Good morning, ladies and gentlemen, and welcome to the Aemos Semiconductor SE Analyst Conference regarding the Fiscal Year twenty twenty. At this time, all participants have been placed on a listen only mode. The floor will be opened for questions following the presentation. Let me now turn the floor over to your host, Doctor. Arne Schneider, CEO.
Good morning, ladies and gentlemen. I would like to welcome you to our fiscal year twenty twenty analyst conference and earnings call. I'm very happy to present to you the highlights and preliminary financial results of a very special and challenging year. As usual, you have the opportunity to ask questions at the end of my presentation. At the beginning, I would like to present a short overview of the Elmos Group, especially for those participants who are new to our company shown on Page two of the presentation available on our website.
Elmos is one of the world's very experienced semiconductor companies for the automotive industries and on average six Elmos ICs are installed in every new car. We develop, manufacture and distribute mixed signal ICs for more than thirty five years. Our routes and headquarter are located in Dortmund, but we have continuously expanded our international presence. With 16 locations around the globe, we serve all regions and are always close to our customers. Seven R and D centers worldwide and more than three fifty experienced engineers turn our deep understanding of our customers' needs and future trends into beautiful microelectronics.
We have implemented a successful and flexible fab light manufacturing strategy, processing wafers in house in our own fab in Dortmund and externally at our foundry partners. We organize ourselves in six main product segments, which all support the global megatrends and offer very attractive growth potential. Our sales are mainly attributed to Europe and Asia where the majority of our customers' factories are located because we show you a distribution by shipping locations. But our automotive ICs are used in cars all over the world and are present in all the well known brands. In 2020, we have been impacted by corona as everybody else, resulting in lower sales and profit.
But despite the global pandemic, we have further intensified our R and D activities with a record spending of almost €48,000,000 last year. Elmo is a crisis resistant company, thanks to our strong balance sheet and a very solid financial position. With an attractive dividend and major share buyback offer, we could further increase shareholder value in 2020 when many other automotive suppliers were heavily struggling to finance that business. Amos products provide innovative solutions for automotive megatrends with cutting edge ICs for ADAS, auto autonomous driving, safety, comfort, user experience like gesture control and powertrain electrification, and Page three gives an illustration. Almos has a leading role and number one positions in important automotive application fields.
Of course, I will not read the entire product catalog now, but let me just give three examples. We are global leaders in semiconductors for ultrasonic distance measurement. Our new generation of ultrasonic semiconductors processes signals considerably faster and in higher resolution than previously possible, delivering an additional gain in traffic safety. Applications are also promising high potential for growth. We offer OEMs a large extent of design freedom as well as cost advantages over conventional solutions because we save an ECU and thus system cost.
AMOS applications for the optimized configuration of front grille and air flaps are convincing solutions, especially for electric vehicles, providing a smart and efficient power and battery management. As I mentioned before, despite the significant effects of the corona pandemic, we have not reduced the R and D activities last year, so many more and exciting products are to come. These efforts combined with the IC market growth expectations and increasing IC content per vehicle provide a very reasonable basis for future growth of our company. Let me now move to some of the highlights of the last year on Page four and five of our investor presentation. The past financial year was a special year for our company.
We had to manage the global crisis, but at the same time, we were able to successfully continue with our strategic course and consistently exploit new opportunities. At Amos, we have recognized the seriousness of the COVID-nineteen pandemic early on. For the protection of our employees and to safeguard our business operations, we have implemented the first corona measures at the January 2020 already. As the COVID-nineteen pandemic worsened, we also intensified protective and cost saving measures, including short term work in our Dogmont fab, voluntary salary concessions of the management board, senior executives and employees, personnel reductions and further cost cuts.
Finally, we could suspend
the short term work program from November 2020 onwards in the light of increasing orders from our customers. We also achieved important strategic milestones during the last year. With Samsung, we found a prominent new partner and signed a foundry corporation agreement for the manufacturing of ICs on wafer level for automotive application in Samsung's state of the art facilities. This is a consequent next step in our fab light manufacturing strategy position and successfully completed a public share buyback offer for around 8% of own shares, now holding roughly 10% in total. With the conversion into European Stock Corporation, as of 07/01/2020, we have successfully completed a step towards the international and future proof positioning of Amos.
