Maxim Integrated Products (MXIM) 30 Jul 192019 Q4 Earnings call transcript

Good day ladies and gentlemen and welcome to the Maxim Integrated Fourth Quarter of Fiscal 2019 Conference Call. At this time, all participants are in a listen-only mode. Later, we will conduct a question-and-answer session and instructions will be given at that time. [Operator Instructions] As a reminder, today's program is being recorded.

I would now like to introduce your host for today's program, Kathy Ta, Vice President, Investor Relations. Kathy. ahead go Please

Welcome conference Maxim call. Jonathan. quarter fiscal XXXX earnings everyone you, Integrated's to fourth Thank

Officer, Joining and Tunc Financial Chief on Executive Kiddoo. me the Officer, Doluca; call and today are Bruce Chief

usual As our and presentation on press into Relations accompanies process, part financial Investor of we posted in financial external in a information The call. release disclosures this have website. the conference presentation supplemental this earnings our our

Securities In call, statements conference making will Reform light to of like we Private in must conjunction these statements. today's During with warnings some remind the SEC our the be in filings. Litigation considered that I'd Act, cautionary forward-looking you appear that be

statements Investors from differ involve this materially call uncertainty statements events are forward-looking risks made. may cautioned the that in and all and that future

information, our website. filings the and company's For refer to on Securities which posted additional Exchange please are Commission

I'll call Now, the turn to Tunc. over

and today. our Maxim channel Thank we our all reduced to for quarter's results met June participants you, outlook, in and internal both interest while you inventory. your and our us Good quarter Kathy. Integrated. to appreciate last results thank joining expectations, were afternoon distribution If We

manage soft quarter. will we the to and continue September Given in spending the tightly environment, inventory

Today, continued confidence cash dividend to a in difficulty]. increase shareholders our reflecting we announced commitment in our and X% our to return long-term [technical

and outlook. quarter June current now me results detail more Let on provide

revenue. been our reminder, flat has a historic As quarter June seasonality the September from to

and to management we revenue year, system September However, this Huawei, seasonal be accept your battery lower than to from Samsung, lower due customers.

strength X% car decline our year-over-year despite management environment expected quarter anticipate Automotive. by Automotive assistance and production decline in quarter for electronics last significant September battery In units. auto quarter, year June impacted products was start from by In in color will same market with provide vehicles next electric an global growth soft infotainment revenue. driven and we a in system This end the slow I'll driver for and business offset our production. by the and was up a body businesses the quarter, I Automotive

electric management market In to consumers. and for demands uncertainty auto from due forecasting lower systems changing lower battery given we subsidies vehicles, in the shipments China are

year-over-year the anticipate BMS quarter. in still growth electric we vehicles -- products growth revenue September However, in

we forward, of Looking design in growing for have link parking wins a products pipeline serial assistance.

the last Chinese at view OEMs, surround started we of have years, won whom products. have nine Over few some production with sockets our

enable design-win have serial displays also our traction that products and link we China, systems. In high-resolution next-generation for camera

started serial production The link these these receiving first shipments have of customers products. of

with currently products monitoring production comply lighting, LED are for volume to we application that initial with the in introducing reach Maxim's production Additionally, products systems. well are driver integrity work These are expected highest new Automotive as in products levels. technology link driving new automotive for ADAS application serial are with as next our LED-adaptive lighting lighting safety the and few years. monitoring

year Fiscal for design a record XXXX was wins. Automotive

prior fiscal pipeline which new the up the $X.X year. During we won in to year, of XX% close design billion wins was our from fiscal

down next global distribution, Industrial environment. the were me Industrial quarter, the quarter up. Let resales same In to seasonally year, demand Within a was XX% turn June soft the reflecting market. last from

level seasonality continued business overall quarter, resales In a last the in roughly at the September we and the sequential with expect lower distribution and flat year. Industrial significantly

after me. days channel will maintain as inventory our remain Bruce inventory on the of distribution around business we will disciplined XX. right further with details We provide target

of last Communications year. & In next the same me Data & Comms June discuss XX% Data from the Center. quarter, Center down Let was quarter

of driver modules building applications. Year-on-year in center products for revenues declined lower saw used As in we broad-based XXXG also we intra-data demand laser hyper-scale a optical for block products. expected,

& broad Comms by Center of in anticipate growth a In down Data at weakness building shipments in declines driver to September offset and with quarter, be base XXXG Huawei revenue we strong block laser sequentially the products.

has Our to customers of placing been for and see are reduced indicating drivers modules XXXG our customers and starting we their excess are that orders inventory products. laser

