All right, I think we'll close the doors now. Welcome back, I'm Tom O'Malley, Semiconductor and Semicap Equipment Analyst here at Barclays. Lucky enough to have Cirrus Logic here with us. We got John Forsyth, President and CEO, and Venk Nathamuni, the CFO here at Cirrus. Thank you both for joining me. Thanks, Tom. So, as most of you start off, I want to talk kind of high-level strategy. So if we go back to last year, what we had here, the strategy was two parts. You had a multigenerational, multi-product content share, your largest customer, the diversification effort, the Android, and the notebook market. Can you just update us on how that strategy is playing out? I know, unfortunately, the [audio distortion] just wasn't enough in the iPhone [audio distortion]. And I would also say that the non-Apple revenue has struggled a bit. Where are we today, and where are we pointed in the future over the next couple of years? Right. Yeah, as I generally talk about our strategy in terms of three main vectors. So the first of those is maintaining and building our leadership in smart audio. T he second of those is expanding our high-performance mixed-signal or HPMS content in smartphones. And the third vector is leveraging our leadership in audio and HPMS to attack and adjacent markets and other new markets for us. So across those three vectors, I think we're very excited about how what we've got ahead of us, you know, notwithstanding kind of micro events and conditions this year. I think there's a lot of exciting stuff going on. First of all, on smartphone audio and kind of maintaining and building our leadership there. We've said publicly that in the coming year, we have new generations of our biggest selling individual products and so forth, so codec and booster amplifier. So we're excited about that. In HPMS, expanding HPMS in smartphones, we've got a lot of things going on, but we continue to be really excited about the opportunities, what we've done so far and the opportunities in the future around camera and power, especially. So we've made a lot of great progress there. We've just recently launched our latest generation, third generation camera product, for example. And then when it comes to leveraging HPMS and audio content into new markets, which I think is very important for us long term, we've started to see momentum in the laptop space that demonstrates that we can do that, and that's in both audio and HPMS content. Very helpful. On the technology side, because that's broader strategy side, can you talk about where your core competencies are and how that's changed over time, right? So for analog, you're at leading nodes, you pushed to 22 nanometer. I assume, you know, there's some competitive landscape that's become more challenging, but where do you, where do you continue to out execute the competition, and how do you continue to be at the leading edge, particularly with your largest customer? Right. Right. Yeah, that's a great question. So I think we are at our best, and this has been the case really for a long time in Cirrus's history, even though the kind of goalposts have moved and we've kind of pushed the boundaries over time. We're at our best, really, our customers have some really, really challenging mixed-signal problems that typically require very high performance, very high precision, combined with extraordinarily low levels of power consumption, extraordinarily low levels of latency, and very often for all that to be done within a very, very constrained space. So to give you an example, I mentioned the camera part of our business. In our camera controller products, we're doing, we're taking in data and moving elements many, many thousands of times a second, in order to provide a great stabilization and autofocus. If you look at the size premium on like a kind of a prosumer camera, for example, stabilization, the stabilized lenses are always bigger, stabilized bodies are bigger and so on. And you have a lot of space to work with. The amount of space in a smartphone camera module is effectively nothing. It rounds to zero. So we've got tiny, tiny amount of area in which to pack all that processing and control. And so in order to be able to do that, you've got to have really leading-edge analog design because you're going to be on an advanced node to get a small package analog and a lot of digital processing capabilities as well. Yeah, I think that diving deeper into the camera side, you have a portfolio. On the low end, you may have one controller in a device, and at the high end, you can have multiple, almost four. So can you walk through why are you adding that functionality in a phone? And like, if there's a roadmap that you could talk to as to why that may need to happen in other modules, because you're seeing in certain modules, multiple portions of your product. And so walk through why it's needed and how you see that roadmap progressing, so that works its way down, where all phones may have multiple of your products. Absolutely. Absolutely. We've seen, you know, we've seen the attach rate grow over time and the total blended value of our content, c amera controller content grow over time as well. Because at this point, we have multiple generations of the camera controller shipping, and as we brought in newer generations, we packed in more processing, more channels, the ability to do more in the camera. I would say when we look ahead of us, we also have a rich and aggressive