Good afternoon, everyone. Welcome to the 2021 Investor and Analyst Day for Microchip Technology. This event is being run live here in New York. It's also being webcast for all of the attendees who are not able to make it here, so welcome all. I know it takes a fair amount of your time out of your calendars to join us at this event. I hope what you'll see is a reflection of how much progress Microchip has made and how much more there is ahead of us in terms of the upside of things we're doing that you will see in the coming years as well. By way of introduction, my name is Ganesh Moorthy. I'm the President and Chief Executive Officer of Microchip. Sitting on the podium next to me is Eric Bjornholt, who's our Chief Financial Officer. Eric and I will be tag teaming for the first part of this presentation. We're gonna start with an eye test for everybody. I'm not gonna read it all, but there is a summary I got to give you, which is that before we get started, I wish to remind you that during the course of this presentation and this event, we will be making projections and other forward-looking statements regarding future events and the future financial performance of the company. We wish to caution you that such statements are predictions and that actual events or results may differ materially. We refer you to our recent filings with the SEC that identify important risk factors that may impact Microchip's business and results of operations. Our agenda today will start with an overview and a value proposition that Eric and I together will take you through. At the end of that, we will shift into the capital return strategy that Steve Sanghi, who's our Executive Chairman, will be taking us through. We'll probably do a break right about at the point where that is over, restart from there to go into the business growth strategy and give you an idea of the many things that Microchip is doing, some of which you may be familiar with, but a lot of it I think you'll be surprised to see where are we involved and what are we doing to drive some of that growth. Probably take a break at the end of that, and then we'll bring up the balance of this with how do we enable this business growth from a manufacturing and from a foundational standpoint at Microchip. We'll have enough time for questions and answers at the end, and so please hold your questions to the end. We're not gonna do one during each of these sections itself. Okay. I'm gonna start with a corporate overview. I look at this is our resume. Many of you know us, some of you may not, especially some of the people who are in the webcast today itself. But we're a leading total system solutions provider who have a broad range of products that make up our palette of solutions. They range from microcontrollers, microprocessors, analog, mixed signal, any number of these required to build, deeply embedded systems. The first half of this year, our fiscal year starts on April 1, so the first half of fiscal 2022 was running at a $6.4 billion revenue run rate. The quarter that we just guided to in December is annualized at a $7 billion run rate. We are in a growth mode as we're going through the quarters themselves. About 20,000 employees worldwide, in all of the different locations where we do development, sales, manufacturing, support, etc. We serve a very broad number of customers, 120,000 customers, and you'll hear about how we reach these customers and how we serve them for the different needs that they all have. We're headquartered in Phoenix, Arizona, in a suburb called Chandler. You know, every company needs a purpose beyond profits. Obviously, we exist to run a business, to grow the business, to be profitable, et cetera. We look at also, what is the passion that burns inside us? You know, what makes us wake up every day? For us, that's what this purpose statement is. The purpose is to be, how do we empower that innovation, this is in our customer base, and that innovation which will drive and improve the human experience, and by providing smart, connected, and secure technology building blocks that come with it. That is why we wake up every day is how do we go make that happen in different fields of play. You'll hear lots of examples of that, as we go through today. Everything we do is really tied and deeply rooted into this purpose itself. Now, while the purpose talks to the, you know, what, you know, what drives us and why do we exist, the vision tells us where are we going, and the vision for us has been pretty consistent for the last 25+ years. It is to be the very best embedded control solutions company ever. That has meant different things during the evolution of Microchip. At one time, back in the 1990s, that meant you know bringing out these 8-bit microcontrollers that no one else had done at the very low end and low pin count and functionality, programmability, et cetera, and has evolved over time. It has meant newer products, 16-bit, 32-bit, analog, mixed signal, timing, et cetera. In today's version of our vision, it's really about how are we taking these building blocks that enable systems to be smart, that enable systems that are smart to be even more valuable when they're connected, and that allow connected systems to be secure. How we put those three building blocks are really the foundational elements of what we do today. Our mission statement has a, you know, all the normal words that you would see, but I want to draw your attention to two items. The first item is around our stakeholders. We have important stakeholders who form both, our shareholders obviously, but our employees, our customers, and the communities in which we operate. We balance what we are doing in order to serve all of these stakeholders in what we do. The other part of it is towards the tail end of that sentence, which is, you know, and we work all of this so that we're able to provide, particularly for our shareholders, an industry-leading return on that investment. You have many choices of where you can make that investment. We wanna show you why the choice of Microchip is in fact the best choice for you to make. I'm gonna start by framing Microchip 2.0. We introduced this several years ago, and what were the elements of Microchip 2.0? There was sustained growth from organic, but also a component of it, which was in acquisitions. Over the years, eight-10 years of time, about half and half of our growth, half of it came from organic, half of it came through the acquisitions itself that we did. That allowed us, over the course of eight-10 years, to build scale. We went from a billion-dollar company to a $6 billion–$7 billion company. A breadth of product lines that came with it to enable us to have more complete solutions, which then brought to the idea of total system solutions, that took advantage of all of these and said, "How can I create more complete solutions with all the assets that we have?" Gains in market share. If you look, and I'll show you a couple of examples. Every single year, we were able to go out, take market share, build the key businesses that we were in. It came with some stability of large end markets that have long life cycles, good profitability characteristics, industrial and automotive form, and still do form a significant part of our revenue. These solutions have very long lifetimes. The market life of products in the industrial applications or the app. The designs that we win, you know, can be 10, 15, 20 years. Same within automotive. Some of the other areas we're in, aerospace and defense. We have all these markets that have long life cycles. It does take a long time to get designed in, two, three years sometimes, but then it pays off for many, many years after that. From it came record gross and operating margins. If you go back three years ago, we were talking about record gross and operating margins that were at 62% gross margins, 40.5%. We set new targets, and we went right past it to past 63 onto, we just crossed 65% gross margins, 42% operating margins. We have continuously been able to improve the operating characteristics of the business. That has come from both the scale we built, but also the synergies from the acquisitions that we made. Now, we did the acquisitions with debt, and it is the most cost-effective way to do acquisitions. We were able to have the lowest cost of being able to do the acquisitions using debt itself. But we also had substantial cash generation, which then brought down the debt. As you will see when Eric gets into some of where we have gone into over the last three years with debt reduction since the last major acquisition, which is Microsemi. Finally, we've had consistent capital returns through steady dividends. The dividends have grown a smidge every quarter, but they've been consistent. Through the ups and downs of the industry, they've always paid out, and they've always paid out slightly more. Now, when you look at these total system solutions and you look at the breadth of what we bring, right? Every system that we address, every customer that we try to go win, the first decision they gotta make is the brains of the system, and those brains are the products that from us are a microcontroller, a processor, an FPGA, a system on chip. Those are a big part of our portfolio, is how do we go after what the brains of the system are that a customer is trying to design in. But the brains are not enough. Every system needs power. Every system has a heartbeat. It needs a clock. Those are key elements of what we bring is the power to the brains, the clock, the heartbeat, that is required. Beyond that, what we enable is for those systems to work with the outside world. It has to sense. It can be sensing pressure, it can be sensing light, it can be sensing touch. Whatever it is sensing, it requires an analog signal chain by which we're able to bring that signal into the main brains to be able to process. Often that needs to connect with other parts of the system. It can be within the system, like inside of a car. It can be between systems, as the case might be. It has a wide range of networking standards that are wired standards, wireless standards, proprietary sometimes, in many cases. That's the breadth of networking and connectivity standards that we bring to bear. Anytime we have networking, you have a surface area that has exposure to security, and so, or security threats. Now we have the solutions that allow us to enable customers to be able to secure their systems. In that smart, connected, and secure, security becomes a large building block for what we do. Finally, you gotta do something with it at the end. When all that processing is done, you're turning on a motor, you are getting a compressor to turn on. Some function has to be done as a result of the intelligence that is collected and the decision-making that is being done. Let's look at what the market has done. This is in microcontrollers, the market we've been in the longest. Going back in time to 1991 when we were a new entrant into the microcontroller market in a field of very you know, large, giant names. Many of them still are giants in their own right in what they did. By having a product that was differentiated, that met the needs of what was required, that had the right support structure, had the right cost of ownership requirements, we gained share consistently. This has, you know, break points in several years in some of the columns. We gained share throughout this time. About four or five years ago, we became number three in the market. At the time we became number three, we were about 30% smaller than number one. In a couple of years, we cut that in half. We were about 16.5% smaller. As of the end of last year, we're 4.5% away from number one. One and two are about tied at this point in time. I have no doubt that with what we are doing, we will get to that number one spot. It may take us a year, it may take us a couple, two, three years, whenever that is. That is the momentum we have in everything that we do that is microcontroller related. Even though you know us as a microcontroller company, we're as much an analog company today. Almost 1/3 of the business, about 30% of our revenue comes from analog, and you can see the growth of analog. Here we have had some inorganic help as well, but still the business has grown nicely for us. If you take the last quarter's analog reported revenue, we're almost at $2 billion annualized revenue run rate. A pretty large business, in and of itself, and nicely complements everything we do with respect to the microcontrollers itself. Now we have a diverse end market that helps us to be able to take the technologies, take the solutions we have, and find a broad set of applications and end markets that can appreciate them. This is data as of the end of March of this year, so it's looking back on the previous fiscal year of time. Our end markets are dominated by industrial, which is the largest market at 29%. Data center, which has grown quite a bit post the Microsemi part of the acquisition. It's 18% of our revenue. Automotive, which is about 15% of our revenue. Communications, all in the infrastructure. We don't like to do anything on the cell phone side of things itself, so that's about 13%. Consumer is all appliances for the most part, home appliances, kitchen top appliances, et cetera. Defense and aerospace, which again came through the Microsemi acquisition as a much bigger part to it. These are very, very durable, you know, segments for us, which give us a nice end market resilience for how the business can manage through the cycles. We also see going forward, for the last several, you know, two, three years or so, is new markets and new market trends that are emerging. So on the left-hand side of this slide are the same six end markets. On the right-hand side are six major market trends with a five- to 10-year durability in terms of what's gonna happen and how much growth can afford to give us. We've described them before. I'll do them one more time. So the whole rollout of the 5G infrastructure, each of these, transitions, 2G to 3G to 4G to 5G, is about a 10-year transition. More like right at the beginning of that 10-year transition. In one of the sections today, you'll learn more about what do we do in 5G and how important a player are we, in the 5G rollout. The next one is in the Internet of Things and edge computing. A big part of where we play fits into that, and we have another section today that we'll hear more about, you know, where do we play, what makes us valuable in that segment. Data centers, a significant part of the revenue does come from data centers. We're a large player in storage servers, in compute servers, and you'll start to hear about some of the places that within it we have, you know, significant differentiation. Electric vehicles, you know, still small but growing fast and with a significant amount of both regulatory as well as consumer interest in how that transition is gonna take place. Big part of our focus. You'll hear about that today. Artificial intelligence and machine learning, we'll kind of tie that back into the IoT and edge processing in the way we present today. Finally is in drivers, advanced driver assistance, and that'll be the second part of the automotive segment. Those are all the major market megatrends that we expect will propel Microchip's growth at a faster growth rate than the company and certainly a faster growth rate than the industry itself. Now for the first time, we're gonna show you what is our revenue by megatrend today. This is looking back on fiscal year 2021, so the year before March end of this year. As we look back and take all of our revenue and bucketize it into the six megatrends, but it's dominated by two of them. There's the data centers and the Internet of Things. We have smaller positions, although fast-growing, in the other four areas that we've defined as our megatrends. Now, the IoT portion, we have a more stringent definition of what that is than some of the others in the industry do. we require for something to be IoT to not only be computationally required, but also have a connectivity piece. it has to be an and condition for what it is. Most of the other people I know of have an or condition. If you look at the or condition and apply it to Microchip, you know, the actual business in IoT for us is about 5x-6x what is represented in this spreadsheet, but this is exactly what we have that is intended to be both computation and connectivity. Now, these are growing at a pretty fast rate, and we are expecting that these megatrends will help drive 2x the growth for Microchip than what our nominal growth rate will be, which I'll share with you in a few slides in terms of where we expect our long-term growth rate to be at. These are helping to pull up the averages, helping to pull up the growth rate for the company, and in time will represent a higher and higher percentage of the total revenue for the company. Megatrends overall are about one-third of the revenue of the company today. The other two-thirds is our broad-based market, and that goes into any number of applications. There are thousands of applications into which we get designed in. It's a highly fragmented business. We view fragmentation. It's our friend. It's very hard to replace, and it takes hundreds of designs that are won and retained and last for a long time. It's a solid business foundation on which to build the megatrends. The foundation of this fragmented business, broad-based, lasts for a long time in the end markets that we're in. It also gives us the opportunity to elbow out into adjacent spaces. Because we're so broadly placed, we're able to find these new megatrends. If you go back three, four years ago, we didn't have all of these megatrends in our sights. Because we're present, we detect them, and we detect them early. Finally, there's also new applications that show up, things that either didn't use electronics before or are starting to use a different type of electronics, and the most, you know, prevalent example I can think of is, you know, 10 years ago, for the first time, we saw things like pregnancy testers using microcontrollers. Had we not been a broad-based player, we would never have anticipated, you know, a light bulb requiring a microcontroller or any of these other, you know, devices which you don't associate normally with needing it. That presence, broad-based, thousands of customers, a very broad channel, gives us that ability to see a lot of these new applications that are using electronics for the first time. The serviceable addressable market that we have, we estimate that today to be about $60 billion that we can address. About 11 of that is in the megatrends, and the balance 49 or so is in that broad base of markets. As we look at a five-year window of time, the megatrend portion of it grows significantly. It almost doubles from 11 to 22, a little over 22 actually, over this period of time. Then the balance is in the broader markets. We go from about a serviceable addressable market of $60 billion to a serviceable addressable market of $84 billion over this window of time as we expand our solutions, as we expand the number of places where we can play a significant role as well. That serviceable addressable market in its totality, we expect, is growing at about 7%, in the megatrends portion is growing at double that, at about a little over 14%, in terms of its growth rate itself. With that, I'm gonna hand this to Eric to take us through a little bit more of the financial slides themselves. Go ahead, Eric. Okay. Thank you, Ganesh, and good afternoon to everybody. I am gonna walk you through some of our historical P&L balance sheet and cash flow information and then turn it back over to Ganesh to what you really wanna hear is about what the new model is gonna look like. This slide looks at our historical sales growth going back to the year we went public, which was fiscal 1993, where we were just under $90 million in revenue. And as Ganesh mentioned earlier, our current quarter, if you multiply that by four, we're at about a $7 billion run rate. We've seen tremendous growth over that timeframe. There's been a lot of organic growth. There's been the acquisition growth that has come over the last 10, 11 years, but we've really executed very well over that time period. It's been 124 consecutive quarters of non-GAAP profitability, which we believe is a record that is unmatched in the semiconductor industry. From a gross profit perspective, over the last 12 years or so, we've grown at a CAGR of about 18.3%, which is a pretty amazing result given the fact we've acquired many companies that have, you know, significantly lower gross profit margin than Microchip. Over the course of time, through integration activities, business process improvements, and the hard work of our manufacturing teams and business units, we've been able to consistently grow our gross profit at a very fast rate on an annualized basis. If you look at this today, you know, we are doing very, very well. Our current quarter guidance for non-GAAP gross profit is 66%. We've done an amazing job that's higher than the long-term target that we unveiled to you just a year or so ago. You know, you'll see in a little bit that can go even higher from here. From an operating income perspective, same thing. We've grown the CAGR of that over the last dozen years or so by over 20%. Again, there's been lots of acquisitions that have come in during this time period that have had significantly higher expense models than Microchip has had, and we've brought those into the Microchip system, got the synergies out of them and implemented them into our structure. With that, we've seen tremendous growth in the operating income that we're producing. This quarter, we're guiding the business at the midpoint of guidance to 43.5% non-GAAP operating income, which is really one of the best models in the industry. EBITDA is something that we've been very focused on over the last several years. I mean, with the acquisition of Microsemi, our debt went pretty high, and then we entered a period of time where, you know, we hit the China-U.S. trade war situation followed by the pandemic. With that, our EBITDA had kind of flatlined for a couple years, but you can see the business is firing on all cylinders today, and EBITDA is growing quickly, and with that, our leverage is really coming down. From a free cash flow perspective, we've grown free cash flow by over 20% over the same time period. We've been very focused on working capital over the period of timeframe that we're looking at this slide. Again, there's been lots of acquisitions that have come in, but our cash flow has consistently been rising very significantly, and current quarter is gonna be somewhere in the range of 34%. The company's doing very, very well in generating cash, and that allows us to invest in the business, pay a nice dividend, and bring down debt at the same time. From a balance sheet restructuring perspective, we've done a lot since we've acquired Microsemi. When we acquired Microsemi, we had about $12.8 billion of debt, and since that time, over the last full 13 quarters, we've paid down over $4.4 billion of debt. A lot of that time period was pretty challenging from an industry-wide perspective, but it speaks to the cash flow strength and the overall business model that we have. Over the same time period, we've really been focusing on restructuring the balance sheet. We had a whole bunch of convertible debt on the balance sheet when we acquired Microsemi, about $4.5 billion, and we've taken out the kind of deep in the money convertibles, over $4 billion of that, and I've got a slide in a little bit that shows the benefit that our equity holders get from that over the course of time, where it's really viewed as more of a synthetic stock buyback because we avoid that dilution. We've done a couple of other bond refinancings over this time period too. Back in December 2020, we took out $1.4 billion of Term Loan B, which had a variable interest rate, replaced that with a three-year bond at under 1% interest, and followed that up in May by taking out another billion-dollar bond that matured. It was one that we put in place when we acquired Microsemi that had almost 4% interest rate, replaced that with a less than 1% coupon, and that refinancing alone is saving us about $20 million on an annual basis in interest cost. Here we're looking at the net debt, adjusted EBITDA, and net leverage. This has been a very big focus point for many investors, of when we closed Microsemi, our leverage went to about 4.95, so almost 5x. Since that time, we've been, again, generating a lot of cash. The leverage came down relatively slowly after the acquisition because, from a business perspective, we faced U.S.