Welcome to MACOM's third fiscal quarter, 2023 conference call. This call is being recorded today, Thursday, August third, 2023. At this time, all participants are on a listen-only mode. I will now turn the call over to Mr. Steve Ferranti, MACOM's Vice President, Strategic Initiatives and Investor Relations. Mr. Ferranti, please go ahead. Thank you, Olivia. Good morning, and welcome to our call to discuss MACOM's financial results for the third fiscal quarter of 2023. I would like to remind everyone that our discussion today will contain forward-looking statements, which are subject to certain risks and uncertainties as defined in the safe harbor for forward-looking statements contained in the Private Securities Litigation Reform Act of 1995. Actual results may differ materially from those discussed today. For a more detailed discussion of the risks and uncertainties that could result in those differences, we refer you to MACOM's filings with the SEC. Management statements during this call will also include discussion of certain adjusted non-GAAP financial information. A reconciliation of GAAP to adjusted non-GAAP results are provided in the company's press release and related Form 8-K, which was filed with the SEC today. With that, I'll turn over the call to Steve Daly, President and CEO of MACOM. Thank you. Good morning. I will begin today's call with a general update on our business. After that, Jack Kober, our Chief Financial Officer, will provide a more in-depth review of our financial results for the third quarter of fiscal 2023. I will then provide revenue and earnings guidance for our fourth fiscal quarter, and we will be happy to take some questions. Revenue for the third quarter of 2023 was $148.5 million, and adjusted EPS was $0.54 per diluted share. Cash flow from operations was approximately $46 million, and we ended the quarter with $588 million in cash and short-term investments on our balance sheet. Our team did an excellent job in meeting our business and financial objectives, albeit in a challenging market environment. We are especially pleased with our cash flow as we manage our way through the down part of the cycle. Our book-to-bill ratio in Q3 was 0.9, which was a significant improvement over Q2. Our total company backlog decreased slightly quarter-over-quarter, although it remains at a healthy level. The bookings growth was driven primarily by our Data Center and defense customers. Our turns business, or revenue booked and shipped within the quarter, represented approximately 18% of our total revenue, which is approaching historical norms. While we are encouraged by the improvement in bookings, the broader demand environment remains weak in several of our served markets, and in particular, with the telecom end market. I'll note that customer cancellations and pushout requests have slowed, which is a positive indicator. I would still characterize overall industry inventory levels as high, with many customers still carrying excess inventory. Our external sales channel inventory did decrease in Q3, and we plan to manage our external sales channel inventories down again in Q4. Turning to our discussion of our end markets for fiscal Q3. Industrial and Defense revenue was $83.5 million, up sequentially, and it was a company record. Within the I&D market, demand for MACOM's products remains robust, and we continue to see numerous secular drivers within both the Industrial and Defense markets, which have the potential to drive slow but steady growth for MACOM over the coming years. Applications include new satellite networks within the DoD, new AESA, or active electronically steered antenna, radar deployments, electronic warfare applications, secure communications, and new very high-frequency electronic sensors. These applications require progressively higher frequency levels, more bandwidth, and higher power levels in smaller form factors, which plays directly to MACOM's competitive strengths. Our goal is to expand our SAM within the I&D market and to establish differentiated products that span analog ICs, MMICs, and RF and microwave subsystems. Our portfolio has multiple growth initiatives, which were previously discussed, including our high-frequency 0.14 µm GaN process, low-frequency MACOM Pure Carbide power amplifier products, BAW filters, kV capacitors, ruggedized photonic subsystems, and RF amplifier pallets. Our recent acquisition of Linearizer Communications Group is an example of our SAM expansion initiatives. As previously highlighted, the Linearizer team brings MACOM new design and manufacturing capabilities in microwave predistortion products for SatCom and satellite payloads, as well as microwave photonic subsystem products for defense applications. Over the past three decades, the Linearizer team has developed an outstanding reputation in the SatCom industry and forged strong relationships with many leading TWT manufacturers, tier-one US defense prime contractors, SatCom ground station OEMs, and satellite manufacturers. This acquisition strengthens our market position within the defense industry and improves our ability to capitalize on the estimated incremental $250 million TAM. Since closing the acquisition in March, we have initiated new R&D activities to combine our proprietary semiconductor technologies with Linearizer's system design expertise to create more differentiated solutions for our combined customers. The industrial market continues to expand with new applications, including, by way of example, traffic monitoring radars, automotive sensors such as LiDAR, industrial wireless IoT platforms, factory automation and robotics, and wireless and laser-based instruments for medical applications. In short, we continue to build a unique and differentiated product portfolio of RF and microwave and millimeter wave and optical capabilities for the I&D market. While programs in the I&D market take a long time to enter production, the programs typically have long life cycles and carry healthy margins, which ultimately create attractive financial returns. Revenue for the Telecom end market was $38.3 million, down 29% sequentially. The global telecom markets remain very challenging, with weakness in China, slowing 5G, 5G deployments in the U.S., and elevated inventory levels at CATV and metro long-haul customers. Our Telecom bookings have been weak for most of fiscal year 2023, and at current levels, we believe we are under shipping to end demand. In spite of the current market weakness, we continue to view telecom as an attractive market with large and diverse long-term growth opportunities. We believe this market has the potential to be one of our faster growth markets because design cycles are fast, volumes are high, and customers