In Finally, quarter, half our quarter X% let the me Consumer quarter. less Smartphones last offset turn same That to the in down of wearables the and smartphones, peripherals. partially in business Consumer Consumer. comprise from of June was year. growth weakness than by

total our fiscal of total expect to the Going a XXXX to mid-single-digit lower in forward approximately content XX% decline Samsung and revenue fiscal we from Consumer revenue shipments. revenue unit due to of percentage in XXXX

quarter, over Despite year. up Samsung the the peripherals, in same tablets. be expect September to smartphone sequentially due broad-based Consumer -- decline quarter the in growth expected revenue we XX% business the Consumer gaming, head last from our to to and wearables is In of headwind,

to current To the and company next upturn. including summarize, built we successful downturn have to Maxim the position any environment market be in in outperform to the

new product and content new long such our design cycle market growing in wins life Industrial. end Automotive and as – and are design We

analog Our model profitability manufacturing stability. consistent are and enables company flexible and business strategy

results free this year this our decade. cash last This All year flow. in again, enables strong as have we for predictable dividend the of increase consistently done a us to each

White Financial be an announcement released ago, About Officer. Brian our Chief hour we the will that next

for to in recognize and our Bruce the me make have initiatives to to last He's XX be call. driving Bruce's trusted partner likely improve of many to at my feel I with earnings on been will as Maxim report our for I want very Bruce and Maxim. had over contributions years. performance strong we've to fortunate this So side structurally long-term. instrumental together over a the

front, like he investment the of support a to make interest this acumen, looking transition. out community the consistently for also the of as shareholders their best thank important delivered operational is while Bruce's we I for benefits financial on employees. would addition our the and In to

turn I'll time. one last over call Now, the Bruce, to

very Maxim pleased today. welcome White to Thanks, Tunc call the to I'm you much to appreciate. the everyone And thank Brian on team.

after to lead August CFO XX-K. Maxim successful on become make will and as our Brian going qualified As uniquely forward. XX-years experience join we of industry today, announced run of him CFO file IDT he XX and Maxim

Turning to million same X% the $XXX our expectations, sequentially a line from in revenue and for up year with QX quarter down ago. was XX% results,

this While to perform a any built soft has Maxim is environment. demand clearly

XX-month free was flow trailing Our of period. million, $XXX XX% cash XX-month and was trailing

soft we flow dividend XXXX, through share return fiscal return XXX% our will to exceeded commitment X% shareholders. free In dividends business plan more we XXX% to free to and despite flow again environment. In our Today, of announce or fiscal increase cash XXXX, cash that we we by the repurchases. of

major XX% Consumer, XX% approximately and XX% computing. Industrial, XX% and markets X% Our data revenue QX was mix Automotive, com by center, in

XX% Industrial our the Our and quarter. in Automotive of businesses revenue comprised

automated using be markets. Starting in in QX our to QX end system earnings report revenue map to – starting we'll an

of As of most we thousands end products quarter. that market and revenue given mapping in have by mapping This know our will of can you breakout a market thousands to next some result starting industry updated our be in customers. end challenge changes

use. as looked regardless current and trends system QX to in same sequential guidance However, the of system at from the today's QX we the new is both the

provide we As an four investment, when make aid of change, quarters will we this history. for

segment small and will Data to be today's quarter the and us of category same commentary Computing R&D time references area Computing segment, Communications not in the for combine Maxim, into is as the combining with Also, and we servers. However, Center for being focus the is existing the enabling because PCs mapping. all next peripherals

XX quarter sequentially. ended distribution Let to the in flat dollars me days channel. X% of announce now XX% the turn we quarter. from pleased were the I am were revenue prior prior that of quarter, resales comprised in days Channel from Maxim's with their to Distribution inventory in while down the QX. channel, up inventory XX

closely partner our with of inventory distribution distributors commitment manage demonstrates uncertain the maximize and current in performance performance environment. in inventories This to the channel

XX channel days. maintain to committed current are our We around inventory

special XX.X%, points our to Operating P&L. with and higher $XXX up Maxim's items, basis excluding Turning gross quarter inventory excluding prior million, lower reflecting by XXX guidance, increased expenses, items, controls. reserves. quarter, special cost revenue the was below were from margin, prior the tight down and driven from the

QX GAAP items, per GAAP tax excluding XX%. due was special was was gross share, in from margin. higher prior items, Operating special of to revenue, $XXX was up earnings items, special operating rate, line with excluding million. $X.XX QX XX% income, GAAP excluding the margin quarter, expectations.

were cash, inventory Turning in total quarter. to balance Overall, billion, were dollars cash down short-term the from down QX Capital and expenditures inventory prior XX% the investments ended million from the days days flat cash QX were $X.X equivalents XXX, quarter. XX flow. and sheet $XX the and prior quarter. at with

cash free million up unadjusted which X% XX-month XXXX. of cash is QX million payment basis. of was $XXX Trailing flow flow $XXX basis tax an down excludes XX% adjusted or an on or fiscal revenue, Adjusted the one-time XX% XXXX year-over-year on in free

free was flow $X.XX. share cash Our per

price. closing cash Our flow free stock yesterday's yield X.X% is at

return, million dividend For $XXX share and is capital yesterday's totaled increased our dividend million repurchases in we based as approximately the stock $X.XX yield million bought of back share, in quarter, closing $XXX shares. price X.X Dividends are on per our QX X%.

