Good morning and welcome to the Allegro MicroSystems Second Quarter Fiscal 2025 Earnings Conference Call. At this time, all participants are in a listen-only mode. After the speaker's presentation, there will be a question-and-answer session. To ask a question during the session, you will need to press star one one on your telephone. You will then hear an automated message advising that your hand is raised. To withdraw your question, please press star one one again. Please be advised that today's conference call is being recorded. I would now like to hand the conference over to Jalene Hoover, Vice President of Investor Relations and Corporate Communications. Thank you, Corey. Good morning, and thank you for joining us for today's call to discuss Allegro's second fiscal quarter 2025 results. I'm joined today by Allegro's President and Chief Executive Officer, Vineet Nargolwala, and Allegro's Chief Financial Officer, Derek D'Antilio. They will provide highlights of our business, review our quarterly financial performance, and share our third quarter outlook. We will follow our prepared remarks with a Q&A session. Our earnings release and prepared remarks include certain non-GAAP financial measures. The non-GAAP financial measures that are discussed today are not intended to replace or be a substitute for our GAAP financial results. Reconciliations of these non-GAAP financial measures to the most directly comparable GAAP financial measures are included in our earnings release, which is available in the Investor Relations page of our website at www.allegromicro.com. This call is also being webcast, and a replay will be available in the events and presentations section of our IR page shortly. During the course of this conference call, we will make projections and other forward-looking statements regarding future events or the future financial performance of the company. We wish to caution that such statements are based on current expectations and assumptions as of today's date and, as a result, are subject to risks and uncertainties that could cause actual results to differ or events to differ materially from projections. Important factors that can affect our business, including factors that could cause actual results to differ from our forward-looking statements, are described in detail in our earnings release for the second quarter of fiscal 2025 and in our most recent periodic or other filings with the Securities and Exchange Commission. Our estimates, expectations, or other forward-looking statements may change, and the company assumes no obligation to update forward-looking statements to reflect actual results, changes to assumptions, or other events that may occur except as required by law. It is now my pleasure to turn the call over to Allegro's President and CEO, Vineet Nargolwala. Vineet? Thank you, Jalene, and good morning, and thank you for joining our second quarter fiscal year 2025 conference call. We delivered results consistent with our guidance despite a challenging macro environment. Q2 sales were $187 million, with sequential growth in automotive and industrial and other end markets. Non-GAAP EPS was $0.08, at the high end of our outlook. We are laser-focused on executing our new product roadmaps to bring innovative new solutions to our customers. In Q2, we announced two new XtremeSense TMR current sensors, which represent the first products launched since the company's acquisition of Crocus. These high-bandwidth, high-resolution TMR sensors streamline high-power density designs and provide space and cost savings while improving energy efficiency. They're well-suited for automotive powertrain, AI data center, electric vehicle charging infrastructure, and solar applications. And this focus on innovation is paying off as our solutions continue to build momentum across our strategic focus areas with important design wins. In Q2, we had a large design win with a leading Japanese OEM for a PHEV inverter using our current sensor solutions. Our XtremeSense portfolio won a major project for a clean energy smart metering application in North America. Our high-voltage isolated gate driver secured a win with a Chinese equipment manufacturer to test lithium batteries used in xEV and solar applications. And finally, we secured another large design win using our TMR technology for blood glucose monitoring. This expands the medical business we obtained through the Crocus acquisition, where we continue to gain traction. The diverse nature of our wins further highlights the resilience of our portfolio across vehicle architectures and between automotive and industrial markets. I now want to discuss what we're seeing in our end markets, starting with automotive. Over the past two months, I've had the opportunity to meet several of our key customers in China, Japan, Europe, and North America and really get a sense for how things are on the ground, both in terms of the state of the market and our engagement with customers. Overall, I'm really encouraged by the continued global demand for our highly differentiated magnetic sensing and power semiconductor solutions across vehicle architectures and the significant progress made in rebalancing inventory in the channel. Chinese OEMs are hitting