typically select products based on performance rather than price. MACOM has compelling products for the telecom market, from our diode and MMIC portfolio to our analog ICs and optical or optoelectronic analog IC products. While this year's order demand has been weak, our sales team have been doing a great job finding new customers and applications which will drive our future growth. We believe our Telecom revenues will improve in the near term when infrastructure deployments increase and as customers and sales channel inventory is depleted. New product introductions remain a core aspect of our growth strategy in the telecom market. As an example, over the past few years, we have expanded our portfolio to include high-power switch and LNA modules to serve 5G base stations, including macro cell, small cell, and massive MIMO active antenna systems in frequency bands up to 6 GHz. We've also developed a product line of high-power transmit and receive front-end modules, or FEMs, that operate in the 5G FR2 microwave frequency bands, which consist of multi-stage PAs, LNAs, and a T/R switch, and directional couplers. MACOM's RF and microwave IC design expertise is compelling. Our chip designers have the ability to utilize a wide range of GaAs, GaN, SOI, and CMOS processes from both internal and external fabs, and as a result, we're able to select the process which achieves leading product performance. While this capability is ideal for 5G radios, our growth strategy is broader than the 5G infrastructure market, and our product line managers use the same technology to target other high-volume applications where we can differentiate. For this reason, we see a large telecom growth opportunity for MACOM over the next few years. Data center revenue was $26.6 million in Q3, down 31% sequentially. We still see excess inventories impacting customer demand at lower 25G and 100G data rates. However, during the quarter, we were pleased to see customer demand for our 400G and 800G products start to accelerate, and this near-term trend will provide an opportunity for significant quarter-over-quarter growth. We have also seen an uptick in 200G short-reach PAM4 demand to address some new US cloud deployments. MACOM has a focused product portfolio for the Data Center to support high-speed analog connectivity. Our products are used in optical transceivers, active optical cables, and active copper cable applications. MACOM has been a leader in supporting the analog linear drive architecture across InfiniBand and Ethernet protocols, because we believe linear drive, in certain applications, can provide lower latency and reduced power consumption compared to DSP-based solutions. We believe our solutions are gaining traction in the market, especially at the higher data rates. As an example, our linear drive products can support new deployments in artificial intelligence, machine learning, and high-performance computing. Hyperscale operators are in the early stages of 400G and 800G deployments today. These customers are actively looking for ways to reduce complexity, DC power, and cost. We believe we are well-positioned to capture a portion of the market with our analog solutions. I would now like to review a few key events during Q3. First, we continue to focus on developing cutting-edge semiconductor processes. In support of this effort, we were awarded a contract from the United States Air Force Research Labs, or AFRL, to develop advanced semiconductor process technology related to gallium nitride on silicon carbide. The contract will support MACOM's research and development on process technologies used in millimeter wave MMIC products. We believe this contract underscores MACOM's technical leadership and commitment in high-power millimeter wave GaN- on- silicon carbide, and it will enable us to strengthen our competitive edge. This is a multi-year contract that has a total value of around $4 million. Our strategy is to provide customers with the industry's best performing high-frequency GaAs and GaN MMIC products. Future MMIC products from advanced processes represent a large growth opportunity for MACOM over the next two to five years. Historically, MMICs have been among the most profitable products within our portfolio. Second, we are pleased to announce that during the quarter, we were awarded a platinum supplier status by a U.S.-based tier-one defense contractor, and we were named as a global preferred supplier by a leading Japanese test and measurement company. Customer satisfaction is at the center of MACOM's business strategy, and these awards are a great recognition of our success in servicing these customers. I would like to congratulate the sales teams, application engineering, operations, and all of the other critical members of the MACOM team who helped make these awards possible. Third, we are pleased that during the quarter, we formally established the MACOM European Semiconductor Center outside of Paris, France. The center bolsters our European presence and provides a manufacturing platform from which we can build upon to expand and better serve our European customers. The center also brings us an amazing team and a portfolio of high-performance MMIC products. Finally, I would like to note that the integration of Linearizer Communications Group acquisition is on schedule, and our teams have been excited to start collaborating together to win new business. Before I turn the discussion over to Jack, I would like to review one more item. In mid-July, the management team updated its long-term strategic plan. As a reminder, in July of 2020, we initiated a long-term new planning process, and this year was our fourth revision of the plan. As you would expect, the strategic plan analyzes our capabilities, the markets, and potential areas for SAM expansion. It reviews our current technology portfolio, product roadmaps, competitive landscape, SWOT analysis, and formulates a roadmap for growing revenue and profitability at a detailed product line level. We believe that an in-depth, long-term planning is essential for a semiconductor business, and this is a critical element of how we manage the company. We believe our strategy will strengthen and diversify our business and provide MACOM the ability to capture market share. We are excited to scale the business and achieve $1 billion in revenue. Jack will now provide a more detailed review of our financial results. Thank you, Steve. Good morning, everyone. Our results for the third quarter of fiscal 2023 were within our guidance for the period. Revenue for the third quarter was $148.5 million, down 12% quarter-over-quarter. The sequential decrease was driven by weakness in Telecom and Data Center markets, with a slight sequential increase