance and angle. A camera on the other side is great to do object detection, pattern detection, color detection. And then on the other side, several of these sensors have certain limitations and might struggle with some environmental effects. So for example, a camera can be blinded by bright light or not see at night or struggle with fog or snow. And likewise, a LIDAR sensor might have issues when it's raining or snowing. Radar on the other side has a very insignificant limitation. So a radar sensor doesn't care if it's night or bright light. Doesn't care if it's fog or snow. And the radar sensor works very robustly and very reliably as an all-weather capable sensor under all these conditions. And radar keeps evolving. So radar has evolved big time. So in the past, in the early days, radar was essentially good at detecting big bulky metal objects like ships or like detecting a single car. But we have long evolved from that stage. And today, radar technology is capable of drawing a precise map of the whole environment, 360 around the vehicle. And some of the key technology ingredients that have enabled that were the migration from 24 to 77 gigahertz, from specialty technologies like gallium arsenide or silicon germanium to standard plain RFCMOS as well as going from low channel count to high channel count advanced MIMO configurations, and from basic processing to high-performance processing with dedicated accelerators. And with all of that together, we are, today, able to build very small, very power-efficient modules with a great range resolution and a very high angular resolution that reaches below 1 degree and LIDAR-like resolution. And this right-hand side is where NXP spends its investment focus. Now speaking of the market. I mentioned in the beginning, the market is very attractive. Just in the past year, year-over-year market has grown by about 37%, expected to reach $1.6 billion in 2021. And then on the 3-year CAGR going forward, we expect an annual growth rate of about 18%, reaching $2.7 billion by 2024. Within that, very important to note, that the 24 gigahertz segment keeps declining and will phase out over time, while 77 gigahertz is taking over and is driving the vast amount of the growth going forward. And that's where NXP anyway has a leadership position. And speaking about leadership position. So looking at the market share picture on the right-hand side, NXP is the clear market leader. And this is a great example of the true leadership that Kurt has mentioned in the beginning. So we have a relative market share of about 1.4 in this field. And that means NXP is about 1.4x as big as our closest competitor, a German company, which we call competitor A here. And then there's about 5 other companies in the market that share the rest of the market, none of which is anywhere close to NXP nor even to competitor A. And not only that we are very proud of our market share achievement, but it's really fundamental to our strategy because it allows us to spend more R&D dollars to out-invest our competition. And that, combined with the deep technical know-how that we have built up over decades, gives us a significant competitive advantage and also a high degree of confidence in our future. Now you might ask what's really driving this growth? And is it all real? And the answer is yes because there's 3 distinct growth vectors at play, and we call that the triple acceleration. So first, there's simply the penetration of radar sensors within vehicles is growing. And that means there's simply more cars with radar coming to the streets. And secondly, you find more radar nodes per individual vehicle. And that is driven by the need for 360 sensing all around the vehicle. And then thirdly, there's more semiconductor content and thereby more semiconductor dollars coming to the individual radar nodes. And that is driven by the increasing adoption of imaging radar and the drive towards precise environmental mapping around the vehicle. So this is not an addition. It's a multiplication. So it's more cars with radar times more radar nodes per vehicle times more semiconductor dollars per individual node. And that's driving the nice exponential growth curve. And the good news is, and that's what you see on the right-hand side, we're just at the very beginning of this S curve. So if you take all automotive radar sensors produced in 2020 and divide by the global car production, then on average, we had about one radar sensor per vehicle globally. And this is nicely growing towards 2 by 2024 and to 3 in '27 and then eventually towards above 5 as we move forward. And on top of the quantity increase comes then the additional dollar content as we move more and more towards higher level of automation and imaging radar. Now I spoke a little bit -- I touched upon the evolution of where has radar come from seeing other cars in the past. And I would like to also show you how we see the market evolving and segmenting going forward. So as mentioned in the beginning, it was more seeing other cars, 24 gigahertz technology. And essentially, we had 2D capable radar sensors. And with 2D, we mean the 2 measurement dimensions where radar is the only sensor that can directly measure speed and it also measures distance. So that was a 2D sensor. From there, we moved to 77 gigahertz and eventually towards RFCMOS and advanced processing. And today's state-of-the-art are essentially 3D to 40 capable sensors. And when we say 4D sensing, then we mean measurement of speed range as well as horizontal angle and vertical angle. So that is 4D sensing. And that allows us to not only see cars but see pedestrians, see bicycles, see smaller objects in general. So for example, seeing in low-light conditions, a child standing between 2 cars. Or seeing a motorcycle right next to a truck approaching with high speed from behind and separating those objects in a far distance. So very important use cases. And that is one of the directions where we see the market segmenting. So one is really on this high-end side, seeing smaller objects, going to higher resolution and going towards imaging radar for full environmental mapping around the vehicle. And then on the bottom end of the spectrum here, it's about this 360 cocoon around the vehicle. So it's seeing around the whole car. And the buzzword here is corner radar. So multiple small modules around the vehicle. And as corner radar suggests, at least 4, but oftentimes even 6 or 7 radar sensors as you might have additional gap filler radars to the side, et cetera. And also the long-range radar keeps evolving, not only front-facing, but increasingly also rearward facing, going to higher ranges, exceeding 300 or 400 meters and more. And it doesn't stop here. I mentioned to you, we are trying to out-invest our competition and we have the funds to do so by the revenue that we generate. And on the right-hand side, just a few examples on where the journey is heading. So in the bottom part, it's about higher integration, smaller footprint, one-chip integration of transceiver and processor on a single chip. Antenna integration, capturing more value integrating PCB stuff and simplifying the application for our customers. And then as you move up through these segments, it's about higher performance, longer range, new waveforms, advanced algorithms, applying AI and machine learning. So we are, by far, not at the end, but radar keeps evolving, and we keep innovating big time. Now let me show you how NXP maps onto these 3 segments. And this is a simplified view of our comprehensive radar portfolio which stretches across all of these different segments. And I would say we are really unique in the complete lineup that we have as we cover the whole spectrum. So we have a full lineup of 77 gigahertz RFCMOS radar transceivers in full mass production and in very high volume running in 40-nanometer technology. Then we have a complete lineup of leading-edge processor -- processing solutions in 16 nanometer. So really the leading edge node in the market and covering everything from corner radar all the way up to imaging radar based on the same building blocks, the same LEGO blocks, but different product instantiations for the different use cases. And newly coming up. You see that in the middle, we have a new one chip coming up as an addition. So taking the transceiver IP that we have in RFCMOS, combining that on a single chip with the processing capabilities for smallest footprint and highest integration level, and that is coming up in 28-nanometer technology. On top, we have the state-of-the-art 77 gigahertz RF know-how, and yes, best range. And we apply unique radar architecture and algorithms that allow us to implement solutions with minimal power dissipation and smallest footprint. Now we have been traditionally very strong in the market. I showed you the market share, and we are globally very strong. However, we always had a bit of a stronger center of gravity in Europe and the U.S. And therefore, looking at this one chip family, I'm very pleased to announce that here, we add an additional strong partnership with leading ADAS Tier 1 DENSO in Japan. And very pleased with the endorsement statement of Takeuchi-san, one of the senior leaders of the DENSO executive team, where yes, he really reconfirms the high expectation on the one chip family being part of a scalable system solution, and boosting the radar performance in the smallest footprint thanks to our state-of-the-art RFCMOS technology. So keep in mind, this upcoming one chip family, it's already our third-generation RFCMOS. It's in 28-nanometer. Then able smallest footprint and smaller-sized radar sensors. And it supports high performance, both corner as well as front-facing radar solutions. So we expect to see multiple instantiations of this one chip family in a single vehicle going forward. Now coming back once more to the portfolio picture that I showed you. I would really like to stress the message with you that we have the complete performance scaling solution. So we reuse the same IPs and the same building blocks across these different segments. And that, in turn, allows our customers to have a full software reuse as also Henri mentioned earlier. So that, in turn, gives fast time to market to our customers. And that translates into lowest total cost of ownership. So this is a very important differentiation for our customers. So this complete performance scaling up and down. And mind you again, NXP is really the company that has the full system solution across the whole application. So we have the transceivers, the processors, the one chips, the safe power management, the networking and the software. So we're really in a unique position here, stretching it up and down, left and right, the complete thing. One-stop shop. Now let me briefly zoom in auto -- into this imaging radar space at the high end. And there, we're really very excited to announce that we are able to boost the performance with high resolution 3-in-1 radar. And we believe that this will give an acceleration to the adoption of Level 2+ vehicles that I mentioned earlier. So 2 innovations that are driving this. So one is what we call maximum awareness. And what we can do is simultaneous multimode scanning. And that means concurrently scanning the wide near field, the mid and the far range at the same time, across the 4 dimensions that I mentioned earlier. So measuring range, speed, horizontal angle and vertical angle. So that is one innovation. And the second one is maximum efficiency that we achieve by applying our complete system solution as depicted here on the right-hand top, we applied 4 of our transceiver chips, combine that with a high-performance imaging radar processor and the peripheral components. And out of that, we get 192 virtual channels, which are boosted by a factor of 12x efficiency gain of the raw radar performance. And that allows us to achieve below 1 degree angular resolution and very smart and lean designs. So in a nutshell, an easy way to remember this, it's 4, 3, 2, 1. So it's 4D sensing with 3-in-1 sensing capabilities for Level 2+ automation with below 1 degree of angular resolution. So very exciting stuff on the high-end side. Now obviously, we don't do all of this in a vacuum, but we work very closely together with our customers. And I mentioned the DENSO example, which is a great example of how we collaborate and codevelop with our direct customers who are always the Tier 1s. But besides that, we also work very, very closely with the carmakers themselves. And we co-define road maps, we co-specify future architectures with the carmakers. And we are seen as a trusted adviser to the car OEMs. And that is what we call the innovation triangle, so working closely with Tier 1s as well as with OEMs. And this has been a really great recipe for success, resulting in what we are really proud of, we're designed in with 20 out of the top 20 car OEMs globally. And that is a fantastic result and the innovation triangle is a key contributor to that. Now wrapping it all together. I mentioned in the beginning, radar market, very attractive, growing strongly at 18% CAGR towards $2.7 billion by 2024. And remember, the driver is what we call triple acceleration. So more cars with radar times more radar nodes per vehicle times more semiconductor dollars per individual radar node. Within that market, NXP has a very strong and unique value proposition. So we are the ones with the leading-edge technology nodes with a complete performance scaling, complete system solution and complete software reuse, allowing our customers to achieve fast time to market and lowest total cost of ownership. And that allows us to outgrow the market by a factor of 1.2x, resulting then in true leadership revenue growth. We expect to grow at 20% to 25% over the next few years, reaching from $600 million this year, $1.1 billion by 2024. And the good news is about 90% of that is already underpinned with design wins as we speak today. I mentioned we're designed in with the top 20, and we've also seen major share wins and adoption momentum through 2021, which gives us a high degree of confidence. So summing it up. Great market. Great outgrowth. True leadership revenue growth while we make a massive contribution to avoid accidents and saving lives. And with that, I would like to thank for your attention and invite my colleagues and Jeff for a Q&A session on the automotive part. Thank you.

Thanks, Torsten. So everyone, we're going to spend about the next 15 minutes going through Q&A. I've invited up the 3 auto general managers. And Kurt and I will be the moderators here this morning. So let's first go with C.J. One second. Before -- we're going to have microphones being passed around.