full stride with mid-20% growth in xEV production and a slew of new products and models at every price point. They're expanding their production outside China with announcements of new plants in Europe, South America, and Southeast Asia. Chinese xEVs are now 45% of total domestic production and expected to exceed 75% of domestic production by 2030. We recognized this momentum early on and responded by proactively moving more resources to this region and localizing production in China with our partners. I'm pleased to report that our first parts from a newly formed China supply chain will launch before the end of the year. I remain encouraged by the deep engagement of our teams with our China partners, including continued design win progress with customers like BYD and NIO as we collaborate on future solutions. With the inventory digestion largely behind us, we're seeing our China shipments return to normal ordering patterns, supporting a strong increase in second quarter sales. In Europe and North America, we're seeing continued progress from a design and activity standpoint and recognize that OEMs are still trying to get their investments and cost structures aligned to market needs. While we have made progress in inventory digestion, we expect continued near-term choppiness in auto patterns from North America and European customers. Despite these near-term challenges, we are highly encouraged that auto OEMs remain committed to an electrified future and the adoption of more autonomous features. We are confident in our customers' ability to navigate these challenges, and we are well-positioned to support them with world-leading magnetic sensing and power semiconductor solutions. Our customers in Japan and the rest of Asia continue to make steady progress in expanding their hybrid and battery electric solutions. In our industrial and other end market, we are seeing signs of increased activity after a prolonged inventory digestion period. We still expect demand to recover at some point in calendar year 2025, and we are encouraged by the signals we're seeing from our customers. Our third quarter sales outlook comprehends continued progress towards vehicle electrification. Ongoing inventory rebalancing is reflected in the latest third-party estimates and typical December quarter seasonality. While the macro continues to be uncertain, we remain focused on executing our strategies, accelerating our new product introductions, and serving our customers. We continue to invest for growth with the intent to extend our market leadership and deliver on our commitments to our teams, our customers, and our shareholders. We're encouraged by the progress made and believe the business is poised for acceleration. I want to thank our teams around the world for their continued hard work and dedication in focusing on what we can control, executing at the highest level, and serving our customers. I'll now turn the call over to Derek to review the Q2 financial results and provide our outlook for the third quarter. Derek? Thank you, Vineet. Good morning, everyone. Starting with a summary of our Q2 financial results. Sales were $187 million. Gross margin was 48.8%. Operating margin was 11.7%, and adjusted EBITDA was 17.2% of sales. As a result, earnings were $0.08 per share at the high end of our outlook range. Total Q2 sales increased by 12% sequentially but declined by 32% compared to Q2 of fiscal 2024. Sales to our automotive customers were $142 million, an increase of 8% sequentially and a 28% year-over-year decline. Auto sales were 76% of Q2 sales, and e-mobility sales were $71 million, an increase of 14% sequentially. Industrial and other sales were $45 million, increasing 27% sequentially due to increases in consumer and broad-based industrial markets. Industrial and other sales declined 42% year-over-year. Sales through our distribution channel were $96 million and represented 51% of Q2 sales. From a product perspective, magnetic sensor sales were $129 million, increasing 12% sequentially and representing 69% of Q2 sales. Sales of our power products were $58 million, increasing 13% sequentially. Sales by geography were again well-balanced, with 26% of sales in China, 21% of sales in the rest of Asia, 20% in Japan, 18% in the Americas, and 15% in Europe. Now turning to Q2 profitability. Gross margin was 48.8%, and operating expenses were $69 million, down 3% sequentially and 7% compared to Q2 of fiscal 2024. Operating margin was 11.7% of sales, nearly doubling from 6% in Q1 but down from 31% a year ago. The effective tax rate for the quarter was 4%, and our full-year effective tax rate is now projected to be 6%, lower than our previous outlook due to the favorable impact of a relatively fixed R&D credit on lower taxable income. The second quarter diluted share count was 190 million shares, and net income was $15 million, or $0.08 per diluted share, up from $0.03 in Q1. Moving to the balance sheet and cash flow, we ended Q2 with cash of approximately $200 million, and the term loan balance was $400 million at the end of Q2. Cash flow from operations was $16 million. Capex was $10 million, and free cash flow was $6 million. From a working capital perspective, DSO was 37 days compared to 35 in Q1, and