Good morning and welcome to the Allegro MicroSystems third quarter fiscal 2025 earnings conference call. At this time, all participants are on a listen-only mode. After the speaker's presentation, there'll be a question and answer session. To ask a question during the session, you need to press star one one on your telephone. You will then hear an automated message advising your hand is raised. To withdraw your question, please press star one one again. Please be advised today's conference is being recorded. I would now like to hand the conference over to Jalene Hoover, Vice President of Investor Relations and Corporate Communications. Please go ahead. Thank you, Kevin. Good morning and thank you for joining us today to discuss Allegro's third 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 fourth 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. A reconciliation of these non-GAAP financial measures to the most directly comparable GAAP financial measures is 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 third quarter of fiscal 2025 and in our most recent periodic filings and other filings to 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 third quarter fiscal year 2025 conference call. We delivered on our commitments with third quarter sales of $178 million and non-GAAP EPS of $0.07, both above the midpoint of our guidance. Beyond that, we continue to see positive trends across a number of leading indicators in Q3: increase in quarter orders, which is an indication of lower channel inventory, cancellations have largely abated, and bookings are the highest they've been in the past eight quarters, and up 50% year-over-year. In addition, we continue to make good progress on the localization of our supply chain in China. We have begun shipping from our local OSAT partners, and we expect volumes to expand throughout the calendar year. We continue to make progress reducing inventory in direct and distribution channels. As we enter the 2025 calendar year, industry estimates project automotive production to be flat, and we are encouraged by the projections for continued double-digit growth in xEVs and ADAS adoption. Allegro's content is meaningfully higher in hybrids and BEVs, which enables us to grow even if there is no growth in auto production. In our industrial and other end markets, we are encouraged by increasing signs of activity, and we are cautiously optimistic that an easing monetary and regulatory environment could fuel a demand recovery later in the year. I will now discuss key product highlights and achievements in the quarter. Innovation with purpose is a core value and integral to serving our customers. One of the most powerful ways that we meet and exceed our customers' expectations is by addressing the design challenges through new product innovations, and we have doubled the number of new product introductions over the past two years. In the quarter, we further strengthened our magnetic sensing portfolio with a slew of new and innovative new products, including new inductive position sensors featuring integrated high-accuracy and advanced diagnostics that perform consistently across a wide temperature range and excel in noisy environments. Our newest sensors are ideal for motor position sensing in demanding applications such as xEV traction motors, steering and braking systems, as well as robotics. Additionally, our new micropower magnetic switches and latches are redefining position sensing by using 50% less power than existing solutions. These products open up new markets for battery-powered applications in IoT, home automation, and consumer applications. And earlier this month, we announced a fully integrated current sensor IC, offering the industry's fastest response time for protection of wide-bandgap SiC and GaN devices. Our innovative packaging enables a product which is five times faster and 40% smaller than existing solutions. This offers unparalleled space savings and protection of expensive electronics in solar energy equipment, AI and cloud data servers, industrial machinery, and xEV powertrain systems. Our technology leadership also extends to power applications that leverage our automotive-grade technology. In the quarter, while at Electronica in Germany, we introduced a groundbreaking series of power products poised to redefine performance and efficiency across the landscape, including cutting-edge 48-volt motor drivers featuring a code-free industrial product and an automotive SoC solution designed to address the thermal management needs of hybrid electric vehicles and AI data servers. We were honored to receive a Best in Show award from Embedded Computing Design for the solution. Complementing these new motor drivers, we also introduced a 48-volt pre-regulator designed for superior EMI performance in dual-voltage hybrid electric vehicles. Our ever-expanding portfolio of 48-volt solutions positions us well to support the transition to 48-volt architectures in automotive and industrial markets. Our focus on innovation and the increasing velocity of new product introductions is further enabling design win momentum across our strategic focus areas. And this quarter, we continued our winning ways across key new opportunities. We secured multiple wins leveraging our power and steering sensing solutions with a top Chinese OEM. This included multi-part wins for steering, electrified powertrain, and in-cabin applications. Our power motor solutions secured multiple wins with customers in Taiwan, China, and Japan for data center cooling applications. Our high-voltage isolated gate drivers continue to gain traction in the market, garnering multiple wins across many industrial applications, especially clean energy and