Greetings and welcome to the Microchip Q4 of Fiscal Year 2024 Financial Results Conference Call. At this time, all participants are on a listen-only mode. A brief question-and-answer session will follow the formal presentation. If anyone should require operator assistance during the conference, please press star zero on your telephone keypad. As a reminder, this conference is being recorded. It is now my pleasure to introduce your host, Eric Bjornholt, Senior Vice President and CFO. Thank you, Eric. You may begin. Thank you, and good afternoon, everyone. During the course of this conference call, we will be making projections and other forward-looking statements regarding future events or 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 press releases of today, as well as our recent filings with the SEC that identify important risk factors that may impact Microchip's business and results of operations. In attendance with me today are Ganesh Moorthy, Microchip's President and CEO; Steve Sanghi, Microchip's Executive Chair; Rich Simoncic, Microchip's COO; and Sajid Daudi, Microchip's Head of Investor Relations. I will comment on our fourth quarter and full fiscal year 2024 financial performance. Ganesh will then provide commentary on our results and discuss the current business environment, as well as our guidance, and Steve will provide an update on our cash return strategy. We will then be available to respond to specific investor and analyst questions. We are including information in our press release in this conference call on various GAAP and non-GAAP measures. We have posted a full GAAP to non-GAAP reconciliation on the investor relations page of our website at www.microchip.com, and included reconciliation information in our earnings press release, which we believe you will find useful when comparing our GAAP and non-GAAP results. We have also posted a summary of our outstanding debt and our leverage metrics on our website. I will now go through some of the operating results, including net sales, gross margin, and operating expenses. Other than net sales, I will be referring to these results on a non-GAAP basis, which is based on expenses prior to the effects of our acquisition activities, share-based compensation, and certain other adjustments as described in our earnings press release and in the reconciliations on our website. Net sales in the March quarter were $1.326 billion, which was down 24.9% sequentially. We have posted a summary of our net sales by product line and geography on our website for your reference. On a non-GAAP basis, gross margins were 60.3%, including capacity underutilization charges of $32 million. Operating expenses were at 27.4%, and operating income was 32.9%. Although our operating income was better than the midpoint of our guidance, our cash taxes came in higher than forecasted. non-GAAP net income was $310.3 million, and non-GAAP earnings per diluted share was $0.57 and at the midpoint of our guidance. On a GAAP basis in the March quarter, gross margins were 59.6%. Total operating expenses were $536.4 million and included acquisition and intangible amortization of $151.2 million, special income of $16.9 million, which was primarily driven by the settlement of an unclaimed property audit at a value that was less than what we had accrued for. Share-based compensation of $37.4 million and $1.1 million of other expenses. GAAP net income was $154.7 million, resulting in $0.28 in diluted earnings per share. For fiscal year 2024, net sales were $7.634 billion and were down 9.5% from net sales in fiscal year 2023. On a non-GAAP basis, gross margins were 65.8%, operating expenses were 22% of sales, and operating income was 43.9% of sales. non-GAAP net income was $2.698 billion, and EPS was $4.92 per diluted share. On a GAAP basis, gross margins were 65.4%, operating expenses were 31.8% of sales, and operating income was 33.7% of sales. Net income was $1.907 billion, and EPS was $3.48 per diluted share. Our non-GAAP cash tax rate was 18.8% in the March quarter and 14.5% for fiscal year 2024. Our non-GAAP tax rate for fiscal year 2025 is expected to be about 13%, which is exclusive of the transition tax and any tax audit settlements related to taxes accrued in prior fiscal years. We are still hopeful that the tax rules requiring companies to capitalize R&D expenses will be pushed out or repealed. If this were to happen, we would anticipate about a 200 basis point favorable adjustment to Microchip's non-GAAP tax rate in future periods. Our inventory balance at March 31st, 2024, was $1.316 billion. We had 224 days of inventory at the end of the March quarter, which was up 39 days from the prior quarter's level and in line with our expectation, given the difficult revenue quarter we experienced. At the midpoint of our June 2024 quarter guidance, we would expect inventory dollars to be up modestly and days of inventory to increase based on the lower cost of goods sold, driven by the depressed revenue levels at which we believe is the low point of the current cycle for Microchip. We also continue to invest in building inventory for long-lived, high-margin products whose manufacturing capacity is being end-of-lifed by our supply chain partners, and these last-time buys represented 14 days of inventory at the end of March. Inventory at our distributors in the March quarter were at 41 days, which was up 4 days from the prior quarter's level. Distribution took down their inventory in the March quarter, as distribution sell-through was about $125 million higher than distribution sell -in. The inventory days increased, as this is reflective of the much lower cost of sales for Microchip in the March quarter that is used in this calculation. Our cash flow from operating activities was $430 million in the March quarter. Our adjusted free cash flow was $389.9 million in the March quarter. As of March 31st, our consolidated cash and total investment position was $319.7 million. Our total debt increased by $312 million in the March quarter, and our net debt increased by $273.3 million. Our Adjusted EBITDA in the March quarter was $503 million and 37.9% of sales. Our trailing 12-month Adjusted EBITDA was $3.623 billion, and our net debt to Adjusted EBITDA was 1.57 at March 31st, 2024, up from 1.45 at March 31st, 2023. Capital expenditures were $40.1 million in the March quarter and $285.1 million for fiscal year 2024. Our expectation for capital expenditures for fiscal year 2025 is about $175 million. Depreciation expense in the March quarter was $45.8 million. I will now turn it over to Ganesh to give his comments on the performance of the business in the March quarter, as well as our guidance for the June quarter. Ganesh? Thank you, Eric, and good afternoon, everyone. Our March quarter results were consistent with our guidance, with net sales down 24.9% sequentially and down 40.6% from the year-ago quarter, as we endured through a major inventory correction. non-GAAP gross margin came in as expected at 60.3%, and non-GAAP operating margin was better than expected at 32.9%, due to the strong expense control programs we had in place. However, as Eric mentioned, our tax rate was higher than expected, and as a result, our consolidated non-GAAP diluted EPS only met expectations at $0.57 per share. Our revenue decline resulted in March quarter EBITDA dropping, and as a result, our net leverage ratio rose to 1.57x. We expect our net leverage to rise modestly for a few quarters as trailing 12-month Adjusted EBITDA drops when replacing stronger prior year quarters with weaker current year quarters. However, our cash generation capability remains strong, and we are committed to our capital return plan. Our capital return to shareholders in the June quarter will increase to 87.5% of our March quarter adjusted free cash flow, as we continue on our path to return 100% of our adjusted free cash flow to