Greetings, and welcome to the Microchip's Q3 Fiscal 2025 Financial Results Conference call. At this time, all participants are in a listen-only mode. A question-and-answer session will follow the formal presentation. If you 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 you to your host, Steve Sanghi, CEO. Thank you, Steve. You may begin. Thank you, Operator, 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 release of today, as well as 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 Rich Simoncic, Microchip's COO, Eric Bjornholt, CFO, and Sajid Daudi, Head of Investor Relations. I will comment on our restructuring and my observations since returning to Microchip as CEO. Eric will go over our third-quarter fiscal year 2025 financial performance, and Rich will then review some product line updates. I will then provide an overview of the current business environment and our fourth-quarter fiscal year 2025 guidance. We will then be available to respond to specific investor and analyst questions. Since I returned as Microchip CEO on November 18, 2024, I have spent a significant amount of time evaluating key aspects of Microchip's business. At the UBS conference on December 3rd, I described a nine-point plan to evaluate Microchip and make changes where needed to set the company on a course to achieve its previous premium status of performance. We're setting up an investor and analyst call on the morning of March 3rd to provide you with a comprehensive update on that nine-point plan. Today, I'll give you an interim report on several aspects of that nine-point plan. The first action was to resize our manufacturing footprint. After analysis, we have decided to close our Tempe fab known as Fab Two. Currently, we are in the process of building the material to provide the buffer required before we transfer the processes and products to our other two fabs. 70% of this product is already qualified at these other fabs. Our other two fabs, namely Fab Four in Gresham, Oregon, and Fab Five in Colorado Springs, are working on rotating time-off schedules. This reduces the capacity but leaves the fabs in a position to ramp capacity when needed on a very short notice. In our backend facilities in Thailand and Philippines, we're managing capacity by taking shutdown days and reducing the number of employee hours and days of work. In the rest of our smaller plants worldwide, there is a plan for each plant based on the specific demand in each plant. Some of them are running at capacity, while others are working shortened weeks. The second action was to reduce our inventory. Our inventory at the end of December 2024 was 266 days, up from 247 days at the end of September 2024. Our target inventory is 130 to 150 days. On March 3rd, I will project out for you the inventory reduction plan as an example from December 2024 to the end of fiscal year 2026, which is March 31, 2026. We are currently expected to be able to reduce our inventory balance by approximately $250 million, which will liberate cash from this inventory reduction. The third action was a review of our Megatrends and TSS and recommend any changes. I will provide an update on this topic on March 3rd. The fourth action was business unit by business unit deep dive. This is still underway, but I already know that we will reorganize some of our business units for greater efficiency and synergy. In the process, we will combine a few groups together. The fifth action was a review of Microchip's channel strategy. I have reviewed our channel strategy, and we have made two changes. First, when we give a demand creation registration to a distributor on a design socket, we historically have kept that demand creation flag forever. Going forward, we will change that flag to demand fulfillment after a given number of years. This will incentivize the distributor to present our new products to customers instead of sitting on a higher margin and exposing the socket to competitors. The second change is we had been providing industry-high fulfillment margins for distributors. We have lowered the fulfillment margins, which will bring it to a level that is still on the higher end of what our competitors provide. The sixth point of evaluation was to strengthen our customer relationships. We have targeted the top 1000 customers with an urgent focus on the 256 customers. Many of them have already been approached and visited, or the customers visited us. We are giving customers a chance to communicate candidly with us, showing empathy and care, and then engaging with them to support them on their new designs. Our goal is to put our customers first and win their hearts and design opportunities with our products, technologies, support, and care. Points seven and eight were our long-term business model and operating expenses. I will provide an update on these topics on March 3rd. The ninth and final area was the CHIPS Act activity. We are currently paused, waiting for the new administration to restaff the CHIPS office. We will then reengage when the time is right. With that, I will pass it to Eric Bjornholt. Eric. Thanks, Steve, and good afternoon, everyone. We are including information in our press release and 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 December quarter were $1.026 billion, which was down 11.8% 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 55.4%, including capacity underutilization charges of $42.7 million, as we are aggressively managing production activities to adjust to challenging business conditions. Operating expenses were at 34.9% of net sales, and operating margin was 20.5%. Non-GAAP net income was $107.3 million, and Non-GAAP earnings per diluted share was $0.20. Please note that our operating expenses increased in the December quarter and will further increase in the March quarter due to a predominant portion of our employees coming off the pay cut that we had put on for about nine months in the late November, early December 2024 timeframe. The full quarterly impact of this is reflected in our operating expense guidance for the March quarter. On a GAAP basis in the December quarter, gross margins were 54.7%. Total operating expenses were $530.5 million and included acquisition and intangible amortization of $122.6 million, special charges of $3.5 million, and share-based compensation of $42 million and $4.3 million of other expenses. The GAAP net loss was $53.6 million, resulting in a loss per share of $0.10. Our non-GAAP cash tax rate was 19.9% in the December quarter. We currently expect our non-GAAP cash tax rate to be approximately 14.5% for the fourth quarter of fiscal year 2025, which is modestly higher than our previously forecasted 13% tax rate. This is a result of expected overpayments in two of our larger tax jurisdictions, which will have the impact of reducing our fiscal year 2026 tax rate as we are calculating this on a cash basis. Our Non-GAAP cash tax rate is exclusive of the transition tax and any tax audit settlements related to taxes accrued in prior fiscal years. Our inventory balance at December 31st, 2024, was $1.356 billion, which was up $16.7 million from the end of the September 2024 quarter. We had 266 days of inventory at the end of the December quarter, which was up 19 days from the prior quarter's level. At the midpoint of our March 2025 quarterly guidance, we would expect both inventory dollars and inventory days to decrease from the December 31st, 2024 levels. We also continue to invest in building inventory for long-lived, high-margin products whose manufacturing capacity is being end-of-life by our supply chain partners, and these last-time buys represented 18 days of inventory at the end of December. Inventory at our distributors in the December quarter was at 37 days and was down three days from the prior quarter's level. Distribution took down their inventory holdings in the December quarter as distribution sell-through was $118 million higher than distribution sell-in. Our cash flow from operating activities was $271.5 million in the December quarter. Our adjusted free cash flow was $244.6 million in the December quarter. As of December 31st, our consolidated cash and total investment position was $586 million, which is higher than normal due to the timing of the maturity dates of some of our commercial papers that did not occur until early January, which was used to pay down debt after the end of the December quarter. We retired $665.5 million in convertible bonds that matured in November 2024. In the December quarter, we also issued $1 billion in investment-grade bonds with a 4.9% coupon maturing in March of 2028, and $1 billion in investment-grade bonds with a 5.05% coupon maturing in February 2030. We used the proceeds of these bond offerings to retire our $750 million term loan and pay down a portion of our commercial paper balance. Our next debt maturity is a $1.2 billion bond maturing in September 2025. The debt issuance this past quarter will give us ample room to retire our September 2025 bond with our line of credit or commercial paper programs. As a result, we have taken the refinancing risk off the table for the $1.2 billion maturity. Our net debt increased by $33.6 million in the December quarter. Our Adjusted EBITDA in the December quarter was $274.9 million and 26.8% of net sales. Our trailing 12-month Adjusted EBITDA was $1.64 billion. Our net debt to Adjusted EBITDA was $3.78 at December 31st, 2024, up from $1.27 at December 31st, 2023. Capital expenditures were $18.1 million in the December quarter. Our expectation for capital expenditures for fiscal year 2025 is about $135 million, and we expect fiscal year 2026 capital expenditures to be lower than that as we have a lot of capacity to grow back into, as well as capital that we purchased during the upcycle that has not been placed in service yet. Depreciation expense in the December quarter was $40.4 million. I will now turn it over to Rich, who will provide some commentary on our product line innovations in the December quarter. Rich. Thank you, Eric. And good afternoon, everyone. Our strategic investments continue to strengthen our position across key growth markets. In our core microcontroller business, we introduced a new generation of 64-bit RISC-V processors featuring advanced AI capabilities, integrated time-sensitive networking, and next-generation security. These processors deliver exceptional reliability for factory automation and secure data processing applications, particularly where real-time communication is critical. Initial customer response has been strong, with promising design win momentum across industrial and aerospace and defense sectors. We expanded our Wi-Fi portfolio with 20 new products spanning microcontrollers and plug-and-play modules, helping customers simplify robust, secure wireless connectivity and accelerate time to market. We also introduced a new smart touch controller with an industry-standard interface, making it simpler for manufacturers to implement water-tolerant touch solutions in their products. For high-speed wired connectivity, we continue strengthening our automotive networking portfolio with ASA Motion Link technology, enabling next-generation software-defined vehicles with high-speed data exchange between