Good morning, everyone. Welcome to the conference call for analysts and investors for Infineon's 2023 financial third quarter results. Today's call will be hosted by Daniel Györy, Senior Director, Investor Relations at Infineon Technologies, who is stepping in for Alexander Foltin today. As a reminder, this call is being recorded. This conference call contains forward-looking statements and/or assessments about the business, financial condition, performance, and strategy of the Infineon Group. These statements and/or assessments are based on assumptions and management expectations resting upon currently available information and present estimates. They are subject to a multitude of uncertainties and risks, many of which are partially or entirely beyond Infineon's control. Infineon's actual business development, financial condition, performance, and strategy may therefore differ materially from what is discussed in this conference call. Beyond disclosure requirements stipulated by law, Infineon does not undertake any obligation to update forward-looking statements. At this time, I would like to turn the call over to Infineon. Please go ahead. Thank you, operator. Good morning, ladies and gentlemen. Thank you for joining our earnings call for the June quarter, on which we have our CEO, Jochen Hanebeck, and our CFO, Sven Schneider. As usual, Jochen will open the call with remarks on the market situation and divisional performance, followed by Sven commenting on our key financials. Jochen, again, will provide the outlook and highlight key messages. The illustrating slideshow, which is synchronized with the telephone audio signal, is available at infineon.com/slides. After the introduction, we will, as always, be happy to take your questions, kindly asking you to restrict yourself to one question and one follow-up. A recording of this conference call, including the aforementioned slides and a copy of our earnings press release, as well as our investor presentation, are also available on our website at infineon.com. Now, let me turn it over to Jochen. The floor is yours. Thank you, Daniel, good morning, everyone. 3 quarters of our fiscal year 2023 are now in the rear mirror, I'm happy to report once again on a strong set of results. On top of our strong business performance comes a number of important design wins and the major announcements with regards to our future plans in silicon carbide, which I'm sure you have seen this morning. As ask for your patience, as I will address this topic at the end of my introductory remarks. Coming first to the general market development, we are facing, at the moment, 3 categories of momentum. Firstly, our decarbonization-related businesses like renewables, e-mobility, as well as the automotive MCUs, keep performing extraordinarily well. Given the structural dynamics of those markets, we see the momentum as unabated. Some of our businesses, like classic automotive components and industrial drives, keep a strong performance in as expected, more and more normalizing market environment. Lastly, our computing, consumer, and communication-related businesses keep performing comparatively well in a challenging environment. For meaningful improvement of this situation, a certain inventory digestion and a recovery in end customer demand has to happen. Considering that mixed market environment, our results are once more a strong proof point of the underlying quality of our portfolio. Let's look closer at them. Revenues in the third quarter of our 2023 fiscal year came in at EUR 4 billion 89 million, basically stable in comparison to the previous quarter. The corresponding segment result was EUR 1 billion 67 million, with a segment result margin of 26.1%. This strong print is fully in line with our guidance for the quarter and incorporates some of the previously flagged effects, like incremental underutilization charges, additional ramp-up costs, and a slightly weaker currency development. As expected, our backlog of confirmed and unconfirmed orders keeps trending to healthier levels as we witness a normalization in some of our core markets. At the end of June, it stood at EUR 32 billion, after EUR 36 billion 3 months ago, still around 2 times of our annual revenue. Let's take a closer look at our divisions. After crossing the EUR 2 billion quarterly turnover mark in the March quarter, Automotive could even further expand its revenues to another record high of EUR 2.129 billion and an increase of 2% compared to the previous quarter. In particular, microcontrollers were contributing to this further increase. The segment result decreased to EUR 583 million, equivalent to a segment result margin of 27.4%, compared to the record 31.1% in the previous quarter. The difference is due to the non-reoccurrence of premium fees for additional short-term deliveries that we benefited from in the March quarter and the result of increased input costs. All in all, the business is doing very well in delivering strong margins on a substantially higher flight level than in the past years. To reiterate, several product categories, like MCUs and high-voltage semiconductors, remain rather tight, while the principal portion of the classic automotive business has now reverted to a normalized state. For 2023, once again, the market researcher, S&P Global, has slightly revised up their forecast for global light vehicle production, now seeing a total volume of 86.7 million units. This coincides with our view that customers' interest and a certain pent-up demand will keep production growing modestly. Needless to say, content expansion will be the much more relevant growth driver in the coming years. With our leading franchises in EV and ADAS, we are confident that we will grow our automotive business further in 2024 and thereafter. One of the strongest growth markets is and remains China. It is the biggest global automotive market, as well the largest market for electric vehicles. According to TechInsights, Infineon is the number one automotive semiconductor provider for China. Encouragingly, the extension of China's NEV subsidy to 2027 will support the demand for EVs, while Chinese OEMs are increasing their export volumes strongly. From a design win side, we saw, once again, a very favorable dynamic. A key win shows how we benefit from the evolution of the E/E architecture. With around EUR 800 million, it is the largest contract ever we achieved at our NOR Flash business. A North American OEM has decided to use several versions of our high-performance, non-volatile memory in its upcoming platform for software-defined vehicles. The NOR Flash components, on average, more than 20 per vehicle, will store code and configuration data in applications like central computer, ADAS, in-vehicle communication, and infotainment. In the field of silicon carbide, we have secured impressive new design wins as part of our planned significant expansion of our Kulim facility, to which I will come later. Also, no newsworthy are the very encouraging developments on our silicon carbide supply side. In line with our strong belief