Good afternoon, and welcome to Diodes Incorporated Fourth Quarter and Full Year 2019 Financial Results Conference Call. At this time, all participants are in a listen-only mode. At the conclusion of today's conference call, instructions will be given for the question and answer session. If anyone needs assistance at any time during the conference call, please press the star key followed by the zero on your touch tone phone. As a reminder, this conference call is being recorded today, Tuesday, February 11, 2020. I would now like to turn the call over to Leanne Sievers of Shelton Group Investor Relations. Leanne, please go ahead.
Good afternoon, and welcome to Diodes Fourth Quarter in 2019 Financial Results Conference Call. I'm Leanne Sievers, President of Shelton Group, Diodes investor relations firm. Joining us today are Diodes President and CEO, Dr. Keh-Shew Lu; Chief Financial Officer, Brett Whitmire; Vice President of Worldwide Sales and Marketing, Emily Yang; and Director of Investor Relations, Laura Mehrl. Before I turn the call over to Dr. Lu, I'd like to remind our listeners that the results announced today are preliminary as they are subject to the company finalizing its closing procedures and customary quarterly review by the company's independent registered public accounting firm. As such, these results are unaudited and subject to revision until the company files its Form 10-K for its fiscal year 2019.
Management's prepared remarks contain forward-looking statements which are subject to risks and uncertainties, and management may make additional forward-looking statements in response to your questions. The company claims the protection of the Safe Harbor for forward-looking statements that is contained in the Private Securities Litigation Reform Act of 1995. Actual results may differ from those discussed today, and therefore, we refer you to a more detailed discussion of the risks and uncertainties in the company's filings with the Securities and Exchange Commission, including Forms 10-K and 10-Q. Any projections as this company's future performance represent management's estimates as of today, February 11, 2020. Diodes assumes no obligation to update these projections in the future, as market conditions may or may not change, except to the extent required by applicable law.
Additionally, the company's press release and management statements during this conference call will include discussions of certain measures and financial information in GAAP and non-GAAP terms. Included in the company's press release are definitions and reconciliations of GAAP to non-GAAP terms, which provide additional details. Also, throughout the company's press release and management statements during this conference call, we refer to net income attributable to common stockholders as GAAP net income. For those of you unable to listen to the entire call at this time, a recording will be available via webcast for 90 days in the Investor Relations section of Diodes website at www.diodes.com. Now I'll turn the call over to Diodes President and CEO, Dr. Keh-Shew Lu. Dr. Lu, please go ahead.
Thank you, Leanne. Welcome everyone, and thank you for joining us today. 2019 was another record year for Diodes across all financial metrics, generating solid revenue growth as well as increasing profitability and cash flow. Additionally, our record performance in the automotive and industrial market, combined with record sales from our telecom IC products, continue to be key contributors to our growth and margin expansion. As a result of our strong cash flow generation, we have also been able to strengthen our balance sheet and significantly reduce long-term debt to below $100 million. Our full year revenue growth of 2.9% once again outperformed our server market, which was down 6.6% in 2019. This consistently above-market performance is a direct result of our target sales strategy to serve as a total solution provider, leveraging our expanded product portfolio and broadened customer relationships.
Our approach has also resulted in increased market share and content gains across key end equipment, while also addressing new application areas. Looking forward to the coming year, we expect to maintain our strong performance and continue achievement of good results as we take further steps toward our long-term financial goals of 40% gross margin and 20% operating margin. With automotive and industrial markets approaching to our target of 40% of total revenue, we are well-positioned to further drive growth and margin expansion. Our focus remains on increasing content across the growing end markets of automotive, industrial, high-end servers, and storage, 5G, as well as IoT. Before I turn the call over to Brett, I would like to take a moment to comment about the coronavirus outbreak in China. First and foremost, our top priority is our people.
