Greetings and welcome to the Microchip First Quarter Fiscal Year 2025 Financial Results Conference Call. At this time, all participants are in 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, CFO. Please go ahead. 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 first quarter fiscal year 2025 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 and 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 June quarter were $1.241 billion, which was down 6.4% 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 just below the midpoint of our guidance at 59.9%, including capacity underutilization charges of $36 million as we continue to manage production activities to adjust to the challenging business conditions. Operating expenses were at 28.4% of net sales, and operating income was 31.5%. Non-GAAP net income was $289.9 million, and non-GAAP earnings per diluted share was $0.53, which was a penny ahead of the midpoint of our guidance. On a GAAP basis in the June quarter, gross margins were 59.4%. Total operating expenses were $517.8 million and included acquisition intangible amortization of $123 million, special charges of $2.6 million, share-based compensation of $37.4 million, and $1.8 million of other expenses. GAAP net income was $129.3 million, resulting in $0.24 in earnings per diluted share. Our non-GAAP cash tax rate was 13% in the June quarter, which was in line with our guidance. Our non-GAAP tax rate in 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 June 30, 2024, was $1.308 billion, which was down $8 million from the end of the March 2024 quarter. We had 237 days of inventory at the end of the June quarter, which was up 13 days from the prior quarter's levels as a result of a lower dollar value of quarterly cost of goods sold from lower sequential revenue. At the midpoint of our September 2024 quarter guidance, we would expect inventory dollars to be up modestly and days of inventory to increase. 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 19 days of inventory at the end of June. Inventory at our distributors in the June quarter was at 43 days, which was up two days from the prior quarter's level. Distribution took down their inventory holdings in the June quarter as distribution sell-through was about $85 million higher than distribution sell-in. Our cash flow from operating activities was $377.1 million in the June quarter. Adjusted free cash flow was $301.3 million in the June quarter. As of June 30, our consolidated cash and total investment position was $315.1 million. Our total debt increased by $179 million in the June quarter, and our net debt increased by $183.6 million. The increase in debt was impacted by our refinancing activities in the quarter, which included issuing a 0.75% six-year convertible bond for which we paid $105 million for a 75% capped call to provide some protection from future equity dilution from stock price appreciation. Our adjusted EBITDA in the June quarter was $456.2 million and 36.8% of net sales. Our trailing 12-month adjusted EBITDA was $2.908 billion. Our net debt to adjusted EBITDA was 2.02 times as of June 30, 2024, up from 1.29 at June 30, 2023. Capital expenditures were $72.9 million in the June quarter. Our expectations for capital expenditures for fiscal year 2025 is about $175 million and is more heavily weighted in the first quarter of fiscal year 2025 as we had worked with our suppliers to push out capital that was originally planned for delivery last fiscal year. Depreciation expense in the June quarter was $43 million. I will now turn it over to Ganesh to give his comments on the performance of the business in the June quarter as well as our guidance for the September quarter. Ganesh. Thank you, Eric, and good afternoon, everyone. Our June quarter results were consistent with our guidance, with net sales down 6.4% sequentially as we continued to navigate through a major inventory correction. Non-GAAP gross margin came in just under the midpoint of our guidance at 59.9%, while non-GAAP operating margin was at the midpoint of our guidance at 31.5% as we continued our strong expense control programs. Our consolidated non-GAAP diluted earnings per share came in a penny ahead of guidance at $0.53 per share. Our sequential revenue decline resulted in June quarter adjusted EBITDA dropping, and as a result, our net leverage rose to 2.02x. We expect our net leverage to rise modestly for a few more quarters as trailing 12-month adjusted EBITDA drops when replacing stronger prior year quarters with weaker current year quarters. However, our cash generation continues to be solid, and we remain committed to our capital return plan. Our capital return to shareholders in the September quarter will increase to 92.5% of our June 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. My thanks to our worldwide team for their support, hard work, and diligence as we continue to navigate a difficult environment and focus on actions that we believe position us well to thrive in the long term. In early July, we announced 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 extends 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 - 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 June quarter and the general business environment. All regions of the world and most of our end markets exhibited varying degrees of weakness. The exceptions were aerospace and defense, which was stable, and the artificial intelligence subset of data centers, which continued to be strong. Our business in Europe and Americas, which are dominated by industrial and automotive markets, were particularly weak on the heels of a very