roadmap for further features. I see no sign whatsoever that this area is done, and so it will continue to be a marquee differentiating feature that you see-... talked about a lot in keynotes, and we've been working very, very closely with our customer to make sure that we're the partner for their innovations. The kind of things that we're doing today are obviously enabling stabilization, which allows you to use, for example, telephoto lenses, which otherwise are very, very susceptible to camera shake, night mode photography, and so on. The abilities that we've brought with very, very advanced processing and high speed processing to do stabilization very, very rapidly are being kind of central to enabling those features. So our plan for the future is to continue to partner with our customer in innovation and help them deliver even more advanced features. I'm very, very confident that they're gonna do that. What we typically see is that those features come in, in the high end and then cascade down, and we've been benefiting from that and just seeing our camera content continue to step up year after year over time. What do you think the bigger opportunity is? One, your customer adding more cameras or more functionality from an audiovisual perspective? Or two, do you think that in existing cameras and phones, you will continue to see a penetration story that is more robust? Oh, I think it can be both of the time. Yeah. Okay, very helpful. So kind of related to that question, circling back to the largest customer, I know you can't speak beyond next year, but can you talk about the level of engagement that you have on various projects right now? Clearly, with what occurred this year, I think the first time, at least in my memory, that you guys have ever had, you know, a product that didn't go into production, where it was at least generally spoken about that it may, it may ramp. So did that change the way you're working with that customer? Is there, you know, a move forward to next year, right now, sort of mentality, or do you try to use that as another function? Just anything about where that relationship is and how that will change it? Right. Yeah, I don't think it changes anything. I think you'd have to look at it in the context of the length of the relationship we've had. We've worked very, very closely with that customer for 15 years now, 15 years plus. And in that entire time, I mean, you're absolutely right, this is the only instance like that, and the hit rate has been phenomenal. You know, as much as this is, you know, a tough break for us and prophetic for us, I think it was for them as well. And so, you know, that will very occasionally happen, even with great people when you're trying to push the boundaries of innovation. Our attitude is, has been, you know, that doesn't change our appetite to continue to partner with that customer in bringing innovations to market. I think the relationship is in a great place. Obviously, you know, we work very closely with the customer on the practicalities of dispositioning material we had in flight and so on, and that will be resolved very smoothly. But I think the best indicator, though, is the number of opportunities that we have in discussion or at some level of being in flight with that customer. And I think there are more of those across a broader range of areas than we've ever had in the past. That really is testament both to our consistency and execution and the fact that, you know, they supply. Just to add to what John said, I mean, just to put things in context, as you know, we started out being a, primarily an audio supplier to this customer several years ago, almost a decade ago. As you fast forward to today, we have grown the multiplicity of our capabilities, not just in the audio form, but codecs amplifiers, but also in the area of high-performance mixed-signal. Yes. As we see the pipeline, you know, we continue to work very closely with our customer in terms of expanding the portfolio. Obviously, at the appropriate time, we'll share more details about what's coming down the pipe. But suffice it to say that it's been a very strong relationship. I think as John alluded to, even with this particular part that is no longer shipping or was originally expected to, we have been working collaboratively, both with our customer and with our foundry partner in terms of disposition. So I think it's another indication of the level of customer intimacy that we have, and clearly it's a relationship that has continued to grow over time. It's as demonstrated by more products, more technologies, and the rate of the opportunities expanding over time. Right. And to put, I guess, some numbers around how that relationship has broadened and deepened over time. If you go back to the beginning, obviously, we were shipping one piece of silicon into their devices. And today, in the devices, there are nine pieces of silicon, and we're, you know, still very, very active across a whole range of areas for new programs. So you opened the door for the breadth of product question, and I wanna dive a little bit more into that. So in the all-important shareholder letter, which is loved across your investors, by the way, it, you mentioned customer interest, battery, and power. And when investors hear power, they think PMIC. Can you talk about what you're doing today with your PCC chip, and what can you say regarding those capabilities in batteries and