And towards the end of the year, acquired the Dortmund based software engineering provider Online Engineering, which
will
help us to offer our customers even more comprehensive system solutions in the future. We also had, as we had planned a long time ago, the CEO handover between Tony Mendel and myself. During his fifteen year term as the CEO of Elmos, Doctor. Mendel played a major role in shaping the successful development and the strategic realignment of the company. We at Elmos are all very thankful for his outstanding commitment and his great achievement for our company.
The global automotive market has been hit very hard by the corona crisis last year, which is shown on Page six of the presentation. Overall car sales dropped 16% year on year and with a decline of minus 22%, Europe has been impacted the most of all regions. In China, the market could recover very quickly, posting strong increases, especially in Q4 of last year. And also other regions could recover from the low point of the crisis, however, somewhat later and less positive than the Chinese market. You all know that this V shape recovery is currently leading to a very dynamic growth and all sorts of challenges, but more of that later.
Let's now have a look at our financial results, starting with the sales and gross margin development on Slide seven. Just as a clarification, the previous year figures are based on our continued semiconductor business only as we sold SMI in Q3 twenty nineteen. In fiscal year twenty twenty, sales decreased by 14.9% to €232,600,000 due to the COVID-nineteen pandemic. However, our 2020 sales finished at the upper end of the guidance range, which was between $227,000,000 and €233,000,000 And please also note that after our turning point in Q3 last year, Q4 showed 68 sequential growth. The decrease in gross margin is the result of lower fixed cost absorption rates from the underutilization in production.
Especially in Q3, demand was significantly lower than what is needed for an efficient and profitable production. As expected, we benefited from the recovery of the automotive market and stronger IC demand in the last quarter of the year. Accordingly, the Q4 twenty twenty sales increased to €68,700,000 which was the highest quarterly sales level in 2020. Turning to Page eight. At €8,700,000 the EBIT in fiscal year twenty twenty ended also at the upper end of the guidance range.
It was heavily impacted by the sales decrease and lower fixed cost absorption. The implemented countermeasures such as short term work, layoffs, voluntary salary cuts and other cost savings could not fully recover the negative impact of the lower top line, but prevented a further deterioration of our profitability. As volumes increased at the end of Q3, we were able to achieve a very fast turnaround in Q4 with an EBIT margin approaching pre crisis performance levels already despite the fact, by the way, that October was still impacted by short term work. Let us now have a look at some of the other KPIs on Pages nine, ten and eleven. In the last year, we were very restrictive with investments in new equipment as we did not need additional capacity due to the lower demand.
Therefore, CapEx was significantly lower than in the previous year totaling to only €18,800,000 or 8.1% of sales. As I mentioned, we invested a record amount of almost €48,000,000 in new products in 2020, which underlines our long term perspective and our long term ambitions. Our cash flow from operations declined year over year mainly due to the lower income. But despite the overall challenging business development with declining sales and lower income levels, we still could achieve a positive adjusted free cash flow in 2020. At the first look, this looks, by the way, significantly less than last year, but please keep in mind that the free cash flow in 2019 shows the cash inflow from the FMI transaction, so this is not really comparable.
We have clearly shown, Elmos is a crisis proof company, supported by a very solid financial foundation, as you can see on Page 11. The further increase of the equity ratio to 78% at the end of the year 2020 underlines the financial solidity of Amos. Total equity at year end was €310,000,000 The dividend of €9,000,000 and the 2020 share buyback about €27,000,000 is of course reflected. And these two topics are also reflected on the cash side. Ladies and gentlemen, despite the massive impact of the global pandemic, Elmo's equity and financial base is stronger than ever.
We have successfully managed the 2020 crisis year and are now in a very good shape. At the end of my presentation on Page 12, I would like to give you an outlook for the current quarter. The beginning of the New Year is characterized by a very high demand for semiconductors, not only for automotive applications. Therefore, our main focus is to manage the available capacities and to secure our deliveries to our customer. The automotive market is expected to grow by 14% based on the low level of 2020.