weak March quarter. Our broad base of customers continued to manage their inventory tightly and adjust their business plans in the midst of a weak macro environment for manufacturing, high interest rates, very short lead times, and an uncertain business outlook. This combination of factors we believe is driving inventory destocking as well as reductions in target inventory levels in multiple areas at our direct customers, at contract manufacturers, and at distributors who buy from us, at our indirect customers who buy through our distributors, and in many cases, at our customer's customers. The early signs of green shoots in our business we saw in February, March, and April have continued to progress, although at an uneven pace, with bookings up sequentially in some months and relatively flat sequentially in other months. Although quarterly bookings grew close to 50% in the June quarter as compared to the March quarter, overall bookings were still below where we would like to see them. Bookings, however, continued to age over a shorter period of time, and we continue to see many requests for expedites of new orders and shipment date pull-ins for previously placed orders. Requests for cancellations and push-outs continue to subside. Our average lead time continued to be about eight weeks or less, while the short lead times are resulting in reduced near-term visibility as customers delay placing orders since they have high confidence that supply is readily available. We also believe short lead times during a period of business uncertainty are the best way to help customers navigate the environment successfully and improve the quality of backlog placed with us. We have adjusted our operational systems to adapt to this uncertain environment and pre-position semi-finished and finished goods inventory as best as we can to accept and ship the turns orders we need this quarter. Given the severity of the down cycle, our factories around the world are continuing to run at lower utilization rates in order to help control inventory levels. Our internal capacity expansion actions remain paused. We expect our capital investments in fiscal 2025 and likely in fiscal 2026 as well will be low as we will use the inventory we have invested in as well as our underutilized capacity to support the next up cycle. We are also prepared for the long-term growth of our business, on the one hand in partnership with our foundry and outsourced assembly and test partners, and on the other hand for our internal factories with the optionality of deploying capital, which we have purchased but not yet placed into service. While neither we nor our customers know the shape of the recovery in the coming months, we do expect it to arrive as it has in all prior semiconductor cycles, and we believe we are well prepared for the things we can control to exploit whatever the market recovery looks like. On the CHIPS Act front, we continue to work through a number of challenges with the CHIPS Office and other government departments in regards to the grants. While the investment tax credit process has been relatively straightforward, and we are greatly appreciative of this benefit, the journey to receive grants has taken much longer and been more complicated than we expected. Recall, we announced a preliminary memorandum of terms in early January 2024 and supported the completion of diligence by March. Given that we align extremely well with the U.S. government's goals of shoring up semiconductor supply for national security and industrial security, it would be unfortunate if a pragmatic agreement on the conditions attached to the grants cannot be reached. We continue to persevere through the challenges by collaborating with the CHIPS office while remaining resolute that whatever agreement we reach must also be consistent with our business values. Before we get into our guidance, a note about the strength of our design activity. After 2+ years of dealing with shortages and redeploying their innovation resources towards mitigating the impact of shortages, our customers over the last year plus have returned to prioritizing their innovation projects. The result is a strong design and pipeline for us across all end markets, megatrends, and key customers, amplified by a total system solutions approach to take advantage of our broad portfolio of solutions. The impact of this growing design pipeline is muted in the current environment where excess inventory gets most of the attention, and design -in activity takes time to gestate into production. But design-in momentum is the engine of long-term growth that we have always focused on and which we expect will drive above-market long-term growth. Now let's get into our guidance for the September quarter. While we continue to see a number of green shoots in our business indicators, we do need turns orders within the quarter to meet our guidance. Operating in a high-turns environment has historically been normal for Microchip, but it is challenging to predict during abnormal times as we are in today. We are, however, forecasting strong signs of growth in our data center business beyond the artificial intelligence subset after several quarters of weakness. This is effectively another green shoot. Taking all the factors we have discussed on the call today into consideration, especially the very low backlog visibility we have faced with, we expect our net sales for the September quarter to be between $1.12 billion and $1.18 billion. We expect our non-GAAP gross margin to be between 58.5% and 59.5% of sales. We expect non-GAAP operating expenses to be between 30% and 31% of sales. We expect