in Industrial and Defense. On a geographic basis, sales to domestic customers represented 49% of revenue, flat sequentially. Sales to China-based customers were 16% of revenue, down from 20% in our fiscal second quarter. Despite sales declines in China, we continue to see additional growth opportunities in Asia and Europe. Adjusted gross profit was $89.2 million, or 60.1% of revenue, down 200 basis points sequentially, driven by lower absorption of some of our fixed costs with the lower Q3 revenue levels. MACOM utilizes a flexible manufacturing model, leveraging our internal wafer fabs as well as third-party foundries, which we believe will provide financial leverage as the business cycles and revenue improve. Total adjusted operating expense was $52.2 million, consisting of R&D expense of $33.2 million and SG&A expense of $19 million. As expected, our total operating expenses were sequentially up by $3.6 million, mostly due to the incremental expense from our acquisition of Linearizer and the establishment of our European Semiconductor Center in France. Adjusted operating income in fiscal Q3 was $37 million, down from $56.6 million in fiscal Q2. Adjusted operating margin was 24.9% for fiscal Q3, sequentially down from 33.4% in Q2. Going forward, we expect our operating margins to improve as revenue recovers. Depreciation expense for fiscal Q3 was $5.8 million, and adjusted EBITDA was $42.8 million. Trailing 12-month adjusted EBITDA was $233.1 million compared to $250.3 million in Q2 fiscal 2023. Adjusted net interest income for Q3 was $2.8 million, up roughly $700,000 from fiscal Q2 on higher investment portfolio returns, partially offset by higher interest expense on our term loan. Our adjusted non-GAAP income tax rate in fiscal Q3 remained at 3% and resulted in an expense of approximately $1.2 million. Our cash tax payments were $1.2 million, down from $1.4 million in the second quarter of fiscal 2023. We expect our adjusted income tax rate to remain at 3% for the fourth quarter of fiscal year 2023 and through fiscal year 2024. Fiscal Q3 adjusted net income was $38.5 million, compared to $56.7 million in fiscal Q2. Adjusted earnings per fully diluted share was $0.54, utilizing a share count of 71.4 million shares, compared to $0.79 of adjusted earnings per share in fiscal Q2. Moving on to balance sheet and cash flow items. Our Q3 accounts receivable balance was $105.9 million, down from $121.8 million in fiscal Q2, with our day sales outstanding remaining at 65 days. The decrease in our accounts receivable balance is primarily due to the timing of outstanding receivable collections, as well as lower sales in the quarter. Inventories were $139 million at quarter end, up by $7.1 million sequentially, primarily due to inventory balances acquired through our European Semiconductor Center acquisition, as well as increases expected to support future Data Center revenues. Inventory turns were 1.7 x in Q3, down slightly on a sequential basis from 2.0 x in the prior quarter. We recognize that at this stage of the business cycle, our inventory balance is at a multi-year high. The quality and mix of our inventory is strong and continues to support our strategic backlog. I would like to note that our turns business was the highest since our fiscal second quarter of 2022, and our book-to-bill also improved during the quarter, both of which we believe are positive indicators that will support improving inventory turns as we progress through fiscal 2024. fiscal Q3 cash flow from operations was approximately $45.8 million, compared to $32.5 million in fiscal Q2. The increase was due in part to increased accounts receivable collections. Capital expenditures totaled $3.3 million for fiscal Q3, down from $6 million in the prior quarter. Our full year 2023 CapEx is now estimated to be $25 million based on the timing of payments and as we balance our capital spending with the growth and profitability of the business. Continued capital investments in our fabs, manufacturing capabilities, as well as process and product development initiatives, remain strategic priorities for us. Cash generation continues to be an important priority for us as we manage through changing business cycles. Despite the challenging demand environment in Q3, we generated cash flow from operations of $45.8 million and approximately $117 million year-to-date. Cash, cash equivalents, and short-term investments for the fiscal third quarter were $587.6 million, up from $577.3 million in fiscal Q2 2023. During the third fiscal quarter, we utilized approximately $37 million of available cash to acquire the assets utilized to establish our European Semiconductor Center, located in France. Today, our net debt remains less than $50 million, and our gross leverage is approximately 2.6 x. Before turning the discussion back to Steve, I would like to note a few additional items. As Steve mentioned, we opened our new MACOM European Semiconductor Center, or MESC, at the end of May and look forward to integrating the differentiated technology and dedicated workforce. We do not expect that ESC will have a meaningful impact on our revenue in 2023, and its associated operating expenses will result in slight EPS dilution. We are excited that it brings us new products, technology, manufacturing, and customers. We are also pleased to announce today that we have paid off the $121 million that remained outstanding on our term loan. The term loan did not come due until May 2024. However, with increasing interest rates and our consistent quarterly cash generation, we felt it was appropriate to put this outstanding floating interest rate debt behind us and reduce our net interest expense by approximately $600,000 per quarter. Finally, as Steve mentioned, we completed our five-year annual strategic planning process during the quarter, which we believe will result in increased stockholder value. I will now turn the discussion back over to Steve. Thank you, Jack. MACOM expects revenue in fiscal Q4, ending September 29, 2023, to be in the range of $148 million-$152 million. Adjusted gross margin is expected to be in the range of 59%-61%, adjusted earnings per share is expected to be between $0.53 - $0.57, based on 71.5 million fully diluted shares. Sequentially, in Q4, we expect revenue in I&D and Telecom to be down, Data center up. Finally, as you may have seen in a press release issued yesterday, I am pleased to announce the appointment of Wayne Struble as Senior Vice President, Advanced Semiconductor Technology, a newly created position reporting to me. Wayne will be a key contributor to the development and management of our semiconductor technology roadmap. Wayne has over 40 years of experience in RF and microwave engineering, and