Okay, so gentlemen, we're gonna go ahead and get started. This session is about Microchip, the ticker is MCHP. I've covered you guys for what? 17 something years I've known you, Eric? Long time. And you guys have made Microchip into a phenomenal business that generates a ton of cash. But right now, it's a very interesting time because there's a lot going on in the industrial and automotive space that I wanted to hit upon. So maybe let's start there. You tell us what you guys are seeing in the industrial and the auto space, which is what is on top of the mind for Wall Street investors right now. Okay, sure. I'm gonna do the general disclaimer that I'll be making certain projections and other forward-looking statements in our discussion today, and refer you to our filings at the SEC that highlight important risk factors about Microchip. So with that out of the way, so when we announced our earnings for the June quarter and gave guidance for September, we really highlighted two areas of really significant weakness for us. The first of those was China, and I would say China is the most weak for us of any geography. It's been that way for several quarters, and it has not and is not getting better for us today. The sell-through activity that we were expecting, what our distributors were expecting, did not materialize in the June quarter. Distribution built inventory. This is not an industrial and automotive specific response, but those are two of our larger end markets and obviously are impacted by that. The other piece of it that ties into your question, though, is also Europe is showing signs of weakness for us. And Europe, for us, particularly Germany, is a heavy industrial and automotive exposure area, and they're a high export economy. Their GDP has been negative in Germany for the last two quarters, so technically they're in recession. And we are seeing that in the order patterns of our customers, in industrial and automotive, that things are slowing down. We are getting requests for push out of backlog, and we are trying to accommodate those requests where we can, and working with the customers to find kind of a win-win situation there. A lot of these orders came to Microchip under our Preferred Supply Program, and that program was requiring customers back then to give us 12 months of non-cancellable, non-reschedule backlog, and in return for that, they got priority and supply. Today, with the market softening, they're finding themselves either in an inventory situation or heading towards one if we ship them the backlog that they have on the books. So again, working proactively with them to reschedule that. And that's not having a material impact in the current quarter, where we've guided the quarter at the midpoint to be down about 1% sequentially. But we've talked about the impact really being seen in the December quarter, where we've talked about amplified seasonality. December is typically our most difficult quarter of the year. Normal seasonal might be 3 or 4% down, and we expect it to be worse than that. Yeah. So with respect to this sort of slowdown that you're seeing, do you think it's happening because of slowdown in the end markets, or do you think it's happening because of inventory excesses? And how do I think about what it takes to burn it off? In other words, it's a situation where we just wait for these economies to turn, or is it just a matter of excess inventory that'll get burned off over time, and you get back to some sort of steady rate again? Yeah, so I think when the end markets slow down or a specific customer's end market slows down, it kind of can result in inventory, right? So you have an expectation that the business is gonna be performing at a certain level, and then when that does not materialize, either you've got excess inventory, you've got excess backlog that you have to work through. So, you know, we're kind of seeing that across the board, all end markets. Now, typically, in an inventory cycle or a semiconductor cycle, we see two to three quarters of weakness, and that is what we would expect this go-around also, unless there's something more significant that happens in the broader economy. But I think it just takes time. It takes time for customers to kind of work through the inventory. We've been through many cycles. I think we're positioned well for this cycle. We can talk about that more in some of your follow-up questions. Great. And you're pretty extremely diversified from what I understand. Could you give us a sense y ou know, every, I think every couple of years you give a breakdown, but I think you might have given one recently. Would you mind giving us a breakdown of, of how your business breaks down, breaks down across the end markets? Sure. So, you know, we, we typically quantify our exposure to the end markets once a year at the end of our fiscal year. So for fiscal 2023, which ended in March, industrial was our largest end market at about 41%. Second largest was data center and computing, which was about 19%. Automotive is about 17% of the business, communications is 11%, and consumer, which for us is primarily consumer appliance, is about 12%. And, you know, it doesn't really change much year to year. So from fiscal 2022 to fiscal 2023, I think industrial was up 1%, data center computing was up 1%, and the, the consumer appliance piece was down 2%. But from what I understand, consumer for you is a lot of white goods, right? Like, it's a lot of washer and dryers, and it's not really, you know, gimmicky kind of consumer stuff. It's, it's really like