-China trade war, as I mentioned, and then COVID. Our cash flows remained strong over that time period, and we paid down about $4.4 billion of debt and hit a milestone at the end of this last quarter with our net leverage dropping below 3 at 2.99. From a total debt perspective, again, we paid down from about $12.8 billion to about $8.4 billion at the end of this last quarter. You know, at the end of this quarter, we should be somewhere in about the $8 billion range, so another $400 million of potential net leverage pay down in the current quarter. The other piece of this is that with the restructuring that we've done, we had a lot of convertible debt on the balance sheet, and that typically has a very low cash coupon on interest. Even restructuring that debt, we've been able to take the average interest rate down from about 3.3% to about 2.2%. I wanna spend a little bit more time on the convertible to make sure that you understand the benefit that's been derived by retiring some of those converts. Back when the Microsemi acquisition was closed, we had $4.5 billion of convertibles outstanding. These are instruments that tend to have low coupons, but as the company does well and the stock price performs, there's equity dilution, and equity appreciation that those bondholders participate in. We wanted to work to kind of rapidly get those converts out of our structure and move to more of an investment-grade type capital structure. Over this timeframe, we've taken out $4.1 billion of those convertibles. We did issue another convertible back in December of 2020 for about $665 million, but that particular convertible was used to exchange out some of these longer-dated converts that we had in place with a shorter-dated instrument to allow us to get rid of the converts over a quicker period of time. That was a four-year instrument. What does that mean? This chart looks at stock price along the bottom. On the left-hand side, you've got market cap value. On the right-hand side, you have number of shares. Pick a point on this chart. You know, Microchip's trading at $85 or so today. But pick a $110 price or a $140 price in the future. Take your pick here. What it shows is the dilution that we're saving and the market cap value that we're saving by taking out these converts. At a $110 price, there's about 38 million shares of dilution that otherwise would have come into the EPS denominator and been owed to those bondholders, and that's over $4 billion. These converts that we were taking out had maturities of 2025, 2027, and 2037. Some very long-dated instruments were in that. If you fast-forward and say, "Hey, the stock goes to $140 in the future," that's 50 million shares of dilution that was saved or $7 billion in market cap. Really just wanna leave you that, hey, these things have been very accretive to our equity investors. You know, the first time that we went to the market to take some of these out was in the March 2020 quarter, and that was a very, very difficult time to raise money, right? I mean, that's the quarter that COVID hit. Steve and I spent a lot of time with our banking partners during that time period. We were able to get about a $650 million bridge loan from some of our key banking partners and used that to retire some of those converts when Microchip's stock on an adjusted basis was about $35. Really good transactions for the company. The last piece I have on debt is how we've restructured from a fixed versus variable rate instrument. When we closed on the Microsemi acquisition, which was Q1 of fiscal 2019, about 50% of our debt was variable rate and interest. Market rates go up or down, we pay a higher or lower rate. We were fortunate at that point in time that rates were slowly coming down. Today, I think that the upward pressure on rates is pretty prevalent. In the marketplace, when we end the current quarter, we expect our variable rate debt to only be about 20% of the debt that we have outstanding, and that's just our line of credit. With that, I'm gonna turn it back to Ganesh. Thank you, Eric. Going back to Microchip 2.0, I mean, this has been a fantastic journey over 10+ years of how we navigated from what we were, a billion-dollar company at that point, to where we are, $6 billion-$7 billion. The change in profitability, the change in so much of what the company has become. There are more changes that we are starting, and these started about a couple, two to three years ago and some more that are coming up in the coming years. Things that have changed from what was Microchip 2.0, right? We've been very clear, we are not focused on acquisitions. We are focused on organic growth. Second is, you know, the whole debt financing that we had that was driven by the acquisitions then falls away, giving us more optionality on what we can do with the cash generation of the company. Third, you've seen on dividends, we have four quarters ago started a path of starting to grow dividends, and not by a small amount, 26% year-over-year growth in dividend in what we just announced this quarter versus what had happened a year ago. The changes have begun in terms of where Microchip is today versus what Microchip 2.0 was, and we have more coming. With that, we wanna unveil what is Microchip 3.0. What is the next part of this journey? Where is the value generation to be done, in that? Let me take you and step you through the key elements. Many of what was in Microchip 2.0 continue on, but some new elements come on. The sustained growth comes from total system solutions and mega trends, and you'll hear a lot of both of those, as we go later on this afternoon. Organic growth from those two elements is a key part of the growth strategy going forward. Now you might ask, "Well, what growth are we gonna have?" That's been a question over the last two or three years that many of you have asked. Well, today, we wanna tell you that our objective is to grow on a long-term basis 6%-8% organic growth. That's a compounded annual growth rate. Much faster than that, obviously, in the near term, as we got lots of tailwind behind us, but on a long-term consistent basis to be able to do that. That kind of growth we think is about 2x what the industry growth rate is over that same period of time. If the industry growth rate changes, we will change with it to be able to grow faster than what the industry growth rate is. Then an update to our model. We blew past the gross and operating margin targets in the last quarter. Our new long-term trend, our new long-term targets for gross margin are to be at 67.5%-68.5%, in that range, centered at 68%. Our new operating margin targets are to be between 44%-46%, so centered around 45%. A much, much more valuable model, as we take advantage of the continuous improvement in gross and operating margins, plus add onto it the growth that we expect to be able to drive from our organic efforts. Now, a few more things which are more cash-oriented. When we look at EBITDA, and it's been a big focus for us post the acquisitions that we've done, the last two big ones. We expect that we can generate a 48% EBITDA margin on a long-term target basis, and that the free cash flow target can be a 38% or higher target for us. Both those are important because they will play into the capital return strategy that Steve will talk more about here in a few minutes. We do all this with being in these diversified end markets, giving us that solid base on which to be able to build a business and build the growth from. Consistent results, resilient business. As to some extent you have seen in the last, you know, six to eight quarters, despite all the pandemic and all the other uncertainties, we had a pretty solid record over that whole period of time. Now we are going to make investments in inventory. We believe that our product lines have these long-term characteristics and they last 10, 15, 20 years. In times when there is available capacity in our factories to be able to build inventory, we wanna build it because it's an efficient way to be able to run it. It minimizes the amount of capital that we need to spend. We will have the cash freed up from our business to enable us to make that in inventory investment. In an environment like we're in today or have been in the last four, five quarters, more inventory would actually have helped us to be able to go even faster than what we did. That's one change, is we were at about 115-120 days as our old inventory target. We're gonna take it up to between 130 and 150 days. The next thing we've talked about in some of the earnings calls has been to make some of the capital investments in trailing edge technologies that we see having long life cycles, but that our partners aren't necessarily seeing as a high priority for them to be able to invest in. We think that allows us to serve markets more profitably, more consistently over the long run, and to tap up the capital intensity from where we are today, which is more like a 3%-4% range to a 3%-6% range, and be able to utilize that incremental investment to make even better margins, driving the gross margin targets that we have. The capital return itself, which I won't steal Steve's thunder on it, but you know, we want to be able to get to as soon as we get investment-grade rating, which we think is within the next several months or so, is to increase the capital return from today, which is in the 23%-24% of free cash flow, up to 50% of our free cash flow. Continue to pay down the debt, but also keep increasing the capital return every quarter so that we get from 50% to 100% as the net leverage drops from today's 3 down to about 1.5. Steve will take you through a lot more of that detail of how do we get there. A pretty consistent pattern of returning capital to shareholders, jumping up quickly as soon as we get investment grade, and then you know, going on a pretty consistent basis as we get the net leverage down from 3 down to 1.5. Finally, on all of this, I think it has to be built on a strong foundation, and the two major foundational elements for Microchip. One is around sustainability. We know it's important to many of our stakeholders. It comes natural to us. We do it all the time. I'll show you in a few slides what we mean by that. The second is around culture, and we think that is a very important distinguishing characteristics for Microchip. That's how we build the success of the business, and you'll hear about that as well. To take all these and kind of put them into a single slide that gives you a, you know, a summation, a numerical summation of this thing, what you see is the first half fiscal year 2022, what was the actual run rate that we had in revenue, $6.4 billion growing from, you know, 6%-8% on a long-term basis. Gross margins going from 65%-68% on a midpoint. Operating expenses staying at about 23%±, an operating margin going from 42%-45%. Pretty nice movement in all of the major financial targets that we have. CapEx going up. It's running a little higher this year already because of the growth that we're experiencing, but we want to take it to a 3%-6% model longer term. The EBITDA and free cash flow margin models itself. This is an elite model, getting even more elite as we go through this transition over the next coming years, and we take advantage and put a virtuous cycle on our business, a virtuous cycle that creates growth, that creates more gross margin, creates more operating margin, where it gives us more affordability to make investments, which generates even more cash, which allows us to give you more cash back to the shareholders itself. That is the virtuous model that we wanna continue to stoke in the coming years, itself. With that, I'm gonna hand this off to Steve to tell you more about capital return. Thank you, Ganesh. I think I don't need an introduction to this group. I pretty much know everybody. Just in case, we have two people in the room that are new to Microchip. I'm Steve Sanghi. I was the CEO of Microchip for 31 years and became executive chair this March, and Ganesh Moorthy stepped up to be the CEO. I'll take you through the capital return strategy, but I'll build up to it. I'll talk about the history a little bit and then see how we derive to our new capital return strategy. We'll start with how we allocate capital. Then we will talk about the debt paydown. Eric covered some of it. I'll probably repeat a slide or so in that area. Talk about our historical dividend growth, and then go to the future cash and capital return strategy. We'll build up to it. Let's begin with how we allocate our capital. We look at how we allocated our capital in the last 10 years and then compare it to how we will allocate capital in the Microchip 3.0 that Ganesh just introduced to you. When it comes to the operating expense, which is R&D, marketing, sales, general expenses, there's really no change. We always allocated capital to the operating expenses based on what P&L can afford. We made some, you know, strategic, some opportunistic and very disciplined investments to create organic growth through our R&D efforts. There is really no change in that. The first change is in the capital expenditure, where historically we talked to you about investing 3%-4% of our revenue, and in the Microchip 3.0, we're talking about investing 3%-6% of our revenue. From a midpoint of 3.5 to a midpoint of 4.5, about a 1% increase. It's, you know, largely driven by two factors. One, we continue internalization of manufacturing from outside to inside, which will cost a little more in capital. Even more than that, some of our foundry partners are investing capital only on the leading-edge technologies. A large amount of Microchip revenue still comes from trailing-edge technologies and will continue so for next 15, 20 years and growing, all the mixed signal, analog, low-end microcontrollers. A lot of those things are still on trailing-edge technologies, and they're growing rapidly. Therefore, we will invest some of the incremental capital in growing that trailing-edge technology capacity that our foundry partners are not doing. Third area is inventory, and Ganesh talked about taking our inventory level, by, you know, midpoint of 117 days we had before to a midpoint of about 140 days. That's again driven by our experience where if you build some inventory during slow times because you have factory capacity available, then it allows you accelerated growth when the strong times come. In our history, we always built inventory in slow times. This was the only cycle during 2020 we did not build inventory, and therefore, we entered this cycle, you know, early on with a low level of inventory than we would have liked. The question you can ask is, well, why did you not build inventory last year? Well, it was a very strange time. We had a very high leverage, and I still recall in June of last year, some of you were asking the question: What if your revenue goes down 40% during COVID? You know, how would you survive? Will you miss the covenants and, you know, so on and so forth. Memories are often short, but we ran the business last year with the intent of cash comes first. We drained down inventories, we put the factories on attrition, we managed the capital very well, and we, the focus was on debt pay down and lower our leverage so that even in a worst case scenario, if the COVID took the businesses down, we would really be a safe company becoming stronger rather than become you know, vulnerable because of high debt. We entered this growth cycle with a very low level of inventory. What we are basically saying is that that was just totally unique one time when we had very high leverage. Going forward, that will not be the case, and we will really have an average higher level of inventory going forward. In the area of debt, we leverage up you know, M&A. Did lots and lots of M&A with debt, and we followed that up with creating significant cash from operations, then actively reduced debt. Going forward, we will first receive the investment-grade rating, then maintain that rating, and then really have a 1.5x leverage longer term. In the dividend area, with the M&A as a focus, we increased dividend very minutely, steadily, but very, very small. Going forward, we will have accelerated dividend growth as the leverage decreases. The stock buyback, in the past, we only did stock buyback when we did an acquisition and had to give some stock in that acquisition, we kinda bought it back. Going forward, followed by, you know, a IG rating, we aim to reduce share count, improve EPS, and do a substantial buyback, as I will talk more about in a few slides. Finally, acquisitions. In the past, we were a serial acquirer to build scale as well as total system solution. Going forward, there is no near-term large-scale M&A, and we're only looking at small tuck-in acquisition like the last quarter, where we did a $1 million kind of acquisition, buying IP and buying an engineering team. So really small tuck-in type, no large scale M&A. Eric already showed that slide. It fit in here, so I put it back in here to show how our leverage has gone down over time, how we have paid the debt. Last quarter we broke the magic number of 3.0 in leverage. Why is that a magic number? Because that is a number at which we have gotten indications during discussions with various rating agencies that we could, you know, get an investment-grade rating. Now mind you, it's an independent call by them, and they look at a lot of different things, leverage being just one of them, their future outlook of the industry and the business and all that. The decision of giving an investment-grade rating is an independent decision by the rating agencies. However, our job in that is to ensure that we keep bringing the leverage down and are able to deliver the metrics that they're looking at. Last quarter we broke that number from 3.0. The next slide here shows how much dividend we have paid cumulatively since we started paying dividend. That's not a small number, $5 billion returned to shareholders. I believe if I look at the total amount of money we raised in equity from investors going back to private company, when there were three series of money raised and then an IPO and couple of follow-on financing, I think we'll have trouble getting up above $300 million-$400 million of total equity raised ever. We have returned $5 billion already to the shareholders. That has been very significant. Eric covered this slide also, total convertible debt repurchase. The point I just wanted to reemphasize that during the last year, when we didn't want to spend our cash in buying equity, because doing so we would not have lowered the leverage. We found a synthetic way to buy equity, which was to buy convertible stock, and we paid the face value of those convertibles in cash, so it was leverage neutral. The incremental growth part of that we paid in equity, which was kinda already in the numbers in the equity dilution. The impact was so dramatic that, as Eric described, if you go to the right-hand side of the slide and the stock goes to $140, let's say in future, some of those equity instruments mature in 2037. At a $140 stock price, we save 50 million shares of dilution. At $440 a share, that's $7 billion of equity market cap saved for our equity investors. That was very, very significant, and we did that because we really couldn't buy stock last year because buying pure stock from the market will not be leverage neutral. With this build-up, I think, let me first describe how we become now sort of get to a point where we can do a future capital return strategy. One of the reason is really the change in M&A focus of the company. You know, M&A strategy of the last decade has really met its goal, has delivered the purpose it was set out to do, and we started that in 2010. There were five goals we were trying to accomplish through our M&A strategy. One was obviously to build a significant scale so that we don't have a scale disadvantage to our competitors. Back then, we had a scale disadvantage to everyone, ST, Infineon, Freescale, NXP, Linear, Maxim, ADI, everybody. Today, we don't. Second was to strategically acquire companies that will fit into our embedded control model. We were not trying to go buy a DRAM company or some other memory company. We were trying to stay in embedded control. Third was to build and acquire a portfolio, either organically build or acquire a portfolio that will help us complete the total system solution to our customers. Ganesh talked about that being a significant part of our growth strategy, organic growth strategy going forward. In presentations that follow me, you will hear a lot more about how TSS works and how it is benefiting us. Fourth was to pay reasonable valuations. I never paid anything for the company compared to what has been some recent large deals done at the multiples. That just will never be the case. We never really paid that kind of money. We paid very reasonable valuations and made the deals, you know, highly accretive, you know, deal after deal after deal. We largely paid cash for the deals or debt. If we ever paid stock, then we bought the stock back. For financially, those acquisitions work like, financially like they were cash acquisitions. Therefore, if you evaluate our current situation today, at an annualized run rate of $7 billion, we don't have a scale disadvantage. We don't find that