inventory days were 158 compared to 174 days in Q1. Before I discuss our Q3 outlook, for modeling purposes, I'd like to take a few minutes to highlight key details related to our share repurchase from Sanken Electric this past July. Allegro repurchased 39 million shares from Sanken, which reduced Sanken's ownership in Allegro from 51% to 33%. To fund the transaction, Allegro issued 29 million shares in an equity offering and purchased and retired a net 10 million shares with an incremental $200 million term loan and cash on hand. As a result, Allegro's outstanding share count declined from 194 million shares to 184 million shares. These transactions also increased Allegro's public float by 30%. In addition, Sanken reimbursed Allegro for all transaction fees and expenses and paid Allegro a $35 million transaction facilitation fee. As a result of a stock price decline between the fixed repurchase price and the closing of these transactions, Allegro was required under GAAP to record a forward repurchase fair value adjustment. This resulted in a $35 million non-cash GAAP loss in Q2. Finally, in conjunction with the $200 million incremental term loan, we took the opportunity to reprice the entire term loan from SOFR plus 275 to SOFR plus 225 basis points. I'll now turn to our Q3 2025 outlook. We expect third quarter sales to be in the range of $170-$180 million. As Vineet mentioned, this range contemplates continued progress towards vehicle electrification, ongoing customer inventory rebalancing, and December quarter seasonality. We also project the following all on a non-GAAP basis. We expect gross margin to be between 49%-51%. And this morning, we made another $25 million voluntary debt payment on our term loan, bringing the balance down to $375 million. As a result, we now expect third quarter non-GAAP interest expense to be approximately $6 million. We expect our tax rate to be approximately 6% and our weighted average diluted share count to be approximately 185 million shares. As a result, we expect non-GAAP EPS to be between $0.04 and $0.08 per share. Now I'll turn the call back to Jalene for questions. Jalene? Thank you, Derek. This concludes management's prepared remarks. Before we open the call for your questions, I'd like to share our third fiscal quarter conference lineup with you. We are attending UBS's Global Technology Conference on December 3rd at the Phoenician Hotel in Scottsdale, Wells Fargo's 8th Annual TMT Summit at the Terranea Resort and Rancho Palos Verdes on December 4th, and Barclays' 22nd Annual Global Technology Conference at the Palace Hotel in San Francisco on December 12th. I would also like to direct you to an updated investor presentation located in the Events and Presentations section of the Investor Website section of our website. We will now open the call for your questions. Corey, please review Q&A instructions. Thank you very much. At this time, we will conduct a question-and-answer session. As a reminder to ask a question, you will need to press star one one on your telephone and wait for your name to be announced. To withdraw your question, please press star one one again. To provide the opportunity for everyone to ask a question, please limit to one. Please stand by while we compile the Q&A roster. Our first call comes from Blayne Curtis of Jefferies. Blayne, your line is open. Hey, good morning, and thanks for taking my question. Vineet, I just want to ask, obviously, you had a very sharp correction in June. I think you felt comfortable at the time that that was such a big correction that you could kind of grow off of that. And you did in September, but then the sequential down again. So I'm just kind of curious what you're going to be back to kind of those June levels, which you thought were way below where they should be. So I'm just kind of curious what changed, and can you walk us through also for December? I'm assuming a big part of that correction is auto, but industrial was up strongly. Is that back down in December as well? Hey, Blayne, this is Vineet. So thanks for the question. So at midpoint, our guide for the December quarter will be higher than where we were in June. And when we looked at our trends back in that timeframe, really the biggest challenge was the inventory digestion. And as I said in my prepared remarks, we made some really good progress in bringing that down into normal levels. I will tell you that when I look at the automotive sector, we're seeing some great momentum in China. Our shipments or sales in China in the second quarter were up 54%. Okay? And the inventory rebalancing is all behind us in China, and we see some great momentum there. Where we see still some lingering effects of the inventory digestion is North America and Europe, which has been compounded by further reduction in production totals by the North American OEMs and the European OEM. So I think that's the new piece of data that we're layering in as we think about the next quarter. Thanks. And then I just want to ask, you mentioned a gate driver win with a Chinese OEM. Can you just expand on that? Obviously, it's a new product for you, and there's a big discussion about Chinese silicon carbide. And is your gate driver paired with Chinese silicon