that the base materials will become a commodity, we are seeing great progress from our two recently disclosed additional Chinese suppliers. We have finished the automotive qualification for these suppliers ahead of time and are already delivering devices to our worldwide customers. For the past quarter, our share of silicon carbide materials from Chinese suppliers has reached around 20%. This share is to double in the next few quarters, allowing us to optimally serve local demand and to balance our supply. With that, we feel confident of having the most reliable and geographically diversified supplier network for silicon carbide boules and wafers in the industry, and if I may add, also a very cost-efficient one. Looking at the prospects of the transition to 200 millimeters, we have sample material from 5 suppliers in-house to further set up our processes, preparing to switch when it makes sense from a cost perspective. For fiscal 2023, we are fully on track to reach our target of around EUR 500 million in silicon carbide sales. As previously said, limited currently only by our Villach footprint. Now to Green Industrial Power. The segment printed once again an excellent quarter. Revenue for the third fiscal quarter amounted to EUR 565 million, 1% up from the previous record quarter. Transportation, renewable energy, and power infrastructure were the main growth contributor for this quarter. Profitability is staying at a very high level. The segment results came in at EUR 171 million, with a segment result margin of 30.3%. From a market view, we continue to see very strong demand in our core decarbonization-related applications, moderate growth in our automation and drives business, and a clear potential of the transportation business to recover to or above pre-pandemic levels in the near future. With our EasyPACK module for MOSFETs and IGBTs, we landed an important design win at Delta Electronics. Our components, covered by the low triple-digit EUR million design win, will be used in the DC-DC converters and onboard chargers in EVs for Delta's customer, a major German premium car OEM. Our customers like Delta especially appreciate our ability to address their need for customization and supply assurance. We continue to see a very encouraging momentum in our industrial silicon carbide-related business, with a year-on-year growth rate of over 60% achieved in the last quarter. Industrial customers and automotive customers, ones alike, are supporting the expansion of our silicon carbide manufacturing capacities with design wins and monetary commitments. Since there seems to be some confusion in the market, let me reconfirm that we are consistently, and by far, the number one power semiconductor supplier for solar applications by revenue. This is not only underpinned by our recent design wins, but also by our leadership in silicon and silicon carbide power semis in the industrial space as a whole. Our supply agreements in solar cover, as we speak, more than EUR 3 billion alone. Now, coming to Power & Sensor Systems. For this quarter, the segment's revenue stayed almost constant at EUR 917 million. With a decline of only 1%, this was better than expected. Despite an ongoing inventory correction on the power side, our RF and sensor businesses has recovered somewhat from the very low previous quarter's levels. The segment result of EUR 191 million came in at almost at the same level as in the previous quarter, leading to a segment result margin of 20.8% in the June quarter. The segment is diligently managing production capacities, inventories, and corresponding idle costs in order to balance customer needs and safeguard margins and cash flow. While seasonal fluctuations might occur, in particularly in the mobile phone-related businesses, the general demand environment remains rather subdued, and inventory cleanups on the part of our customers are still ongoing. We do not expect a near-term recovery of the business from a holistic segment perspective. Specific applications, like automotive charging and residential solar, remain strong growth drivers. In recent months, the potential of artificial intelligence, or AI, or generative AI, to take digitalization to a whole new level, has become apparent. PSS stands to significantly benefit from this structural growth factor over time. AI training is a very compute-hungry and calls for massive build-outs of dedicated server capacities. At the same time, power consumption is soaring at ever-lower CPU, GPU core voltages and thereby driving electrical currents up. This, in turn, necessitates dedicated power management solutions with best-in-class density, efficiency, and reliability, which Infineon is offering to all leading CPU and GPU vendors. Stay tuned. A further bright spot during the quarter is a significant silicon carbide design win for the onboard charger in a battery electric light-duty truck of a leading North American e-mobility company. Let's finalize the divisional overview with Connected Secure Systems. After the previous record quarter, CSS revenue came in at EUR 474 million, a 14% decline in comparison to 1 quarter earlier. This was driven by a weaker development in predominantly Wi-Fi components and microcontrollers, with identification and payment applications staying strong. The segment result declined to a value of EUR 119 million, equivalent to a segment result margin of 25.1%. Despite the decline in volumes, the margin level was supported by structural improvements and efficient management of our foundry corridors. From a market perspective, consumer and IoT, as well as compute applications, were, as expected, clearly weaker, with an immediate recovery not in sight. On the other hand, our order backlog for the segment has now reverted back to usual levels, which we see as an indicator for a normalized market environment going forward. During the quarter, one of many interesting design wins we secured was on Wi-Fi components for the next generation of a quasi-standard, small single-board computer. We are excited about our acquisition in the AI space. With Imagimob, a leading platform provider for machine learning solutions for power-efficient edge devices, we will further enhance our AI offering. It will allow us to transfer machine learning capabilities, which were primarily at home in large-scale server farms, onto our microcontrollers. This strategic move brings together two of our key focus topics, AI and software, and will be a great enabler for our customers. Actually, there are many more exciting digitalization opportunities ahead for us, on which we will update you during our IoT Roadshow in September. Now over to Sven, who will comment on our key financial figures. Thank you, Jochen, and good morning, everyone. Building on the very strong financial trajectory of the first half of our 2023 fiscal year, the June quarter came in as predicted. Overall, very resilient and at a good level, given certain margin headwinds we had hinted at before. Gross profit for the quarter, under report, amounted to EUR 1,821 million, corresponding to a gross