Was a record $814.4 million. Non-GAAP earnings per diluted share was a record $0.46, and at the high end of our guidance range. On a GAAP basis in the September quarter, gross margins were a record at 67.4%. Total operating expenses were $642.8 million, and included acquisition and tangible amortization of $167.5 million, special charges of $4.3 million, $3.2 million of acquisition-related and other costs, and share-based compensation of $34.8 million. GAAP net income was a record $546.2 million, resulting in a record $0.98 in earnings per diluted share, and was adversely impacted by a $2.1 million loss on debt settlement associated with our convertible debt refinancing activities. Our September quarter GAAP tax expense was impacted by a variety of factors, notably the tax expense recorded as a result of the capitalization of R&D expenses for tax purposes. Our non-GAAP cash tax rate was 11.2% in the September quarter. We now expect our non-GAAP cash tax rate for fiscal 2023 to be between 9.8% and 10.8%, exclusive of the transition tax, any potential tax associated with restructuring the Microsemi operations into the Microchip global structure, and any tax audit settlements related to taxes accrued in prior fiscal years. This is modestly higher than our previous forecast as we have refined our tax calculations for the year. A reminder of what we communicated last quarter, our fiscal 2023 cash tax rate is higher than our fiscal 2022 tax rate for a variety of factors, including lower availability of tax attributes such as net operating losses and tax credits, as well as the impact of current tax rules requiring the capitalization of R&D expenses for tax purposes. There appears to be some momentum for the tax rules requiring companies to capitalize R&D expenses to be pushed out or repealed. If this were to happen, we would anticipate about a 300 basis point favorable adjustment to Microchip's tax rate in fiscal year 2023. Our inventory balance at September 30th, 2022 was $1.03 billion. We had 139 days of inventory at the end of the September quarter, which was up 12 days from the prior quarter's level. We have increased our raw materials inventory to protect our internal manufacturing supply lines. We are carrying higher work in progress to maximize the utilization of constrained equipment, as well as to position ourselves to take advantage of new equipment installations which will relieve bottlenecks. We are investing in building inventory for long life, high margin products whose manufacturing capacity is being end of lifed by our supply chain partners. We need to ensure that our supply lines can feed growth beyond what we expect in the December 2022 and March 2023 quarters, and our reported days of inventory is a backward-looking indicator. As gross margins rise, the effective days of inventory for the same physical inventory rises, and with every 100 basis points of gross margin growth, it creates approximately 3 incremental days of inventory. Inventory days at our distributors in the September quarter was at 19 days, which was flat to the prior quarter's level. With distribution inventory still being low, we will be carrying higher inventory at Microchip to ensure our customers can be served. In the September quarter, we repurchased $36.9 million of principal value of our 2025 and 2027 convertible subordinated notes for cash, and we also paid cash for the value of these bonds above the principal amount, which was an additional $60 million. We used cash generation during the quarter to fund the amount of the convertible debt repurchases, and we believe that these transactions will benefit stockholders by reducing share count dilution to the extent our stock price appreciates over time. The principal amount of convertible debt on our balance sheet at September 30th was $766.6 million. This includes $665.5 million of convertible bonds maturing in November 2024, with a cash call option in place that offsets any potential dilution from these convertibles up to stock prices of $116.15. At the beginning of calendar year 2020, Microchip had $4.481 billion of convertible bonds outstanding. Today, our overall capital structure is in a much better long-term position. Our cash flow from operating activities was $793.2 million in the September quarter. Our Free Cash Flow was $682.9 million and 32.9% of net sales. As of September thirtieth, our consolidated cash and total investment position was $306.8 million. We paid down $264.9 million of total debt in the September quarter, and our net debt was reduced by $192.6 million. Over the last 17 full quarters since we closed the Microsemi acquisition and incurred over $8 billion in debt to do so, we have paid down almost $5.5 billion of debt and continue to allocate substantially all our excess cash beyond dividends and stock buyback to bring down this debt. Our adjusted EBITDA in the September quarter was a record at $1.056 billion and 50.9% of net sales. Our trailing twelve-month adjusted EBITDA was also a record at $3.814 billion. Our net debt to adjusted EBITDA was 1.84 at September 30, 2022, down from 2.05 at June 30th, 2022, and down from 3.0 at September 30th, 2021. Capital expenditures were $110.3 million in the September quarter. Our expectation for capital expenditures for fiscal year 2023 is between $500 million and $550 million as we continue to take actions to support the growth of our business and the ramp of our manufacturing operations. We continue to prudently add capital equipment to maintain, grow, and operate our internal manufacturing operations to support the expected long-term growth of our business. We expect these capital investments will bring gross margin improvement to our business and give us increased control over our production during periods of industry-wide constraints. Depreciation expense in the September quarter was $63.6 million. I will now turn it over to Ganesh to give us comments on the performance of the business in the September quarter, as well as our guidance for the December quarter. Ganesh? Thank you, Eric, and, good afternoon, everyone. Our September quarter results continued to be strong, driven by our disciplined execution and our resilient end markets. Net sales grew 5.6% sequentially and 25.7% on a year-over-year basis to achieve another all-time record at $2.07 billion. While we don't normally provide information on a distribution sell-through basis, which we refer to as end market demand, we are providing information this quarter to give investors some insight into consumption. September quarter end market demand grew sequentially at about the same rate as our GAAP net sales, which is based on sell-in recognition. The September quarter was our eighth consecutive quarter where we achieved a net sales record, and the first time we have ever crossed the $8 billion annualized net sales mark. Non-GAAP gross margin came in at the high end of our guidance at a record 67.7%, up 64 basis points from the June quarter and up 244 basis points from the year-ago quarter. Non-GAAP operating margin came in well above the high end of our guidance at a record 46.9%, up 127 basis points from the June quarter and up 438 basis points from the year-ago quarter. Due to a rapid increase in net sales over the last two years, operating expenses at 20.9% were about 160 basis points below the low end of our long-term model range of 22.5%-23.5%. Our long-term operating expense model will continue to guide our investment actions to drive the long-term growth, profitability