power? Right. Yeah, absolutely. So first of all, for anybody who's not familiar, PCC refers to power conversion and control, which is not hugely informative name in its own right, but I thought at least I'd. We are... First, what I will say, we're not especially going after kind of conventional PMIC, and the power conversion and control chip certainly isn't that. And there's a variety of reasons for that. It's a market that's in most cases pretty well served to start with. But also going back to the earlier points, we were talking about the fact that we're typically invested in advanced geometries; they don't make a lot of sense for a conventional PMIC. They make much more sense when you need a lot of logic there as well, when there's gonna be a fair amount of digital alongside the analog circuits. And so when you look at the power conversion and control chip, yes, it's managing power at some level, but there's a lot of logic and processing in there as well. And what that logic is doing is really three things. One is it's looking across the system and the system. So it's looking at what's happening with the power demand in the system and avoiding preventing system brownout when something places a very high level of power demand on the battery, which, for example, can happen when you start using AI accelerators and so on. They're a kind of classic case where there'll be a big spike in power demand. So typically, the lights would dim and the rest of the system in that situation, we prevent that. We also make sure the performance across the system remains consistently really good, even as the battery's state of charge starts getting much lower. And this is one of the kind of things where you almost don't know the benefit of it until you see it side by side with a device that doesn't have it, as the battery state of charge declines, and you can see every the performance of just about everything declining. And then the third thing, which is a longer-term benefit of what we're doing, is managing the battery's health, or rather, preventing damage to the battery, preventing premature aging of the battery, or limiting that, in order to extend the life of the battery system and the user. So all of that requires both a lot of kind of conventional power, so it's an analog domain, but also a lot of digital logic and control. That means, you know, that there are many people who could do that in a single chip, but it exactly in our wheelhouse. So when we look more broadly for other opportunities in the power space, that's the kind of thing that we're looking for. Places where there's a lot of, there's a compelling case for there being a much more digital approach to power. Yeah. So it sounds like you're displacing the classic analog guys. Can you point to certain devices that make sense for a solution like that? I mean, obviously, you have PCs, but you're talking AI at the edge, wearables. Where does it make the most sense? Well, I think certainly, I think right now, both in smartphones and PCs, we see opportunities, lots of opportunities for these devices and then or these kind of IP, and then we anticipate there'll be more markets beyond that. So we talked about a refreshed version of your codec and amp at the beginning of this fireside. So there used to be a two-year cadence, but that clearly extended the cycle. So you have four different, four different chips you sell to Apple, each with their own cadences. I assume design doesn't improve these days. Yep. Can you talk about your own R&D center and your customers? How do you balance those different properties, and how do you look to make sure that you're making the right decisions on the right product so that you're making money? It's very collaborative, to start with. I think, I think one of the, one of the many, many things, outsiders aren't necessarily familiar with when it comes to working with our largest customer, is the size of the investment they make in a chip program as well, which is, you know, which is considerable. So although we're doing the specification design, they're, they are passionately concerned about how that's going. They want to be able to sleep at night. It's a big investment. They have a lot of resources on their side dedicated to seeing that, that program through to success. And so all of those discussions about what the right clock rate is for bringing out new versions of existing sockets, for example, or other new products and sockets, they inherently have to be very collaborative. I think it used to be the case that the idea of doing a new amplifier and a new codec in one year was kind of, you know, bad juju, or just considered like, you know, not good planning, because of the sheer amount of work involved. I would say that given the confidence in our execution record and the fact that these are kind of well-known areas now, like 10 years ago, you wouldn't have done that, but I think now, you know, we can do that and be confident in our plan. I think that also just kind of speaks to the level of customer intimacy as well as the execution excellence, you know, in terms of being able to bring on these parts, working collaboratively with the customer. In one case, you know, we're moving from a 55 nanometer node to 22 nanometer node. That obviously also has the heavy lift of the process technology aspects of it, architecture. And then on the amplifier side, there are three instances that are clearly a different architecture, much lower power