However, the further course of the pandemic, ongoing lockdowns and their impact on the global economic development and on the automotive demand cannot be precisely predicted at the moment. Our forecast stability is also significantly affected by the current allocation within the IC market. Some cars may not be built, some components may not be available. Currently, things are well, but we do not know what the future holds. Therefore, and we provide a comparative forecast for the full year 2020, and we do that for regulatory reasons.
So our and maybe also your focus should be on the Q1 guidance. We have started the New Year very positively with a substantial growth momentum. In the first quarter, we expect sales to reach €76,000,000 plus or minus €3,000,000 The Q1 EBIT margin is expected at 14.5% midpoint plus or minus 1.5 percentage points. Ladies and gentlemen, as I said at the beginning of my presentation, 2020 was a very special year and the coming months will also be challenging, but also very exciting. Amos is well prepared and perfectly positioned to benefit from the market recovery and the long term trends within our industry.
We have the perfect setup composed of innovative products, a very strong financial position and highly motivated and very skilled and experienced employees. This is a great recipe for long term success. That is why the Management Board has decided to raise our midterm EBIT margin goal from 15% to 17%. Please let me repeat, this is our midterm target, so not immediately for 2021. But we strive to reach it in the midterm and we are pretty confident that we will.
Before the crisis, we have already managed to achieve an EBIT margin of 15%. So we are confident that we will be able to further increase our profitability in the coming years. We have the right setup, a good product pipeline, combined with strong financial structure to finance our future growth. And we are all very determined and highly motivated to continue our successful path. Thank you very much.
I'm opening the floor for questions.
And the first question comes from Johannes Reiss from Ipohs Capital. Your line is open.
Yes, good morning. I think you can hear me now.
Hello? Yes, yes, yes, I can hear
Okay, yes, yes. Good morning. Yes, what a difference a quarter makes, if you look to Q3 back. Maybe a couple of questions. First, design wins.
Because you have this very, very long, long design in phase, only a feeling maybe as a direction for the mid- to longer term. How had design wins developed over the year compared to the year four? How much had been influenced even by the pandemic? That's the first question.
Well, we had and this was a little bit against my expectations, a very good design win year 2020. I thought that with the travel restrictions and everything, it's going to be hard. But in the end, I believe our strong product portfolio prevailed, and we ended with a very good number. So this is something we are actually very happy about because it proves that it's not just traveling and being at our customers that helps, but it's also products and virtually meeting that somehow also does the job to a very, very good level. We also started well into the New Year, but a month too early.
It's clear. Next question, that's a big, big elephant everywhere in the room at semiconductor conference calls at the moment, especially also in the auto sector. You also, in some regard, discussed it a little bit before. What is maybe the right view on the sector, what is maybe overbooking in this boom because of the shortage we have in the sector on semis? How much how you see the inventories at your customers and in the channel?
And do you share the opinion of MELEXIS that the second half year will be weaker or more in the camp of Infineon who is more optimistic? So what's your feeling despite you have also not 100% view, but only from the hard facts you see out of maybe how much the inventories look and how much is structural even that maybe some of the growth is and the shortage in areas which are now really booming because of change in the market like EV, electrical vehicles, ePretia vehicles and new lightings and things like this, maybe new features which are now in much more cars. And therefore, the demand is much higher, and so the market is not prepared for this.
Well, fundamentally, I think we have a good momentum with our products. So even if we would not grow as a number of cars this year, and of course, this won't happen, We will still grow at Almos and also in a nice way. Of course, we will grow much more because the number of cars will rebound. To what number exactly, we cannot tell. If we turn to IHS, this will be some 84,000,000 or €85,000,000 light vehicles.
You can deduct something for the chip shortage. You can add something for coming out of the corona crisis. We cannot be sure about that. The competitor said their orders are more in line with 95,000,000 cars as compared to the IH at 85,000,000, which suggests overstocking. On the other hand, I think we went into the year with a relatively low stock level at some of our customers through the value chain.
So maybe it's just restocking and not overstocking. Who can tell? We would be overly optimistic in our forecasting skills if I could tell you exactly where Q4 or even Q3 will come out. This is with so much moving pieces, really hard to tell. Today, we are very optimistic because our order situation is super bright.
We try to smooth out orders over the year to kind of put the butter evenly on the bread and not only have a very much front loaded year. This is our aim, and let's hope that we are pretty successful with that.