Thank you all for hosting this live in New York. It's great to see you all in person. I guess 2-part question. So I guess, Henri, you spoke around system level kind of approach. And I guess curious, how important is the ability to scale down to 5-nanometer to that effort? And how much of a competitive advantage is that for you over time? And then I guess the second question and for all of you, and maybe, Kurt, bigger picture. Can you speak to your ability to actually monetize software on a stand-alone business? Or is it something that is a functional with the hardware side?

So on the 5-nanometer question. It's pretty essential for our road map. And people were kind of wondering a little bit the same 4 years ago when we decided to pivot to 6-inch FinFET. It is clear that these architectures are going to accelerate. It is clear that there is the need for up integration whilst reducing the power consumption. And that is the essence of what 5-nanometer is going to bring us but by being automotive grade. So we're not just planning to take the vanilla 5-nanometer from TSMC, which maybe you could do for some high-end infotainment system, but not for the kind of systems that we're describing here. So we already have 2 test chips that are out with 5 nanometers, and we are in very active design and very active conversations with our customers. Now in terms of revenue impact in the horizon, we're describing here, 0 impact, of course. But in terms of the trajectory of our business, very, very important.

Let me take the question on software. It is an integral part of our value proposition. I think Torsten spoke very clearly what he is doing in imaging radar, which is all about algorithms. And we eat more and more into that territory. So part of the solutions which Torsten's team is providing is more and more moving into software, including those algorithms. Later today, Rafael will speak about ultra-wide band as a secure access solution for the car. And again, here, as opposed to the former keyless entry solutions, we are providing the software coming with it. So my answer would be clear, yes, it becomes part of our value proposition. And with it, also part of our revenue stream.

Let's take Vivek here.

Vivek Arya from Bank of America Securities. Thanks for hosting the Analyst Day. So my very simple question, Kurt, is when you look at that 9% to 14% growth CAGR you gave for automotive, how much are you expecting from units and content and mix and pricing? Because if I look at the last few years, units did not grow, right? Now at the start of this year, there was a lot of expectation on unit growth. Did not happen. Content was very strong. Next year, again, there is expectation of unit growth. So what if, let's say, industry units don't grow from here, right? What are the factors on mix and share gains and pricing that you think you have very high confidence in? So -- right, so that's one part. And the b part, just to clarify. In the past, you described your auto business in terms of the 70-30, right, 70% is SAAR and 30% is kind of tied to the growth activities. If I caught it in one of your charts, is it now 50-50? Or did I get that mix right? So just -- I think related questions, but...

Yes. Thanks, Vivek. So it is all about content growth. we will not get obsessed here about the SAAR because obviously, the SAAR is jumping around. What we use for our forecast on the SAAR side would be IHS, and they speak about a 10% SAAR growth from a very, very muted number this year, maybe the year after coming back to the '19 levels and then in '24, probably getting above what used to be the high point in 2018. But the true growth engine for us is content growth. It's really -- and all the drivers which we have explained in the past 1.5 hours is all about content. Now Vivek, I will not parse this into units versus pricing, et cetera. But yes, there is a component of pricing in this. I talked about the value reset of the industry, which we are going through. And we also talked about during earnings last week that the input cost increases, which we are exposed to, we are passing that through to our customers, not to pat our margins but to protect our margins. I mean that's the way how you should think about the pricing component in this. But the overriding element in that growth algorithm of 9% to 14% is content growth in the industry and share gains of NXP. I think all 3 examples, which we've discussed, showed clearly how we outgrow what is already above average growth opportunities. I mean the radar market is growing much faster than the overall auto semi market. And Torsten showed you how he's outgrowing it. The same on the processing solutions and actually to pretty extremes since it's still a bit smaller on our electrification business. So it is a combination of content growth in the industry and share gains of NXP.

Let's go to [ John ] right here in the end.

Kurt, I've got 2 quick questions, 1 for you and then 1 for the group. Whether it's the 9% to 14% CAGR for the auto or the 8% to 12% overall, the tricky thing with CAGRs is always picking the starting point. I think there's a lot of people out there would say that there's a lot of cyclical tailwinds. I'm kind of curious as I look to how you break it apart, it seems like almost all of the growth is coming from sort of these new design product wins. And so I'm kind of curious of the 5% of the core, how are you thinking about cycle within that number? But more importantly, when you think about sort of the product design pipeline, what inning are you in to actually seeing those designs go into volume manufacturing? Because it seems to me like it's hard to have inventory in future designs that haven't yet hit volume manufacturing. And then my second question for the rest of the group. Just as you think about auto is doing more actions, how do you think about redundancy? And how is the industry sort of tackling the challenge of redundancy? And is that built into your content expectations as you think about cars driving themselves? I think a lot of auto manufacturers have said they need to have the ability that 80% of the subsystems go down, the car can still figure out how to get to the side of the road safely. So I'm kind of curious how you see that dynamic playing out.

Thanks, [ John ]. Lots of great questions. I tried to be very concise. I saw a lot of hands raising. Number one, I don't want to steal the thunder of Bill later, but we will give you a better idea about the year 2022 out of that 3-year horizon, which we are giving. But that's what Bill is going to do later. Secondly, we don't really think about inventory growth here at all. You know the supply situation. I explained that at large last week. We are just not in a position to build any inventory. So the numbers which we speak about here are really derived from secular growth drivers. It's not about inventory. I mean, honestly speaking, I think the industry will ask for strategic inventory at some point. I hope at that, that point is not so far away because of the capability of the industry. I mean we are just not in a position to do it, certainly not next year. Maybe in the years after, but it's all part of this algorithm. And then I would I don't know who...

Okay. I can answer briefly that question. Then on to you, Torsten. That -- there's a lot of new mission profiles that are being adopted in the industry, and we see this as part of this integration journey. And so moving to a failsafe operation, moving to fault tolerance systems. And so that is core concept built into our functional safety within an integration of running this multiple application in parallel rather than multiple chips next one another. On the sensor side, it may be a little different, right, because you're adding more and more.

Yes, indeed. I mean, it's important to have multiple complementary sensors and thereby have a certain sense of redundancy. But also, as Henri mentioned, the functional safety as such is already adding silicon content and driving redundancy within a chip. So for example, a lot of these functional -- any functional safe processor, it goes to ASIL-D, for example, will have redundant costs. So you will have, for example, 2 cores running in lockstep, doing the same task where one is sort of monitoring and checking if it's correct, what comes out from the other one. So I would say the answer is, yes. In multiple ways, redundancy drives silicon content, yes.

So Ross has been -- had his hand up here for a few minutes.

Ross Seymore from Deutsche Bank. One for all of you, but probably more for Kurt and following on [ John's ] question. I'll try to make it relatively simple. There's a lot of cyclical versus secular debates. Your team did a great job laying out the secular drivers, the content gains, et cetera. But I want to go back to one of the things you said, Kurt, off the bat about the customer behavior changing. These are the same customers that wanted no inventory 2 years ago, and yet now they can't get enough. So can you give a little visibility, not customer-specific examples, but what gives you the confidence that their belief has structurally changed in such a short period of time?

Well, first of all, Ross, let me be just sure. They -- currently, nobody is building inventory. They just cannot. So when you say they cannot get enough, they don't get it. On the long horizon, the learning is clearly that the just-in-time system on the OEM side versus our reaction time, given the 3 to 6 months manufacturing cycle time, is not compatible. And what gives me the assurance that the learning from this uncompatibility is now sinking in is, they haven't even known this before, Ross. Only through this pain period, which we are in the middle of now, I think many of the car companies have learned what is it with semiconductors. I mean, they knew that semiconductors apparently are important for a lot of their functionality. But they -- I think they've been looking at it much more as a commodity, as a very low-cost commodity. And at least in the spaces where we are moving, I mean, we are the opposite of a commodity. We are a very application-specific business which needs a lot of upfront investment and has long manufacturing cycle times. Since they have understood this, I think the whole discussion is a much more educated discussion about what you could possibly do about more inventory in the extended supply chain. I just want to be sure, Ross, it's not going to be at us. We will speak, and Bill is going to show this later in our future financial model, you will not see that we plan to grow our inventory. But there will have to be more inventory in the extended supply chain at the right points. And I'd just remind you that actually the Japanese car industry, they seem to be a bit more immune to this supply situation in the first half of 2020. And the whole reason was that they had this inventory concept already earlier since Fukushima. I mean they learned the lesson years ago and had successfully implemented it. Now just for 1.5 years, not long enough, but at least you saw it, it was at work. So that gives me the confidence that given that lesson learned and given the much bigger understanding and proximity also to semiconductor companies like NXP now, it is going to work. But it will take time.

So we'll take 1 last question in this session. Right here on the left.

The dollar content numbers you gave for the S32 were very interesting. Could you provide similar for the battery management and the inverter control? And related to that, can your inverter control solution work without Wolfspeed and vice versa? Does Wolfspeed need you? Or do they have other partners?

All right. Yes. Thank you for your question. Let me start with the last part of your question. So Wolfspeed is just a collaboration and the system basically works with any power semiconductors with any power module, whether it is IGBT or silicon carbide regardless from whom it is coming from. The first part of your question was the content. And we had also several conversations also in the investor teach-in on the battery management system. So what is really the semiconductor content of this system. And this system really significantly varies the semiconductor content of a 12-volt or 48-volt battery management system is completely different than for a high-end sports car for an 800-volt system. So it really varies and it's very difficult to say that. The same thing is also on the inverter platform. You have seen that we are scaling, for instance, the gate drivers 8 to 16 gate drivers are being used in these solutions, depending on the power requirements and performances. So also here, it is scaling. However, what we were showing basically in earlier sessions is that on average, if you basically take this across all the platforms, I would say, in the typical battery management system, we are providing approximately the $60 content. And for the inverter is roughly half it.

Thanks, Jens. And just adding and highlighting what you said. The more it goes to high-voltage systems, the more cells you have in the battery and the more analog front end will be needed which means it will tilt to higher dollar numbers. So this average number strongly depends on the mix between hybrid electric vehicles and fully electric vehicles because this is where the move is from a voltage perspective. So optimistically looking at this is, since there will be more fully electric vehicles going forward, it's actually going to move to higher numbers for us.

Great. Well, this brings us to the conclusion of the morning session. We're going to take a 15-minute break. There's refreshments outside, and we'll get back in here and kick off in about 15 minutes after the hour. Thank you very much, everyone. [Break]

Let me get started now. I'd like to introduce Ron Martino. Ron runs our application processor business for industrial and IoT, and he's going to give you some really great insight into our long tail business. Ron, please take it away.