shareholders by the March quarter of calendar year 2025. Reflecting on our fiscal year 2024 results, it was a rollercoaster year, with a positive start that was followed by a major inventory correction. As compared to fiscal year 2023, revenue declined 9.5% to $7.6 billion. non-GAAP operating margin was resilient at 43.9%, as we took the actions required to respond to the major inventory correction. Capital return to shareholders, through a combination of dividends and share buybacks in fiscal 2024, was $1.89 billion, representing a 15.4% growth as compared to fiscal year 2023. My thanks to our worldwide team for their support, hard work, and diligence as we navigate a difficult environment and focus on actions that we believe position us well to thrive in the long term. Taking a look at our fiscal year 2024 net sales from a product line perspective, our mixed -signal microcontroller net sales were down 10.2% and represented 56% of Microchip's overall revenue. Our analog net sales were down 15.2% and represented 26.4% of Microchip's overall revenue. While we don't normally break out our FPGA product line results, it is noteworthy that our fiscal year 2024 FPGA revenue exceeded $670 million and set another record. FPGA revenue grew over 22% as compared to fiscal 2023 and delivered operating margins north of corporate average. We deliver market-leading mid-range FPGA solutions with best-in-class low power, reliability, and security, and are especially well suited for the fast-emerging opportunities around artificial intelligence at the Edge. Our overall FPGA design win momentum is strong across multiple end markets. A few other product line notes of significance. Early in April, we closed our acquisition of Seoul, Korea-based VSI, an ADAS and digital cockpit connectivity pioneer, to extend our automotive networking market leadership. This acquisition adds Automotive SerDes Alliance Motion Link technology, otherwise known as ASA-ML, to Microchip's broad Ethernet and PCIe automotive networking portfolio to enable next-generation software-defined vehicles. With the anticipated increase in the adoption of advanced camera-based driver assistance systems, in-cabin monitoring, safety and convenience features, and multi-screen digital cockpits for next-generation software-defined vehicles,... There is a growing requirement for a more highly asymmetric raw data and video links and higher bandwidth, which the ASA Motion Link open standard supports. Also last month, we closed our acquisition of Neuronix AI Labs, whose innovative software technology enhances AI-enabled edge, intelligent edge solutions, and increases neural networking capabilities. This technology expands our capabilities for power-efficient, AI-enabled edge solutions deployed on FPGAs. Neuronix AI Labs provides neural network sparsity optimization technology that enables the reduction in power, size, and calculation for tasks such as image classification, object detection, and semantic segmentation, while maintaining high accuracy. Finally, in July, we expect to announce our entry into the 64-bit embedded microprocessor market with a suite of products, development tools, and other support requirements to address high-performance embedded processing applications, including AI-enabled edge solutions. This will extend our strong 32-bit embedded microprocessor portfolio to higher performance and increased capabilities, while preserving Microchip's historically strong ecosystem of leading development tools to make adoption easy for embedded system design engineers. Microchip is the only company to offer the widest embedded control and processing platform, from 8-bit to 64-bit, as well as FPGAs, with a common development tool ecosystem that's empowering customers to innovate and reuse their work across a wide spectrum of markets and applications. Now for some color on the March quarter and the general business environment. All regions of the world and most of our end markets, with the exception of, aerospace and defense, and the artificial intelligence subset of data centers, were weak. We believe that our product shipments are significantly lower than the end market consumption of our products, as our distribution channels drained inventory during the quarter. Our broad base of customers continued to lower their inventory and adjust their business plans in the midst of a weak macro environment and an uncertain outlook. With no major supply constraints, coupled with very short lead times and a weak macro environment, we believe there is inventory destocking, as well as reduction in target inventory levels that is underway at multiple levels, at our direct customers and distributors who buy from us, our indirect customers who buy through our distributors, and in some cases, our customers' customers. We are, however, also seeing early signs of green shoots in our business. First, the level of requests for cancellations and pushouts has started to subside. Second, our bookings have started to pick up, albeit from low levels. February bookings were the highest in eight months. March bookings were the highest in all of fiscal 2024, and April bookings were higher than March. Third, the new bookings are aging over a shorter period of time. And fourth, the number of expedites and pull-in and shipment pull-in requests are growing. Collectively, these green shoots, we believe, are pointing to the formation of a bottom. Our average lead times continue to be eight weeks or less. During a period of business uncertainty, we believe short lead times are the best way to help customers navigate the environment successfully and improve the quality of backlog placed with us. However, the significant reduction in lead time is also resulting in reduced near-term visibility for our business. Given the severity of the inventory correction, our factories around the world are running at lower utilization rates, and our three major fabs will take another two-week shutdown in the June quarter in order to help control the growth of inventory. Our internal capacity expansion actions remain paused. We expect our capital investments in fiscal year 2025 will be low, even as we prepare for the long-term growth of our business. On the CHIPS Act front, we have nothing new to report. The CHIPS office has completed their diligence for the grants we are seeking, and we are working towards an agreement. At this stage of a major inventory correction, we believe that the days of inventory metric, whether for Microchip or for our distributors, can be deceptive, as this is a backward-looking indicator measuring off a baseline that is well below where we believe end market consumption is at. For inventory planning, we are therefore focused on where we believe consumption is running and will likely run in the coming quarters. We continue to work with our distribution partners to attempt to find the right balance of inventory required to serve their customers, manage through their cash flow requirements, and be positioned for the eventual strengthening of business conditions. The operating expense reduction efforts we implemented last quarter, including broad-based salary sacrifices, are continuing this quarter. The shutdowns for manufacturing team members and pay cuts for non-manufacturing team members are consistent with our long-standing culture of shared sacrifices in down cycles and shared rewards in up cycles. Our culture of shared sacrifice protects our valuable employees from layoffs, helps enable us to support customers and maintain our design win momentum, helps ensure that manufacturing capacity can be turned on quickly as business conditions strengthen, and helps enable our product development teams to maintain their pace of new solution introductions. Now let's get into the guidance for the June quarter. While we see a number of green shoots in our business indicators, we still need turns orders within