has served as a MACOM distinguished fellow of technology since joining MACOM in 2010. I would like to congratulate Wayne on this well-deserved promotion, and the entire management team and I look forward to working more closely with him going forward. I would now like to ask the operator to take any questions. Thank you. Ladies and gentlemen, to ask a question, you will need to press star one one on your telephone and wait for your name to be announced. To withdraw your question, press star one one again. In the consideration of time, we ask you please limit yourself to one question and one follow-up. Please stand by while we compile the Q&A roster. Our first question coming from the line of Tom O'Malley with Barclays. Your line is open. Good morning, guys. Thanks for taking my question. I guess my first question, and it's something that you've highlighted since you took over the company, is just the strategic review process in July. You mentioned the $1 billion again. Can you just give us any update on the timeline there? Could you talk about just the overarching growth drivers that get you to that $1 billion and just the framework that you put together over the last month that's gonna guide you from this point over the next couple of years? Sure. Good morning, Tom. The timing of that is in our fiscal 2026 or early 2027 timeframe, which is about one year or one and a half years behind what we had sort of originally stated one year ago, primarily due to the softness in the market, slowing things down this year. When we look at our growth trajectory, we want to achieve at least our 10-year historical CAGR, which is about 14%. When we look at what's going to be driving our growth, it's primarily new product driven, not necessarily acquisition driven. I think more importantly, when we start to look at the P&L at that $1 billion-$1.3 billion run rate, we see an EPS close to $5. Part of our strategy is to make sure that we are growing, profitable revenue that's accretive to the business model. In terms of the specific product lines or segments that, you know, that we're focused on, it's really the same markets that we've been speaking about over the past few years. Certainly, we believe Telecom, over the long term, will drive growth, followed by Industrial and Defense and then the Data Center. The framework that I talked about is really some of those details that I spoke of in my prepared remarks. It's really an external review of market dynamics, looking at our capability to design and, and, and, and then positioning the company in a market where we know we can be successful. Helpful. This, and then something, I guess, more shorter term than the overarching question there. It looks like Data Center was a lot stronger, particularly, well, into the September quarter. You mentioned specifically higher speed connections at 400G and 800G. Is that the area of the Data Center business that you're seeing accelerate? Could you talk about different areas where you're seeing traction with those deployments? Thank you. You're correct that we are predicting, you know, strong growth in our fourth quarter for the Data Center business. In fact, we think it will be so strong that we'll have year-over-year growth within the segment. So this would represent five years in a row where the Data Center end market is growing, so we're happy about that. The growth is primarily coming from 400G and 800G short reach applications. Typically, it's 100G per lane, and we have a very strong position with some of our latest products that are ramping quite quickly. We have not seen a general recovery in the lower data rate applications, sort of the standard 4x50G or 8x50G type applications. Where we see the growth is primarily short reach, 100G per lane. Some of these products are supporting linear drive applications. Most, if not all, of the business is coming from PAM4 protocols. So we do expect that, you know, good things in the, in the quarter. Thank you. Our next question coming from the line of CJ Muse with Evercore. Sir, your line is open. Yeah, good afternoon. Good morning, sorry. Thank you for taking the question. I guess, first question, just to follow up on Tommy's question on the Data Center. You just highlighted, you know, year-over-year growth, which means, you know, roughly $10 million plus growth sequentially. I, and I guess, can you speak to kind of the trends that you're seeing, in terms of kind of, I guess, AI Data Center trends versus kind of, you know, base case? Is there enough kind of spending on this high-speed connectivity related on the AI side to sustain, you know, growth in Data Center, you know, through the calendar year? Right. Our, our primary focus for product development within the Data Center is analog solutions, as well as optical photodetectors and lasers. Those are the, really the three areas that we focus on. Wherever we can find an application, whether it's a pluggable transceiver, a CPO, an active optical cable, or even an active electrical copper cable, we wanna, we wanna sell our products into those applications. We have definitely seen an increase in what we would consider AI-related deployments and applications. We've seen many examples where customers are excited to perhaps reduce the diameter of a copper cable by electrifying it and running it at a higher data rate over, you know, a slightly longer reach than they could have otherwise. That's been a growth area for us. Then, of course, the linear drive, as we've talked about in the past, has many advantages over a DSP solution. So we, we are seeing a bit of a convergence around this type of architecture. This is typically in areas where you have a 100 gig switch effectively, and you have a 100 gig optical. So this is an example where MACOM can insert, you know, one or two or maybe three or four different products that go into these applications. The key here, really for the customer is, there's no gearbox, lower power consumption, lower latency, and lower cost. Of course, the challenge is designing these optical channels with just equalization or, you know, an analog solution for signal integrity is very difficult, so the design process is complex. We've been working with major OEMs to support the growth of this part of our business. Very, very helpful. I guess maybe a, a broader cyclical question. You talked about, you know, book-to-bill almost to 1, you know, versus 0.5 last quarter, turns normalizing. You know, it looks like, you know, backlog somewhere close to $300 million, so still strong. You know, are, are you suggesting that, you know, we're, we're nearing a bottom for the totality of your business, or might it take a few more quarters for, for Telecom to, to bottom? We, we try not to call the