automation. And finally, our TMR solutions continue to gain momentum, securing wins in smart metering and medical applications. I will end by thanking our teams around the globe who are embodying our values while executing our strategies and going above and beyond to serve our customers. I'll now turn the call over to Derek to review the Q3 financial results and provide an outlook for the fourth quarter. Derek. Thank you, Vineet, and good morning, everyone. Starting with a summary of our Q3 financial results, sales were $178 million, and non-GAAP earnings per share was $0.07, both at the high end of our guidance range. Gross margin was 49.1%, operating margin was 10.8%, and adjusted EBITDA was 17% of sales. Total Q3 sales declined 5% sequentially and 30% year-over-year. Sales to our automotive customers were $130 million, a decline of 8% sequentially, led by expected declines in the US as our customers continue to reduce inventories at their year-ends. Auto sales declined 33% year-over-year. Within auto sales were 73% of total Q3 sales, and e-mobility sales were $63 million, a decrease of 12% sequentially, and represented 48% of total auto sales. Industrial and other sales were $48 million, increasing by another 5% sequentially, largely due to growth in data center and medical. Industrial and other sales declined 21% year-over-year. Sales through our distribution channel were $94 million, a decline of 2% sequentially, and represented 53% of Q3 sales. POS was up quarter over quarter, and we continue to work with our distribution partners to reduce channel inventory levels. From a product perspective, magnetic sensor sales were $114 million, declining 12% sequentially, and represented 64% of Q3 sales. Sales of our power products were $64 million, increasing 9% sequentially. Sales by geography were again relatively well-balanced, with 28% of sales in China, 22% in the rest of Asia, 21% in Japan, 15% in Europe, and 14% in the Americas. Now turning to Q3 profitability. Gross margin was 49.1%, and operating expenses were $68 million. Operating margin was 10.8% compared to 11.7% in Q2 and 27% a year ago. The effective tax rate for the quarter was a benefit of 3%, and our full-year effective tax rate is projected to be 3%. This favorable tax rate is driven by research and development credits. The third quarter diluted share count was 184 million shares, and net income was $13 million, or $0.07 per diluted share. Moving on to the balance sheet and cash flow, we ended Q3 with cash of $149 million, and in the quarter, we made another voluntary principal payment on our term loan of $25 million, bringing the balance to $375 million. Cash flow from operations was an outflow of $8 million as we continue to build strategic wafer and die bank, and CapEx was $14 million in the quarter. We now expect CapEx for FY25 to be approximately 6% of sales. From a working capital perspective, DSO was 43 days, and inventory days were 182 days. I'll now turn to our Q4 2025 outlook. We expect fourth quarter sales to be in the range of $180-$190 million, or up 4% sequentially at the midpoint. Additionally, we expect the following all on a non-GAAP basis. We expect gross margin to be between 46% and 48%. Our Q4 guidance range for gross margin contemplates the expected impact of annual pricing agreements ahead of cost reductions, which typically take one to two quarters to cycle through inventory. This range also includes higher estimated excess inventory and capacity charges resulting from adjusted production levels in the quarter. Taken together, these items are expected to contribute about 200 basis points headwind to our Q4 gross margins. Also, as a reminder, OpEx is expected to increase by about 5% due to annual payroll tax resets in the March quarter. We expect interest expense to be approximately $6 million. We expect our tax rate to be 3%, and the weighted average diluted share count to be 185 million shares. As a result, we expect non-GAAP EPS to be between $0.03 and $0.07 per share. Before I turn the call back to Vineet, I'd like to review a number of actions we have taken and continue to take to optimize our cost structure and improve profitability and cash flow. We continue to align our back-end production levels to anticipated demand while balancing that with building die bank and high-running finished goods to be in a position to maintain excellent customer service levels. As Vineet mentioned, we are making good progress advancing our China for China strategy with local fab qualification in process and shipments from local OSATs already underway. We also continue to reposition our resources to optimize our cost structure and capture high-growth opportunities closer to our customers. We are leveraging global design and shared services centers and using AI and automation to enhance efficiency across the company. We also initiated a repricing of our term loan, and we expect the interest rate to decline by another 25 basis points to SOFR plus 200 basis points. And finally, we plan to make another voluntary debt payment of $30 million in Q4. We expect the repricing and planned debt payment to result in annual interest savings of approximately $3 million. We believe the actions we are taking will position us well for significant earnings growth as the cycle improves. Now I'll turn the call back over to Vineet for some closing comments. Vineet. Thanks, Derek. Before we open the call for Q&A, I want to leave you with three key thoughts. First, we have a strong foundation and a clear strategic focus. We continue to be a market leader in magnetic sensing and possess deep expertise in targeted power ICs. Second, we're encouraged by the progress we've made in the third quarter as we