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MagnaChip Semiconductor (MX) Q4 2019 Earnings Call Transcript

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MX earnings call for the period ending December 31, 2019.

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MagnaChip Semiconductor (MX 1.30%)
Q4 2019 Earnings Call
Feb 19, 2020, 5:00 p.m. ET


  • Prepared Remarks
  • Questions and Answers
  • Call Participants

Prepared Remarks:


Good afternoon, ladies and gentlemen, and welcome to the Q4 2019 MagnaChip Semiconductor Corporation earnings conference call. [Operator instructions] As a reminder, this conference call is being recorded. I would now like to turn the conference over to your host, Mr. Bruce Entin, head of investor relations.

Please go ahead, sir.

Bruce Entin -- Head of Investor Relations

Thank you, Alexander, and thank you for joining us to discuss MagnaChip's financial results for the fourth quarter ended December 31, 2019. The fourth-quarter earnings release we filed today after stock market closed and other releases can be found on the company's Investor Relations website. A telephone replay of today's call will be available shortly after the completion of the call and the webcast will be archived on our website for one year. Access information is provided in the earnings press release.

Joining me today are YJ Kim, MagnaChip's chief executive officer; and Jonathan Kim, our chief financial officer. YJ will discuss the company's recent operating performance and market outlook for our product categories, and Jonathan will provide an overview of our Q4 and year-end financial results. There will be a Q&A session following today's prepared remarks. During the course of this conference call, we may make forward-looking statements about MagnaChip's business outlook and expectations.

Our forward-looking statements and all other statements that are not historical facts reflect our beliefs and predictions as of today and, therefore, are subject to risks and uncertainties as described in the safe harbor discussion found in our SEC filings. During the call, we also will discuss non-GAAP financial measures. The non-GAAP measures are not prepared in accordance with generally accepted accounting principles, but are intended to illustrate an alternative measure of MagnaChip's operating performance that may be useful. A reconciliation of the non-GAAP financial measures to the most directly comparable GAAP measures can be found in our fourth-quarter earnings release available on our website under the Investor Relations tab at I now will turn the call over to YJ Kim.


YJ Kim -- Chief Executive Officer

Thanks, Bruce, and welcome to everyone on the Q4 2019 conference call. First, we'd like to extend our deepest thoughts and prayers to those coping with the impact of the coronavirus health crisis in China and elsewhere. I will come back to discuss this issue a little later. Let's begin now with a recap of Q4 results and the business outlook.

We ended 2019 on a high note in Q4. If you recall, our October 23 earnings call, we said we expected normal seasonal softness in Q4 and guided revenue to be between $181 million to $191 million and gross profit margin to be between 24% to 26%. Due to an improving business environment, we updated guidance on January 13 and projected Q4 revenue between $198 million to $200 million and gross profit margin between 26% to 27%. Today, we reported actual Q4 revenue of $200 million, which was at the high end of the updated guidance range and represented the highest level achieved in any fourth quarter since 2012.

While seasonal softness was a factor for all three businesses, as expected, total revenue in Q4 increased 11.5% from a year ago. OLED revenue was significantly better than expected. Foundry was better than expected, and power was seasonally softer than expected. Corporate gross margin, profit margin of 26.6% was slightly above the midpoint of the updated range due to better-than-expected fab utilization and improved OLED product mix and better manufacturing yields at an external foundry on latest generation OLED display drivers.

Our cash position improved by 15.5% sequentially, which Jonathan will discuss shortly. Now let's review the performance of each business unit in Q4, beginning with OLED. OLED revenue of $67.3 million was the highest level achieved in any fourth quarter in the company history. Revenue increased twofold from $33.2 million a year ago and declined by only 14% sequentially from Q3.

The sequential decline was significantly less than we anticipated heading into Q4 and compared very favorably to the 43.1% decline we experienced from Q3 to Q4 in 2018. Two smartphones with our OLED drivers launched in Asia in Q4. And we expect up to another nine OLED smartphones with our display drivers will launch in the first half of 2020. While all our OLED driver IC contributed to revenue in Q4, our 28-nanometer drivers had a very good production ramp following their initial launch of mass production in Q3.