Non-GAAP operating profit to be between 27.5% and 29.5% of sales, and we expect our Non-GAAP diluted earnings per share to be between $0.40 and $0.46. This multi-year semiconductor cycle for Microchip and for the overall semiconductor industry has been like none other we have seen. It started with COVID-related supply and demand disruptions in the March quarter of 2020, which then continued for many months. This was followed by extreme product shortages and resultant supply chain challenges later that year and for several quarters thereafter, and finally, a substantial inventory correction over the last several quarters. We recognize that on a peak-to-trough basis, our revenue decline has been sharper than many of our competitors. Some of this variance reflects the differences in end market exposure as this cycle has impacted different end markets at different times. Some of the variance is due to differences in non-cancelable, non-reschedulable programs implemented by us and our competitors. Finally, some of this variance is driven by differences in the relative size of business transacted, either directly or through the channel. While peak-to-trough revenue performance is relevant, we believe a better longer-term indicator is a comparison of the cumulative revenue generated through the entire cycle. Assuming the December quarter of 2019 was the last unaffected or normal quarter, Microchip's cumulative revenue over the next 19 quarters, inclusive of our guidance for the September 2024 quarter, when indexed to the December quarter of 2019, shows very comparable performance between us and our competitors. This is, of course, excluding the impact of acquisitions for everyone. The revenue peaks and troughs were different for each company, we believe, for the factors that were mentioned earlier. However, when looking at the cumulative 19-quarter revenue, essentially the area under the revenue curve is what that would represent. While the journey for each company was different, the destination was very similar after 19 quarters. This would suggest that Microchip may be positioned for a sharper growth in the coming quarters, although we're not ready to predict the shape of that recovery at this time. My point is that rather than be focused on peak-to-trough performance alone, it seems prudent to consider the area under the curve of cumulative revenue performance as well. We believe 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 application of the end markets we serve. We remain committed to executing our strategic imperatives, which we believe will deliver sustained results and substantial shareholder value. Finally, at a time of macro uncertainty, we remain focused on the things we can control to create long-term shareholder value. With that, let me pass the baton to Steve to talk more about our cash generation 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 10.7% from the year-ago quarter to a record $0.45 per share. During the last quarter, we purchased $72.7 million of our stock in the open market. We also paid out $242.6 million in dividends. Thus, the total cash return was $315.3 million. This quarter, our total cash return was reduced by the cash outlays for the recent acquisition of VSI and Neuronix. When you combine the dividend paid, buyback, and acquisition-related cash outlays, this amount was 87.5% of our actual adjusted free cash flow of $389.9 million during the March 2024 quarter. Our net leverage at the end of June 2024 quarter was 2.02x. 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 $4.6 billion to shareholders through June 30, 2024, by a combination of dividends and share buybacks. During this period, our share buyback in the open market was approximately 31.2 million shares, representing approximately 5.8% of our shares outstanding. In the current September quarter, we will use the adjusted free cash flow level from the June quarter to target the amount of cash returned to shareholders. Our adjusted free cash flow for the June quarter was $301.3 million, so our target return to shareholders would be 92.5% of that amount minus a small payment made for acquisitions. Our resulting cash return to shareholders will be approximately $261 million. Out of that amount, dividends are expected to be approximately $243.8 million, and our expected stock buyback will be approximately $17.2 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 returned to shareholders through dividends and share buybacks. That will take two more quarters, and we expect that dividends over the long run will represent approximately 50% of our cash return. We also announced today that effective at the close of business on August 20th, which is the date of our annual shareholders meeting, I will transition from executive chair to being the non-executive chair of the board. In this role, I will continue to be a resource to Ganesh and to all of Microchip. I want to thank our investors and our employees. It was my highest honor to have served you for 34 years. Let me now turn it back to Ganesh. Thank you, Steve, on behalf of the Microchip leadership team and all of our employees worldwide. Thank you so much from the bottom of our hearts for your 34 years of service to Microchip. In your non-executive chair role, you will continue to be an important resource for me personally and for other Microchip team members as well. With that, Stacey, will you please poll for questions? Thank you. We will 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 would like to remove your question from the queue. We ask that you limit your questions to one so that others may have an opportunity