$XXX revenue backlog and $XXX million,, to was QX million. on $XXX beginning we backlog forecast million turns, Our of expected QX based beginning this

in special upgrades. to expenses, of perform gross $XXX low the as QX expected continued revenue at items, million items, due to our is special to XX%, fab to margin, from internal down facility $XX controls. million utilization tight be and excluding forecasted are operating lower QX lower due excluding we cost QX

flat excluding to Our is expected special quarter. XX%, for prior with tax be rate items, QX, the

excluding of expect For share QX earnings $X.XX. to GAAP range a special we per items, $X.XX

from X% the free internal returned more complete again of to at flows expenditures XXXX. upgrades to in investors. In For revenue range capital of fiscal facility as we we be XXXX, our targeted the FY or plan return down of XXX% to near X% of expect We to XXXX, fab. prior XXX% we flow cash our year cash of free midpoint

in environment, tightly and we inventory, In internally spending managing summary, and the are the given current channel. both

We secular growth Data continue our of to and invest Industrial, Center. Automotive, drivers in long-term

to to consistent by free to investors announced us cash the environment as in in today. of enables evidenced flow return or XXX% increase our commitment cash strong flow generate and more any dividend model financial Our our

has be team. my finally, I support this is as over as nearly to last years of It part we our a sell-side analysts investors Maxim. proud at great And the and their honor for all I our accomplishments conference transform call, to many Maxim want of am earnings XX been Maxim. my thank

the make Maxim we and shareholders, our value I'm truly that Tunc, a Brian, X,XXX all our operate. Maxim, our our will the maximize difference employees for customers, continue to employees, communities stakeholders. where for and we At confident highly

the back with call And I'll Thank over you. that turn Kathy. to

in previous for we concludes possible. as and now we continue that the Thanks open each can to as We’ll remarks process people will to used one calls. prepared the like our Bruce. Q&A get so That We’d call caller, take we’ve same from question questions. many

we could please have Jonathan question? our first

question of Instructions] comes line Deutsche [Operator from first Ross Seymore Bank. Certainly. the Our from

please. Your question

for with you. Thanks say ask question bye that before me that letting pleasure Bruce. a It's working Okay. to I and been good and congrats wanted the just do

just So, have for your general kind call. Tunc of stabilization word on used and/or quarter down. Last like things environment. step talk was And was Bruce, about wanted taken to another that the a seems it

quarter So, or the we size you it into end Is you other just from the to If that Huawei? appreciate? just just one what is that can trade, to China there dynamic talk whether to you should are want about an or split markets various want changed aggregate, next?

and one that take add he I'll Ross can wishes. Bruce if So,

say did it was used markets. to. rebound has say end the we demand last all lower at The We And across didn't a seems there demand it So, to level stabilize. time. a that soft than remain stabilized

we have look to that I'm saw patterns. Basically few exceptions And for except things kind said seasonal. do what we that seasonal mention a of going still

by fiscal and order Industrial to a the I comps from that but if impacted prepared by there's my so you is to but this -- out. the so starting down there QX, QX But the side broad-based Customers being more by was uncertainty in infrastructure no impacted seasonal it this about rebound optical, BMS lot market, up in and in is communication help remarks. that's break So, down datacenter again and Automotive going is weakness QX to QX, on lot a in frankly. than Huawei. seasonal talked are

of – most So have have actually to what as we products, in is we really for we kind but on essence able demand. a of good And are Huawei, visibility ship, backlog their from our standpoint don't want. they Huawei realigning to

roughly down. way in side, their kind forecast So an to having means we've of be they're quarter. so on basically the million or And effect taken that $XX safe the about

business by content and is this up strongly wearables And which in offset in gaming. good is is market But phones. and tablets, Consumer's, broad our Samsung lower

you the effects three were may about BMS combined, reduction again those Samsung $XX Huawei So contribute so. to and content or remind million uncertainty, which just unit uncertainty, and

rest Hope So you and kind the that's color I don't the But that seeing. gave are is we've to of said pretty of biggest similar know seasonal, weakness it previous add quarter. the kind Bruce that in if of what some you want anything. to you

I think for really there. three- well And you flat. it's No. the add said it's actually just pretty seasonality September I'll just quarter Tunc. consistent year

at kind there's are put it a normal. And a third, So XXX been today. kind just third That of the Tunc really we third, would've a started where that then us of million at we $XX has about outline.

help. the for Thanks

Yes.

you, Thank Ross.

Thank you.

you. Thank

line of Sur from from Our next question Harlan JPMorgan. comes the

Your question please.

Bruce Industrial for support December guiding on than are seasonal, question, kind afternoon. the in weaker be June down in you but retirement. Industrial in much Industrial expected. I the as for over your sequentially a last seems didn't was more taking Good bit quarter you Thanks just years over the my wish And all looks the to grow of that like quarter the The thank specifically and off June that I very in it maybe quarter know anticipated. well strongly questions, follow-up again

are I business back picking what So late some were catalog factory little your can seen some geographies, when demand a the trends across us even of understand SMB happened just seen you maybe automation think help from as recovery more up, bit in well. April you broad detail good in was trends

can color us more you just happened provider bit the what So on a quarter as maybe progressed?