Diodes is taking proactive measure to protect the safety, health, and well-being of our global associates, as well as their family and the communities. Brett will discuss this further as part of the first quarter 2020 outlook. I would like to provide a brief update on our proposed acquisition of Lite-On Semiconductor. As we announced in January, Lite-On Semiconductor approved a resolution in which they sold more than half of their holding of On-Bright Electronics, or 16.5% of outstanding to Orthosie, an entity in which On-Bright Electronics will become a wholly owned subsidiary. This stock transition was completed on January 14th at $ 221 per share. Upon approval and the completion of the merge between On-Bright Electronics and Orthosie, Diodes Incorporated remaining 14.69% of On-Bright Electronics shares will be exchanged for $230 per share on the record day of the merge.
As we stated in our announcement, those actions were taken in order to help facilitate the review by the relevant Chinese authorities. We remain confident our acquisition of Lite-On Semiconductor will close as planned. Once the final regulatory approval has been secured, which we anticipate will be in the second half of the year. With that, let me call over to Brett to discuss our fourth quarter and full year financial result, and our first quarter 2020 guidance in more detail.
Thanks, Dr. Lu, and good afternoon, everyone. As part of my financial review today, I will focus my comments on the sequential change for each of the line items and would refer you to our press release for a more detailed review of our results, as well as the year-over-year and full year comparisons. Revenue for the fourth quarter 2019 was $301.2 million, as compared to $323.7 million in the third quarter 2019. For the full year 2019, revenue was a record $1.25 billion, an increase of 2.9% from $1.21 billion in 2018, and well over the growth of our served markets. Gross profit for the fourth quarter was $109.4 million, or 36.3% of revenue, compared to the third quarter 2019 of $122 million or 37.7% of revenue.
For the full year, gross profit increased 7% to $465.8 million or 37.3% of revenue as compared to $435.3 million or 35.9% of revenue in the prior year. Both gross profit and gross margin were records. GAAP operating expenses for the fourth quarter 2019 were $48.1 million or 16% of revenue. On a non-GAAP basis were $65.2 million or 22% of revenue, which excluded a $24.4 million pre-tax gain on the sale of land, $4.5 million of amortization of acquisition related intangible asset expenses, $1.6 million loss on asset impairment, and a $1.2 million acquisition related cost. GAAP operating expenses in the prior quarter were $73.3 million or 22.7% of revenue.
Total other expense amounted to approximately $1.7 million for the quarter, including $2.4 million of foreign currency losses, $1.7 million of interest expense, partially offset by $2 million of other income and $409,000 of interest income. Income before taxes and non-controlling interest in the fourth quarter 2019 was $59.6 million, compared to $48.7 million in the previous quarter. Turning to income taxes, our effective income tax rate for the fourth quarter was approximately 20.2%. GAAP net income for the fourth quarter 2019 was $47.2 million or $0.90 per diluted share, compared to GAAP net income of $38.1 million or $0.73 per diluted share in the third quarter 2019.
The share count used to compute GAAP diluted EPS for the fourth quarter 2019 was 52.1 million shares. GAAP net income for the full year 2019 was a record $153.3 million, or $2.96 per diluted share, compared to $104 million, or $2.04 per diluted share in 2018. Non-GAAP adjusted net income in the fourth quarter was $33.8 million, or $0.65 per diluted share, which excluded net of tax $19.2 million gain on land sales, 3.7 million of non-cash acquisition related intangible asset amortization costs, and 1.3 million of asset impairment charges. This compares to non-GAAP adjusted net income of $41.9 million, or $0.81 per diluted share in third quarter 2019. Non-GAAP adjusted net income for the full year 2019 increased 24.6% to a record $151.1 million, or $2.91 per diluted share, compared to $121.3 million, or $2.38 per diluted share in 2018.