and durability of our business. Our consolidated non-GAAP diluted EPS was a record $0.46 per share, up 36.4% from the year-ago quarter and at the high end of our guidance. Adjusted EBITDA at 50.9% of net sales and Free Cash Flow at 32.9% of net sales were both very strong in the September quarter, continuing to demonstrate the robust cash generation capabilities of our business. Net debt declined by $192.6 million, driving our net leverage ratio down to 1.84x exiting the September quarter. During the September quarter, we returned $413.3 million to shareholders in dividends and share repurchases, representing 57.5% of the prior quarter's Free Cash Flow. I would like to take this opportunity to thank all our stakeholders who enabled us to achieve these outstanding results, and especially thank the worldwide Microchip team for their continued efforts during challenging times to deliver results for our customers despite a large and persistent imbalance between supply and demand. Taking a look at our net sales from a product line perspective, our microcontroller net sales were sequentially up 11% as compared to the June quarter and set another all-time record. On a year-over-year basis, our September quarter microcontroller net sales were up 31.9%, and microcontrollers represented 56.9% of our net sales in the September quarter. Our analog net sales sequentially decreased 1.3% in the September quarter. On a year-over-year basis, our September quarter analog net sales were up 16.6%, and analog represented 27.6% of our net sales in the September quarter. As we mentioned last quarter, there are quarter-to-quarter differences in supply constraints which can cause differences in net sales growth by product line. If you compare the trailing four quarter net sales growth performance versus the prior four quarters for our analog and microcontroller product lines, the growth rates are almost exactly the same. In the September quarter, our technology licensing net sales achieved a new record. Business conditions continued to be strong as viewed through our internal indicators. Demand continued to be strong despite the capacity increases we have been implementing for some time now. As a result, our unsupported backlog, which represents backlog customers wanted shipped to them in the September quarter, but which we could not deliver in the September quarter, climbed again, and we exited the September quarter with our highest unsupported backlog ever, with unsupported backlog well above the actual net sales we achieved. We are working hard to reduce our unsupported backlog to more manageable levels and expect to do so in the coming quarters, but also expect to remain supply constrained through the rest of 2022 and well into 2023. We are of course cognizant of the weakening macro conditions resulting from rising inflation and interest rates and are monitoring such conditions closely. We're also aware that there is some inventory build at our customers, as can be seen in their balance sheets. Some of this, we believe, is due to strategic buffer inventory builds arising from the learnings of the last 2 years, and some of this is due to the incomplete kits or the infamous golden screw effect. While we have seen an increase in requests to push out or cancel backlog, these requests remain a very small fraction of the very large backlog we have over multiple quarters, and hence they have not had a material impact on our business. We believe there are three reasons why Microchip's business is demonstrating more resilience in the midst of the weakness seen by some of the other semiconductor companies. First, on the demand side, the industrial, automotive, aerospace and defense, data center, and communications infrastructure end markets, which make up 86% of our net sales, remain strong. The consumer end market, which is about 14% of our net sales, is experiencing some weakness, but is dominated by home appliances. Home appliances are more resilient than other consumer markets, as a high percentage of demand comes from replacements for appliances which have broken down and must be replaced. Hence, our demand is quite durable because of the end market mix we have consciously gravitated towards over the years. Second, on the supply side, a vast majority of our products are built on specialized technologies requiring trailing edge capacity. This is the capacity that has been most constrained over the last 2 years, which still remains constrained, and where there was the least opportunity to overship to consumption. Last but not least, a laser focus on organic growth through Total System Solutions and higher growth megatrends for multiple years is giving us increased design win momentum and a resultant revenue tailwind. Given the crosscurrents of strong internal business indicators and some uncertainty in the macro environment, we have modeled a range of potential scenarios and are closely monitoring various indicators, which should enable us to take deliberate action when we feel it's appropriate. Our goal is to deliver a soft landing for our business if or when there is the softer macro environment catches up with it. The playbook we shared with you last quarter for how we will deal with the macro slowdown remains unchanged. If you study Microchip's peak-to-trough performance through the business cycles over the last 15 years, you will observe our robust and consistent cash generation, gross margin, and operating margin results. The investor presentation posted on our IR website provides details about our performance through the business cycles. If or when there is a macro slowdown that impacts our business, we expect our cash generation, gross margin, and operating margin to once again demonstrate consistency and resiliency. This will help us continue to execute our long-term Microchip 3.0 strategy and help insulate it from whatever short-term market challenges there may be. While we are seeing some loosening of constraints in our supply chain, we continue to have several internal and external capacity corridors that remain very constrained. We are continuing with our carefully calibrated capacity increases, seeking to serve what we believe is a long-term consumption growth. We believe our calibrated increase in capital spending will enable us to capitalize on growth opportunities, serve our customers better, increase our market share, improve our gross margins, and give us more control over our destiny, especially for specialized trailing edge technologies. As you may have seen, Microchip has expressed its view that the recently approved CHIPS Act is good for the semiconductor industry and for America, as it enables critical investments, which will even the global playing field for U.S. companies, while being strategically important for our economic and national security. For a very long time, an important component of our business strategy has been to own and operate a substantial portion of our manufacturing resources, including wafer fabrication facilities in the U.S. This strategy enables us to maintain a high level of manufacturing control, resulting in us being one of the lowest cost producers in the embedded control industry. In light of this strategy and potential grant funding from the CHIPS Act, the investment tax credit provision, as well as state and local grants and subsidies, Microchip is in the early stages of considering a 300 millimeter U.S.