margin of 44.5%. The adjusted gross margin, which excludes non-segment result effects, stood at 46.2%, in comparison to 48.6% in the previous quarter, due to the earlier-mentioned effects, like incremental underutilization charges, additional ramp-up costs, and the slightly weaker currency development. Our operating expenses saw only slight sequential increases. Research and development expenses were EUR 496 million, compared to EUR 487 million in the quarter before. Selling, general, and administrative expenses amounted to EUR 396 million, after EUR 394 million in the March quarter. The net other operating income was EUR 67 million, containing, again, some disposal gains from the sale of the Temecula site in the USA, which were grouped into our non-segment result, which therefore totaled a comparatively low -EUR 71 million. Of the overall amount, EUR 67 million corresponded to cost of goods sold, EUR 12 million to R&D expenses, and EUR 55 million to SG&A expenses. Net other operating income amounted to EUR 63 million. The financial result for the June quarter was -EUR 5 million, after -EUR 17 million in the quarter before. The improvement relates principally to valuation effects on some of our monetary investments, which we liquidated in connection with the scheduled repayment of our EUR 750 million bond maturing in June. Income tax expense amounted to EUR 167 million for the third quarter of the current fiscal year, equivalent to an effective tax rate of 17%. Cash taxes in the June quarter were EUR 100 million, resulting in a cash tax rate of 10%. For the entire fiscal year 2023, we expect an overall rate for both effective as well as cash taxes of between 18%-20%. Our investments into property, plant, and equipment, other intangible assets, and capitalized development costs in the June quarter increased, as expected, to EUR 768 million, up from EUR 565 million in the quarter before. Depreciation and amortization, including acquisition-related non-segment results effects, were EUR 441 million in our fiscal second quarter, after EUR 434 million in the preceding quarter. Driven by a strong operating cash flow, our quarterly free cash flow from continuing operations improved to EUR 326 million, after EUR 193 million in the prior quarter. Within this overall positive development, inventories on our own balance sheet increased in total, with reach going up from 143 to 149 days. Looking a bit deeper, it becomes apparent that finished goods actually came down quarter-over-quarter in absolute terms, whereas we saw higher values for raw materials and work in progress. As mentioned before, we are taking a differentiated look at stock levels as the supply-demand balance varies a lot by product category. Now to our liquidity and leverage figures. The positive free cash flow notwithstanding, our gross cash at the end of June decreased to EUR 3 billion, compared to EUR 3.4 billion at the end of March. The key reason is the mentioned repayment of a EUR 750 million bond. Our gross debt correspondingly went down and stood at EUR 4.7 billion, further reducing our gross leverage to now 0.8 times. Net debt came in at EUR 1.7 billion, equivalent to a net leverage of 0.3 times. These figures translate into ample financial flexibility to support our growth path, including lighthouse projects like the further Kulim expansion. Let's close the financial part with a look at our after-tax reported return on capital employed. With 18% for fiscal Q3, we once again clearly exceeded our cost of capital. Now back to Jochen, who will comment on our outlook. Okay, I have to switch on. Thank you, Sven. Overall, the strong trends, decarbonization and digitalization we are addressing are intact and will allow us to close our fiscal year much better than originally anticipated in November last year. We are fully on track to reach our twice-upgraded guidance in a market environment, which continues to be characterized by different patterns of demand, areas of strong structural growth, fields with resilient momentum, and more sluggish areas exposed to consumer spending. For the currently running fourth and final quarter of our fiscal year, we expect revenues of around EUR 4 billion, essentially flat compared to the previous quarter. By division, we do not expect major differences in the sequential growth development. For the group segment result margin, we project a level of around 25% for the September quarter, reflecting the demand situation in conjunction with deliberately accepted higher idle costs and some incremental ramp-up efforts, as already communicated. As before, we do assume 1.10 for the US dollar/euro exchange rate. Considering our outlook for the final quarter, for the full 2023 fiscal year, we continue to expect revenues of around EUR 16.2 billion, fully confirming our previous estimate. As before, by segment, we expect ATV and GIP to grow above, and CSS at, at the expected corporate average rate of around 14% year-over-year. For PSS, we expect annual revenue to fall short of last year's level. Our expectation for the adjusted gross margin is unchanged at around 47%. The outlook for the segment result margin for our full fiscal year 2023 is unchanged at a level of around 27%. Both will be in line with the upgrade we have done in May. Our forecast for investments in property, plant, equipment, other intangible assets, and capitalized development costs is unchanged at a level of around EUR 3 billion. For depreciation and amortization, we continue to expect a value of around EUR 1.8 billion, including amortization of around EUR 450 million, resulting from purchase price allocation that will end up in our non-segment result. For the free cash flow, we now see a slightly increased level of around EUR 1.2 billion. Our adjusted free cash flow is now expected to come in at around EUR 1.7 billion, representing above 10% of sales. As previously, none of our projected numbers is incorporating any effect related to the planned acquisition of GaN Systems. We continue to expect closing of the transaction within the fiscal year 2023. With this, ladies and gentlemen, I would close the usual part of our quarterly earnings call and take the opportunity to take you through our plans for significantly accelerating our silicon carbide business. As you have seen this morning, we plan to build the world's by far largest 200 millimeter silicon carbide power fab in Kulim, Malaysia. The market for power semiconductors continues to show accelerating growth, driven by decarbonization. Within this market, silicon carbide shows impressive and unabated growth in automotive and in a broad range of industrial applications like solar energy storage systems, high-power EV charging, and more to come. This accelerating growth is clearly above the projections many market researchers and also we had in the past. Therefore, we have decided to significantly increase the scope of our expansion of the Kulim site to provide capacities for an annual silicon carbide revenue of around EUR 7 billion by the end of the decade. With this site, we will be able to leverage our