And that's the reason why I don't give an exact number of book to bill. Maybe you can only give us a direction. Think the book to bill at Infineon was 1.6 in automotive space. Is that a number which is maybe you would say it's not unusual in these times?
Yes, this is I mean, we would consider that number probably be a little above one. I believe we said we are substantially above one. So our book to bill reflects our good mood.
It's really high in other words, not only 1.1 or 1.2, it's higher.
More I wouldn't comment because then we're kind of ending up as a statistic of our book to bill. But significantly above one. And I mean, would, of course, get that if you see our guidance for Q1. You know the numbers for Q4 last year. So
Next question, how much you are limited in growth by capacity? How much is the growth can supported by Dockman? How much you really get capacity at your foundry partners? Because I think maybe you are more in the notes, which are really tight. I heard the tightest notes are the notes between '28, 40 and above, so not the high end.
And also, signed a new foundry partner with Samsung. Did you get enough capacity to really fulfill all your needs?
Well, whole industry is struggling and discussing because we all go to the same facilities in mostly in Southeast Asia. And as almost, we, of course, load our own fab to the maximum extent and if we can below the maximum, if that is possible. But then it is, of course, also suppliers in assembly for wafers where we have to rely on. I believe currently, the auto industry as a whole finds itself in a situation where there's a lot of demand from the home office and lockdown based electronics that somehow partially tries to crowd out the automotive chips. And then there are counterreactions.
You have read in the newspapers that the German Minister, Eichtmeyer, wrote to the Taiwanese that also has to get a priority. And so there are a lot of moving things right now and a lot of struggle to get capacity. We are, of course, also part of that struggle. So to claim that things are easy right now would be wrong. But I believe we are holding up.
We are serving our customers well. We are not the reason that there are line downs at the OEM. Let's knock on wood that, that stays so forever. But we are yes, we are, of course, struggling like everyone else, but I believe we are holding up reasonably well.
Last question from my side to give the line free. How much the growth in this year is driven by maybe the ramp up of really new growth products or maybe the ramp up of products which have maybe started last year and now get really volume? So for some structural internal AMOS growth in some regard.
Well, we are looking at pretty nice structural internal AMOS growth, but of course, the rebound in the number of cars also helps. I mean, it would be wrong to say coming from 70 something to maybe 85 or so that, that doesn't help. Of course, it helps. But we had very nice product and very nice momentum. We have new ultrasonic generation ramping.
I mean, it's pretty broad actually. We have a list of ramp up projects. I believe it goes to 15 or 20 that we monitor just to ensure the ramp ups are smooth. So we also you learn from that, we also actively monitor our ramp ups because ramp ups are special situations for products, and you need to take extra care that things are happening in the way it is planned.
Okay, super. Sounds good. Thanks a lot, and good luck for the year. And you have a very, very, very good maybe last comment. With 10% of your shares, indirectly, you have now I think, if I'm not wrong, €110,000,000 in liquid assets.
That's not bad. Our
financial situation is okay.
The next question comes from Stefan Hodin from ODDO. I
still have a few questions, either Esther or Johannes. So the first one would be about your manufacturing strategy. You've been talking about the Samsung deal that you've made. What is, in your view, the target in terms of insourcing, outsourcing for manufacturing in light of your new 17% EBIT margin long term target? So that's the first question.
Second question is about the R and D. Where should we think about the right level for R and D for the next year because it has come up pretty significantly as a percentage of sales. So I know sales were down, but still the level was still pretty high. And so what should we expect going forward? And some of your competitors and maybe sometimes bigger like to present themselves and say, explain how much of their sales is for green, how much for their sales is for ADAS.
And so they give a kind of rough image of what they are doing. So can you play that game and maybe tell us what is the size of your ADASGreen sales as a turnover in the turnover?
Thank you very much. Thank you, Stephane. So on your first question of satellite strategy, we moved new technologies with the Samsung agreement. That is good, though there will be no serious production kind of in the very short term in very high numbers. So this will ramp, of course, over the years.
We have a set of products that is in development now and that is coming out all according to plan and very nicely. So it's a big strategic advancement for us. I wouldn't say this is the only driver of our 710% margin goal. There are lot of more drivers behind it. This is not kind of linked to that single event that we tell you about the things now at the same time.
