Microchip Technology (MCHP) 3 Aug 232024 Q1 Earnings call transcript

Welcome to the First Quarter Fiscal 2024 Conference Call. I will now turn the call over to today’s host Eric Bjornholt, Chief Financial Officer of Microchip.

You may begin.

Good afternoon everybody.

During the course of this conference call, we will be making projections and other forward-looking statements regarding future events or the future financial performance of the company. you or statements results caution that predictions to events actual may wish that are such and We differ materially. to recent SEC you well Microchip's business factors refer our of of impact releases We operations. results today, that as may our identify filings that the and with important risk press as

Executive today Relations. Daudi, Sajid Microchip's of Investor me are President with and Moorthy, attendance Microchip's CEO; Chair; and In Ganesh Steve Sanghi, Microchip's Head

then our XXXX I commentary will business first our results return performance. discuss on an provide comment Steve strategy. will and quarter fiscal our cash provide financial environment Ganesh year on as guidance, on the will our update current well and as

specific and to We will available then analyst investor be respond questions.

this on measures. are and non-GAAP GAAP conference call in including and We information various our press on release

full find when We and at website to press release, believe have of results. on which in earnings non-GAAP GAAP www.microchip.com page Relations the our useful a we GAAP comparing will posted our Investor and our non-GAAP included information reconciliation reconciliation you

a also website. our and debt leverage our have our outstanding summary on We metrics of posted

in based website. is I margin will these our Other our non-GAAP operating which through described activities, now net operating referring other than earnings and be I sales, will on in share release expenses. reconciliation results our that effects net on sales, on of of results to adjustments our press including to go the based are expenses acquisition a prior certain gross compensation and the basis, and some

sequentially. $X.XXX in was the to which X.X% sales quarter were billion, Net June up

website line of by summary a sales posted product have reference. and our geography on your net for We our

XX.X% expenses income Non-GAAP was earnings a XX.X%, $X.XX. operating margins a basis and XX.X%. income a record per was non-GAAP record record and a were basis, gross on share diluted million net Non-GAAP were a operating $XXX.X On was at at

million million were benefit GAAP Total net at $X.XX income $XX.X other On record margins gross of in and diluted million, compensation bases share. and tangible amortization share were a per a record of $X.X million expenses for in million, the of in basis and million, a operating record resulting a was included $XXX.X of $XXX.X $XXX.X GAAP XX.X%. a $X.X acquisition charges a June quarter special matters.

non-GAAP in Our was tax rate June XX.X% quarter. cash the

tax non-GAAP to the is fiscal of which about transition exclusive tax fiscal for Our tax audit prior any and rate to year related expected XXXX is settlements accrued be in years. taxes XX%,

lower in rules tax and a as expenses lower tax capital ’XX, cash is than be factors, expenditures requiring of fiscal the including losses, tax for tax the well U.S. tax attributes, tax purposes. depreciation of impact fiscal such lower net as our variety for rate to the fiscal expected availability higher in rate tax our of Our capitalization of for ‘XX ‘XX credits, expectation as R&D current operating

future periods. We to the are adjustment to about tax or rate still rules Microchips, point repealed. favorable we R&D that requiring XXX basis happen, in a out to tax be anticipate would capitalize will were If hopeful pushed companies non-GAAP that expenses

XXX the from inventory at was prior XXXX of end down inventory had which at balance Our billion. two quarter's June June We the XX, level. $X.XXX days of the was quarter, days

requests we Although for delivery liked have were much to out as push schedules would customers we days were the to, that through far manufacturing very process. in inventory quarter, by progress as we products reduced accommodated as not make to the able we

inventory these long high days with We inventory eight building of for last-time chain to and end whose of also life of capacity represented our lives is margins, manufacturing supply end in the and continue June. being products by invest at buys partners,

other March quarter. of was and dollars Inventory from days, – quarter in me, September five to excuse XX sheet Compared regions, up our in significantly was quarter's heavily June at unfavorable basis sell-through in by in the which our to distributors on Asia level. the as China. quarter balance prior days was reduce inventory the days a the this in in grew distributors at on inventory sequential activity region, down expect at our We the business driven the quarter, conditions our most

cash supply quarter. activities operating of $XXX.X our assurance million from flow June million receipts Our flow in operating from the activities long-term $XXX.X from in was was Included customers. cash

determine as fulfilled. our to will of these free return adjusted payments we have these and be flow time, share adjusted through assurance We refundable to over purchase as supply repurchases, cash free the cash items will out flow shareholders that are dividends commitments

cash free $XXX in June the adjusted flow million was Our quarter.