strong technological base, like the best-in-class silicon carbide trench technology, broadest package and customer portfolio, and deepest and widest application understanding, together with an unprecedented scale and factor cost advantage. Together with our well-diversified substrate supplier base, we are convinced that we are set up for a silicon carbide market leadership position. Expanding the third module at the existing site in Kulim offers significant advantages, not only from an infrastructure point of view, but also with the outstanding competence level of our employees on site, allowing us to establish a highly competitive world-scale fab, in combination with our R&D competence center in Villach, Austria. This decision is supported by an impressive incremental design win volume of about EUR 5 billion, along with about EUR 1 billion in prepayment from existing and new customers. In the automotive sector, this includes six OEMs, three of them from China. Among the customers are Ford, SAIC, and Chery. Notably, all of these long-term agreements are linked directly to OEMs, who are the ultimate decision-makers in this market. In the era of renewable energy, customers include SolarEdge and three leading Chinese photovoltaic and energy storage systems companies. Infineon and Schneider Electric agreed on a capacity reservation, including prepayments for power products based on both silicon and silicon carbide. We will provide more details in separate announcement with our customers in the near future. The prepayments will contribute positively to Infineon's cash flow in the coming years and shall be fully repaid in connection with agreed sales volumes by 2030 at the latest. With phase two of the Kulim expansion, we will invest additionally up to EUR 5 billion over the next 5 years. We now plan to spend a cumulative amount of around EUR 4.5 billion on major front-end buildings over the next 5 years. The investment, along with a planned 200 millimeter silicon carbide conversion of Villach and Kulim, will lead to aforementioned annual revenue potential of EUR 7 billion by the end of the decade, underpinning our 30% market share target. Our near-term revenue target is now more than EUR 1 billion in 2025. The start of production of the second phase of module three is planned for mid-2027, while the already announced investment of the first phase is well on track, and production will start in the second half of 2024. Ladies and gentlemen, it is time to summarize. Once again, we have delivered a strong quarter and are fully on track to reach our twice-upgraded guidance for fiscal 2023. Market dynamics are clearly mixed, with some businesses continuing to show unprecedented demand, while others are in a more normalized or even muted state. With our recent decision to significantly expand our silicon carbide manufacturing footprint, we are reaffirming our leadership in power systems. With our strong portfolio geared at the long-term trends of decarbonization and digitalization, we are addressing the right structural themes, in despite of any short-term cyclical movements. We will continue our determined execution, knowing that our solution provide answers to the challenges of the green and digital transformation. Ladies and gentlemen, this concludes our introductory remarks, and we are now opening the call for your questions. Emma, please start the Q&A session now. Thank you. Our question-and-answer session will be conducted electronically. If you would like to ask a question, simply press star followed by one on your telephone. If you are joining us today using a speakerphone, please ensure that your phone is muted locally. We'll take our first question from Lee Simpson with Morgan Stanley. Please go ahead. Great. Thanks. Good morning. Thanks for putting me in on the call. Just wanted to go through that, the margin structures again around automotive. I think you talked about 27.4, versus 31% in the last quarter. But you gave us some details around non-recurring fees, around short-term deliveries, and I think you said there was an increase in the input costs. Could you maybe just go back through that and give us a couple of numbers around that, if it's possible? Thanks. Yeah, Lee, Sven speaking. Hello. I'm happy to take that. You, you already summarized it well, so it's a combination of these effects. There are some premium fees which are related, for example, to expedited delivery or extra quantities. That's something which has faded out in the last quarter to a certain extent. These are the premium fees we were referring to, which is in line with the normalization of parts of the businesses as we have described around classic automotive, for example. The second part are the increased input costs, here it's from the silicon foundries. There are some increases on externally procured products, for example, for the microcontroller business. Great. Thanks so much. Pretty clear. Maybe just to, as a, as a quick follow-up around sort of IGBTs, and clearly as far as your position to China is concerned, could you give us a sense for how pricing there is progressing, and what sort of position you see for yourselves going into 2024 as it currently looks? Thank you. Yeah, I take the question on pricing. First of all, pricing in automotive is very firm, and I think this is what you refer to. Also, pricing in many parts of the industrial business is as it is in allocation, very firm. We even see some opportunities for silicon carbide, for example, on silicon carbide, to increase prices. Now, in some standard components, power discretes, there is somewhat slightly weaker pricing. However, that is only relates to the standard parts, not the differentiating MOSFETs and IGBTs, and the standard part is only a small part of our overall portfolio. Of course, we remain to be a leading supplier of the Chinese EV companies. This is still an area where we are short of supply, and therefore, no discussion for sure on pricing going in reverse. Great. Thanks so much. Next question is from the line of Johannes Schaller with Deutsche Bank. Please go ahead. Yeah. Good morning. Thanks for taking my question. Just on the EUR 5 billion incremental designs that you have in silicon carbide, can you maybe give us a little bit more detail with all of that happened in this quarter? So it's quite a big number. Then maybe as a second question, just on pricing, you alluded to silicon carbide seeing some more upside. Can you maybe help us on the profitability of that business right now? One of your competitors gave a bit of color around that, and then also on the microcontroller side, I think, Sven, you spoke about higher input costs. I mean, is there more scope in higher MCUs also to maybe increase prices going forward again? Thank you. Yeah, thanks, Mr. Schaller, for the question. I take the first part. So look, various customers approached us over the last two quarters and said: "We need more. We need more long-term. We need more silicon carbide capacity until the end of the decade." Then, we concluded, okay, if there is sufficient customer