delivered on our commitments with results about the midpoint of our guidance. We're laser-focused on executing a product and technology roadmap with a record number of new product introductions and securing important customer wins with our sensing and power solutions. Third, we believe Allegro is poised for significant value creation. We've been serving the auto and industrial markets for over three decades, and we see multiple catalysts for long-term growth in these markets as they are transformed by the megatrends of electrification and automation. We've taken advantage of the down cycle to expand our portfolio of innovative solutions and reposition our business. This, along with the signs of an improving cycle, gives us the confidence in our ability to outgrow our served markets, deliver a very attractive financial profile, and create an opportunity for significant shareholder returns. Now I will turn the call over to Jalene. Thank you, Vineet. This concludes management's prepared remarks. Before we open the call for your questions, I'd like to share our fourth fiscal quarter conference lineup with you. We will attend Wolfe's Semiconductor Conference on February 12th at the Kimberly Hotel in New York, Morgan Stanley's TMT Conference at the Palace Hotel in San Francisco on March 4th, and also participate virtually in Loop Capital's sixth annual investor conference on March 10th. We will now open the call for your questions. Kevin, please review Q&A instructions. Thank you. Ladies and gentlemen, if you have a question or a comment at this time, please press star one one on your telephone. If your question has been answered or you wish to move yourself from the queue, please press star one one again. To provide the opportunity for everyone to ask a question, please limit yourself to one question and one follow-up. We will pause for a moment while we compile our Q&A roster. Our first question comes from Joe Quatrochi with Wells Fargo. Your line is open. Yeah, thanks for taking the questions. Maybe first, just to kind of unpack the gross margin guidance a little bit for the March quarter. How should we think about the mix of the impact from underutilization costs as well as the pricing agreements? Just the timing there. And then do we think about the March quarter as being kind of the bottom for gross margin this year for the calendar year? Hi, Joe. Good morning. This is Derek. Yeah, so the 200 basis points, the headwind that I talked about in the expected in Q4 includes all three of those things. It includes the pricing resets ahead of the cost reductions that cycle through inventory. It includes some minor amounts of excess inventory charges, and it does include capacity charges as we dial down some production in Q4. And if you look back a couple of years ago, the same dynamic happened in 2022, where we had pricing increases ahead of the cost resets, so we had a higher gross margin. And to answer your question about the March, I would take those things out. These are specific to the March quarter, and rolling that forward to June, I'm not going to give guidance for the June quarter, but I feel pretty good that the March quarter will be our trough in gross margin percentages. Okay. That's helpful. And then I guess as we just kind of look forward in demand, and I can appreciate you're talking about continuing to work down inventory, but I guess how do you view the shape up for the calendar year? And given that you're talking about some of your end markets growing low double digits or double digits for ADAS and EV production, do we start to shift to better than in demand here as we look beyond the March quarter? Hey, Joe, this is Vineet. So one step at a time, right? As I said in my prepared remarks, we're really focused on the leading indicators that start to give us some conviction. And we see an increase within the quarter orders. That says that there are pockets of inventory gaps that are starting to emerge in the channel. Our cancellations are at an all-time low, and bookings are the highest they've been in the past eight quarters, and they're up 50% year- over- year. So these are the leading indicators that Derek and I look at to say, "What should we expect over the next quarter or two?" And then over the mid to long term, or over the midterm, really we're looking at what are the projections for automotive growth, what are the projections for xEV production. And I think across the board, those signs are right now encouraging, right? So we're not guiding for next quarter, but at least the indicators that we look at are all pointing in the right direction. Thank you. One moment for our next question. Our next question comes from Thomas O'Malley with Barclays. Your line is open. Hey, guys. Thanks for taking my questions. I have a couple of housekeeping ones and then a broader one. Into the March quarter, could you give us the split between your expectations between auto and industrial and other? I won't give it to you by market necessarily, but I can give you a little bit of regional color. So as you might expect, we expect China to be down single digits in the March quarter with the Lunar New Year. But the good news about our business model being very well geographically balanced, we're still guiding up 4% at the midpoint of our guidance. And within that, we do expect North America to have a nice rebound as well after coming off of a pretty severe inventory decline here in Q4, Q3. Okay. And if I look at your xEV business, you said it was 48% of revenue. This is the first time since kind of really June of 2023, I guess. There's been a couple of times along the way, but you've seen a crossover of the other auto business or more of the SAR tracking auto business