Yes.

look of a week guided strongly channel Industrial bringing So Industrial about – lot took March, we been And business where off up kind we of that we you're talked and dusty our right our medicine the and June kind quarter. when at our had in of we had down inventory. of

line in saw similar clearly, Industrial. we pickup it bit up the sequentially we as But was haven't the wasn't in did quarter. or really June seen strongly, a Industrial with And stabilized, overall order up our seasonality little but in so So probably weaker, for normal patterns it have come a business.

days down time March this to brought what channel did quarter, down we the XX. to similar As we right in inventory again from XX

up and and X% inventories a saw recap you the So, resales channel were in basically flat.

in are So, inventory basically, down. we under-shipping channel demand order aggressively get our

seen of think of it's haven't I of Industrial. in form So, just combination kind rebound we a any

really We really of its -- with flow bit flat sort haven't channel a this at inventory lighter we seen than of level it order getting combined a of But combination kind in coming managing lower thought. little resulted weaker.

I base haven't bounce unusual we in think at think much look seeing it's And there. nothing normal that's we're the to down line -- quarter But we back. for and when offset going I yet. of that When balance lower actually is seasonality we seen looking course September again but it challenge with are

Thank you.

we Yes, it yet. haven't seen

add me little Let a bit.

on that they're see seen haven't levels. to few inventory We've We how their yet. told customers doing

the And some year. back levels that's customers are down few those broad second got. they kind the they saying reductions That's late by sometime of But That's of there's half ask. are the of answer to way the normal inventory a get that expect a -- them in that not working we to survey. inventory we and

you. Thank Great.

you, Harlan. Thank

you. Thank

comes BMO. Our line Srivastava the next from Ambrish question from of

question Your please.

to and much. very best Bruce, leaving fill all been you Wish big Hi, here. pleasure. a thank shoes thanks you're you behind the

out the you it thinking -- last reducing how look that missed And you impact facility I you. we have question looks prolonged definitely I wanted loadings now? further playbook about upgrade? Are quarter. factory the And Thank downturn For what's loadings into what's you days XX like than ago? as margins? it go to of this on What -- more might is and my been maybe think should

Yes.

our look had we CapEx, X% if came our So, we you X% in -- motto. at to above

a it was uptake CapEx quiz, systems. our of we the some think X.X% we revenue. remaining identified water came that were as to think about round we to And making had electrical systems, to I -- in I the percent loan

spending do in And money were XXXX so we that that. to FY

we We've that moves our kind really completed down about the fab of bulk by of kind shut of that And it down time on-schedule. the got in period, period. work, in weeks. fab during for And the two essence, Xth time during that we XX% lowered July the

may impact, that so I an XX bps. XX, be had think it And certainly

to reason as that's strong -- just not us before. quite the causing of certainly that's So as have be we one

lower in to overall saw fab shutdown, days, desired -- inventory our addition the we by right, right, down XXX. XXX took in you to that from the overall in revenue quarter, just you Obviously, XX saw down June the

ourselves be So, setting again, come for margin going see back we're to benefits a inventory, view. able to to to lean point us up we're of that as have not -- comes -- just things immediate the going to we're revenue going have from as back,

Okay. you. Thank

you. Thank

Our line next question from comes Vivek BMO from BoFA. the -- of Arya

please. Your question

more that also question. letting for macro Do is you little you Could in that in Thanks or September be competitive market? market? quarter Thanks. bit increase environment talk due on to ask seeing see No this the about the competitive problem. This softness the positioning? BMS Jamie weakness the going for to [Indiscernible] a Vivek. And the you're competition me is in

Yes.

comment about Tunc. I’ll So that. This is

in -- The we've growth were BMS market about last of is rates recall, really of which market, two automotive huge. one it if to share don't you the all XX% grown the changes second so the XX% slowly, see relatively over year -- that quarters. part know, business talking whereas half So first or BMS in don't but year-over-year you were of -- I last significantly is we the

fact changed way a of taking the in of sale reduced dampening be been that is that we to for change think may that and that, that forecast subsidies a What's China. cars consideration, And are have the there's market. will the now out in we our paid into

we're seeing year-over-year. that, still even the call growing I we're pretty growth, in healthy Now though deceleration. would said that mid-XXs number having this quarter-over-quarter one a still

still part about effect, is, of the Chinese government second ago million grow will their to years has electric their from an to or but vehicles almost the the that of couple of subsidies X.X million couple policy next the in objective And overall just X years. have

So I healthy, we happen to how know be on think the didn’t matters to going forecast consumer just what behavior. was to going

think or years have competitiveness, which from risk In that plus with the been customers safety fact that, robust customers ASIL-D The tremendous in products used strong have our we I portfolio. by less they we have terms our there's our product terms a for like of are very of products and the means that requirements standpoint. history customers

is this to to quarter-over-quarter. BMS us it -- what cause that down be revenue I I on, So essentially is gave color hopefully some forecast

year-over-year. said XX% it's that up helps? still As before, Hopefully I mid

Thank you, Jamie.