commitment, and not only by talking, but by actual monetary commitments, and also supported by our market picture, which is not only geared, as you know, from the automotive side, but also supported from the industrial space, where we see more and more applications, where the value proposition of silicon carbide is emerging and becoming a reality. Based on our market picture, based on numerous customers, we concluded it's now time to go here on a different scale, and to build out Kulim 3 immediately with the second phase, and that will give us a unprecedented scale and also a cost advantage compared to any other fab on silicon carbide on this globe. With this, I hand over for the other questions to Sven. Yeah, thank you. Johannes, you asked on the pricing and the profitability for silicon carbide. Happy to reiterate that our silicon carbide, now I'm talking Infineon, is profitable, as you know, since several multiple quarters. Here there is a differentiation, as we have said all along the last quarters. The industrial silicon carbide business is an accretive business, but also the automotive business is increasing significantly in profitability. Also here we are around the company margins. That's a very positive development. I think the other one, as Jochen was just saying, that's the short-term situation. Mid to long term, we will benefit from the combination of scaling and also the diversified supplier base, which is also geared towards cost competitiveness, if you just think about the most recent supplier agreements we have communicated. Yeah, on the microcontroller side, to finish the question, it's a very, very strong growth in this business. High or well above EUR 2.5 billion this fiscal year, growing very strongly from last fiscal year. This is based on design wins we got many years ago, when we took a chance in the market to come up with new innovative products, which were then picked up by big time by many, many customers. We secured capacities now long term with various foundries in this regard. Towards your question, we will, of course, make sure that also over the course of time here, the market price is reflected in our books. That's very clear. Thank you very much. Next question is from the line of Joshua Buchalter with TD Cowen. Please go ahead. Hi, guys. Thank you for taking my question. I, I wanted to ask about underutilization charges. Could you maybe pinpoint which segments, are there any going on in ATV? You know, I guess, bigger picture, how are you thinking about inventory levels? Are you managing to a target now and trying to get them lower, or are you comfortable with, with where things are? Thank you. Yeah, Joshua, Sven, I take your question. On the underutilization charges, because they are, I think, important to also understand the margin dynamics, let me give you here full transparency. In the first half, we realized, give or take, around EUR 180 million of underutilization charges. For the full year, we expect them now to be at around EUR 425 million. You see that there is a significant increase in the second half, as communicated already in the Q2 earnings call. The peak of that is expected to come in Q4, and that's the main reason, next to the currency, where we expect $1.10 for the dollar, and we have already seen the first months being weaker than $1.10. We accept, on top of the currency effects, this is the important driver for the margin reduction from 26% to 25%. The underutilization charges are of course, managed, as you asked in your question, following the market demand, and therefore, you can assume that it's geared towards the weakness we continue to see in the consumer communication compute segment. Therefore, I would say the majority of that will be reflected and visible also in the margins of the PSS, and to a certain extent, on the consumer business for the CSS business. That's the majority, what we see currently. Thank you. That's very helpful. I appreciate that color. You call that high voltage power and MCUs as sort of the higher, remaining tight in ATV. Any help you can give us on what percentage of that business it is, and sort of what's going on in the non, high voltage and microcontroller portion of the business? Are pieces of those businesses within auto still seeing pricing firm? Thank you. Yeah, if you combine high voltage and microcontroller in the automotive space, you're talking roughly half of the division revenue. As always, if things are tight, then there is no reason, or price discussion go in one direction. There's no reason to discuss softer pricing or weaker pricing. The other half of the business is fine as well? Thank you, sir. The other part of the business falls in the category of, firm, firm pricing, as I alluded to before, because automotive is a business with long design in cycles. The overall statement is very firm pricing automotive, and then in the areas of, allocation, the discussion is, if at all, about, price up further. Understood. Thank you. Next question is from the line of Didier Scemama with Bank of America. Please go ahead. Good morning, gentlemen. Thank you for taking my question. I'm afraid back on autos again. I think last quarter, you sort of alluded that to the fact that you could grow in ATV revenues in fiscal year 2024, but not ready to commit to double-digit top line growth. My question would be, you know, are you prepared now to reiterate that, or at least to give us some commentary on the trajectory of revenue next year? Then on the margins of ATV, given your earlier comments then about peaking idle costs and also FX, assuming sort of a flattish development from here, do we expect margins to trough in the current quarter, so Q4, or the ramp-up costs are going to wait further in the first half of fiscal year 2024? Thank you. I take the outlook statement. Even if we do not give any guidance on the next fiscal year, I think it's fair to assume, and I stated also in my introductory statements, that automotive will continue to grow, because obviously we have here one of the biggest structural growth drivers in our hands. Yeah, Didier, on the automotive margin, I mean, as I alluded to already in my answer to your colleague asking the previous questions on where will we see idle coming up in Q4? I mean, I expect the Q4 numbers also given that the revenue line is more or less the same in the same ballpark for automotive. We are not guiding for next year. Please understand, we will be the first to guide for the next year in November. Give us please the benefit in this call not to guide for 2024. There are always puts and takes on margin. Keep growing is one thing, ramping is the other thing, but, as I said, let me come back to that in the November call, please. Fair enough. For my follow-up, I wondered if you could go back to the commentary you made on the-- I'm not sure if you said PSS or CSS or both, but on the sort of backlog and order, starting to recover from the depressed level of Q2. If, if, if you could perhaps, comment a little bit on that, and if you just give us a bit more color on the outlook. I mean, probably