get larger. When you looked over the next four quarters, would you expect there to be a crossover again where you see more growth on that xEV side, or do you think that the trajectory of this year is really growth fueled by the broad-based bucket just because it looks as though the faster growing stuff is actually down a bit more year-over-year at this point? Yeah. Hey, Tom, this is Vineet. So just a correction first. We talk about our e-mobility business, which is a combination of our xEV products as well as the products that go into ADAS applications. And that collectively was down a little bit this quarter. Again, it's a function of some of the inventory management that is happening in North America and a little bit in Europe, okay? When we take a step back and look at what our business looks like from a mid to long-term standpoint, it's really our design wins that guide us. And I've said this in the past, more than 70%-75% of our design wins in automotive are in the field of e-mobility. So that gives us a lot of conviction that we are aligned to the fastest growing areas within automotive. And we certainly expect that trend to continue as we move forward here in the next few quarters. So I would just regard this crossover, as you called it, as a blip just for this quarter and really an artifact of some of the inventory management that's happening. Gotcha. And then if I can just sneak one more, and if you look at the trajectory over the last three quarters, the industrial business has tracked pretty closely with your exposure to China. In June, there was a very large step, a very large step down. China stepped down from 27 to 19. You had a really big uptick in September. China stepped up from 19 to 26. And now with auto down, you're actually seeing a little bit of China growth. Could you help us understand, as a percentage of your revenue in industrial, is China a bit more outsized there versus the rest of the business? Thank you. Tom, this is Derek. Not necessarily. China's not particularly outsized. There's some solar business that's been pretty muted that's in China. The data center business, in fact, most of it's outside of China in places like Japan and Taiwan. And there's a fair amount of industrial in Europe as well. So where we've seen the strength in industrial over the last couple of quarters has been our new business in medical that came with the TMR. That's the patches for the continuous glucose monitoring. That's an exciting new business for us. In this quarter, we saw some strength in data center. In the September quarter, we did see a seasonality of consumer products that's China-related. But in this quarter here, it was really data center and medical. And medical continues to be an exciting area for us. As Vineet mentioned, many of our industrial markets have continued to sort of bounce along the bottom. We are encouraged by some of these what I'll call green shoots. We're watching that very closely. We're focused on the industrial areas as well. One moment for our next question. Our next question comes from Gary Mobley with Loop Capital. Your line is open. Hi, everybody. Thanks for taking my question. I want to ask a very, I guess, direct and focused question. One, do you believe in S&P Global Mobility's forecast of light vehicle production in calendar year 2025? And given where your inventory levels are in the automotive channel, do you think you can grow in line or better than light vehicle production unit growth in 2025? Hey, Gary, this is Vineet. You broke up a little bit, but I think I got the gist of your question. So I think the first question was, do we believe the S&P forecast for 2025? It's one data point. We have direct conversations with OEMs. We have direct conversations with the tiers and contract manufacturers that serve them. And so we sort of triangulate into what we think is the right estimate with some guard bands, and then we have our own planning scenarios around it. As we've said before, we actually don't need auto production to grow for us to grow because we see the tailwinds from content growth in xEVs, in increased ADAS penetration. And frankly, even the other side of our business, which is largely in-cabin, whether it's thermal management, whether it's LED drivers, whether it's switch and latch for a variety of applications in the automobile, all of that content is growing as consumers seek more tech-heavy content within the cars. So we feel really good about our ability to grow. And I'll bring you back to the model that we put out. We should expect to see inventory digestion put aside. We should expect to see SAR plus or production plus 7%-10% growth. That's our model. And we feel really comfortable with that sort of growth going forward. Okay. This is my follow-up. I I wanted to ask about pricing on both sides. So pricing to your customers, we think about that as being once-a-year distinct event, or is it more dynamic, real-time adjustments? And what sort of pricing trends are you seeing from your various foundry partners? Yeah, Gary, I'll take the pricing question, and I'll have Derek talk a little bit about what we're seeing from a cost-strength standpoint. So pricing within our largest market, which is automotive, is back to what I would call normal pricing environment, right? And I think we got there maybe three quarters, maybe four quarters ago. And by normal, what I mean is typically when you win a program, your pricing is high because volumes are low. And as volumes ramp, you share some productivity with your customers. And those are built into the program or long-term agreement contracts. That tends to be in the 2%-3% range. And we are back in that range across the majority of our automotive customer