Thank you.

Our Morgan next question line comes from from Craig Hettenbach of the Stanley.

question Your please.

perspective customers you so that? new give A all market, understanding Industrial the color at seeing on thank coming question terms pause just but design look you are more design any If weak inventories it's demand they Yes, from and opportunities? down, how in on of a you. that

assume? the build not are help win as factories. asking We -- Things ever looking of seen you're them are that design been for No, more I that. terms Is them about as productive activity? that robust we about that they've products in talking you're

our us that's us really parts of asking power products and customers small The So generation find well. has very are robust changed. for frankly supply in not helping level and advanced and new products products to more communications high interest efficiency as that our

products very that So slowdown we're automation continues design customers despite the that be fact the new of that there's observing robust. of generation to our factory

Got it. Thank you.

Craig. you Thank

you. Thank

Curtis the Barclays. comes of question from next line from Blayne Our

please. question Your

wanted is this my But is I O'Malley just the thank guys echo Curtis to here on Hey others, and for December. from question Blayne Tom -- and sentiment on Bruce.

end a the year? market what right of moving your kind forward the there's seasonal on not to guys year do color think can have December? But you know to Moving visibility normal any just now. I pieces of better is much -- you And there, quantify feel of calendar you are give just us the you viewing how best in for the

Yes.

think And period all time isn't this so know we normal right I a now.

the is so end And broad-based from certainly out, we're consumer but -- historically very a Samsung just seeing a business good And market, strong take our September at view, the point back looking and down of by that after seasonally highest usually September. is doing well. level

is flat. advance. very seasonally start about usually Industrial seasonally Comms the not waiting usually shipping is we were seasonal. course, Center business Industrial And up talked yet. is haven't & in again of then, but we've is seen And Data stable, rebound as people Automotive is

going And other And reordering be rebound course, continue. the depended be data center that to that's question off on the happens -- what's or with have. would this Huawei happening we what open then, on start of

you about December be this also we that of if out are the well. to those think several for I items going quarter, So called all questions as open think some

Thanks.

Thank you, Tom.

you. Thank

from question of Pitzer next line comes from the Credit Our John Suisse.

please. question Your

customer question. to thank I through market the good question the that it a largest help guys. diversify the and really guess Bruce in and letting asking that consumer that's for the still market enjoy the back feels going for afternoon, retirement. I the all Samsung, efforts bucket general, in the good you me smartphones guess, despite Thanks Yes my like smartphone from and headwind. years away

forward? going to part help model to continue curious business? kind as resources the you is here, that from of reallocate deemphasize and cost the further understand out that you Or still I'm market take or customer can to a support philosophically is of of that think try important you us So while the

-- really mean so we level add cares our programs, it. in customer are of peripherals we've where investment. okay on -- to investment essence have mostly The product so very high, value talk markets this and variables an diversify from investment not some and one and and our gaming got and large more questions that big in we and our we customer, R&D about that's general-purpose on. it's at about the that Well, been are R&D required I sockets our your has more resources, -- all that hearables lines about

So, a already shifts of lot of the have terms investment. R&D occurred in

really So, look John to investment what is what is to see be. we at return going

of other short-lived We have higher a that's areas. our bar product products returns than in for terms

So, really we don't development. of been see a investments a need to terms really other make Consumer some of research of now. while our in major most areas investment changes and in for And

past the think or what you're I So, terms changes we've this are be in behind the of may already so. done suggesting in of kind year

And mean right, XX% was had I just and put Samsung basically side. QX, tablets to the gaming, smartphone to in But quarter-over-quarter. our was on down we wearable, John up significantly numbers broad some that Consumer obviously businesses Yes. market business flat. while

strong see did we some there. growth of So,

look Consumer we again, ex-Samsung September quarter, XX% sort sequentially. at our when up And seeing business of the we're

So, it several seems and seeing we made are that again, seeing shift R&D that we we're and years focus ago that -- benefit. in and

and despite strategy we've takedown Samsung. to significant it's still But sequentially the in based June of to a from roughly you XX% a we grow this down as -- effectively to that taken mid-single-digit, of Consumer -- that's move flat the from as kind step think it continue -- I working to September compete Obviously, being call very and see down. a are Consumer broad it to able step one customers a that Samsung kind

guys. Thanks

Yes.

Thank you, John.

Thank you.

Matt next Our the comes question line Cowen. Ramsay from of from

Your question please.

and luck my to Hi, for Josh this Thanks Buchalter taking is and question echo best Brian. Bruce of me of on congrats my behalf let to Matt.

the guess levels your -- you've should to you And closer could taken fab-like past here? that compared softness, to And I have now revenue despite we're margins model represent shipping assuming I into bottom. demand, you. talk about plays well measures was current this? the of comparatively how also end roughly some the hoping up gross your Thank held So, you cycles.