there is any deal that is left to do, which we must do. The rest of the targets are not strategic. We have a product portfolio that can provide a total system solution to our customers. We do not find any gaping holes. Our current valuations are not meeting our disciplined financial you know, targets. We're just reaching a leverage of 3.0, and we wanna go towards 1.5. We don't wanna relever up. Only acquisitions we might do would be the small tuck-in acquisitions, strategic like I talked about. That really builds then the foundation for creating the shift that we're talking about, which is shift to a capital return strategy. Currently, on a quarterly basis, we generate about $550 million worth of free cash flow. That's about $2.2 billion a year. The trigger for this shift of strategy would be getting the investment-grade rating. I reemphasize that we have to get that rating from both Moody's and Fitch. It is an independent decision by them. As soon as we get that, and in the earnings call, I talked about getting that in the next few months. We may get it next month, we may get it in two months, three months, but somewhere it's close. When that happens, then we will immediately increase our cash return to shareholders from 23% it is now to 50%. That will really happen in that quarter. In a most aggressive scenario, if you were to get that rating, let's say, you know, this month, I'm not projecting it, but if it happens this month, then before the end of the quarter, we would have bought significant stock back to create about 50% of the cash return to the shareholders. So we will increase the capital return to shareholders to 50% and then increase it every quarter. We haven't totally defined how much we increase every quarter, but it could be sort of like 50% goes to 52.5%, then 55%, then 57.5%. You know, the 50% goes to 60% in a year, then it goes another 70% in a year. These are just approximate, and board will make a decision every quarter. We will basically take that 50% up to 100% over time. We will increase the dividend about 7% sequentially. We have been increasing it about 5.5-6, 5.5.8-6. Last quarter, I think we increased 6.2%, and going forward, we will increase it 7% sequentially until it gets to 50% of the free cash flow. Then we'll take the difference between whatever total return is in the very first quarter after investment grade rating, it will be 50% minus the dividend, rest would be the stock buyback bogey. That total will increase every quarter from 50%. Dividend will increase from you know, every quarter, and then the stock buyback will be a calculation, total target minus the dividend. That will still leave significant remaining free cash flow. While it is not 100, remember, it won't be 100 for several years. We'll use the remaining free cash flow to further pay down debt till we achieve a 1.5x leverage, which would be sort of the steady-state. When we get there, then we will accelerate the dividend and stock buyback even further to rapidly then get to 100% of free cash flow return to the shareholders. That's the strategy. If you look at our dividend record, you can see over history, the dividend went up very slowly. Steady increase, but we increased it every quarter very slowly. In the last four quarters, we have increased it significantly faster, and it projects it for Q4, as you can see, the increased rate of dividend that we have done in the last four to five quarters, which leads us to stock buyback. Just this morning, Board authorized a $4 billion stock buyback, and we, you know, canceled the old $30 million stock buyback authorization we had. We had it for several years, and we hadn't acted on it. We wanted the stock buyback to be in dollars rather than shares because stock price moves around. $4 billion of stock buyback. You know, if you do a rough calculation of $550 million free cash flow, we start with giving half of it to the shareholders, which becomes $275 million. Our dividend currently is about $110-$115 million. I don't know exactly what it is. $275 minus the dividend kinda gives you the bogey for the stock buyback. It's significant, it's immediate, as soon as we get the investment-grade rating. That to be executed over time based on cash generation, leverage metrics, market conditions. These are just normal caveats. Microchip is absolutely committed that as soon as we get investment-grade rating, there will be a large stock buyback in that quarter, 50% of the cash, free cash flow minus the dividend, contingent on achieving IG rating. With that, let me kinda summarize this, what a strong capital return focus looks like. What makes it possible is the existing total system solution product portfolio, rapid deleveraging that we have achieved, and our improved business model, and Ganesh talked about, you know, how high the model is going. All that has driven a shift from M&A to now a capital return focus. As soon as we get the IG rating from the two rating agencies, we plan to increase the cash return immediately from 23% to 50%, and then that will have two components. One will be the dividend growth, which will grow at about 7% rate, and the difference will become the stock buyback, immediately and then continuously do the stock buyback every quarter. Then systematically increase that cash return to shareholders towards 100% of free cash flow as the leverage approaches 1.5x. At the end of all the presentations, we'll take questions. I'm sure there are some, you know, questions, and you may have done your own calculations, so we'll take questions on that. That's what I have. I think we have a break now, right? We will take a 10-minute break at this point. Please come back. We'll start right on at 2:10. We'll go into the growth strategy at that point in time with the product lines and markets and all of that. Thank you. Thank you. Hey, we are getting started in about a minute's time, so if I can have everyone settle down, please. If anybody is on the outside, I'd highly recommend starting to come in and get into your seats. All right. For the next part of the presentation, we're gonna have Richard Simoncic, who's our Senior VP of Analog Power, and we're gonna start to tell you more about the growth strategy at Microchip. I think between what he shows, and we have a number of other executives who are gonna speak, you're gonna see little surprises of where Microchip is involved in a number of different areas that provide significant growth. Go ahead, Rich. Yours. All right. For those that don't know me or may not have seen me before at other investor conferences, Richard Simoncic. We got more people coming in. Senior VP of Analog. I also work a lot with the development of our organic growth strategy in terms of megatrends and TSS. In this particular section of presentation, we'll focus on our two major growth strategies, organic growth strategies, the first being TSS, and the second being megatrends. A combination of those two help us provide for that 2x industry growth. How did TSS come about? TSS came about a number of years ago at Microchip Technology because we were buying and acquiring lots of technology and companies. There's typically three stages involved in getting synergy out of an acquisition. The first stage, and typically the easiest stage, of getting synergy out of an acquisition is organizational synergy. Most companies do this very well. The second stage of any acquisition is manufacturing or systems integration. This is where Microchip has done quite a bit of work with a number of these acquisitions to derive a great deal of value out of our acquisitions. The third stage of our acquisitions is where we capture synergies from our sales and revenue growth portion of our acquisitions. Almost all of the companies we've acquired, very few of the companies got through the first stage of integrating all of the companies they acquired. Whether it was Atmel or SMSC or Microsemi, all of them typically stopped at that first stage, organizational integration. Microchip takes it all the way through operations, manufacturing, and in the end, we get to sales and revenue integration, and that's TSS. TSS is that combination of hardware, devices, software. We bring that all together to provide extraordinary value to customers in the marketplace. How do we do that? Here's an example of one of our large growth areas right now in the EV megatrend marketplace. These are the standard charge poles that you would see for charging an electric vehicle. In each of these charge stations, Microchip on average has about 32 devices per charge pole. In these charge poles, Microchip leverages TSS by bringing together all of these acquired technology over the years to provide that complete solution to a customer. In a typical charge station, we have ruggedized silicon carbide devices from Microsemi. We have HMI or human touch or gesture devices from Atmel. We have security solutions that we acquired from Atmel. For the connectivity, those connectivity solutions came to us via SMSC over the years. We have memory solutions. The power solutions all came from the Micrel acquisition and Supertex acquisitions over the years. What TSS allows us to do is seek and get the revenue synergies out of all of the acquired technologies that we've done over the years. When we look at the typical charge pole in EVs, the potential SAM from Microchip is sitting at $1.4 billion. This is just one segment of the EV market. There are many other segments in terms of traction control, buses, trains, motors, scooters, are all potential large growth markets for us in this area. Let's look at another area in our EV megatrend marketplace. When you look at this and you think of an electric scooter, an electric bike, you know, how big could this market be, right? This market for Microchip, from an estimated SAM is about $840 million, right? What Microchip has done over the years is we find these emerging markets, we build a TSS solution for that particular market, we bring it to customers worldwide, and then we win as much revenue around the world as possible. Here is a list of some of the devices that go into a typical e-scooter or bike, and again, a note, new emerging application. This idea of finding an emerging application with an anchor device is repeated thousands of times throughout the world. Here's another interesting example. This storage data products or SoCs came to us via the Microsemi acquisition. Microchip had very small footprint historically within a data center or hyperscalers. Microchip purchased Microsemi and we started working with, in fact, you'll meet him later today, Pete Hazen, the Vice President of the Data Storage Group, surrounding his SoCs with Microchip devices, whether they're timing devices, power devices, mixed signal devices, microcontrollers to do management of those products. We've released over a dozen reference designs since the acquisition of Microsemi. The content in those reference designs are anywhere from 5-25 devices per board. Right now, the additional designed-in revenue just from this small segment of the Microsemi acquisition will represent about $60 million additional revenue in attached devices that Microchip would not have had before. This gives you a very clear idea of how we go about getting revenue synergy out of the acquisitions. We repeat that over hundreds of reference designs. Whether it's with our CBU, whether in a 5G group, automotive group, we bring together these total system solutions to get incredible leverage out of all of the acquisitions that we've done over time. When you think about this, you think about all of the acquired technologies that we've gotten, all of the product lines. We have over 250,000 different devices, over 120,000 different customers, with tons of emerging applications around the world. How do we communicate that to the entire sales force? How do we bring that all together? Several years ago, we started a project, where we would use AI/ML recommendation engine to serve up those solutions. Now we have multiple data sources that come in, to a central hub that we've been training for several years now, to provide those recommendations either to our distributors, our customers, our salespeople, to build out these TSS solutions. This will significantly turbocharge our whole TSS process within the company in terms of generating additional revenue growth. As we develop these TSS solutions, we are very much targeted on these megatrend high growth marketplaces. These are markets, since they're very fast-growing, high growth areas. These customers are really dependent on us to provide them with that complete solution, to offer high growth. In summary, we depend on two organic growth strategies. One is that focus on total system solutions. Combining that with our megatrend high growth areas allows us to double the overall SAM for Microchip in those target marketplaces. We're looking to go from about $11 billion SAM today to just over $22 billion SAM in the next five years. With that, I'll turn it over to Steve Drehobl. Okay. Good afternoon, everybody. My name is Steve Drehobl. I am Senior Vice President of 8‑bit and 16‑bit microcontrollers. Today, what I'm gonna talk about is our growth strategy in the area of edge computing. For Microchip, we see edge computing as a $4 billion SAM as of last year. We continue to see that market growing. We believe that the products that we have, we participate in a market that's gonna be about $7.4 billion by 2025. We have many multiple growth drivers in edge computing, and that's why I'm gonna focus on a couple of those today. The first area is, there's just an awful lot of devices out there these days, putting out a lot more data, all of that's going up to the cloud. A lot of raw data, a lot of computed data. Part of the challenge is there's still methods that are needed on how to process all of this data. The cloud can't handle it all, and sometimes it shouldn't handle it all. One of the trends that we're seeing in our business is customers are now pushing some of that data processing all the way back to the edge, and that is the edge computing. As you've heard a couple of times before already today, one of our other growth drivers is we have 120,000 different customers. These customers all are currently buying Microchip products today, but a lot of them are looking to find different ways to add value to their business models. One of the areas that they're looking to add business mod-- they're add value to their business model is in adding IoT functions. Microchip brings that wealth of knowledge that we have with our customers, the wealth of knowledge we have with a vast portfolio of different products. Our strategy is to create these products using smart, intelligent, embedded controllers, connect that information up, and then once we have it connected and supplied with smart data, then we somehow have to secure it. We wrap it all around with TSS, as Rich has just described a few minutes ago. Let me briefly kind of go over and just remind everybody what we have as far as our embedded control family. It's not just microcontrollers, it's also other components that we've acquired over the years. First off, just keep in mind that the embedded control market is an incredibly fragmented market. One size doesn't fit all. You gotta try to find the right product to fit the right product, the right tool, and that's why we've continued to invest in a lot of different products over the years. For Microchip and in the microcontroller side, we have 8-, 16-, and 32-bit microcontrollers. We have those available in multiple architectures and multiple tool sets and ecosystems. Through the Atmel acquisition, we picked up another portfolio with the 32-bit MPU. And through the most recent Microsemi acquisition, we picked up the low-powered FPGA to fit into the portfolio. We've got this large breadth of smart, intelligent, distributed, intelligent controllers. One of our themes over the past 20 or 30 years has been we've been constantly seeing this constant growth of putting more and more intelligence out at the end nodes, even before they were nodes. One of the things that's come along is the evolution of machine learning. Machine learning, for us, is another evolution of how to apply more distributed intelligence and put more control at the node so data can be processed. These are just a few of the range of examples that we utilize from machine learning. I want to highlight a couple of those specifically at the two corners of where we participate at in the entry-level for 8-bit microcontrollers. An 8-bit microcontroller is often used for something that has a small, dedicated, small area, non-high-performance area, but it's very compact, small footprint and can output a single predictable element from machine learning. As we continue to grow in different needs as far as data size, as far as data rates go for memory, and for different size and latency requirements, then we can evolve up to the FPGAs. In the FPGAs, we also see different projects utilized for pattern recognition in passenger patterns in agricultural patterns and in vision systems. After we have all of this information together, we somehow need to connect it up. When we connect it up, we've got a broad base of products that we utilize, both from wired and wireless protocols. The different protocols that we have available are listed across the bottom of the screen. One thing to point out is Microchip is also a leader in the wired protocols, and those are in the USB and Ethernet technologies. After we have all that connected, we've got all the data available, one thing that we definitely need to do is to secure that information. Microchip also has a large portfolio of security products that are available either on a single chip or on multiple chips, which provide different layers of security. This offers the customers an ability to choose a tool suite to be able to connect the data, secure the data, and then offload that data up into the cloud. As we wrap it all together for our total system solutions, we bring the smart data together, we connect that data, and then we secure that data. Then, as Rich had described, we've also got a portfolio and breadth of other products that are also available for the products that fit around the board for analog, timing, power management, and we can provide the ecosystems for those products to give a total system solution. That combination of smart, connected, secure really gets us to a point to where we think that we're gonna be very well positioned for growth on edge computing over the next four to five years. We continue to see this market growing for us in about the 13% CAGR range, which will exceed 2x of our organic growth. That's all I had. Next up is Pete. Thank you, Steve. Hello, everyone. I'm Pete Hazen. I am the Vice President of Microchip's Data Center Solutions business. I joined Microchip through the Microsemi acquisition back in 2018. I've spent 35 years in my career defining strategy, building products, and growing businesses targeted at the storage and the data center markets. I'm excited to be with you today to show you our progress based on our continuous investment and how we're enabling the next generation data centers. First and foremost, based on our continued investment, we've established a leadership position in delivering smart, connected, and secure solutions to this segment of the market. In this field of play, the serviceable market that we have is growing to approximately $4 billion over the course of the next four years, and our revenue in this segment has consistently grown at twice the rate of the market. We're committed to be the partner of choice as we engage with all of our key customers. That includes the cloud providers, including the world's largest, often referred to as hyperscalers, as well as our server and storage OEMs. We also are deeply engaged with many of the media vendors that are building the most advanced solid-state drive solutions in the market. There's been a lot of talk recently in the mainstream media about infrastructure. Well, you can think about our business as building the roads, the highways, the super highways, and all the connectivity between compute, memory, and storage within the server, within the data center, and between data centers. Our vision is to enable, connectivity and management, of those solutions to, for the world's information. The segment of this market is large and growing. Today, the data center market that we serve is nearly $3 billion. We're projecting that to grow by over $1 billion over the next four years for an annual opportunity in the range of about $4 billion. This is our third consecutive year of double-digit growth. Our revenue is growing at twice the rate of the market. We're achieving that, both by targeting the sweet spots of the market, as well as by winning share in the key areas of market focus. Let's take a deeper look at our portfolio as we look at that across the three segments, that I showed in that market growth chart. Storage, compute, infrastructure on the left-hand side. As you can see, we have a broad portfolio of products, smart storage controllers, expanders, switches, and fabrics, as well as storage controllers. We sell at multiple levels of integration. We'll deliver silicon plus software, silicon plus software plus complete turnkey board solutions that our customers can integrate into their server designs and bring to market. We serve the cloud providers and the server OEMs, as well as the storage system vendors. In the solid-state drive segment, we develop both high-performance and mainstream SSD controllers to customers that build their own solid-state drives. That includes some of the largest NAND and SSD providers, as well as the hyperscaler and cloud providers, and OEMs that are building and integrating solid-state drives into their storage solutions. We have a broad portfolio of products, as Rich described earlier. In memory infrastructure space, there's a new standard called CXL, Compute Express Link. We have the industry's first CXL controller that's shipping in the market today, and we're investing in this particular segment of the market as we see growth in this area of expanding the bandwidth through serial memory connect. We develop optical transport network processors to enable inter data center connectivity. Our microcontrollers, as you just heard from Steve, go into a broad variety of applications in the data center. Power conversion is becoming increasingly important as our architectures become more complex, and we have to dial into various different current needs as well as voltage levels. In timing, we have both discrete components that go into servers, as well as complete systems that we bring to market to help synchronize the timing, again, within the platform or across data centers. Finally, we have a portfolio of products across system management, and security that includes both secure, discrete capabilities as well as functions that are integrated into our larger SoC devices. We have a clear strategy across these product segments as to