-based fab for specialized trailing edge technologies. This fab project, if we decide to pursue it, would be intended to provide competitive growth capacity as well as geographic and geopolitical diversification. The availability of grants, subsidies, and other incentives will all be important considerations in our analysis and will also help determine the location and timing for a fab. Now let's get into the guidance for the December quarter. Our backlog for the December quarter is strong, and we have more capacity improvements coming into effect. Taking all the factors we have discussed on the call today into consideration, we expect our net sales for the December quarter to be up between 3% and 5% sequentially. We also expect our net sales based on end market demand to grow at about the same growth as our GAAP net sales. Further, we expect sequential net sales growth again in the March quarter. At the midpoint of our net sales guidance, our year-over-year growth for the December quarter would be a strong 22.7%. We expect our non-GAAP gross margin to be between 67.8% and 68% of sales. We expect non-GAAP operating expenses to be between 20.7% and 20.9% of sales. We expect non-GAAP operating profit to be between 46.9% and 47.3% of sales. We expect our non-GAAP diluted earnings per share to be between $1.54 per share and $1.56 per share. At the midpoint of our EPS guidance, our year-over-year growth for the December quarter would be a strong 29.2%. Finally, as you can see from our September quarter results and our December quarter guidance, our Microchip 3.0 strategy, which we launched a year ago, is firing on all cylinders. We continue to build and improve what we believe is one of the most diversified, defensible, high-growth, high-margin, high-cash generating businesses in the semiconductor industry. Let me now pass the baton to Steve to talk more about our cash return to shareholders. Steve? Thank you, Ganesh, and good afternoon, everyone. I would like to reflect on our financial results announced today and provide you further updates on our cash return strategy. Reflecting on our financial results, I continue to be very proud of all employees of Microchip that have delivered another exceptional quarter while making new records in many respects, namely record net sales, record non-GAAP gross margin percentage, record non-GAAP operating margin percentage, record non-GAAP EPS, and record adjusted EBITDA, and all of that in a very challenging supply environment. The board of directors announced an increase in the dividend of 9% from last quarter to $0.328 per share. This is an increase of 41.4% from the year ago quarter. During the last quarter, we purchased $247.2 million of our stock in the open market. We also paid out $166.1 million in dividends. Thus, the total cash return was $413.3 million. This amount was 57.5% of our actual Free Cash Flow of $718.5 million during the June 2022 quarter. Our pay down of debt as well as record adjusted EBITDA drove down our net leverage at the end of September 2022 quarter to 1.84 from 2.05 at the end of June. Ever since we achieved investment-grade rating for our debt in November 2021 and pivoted to increasing our capital return to shareholders, we have returned $1.457 billion to shareholders through September 30, 2022, by a combination of dividends and share buybacks. In the December quarter, we will use the September quarter's actual Free Cash Flow of $682.9 million and plan to return 60% or $409.7 million of that amount to our shareholders. Of this $409.7 million, the dividend is expected to be approximately $181 million, and the stock buyback is expected to be approximately $228.7 million. With that, operator, will you please poll for questions? Sure. If you'd like to ask a question, simply press the star key followed by the digit one on your telephone keypad. Also, if you're using a speakerphone, please make sure your mute function is turned off to allow your signal through to our equipment. Once again, press star one at this time. We'll pause for a brief moment. Ambrish Srivastava of BMO has our first question. Hi. Thank you very much, Ganesh, Steve, and Eric. It's very appreciated that you put that investor slide deck where you talk about the playbook and the scenarios, and you've talked about the playbook. I just can't help ask this question because weakness is rampant. It's everywhere. Many of your diversified peers have talked about weakness. Just kind of help us understand. The big concern I have is the longer the lead times stay stressed out, the higher the possibility of a harder landing. Just kind of help us understand how are you managing the quote, unquote, "soft landing" that you have addressed a few times, but I just wanted to re-address that issue, if you could please. Thank you. Sure. You know, it starts with having high-quality backlog. You know, PSP being a high percentage of our backlog, well over 50%, is the highest quality backlog. It is non-cancellable. It's customers who have put time into making a commitment to be non-cancellable, and that is always gonna have far more thought that goes into it. It starts also with the supply side, where you know, we are making calibrated investments every quarter. We're not trying to, you know, satisfy all the demand that's out there. Our lead times are long, but they've also, in specific areas, started to improve, and that helps with you know, customers who have visibility out in time. The end market exposure we have is another huge benefit to us, right? Most of these customers in these end markets are not in volatile markets where things can go up and down in short order. They're looking at the long term. They're looking at demand that is far more durable. You put all that together, and we feel we have a model that is outperforming, and for those reasons, from a market standpoint, supply standpoint, and what we have done for ourselves in terms of Total System Solutions and the mega trends we're focused on and the designing activity that we have pursued. Okay. Just a quick follow-up. Where are the lead times now on a... I know the product line is very diverse, but the way you characterize it, what% of lead times have come in versus staying at 52+ weeks? You know, the lead times are all over the place. We have some lead times which are as low as 4 weeks-8 weeks. We have a lot of them which are at 26 weeks-52 weeks. It's corridor by corridor, product by product, where the constraints are, right? We go to work every day trying to improve it, and as long as supply improves, we're able to do that. Demand remains still strong. There's not a single number I can give you or a single percentage that I can say, "Hey, this is what the lead times are at." Most importantly, it's not just the lead times, it's also how strong the demand is. You can see with some of the end market data that we provide you, the information on the growth, right? The end market growth is keeping pace with what we're shipping in to on a GAAP basis. Got it. Thank you, Ganesh. Thank you. Next, we'll hear from Vivek Arya of Bank of America Securities. Thanks for taking my question. For the first one, it's very interesting you're considering a 300 millimeter fab. I was wondering what is driving that decision? What kind of CapEx will it require? You know, will it have any impact on your dividend or buyback philosophy? Does it mean you will bring back some of what you're giving to external foundries inside the company? Just any more color on the 300 millimeter fab. I appreciate it's probably still in early stages of discussion. Yeah. You know, you should look