Yes.

years we XX% transformation fab-sourced So, I you XX%, part when think at almost was a internal about our gross really margin from XX if are look -- about and joined that company were we we went XX%. I today, and of ago,

really kind XX% And the to when of the we we this of would have years much XX% about in capture internal, drop and revenue, is, this kind XX one probably we shifted gross a of more to variable that recession of model. ways five margin. for we've So, lost tried were ago points

range Today with the starting then again, DOI -- we've is element a at basis, little that kind seen X%, kind gross right, the simply outsourced of on but up. model slowdown. of, the lose bit other two we part for end And is demand. revenue, of if we've test reserve and bit holding against higher utilization. And drop little to from to the margin in the reduce of the, the the on year-over-year one same we're that about high points low to our so inventory time, actually we here, the wafers that model XX% is just of of because of same X% we're results trying We're a also seen because

that. Oregon, our of the that's still are wafers through in through for feel gross put can kind network, still get little the just up feel distribution model we over that margin we're story. kind still fab growth to confident and favorable fact to able lowest whether for gross and our environment, the that's our to million our continuing and test we're the of still drivers back able backup to we returns. of, right, environment. or about of and absolutely think get in and in And We there that good good very place, those -- margin think But we more of XX% good pricing something believe of our bit good place feel looking it's back foundry very the to kind we revenue sort the gross as whether -- in -- We $XXX to forward range cost, are that at XX%. been to drive current very long margin tailwinds the the inevitably rest a and we us All still optimize that to and SMB move tailwinds the feels been for stress in moving are XX%, XX%, for

Thank you.

Josh. you, Thank

Thank you.

question line of comes Tore Stifel. from Svanberg the next from Our

Your question please.

where like distri Welcome CFO I a channel feels Yes, resales congratulations way? Brian more you. just I of you're back appreciate to demand and bit pretty the exemplary perceiving strong, on really to know sort distribution. that these were had all the mean Bruce, to is an I a is. trying over am years. little question thank and obviously wrong perhaps than lower even your but inventory I It

candidly, being think expenses have little think probably I I bit about. belief more -- aggressive something a That's a strong I reducing inventory. were on our

pushing in Asia, of in Center and And is of to OEMs, as it's I kind to say so whether starts lower. Automotive, inventory particularly, in extra the a we've carry little situation, who think I been whether kind Data some gaming, distributors whether support want would larger of back. to in that it's in come

more within XX that push from area the I -- to Maxim. around of would days kind inventory manage we say is of So,

a you just don't cyclical a get basis, And especially to with want in inventory caught too much selling business. on

basically to we up much up saw we comfortable up Asia And -- in, And point X%, channel of and XX%, been I manage shipments just that X%, DOI. overall was that used so said the that. from these were reasonably to Taiwan up bring our normal opportunity think XX%, resales that down managing was up order X%, in China view. so we've And Japan strength; you seasonality pretty was is as good And positive. had we

Very helpful. you. Thank

Tore. you, Thank

Thank you.

Our Hari of the Toshiya Goldman next line Sachs. question from from comes

please. question Your

I you've potential today you Thanks. taking is Thanks in for Hi just if it hyper-scale guys. the Long had of for luck Bruce overall got market? wondering, also any on trends how This would in the that characterize Toshiya. question question. as environment. and quick future pickup end or on endeavors. Charles it And I good stands visibility was a on all your congrats, stronger

all -- So right.

hyper-scale a optical occurred inventory currently to my optical And itself to seeing business. took while, year. quite business going that And multiple a mostly there of growth in on that what last commentary is And our actually be is quarters piece of work So to that the portion is side. actually on down. largest the we're inventory was the limited side the

from So coming And what end sell started seeing we're module normal. us that are inventory the we levels that the module customers hyper-scale pretty sell customers customers, indicating to they’ve and to orders. much now back they're then into placing their to the

customers, -- another hyper-scale So that direct that’s also in else inventory. there's because the about building somebody implication is way not a

as does it that consumed inventory So -- been if hyper-scale the indicate that but a must have customers, there well. of lot extra at was end

much that's our the customers. extent that's of look how I all don’t So knowledge or can know that the cloud helps, really say. into but we

you. Got it. Thank

Thank you, Charles.

Thank you.