to ask questions. You may re-enter the queue by pressing star one. For participants using speaker equipment, it may be necessary to pick up your handset before pressing the star keys. Your first question comes from Tim Arcuri with UBS. Please go ahead. Thanks a lot. Ganesh, you talked about orders being up 50% sequentially, but you said that they're still weak. Can you talk about that a little more? Are you just saying that book to bill is still well below one? Is that the point there? Yeah, I wouldn't say well below one. Book to bill is below one. Bookings have been growing. They've been growing unevenly between the months. So it's on the right track, just not as fast as we would like it to. And by their coming in, they're aging faster, so that also helps. Got it. Thanks. And then can you talk a little bit more about you had talked about the green shoots, and it sounds like they kind of stalled out a little bit. Can you talk about maybe when that happened and the quarter? Was it the last month of the quarter, and has it continued through the first month of this quarter? And maybe the end markets where that's actually happened. So at the end of May, I think we were at a public conference where we had said, "Hey, bookings are flattish for May versus April." June got a little bit better. I think it's just through the quarter, week to week. I think these are short-term indicators. We have to look at it kind of on a longer-term basis. How is it evolving? But yes, June did not have the same momentum that we would have expected if this was continuing at a consistent pace. And so that's the difference between what we saw in April versus May versus June. It just didn't have a consistency throughout the quarter. And there's no particular end market thing. The two end markets I referred to, stability in aerospace and defense, strength in the data center market. Of course, we're indicating that it's not only the AI subset, but going forward for September and December, we're seeing strength across the data center markets that we're in. Thank you, Ganesh. Thank you, Tim. Next question, Christopher Rolland with Susquehanna International Group. Please go ahead. Hi. Thank you for the question. Mine is around utilizations and where we go from here. So I think you guys had some shutdowns in June. Are you expecting to continue those into September? And then you also talked about external wafer supply agreements. Would you expect those negotiations to go well and to push those out, or might those affect utilizations and inventories as well? Thank you. Okay. So I'll start with internal utilization. So we are not planning on having another two-week shutdown for our wafer fabs in the September quarter. We do not expect production value out of the fabs to be much different quarter- on- quarter. We continue to have attrition and had to lower starts because of that, but we'll not be having another two-week shutdown. And in our assembly and test areas, we will continue to have days off for those activities to manage our finished goods assembly and test outs appropriately. Ganesh, do you want to comment on foundry? Yeah. We have continued to work with our foundry partners on how to match the wafers coming in to the demand picture as it changes. The degree of how we have worked that out has had different results at different foundry partners. But by and large, we are working through those with business arrangements to make sure that we are not receiving substantially more wafers than what we can use, with the exception of the last-time buys that Eric referred to, where factories are either closing down or processes are being end-of-lifed, where we are buying because those products often have extremely high gross margins, and it behooves us to be able to take the inventory and over many years realize the very high gross margin on those parts. Thank you, guys. And then you didn't call out China as a source of additional weakness. I was wondering if we could maybe get an update there on what you're seeing out of China and/or Asia? Sure. So in the breakout that we provide that's on our website, Asia, we don't usually break out China, but Asia was flattish. The declines were largely in the Americas and to a larger extent in Europe. And I think China and Asia, on a current basis, is more constructive. The weakness is predominantly in the Americas and Europe. And I think that is to some extent consistent with if you look at some of the PMI reports and where the manufacturing economy is at. Just this morning, the U.S. PMI came out. Last month, the European PMI came out. This is not the first month. There's been many, many months over which that weakness has been playing out. And I think China was there earlier on, as were other parts of Asia. Some of that they have worked out. So more stability and strength in a relative basis than the Europe and America regions. Thank you, Ganesh. You're welcome. Next question, Tore Svanberg with Stifel. Please go ahead. Yes, thank you. Ganesh, one of your peers last week talked about customers sort of ordering hand-to-mouth and potentially even holding too low inventory due to working capital constraints and so on and so forth. Are you seeing that with some of your customers, and maybe especially on the industrial side? Because that's certainly a concerning thing, and it certainly may reflect the very low turns orders that you are getting or the very low backlog visibility that you are getting. No, that is absolutely happening at many, many customers. And I think they have, in some cases, low visibility into their own business as well. So they're reflecting that. Given that