position As consolidated of was investment $XXX debt by the million. cash $XXX.X June million reduced and our our XX, down $XXX.X paid of debt net total total quarter, and million. was in We June

quarters, down have paid all we last to billion to XX closed the incurred so, do continue our bring we and this cash since and debt billion $X.XX buyback allocate beyond debt. Over down and stock the of in debt excess over Microsemi substantially to of acquisition, $X dividends

quarter, of matured credit billion our so. do In retired using $X the to line June we in that bonds

Our line billion against of had of June credit bonds. XX, XXXX, $X paying borrowings in after $XXX off at it million the

The count total XXXX principal $XX and $XX.X result XXXX cash will current of ever into shares. bonds for synthetic total During reducing and essentially stock share convertible amount paid of the the converted retired amounts that June a quarter bonds million works XXXX, our future million. these principal amount a payment buyback, like if dilution above any we of also were convertible

reduction buyback was the we to bonds executed million quarter, $XX our convertible additional share above dilutive value the the activity par over resulting in in during an outstanding. normal addition that in we the for shares The paid

XX.X% was EBITDA in of Our a $X.XXX and record net adjusted the sales. billion June quarter at

also XX-month trailing at a was billion. Our $X.XXX record EBITDA adjusted

$X.XX EBITDA from XXXX. at net from XX, adjusted June down Our March XX, down $X.XX June and was debt to at XXXX, at XX, $X.XX XXXX,

in the $XXX.X expenditures Capital were million quarter. June

year will be expenditures still receiving XXXX expectation we and lead $XXX that Our next capital $XXX we that was million long as million, with a between over fiscal is the ordered times year. have equipment of lot for for

We increased periods will constraints. quarter investments industry-wide during expense million. of over continue the us to was expect Depreciation $XX.X that with control June provide capital in our our production

over guidance now in to to turn performance quarter, comments will business Ganesh? as quarter. I the give his June it the our September the Ganesh, on well the as of for

good afternoon you, Thank everyone. Eric, and

customer quarter slowing June Our our environment, as continued in execution, marked the resilient diversified were a our as context strong of and disciplined macro end base. markets by well results

XX.X% all-time on quarter and basis June record at of sequentially XXth represented were billion. consecutive grew X.X% year-over-year XX.X% respectively. $X.XX a revenue our growth. margins operating Net The Non-GAAP XX.X% sales and sequential quarter of achieve records to another both and gross

diluted earnings quarter. was non-GAAP consolidated a $X.XX per share, XX.X% record per by another whisker and Our share the year-ago from up

was a of sales continuing cash adjusted of and cash our generation of the flow XX.X% record XX.X% the Adjusted sales in June quarter, business. characteristics free net was EBITDA net to demonstrate robust

exiting quarter to to share repurchases X.XXx. leverage $XXX.X shareholders March million representing cash dropped June of free June net We in our flow. in XX.X% quarter, adjusted returned Our the dividends and

free shareholders to year cash XX.X% to March of to September by the in our return adjusted our capital free increase quarter return path June of flow Our quarter our continue of XXXX. quarter to adjusted XXX% calendar on cash flow, will as we shareholders the

the stakeholders outstanding our us cycles. despite especially team achieve the all to business thanks macro increasingly are environment, who the efforts through results worldwide whose enable enabled to agility navigate to challenging effectively profuse us to Microchip adapt tireless these to and My and what

microcontroller look year-over-year net a net record, Taking from at line and June coming set mixed sales another all-time a June product quarter our up in in a sequentially our basis. on quarter XX.X% signal X.X% sales up perspective, the

set the Our sequentially June basis. coming record, up and all-time another sales quarter X.X% in also on in a net analog up year-over-year X.X%

record we Our time-to-time, on to with revenue in FPGA comment continuing digits. growth another double sales, be net the annualized quarter from which had

for color the Now quarter. on June some

While slowing early business our activity we the overall and Starting remains in economic three areas. customers feel conditions uncertainty. continue business increasing business of our effects saw in deteriorate June, steady, to