the quarter to meet our guidance. Operating in a high -turns environment has historically been normal for Microchip. It is just not a position we have found ourselves in over the last few years due to the supply-constrained, high backlog environment we and the industry experienced.... Taking all the factors we have discussed on the call today into consideration, we expect our net sales for the June quarter to be between $1.22 billion and $1.26 billion. We believe that the June 2024 quarter marks the bottom of the cycle for Microchip, and that our business will return to sequential revenue growth in the September 2024 quarter. We expect our non-GAAP gross margin to be between 59% and 61% of sales. We expect non-GAAP operating expenses to be between 28.25% and 28.75% of sales. We expect non-GAAP operating profit to be between 30.25% and 32.75% of sales, and we expect our non-GAAP diluted earnings per share to be between $0.48 and $0.56. We believe that the fundamental characteristics of growth, profitability, and cash generation of our business remain intact. We are confident that our solutions remain the engine of innovation for the applications and end markets we serve. Our focus on total system solutions and key market megatrends continue to fuel strong design win momentum, which we expect will drive above-market long-term growth. We remain committed to executing our Microchip 3.0 strategic imperatives, which we believe will deliver sustained results and substantial shareholder value. Last but not least, a month ago, we appointed Rich Simoncic as Chief Operating Officer. Rich is a Microchip lifer who has been with us for 35 years in many different capacities. Rich has been expanding his role over the last few years, and he and I will jointly lead the Microchip global enterprise so that we can apply our combined leadership capacity to engage the opportunities and challenges that are ahead of us. With that, let me 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 provide you with a further update on our cash return strategy. The Board of Directors approved an increase in the dividend of 18% from the year ago quarter to a record $0.452 per share. During the last quarter, we purchased a record $387.4 million of our stock in the open market. We also paid out a record $242.5 million in dividends. Thus, the total cash return was a record $629.9 million. This amount was 82.5% of our actual adjusted free cash flow of $763.44 million during the December 2023 quarter. Our net leverage at the end of March 2024 quarter was 1.57 x. Ever since we achieved an investment-grade rating for our debt in November 2021 and pivoted to increasing our capital return to shareholders, we have returned a total of $4.23 billion to shareholders through March 31, 2024, by a combination of dividends and share buybacks. During this period, our share buyback in the open market was approximately 30.4 million shares, representing approximately 5.7% of our shares outstanding. In the current June quarter, we will use the adjusted free cash flow level from the March quarter to target the amount of cash returned to shareholders. The adjusted free cash flow excludes amounts we collected from our customers for long-term supply assurance payments. These payments are refundable when purchase commitments are fulfilled. Our adjusted free cash flow for the March quarter was $389.9 million, so our target return to shareholders would be 87.5% or $341.2 million of that amount. However, as Ganesh mentioned, we did complete two small acquisitions in this June quarter, so we are reducing our share buyback amount to reflect the cash outlay for those deals. Thus, in the June quarter, our cash return to shareholders is expected to be $315.3 million, out of which dividends are expected to be approximately $243 million, and our expected stock buyback will be approximately $72.3 million. Going forward, we plan to continue to increase our adjusted free cash flow return to shareholders by 500 basis points every quarter, until we reach 100% of our adjusted free cash flow return to shareholders through dividends and share buybacks. That will take three more quarters, and we expect that dividends over time will represent approximately 50% of our cash return. With that, operator, will you please poll for questions? Thank you. We'll now be conducting a question-and-answer session. If you would like to ask a question, please press star one on your telephone keypad. A confirmation tone will indicate your line is in the question queue. You may press star two if you'd like to remove your question from the queue. For participants using speaker equipment, it may be necessary to pick up your handset before pressing the star keys. In the interest of time, we ask that participants limit themselves to one question and queue for additional questions. One moment, please, while we poll for questions. Thank you. Our first question is from Vivek Arya with Bank of America Securities. Please proceed with your question. Thanks for taking my question. Ganesh, you were suggesting June to be the bottom and for September to grow sequentially because of green shoots. But to be fair, you know, green shoots were suggested on the last call also, so what's the difference between the last call and this call? And if you could help us maybe quantify, you know, what has been maybe the pace of bookings increase year-on-year or quarter-on-quarter so far, so we can get a sense for the pace of recovery into September. And then maybe if I could also ask Eric on a related note is 60% also the trough for gross margin, if June is the bottom, does it also mean 60% is the trough for gross margins? Thank you. Great. Thank you, Vivek. I don't think we mentioned green shoots at the last earnings call, but we did say it at one of our banking sessions that we were at, and that was the first time we began to see it was in the March timeframe, and the momentum is picking up, right? As we go through March and April and May, I mentioned what the bookings were doing on a relative basis over that time. We can see how many more people are asking for pull-ins and expedites and all of that. So it's a, it's a qualitative view, looking at how we integrate the last two or three months of where momentum is coming in, where the customer feedback is coming in, that reflects our view that the June quarter is the bottom and September quarter is growth. Then the follow-up question for me on that was on gross margin, and would I expect if June is the trough in revenue, if gross margin would bottom out? I believe that to be the case. I mean, obviously, we haven't given guidance yet, and there's factors that apply to that that we don't know yet in terms of product mix and where we'll be running our factories, but I think that we are bouncing along the bottom on gross margin. Thank you. Great. Thank you. Our next question is from Chris Caso with Wolfe Research. Please proceed with your question. Yes, thank you. Good afternoon. I guess the question is if there's any difference that you're seeing from any of the different end markets. I mean, you know, some of the booking stabilization improvement that you've seen. You know, how would you characterize that among the different end markets? On the stabilization, I can't really point to a particular end market as doing better or not. As I said, in the aggregate, aerospace and defense and the AI segment of data center are both doing well. And so that part is pulling it up. On the others, you know, there can be some industrial customers who are still seeing weakness, others who are beginning to see the bottom and trying to come back in with rush orders. That goes into the other end markets as well. So no particular end market trend that is distinguishable on the bottoming out of where their inventories are. Thanks. As a follow-up, you know, Eric, you talked about, you know, perhaps if the things