how we're going to win share, and we're gonna grow our revenue. First and foremost, our deep customer engagements. Over the course of the last decade, we've engaged very deeply with our customers. We often have joint investment in new products as we work with our customers to define the latest needs and features of our products. We're engaged not only with our end customers, but their partners, whether they be ODMs, contract manufacturers, or otherwise. Our product philosophy is around providing configurable and flexible architectures that our customers can design with. In a broad variety of our products, we offer software development kits. Our customers end up spending a significant amount of investment in terms of building a software and firmware stack on top of our solutions as they bring these to market. That enables them not only to differentiate, but to personalize their solutions that they bring to market. We're also engaged with the broad ecosystem that includes all of the major CPU and GPU vendors, as well as the storage devices and operating system vendors. Just as an example, to give you a sense of the level of investment here, in our lab, we have over 800 servers running 24/7, 365. That includes over 15 different brands of servers. We have over 10,000 endpoint storage devices, and we engage with that broad ecosystem to ensure that we have full compatibility and that we validate all of these solutions as they work together. Finally, we focus our product design and development around the key transitions in the market. Obviously, when a new server platform and CPU is coming to market, we align with that to make sure that we deliver our products that can be validated in advance of the launch of those platforms. We work with the broad set of vendors that deliver storage devices and memory devices to the market that align into the data center platforms. I'm gonna share with you three examples, going back to the three segments that I highlighted earlier. This picture here shows our SmartRAID Ultra RAID card. This is a full turnkey solution. It's the highest performing product of its kind on the market. You can see in that center picture, we have the storage controller in the middle. These are highly complex system on chip implementations. As an example, this chip has over 250 million transistors. On our design, we have Microchip clocks, sensors, memory, oscillators that are completely validated, enterprise-class quality that we bring to market, that our customers ship. Along with that, we have our smart storage stack. Again, highly complex, millions of lines of code, that is hardened, enterprise-class, enables the connectivity, the manageability, and the security necessary. In total here, we've shipped tens of millions of controllers. As I mentioned, we have industry-leading performance. Power obviously becomes increasingly important as well as interoperability, and we're very much focused on ensuring that we have the highest data integrity and security. As a second example, we have our Flashtec line of products for solid-state drives. This card here, as you can see, at the center, we have our SSD controller. We are currently working on our fourth generation of products that we sell to, again, vendors that will build their own solid-state drives. We've established a leadership position in this market. As many of you know, the storage market continues to grow as the end user demand continues to increase, and solid-state drives are growing quickly. The largest segment within the solid-state drive market is this Non-Volatile Memory Express interface drive, NVMe, that we deliver a controller for. Again, we spend a lot of time to make sure that our solutions are 100% validated with Microchip controllers, sensors, oscillators, clocking, and memory. Again, another good example of our philosophy is of enabling high flexibility and configurability in our solutions. Then the final topic I wanna touch on here as an example is around security. Security is no longer important. It's a critical imperative that we enable the right security features in our products, from the edge to the enterprise servers to the cloud. This is an evolving area that's changing quickly, that we're increasingly investing more as we develop new products. At its foundation, we develop a trusted platform. It enables secure boot. We measure the image that we're booting from. We make sure it's authenticated as the correct image. We also enable secure updates so that as firmware is updated in the field, we can authenticate that it's coming from the right place and that it's secure. We support and enable all of the industry's latest encryption algorithms, and standards, and we enable those for our customers' use. Finally, we have proven solution stacks to ensure the integrity and security of our customers' data that is passing through all of our connectivity devices, as part of the infrastructure in the server and the data center. Again, we're delivering smart, connected and secure solutions. We're committed to continue to be the leader in this market segment. That segment of the market is growing by over $1 billion over the next four years to $4 billion opportunity per year. We continue to be committed to be that customer of choice, to deliver total system solutions and, you know, really excited to be part of the Microchip team as we bring together the full force of all of the investment across all of our product lines. Thank you. Thank you, Pete. Good afternoon, everybody. My name is Matthias Kaestner. I'm the Vice President for Microchip's Automotive business. I'm based out of Germany. I'm glad to be here. This is my first longer trip after 21 months of abstinence to travel. I joined Microchip through the acquisition of Atmel, where I held the similar position. I'm excited to talk to you about the automotive market, the trends and opportunities that are rising for Microchip. This includes the megatrends that Rich already alluded to, the electric vehicle, as well as ADAS. Let's have a look first at the automotive market itself. The automotive market is a sizable market, about 10% of the overall semiconductor market, and it is expected to grow at 8% annually over the next five years. If you look at the two megatrends, the electric vehicle and ADAS, the growth rate is more than double that of the automotive market at 17.5%, expected over the coming years. That's the growth of our SEM portion in that market. Overall, Microchip is serving the automotive market with a very diversified and broad portfolio, and we have roughly $1 billion of revenue in this market. Let's have a closer look at the different components, safety and convenience. Safety and convenience is driving the adoption of sensors inside the car. There are numerous sensors that are getting put into the car to enable driver assistance as well as additional convenience. The car becomes basically a sensor network on wheels. If you look at higher levels of driving autonomy, they require a lot more processing power, meaning processing power is getting centralized, impacting the architecture of the car. With its processing power and also its redundancy, the modern car is becoming a data center on wheels. If you look at those two segments, we expect a CAGR of about 15% in the coming years. The third one is the electrification, driven by a lot of government initiatives, government regulation, but also the increasing availability of charging infrastructure. This is growing even faster in the coming years at 22%. It's noteworthy to say that an electric vehicle has about 2 x the semiconductor content compared to a traditional combustion engine car. But I'll get to that later on. Let's have a look at the convenience portion first. This is a cockpit just eight years ago, overloaded or loaded with buttons and switches individually. Today, that's the Mercedes-Benz EQS that will be launched this November. Almost no more buttons, but all screens, all capacitive touch-enabled. Smartphones and tablets trained the consumers over the last couple of years how to use touch technology, and the car makers are adopting this extremely fast because of consumer demand. Microchip is number one in touchscreen controllers, number one in touch buttons and touchable surfaces. Even the wood can be touched because the touch sensor is underneath. In such car, there are 10+, more than 10 opportunities for touch-enabling devices. Every touch device basically is a sensor inside the car. It's no longer just the consumer sensor because a lot of safety relevant features are controlled through touch technology, touch switches as well. We built functional safety relevant aspects of touch already into the touch controllers and into the touch firmware that goes along. Let's have a look at assisted driving. Many of you have seen the symbols popping up in your dashboard. Each of them indicates an individual driving assist function. They're very different, but they have a lot in common as well. Each of the functions requires one of various sensors and the associated sensor processing that comes along. We have a multitude of products that enable the sensing part and the sensor processing part. Once the data is there and captured, it needs to be transmitted and communicated throughout the car to the main processing unit, be it in central ADAS controller or be it individual ADAS function controller. That we also support with our broad product portfolio, as described before. In all the cases, there are usually multiple parts that come from Microchip that go into such kind of assistance systems. Let's have a look into the future by starting with the past. There is a significant shift in how the value of a car is defined. In the past, the value of a car was defined by hardware, power, torque, speed, maybe sound of a big block. But this is changing. In future, the car is more and more defined by the software and of course, by the semiconductors that run the specific software. For advanced ADAS functions, personalized infotainment are just two examples. Over-the-air updates will become the norm. Current architectures almost don't allow it, so new architecture is required to enable that. More importantly for the car makers are feature upgrades. The car won't be the same at the time when it's sold versus five years from later. Features are getting added, are getting improved, and the car makers are trying to get a continuous revenue stream from those additional features. Imagine the car is fully equipped with sensors. It is capable to drive autonomously up to 40 mph. One morning on your tedious commute, car offers, "I drive you for free for the next 20 mi in heavy traffic. Try it out." Next time, it's gonna cost you pay-per-use or buy a subscription for the morning commute. Those revenue streams the car makers are trying to build and to open. A continuous revenue stream, not a one-time at the point of sale. Why is this important to us? It is important because it changes dramatically the architecture of a car. In the past, in the hardware-defined architecture, individual modules had a single function that was implemented as cheaply as possible, and was fixed for the lifetime of the car. In a software-based model, the car needs to be future-proof, which means it needs to have excess computing power so that additional features can be added over the lifetime of the car. It's like when you buy a laptop today, it is oversized and overpowered because you do expect it to run your software also five years from now, ideally. We see a centralization of compute power, and there are two of them. Sometimes there are three, because all those are safety-critical functions where you need redundancy. There needs to be a high-speed backbone to ensure there's redundancy between those compute units, and that's where we see the synergy with our data center business, because we're able to bring technology from the data center into the car. In this software-centric architecture, we see more and more computer and data center technologies, not only like PCI Express, but also Ethernet that is entering the car. We have a leading position in those technologies, and we are glad that we can bring them into the automotive world. There's a big change in electrical architecture of the vehicle as it becomes more software-centric. Let's jump to the third element of fast growth, which is the electric vehicle. It's more obvious that the architecture needs to change from the electric vehicle versus combustion engine vehicle. Basically, an electric vehicle is energy storage, the battery, and energy conversion on wheels. It's paramount that the energy conversion from the battery to the drivetrain or from the charger to the battery is as efficient as possible, not to lose energy, to increase the range of the car, and to minimize also heat that is generated when the conversion is not efficient. This is resulting in numerous opportunities for Microchip around the electric-powered drivetrain, around the electric vehicle charging and battery management, which includes also the health of the battery. Temperature needs to be managed, battery needs to be cooled, need to be prepared for fast charging, et cetera. It's highly complex and requiring efficient power conversion products like our silicon carbide products and specialized microcontrollers that control digitally the energy flow throughout the car. There are also less obvious opportunities like eSound. In many countries in the world, it is mandated that cars emit a sound when driving slowly to warn pedestrians, for example. This is a safety feature. It cannot go through the standard audio system. It's a separate box for safety reasons, driving additional opportunities for us. Overall, as mentioned before, the amount of semiconductors in an electric vehicle is about 2 x bigger than in the standard car, driving the growth of the market. Not only within the car, within the electric vehicle, there are opportunities. There are also opportunities outside, and which I mentioned in the TSS section before, the numerous components that are, for example, in the EV charger, starting with communication interfaces that communicate with the car, but the charger also needs to communicate with the grid to see how much power it can draw from the grid at any given point of time. Such high-speed charging at several hundred kilowatts per hour needs generates heat. There need to be cooling inside the system, cooling fans need to be controlled, temperature need to be sensed. The human machine interface is usually a touch screen. It needs to be a ruggedized touch screen that also works when it's freezing outside, when there's rain, et cetera. There needs to be secure payment solutions, so that your credit card information or other information can be read for payment. Of course, efficient microcontrollers for the charging function itself. Last but not least, we already mentioned silicon carbide, high power components that are used in those kind of chargers. If you look a little bit beyond automotive, silicon carbide and high power is not only used in automotive, although the electric vehicle is a very large market for this type of product. There are other markets that require the same technology, have the same need for efficient power conversion. First and foremost, renewable energy generation, wind power, solar power, but also less obvious ones like exhaust gas cleaning in industrial applications is using high power electricity. Commercial transportation like electric trucks, delivery vehicles, electric buses, electric trains. In the industry, industrial test equipment, robotics. There's a lot of talk about decarbonization of the industry, so a lot of processes that use coal and other combustion type of energy can be replaced with electricity, needing the same control of the electricity flow like in the electric car. Last but not least, our silicon carbide products are also used in semiconductor manufacturing equipment itself. Ion beam implanters, et cetera, using high energy devices there. To conclude, I would like to summarize. If you look at safety and convenience, the number of sensors that are put into a car are ever-increasing. Cars will be fully equipped with sensors, even if they're not used at the time of sale of the car. The car is becoming a sensor network on wheels. Going up a level of autonomy, processing power will be oversized. There will be a big buffer available to add features during the lifetime of the car, which requires a new electrical architecture, centralization of the processing power, which opens a lot of opportunities to bring the technology we have from the data center side, from the Ethernet side into the car, and the electrification speaks for itself. Adoption is accelerating with 2x semiconductor content. Microchip benefits from all of the above, trends with our broad automotive product portfolio, and also the ability to bring all those new technologies into the car for which we are already a leader in other markets. Thank you. My name is Patrick Johnson. I'm Senior Vice President of the Mixed Signal. Can you hear me? Okay. I'd like to... I think there's something wrong. Maybe pull it up. 4G compared to 5G. There's a large difference between 4G and 5G. First of all, in terms of the amount of bandwidth, 10 x the amount of bandwidth that you'll see within a 4G. I'll try this. This should be better. Okay. One of the other big things is that, as Steve Drehobl talked about, it's not just a mobile phone that's anymore onto the 5G network. It's all the Internet of Things devices that are being put on the network. We're now seeing a 10 x increase in the number of connections that are being placed within the network. The other major thing that's happening is that all of this needs to happen, more the higher bandwidth, the more connections, and the amount of time that data needs to be transferred over the network is 1/10 of the time. If you look at a network starting at the radio head, the request comes in from a mobile phone or an Internet of Things device, and it needs to go all the way back to the data center, get its data, and then return that. In a 4G network, that was approaching about 10 milliseconds. In 5G networks, that needs to be less than 1 millisecond. It's doing all this work, it has to do it much faster. To be able to do that, it has some really profound effects onto the 5G network. Again, looking at the network, what you'll see here is, we have to process that data, get it across the network at, you know, 10x the speed that it happened before. Now, one of the first ways that this is being done, this is something that you probably don't normally see from Microchip. You normally think of us in terms of semiconductors, microcontrollers, analog. One of the big product areas that we have here is actually in timing systems. Our timing systems reside all the way at the radio head and are deployed throughout the entire network, all the way back to the data center, and they're synchronizing the data as it flows through the network. Now, of course, we do provide, as you normally would expect from us, the semiconductors that go inside the rest of the network equipment that you'll find within the 5G network. That's not enough. It's still, you need to be able to synchronize all this, manage it. What we also provide as well is we provide synchronization management software to make sure that all of this works well throughout the entire network. We're the leader in the industry in terms of the Synchronous Ethernet or IEEE 1588 protocols to be able to do this. Our system-level clocks are the standard with inside the industry. If you look around, the world creates a world time that we refer to as UTC. 90% of the contributions to the world time comes off of Microchip clocks. You know, one of the things, if you ever, you know, less and less people are wearing watches every day, and so when people need to look what time it is, they just tap their phone. You wonder what happens when you tap the phone. Well, again, there's your mobile phone there. It goes to the radio head, and it goes back to a time provider or a sync server. Chances are, it's touching that Microchip timing system that's delivering the time to your mobile device. That's kind of at the system level. Now, breaking it down and looking a little bit more in terms of the semiconductor opportunity, you'll see here that we see a very, very healthy growth, more than 40% growth opportunity for Microchip semiconductors in the 5G market. A lot of these products have been added the last few years that have come in from some of our more recent acquisitions, and we are poised for a very large growth in this area. As Rich also told you about TSS before, you know, inside of every one of these pieces of network equipment is an opportunity for many, many different types of Microchip solutions that we provide within that. Of course, the timing solutions that we talked about, either the systems or we provide the timing silicon, but it could be the power, digital power, analog power, Power over Ethernet. The security aspect that Pete talked about as well, we have to make sure that go into these critical networks. The network connectivity inside and then the processing with it through the network, for example, our FPGAs or some of our other microprocessors. Here's an example of Pete referenced this earlier. This is OTN, Optical Transport Network reference for a 100- gig opportunity. At the kind of the center of it, you'll see our DIGI OTN processor. Then surrounding that is Ethernet switches, FPGAs doing different works, clocks, temp sensors, analog to sense the power, and again, you know, a secure boot microcontroller in there to make sure that the system doesn't get compromised, and hot-swap controllers. This is one piece of equipment within that network, and we're doing this multiple times in the various stages of the network. Here's an example of another piece of equipment that's kind of a building block inside of the telecom networks. This is an SFP module, a small form-factor pluggable module. You can see next to it that's an Ethernet cable. You get to see the size of this type of thing. It's very small. It's compact. It's in there. There's no opportunity for... It's space- constrained, and it's very thermally constrained as well. For example, our FPGAs are used in this type of application because to do the same load, our low-power FPGAs consume about half the power of our leading competitors. Where we can live in this environment and within the thermal envelope, our competitors can't because they'll overheat, and they won't work. Within telecom networks, we offer, and this is not something you really know Microchip for, but we have the broadest range of timing solutions in the industry, starting with the network synchronization we talked about, MEMS-based oscillators, clock generators, jitter attenuators. In the timing system side, I kind of showed you the box, which we'll call the time providers, the grandmasters there, or the time servers. We're also a leading provider of the atomic clocks, the workhorse cesium atomic