holidays weaker our building from and than in channel in China. manifested distribution inventory much not in and of recovered was the This weak Year expectations shutdowns of activity the quarter. last business China New has the in sell-through our year the and Lunar First, the March

we signs started and and uncertainty impact high of interest to the the reflecting of segments, initial weakness driving see inflation industrial Second, more in rates automotive high and spending. cautious

to of much weaker of dependent And business by than third, signs are China, that customers on early like exacerbated whereas being expected. countries Europe, an we we impending seeing is exports our environment slowdown the in European some know

were they amounts light business to cancel of As backlog out to backlog non-reschedulable requests push conditions to out a receive we result, experiencing. meaningful inventory customers to rebalance inventory as We push their to weaker the in quarters increased or with and were later able customers uncertainty start to many of help positions. continue

of demand rate to and will XXXX, as and the to out request adjust stabilizing, be likely requests with we While cancellation to of environment us commensurately. appears calendar their be backlog the cancel de-risk push customers or expect rest position through to push-out new their attempt inventory

supply U.S. impact We quarters cumulative demand an issue an effect significantly but as issue less actions than come into These few direct actions, demand from especially and more an supply, are over the export when more indirect were increasing and China. the of now in was last also higher seeing of are of balance. control

of factors supply buys being all in Despite of life able we days, last-time by products investment of XXX inventory reverse inventory in the quarter two chain. from capacity sheet, the inventory of dropping an our to far, with by manufacturing to eight days growth our so days of high-margin, which, mentioned the end days balance were June long-lived in were on was whose

to Reflecting in by China, channel grew days X inventory especially days. XX our the slowing macro-environment,

factories. on to also to actions eventual internal the be and our an absorption serve while sheet, continue our inventory in customers to reduce We further with our inventory strengthening find for partners of wafer fabrication the to required channel conditions. business positioned balance of take working We're days balance of maintaining right to

than overall a progress higher environment to bit our manufacturing to best in position able made to Finally, while growth still locations inventory strengthens. we our the to when inventory demand excellent target, macro the our rapidly at is respond be

with channel on lower as factory internal and Consistent will expansion some as with environment higher remain expect slowing balance level most result our of in inventory This customers the in sheet, well ‘XX our our partners, ‘XX. paused. of macro capital the investments year actions and year we of fiscal than and target fiscal

we During a us. on shorter improve weakness times help period the business the best successfully, and environment backlog customers navigate way lead placed macro to and believe the uncertainty, of of are quality

the by to able start weeks the to quarter, from average lead expect end been of the drive the at down time June have of XXXX we to weeks in months. We continue reduce lead roughly coming to and times XX farther roughly XX

lead investment We have heard falling results some backlog. concerns the lower community from it in times, because of about

this is And true, enable times While level believe navigate often analysis, our final uncertain backlog to effectively. and to does not with true lead we equate agility in environment end more customers Microchip the market an shorter consumption. of and the

guidance get now the the quarter. into So September for let's

are Although Taking on we down our September factors with to have for out up consideration, strong, net sales into our backlog today sequentially. the backlog. expect push help to and we all for quarter their be X% customers to active positions discussed X% between the take inventory the steps September call is to quarter the we continuing

sales net our of year-over-year the the be for quarter, growth X.X%. midpoint the would for our guidance quarter September At

non-GAAP We of be our sales. and XX.X% between XX.X% gross to expect margin

between We expect non-GAAP sales. be operating XX.X% and XX.X% expenses to of

the would between we of earnings the quarter. profit diluted non-GAAP tax per earnings non-GAAP non-GAAP expect our a be be despite year-ago $X.XX to XX% be much operating $X.XX. to our expect between per quarter share growth and the year-over-year for XX.X% midpoint of and guidance, and sales We At than share higher our XX.X% rate September

normal been by macro seasonality business. demand This the and amplified expect weakest the into seasonality quarter our we we balance, customers quarter. weakness quarter that December our to our and in return likely be has are the that As uncertainty Historically, will December experiencing. supply year, seasonally to come business our expect normal

quarter. December a As the anticipate result, in we further headwinds business

However, we and are we that notwithstanding remain any serve. markets the macro innovation of the confident semiconductors near-term for applications weakness, engine

system key total and which growth. strong will drive market continues long-term fuel momentum, design on focus expect above-market we to megatrends Our solutions