go well, June's the trough, then June's likely the bottom for gross margins as well. As you go forward, as we pull our way out of this, what do you think would be the trajectory of gross margins? And I guess I ask that taking in consideration the fact that your internal inventory is still high. So how would we think about gross margins, you know, in the context of recovery as you have to bring your own inventories down to normal? So it does depend on the revenue trajectory and then how we would run our factories to respond to that. And so, you know, it's not a question that I can 100% answer today, but, you know, our cost structures are still in good shape. Average selling prices are absolutely hanging in there. So with that, you know, we have confidence in our long-term model and our ability to get back there. But the trajectory and how we get there is gonna very much be revenue dependent, which will drive certain actions to increase output from our factories. So I know that's not specifically answering your question, but I think that's the best we can do right now. Yep. Fair enough. Thank you. Our next question is from Harlan Sur with JP Morgan. Please proceed with your question. Good afternoon. Thanks for taking my question. Can you just talk about channel sell-through dynamics from your global distributors? You know, in March, you mentioned sell-through, $125 million, higher versus sell-in. Is that a similar delta here in the June quarter? And if excess inventories at end customers of distributors are coming down, I would assume that distribution sell-through is starting to grow. Are you seeing that this quarter? And is this maybe what's also giving you confidence that June is the bottom? So, Harlan, thanks for the question. You know, the level of inventory that is past what our distributors have, that it ends with our customers, is not always visible to us. I think we can get some sense of that from what the distribution sell-through is. But there's also a second factor, which is some of those customers are also reducing the months of inventory they want to carry. So it's a, it's a multipronged, you know, answer to it. But what we can see is that distribution is part of the placing of additional orders on us, so they are seeing how they are managing their end customer, their inventory, and placing incremental orders on us.... So that must have some relevance to how they're viewing things, but I don't have a definitive answer on where sell-through is gonna end up versus sell-in here in the June quarter, at least not at this time. Thank you for that. Then just a quick follow-up. Direct customer shipments were almost 30%, were down almost 30% sequentially, while disti shipments were only down 20% sequentially in March. Does that suggest that excess inventories are maybe a bit more pronounced at your direct customers? If your lead times are sub 8 weeks, you guys only have visibility through the end of this quarter. What gives the Microchip team confidence that shipments to direct customers post-June will be growing sequentially, as you aren't booking beyond that, and you don't really have visibility into their sell-through dynamics? So we know, and customers are placing backlog into the September quarter, into the December quarter. So there's not a single answer- Mm-hmm. - that everybody is following. We can see that as the bookings are rising, they are placing them into the next three to six months on a more predominant basis. That level of where the momentum is coming in and how backlog is coming in is what gives us a sense of where the bottom is and how things are going to be as we move into the September and December quarters. Thanks, Ganesh. Thank you. Thank you. Our next question is from Gary Mobley with Wells Fargo. Please proceed with your question. Hi, guys. Thanks very much for taking my question. I, I know you guys communicated that you held the OpEx lower than expected, and I think it sits today, what, $355 million on a non-GAAP basis. My, my question is, you know, how long can you hold that down? And is there any clawback provisions for the lost wages during this temporary salary cut? And, I'm just trying to get a sense of, of how we should think about the OpEx increasing as revenue increases. Well, I'll start with the response, and Ganesh can add to it if he wants to. So yeah, there is not a clawback in terms of what we're doing from a salary sacrifice for our employees. We have this shared sacrifice, shared reward program, and in the past, when we have implemented something like this, it has worked out well for our employees, that we keep everybody working on the things that are important to drive the revenue growth as the cycle turns upward, and we've gained market share through that. And so we've had great financial results coming out of it and then been able to share those rewards with employees through higher bonuses and, you know, taking away the pay cuts at the appropriate time. So we're gonna have to see how this plays out from a top-line revenue perspective. It would be my perspective that we will achieve the same types of results this go around with the actions that we've taken. But there's no promise to employees that they're gonna get this money back. There's no retroactive clawback that would be implemented. You know, this is a part of our culture that is not always as easily appreciable from the investor community. You know, we have 98% of employees around the world that are participating in this voluntarily. We have another 700 employees who have volunteered for a higher salary reduction than what we have requested from them. It's very difficult to quantify how powerful culture plays a role in these type of difficult situations, and how much that the employees are a part of the solution. And of course, they are a part of these shared rewards that come up as we get into better times as well. So this is very much of a program that has worked many times in the past and is another time we're applying it, and we expect it to be successful. I think the other thing that I'd add is, you know, we know this is difficult for employees. You know, inflation still exists, and this is a challenge for employees. It's not that we want to keep these in place, but, you know, at the time, with where we're guiding revenue for the current quarter, revenue and earnings, it's appropriate, and we hope that we can restore these things back to normal salary levels as soon as possible. Thank you for that color. As my follow-up, I wanted to perhaps strike a more positive chord and ask about design win metrics for the fiscal year. I don't know if you have those stats on hand with you, but maybe if you can just give us some qualitative or quantitative measure of the lifetime value of the design wins. So we don't usually break that out, and, you know, we have slightly different ways in which we look at this. What we do constantly look at is, you know, how is the design pipeline progressing? And in the course of 2023, in addition to all the work that we did, we also saw customers shifting their priorities from doing triage for some of their shortages that they were running into, to bringing back the innovation programs that they had put on hold. And so if you put all of that in together, the design win pipeline is strong. There's a lot more design activity over the last 12 months than there was in the prior 12 months, just simply because customer bandwidth was there to be able to run the development programs that they were progressing with. Thanks, Ganesh. Thank you. Thank you. Our next question is from Carlos Coronado with UBS. Please proceed with your question. Hi, hi, it's Tim on. So, Ganesh, can you give us a sense of book-to-bill? Sounds like it was below one for March, but I just wanted to confirm that. And I know that, you know, you did say that orders are getting better month by month, but is the message