don't expect a strong recovery given the demand environment, but can that be supportive, again, for the coming quarters, for revenues and margin? The CSS, the comment was relating to CSS, where we see the total backlog now on a normal level, on a historic normal level. The business is still, yeah, subdivided in two parts. Our government ID and payment, strong, and connectivity components related to consumer applications, weak. Here we still have to see clear signs of recovery. All right. Thanks very much. Next question is from the line of François-Xavier Bouvignies with UBS. Please go ahead. I have two, two question. The first one is on the investment in silicon carbide. You're going to explain well, I mean, you know, the investment and the prepayments. I think what one of the market concern is around the timing of this investment. You know, when we look at the outlook, the macroeconomic is uncertain. When you look at the Q4 guide, actually your revenue are gonna decline on a year-over-year basis, first time for a long time. You know, how can you reassure the market on the timing of this investment? Because when we look at the already first module you had on the silicon carbide in Kulim, I mean, it's far from full yet. You, you didn't start ramping it from my understanding. Maybe can you help us understand your capacity trajectory, potential next year and 2025? You know, what kind of revenues could you, you know, theoretically achieve, them on the side, in the next, in 2024, 2025, and why do you need to invest now? That's my first question. Yeah, happy to take. First of all, silicon carbide, we are currently limited in, in, in Villach. Next year we will only grow in Villach before Kulim 3, phase one will then support us in revenue growth in 2025. Building factories takes time. Kulim 3.2, phase two is providing capacity then from 2027 onwards. Here we are clearly aligned with our market models, aligned with public data, aligned with many of our customers. We are convinced that the structural growth drivers will ask for more output, especially in the second half of the decade, that's why we are making this investment. Of course, this investment can, in terms of equipment, always be adjusted to the exact market conditions then down the road. We are starting now with the building, which is a certain amount out of the EUR 5 billion. It will be adjusted, but today and proven by prepayments, I mean, customers don't make prepayments lightly. We believe that this is the right step. Please remember our decision on Villach at the time. It was also in a weaker environment, and yeah, in that case, obviously, we got it right, and therefore, building semiconductor factories is always something looking into the future. Of course, we are also confident because of the breadth of application. It's not only automotive, but many, many industrial applications which are now gearing towards silicon carbide. In the future, also gallium nitride, I have to say. Okay, thank you. Maybe my second question is, as you see the silicon carbide, you know, ramping up, what does it mean for your IGBTs, especially on the high-edge front, high-end, you know? Do you see any change, like a change of mix, basically, where you see silicon carbide application increasing? Because you're not the only one, you know, investing significantly in silicon carbide and seeing the demand, you know, greater, but it has surely some implication into maybe the, the high-end IGBT. Does it change the roadmap at all on the IGBT, maybe lower investment on that front? That would be helpful to, to know your thought on that. Thank you. Yeah, look, the, many people are indeed announcing factories on silicon carbide, and, and, the winners will be the ones with the best cost position. We feel that with Kulim as a production site and the scale of our facility, we are will be much better off than any our competitors. In case there is an oversupply situation towards the end of the decade, then the ones that will win, as usual in the semiconductor industry, will be the ones with the best cost position and the best differentiation potential, which again, I I repeat myself here, is technology, is package portfolio application or how, breadth of application, and customer portfolio, and so on and so forth. Now, with respect to silicon, here we have with the 2, 300 millimeter factories, we have achieved a very good economy of scale. We see further growth, of course. Some of the growth in the overall market goes into wide-bandgap, but also according to external markets research sources, silicon is still growing, and that is also supported by the application view. If you think about the public discussion on hybrid inverters, silicon carbide, silicon, the opportunity for silicon in, in, in, in entry-level cars, for second axles. It fits all nicely together in our view, and we feel that we, as our claim is, or our ambition is, to be the leader in power systems, and that's why we will, keep on investing into all three technologies. Relatively, of course, the investments now go stronger into wide-bandgap, silicon carbide, and gallium nitride. Thank you very much. Next question is from the line of Sandeep Deshpande with JP Morgan. Please go ahead. Yeah, hi. Thanks for letting me on. I have a couple of questions. My first question is regarding your margin situation. I mean, when we look at your margin in the most recently reported quarter, you know, we've seen the margin in autos drop a lot, but then Power & Sensor Systems, which actually saw a decline in revenue, has not seen margin decline a lot. I mean, I'm trying to understand what is the trend, why the margin behavior between the different divisions is so different as such, when one is growing, the margin is dropping, the other one is declining, but the margin is not dropping as much. Is this anything to do with the inventory positions? The same thing, I mean, when we look at CSS, for instance, where is these inventories in CSS, and why is the margin dropping only by three percentage points there, when the revenue decline is so significant in CSS? Yeah, Sandeep, thank you for the question. Happy to take that. I mean, again, starting with, with the automotive situation, I think we explained that there is a, a combination of some additional factors, which we, which we have not seen, so much in the, in the other divisions. For example, the premium fees, and the higher input costs on wafers or inputs which are going into material which is still heavily in allocation. That, for example, is not the case, as unfortunately, as we see the weakness in many consumer-related applications in PSS and CSS. It's always a combination of, of input and price, of course, which then makes the delta. You are right. I can confirm that we have been a bit more pessimistic, so to say, on PSS than they came out this quarter. We still want to see more evidence and not only some sub-pockets of PSS, like RFS or some server-related businesses before we really declare it to bottoming out. We keep being here conservative, but these are the main drivers for