bottoms, let's say, 'cause we really don't know. What we can say based on where we are today, that for a year-over-year comparison, two of our three markets will be up. I&D will be up, Data Center will be up, and telecom will be down, somewhere between 20% and 25%. As I highlighted in my comments, that the inbound new business and the, and the has been quite weak this year, for telecom. We do expect at some point that will turn. We see certainly great opportunities in the SatCom market, with the deployment of a wide range of different satellite platforms, which we believe can provide, you know, certainly near-term growth opportunities. It's very difficult for us to say sort of where the bottom is and what might happen, you know, three or six months from now. Thank you. Our next question coming from the line of Tore Svanberg with Stifel. Your line is open. Yes, thank you. Good morning, and congrats on the, the order, turnaround here. Steve, you, you talked about being able to support, InfiniBand and Ethernet. You also said that, for next quarter, it sounds like most of the growth is gonna come from PAM4. Does, does that mean InfiniBand is kind of further out? If you could just add any color to that, that'd be great. Yeah. Most of our, well, I would say more than 50% of our Data Center revenue over the past few quarters has been PAM4 related. We see that trend continuing as we go into our fiscal 2024. I would, I would certainly highlight that point. The other point I would make, frankly, is that InfiniBand and Ethernet are both PAM4. Perfect. Thank you. As a follow-up, you mentioned China revenue 16%. Is that predominantly PON at this point, or do you still have some, you know, base station business there? You know, just, just trying to understand, you know, regionally, where the risks are and so on and so forth with that, that 16% revenue. Well, I would say there's been a broad decrease in our China-based business. It's primarily on the optical side and 5G related. I would say that's the, the area that's the weakest. Areas where we see support would certainly be in some parts of, of, you know, some 5G networks we are supporting at a, at a low level. There's no doubt that this year is going to be a down year for our China business, and as it starts to come back, it will come back primarily due to the recovery from our Data Center and optical customers. Thank you. Our next question coming from the line of Karl Ackerman with BNP Paribas. Your line is open. Yes, thank you. Good morning. I wanted to follow up on Data Center for a second. I just wanted to confirm. Are you suggesting that Data Center is up year-over-year in the fiscal fourth quarter or for fiscal 2023 as a whole? I have a follow-up. Sure. From a Data Center point of view, going into Q4, it would be up certainly quarter-over-quarter, significantly, as well as year-over-year. I would say very strong double-digit quarter-over-quarter and high single-digit year-over-year. Just to highlight that the color of our Data Center revenue has shifted quite a bit this fiscal year. The first half strength predominantly came from shipping backlog that was constrained in fiscal 2022 due to supply issues, and we cleared out a lot of that backlog in the first half. In Q3, we effectively hit an air gap, where there was very little demand on what I would consider our base business due to inventory issues. Now what we're starting to see is growth and demand for our higher data rate products for 400G and 800G. That is just starting to kick in. When you add all of that up, what you ultimately get is a, a growth year-over-year and growth quarter-over-quarter for the fourth quarter. Yep. Thank you for that. I guess, is there anything to read into your prepared remarks on slowing sales in China? Is the reduction due to general market malaise and 5G infrastructure, as you just called out, or are you seeing competitive pressures there? If you could just clarify on that, that would be very helpful. Thank you. Yeah, well, our, just to come back to your last question, we, so that you're perfectly clear, there will be full year, year-over-year growth for our Data Center. That is what we're expecting. Then answering your question about China. China, our revenues there have been trending down pretty much all year. We started, I think, in Q1, about 20%-23% of our business was China-based, and now it's in the mid-teens. Most of that is due to 5G in front haul weaknesses, as well as, as we just talked about, the Data Center. I would say that there's always been a very competitive dynamic in China, that, that competitive dynamic, I would say, is increasing. There's certainly, more and more, focus on supplying, locally and having local vendors supply the local OEMs. I would say that, that, that trend is increasing, and some of that's due to geopolitical reasons. We have not been defocusing our efforts on China. Today, still some of the major telecom, suppliers into the optical, you know, optical networks and, and, and whatnot, are based in China. We'll continue to service the market. We're not pulling back per se. However, I would also add that we are focused on developing our revenues in other areas, including, Europe, and that's one of the, main reasons why we decided to establish, facilities and manufacturing inside of the EU. Thank you. Our next question coming from the line of Harlan Lee Sur Jr. with JP Morgan. Your line is open. Yeah, good morning. Thanks for taking my question, and good to see the inflection in order activity, but can be quite noisy, right, during this period of sort of macro weakness. It looks like dynamics are stabilizing, right, as reflected by the decline in orders and pushouts. Quarter to date, here in September, are bookings continuing to rise sequentially, and what's the turns assumption embedded in your September quarter guide? We're certainly very pleased with our 0.9 book-to-bill in the third quarter, and I would say that we've started the fourth quarter with strong bookings, and it certainly would be our expectation that we can be, you know, somewhere around the 0.9-1 book-to-bill this quarter. That's our expectation. We'll see how August and September go. A lot of these programs that are coming in are also program-related, large program-related, so in some instances, we have good line of sight. I think your point about the choppiness is absolutely there. As I highlighted, the telecom market is still very, very weak. We see that many of our major customers still are carrying tremendous levels of inventory, including CATV customers. Then regarding your, your question about the turns, you know, I think we're gonna have similar turns level in Q4 as we had in Q3. Yeah, thank you for that. Then congratulations