consumption, so forth. So the ability to work in close conjunction with the customer in introducing a multitude of products, both in existing domains and new domains, puts a lot of customer enthusiasm and- You're doing more at once, which is a good thing, but I think that there's been a lot of challenge in this past year with getting more done at the same time, just given wafer supply and a variety of different headwinds in the marketplace. So you signed a large deal with GlobalFoundries to secure supply, and you've had to juggle those commitments with new components that didn't ramp. So can you talk about when you'll be able to reduce inventory levels, and does this leave you with less flexibility through to move? I think I'll say a couple of words and let Venk speak more to inventory. Just give broad color that for a start, the agreement we have, the long-term agreement, that we disclosed with GlobalFoundries is not product specific, it's process specific. We have many products running on that process. So there wasn't really a scenario where we thought we would be, you know, we would have a particular challenge consuming those wafers. In fact, I think if you go back to what I've said in previous quarters, going back to last year, I think we were still anticipating that our wafer demand would actually exceed those. Those and that agreement. So that we feel is in a good place. I think the part of the challenge for us, though, has been responding to both a need from customers almost across the board, to see more supply assurance, supply chain resiliency and geographical diversity, while at the same time making sure that we have the right set of partners, enough competition amongst our foundry partners, and the right process technologies to serve our future roadmap. So it's certainly part of our goal to continue to develop our foundry partnerships and that part of our supply chain, so we meet all those. Yeah. And then just talking about inventory, if we step back a little, you know, the prior couple of years, we were all in a hand-to-mouth existence, we had a supply. And so clearly we were at some point running at less than 50 days of inventory. So even prior to this particular coming to the market, we had talked about increasing our inventory positions, such that it was much more balanced in terms of the supply and our ability to meet customer demand. And so obviously we started building some inventory, and then the situation happened. To John's point, we have a relationship with GlobalFoundries such that the wafer capacity is fungible across the whole suite of products that all support the same process. So as a result, we're able to use that supply that originally dedicated to that specific chip to other components, which we expect to ship for multiple years to come. Then specifically, as it relates to inventory dollars and the days of inventory, we said on the first quarter call that that particular quarter represents the current peak in inventory for the fiscal year. We do expect the inventory level, especially as we're building inventory in anticipation of the new product that was launched a couple of months back. Usually with the seasonal uplift in demand, you'll see the inventory drawdown that's natural for this part of the year and expect that to continue for the rest of the fiscal year. John, you brought up a point that I've heard now in several firesides with the geographical issues of the supply. So can you talk about what those customers, what the conversations are like with your customers in terms of what they expect now from you, in terms of where you're sourcing product? And can you also talk about where you think that direction is headed? Because I think more and more important theme I'm talking to. Yeah, absolutely. That doesn't surprise me. I think it really came back on the agenda as the wafer supply situation up. You go back a year ago, or 15 months ago, it was maybe at the back of people's minds, but it wasn't a topic of conversation because they just want where they were from. Let me [crosstalk] Just get it going. But now that we've got past that, it has come to the forefront of conversations in quite a marked way. And I'm not talking about any one customer here, but across numerous of our customers wanting both a degree of... I mentioned supply assurance, but also this diversity in supply. So running in multiple facilities, for example, and getting away from too much geographical concentration. So that has very clearly come onto the radar as a major theme. From our point of view, it very much fits with the direction we were going in. I think it's absolutely consistent with our strategy of cultivating foundry partnerships that give us leading technology and that geographical diversity. But I've been, you know, if anything, surprised by the degree to which customers started making that a kind of central part of the conversation just about as soon as we got past it. Thanks. All right. So we dove down the supply chain and geographic diversity. Can we pull back to more of a product side in notebooks? So can you talk about your roadmap in notebooks? You've mentioned that you're shipping to five current ODMs, and you're working with Intel on their Lunar Lake reference design. Can you speak to the size of this opportunity, and what drives customers' decisions to use Cirrus [audio distortion] Right. What drives customers to choose Cirrus? Well, I think they are choosing Cirrus