We will continue to load Dortmund to 100%. We believe this is the best and the most clever strategy to keep our own fab fully loaded, thereby very cost efficient and to have the rest on the outside. Of course, as we grow the share of internal production, which we do not substantially increase in terms of an absolute number, will, over the years, a little bit decrease because with growth, we need more wafers and it's more or fixed amount that we get out of Dortmund. And we squeeze out a little bit more maybe each year, but it's getting harder and harder. On your second question, the R and D, yes, had quite a high it was a record.
Last year, we built up the Dusseldorf R and D team. We built up other resources in R and D in the previous years. I think we will probably have a year or two or three, let's see how it develops, where R and D is a little bit more flattish. So we do not plan to offer a news that to open a new site in the kind of immediate future. So I would not expect that the R and D line is a straight line that can be extrapolated in the future.
It will be a little flatter.
In absolute value, right?
Yes, in absolute value. I mean, may decrease a little, it may increase a little. That is also, of course, an effect of capitalization, which is very hard to predict. But we do not plan really significant adding of resources this year. So it's going to be a flatter line overall.
Looking to the green and ADAS, we are not going to do the same as others do and have revenue shares by product. But I believe we have a very substantial exposure to the trends. The ultrasonic portfolio is a key part of the more and more autonomous driving, and it's a good share of our business. Our sensors help in many ways, but also in ways, I believe, some two, three or four quarters ago, we had a little discussion around it that we use our pressure sensors for thermal runaway detection in electric batteries, which I believe would be in the green category if you want to. Also many other products that we do for the EVs would probably be in the green category.
In general, I believe the microelectronics helped a lot for the car to become greener. We had a kind of back on the envelope calculation, what CO2 do we actually use to produce our semiconductors and how much CO2 is saved by semiconductors. And the CO2 that is saved by semiconductors and also our semiconductors is a multiple of the CO2 that we need to produce our products. So overall, we consider ourselves a very sustainable and if you want to, yes, green company.
The next question comes from Malte Chauman, Warburg Research.
With respect to the CapEx required investments, I mean, obviously, you had lower investments last year during this environment. But should we think about the return to kind of similar investment levels, which are pretty high seen in 2018, 2019 owing to the expected future growth?
Well, CapEx is very much correlated to our general mood, which is then very much correlated to growth. And I would see that your statement similar levels that we've seen in the past are possible this year is not wrong.
Yes. Okay. And in that respect, maybe some more color on the outsourcing in the back end, which was historically more or not outsourced. So where are you in the process? And when will the next milestones be reached?
Yes, we are it is one of the key strategic initiatives going forward to also achieve the equivalent of a fab life concept in the back end. We are I mean, we were a little bit slower in pushing for it during the last year due to corona. Travel was a little bit restricted. And also, we had less need. This year will be a bigger push, and I believe next year, we will have markedly increasing share.
So it's in a way as planned. We prepare, we execute and then with all the qualifications, with all the customer agreements that we need, this will start to run.
Okay. And then on the sales, in your presentation, I think there were a number like 85% automotive, 15% industrial. What is this on non automotive and industrial? I would have assumed slightly less favorable ratios, more automotive after the sale of SMI. So did that ratio increase more substantially last year or was that just kind of a coincidence or just not perceptual I in earlier
mean, SMI also had an auto part and it was small. So if you look very, very closely, you will actually find an SMI effect, but it's not that huge actually.
Yes, sure. Okay. So more or the same as in all the other years basically.
Yes. We also some I mean, this is just minor effect. But we also had some of the non auto sales to be a little bit more stable last year than the auto sales. So this also contributed then again a little bit. So yes, that's the results overall.
Anything on the horizon that could change that ratio in the near to midterm, anything like new interesting designs or design teams that could be acquired, something in that respect?
Well, nothing that I would be aware of. The smallest changes will could just come out of the portfolio, but a big change would have to be inorganic, and this is not on the horizon.
The
next question comes from Robert Sanders, Deutsche Bank.
Yes. Hi. Good day to you. I have a few questions, although Johannes did ask a lot of mine at the beginning. Thanks, Johannes.