on the close of the OMMIC deal. Looks like their operations are gonna become the hub of the European semiconductor sector. Is the MACOM team going to be transferring some of its MACOM-originated GaAs and GaN-based MMIC technology to the OMMIC fab, including your 0.14-micron GaN technology? What's the revenue potential out of their current 3-inch manufacturing line? Thanks, thanks for that comment and question. Just to highlight, we've had operations in Europe. We have a fairly large facility in Cork, Ireland, where we have a design center. We do quality and reliability testing, and we have a fair amount of sales and finance and administration supporting a lot of our international business. Cork is certainly today the main hub of MACOM, certainly in Europe. We've also had a design center in Sophia, France, for over 10 years, and they've done a super job supporting a lot of our high-performance analog product development. Then adding a wafer fab and a group that is expert at very high frequency, millimeter wave process technology, really complements the portfolio. We do not have any plans to transfer any of our technology that we're running here, including the 0.14 micron process, to France. Instead, we will continue to build and develop the technologies that they've been working on, and as a priority, move some of those process technologies from the three-inch line to a six-inch line. We haven't explicitly said what the revenue potential is of that fab. We probably wouldn't want to say that, you know, with that level of detail. What I can tell you is right now, that is, that fab is underutilized. We see a tremendous opportunity for growth, and our sales team and our business development teams are very actively really turning the business around, and we see that will be a nice growth vector for us over the next one to two years. Thank you. Our next question coming from the line of Vivek Arya with Bank of America. Your line is open. Hi, this is Blake Freeman on for Vivek. Thanks for taking my question. Just kind of wanna focus a little bit more on the Q4 guide. I know you gave color around Data Center. If you can provide kind of the sequential commentary, maybe for the Industrial and Defense and Telecom business, the magnitude of the declines in each of those areas, that'd be helpful? Sure. I, I I'll say a word on that, and then maybe Jack can add in. As we, as we've talked about, we do expect very strong Data Center growth, and we expect I&D will be down in the sort of mid-single digits in Telecom and somewhere between 10% and 15% down sequentially. Jack, I don't know whether you wanna add to that. Yeah, I think I would just add, you know, we've, we've developed a fairly strong backlog over the past couple of years, and we've, we've eaten into that a little bit over the past couple of quarters. So I think with regard to some of those, you know, Q4 guide items that we have with Industrial and Defense and Telecom being down, that's also coming on the back of, you know, lower than 1-to-1 book-to-bill. You know, we need to work some of those lower order patterns that we've seen going through the past couple of quarters, through this Q4 time period. Once again, as I had mentioned, you know, we do have a fairly strong backlog that supports the business going into Q4 and beyond. Got it. Then just kind of following up on that, maybe specifically on the Industrial and Defense side. I know this is certainly across the industry, you know, several vendors observing some kind of digestion in the core industrial space. I know this segment is kind of, you know, about 50%, 60% defense. I was maybe kind of, you know, hoping you can kind of, you know, provide more specifics, maybe what you're seeing specifically on trends on the defense side, and then areas in core industrial markets that could be a little bit weaker or stronger versus others. Yeah, I would say, in general, our industrial business is weak and will remain weak in the near term, and most of the growth that we're getting in the I&D segment is coming from defense programs, primarily radar programs, communication programs. I think we mentioned on last quarter's calls, some heavy demand for international radios coming out of Europe, that we have some content in. The I part of I&D today is weak. I talked about in my prepared remarks some of the new applications that we are going after, within the I portion there. Generally speaking, it's weak. The other thing I would add is we're not really a good bellwether of the industrial end market. It's one of the smaller parts of our portfolio. Yeah, and Blake, this is Jack. I would just add that, you know, some of the inherent business that we have going through, from a defense perspective, that can be lumpy at times. I think the other item, when you look at our Industrial and Defense end market, is that it's quite diverse. There's, you know, a number of different things that work its way into the industrial category as well. That, that helps us, you know, from a, from a stability standpoint as well. Thank you. Our next question coming from the line of Matt Ramsey with TD Cowen. Your line is open. Thank you very much, guys. Good morning. Not to go back to the Data Center stuff, but you can't get through a call now without saying AI a few times, so we kinda have to go there. I wanted to ask about your 400 and 800 gig product portfolio, and particularly, you mentioned the linear drive differentiation versus DSPs. Maybe you could expand on that a little bit more from a technical perspective, and also, how you're thinking about the penetration of linear drive into those Data Center markets, where we are today, where that can go over time, and what it represents as sort of a dollar TAM for your company. Thanks. Sure. I'll try to provide a bit more detail. Where we see linear drive working is when you have a 100 gig electrical lane matching up with a 100 gig optical lane. That's, that's the ideal application. You can run that at, you know, you can run that at 400, you can run that at 800, you can run that at 1.6 terabits as well. When you use a linear drive architecture, you're, you're effectively removing the function of the DSP or a CDR from the module, and you're, you're having the switch effectively manage the interface, the interface within the module, if it's a module. There's benefits in doing that, just from latency, cost, power consumption, and so those are the benefits, and you can eliminate the DSP and still be in a pluggable form. You can use this for active optical cables, you can use this for pluggable cables, and so there's customers like that, that option, because then they can use many vendors to support their deployments. What it requires is certainly a switch ASIC, and