Good morning, and welcome, ladies and gentlemen. Our 76th quarterly earnings call has an unusual setup. Our CEO, Reinhard Ploss, is joining the call from the other side of the globe. He has dialed in from Japan, where he is part of the delegation that joined German Chancellor Angela Merkel on her official visit. Here in snowy Munich, you have Helmut Gassel, Chief Marketing Officer; Jochen Hanebeck, Chief Operations Officer; and Dominik Asam, Chief Financial Officer, for whom this will be the last quarterly earnings call at Infineon. Apart from being in different places, we will proceed as commonly practiced. Reinhard will start with an overview of group and division results, market developments and quarterly business highlights. Dominik will comment on key financials, followed by Reinhard again updating you on our guidance. We will again illustrate these introductory remarks with some slides that are being shown live and in sync with this call at infineon.com/slides. Again, the link is infineon.com/slides. After the introduction, we will be happy to take your questions. Most likely, Reinhard will not be able to join the Q&A session. [Operator instructions]. A recording of this conference call including the aforementioned slides and a copy of our 2019 fiscal first quarter earnings press release, as well as our investor presentation, are also available on our website at infineon.com. So now I would like to hand over to Tokyo. Reinhard, please go ahead.

Thank you, Alexander. And good morning everyone. Infineon has started into its 2019 fiscal year with a December quarter that evolved according to plans. Revenues declined quarter-over-quarter, in line with normal seasonality, to €1,970,000,000. Year-over-year, our revenues grew by 11%. Segment result for quarter 1 was €359 million, corresponding to a segment result margin of 18.2%, even slightly ahead of our guidance. In our last quarterly update in November, we already described a mixed demand picture ranging from areas that in allocation results already seeing a slowdown from the third quarter. Now at the beginning of the new year, this picture is getting even more divergent. Also, our book-to-bill ratio of 1:1 for the December quarter has to be interpreted in a differentiated way. On the one hand, demand in several end markets remained lackluster or even slowed down. This applies to traditional automotive applications, servers for data centers, smartphones and the small -- multisource business. Again, with a background of continuing macroeconomic uncertainties, customers adopt a wide currency approach. Unresolved trade tensions blur the picture for economic growth in China going forward. Inventories throughout the supply chain are at comparatively high levels, indicating that it will take some time for a recovery to feed through to the suppliers. At the same time, we continue to see strong momentum in a significant part of our business. For differentiated high-power components, for electric drivetrain and a number of industrial applications, demand still exceeds supply. This is what gives us confidence in our ability to return to the growth path in the second half of our fiscal year despite generally lower visibility. Now to the divisions. Automotive revenues in the first quarter were €846 million, down 2% sequentially but up 10% against the very strong December quarter of the prior fiscal year. The continued strong demand for high-power products for electromobility, including 48-volt mild hybrids, [indiscernible] particularly in seasonality. The segment result decreased to €117 million from €127 million in the previous quarter, driven by a lower revenue. The segment result margin stood at 13.8%. The book-to-bill ratio stood at 1.1 for the December quarter, influenced by diverging demand patterns. Global car production has been shrinking in calendar year 2018, but still decent growth in the first half and accelerating deterioration in the second half of the year. China as a key market saw a decline of the annual number of cars produced by 4%, the first such negative development in 11 years. In Europe, the impact of WLTP continues to take its toll on car production. For 2019, a slow recovery to around 1% car sales growth is predicted, with production growth probably lagging given higher dealer inventories at the outset of the year. It remains to be seen if much of Asia's stimulus program in China might provide upside. This deceleration is obviously affecting our business with traditional automotive applications such as engine management or body and safety functions. In these areas, the content growth is not as dynamic as in those where structural trends are fueling demand. There's an ongoing strong momentum for our solution for the electrification of the drivetrains, one second, I will continue in a second, yes. I just have to change rooms. The deceleration is obviously affecting our business with traditional automotive applications such as engine management or body and safety functions. In these areas, content growth is not as dynamic as in those where structural trends are fueling demand. But there is an ongoing strong momentum for our solutions for the electrification of the drivetrain, where several product categories remain in allocation. Recently, the European Union resolved on CO2 emission targets for 2025 and 2030. These are 15% and 37.5%, respectively, below the 95 grams to be achieved by 2021, calling for car OEMs to significantly increase their efforts to electrify their fleets. Advanced driver assistance systems are the other main area of growth and provides attractive opportunities for our system solutions, including radar sensors and our AURIX automotive microcontroller. Taking the areas of EV and ADAS together, we continue to expect a year-on-year growth of 50-plus percent. Furthermore, the second generation of our AURIX automotive microcontroller is becoming a prime choice for the connected car, and we have witnessed encouraging design wins. A major European OEM selected the AURIX second generation for its main telematics module for all of its brands, and a large European Tier 1 choose AURIX second generation for its gateway platform for in-vehicle networking. Besides performance, the built-in hardware