EBITDA for the fourth quarter was $88.3 million, or 29.3% of revenue, compared to $78.3 million or 24.2% of revenue in the prior quarter. EBITDA for the full year improved over 20% to a record $313.6 million or 25.1% of revenue, compared to $261.1 million or 21.5% of revenue last year. We have included in our earnings release a reconciliation of GAAP net income to non-GAAP adjusted net income and GAAP net income to EBITDA, which provides additional details. Cash flow generated from operations was $52.1 million for the fourth quarter 2019 and $229.8 million for the full year. Free cash flow was $29.7 million for the fourth quarter, which included $22.4 million for capital expenditures and $131.3 million for the full year, which included $98.5 million of capital expenditures, or 7.9% of revenue.
Net cash flow in the fourth quarter was a + $39.8 million, which includes the paydown of $22.6 million of long-term debt in the fourth quarter and a + $17.7 million for the full year, including paydown of approximately $117.3 million of long-term debt during the full year 2019. Turning to the balance sheet. At the end of fourth quarter, cash and cash equivalents plus short-term investments totaled approximately $263 million. Working capital was $524.5 million, and long-term debt, including the current portion, was $98 million. In terms of inventory, at the end of the fourth quarter, total inventory days increased to 112 in the quarter compared to 104 last quarter as we prepared for the Chinese New Year. Total inventory dollars amounted to approximately $236.5 million, which reflects a $3.2 million increase in finished goods and a $2.4 million increase across raw materials and work in process.
Finished good inventory days was 29 in the quarter compared to 27 in the third quarter 2019. Capital expenditures on a cash basis for the fourth quarter 2019 were $22.4 million, or 7.4% of revenue, and $98.5 million, or 7.9% of revenue, for the full year. We expect CapEx for the full year 2020 to remain within our target model of 5%-9% of revenue. Turning to our outlook. For the first quarter 2020, we expect revenue to be approximately $290 million, ±3%. At the midpoint, this represents a reduction of approximately 3.7% sequentially, which is better than the typical seasonality. We expect GAAP gross margin to be 35.0%, ±1%. These guidance ranges reflect the delayed start to manufacturing production following the extended Chinese New Year holiday due to the coronavirus outbreak in China.
All production, including wafer fabs and assembly test facilities in China, resumed on February 10th, but we anticipate it to take longer to return to full production. At this time, it is difficult for us to fully determine the potential impact to the supply chain or the customer demand disruption resulting from the prevailing crisis. As a reminder, Diodes does not have a manufacturing facility in the affected areas of Wuhan and Hubei province, as our primary facilities are located in Shanghai and Chengdu. Similar to many other companies, we will continue to closely monitor the situation. Continuing with our first quarter guidance, non-GAAP operating expenses, which are GAAP operating expenses adjusted for amortization of acquisition-related intangible assets, are expected to be approximately 22.5% of revenue, ±1%.
We expect net interest expense to be approximately $2 million. Our income tax rate is expected to be 20% ±3%, and shares used to calculate diluted EPS for the first quarter are anticipated to be approximately 52.9 million. Please note that purchasing accounting adjustments of $3.7 million after tax for Pericom and previous acquisitions are not included in these non-GAAP estimates. With that said, I now turn the call over to Emily Yang.
Thank you, Brett, and good afternoon. As Dr. Lu and Brett mentioned, we had a record year in 2019, with revenue growth once again outperforming our served markets. Looking more closely at the fourth quarter, revenue reflecting the seasonal softness in inventory adjustments that are typical of our industry at the end of the year. POS was down slightly, mainly driven by the slowdown during Christmas holiday in North America and Europe. Distributor inventory in terms of weeks was flat in the fourth quarter, which is within our normal range of 11-14 weeks. We expect distributor inventories to remain within our normal range of 11-14 weeks in the near term. Looking at the global sales for 2019, Asia represented 75% of revenue, Europe 15%, and North America 10%.
In terms of our end market distribution for the whole year, the industrial market represented 28% of total revenue, consumer 23%, communication 23%, computing 16%, and automotive 10% of revenue. Let me review the end markets in greater details. For the automotive market, we continue to see significant growth in this market as we capture both increasing market share and content gains, despite the overall challenges with the decreased unit output of autos during the year. Revenue in this end market grew more than 14% in 2019 to 10% of the total revenue, representing a 29.4% CAGR since 2013. Our ability to secure an increasing number of design wins has been a key factor to our success, in particular for application in connected driving, including ADAS, telematics, and infotainment, as a result of the rapid increase of electronics in today's highly connected cars.