carbide? I'm just trying to understand. Obviously, there's a bundle situation for some of the vendors. You're kind of breaking that bundle with a better-performing chip. So just kind of curious what drove that win and expand on maybe the gate driver pipeline. Sure. Blayne, so the win was actually on our GaN isolated gate driver. And you're exactly right. We bring a unique value proposition with our isolated gate drivers where we combine essentially three functions into one chip. There is almost 30%-35% space savings and overall system cost savings. And for OEMs who are really astute and are looking at ways to reduce overall system cost while also regaining flexibility and sourcing power as they look at different GaN FETs or silicon carbide FETs, our gate driver is a great option. And so we're getting some really good traction with our GaN drivers that have been released into the market. That win was related to that, and we'll be shortly sampling our silicon carbide drivers as well, which we've got a long line of customers waiting to sample that. Thank you for the question. Thanks. Thank you. One moment for our next question. Our next question comes from Thomas O'Malley of Barclays. Thomas, your line is open. Good morning, guys. Thanks for taking the question. My one's a little bit broader. So if I look at just the general auto space from kind of calendar year 2021 on just before the pandemic and to today, you've grown pretty much lock, stock, and barrel with the auto group. And if I look at 2024, obviously, not everyone has reported yet, but it looks like you're seeing a much sharper correction than your peers this year where, just based on your guidance, you're kind of down 20-ish% on the year versus the peer stuff that's just down modestly. So could you maybe just describe, one, do you think that you are just earlier to the correction where you're taking this cut before others and have a little bit more of a lean supply chain given your product type and would see a recovery more quickly? Or maybe any sort of statistics around inventory drawdown or where the channel is today or where direct customers are today that would explain that difference? I guess that's the first question. Yeah. Yeah, Tom, thank you for the question. It's hard for me to comment on how others are navigating through what we consider to be pretty challenging inventory situations in the automotive sector. I will tell you that we didn't really have an extreme use of long-term strategic agreements to lock up customers on volumes that perhaps didn't make sense based on new realities. And so we were also working very closely with our advanced visibility into our backlog and our order patterns with customers to make sure that we weren't putting excess inventory into the channel. So I would say that we took our medicine early, and we believe that we have done some really good work in helping our customers clear out that inventory from the channel and from their positions. And so I think it remains to be seen how we get out on the other side, but we're confident that as these near-term challenges around inventory digestion abate and our OEMs, our OEM customers get their production plans in place aligned to what the market needs, we're going to be coming out of it in points for acceleration. Tom, this is Derek. I'd just add that if you remember, about a year, exactly a year ago in the November call last year, we started talking about opening up our cancellation window, particularly for things that were sort of we were late on and for long lead time items. So we did that, and we did that pretty proactively. This happens every couple of years. Even though things are NCNR, right, we're not going to hold our customers to those things. To answer the second part of your question, backlog has relatively kind of been consistent the last couple of quarters. Inventory has come down both in the auto side of things and in the distribution channel. And as Vineet mentioned, we saw that very clearly in China, where China was back up 54% in Q2, and that all goes through distribution, all the auto, all the industrial in China. So there's still work to be done in other regions. I'd say Japan is relatively flat, which is good. The rest of Asia is in pretty good shape. North America and Europe still have work to be done, quite frankly. Helpful. And can you just give us a metric on weeks of inventory at disties, like where is that normally, where did that kind of peak, and where is it now? And just kind of in line with that question, if things are more normalized, do you expect that kind of looking into the March and June quarter, obviously you're describing some seasonality in December, that you would see some accelerated growth off of the bottom there? Yeah, Tom. So I'm not going to provide the exact weeks on hand, but what I have provided in the past, that typically in the aggregate, we'd like to be within eight to 12 weeks. At one point a couple of years ago, we were well below that. We don't want to be there either. Some regions are getting much closer to that right now. Other regions like North America and Europe are still above that. Japan is historically above that, kind of in the 14, 15 weeks, and it stays there. China is moving much