white goods. It's really kind of borderline industrial stuff. Yeah, I mean, I referred to it as consumer appliance, but yeah. Okay, got it. It is appliances and white goods is the vast majority of it. It's a little bit more resilient. Yeah. It's not, it's not cell phone exposure and things like that are fast-moving, high volume. All right. So you've you generate a ton of cash at this point in time. You've just sort of like, sort of matured as a business and you know, you've got everything sort of steadied up and you're throwing off a bunch of cash. You already pay a tremendous dividend. So what do you intend on doing with the free cash flow that comes out of your business? Yeah. So since we acquired Microsemi back in 2018, we were very highly levered at that point in time. We had about 5x net debt-to-EBITDA on the balance sheet. And we've worked very proactively to bring that down. And at our Analyst and Investor Day back in November 2021, we set a target to get down to 1.5x levered, and we've done that now. We ended last quarter at 1.29x on a net debt-to-EBITDA basis, and we have increased the amount of capital that we are returning to shareholders. So, this quarter, we are returning 72.5% of last quarter's adjusted free cash flow through a combination of dividend and buyback. Our dividend has been growing very rapidly. So last fiscal year that ended in March, we grew the dividend by about 40%. The board was increasing at 9% each quarter sequentially. This year, that's moved to 7%, and, you know, the board makes that certain determination each quarter. I kind of expect that 7% to remain in place this fiscal year, and so growing very fastly there. And then, so our answer on stock buyback is essentially a subtract answer. Whatever your adjusted free cash flow was, times the percentage that you're returning, back out the dividend. And, you know, this quarter, the dividend was about $223 million, and the buyback was about $339 million. Now, the trajectory for our capital return, we've laid out that we expect to get to 100% free cash flow return by March 2025. So every quarter, you should expect us to take that 72.5% this quarter, increase it by 5%, so it'll be 77, 77.5% next quarter, and that run rate will take us to 100% free cash flow return in March 2025. What happens, if you need cash for whatever, something attractive comes along or, you know, some other reason for you to have cash? What happens when you're giving away 100% of your free cash flow? I think it depends on what it is, right? I mean, we feel that, you know, the free cash flow calculation is obviously operating cash flow less CapEx, right? So we've got what we need there to invest in working capital in the business and capital expenditures, and our capital intensity is pretty low. You know, our CapEx intensity is 3%-6% of revenue. Your question might be geared a little bit more toward acquisition. Which, you know, we, we've done a ton of acquisitions in our past, but we haven't done an acquisition since 2018 with Microsemi. And we've said publicly that, you know, we don't need. We don't have a gaping hole in our product portfolio, so there's really no desire to go do a transformative deal. We will probably do some small tuck-in deals. We've done some of those over the last five years, but they're, you know, $5 million, $10 million, $15 million deals that don't move the needle, but help us, you know, acquire something on an IP side, an R&D team, or something like that, and advance our product direction in one of our business units. So you should expect more of that. But, you know, we're not in need of doing an acquisition. When we set out on our acquisition strategy back in 2009, 2010 timeframe, you know, we were a billion-dollar revenue company. We were primarily a microcontroller company. We had some analog. But, you know, through the process of growing, both organically and inorganically, to the $8.5 billion we did last fiscal year, we now have, we've got a very broad analog portfolio. Obviously, we have everything in microcontrollers that we're, that we're really needing, from low end to high end. Low end, 8-bit, high end of 32-bit. But now we have timing solutions, we have connectivity, we have security in the portfolio. So you know, today, we can offer our customers what we call Total System Solutions, and that's going into a customer that has an embedded control need and not just being a microcontroller supplier. You know, being that first point of entry on the board, whether it's a microcontroller, a microprocessor, an FPGA, we offer all of those things in our portfolio, and then selling the rest of the portfolio around that, speeding the customer's time to market, reducing their investment in R&D, and becoming a more valuable supplier. So, you know, I think we're set up good for organic growth. That's what we've been doing the last 5+ years, and you should expect that to continue. You've got a bunch of different technologies and products under your Microchip umbrella. If I had to say, you know, Eric, could you rank for us the highest growth areas or the steadiest areas? What would that list look like in terms of just growth? What we talk about publicly is our focus on the mega trends in the marketplace t hat we're targeting. You know, we, we've got our end market exposure that I talked about earlier in response to one of your questions. Then on top of that, we layer these mega trends, which we think are the fastest-growing areas for us to focus on over the next five-10 years of growth, and then combine that TSS, or Total System