clocks, rubidium atomic clocks. We're the pioneer in making a chip-scale atomic clock, which is a very small one, can find its way in a lot of areas where you can't put in another atomic clock. Then, on the bottom right-hand side, you see there it's a new class where we've been innovating and some new leadership products. All these networks, whether it's a 5G network or it could be a financial system, data centers, they all depend on one of the sources of time comes from the GPS constellation. That GPS constellation has grown more and more under attack by hackers and other people trying to disrupt it. If they were to be able to disrupt that time, they could bring down the 5G network. They could take down the financial systems. They could stop transportation. That product that you see there with the BlueSky Technology, this is a new system level product again, where what we do is we can install this into a service provider, and it 24/7 is looking at the GPS signals. We can tell when those signals have been disrupted. We can notify the network administrators, and then we can also provide a known good signal until the attack has been resolved. With that, you know, 5G represents a 10x change over 4G. It's driving a large opportunity for us at the system level, as well as more than a 40% compound annual growth rate opportunity for Microchip. You know, our innovative and market-leading products in timing really provide the heartbeat for the 5G networks. Thank you very much. Okay. Good afternoon. My name is Joe Krawczyk. I'm the Vice President of Worldwide Client Engagement, based out of our headquarters in Chandler, Arizona. I have two topics that I get to discuss with you today. First is how we are growing a broad and diverse customer base, and second, the foundation of diverse and sustainable revenue on which we're building. Our growth comes from a broad and diverse customer base. We grow by supporting our customer designs using Microchip products in their designs that ultimately lead to revenue. It's already been mentioned that we have over 120,000 customers. Now, to scale design support to 120,000 customers is a challenge, so we deploy different resource depending upon the customer. The pyramid is a simple view of how we resource revenue creation. The tip or the top of the pyramid is currently supported by our Microchip direct resource of roughly 7,000 clients that we call on directly. The middle tier represents about 25,000 middle-sized customers today that we support with our distributor partners and our independent sales representatives. Finally, the lower tier today is roughly 90,000 mass market broad customers that we serve with our web-based self-sufficiency solutions. Collectively, 2/3 of our revenue is created in that upper tier by our Microchip team, and the other third of our revenue is created by our partners in our self-sufficiency solutions in the lower two tiers. For clarity, right now I'm speaking to the creation of revenue. This is not the fulfillment side of where it's purchased, but this is the creation side. For as long as I've been at Microchip, we engage at every level. Over time, we've had great success nurturing small customers into mid-sized customers and mid-sized customers into large customers. Going to the upper tier, as I mentioned, our highest value clients are supported by our Microchip resource. To set our resources and our course, we first align with our Microchip business units and our technology offering. From there, we deploy our resources to the highest value customers and our mega trend growth. We don't really view our team as salespeople. We view ourselves as client engagement managers, facilitators. As we're approaching our 7,000 focused customers, we are facilitating even greater resources of field applications engineers, engineering specialists, and our customer service professionals, all in support of our clients. We believe we are the most collaborative and productive sales force in the industry. We do that because we have great processes and great systems, but we're greatly enhanced by our non-commission culture. Speaking to our composition and compensation and how that helps us. You know, today, customers don't necessarily design in one location. It's very common for our customers to design in multiple locations. For example, maybe the architecture of a system would be done in Austin, Texas, the hardware design would be done in Taiwan, software in India, and then it would be manufactured in a low-cost region, maybe China or Southeast Asia. To service that kind of client in the world we live in, with many of those customers you see on the right of the screen there, it requires a total team effort and total transparency among the team to best service our client. When you're in a non-commission type model, you usually don't have as much transparency. We certainly don't spend any human capital sitting trying to rationalize who deserves more in the equation. Was it the guy that supported the architecture? Was it the guy that supported the hardware design? It's a total team effort and maximum collaboration. Our compensation is just like many. We are paid on corporate recognition, how the corporation performs, the same way, we work in the best interests of Microchip and such in the best interests of our shareholders. Nearly every global household name uses Microchip products. Moving to that second tier, again, speaking to revenue creation, we multiply results through our distributor partners and our third-party sales representatives. We support three distributor models, unique in their own way. Our global distributors, of course, have a global footprint, a very wide line card, includes our competition, by the way. Their strengths are logistics, deep inventory, finance and global support. Our regional distributors, which number about 110 worldwide, mostly in Asia, to a lesser extent in Europe, not so much in America. Their strengths are demand creation. Demand creation is something that all our distributors do with some degree. What makes them unique and why they're so focused on it is that's how they differentiate themselves from the globals. They're not as successful in the logistics. They don't have the finance. The successful regionals succeed through that approach. They're also better at delivering total system solutions because they have a smaller line card, which means they're populating their systems with Microchip products, whereas a broad-based distributor with multiple lines has many masters. Some of them are very specialized. Some of these guys are very good at doing touch control designs turnkey, just as good as some of our applications engineers. Of course, they're regionally based, and some of our clients just prefer to work with a local regional partner, somebody they're more comfortable with, and speaks the same language. The third model that we deploy is our catalog distributors, or the e-commerce specialists. That is their strength. The catalog distributors are favored greatly by a lot of the engineering community when they're doing their designs. They have the widest inventory mix, not the deepest, but the widest. They always seem to have the products that the engineers need to get their designs done in a hurry. Finally, our independent sales reps are our third-party companies. They have a very limited line card. They're predominant in America and Europe. Their strengths is demand creation and they have local business. Collectively, these partners are driving growth at approximately 25,000 mid-sized customers for us, that we don't cover with our direct resource, although these customers do take advantage of our self-sufficiency solutions that I'll speak to next. Today, Microchip is delivering a high degree of customer self-sufficiency to roughly 90,000 mass market customers, as well as larger customers who prefer to use the same solutions. We do this by providing a client-friendly ecosystem, hosted from our website, right from our website. Our ecosystem enables everything from customer acquisition or discovery, through the entire design phase and ultimately order fulfillment. Some of the elements, I'll just roughly, including but not limited to, are solutions and applications. That's all the application notes. This is things oriented toward what the client does, not so much our product. Our product, of course, is used in the applications, but it's how to spin the motor, it's how to convert the power. It's complete with the diagrams, the schematics, the design files, and the demos, all making it easier for our customers to do their job. Our tools and software, that's all the development tools. It's all embedded in the same MPLAB ecosystem. That's what customers use to write our code and develop with our products so they can deliver their products. Education, we serve up a comprehensive education line. Thousands of customers come to us for learning. The primary models that we use or platform is, we call it Microchip University. We also do live stream broadcast, webinars and then we also utilize third-party media such as YouTube videos and the like. Our design support resources include customer applications engineers, which are centralized groups of engineering Microchip employees strategically placed around the globe offering 24/7 service to our customers. They provide a knowledge library that services a long-tail client, but they also speak virtually to our customers when necessary. Our design support also includes developer help. We have design check services. We actually bring in customers' designs, check their designs and report how those do, whether it be EMI issues or something like that. Finally, another service we offer is forums. We sponsor these forums. These are crowdsourced type models where there's a whole community of customers. They all join the forums, and it's a very effective model for us where customers are actually helping us to solve each other's problems and designs. I want to add on the design support side. We also provide access to over 1,600 independent design partners. Microchip has agreements and partnership with over 1,600 independent design companies across the globe that help that work with us and then with our customers to do turnkey designs between them and the client. Of course, products. You know, we want to make it easy for our customers to find and use our products, and we do that very well. Then finally, when it comes time to buy, we provide the industry's best e-commerce purchasing website. Over the last year, we will deliver products to over 30,000 customers that come directly to Microchip website to buy. That's spanning 63 countries, 11 local languages. We support all the major payment options, the most popular payment options for all our clients. Finally, I'd like to just add on this is that, you know, I wish we could say we designed this for COVID, but this was. We just absolutely thrived when COVID hit. This model was excellent for our clients. We never missed a beat. The learning went on, the development went on. It was a wonderful tool and it really helped our clients in a time of crisis and significant change. Now let me shift gears a little bit. Now I'm gonna talk about the foundation of our diverse revenue and what we're building. Our revenue fulfillment is 55% Asia. That's because you know, China and Southeast Asia are still very attractive low-cost manufacturing regions. So that's where things are purchased. If you look on the right-hand side where the revenue is created, that's a different model. Our revenue is created pretty balanced, with Americas being the top 37%, Asia's 37%, Asia's a very big place, and then Europe at 25%. Our sales channel, you know, we're channel agnostic. We give our customers choice. We'll sell direct or they choose distributors, and you couldn't be more diversified there. We're 50/50. If you look at our distribution revenue and how it's split, our customers choose to buy 61% from our regional distributors, 35% from our global distributors, and then 4% from our catalog or e-commerce distributors. Forgive me for being redundant. Ganesh shared this slide with you, but this is a big part of our diversity story. We're very diverse in our market segments, thousands of applications. You know, we're building on a foundation that is sustainable. It's already been mentioned that we've served over 120,000 customers. There's no client that's greater than 3% of our total revenue, which further enhances our diversity. By design, we make it easy for customers to stay with us. We have a very strong, established proprietary product footprint and just a continuous flow of new products, and we just make it easy for customers to stay with us, reuse their previous engineering investments with Microchip. Of course, I mentioned that we're supporting all three levels. You know, we care about small customers because they grow as well as the larger clients. We're well-aligned with the mega trend growth. That's how we deploy and allocate resource. Then we deliver total system solutions. You know, the increased footprint, as Rich was speaking to, it just deepens the customer relationship. It further strengthens our foundation. It's a mutual dependency type of relationship. Customers depend more on us when they buy more product for their system. We depend more on them when they buy more product from their system. You know, win-win is an overused word, but in this particular case, it's actually true, and it just makes us stronger and make us longer lasting and more defensible at our clients. We're winning. You know, this year we're our design wins are up double digits. Our design win dollars are up over last year, and they're up double-digit percentages, and the same thing occurred last year. In conclusion, you know, we are continuously growing a broad and diverse customer base, and we're doing so on a very strong foundation of diverse and sustainable revenue. Thank you. Okay, we're at the point where we're gonna take another break. The time provider is telling me it's 3:18 P.M., so I suggest we come back by 3:30 P.M. and restart from there. We'll go now into how do we enable these different activities with the next set of what we do in our manufacturing and some of our foundational elements. Thank you about what we're doing with respect to the products and technologies and markets and all of that. Now we gotta make sure we can build it all, and that we have a solid foundation on which we're gonna do it. We're gonna start with Mathew leading off the operations, and I'll let him introduce himself. Good afternoon. I'm gonna be discussing with you about how manufacturing enables the growth strategy for Microchip. Microchip's manufacturing teams are split up into two different areas, the front end and the back end. The front end deals with the wafer, the wafer manufacturer, and Mike Finley is responsible for the front-end operations. Mike has worked at Microchip for 31 years, and for the past seven years, he's been responsible for all of our internal and external wafer fab manufacturing. My name is Matthew Bunker, and I'm responsible for what we affectionately call the back end. That includes wafer test, assembly test, the warehouse, and all the planning functions. I've been at Microchip for 30 years, starting as an intern before I graduated from college and spent 13 of those 30 years living in Thailand, leading our manufacturing and supplier activities in Asia. Microchip's manufacturing capabilities are a key part of the total system solution package that Microchip offers and we believe is a valuable advantage to both Microchip, our employees, our suppliers, and our investors. For the next few minutes, I'll share with you our manufacturing strategy to enable growth. It starts with having strategic relationships with our suppliers, employing the right mix of internal and external manufacturing, investing in internal capacity so that we have on products that have a long lifetime, investing in inventory on those products. Of course, it also means being a responsible steward of the environment as we grow, both at our internal factories as well as our external suppliers, and being positioned to be able to meet Microchip's growth targets that Steve Sanghi shared with you this morning. The manufacture of Microchip's products requires thousands of suppliers spread around the world. It starts with the purchase of raw silicon wafers that are then processed in wafer fabs or wafer factories. Each of these wafers goes through hundreds of steps that can take anywhere from a few weeks to a few months, depending on the complexity of the product that we've designed in our manufacturing. Once the wafer is made, then we transform it into a package that customers can easily design into their products during the assembly and test process. We sell these packaged integrated circuits to customers so that they can create their products that change the world. Today, we produce about 8 billion units every year, which is enough to supply one to every person that's alive today. In addition to making integrated circuits, a growing portion of our business is also making systems or end products. These end products or customers are products that customers can buy from Microchip and immediately start using. In fact, it's building in the total system solutions that we've been talking about before, where we can design products that have all of the Microchip content in on those products and gives us total control of that. Today, you saw some of those innovative products in both Patrick Johnson's presentations and Pete Hazen's presentations. These products range from the smart RAID cards that go into data centers to the atomic clocks that are refrigerator-sized that power the UTC time signal that Patrick mentioned. One of the guiding values that we live and breathe every day is that suppliers are our partners, and we believe that supplier factories are an integrated part of Microchip and part of our internal manufacturing footprint. We see them as extensions of our factories and strive to develop mutually beneficial relationships with them. This is especially critical right now in the constrained supply chain environment that we have that is going on at the moment. We believe that these partnerships will continue to be essential for our growth. Another part of our total system solution is the internal manufacturing process. Microchip has 20 internal manufacturing locations spread around the world. Three of them are high-volume wafer fabs that are led by Mike Finley and his team. They are busy continuing to expand and invest in additional capacity to keep up with the customer demand. We also have three high-volume assembly and test factories, and we continue to invest in the latest high throughput, high volume, and high-quality equipment to expand those areas, and those are located in Asia. We also have 14 specialty factories spread around the world. In one of them, we make the atomic clock that I mentioned before, and another one, we make the chip-scale atomic clock that Patrick talked about, where you can fit several in your hand, and they provide an atomic clock that provides positional awareness that users can use when they are away from a GPS signal, and they can continue to have an atomic clock go with them when they're out of range and still know where they are and provide positional awareness. In another factory, we provide miniaturized microelectronic boards that provide the wireless signals that go into implantable medical devices. In one case, in that factory, they used to build a part, a miniaturized camera that would... You could swallow and help the doctors diagnose what ails you. We also have one of the largest high-reliability test centers in the world that allow us to screen parts for the aerospace and defense industry and provide them with the exacting quality that they require. As I mentioned about all the different guiding values that we have, another guiding value is that products and technology are our foundation. As we invest in new products and processes, we understand that each of these innovative ideas requires an investment of time, of ideas, and money. When we wanna make those investments, we wanna make sure that those investments last a long time. This chart that I'm showing you shows an example of one of our... Of the 20-year revenue trend for a typical microcontroller process that powers some of the edge devices, edge compute devices or Int ernet of Things products that Steve Drehobl shared with you earlier. As you can see, having a very long lifetime for these processes and these products gives us several advantages. The first is when you develop those processes and products, they provide a long stream of revenue for many years into the future. Because of this long life, we can continue to make ongoing investments in those processes rather than chasing the latest high volume short-lived products that fill some of today's consumer products that require the latest bleeding-edge technology. We consciously design products that will pay dividends for decades. We make ongoing investments in these technologies so that we can improve yields, expand capacity. As we grow, we're often able to use used equipment that frees up from, as other manufacturers move on to the next generation. These ongoing investments also enable us to allow our customers to decide when they wanna stop using our parts. One of the challenges that many are facing in today's constrained supply chain is many suppliers will immediately say, "I don't have enough capacity for everything, so I'm gonna focus on this product." Quickly get; q uickly send out an end of life notice, and customers have to then spend their valuable new product design resources to redesign existing products that they released many years earlier. With Microchip, when we have these long product and process life cycles, we let customers decide when they wanna stop using parts instead of having Microchip dictate that for them. Our industrial and automotive suppliers really value that policy. What is the right balance of internal and external manufacturing? It's changed over the years as Microchip has grown. As you've seen, I think Steve Sanghi, Ganesh, and Eric introduced to us Microchip 3.0. Internally, Microchip is on Microchip 20.0, as we have worked very hard with the last 20 acquisitions to integrate them into one company. We integrate, we take the best parts of the old Microchip and the old acquired company and try and get rid of the bad parts and create a new Microchip that combines the best of both. As part of that, typically, these acquired companies often have a large percentage of external manufacturing. As part of the integration synergies, we have searched for and have been able to find many projects that have a good payback for investing in transferring those parts and that manufacturing inside. These projects have kept us very busy over the past few years. You can see that with regards to wafers, two years ago, when we acquired Microsemi, about 57% of the wafers were manufactured or were sourced from external