systems. Our innovative technology is currently being evaluated by several leading global automotive manufacturers. Our FPGA portfolio achieved two notable milestones. We earned the highest level of space certification for our radiation-hardened chips, strengthening our position in critical space missions, and released a new sensor connectivity solution for NVIDIA's Holoscan platform, enabling AI applications in medical imaging and industrial automation. These developments reinforce our commitment to providing comprehensive solutions across our target markets while making it easier for customers to implement advanced capabilities in their next-generation products, demonstrating our ability to simplify advanced technological implementation for our customers. With that, I will pass the call to Steve for comments about our business and guidance going forward. Steve? Thank you, Rich. As Eric described in his prepared remarks, our December quarter net sales were $1.026 billion, down 11.8% sequentially, and down 41.9% from a year-ago quarter. As we continue to navigate through a very large inventory correction following a post-COVID supercycle, we saw continued broad-based weakness in the December quarter. Our revenue from our microcontroller, analog, FPGA, and other businesses were all down sequentially. Geographically, our business was down sequentially in all major geographies of Americas, Europe, and Asia. Now let's get into our guidance for the March quarter. We believe substantial inventory destocking has occurred at our customers, channel partners, and their downstream customers. Everyone would like me to call the last quarter as a bottom. However, in our view, the inventory at our customers, channel partners, and their downstream customers has not fully corrected yet. Our bookings remain low, although the current quarter bookings are running at a higher rate than in the December quarter. Our backlog started out lower for the March quarter than it was at the start of the December quarter, so we have a lot of turns to take for the March quarter, and the visibility remains low. Taking all these factors into account, we expect our net sales for the March quarter to be between $920 million and $1 billion. We expect our non-GAAP gross margin to be between 52% and 54% of sales. We expect non-GAAP operating expenses to be between 37.7% and 40.5% of sales. We expect non-GAAP operating profit to be between 11.5% and 16.3% of sales. We expect our non-GAAP diluted earnings per share to be between $0.05 and $0.15. We are laser-focused on our nine-point plan. The Megatrends and customer portion of that plan entails aggressively winning designs at the customers and then pulling them through the funnel to generate growth. We believe that as the remaining excess inventory is consumed at our customers and distributors, we are well-positioned to provide above-market growth in our net sales. Now let me provide an update on our capital return program for shareholders. We are essentially returning 100% of our adjusted free cash flow to investors in the form of dividends right now. Due to depressed net sales, our adjusted free cash flow is currently less than our dividend, and in certain quarters, we have had to make higher bond interest payments and tax payments. Bond interest payments are made every six months, so every other quarter, this impacts our adjusted free cash flow and results in a dividend exceeding our adjusted free cash flow. As we begin to liberate cash from our inventory, coupled with very low capital expenditures, we expect to bring the free cash flow above the dividend. In future quarters, we intend to use the excess cash to bring our borrowings back down to at least the levels they were at before our dividend exceeded our adjusted free cash flow. With that, Operator, 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 to indicate your line is in the question queue. You may press star two if you would 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. One moment, please, while we poll for questions. Thank you. Our first question comes from the line of Vivek Arya with Bank of America Securities. Please proceed. Thanks for taking my question. Steve, I appreciate your comments, and I realize visibility is limited, but you mentioned inventory remains elevated at customers and channel partners. Could you share with us where the hotspots are by end market or by the kind of product? Is it worse in industrial or microcontrollers, etc.? And do you think that this is the inventory issue specific to Microchip, or do you think those customers and channel partners have kind of excess inventory from your competitors also? Because many of them seem to be indicating a lower level of concern than you are indicating. So I think the answer to your first part of your question, which is by end markets or by product line, the inventory is high pretty much across the board, and it's not different by end markets. What it is different is slightly by direct distribution. Our distribution customers' inventory is getting a lot closer to where they historically would be. And just in the quarter past, our sell-in revenue was $118 million lower than our sell-through revenue. On GAAP, we report on sell-in, but distribution sold out $118 million more. And they've been doing this kind of number for the last few quarters. So the distribution inventory is getting a lot closer to getting corrected. But the direct inventory at customers is still high. And part of that reason is when the supply was really tight, we were serving our large direct customers, sometimes preferentially over the broad-based