I'd like to now to discuss a new technology initiative that will extend our reach into multiple addressable sectors. We are excited to announce that we've developed and introduced the industry's first single-chip active metrics micro LED driver ICs for large panel televisions. At CES, a major TV maker showcased 75-, 93- and 150-inch TV models that include our micro LED DDIC. Depending on the resolution of the TV, up to 256 units of our micro LED DDIC can be used for TV.

We currently expect to begin initial pilot production toward the end of this year. Looking ahead, we believe some micro LED driver ICs will be used for ultra-high-end TVs and for large digital signage applications in commercial and industrial markets. Speaking of extending the reach of OLED technology, we are encouraged to see that new markets aside from smartphones, tablets and TVs have begun to adopt OLED as a replacement for LCD. The auto market is a prime example.

Some carmakers already use OLED for brick lights, but the technology is beginning to move from the trunk to the driver seat. Just a few weeks ago, Cadillac announced its 2021 Escalade SUV will contain three screens that form a 38-inch flexible curved OLED dashboard display. Mercedes also has reported plans to replace its LCD cockpit display with an OLED display in E-Class and S-Class models. We have a number of attractive LCD design wins in the auto segment, but we can see the day when LCDs will convert to OLED for auto application, just as they have done in smartphones.

As a result, we believe the auto market represents a promising long-term OLED opportunity. To sum up on OLED, we now have a total of 11 OLED display drivers in our portfolio, including five of the latest generation 28-nanometer drivers, one of which we added in Q4. One year ago, at this time, our OLED portfolio had a grand total of six drivers, and we had only one 28-nanometer driver. We will continue to launch new display drivers in 2020 with differentiated features aligned to changing market requirements for next-generation 5G and foldable smartphones.

Our OLED drivers already support enhanced capabilities enabling functions like AR and VR with refresh rates of 220 Hertz, interfaces to optical sensing and fingerprint on display and features like QHD+ resolution and OLED correction IP to compensate for pixel aging. Our drivers also are available in different package types, including the latest and most cost-effective technology called Chip On Plastic. Lastly, our 28-nanometer drivers, which are 20% smaller in chip size than the previous generation, have the lowest power of any captive or independent OLED supplier in the display industry. If we put aside the demand risk from the coronavirus, we are highly confident about our ability to increase OLED revenue, gain market share and extend our technology lead as the No.

1 independent supplier of OLED display drivers. As part of recent internal organization, I have now assumed the role of general manager of the display business in addition to my role as the CEO of MagnaChip. We believe this change will allow us to provide laser-like focus on the display business to best capitalize upon the attractive growth opportunity in the OLED and other relevant emerging markets. Over the past two years, display has grown dramatically.

And now we have the opportunity to help take the display business to the next level of product development end market growth. To increase our focus on power, we've named a dedicated power GM to run that business. For now, I continue as the acting general manager of foundry business. Let's turn now to our power standard products business.

Power revenue grew for the year 2019, but revenue in Q4 was down 18.1% from Q4 2018, and down 22.4% sequentially from Q3 of 2019. We said on the Q3 earnings call in October that power revenue was expected to decline in Q4 due to seasonal softness, but the business actually declined more than we anticipated due primarily to weakness in consumer and communication markets. We also saw pricing pressure stemming from an inventory correction. We don't break out profit margin in the power business, but I can share with you that power profit margin improved significantly year over year in Q4 due to improved product mix.

While we now estimate that power revenue may go sideways in the near term, we view this as a temporarily pause in our long-term growth outlook. As you may recall, we are involved in 10,000-hour qualification stages with auto suppliers, and we expect the auto segment will represent a meaningful growth opportunity for our power business in 2021 and beyond. Now turning to the foundry business. Foundry revenue of $86.6 million in Q4 increased 4.2% from Q4 of 2018 and was at the highest level for Q4 in six years.