In addition, robust ESD protection is becoming increasingly more important, and our production products offer high reliability and high-performance solutions in ESD protection that covers the entire spectrum for connected driving applications. We are also seeing continued success with our proprietary SBR technology. These products are optimized for high surge capability to ensure greater protection against negative spikes and inductive low surge, thereby yielding increasing ruggedness and reliability in often noisy automotive applications. This product series is suitable for a wide range of applications in connected driving, powertrain, battery management, lighting, body control, and central infotainment display. Additionally, we continue to expand our content in comfort, safety, and lighting area. Our new Zener Diodes product family is gaining momentum in automotive lighting applications, and we also have strong momentum for bipolar transistors in lighting, lidar, radar, and wireless charging.
Also in the automotive space, Diodes leading PCI Express Gen 2 packet switch solutions were broadly adopted in the next generation telematic designs and will start to ramp this year. During the quarter, we also continued to expand our leadership position by releasing additional Pericom products, including a PCI Express Gen 2 packet switch family that meets the AEC-Q100 Grade 2 for higher temperature requirements and low standby power consumption to satisfy the always-on requirement. In the industrial end market, revenue grew 14.7% for the full year over 2018, representing a six-year CAGR of 14.6%. Brushless DC motor LED lightings are key industrial application for Diodes MOSFET product. We have addressed this application using our SGT MOSFET technology for low power loss, as well as normal density trench MOSFET technology for better safe operating areas. We are also addressing e-meter applications with our SASP and [YIN LDOs].
With the rapid adoption of high-speed interfaces across multiple end applications in the IoT industry, ESD protection is increasingly more important for these data links. Diodes data line platform features ultra-low capacitance with industry-leading surge handling and ESD protection characteristics. For the industrial DC fan and lighting market, our SBR and Schottky products offer cost performance in a high-temperature operating environment that is ideal for these applications. Schottky Diodes offer low and stable leakage under the high thermal stress, while our rectifier package in the ultra-thin CSP package is growing in popularity for the space saving in DC fan applications. We're also seeing our latch and omnipolar hall sensors gaining momentum in the security cameras, fans, e-bikes, and power tool applications. Turning to consumer space, quick chargers and direct chargers have gained momentum in the response to the market need to reduce the charging time of batteries.
The ultimate solution of USB power delivery is to propel the output power to a higher level. With Diodes advanced SGT technology, 40-100 V MOSFET offers synchronized rectification and secondary synchronized rectification to support a wide voltage range of adapted topologies. Additionally, wireless power charging also gained momentum because of the convenience of use. To increase the wireless transmitter power, 20-30 V MOSFET in smaller package are required, which Diodes offers. Also in the consumer market, Diodes protection products, including TVS, DC-DC, LDO, SBR, and Schottky families, are gaining traction in panels. In the communication market, mobile communications have profoundly changed people's lives.
With the 5G emerging as a key solution to meet the significant speed upgrades and large bandwidth requirements, Diodes is seeing increasing demand in this area for our products that helps improve 5G amplifier performance, boost the power in the base stations, and also save on power consumption. Diodes PCI Express Gen 2 package switch family are designed into 5G mobile routers and 5G CPE home routers. Diodes also released our next generation MIPI 2x1 switch for cell phone applications with higher resolution capability and superior performance under cross talk, further delivers the highest system performance for camera picture quality supporting 5G phones, which are expected to hit the mainstream market in 2020. Lastly, in the computing market, our SBRT product saw a resurgence of revenue growth in notebook PC applications in GPP rectifiers and bridge rectifiers, as well as TVS products.