there's plenty of capacity and short lead times, there's really no reason for them to try to get backlog ahead of time. At some point, that will change, and it will correct itself. But yes, what is reflected in the green shoots we talked about when we said we're getting expedite orders where new orders are being placed with short-cycle expectation, and prior orders that were placed are being pulled in. Those are all reflective of people who are more conservative in how they placed orders and then recognizing they needed parts sooner. And at some point, that will catch up on itself. It's still early. But that's how these things usually correct, is people tend to go too low and run out of inventory. Any strengthening in the business starts to create some urgency for orders. That becomes the whole expedite chase. We saw that back in other cycles as well. But it is something we're watching. We're still in the early innings of how that upcycle will play out. Yeah. Related to that, I mean, can you comment on how much terms you need at this point and maybe compare that with previous cycle? We don't typically break that out. I think maybe you want to give some historical perspective on where they're at. I mean, it is not unusual for us to enter a quarter meeting 30% - 40% turns. With short lead times, we've been able to do that historically. Now, we're coming off a period up to the last couple of quarters where we were fully booked entering a quarter. It's definitely a large change for us from what we've seen over the last 2.5 years. But there's a significant amount of turns that we need to take, and we've kind of been signaling that to the marketplace that with short lead times, that is not outside of what we would expect it to be. And customers are managing their balance sheets and know that we can get them inventory quickly. Very helpful. Thank you. Great. Thank you, Tore. Once again, if you would like to ask a question, please press star one on your telephone keypad. Next question comes from Joshua Buchalter with TD Cowen. Please go ahead. Hey, guys. Thank you for taking my questions, and congratulations to Steve and the next step and incredible career. To start, I was hoping maybe you could provide some more color on what's baked into your assumptions for the September quarter guidance. I know it's difficult, but is there any way maybe you can give us on a relative basis? How much do you expect to be under shipping demand in the September quarter? Is that level going down versus June? Do you feel like you're close to shipping to end demand? And end demand is just weak. I'd just be curious to hear any granularity you can give us on what you're seeing at inventory levels, both in the channel and at your downstream customers. Thank you. So a lot of questions there, and I think there's a lot of information that is really not readily available. Clearly, as Eric mentioned, the distribution inventory in absolute terms has been coming down. It's the third consecutive quarter where we've brought down distribution. So that is draining. Where is true consumption at? I think that's a $64 million question that I'm not completely sure we know where that is. Anecdotally, when I visit customers and I try to understand where is their business, and I try to compare it to where is our business, right? Where's our business? Customer business is down more in the 5%, 10%, 15% year-over-year kind of levels. We're obviously down in the mid-40s, maybe high 40s with the guidance in it. So that delta is what you should expect that in time, as inventory drains, we'll get closer with a recovery in our business, even when the macro is still weak. But that customers don't really report out inventory to us. We can glean information based on are they placing orders? Are they expediting orders? What are they seeing? And in those patterns, you can begin to form conclusions for a given customer. We have 100,000 customers. It's awfully hard to integrate that. And then from an end market perspective, as we mentioned, both industrial and automotive are both large pieces of our business and where we see the largest weaknesses as well. Understood. Thank you. And I mean, it doesn't really seem like it from the gross margin numbers you're putting up, but anything change as this digestion extends on the pricing front? And in particular, one of your larger peers, I think, called out some pricing pressure and weakness in general-purpose microcontrollers. Are you observing any of that? Thank you. So there's no pricing pressure on the immediate products we're shipping last quarter, this quarter. And there's always at the fringes some of that. But what really takes place is on new designs, all participants who are trying to win a design are going to put their best foot forward, which often is their newest and most cost-effective products, and are going to be as aggressive as they can be within the consistent within their model for that. That is, in fact, happening. But that is always how business has been conducted. And I'm sure there may be a little extra of that when people see the environment is weak. But pricing in general is a more strategic exercise, both for us and for customers for whom they're making decisions on a platform for multi-years. And price is not the only reason somebody makes a decision. It's really value. And it's what else do we bring besides price that brings the overall value equation to match what the customer is willing to accept. Thank you. Thank you. Next question, Harlan Sur with JP Morgan. Please go ahead. Good afternoon. Thanks for taking my question. As you guys mentioned, others of your peers in