if they want the best audio, if they want to make their devices thinner, if they want a better trackpad experience, and if they want more efficient power conversion with less waste heat warming up the planet. I think those are the main things. So if I kind of break those apart, nobody's gonna argue that laptop audio, in particular in the Windows world, has been anything to celebrate over the past 20 years. I think we still several of those top five OEMs, as of the COVID kind of work from home period, with a very different view on that. And that is the same. They still hold that view. It's now vitally important that the audiovisual experience of communicating with somebody through the screen is significantly better than it has been in the past. So we see that commitment. I honestly think once you go down that road, it's very hard to go back from it. So we're able to provide our customers with the tools, boosted amplifiers and codecs, which really make the kind of experience. I mentioned thinner devices. This is actually closely connected with the transition to boosted amplifiers. Because if you make your devices thinner, you're gonna have less cavity for the speaker. You're gonna be able to make less air move. It won't be as loud, so you're gonna have to put more power through the transducer, which means you can keep boosting the amplifier. Mechanical trackpads also typically have a bigger stack up in terms of height than haptic trackpads. So again, thinner devices are much more likely to use a haptic driver instead of mechanical switches for trackpads. And then I mentioned fanless designs and less heat. If you generate less heat, you can deliver a device without a fan, which means it isn't making a stupid noise all the time, and it can be thinner and more complex. And our power solutions are significantly more efficient than legacy power. That means you're basically doing the same amount of charging or DC-DC power conversion with less heat. So it gets you closer... It helps you stay within the thermal envelope of designing a fanless system. So we're very excited about the kind of range of products that we have and the number of reasons that we believe people are choosing us and looking for solutions like these. So those represent pretty good tailwinds that we feel mean the SAM is expanding even without any significant assumptions on units. So we've obviously kind of, you know, backed off this year, maybe laptops, 180-ish million units, something like that. I think most people are starting to think that probably 200-ish is a reasonable assumption. In that scenario, the SAM, for us, continues to very significantly over the coming years. So, you know, that, that could easily be $1 billion plus. That, get some specific numbers around that. So we've talked the last few earnings calls about the fact that we've got about 70 design wins plus in this market, across the top OEMs and across a multitude of different product categories as well, some of which John talked about. In particular, in terms of revenues, we said in fiscal 2025, which for us starts in April of 2024, we expect to see low [audio distortion] and with a significantly faster ramp in fiscal 2026 and beyond. So quite excited about the opportunity. Obviously, you know, we've brought to bear all the capabilities that we had in the smartphone space in terms of codecs and amps, and all of those characteristics are now relevant in the especially high-end laptop market. Absolutely, really focusing in terms of our view and expand the SAM in a meaningful way. The strategy and the logic makes a lot of sense, right? You're moving towards a device that is more and more used in the work home- Right. -and work around world. And I don't think... I think that there is some of that that moves away from how extremely pandemic, but I think that clearly things are heading in that direction. So I guess the question is really, it seems like the strategy is very sound, but talk to me about the timeline for that portion of the business becoming more significant, and what are some significant milestones that we should look forward to as investors as to what you're deeming a success, and those landmarks that we can say, "Wow, like, this is really progressing this kind of success? Yeah. So it will take some time to get to needle-moving revenue, but there's I would say that the first milestones, the first external signs are you're gonna see are when, next calendar year, we see, customers, you know, top-tier customers bringing product to market, that have, in some cases, seven pieces of our selection in there, or boosted amplifiers, haptics drivers, and codec. And, you know, in addition to that, we're sampling our products today. So I can see, instances where we're gonna have even more content than that. Our revenue, you know, we'll provide updates to our investors, on the quarters on how we're doing and how we're tracking, and as that revenue increases, we'll obviously look at providing more visibility into that. But just to recap on that point, you know, we think in going to fiscal 2025, I'd say low tens of millions, and then a more significant step up into fiscal 2026. And sometime in fiscal 2026 or 2027, I think if Android stayed where it was today, we expect the PC market to outstrip that as a part of our business. Very helpful. I think we've run out of time here. Thank you so much for joining us, and have a great rest of the week. Yeah, you too. You too.