As notebook and PC markets continue to adopt USB Type-C, this application is emerging as the next big growth engine for power protection. We have current solutions to protect all pins on Type-C connectors and are also developing custom solutions for customer-specific usage on Type-C applications. Additionally, Diodes' comprehensive product portfolio for docking stations continue to provide customer solutions for interface and switching needs. Our newly released PCI Express Gen 4 cross bar switches offers the best performance with high bandwidth and low signal loss, while also being designed in for connecting the notebook to dock ports at major OEMs. In summary, our achievement of record annual results and growth that exceeds our served market is further testament to our success of our total solution sales approach that has resulted in market share gain and content expansion at key customers.
We are well positioned to continue driving further growth and margin expansion in the coming year and looking forward to reporting our ongoing success and milestone achievements towards our long-term financial goals. With that, we now open the floor to questions. Operator?
Thank you. As a reminder, to ask a question, you will need to press star one on your telephone. To withdraw your question, press the pound key. Please stand by while we compile the Q&A roster. Our first question comes from the line of Gary Mobley from Wells Fargo Securities. Your line is now open.
Good afternoon, everybody. Thanks for taking my question. I want to start off by asking about your Q1 guide. It sounds as if your own inventory days were sufficiently high enough heading into the, as you started the first quarter. Therefore, I'm assuming that the fewer workdays among your employee base is not really having too much of an impact on your sales outlook for the first quarter, but really more so on the gross margin side. Correct me if I'm wrong there. My question is, can we see some reversal of this impact in the second quarter as presumably your manufacturing utilization rates would be higher in the second quarter, and thus some fairly sharp improvement in the overall gross margin?
Okay, Gary, let me answer those questions. First, you are 100% correct. In the first quarter last year, because we know we're going to have a Chinese New Year slowdown as usual, so we build up additional finished goods inventory to prepare for Chinese New Year. Unfortunately, due to the coronavirus, our factory in China actually slowed down the opening for more than we expected, okay? We plan. Typically, we only plan three to one week shutdown, and this time, we actually get over two week of the Chinese New Year shutdown. Unfortunately, we have finished good build-up, and therefore, if you look at our guidance of $290 million, it already reflects the manufacturing slowdown and the inventory flush and all those to reflect in this $290 million.
The reason we put up a wide range of the revenue, changing from typically ±2% to ±3%. It was due to we really still cannot figure out, or we still don't know the supply chain. Our raw material, most of them coming from outside of China, but some of the supply chain material is coming locally, and that we don't know what will be happening. Okay. Even we have some inventory, but we still cannot figure out what will be the whole picture. Most uncertainty is our customer, because our customer gets the same reaction or the same restriction such that they cannot open until February 10. Some of the factory or some of our customer even extend that shutdowns. If you have the factory in Wuhan, that still don't know what going to be happen.
From all this one, we open up our range for the revenue. You're talking about gross margin. The gross margin, because extended shutdown, we guide for 35%. From that point of view, we thinking we already know, or at least we can figure out how many people return and what kind of run rate going up from week to week, how many people will return to work from week to week. We guide as usual, ± 1%. This is the reason we give that kind of guidance. We already anticipate the revenue and the wafer fab and the assembly function. I think in my speech, we already tell you, we do not have a factory in Wuhan or Hubei province. Most key manufacturing factory is in Shanghai, including wafer fab and assembly, and in Chengdu.
Those are the key manufacturing areas. Virtually, our wafer fab is supplied by China, but we still have a lot of wafer support from fab in Oldham. We have factory from Japan, DB HiTek, and Taiwan Nextchip, and MagnaChip in Korea, okay, [Vega] and Nextchip in Taiwan, and even Fintek in Japan. We have a lot of wafer supply. Our expect is a very small portion of our wafer fab support. Okay. SAT is more concentrated in China. Okay. From the guidance point of view, we still better than seasonality, even we down 3.7%, it's still better than seasonality, and it's already put into consideration of the factory slowdown. The only thing we don't know will be supply chain and customer requirement. Now, you were talking about after the second quarter, if the demand starts getting strong, it's really the demand. Okay?