one and of be improve results high-cash build strategy can Finally, Microchip guidance, is continue and believe June see launched industry. quarter which as high-growth, you from to our we quarter the semiconductor the businesses our defensible, what we our XX the ago, of results, high-margin, months our continues in most September foundation we as generating X.X to diversified,

the operate not in that immune recognize industry we're and that cycles. we to a cyclical we However, business

review the XX-plus the our you through gross posted is margin you last Microchip's which performance investor operating cash-generation, the trough If years, and robust presentation on our cycles will peak observe business to over website, and included in margin results. consistent

don't through industry past, our highly what inventory exactly operating the non-GAAP has consistency resiliency and if future experience above margin, were well margin remain and non-GAAP the a Although again cycle. know would and we our to are we once holds, semiconductor margins what we operating correction gross confident demonstrate like in to we that seen expect the cash-generation, the non-GAAP XX%,

to to baton talk with our let return Steve. to cash about more pass And shareholders. me Steve that, the

and reflect our you like return strategy. would I today everyone. financial updates cash further afternoon our on good announced and Ganesh, provide you, to results Thank on

I all and quarter operating in EBITDA, employees proud Microchip in have be our sales, exceptional challenging on of while environment. records net and percentage, financial Reflective that non-GAAP record that record of record adjusted a namely results, continuing margin percentage, another making record many very new respects, continue EPS record margin non-GAAP non-GAAP of gross delivered all to

of Board share. XX.X% an of Directors dividend per increase The announced to quarter the ago the year in $X.XX from

in quarter last our the $XXX.X of stock we market. the During million purchased open

million million We actual return the million. $XXX.X of also amount our dividends, was paid of the XXXX out free March XX.X% total was cash quarter. cash flow This $XXX.X adjusted $XXX.X in thus during

as adjusted EBITDA, the leverage quarter record XXXX to well of at X.XXx down debt, the XXXX. as at from drove pay June of X.XXx net June down a Our of end end

XXXX XXXX of in June combination an capital to buybacks. increasing we stock pivoted November to dividends Ever a we shareholders, since $X.XXX through achieved shareholders XX, investment returned our rating to debt billion great our for have by and and return

to the our customers September free purchase when target the long-term excludes adjusted to a will payments refundable current cash commitments million flow we cash assurance we are cash shareholders. from flow from quarter the payments. that are In free returned use quarter June collected adjusted the $XXX.X net for These fulfilled. The supply

expected free $XXX.X plan and million $XXX $XXX to be amount approximately June $XXX.X quarter We the stock adjusted XX.X% for the flow shareholders expected was that million. return to cash the of dividend million to with The our approximately or buyback to be million.

to by return flow quarter time quarters, continue shareholders This and represent every more XXX cash until returned. our to increase basis dividends plan will we XXX% flow we we forward, of points will free Going our XX% take free shareholders. reach cash of to over expect adjusted cash six approximately return to

poll operator will that With please for questions? you

Instructions]. [Operator

Tore first Our with is Stifel. Svanberg to going from come question

Your line is open.

from could and I I you thank could just all about points of will seen hoping a backlog you especially you’ve to at bit talk Yes, economy I the life orders. that little your are was and stimulate because are wondering more sort you if sense, data any and mean up if but just any all. seeing wondering by China, make on there the update orders they at you. signs trying of region, backlog obviously us was

I we of those through think seen There in be are not may things July, have understand the I month do going China quarter, rest seen. about have the of to yet discussions this they recover.

respect with anything I more have add to to So don't China.

will we Our begin weak. still backlog. carrying lot We expect pushing we that backlog in to bookings and is are of do a time have been are There those strengthen. out that

they to requirement spring immediate an for to be. not where used to is back there bookings So

Perfect. Thank you.

welcome. You’re

just can that. add I to Maybe

lead just backlog viewing reflection aren't need the they coming times put know lead You place, our down, are with to where customers pretty and times are because are that the lead times a in of bookings falling rapidly.

Thank Eric. sense. you, Make

Mizuho. next from going to with come is Our question Vijay Rakesh

is line Your open.