base and across the geographies. Derek, you want to talk a little bit about cost? Sure. Gary, so as you know, wafers are our highest piece of the BOM within cost of goods sold. We continue to negotiate, and we have successfully negotiated price reductions on wafers. And the trade-off for that is volume. We give them more volume. So we're building some strategic die bank and strategic wafer bank on our balance sheet. And that's okay because it's pretty fungible downstream until it's packaged, and it can sit for a couple of years. We're okay with that. We're good that we're going to turn that pretty quickly. But we're negotiating those costs down. But it takes one to two quarters for that to cycle into the P&L. So you'll start to see that benefit as we move into FY26. And it's not just wafers. We're working with our OSATs. We're using our own internal facility more efficiently. We continue to bring costs down across the enterprise. Thank you both. One moment for our next question. Our next question comes from Chris Caso with Wolfe Research. Your line is open. Yes, thank you. I guess just another question with regard to kind of pricing and margins. And it sounds like what you said was there was a 200 basis points impact from this pricing ahead of cost reduction and some of the other charges. I guess question one would be, do we expect that we recapture that as we go into the second half when the cost reductions come back? And then secondly, and perhaps more importantly, what do you think is the right gross margin structure for the company? And coming out of the pandemic when prices were going up, perhaps that's not the best way to look at it. What's the right way to look at the company's margin structure as we go forward? Yeah. So Chris, that 200 basis points, which equates to nearly $4 million in total in Q4 here, that includes the pricing resets ahead of the cost reductions. That includes some obsolete inventory charges as well as capacity charges specific to Q4. So those items are specific to Q4. And to answer your question directly, the cost reductions that were negotiated and continuing to be negotiated will start to roll as a benefit in 2026. So some of that stuff will start to normalize. And we continue to look for those cost reductions. Getting past this Q4, that 60%-65% drop through that I've talked through in the past, that still holds pretty true. And that's actually held true since we've been a public company. If you look at it year-over-year, it's been right in that 65% range. And that's what we target, is that 65% drop through. So long-term targets haven't changed 58%. There's a lot of work to get there. First step is get back to 50% pretty quickly, then back to the mid-50s, and then head towards that long-term target. Okay. Understood. As a follow-up, you had spoken, I think it was last spring, where you had taken some price actions. And I think at that time it was in the industrial business. There was some price support you provided to the channel to move some inventory. Has the pricing in that segment now normalized? And I guess our assumption at the time was that was sort of a one-time short-term thing in order to move some inventory. With the channel business, what's been the trend in pricing there? Yeah, Chris, I should clarify. That wasn't a one-time thing. I mean, in the channel, what happens is it's real-time pricing, right? So back in 2022, we had the same dynamic on the opposite end, meaning that pricing in the channel goes up immediately because it's market-based pricing. It's sort of off the shelf in many cases. So that pricing goes up and down pretty quickly with the market. I started talking about exactly a year ago now, actually a year and a quarter ago in November, about we started seeing pricing come down in our channel. And that's been ongoing for the better part of a year. The good news is that's stabilized, right? And so usually when the cycle comes back, that's where you start to see pricing stabilize and then pricing even start to increase when things get a bit tighter in the channel. That's still our expectations. Okay. Got it. Thank you. One moment for our next question. Our next question comes from Quinn Bolton with Needham & Company. Your line is open. Hey, Derek. I guess I wanted to follow up on a gross margin question. You've talked about the 65% incremental fall through for a while now, and it sounds like that still holds. But I guess, obviously, you're taking a step back in March. It sounds like some of that are charges like obsolete inventory. And so I guess if I looked at a 65% incremental fall through off the December base versus a 65% fall through from the March base, that's a pretty different outlook. And so I know you're not guiding beyond the March quarter, but is there an opportunity at some point in calendar 2025 to see better than a 65% fall through as, one, you start to see these lower costs cycle through inventory? You obviously won't have inventory charges, I hope, every quarter. It just kind of feels like if we're only modeling 65% fall through off that March base, it's a pretty big reset to margins throughout fiscal 2026 and probably into fiscal 2027. So just wondering if we might be able to make back some of that margin over the next several quarters? Yeah, Quinn, that's a good question. And that's why I quantified the 200 basis point headwind for these quarter-specific items, which is approximately $4 million. All else being equal, I don't expect those to recur necessarily in the June quarter. So you should use a higher drop through from March to June for your gross margins. I don't expect those to recur. Got it. Okay. Great. And then maybe just a sort of question on what you're seeing from