it requires now the module manufacturer to work very closely with the switch vendor. We demonstrated at OFC a few months back, three different module manufacturers, with an interop, with a Tomahawk 5 switch. If that was ideal for primarily short reach, and that's where, you know, MACOM has historically serviced the short reach market. That's just sort of the lane that we're in. What we sell into that market are drivers and TIAs, primarily, and equalizers. Those are the sort of the three product sets. These are highly integrated silicon chips that have all sorts of creature features on them so that the customers can turn the knobs they need to turn to get the product working. Where we stand right now is, we have production at 100G, and we are pretty far along with 200G per lane as well. Thank you for all that, that, that detail. I really do appreciate it. As my follow-up, I, I think it is encouraging to see book-to-bill up to 0.9, and I think you guys indicated close to 1, hopefully for the September quarter. Maybe you could give a little bit of color, if you could, on the three segments and how book-to-bill is trending in each of those, or, are some well ahead of 1 at this point, and what those products might be, and are there certain end markets where we're still coming off the 0.5 that we were last quarter and working our way back up? Thanks. Right. Well, as, as in Q3, we will see the same behaviors in Q4. It will be primarily Industrial and Defense and Data Center driving the bookings growth or, or recovery, let's say. We still see tremendous weakness across many of our Telecom end segments, cable, test and measurement, 5G. These are still very weak. Don't expect recovery in the fourth quarter. In terms of the products, it's certainly many of the products that we've talked about in the past. A lot of our MMIC products, a lot of our, high-end, GaAs and GaN products for military applications, there's a wide range of those, are really supporting the growth within the, the defense sector. You know, when we think about 2024, the growth drivers from a product set point of view would certainly be, GaN. GaN is, you know, we think 2024 will be a great year for us. We launched the 0.14 µm process about six months ago into production, and our teams are in the process of getting their first design wins, which will turn into production next year. Certainly, on the Data Center side, we think in 2024 there'll be more high data rate applications coming to bear, and potentially ramping up. In the Telecom area, you know, the only real bright spot for us right now is what we're doing in the SatCom market, both on the ground side and on the satellite side. Thank you. Our next question coming from the line of Harsh Kumar with Piper Sandler. Your line is open. Yeah. Hey, hey, Steve and Jack, had a quick one. Steve, when you, when you talked about your long-term drivers, you mentioned the order of Telecom, Industrial, and then Data Center. As you try to get to your billion-dollar goal by FY 2026 or early FY 2027, is that how you're thinking about growth to that billion-dollar number, or was that just a random order? If I can flip the question, if that's not the correct order, what is the correct order as you think about growth? Yeah, that is the correct order, and that's the way we think about it, but we're, we're oftentimes wrong, more often wrong than right when we make forecasts, so you have to take that with a grain of salt. When we look at our R&D spending and we look at the projects that are in our pipeline and where we want to position the company, we see that there's a lot of variability within the Telecom space that is very attractive to us. We like the diversity, we like the long tail of customers that we can approach, and it plays to a lot of our strengths. We do end up spending a fair amount of our R&D dollars, developing chips for that end market. Obviously, the A&D market is another great market for us. I think Q- as I think I mentioned on the, in the script, Q3 was a record for our I&D segment, and this year, we'll have great year-over-year growth for the full year. And we expect more good things to happen next year and the year after that, as we start to bring into production, some of the new programs that we know were designed into. And the smallest piece of our business is the Data Center. I realize we get probably the most questions about the Data Center, but as I highlighted, we do have a narrow focus in the Data Center, where we focus on analog solutions for short-reach, where we can insert, you know, high performance, connectivity chips or lasers and detectors. That is our strategy there. That's a fairly narrow focus strategy. For what it's worth, we get things wrong all the time, too, so I wouldn't be too hard on yourself. From, from a follow-up, you're seeing some pretty good pickup in the Data Center space. The kind of trends you're talking about typically don't go away in a quarter or two. Is it a fair assumption to think that the activity in 400G and 800G should stick around for a handful of quarters, as you look maybe past the, the next quarter, and, and a little bit more beyond? It is possible, and it's very difficult for us to say. We have certainly seen in the past, examples where programs ramp up very quickly, and then they ramp down very quickly. We have to be cognizant of that. While we're certainly excited about all the great things we're doing with, within the Data Center, we also recognize that it can be a very volatile business. Thank you. Our next question coming from the line of David Williams with Benchmark. Your line is open. Good morning. Thanks for taking the question. Steve, just quickly, I, I guess on the magnitude of the inventory depletion that you still see needs to happen in the channel, and you, you've talked about, I think you've mentioned tremendous a few times, so it sounds like a fairly heavy level of inventory digestion still needs to happen. Just wondering if you could thought that for us? Yeah, sure. I'll make a comment, then certainly maybe Jack can add to it. As everybody knows, the manufacturing cycle times for many of our products can be in the range of six months, maybe longer, maybe shorter, depending on the fab and the technology. As everybody knows, just two quarters ago, we had a run rate of $180 million. When you're looking at our inventory today, and you relate that to sort of a $180 million run rate, you can see that we are, as Jack said, carrying excess inventories at today's level, but not necessarily from maybe one or two quarters ago. We are going through a digestion period where we need to move that inventory out into the market. Part of what we're also doing is making sure that our channels are not carrying