distribution customers. And the number two reason for our customers having higher inventory is that we dismantled our non-cancelable program called PSP two quarters or so later than our competitors did. So therefore, we continued to ship for two more quarters. And when the business eventually fell at our customers, they had higher inventory of our products than potentially our competitors. Hopefully, that answers your question. Steve, just as a follow-up, what would you say is the earnings power for Microchip over the next year? In this last fiscal year, with the March guidance, it's about $1.30-ish or so. So even if we start assuming some level of seasonal rebound at some point over the next several quarters, should we be thinking $2, $3? What is the kind of earnings power in the medium term for the company? Because I imagine you are justifiably prioritizing cash flow, and you'll probably keep fab utilization low. And then the need to get OPEX back to a reasonable level would also influence. How do you think about earnings power for the company over the next year to two years or so? Thank you. I mean, you're right on all that, but putting numbers around it, I don't really have it. We don't guide that far out. I'll pass it on to Eric and see if he has something to add. Yeah, Steve's right. We guide a quarter at a time. We are working through Steve's nine-point plan. Obviously, he's talked a lot about what we're doing in manufacturing, OPEX, and the long-term business model. That is still to be set, and we've got some more work to do on that, and we'll share more details with the analysts and investor community on March 3rd. It's hard to answer that question, I think, as you knew when you asked it. We think we are positioned, as Steve's prepared remarks said, for above-market growth. We need to get through this inventory correction to start seeing the benefits of that. We've got a lot of confidence in our long-term business and what it can drive from an operating margin perspective and cash flow perspective, but we're not quite out of this yet. Thank you. Thank you. Our next question comes from the line of Blaine Curtis with Jefferies. Please proceed. Hey, good afternoon. Two questions. I just want to ask, I know you don't want to forecast the revenue slope back, but maybe can you walk us through the gross margin a bit? Because I think it stepped down more. Obviously, you said days and dollars would come down in inventory, but is there some level that you want to get to to give us some reference as to how long this may be depressed before it comes back with revenue? I think on March 3rd, we'll give you some data on inventory depletion and right-sizing our factories and all that, with which you may be able to model the question you asked and the question Vivek asked. We don't really have it today, but what I would like to highlight is even for the current quarter, we're guiding a gross margin of midpoint of 53%. Many of our competitors don't do that in good times. That's an extremely good gross margin. Now, operating expense at about 39.1%, which is the midpoint of what we guided today, is quite high compared to our historical. That's driven by really adding a lot of people at the top of the cycle when the assumption was the business just keeps going. So we have a correction there to do, and I'll be able to talk to you more about it again on March 3rd. And the gross margin of 53% is with very, very low factory utilization that we're running today. And you know where our gross margins historically have been. There's absolutely no reason why gross margins do not return to historical numbers, not the historical high, which was really at the peak of the cycle and had expedite charges and price increases and all that in. But leaving that time frame out, we should be able to get to our historical gross margins. And with correcting the operating expenses, you should have really a beautiful P&L, which I'll give it to you as a long-term target on March 3rd. Thanks, and then I wanted to ask you on the growth side. That's always been a debate for the company. I'm just kind of curious your renewed perspective here coming back. You mentioned some moves with the distribution channel to kind of incentivize demand creation. Do you think when you said the company can outgrow the market, is that going to be a work in progress, or do you think that's what it is today and these moves would kind of add to that? I don't know if I can separate those two. I think our megatrend design wins are higher than a non-megatrend design win. I think we have shared some data in the past with you. They're about 2x the normal. So we also went through an environment during a super cycle of COVID where all customers' engineers were doing is trying to find alternate parts or really fit whatever product we had available for them into their design and requalifying them. So kind of not much new designs happened for a couple of years. Our customers are re-engaged doing new designs. They are in various parts of the funnel, and when they go to production, that really a model will show that our business grows from that. And then the other thing is the inventory depletion both at the customers and channels. And when that inventory depletes, then customers start buying their full consumption rate, then that will increase revenue. Combine those two together, we don't really have any concerns about the long-term future. It's just we got to get through this. I think we're getting close, but industry has been saying getting close for about a year. So I don't want to really spell out any quarter to be the bottom, but