at it as it's a very strategic thought process and decision for us. It's something we think about over a 20-year-plus timeframe of what it will do for us, not unlike how when we bought our Gresham fab just about 20 years ago, right? It was a long-term investment that we made. We have many processes that are at 300 millimeters that are candidates. We have some specific ones we would look at as the early ones we bring in. But I wouldn't look at it as necessarily just bringing all this stuff inside as much as we grow, we would have additional places where it can grow. This investment will happen over multiple years. It will be largely within the range of the CapEx that we have provided, and we do not expect it to have either an impact on our dividend or our share buyback or anything else with where we're at. All right. For my follow-up, I think, Ganesh, you mentioned that one reason that you might be seeing the strength is some customers are building some buffer inventory. I'm curious, how far along do you think they are in that process? Does it just, you know, pull forward their demand from outer quarters? Because I think what everyone is trying to, you know, get a sense for is that in most prior downturns, Microchip was always the first one to signal when the market conditions weakened. This time conditions are weakening. Every one of your competitors is saying that, yet you're not seeing it. What has changed versus your analog industrial peers? I can understand the consumer part, but what's different versus your peers who are also exposed to the same automotive, industrial type markets? Thank you. Hello, are you guys still there? Please remain on the line while we reconnect our presenters. You may proceed. We're back. Vivek, if you're still on, we didn't get the entirety of your question. Would you repeat your question, please? Yes. So basically what I asked, Ganesh, was that you mentioned customers are building buffer inventory. I was just wondering how far along they are in that process. In general, you know, if you contrast Microchip today versus in prior downturns, right, when you had a somewhat similar mix of products, the company was always the first to see the downturn, but you're not seeing it now. I was curious, what is the difference between the old Microchip versus the new Microchip? Sure. Let me answer the second one first. If you look at the old Microchip, we had more exposure to markets that perhaps were more volatile, right? We didn't have the same aerospace and defense data center infrastructure. We weren't as high in industrial and automotive. Those are far more durable, right? We had a much higher consumer exposure if you go back 10 years or the financial crisis in that timeframe. That has changed to where we can see the customer and their end market demand as being far more durable today than it was in history. On your first question about the buffer, you know, I think the amount that's being built is small because we're not able to ship, right? I mean, we're constrained in our ability to service all this backlog that is unsupported. Anecdotally, are there going to be some customers who are building in? Yeah, we're sure there is some of that, but we still think it's small. Mostly it is in the markets where there's a very large multiplier for the OEM's end product as compared to the value of the semiconductors that they carry. Thank you. You're welcome. Operator, would you continue to poll for questions, please? Christopher Rolland, Susquehanna. Hey, guys. Thanks for the question. I guess my first one is for either Steve or Ganesh. You know, you had confidence enough to provide growth into March, which is pretty incredible in this environment. Do you think you have this confidence and this visibility because of your kind of tough stance on your NC NR policy? Is it perhaps you're looking at the channel inventories and keeping those tight? Is there some other difference here operationally, or, you know, that kind of affects your confidence versus others out there? Is there something you're doing different? Firstly, you know, we have confidence both on the demand side as well as the improving supply that we're making. Let me put it in perspective, right. Even if we accepted 100% of all the cancellation and pushout requests of non-cancellable backlog, this factor alone would not have changed our September quarter results, our December quarter guidance, and we would remain poised to grow sequentially again in March. Don't assume that it's the non-cancellability that is somehow propping us up. Great. Thank you. Steve, you've talked before about industry capacity being tight and us not having enough as an industry moving forward. You know, I think there's probably been some cancellations in terms of equipment and stuff like that, but would love an update here. You know how you feel about that. Are you even, you know, more strong in that belief? Is that what underpins the 300 millimeter thought process as well? It began a year and a half ago with capacity being constrained at all the nodes, trailing edge, leading edge, in the middle of the way. What has happened in the last few quarters is with the personal computers and cell phones, which are, you know, significant consumers of semiconductors and mostly semiconductors on the leading edge of technology, you know, processors and very high-end chips in the cellular phone. With the production in that market, the leading edge capacity now is really no longer constrained. You have seen dramatic downside guidance by a lot of the very leading-edge people. Today, if you wanted, you know, a 7 nanometer, 10 nanometer, 14 nanometer capacity, you can have everything you need. But the trailing edge capacity continues to be extremely constrained. On trailing edge, we built some inside, and we also bought some from the foundries, and we are constrained on both. Inside, we haven't been able to get all the equipment we wanted. Most equipment that was even scheduled to be delivered got pushed out by many months, sometimes many quarters, because the equipment supplier wasn't able to get semiconductors for their parts. So the inside products that we run inside remain constrained on many different corners. The capacity we buy outside is really very similar. The trailing edge capacity remains constrained, and we currently believe will remain constrained well into 2023. I would add one more thing, right. I think on 300 millimeter, if we started on a fab tomorrow, it's 4+ years away before that fab is starting to ramp. These are not decisions we make in a single cycle. We think through these across cycles on a long-term secular growth basis and what our position is and what we want our capabilities to be out in time. You know, on the prior question, we were talking about, you know, backlog and why we are so resilient, and in the prior cycles, we used to be the first one to see this and why we're not seeing it today. I think I wanted to add a comment, you know, a couple of comments. You know, one that Ganesh mentioned, which is a dramatically different end-market mix we have today than when you used to call us the canary in the coal mine. Secondly, I think we wanna keep emphasizing that PSP backlog is a very high-quality backlog. When a customer has to commit 12 months, and in some cases 18 months and longer, non-cancellable, non-reschedulable backlog, there is a lot more thought that goes into it. It's not the junior purchasing manager who places a backlog. It goes up for approval. It's a