that you think book-to-bill could be above one for the June quarter? So I'm just wondering if you could talk to book-to-bill. Thanks. ... So book-to-bill was below 1. However, book-to-bill has never been an indicator for us of where the business is going as much as an indicator of where our lead times are. You know, during the 2021, 2022 shortages, we had book-to-bill in many, many multiples of where they were at, reflecting the long lead times. Right now, with short lead times that we have, we expect book-to-bill will be lower. But the bookings are rising, and I can't quite tell what May and June are going to complete, so I don't have a thing. But we don't really look at book-to-bill as necessarily an indicator of where the growth is going to be. It's more a reflection of, as lead times get short, people will place the booking consistent with the shorter lead times. Got it. Okay. And then, Eric, one for you. So inventory was a little higher coming out of March than I think, you know, some of us thought it would be. Can you talk about loadings in the factory and sort of how you're thinking about loadings into June? Are you kind of drawing a line in the sand where you plan to bring down inventory on the, you know, balance sheet in June? And yeah, just kind of talk about that and its impact on gross margin. Thanks. Yeah. So I'm honestly not quite sure where the Street had us modeled. You know, we had talked about in our last conference call that inventory days were expected to be between about 225-230 days at the midpoint. We came in at 224, so I think we kind of delivered on what we, what we told the Street we were going to do. In terms of utilization in the current quarter, you know, we, we have been having some attrition in our factories, and because of that, we can start less wafers on a monthly basis than we can because we have a fewer number of employees. But it's, in the big picture of things, relatively modest. I don't think utilization will be significantly different than it was in the March quarter, maybe just modestly lower. Perfect, Eric. Thank you. Thank you. Our next question is from Tore Svanberg with Stifel. Please proceed with your question. Yes, thank you. Let me move on from cyclical questions. I have a question on 64-bit microcontrollers. You also had an AI acquisition in the quarter. Just trying to understand, Ganesh, you know, your conversations with customers. You know, we hear AI at the edge a lot, but, you know, it's hard for us to get true visibility on that. So when will, you know, edge AI become a much more meaningful part of your revenues, would you think? You know, our target market for Edge AI are predominantly in industrial, small extent automotive, some in medical, the medical segment of industrial, factory automation, all that. So they are designs in progress, and they've been taking place over the last six to 12 months. They probably will gestate over 24-30 months of time. So it's in that time. There's some of it, small amounts that are already taking place, but I think it becomes a more and more meaningful part, as time goes on. And each of these, either product line announcement or some of the acquisitions which give us specific technologies, just accelerate where those designs can go and how our solutions can be differentiated from others providing similar solutions. Great. And as my follow-up, you said that you're basically shipping below consumption. You're about $1 billion, you know, from your trough. Obviously, you're running inventory at a certain level, and so you must have some idea where the consumption is. Is that a number you could share with us? Not with any level of precision, but I think any form of a take a four-quarter revenue divide by four starts to get you into the ballpark, but even that is unclear, right? So I think that number will get clearer as people begin to book and buy at a level that they need to, excluding any growth, just to get back to consumption. But there's not an easy way to make that number determinable. It's clearly between where our peak a year ago was in the June quarter to where you're seeing the guidance for this quarter. That's helpful. Thank you. Thank you. Thank you. Our next question is from Toshiya Hari with Goldman Sachs. Please proceed with your question. Hi, good afternoon. Thank you so much for taking the question. I had two quick ones. First on inventory, maybe for Eric. So how should we think about inventory management through cycle or longer term? I know you've got, you know, strategic inventory. I know you want to better service your customers on the way up, but, you know, when you think 12 months out, 18 months out, whether it be in dollars or days, what are you managing the business to? And then, a quick follow-up on pricing. I think you mentioned that in the near term, pricing is holding up. But as you think about, you know, calendar 2025, I think some of your peers have talked about pricing trends potentially reverting to pre-pandemic patterns, down, call it low singles. Is that a view that you would agree with or share? Or, do you feel or think differently on pricing? Thank you. Okay. All right. So on inventory days, you know, longer term, our model is, and this really hasn't changed from what we shared back in our analyst and investor day, that we're targeting 130-150 days. Now, we're a long ways from that today, and I'm not going to put a time horizon on when we will get there, but that, that's still the goal, right? We, we think with that level in a more normalized environment, we can have short lead times and support our customers appropriately with that level. So I'll turn the pricing question over to Ganesh. ... And I would add one more thing, which is, you know, we also have these, last time buys that we put into place on very high gross margin product lines, and those will be additive, and they are situational, depending on when we're faced with that kind of situation. On the pricing itself, you know, our, our pricing is predominantly a function of what, we have to compete with at the point of design. And so, you know, in the near term, pricing is really driven by where designs were historically, what we want them at. And, and a lot of these are products, going into applications that have long life cycles, and, they don't really change. Unlike a consumer electronics or other end markets, they don't really, every nine, 12 months, change things out. You know, we have products that have been in designs for five, seven, nine, 10 years in many cases, as well. We are being competitive on new designs with pricing where we need to be, but we also have new products that we compete with. And so the most competitive new products are what we use to go fight in the most price-sensitive new design applications. And that's been historically how it's been. It's not something new. And if you go back and look at 20 years of Microchip, that's how we've done it. And we have a lot of business that continues, that will be existing business at existing prices for a long, long time to come. And then we'll have new business at new pricing, and that new pricing, we expect, will have good gross margins as time goes on. Great. Thank you. Thank you. Thank you. Our next question is from Joshua Buchalter with TD Cowen. Please proceed with your question. Hey, guys. Thank you for taking my questions. I guess to start, maybe I can follow up on the previous one. You mentioned pricing hanging in overall, but, you know, competing more on new design wins. Are you observing those new design wins becoming any more price sensitive or more price competitive as the shortages have eased and we've entered this correction mode, or sort of still normal operating and competitive conditions? Thank you. You know, new designs have always been highly competitive. It's where people are trying to work on winning platforms with multi-year implications. So, in