the embedded markets, MCU and Analog, have seen sort of this broad pickup in China. Back in May at our conference, I think you did talk about seeing improvements in sales through your China-based customers. Looks like, again, as you guys mentioned, this was reflected in your Asia sales, which were flat sequentially. Did Asia-based sales actually grow sequentially in June? And here in the September quarter, would you anticipate China and the Asia region revenues this quarter to outperform Europe and North America again? We don't break out the details of sell-through any longer, right? We provided some information the last couple of quarters of the amount that sell-through exceeded sell-in. That amount was $85 million, roughly, in the June quarter and about $125 million in the March quarter. I will just say that China was really the first to go into this. This is similar to Ganesh's comments earlier. We wouldn't be surprised if they were the first to come out. The June quarter is a little bit hard to judge because the March quarter has a Chinese New Year. There's just more shipping days, right? So you kind of have to look effectively at what's happening on a daily basis. But I would say China is our least weak market at this point in time. I know that doesn't sound great, but Americas and Europe are definitely hurting more so at this point in time than what we're seeing out of the Far East. One other question in this cycle is we have typically viewed sell-through as a measure of the consumption. As the economic conditions have changed, what we're also seeing is there is inventory sometimes downstream. So a great example, if you take automotive, right? If you look at automotive showrooms, particularly in the U.S. where they have inventory, they have substantially more inventory today than they did a year ago or two years ago. So inventory sometimes is not just what the channel has, but also what is downstream from them. And all those play into the final equation of how does the destocking take place. And I think that has been one of the reasons why it has been slower than what most of us have expected. But as every month goes by, it continues to lower the level of water. I think that just sets the conditions up for when this will revert back and change to the direction. I appreciate the color there. Obviously, in this kind of environment that you just described, there is a lot of volatility in orders. I appreciate that. Is the team seeing a pickup in cancellations, push-outs, and rescheduling, or is that still at relatively low levels? No, that has been on a decline. Continues to be. That's one of the green shoots that continues, is that the new bookings are continuing not as fast as we would like, and the cancellations and push-outs are decreasing. So those are good signs. Great. Thank you. Thank you. Next question, Chris Danely with Citi. Please go ahead. Hey, thanks, Ganesh. I guess just from a broader perspective, so you're seeing some green shoots, but the revenue decline is getting incrementally worse. So exactly how is that happening? And then when the customers come to you guys, are they saying that it's more their demand trends are a little worse than expected, or they just found too much inventory, or is it some combination of both? Maybe just take us into the machinations of the quarter and the business. If you look at the end markets, we have a large exposure to industrial and automotive. And clearly, there's more cleanup there. That's also where when you look at broader macro trends, what is happening with the PMI, what is being reflected in that? I mean, I think U.S. has had 20 of 21 months in a row where the PMI has been weak. Europe, I think, is closer to 24 months. So all of that is just playing itself out into lack of confidence in knowing what and when their business will change, lack of confidence in placing orders soon enough. And so at some point, this will all reverse. We just don't have enough visibility to be able to say, "Hey, here's how it is, and here's when it is." But I don't have more than that. We call it the way we're seeing it. And right now, I think there's just lack of confidence reflected in the backlog being low and the orders being placed on shorter cycles than what they would historically have done. And you add all that up, and it is what we have in our guidance. Sure. And before I ask my follow-up, I just want to say that, Steve, you are a true icon in the industry, especially for those of us that have been around for a long time. And we've really appreciated your candor and your honesty over the years. I really mean that. And as my follow-up. Thank you very much. Appreciate it. Sure. And as my follow-up, just in terms of your two bigger end markets, automotive versus industrial, any qualitative or quantitative comments on which is worse or which is better and why on a relative basis? Yeah. I don't know about the why, but I can tell you, I think in general, anecdotally, I would say industrial feels worse. And it's just been consistently there. I think automotive has a bit of it, which is inventory, but also a bit of it, which is people are still buying cars, and it's just blowing through that inventory. But I would say on a relative basis, that would be my best guess. Okay. Thanks, Ganesh. Appreciate it. Th ank you. Next question, Harsh Kumar with Piper Sandler. Please go ahead. Yeah. Hey, let me start off. Steve, congratulations. I've enjoyed working with you for all these, I guess, over a decade now. And hopefully, we'll still get to hear your voice on at least some of the calls. Thank you, Harsh. But appreciate it, Steve, all this time