Revenue was down 4.1% sequentially from Q3 of 2019, but the decline was less than we anticipated. Eight-inch foundry revenue in the second half of 2019 was at its highest level since the company went public in 2011. Revenue for BCD EEPROM increased 21% year over year and nearly 15% sequentially from Q3 '19, offsetting a decline in high-voltage processes. Foundry revenue from new products held steady at 27% in Q4 as compared to Q3 2019, which we attribute to high-touch customer service, excellent product and eight-inch process like BCD EEPROM that are aligned to critical market needs.

New products are those in production for one year or less. As for the strategic evaluation process of the foundry business and Fab 4, there's nothing further we can disclose publicly at this time. But as stated previously, we continue to make substantial progress in discussion with multiple interested parties toward a possible sale of the business, as well as consideration of accretive business conversions and other options. We reiterate that our decision regarding the outcome of the various options of the strategic evaluation process will be guided by what the board and management consider to be the best overall path to improve MagnaChip's profitability and to maximize shareholder value.

We appreciate your continued patience. Now let me make a few points about our business outlook. Coronavirus aside, I can recall a time when I felt more upbeat about the long-term outlook for MagnaChip. We are poised to expand our position as the leading independent provider of OLED DDIC in a range, large market space growing by double digits.

We are extending our market reach with our first-ever single-chip active metrics micro LED display driver. We are also well-positioned down the road with OLED drivers for auto displays and high-voltage power products for automotive. When I look back on 2019, trade tensions were headwind for many semiconductor firms but a tailwind for MagnaChip. And we are well-positioned in the future since we occupy a unique place in the Asia supply chain with our 100% our IP and our own fab located in Korea.

As a final note, I am proud that the Global Semiconductor Alliance has named MagnaChip as one of the three finalists for the 2019 Award of Most Respected Emerging Public Semiconductor Company. Now let me make a few comments about the coronavirus. From a business perspective, we are still assessing the potential impact since the coronavirus situation is fluid. MagnaChip historically has experienced typical seasonal softness and a decline in revenue in its fourth quarter as compared to the prior fourth quarter, but we enter 2020 with a more optimistic view.

Prior to the coronavirus outbreak, our primarily internal forecast had anticipated Q1 revenue would be slightly higher than $200 million in revenue reported in Q4 2019. MagnaChip's manufacturing supply chain resides largely outside China, so there is negligible impact on our results. However, based on our preliminarily assessment public health measures taken to protect population in China likely will affect customer demand in Q1. As a result, we've lowered our internal expectation and widened the typical guidance range, we normally would provide for Q1 2020 to help account for lingering uncertainty around this public health crisis.

Now I'll turn the call over to Jonathan and come back for Q&A. Jonathan?

Jonathan Kim -- Chief Financial Officer

Thank you, YJ, and welcome to everyone on the call. Let's start with key financial metrics for the 2019 year and Q4. Revenue in 2019 increased 5.5% despite macro uncertainty that caused the non-memory segment of the semiconductor industry to decline by 3.8%. It was our second straight year of annual growth.

Our growth was fueled primarily by a lineup of homegrown standard products, including low-power OLED display drivers that accounted for 87% of our display revenue. The premium power products that represented over 50% of total power revenue. Let's turn to OLED results in 2019. OLED DDIC revenue of $267.1 million set an all-time record and broke our previous record of $188 million in 2018.

That 42% rate of annual OLED growth was more than 2.5 times the rate of growth for OLED smartphone panel shipments worldwide, according to IHS. Turning now to power. Revenue increased 12.4% for the first nine months of 2019 but a slowdown in Q4 reduced our annual growth rate to 4.1%. As a reference, power market declined by 3% in 2019 according to IHS.

Still, revenue of $176.2 million marked our third consecutive year of growth following double-digit year-over-year increases in revenue in 2017 and 2018. Revenue from premium products, which include Super Junction MOSFETs, IGBT and power IC increased by 21.2% year over year. Now turning to foundry. Revenue in 2019 was $307.1 million, down 5.6% from $325.3 million in 2018, but those figures don't tell the whole story.

