Chris Danely: Got it. Thanks for all the color guys.
Bill Betz: Thanks, Chris.
Operator: Thank you. Our next question comes from Joshua Buchalter with TD Cowen. Your line is open.
Joshua Buchalter: Hey, guys. Good morning or good afternoon depending on where you are sitting. Thanks for squeezing me in. In Autos, you’ve heard from a few in the supply chain, that there’s a bit of a push pull going on between OEMs and Tier 1s, where the OEMs want the Tier 1s to keep carrying more inventory, Tier 1s are trying to manage their working capital and carry less. I’d be curious, are you seeing that going on? Is that some — the Tier 1s wanting to lower their levels. Is that playing into what’s going on with some of the digestion you’re seeing now? Thank you.
Kurt Sievers: Joshua, absolutely. That’s a horrendous fight and that’s why I said earlier, it is really hard to call the final exact landing place for the size of inventory for Tier 1 because it is a matter of their negotiation with the — with their OEM customers. The midterm trend is that every piece of new business they are winning, OEMs are now often enforcing for the new business to hold a certain amount of inventory for specific semiconductor components. So that becomes very explicit, but it’s only for new business. So think about it as something which will be layering in over the next couple of years as those new design wins are materializing. That’s the way how the OEMs want to get a firm handle on the size of inventory at Tier 1s.
At the moment, it’s still Wild West because none of this is really contractually anchored because it’s old contracts, which didn’t have these articulations, which is why it is indeed all over the place, and that makes it also a bit harder to be precise.
Jeff Palmer: I think — you have one more, Josh?
Joshua Buchalter: Yeah, that’s okay. I would just, maybe, Bill — I was going to ask about the policy of repurchases. I know you mentioned it’s still return 100% of free cash flow but have been running a little bit below that in the last several quarters. Should we expect after you pay down the debt in March that repurchases pick up? Or is it something more tied to the business environment? Thank you.
Bill Betz: Yeah. I mean, again, our capital allocation, as I stated, hasn’t changed. If I just look over the last three years, we returned $8.8 billion or 113% over those three years. And you’re right, the trailing 12 months, 77%, current quarter was 72%. And again, we are — we set aside some cash, as you all know, that we’re going to retire some of our debt and deleverage the company here, and we think that’s a good use of our cash and we’re going to continue being flexible on our balance sheet and doing all of the above, dividends, buybacks, debt as well as small M&A, no changes and we are going to continue to do what we do.
Joshua Buchalter: Thank you.
Jeff Palmer: Thanks, Josh.
Operator: Thank you.
Kurt Sievers: Yeah, I guess that gets us to the end of the call. So, thanks everybody for joining the call this morning. Clearly continues to be a tough environment where NXP takes any control possible, and I dare to say we have started to take that control, especially relative to inventory builds externally and inventory management internally. We started to take that control in a very disciplined manner early, in the mid of 2022 for the distribution site, and starting in the second quarter of last year on the direct customer side, which we believe allows us to continue to drive a safe landing and soft landing in this tough environment. Mid and longer term, we continue to be fully focused on the Automotive and Industrial markets to innovate and drive profitable growth. Thank you all.
Operator: Thank you for your participation. This does conclude the program and you may now disconnect. Everyone, have a great day.