much, much higher quality backlog, and people don't just double order it thinking that they would cancel it, you know, because it's non-cancelable. They don't double order it thinking that, you know, Microchip would let them change the rules and will let them cancel it. That backlog is very high quality. We've gotten very small number of scattered requests here and there. As Ganesh mentioned, if we were to take all of them for cancellation, it wouldn't change anything. It would not change our September, December or March. It's just a minuscule percentage. It really means nothing almost. Take that into account. You know, we have heard from a lot of investors and analysts that think, you know, PSP is, you know, some sort of, you know, accident waiting to happen because people are building inventory and we're not letting them cancel it, and the fall would be even harder. I think that thinking is not correct. Yeah. Thank you, guys. Appreciate it. Great. Thank you. Next, we'll hear from Timothy Arcuri of UBS. Thanks a lot. You mentioned PSP is more than half of backlog, but can you talk about how much of the September revenue is moving inside of PSP? Maybe Steve, I know that you just made some comments about some requests for changes within PSP. It sounds like they're still pretty small. I guess can you also just double click on the comment you just made? Because PSP doesn't really change demand. I mean, to a certain degree, you just put product to customers that might not need it because they committed to it, you know, 6 months - 12 months ago. Can you just kind of talk through that and then maybe answer the question about how much revenue is moving inside of PSP, thanks. Firstly, in a given quarter, by the time we get to that quarter, PSP is an overwhelming percentage of what we ship in that quarter. That's what customers who place backlog back in time receive priority for it, expect, and that's what we give them. You know, farther out in time, there is more space and new backlog can come in and fill it out. Near term, like what just happened in September or what is gonna happen in December, has a very, very high percentage of it. That is PSP backlog that is being fulfilled. Let me reiterate the point Steve made and which I made a little bit earlier on. PSP backlog is the highest quality backlog that's there. We make non-cancelable commitments to our suppliers, and we don't make them lightly because there is a financial commitment that is required to have enough scrutiny. Similarly, our customers have significant scrutiny when they're trying to make commitment. They don't try to get excess capacity orders from us. They in fact will try to undershoot so that they can actually hit it. I want you to take from this that PSP backlog is the highest quality backlog. We have far more cancellations and requests on non-PSP, but PSP backlog is very high quality. Even outside PSP, I wanna note that our standard cancellation window is 90 days. When we enter a quarter, really everything that's on books for the quarter is non-cancelable, whether it's PSP or not. You should also think that, you know, when we took the PSP backlog and for the last year and a half, in the middle of extreme constraints, we made a choice to ship to the PSP customers and not ship to the non-PSP customers. All the non-PSP customers are not low quality customers. Some of them are very good customers, but their business is such that they cannot make a 1-year commitment, so they were non-PSP customers. They got very little product. We made a choice to prioritize giving it to PSP customers and let the other customers go, not get product, get somewhere else. Our PSP customers have benefited from the best of our attention in the last year and a half. Now, you know, they can't have the best of them and then be flexible and not really meet their part of the bargain. We have added capacity for them. We prioritize them. We lost the other customers whom we did not give any product. I think this. I would say don't be fixated on it. Yeah. This is our best demand. It's our best customers. Got it. Got it. Thank you. Just as a follow-up, so you gave some view on consumption and you called it end market demand. Does that include the inventory that's building at your customers? When you talk about end market demand, is that net of the inventory build at your customers, or is that inclusive of the inventory build at your customers? Thanks. When we speak of end market demand, it is everything that we ship to our direct customers, which is no different than GAAP revenue. The other difference is the roughly 50% of our business that goes through distribution. It represents the distributors sell through to those customers rather than what we're selling into the distribution channel. We do not have any kind of view in terms of exactly what our customers are doing with inventory. We service 125,000 customers, and that's just not data that we have or is possible for us to track. Yeah. When we talk about potential inventory at customers, all we can see is what do they publicly report? I can tell you that the level of expedites and customer escalations we're experiencing remain high, indicating that demand-supply are imbalanced for many customer situations. Thank you. Thank you very much. Appreciate it. Our next question comes from William Stein of Truist Securities. Great. Thanks for taking my questions. First, a little bit of an off the run question, and then I will have a follow-up. OpEx, I think you highlighted that it's below your target range as revenue continues to grow, and you're not spending as much as sort of you would normally target. Over what time frame should we anticipate your OpEx approaching your target percent of revenue? You know, it'll be over many quarters. You can see in our guidance it's not happening in the December quarter. The hiring environment has been difficult. You know, perhaps we will do better as we go into 2022, 2023. It'll be slow. Eric, do you wanna say anything? Yeah, I mean, it somewhat depends on what the revenue curve looks like out in time. Obviously, we're guiding for nice growth again in December. Ganesh has made comments about March being a growth quarter for us. It's going to take us some time to catch up, Will. Okay. Thank you for that. I'd wanna linger on the same topic that so many other people have hit on, but I wanna ask it sort of a different way. I understand the PSP is very high quality backlog. You're not seeing many cancellation requests. Even if you took all the cancels, you know, you'd still have this good guidance and the comments on March. What it doesn't so much address is what might happen in a couple quarters if more customers, either doing PSP or otherwise, come in and request a cancel or a pushout. The question really is that this is one thing that has changed in, maybe not the model, but in the way the company operates. Steve, in fact, you've talked a lot about how you'd never use distribution as sort of the mechanism to, let's say, stuff. Let's call it stuffing the channel for a moment. When you have to make a decision as to whether you force a customer to live up to an NCNR, that is remarkably similar to stuffing the channel in terms of at least the economic impact on your business. I'm wondering how you're gonna take that decision if you wind up in a position where more customers come to you to cancel, whether it's PSP or regular backlog, how you make this decision. On the one hand, I wanna make them live up to their commitments 