Okay. Thank you. Welcome back from the break. I'm excited to give you insight into NXP's full industrial and IoT edge processing business. The world is transitioning to the age of intelligent edge computing. It's a $40 billion market. It's complementary to cloud computing. There's billions of devices that are being deployed around reasons for health, productivity and safety and the capabilities are being enabled by embedding small computers that are low power, connected and secure. These devices need to be easy to use. These devices need to process many different types of data sources. And then these devices need to become more intelligent. They need to act independent of human instruction, and they need to perform tasks consistent with human desire. Edge computing is creating data processing at the source of data generation. And we are creating this local compute to seamlessly interact with cloud computing. So a very exciting moment of broad adoption with this local compute. We're enabling edge to cloud, and we're focusing on optimization on the value for the end application and for the infrastructure in our mind. There's 3 categories of edge processing that I describe: networking edge processing that involves data aggregation and data access. Then there's industrial edge processing, which really is building out the infrastructure capability in many different forms. Then there's the IoT infrastructure for the proliferation of these many devices that are coming into your life, in your home, in retail. And the way that NXP is servicing this is by developing processor platforms and product offerings that service multiple markets by one platform. So a multiplying effect of revenue to $1 of R&D that's spent servicing these many applications with common and some optimized capabilities. We then leverage the fact that our customers and the developers within our customers, first, choose processor platforms as the key to their current and their future needs. And selecting NXP with the processor platform allows us to bring in the complement of connectivity, analog and security optimized to give our customers more complete solutions and benefit from the optimization that we enable in terms of the interoperability of these different components and the software that pulls it together. More development efficiency, faster time to market. Our customers, when looking at edge processing, benefit in many different ways. Reduction of cost of ownership when working with the cloud. Processing data locally and simplifying it, so you only have to send what's necessary to the cloud and not raw data. Choosing which content is needed to go to the cloud. So selectively choosing. And in doing so, it also has a benefit on total power. You don't have to waste energy transmitting to a remote and then back to a local environment in order to perform tasks because local computing enables the user experience that's needed. You get faster action at the edge for critical tasks, real-time tasks, safety tasks quite not having that latency. You have enhanced security capability that you can control locally. And then you can combine it with different ways to work with security on the cloud and transmission of data, but you can also control it locally. So enhanced security is a benefit. And then we have quality of experience. Systems that are working with the cloud when they're disconnected, you want to have a user experience that's consistent and you want local compute to enable that local experience until it can reconnect for the tasks that are needed from the cloud. There we go. When we look at our edge strategy, how are you going to grow. It starts with the breadth of our processing portfolio. We have a processing portfolio that goes from the smallest MCUs to very high-performance processors that very few in the industry have in terms of the range of compute that we bring to the market. And then we optimize that portfolio between those 2 endpoints, so our customers can scale in terms of the capabilities, the costs and the performance levels that they need in order to operate their systems and the variance of the systems that they want to deploy. We complement this with our enhanced connectivity portfolio, our analog content, AFEs, interfaces and our security to bring the complete solution to a broad set of customers. We then focus and target our investments around key technologies to differentiate this platform that scales, not just a point solution, but a scaling platform. Power efficiency, whether it's in a standby monitoring or run time or optimization of total energy usage is a key part of where we invest and optimize the platform. Making devices more intelligent, deploying machine learning in a very easy way that the broad market can enable devices and systems using technology and product offerings delivered from NXP. The highest levels of security that builds off our long history in terms of financial and banking business and what we've done to integrate security or provide it in discrete forms. And then reliability, longevity and quality. We have unique capability demonstrated over decades servicing the industrial and automotive market that then applies to our future product offerings. We then are making additional investments in strategic OEM relationships by placing engineers locally with these key customers. Working together in terms of optimizing both tactically and long term, our road maps to meet their needs to build confidence that their capabilities will be met. And in some cases, bringing custom IP from those in small forms into our more general-purpose platforms in order to get the benefit from our offerings and still allow some of our customers to have specific differentiation. And I'll touch on some of those as I go through the discussion. And then beyond these big OEMs, driving growth with the significant adoption that we're seeing. We're serving over 25,000 customers in the mass market with easy-to-use solutions with this compute platform and with the attach that I've described. We do this with very strong ecosystem partners that service the many smaller companies. We have active communities with developers around the world working on these platforms, learning from each other. We offer turnkey solutions. We offer services in order to enable the broad adoption across the world through the mass market. We're taking this strategy, and we're focusing it on high-growth applications. And that enables us to achieve the greater than 2x growth versus the market that Kurt showed. One great example that we have is the touchless human machine interface capability, growing 35% CAGR. Why is it growing 35%? Health, efficiency, ease of use of systems of interaction with machines and how machines can help you and your life, work, productivity. This aligns extremely well with our investments in machine learning, in vision and voice as well as rich display content. We see wins in smart homes and many devices that are coming into the home, in infrastructure around building access and industrial systems where you have machine-human interaction that needs to occur in a seamless and easy way. You combine this with our turnkey solution capability that we've already been bringing to the market. And we just recently announced last week the latest turnkey HMI solution, which we refer to as the RT117-F. It's using one of the industry's fastest microcontrollers in our crossover microcontroller family and building upon that a full HMI solution of voice, vision and rich display. Combine this with our connectivity portfolio, and we have a great home and industrial control system that can be easily deployed by small companies as well as large companies who want to leverage it as a starting point and then modify it to their specific needs. The second area where there's significant growth is in the smart home, where we're extending our leadership and growth in personal devices. Within this market, it's growing 9% to 11%, 2x the market growth. And here, we're making investments in low power such as taking our crossover portfolio with rich integration, putting it on technologies like fully depleted SOI and bringing leadership power capability that is winning in wearables and hearables as well as other personal devices. We have applications that are needing higher levels of capability and performance. So traditionally, 8-bit going to 32 bit. And there's a migration into our LPC 800 and our low-end crossover MCUs, that's continuing to get more and more traction as these devices require that higher level of capability. Within the home, you have many more systems on Linux and Android using our i.MX platform, i.MX 6, i.MX 8. And we just announced this week i.MX 9, the latest machine learning integration, the latest energy efficiency. Security services, a rich content for our customers to build applications at different cost and performance levels to roll out to the explosion of devices that are coming into our home. And then there's the attach as well as many of the customer engagements that we have, such as our partnerships with Garmin, with Sony as well as worldwide appliance manufacturers, including companies like Whirlpool. We're also growing significantly in the industrial space, in factory automation, building infrastructure. Energy. We're working with customers to move custom IP that was traditionally ASIC, in-house ASIC into our crossover family of processors, growing our SAM and addressing it with our more general-purpose processors but maintaining that custom need. We have vision systems that are proliferating within the industrial environment, robotic security safety, leveraging both crossover MCUs with vision at a very competitive bill of materials as well as our i.MX apps processors. The 8M+ and the 9 series that integrate machine learning vision capability and the ability to make decisions in a very efficient way and interface with the environment around them. And then in the case of medical, door access and metering, we have a portfolio of our narrowband MCUs that we continue to roll out with various features and functions to expand in applications like diabetes care, access to doors that you encounter throughout your work, retail. And then again, we have the attach aspects of this in terms of connectivity, security, analog, combined with the partnerships with companies like Honeywell, Schneider and Zebra. The core of this is the hardware portfolio of processing, as I said, the first decision. We go from traditional embedded flash MCUs to very high-end processors and application processor space and MPUs. We go from -- If you use a relative term for performance, 1 DMIPS to 200,000 DMIPS to just give you a feel of how broad this portfolio is. And then we optimize in between this crossover family of MCUs and application processors that have a rich integration of content. MCUs of the past had embedded flash, had real-time processing capability. MCUs now have graphics, have audio acceleration for voice. They have higher levels of security, higher levels of capability. And then scaling to application processors that are also now integrating real-time domains so that you can choose which optimization that's needed. On top of that, we have our connectivity portfolio. We have WiFi, N, AC, AX. We've integrated this into our BSPs, into our development environments with MCUXpresso for ease of integration. Industrial customers, small and large, can choose our solution, quickly attach connectivity with WiFi and simply get their platforms up and running. Combine that with our narrowband MCU portfolio and then our wired, time-sensitive networking or more deterministic networking capability with integrated MAX and switches as the industrial protocols and bandwidth increase. NXP is supporting this with proprietary IP and integration to lead in the industry. In the end, it's about application performance. And the investment in our software is absolutely critical. And at the bottom of the chart, there's many base capabilities that I could talk about for quite some time. But where I want to focus on is that next layer, that layer of differentiation to enable the edge. We're investing with companies like Ozone. And our engineer teams together are rolling out our EIQ machine learning development environment for ease of deployment and machine learning onto our scalable processor portfolio, making things intelligent in an easy way. We are investing and acquiring R&D capabilities, such as voice with the latest Retune DSP integration into the NXP voice capability to make even stronger capability for HMI, both open source and industry-leading capability in triggering and processing multi-mic audio environments. We have security services with companies like Microsoft, where we have secure enclaves. And we have IP compliant pluton capability to allow Microsoft and NXP to offer Azure Sphere security services for 10 years of support. And then from a device management point of view, all these billions of devices, putting them out there, decommissioning them when they're done. Using our history in my fair with our edge and lock to go capability to provision devices and working with partners like Foundries IO in order to enable that management of all these devices. So if we take that portfolio and we look at some of the customer examples, I'll discuss 3. Schneider Electric. We work together very closely to drive leadership in factory automation and control, taking custom IP, integrating it into a crossover MCU where our customer benefits in terms of energy efficiency, they benefit in security, they benefit in terms of networking IP. And we combine it in a system solution with the analog front end, power management and connectivity to create one-stop shopping system solution and increase our serviceable market. ChargePoint. They use a very comprehensive portfolio of NXP offerings, and they create EV infrastructure rollout capability. So together, we address the needs of point of sale and secure interfaces. We address energy metering and safety for high voltage and thermal concerns. We address connectivity to personal devices as well as cloud connectivity. And the third is Microsoft. Working together, we actually literally go from the surface to the cloud with Microsoft where our MCUs support keyboards, docs and accessories. Our crossover MCUs allow for the integration of sensor aggregation modules into their entire lineup. And then we integrate their Azure RTOS onto our MCUs in a real-time subsystem, our apps processors, for easy connection to the cloud, deployment of ML and enablement of services, including services around Sphere, a win-win for both companies. This then all comes together into the smart home. In terms of many devices that are being enabled, NXP is serving all of these applications with this industrial and IoT edge processing offerings. We're working together on how these devices can easily be entered into your network, how they can interoperate, working together with industry bodies around home interoperability standards like matter, deploying products that are enabled with matter that's sitting on top of our BLE, ZigBee as well as WiFi stacks. And enabling the home to perform tasks that are useful for the owner and the occupants in a more independent way. The same technology applies to the factory, in terms of machine learning, voice, vision, rich display. And then enhancing this with higher endurance, higher safety, longevity programs, more deterministic networking connections that are critical for handling factory automation, solving critical tasks as a very deterministic part of the optimization of the factory. EV infrastructure rollout with solutions such as the ChargePoint example. So pulling this together, as Kurt mentioned, we're growing from 9% to 14% in terms of CAGR in a market that's growing 4% to 6% on a $40 billion base based on the strategy I outlined with a scalable portfolio for complete system solutions, big OEM customer intimacy, broad market adoption through our 25,000 customers to achieve 2.3x with optimizing our portfolio towards these growth applications. In March in the teach-in, I discussed 2020, and I mentioned processor revenue of $1.2 billion and attach of $600 million. In 2021, we're over $1.5 billion in terms of the processors and over $800 million in terms of the attach. And that's 100 basis points higher than the growth rates that I talked about earlier in the year in terms of the overall CAGR. And that is driven by the adoption and success we see with our customer engagements, the rich portfolio of connectivity and the adoption of the system solutions. So NXP is driving a positive impact and enabling this new age. We're addressing needs around productivity, around health and safety as well as a greener world. So with that, I want to thank you for listening, and we will open up Q&A for this industrial and IoT area.