security module is often the decisive factor to clinch a design. Industrial Power Control recorded quarterly revenue of €352 million, 2% lower than in the previous quarter but up by a staggering 19% year-on-year. Whereas industrial drives and home appliance saw typical seasonal declines, renewable energy and traction provided wide resilience. Solar even showed a strong increase, which is remarkable for the seasonally weaker December quarter and can be explained by China feed-in tariffs expected to be hiked again for the new year. The book-to-bill ratio stood at 1.1, representing a mixed picture of products suffering from a broad deceleration in the market and elevated inventories in the distribution channels such as gate drivers on the one hand and high-power modules still allocation on the other. The segment result for the December quarter was €69 million compared to €73 million from the previous quarter, resulting in a segment result margin of 19.6%. The uncertain [indiscernible] environment leads to an overall cautious market sentiment for industrial applications. Also in terms of bookings, demand patterns are diverging. For gate drivers, the momentum has considerably softened, reflecting a mean reversion of home appliances and industrial automation from previously quite elevated levels. Wind and solar power as well as traction, however, still exhibits good growth momentum and continued strong order intake for our high-power modules. With our differentiated product portfolio, we are addressing critical customer needs. From a regional perspective, we continue making inroads into the Japanese market. In the past quarter, we achieved 2 important design wins with our intelligent power modules there, in line with our aim to offer complete system solutions. Now to Power Management & Multimarket. Segment posted revenues of €617 million, a sequential decrease of 5% over the prior quarter but up 13% year-on-year. The quarterly decline was mainly due to lower demand for standard MOSFETs as well as controller ICs and power stages for servers in line with the weakness in the global server and data center business. In both categories, inventories within the channel are above their long-term average reach, as trade tariffs announced and introduced in the second half of 2018 have caused demand swings. Distributors are now working swiftly to bring stock levels down. Additionally, the softer demand and a softer smartphone market led to a deceleration in handset-related products. Overall, we experienced lower order intake and a higher level of cancellations, resulting in a book-to-bill ratio of 0.9 at the end of the December quarter. In stark contrast to this, AC-DC power suppliers saw healthy demand and rise in their volumes. For instance, budgeted communication infrastructure driven by early 4.5G and 5G network build outs. This is another area in which we continue to be supply constrained. The segment result came in at €155 million, after €181 million in the previous quarter, yielding a segment result margin of 25.1%. We are currently seeing a mixed demand picture [indiscernible]. Longer-term, growth driver remains strong and intact. Underlying trends like big data, artificial intelligence or cloud computing will lead to more and larger data centers being built. 5G installations and also low-speed electrical vehicles are further demand drivers. Current business activities in order centers, however, have temporarily subdued. This in combination with high inventories means we are currently under-shipping end demand. We expect this to continue in the current quarter. Relevant data points. On the quarter, this pickup of demand has emerged after Chinese New Year, which coincidently is today, so this business to the business from that region for the year continues. On the bright side, high-voltage power switches continued its positive momentum, and we are reallocating some of our production corridors to that segment to better serve customers. This and further capacity being ramped will support PMM's growth through the second half of our fiscal year. From owners for mobile handsets, such antenna tuners, filters, low-noise amplifiers and silicon microphones provided by far a smaller part of demand, weighing on growth in the near term due to sluggishness in the smartphone market. However, we expect to see a more positive dynamic after the seasonally weak March quarter for the, due to new sets of product launches later on the year. Now Digital Security Solutions. The segment recorded revenues of €149 million, a decline of 9% compared to the previous quarter and minus 8% year-on-year. The negative revenue development was mainly due to ongoing stock measures with some smart card customers combined with typical seasonality of the consumer authentication business. Order entry improved again towards the end of the quarter, bringing the book-to-bill ratio to 1.3, making us confident the demand [is currently tracking] the moderate improvements looming in the second half of the fiscal year. The segment results came in at €16 million. The segment result margin stood at 10.7%, driven by the decline in revenues. Already in previous quarters, we described the segment's ongoing transition from more traditional card-based applications to higher-margin security solutions which are often embedded in our bundles and other components. We have enhanced our positions in key applications like payment as in connected cars such as recent security solution modules, like SECORA Pay, value of payments with functionality, the variables within a trusted platform module, OPTIGA for automotive applications. The latter will be used by Volkswagen and [indiscernible] services like secure software updates over the air [indiscernible] of parcel delivery to a car's trunk. To protect digital transfers, Blockchain introduced blockchain security starter kit. It is encouraging to note that the recently agreed EU Cybersecurity Act, which includes among other aspects, an enhanced mandate of the EU cybersecurity agency ENISA. And the target is to create a framework for a European cybersecurity certification. With this, I would like to hand over to Dominik in Munich, who will lead you one last time through our key financial figures.