closer to that. We're actually seeing small pockets of behavior where we're seeing orders within lead time and maybe people dipping too deep in inventory. So those kind of things are good indications that we might start to see some acceleration in 2025. Thank you very much. One moment for our next question. Our next question comes from Josh Buchalter of TD Cowen. Josh, your line is open. Hi everyone. This is Lannie on for Josh. Can you hear me okay? Yes. Awesome. So kind of switching gears a little bit to industrial, I know it's been a bit of a slog to get through the inventory correction, but you posted a pretty healthy sequential growth in the quarter, and you mentioned broad-based industrial kind of recovery. Where are you seeing some of the green shoots? What are the puts and takes? And looking forward into the next one to two quarters, where do you see the trends lining up? And I have a follow-up. Sure. Hi, Lannie. This is Vineet. I'll take the question. So you'll recall that last quarter we combined our industrial and other segments. So this is sort of more broad-based commentary. We've highlighted success in our medical business. That's continuing to perform nicely for us. We're also seeing some consumer - we have very select consumer positions with some major OEMs. We're seeing some nice pickup there. We're hesitant to call it a full broad-based recovery in industrial and other. Obviously, there's some work to do. We think recovery is most likely in somewhere in 2025. But the initial signs we're seeing in terms of pickup in order patterns, certain segments showing more strength than others, gives us some encouraging signs, and we're hopeful that the industrial segment, industrial and other segment, will recover after what has been a really prolonged inventory digestion. Great. Thank you for the color. And then I guess one for Derek. Looking into the next quarter, gross margin expected to expand just slightly at the midpoint, but revenue down, call it 6.5% quarter over quarter. Can you help give a bit of color on the puts and takes there, parse out expectations in terms of sales channel, segment mix, etc.? Yeah, Lannie. So in Q2, our gross margin was 48.8%, and it had a sort of, I'll call it a one-time quality resolution of about 80 basis points, plus some geographical mix, right? There was a heavy component of China in there. As we go into Q3, I'm pretty confident in that 49%-51% range as the geographical mix starts to normalize again. We're getting better utilization in our factories, and then that one-time cost goes away. So that's really the bridge from Q2 to Q3. Got it. Thank you. Thank you. One moment for our next question. Our next question comes from Chris Caso of Wolfe Research. Chris, your line is open. Yeah, thanks. Good morning. I guess maybe just to follow up on that last comment you made where the mix normalizes in Q4, maybe you could give some sense of what you expect for the product mix as you go into Q4 with maybe the buckets of auto, industrial, and what's going on in China there because obviously a lot changed. There was a lot of China in Q3, a lot of growth in industrial in Q3, and how that kind of plays out as you go into Q4. Yeah, Chris, we're not going to guide by market, but we expect the sales at midpoint, sales are declining 6%, right? That's going to be pretty consistent between the two markets. And so when I talk about mix, it's largely geographical mix and product mix. Product mix can have the biggest impact on that. So to the extent that certain parts of our current sensor business and other things have a higher component of those sales, and even geographically, it can impact that. Okay. Understood. I wonder if you could also follow up on some of the comments you made about the China supply chain, which you're making some changes there. I mean, is that you're going to move some production into China domestic to be able to address some of the local OEMs there, maybe give some color on what the strategy is there and what's the timeline of that? Sure, Chris. This is Vineet. Happy to take the question, so about almost over a year ago, we started talking about our plans to localize manufacturing in China as we saw the significant boom in production, especially related to xEVs, both plug-in hybrids as well as battery electric vehicles or new energy vehicles, as they call it in China, and we started the process of qualifying a wafer supplier as well as OSATs, and the OSATs are obviously on a shorter time frame. The wafer qualification will take a little bit longer, but we are starting to see the first parts from our OSAT partner roll off by the end of this year, and so really excited about that. We are ahead of our schedule, so pleased about that progress by the team. And we will endeavor to move a sizable portion of our China revenues into China, and that will really be paced by the time taken to qualify different parts. As you will remember, all of our parts are automotive grade, so it does take time. But really, our focus is to make sure that we are serving our China customers the best way that they want to be served, and increasingly, that's local manufacturing. Just to follow on to my follow-on, is there any margin implications with moving that