Thanks, Ron. Appreciate it. So we'll take Q&A is just on Ron's presentation right now. I know there's a few folks who had their hands up before. If anyone want to lead us off? [ John ]?

Thanks for the presentation. I'd be interested in kind of understanding how you've been able to take the Marvell assets into this business and kind of expand kind of your footprint there. Is that relevant within this business? I mean if memory serves me correct, that was a business that was kind of hampered by the fact that it was in a company that had a direct business model and didn't really have strong distribution channel. I'd be curious about what you've been able to do with that asset since acquiring it.

Sure. And I like to refer to it as NXP WiFi as opposed to other names. But now that's absolutely key to the growth that we have. It's integral to what I described. We have connectivity solutions that go from WiFi through narrowband. We've integrated it into our BSPs. We've replaced what we've used before in terms of module partner WiFi content that was not NXP. And now it is NXP. The attach rates through some of the examples I've given you is very high, and we see a very positive growth. And it allows us, as this whole strategy was set up, to have a more complete connected compute system. So it is as expected in terms of adoption and leveraging what we've done with a 25,000 customer base plus understanding how to work the channel and our partners that we have in there is making for a great combination that didn't exist before, but with NXP is much, much stronger.

Gary in the back?

On IoT connectivity, other than WiFi, I noticed you had all the different logos up there, ZigBee. I don't know if you had Z-Wave up there, but Thread perhaps. So my question is, how far along is NXP in driving that short-range wireless connectivity revenue as a part of your industrial or embedded compute offering? And how much further do you have to go?

So the great thing about this industry and what we're describing is there's always a long way to go in terms of innovation and creating products. We have -- to answer your specific question, we have a very strong base in narrowband connectivity in the company. We are selling into diabetes systems. We are selling into access systems. So we have a family of both Bluetooth low energy/ZigBee-enabled processors and more that we have in development and are launching that have attributes that service multiple markets as well. So the same concept of an MCU with a radio integration around narrowband servicing multiple markets is in flight today. And it is a meaningful multiples of 10 millions of revenue type of capability.

We'll go right here to Will.

It's Will Stein from Truist Securities. I think we hear a lot less about relative market share in this part of your business. I think it's perhaps because the applications and the customer set's much more fragmented than much of the rest of your business, especially automotive. Can you comment as to whether that becomes relevant at some point and relative market share specifically? Can you drive it to a more meaningful level? Or are you very happy with the position that you have today? And then also, can you talk about the role that distribution plays in this market and your connection with distributors globally to enhance the growth here?

Sure. So 2 questions. First question, relative market share matters. It is company philosophy that applies to this area. You can look at it in different ways. If you try to get down to a small, small application in this space, you can argue how meaningful it is. When you look at NXP's position for MCUs, we are #1, so from a relative market share very strongly. If you look at applications, processors for industrial, we are #1. So if you look at it from a product point view, you can look at relative market share. And from an overall edge processing position in terms of our total revenue in this space, we have a very, very strong position, and the whole mindset of RMS applies there as well. So yes, philosophy applies, and it also goes to focusing on high-growth areas and becoming the leader in those areas. So we try to look at it from multiple angles. Specific to distribution channel, we service over 25,000 customers. So distribution channel is absolutely critical. We have relationships with all the top distributors. Obviously, with our sales team, we focus on the most effective distribution partnerships in order to service the NXP business. But it is an ongoing relationship where we work together also in co-development modes to enable our platforms for going to market, and that's across multiple different key distributors.

Anyone on the left side? I can't quite see past the post. No? Okay. C.J., why don't we take your question? Go ahead.

I guess curious, I think your relative growth to the market is the greatest here, I think, at about all the business segments that you're all presenting. And I think we all traditionally think of kind of this business is GDP plus. So curious what the high-level drivers are. Is it having the right portfolio today? Is it having the right customer mix the right support? What is the critical driver? And I'm sure you're going to say all of the above. But would love to dig a little bit deeper into that, if you could.

Sure. Well, I touched, as you just said, on the combination of things. Take industrial as an example. We offer decades of proven capability in terms of longevity, in terms of quality and reliability. So we distance ourselves from other competitors who are trying to come in there. Partnerships are becoming more critical, similar to what Kurt described. Here, we have more and more partnership discussions every single day. Capability needs and the complexity of what our customers need to do where they don't have the engineering team that are experts in all these capabilities are looking for NXP as a partner to enable them in what they need. Schneider Electric being a great example. So that is another aspect that's really driving it. And the breadth of the portfolio, again, no one has a portfolio with this dynamic range of performance and feature sets that allows customers to tune because they don't have the perfect view of their future. So having this platform also allows them to pivot when they see different needs and can quickly do it on an NXP-based platform.

I take one last question here for this session. Vivek?

One more question on growth. If I go back to the last Analyst Day, there was, I believe, about an 8% to 11% CAGR that was suggested for this segment. And it did actually grow 10% but -- when I include the M&A that was done during that time frame. So can you talk about what the organic growth was in the last few years? And more importantly, how did those 3 years evolve relative to what was assumed before? Because now when I look at the 9% to 14%, it's again a very strong growth rate. So I guess part of following up on other questions that were asked, what has history shown us in terms of assumptions? And what does that tell us about what the next 3 years can be?

Sure. So the way I would answer that is, you referenced it, 8% to 11%. In the teach-in earlier this year, I brought that up 100 basis points, and that was linked to the strength of our connectivity portfolio, combined with the processing and attach in these solutions that I've described. So that brought us up to 9% to 12%. And then here, the 9% to 14% is the added success on the system solutions, this more intimate customer engagements, and we've been able to invest the R&D dollars into a richer portfolio and enhanced portfolio. We've just announced the i.MX 9. We just announced the next HMI solution that's growing at that 35% CAGR in the market as a reference. So the richness of the product offerings through our investments, combined with the connectivity and the engagements, are just creating a multiplier effect.

Let's move along. Rafael? Hand off the clicker.

Thank you, Jeff. Let me go here. So early Kurt talked about UWB as one of the growth areas for mobile. So I'm going to be talking to you about UWB but not just in the context of mobile, but in the context of all the section and everything we're doing to grow the ecosystem. And just to level set, since UWB is somewhat of a nascent technology. UWB is a wireless technology that is used for sensing. And the reason it's being adopted in the market, both in auto and mobile is because it solves a difficult problem, which is knowing the relative location of an object routed to you or to another device with enough level of accuracy to matter, to make a particular use case happen, to take actions, to make decisions, to react. UWB delivers awareness or where a trusted object is relative to you with such level of accuracy that is going to be the catalyst for new use cases, use cases where objects anticipate our actions. The way I think about UWB is UWB is the closest thing that -- giving objects intuition, knowing accurately a tridimensional position. It will transform what device can do. It will create inflection points in the value proposition of many of the devices that we use today. There are a lot of -- there are some technologies today in wireless that can be used to calculate distance, right? But none of them, and I really mean none of them with the technical attributes and the value proposition that UWB provides. I mentioned already accuracy. It's been more important. UWB is very accurate both in angle and distance calculations. Look at 10 centimeters. Those 10 centimeters, that's really what unlocks these new use cases. Not only has it unmatched accuracy, it does it on the very difficult environments. Think of rooms, think of multiple walls, reflections, RF blockers, UWB remains resilient. It remains accurate under those conditions. It's got a long range. I mean 100 meters more than enough for most use cases. Security is a very strong attribute. UWB was designed from the beginning with security in mind. Unlike other technologies, it has RF security. The preamble, which is a sequence of it used to synchronize the transmission packet, that is derived from a unique key every range in measurement. Essentially, every range in measurement is encrypted with a different key. And low latency. That also unlocks a new type of category of use cases. Think of gaming, right, where latency is critical. Think of public transportation and subway turnstiles where the transaction speed is also critical. These technical attributes, this is what it makes UWB very good of what it does. Now at the early stages of every technology adoption, there's always a killer app that propels the adoption. For UWB, it is secure car access. This is what triggered the adoption of UWB in mobile and in auto. Now UWB is on its own right a great access technology for auto even without the phone. It holds the relay attack. Just relay attack is when someone an aggressor picks up the signal from the key fob while the user is away from the vehicle relays it to the vehicle and get access to it. UWB prevents that because every range in measurement is checking where the position of the fob. And that cannot be manipulated because, as I said, every range in measurement is encrypted. This is a use case that really brought 2 ecosystems together, the auto and the mobile, and we are really proud of the role that we play in making this thing happen. Now secure car access is not the only use case for UWB. Just want to give you what has been happening with UWB just to give you a sense of the progress. The FiRa consortium, and this FiRa stands for fine ranging, which is the consortium that NXP co-created to develop an open UWB standard to ensure there was interoperability among different OEMs, that membership has doubled since last year. And now we're talking about companies like Google, Cisco, Sony, Samsung, Xiaomi. Last year, there was only 2 phone OEMs with UWB in the market. We estimate by the end of the year, there will be 5 and 5 more working on adding UWB in their phones next year. 8 out of those 10 are working with NXP. Now the customer -- our partners, this is NXP partners that help us develop UWB solutions across all markets, are now 150, over 150. Cars, there was no cars with UWB in the market last year. There will be 3 this year. And there's -- we're working on another 19 to make sure that we migrate their systems to UWB. All of them working with NXP. And again, the use case continues to come and come. The FiRa consortium now has over 35 use cases that we are working on for UWB. Indoor navigation, residential access, payments. The ecosystem is very healthy and is growing. And we, at NXP, are a catalyst for this growth to happen. When we started working on bringing UWB to market and bringing this spatial awareness feature to market, we did it -- from the beginning, we did it with our partners. From the beginning, we did it with industry leaders who had a vested interest on the co-creation of this technology. This is customers that we have in mobile and in auto where we already have a very strong position to leverage. There's a lot of really good progress in the last 2 years. We launched a couple of models with Samsung last year. We launched Xiaomi with a UWB phone this year. BMW announced that our digital key plus system where UWB plays a central role. And then more things to come. Samsung launched UWB tag. Tile announced their own UWB tag to be released soon. And on top of that, now we have the support of the software ecosystem, Android announced support for UWB and Android 12. And Apple released UWB support for iOS. Again, this is yet another sign of our thesis that UWB markets is indeed happening fast. Now creating quickly an installed base of UWB devices is critical. New companies are not going to add UWB unless they really believe there will be more UWB devices out there, and this is the reason why getting UWB in their phones is critical. Phones are pervasive. And the moment UWB makes it on the phone, then the UWB technology becomes a free resource for other verticals to use. The reason we're bullish is because we think that this is indeed happening. You look here, the chart on your right, it shows you the cumulative devices, the key devices that are in the market. And we see now that by the end of the year, there will be over 350 million UWB-enabled phones in the market. There will be 2 generation of iOS, multiple Android OEMs. Also, a lot of these mobile phone OEMs are also developed on IoT products with UWB to connect with their phones. So we estimate the IoT devices will be about 50 million units next year. In 2023, now the number of cars with UWB in the market starts to become interesting, and we estimate this to be about 15 million units. Ensuring that we have this virtual cycle of early UWB adoption leading to more adoption, leading to more adoption requires focus and support in these 3 segments. We talked about mobile, IoT and auto. And because of that, we focus here at NXP to develop a UWB road map for these 3 segments. We call it NXP Trimention, different products with different attributes going to 3 different markets but all with a common platform. In that way, we ensure interoperability, we ensure we use for our customers. I mean, this is one of the reasons companies like Samsung or Xiaomi, they have peace of mind that even the early adoption of UWB, their phones are going to interoperate with other verticals because those verticals are most likely powered for NXP anyway. We announced Samsung and Xiaomi are using our UWB on the phones. On automotive, we're working with BMW and Hyundai. And we now have tags solutions with Samsung, residential access with Assa Abloy and Tile. We talked about how important it is to get UWB in the phones, and you should not think about UWB as yet another connectivity technology in mobile. The way you should approach it is a secure sensing technology that has the capability of enhancing secure transaction applications. And in that sense, UWB is an extension of the NFC mobile wallet. Clear examples are the access use cases that we talked about, car, door, but moving into payment, moving into transit. All of them require a certified security solution in the phone, not just UWB. And we've been a leader in mobile wallet for years. We have a unique end-to-end offering from hardware, software services. We have very strong ecosystem partnerships. We have a deep expertise on the application, and that is what allow us to quickly develop a UWB solution that it was based on the mobile wallet. And that's what led for us to have 4 OEMs design wins with UWB and 4 more working with us with UWB phones next year. Automotive. We're seeing a lot of traction in auto as well, and this is pretty exciting. NXP is the leader in car access. So we are the natural go-to partner for anything car access. So we are working essentially with all our partners to migrate their existing car access solutions to UWB. The way you got to think about UWB in this system is it is part of a much bigger system that includes BLE, NFC, and the door handles, security. And NXP is the only provider and the only vendor out there with all the technologies: connectivity, security, localization algorithms. We have won over $700 million in design wins with 16 OEMs. And the other 6, they're working with us to develop proof of concepts and develop their system with UWB. In IoT, it's early days of IoT. And the beginning of IoT, well, most of the use cases were very similar than mobile. Access, trackers, indoor navigation. But now what we've seen lately is a lot of innovation, a lot of creativity in our customers. We're starting to see things like our customers using presence detection to be able to customize the behavior of the device. We've seen customers now using UWB to do audio tuning depending on the physical placement of wireless speakers or robots finding their way back to their charging station. We're starting to see a lot of creativity. It kind of puts a big smile on my face because it's quite amazing what our customers are thinking of doing with this technology. IoT requires flexibility requires options for all these customers, and we're providing them. We have partners, module partners, design houses, reference designs, turnkeys, SDKs, A lot of these customers and UWB for IT for us are already customers of NXP, either they use our microcontrollers or they use our connectivity. So usually, the engagements are relatively smooth. We have right now -- obviously, IoT, big, big fragmented market. We have -- we're working with over 100 companies today to develop UWB solutions for IoT. There's going to be a lot of innovation coming out of our customers using UWB in this segment. UWB is a growing market for the reasons I stated. There's a huge value proposition that technology gives. We estimate the market to grow over $1 billion by 2024. Yes, a big part of this segment is mobile. But IoT is starting to become significant by 2024, just shy of 1/3 of it. We have a strong position in the market. We have -- and that has given us early access to our customers and deep understanding of the application and an ecosystem, and that allows us to define not only today's solutions but tomorrow's. We expect to outgrow the market by 2x and get to a revenue of $400 million. NXP will continue to play a critical role and a catalyst to continue to grow this market. We expect to continue to innovate for our customers, and we're very proud of the role that we play in growing this segment. Thank you.