the situation. On top of the group aspects, as we said before, the idle, the FX effect, which of course affects the divisions all to a different extent, but all are affected. You have these special ones which are automotive specific or which are, to your example, more CSS specific. Sorry, I didn't understand the point on CSS. Why is CSS not down more given the 14% drop in revenue? I said that the, the, the, difference, for example, is that it's a different mix effect between the, what we call ICW, so the, the Bluetooth, the, the connectivity business and the payment business. The other thing is that the, the, the increase in input costs, given that the end markets are weaker in CSS, was not as much, as in automotive, for example. My next question is on CSS itself, on the inventory. I mean, can you tell us where the inventory positions you see in the non-automotive microcontroller market is at this point? Is there a pricing impact in the microcontroller market, in the non-automotive side as such? Because, you know, the consumer market remains incredibly weak at this point, so trying to understand where on the trajectory of that market at this point. Yeah. On the, on the CSS pricing side, Sandeep, these are all design-in products. We are not in this standard general purpose microcontroller markets, which other have reported about. Ours are security design in products and connectivity parts. I don't think we can put these two into one bucket. What about the inventory of it? Inventory on, in the channel, or? On the microcontroller next autos as actually overall, how do you see that? I can take that. Generally, Sandeep, the inventory levels, in line with our development, from the market or end market side are in an okay-ish area for automotive and GIP. They are out of the normal range in PSS and CSS. Our normal range, that's now for. Just to give you 1 example, the distribution inventory, which is 9-11 weeks. Here for CSS, we are above the 11 weeks. Thank you so much. Next question is the line of Aleksander Peterc from Societe Generale. Go ahead. Good morning. Thank you for taking my question. I'd just like to focus on the order backlog, which shrunk sequentially by EUR 4 billion, and that is the equivalent of your revenue. From a simplistic point of view, it looks like your order intakes of the quote have been offset by potentially cancellations. Is, is that the right way we should be looking at this in the future? Just a little bit of color on what are the moving parts in, in the backlog? I have a quick follow-up on that. Thank you. This quarter, there is no foreign exchange rate effect in the reduction from EUR 36 billion to EUR 32 billion. It's orders, but as always, it's the without limitation, right? It's over the total order book over the next years. Yes, we printed EUR 4 billion of revenue, but you cannot take that as the only factor, because there are many structural effects between the divisions and also on a product portfolio ongoing. Overall, we consider this reduction as a healthy normalization. As I always said, this number was too high, and it will probably also go further down in the next over the next months. That's not surprising, and that's not at all concerning for us with respect to our growth trajectory for the years to come. Alex, maybe to add the two other data points, which we are also always happy to share with you, is that based on the EUR 32 billion backlog, still unchanged, more than half is with automotive, and give or take two-thirds are up to 12 months, so no major change on the structure as well. Okay. Thank you. Thank Thank you very much. My quick follow-up would be just on, on the idle capacity charges. You do clarify that we should expect a kind of a peak in these charges in the current quarter. Do you anticipate reaching a satisfactory level in terms of your inventory to declare basically the end of major idle capacity charges going forward? How should we be modeling this going forward? Thank you. Alex, sorry, I think we lost you here for, for, for 1, 2 sentences. Could you please repeat the question? Yes, sorry. It was just on idle capacity charges. You specified that they peak for the year in your fourth quarter, which is, you know, a helpful indication. Will you, by the end of the year, reach inventory level that are satisfactory for you, and therefore, model moderately, if any, idle capacity charges after this quarter? That was my question. Thank you. Yeah. Alex, I'm, I'm a bit speculating because the line is really broken. I, I hope I, I got your question and I give you the right answer. I understood your question around the idle. Will that peak in this Q4 for the fiscal 2023? The answer is yes. Then the second part, as far as I understood it, is if we are then satisfied with the inventory levels towards the end of the year. I would say, if you ask me, I, I should not be satisfied with the levels we are, we currently have. It depends very much on the divisions and within the divisions than on the different buckets, as we said. There are still products hand to mouth. We will focus very much on the ones where we see a continued weakness, and that is mostly around consumer compute communications. Let's then show the numbers at the end of the year, which will be the, the end effect of all the balancing between idle, as Jochen also said in the intro remark, between idle revenue and free cash flow. That's very clear. Thank you very much. It's from the line of Tammy Qiu with Berenberg. Please go ahead. Hi, thank you for squeezing me in. Firstly, regarding again, your auto margin, how should I be thinking about this auto margin trend on the sort of midterm, long-term basis? Because obviously your mix has improved, and also this EV agent has been much more popular than it was previously. Also the second question is relating to your China supply or your silicon carbide. Do you see your suppliers' yield rate improving recently? In the long term, are you going to probably increase your percentage of sourcing from them? Tammy Qiu, I take the first part, and Jochen will take the silicon carbide part. Again, as I said earlier, please do not expect us now to guide midterm, long-term or 2024. I mean, I can maybe help you a little bit. If you look at our through the cycle target operating model, you see the 25% being the midpoint, and then in very good years, we want to be in the high 20s and in bad years, in the high teens. If you just assume that automotive represents a give or take, close to 50% of our revenues, I mean, you can assume that they should be in that ballpark as well. Otherwise, it will be very hard to reach these markets. Maybe that, these margins—s orry, maybe that explains it indirectly without now giving you concrete numbers for the next year. Yeah, I take the silicon carbide part. We are very happy with the progress we make with these two Chinese silicon carbide supplier, SICC and TanKeBlue we announced last quarter. As I stated, they are automotive qualified now with us. They contribute already 20% to the volume as we speak last quarter. This share will likely