we ought to be getting quite close. Gotcha. Thank you. Thank you. Our next question comes from the line of Harsh Kumar with Piper Sandler. Please proceed. Yeah. Hey, Steve. Good to see you back. I had a quick question on OpEx. Sounds like from the answer you just gave to Blaine, I think you said that OpEx will come down from the current level in absolute dollars. Is that a fair assumption? That's my clarification question. And then on the nine-point program that you have, are you assuming that things for the environment will stay the same, or are you baking in some level of recovery at some point in time this year or next year? It's got to come back at some point in time, but I'm curious if you're baking that into your assumption or just keeping the environment the same. We are baking it in our assumption that growth will be a result of some return of business when the inventory is depleted, plus our efforts into winning new designs with all the new products we have introduced in the last three, four years. Many of them, many customers are sitting on significant designs, but they didn't complete them or launch them in an environment when they had a lot of inventory. Understood. I had another question, maybe not so easy, but could you take me through the process of how your organization would even try to gauge the correct level of channel inventory or direct inventory in this kind of an environment where things are dynamic, they're moving around, mostly going down, but still moving around a lot? I'm more curious about the process to understand how you would try to get to the right answer here. So I think historically, over 20, 25 years, our channels on the average worldwide would have an inventory which is about 2.5 to 2.7x what they ship out to their customers in a given quarter. And it kind of really stayed in that window, 2.5 to 3. There have been very few occasions when the inventory was much higher than that. One happened soon after the Microsemi acquisition when we consolidated the numbers. Microsemi inventory was closer to 4, and ours was lower. And then after that, we aggressively brought it down. So it can change, but in general, it is in that. And we see no reason why distributor inventory would come back down to below three. Understood. Thank you. And I think when you're saying that, Steve, you mentioned 2.5 times what they ship in a quarter. It's really 2.5-3 months of inventory based on what they're shipping out. 2.5-3 months. Sorry. That's all right. Understood. Thank you. Same work. Thank you. As a reminder, please press star one to ask a question at this time. Our next question comes from the line of Toshiya Hari with Goldman Sachs. Please proceed. Hi. Thank you so much for taking the question. Steve, it sounds like you've been spending quite a bit of time with customers over the past two months since your return. I'm curious what the feedback has been to you and the company, any common threads, and how do you plan on responding to some of the customer asks going forward? What do you need to do to regain any lost trust, if you will? So I'm going to hand that question to Rich Simoncic. He has talked to more customers than I have. I've been spending a lot of time on the business units and the factories and customers also when they come to us, but I may add something, but let him give the basic answer. Go ahead, Rich. So we've been spending a lot of time in front of customers, and mainly what customers are dealing with today is trying to digest the inventory that they have and dealing with the weaker markets. So we've been spending time with our distributors, our catalog houses, and our customer relationships are in pretty good shape. Where we're losing, or not losing, but where we have some tough customer relationships where they're sitting on quite a bit of inventory from a PSP program or upset about some of the price increases that took place during the COVID period. But I think a lot of customers suffered from that from other semiconductor suppliers. So what we're trying to do is work with them, understand where they're upset on some of those customers, and then see what we can do going forward. I don't think there's anything magic here other than us working together to find good win-wins going forward. I think as we went through the customer relationships, we found twice as many that were happier with us, that our relationship improved, and then we had some that our relationship had degraded. And where we have those that degraded and our worst accounts where they had degraded was those 256 that Steve highlighted. And out of the abundance of customers we have, we're going to work on those 256 where we've degraded that relationship. Thank you. Really, no customer is telling us, "Go away. You're horrible," anything like that. I think our products are good, our tools are good, our service and support has been world-class over the years. And many of these customers, we have a multi-decade relationship. So it's kind of just they're a lot they got hurt. Some of them got hurt during the super cycle one way or the other, either with pricing or not getting enough product or getting too much product and have inventory. And just hurt feelings have to be soothed, and time heals, and discussion and talk heals, and we're largely getting those customers back designing with us. Great. Thank you. And then as a quick follow-up, maybe on pricing, calendar 2024, where did blended ASPs for you all land roughly, and how should we think about 2025 and sort of the forward path? I think many of your peers have said something along the lines of they expect pricing to