excess inventory, and so we are, we are definitely managing that down. We wanna see more depletion. Jack, maybe you can add to that. Yeah, I think as we had discussed in some of our prepared remarks, we're working closely to monitor what's out in the channel and making sure we understand where things are going there. We have had some positive trends over the past quarter that are somewhat encouraging, but we will continue to monitor that. With regard to MACOM's inventory, I described the uptick that we've seen. Some of that uptick is associated with some of the acquisitions that we've brought on board when you look back over the past year. We're also continuing to, you know, to purchase inventory to support our backlog, and I think most notably, the Data Center backlog that we have. Great, thanks. Jack, in the past, you've talked about the flexibility in the model, on the expense side, and just hoping you could give us a little more thoughts in terms of modeling and what's appropriate. If you're, if you're restraining growth or development efforts here, just kind of through this softer demand environment. Yeah. We've been, we've been pleased with the gross margin performance of the business, you know, in light of the slowdown over the past few quarters. We've made a fair amount of structural changes to, to the business to, to, to manage the improvements that we've seen over the past couple of years from an overall gross margin standpoint. We do have the flexible manufacturing model, as I had described, with some of the products being manufactured in-house in our internal fabs and, and, and others that go to third party. That helps us in terms of being able to mitigate some of the costs that that we have with, with a portion of them being essentially variable. I think the other, the other piece that I would like to highlight is our internal manufacturing fabs are generally medium volume. We don't carry the same large overheads like some of the mega fabs have, so that helps protect us too, in periods where there may be a slowdown. As we look, look out into the future and, you know, hopefully, as we get back to some of the higher run rates that we were at from an overall revenue perspective, I think that will support improving gross margins as we go forward. Thank you. Our next question, coming from the line of Quinn Bolton with Needham. Your line is open. Hey, just a quick clarification on the 400G, 800G. Is that almost entirely optical, or are you starting to see copper applications, active copper cables starting to take off within that higher speed PAM4 business? We see both. You know, our chips are four lanes of 100 on a single chip, and you can use two of those to achieve 800. The other thing I'll note, which is sort of a benefit of the linear drive approach, is it can really work with a whole variety of architectures within the module, whether it's a silicon photonic-based solution, whether it's DML or EML, and also thin film lithium niobate. Whatever, whatever technology the module vendor wants to use, you know, we can support those including VCSELs as well, if I didn't mention that. Very, very flexible technology from MACOM's point of view. To follow up on linear drive, it sounds like your, your comments, it's, it's mostly on the Ethernet around Tomahawk 5. InfiniBand seems like it's much more closed channel. You have effectively one vendor, I think, you know, that, that dominates that market. It seemed to me that the InfiniBand could be a, a pretty significant opportunity for linear drive. Where do you, where do you think we are in adoption of linear drive in the InfiniBand market? I would agree that we can service both sides or both protocols, and I think we in fact demonstrated a solution using a InfiniBand application at OFC. Yes, we are, we're supporting that as well. Thank you. Our next question coming from the line of Richard Shannon with Craig- Hallum. Your line is open. Well, hi, guys. Thanks for taking my questions. Steve, I want to follow up on one of your responses to an earlier question on GaN. I think you mentioned you're expecting a great year in fiscal 2024. Maybe if you could help us understand those dynamics and maybe even quantify what you see as the opportunity for your for that in that year? Sure, and I'll, I'll sort of define great as we developed a process, and now we're selling it. That we'll, we'll start selling it in 2024. We're starting at zero for our 0.14 µm process, and we are getting design wins, and we expect to see growth in that fiscal year. That's our right now, that's our definition of great. It's a win. Our sales team, our business development team, our fab engineers are excited to make that happen. We haven't put a fine, you know, number on the goal, our internal goals, and we haven't shared that externally, and I think it's premature to do that. We just look at that as another vehicle for growth. We have the full support from major OEMs here in the U.S. that wanna use the technology. We're doing some novel things regarding R&D, as I mentioned on my prepared remarks, including bringing in sort of next generation process steps to improve performance beyond what we currently have. Certainly we think next year will be a great year for GaN. Okay, perfect. Thanks for that detail. The last question for me on Data Center here. I just wanna verify. I think you said it, but I just wanna verify. Is all the upside here you're seeing is on the analog side, or are you seeing any upside coming with lasers? Obviously, had some great discussion the last few quarters on what you're thinking about with your laser portfolio, but it seems like it's all analog-oriented. Can you confirm if that's what you're, what you're seeing? I would say it's true the growth is coming from the analog side, and I would characterize our fiscal 2023 as a building year for our optical products, where lots of design-ins, and lower revenue than we had expected. That's been a disappointment. However, the team is making progress, winning those design wins, not only at, you know, accounts here in the U.S., but also in China. We're also working on new laser categories, including EMLs and arrays, that are. You know, we have a lot of interest in on that. But to your point, yes, the growth for this year, for this quarter in the Data Center is driven by analog solutions. Thank you. I'm not showing any further questions in the queue at this time. I would now like to turn the call back over to Mr. Steve Daly for any closing remarks. Thank you. In closing, I would like to thank our team for their continued hard work and dedication. Have a nice day. Ladies and gentlemen, that does end our conference call today. Thank you for your participation. You may now disconnect.