'cause you highlighted all those reasons. On the other hand, if you do that, you know you're damaging future demand and pushing out, you know, a painful situation. How do you plan on managing that, you know, balancing those two dynamics? Thank you. Well, well, this is not the first time we've had to deal with non-cancellable backlog. It has been a part of our business for basically ever, right? It's just that the percentage of that has grown. We work with customers on what their requirements are, but you can't have an asymmetric agreement where heads they win and tails we lose, right? You gotta make sure that there are commitments. This is why if you make sure that there is an understanding that there is a responsibility with placing that backlog, they will moderate the backlog they place on us. If they have no responsibility, then there is no reason why they wouldn't just give us much, much higher backlog than where they're at. We think, again, going back to the quality of the backlog, it comes because it has responsibility that goes with it. Outside of that, situation by situation with a customer, you know, we're in this to be in business. We're not in this to say it's all risk-free or all the risk is on our side in what we go with it. By the way, by and large, that's how customers have expected us as well. They are not pushing on us to say, "Hey, I didn't mean that it should be, you know, PSP, and I now want something else different from, you know, what we had agreed to." I don't see that as big of an issue. By the way, if we didn't have PSP, the situation we'd have is far, far higher backlogs and far bigger of a fall from that high backlog we have. Yeah. I think one other thing I'd like to point out, Will, 'cause you're talking several quarters out in time beyond March, right? A customer that's on PSP and has 12 months of backlog with us, every week or every month that goes by, they make a decision in terms of what the next backlog that they're gonna put on us out in time. They could put zero backlog, they could put 50%, they could put 120% of what it was the month before. You know, these fears of rising interest rates and recession, you know, this is not new when we woke up today. You know, this has been happening now for several months, and I think customers gradually adjust that over time. As Ganesh has said, you know, PSP is still a large percentage of our backlog. We still have tons of support, and it's been a program that I believe has worked very well, not only for the customer but for Microchip. I think the gist of your question is that lots and lots of PSP customers want to cancel, and we're just not letting them do it, and that is not the case. There is a negligible amount. I mean, at any point in time, you have, you know, customers that wanna, you know, move small things around. The PSP backlog is not gonna see the behavior that you're talking about. We're not inundated with PSP customers wanting to cancel the backlog, and we're not canceling it. That's not happening next quarter, it's not happening quarter after. I think that's the issue. That's your assumption that it would happen. We don't think we will face that because the PSP backlog is very high quality, and customer can easily start to adjust it by taking the foot off the gas pedal, you know, every month when they place the order 12 months out. Let me give you one more piece of data. You know, we're making a big deal of cancellations. If you aggregate all the cancellation requests we have, it's 4.5% of our total backlog. That includes PSP, non-PSP, and it will be dominated by non-PSP. It is a negligible part of the business, guys. Thank you. You're welcome. Next, we'll hear from Christopher Danely, Citigroup. Thanks, guys. I think someone asked you earlier about, you know, lead times. Have they gone up or gone down or how much? You said you really couldn't define that. You also said you still have some, I guess, quite a bit of business that's constrained or products that are constrained. Is there any, like, I guess, metrics that you could give us that would talk about your percentage of products or percentage of business that is constrained or in shortage now versus three months ago and what you expect to be three months from now, just so we could, I guess, track the progress of that? You know, the best metric probably is what is the unsupported backlog exiting quarters. I'm gonna tell you it's high. It's probably not healthy to be there, and we will work to improve that. It is to improve the customer service and the customer experience with it. We have still substantial constraints that we're working through, and it will take us many, many quarters to work through them. I don't know if Ganesh said that earlier, but our unshipped backlog leaving September quarter was another all-time high. During the quarter, customer wanted more parts to be shipped in the September quarter that we couldn't ship, and the unshipped grew over the June quarter to another record. That doesn't mean in any way that customers are feeling that the lead times are coming in. I mean, we are broadly constrained almost everywhere. I mean, we got daily escalation calls from multiple customers every day. Yeah, that's what I was getting at. It hasn't even reached the peak. The unsupported hasn't even reached the peak and started dropping. It is still growing. Yeah, that's what I was getting at. That's what it felt like. For my follow-up, you know, Steve, you've been through even more cycles than I have. If this continues where, you know, the competitors keep taking numbers down and you know, the recession gets worse and worse and your business gets better and better or you know, gets through it, I mean, do you think it's possible for you guys to make it through a global recession and a downturn unscathed or relatively unscathed? Did you see anything during this quarter other than the unsupported backlog that made you feel any better or any worse about Microchip's ability to do that? Well, you have to define what unscathed meant. You know, as Ganesh talked about it in his remarks, that we're not seeing anything today, but we see the macro weakening and what all the other companies are saying. What we are saying is if macro ever catches up to us, then we have steps in place to create a soft landing. You know, when you say unscathed, you know, we're not saying we're going to keep growing 22% per year forever like we have been. We will soft land the plane because of all the attributes Ganesh went over. Yep. Thanks. Next, we'll hear from Toshiya Hari at Goldman Sachs. Hi. Good afternoon. Thanks so much for taking the question. I was hoping you could talk a little bit about what you're seeing from a pricing perspective, across your microcontroller and analog businesses. You know, your September quarter revenue was up 25% plus year-over-year. How much of that was pricing? Steve, when you were at our conference a month and a half ago, you had hinted that pricing should be a tailwind in the early part of 2023 as well, given some of the conversations that you were having with your foundry suppliers. I'm curious if anything has changed since then. I have a quick follow-up. Pricing is stable. There are no price adjustments that are being made that are affecting where the quarterly results are. We did make an adjustment at the beginning of this year or the early part of this year, and that's where it's at. You know, I don't think we have any price adjustment plans into 2023 that are in the offing. Pricing