Foundry revenue and foundry fab utilization were extremely disappointing in Q1, but the business stabilized faster than we expected and staged an impressive recovery in the final three quarters of the year. Now to Q4 results. Revenue in the standard products group, which includes display and power, was $113.3 million, up 17.7% year over year and down 18.6% sequentially from a record $139.2 million in Q3 2019. Display revenue was $75.5 million, up 50.6% year over year and down 16.6% sequentially from a record of $90.6 million in Q3 of 2019.

The year-over-year increase was primarily attributable to an increase in revenue related to our mobile OLED display drivers and was especially impressive considering that we continue to strategically reduce the production and sale of our lower-margin LCD products. In Q4, LCD revenue was $8.2 million, down 52% as compared to $17 million for Q4 of 2018. For the full year, LCD revenue was $41.4 million in 2019, down 39.3% as compared to $68.1 million for all of 2018. OLED revenue represented 89.2% of total display revenue in Q4, up from 66.2% in Q4 2018.

As noted previously, power revenue was $37.8 million in Q4 and foundry services group revenue was $86.6 million. The standard products group represented 57% of total revenue in Q4, up from 54% in Q4 2018. The foundry services group represented 43% of total revenue, down from 46% in Q4 2018. Let's now recap profitability metrics in Q4, beginning with total gross profit and gross profit margin.

Total gross profit was $53.2 million or 26.6% or slightly above the midpoint of the updated guidance range of 26% to 27% provided on January 13. Gross profit in Q4 increased from $43.9 million or 24.5% in Q4 2018. Fab utilization in Q4 was in the low to mid 80% range but was higher than we had expected when we provided our initial Q4 guidance during the Q3 earnings call on October 23. Fab utilization in Q4 compared to approximately 90% in Q3 2019 and the mid-80% range in Q4 of 2018.

As we said on many earnings calls in the past, we believe gross profit is an important financial metric to monitor because of the potential flow-through to operating income, adjusted EBITDA and cash flows. In Q4, cash and cash equivalents totaled $151.7 million, up 15.5% sequentially from $131.3 million, and highest in six years, and we recorded $20.5 million in net operating cash flow. This represented the third consecutive quarter of net positive operating cash flow. The standard products group gross profit margin in the fourth quarter was 26.9% as compared to 25.6% in the fourth quarter of 2018 and 25.3% in the third quarter of 2019.

The year-over-year and sequential improvement in the standard products group's gross profit margin was due primarily to an improved product mix and stabilized wafer yields from an external supplier on OLED products that entered production in the third quarter of 2019. Foundry gross profit margin in the fourth quarter was 26.1% as compared to 23.2% in the fourth quarter of 2018 and 28.3% in the third quarter of 2019. The year-over-year improvement in the foundry services group's gross profit margin was primarily due to an improved product mix. Now turning to operating expenses.

SG&A was $19.8 million or 9.9% of revenue as compared to $17.5 million or 9.8% of revenue in Q4 2018 and $16.8 million or 7.3% of revenue in Q3 of 2019. R&D was $19 million or 9.5% of revenue, compared to $18.5 million or 10.3% of revenue in Q4 2018 and $17.4 million or 7.6% of revenue in Q3 2019. The increase in both SG&A and R&D was primarily attributable to the timing of equity-based compensation. Turning now to the balance sheet.

As mentioned previously, cash was $151.7 million. As you recall, our interest payments occur in the first and third quarters of the year. Accounts receivable totaled $95.6 million, a decline of 10% from $106.3 million in Q3 of 2019. Inventories totaled $73.3 million or about flat was $72.7 million in Q3 2019.

Capex was $6.3 million in Q4 as compared with $1.7 million in Q3 and $10.1 million in Q4 of 2018. Capex in 2019 was $23 million, down from normalized capex expenditures in 2018, which were approximately $29 million. The decline in capex is consistent with our forecast during our Q1 2019 earnings call. With that, I'll turn the call back to Bruce.