production into domestic China? Chris, over time, we do expect that to be positive to gross margins, yes. Got it. Thank you. Thank you very much. One moment for our next question. Our next question comes from Grant Joslin of UBS. Grant, your line is open. Hey, it's Tim Arcuri. Thanks. So can you talk a little bit about what's going on with magnetic sensors versus PMIC? Is the outlook better in one market versus the other? Tim, not particularly. I think we're seeing broad-based momentum, whether it comes to our design wins or to our orders. Generally, we do a lot of solution selling as well, which kind of tends to make them sort of move together. Having said that, we're obviously the leader in magnetic sensing. We tend to win more than our fair share, whereas in the power portfolio, we have leadership in selected applications that we focus on. So hopefully that gives you a sense for how these things move together. And Tim, Q2, they were kind of up similarly. Magnetic sensing was up 12%, power was up 13%. And typically, there's a bit more power in industrial and other and a bit more sensing in automotive, so you can kind of correlate those two a little bit. Perfect. Yeah. Got it. So Derek, I think back in May, you were hopeful to get to kind of mid-50s gross margin by March. And obviously, things are worse than you thought then. But can you sort of talk about some of the puts and takes as you look into next year and maybe what the sort of incremental drop-through we should think about is on the gross margin as you kind of come off the bottom? Thanks. Yeah. So the Q2 drop-through, when we gave the guidance, was expected to be 65%, and that's kind of where it's been historically the last three years, Tim, since we've been public, essentially. I still expect that to hold pretty true, absent one-time charges like we had here in Q2. And actually going into Q3, as Lannie pointed out, we're having a decline of 6% in revenues and still having gross margins improved by 120 basis points at the midpoint of our guidance when you take those one-time items out and a little bit of mix. I still believe in that 65%. We still see that as utilization. So that's the good news. As we continue to have revenue, if you put a revenue number in your model, we should get that 65% drop-through. On top of that, we expect tailwinds from normalization of mix and industrial and by region, plus a lot of the new products that we've released. As those start to get momentum in the market, a lot of these isolated gate drivers, the TMR products, those inherently have higher gross margins at better ASPs. Thanks, Derek. Thank you very much. One moment for our next question. Our next question comes from Vijay Rakesh of Mizuho. Vijay, your line is open. Yeah. Hi. Just two quick questions. On the disty side, can you talk to where inventories are and where they should be versus normal levels, I guess? Yeah. Vijay, earlier I mentioned that normal levels are about 8-12 weeks, and that's in the aggregate. Regions like Japan typically carry a little bit more inventory, and they're not far off of that. It's been consistent in Japan for the last couple of quarters as we built that distribution channel away from Sanken a year and a half ago. So that's in pretty good shape. China has come down pretty significantly heading towards that 12 weeks. Rest of Asia, I think, is getting close to that. There's some pockets like data center that are just taking time with specific products that we've had an elongated distribution inventory for quite some time. As Vineet mentioned, in North America and Europe, there's still work to do over the next quarter or two. Got it. And then as you look out, let's say look out to next year, just wondering how the competitive landscape looks. What do you think in terms of your share on the magnetic sensor side? And are you seeing any pricing pressure, or do you expect pricing to be pretty stable into next year if you can give some color on that? Thanks. Yeah. So Vijay, that was two questions in one, but I'll start with maybe the share piece. Look, we've talked about our momentum in design wins, our momentum, and our engagement with customers. And all of that gives me a lot of confidence that we will not only maintain our share in magnetic sensing, but most likely extend it, okay? And that's really where our new product introduction focus is. Really excited about the slew of new products we're bringing to the market. You'll hear more about it in the coming weeks and months. I highlighted some in my prepared remarks. We highlighted some in the last quarter. So there's a lot of momentum in our new product velocity. So excited about that. And I think that's going to help us build, maintain, and extend share. From a pricing standpoint, I would say we're back into the stable environment. So what do I mean by that? In automotive, we're governed by our strategic design wins and the contracts associated with that. Typically, when we launch a part, it starts off at a higher price, and then as volume ramps, we get productivity. We share some of that with our customers, and that's very, very typical. That's usually in the 2% range. We got back to that a couple of quarters ago, so no change there. Competitive-wise, I think