Yes, hi.

side to on or a at if just wondering, was the globally? look chain, quick I where seeing you are look pricing – when your were are China any you Just what supply seeing you question. at you

test of Clearly, be from, from. You stable in where services places buy there most of have movement we some supply chains are been on it chains stable, certain assembly perhaps buy I may what we lead track our think supply you I where say and know, don't some come some need. But able in have at are may cases. get we interested materials, the that we level wafers would to in. down, the times we’re

Got how that on could the last I out any if it. guess. side, you pricing see And general, look two, you you seen thoughts trends look and I as thanks a you at what going in lot. That's it, trends what mean, has three share? years in you and have been forward, the

our the business, your Pricing fulfilling the at something embedded of a tends stable. at In design and solutions lot at in. doing demand new pricing activity, point business, be point establish not more you're for coming that's you to is the which

last the time. the pricing to our of that where over two relatively we in is change inflation it's increase passed that as pricing significant business we We're forward, we there outside to customers, going I that expect pricing. way reduce or don't And to and usually to And faced our on that looking was runs. years not go stable

right, you. All thank

welcome. You’re

to with Our Bank Arya from come is Securities. next America of question Vivek going

as in You're line open.

my Thanks for question. taking

I flattish, the even Sort look of kind at tougher. though a multi-part, somewhat it's related at getting but quarter describing the you're outlook, situation When Ganesh. September of

year-on-year, if And margins? they effect year-on-year quarter or would year-on-year But were should where about, headwinds, could to, the see think continue be be we December think you it quarter, scenario And than you then thinking grow you worse I a gross the decline declines. as be right, seasonal. to could the even to what of Microchip first do I look on mentioned out the with

working are I the and December nor what modeled offer more haven't have really range going it. any a that to scenarios is quarter on guiding to don't the we December We are of There quarter be. what we are to color with,

With the have gross margin resilience we respect we gross to strong works. said a the pretty have margins, way many times, to the as

If you we look still our XX% at mix. inside-outside outside a mix, have

we continuing inventory. We build product building the we our are are building where absorption to fact, that some and for run to purposes need

provide So you but that have, not right. any to trying might guidance really, for you're absolutely I'm December

than weaker We to are quarter seasonality. expecting December the that be going is normal

Thank you.

going question Capital to Our is with next from BMO Srivastava Markets. come Ambrish

Your is open. line

much. and industrial. to ask of Hi. Thank the be Industrial to for for be about you weakened few growth seems descending. know quite rate a has competitors continues wanted you and automotive I less, to strong, some although more or the very auto's quarters,

your contracting. times several started our lead What's having these on We for just on take cycles? and here

many how So weakness industry for the you business in matter loss? and quarters expect auto, to that think we your do should

that You weak how to this using the that part me digestion of, very question just China changes consumptions consumption for it consumption and know, as is weaker taking place. change? China example, that's quarter. is anyone might question. which or So in it's June inventory difficult how was of And the expected There of answer just changes is much than

back December does how quarters guess come it's where at. is anybody's or in it and Now, September the

weak. gone how does on clear cycles through automotive how a there many can have perform. view some are and you don't look see forever typical I long back and they don't obviously, So last We've industrial cycles. They or of stay

right you know quarter. when struggling keep. allowed expect to R downturn, the Ganesh. A by going the I'm about part should the learning volatility say Well, improve, a reduce it NCNRs. used rescheduling rescheduled it's the so think usually keep here? shouldn't reschedule learning because that a into many NCNRs what's Has had to this? investors seen the occur of couple just quarters were quick I we you of way from and and What's true. with What's you follow-up, the I you don't we've another Because next companies these. these, I this.

investment where based go, purpose times to was visibility commitment of business the everybody's Well, of going a was were set of think we be It's lead on the to less to and as benefit to and farther a make is gets clear. get. a get and going NCNR to go going about assumptions farther mutual I customer out,

extremely vast And extremely majority the were XXXX in programs different and the NCNR they in been of happy environment able part customers of with were XXXX. to the have who what get an

no that substantially program I had believe programs them. You perfect. our know, issues more with have benefit is than

demand curve as We to into again the of curve way, will are and the change that has we the have curve adjust. same demand the as at demand point And a cycle changed, XXXX. by we changes, go where

these I up the beyond the term. So think this and have of mutual where benefit we long ends at how to do all view in look look provide medium short-term programs to

you. Thank sense. Makes

welcome. You're

from [Operator Instructions] Stanley, is Morgan is open. to question Our next your Moore line going Joe with come