the couple of years of constraints, there were fewer new platforms, new designs that customers were doing. But in the sense of having to be competitive and the competitive intensity for new designs, yes, it's different from the last two or three years, but it is consistent with what it has been over 20 years before that. That's clear. Thank you. I appreciate the color there. Then for my follow-up, the CapEx guidance is obviously down meaningfully off of what was likely a peak two years ago. Could you maybe just speak to your confidence in having enough capacity, both internally and perhaps more importantly, investment from your foundry partners at the process geometries that you ship your products on? Thank you. Yeah, so let me say, it's a plan that we look at consistently, both short, medium, and long term. We feel very confident with the internal capacity, both what is installed and underutilized, what is available and ready to go, and then eventually, what we might add to it. And then we work with our partners, both the foundries as well as the OSATs, on their capacity planning across the horizon that they have. You know, we're obviously a small piece of a much bigger pie there that they're running, but, we don't have any particular capacity constraints that we're concerned about. You know, it may change, as demand begins to come back, and, if in fact, there's a much sharper rise, as some people are predicting. But for the moment, we're quite confident both in our internal, as well as our partner capacity for the business we're running. Thank you. Yeah. As a reminder, if you'd like to ask a question, please press star one on your telephone keypad. Our next question is from Chris Danely with Citibank. Please proceed with your question. Hey, thanks, guys. So now that we're, you know, yet another quarter into the correction and hopefully coming out of it, if we look at your total drop in terms of revenue, it's probably gonna be like 45% or something like that, and that's worse than most of your competitors. So I guess, why do you think that is? Do you think that, you know, the PSP program encouraged a little double ordering? Is there some, you know, geographic or something else going on? Just looking for some, for your take on why that's happened. Yeah, no, great question, Chris. You know, when you look at peak to trough, it all is a question of when does it start and when does it bottom out, right? You've seen one of our peer group companies that tried to do a peak to trough in one quarter, and you could say, "Boy, you know, that was one way to do it." Our, you know, objective has always been to try to respond as the business is changing. And so we've had different end markets responding at different times. We had a lot of automotive and industrial. They were later in the cycle, and our mix is higher in some of those markets as well. In this case, the downturn is, you know, substantially deeper than what anybody had expected on that. There's probably a component of PSP that may have amplified some of those things, et cetera. But a lot of it has to do with, we started later, and we are correcting stronger, and the end markets that we are predominantly represented in were the ones with the later in the cycle corrections than perhaps those that are more consumer or phone or PC, that kind of exposure. Got it. Thanks, Ganesh. You're welcome. Thank you. Our next question is from Vijay Rakesh with Mizuho Securities. Please proceed with your question. Yeah, hi, just a quick question on the competitive landscape, I guess, especially as you look at kind of China supply. Is there any worry around them being aggressive on the microcontroller supply coming out from there? And what are you seeing in those trends? You know, China has always been a competitor in many of the spaces that we're in. You know, their approach is a little bit different. They have a lot of their attention going into things that can be faster to market, you know, quicker, and those tend to take them into places like consumer electronics and, you know, the other areas that are faster design cycles, a lot of the power supplies for cell phones and those kind of things. Clearly, you know, they are also making products that can go into other end applications, and that's a competitive environment that is not different today. You know, you could argue perhaps that there's a lot of attention and priority that they have. But, you know, we win with new products, we win with competitive solutions that we have. And, you know, we win by providing the customer with a solution that is better than what they can get otherwise. And, that remains the way in which we've gone to market, and we'll continue to fight for new business in China and anywhere else. Got it. Then, as you look at the utilization, I don't know if you gave a hard number there, but how do you see that playing out through the rest of the year? I know there's a lot of moving parts to that, but any way to look at what your utilization looks like? I know you cut CapEx pretty significantly too, so that should help, but. Yeah. So, you know, we, we don't break out a specific utilization in total. We have, you know, it varies very much by factory. You know, we, we have had some attrition in employee headcount, which I mentioned in response to an earlier question, that just makes it that as we go by, by the months and aren't rehiring, that, you know, capacity utilization would come down modestly. So I'm not expecting a huge change from March to June, maybe just a little bit lower. And then, obviously, actions, depending on what our outlook is on revenue and inventory, will drive, you know, what the rest of the year looks like as we, as we gain a little bit more confidence and understanding where the business is heading over the coming months. Got it. Thanks. Thank you. Our next question is from William Stein with Truist Securities. Please proceed with your question. Great. It was interesting to see a couple of tuck-in acquisitions this quarter. I'm wondering if you could talk about the relative focus of that approach to capital deployment, or let's say, product development going forward relative to internal development. So, you know, we have an internal development that works on the model that we have provided, which over the long term is the 68% gross margin, 23% operating expense, 45% operating margin. That allows for the prioritization of our internal activities and where we want to apply it for different opportunities that we have in front of us. From time to time, we find there are external opportunities where the speed at which we could do something or the time that it would, you know, involve in trying to get to a solution can be a lot longer if we were to do it just organically. There, we have applied these tuck-in acquisitions as a way to speed up what we're able to do, consistent with the direction that we are interested in or have been following for a while. We've done about six or eight of them now in the last four or five years of time, ever since Microsemi was the last major, public acquisition we did. We've done about six to eight smaller ones, since then. It all is to speed up our agenda, with a very tactical and a pinpoint strike on, what the acquisition can do, for the areas that we're driving growth in. We will do more of those, as we continue on as well. It's a, you know, we've always been public, that's an essential part, of our strategy. As a follow-up, it does sound that while you anticipate revenue to grow in September, I would imagine the inventory burn isn't done at the end of June. I wonder if you can maybe help us understand when we should expect a situation where your revenue is approximately the same as in demand. In other words, when the inventory reductions will be mostly done. Do you think that's accurate? Have I misread you, and that actually does happen in June, or do you think