So my first question is if you think about line stops, I know you're not contributing to those line stops, but it does seem like both MCU and some specific sensors are to blame. So given that most of these sensors are on 200 millimeter and car companies are now asking for higher inventory stocks, do you think the chip shortage can actually realistically be over by year end? And I have a few follow ups. Thanks.
I mean, how much stock you feel fine with? You can theoretically have very, very high stocks and you would need time to build it. But I wouldn't if you haven't reached your stock level that you want in the end, I wouldn't say that is a real shortage. The real shortage is when there's a line down. This is the essence of the shortage.
And I think we should come out of this line down situation somewhat in the first half, if not earlier.
So these rocket lots that the foundries are doing, you think can basically solve the issue quite quickly?
Okay.
So in terms of the wafer pricing from foundry is clearly going up. I assume you're able to pass on the higher cost foundry wafers to your customers? And in the context of higher pricing, how long can you lock in higher pricing? I mean, Infineon's increasing some products by 20% in 2021. So presumably, you can, given the tightness in the industry and your allocation for some products, surely there's an opportunity to increase prices and lock in prices for longer.
Well, it is too early to really comment on that. You mentioned, yes, with our suppliers, there are demands higher prices. With some, we haven't discussed what it will finally be. So is way too early to comment how this whole price change, both on our customer side as well as on our supplier side in the end turns out. So we're in the middle of that dynamic.
I really cannot guide you where it ends because I don't know.
But the current month and next month is the main season for price agreements, right?
Well, we would usually have these finished by the end of the year, but we are living in the allocation now. So what will happen will also depend how the allocation continues. Okay.
And just related to this rather interesting story out of the EU, I know you are moving in a more fab light direction, but I mean it does look like the EU wants the automotive supply chain to be derisked from Asia. So how do you is that not a risk to you guys if your competitors, some of which are in Europe, start to build up production in Europe while you are outsourcing to Asia? Don't you think that's a potential issue for your ultimate customers, lot of them being European based car companies?
We have a very global customer base. So and we will not differentiate the wafer source by the end customer. Most of our products go in every well known brand. So it would be very hard to kind of secure wafers that then are transferred to a Tier one or even through multiple stages in the value chain and to have that linked to the OEM, where the OEM has kind of maybe its main production sites or maybe its headquarters. I think we are having a very good setup with the partners that we do have and our own fab here in Dortmund.
So I wouldn't see that there's any strategic risk in that.
Got it. Just last question would just be on inventory. I think a lot of products in automotive are on consignment. I'm not sure how much are for you. But you know, what is it based on your historic experience of looking how the behavior is happening as these customers pull from consignment, what is your level of worry on on double ordering and triple ordering based on what you're seeing?
Because, I mean, some of, like, X FAB is just saying the booking number is a bit irrelevant because it's it's almost kind of an automated, you know, ERP or s supply chain management thing that is leading to a lot of these bookings, which could just be the result of Tier 1s hoarding. So what is your assessment of the inventory level at Tier 1s and OEMs?
Well, we do think that currently, whether some chips are very short and some are medium short or some are in halfway okay availability, that there is, of course, a tendency to play it safe. On the other hand, we try to keep the situation at our customers also a little bit in check and try to smooth things out. So anyone who would now come and say, I need 30% extra share for the next quarter, we would, of course, ask questions because it's a difficult time for such extra demand. We do not have, of course, full transparency of what happens to the whole value chain. Where we do see in our consignment stocks, we wouldn't see this extra holding.
These are at very reasonable levels. People take out at the run rate that they really need. Stocks are not too high. These are just for operational needs. Overall, through the value chain, it's hard to tell.
Okay. Thanks a lot. Thank you.
The next question comes from Angie Kulwitz, Bergenstein. Good morning. Just one question. Is Almot planning to pay a dividend for 2020?
Well, you've seen the year 2020, which was not exceptional, but you've also seen the excellent financial condition that the company is in. So I probably wouldn't ask for an increasing dividend, that we pay a dividend, think it is likely. And we will take all factors into account and let's see what comes out of it. But I'm not negative on dividend payments. Thank you.
And there's one follow-up question from Johannes Ruiz.