Bruce Entin -- Head of Investor Relations

Thank you, Jonathan. So Alexander, this concludes our prepared remarks. We'd now like to open the call for questions.

Questions & Answers:


Thank you. [Operator instructions] We have your first question from Suji Desilva from ROTH Capital. Your line is open.

Suji Desilva -- ROTH Capital Partners -- Analyst

Hi, YJ. Hi, Jonathan. Congratulations on the progress here. Outstanding results on display and across the board.

So maybe why you've said this multiple times. So can you just kind of go through again why it's been OLED to 28-nanometer product is seeing such a sharp design-in and volume ramp interest? It's helpful to understand that as we go into 2020 and how you're comparably positioned.

YJ Kim -- Chief Executive Officer

Yes. Suji, thank you. So as my remark, we're entering the 2020 with 11 products where five are 28-nanometer. So obviously, that we started production in Q3 '19, and we had a very good ramp in the fourth quarter with more 28-nanometer.

So I think the 28-nanometer products will be a key product, and you will see more 28-nanometer product that's going to tape out and sample and group production in 2020. With the 5G and the foldable, the power consumption is very key, and our key aspect is lowest power consumption. So we think that that's going to play to our advantage and also 28-nanometer products put a foundation our future OLED business road map.

Suji Desilva -- ROTH Capital Partners -- Analyst

OK. Great. And then specifically, on OLED, form factors like foldable and then you talked about large panel TV in one of the first times I've heard you talk about. What kind of contribution can those sub segments make within OLED, if that's the way to think about it? And can those help your gross margin in that business trend upward throughout '20?

YJ Kim -- Chief Executive Officer

So my comment earlier, the comment was in micro LED TV. We have the industry's first active metrics micro LED TV controller, DDS one chip, full chip, so you can put as much as 256. And we also commented that the limited production will start toward the end of 2020. So obviously, it's not going to be big, but I think it's showing the capability of what this company can do.

The micro LED requires OLED knowledge, as well as power IC knowledge, as well as some of the analog. And as you know, we have both display business, OLED business, as well as the power IC to discrete analog business. So that enable us to create the world's commercial active metrics micro LED TV DDIC, so this is just an example of us addressing adjacent or aggregate market that's next to OLED.

Suji Desilva -- ROTH Capital Partners -- Analyst

OK. I didn't catch the part about being end of '20. So that actually helps in terms of timing. And then a similar question for foldable, I think I asked as well in terms of if you take that as a separate set of segment opportunity in '20 for OLED.

Or is it kind of blended in and kind of helped the margin?

YJ Kim -- Chief Executive Officer

Yes. So foldable, as you know, it's embryonic stage. The good thing is that there are already a half dozen products that have been introduced or to be introduced. So we think the foldable is really future of the OLED and the market in the new smartphones, so we are excited about the future prospect of the foldable segment.

So that's how we look at it.

Suji Desilva -- ROTH Capital Partners -- Analyst

OK. Great. And my last question is on the macro environment and the coronavirus China impact here. Since you had to guide a little bit lower than you had previously expected, which of the three segments kind of most contributed to that, more cautious outlook? And more generally, how are your three segments, particularly foundry, exposed to China and the demand environment there? Thanks.

YJ Kim -- Chief Executive Officer

Thank you, Suji. So as you know, we don't break out product by product on where and how much we do. But I can generally tell you that the coronavirus thing, again, I feel really sorry for the people who is going through this tremendous crisis. My hearts are with them.

But at the same time, you don't know how long this will last. But if you look at the history, in the SARS, of course, that's a long time ago, but the market really reacted and kicked back when people saw that the numbers of the contract people start to go down. So again, this one, I don't know how long will it last. But I'm hoping that is the similar kind of kick back that we're going to see.

So that's going to determine the actual market and projection. But in the short term, I think there will be some impact and how it's going to play out, we have to be very cautious. But in terms of foundry, we don't have a big exposure yet, but it's one of the key markets. The foundry revenue is expected to grow, and so that's what I can say.