is really not a factor today in terms of what we're executing, where we're going in terms of our new designs and where we are in terms of our business. Got it. My follow-up, I guess this is a hypothetical, but, you know, given the visibility you have and given, you know, everything that you've said so far on the call, you know, if your business in calendar 2023 is, you know, say, up 5% or flat or somewhere in that range, and most of your peers are down 10%, would it be fair to say that, you know, in a recovery phase, say in 2024, you undergrow your peers or you perhaps don't participate in that recovery? Or, are you guys, you know, gaining permanent structural share across the analog and MCU businesses? It's a hypothetical. We don't know what 2024 is, but we believe we are gaining share. We are executing the Total System Solutions strategy we have. We are focused on the fastest-growing markets, and we are seeing substantial wins that are creating the tailwinds for us. Thank you. Our next question comes from Harlan Sur of J.P. Morgan. Good afternoon. Thanks for taking my question. Channel or disti inventories still 40% below pre-pandemic levels. Your own inventories are kind of at the low end of your target range. Obviously clear signs that demand remains strong. Given your capacity expansion plans, looking at your demand profile and backlog, do you guys anticipate increasing inventories with your disti customers and moving towards the midpoint of your range on your own inventories over the next, call it, two to three quarters? You know, we actually grew quite a bit of inventory on our balance sheet in the September quarter. You'll see just below our guidance table in our press release, we're expecting that to grow again this quarter. In my prepared remarks, I kind of went through some of the reasons why that is happening as we're positioning the company for future growth. In terms of distribution, you know, distribution inventory stayed flat quarter-over-quarter at 19 days. You know, we think at some point in time there will be some level of restocking in the distribution channel. You know, that's gonna vary by distributor, and what, you know, how they manage the business. In the meantime, with their inventory being relatively low, we feel that we need to have more inventory on our balance sheet to support the end customer needs. That's what we're doing. Really, we are now within our target range of inventory days that we provided to the street back in our November Analyst Day. We're managing it appropriately in a challenged supply environment, I would call it. Yep, thanks for that. I know it's always somewhat complex to sift through end market demand trends because you've got such a broad portfolio of products, you're serving many different end markets. However, there is one segment where products are more easily tracked because they are very specific to that end market. That's your rad-hard kind of Hi-Rel products. That's your aerospace and defense business. I believe it's about 13%-14% of your revenues, much higher mix versus your peers. Seems like activity around commercial space programs, new satellite constellations, defense spending all look strong for not just next year but the next several years. You guys are number one in space, strong player in defense. Like, help us understand the visibility in A&D growth trends and sustainability of this segment into a potentially weaker macroeconomic backdrop next year. Sure. Aerospace and defense, I think it's about 9%-10% of our revenue. It is performing extremely well for many reasons. You missed commercial aviation. Commercial aviation is going through a strong resurgence, and so all three elements, space, defense, and commercial aviation, are all doing strongly in the current environment. They are generally less influenced by shorter medium-term macroeconomic conditions. Thank you. Thank you. Next, we'll hear from Matt Ramsay of TD Cowen. Thank you very much. Good afternoon, guys. I think Toshiya took my earlier question on ASP assumptions, so I'll just ask one. It's around the consideration of investing in the 300 millimeter fab. I guess there's two parts to the question. Ganesh, as you consider that, what would be just, I don't know, ballpark off the top of your head focus of which process nodes, mix in a facility like that as you consider it? And then second, is this something that you guys felt you needed to do but didn't really feel like you could fund all of it until the CHIPS Act got passed, and now that's a reaction to potential funding from governments? Or was this a decision that you were probably gonna need to make anyway? Thank you. First, on, you know, process technologies, those are still being worked. Largely we use our 300 millimeter, you know, foundries today on process technologies that are 90 nanometer and smaller in size. The workhorse technologies for trailing edge tend to be at 40, 65, 90, in that general neighborhood. We wouldn't limit ourselves just to that. You know, as again, I want you to think of this as this is a 25-year look at what we would do with a 300 millimeter fab. The reasoning for it is, we have, as our business has grown, the portion of our business that we do with 300 millimeter has also grown. The investment in the trailing edge part of 300 millimeter technologies has not been there with many of our foundries at the level that we have wanted. It takes a certain scale to get there. If you had a full boat fab that you needed to build, the way in which the break-even points and the absorption points come about are different from when there is a fab that can be built with government funding and the investment tax credits from whatever local things come in. Clearly that has changed the equation as to when does it make sense financially. That's not the only reason why. We think trailing edge 300 millimeter technology is going to have constraints for a long time to come, and a portion of that being within Microchip would allow us to better serve those markets. Thanks, Ganesh. Thank you. Our next question comes from Joseph Moore of Morgan Stanley. Great. Thank you. If you look at your operating margins now, you're obviously much higher than you've been in prior cycles. You know, it seems like a lot of that is secular, but like, do you —when you contemplate these soft landing scenarios, do you expect your margins to sort of see the type of decline you've seen historically? Could we go back to prior troughs? Just how do you know, I know some of your competitors have talked about a target margin on kind of a trough revenue level. Like, how should we think about, you know, primarily gross margin leverage in a sort of weaker environment? Well, I'll give you a quick answer, and then Eric might wanna elaborate more on it. Again, the best way to look at it is how have we performed over the last 15 years through the cycles. You'll see that on those metrics, the gross and operating margin, from peak to trough across the cycle, about 200 basis points is the decline in that range, plus or minus 200-300 basis points. You know, that's the way in which we manage the business. It's built into our DNA. It's built into our systems and processes. It's built into the soft landing that I described a quarter ago. Eric, do you wanna add more to it? Yeah. I mean, obviously, we've continued to, you know, integrate acquisitions. We've got a different product mix than we've had historically. You know, we feel really comfortable with the margin targets that we've set