Take some questions. Stand behind the speaker now, the light in my eyes. Who would like to let us off on some questions here on the ultra-wideband topic? Don't be bashful. Chris, down on the front.

Chris Rolland, Susquehanna. Perhaps you can talk about UWB and its eventual use for automotive keyless entry and kind of the size of your keyless entry market today and whether UWB would cannibalize some of this market or enhance some of this market.

Actually, I have the right guy to answer the keyless entry segment in terms of cannibalization -- he's basically telling you no, but...

Thank you for your question. Well, as outlined by Rafael, we are truly the leader in the secure car access business, and we are coming back to the relative market share model. We are close to 3x larger than the next competitor in the market. We are not disclosing the size of the business. But to give you an idea, the secure car access business, and we'll not be, let's say, taken away by the ultra wideband mobile access business because it will be a complementary business. So all of the use cases we do see right now is that every car still will come with a key. So it will have a full-blown passive keyless entry solution. And then on top of it, there is the ultra wideband car access, mobile car access being enabled, which will be really an add-on to an existing bit of material as a complementary feature going forward. So we don't see that in the near future, and because this is also a very long-lasting business, we don't see in the near future that the existing classic or passive keyless entry business will be gone away.

Gary in the back.

Might as well stay here. I guess one of the more notable smartphone OEMs in Cupertino has his own ultra wideband chip. And so my question to you is, how do you convince Samsung, Xiaomi and others that they don't need to develop their own? And related to that, how do the hooks of NFC prevent that from happening?

So we didn't have to convince them very hard because the know-how and the need they had to actually connect the dots and create the ecosystem, remember the first use case was with the auto has created high bars of entry. And so I think it was more of a partnership to develop the use case more than a conversation about whether they should be doing UWB or not. The relationship with UWB as the second rate for the mobile wallet is very strong, okay? There will be use cases at car, we will talk about car for a second, where you use your mobile phone to enter you that would be enabled car, but there will be a point in time where maybe your phone is out of battery and now you use your NFC phone as completely a low battery, battery-less operation to open the car. So you can see now that NFC is more of a backup radio for you that we be in many of these access options. And so there's a very, very strong relationship between UWB rating in the mobile world.

Sure. [ John ]?

Maybe I can add on to Gary's question. I mean to the extent that it is an extension between UWB and NFC, is there a single sort of chip solution in your future around these 2 technologies? And if you kind of drive towards that, might that be enough of a value proposition to expand your footprint in the mobile phone space for UWB?

I mean that is -- I think there's a history of that happening, right? It happened with Bluetooth and WiFi, became combos. Because once the attach rates and the use cases were so synergistic, there was no reason to it. Right now, we're at a phase in UWB where the attach rats are not as high as the mobile wallet so it doesn't quite make sense. But yes, I see a future where that would make perfect sense, and that will be the logical step to take.

Anyone else? Okay, if we don't have any other questions just yet, then we can move on. Thank you. Okay. Great. Thank you very much, Rafael. Thanks, Jens. I'd like to introduce Paul Hart.