X% seeing guys. as only describing multiple Great. down yet and markets, that, you're Thank regions, in weakness weakness quarter-on-quarter. signs you, you're an characterizing kind environment of and in I you're guess early you're guiding end multiple which that in of

for So that's I Can demand can than I do few quarters? looking level of be now. the give a of qualitative as you have be next the runs we anything guess type drawdown backlog a a great. you that just out. lot mean, like, course help, at Just this? happens right backlog of us of have that you What you lower would over sense what its might so

we It's it peer takes say, can into best more again, provide Joe. and don't the future to what to going. between able for today as plus backlog know and could it a insight we reflects three, one And go calling I business. we're we what a business normal. it. that see We've the in We're number the than of think of see it. and some we We’re has December in tone brackets the quarter is that a quarter and and given September that sense puts where is guidance that weaker giving seasonally into see you that going minus the you be as what to I our

weakness XX% what how that. can of is operating are in terms of And know, revenue of margin, I the Thank still you you. you parameters your if give give us just north two number? or a three a that? might it's – of normal than a that for do us in appreciate kind you you the Could for have much the can sense confidence durability years that you then, sense that? XX% of a seen worse ago? Can Like that

Our confidence pretty high. is

We We've other have looked it brought. to at of in that a gone, in it? looked you at scenarios the XX% how have above more we Eric, I and number modeled cycles the scenarios. we think we'll have well add be that have want different way to do

scenario you've Yes, done it operating summed not margins XX%. planning fall do We've well below see basis non-GAAP a where could I our up a and scenario on think Ganesh.

statement. very making we're So comfortable that in

now, last the couple seasonality would say we've a supply X% other add for probably of done might did response play because the years is I that understand then down microchip, normal under a we December a have is, But that, investors Maybe of it's historically, the lot or normal what that for Ganesh's and piece first bit X%. tricky to to constraints for they be right? acquisitions would seasonal a I part think little in been

Talk] amplified. yes, based and on could know saying what's that Ganesh? provides that likely [Cross it seeing, conditions we're that the some context, we're So the be word, you hopefully –

much Thanks for appreciated. your Much candor. so Great.

with Our Joshua next Cowen. to come from Buchalter question TD going is

open. Your line is

are the my can for comfortable and on-books rough more in question. of to sort you're this digestion you where feel the Thank period, guys. given level of levels I In would about targets us comfortable us we're you channel in inventory for end taking thinking demand? past What would you shipping of through you. expected quarter. Thank feel the going in you when that you to give with? come Hey you've given guess any sort you closer that

and we know, their is the demand carry, the driven You is. inventory supply, to can part channel what what think intensity I by wants channel what in

we the goes those where's So on goes to inventory don't to guide go. channel going it try where It based factors.

we a point, help. do that an looking of slower for the has which this is we have us would take in normally and for are inside days the internal And of microchip And to our We sheet we do inventory effort and are positions quarter. our expect factor both, answer have September as caused on but liked, on lot have customers have Eric in at we than push-out who inventory a and said, reduction and absolute it's the to inventory long-term go added us for customers. right balance

there. I color the appreciate

well. margin question your how Thank thinking follow-up, your I foundry partners Can material there's rates. then mean my utilization on you. same dynamic, As given this through that factory for gross internal suggests your about as that you about period the your of at no least real cut, running talk you're and digestion, guess I

Sure.

want. high fabs are inventory serve the been we long-lived products. be time as had run many to as to level products unchanged. cases So, our depleted able that relatively continuing In well points we lead typically the to are certainty, need very of a internal These in at

internal continuing and run. to internal particular in are factories our fabs So the

depending will And we be want long-term. inventory with line on and foundry adjusting where the partners, in some the our be we cases, that were, purchasing to have levels inventory to adjusted where bring into

Thank you.

welcome. You're

Caso Our Wolf going come next to with Chris Research. from question is

line is open. Your

evening, thank Good Yes. you.

given reduction you haven't closer can Gap] First I that, fact lead the speak requirement guess the for that for we in in? turns. spoken [Audio customers about are a situation… question the booking is something about a in times, potential in And while, a we about, Are

lost have Chris, hear you you. Can we may us?

like line looks It this is hijacked.

to the we'll Sur And that's be back, Harlan move on going just calls queue. he JP until to So, person next Morgan. with in

line open. is Your

my Hi, Thanks question. for Good afternoon. taking

weeks target and the XX the boundary a you're there average scheduling capacity, had in second know, mean get now to I demand times given activity the You improving down half. team right? near-term to lead the weakness,

to that you times eight XX-week that I Is expect move average, been this to environment? year kind do half expect range as this XX-day in you historical just of continue guys your inventories the second range. level for you And to normal the channel quick guys follow-up, in the you that a to see a from distribution think have now? lead rise of weak