revert to pre-pandemic patterns, which is down low single digits. Are you thinking about pricing the same way, or could it be a little bit different for you guys? Thank you. So my sense is that short-term, yes, what the competitors are doing is correct. But I'm not sure it returns to a price drop every year because pre-pandemic, Microchip wasn't giving a year-over-year price decrease. Our costs don't go down year-over-year. Many of the costs go up, and through efficiency gains and yield improvements and others, you got to get back your margin. So the price drops every year was really a thing of the past. But short-term, I think we increased prices quite a bit over the past three, four years, and some price reduction in the low to mid-single digits near term is appropriate. Thank you. Thank you. Our next question comes from the line of Vijay Rakesh with Mizuho Securities. Please proceed. Yeah. Hi. Thanks, Steve. And I think just a quick question. As you look at your different segments, all those industrial, consumer, autos, is there a way to tell us what the split is and how they're done year on year? We break out our end markets once a year. Vijay, we do that at the end of the fiscal year, which will end in March, and so we'll provide more color on that, probably in the kind of early May timeframe when we release our year-end earnings, so don't have it to share today. Really, all end markets have been weak. We've highlighted a few things that have been stronger over this period of time and not a whole lot of change there, right, but overall, industrial automotive has been weak. That's consistent with what you're hearing from everybody else. Got it. And then on the inventory side, is there any risk of inventory obsolescence or write-down given you're seeing some disintermediation with other solutions, I guess? Thanks. So we've been taking pretty significant inventory reserve charges, and so those have been reflected in the gross margin and our expectation for gross margin this quarter. We've got a lot of inventory sitting on the balance sheet, and revenue has been falling and backlog's been falling. So with low visibility and lower revenue and a high level of inventory, that's just the place we're in right now. But Steve's talked about the actions that we're taking to reduce inventory in dollars and days, and I think we've got a good plan in place to do that. And so as we move forward, not saying necessarily this quarter is our gross margin guidance is down, but as we move forward, those charges should reduce as the inventory balance comes down, and hopefully we see a better revenue environment. Got it. Thank you. You're welcome. Thank you. Our next question comes from the line of Chris Danely with Citi. Please proceed. Hey. Thanks, guys. I guess question for Steve/Rich. Steve, as you've been there for three months now, is there anything you see that's gone wrong that is not fixable? And then if you/Rich could just spend some time on your assessment of Microchip's competitive positioning and how you feel that that is, let's say, versus a couple of years ago. Thanks. So I haven't found anything that is not fixable. I think right-sizing the factories is fixable, and we're in the process of doing so. The high inventory is fixable, and we're in the process of doing so. As we're doing these various business unit by business unit reviews, some business units have flourished, some of the others have atrophied, and we need to move some things around to put our resources, take them away from lower-performing business units and put them in the higher-performing business units. So some optimization needs to be done so that is fixable. We compete in a lot of different businesses: microcontrollers, analog, data center, automotive, aerospace, and defense, and all that. And in any business unit or any end market, you'll find, "Oh God, we should have this product or this feature. We don't have it yet. “Somebody else has it.” And an internal discussion would be how we can plug that gap. But at the same time, we have products with some differentiating features that our competitors don't. But no, I haven't found anything that is not fixable. But anytime you find a product hole, it does take two years of development to plug that hole. So I think. Great. And. But in general, I haven't really found anywhere any major problem that is not fixable, but it takes time to fix some of these things. Okay. And the competitive positioning question? And then I'll go away. Rich, you want to answer that? Yeah. You know what? I think in our analysis of that, in our surveys of that, in our discussions with our distributors, the feedback we're getting, we're predominantly holding our own in that competitive positioning. And so we're still working through it. I think what's confusing right now, because of inventory, you lose visibility in terms of where some of those customers are when you have a large swath of customers. Microchip has about 120,000 customers. So obviously, we can't touch 120,000, but we're touching all of the focused ones and dedicated ones that we have. And the relationships are still strong. And we have customers that are still coming through and working with us. So I don't see anything majorly broken on that customer front. We do work on building relationships, but there's nothing fundamentally broken. Like I said earlier, I think most customers were just unhappy about how the whole COVID period went and how they built up inventory. We did find, which was quite fascinating, our smaller customers, medium and smaller customers, when material was finally available to them, instead of