pricing pressure, we talked about some perhaps trying to fill fabs, getting a little bit more desperate. I think that has become more normalized now, and certainly people are seeing past that to look at, okay, what is the form, fit, and function and really focusing on value. I would say it's stable. Got it. Thank you. Thank you very much. One moment for our next question. Our next question comes from Mark Lipacis of Evercore. Mark, your line is open. Great. Thanks for taking my questions. Vineet, you said you had visited, spent a lot of time visiting customers this past quarter. And I'm wondering, if you look past your own distributors to your customers, and I guess particularly at the tier ones, do you have a sense that inventories there further downstream past the distributors are still above normal and going to normal levels, or do you think they're at normal levels going to below normal levels at that part of the supply chain? Mark, thanks. That's a really insightful question, and I think there is a geographical split to this. I would say that in China and broad parts of Asia, as we look at inventory at distributors and beyond the distributors, we feel pretty good about where they are and where they're trending. In some parts, we're starting to see orders come in within lead time. That indicates that maybe some customers are a little too skinny on inventory. We're trying to respond the best we can. As you will recall, we've built up some strategic die bank inventory that's allowing us to respond in a very agile way. We expect more of that to happen, by the way, as the quarter goes on and perhaps even into next quarter. We think a lot of customers have become too skinny on inventory. In Europe and North America, the inventory situation has been compounded recently with cuts in production rates, a little bit of repositioning in the portfolio by the OEMs, which is having some downstream impact on the contract manufacturers and tiers as they sort of figure out what parts do they need in order to go serve perhaps a realigned portfolio. That's causing a bit of churn, to be honest. And so it's hard to look at that picture and say, are they? There might be pockets where they have no inventory, and there might be pockets where now, based on realigned product plans, there might be a little excess inventory, right? So that's a little bit harder to read in full transparency, but we are working through that in close collaboration with the OEMs as well as the contract manufacturers and the tiers. All right. That's very helpful. Thank you for that. A follow-up, if I may, just moving to that, you discussed the die bank. You had a large decline in your own days of inventory on your balance sheet. And could you just remind us of the target that we're shooting here for here, and can you characterize that? Is that mostly die bank to the extent it's finished goods? And what do you think happens to your own inventories over the next several quarters? And is the decline in aggregate impacting your own effective lead times on an aggregate basis or how you're able to respond to your customers? Thank you. Yeah, Mark, this is Derek. So our inventory dollars has actually increased by about $1 million. Quarter over quarter, the days came down pretty significantly from 174 to 159 as a function of the increase in revenue quarter over quarter. Obviously, revenue is declining at the midpoint of our guidance, 6% in the December quarter. We expect to increase our on-balance sheet inventories a little bit as we continue to purchase wafers, as we get favorable pricing to continue to buy wafers and turn those into die bank, which we're confident we can use in the near future. So I expect inventory days to tick up a little bit this next quarter. And about half of our inventory is either wafer bank or die bank. And then the finished goods inventory, we carefully look at that to ensure that we have finished goods inventory that is standard parts or catalog-type parts such that we can respond within quarter because we're starting to see some within-quarter orders, particularly for distributors. So that's kind of how we look at our inventory profile, Mark. Yeah. And Mark, just to add to that, the strategic die bank is really important for us. As I visited customers over the past couple of months, the constant refrain I heard globally was, "We aren't sure about what's happening with inventory in the channel or at CMs." But they are very concerned. The OEMs are very concerned that the channel on an aggregate basis has gone too skinny. And so the die bank that we're putting in place helps us protect our final OEM customer and us, to be honest, in a lot of ways. And so we think that that's really important as we go through this sort of turbulent period here in both the industrial and the auto markets. Very helpful. Thank you. Thank you very much. One moment for our final question. The next question comes from Quinn Bolton of Needham & Company. Quinn, your line is open. Hey, guys. I was hoping you might be able to help square the circle here. In the June quarter, you guys saw a pretty heavy decline in revenue, and I think you said at the time that you took four weeks out of end customer inventory with that decline. Then from