double and then go in line with the local demand in China. With respect to their own yields. Our yield is absolutely on a very good level, also compared to other suppliers, their own yield. I can only speculate, but I can assure you the material we get, whether it's spools or wafers, are of very high quality. Okay, thank you. Just to confirm, regarding your midterm target, at that time, you were saying you're going to increase the level of value-based pricing for segment, including auto. Is that in progress? Yeah, absolutely. Value-based pricing is our strategy and in execution along the thought of product to system. We are not selling individual parts. We are making proposals, we are making offers, we are designing in, we are have design wins on product sets. In that regard, including software, by the way, and in that regard, of course, we can make a very different value proposition to our customers, including also a capacity reservation agreements and other services. That is what we call overall value-based pricing. Yes, in execution across the company. Okay, thank you. Next question is from the line of Jerome Ramel with BNP Paribas Exane. Please go ahead. Yeah, good morning. Quick question on silicon carbide. Have you qualified your 8 inch yet? If not, when do you expect to qualify your 8 inch? For Kulim 3, what's going to be the capacity in terms of wafer start per month for 200 millimeter of silicon carbide? I'm not sure whether I fully understood due to the quality of the line, but I understood it's a question about 8 inch. I can tell you, the second phase of Kulim 3 will start with 8 inch. That's for sure. When exactly now the transition to 8 inch will happen, whether it's in 2 years or in 4 years, we are still observing the market. As said, we have material in-house from various suppliers to set up our processes, our own processes. That's ongoing. We are ready, but we will only make that transition, of course, when it's commercially meaningful. This will play out over the next years. The the 7 billion at the end of the decade is then purely 8-inch in Kulim and Villach. Okay, thank you. Next question is from the line of Janardan Menon with Jefferies. Please go ahead. Yeah, hi, good morning. Thanks for taking the question. Just a question on your, on your 2030 outlook on silicon carbide. At, at $7 billion, you're, you're gonna be, you've sort of stated your claim to be the, the, the largest supplier of silicon carbide in the market, because that number is higher than other numbers from current leaders. You've attributed some of that increase, of, you know, or, or, or to take that share, to the lower cost production, on this big facility you're building, from an economy of scale point of view. I'm just wondering how sustainable is that? Because your competitors can also put up very big facilities. Is that on its own sufficient to give you an advantage from a cost point of view? Does your advantage come sort of more from the fact that you're a few generations ahead in trench technology or, or packaging? Is that the more sustainable advantage? I'm just talking about, you know, purely from an investment point of view, other, other companies can also do what you're doing. What gives you the confidence that you have a sustained advantage? How would you see the split of industrial versus automotive revenues, roughly? I know it's difficult to predict to 2030, roughly, how do you see the split at that point in time between industrial and auto? I have a small follow-up after that. Thanks. Yeah, thank you for the questions. Our assumption on the EUR 7 billion is roughly 50/50 between automotive and industrial, of course, that can change over time. If you ask me today, that would be my assumption. On the differentiation potential, it's all of the factors: cost advantage, technology, application, know-how, package portfolio. Why do we believe this, this cost advantage on the fab is something hard? In, in, in, in principle, yes, others can also build up factories, building a new factory is a different game than converting a factory. To give you a bit of a feeling, such a factory, in a moment where depreciation is still on, the cash cost is 50%, and a good chunk of this 50% is labor cost. You can assume that labor cost is a lot less in Malaysia as compared to Korea, to Europe, to U.S. If the factory is running out of depreciation, then, of course, this share even goes up further. Also, the building cost of a facility in Southeast Asia by square meter or square foot, whatever you like, is half of the cost compared to Europe or U.S. I have no doubt that this facility will beat, in terms of cost position, any of the announced project, and looking forward to any plan of a competitor that, yeah, tries to beat us in that domain. Understood. Then just on the automotive margin side, in the third quarter, did you still have premium fees, which could come down into subsequent quarters? Or was the premium fees sort of only a first half phenomenon? The same on the wafer input side, on the microcontroller side, has all of that microcontroller pricing, I mean, the wafer pricing, been reflected, or will there be more increases in subsequent quarters? Yeah. Jan, thanks for the question. again, guiding now only for 2023, there was a reduction as communicated from the last quarter to Q2 to Q3. I would now take the current run rate as a good proxy for the next quarter, as I said, for 2024, we will then guide in the November call again. please also look at that in combination, these fees, these expedited fees for premium services, as we call it, they have to be also seen in connection with the capacity reserve agreements. There is a lot of debate with the customer still ongoing, also shown by the prepayments now on silicon carbide, where it's about supply certainty. There are other buckets which, which we are triggering and which will also play an important role in the revenue and profitability line going forward. It's not only about the, the premium services, not to confuse you here. Let me add 1 more aspect to the discussion on the silicon carbide factories. Of course, others or in, in Europe or in, in, in United States, you might be able to achieve a higher level of subsidies. First of all, that also implies that we are also confident to get some subsidies in, in, in Malaysia, of course, not to the same extent. Again, these subsidies need to, first of all, cover the building infrastructure difference between high-cost countries and a country like Malaysia. Then, of course, ultimately, over a longer period of time, if you look, 4, 5 more years or 5 years and more down the road, the subsidy effect will have disappeared, and what remains is the cash cost, and that determines then the competitiveness of a factory. Time to wrap up. Understood. Very clear. Thank you so much. Thanks, Janardan. Thank you for all your questions. With that, we are concluding our fiscal third quarter conference call. For further questions, please feel free to contact the IR team here in Munich. Thank you very much. Take care, and have a good summer.