Good morning, everyone. Now I'd like to change gears and talk to you about NXP's radio power opportunity in the 5G communications infrastructure market. And to get started, I want to kind of step back to our investor teach-in and our 5G teach-in last year. And at that time, I said that we felt that we were at the early stages of an extended super cycle for 5G deployment globally. We were seeing spot -- well, actually significant deployments in a few geographies, South Korea and in China in particular. And we're also seeing enhanced mobile broadband deployments at millimeter wave frequencies here in the U.S., led primarily by Verizon. Today, 1 year later, we can safely say we're -- we've passed the early stages, and we're now in the growth phase of the 5G deployment super cycle. And what I mean by that is this is no longer a geographical deployment only. We're not talking about certain regions. We're now talking about all regions across the globe adopting 5G in a more aggressive manner. The primary driver today is still around enhanced mobile broadband. It's still about more data, faster data to the end user, and that's the value proposition that operators are investing in. They're investing in more data and a more efficient means of delivering high data to their customers. But we're also starting to see the emergence of new business cases with 5G. First, in the industrial segment but growing, growing not necessarily at the rate that was forecast 3, 4 years ago, but we're starting to see it now and have seen it develop. And that, combined with the fact that 5G is really a multifaceted network solution, gives us the confidence to say that this really will be an extended deployment cycle, dissimilar to what we saw in the 3G and 4G areas but something that really continues to grow really throughout this decade. There are some impediments. Cost and power consumption of these systems are both high, higher than previous systems. And these are areas that we, as the enablers of 5G infrastructure, need to keep our focus on. We need to keep driving and investing to drive down cost, investing to improve power efficiency and investing to make these systems easier for our customers to deploy. At NXP, well, at NXP, we're focused primarily in 2 areas. One on the radio power devices, which is the theme of today's presentation. We also have a family of edge programmable modems, which layer into 5G as well. All of these investments really focus on the 3 fundamental pillars of what we see as being key to bringing 5G to a global market. The first, our coverage capacity. So coverage by meaning establishing a 5G signal everywhere you go. I think that's first and foremost in operators' thinking when they think about investing in 5G. Second is capacity, making sure there's enough data transport available so that users feel the difference when they experience 5G versus previous 4G systems. But the fundamental differentiator of 5G versus 4G and previous systems is truly on the latency front. This is the real-time interoperability of the network and your engagement with the ecosystem around you. It isn't just downloading a large data file to your phone, but it's about how you interact in a dynamic way with the world around you. And I mention it here because latency is fundamentally an edge compute-enabled feature. Without decisions being made at the edge, compute happening at the edge, 5G can't deliver on the latency promises. And so Ron touched on this heavily, and I just wanted to follow up on that because it is a key point to the value proposition of 5G. At NXP in the radio power space, we're focused on coverage and capacity. From an RF perspective, there's no delay in our signal, so it's not a latency issue. But the opportunity for us is about getting more 5G into the systems and making it easier for our customers to create systems that are cost-effective for the operators. When I think about 5G, I think about a complementary network ecosystem. We hear people talk about 5G in different ways. They talk about 5G deployments in mid-band. You hear operators like T-Mobile talk about 2.6 gigahertz deployments, but also going down in frequency to 700 megahertz for a big coverage solution. You hear operators like Verizon talk about millimeter wave deployments and delivering 2 gigabit per second data to the users in dense urban areas like Midtown Manhattan. And we also hear about C-band deployments and mid-band spectrum as being the catalyst for really ubiquitous 5G connection globally. And at NXP, we're focused on all those aspects. We're focused on delivering macro solutions for coverage. We're focused on mid-band 5G millimeter wave solutions, and we're focused on 5G massive MIMO solutions, and we're focused on 5G millimeter wave solutions as well. And we're also focused on the indoor handover of those data-driven connections by driving WiFi 6 and WiFi 7 solutions across the board. So for us, it doesn't actually matter which format of 5G a specific operator chooses to invest in, but our value proposition is fundamental. We're really agnostic whether they talk about mid-band deployments or coverage deployments or millimeter wave. We're invested to grow all those segments together. So that means coverage in all frequencies, power levels and architectures. It, of course, means complexity. When we look at the spectral allocations for 5G's network systems, they really have exploded. They've explored dramatically over the last few years. If we go back in time to simpler era of 2G to 3G, fundamentally, the shift in a radio technology was going from a single-channel radio to a multichannel radio. We increased bandwidth a little bit, improved the modulation format to allow greater data rates in a given frequency allocation. But from an RF content perspective, which is the theme of my presentation and what the business is invested to deliver, it was pretty stable, right? A little bit of power increase moving from 2G to 3G. As we move from 3G to 4G, the major breakthrough was on the modulation format. WCDMA moving to LTE, just changing signal modulation schemes allowed far more data to be delivered to the user. Expanding the single bandwidth multiplied that data delivery mechanism further. And we saw a great pickup, I think, in mobile data as a result. Still from an RF perspective, we aren't fundamentally talking about significantly different architectures versus the 3G era. Slight increases in diversity of the systems, a few more antennas delivered per radio unit. But fundamentally, the same, and we added a few frequency bands. But here in the 5G area, what we're seeing is an explosion of complexity. New frequencies that haven't been touched, brand-new deployments, new architectures. There's no Moore's Law in RF, which means if you want to deliver more antenna systems and more content and more data to the end user, you have to add more content. And we're seeing that explosion now today. Right now, mid-band spectrum is going to be -- looks to be the global workhorse. 3.5 gigahertz is really a key special area across the globe. We're seeing millimeter wave deployments happen in the U.S. and expect those to come in years ahead, and we're also expecting frequencies to start spanning between 6 gigahertz and 5 gigahertz in the next few years. All of this is enabled by custom technologies, technologies spanning silicon LDMOS, which Kurt mentioned; gallium nitride, which we've invested heavily to bring to market in the last several years; and proprietary silicon germanium, all of which have been fine-tuned and tailored for the communication infrastructure market. So these aren't one-size-fits-all technologies but really spot optimized solutions for this market segment. And that sets us up really to be able to deliver on any of these deployment mechanisms, whether we talk about sub-100 megahertz, we talk about 39 gigahertz or even we start thinking about 6G and 100 gigahertz applications. NXP's technologies span that spectrum of frequencies and enable us to create competitive offerings across the board. I want to show you just a few of the systems here. 5G macro systems are kind of the workhorse of early days of 5G. And fundamentally, they're very similar to what might have been seen in a 4G radio. High power per antenna delivered by high-powered technologies like 28-, 40-fold silicon LDMOS, now gallium nitride. And the migration from 4G to 5G has really been on the technology front, enabling smaller size, enabling higher-powered density and enabling improved efficiency. The new market segments are around the active antenna systems in the 5G massive MIMO domain. This is where the antenna diversity has increased from 2 to 4 transmitters up to 32 to 64 transmitting elements per radio. And here, we see a completely different dynamic unfolding. The need for massive integration, the need for making parts pin-to-pin compatible, the need for driving consistency in product offerings across frequencies and powers. And that's another area that we've invested heavily in. And at the end of the spectrum, at millimeter wave domain, now we're looking at 256, some cases of the 1,024 transmitting elements per radio. Huge integration complexity is required in order to make these systems realizable, and we're happy to say that we have these systems also deploying in the market today. So what do you think about coverage solutions or capacity solutions? What we have already developed and what's deploying in our customer base spans all ranges, and it touches every addressable customer that NXP has access to today, whether you talk about traditional OEMs focused on traditional operators or you think more about O-RAN-enabled equipment vendors. We're engaged with and working with and designed into 100% of them today. I mentioned there's a challenge to rapid 5G deployment. There's 2 challenges, in fact, and the first of which is size. These 5G radios -- and I'll focus on the mid-band radios today because that's the main deployment vehicle for 5G in the next couple of years. These radios are fundamentally big. We're talking 25 liters a few years ago with aggressive road maps to reduce size. And at NXP, we've been investing heavily to enable that size reduction. We've been investing in integration, non-monolithic integration capabilities at very high power, which is not an easy problem to solve. If we go back to 2018, we had a largely discrete portfolio of products that were going into 5G radios. By last year, we transitioned the majority of those products into integrated modules, including all the respective matching, combining multiple technologies to create performance-optimized solutions that are cost-optimized as well for our customers. Moving from yesterday to 2020 into today and what we're really enabling tomorrow is the further acceleration of this integration road map and bringing in advanced thermal management techniques so that we can scale up the power in these small form factor solutions and continue reducing radio size. The developments we've enabled over the last several years have -- are resulting in up to 40% smaller radio boards, which means the volume of these radios that go up the tower can dramatically reduce. This integration is enabled through a broad range of technologies. Most of them in-house developed. Some of them available in the general market, but all of them tailored for these applications. So whether we talk about gallium nitride, we talk about silicon germanium, we talk about SOI. All those pieces have to fit together in a uniquely optimized solution in order to continue reducing system costs for our customers. Advanced packaging, high-power packaging techniques are all fundamental tenets also of this value proposition, as well as wideband and multi-band IP. So if you think about enabling wider frequency ranges to be created through additional radio system, you could think about fewer radios being required on a tower. And therefore, there's a cost reduction enabler for our customers. And what's nice is the technology we've enabled, the technology features and the integration capabilities span, again, the full range of 5G opportunities and WiFi 6 and WiFi 7, which gives us confidence that we really have the right value proposition to grow in this market. The second tenet to reducing costs for the operators is system efficiency. We fundamentally have to make these boxes smaller, and the easiest way to do that is to reduce the power consumption because the greatest weight in these 5G radios comes from the density required to dissipate heat. So we've been investing to increase efficiency. And over the last 3 years, we've increased system-efficient radio PA efficiency, 15 points, which is an unprecedented achievement in the last 20 years of this market. Massive efficiency increases coming through the means of high-efficiency gallium nitride, advanced thermal management, improved system design techniques and really some new architecture concepts that we brought forward. Going forward though, we don't see that to be at the end of the journey. We see further efficiency enhancements enabled for us focusing on areas like enabling low-power compute, enabling dynamic and optimized behavior over the real-time life operation of the radio. And all of that will continue to drive the PA efficiency up, which means the radio size can continue to reduce. So focusing on both area and efficiency for weight, we've enabled massive reductions in radio system volumes and mass over just the last couple of years. When we look at that through the operator lens, this to me, this graph stands out. Today, what's deploying for a mid-band 32T or 64T active antenna radio is about 20 kilograms and 20 liters in terms of radio size. Just 2 years ago, we were 25-plus kilograms to 25-plus liters. What's going to deploy next year across the board is about 20% smaller, 16 liters, 16 kilograms is the target. And both of those -- that drive from 20 kilograms to 16 kilograms has been enabled through a lot of innovation on our part, both on the discrete front with new technology introductions and also on the integration front with -- against advanced design features. And we found ourselves able to create something that's fundamentally lower cost for the operator. Industry leaders, however, are already sign posting 12-kilogram systems that are going to hit the market in the next 1 to 2 years. That's a 40% reduction from where we stand today, and it's something that is really only enabled now by this high-power integration capability and this advanced thermal management that we've put together to create the most advanced products for this market space. We see this as a huge differentiation for NXP and really a huge enabler for 5G on a global basis as well. From an operator's perspective, smaller size results in simplified installation costs. You're no longer rolling cranes out to the towers, but you can imagine a single installer carrying 1 to 2 units up a ladder at a single time. Reduced tower loading, which means you can put more equipment on the tower and reduce again site rental costs and improved tower utilization. And then on the OpEx front, lower rental cost size equals cost on these towers to the operators but also lower efficiency consumption, which leads to lower OpEx. And again, further accelerates the 5G mid-band deployment and the opportunity that NXP sees. So when we put the pieces together, we see a market that's growing. We see a market that's growing at a rapid pace. We see the 5G radio power market increasing at a 14% CAGR. But what's fundamental to this calculation is the realization that this market is growing not because more base stations are being deployed, but because the same number of base stations will be deployed in a more content-rich manner or a content-rich manner than in the past. So for the last 20 years, 1.5 million base stations per year on average are deployed. Our model in the future assumes the exact same scenario. But it assumes that more and more capacity solutions will be deployed by year versus coverage with the more content-rich systems, which enable higher data rates to the customers. And a better user experience will be deployed globally and that more 5G networks will turn on across the globe. NXP approaches this market from a strong leadership position today. We currently enjoy an RMS of 1.2 in this space. But from that high level, we expect to continue outgrowing the market at a rate of 1.1x, meaning our revenue CAGR will be at 15% for the next 3 years. And it's driven on technology leadership, our system expertise and last but really not least, our manufacturing scale. These are complicated products that we're creating for a pretty specialized market segment. And we've invested to create the scale to bring those products to market at the volumes that the industry needs. Final summary, this CAGR that we described both from a market and a revenue perspective is driven by more radios per base station, more RF power content per radio and an increased addressable opportunity for us to share the Board through the integration initiatives we've been driving. And that's why we're confident that the next few years in the 5G comms infrastructure space will be a growing area for NXP. Thank you.

So we're almost near the end. Let's open it up for the last few minutes of Q&A with Paul. Anyone have any questions about the RF power business at this point? Will here in front?

It's maybe a little bit off the run. Some years ago, there was a an idea that perhaps our power components would be adopted in non-comms end markets, in particular in industrial, heating and things like that. Has that not taken off? Or has it taken off but it's smaller? Or what -- maybe any update in that aspect of this technology would be helpful.

It's a good question. We have seen some our power products, growing in the industrial segment, growing through applications like industrial heating, drying, et cetera. There was a big talk about deployments in the cooking space. I say that, that deploy -- those business opportunities have been slower to develop than we previously forecast. We've seen the majority of that happening in industrial cooking applications today or restaurant environments, but nothing yet that has migrated into residential settings.

[ Wayne ] out there in corner.

Hiding behind the bull. Wondering if you could just talk a little bit about millimeter wave. You obviously have a leading position in sub-6 gigahertz, just your competitive position in millimeter wave. And then in terms of the forecast, just any perspective on your outlook for Millimeter wave deployments through '24.

Yes, yes. So to be fair, we saw an initial surge of millimeter wave a couple of years ago driven here in the U.S. However, today, what we've seen globally is more focused on the mid-band spectrum for coverage reasons than previously available, and a lot of that came through new auctions across the globe. We see millimeter wave continuing to be a strong element of 5G in the future, but it will probably start layering in, in the next 2 to 3 years versus broad mid-band deployments, which are happening in the next 1 to 2 years. Our position in millimeter wave is quite good. We're designed in at several key OEMs, and we're seeing constant steady-state volumes, I would say, being deployed. But we're not yet at the stage where the mid-band spectrum is built out and then the millimeter wave is needed to complement that and deliver massive amounts of data beyond what mid-band can produce. So I see this as really an extended -- development part of the extended development cycle of 5G.

Vivek?

So first, a clarification. I know you only discussed the RF part, but the rest of the comms infrastructure business is the assumption that it kind of just flattens out the next a few years because that's what the CAGRs. What exactly is in there? And why would it just stay flat? So that's part 1 of the question. And then part 2 is the GaN market more or less or equally competitive versus the LDMOS market as you see it?

So Vivek, why don't I take the first part of that question? So what's -- the other product portfolios inside of common infrastructure are our legacy digital networking business, and multi-core PowerPC products and then also our embedded secure car business like our ePassports, Access business, things like that. And you're correct. Our numbers do assume they stay roughly flattish.

The technology question is also interesting. We have products that span both gallium nitride and LDMOS. And we see strong growth in GaN today, particularly because the frequencies of 5G deployments continue to go up, right? We see GaN growth in the mid-band spectrum. We see GaN growth of 3.5 gigahertz. And all of the products that we're creating in those frequency ranges are GaN-based. But depending on which operators choose to deploy and what spectrum they use, what we see going forward in terms of technology mix is kind of open, right? We have solutions that delivered at all. And like I said, depending on which operators deploy, we'll ship what they saw. But GaN is definitely a strong growing market for us. Well, at higher frequencies, it enables higher efficiency. And so in higher frequencies, the difference between what can be achieved with silicon again is it grows. Lower frequencies, they're pretty similar. And silicon optimizes more mature, more reliable and more cost optimized. So again, it depends on which operator is doing what, when and how.