it's more like September or even further out? Thank you. So I'll start with the response here. I mean, I think the bottom line is, Will, with 125,000 customers, it is impossible to know, you know, when all customers or majority of customers have kind of corrected in their inventory to what they think the right level is. And that's somewhat a moving target as lead times adjust based on whatever point in the cycle that we're at. So we don't have a good answer to be able to answer your question there. We'll obviously give guidance for the next quarter, and we'll have more information that we can share at that time. But, yeah, I think that for some customers, this inventory correction is going to last beyond this quarter. I think that absolutely is the case. Yeah, I think many customers made their own mistakes on how they viewed their business, what they thought the prospects were. Many other customers, you know, were very thoughtful, continue to be strong players in where they're at, and as we gave you some indication of certain end markets where there's strength as well. So it's all over the place. And just as a preponderance of people who are done with their inventory correction and are now going back into buying for their consumption, and/or into growth that they may be seeing, the weighted average begins to shift, and that's the weighted average that begins to shift in September. Thank you. Thank you. Our next question is from David O'Connor with BNP. Please proceed with your question. Great, thanks for taking my questions. Two from my side. Maybe firstly, Ganesh, just on the green shoots, can you talk about them from a geographical perspective? Is it mainly China driven, and now you're seeing that continue in Europe and the U.S. or how would you describe it geographically? Yeah, so the green shoots are not limited to any one geography, not limited to any one end market. It's really across all of them. And as I mentioned, you're gonna have in a geography or in an end market, both customers with continued pain and other customers who are starting to look at how to get back into growth mode and what they're doing. So no specific end market or geography leading to the green shoots. Okay, got it. Thanks for that. And then maybe just on the acquisition, the Neuronix AI Labs acquisition, seems like it helps you address the Edge AI market with your MCUs. Can you maybe talk about the kind of content tailwind for your MCUs for Edge AI that this can generate? Or, you know, how much of your MCU portfolio or customers looking to add Edge AI content in their next-gen products to kind of run those Edge AI models? Maybe if there's any more color around that, it'd be helpful. Thank you. I don't know if there's a numerical way to give you that. I think, here's what I'll say. I believe that embedded customers are thinking about how AI can be used in delivering better solutions than what they have in the past. No different from if you go back in the chronology from 25 years ago, people added intelligence first, because you could make a product better with intelligence added. Then farther out in time, people added connectivity as a way to now make it even better than just adding intelligence. And then they added security as the thing. And now finally, I think, you know, AI is the next leg of how people will add capability to the products to make them better. So it's a journey, and there's gonna be many customers who don't need to do anything with AI, others who are seeing the opportunity and will take advantage of that in the next generation of their products. But I think you should think of it as a continuum of customers. They're all looking to innovate. AI gives them another opportunity in their platforms to be able to innovate and provide better products than the previous generations. That's helpful. Thanks, Ganesh. Great. Thank you. Thank you. Our next question is from Mark Lipacis with Evercore ISI. Please proceed with your question. Hi, thanks for taking my question. I think this is for Ganesh or Steve. I'm wondering, what is the difference between the setup for Microchip's business over the next six months and the setup that you see at the bottom of every cycle? It seems like there's a lot of similarities, and I'm hoping you can tell me the difference. The similarities I see are, there's some kind of demand shock or, you know, a big inventory build, and then your customers and the supply chain downstream from them recognize that, so they decide that they're gonna supply themselves out of their own inventories, they cancel orders, or they take orders down, and then you don't get any visibility. So you and your peers take your utilization rates down and, you know, sometimes do temporary fab shutdowns. And then your customers have an epiphany that they overcorrected on the downside, and in three, four quarters from here, everybody's ticking their numbers up, and everybody's scrambling to get components. So those are the similarities I see. What, what are the, what are the differences? And if, and if you have a disagreement over those similarities, I'd, I'd love to hear that, too. Thank you. Mark- Mark, I think you've answered your question. We couldn't say it any better. You asked the question, then you answered it. I think it's perfect. Mark, I was gonna welcome you back. Thank you. To the floor as well. And as you said, I think this is a cycle we've seen play out many times, and the elements that you answered or the elements that you proposed are there. I don't know of any differences in this one. Obviously, you know, the length of the upcycle sometimes affects the depth of the downcycle, but other than that, the elements are very similar. Yeah, I think- Well, I was hoping that you might say, I was hoping you might say, "Well, the supply chain has learned their lesson over the last three years and recognized that you guys need to have visibility because there's a manufacturing cycle time." So is, is that, has the supply chain not learned anything downstream from you? Is it- No. We're just doing the same thing over and over again? No. So yeah, I had assumed that during the depth of the constraints, with all the different discussions I was having with the senior executives at our customers, that they would come out of this cycle with a better understanding of how semiconductor supply works and what they would need to be to be more strategic. But I have been surprised at how quickly people have forgotten and how quickly people have returned back to the way they used to think. You know, basically, they think semiconductors are like water in your tap. You turn on the tap, and the water comes, and you turn off the tap, and it goes away. I am of the belief that those lessons will have to be relearned again as we go through the cycle. You know, we'll see how the cycle goes. But no, there has not been any. There are a few, but for the most part, those learnings have not carried forward. So, so wash, rinse, repeat off the bottom? Yes. Mark, from time to time, you know, some people have written or talked about, you know, industry has matured and there will not be any cycles anymore. I think all those predictions have been wrong. Industry has always been cyclic and will always be cyclic. I think our customers, our distributors, our vendors, suppliers, they don't learn. You know, I think people change, new purchasing managers come in, new people come in, and as Ganesh described, the lessons are forgotten very rapidly, leading to just these cycles never going away. This one was the most pronounced cycle, both on the upside and now we're seeing on the downside. Yeah, I was just gonna make the point, as I view this as inventory correction on steroids, right? I mean, that we had not seen our lead times for the vast majority of our products go to 52 weeks before, and then they contracted over a period of 12 months down to, you know, these