customers. One of your peers, Mobileye, on their call this morning talked about, given some of the slower growth in EVs, they're seeing some customers reemphasize ICE vehicles that have just sort of obviously, they're ICE vehicles, not EVs. They also have perhaps lower ADAS content. Wondering if you're seeing any of this kind of shift back to ICE vehicles with lower ADAS. And if so, does that have, what kind of impact might that have on your business over the next couple of years? Or are you just not really seeing any major push to reemphasize ICE among your customer base? Quinn, this is Vineet. I'll take that. I just came back from meeting customers in North America, our customers in Detroit, as well as the one large company in California. And I will tell you that with our legacy customers, nobody's talking about introducing new ICE platforms. Now, they might keep an existing ICE platform a little bit longer. But really, in order to meet their own portfolio requirements and some of the emissions requirements globally, they are introducing more hybrid solutions. And I think it's a good reminder that for Allegro, the hybrid content is very similar to that on battery electric vehicles. We gain from really two bites of the apple, which is the ICE powertrain content, as well as the electric content, even though the battery size is smaller. You really still need all of the same sensing and power control modalities and products that you would in a full BEV. So it still feels like people are moving forward with hybrid and battery electric programs. And the tech content, regardless, is continuing to be really high. So nobody's going backwards in terms of the tech content. So we're not really seeing it. Thanks, Vineet. Thank you, Derek. One moment for our next question. Our next question comes from Blayne Curtis. The Jeff eries line is open. Hey, guys. Thanks for taking my question. I had two. First, just going back into gross margin, I want to understand. Obviously, you said higher under-utilization charges. Derek, just what do you expect to do with absolute value of inventories with these moves that you made? Will that start to come down into March? And I'm just trying to use that as a gauge as the recovery into the next fiscal year. I know you don't want to give absolute numbers. But I also want to know, is there any interplay between your different fab options? I kind of lost track. You went during the pandemic back to more Polar because it ended up being cheaper. There was a storyline about using TSMC and UMC at one point to be cheaper. Can you just kind of level set us on that as well as it impacts your utilizations and whether there's any swing factor there? Yeah. Blaine, good morning. It's kind of a lot to unpack there. When I think about the gross margin interplay with inventory, so we do expect to continue to build a little bit of inventory at the wafer and die bank in the March quarter. And as I said, that's the trade-off for getting price reductions with our wafer fab. So that's okay with us. We will be bringing down our finished goods inventories. And those are the high run of finished goods inventories that we've been building the last couple of quarters. And as a result, we adjust some of our assembly and test production in our backend facility, and we'll adjust cost as well. So that's kind of some of the quarterly-based items. In terms of the fabs that we use, about a little bit more than half is UMC. That hasn't changed over the last couple of years. Polar is about 35% of it, and then TSMC is 10%-12%, and there's another small one. But we're also qualifying a fab in China, so we'll continue to optimize our fab strategy based on quality, cost, technology, and more increasingly geopolitics. Perfect. And then I wanted to ask you on bookings. You mentioned some improvement. You probably don't want to give us book-to-bill, but kind of directionally, just kind of I'm trying to understand between your two segments, auto and industrial, whether they're above one. I guess kind of just any color you can provide as to where it is today. Yeah. Blaine, this is Vineet. So as I said in my prepared remarks, we're encouraged by what we see in our set of leading indicators, right? So increased within the quarter orders, cancellations at an all-time low, and then bookings have been at the highest level and up 50% year-over-year. Book-to-bill has stayed above one for a few months now, which again is very encouraging for us. So we continue to build positive momentum. Again, we're not calling it victory and not hanging up a mission accomplished flag, but certainly feels like we made a lot of progress in clearing things out. My conversations with leadership across the OEMs is definitely indicating that we're starting to see now healthy levels and maybe some pinch points from an inventory standpoint, which is why we've erred on the side of caution and actually built up some additional die bank, some additional finished goods, which I think is going to serve us really well as and when the demand comes back. Thanks. One moment for our next question. Our next question comes from Vijay Rakesh with Mizuho. Your line is open. Yeah. Hi. Just a quick question on the bookings. I saw your December quarter bookings. It had a pretty nice pickup, 50% sequentially. Just wondering how that's trending into March. And also, if you could give some more color on the bookings, is that more on the auto side? Is that spread out between auto and industrial? Thanks. Yeah. Sorry, Vijay. We're not going to be able to provide more color than that. I will tell you it's broad-based, so that's encouraging, and just if you refer back to my prepared remarks, we are seeing encouraging signs in our industrial