Any other questions? Harlan? Right here on the right. Harlan?

Harlan Sur with JPMorgan. We keep hearing more and more about the virtualization of the radio access network. So O-RAN, V-RAN, greenfield build-outs, potential brownfield build-outs, but also private networks. Other than the potential just SAM expansion because of the adoption of O-RAN and V-RAN, is there anything that NXP, your team, is doing to differentiate your products to take advantage of this trend?

Absolutely, absolutely. So if you think about the O-RAN players, these aren't your traditional OEMs. They don't have hundreds or thousands of engineers capable of creating high-power RF systems. So what we've done is really focused on ease of use. The integration activities we've undertaken make it fundamentally straightforward for new entrants to create these 5G radios, at least from an RF design perspective. Now I think that, that sets us up very nicely in the O-RAN space, and it actually enables new entrants to participate, where previously it was very difficult.

Anyone else? no? Well, with that, Paul, thank you very much. And it's my real pleasure to introduce Bill Betz, our new CFO. I've worked with Bill for as long as he's been at NXP, and it's been a real pleasure for those years.

Thank you, Jeff. Again, I'm Bill Betz, and I am the NXP CFO, and I'm just thrilled to be here in New York City. I grew up right across the river in New Jersey. And more importantly, as a team, we haven't seen each other over 2 years, and then thank you for you all being our supporters and our owners coming face-to-face. This means a lot to us. So thank you for that. With that, let's get right into the NXP financial value proposition. I'll try to keep it very simple, very easy to follow. Here's today's agenda that I plan to go through. We're going to start off with the NXP investment thesis, and Kurt showed that slide in the beginning. Then I'm going to try to summarize our growth areas or secular growth areas specific to NXP that our team covered for the last 4 hours. I'll then spend a couple of moments on recapping our financial progress since 2018. Then I will share, which I know you've been all patiently waiting for is the NXP model for the next 3 years and our commitments. I will also, Kurt hint it, I'll also provide a little bit more color about 2022, and then we'll wrap it up with our capital return policy. So again, our NXP investment thesis is very simple. It's very easy to follow. First, we're a market leader driving strong, profitable growth in everything we do. Second, we have a very disciplined and proven financial model that is resilient to the bottom line. And then third, we have a reliable capital return policy to return all excess free cash flow back to our owners. So let's talk about this first principle. It's about driving strong growth in the markets we lead into. Behind me, what you can see is a chart showing what we talked about today about the accelerated growth drivers. If we just look at that chart. In 2018, that portion of the business that we talked about for the last 4 hours was $1.6 billion, 17% of our business. That doubles by the end of this year in 2021 to $3 billion, representing 28% of our total revenue. And what you heard again for my colleagues, we're going to double that from $3 billion to $6 billion in 2024, and let me recap what those growth drivers are. Torsten talked about the leadership position in the radar system business that we have. Today, that is $600 million, growing to $1.1 billion in 2024 as a compound annual growth rate between 20% and 25%. Then if we talk about the auto processing, and Henri did a great job talking about the S32 platform, the future growth of this franchise here in this business. That business, Henri, is about $1.7 billion today going to $2.3 billion in 2024 and has a compound annual growth rate of between 10% and 12% over the horizon. Jens talked about electrification, battery management systems, e-motor control, the inverter part of that business. It's early. It's at $200 million today, and we are confident that business will be over $500 million in 2024 that has a compound annual growth rate of over 30% during that horizon. Ron shared with us the connected edge, the WiFi attach, the analog attach. He has over 25,000 customers. He focuses on the smart home, the smart factory, the smart devices. His business is $2.4 billion -- I'm sorry, $2.3 billion -- no, $2.4 billion today, and that business is going to over $3.3 billion in 2024, representing a compound annual growth rate of 9% to 14%. Then Rafael talked about ultra wideband. He talked about the ecosystem focused on the mobile phone, the car access, the Internet of Things. That is super early. This is the early innings just like the mobile wallet. That business today is $80 million in 2021, and it's going to grow over $400 million to 2024, and that represents a compound annual growth rate of over 80% during that horizon. And then lastly, what you just heard from Paul, he shared about the RF 5G infrastructure business, where today, it's $500 million, and we are confident that will get us to $800 million in 2024 with a compound annual growth rate of 15%. Now also on this chart, which we did not talk about at all today, it's the rest of the portfolio. This portfolio has relative high market share, high barriers of entry. Yes, some of it goes up, has higher growth rates than what we're showing here, some a little bit lower. But on average, if you just assume, that has a 5% compound annual growth rate over that horizon. You combine both those, you get to 8% to 12% at the total NXP level, and it's being driven by those accelerated growth drivers. Now this is a slide that you're all used to seeing. We share this slide every quarter, every year. This is how we report our revenue. It's important to note these are our growth franchises. And when we compare our growth franchisers to what we said 3 years ago, they are all increasing from a growth standpoint. So just think about it, you take auto, you take industrial IoT, you combine them. That's 72% of the total business. We expect that part of the business to grow 9% to 14%, 3-year CAGR. Now if we just look back. Auto, what we said 3 years ago, that business was going to grow 7% to 10%. It grew 7%. If we look at industrial IoT, we said that business will be 8% to 12%, it grew 10%. Now if we look at the mobile business, the mobile business represents 13% of our total revenues. If I look back 3 years ago, we said that would grow 4% to 6%, it grew 6%. We're now raising that based on what Rafael shared with you about UWB, the ecosystem, along with the attach rates continue in the mobile wallet, and that's now a growth rate of 8% to 10%. And lastly, in the common infrastructure business, 3 years ago, we said 0% to 2%, we were basically 0. Now with the investments we made in the RP business, in Paul's business, we expect the total common infrastructure business to be lifted and grow between 2% and 6%. Again, overall, this drives an 8% to 12% total NXP CAGR. And again, 3 years ago, Kurt mentioned this, we're basically -- it was, I think, from an actual standpoint by the end of the year, we would have grown 5.4%. So we're basically doubling it from where we were 3 years ago, and that's how confident we are with these accelerated growth drivers. Now quickly, I'm not going to go spend any time on this slide, the owners of this company know these numbers inside and how. Kurt talked about them in the beginning. But without going line by line, we are proud that we have and demonstrated a strong financial, proven, disciplined model. I've been part of that model for the last 8 years. I'm very proud of it. Good times and bad times. We know how -- we have our levers. We know what to go deliver to. And I'd also like to thank our NXP employees to get us where we are today as well as you as the owners and the supporters of NXP. So thank you for that. So now let's go to the 3-year model for the next 3 years. Okay. Talked about growth enough, 8% to 12% for the last 4 hours. If we look at gross margin, our new gross margin range is 55% to 58%. If you recall, 3 years ago, the high end was 57%, now it's 58%. That 58% is going to be driven by our new product introductions over the next several years. It won't happen tomorrow, it will take some time to get there. OpEx. We've been talking about this for the last year. We feel very comfortable with 23% OpEx, 16% R&D, 7% SG&A. Now we talked about, as we grow, we probably and we will have leverage fall through on the G&A side. But for simplicity, going through the horizon, 7% is a good way to model the number. Now let me talk about R&D. R&D is the lifeblood of this company. It's what drives the innovation, and what we spend today really doesn't impact our revenue for the next 3 years. It impacts it post 2024. Now we take that all together, that brings an operating margin of 32% to 36%. And again, this is above what we said 3 years ago of 31% to 34%. A couple of house cleaning items on the slide. Our cash tax rate at the moment, this is on current legislation, I think, I hope this is the worst case, 15% for 2022 and 18% for the next 2 years. Tax is very complex. As the governments around the world decide to figure out what is the final and what they put in law, we will follow that. We pay our fair share of taxes. Paying tax is not really a bad thing because that means we're making money. And we'll get back to you, on a quarterly basis, we hope to refine that number as we go forward. Noncontrolling interest. As you can see, just to remind everyone, this is related to our joint venture with TSMC. We have a joint venture called SSMC in Singapore, and we consolidate the full results to NXP. Net CapEx. As you can see, this is 6% to 8% over the cycle. This is higher than what we said 3 years ago. We said 5% to 6%. And in the last year, we said 7%. This is driven by the fact for us to grow at these higher levels of revenue, as you all know, 75% of our supply for back-end and test comes internally. This is where we're spending the money. Stock-based comp, you can see the numbers there. And then let me talk about the working capital metrics. We're very proud of these. I'm proud of these. I've been involved in weekly basis, making sure these are best-in-class. DSO of 30 days, DPO of 75 days and inventory at 95 days. We wish we can have that inventory today at 95 days, but we don't see it, as Kurt mentioned earlier in his -- one of the Q&A questions. So with that, our target is to drive free cash flow as a percentage of sales of 25%. That's what we want to drive to. We think that's a healthy level after we invest in the business and deliver to these set of numbers. Now let me share and maybe provide a little bit more color about 2022. For modeling thoughts, revenue, 2022 forecast near the high end of our model. That's what we're expecting. We expect our non-GAAP gross margin and OpEx in line to our long-term midranges. Again, other items, cash tax, we'll get back to you. We think we can do better. We'll keep you up to date on it. Now CapEx will be slightly higher than our 6% to 8% by a couple of percentage points. Non-GAAP free cash flow as a percentage of total sales will be below the target that we want to drive through in the long term. We believe this is temporarily. And in '23 and '24, we'll get it back where it needs to be based on these targets. And again, this feeds nicely. I'll talk about capital return. There's no change in our policy. So as mentioned, we have a very consistent with our capital allocation strategy for the past several years. Therefore, we decided to add a simple graph that shows 4 time periods: 2015, '18, '21 and '24. These blue bars behind me represent the cash that we return to our owners. The percentage above the bars represent the cumu cash that we return over our cumu cash flow percentage. And what you can see in 2021, since in 2015, we have returned over $14 billion to our owners. And as we look ahead with the 3-year financial commitments that we just provided, we expect to return another $10 billion to $13 billion to our owners. And this is roughly at 100% of our free cash flow. And then finally, we're very disciplined. And with our capital allocation strategy, and you could see our leverage ratio, that's very important to us. At times when it's above 2, we don't. When it's below 2, we provide that cash back to you all. So with that, let me close with the NXP investment thesis slide, and then we'll open up for Q&A. Again, as mentioned several times, our investment thesis is very simple. We're going to drive that strong growth above market, 8% to 12%. We're confident in it. I hope you are after 4 hours of listening from the team. We're going to continue to execute to our financial discipline model and drive that operating margin to be between 32% and 36%. And then lastly, as I mentioned, again, we're going to return all excess free cash flow back to our owners with a range of $10 billion to $13 billion over the next 3 years. We're very confident we can deliver these set of financial commitments, and I'd like to thank you all for owning NXP and supporting us. We are NXP. And with that, maybe I'll invite Kurt to come up and the whole MT to take questions about today's presentation.

Thanks, everyone. We're going to take some questions here for the next 15 minutes or so. Please feel free. Will, since you had your hand in the air first.