that we put in with you and your honesty, as somebody else said earlier. I had a question. Let me start off with a product question. Could you just help us understand what kind of end markets you might be able to address with a 64-bit microcontroller? And I think you mentioned that the software that will be used on 64-bit is also the same over 8 through 64 and also your FPGA line. Is that actually correct? And how important is that? So firstly, it isn't the software that is common. It's all the development tools and the related ecosystem of what we need to do. But yeah, so they all come under, what is it, a Microchip-branded set of ecosystem and tools. We call it MPLAB. And all of that is set up in such a way that once you get used to that environment, you can easily move around. You can port things between the different products, and you can start on a 32-bit processor and move to a 64-bit processor or vice versa, as the case might be. There's a significant expansion that is at the higher performance end of where this processing takes place. And so this is more compute-intensive. It's in places which can be in factory automation. It's in machine vision. It's in AI at the edge. And so it's a continuum of where we were on microprocessors with 32-bit, but now higher end from there where we couldn't reach before with the products that we had. And also, in some cases, opening up some places where perhaps people would not have considered us because they didn't see a common roadmap that they could get to from starting at one end of what we had in 32-bit and moving into the other end of 64-bit. So this is going to be done over multiple years. We'll have a broad set of portfolio of products, a family of products that are going to be needed. But clearly, it opens up a meaningful amount of new total available market to us. And by our estimates, there's about $3 billion-$4 billion of total available market on the 32-bit alone. By the time you add the 64-bit, it almost doubles that to about $6 billion. Got it. And maybe for my follow-up, I wanted to ask, you sort of talked about industrial versus automotive, but maybe you could give us some more color on which other end markets outside of data center are acting better and perhaps some that are not acting so well outside of industrial. There's nothing that is acting better, so to speak. Aerospace and defense, for various reasons, it's stable. There are pockets of commercial aviation that, for the well-known issues, are there. Space tends to be a very lumpy business for us quarter to quarter. Defense is strong for reasons that you can read in the news as well. But I don't call any other end market out as being particularly noteworthy. Okay. Thank you, guys. Thank you, Harsh. Next question, Quinn Bolton with Needham & Company. Please go ahead. Hey, guys. Nick Doyle on for Quinn. Just one question, kind of talking about the other side of the only place that's positive. You talked about a broadening of data center growth in the September quarter. Can you just elaborate where that's coming from? Is it from the general purpose side, the power, connectivity, anything specific you can call out? Yeah. So the data center infrastructure, which is kind of where a lot of the business was before the AI wave and the accelerated computing wave came about. As that happened, there was some amount of CapEx at many places that moved primarily to the accelerated computing. And we had our fair share of that with where we were designed in. Now what we're seeing is some of that rebalancing. And it can be in the backp lanes. It can be in the power supplies. It can be in the storage networks. A number of different areas that all need, at some point, the data center investment as well. And all of that plays into the data center solutions that we bring. So the AI or the accelerated computing piece is still going well. It's just the other parts of data center are doing better at this point. Thank you. Yeah. Some of that you can see also reflected in the CapEx a nnouncements that have been made by some of the data center players out there. Next question, Craig Ellis with B. Riley Securities. Please go ahead. Yeah. Thanks for taking the question, Steve. Let me just start off by saying thanks for all the insights over the years. Learned a tremendous amount from you and really appreciate all your help. Moving on to questions, Ganesh, I wanted to go back to the point you made in prepared commentary about the significant re-engagement from customers and design activity as we got through the supply chain crisis. As you look at how that's manifested across Microchip's business, can you comment a little bit further on notable trends and from when those engagements result in a design or a design win that's going to go to production, how should investors think about the gestation period? So when do we begin to see the benefit of this renewed, more vibrant engagement that you're seeing from your customers? So our historical design cycles have been in the 12-24 months range. Some of them are a little longer. Some may be a little shorter. But for the most part, it's in that 12-24 months range. And so you would begin to see a lot of this in the next 12 months because we're about 12 months into that process. Now, keep in mind that there are a couple of other forces that will make certain adjustments to it. One is when customers have inventory, they will also look to use their inventory and perhaps build a little more of the older generation until they can burn through that inventory before they shift to the newer generation of whatever they're building. Second, if the slowdown in the