that June base, a quarter ago, you sort of thought you could grow low double digits through the end of the fiscal year. Obviously, we're seeing a little bit of a reset in December, and I understand your comments about pockets of inventory and lower demand in North America and Europe given some of the production cuts, but that's only a third of your total sales. And so I guess I'm just trying to get a better sense from you. Where do you think end consumption of your devices are? It sounds like inventory in China, Japan, and most of the rest of Asia is back to pretty normalized levels. And so I'm just trying to figure out, are you sort of implying that the run rate of your business kind of sell-out POS type, is that now well below prior expectations, or is there still a fair amount of inventory digestion embedded in the September and December numbers? Quinn, this is Vineet. Great question, and I want to start by saying that we still see really strong demand, end market demand for our products and solutions, right, and my conversations with various customers as I went through all the regions that we serve really confirmed that, and I think the short answer to your question is we have pockets of further inventory digestion to go, namely in North America and European auto that are taking a little bit longer than we expected, okay? Had the production cuts not happened, and keep in mind that it's not just the OEMs, it's the tiers that are based in North America and perhaps have more exposure in North America and in Europe that are probably sitting on a little bit of excess inventory that they've got to work through. It's compounded by the cuts they're seeing in North America and Europe, right, which are pretty substantial. And you only have to look at what German OEMs and North American OEMs have announced in terms of repositioning their businesses and trying to get ready for this electric transition to an electrified future. So that's really what's weighing on them. I think if you look beyond that, I would say it's playing out pretty much the way we thought it would. And so this may be sort of a difficult number, but would you sort of think that as you get through these pockets of inventory over the next one or two quarters, I mean, do you think natural consumption or demand for your parts is that closer to, say, $225 million a quarter? Is it closer to $250 million a quarter, or do you think that it's lower? Again, if you're at $175 million in December, getting back to kind of the prior run rates of $250 million or above, that's a pretty hefty jump. And I'm just trying to figure out whether you think that's still kind of in the cards or whether there may have been demand destruction or just lower production kind of says maybe you don't think you get back to that level all that quickly. Yeah, Quinn, this is Derek. So the way I'll maybe approach this is when I go back to Q4 of FY 2024, we were at about $250 million, and we had some excess inventory shipping in that quarter that we talked about of about $25 million. Nothing has changed in the end markets. We still see the end markets growing low double digits. We've actually refreshed the data. We refreshed our investor presentation that we posted to our website this morning. Nothing has changed there. In terms of when that timing is when we get back to that run rate, that's hard to call right now given the near-term choppiness. Yeah. And our target model was for automotive, SAAR, or production, plus at least 8%-10%. I would tell you that our consumption estimates still track that, right? So it's really a question of how long does it take for the inventory bubble to get completely digested. And as I said, it's largely now an artifact in North America and Europe. Obviously, there might be some tiers that serve more than North America and Europe, so you got to factor that in. But we believe that the consumption model continues to be intact. Gotcha. So kind of end consumption maybe in that $225 million a quarter range, growing at sort of 10%. So once you get back to that level, whether that's 2025 or into fiscal 2026, we'll see. But it sounds like that's kind of the right end demand levels to be thinking about. Yeah. Quinn, we still believe in our long-term model. As I mentioned, we went through a pretty extensive exercise both in our strategic planning and updating our investor presentation that really corroborated those numbers. And some of the interesting things you'll see in that investor presentation is even when we went public four years ago, there was an expectation of EV growth around the world or xEV growth being pretty good. Believe it or not, it's actually better today for the next five years. So we were pleasantly surprised in some of the data we found. We knew that when hearing that from our customers, but the data corroborated that. Got it. Thank you. Thank you very much. At this time, I am showing no further questions in the queue. I would now like to turn the call back over to Jalene for closing remarks. Thank you, Corey. We appreciate you taking the time to join us. This concludes this morning's conference call. Thank you for your participation in today's conference call. This does conclude the program. You may now disconnect.