We should have enough capacity, and we already know by end of 1Q, our workers should be already back to normal. Today, our CAT today is already, manpower is already up to 85%. SAT in Shanghai, yes, it's only 45%, but they already have the control, know who will be back, who cannot be back, who will need to be quarantine at home. We contact with all our employee to understand where they are and when can they go back to work. We believe by end of this month, February, we should be up to 60%, 70%. By end of March, we should be up to 90%. I think you are right. In the second quarter, we should be fully up to run in the manufacturing. The only question would be, if our customer can fully back or not.
That is the one we don't know.
Okay. Thank you for that expansive answer, Dr. Lu. Brett, a couple quick questions for you. I noticed your first quarter non-GAAP OpEx guidance is flat sequentially. Correct me if I'm wrong, but don't you normally see some sort of a merit increase in the second fiscal quarter Sort of quantify what that may be and as well what your full year 2020 OpEx growth may look like, if there's any growth at all.
Well, actually, let me answer that for Brett. Okay, we have two different time periods for the compensation increase. Okay. In the January, is China making function and officer compensation increase. In July 1st will be the compensation increase for the rest of the people. Okay. The impact for the gross margin actually in the 1Q, you can see some, but it's not a major significant GP burdens. The GP burden more is because the extent is the Chinese New Year slowdown and especially this year, that's more than usual slowdown, okay. That is what caused our GP, and another reason cause the GP is the revenue. If because the revenue down, your GP will be down because building rate in our factory typically will be slowed down, utilization will not be full. Okay.
Okay. What about tax rate for the year? You going to stay around this 20% mark that you're starting the year with?
Yeah, I think 20% is a good assumption.
All right. Thank you guys. I'll hop in the queue.
Thank you. Our next question comes from the line of Shawn Harrison from Longbow Research. Your line is now open.
Hi. Afternoon, everybody.
Hi, Shawn.
Hi. Is my math right that the extra week of shutdown is maybe costing you within the guidance, $2.5 or $3 million of cost? Is that the right way to think about it on a dollar basis that type of drag wouldn't repeat itself into the June quarter?
I really don't know on that because it depend on the mix. If from revenue point of view, it depend on the mix, and we do have the inventory, we can ship it out. Okay. I don't have the number tied to the dollar. Okay. I remember the number we try to ship it out from our warehouse, we call SDC in Shanghai Distribution Center, which is our warehouse. Currently, we plan to ship out that inventory, 900 million units. I don't know what would be the ASP and what would be the GP increase due to that. I know the number, but I do not get into how much dollar will be.
Okay. You're not seeing anything abnormal in the pricing environment right now, though, Dr. Lu? It's pretty benign still.
I actually do not want to talk the price because it's the demand is the issue now for us, okay?
Yeah. Let me answer the question.
Okay.
We haven't really seen anything abnormal price pressure or price change going through this time period at this moment.
Okay.
We did have 1.5%-2% price reduction buffered into our business.
Model
Model.
Our business model typically is, once quarterly ASP drop 1.5%-2%. We still see in that kind of model.
Yes.
We don't see unusual price pressures.
Right.
Okay. One final question. Let's exclude maybe the virus unknown for a second, you grew a fantastic double-digits in the industrial and auto business last year. Do you think you have the product wins or share gains or whatever that would allow those businesses to see that type of robust growth again in 2020?
Yes.
Okay. My answer is definitely yes, because whoever down, the whole industry will be down anyway. If the demand really slow down, not because it's due to some key component or some labor, the factory, our customer cannot get enough labor to build in the units or due to the key component cannot supply, the whole industry will be down anyway. We are in a good position because of product portfolio and because our solution sales and all this one, I just don't think our growth will be changed, so we will continue getting the market share.
Correct.
I don't see a reason why not.