macro persists for some time, historically, what we've seen is customers tend to want to delay some of the launch because there's upfront costs associated with their marketing activities, their building of inventory, stocking of channels, and all of that. And so there are many things at play here. But it should, in the next 1, 2, 3 years, create a surge of activity from all the work that has been started since about a year ago. And it's continuing and will continue. And that surge has the benefit of both Microchip's approach on maximizing the total system solutions. And we do measure that internally, how we look at how many products from Microchip are getting attached into these new designs and how well it attaches to the fastest growing parts of the market. So I think there's a lot coming in the next 1, 2, 3 years from design- in activity over the last year, plus the design-in activities that are still continuing over the next 1 or 2 years. That's really helpful. Thank you. And then for the follow-up one for Eric, Eric, it's clear you're able to keep CapEx pretty low over the next 2-4 quarters. I wanted to understand the interplay of that with low foundry utilization that we're seeing and potentially attractive pricing. At the margin, does the current foundry environment with low utilization give you an opportunity to do a little bit more externally? Or as you look at the mix of internal and external production, are you interested in continuing with the mix that you've had and driving that forward? Thank you. I would say the mix that we have is pretty fixed, right? Typically, a product is either designed on a process technology in one of our own factories or an outsourced partner's process. There are limited cases where we have capabilities to do something both externally and internally on the fab side. So I think that mix is going to stay about where it's at. We continue to do some things with technologies that we own to bring them in-house. But we' ve got this roughly 40% internal, 60% external split for foundry. And I think that will likely stay about that for the coming years. And where we have opportunities of technologies that can run both inside and outside, and we have done some amount of work over the last 2-3 years towards that, it is far more favorable to load an underloaded internal factory for almost all cases that I can think of than it is to say, "Let's continue to underload the internal factory and load more at the foundry." Got it. Thanks, team. Next question, Janet Ramkissoon with Quadra Capital. Please go ahead. Thanks for taking my question. First, Steve, thanks very much for a nice ride all these decades and for all you've done for Microchip's long-term shareholders. A lot of my questions have been asked already. I'm sorry? Janet, I met you 34 years ago when I was raising private financing at a $10 million market cap. Fast forward 34 years. With a $45 billion market cap, you're still around. So stay in there. I'm ready to go kick four of my grandkids, kick them around by 2020. Oh, yeah. And I still hold some of that stock, Steve. Thank you. Thank you for convincing me then to invest. So just a couple of little ones, if I may. 64-bit marketplace. Can you give us a sense of any color on what the early design win activity is looking like? And the second question is that you said that May was flattish, June was weak. Any additional color on how July progressed relative to June and May? Thanks. So I think I said May was flattish. June actually was, in terms of bookings, was up from there. The July numbers are just coming together. I would say it's flattish with where it was. So month-to-month, these things don't matter as much. We just need to look at it kind of on a quarterly bucket in terms of where it's at. In a stutter step, it is heading in the right direction, just not consistent month-to-month and not at the pace that we want to on a quarter-to-quarter basis. On your 64-bit question, it's early days. So it's too early to have design wins, but we have lots of early adopters. These would be customers who are interested, want to have the product samples and the tools, have an idea of a design that they want to pursue, are in detailed discussions with our field and technical teams because they see an opportunity to take advantage of what the 64-bit product lines have. And so it's optimistic early days, but still early days. Thanks. Just one other little thing. If history repeats itself, once you start producing the 64-bit chips, the margins on those new products should really move up the ramp quite a bit faster. Well, it would certainly be faster than the 32-bit, I would assume, given the markets that you're targeting. Is that a fair assumption? It's a little early for that. Typically, the processor controller margins have all been within a narrow range between them. I think to some extent, as we find the specific applications, we'll look at that. And we want to look at margin not just on that one chip alone. We want to look at how is it with the entire portfolio that attaches to that 64-bit. And so the value for us is not just the one chip, but it's really the entire total system solutions that we can bring to that customer. That's helpful. Thanks very much. Great. Thank you. I would like to turn the floor over to Ganesh for closing remarks. Okay. Well, thank you, everybody, for coming in and spending some time with us. And we look forward to meeting many of you in the coming weeks through the conferences and other meetings that are being set up. So thank you. This concludes this call. This concludes today's teleconference. You may disconnect your lines at.