foundries. That has over the past two years, the external portion has increased to 61%. With all of the work that Mike Finley's team is doing in investing in new capacity for our internal wafer fabs, and in addition, as the environment grows, we're also working with our foundry partners. We believe that over the next five years, the split will be more like 55% outside and 45% inside. Two years ago, you can see that our assembly, the portion that was assembled externally was 62%. Over the past two years, we've flipped that, where now 59% of our assembly is completed inside, and 59% is completed inside, and we have plans in place to continue to expand that to over 70% over the next several years. On the final test side, there's more opportunities, and you can see that two years ago, we were about 50/50 external and internal. Now we're about 63% inside, and over the coming five years, plan to be at 80% inside. Our ability to invest in the right internal technologies allows us to continue to grow revenue, reduce costs, and increase the gross margins, as well as give us more control over our own destiny as we're able to control and have the capabilities to expand the manufacturing. As many manufacturers in today's environment are often at the mercy of their suppliers who are allocating capacity, and Microchip has the ability to provide that internally. As this slide demonstrates, Microchip has many tools in our process or technology toolbox, and we always want to choose the right tool for the right job and for the right product. You can see that some products require the most advanced wafer fab and assembly process technologies, and with those, we partner with the world's leading suppliers in order to provide those leading, innovative and leading-edge products. Many of the megatrend products that you learned about earlier, like supporting 5G, supporting the data center, supporting artificial intelligence, all require these advanced technologies, and we will continue to push the limit of the process technologies. However, some products are most cost effective using trailing-edge technologies. In those cases, we combine a mix of internal and external manufacturing. Some of these are at the foundries, while others are inside. Over time, as markets increase or change and as customer demand patterns change, we continue to watch that, and you can see those arrows continue to drive towards more innovation and higher technology as we go over time. We constantly review the volumes and the costs and the investments required as well as the payback, and over time, if there's a good return on an investment, we will choose to internalize the manufacturing processes. We have and we will continue to develop many of those processes. On the other side, if it's more cost effective to do it externally, we're not afraid to transfer some of those activities externally so that we can redeploy the internal resources in order to redeploy our internal resources. I can't stress enough through this process the importance of suppliers, both from the manufacturing side as well as providing raw materials and the equipment. It's we have to have them. Microchip grows and even as we grow internally, we'll also be growing externally as well. Another advantage of having long life products that are in durable end markets with 120,000 customers, right now we don't have a problem with enough customers. We have lots of customers. In the future, there could be times when one customer may go away. With 120,000 customers and lots of different end markets, when one customer goes away, there's another customer, there's several other customers lined up behind it. If one industry or industry segment goes down, there's another industry segment that's booming. With these durable end markets, it does make sense to increase our inventory positions. I can vouch from personal experience that our customers right now wish we had a lot more inventory available to help them through the struggles they're facing. In order to do this, we are increasing our inventory targets from 115 to 120 days to 130 to 150 days. This does several things. It will enhance our ability to serve customers. It also enables us more effective use of the capital investments that we make, rather than investing in enough equipment for peak capacity, we can support just-in-time demands. We can keep the equipment utilized during the troughs so that we can also have just-in-case inventory and quickly respond to our customers' ever-changing forecasts. This increase will occur gradually over the coming quarters and years as we are able to add capacity, and we believe that this will result in happier customers, happier employees that remain busy, happier suppliers, and also happier investors. Embedded into our culture are the values that safety and security are never compromised and professional ethics are practiced. I have witnessed this commitment over the past 30 years of my career at Microchip. This commitment to our employees, this commitment to the local communities where we operate, and this commitment to the global community that we are a part of. We are committed to reducing the environmental impact of the operations that we have in reducing waste, in reducing the amount of water that is used, in reducing the energy consumption, in reducing greenhouse gas emissions. We also contribute to reducing the environmental impact by the products that we offer that enable our customers to design products that save energy and reduce the impact on the environment. I think you saw a very dramatic example of that in Patrick's presentation when he shared with you the small form factor of the small FPGA part that is half the power consumption of the competitors. When you spread that in data centers, the amount of data centers that these are installed into, that impact is measurable. Are we ready to support the growth of Microchip? Yes. We have strategic relationships with foundries, assembly and test subcontractors, and raw materials and equipment suppliers that will feed and allow our operations to grow. We carefully balance both internal and external manufacturing. As we mentioned, some products are most effective being external, and some products are most effective being internal. As we just like, as you measure the criteria for investing in something, we do the same thing as we're looking at these investment opportunities to find the right cost. Microchip's process technology requirements range from the most advanced state-of-the-art technology that's measured in a few microns to support the data center product roadmap, and everything in between, all the way up to products that are measured in a few nanometers, all the way up to products that are measured in a few microns. Everything in between is where the product technologies that we're involved with, and often it makes incredible business sense to invest in some of those process technologies to be able to gain control of our own destiny. These long product and process products that we have allow us to invest in inventory so that we can also have just-in-case inventory to be able to quickly respond to changes in market demands and allow us to capture that revenue. We are committed to reduce the impact on the environment, and with the capabilities that we have and the capabilities that we plan on installing, we will be able to support Microchip's growth. Appreciate the time with you this afternoon. Okay, we're coming onto the home stretch here. Before we get to the end, there's two foundational elements that support all that you heard today. I wanna go through what are we doing from a sustainability standpoint and what are we doing from a culture standpoint. Sustainability is increasingly important to all of our stakeholders. It's a topic of conversation. Now, it has always been a key part of our culture. As Mathew showed you, there's actions we've been doing for years. We didn't talk about it in the terms of sustainability. We talked about it, the things we needed to do to perform better, to have better results, to take care of the environment, and to be a good partner in the communities that we're in. When we think of sustainability, you know, this is not about compliance. There's a lot of wording and a lot of discussion about how are you compliant to certain things. Sustainability is fundamentally about being responsible as a business to the places that we operate in, and it's fundamentally about competitive advantage and building competitive advantage using sustainability as a guiding principle. What are the elements for us of sustainability? First is, you know, we look at it as how do you embed value generation into the business? How do you make it just part and parcel of how you do business? Not as something you do outside of the business. It's part of our DNA. It's part of our values. It's part of our operating practices. That's the first step in how we think about this. Second, it incorporates all the elements of environmental, social, governance considerations that are important for business decisions and how we go about making those decisions. To give it a framework, we're going to adopt, and we have adopted, the SASB, which is the Sustainability Accounting Standards Board, and that will now drive how do we plan our actions as well as how do we measure our actions, with the environmental actions focused on what Matthew talked about, which is how do we reduce the consumption of water, consumption of energy, the reduction of emissions, as well as the reduction of waste that we generate. The social actions will focus on diversity, equity, inclusion. I'll talk about that when we talk about our culture, which are also fundamentally you know, part and parcel of how we run our culture. The total system solutions you've been hearing about from multiple players today really enable a multiplier effect from our customers who are using our technologies to be able to drive reduction in their systems, reduction in energy, reduction in greenhouse gases, reduction in water consumption, reduction in waste. All of that requires technology, and a lot of that uses the products that we make that are embedded into those technologies. Finally, there's a Responsible Business Alliance, RBA, and that'll become the way in which we measure ourselves, year in and year out, from an accountability standpoint. Today, we wanna target Microchip to be a net zero emissions company by 2040. It is a big goal. It doesn't have all the steps for it lined up on it, but it's certainly one that we wanna use as our North Star. It's what gives us the beacon in which to plan our activities, work towards where we wanna go, and start to head in a direction that gets us continuously working in that direction. We think it's important, not only for the business, but also for our stakeholders to be able to make that commitment, and then be able to drive towards those targets, as well. As I mentioned, all of this is something we think is important, not just because it's the words, it's the buzzword, it's really part of how we wanna run the business and make it part and parcel of the business. The last part of the discussion today is about culture, and you might ask, you know, why am I talking about culture? We feel passionately that culture is a key element of differentiation. It's the bedrock for Microchip that makes us who we are. The results you see over 30 years, yes, they've been products, they've been factories, they've been technologies, but really the results came from people and the culture that enables them, that unleashes them to do the results that you have seen. I wanna speak a little bit about what is this culture and what makes us different. Firstly, you know, many of us are engineers by training, and we think about systems. We think about how do pieces fit together so that the sum of the parts creates a whole that is bigger than the individual parts of it. Here's how we think about it. We think about, you know, what is the strategic formula? We talked about at the beginning of today's presentation, you know, what is the mission? What is the vision? What are the strategic objectives? How do those all come together? Then we overlay on it, what are the company's values? How do we imbue those values to our team so that they can understand the formula and be able to execute their part of whatever that is in an empowered culture? You know, we're not a rules-based culture, we're a values-based culture, and about the only place where we use policies and procedures are things which are about either legal or safety-related items. You know, we are light on those items. We're strong in terms of values, and we want people all over the world to be able to make good decisions because they have the right values. Then there are the practices, either the employees' practices, the management practices that they come about, and then the human systems, that is the glue that all ties it together, pieces, you know, how do we hire? How do we train? How do we develop? How do we promote? All of those have gotta come together. That's the aggregate system that we define in terms of how our culture manifests itself. Built into that also is things like diversity, inclusion, and we have the of the 11 guiding values, as we'll talk about, one of them is that people are our greatest strength, and it is a key part of how we make sure that we value that diversity. Wherever we are, we value that equity, we value that inclusion, because by living up the value of people are our greatest strength, we live up to these new areas from a social responsibility standpoint. I talked about this being an enduring competitive advantage. Joe Krawczyk talked about one of these items, which is a non-commissioned sales force, and it's just an element of our culture. We have many other ones as well, which is a strong and practiced guiding values. I'll show you some results of how we measure that on an annual basis. Again, we, as a company run by many engineers, we take our pride in being able to measure and continuously improve what we do. It's a company built on teamwork, rather than individual personas and what they may do. Shared rewards and shared sacrifices embodied by last year as we went into what was an uncertain down cycle, as we went into a company-wide pay reduction that was voluntarily agreed to by 99% of the company worldwide. You know, people now seeing the rewards of what we were able to do. It's not just words, it's really the actions of a collective group across the world that sees and buys in and practices these guidelines or these guiding values. Then a substantial investment in leadership development. As you can see from the speakers you had today, we take tremendous pride in taking from the youngest managers to the most experienced managers, and continuing to build from within so that every position has substantial succession planning, people development, well ahead of when we really need to be able to have that. Peter Drucker has a great saying, and he's the management guru for many of you, who I'm sure you know about. It says basically, "Culture eats strategy for breakfast." What he means is that, you know, if you have the culture right, strategy may not be perfect, but a good culture figures things out. The people within that figure things out. If you have it the reverse way, you have a problem with it, where you can have the greatest of strategies, but the poorest of cultures, and you don't really get the results that come with it. That's what we believe, is that culture is a critical part of how we deliver. Now, you've heard during the course of today some of the guiding values people have talked about. Matthew talked about suppliers are our partners. Talked about products and technology are our foundation. We talked about customers are our focus. Profits and growth provide for everything we do. You know, these are 11 guiding values that we run the company with. This is what we teach, reinforce, and what we do. Every company has them, by the way, so this is not, you know, rocket science in what we've done. What is different is we don't just put them up on a wall, and we don't just talk about it, we measure to it. We ask ourselves on a continuous basis, not what we say, but what do we actually practice. Let me show you a transverse look at culture over 30 years. This is data on the 11 guiding values. We measure this just about every year. I just show this every five years of the data. But you can see, pick one of them, so the leftmost is quality. Quality comes first. You can see 30 years ago, where were we? It was, you know, lower on the bars. You can see the progression over the time. You can see every single one of these is up and to the right over that time because we consciously built continuous improvement, learning from where we're at into every single one of them. In fact, I didn't bring it into today, but our Senior VP of HR just gave it to me over the weekend. We got 2021 results, and 2021 results are the highest ever. Every single one of these is better in 2021, all 11 guiding values, than what you're seeing here. That's what gives us the confidence, that's what gives us the ability when we do acquisitions, when we hire people, when we grow as a company, is we know the culture is strong. We know that people will figure things out because they're at the heart of what we do. Don't take our word for it, right? We get external validation. We don't go seek these things. These come to us as people go out and survey different sites that we're in. Here's recognition awards that come in from different locations around the world, different sites. Just yesterday I learned from our head in Thailand, we just won the environmental award from the President of Thailand, as an example. Again, something that is built in to our culture, built in to our guiding values. These are [inaudible] awards in New York, there's awards in Arizona, there's awards in San Jose. They're built in every different place from where we're at. That's the best validation for us is when the outside world recognizes it. Internally, we know it, we live it, we breathe it, we love it in terms of what we do. I talked about culture outperforming strategy, and clearly that's true. When you have a combination of not only having a strong culture that can outperform, but you also have the strategy that is unbeatable, and I hope what you're seeing today is elements of those strategy as we outlined. What are we doing from a business growth standpoint? How are we applying it from a financial standpoint? What are we doing from a manufacturing standpoint? All of those elements now begin to complement a strong culture, so that culture and strategy is where we think we can bring to the fore in our business. To summarize, we've had a wonderful run for, you know, 10+ years on Microchip 2.0. Prior to that, for many years, 10, 15 years, we had Microchip 1.0. At every one of those periods, you know, we built more, better, for the future and how the company was built up. In that journey, we're on the next part of that journey, which is Microchip 3.0. It takes the best from the history, continues to build on those, but adds new elements to it. I won't go through every one of these blocks, but you will see here different elements that make the business better. Makes the business better in terms of our innovation and products, in terms of our manufacturing, our investments, our return of capital, any dimension you wanna pick in the aggregate for the enterprise. Microchip 3.0 has an improvement element of where do we wanna go next. That's the next part of the journey of where we're going. If you wanna get numerical about it, we can get precisely into, you know, where, from where we are to where we're trying to go on any metric, revenue, gross margin, operating margin, EBITDA, free cash flow, investments we're making in CapEx, in inventory that we have. All of these are important metrics from where we are to where we wanna go that we think generates a set of results. A set of results that I hope you will see is a virtuous cycle of growth, a virtuous cycle of more profits, an ability from that to invest in future growth, and an ability to return more capital to our shareholders to enable us to do all of that. If I were to summarize, and if I can leave you with three things, this is the Microchip winning formula. Part one is to grow organically at 2x the industry growth rate while improving gross and operating margins, so growth with increased profitability. Part two is to generate significant cash and be able to increase the capital return to shareholders going from where we are to the first stage, as Steve described, but getting to 50% of free cash flow to a stage as we get our leverage down to 100% of our free cash flow back to our shareholders. Part three is to do it the right way, do it in a foundation of sustainability, do it in a foundation of a strong culture. In every way, this management team believes our best is still ahead of us, and we want you on that journey with us. Thank you, I hope what you'll take away from this is not only can we empower innovation, which is the purpose that we are here for, but that we can do it by delivering stakeholder results in all the different dimensions that stakeholders care about. On that note, I'd like to invite Steve and Eric to the podium. We'll take questions from you in a minute. Sajid's gonna be running interference on how we get questions to folks. Before I do that, I'd also like to introduce some of the management members that you didn't get a chance to meet. Lauren, would you stand up, please? Lauren is our Senior Vice President of Human Resources. She'll be here if we need any questions and help. We have Mike Finley. Mike, did you stand before? Okay. He's our Senior Vice President of our front-end fab operations. Next to him is Mitch Obolsky, who runs our networking and data center businesses, the Senior VP for that. All the way at the end is Sumit Mitra. He's the Senior VP of all of our 32-bit microcontrollers, microprocessors, wireless, all the fun stuff that we have going on. We got a lot of people here to help with some of the questions, but we're open to your questions at this point in time. All right. Should I start? Yeah. Okay. Hi, it's Chris Caso from Raymond James. Thanks for that. The first question is about the intention for the execution of the buyback program when you put it in place. And really kind of a two-part question. I'll ask the first part first. In terms of the timing of it, is the intention to time the buybacks consistent with cash flow? In other words, you know, you generate the free cash flow, you buy back the stock. Because, you know, the nature of the question is, during a cyclical downturn, cash flow starts coming down, it's often a good time to buy the stock, so I don't know what sort of flexibility you build into the program. No, it's. We've thought about that, and maybe Steve can answer this question. The way we're thinking is, you know, start with the total free cash flow of the quarter, like the example I took of $550 million, and we begin with half of it, which is $275 million. Take out the dividend for that quarter. Let's say it's $115 million. That leaves $160 million. We're gonna essentially buy that within the quarter. We can only buy during open windows, although internally, we're talking about putting a 10b5-1 plan together, so we can buy all through the quarter. But without the 10b5-1 plan, we can only buy it within the open windows, which is usually two days after earnings announcement, going all the way to about the 20th day of the last month. We're gonna buy it all through. Now, if stock gets into a you know downward pull for any reason, a cycle or whatever, and we see a substantial opportunity, then Microchip can always. We have a large credit line, and for one quarter, you know, the leverage can go up by 0.1 or something like that because leverage would still be dropping from 3 towards 1.5. We can do a large buyback opportunistically and then either not do that for a quarter or two or do a smaller amount to even it out. In general, on an ongoing basis every quarter, we're gonna spend the buyback dollars for the amount which is target minus the dividend. That's clear. Thanks. Just to follow up with a similar question with respect to the dividend, and you talked about growing the dividend at about a 7% rate until you get to 50% rate. My assumption is that it is irrespective of where the cash flow is such that you'll you know as even if you know there's a couple of soft patch or whatever, that you would still increase the dividend at that point. Then once you get to 50%, I would presume that even if the cash flow were to drop for a couple of quarters, that dividend would kind of stay where it was and pop over 50% for a period of time until the cash flow caught up with that. Is that the correct assumption? The dividend has never been cut before, and we don't see that the dividend should ever be cut. If we get into a downdraft and the cash flow is lower, then we will not cut the dividend. What we'll compress that quarter will be the stock buyback. Right. Yeah. Agreed. Thank you. Okay. I think I'll point out the words too in that slide that it said on dividend, at least 7%. It gives the board flexibility to analyze it every quarter based on where free cash flow is, where debt levels are. Mark. Hi. Thanks for the really informative presentations. Ganesh, I really enjoyed the section about culture. I don't think we've heard a lot about that from a lot of other companies, and I think it's really important when you talk about the great performance you guys have had. The question, and maybe this is for Ganesh and Steve. Given what's happened over the last 18 months or so with the supply chain challenges, has this changed how you are structurally doing business with your customers or with your supply chain? I can see by the manufacturing presentation you're taking more stuff back internally. I'm wondering if that is part of or an artifact of what has happened over the last 18 months. I guess one way to think about this is if we have another black swan event. You know, seems like we're having black swan events often over the last 20 years or so. If we have another black swan event, are we gonna be in the same situation as we have been in the last 18 months, or are you guys positioned to? Are you doing something structurally different that positions you to, you know, accelerate above the rest of the market? Thank you. You know, the internalization had nothing to do with the last 18 months. It's been an ongoing process. Every acquisition we did brought significant external manufacturing and brought the percentages down. If you go back 10 years ago, our percentage in-house used to be closer to where it is within the last quarter or so. But we have over time made those investments. It's been part of our gross margin improvement. What you have seen us getting up to the 65% gross margin had a component of it, which is the internalization and the improvements that came with it. In that sense, I don't see this as something just done because of what the last 18 months have been. It's been directionally where we wanted to go. As Matthew showed, there's still work to be done. There's more to be had. There's more. It has heightened for us that there are risks in the supply chain that we need to mitigate as well in an environment like now, where there's significant disconnect between supply and demand. Having that control has given us better. In fact, over the last year, having internal capacity has greatly helped us to be able to ship more than if we had been entirely dependent on external capacity. Our partners are important. They're key parts of our you know engagement. We also recognize that sometimes our aspirations and their aspirations may not align, and in those cases then we need to make some of those decisions, which is why some of the CapEx decisions we've made, et cetera, are the structural changes for us in terms of where we wanna go going forward. Hey, guys. Over here. Gary Mobley, Wells Fargo Securities. First of all, thanks to everybody who helped put this event on. It's very helpful for all of us. I wanted to ask about the different bridge scenarios gross margins. So if I look at your most recent quarter and what you guys have been disclosing in just the past few quarters, bridging gross margin from last year to this year, there seems to be about half of that bridge explained by zero cost inventory. Part of it's explained by a bump up in licensing revenue. So the reason I'm asking about this is about the sustainability of that tailwind as you bridge that extra 200 basis points to your gross margin goal. Related to that next phase of the bridge, what sort of revenue threshold are you looking for, or is it more a function of time? Thank you. Let me let Eric get started on this, and I may jump in at the end. Okay. You know, we don't have a revenue threshold aligned to that gross margin target that we laid out today. The sell-through of previously written off inventory, you know, we always have that in our business. In the current environment, you know, customers are looking for potential solutions to their problems of getting product, right? They become innovative and find an alternate product that we built some time ago and wrote off for accounting purposes, you know, held onto that inventory 'cause we knew it would sell eventually, and taking advantage of that and doing some redesign work to make it happen for them. That always happens in our business. It's been a little bit more over the last year or so. The other piece that's really helped gross margin over the last year is also the elimination of underutilization charges, which you didn't mention, and that was a material factor in it. We don't see that sell-through of previously written off inventory as a headwind to us. We continue to have improvements that are coming in manufacturing. Matthew talked about that in his presentation, and that gives us confidence that we can get to the new model. You know, the scale of how internalization percentages have changed over the last two years are giving you a sense of kinda how that has helped, not only from the underutilization, but also in terms of ongoing scale from the factories we have and how much more we're able to make from those factories. There's another element of it, which is also our product mix. You know, we have richened the mix in this period of time, as we have both had success in some of the products that were described in the product development sections today, and pricing, and having the discipline on pricing, which we started many years ago and have continued to implement in all parts of our business. You know, gross margin has all the elements of both the cost side of things, but also the pricing side of things and the discipline to be able to, you know, run the business. You know, I think if I look a little longer term, maybe go back, you know, a decade, you know, from the skeptics on your side, I have heard all sorts of, you know, objections on why gross margin is sustainable or gross margin could increase or the operating margin is sustainable. You know, I recall, you know, we had raised prices on Atmel business and some people felt that that wasn't sustainable. We'll lose a lot of market share and customers will go away. When we bought SMSC, I heard that we're gonna have to add a lot of operating expenses to manage the business, which is now horizontal as well as vertical, and how would we do that? As we bought some of the analog companies, I heard, you know, we were a microcontroller company, a digital company, how would we manage that? You know, skeptics have always been there, but if you take a gross margin chart and plot it out for the next 10 years, you'll constantly see along the business cycles, you know, higher highs and higher lows. In every company we bought, we brought it to our operating margin target. For the combined company, we took it higher. We gave you a new target. We met it earlier than you thought we could, then we raised it again, then we met it again and beat it again and raised it again. you know, I'm hearing a skeptical question again, which, you know, which is what you do, which is fine. I'm just saying that, if anything, we have been very conservative. I think the culture in guiding the street and doing the numbers has been very conservative over time. What we have talked about today is in similar ways. If I can add to it, I think, you know, this is where culture is super important as well, right? Margin is about a mindset. This isn't something you just go in and say, "All right, how do I make it happen on a spreadsheet?" It is a mindset across the company, and you can take 10 years, 15 years, 20 years of history and look at what we've done. Didn't happen by accident. It happened because it was a mindset. It happened because it was a culture to figure out how to get it done. [John] Hi, guys. Oh. Chris Rolland, Susquehanna. Thank you for hosting the day, and it's very good to see you guys in person. You know, you talked about this with Microchip 3.0. It's almost as if some of the biggest guys in analog are moving to platforms. That's really kind of where I think Microchip has gone over the past few years as well. Kind of implicit in that is this economies of scale that has to kind of accompany being a platform company as well. We talked a little bit about manufacturing. I guess first of all, you know, what about larger internal front end, even you're now at the revenue where you could even consider a 300 mm. I know that's not your style, but you could. On the other end, in terms of economies of scale, M&A has been so crucial for the past few years for you guys, and you've done a wonderful job with Microsemi and a wonderful job with Atmel. Why kind of this resistance going forward to M&A since it's been such a kinda core part of your company over the past half decade? Let me take, you had two questions on it. One is, what about more advanced factory investments? You know, that might be something in our future. We haven't really. It's not a focus for us today. There's a fair amount of internal expansion that we can do and are doing, and we wanna take advantage of some of that. You know, at some point in the future, is it a 12-inch fab in our future? You know, we don't know. When we get to the right point, we'll make that decision on it. On the acquisition front, I'll give you my view, and then Steve may wanna add his as well. You know, the acquisitions when we made them met an internal set of metrics that are pretty tough for what we wanted to do. That's why you saw the results that came from those acquisitions in terms of how much accretion we were able to get, how much gross and operating margin improvements we were able to make. You know, our DNA doesn't allow us to overpay for an acquisition and then hope that somehow it'll get made up on revenue or made up on something else on it. We don't see a compelling need that there's a missing element in our portfolio, nor do we see a compelling value proposition in any of the acquisitions that have been made out there or with the valuations we hear about. I mean, we still see things come to us, and so neither of those meets a test for what we have. Do you wanna add something more? Well, I seem to recall that you never liked the acquisitions when we did them. You know, you always liked them a year later, but when we did it, you always had trouble with. Not you personally, but in general. The collective you. You know, collective you. Now we're saying, you know, that goal has been met, and, you know, now we have the scale, we have the total system solution. Acquisitions are very expensive. We don't think it works in our model in terms of what we have to pay. We don't wanna re-lever up. There are all these reasons why we don't wanna do acquisitions. Now I'm consistently getting the question, "Why won't you do acquisitions?" I think we explained it today why we won't do the acquisitions. We don't think there is a deal we must do. There are no gaping holes in our portfolio. We have a very strong total system solutions focus. You heard that from number of speakers today, and we need to deliver organic growth. I think there's a question. Thank you. Vivek Arya from Bank of America Securities. Thanks for a very informative analyst day. My question is about sales growth. You outlined 6%-8% CAGR, and you said you expect to grow, you know, twice as fast as the market. Part A of the question is, who do you think, you know, you can take share from? Are there certain end markets, certain products? B, is refilling distribution channel a goal? Is that accretive to that growth rate? C, just so I can get it out there, and since Steve loves skeptics so much, you know, how do you simultaneously have gross margins that are so far above the norm of largely microcontroller-focused, you know, competitors who are reporting gross margins in the mid-50s%, right? Your gross margins are close to a pure analog company, and still outgrow the market, right, so much. Are you leaving yourself vulnerable to somebody over time, you know, coming and reclaiming that share? You're gonna have to remind us of all the questions. I'm gonna start with the last one since it's easiest to remember. You know, as I said earlier, margin is really a mindset, and it's a mindset that pervades everything from how we plan products, how we go to market, how we serve customers, how we build products. Every part of that team has to work towards how that gross margin is achieved and has to come out on a constant basis and say, what is their part to play? Margin is not the role of sales to say, "You gotta go figure out all of manufacturing." In many companies, you know, they compartmentalize that, you know, price is one person's problem, cost is somebody else's problem. We have a more collective system by which we go do it. All I can tell you is this is the magic of Microchip. This is what the culture does. This is what we do by having a team focus on that being one of the critical elements. You know, these goals are not just external goals, they're internal goals. Every part of the company persists in working on how we get to those goals. Why don't you remind us of your other two questions? Yeah. Refilling distribution. Okay. Is that accretive? Is that included in the 6-8? Is that even a goal anymore? Yeah. You know, 6%-8% is really a growth that we see as about twice what the industry's growth rate is. You know, is there some distribution refilling in it? There may be, but we're not relying on distribution refilling as a way in which we're gonna grow, right? There's a lot more growth to be had in fundamental, you know, new designs, new customers, new approaches of where it's gonna. Distribution will refill at some point. We don't know to what level. We don't tell them what they should go stock. They need to stock what they need to stock to serve their customers. It's at historic lows, you know, from 30+ days, it's sitting at 19 days. Will it go back to 30? Will it go to 22? Will it go to 27? We don't quite know. We're not counting on that as a way in which we're gonna grow back. Do we expect distribution growth? Absolutely. Got it. Which areas, which markets, you know, which products do you think you can take share in? You know, we go at it with every product in response to every business unit, and you've heard several of them here represented today, goes after in their segment, how to take share, not only with the product that they're driving, but how to bring the rest of Microchip along. When Pete Hazen talked about data centers, right? It came with a set of strengths that Microsemi's data center business had built, but has now added all of the Microchip, historical Microchip into it as well. We want to take that share, not only in the SoCs, but any microcontrollers, any timing, any other, you know, other analog pieces that go into it, power, et cetera, in it. We go at it with a view of get the complete solution, and then whatever segments are represented in the complete solution that we have something to add value on, it all comes along for it. The best way to look at it is look at history. What have we done on microcontrollers over 30 years? What have we done with analog over, you know, the 20-plus years that we've been on this? It's a constant, you know, ongoing hand-to-hand combat to be able to get market share every year. Thank you. You know, I just wanted to add a little bit to the gross margin piece. A lot of the MCU competitors' gross margin has now come into the 50s%, given the price increases in the current environment. Back about, you know, three years, five years, seven years, their gross margin was in the 30s. Our gross margin at that time was 60%. Now it has come up to 65%, but ours was 60%. The gap between ours and their gross margin was even larger. We used to get the same question, how the gross margin is sustainable, how would you grow with such a large difference in gross margin? Would you lose share? I think history answers that question. The gap actually is a lot smaller now. Thank you. Thank you. This is Rajvindra Gill from Needham & Company. Just a quick question on the end markets, specifically on the automotive side. You mentioned the growth in EVs and electrification of vehicles. Can you maybe mention your plans in silicon carbide? How do you view that as a growth area? And how do you expect to participate to compete? Just on industrial, that's about almost 30% of your business. Can you talk a bit about some of the growth trends that you're seeing in industrial, and how you're positioned in industrial as well? Thank you. On the first part of your question, with respect to silicon carbide, I mean, we were fortunate to inherit a tremendous capability of these products with a defense heritage that Microsemi had. These are the most robust silicon carbide products in the market. Why is robustness important? Silicon carbide operates in applications that have very high voltages, 700 volts, 1,200 volts, 1,700 volts. A lot of the reliability of those systems is predicated on the robustness of those products. We think we have excellent pedigree that came to us, which we have now moved into adjacent areas, automotive and industrial. You know, there is significant industrial interest as well, which doesn't get as much attention, but is almost a similar size today for what kind of opportunities there are, and of course, in automotive, and automotive charging as well. So lots of opportunities in silicon carbide that we find to be very interesting, aligned with what we're doing. But it's not the goal alone. It's one part of a larger solution that we wanna be able to get with. On the industrial business itself, it's about 29% of our revenue. It's very, very fragmented, right? So, industrial includes things like, medical, so we just happen to lump it into that. There's a lot of factory automation stuff. There's a lot of things which are, you know, building automation related. It's a highly fragmented market. I wouldn't say that there's a single piece of it that is the dominant piece that, where, you know, we're finding growth. It's exactly that kind of fragmentation that we think makes it a great business to be in. Takes a tremendous amount of patience because it takes long to be designed in, to get to revenue, and then it lasts pretty much forever. On this chart that Matthew showed, a lot of that long-lived product is because of the industrial base that's represented in there. Yeah. Good question, John Pitzer, Credit Suisse again. Thanks for all the information today. I appreciate the fact that you have a more stringent definition of IoT than many of your peers. I'm just kind of curious, in this world that's, you know, moving towards the ultimate data-driven economy, why wouldn't most of your microcontroller business over time start to have connectivity and security around it? As that happens, what's the content adder? I guess importantly, given where you are in the evolution of the total system solution, why wouldn't that be just a heck of a lot more op margin accretive than the targets you put out there? Because you look at some of the examples that were put up during the presentations, it really does seem like you're just, you know, looking left, looking right on the board and getting a lot more content than perhaps you were three, four, five years ago. On the IoT, I think you're right. Increasingly, systems are getting more connected, but, you know, there's a very large microcontroller business that's broad-based. Not all of it requires connectivity. It is increasingly, you know, we are finding that connectivity adds value into these systems. And that's the part of our growth strategy in IoT is enable that connectivity, enable the security that's needed in that. And will it grow faster than what we're saying? It might. We wanna be positioned where there's growth available, and then let the market growth decide where we end up, right? We wanna have that design win. We wanna grow faster than the market by being in the place, the right places, and certainly we think IoT is one of those six places for us to be in. As far as the operating margins go, you know, it's... You gotta have, you know-- this is, you know, getting to the gross margins we're suggesting, this is not easy to do, which is why you're gonna find there's very, very few people in this rarefied environment of 65%+ gross margin. As much as it might look like, hey, we should be doing even higher than that. Sometimes it's a bit like, you know, driving through fog. You don't quite see where you can go, until you get farther in. When we were at 60, you know, we thought 65 was almost impossible to get to. But as we got to 62 and we got to 63, it became clearer how would we get there. At 65, we can see our way of how we get to 68. Gross margin also has a finish line, right? You can't just have gross margin only as a thing. We want the growth to come with it and need both. Operating margins. Is your question, you know, why isn't the OpEx lower? Is