Suji Desilva -- ROTH Capital Partners -- Analyst

OK. Appreciate the color during the difficult times. Thanks again. Congratulation again, YJ, Jonathan and Bruce.

YJ Kim -- Chief Executive Officer

Thank you.


Your next question comes from the line of Raji Gill from Needham & Company. Your line is open.

Raji Gill -- Needham and Company -- Analyst

Yes, thank you. And I echo my congratulations on the great momentum in OLED. Just going back to the coronavirus, based on your press release, you were thinking about a little over $200 million. And you're guiding to like $187.5 million at the midpoint, so that's $11 million, $12 million impact.

You talked about that you don't have big exposure to foundry yet in China. I just want to clarify that. And is the $11 million or $12 million impact mostly related to smartphones? Just my concern is that demand is going to be affected pretty significantly, particularly smartphones in China because of the extended Lunar New Year, many of these cities are locked down, and so I just want to get an impact -- trying to get an impact maybe going into June as well, if you thought about June at all.

YJ Kim -- Chief Executive Officer

Well, thank you, and I think it's a very valid question. But I think everyone will agree that the visibility is fluid. If you look at what happened in China, we were looking more optimistic before going to Lunar New Year, and the Lunar New Year, as you know, has extended almost three weeks. And the fab production, I mean, the manufacturing production just began middle of last week.

And some went to up to 90% utilization or some are still at the much less than 50% utilization. So again, we started to get some the demand impact or forecast, just getting this week, so I think that's why our visibility is fluid and limited. But the interesting thing is I'm hearing that the TV sales are up year over year, so I think because the people are staying home, and they watch TV more. So again, I think it all depends on how soon this corona gets settled and you start to see that number coming down is going to be very critical.

But obviously, I cannot forecast when that is going to be. And if you look at also the history of the SARS, the industry was at the bottom of the curve and needed a very strong kickback. The industry started to recover, as you know. And we're hoping that it will have a similar curve.

And I'm sure the China government wants to also do the revamp very quickly. So again, the analysts, I'm sure you have similar numbers you look at, but beyond that, I cannot really comment and give you accurate forecast.

Raji Gill -- Needham and Company -- Analyst

And on the power business, which was strong for three quarters and then saw some pricing pressure in Q4 and some weakness in communication and other end markets. YJ, you mentioned that power may go sideways in the near term. Just wanted to see if you could kind of elaborate a little bit further on that comment. Is the pricing pressure from the inventory correction, is that over? And so maybe that reverses itself and you could see kind of a benefit there.

And any thoughts in terms of the end markets in power, picking back up again in maybe Q1 or Q2? Any views on power would be helpful.

YJ Kim -- Chief Executive Officer

Sure. Let's look at the big picture. The power last year, the discrete and power IC for the world has decreased minus 3%, so that's according to IHS. If you look at our power number, we grew 4% year over year.

We had a double-digit growth in the first three quarters. And fourth quarter, just like everyone else, we saw, we cut up with the supply and demand in our customer segments. But we still ended 4% year-over-year growth. It is the market assessment and the data you see from all the power makers.

They think that the market will recover second half this year. And last year, I think the power industry went down due to slowdown in automotive, with the trade tension in China also slowed down. But second half, we expect to see a really good kickback, including, hopefully, the coronavirus is gone, therefore, there is a big acceleration. So my forecast believe is similar to other people who have announced about the outlook on the power business.

Raji Gill -- Needham and Company -- Analyst

That's great. On the foundry side, to the highest level in six years in Q4 and the highest full annual foundry since going public. You mentioned that the strong growth in BCD EEPROM, these high-voltage processes. What end products, end markets are driving this kind of significant increase in your foundry business? And how do you describe your competitive differentiation in foundry given the high-growth last year?

YJ Kim -- Chief Executive Officer

Yes. So to look at the real numbers, we actually decreased in the foundry revenue last year. As you know, we had a very poor Q1 due to the industry downfall where most foundry had between about 20% to 25% downfall Q4 to Q1 in '19. And so despite that, we recovered nicely.