Thank you, Reinhard. And good morning, everyone. First of all, apologies for the high level of background noise. We started an experiment of doing this call from the chancellor's airplane. And while the line is working, obviously we hear that the plane has already taken off and creating some background noise. So apologies for that. We'll see if we can make the text available for you so you can read at your leisure later on also. Let me start with some more details on the margin development. Gross profit was €779 million, after €814 million in the previous quarter. Despite the 4% revenue decline, the gross margin remained almost constant at 39.5% versus the prior quarter's 39.8%. Excluding non-segment result effects, the adjusted gross margin stood at 40.4%. Research and development expenses and selling, general and administrative expenses came in at €236 million and €218 million, respectively. The net other operating income amounted to €2 million. The non-segment result amounted to minus €32 million, predominately related to amortization and other charges resulting from the International Rectifier acquisition. As you can see on the chart, of that amount, €16 million hit our cost of goods sold, €1 million R&D and €15 million SG&A. Our investments into property, plant and equipment; intangible assets; and capitalized development costs in the first quarter of the 2019 fiscal year amounted to €408 million, after €417 million in the prior quarter. Depreciation and amortization, including non-segment result effects, went up slightly from €226 million to €230 million. Included in these figures are €25 million and €26 million, respectively, related to the amortization and depreciation of fair value step-ups from the purchase price allocation from International Rectifier. The portion of depreciation and amortization included in our segment results, therefore, moved from €201 million to €204 million. Income tax expense in the December quarter was €56 million against €54 million in the previous quarter. This results in an effective tax rate of around 18%. Our cash tax rate was 15%, a level we expect throughout the 2019 fiscal year. As you will recall, in the fourth quarter of the last fiscal year, we recorded a loss from discontinued operations of €159 million related to the adjustments of provisions in connection with the ongoing Qimonda litigation. There are no new developments to report in this matter, and hence our result from discontinued operations was 0 in the December quarter. Continuing with free cash flow from continuing operations. We recorded a net outflow of €221 million in the December quarter, after an inflow of €227 million in the prior quarter. Included in this swing is the net cash-out of €123 million for the acquisition of Siltectra in November as well as payouts for annual success bonuses for fiscal year 2018 at the end of the calendar year. Our gross cash position as of December 31, 2018, amounted to €2.3 billion. Net of financial debt of €1.5 billion, our cash position stood at 773 billion, €773 million. Our reported after-tax return on capital employed stood at 15.7% in the December quarter. Excluding acquisition-related bookings, in particular, goodwill, fair value step-ups, amortization and deferred tax effects, the adjusted return on capital employed stood at around 23%, well in excess of our cost of capital. And this is my, this will be my 33rd and last quarterly earnings released at Infineon. I want to take the opportunity to sincerely thank you all for your unwavering interest in Infineon as well as the shrewd questions and thought-provoking comments over the last 8 years. I've thoroughly enjoyed the constructive dialogue with you and hope you will continue to accompany Infineon's growth trajectory. Let me now hand back to Reinhard, who might, will comment on our outlook from the chancellor's plane again.