Our from next of Steves line question comes Mitch Markets. Capital RBC from the

Your question please.

and piece. Industrial thanks for question. guys, Hey to to Auto back circle taking my wanted just I

bit shifts. of concerned be and share semi little I a kind think downturn, the concern longer, there that of cycle then a is there's be that's guess lot going around I to

think you would underlying do you're in end current I guys how Auto space, in guys shares position and think growth for Do the rate market? is both think that about what you you those So Industrial. gaining

So about let me first. talk just Automotive

the were that And drivers growth growth. market we than we actually growing the because still we major market growth, mainly us. years, in of faster faster -- market, many we grow than So will two Automotive for project for

one the and market, BMS that serial the the is link being the making. them company products ADAS or of being products the One second

those still a Not design to mention have registered year. I wins the that that throughout we I think products. strong robust a position as we the areas pipeline talked well So about two strong strong as of where were

infotainment piece still sales – The the it’s more will growth. rates Automotive than content at probably in similar robust infotainment grow think it's that's cars. pretty I unit And as

And infotainment So, growth mentioned. and -- I be the to electronics, that's body car have world. large market growth we especially the right people I the auto through growth. of I We'll Automotive going auto we faster in to it by kind grow cars, drivers able able two going than period. of recover. think will grow, buy think a well, will think revenue impacted will which is And negative because is but markets where I and be be But eventually to do content, production we'll so now, in

Got it. a long Perfect. is the cycle how auto into going quick what on, clarifying think Thanks. guys And just you turns last and to Industrial?

that. So to we a how elusive. can that easy to see charts, We But predict predict. is to it's do, – not at – pretty that's we very always thing a it's look dangerous

happening well trade, it. Industrial significantly. me there external factors are the both as I affecting that of think too just let know, parts kind part on all with business those of the – as those what's bring the with going are are what's factors many China, affecting Automotive And

So questions ask we because end it's of three-month clear when metrics customers. than or inventory say is. from risk Bruce we the some to of not watch bookings a we our very course don't predict you – have difficult gave on were two what just it view. end and getting, gives to And my the maybe color someday. of it. that to where – but can ends. take Industrial we three kind got view, we this that about the handful But The levels, a a for I view other But when cycle going is we only of will that point are inventory But finally answers customers from

Okay. Thank you, Mitch.

you. Thank

next from line comes of the Muse C.J. Evercore. from Our question

Your question please.

the let for question question. And Good follow-up thoughts on me be taking Quick afternoon. Yes. Bruce missed. echo Huawei. Thank everyone you you'll else's

broad-based to shift And September as also here, able to declines into as Huawei products well you're weakness said most just about you at Huawei. products. talked that You curious

Huawei? whether uncertainty have growth So business color demand visibility supply-chain have think drivers should is shares And given and more end to we the how influx disproportional the there? you do of we'll thinking bit Can entire on uncertainty about be you to you to better little the provide when players? other Or move forward? will there going

Yes.

about see September, – to able of million – were to we've When talk and they're essence you Huawei in think June didn't we like Huawei if as year about when think about Tunc it's said this combination, the – Huawei $XX and kind number. their talk want backlog do availability We figure lot to BOM, saw we've a X% out entire to that of inventory before what's So revenue, through able the their much just – And and rules. the as within whole at sort see quarter. what's to the play, and basically think generally the Tunc ship and to there. product impact we of we I a their been kind we in look it's channel, try they with within demand, is of the we just – level, uncertainty is what of said, kind and supply trying of chains what

almost in so, we essence, out And Huawei. zeroed

there, I think, we probably left amount about, which, think of a on small down as quarter-over-quarter, Tunc $XX million in it. said, most million that's rate, but you if it's $XX run

not on. basis, predict just know forecast to I'm demand but just my confidently of beyond on think that could from and of we understanding try do, what what we point happens There capabilities. on what continuing from guided, can down. could well, to geopolitical we being obviously I But upside. a now, to as say of investors view, kind took We're that their to well always with is, we kind – kind we and situation with we prudent, that's going count Huawei a be for of number meet think

And done. kind we've of what that's so

the I orders talked think center, back broader data and Huawei, comm outside 's obviously, there. about datacenter of seen we've coming definitely for Tunc

overall lower think, is but And kind at Industrial, to we've of sequentially, yet. of I to seen we a weakness, – on but, similar see stable kind that it's of of think, so, it's up then order kind year-over-year. we in signs down right? stable, I level, that recovery the comm Industrial, business similar that what course, And of strongly but flow, much still still So market, seen broad-based haven't that again,

Thank you.

Yes.

CJ. you, Thank

you. Thank

line Our comes next Caso from from Raymond the Chris of question James.

please. question, Your

steady-state And certainly congratulations allow business pleasure. Bruce, is, my the expect R&D a and design and to the some in based you at down left? on work there to is, forward? you of earlier business? that I'll what's of The you XXXX. a X% to point? on variables does revenue some to it once level, it's that question the grow guess I of do business Samsung to question level Yes. business. Thank -- gets that grow had Is parts had, from kind non-handset And you. that the fiscal that And echo X% the Or comments, on of are the it going you revenue that to just drops as comments been

Yes.

but don't products design continue the I not Samsung impression know And we just single a giving their valued them way, smartphone than of support us, So, if wrong product from very buy by still products. more customer they company. we're a in is the here, to and their

want performance of from terms to see them. doing So viewpoint when for be in we're we opportunities, careful special though, – our we something that we're

and what on, definitely an outcome give so to we types we and terms we But value for have customer. was going in our want those return happen what's that impression of sense find we we're forecasting it year. those next I likely of the the we next make of from go that sure And we will anybody on don't But year opportunities viewpoint, -- investment make if to that most to felt want don’t sockets.