Yes. Maybe a follow on question to previous questions asked especially by ObsEnders. Can you give us maybe an overview how much of the demand is coming from OEMs and how much is going in distribution? How much this has changed? Therefore, is distribution normally is jumping harder up and down?
Is it the same? And has there unusual increase of sale?
Well, we have as kind of a pure demand driver distribution that's not just there for logistical purposes, but kind of own demand, it's a pretty small share with us. So that statistic may not lead to anything really fundamental. We what we do find is if we look around the world that, of course, China is very strong, which is in line with car sales, in line with expectations. This is what we can distill out. We also see rebounds totally across the board.
So all other markets are also strong, but not kind of in that super strong. So we do see that the distributors are passing on and doing their job well, but there is no kind of hoarding of parts or so that we would see.
And to the regions, U. S. Is still quite small with 2%, but in the past you mentioned you are getting traction with your new teams, installed, therefore could U. See a stronger growth going forward maybe next year or so because given the long design impact, and so forth, we will see maybe even some impact on the sales sooner or later from the success this new team had there.
Yes. So this is not really correlated. I mean, our internal reporting where we think more about where is the design win, where are the relevant people that you talk to, to get the chip into the car, of course, The U. S. Is a lot stronger.
But The U. S. Tier 1s heavily rely on Asian electronic manufacturing services to put the chips on boards. So a lot of the ICs that you see ending up in The U. S.
Had a little stint in Asia, which may be our shipping address. And we report by shipping address because we cannot track them to the final destination and the final customer. So if you tear down a U. S. Car, you'll still find a lot of Airbus ships.
Okay. Finally, we are most close to a peer, Alexis, talk about roughly 13 ships per car. You mentioned six. And Melexis is expecting a mid or longer term that could move to 20. Is it also maybe comparable to you that you see that your number of semiconductors at average per car could increase maybe in the same range going forward?
Well, were at 5%. We're now at six You do see the trend there. So yes, we think that, that goes up. 20,000,000 sounds like a long term plan, but I mean, this is all possible. This is achievable within our market without straying to foreign NAND.
So I believe we do have a solid base for our growth. The number is a good illustration for that, but we don't give a number like that. We'll be at X in some years and at Y two years later and then some years later even higher. We do think this trajectory is pointing in the right direction and indicating good growth.
Super. You talked about the 'twenty, I thought maybe percentage wise, you could go from six to 10 or so. It's But frankly, even
a question where the long term ends. We do see opportunities. And it's also a little bit a question of portfolio composition. So for the little cheaper chips, you reach a higher number quicker. If you do a very big airbag chip for a lot of money, that adds little to the average number but a lot to revenue.
So we are more in the end, we are more revenue focused, but of course, the number of chips is really a nice illustration.
And also there's one follow-up question from Robert Sanders.
Hi. So just one other question was this idea that General Motors puts out that Semicol should hold twelve months of inventory. Can you just run through like the different products in automotive semis? What products you can actually hold as inventory even theoretically? Or some are there some that for quality reasons or change reasons you actually would never hold twelve months of stock for?
Because I think Melexis is a little bit different because they have a lot of products that are kind of non perishable and there's not a lot of change issues for them.
Yes, but this is the same with us. I mean, in your ramp up, you will not hold I mean, you cannot, you will not have twelve months. In your ramp down, the twelve months will be eaten up at the end. But in the middle of the life cycle, yes, theoretically, you could do that. This adds a lot to working capital.
So I mean, in the overall scheme of things for an OEM, this may all may seem small for us. This would be very relevant and we would have to find arrangements. But in terms of the physics or the engineering, you can have chips for twelve months. That's not a limit.
Okay. So the only mitigant then, obviously, your working capital would short term go negative, but you would get you would obviously want more higher pricing in response. That's the only way that would ever work.
Yes. I mean, you can't find these solutions. It has to be a viable one, of course, for all parties.
Okay. Thanks.
There are no more questions at this point. So back to you Mr. Schneider.
So thank you very much for your participation and your interest. I would like to remind you that we will publish our final results and our annual report on March 17. The conference call for the Q1 result is scheduled for May 6. Finally, I would like to wish you all the best in these challenging times. Goodbye from Dortmund.
Take care, stay healthy and stay confident. Thank you.