buying one year or 12 months, they may have bought 24 months, so they bought a little bit extra on the smaller and medium customers, and so it really varies depending on the market and the customer base. Got it. Thank you. Our next question comes from the line of Joe Moore with Morgan Stanley. Please proceed. Great. Thank you. Of the 266 days of inventory, can you talk about how much of that is from the internal fabs? I think you had given a number that it's over 300 in the past, and then I had a follow-up on that. So I think internal fabs were 288 or something. Eric, you had the breakdown? It's in that range. I'd have to pull up a spreadsheet to look at it, but it's in that range. The internal fabs are higher than what it is on the foundry and system side of the business. Okay. And then you talked about taking an inventory kind of reserve around the lower utilization. That 53%, does that fully reflect the lower utilization, or is there kind of a lingering cost of inventory that's higher because of that lower utilization going forward? Well, when you're running the factories less efficiently, you are capitalizing costs and inventory at higher levels, even though you're taking these under-utilization charges, so it takes some time to work through that higher-cost inventory, but I would expect to see gross margin improvement before that because these inventory reserve charges will go down, right? We've taken a lot of reserve charges. At some point, we will get sell-through benefit from that also, so it's hard to predict exactly how that will weigh, and we'll probably just give quarterly guidance, and we'll give a long-term target, but we are reflecting in the gross margin you see today the under-utilization charges, and as the factories build back up, those charges will go down, and obviously, we're taking out our third-largest factory in Fab 2 that's going to help us get inventory corrected faster than if we had not taken that step. Great. Thank you so much. Thank you. Our next question comes from the line of Tore Svanberg with Stifel. Please proceed. Yes. Good afternoon. This is Jeremy calling for Tore. I guess this may be going back to the turns question. Can you just help us maybe quantify or size a little bit the turns that you might need to get the midpoint and how that compares versus historical cycles and at different points in the cycle historically? Thank you. I didn't get that. There was a lot of noise. Did you get that? No, I didn't get that. I've got it. So the question is, I'll repeat it real quickly, is when we're looking at the current quarter to get to the midpoint, how do the turns look compared to what we've seen historically? And so I'll give an answer to that, and Rich and Steve can add to it if they want to. So when lead times are very short, which they are today, our business has historically been able to respond to a high level of turns. And it's just a matter: is the customer demand there to fill that in? We've given guidance based on what we think is reasonable for the quarter and obviously given a range of guidance. And the turns required to meet that are not outside of what would be normal in a short lead time environment. That's very helpful, and maybe. I maybe just add one more piece to it because there's turns and then there's expedites and pull-ins. And we're continuing to see expedites and pull-ins come in as well, right? And what a pull-in would be is we already have backlog in place that sits outside of the quarter. And then the customer comes to us and says, "Hey, instead of needing that product in April, now I need it in March. Can you support that?" And that's what Rich means by a pull-in. That's very helpful. Thank you. And maybe a quick question on the new product side. Can you give us on the RISC-V processor, can you help us maybe size the opportunity here both in the near term and the long term? Maybe in the near term, when we can see initial revenue contribution. And in the longer term, how big could this potentially get as you look out three to five years? Thank you. Yeah. So we haven't forecasted the overall revenue impact to Microchip, but what we're seeing is a great many customers building development environments and asking for help with software and understanding of that product portfolio. And so we've seen customers now start to build out development groups and design groups around this platform of products and starting to design them into different applications. And so we haven't announced any of those design wins yet, but the level of activity is quite high. Thank you. Our next question comes from the line of Craig Ellis with B. Riley Securities. Please proceed. Yeah. Thanks for taking the question. And team, thanks for all the color so far. Steve, I wanted to go back to the plan's first point on production and ask a more qualitative question. Can you help us understand where the team is in assessing the right level of front-end and back-end capacity and where you are in terms of identifying the specific steps that are needed to realign that capacity and the things that allow you to be operating at the new correct capacity that you determine? The team is very far along identifying what steps need to be taken to right-size the other factories beyond closing down Fab 2, and we'll be disclosing that to you on March 3rd. Got it. And then, Eric, I'll just follow up the point you made on the debt maturity in September. It sounds like you're well-positioned to deal with that. Is it correct that the next maturity beyond that would be in March of 2028? And if not, can you help me understand when that would be? Yeah. Eric is