Especially, second half, our run rate on six months was highest on the eight-inch revenue in the history of the company. You are seeing multiple things here. A, I think the industry in foundry is very healthy. I think you will see that the capacity is really tight below 40-nanometer today, due to CMOS and image sensor to latest APs and so forth to RFIC to all kinds, including OLED, by the way.

And then you see eight-inch or so, the supply is tight, so that helps in our favor of our foundry. And I think the product, we offer very competitive BCD technology. We offer very competitive EE for the IoT market, and we do have one of the best low-noise mixed-signal for sensors to other application in this legacy process and I think with continued progress in the stable strategic evaluation keeping our customer intact. So all these points, making our foundry business stable.

Raji Gill -- Needham and Company -- Analyst

Thank you and congratulations.


We have your next question from Atif Malik from Citi. Your line is open.

Atif Malik -- Citi -- Analyst

Thank you for taking my questions, and congratulations on good results and guide. And YJ, I have a question in terms of your March quarter outlook. You're guiding to a better than seasonal total sales. I don't know what's embedded in for display and other segments.

But when I look at some of the revisions the third parties are making to the global smartphone unit forecast because of the supply and demand disruption in China from the coronavirus. We're looking at like 11% sequential units down globally and China units down like 30% year over year. So I'm just trying to understand the guidance that you're providing. How much of that is a function of you guys gaining share versus factoring in the weakness in the overall market?

YJ Kim -- Chief Executive Officer

Yes, Atif, very good question. So let me try to address that. So I think one thing you have to look at is OLED is a growing segment within the smartphone, so I think that helps. And also, I think the 5G is a growing segment within the smartphone.

If you look at the Global Times of China, they said that China mobile believes that the 5G fund sales or introduction in China in 2020 will be higher than 4G phones. So if you look at that, the 5G, OLED, it's all up trend. So even though, just like last year, the smartphone, it was either flat or minus, but we grew 42%. So I think it's a combination of OLED going up, combination of 5G going up.

It helps us, then people who had to sell everything or whether it's OLED and LCD, that's one perspective. And other thing is that this year, our selling into non-China market expect to grow. And I think we alluded in last year that we had a lot of phone introduced by Korean maker, so I think if you look at all these combinations, maybe why we are slightly different than the others. But again, how the corona will do, I don't think anyone knows exactly.

But look, we're taking one quarter at a time and we are also putting wider outlook for Q1 due to the uncertainty that we left in about one month of full revenue.

Atif Malik -- Citi -- Analyst

Great. And then as a follow-up, Jonathan, if you can give us some pointers on how should we think about opex modeling for the full year.

Jonathan Kim -- Chief Financial Officer

Sure. So we've been very focused on cost savings and profitability, and we're able to keep our SG&A relatively flat. So as we look ahead, for the first half of 2020, I think the SG&A will continue to be flattish to the second half of 2019. And then also, with respect to R&D, as we've discussed previously, given our OLED-related activities, R&D could go up.

But overall, I think on the SG&A side, it will be flattish. And on the R&D, the amounts related to R&D will fluctuate based on our activities related to OLED.

Atif Malik -- Citi -- Analyst

Thank you.


I'm showing no further questions at this time. I would now like to turn the conference back to Mr. Bruce Entin. Please continue.

Bruce Entin -- Head of Investor Relations

OK. Thank you, operator. So this concludes our fourth-quarter 2019 earnings conference call. Please look for details of our future events on MagnaChip's Investor Relations website.

Thank you for joining us today.


[Operator signoff]

Duration: 47 minutes

Call participants:

Bruce Entin -- Head of Investor Relations

YJ Kim -- Chief Executive Officer

Jonathan Kim -- Chief Financial Officer

Suji Desilva -- ROTH Capital Partners -- Analyst

Raji Gill -- Needham and Company -- Analyst

Atif Malik -- Citi -- Analyst

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