Thank you, Dominik. I will speak louder. I hope that this come over more clearly. As said in the beginning of this call already, the current market environment is showing high levels of uncertainty. Therefore, we are monitoring demand trends carefully. In our view, this quarter ahead will be a difficult one, characterized by inventory reductions by certain parts of our customer base. We are, however, also seeing indications for normal or even slightly better-than-normal seasonality in several of the markets we address starting in the June quarter. This is the context in which we provide our guidance as follows. Assuming an exchange rate of $1.15 for the U.S. dollar against the euro, we expect revenues in the currently running second quarter of our fiscal year 2019 to remain flat compared to the December quarter, plus or minus 3%. Breaking it down by divisions; ATV and DSS are expected to grow quarter-over-quarter, whereas IPC should see a stable revenue and PMM a mid-single-digit percent decline. At the midpoint of the guided revenue range, we expect a segment result margin of 16% of sales, burdened by annual price declines in particularly in ATV and DSS, which usually occur in the first calendar quarter, and some inventory corrections. Now to our outlook for the full fiscal year 2019. Adding together the actual figures for the first and our projections for the second quarter, plus our expectations of a decent seasonal recovery in late spring, early summer, we should be able to reach the lower end of the range that we guided for in November, which was 11% plus or minus 2 percentage points. In other words, we expect annual revenue growth of around 9%, meaning that Infineon will again significantly outgrow both the total semiconductor market as well as its particular market segments. From a divisional perspective, ATV is expected to grow faster than group average. IPC should see growth at -- and PMM below the average for the group. DSS revenues are expected to decline by a low to mid-single-digit percentage. We as a management are determined to safeguard our profitability over times of lower growth and have -- we have initiated steps such as strictly limiting hiring. Consequently, we are predicting revenue levels -- we still expect a segment, as a result, margin of 17.5% of sales. In the same vein, we adjust our ramp plans to reduce revenue projection and cut our previously communicated investments into equipment by an amount of €100 million to €200 million. At the same time, we will continue to invest into our house manufacturing capacities for such products that continue to trend strong demand that are in allocation. This will enable us to capture market opportunities and foster growth in the second half of our fiscal year. For the current fiscal year, we now expect investments, which will include also capitalized development costs, of around €15 billion . We will proceed with the building of the new 300 millimeter clean room in Villach. Our guidance for depreciation and amortization for the fiscal year 2019 remains unchanged at around €1 billion. Before I come to the conclusion, I want to thank Dominik for his outstanding support of the company. He was a great colleague helping us through a lot of interesting and fascinating quarter and supported the increase in profitability and the growth of the company outstandingly. We wish him all the best in the next step he is doing, where his hobby of the airplane industry, he will explore more and more in detail. And clearly, we will miss you. And this is also the -- a reason why I wanted to make the introductory remarks. Otherwise, Dominik would have been -- done it completely, but I think we cannot expect that he reads that words I just said. So with this, I summarize the key points. Our market environment has become more challenging, but we are navigating it well so far. Evidence of this is our first fiscal quarter, which we completed exactly as predicted in terms of revenue and even slightly better than anticipated in terms of segment results. Our core power business remains resilient, with structurally realizing content across a number of applications, but several end markets currently experience a more pronounced slump than previously anticipated, and Infineon's is not isolated from macro uncertainties. Consequently, we adjust our plans to protect margins on the one hand and facilitate for industry average growth on the other. Ladies and gentlemen, this concludes our introductory remarks, and we are happy to take your questions. At that point, I want to say goodbye and thank you for bearing the background noise from the jet. All the best, and well, goodbye.

[Operator Instructions] And we'll now take our first question from Sandeep Deshpande from JPMorgan.

I have two questions, sir. Firstly, on the PMM business, you have indicated that you have seen a decline in the book-to-bill in the business. Can you talk through what has happened to take the book-to-bill down from the over 1.5 in the last quarter to below parity at this point and how the backlog in that business looks at this point? Secondly, has pricing in MOSFETs, for instance, begun to correct? Or is it mainly due to the unit demand in that business which has caused the book-to-bill to soften then in the business? And then secondly, my question is on the capital spending. I mean you have moderated the capital spending. Can you talk about the areas where you are spending less this year? And in terms of the 300 millimeter fab, does it still remain, in Villach, does it still remain on track?

Yes. Sandeep, Helmut Gassel here. To the question regarding what happened in the PMM market, I think it'd been pretty clear that the market for servers has come to a, let's say, slower market already towards the end of the year, which has then led to an increase of inventory in that respective channel, which then, of course, has led to a lower order behavior, order intake on our end as well. So then inventory has risen roughly by somewhat high single percentage digits in our channel overall. And so, and has come, the rise has come to a halt, so we expect that we will still have a lower ship-through, I would say, into the channel for this quarter but, by the end of the quarter, should be finalized. With respect to your question regarding pricing, basically this has not been affected yet, so it's a stable level. And the sluggishness is more on the volume side right now.