Solutions strategy, with that. But the mega trends, and help me make sure I remember all of them, but it's data center, it's Industrial IoT, it's EV, it's ADAS. It's sustainability. Sustainability. And 5G t ransition. Okay so, so again, pushing back a little bit, growth rate with respect to that, teens, are we talking teens for the high-growth areas? Yeah. So what we expect is that those mega trends will grow at 2x the overall Microchip growth rate. And we've kind of proven that out over the last two years. So in fiscal 2021 to fiscal 2023, Microchip grew 55% in total, and the mega trends for Microchip grew at 109%. So you know, that we expect that to continue, not necessarily at those percentage rates, but that ratio and the mega trends growing faster than the overall size of the business. And you, I think your company, if I remember correctly, was the first one to come out with a program for customers, where they could sort of be locked in, if you will, with preferred—you call it preferred PSP program. But it was the first program of its kind in the industry, from what I understand, where customers would have guaranteed supply, and this was during COVID times. It's called the PSP Preferred Supply Program. Can you, for the benefit of the people listening in, in this room, tell us how the PSP works and the mechanics of it? Sure. So we, we introduced this program in February 2021, and it was in response to customers wanting more assurance that they were gonna have supply when they needed it. There was a huge supply and demand gap in the industry. And so we worked with customers to develop the program. It's been very successful. It's been well in excess of 50% of our backlog for a long time. And that program, for that priority and supply, the customer gave us, in exchange for that, 12 months of non-cancellable, non-reschedule backlog. Now, we've recently changed that program. You know, the, the supply and demand constraints in the industry are subsiding. Our lead times today, ending, ending last quarter, were just under 26 weeks. So now we've changed new orders starting in August, to only require six months of non-cancellable, non-reschedule backlog. And again, today, we are working with customers that are identifying inventory positions on the non-reschedule piece, but not the non-cancellable piece. You know, and what the PSP program did for us, I mean, for the customer, it gave them priority of supply, kept them up and running in a very capacity-constrained environment. For us, what it did is it made sure that the backlog that we were receiving was good backlog. If we had not had this program, we would've had a massive amount of backlog stacked up just outside our cancellation window, that customers could continuously push out. And with that, we wouldn't have known what we should go invest in, where we'd have all this backlog, we wouldn't have known what was real, what was not real. And, you know, how do you, how do you operate effectively in an environment like that when lead times are so, so long across the supply chain? We would've bought the wrong wafers from foundry. We would've invested in the wrong equipment, wrapped the wrong technologies in our own factory. And it really helped us with that. So I think it's really positioned us well. And you, you think about it from the customer's perspective, they want a more secure supply chain, but they have to think through the orders that they're placing. There's a lot of thought that gets put into that versus something that, "Hey, well, you know, if we don't really need it, we'll just cancel it at a future date." They couldn't do that with PSP. Now, we're rapidly returning to more normal lead times, and we've actually put a, a letter on our website, indicating to customers that by the beginning of the next calendar year, we think lead times are gonna pretty much be normalized. And that means that for 80%-90% of what we call our standard products, you know, standard microcontroller analog products, we expect lead times of four-eight weeks. That's, that's where we've been historically. That's normal for us. What that means is, rather than having a full quarter of the backlog entering a quarter or multiple quarters of backlog, you know, we'll, we'll be operating in a higher turns environment, and that's how we ran our business for decades. For years, yeah. Would you still have the PSP program then, just because of the clarity that it gives you? So, you know, the PSP program is a customer-selected program, so it's completely optional. I suspect that there'll probably be some customers that want to continue with PSP. If a customer is selling an end equipment or their end product has a really high value, right? Do they want to take the chance that supply constraints arise again in the future, which they will at some point in time, and be stuck not being able to buy $5, $10 worth of semiconductors to prevent them from shipping a $50,000, an $80,000 piece of end equipment? So, you know, I think there's certain customers that will. We've had multiple of our PSP customers enter into what we call long-term supply agreements with us. Those customers saw benefit in PSP. These long-term supply agreements are typically a five-year agreement. It works similar to PSP in the short term, where the customer gives us kind of 12 months of firm orders, and then after that, they just have a set of products that and certain volume ranges that they need to purchase over the coming years, and then they can place those orders as more firm as they approach a 12-month period. So, you