out for the street, which we are above today, as you mentioned, on the operating margin side. Because the business has grown so well, we've got quite a bit of cushion, yeah, I would call it, on our OpEx today with the level of bonuses that we're planning, variable comp, that will allow us to adjust if need be, if, you know, the macro catches up with us at some point in time. We wanna build inventory in our own factories. We think distributors will rebuild inventory. We don't wanna give a specific number, but again, the range that we've provided on a long-term basis, we think that we can operate within that, and obviously we're operating above it today. The mix of the business we have has end markets that are far more durable in terms of how they perform and what gross margin these products and solutions we bring, you know, are able to command. It's not just, you know, silicon. It's silicon, it's software, it's systems, it's services. These are very, very sticky applications and markets that are not prone to perhaps what a pure consumer or mobile phone type of market, you know, may have. Great. Thank you very much. Tore Svanberg of Stifel. Yes, thank you, and congrats on all the record metrics. I have a sort of a different angle on the pricing question, and it's kinda more related to ASP. If you look at the 25.7% growth year-over-year that you are reporting this quarter, how much of that is coming from higher ASPs, meaning, you know, selling more value in the form of your total system type solutions? There's not an easy way to break that up. You know, clearly, with constrained capacity, we will direct them and have been directing it to the highest value products that we're producing. We're shipping more units, so there's a lot of the growth that's coming from capacity and additions that we have made in it. I certainly don't have a good way to parse out, you know, what comes from mix and pricing versus what comes from units alone. That's fair. I had a question on the inventory, whether it's internal or channel. Obviously, you know, the channel, it sounds like you're gonna sort of keep that a little bit constrained going forward. But is there maybe a secular trend here where basically, you know, maybe the right number is actually around 20 days of channel inventory, and then your own inventories could maybe even exceed the high end of the range, which is 150? No, we don't dictate what channel inventory needs to be. The channel decides what inventory do they need. In some cases, we may be constrained in shipping it to them, and they may not be able to get what they want to. But, you know, channel has history of what does it take to support the mix of product, the customer expectations that are there, and we are at the low end of what they have historically done. Whether they're gonna be at 19 or 20 or 25 or 30 is really a decision they're gonna make. We don't tell them what to do in terms of inventory. Yeah. Ultimately, they need to stock the level of inventory appropriate to support their customers. You know, they'll need to find the right level of that as supply becomes less constrained than it is today. You know, we have a lot of unsupported backlog to our distributors today that we need to catch up on. Well, for the last [crosstalk] 3 years plus. But, but they- It doesn't really matter what distributor wanted. We just don't have the product to stock them. That has not been a choice, and we don't think there's a choice for, you know, well into 2023. Someday, when we have parts available to start distribution, at that point in time, it will matter what they want to do. Right now, it doesn't matter. Yeah, I guess my point was more, you know, maybe you have a better read on sell-through than they do, but so that's fair. Thank you. Next one here from Raji Gill of Needham & Company. Yes, thank you, and congratulations on good results in this very uncertain environment. Just one question on gross margins. They continued to be at kind of record levels. I'm wondering kind of what have been the drivers of the margin so far and how do we think about those drivers going through into next year? Thank you. Yeah. Well, I think the biggest drivers are gonna be factory utilization, right? I mean, we have, you know, more backlog than we know what to do with at this point in time, and so the factories are running harder than they've ever been before. We're using every piece of equipment that we have to produce as much product as we can. With that, you know, our planning and operations team are able to schedule things and batch runs and try to produce as much product as they can. That's a big thing. I think the other thing that we talked about in the response to some of the earlier questions is just our product mix and how that's changed over time has continued to enhance the gross margin. Great. Thank you, Raji. Next one here from Vijay Rakesh of Mizuho [crosstalk]. Yeah. Hi, guys. Just a quick question here. You talked about your own inventory and the channel inventory. I was just wondering if you'd give some color on what the OEM inventories look like because I think you're starting to see some of the OEMs like Stellantis and BMW this morning talk about, you know, worries about caution about a slowing down of sales with macro and rates, et cetera. I had a follow-up. OEMs don't tell us what inventory they carry right now. What we can gauge is how they are interacting with us on how they see business, you know, how many escalation issues we are still working and, you know, we don't see an abatement in terms of what they're trying to do. You know, OEMs also have not only a requirement to sell to their demand, they're also trying to replenish their their dealers and what the dealers' inventory needs to be. They're trying to replenish what the rental car inventory needs to be out there. Demand is still running strong. We don't see for our products an inventory issue that they're bringing to us to go solve. If anything, we're seeing more shortages and constraints for it with them. Got it. Just quick last question on the pricing side. I know you talked about, many different products, but obviously a lot of the microcontrollers are pretty long life products there. Just wondering if you took a step back and looked at, you know, 2021 or 2022, as you exit 2022 here for some of the long life, you know, products that you guys have, how has that pricing changed or trended over the last 2 years? Pricing over the history of Microchip is a strategic exercise for a sole sourced product that is proprietary from us. The only time when we have made a pricing adjustment that's been broad-based is over the last year to a year and a half, when we had cost increases with a view towards covering the cost increases that we were subject to in the way we passed on and margined up. Outside of that, pricing is not something we try to take advantage of when there are constraints, nor is pricing something that we give up on when there is extra supply. Got it. Thank you. You're welcome. It appears there are no further questions at this time. I'll turn the call back over to our presenters for any additional or closing comments. Great. I wanna thank everybody for hanging in there and despite some of the technical challenges, we appreciate the questions, and we look forward to seeing many of you and talking to many of you in the phone calls and conferences we have coming up. Thank you. That does conclude today's call. Thank you all for your participation. You may now disconnect.