And this is Jochen Hanebeck. Sandeep, on your second question, regarding to the CapEx. As outlined, we have reduced the CapEx somewhat, mainly in the capacity expansion in Kulim but also somewhat in Dresden. The new facility in Villach is not affected, as this is planned to hit the market in 2021. So this will be in line with our long-term growth drivers. At the end -- at the same time, we accelerate also some investments into high-voltage MOS and IGBT-related equipment to meet the demand which was described also in the previous statements in -- to be still in allocation. And of course, the number of our total investment budget including everything is €1.5 billion, not €15 billion, as you may have understood from the plane communication. Thank you.

We will now take our next question from David Mulholland from UBS. Please go ahead, your line is open.

Hi, thanks very much. I just wonder if you could comment on what you're doing in terms of utilization rates as you move into the current fiscal quarter, whether that's moved lower at all and having a bit of an impact on margins as well in the quarter; and also then just what you think, given your utilization planning, how your own inventory levels might sit as we get to the end of the fiscal Q2 quarter.

So this is Jochen Hanebeck again. So first of all, we are in a good position that, mainly in the area where we see the slower demand in PMM, we have outsourced this to a good extent. So this is, of course, very beneficial in this situation. However, we do see some underutilization in our own factories, mainly Dresden 200 as well as Temecula a little bit in the back end, but again most of it is at the outsourced -- in the outsourced volumes. Inventories, inventories went up, as you can see from our statement, in the last quarter, again mainly in this area of PMM, low-voltage MOSFETs. And we think we will work through that inventory through the next 1 and 2 quarters.

But do you think, given the planning you have around utilization rates, should we expect inventory to be up again in absolute terms by the end of this quarter? Or you can keep it at the same level or decline.

I think, over a 2-quarter period, it will be flat. The exact number now at the end of March is difficult to predict, but clearly, we have taken measures again in the outsourced production to get it in line with the demand as quickly as possible.

That’s great. Thank you.

We will now take our next question from Johannes Schaller from Deutsche Bank. Please go ahead, your line is open.

Thanks for taking my questions. I was wondering on your auto business. You obviously have a lot of growth from xEV and ADAS, but you commented on more standard business engine management, body safety to obviously be affected by the production cuts that we have seen. Could you maybe give us some numbers how that business has grown this quarter excluding xEV and ADAS and how that maybe compares to last year and what we should expect for fiscal Q2? I think that would be helpful for us to understand. And secondly, one of your U.S. competitors has commented yesterday on their call that in parts of their business actually, over the last 1 or 2 weeks, they saw some recovery in booking trends. Is there any kind of end market where you see also some improving trends or where you saw some improving trends very recently at all?

So it's Dominik here. I will start with that question of how exactly the ATV growth is composed, so to speak. Let me give you some hints on a full year basis for the current fiscal year as we see it. And I think that's pretty analogous for the December quarter and the March quarter, but I don't want to break it down too much. So it is actually true that basically, the 3 topics xEV, advanced driver assistance systems and the AURIX ramp are basically delivering the lion's share of the growth, implying that basically everything else is very, very kind of sluggish. You can say flattish. And that means that this whole story about car unit growth being projected at kind of 1% or so, I think, in sales terms for 2019 is actually conservatively reflected in our guidance because, in order for us to hit a flattish traditional car market, we need basically car market sales on our semiconductors. Given that there are still some content gains even outside these themes of xEV and ADAS means that we can actually live with a very subdued car unit growth in 2019. And it's extremely important to highlight that, especially in Automotive, a lot of the second half ramps we are foreseeing really is centered around these fast-growing themes. There is still a significant gap between the customer demand and what we can ship. And by virtue of ramping our capacity for xEV and ADAS and also bringing AURIX up, we can basically deliver the bulk of the growth in ATV. And this is why we are so confident about the second half recovery in ATV. It's not so much driven by an assumption that unit growth will kick back into gear.