is grow have not, continue on do. they good just products for our we'll We a them time There've to going to years to we ever continue like partner market and Whether been show many or they or will might is that. advantages us many one and to the Maxim. and it -- that see we performance the of the year, and used they've for or And might in years have basically for and value terms forecasted not. product that they from product next sell

there to to believe it. we going use So continue

Chris. you, Thank

Thank you.

from comes William question next from the of SunTrust. Stein Our line

please. question Your

last had, few and Bruce, the level incremental Maxim Thanks on I'm recently past some deal the taking And Tunc degree months. for on there's question wondering like in in congratulations. environment, flow participated Great. not has consider to my the what it M&A my Maxim been participating? would and Question although

they changed. We're matter will be I companies any at for to really look M&A stands for accretive where -- that mean lines Yes. we or companies not our other has continue product to structure. great us, overpay. to dilutive our go will be margins -- we in end, through through the integration, don't to we the And they'll after want and not work they

said look specially -- difficult going are we pretty So to we're flow add that that assets see and have a Maxim. corporate we good to at part, revenue price what you're But it the look that business free stock development cash as as still well. it way purchase find on can group. to I levels at see we a can makes and last we these fit if And what

you. thank Great,

you. Thank

Thank you.

Our next Capital. question line from comes from Cody Loop the of Acree

Your question please.

later, maybe question. I congrats next my it will Brian taking for for on quite what time over on guess And current just Bruce and have for for OpEx are the your uncertain thoughts different OpEx, years. things thanks And the year? thoughts be thanks some Yes, time. thinking your sounds all an might like but

Yes.

line OpEx. revenue. -- of tightly kind with I seen as it control keep We it we've in we So, think

understand in a cycles. a very a little kind of in come underneath experienced the spirit team. We've are usually in of all all bit. our usually a management forecast We the it It's slowdown, We industry. been

of controlling so, and already targets reverse the areas. spending teams And before lowering kind my management usually team off going and

data think, to invest sort our in of highlight that’s automotive, in whether that absolutely to extent continuing consumer even broad-based its We’ll to That in important the or center, factory in whether are invest to said, Industrial the automation growth we it's it's the in right? business. whether I all areas in continue

we so understand those. And

we're and and we're to pretty above of doing drive them got drawing items take ZVB line just you've growth in invest our being where to what's to and continuing more is continuing pretty but going on of we those. and making choices at good believe invest, future good to are discretionary the at the the and line tight We kind

look think to OpEx our As models continue we'll to revenue. at standard And of going the the goes, grow model rate half I as always that's at been far about how forward.

we on side, in whether within those inventory it's the as said to and on all like our channel, difficult in own fabs, to OpEx, to the things what's those inventory the it's revenue going manage tightly within overall going predict control, expanding that. control whether environment but books, But we've whether our things it's happen we're our

generate continue the than downturn we'll XX% cash generate We more free flow and on that much a a obviously in margin -- in upturn.

Great. Thank you much.

Cody. you, Thank

Thank you.

line question from Rolland the with of Christopher Susquehanna. next Our comes

Your question please.

behalf on Chris. of Hi, David Haberle its

then the also products? which the revenue? of us converts You mentioned bulk Can a products auto year-over-year. of and strongly up it's XXXX it's growth type make legacy ultimately pipeline $X.X you a $X.X sense of as this the how opportunities And Automotive billion? more design in pipeline give in of wins Whether of and up or billion your that expectations for such BMS ADAS

Yes.

pipeline all, obviously that that. design Maybe So, of about clear the first get I so those the wasn't -- lifetime is from wins. revenue -- okay you

how distributes design on of than products -- some particular lives depends it design wins others. the So, wins, have kind have longer

in win mentioned that this the areas of is Much before. I

power whether N -- big Automotive to a was going I wins the them, link portion large. was whichever it think function products serial look you or if also area of at of BMS and

XX% about I the I are -- growth think And in So, was it's as year-over-year. we all wins. expected of design the that areas and the -- said XX%

growth we're Automotive that content in for the and we unit teens that, back high what kind in grow than robust that growth to is single-digits better in of X% still X% production all with the the low we're long-term rate been, the So, line growth going has in going or once growth to think our gets signals which have is expectation. so

and But those be which should world. wins we they of were the that the in of exactly most all over design surprise came areas kind exactly no were

were concentrated So, either. there's no where they single in region

we're that's growth good future Automotive. in about very So, why feeling

you. Thank

you, David. Thank

to at hand remarks. this And back any I'm like questions further the Kathy not any the further program for Thank queue I'd to you. in time. showing

for participation for and in our conclude Jonathan. Maxim. today's conference That you, does Thank interest call. your Thank your you

participation today's in Thank the for you and conclude your does This program. ladies gentlemen conference.

Good day. You disconnect. may now