business. As I talk to customers, it feels like automotive inventory is getting to healthy levels. Now, I will tell you that maybe Europe continues to be an area of concern where it's going beyond just inventory digestion. There's enough news around what's happening with OEMs and tiers in Europe, and so we're watching that pretty carefully. Europe is one of our smallest geographic regions, so we're not super exposed to it, but certainly, what happens in Europe is important to us, and we continue to win with the winners there in Europe, and so we're watching that space pretty carefully. Got it. And then on the gross margin side, can you walk us through just if you look out to the next four to eight quarters, how this should play out between what are the puts and takes to it between pricing and inventory and utilization of demand, etc.? Thanks. Yeah. Vijay, as I've answered a couple of times, and Quinn asked a good question. There's about 200 basis points of headwinds specific to the March quarter. I don't expect those to recur in the June quarter. So if you take those 200 basis points out, all else being equal, I'd expect the June quarter to be that much better. So the drop through from March to June will be better than the normal 65%. Going beyond that, the 60%-65% drop through or variable contribution margin has held really true since we've been a public company and expect that to continue. It might be better than that if we start to have some of those cost reductions come in quicker, cycle through inventory. We start to see the pricing in the channel go up a little bit. Some of the new products Vineet talked about around TMR and some of the other interesting products have a higher ASP. Those are all tailwinds to potentially drive that 65% above that. Got it. Thank you. One moment for our next question. Our next question comes from Joshua Buchalter with TD Cowen. Your line is open. Hey, guys. Thanks for squeezing me in. I wanted to follow up on some of Vineet's comments just now. So is it correct? It sounds like you think inventory levels in autos at your tier one partners and OEMs is at levels where you want them to be, and you no longer feel like you need to undership anymore, and it's just waiting on end demand. Anything, I guess. And in fact, the risk is more in the other direction, that there's too little than too much right now. I just want to just ask that one pretty directly. Hey, Josh. Vineet here, so the second part of your question, I do think the risk is now more on hotspots, and we're seeing evidence of that with more sort of increased in-quarter auto activity. I'll provide the analogy as such. We put out the fire, but there are still some embers from an inventory standpoint, so there are certain parts, certain customers that are still a little too hot, and we're watching those very carefully, but I would say on a broad level, we feel good about the progress we've made in helping our customers absorb the inventory. We've been pretty clear in past earnings calls as well as various investor conferences. We believe that our demand profile is intact. It's just being fulfilled through inventory on hand. We've been watching our design wins, our secured programs, actual consumption levels. And so that gives us pretty good conviction that as the inventory digestion gets completed, we're going to start shipping into normal consumption. I would tell you that in certain regions, we already are, right? As we said last time, North America was lagging. We think this quarter's gone a long way in getting that right size. My conversations last week with customers indicated that we are at healthy levels, I would say, in most of the places, maybe a couple of hotspots. Europe continues to be an area we watch very carefully because the inventory situation there got compounded with sort of more structural issues in the auto sector there. But Asia continues to hum along really well for us. Okay. Got it. Thank you. And I guess just apologize for beating the dead horse here on pricing. But I assume that there's been no material change in the competitive environment that's driving any of the incremental changes in pricing. You described it as back to normal. I just wanted to check in on the competitive front. And also ask within your product portfolio, how much is current sensing contributing today? And it would just be helpful to hear an update on Crocus. Sorry, I snuck you in there. Bye. Yeah. So that's like three questions, Josh. So you're going to put a penny in the jar next time. So I think in terms of new products, we don't split out current sensing specifically. But I would tell you that we've got a lot of momentum. A lot of we've really built out the current sensing portfolio. Everything from your standard Hall to very high-speed Hall, we've got five megahertz and now a 10 megahertz current sensor, different packages, different form factors, and all with a view of serving every niche and every need from a customer standpoint. Our TMR business continues to grow really well. We talked about the success in medical. That's expanding. We've qualified in automotive. We've got a lot of our leading customers now starting to test and sample TMR in their most demanding applications, including battery management systems, which is a new SAM for us. So feel really good about it. What was the first part of the question? Pricing. On. Any change in competitive environment in the legacy? Oh, the competitive environment. No. We see the same set of competitors, Josh. In fact, we saw a really nice report coming out of one of our big investors who's done their own checks, and it shows that we don't really have any real competition in China. We're always paranoid, and we continue to