Yes. With respect to the other question of what we expect from the market going forward. Helmut Gassel here again. In China we've seen last year a decline of 4% in production for the first time in 11 years, I believe. And therefore, a recovery is expected. Signs are, I would say, a little bit early to interpret what we see in the market as true signs for that recovery, yet it can be expected that it's going to be better in 2019 than 2018. There also is an expectation of the stimulus program in China to become effective sometime soon, and that should also further help with some growth. In Europe the WLTP has also been, is expected to be digested by now, so that there is some recovery to be expected as well. Again, signs, I would be rather careful to overinterpret what we see there. The good piece and that is I think what Dominik also referred to, is the fact that new energy vehicles in China, there have been 240k, roughly 240k vehicles released in December, 1.2 million vehicles over the year of 2018. So there is this extremely strong growth driver of new energy vehicles in China. And I think also the latest news from Europe indicate that there is a growth to be expected also in the nearer term in Europe.

That's very clear. And Dominik, all the best for your new job.

Thank you.

Our next question comes from Jerome Ramel from Exane BNP Paribas. Please go ahead. Your line is open.

Yes. Good morning. More medium-term question. If I look at your strategy in power, one of the key assumptions you had was that you will be the only one, roughly, to have a 300 millimeter fab going forward, with your competitors in Japan not investing and the U.S. neither. STMicro just announced that it will build a 300 millimeter fab targeting BCD and IGBT, so does it change a little bit the equation for you in the long term, the market share gain you have, let's say, in 10 years down the road? Or is this something that you already have taken into account? Thank you.

Yes. This is Jochen Hanebeck again. So indeed there are some statements made by competitors about 300 millimeter or power on 300 millimeter. First of all, BCD is a different sort of technology. It's not really comparable to power discretes. And in IGBT and MOSFETs, there are statements that others want to engage. Obviously, they want to mimic our success. However, it's a long, long shot. As we outlined in our Capital Markets Day, you need a lot of revenue in order to justify and load quickly a 300 millimeter fab. And besides that, there's a long learning curve, especially on the thin wafer handling which is unique to power discretes and unrelated to BCD or other technologies. And we announced 10 -- Dresden 10 years ago. And so it will take time. And if you mix now BCD and power discretes, it will not make the fab as efficient as our fabs. Thank you.

We will now take our next question from Janardan Menon from Liberum. Please go ahead, your line is open.

Hi, good morning and thanks for taking the question. Reinhard, on the -- on his comments, said something about having signs of some better-than-normal seasonality into the June quarter in some areas. I'm not sure whether I understood that comment correctly, but could you elaborate on what those areas are? Would they be mainly in the Automotive side in terms of EVs and things? Or is it sort of more broadly across other parts of the business as well? And given that you are slowing down your ramp at Dresden 300 as well, as well as in Kulim you said on the back of this one, what impact does that have on your profitability? Is that a sort of positive for your profitability expectations? Or is that sort of neutral to negative because you'll also have a lower utilization level to deal with in the course of the year?

Yes, thanks, Janardan. It's Dominik here. And let's start with the latter question. As Jochen has elaborated, we are kind of working some inventories down. That will have a certain mark predominantly on outsourced volumes but also internally. All of that is already embedded in the change of the margin as we transition from the kind of 11% guidance to the 9% guidance in terms of top line growth. If you do the fall-through from our usual segment result versus revenue, 50% fall-through; if you continue to produce, if you adjust inventory 0.75 on the dollar in terms of segment result loss, you'll see that with the 17.5% we are actually doing slightly better than just doing the kind of transfer to the lower revenue level. So all of these topics you mentioned are embedded. And the second half recovery, I'll let Helmut comment.

Yes, Helmut Gassel again. Thank very much for the question. So as Reinhard wasn't so easy to understand, let me repeat at least what he said to guidance for the second quarter also. So second quarter, we guided flat in terms of revenue. And he also said that that growth, there's actually growth coming from Automotive as well as from, to a lesser extent from our Digital Security Solutions, whereas IPC is flattish and PMM is actually declining. So that's the current status that we jump off of. And the second half recovery is then continuous growth by Automotive, actually not, to some extent accelerating but only to some, whereas PMM is actually picking up then in growth in the second half of the year, actually with then accelerating towards the last quarter. So that's basically the growth drivers we expect; Automotive and PMM to then accelerate, IPC to continue and DSS to come back to better levels than in the past quarters.

Just a quick follow-up on the PMM. Is that second half improvement based on server improvement, or is it coming from elsewhere?

Well, it's several things. Yes, servers is a part of it. We have said before that some inventory has been built up. That inventory correction, I would say, in the channel should be finalized by the end of the March quarter. And then eventually also the mobile market will pick up as well, with additionally some new products ramping as well for us.