very short lead times that we have today. Very helpful. Thanks, everybody. Thanks, Mark. Thank you. Our next question is from Joe Moore with Morgan Stanley. Please proceed with your question. Great. Thank you. You gave us some color on the FPGA business, and I wonder, it sounded like some pretty good growth relative to the peers for the fiscal year. Can you talk about the trajectory of that? Have you seen, you know, it's obviously been a tough patch for FPGAs as well. Has that looked similar to the rest of your business? Has there been an outperformance relative to that? And can you talk about, you know, your market share prospects going forward in there? Sure. So our FPGA business has in fact performed better than our other businesses. And in part, it's because our FPGA business has historically had a large aerospace and defense component, and continues to. Now, we have, over the last four, five years, been creating the new design opportunities for FPGA in the longer term to grow in industrial and automotive and the historical end market strengths that Microchip had before we got the FPGA business. And so this, you know, it is not immune to market forces and where things are gonna go, but it has got a better end market mix than some of our other businesses, and therefore has performed better. And of course, we are picking up designs that, in the long term, that are falling off of, you know, erstwhile Xilinx and erstwhile Intel, you know, Altera, as they take focus away from the mid-tier over many years that they have done, or end-of-lifing products, right? Those are all creating opportunities for our FPGA business. And so I'm very, very optimistic about prospects for our FPGA business. Great. Thank you. Thank you. Thank you. Our next question is from Christopher Rolland with Susquehanna. Please proceed with your question. Hey, guys. Thanks for the question. I guess, first of all, Ganesh, like, in terms of this inventory, are there any products or markets that have surprised you, either that they burnt inventory and have normalized quicker than you expected, or that this is going to take longer for these products or markets? I think not so much by product, but I think if you look at, you know, specific customers, in many cases, even in the same market, right? So we can have an end market, say, industrial, and we have examples of certain customers who have burned through their inventory, and they're back asking for new orders at expedited times. We also have other customers, same industry, who are still burning through inventory and taking longer where they go. So I think a lot depends on the customer, their market prospects, what did they do to create and grow their business, and how well are they executing? And so that's really been the difference, is that it's customer by customer, the stories are different. Yeah. Understood. And then, you know, if I'm hearing you correctly, you think June is the bottom, a lot of that is inventory based. I'd like an idea of how you're looking at the inventory position in September at your customers more generally. You know, do you think we can get back to seasonal trends in September and going forward, or is this, or is there still this inventory drag overall? You know, I think there's gonna be customers at different points in the correction cycle. Some will have corrected and moved on, others will still be correcting. So I think seasonality is perhaps one of these things which you need a level of normalcy for some period of time before you can say, "Okay, we now have all these variables that have been taken out." So I can't say we have seasonality in the September quarter. I can say that incrementally, on a weighted average basis, there are more customers who are gonna be out of their inventory correction, but not that they're all done. Great. Thank you, Ganesh. Thank you. Our next question is from Tore Svanberg with Stifel. Please proceed with your question. Yes, thank you. Just one quick follow-up. Ganesh, you said that you still need quite a bit of turns this quarter. Just wondering, what is the turns requirement, and how does that compare with you know, previous cycle troughs? Thank you. So we are not going to break out the amount of turns that are required, but we do have turns to take to meet our guidance, and our guidance is obviously, you know, to have another, another down quarter. But the lead times are short. We are getting these requests for pull-in. I don't have a good comparison to give you in terms of prior cycles. You know, if this turns out to be the bottom for us, which we believe it will, we can probably give some commentary when we talk about our September guidance, as you know, we kind of hit and move through that bottom. So one of the things which is more difficult to do is, you know, most people talk about turns in a normal environment where there isn't inventory out there, and it's harder to, you know, we can say, "Hey, turns are x percent from a historical basis." But when there is inventory, we know those turns aren't going to show up because people will burn through their inventory before they begin to place it. And I think that's some of the hesitation we have in trying to provide some insight where we know there's a lot of uncertainty. What we have done is done the best of our assessment of what those are going to be, where they're going to be, and built it into the guidance. And so I think that's the best way to think about it, is that we have taken into account the risks that are present from inventory that would otherwise, you know, cause headwinds to turns in the quarter. Very fair. Thank you. Great. Thank you. Thank you. Our next question is from Vivek Arya with Bank of America. Please proceed with your question. Thanks for the quick follow-up. I just wanted to clarify what is the contribution of the acquisitions in the June quarter or in fiscal 2025? And then, Ganesh, back to the September quarter, I think you did say that you expected to grow, or I understand that it's hard to put a seasonal, you know, number on it. But based on what you have seen in prior downturns, just the fact that, you know, Microchip has gone down so much from peak to trough, should we also expect a kind of sharper recovery back to when you do start recovering? So to answer your first question, you know, these are small tuck-in acquisitions. They're intended to accelerate our effort on design ends and design wins and all of that, so they don't have any revenue contribution in the June quarter or in the September quarter, for that matter. In terms of the revenue and what happens as the correction happens, yes, you should think that at some point, and I can't tell you is it in September or is it in December, you will see—we will see a sharper recovery. That's how it has played itself out in many other cycles as well. And you know, there are two stages to it. There's the first stage, which is just people needing to get back to... They've burned through most of their inventory, and they need to get back to at least buying to consumption. And then there's a second phase, which is: What is the macro doing? And is the macro driving further growth for them above just what their flattened consumption line alone might tell us? And I think all of that, if you look forward into a likely environment over the next twelve months, should give us a sharper recovery. Thank you. This concludes our question and answer session. I would like to hand the floor back over to Ganesh Moorthy for any closing comments. Great. I want to thank everybody for joining us on the call. I know we ran over a little bit, but I appreciate the questions, and we look forward to seeing and talking to many of you in the coming days, as well as many of the conferences that are coming up. Thank you. This concludes today's conference. You may disconnect your lines at this time. Thank you for your participation.