create more IP. The tsunami of new products we've brought out in the last, call it three to six quarters, is really a testament to the hard work the team does every single day to meet customer needs and really out-innovate our competition when it comes to our core markets. I should clarify, Josh, the competition in China is still Western competition, right? That's what we mean by that. We continue to win in China, and having a China for China strategy has been really, really helpful. Even while we've done things like reposition our business, bring our OpEx down quarter over quarter, we've invested in research and development, as Vineet's talked about, and we taped out twice as many products as we ever have in the past. That's all while having the lowest OpEx number in two years. Really, where it's come out of is SG&A. We've optimized our SG&A structure. That's the lowest it's been in three years. We're continuing to invest in certain places, the high-growth areas, the high-growth products, while optimizing our cost structure. All right. Thanks, guys. And noted on the penny. We'll bring it next time. Bye-bye. One moment for our next question. Our next question comes from Grant Joslin with UBS. Your line is open. Hey, good morning, guys. In the presentation, you called out industrial being led higher by medical and data center, but I was wondering if you could talk about what you're seeing in your other industrial end markets, like clean energy and broad markets. Are we seeing policy uncertainty or macro overhanging on clean energy, and how would you characterize broad markets generally? Thanks. Yeah. So we are seeing good strength in medical in our data center business. And remember, data center is coming off historical lows, right? So really, the only way it can go is up. We're also seeing strength in the broad industrial base. And again, when I say strength, it's all relative. We are seeing increasing activity. We're seeing encouraging signs, more in quarter orders. Our clean energy business, which is largely solar, is still soft. And I don't want to put it on policy uncertainty just yet. I think we're still dealing with over-inventory in certain pockets. That's an area that continues to be sort of a frustrating area, not just for us, for a lot of the players in this arena where, through the pandemic, just a lot of inventory was built up. I would say, on the whole, I think the industrial segment will benefit from easing regulatory, easing monetary environment, and I say that globally, right? It's not just a U.S. commentary. I'll remind you that close to 80% of our sales are outside the U.S., so we are heavily dependent on what happens in every part of the world when it comes to our industrial business. Thanks. One moment for our next question. Our next question comes from Mark Lipacis with Evercore ISI. Your line is open. Great. Thanks for taking my question. Vineet, when you talk about the doubling of the product introductions over the past two years or six quarters, can you just help us understand where are you in the revenue realization part of that? Maybe if you just step us through the design win process to when you start to recognize revenues from the new products, and then when you really hit your stride with those, and when do they start to really have a nice impact on the top line? Thank you. Mark, thank you. Great question, and I'll split it down by behavior in the automotive market versus the industrial markets. Automotive, as everybody knows, has tended to be long cycle. Those cycles are compressing, but from the time we introduce a new product, we're still looking at a minimum of two years, sometimes three years, to start a production with customers. Because once we introduce a product, there's some concurrent sampling that happens, but really, it starts happening in earnest, and typically, we are shipping to a tier or a contract manufacturer who does their own validation, and then the OEM does their own validation, and typically, in automotive, you have to go through a summer cycle and a winter testing cycle. As I said before, cycles are compressing, but that still is holding true across legacy OEMs and some of the newer OEMs. Typically, in automotive, you're looking at two to three years from the time you introduce a product to start a production, and then you really hit stride probably four to five years from the time you introduce a product to seeing peak revenue. In the industrial side, it's much shorter. Typically, it's 12 months from the time we introduce a product to start a production, sometimes less, but typically, it tends to be in that realm. What's really important for us here is that, as Derek pointed out, we have maintained our investment in research and development and engineering. We've continued to expand our global design centers, and we've really doubled down on the velocity of new products we're bringing out, really trying to address every need that our customers have expressed within automotive. Now we are creating more derivatives and spins for our industrial customers. So how we think about technology investment is we build a platform for automotive, and then we take derivatives from that platform into our industrial sectors and sometimes our consumer sectors as well. So hopefully, that gives you a sense for how we think about our engineering. Very helpful. Thank you. I'm not showing any further questions at this time. I'd like to turn the call back over to Jalene for any closing remarks. Thank you, Kevin. We appreciate you taking the time to join us this morning. This concludes this morning's conference call. Ladies and gentlemen, so this concludes today's presentation. You may now disconnect and have a wonderful day.