We have really good pipeline right now, really the result for all this commitment and the demand creation from the past. We're pretty confident that we'll continue to grow in the automotive area, especially some, for example, the next generation telematics, ADAS side of the product. We're really confident that the momentum will continue.
Okay. Thank you.
Thank you. As a reminder, to ask a question, you will need to press star one on your telephone. To withdraw your question, press the pound key. Our next question comes from the line of Tianyan Goellner from Sidoti. Your line is now open.
Hi. Yeah. Thank you for taking my question.
Sure.
Get some sense about the revenue in 2020. Because usually the revenue kind of in the first half and the second half are pretty evenly split. For this year, probably we'll see some second half loaded, is that correct?
Well, for sure this year will be because 1 Q going to be so much trouble or uncertainty due to the coronavirus.
Right.
I believe it will be slow down the impact in second quarter, but I still don't have any information. Are they going to be complete recover by end of second quarter? I don't know that would be the case or not. If that happen, then third quarter, fourth quarter will be start to booming. I definitely believe first half will be lower than second half of 2020.
Okay. That's very helpful. Next one, maybe some color on the end markets, for example, communications and consumer computing. In 2020, I know industrial and automotive will be still strong, but when we're looking into 2020, how should we think about those three remaining end markets?
Right. Let me address this. This is Emily.
Okay.
I think for communication, I did mention a little bit that 5G deployment is actually going to be, especially on the mobile side, going to start ramping, and we believe that will be definitely boost up some of the areas, this area. On top of that, there's also the routers and switch, related to the 5G. We think this is going to be a bright spot for us. For the computing as well, right? If you really think about, we talk about the data rate, we talk about the speed. We believe the computing, especially high-end server and router and storage, will continue to drive some of the upside momentums and opportunities for us, right? I think for consumer side, right? The IoTs, even related to 5G, that's actually going to drive some of the new demands in this area.
We're pretty confident we continue to focus on the areas we've been talking about, right? 5G within communication, high-end server storage within the computing area, and IoT on the consumer side, on top of the industrial automotive that we show significant performance in both of those areas already, right?
Right.
We'll continue to focus, and that's not going to change in 2020.
Okay. In 2019, I think all those three end markets were down like single digits or low single digits. Should we expect the trend would be very similar in 2020?
When you say single digit, you mean the growth in single digit?
Yeah. Correct.
Right. If you can see their overall market in Brett's comment, the overall market with our participated area, 6.6% drop, right?
Right.
Even with a single digit growth from Diodes, that still outperform compared to all our other peers in the industry, right?
Well, if you looked at - 6.6% + 2.9%.
Right.
Actually it's almost 10%.
Right.
Okay?
Then also, for example, in the computing area, we're all aware of the Intel chipset shortage and stuff like that. We believe in 2020 the situation will improve based on Intel's announcement. That's other area that it's also driven by the market and also driven by the other vendors that are driving the market as well.
Okay. That's very good. My last question, if I may, would be for Brett, on the CapEx. You just mentioned that in the prepared remarks that a 5%-9% revenue would be the good assumption. I'm wondering, considering in the third quarter and fourth quarter, that capital intensity was at like a 7.9%. Should we assume at higher end of a 5%-9% or just the midpoint?
Well, let me answer this one because I would not allow, okay, the CapEx above our model because our model is 5%-9%. I would not allow it. Only one case, if we out of the space in Chengdu, we need build a Chengdu, another big building, another facility, and the equipment and all this. When we out of the capacity or space for Chengdu, we do need to build the buildings, that would be boost up our CapEx a little bit more. Fortunately, they are not depreciate in five years, they are depreciate in 15 years.
Right.
It's 15 years, so it's not a big depreciation. We will still keep it at 5%-9% model.
Okay. Thank you. That's all from me.
Thank you. At this time, I'm showing no further questions. I would like to turn the call back over to Dr. Lu for closing remarks.
Okay. Thank you for your participation on today's call. Operator, you may now disconnect.
Ladies and gentlemen, this concludes today's conference call. Thank you for participating. You may now disconnect.