that- I guess my point is, as you expand on the board. Yeah. It doesn't seem like there's a lot of incremental SG&A costs doing that. Where I see the gross margin level as an appropriate level- Okay. I'm wondering why the operating margin can't expand at a faster rate. Okay, I get your question. Our G&A is one of the lowest in the industry as it is that, you know, you'll be able to find. The sales and marketing side is an important way in which how do we actually provide and demonstrate value when we win the design, right? Is how do you sell the totality of this? How do you understand what the market needs? How do you position the pricing? And how do you make sure that the support is there to win the design, right? It's not just going up, showing off the catalog and say, "Please buy these parts." There's a lot more work that goes into highly valued, high margin business that we have to do. On the R&D side, similarly, you know, to create these differentiated products takes an amount of work that is quite significant to make sure that they're not easy to copy, that they add value, they're sticky, that they last for a long time. All that differentiation requires. We're probably at the lower end of a vast majority of our competitors in terms of where that is. So I think it's finding that right balance that says, "This is the level of investment that we need to continue to build sticky, high gross margin business," and then being able to, you know, get the gross margin to follow as those businesses ramp in time. I think where we are in that range, 22.5%-23.5%, provides that right balance, makes sure that we can create, win, and retain high gross margin business. All right, maybe just a quick note on that. In the current quarter, we're guiding to the low end of that OpEx range at 22.5%. We're in a very constrained labor environment right now. We've got a ton of open [roles] in the company we're trying to hire, but, you know, having our fair share of challenges of bringing on the people that we need. Hey, guys. It's Matt Ramsay from Cowen. First of all, just to preface it, I'm a very agreeable guy, so no skepticism. I guess one clarification quick in, maybe this is for Eric. In the slides, I think there was a 2020 to 2025 SAM that was 7%, and then you guys are talking about industry growth of 3%-4%. Is that just we're lapping 2021, which is a big year, and you're talking about the growth going forward. That's just to clarify that. For all of you guys, in the 6%-8% CAGR, how much are you thinking about unit growth and how much are you thinking about pricing? Thanks. Let me try and take these, and feel free to add in, Eric. First of all, the SAM growth that we showed you, the 7%, was really for the businesses that we believe we can be a part of. It's the serviceable addressable market to Microchip. That wasn't the industry growth. We think industry growth is slower than that. That's why we have our growth rates tied 6%-8% as the long-term growth that we see. It's tied in with what we see as the serviceable addressable market. Now, those are all subject to predictions. You know, markets can change, grow faster or whatever. Whatever it is, we wanna be able to grow at twice that rate by being able to have the right kind of products and in the right markets that are growing faster than that, itself. On the- On pricing. Yeah. Do you wanna take it or want me? Either way. Okay. It's hard to split out pricing versus units. You know, these things go in cycles over the long run. Suffice to say that in the long run we're not counting on price increases as the way in which we're gonna achieve the growth, right? There's a lot of this which is winning new design, shipping more products, and shipping a complete solution into that. Not just the prime anchor product we win, but all the things that attach to that. It's units that drive the majority of the growth from a long-term 6%-8% growth. [Janet Peg] Yeah. For someone who has been observing for decades, I've witnessed a lot of the criticism over the decades about the different acquisitions and criticism about the margins, and you're not gonna get there, et cetera, et cetera. Perhaps it might, just a suggestion, if you start thinking about explaining it in terms of you sell more and more solutions. When you go from Microchip 1.0 to 2.0 and to 3.0, it seems like as you acquire more companies, you're providing more and more solutions to your customers. When you sell solutions, you have more of a leverage in terms of getting better margins. Since you've had quite a few acquisitions, there are a lot of opportunities for organic growth that came about from merging these companies together. Am I correct in thinking of it that way? You're describing total system solutions and exactly how we think about it. As we have created these anchor products, right, people think of silicon as the solution. It's not. It's not. It's really the silicon, the software, the tools, the overall application level selling. That makes it the solution, and a solution is a lot more sticky when we put all those pieces together. A sticky solution has higher margins. I don't think I heard about programmability today at all, and my understanding is that that's also part-- Yeah. It's like breathing for us. You know, programmability is an essential part of. Right O f how, you know, our solutions are created. Thanks. Thank you. Great ride. Thank you. Hey, Steve, this is Harsh from Piper Sandler. I'm trying to understand something, your guide of 6%-8%. You know, assuming that content is growing 3%-4%, and you've got GDP growth of, call it, 2.5%-3%, should that not be a little bit higher in that regard? My second question, I'll just ask it, and one of you guys can answer it. A lot of people are talking about edge computing. We had Qualcomm talk about Arm processors for edge computing. I wanna try and understand the fundamental difference between, let's say, your 16-bit, 32-bit offering at Arm at edge computing, versus what those guys are doing and why you might win against somebody with an Arm offering. Okay. Let me try and take the first part. You know, you can... I could put up any number there, and I think probably there's an argument for why it should be different from that. I think we're looking at saying, okay, we're in times today where, you know, the growth looks large and where it's at, and it looks like. If you go back and look 10, 15 years and see what is actually industry growth then. There's been years that have been much higher, and there's been years that have been much lower. We're trying to look and say, if you look back, you know, 3%-4% growth has been kinda what this industry has done. Now if there's a new normal and you think it is 5-6, well, we will strive to grow at double whatever that is. Assuming a 3%-4% historical growth rate, we think we can grow much faster than that, and that's the 6%-8% growth that we're guiding to. On the edge computing itself, right? I usually think of this in the three pieces to the puzzle. There's a cloud, which all of us understand, and then there's the end node that which all of us understand. The edge really is a point which is between those two, where data from an end node doesn't need to go all the way into the cloud and have to come back and have the latency issues, et cetera, that go with it. So a great example would be, let's assume we have a factory which has a number of, you know, machines in the factory that are doing testing, doing something that they're doing, right? The end node is at the test that the factory is doing on something. If you wanna be able to add intelligence, be able to decide, you know, what is it that the machine is doing, you don't have to send that data all the way back into the cloud. You can have an aggregation point inside the factory, which is effectively saying, for these 30 systems, I'm gonna have an edge processor that provides the artificial intelligence or the machine learning we wanna be able to do there. It is a higher class of processor that is often in edge computing. Often that's our higher-end processors or our FPGA products that go there. They may be surrounded by other microcontrollers and analog, et cetera, that go with it. It's just a continuum of, you know, you have super performance at the cloud, you have basic microcontrollers at the endpoints, and you have something in between those two at the edge. [inaudible] Well, we have Arm processors, you know, we have a variety of processors that fit into this category. You know, we don't look at it as we have a hammer in our hand and, you know, everything looks like a nail. We have different instruments available to us. In some cases, it is a microprocessor. In other cases, it could be a microcontroller. In other cases, it could be an FPGA product. It's really finding the right brains within our portfolio that is appropriate for a given edge computing solution. Well, we're winning today. You said, why would we win? We're winning today. That's the proof. [inaudible] Okay. Hi, Steve or Ganesh. First question. A lot of companies have gotten into the pattern of characterizing their growth relative to GDP or the market, and now we're entering an era where we're gonna have a little bit more persistent inflation. The growth rates that they're describing are nominal and not, you know, versus real GDP. It kind of becomes a little bit confusing. I wonder if you could possibly address that sort of philosophically as, you know, you look into, you know, this changing environment. Thank you. I'll give you my view. Steve may have, you know, additional points of view. I think, you know, we have to be careful that we don't just look at the near term tailwinds that the economy is seeing, that you're seeing in inflation and project that that's how it's gonna be for the next five years, right? We're just to some extent saying, there are historical patterns for how these have done, and there's a near term, where that is. We don't know where it will go. It could be that maybe GDP will be, you know, much higher than where it's at. It hasn't historically done that for great lengths of time. So that GDP growth has been, for the U.S., what, 2%-3%. Depending on different parts of the world, you know, numbers are either lower or higher than that. We're assuming that there will be a point at which the dynamics get back to a more normal historical patterns. Same thing with inflation. We're not assuming that today's 4%-5% inflation is going to continue for the next five years, that at some point that also comes back into some more normal inflation levels. If all of that persists, the GDP is much higher and inflation is much higher, of course, the growth rates are gonna be higher for the industry and for us. Do you wanna add more? Well, sure. You know, in general, I think on the inflation front, you know, our thesis is, you know, same as Fed's, that it's transitory. We don't know what the inflation is in future, and we cannot really put it in our numbers. You know, if prices keep going up 7%-10% every year, the growth will be quite high. It eventually probably will kill the growth because it will kill the economy. We are really not connecting the dots through inflation. We don't really know what it is. The growth comes from one, it comes from unit growth of the anchor products. Second, it comes from everything we can attach around it with a total system solution. Third is the new applications we are enabling, you know, where today there is not intelligence in those applications, and they are using microcontroller, analog, or sensors for the first time, and new applications emerging. Fourth is the content growth. I think Harsh asked that question on the content is growing. When you put all those things together, that's where we are predicting our growth. Inflation is not in here. Constant price increase is not in here. If those things were to happen, then that would be incremental, but we don't know how to model that. Does that make sense? Yeah. I think we're approaching our allotted time, but there was a question from the web. Pradeep from UBS asked, "How should we think about analog versus MCU relative growth rates as part of your long-term model? And do they both grow at roughly a similar pace?" And part two of that question for Steve is on the free cash flow thinking as far as the difference between X percentage of free cash flow and dividends. Does that represent quarterly or last 12 months of free cash flow? All right, let me take the first part. We do not distinguish between analog and microcontrollers in terms of our growth rate. Right? These are all products that go together into embedded systems. That growth rate is the growth rate of everything combined, micros and analog. I think if I understand the second question, it is the 50% of the cash flow the annual cash flow or the quarterly? The 50% where we start with is of the quarter in which we start this. You know, if you get the investment-grade rating, then it starts with the 50% of the cash flow for that quarter. Now remember, you know, at any point in time for the current quarter, the cash flow will be our forecast. We never know till the end of the quarter what equipment is delivered, what you have paid for, so there's always some change in it. Based on our forecast of the cash flow, we will spend the 50% of that cash flow. If we were not perfect in forecasting, you know, with $2 million, $3 million, $4 million, $5 million apart, you could true it up in the following quarter, but it will constantly be a quarterly forecast, not year. Right? Yeah. The 23% that was represented by dividend, that was based on the September quarter that we just reported. Yeah. Okay. Thank you. Any additional questions? He has another one. All right. John does. John. Thanks. Let me ask the second question. Steve, I think it was a couple quarters ago, I think you mentioned to me that you're one of the largest suppliers to the U.S. government. I think one of the things that we're all trying to figure out in the audience and on the webcast is how the subsidies into the semi industry might work. Any insights you can give us on how you're viewing them? Eric, maybe you can parlay that into some tax advice. I know that's another one of those things that's just really hard to predict, but what broad strokes can you give us on tax rates next year and going forward? Let me start with the defense and aerospace part of that. That is true that we are the largest semiconductor supplier to defense and aerospace industry. It's almost a you know $600+ million business, and nobody even comes close. It's not like, you know, we're close, you know, nobody even comes close. The subsidies that you're talking about, you know, at the government level, its focus in general has been to bring the bleeding edge technology in U.S., where the U.S. share of fab production has dropped to 12% now of the world semiconductor consumption. They're trying to increase it, and they're trying to increase it at the leading edge with TSMC and Intel and all the projects you have heard about. Microchip has injected into the appropriate bodies that there is a need to look at it not only on the bleeding edge, but also for defense and aerospace infrastructure, which is critically, you know, there are lots and lots of products we build. For example, today, there is not a offensive or defensive weapon in our arsenal that doesn't have Microchip content in it. Every missile, every battle tank, every airplane, every tactical weaponry, everything has large amount of Microchip content. In space, there is no one that leaves the Earth's atmosphere without Microchip on board, no matter who that is. Those are critical infrastructure products that need to be developed and supported. You know, we have asked the government for funding to shore up some of those facilities which are old and aging, a lot of them on the East Coast of the United States. They're small boutique labs and fabs where all that product is done. Some of those are 60-, 70-year-old equipment is old and is no longer repairable or available. We're seeking government help so we can move that to our more advanced facilities and secure the infrastructure for the next 50 years to come. Mission critical is how we. Mission critical. Describe those things. There's bleeding edge, there's mission critical. I think there's increasing understanding that it's not one or the other, it's both. The second piece of John's question was on tax rate. We've got a very low tax rate, you know, fiscal 2022 guiding to 6% on a cash tax basis. There's a lot of uncertainty in the tax area right now with everything that's going on legislatively around the world. We are modeling that our rate is going to go higher. We aren't giving specific guidance on that today until we get some certainty around the rules. I mean, there's recent proposals about 25% credit for investment in semiconductor equipment and all that. We're in the evaluation phase today, and as we know more, we'll share more with the street. Just a follow-up with regard to pricing and cost. On the earnings call, you spoke about some of the structural things that were happening in industry which were tending to drive cost up. I guess from a short-term and a long-term perspective, for one, do you think that for this cycle, the costs are still going up with things being tight, meaning that we still have cost increases going out in front of us? Over a longer-term basis, you know, with those costs being up structurally because of the need to put new tools in and therefore probably more depreciation expense over time, are we at a point where, you know, what we've come to expect in the industry, at least for your part of the industry, where the customers come back to you and say, "I need a couple points of cost reduction every year," is that potentially at an end? Chris, I don't know if the cost increases are over or not. We went through much of 2021 with price increases to us from our suppliers. I think it's the nature of the beast. Materials are short, equipment is difficult to get and equipment we could buy at discounts, we're buying at premium right now. Some of the people costs have gone up, and those are structurally staying where they're at. Freight costs have gone up. There's a number of things there. Now, is it possible that some of the material costs may go down? Maybe. I don't know. If it is all variable costs, perhaps. But there's also people investing in factories, right? They have a fixed cost that they need to be able to recoup. I think that's part of the fear that some of the capacity isn't going in until they get some certainty that their capital costs are in fact I mean, that's part of our, as we drive PSP, we need the certainty that some of the capacity being asked for, in fact, has got a commitment behind it. It takes commitment at different parts of the chain to be able to make it. I don't think prices are coming down from where they're at. That's my personal opinion, right? There may be something on the fringes that can take place. Maybe the freight goes down as, you know, oil prices change at some point in time. I think the industry has changed to where there's significant investment made and yet to be made if we're going to continue to grow. Even if we grow at a small 7% kinda growth rate, right? There is going to be investments we need to make or for the industry at the growth rate that the industry has that are going to be structurally higher. I don't see prices coming down from where they're at. This 2% per year, you know, we stopped that seven to eight years ago. It didn't make sense, you know, in an industry that was growing 3% and 4%, it's kinda silly to be giving 2% of price reduction every year. Thank you. I'll keep it quick. What do you think the market is gonna grow next calendar year? Whatever I think, I'm gonna be wrong. It's gonna be more right than us, so give us your guess. You know, I don't. I'm not in the business of guessing on where it's at. I think it has a lot to do with macro factors that are beyond our control. I think you know what happens with these mega trends and how much room they have. You know, we almost don't care what it is in a one-year period of time, right? We wanna make investments in those places that have long-term implications, irrespective of what happens in the short term. Whether that is in the markets we choose to focus on, the products we choose to develop, the capacity we put in place. We're not making a one-year decision. Yes, there's benefit in the one year or potentially risk in the one year, but if it's not a good decision for five years or 10 years, it's not a good decision to make for the one year. Vivek, I was gonna say, whatever is in your spreadsheet, that is the answer. Hopefully better than that. A quick other one. Eric, you almost seem to suggest that the midpoint of your OpEx intensity is 22.9%, if I got it right. 23%. Yeah. About 23%. But you said that even in this quarter that you're guiding to December, you're actually 40-50 basis points below that. Can you sustain that OpEx intensity, in which case your, you know, operating margin should be higher over time? I'll give you my answer, but I'll let Eric answer first. Okay. I mean, we've given you a range in the long-term model of 22.5%-23.5%. Current quarter is at the low end of that. Essentially we're saying we have investments that we need to continue to make in people, processes, systems, to drive the long-term health of the business, and that's what we're gonna do. Yeah. You know, revenue is growing at a pace that, you know, we are not able to keep all of the investments growing at that rate, because it is a difficult environment in which to hire, make all the investments and all that stuff. I think you should look at, again, the. There are ups and downs in this industry, if 23% is the midpoint, it's gonna range down to 22.5%, it could range up to 23.5%, depending on where in the cycle we are. These are important investments for us to create differentiated products and solutions to be able to sustain the gross margin. I want you to tie the two together. That if the OpEx is what creates the types of solutions that generate the stickiness, that have the high gross margins over time, and we don't wanna, you know, kill the goose with the golden egg. We've gotta make sure that there's enough investment that we can continue to build growth and gross margin and profitability for the business. Is there more operating leverage? Like, if you are able to grow 6%-8%, is there more OpEx leverage in the model? At 23%, however that growth is, that's the ±0.5% that we have. I don't want you to take 22.5 and say, "Let's now take it down to some number." We need to make sure that the investments are there so that we can make this a great business for the long run, right? At 23%, ±0.5, it's one of the best models out there. Yes, sir. Thank you. I think that's it for questions, and we're kinda out on time as well. Back to you for last comment. Okay. Thank you everyone for coming. We'll see you around in some of the circuits. Thank you. Thank you.