So the take first, times. lead to

drive times are You we know, lead continuing down. to

mentioned in in short what at XX that that on agile lead an average, is As weeks prepared And makes environment times right my and we're, unpredictable we us in. believe effective I all just we're business under now. remarks,

weeks. know that the but are will our lead where we'll we as year our eight a end for in or items XX% for how were. think I historical to XX time, Four at It weeks of well is where benchmark be weeks time. times we by line that XX so under we progress could under

likely to of able sell-through mentioned that some on, has respect doing, functions. what any a of provided you able time for is distribution what don't of distribution they've So, many want maybe it to I be earlier are what on have supply, been It's do inventory do inventory to inventory, June. kind we've asking know to I far for kind they to function are seeing? as of outside it? to a color be so little With we carry? What they What

Ganesh. Okay. Thanks,

Chris, Harlan. you Thanks back? Welcome. are

Yes. is open your Chris Caso, again. line

you. Not thank what Yes. happened, but sure

And time? and either on you you're was that September the business the high environment. can obviously returns seen you under how question the lead contemplate given shortening backlog. quarter that about the in thinking turns So, of Yes, Is quarter? context the December quarters tell terms several for us something haven't you

normal And expect to Yes, go of backlog else that something we'll so just we do, turns starting starting be things then again business the part with are to December certainly and as that most and a done coverage have the have have as we times, what quarter December the manage we right, into is respect turns kind lead requirement quarter. normalize of the will we we'll to also, from onwards. normally

it But December, Okay. in September? not in starts

we're in small one-third may There through parts September the quarter. mean way of September the been in the have quarter. I

right, that's helpful. Right,

really bit there industry, the if various expand you we about obviously but could from wonder there. if seeing and and follow-up, I know expand and can in the Europe. you what comments that's a say And Europe, some a comments about As know could of China, there's you any you're new, auto, industrial about something about upon not heard we you been on others here

European mentioned, I in as – recession. economies Europe there are a look is consecutive Germany more There's rely quarters interest and GDP on is I the believe high, inflation, than headwinds forward, are rates negative energy some is large in of now had export, larger two being still I one. I is as technically more inflation Yes, China still and of think U.S. that the It's economies high. European which facing. are

impact that in see the to is of their exports weakness of but That's China, China look of we'll things Europe. addition are we going the not extent when from going, Europe, what in see the quite we some and the into weak, weakness see as To where all we're also some of are realized.

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there's RISC-V a program? you bit tone Ganesh. with for of FPGA you Could design-win And Steve, your of of for gaining likely share and that question. PolarFire any real provide There’s sense this with little revenue understanding and traction somewhat from different My when see activity this is where we're embedded about Anything lot the efforts color us SoC any this RISC-V the Hi in a of interest on applications. could to you're with a program? area? growth markets

Janet. Sure. Thank you,

were been They as early using for So, ramping. of products RISC-V proponent our Those FPGA you very among production. in are the have solutions mentioned. we

have, which some increasingly industrial, and it It defense, is you markets But is quarters it we automotive of was fact, aerospace FPGA mentioned fastest-growing well. it's it's FPGA, that space. also winning us that in and at. communication winning what where it as In the traditional it, the after family is that PolarFire the if X you amount look doing like-for-like, some in Microsemi in winning, is came applications and quite significantly from to is in in winning as the

doing to And quarter, optimistic RISC-V is for It elements of quite all solution, reflect quarter we driver going very, be this fiscal that new year will that are based we growth on huge quarter to very present, integrated have both it well. and along FPGA, have other to about broadly for how So every is the a that is last records exceedingly and is the results hitting it the been with play out. we contributing FPGAs, quoting the Microchip. it on

is Good This hear Janet. from you to Steve.

Nice one But Hi. hear follow-up to from if Steve. I just you may. quick

above for that margins capability made integrate also new by on to ability corporate shouldn't effective these way, the positive and its this products Given implications architecture, is digital this be, a in gross possible and very analog functionality have average?

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it’s other much any RISC-V for that matter. alone than anything more core about So or much,

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So, thank you.