Yes. And Janardan, I mean maybe we have not been so clear on that. We believe we are strongly convinced that we currently, especially in PMM on the lower-power end, under-shipping end demand because we are working off distribution inventory. And there is the assumption that once that is completed, then obviously there is a certain recovery expected.

We will now take our next question from Adithya Metuku from Bank of America.

So when I compare your guidance to the likes of Texas Instruments, ON and even NVIDIA, where revenues are expected to be flat to down, your guidance of 9% growth is really exceptional. I get the content growth story, but I just wanted to better understand what you've factored in, in terms of unit production, global car unit production, in 2019 into your guidance. And I've got a follow-up.

Yes, Helmut Gassel again taking this question. So IHS is predicting a unit car growth of 1%. Given the fact that there was a steep decline in 2018 and towards the end of December 2018, we see that as a, let's say, rather bold statement. As Dominik commented earlier, we are expecting more of a flattish development of car unit growth.

Understood. And secondly, it feels a bit like the trade tensions level of demand from Chinese distributors could come back very quickly. And PMM could drive significant upsides, especially given what you seem to be assuming in your guidance, so any color on how you expect bookings to develop as you exit the March quarter in the PMM business would be? Any color there would be helpful.

Yes. As we said, the book-to-bill has dropped below 1. Nevertheless, we still have a very steep order book on hand. So there is still a lot of orders that we have in our house and that we are expecting to ship towards. And then the recovery in the second half of the year would certainly then also see some pickup in orders later in the, let's say, next quarter.

We will now take our next question from Achal Sultania from Crédit Suisse. Please go ahead.

Hi, good morning. Just one clarification on IPC. Obviously, you mentioned that you've still seen areas of growth in IPC, around traction, around renewables. Clearly, we've seen a lot of data points coming out around factory automation and industrial pointing to ongoing weakness. Just wanted to understand how sustainable that revenue momentum in IPC is and what gives you that confidence going into the June quarter. And then secondly, on DSS or chip card business, clearly margins have been under pressure because of revenue decline. I -- margins have gone down from like almost close to 20% to 10%, 11% now. Is there a floor for that business in terms of margins? Can you do something in terms of cost structure or outsourcing to protect margins at around 10%, low-teens percent going forward in the long term? Thank you.

With respect to the IPC business -- Helmut Gassel again. Yes, we've seen actually very good momentum on our very high-power business. So that's actually traction. And wind in particular, offshore has been quite strong. And on the other hand, you are right. The, let's say, standard industrial drives business has been weaker, and therefore some inventory has been built up. We see that. We are working towards that. The same is on the -- same is true for the gate drivers, which has also some indication for major home appliances. Nevertheless, there is this underlying inverterization trend that we see in major home appliance that we think there will be a pickup later in the year on this side. And we also believe that, when the industrialization trend continues in China, the pickup in drives will also happen later in the year. Nevertheless, it's certainly an area that we'll be watching out closely for.

Achal -- and don't forget that even on IPC there are a lot of products still on allocation where we are ramping capacity, which give us a leg up in the second half of the year. So even if traction -- sorry. If the general drives market is not doing so great, there is a lot of kind of, yes, buffer to work through before we would feel it in the top line in that segment. On DSS the question was about the margin protection. Of course, we will work very hard, and we've already initiated measures to preserve a -- clearly a double-digit margin for the full fiscal year. So you know the March quarter is seasonally still the weakest. It's kind of the crunch quarter. We have certain good booking activity for following quarters. And from that perspective, our confidence is high that you will see us print a double-digit margin for the full fiscal year '19 on a full year basis.

Thanks a lot, Helmut and Dominik.

We will now take our next question from Alexander Peterc from Societe Generale. Please go ahead, your line is open.

Yes, good morning and thanks for taking my question. I'd just like to come back a little bit on the inventory reductions that you mentioned. So I -- can you clarify that most or nearly all of that will be cleared in the March quarter and we'll then get into the June quarter with a recovery? Is there any difference among the divisions here? And could you comment specifically on Automotive? Because you do mention some inventory reduction impact there in the December quarter. Is that still continuing in the current quarter? And do you have really good visibility on how quickly it is going to clear?