Very good messages around growth. Certainly, margins look good, too, but I want to focus on the growth for a minute. Not only good numbers but very strong messages around justification of that growth and new products more so than what we saw last time. So when we compare NXP's history, let's say the last couple of analyst days relative to what we're seeing today, and we see these new products driving this growth. Is this just better focused R&D, better market conditions? Or are there other things contributing to this, perhaps historical M&A where you maybe 1 plus 1 delivered more than 2? And then I do have a follow-up if I can.

Yes. Thanks, Will. Very clearly, this is a result of the tuning of the portfolio into this edge compute opportunity, which I described in the beginning. It really took a number of years. First step, Freescale NXP. I mean you've seen all the way today a combination of processing with surrounding components. We couldn't have done that without the combination of Freescale NXP. And then the addition of connectivity was kind of in the missing piece. Now having all of these pieces is not good enough. Now we have to enable customers. We had to get the tool chain ready, et cetera. So that took a couple of years. But yes, now it is a matter of the availability of an unrivaled portfolio, which puts us in that position to be very specific and very confident about the accelerated growth. That's really the point.

So the follow-up is there was -- in the capital allocation discussion, no mention of M&A, yet it's been really quite useful from a growth perspective. Is there anything else to consider relative to that trajectory for capital allocation?

Well, we definitely continue, and you heard it a little bit on the sidelines through a couple of the comments of my colleagues earlier today, to do tuck-in acquisitions because this is a dynamic world. I mean that completeness of the portfolio continues to need little additions, and I would especially name artificial intelligence algorithms, low-power compute. And in general, the software capability in the company is something which we need to continue and continue and continue to strengthen. There was actually a question earlier of monetizing software. It is an integral part of our value proposition. So on the tuck-in side, definitely, we continue in favor of that strength and differentiation of the portfolio. On anything else, Will, we are not here to speculate about that today.

Chris right over here.

A question about your capacity plans and how that's affecting you folks in the industry now. And can you say that going forward that the capacity for this plan is now available? And can you talk about the commitments that you've made and you've had to make in order to do that? What your suppliers are talking about to us is that now to get capacity, it requires firm commitments. And if you're making those commitments, structurally, how is that different than what it is in the past? And I guess one of the things that was a concern is when the next downturn happens, does that have more of effect on margins because you've had to make volume commitments?

Yes. So capacity availability currently is definitely a key revenue driver because, as I said on earnings, demand is outstripping supply capability. That has been the case for the past couple of quarters. It continues to be in Q4, and we actually expect it to continue through a good part, at least a good part of next year, which in itself is very healthy, by the way. I mean that's very positive. On the capacity side, and Bill talked about it earlier, the back-end test and assembly, 75%, 80% we do in-house. And some of the lift in CapEx is actually to enable what you were asking for. But it's gradual, and I think we just tune it to the wafers becoming available. I mean that's something which is very, very nicely under control. On the wafer side, you know our hybrid manufacturing strategy. Just short of 50% is in-house manufacturing, which we are optimizing. Most of the future growth is coming from foundry partners. And that's, I guess, where your question is coming to. The nature is changing towards much deeper partnerships, longer-term partnerships. So alignment with foundry partners for multiple year deals. We published this. And again, in earnings, we discussed about it. We currently have like $4.4 billion, I think, standing there as commitments, which is not just foundries. I mean that's overall, but it includes, of course, also wafers. I'm not worried about it at all. The $4.4 billion are for multiple years. I mean that's not just a number for next year. Secondly, we are balancing this very nicely with the same commitment from our customers, actually higher, which is the concept of NCNR orders. So a large part of our customer base is actually rushing all over us, offering NCNR orders. It's not like we are -- we have to ask them for it, but actually, they want to offer it like orders which are nonconsolable, nonreturnable for the full of next year, by the way, volume and price being fixed over each quarter. And that puts us in a good balance. So no, I'm absolutely not concerned about a downturn which would eventually have too much capacity and too little demand. I would rather say we work very hard, and that continues on a daily basis to make sure we get more capacity available for the enormously strong demand. And I hope you understood from today's presentation, a lot of the demand is secular in nature. It isn't cyclical. It is actually secular. And from that perspective, I think the bigger concern, if you will, is how can we make that capacity available to match the demand. It's not about overcommitting on a supply side.

Vivek, right here.

Actually, one question on gross margins and second on the operating leverage in the model. So on gross margins, one of your very microcontroller-exposed peers presented recently. So they had a lower growth rate than yours, but they targeted gross margins that are 10 points higher. So my question is, other than mix, why are you in this gross margin range when many other microcontroller peers, right, granted different mix are in such a different state of gross margin? What is it about your mix or customers or anything else that limits you to this gross margin range? And secondly, on the EBIT side. If I take the midpoint of your 32% to 36%, you're already there in Q4, right, or in that neighborhood. So given all the investments you're making and all the growth you're seeing in these new products and software and other areas and the market leadership, why isn't there more operating leverage in the model?

Well, we are here, Vivek, to give you a plan which we can back up with confidence. That never means there is not a likelihood we can outperform the plan. It doesn't say this is a conservative plan, but it says we are committed to the model which we are providing. And given that commitment, which we want to spit out, we are here with something which we feel is absolutely feasible and where we want to go. Now on the margin question. I guess I know which competitor you were speaking about. The portfolios are absolutely not comparable. And the difference was in your question is about growth. We are here with a portfolio which is geared for long-term growth. And that is very different to a long tail business, which is more commodity like -- I wouldn't say older, but more marginal kind of applications. We really believe that long-term growth of NXP is the biggest value enabler, which we can do for our owners, and that's actually where the focus in the portfolio is. And there, we feel that the margin guidance, which you just gave is about right. It's about meaningful. Now Bill, however, set the lift in the high end of the margin, the 58%, so the 57% now going to 58% is indeed a result of NPI. We are fully utilized today. So where we move the margin gradually up is new product introductions. Now that doesn't happen overnight. It's -- but all the businesses you saw today, they all have very clear targets that new products coming out will beat the old ones from a gross margin perspective. But that's our mechanism to grow gross margins. It's not about utilization anymore. Bill, I think you said it on operating leverage. The R&D, 16%, are the lifeline of what I just said. I mean there is no growth, and there is no leadership in these applications if you don't sufficiently invest. Now we do it in a very focused manner, but we believe in the mix of businesses we have between digital analog and RF, 16% is about the right number. And Bill carefully indicated, especially on the G&A side, there might be some operating leverage. But again, we give a number for 3 years, so we want to be confident and safe such that the 23% seem to make sense.

Chris on here.

Chris Rolland, Susquehanna. Embedded in your model, I wanted to know the expectations for pricing, where you think they can go from here? And then also movements to longer-term agreements, which is going on, I think, in auto specifically. Yes, I guess those 2 things and then also perhaps talk about this movement from -- in auto from Tier 1s to maybe move that much more direct and how this plays into pricing and LTAs.

Yes. So first of all, on the pricing, let's not be confused. The growth which we just projected, the 8% to 12%, again, which is actually doubling our former performance, that growth is not dependent on pricing. I mean most of the pricing adjustment is behind us, is done with the '21 number. Now the numbers we gave today are '21 to '24, so rising is kind of history on this. On the direct in auto, and in auto in general on the growth because I got some noise earlier in a few discussions here on the floor, we don't need the SAAR for our order growth. It is really important to understand what we talked about, and I think Jens and Torsten and Henri were very clear, this is about content growth and it's about share gains. We don't have to lean on the SAAR, and we are honestly speaking, in this environment, not in a position to project the SAAR. I mean there is all sorts of numbers out there. We walked away from this. Our 9% to 14% is our performance from a content and share gain perspective. The SAAR is somewhere underneath, but that's not moving the needle. On the more direct, this is much more about partnerships and strategic alignment. So we are in much, much more direct contact with the OEMs both when it's about transparency for the supply chain to understand what's the future requirements from a supply perspective for specific new models which are coming up, et cetera. Enormously important and part of this change, which I think Ross was asking earlier before and the learning in the industry. But that increasingly moves into innovation partnerships because having that partnership with the OEMs in automotive has now opened the door to do much more together when it goes into innovation, which is future business growth. That does not mean a direct business relationship from a ship-to perspective between us and the OEMs. I mean we still have actually distributors, CEMs, ODMs, Tier 1 customers, they are all between in all sorts of configurations. So the aspiration is not to enter into a direct business relationship from a ship-to perspective with OEMs but significantly increase the intimacy and the partnership and innovation in business creation, which I think is a fabulous positive outcome out of the current situation. I mean it's a step function. It's not like a little bit more than in the past. I would call this a huge step function, which I think for this massive auto business in this company, let's not forget, it's half of NXP is automotive. It's a massive move in partnership, customer loyalty with where the business really comes from because, I mean, those people who are building the cars, they need the semiconductors ultimately. So we consider this as a very, very positive move.

So we have time for one more question before we go to closing remarks. Ross?

So probably perfectly suited to be the last question. You talked a lot about the sexy growth areas of the business, but you also have your core business, your high RMS, and I think you talked about that growing 5% CAGR. If you look over the last couple of years since your last analyst meeting, it's been closer to flat. Could you just walk us through any assumptions you have in that? Is it as simple as, hey, third parties say the market is going to grow 5%, and so you do, too? Or will that market benefit and change to a more pricing-friendly market? There has to be some dynamics to go from the flat to the up 5%. So can you just walk us through your thought process in that roughly $9 billion target?

Well, I mean, it's a mix of many things, right? What is important is that in all of these areas, we have typically very large market shares. So we have a significant exposure. Now the bigger part, obviously, is in automotive and industrial since this is 3/4 of the company. And I would just say that part of the market we are exposed to has accelerated anyhow going forward. So Ross, it's just a function of this market going faster, and we are associated with it. And given our large share position, we have a significant exposure to this and benefit from it in a more significant way. On the pricing side, I just gave the answer here. Consider the pricing more behind us than ahead of us. So this growth, and that applies then to everything, so to the full 8% to 12%, is actually relatively clean off pricing, which makes it, I think, very strong and very, very clean. Jeff, I think from a timing perspective, we got to the end. And first of all, I want to thank all of you actually for being here, for being here physically live and in the room, because it makes such a big, big difference to me. And I know it makes a big difference to the team. It's so much better than talking to a screen. Secondly, I really hope that the day was insightful, that we could help you understand much better why we have that strong confidence of doubling our profitable growth of NXP for the period to come. I mean this is a needle-moving event for us. And that's why I was very happy about the question, what is it, and I think, Bill, you were asking for it, what makes it different to the history. The difference is that the portfolio which we have been carefully architecting, the customer relations which we have been building is now playing out. Many of these things, and Bill, you said it, has been in the works for a longer period of time. Semiconductor's business is not from today to tomorrow. We are building ecosystems that takes time. But once we have them, it is very sticky. And that is what NXP stands for, a high commitment to significant above-market growth for the time to come with robust profitability and I believe absolutely superior return of free excess cash to our owners. I want to thank you for your time today, for your interest and confidence in NXP. I want to thank the team for doing a fantastic job representing 30,000 employees of NXP. I think you did very well. We are all proud of our teams, and I look forward to actually go and see you hopefully more in person going forward. Thank you very much. Thank you.