know, there's certain customers that make sense. I think there's other customers that are saying: "Hey, Microchip has short lead times again. PSP doesn't make sense." And again, that's completely the customer's choice. So you'll leave it to the customer to decide and let it sort of work itself out. Let's talk about pricing for a second. So, you know, historically, semis have been sort of wild in pricing. You know, pricing would go or typically, pricing would go down every year. But I remember talking to Steve about four years ago, and he said it was about four or five years of steady pricing. He hadn't cut prices in a while. And I think you're on that path, and it appears that the industry is on that path, that pricing seems to be steady. I'm not saying that. Well, it's rising because of input costs, maybe. But with all that's going on in China and Europe, for you, have you seen any pressure on pricing at all? Is that something that you, you're even willing to talk about with customers? So it's not really something we're willing to talk about. You know, clearly, over the last two years, as inflation was high, input costs were rising, high capital costs, high foundry costs, high labor costs, we passed those costs on to our customers and marked them up for a Microchip margin. So they weren't gross profit margin percentage accretive, but they were gross margin dollar accretive to Microchip. But we were fair, we were transparent with customers. We could have gouged them significantly, and we didn't, 'cause, you know, we really value those relationships. Now, I am very hopeful that we're at a point of price stability. It's not fun to raise prices on your customers. But if, as an example, this is hypothetical, if foundries were to raise prices significantly on us again, we would pass those on to customers in terms of price increase. But you know, going back to your conversation with Steve, you know, we took the stance probably seven-10 years ago, that we were going to hold prices flat. We're selling proprietary, high-value design-in products. There's a lot of price competition and just competition in general at the design-in phase. But once you're designed in, you know, you have that slot for the life of the design, as long as you don't screw up with delivery or quality or whatever, and, you know, the customer's chosen you for a reason. So, you know, this is not a scenario where we're facing, you know, reductions and, you know, what our input costs are going to be. So my general expectation is pricing is flat. If we have to, we would raise prices, but that's not our intention. Okay. You've got a little bit more flexibility this time around, this cycle around, than you did historically. Previously, I remember you would, because your products have life cycle of 15, 20 years or whatever, you know, decades, you would effectively run. I mean, Steve would tell me, and even Ganesh would tell me, that he's going to run the factory steady, even in lean times, use the balance sheet to build inventory bank, and then when things get hot, he will still run it at the same exact rate and just deplete the inventory. I thought it was brilliant. But now it's a little bit different because I think you're 50/50 or maybe 60/40 in terms of manufacturing. How is it different for you this time around than the scenario that I just described? Okay. So we do, we do about 40% of our wafer fab in-house. The other 60%, we use the professional foundries for. Assembly and test is higher. We do about 60% of our assembly and 67% or so of our final test in-house. But it's really a wafer fab discussion here. You know, our intention and plan of record today is to continue to run our internal wafer fab hard. We'll modify our outside foundry purchases to get to the what we think is the right level of inventory for those products. But we have the balance sheet to support this investment in working capital, build a little bit of inventory in what we call die bank. So it's through the wafer fab, through probe, and then it just needs an order, and we can run it through assembly and test pretty quickly and have short lead times. And so our customers, that's a great advantage for our customers, for Microchip to have short lead times. The products that we build sell for decades, as you say, you know, 10, 15, 20+ years, and so we don't really face a true inventory obsolescence risk. The amount of cost that we can take out if we cut utilization is really pretty small. You know, probably we can get 25% of the costs out, the other 75% of the cost is fixed. So why not invest that in inventory? It actually reduces your CapEx long term, because you build inventory when things are slower, then you can ramp up capital slower on the upturn. So same strategy that Steve has deployed for a long time. You know, Ganesh has the same state of mind. It's the right way to run the business, and because we have such a long life for our products, it's the right strategy. We didn't necessarily do that in the last downturn because our balance sheet wasn't as strong. We'd done all these acquisitions. We were highly levered, but today, you know, our leverage is down, we're firmly investment grade, and that's going to be the strategy. That's all I have. I mean, the last thing I'll say is, you know, you've got a phenomenally strong business that I've personally seen over the last two decades, and it's trading at 12-13 times on a PE basis, throws off a ton of cash, and your dividend is rising, so we love your stock. All right. Thanks, Harsh. Appreciate it, everybody. Thank you.