trying to look at his computer. Yeah. I'm just pulling it up to make sure I don't misspeak to it. So we do have another tranche of $1 billion due in March of 2028. The $1.2 billion we talked about, we'll have to redo our line of credit at some point in time. That's a pretty standard process that we go through. But that's how the tranches are laying out right now. The $1.2 billion in September of 2025 is the next one. And then after that, it's not until 2028. Got it. Thanks, guys. Thank you. Our next question comes from the line of Chris Caso with Wolfe Research. Please proceed. Yes. Thank you. I guess the first question with regard to the dividend, and I know at this point, you're not fully generating free cash flow to support the dividend. Could you talk about your level of commitment to that dividend and, as we're going through sort of the recovery plan and such, that we're still committed to this dividend in the foreseeable future as free cash flow starts to get better? Yes. So as you may have noticed, we did not increase the dividend by a smidgen. We have been doing it probably for years and years. So there's no reason to add to it. And we'll keep this dividend flat, but there is no reason to take it down. Not generating enough cash flow is a very short-term problem. And it kind of raises its ugly head every six months because every six months, bond payments are due. And in one quarter, they're not there. And the other quarter, the dividend payment, I'm sorry, the bond payment pops up. So every other quarter, we have to borrow some money to pay the dividend. But I think this problem should really go away in the coming quarters pretty rapidly. So because it's a short-term issue, there's no reason to do a long-term damage by cutting the dividend. Yeah. And maybe just as an example, our adjusted free cash flow in the December quarter is essentially equal to what our dividend payment is in March. But our adjusted free cash flow will be lower in the March quarter and then won't cover what we would pay in the June quarter. And we always have based our capital return program based on the prior quarter's free cash flow. So anyway, right now, it's obviously not as high as we would like it to be, but confidence in the business, getting back to higher levels and profitability returning, as well as the working capital management we're doing with the inventory reduction, is going to help us with that. Understood. For a second question, it's about kind of manufacturing capacity. And I know you're going to provide some more details in March. But I guess two parts to that. One would be internally, you don't have access to 300-millimeter manufacturing. And it doesn't sound like that's something that you're going to pursue. Do you feel that the internal fab network is still competitive with the rest of the market as you see some others start to expand on 300-millimeter? How does Microchip respond to that? And then secondly, you've seen some other competitors move to a China-for-China manufacturing strategy because of some of the geopolitical tensions, the feeling that Chinese customers want a manufacturing footprint inside of China. How is Microchip responding to that? Let me take those. The first one on 300-millimeter, we use a substantial 300-millimeter capacity at our foundry. A fair amount of our business today in various business units is on 300. It's just not internal. It is external. And I will tell you that many of our competitors who make 300-millimeter, with all the underutilization, all the cost to ramp it, and the time it takes to develop the technology, when you look at the total cost of ownership, I think their experience in total cost of ownership is really no better than us buying a very well-known running technology with high yields at the professional foundry. I think we're pretty happy with that. There was about two or three years ago when foundries were telling us they wouldn't be adding more trailing-edge capacity. All their investments were going to go into the advanced technology. So at that point, we were concerned about whether there'll be enough capacity for 300-millimeter for 90-nanometer, 65-nanometer, and 40, specifically those three technologies. And at that time, we were pursuing building a fab in the U.S. and getting some money from CHIPS Act to do so. And as we were engaging with government and all that to do that, the businesses fell. And our foundry's businesses fell. Now, today, you can buy as much 40-nanometer, 65-nanometer, and 90 as you want. And then the factories told us that this will be no longer a problem. And in fact, some of them are investing in additional 40, 65, and 90 for the future. So therefore, for us to spend multi-billion dollars, probably a $5-6 billion investment to build a 300-millimeter factory, which will take a decade plus to fill it, and you'll have low utilization in the beginning, I think that cost of ownership equation just does not work. And the second part of your question was on China-for-China strategy. We have a China-for-China strategy also. And I'll talk about that also on March 3rd. Got it. Thanks. Thank you. There are no further questions at this time. I would like to pass the call back over to Steve for any closing remarks. I want to thank all the investors and analysts who attended the call. And thanks for your support over many, many years when I was the CEO. And I have just gotten back, and things are going to improve rapidly. So please be patient. And I thank you for your support. Bye. This concludes today's teleconference. You may disconnect your lines at this time. Thank you for your participation.