Okay, this is Jochen Hanebeck again. I would like to repeat what I said before. It's now very difficult to predict, giving the market momentum, whether it will really happen exactly on the 31st of March, but we are very confident that we work through the excess inventory over this and the next quarter. And then it depends on what has been discussed before, whether there is a pickup after Chinese New Year, how the car incentive scheme in China is implemented and so on and so forth, but our timeframe up to the summer, we feel confident that we have worked it through.

And Helmut Gassel adding. As I'm not sure whether you were referring to our own inventory or to the inventory in the channel, a little bit more color as to the channel inventory. As the December month has been very slow on production in China, in particular, there has been a buildup of inventory in the channel in China for Automotive, which is now being worked through as well. So yes, that has been steep there, as far as increase is concerned, in December. The PMM, also an increase in inventory but the decline already starting, so we see that, or confident in the channel by March, they will be back to very normal levels.

Our next question comes from Andrew Gardiner from Barclays.

I had another one sort of around the area of utilization and inventory. In particular, on Automotive you've had quite extended lead times for some time in power in particular given the structural growth in that area. Given what you're seeing in the end market, can you just update us as to where lead times are? I presume they've started to come down as a result, but it'd be helpful to understand the magnitude there.

Yes. Helmut Gassel again. And you've got to be very careful there. As Reinhard said, it is a very diversified picture. We have still products in strong allocation. So there lead times are still rather high, whereas in other areas lead times have come down quite substantially. So it's a spread picture anywhere between regular lead times and still very high lead times for some of our items. And these items are in particular the structural growth drivers that we've mentioned earlier, whereby Dominik said that we will be bringing on more capacity in our, in the second half of the year. And so, therefore, chances are that the lead times will come down later in the year but certainly not now on these areas.

Maybe one comment because we've not mentioned it yet, that reductions in CapEx do not limit our current capability for the current fiscal year. I think that it's very much centered for capacity that would be required the next fiscal year.

We will now take our next question from Stephane Houri from ODDO.

This is a question on margins. First of all, on the Automotive, the EBIT margin, the segment result margin, has been under pressure. Do you think this trend will remain specifically on Automotive? And do you think that you can assess a kind of a flattish margin for the full year? And on the opposite, on PMM, as your business is under pressure and it's one of the biggest contributor in terms of margins, how do you see evolving the margin level going forward in the year? Thank you.

So it's Dominik again. On Automotive you might have realized that the Q1 segment result margin, despite down on the December quarter, is slightly up to the March quarter of the prior year. And in the same vein we think that we can keep the kind of about 14% margin I think we've printed last fiscal year for Automotive stable, more or less so. So don't expect any wild decline on a fiscal year-to-fiscal year comparison. On PMM I think all the factors that we have discussed on the positive side, still very healthy pricing levels -- and as has been stated, we are not seeing for the time being that prices are kind of coming down, especially on the high power where we have a very strong position. But PMM margins last fiscal year were around 23%, and we would expect a similar margin level in the current fiscal year.

So we'll take our next question from Sebastien Sztabowicz from Kepler. Please go ahead, your line is open.

Yes, thank you for taking my question. It was Sebastien Sztabowicz. And I have a question on the interest rate in the 300-millimeter thin wafer fab in Dresden. What was the level of fab loading in Q1 in that fab? And secondly, you had the best gross margin for the group in Q1 at 40% plus. What was the driver behind that in the first quarter? And do you think this could be a sustainable level for the coming quarters? Thank you.

Okay, on the loading in Dresden, to answer that question. This is Jochen Hanebeck. The factory was fully loaded in the sense of loading the existing capacity, the existing equipment. Other than that, we said that, from the turn of the year '17, '18 onwards, it's reasonable to take a linear line towards 2021 in terms of capacity growth to the utilization limit of the clean room. Now this will be a little bit delayed given the pushout but not really significantly. So I think overall I would say we are on track with the utilization of the clean room in Dresden.

Anyone still on here? We heard some strange beep.

There are no further questions, sir. I’ll hand the call back to the speaker for any additional or closing remarks.

Okay, then we are through with our question-and-answer session for today. Thanks, all, for participating and for your questions. With that, we would like to conclude our First Fiscal Quarter Conference Call. As said in the beginning, a bit of special circumstances. Once again, apologies for the sound quality that was affected by satellite call of Dr. Ploss from an airplane, but I guess most of the things came across still. We are -- yes, we are analyzing to discuss or to publish our introductory notes so that all of us -- all of you can read it at your leisure. For further questions, please feel free to contact us in the IR team here in Munich. Thank you very much, and have a good day.