Good day, everyone, and welcome to ON Semiconductor Corporation' s Fourth Quarter 2025 Earnings Conference Call. At this time, all participants are in a listen-only mode. After the speaker's presentation, there will be a question-and-answer session. To participate, you will need to press star one one on your telephone. You will then hear a message advising your hand is raised. To withdraw your question, simply press star one one again. Please note, this conference is being recorded. Now it's my pleasure to turn the call over to the Vice President of Investor Relations and Corporate Development, Parag Agarwal. Please go ahead. Thank you, Carmen. Good morning, and thank you for joining ON Semiconductor Corporation' s Fourth Quarter and Full Year 2025 Results Conference Call. I'm joined today by Hassane El-Khoury, our President and CEO, and Thad Trent, our CFO. This call is being webcast on the Investor Relations section of our website at www.onsemiconductor.com. A replay of this webcast, along with our fourth quarter and full year 2025 earnings release, will be available on our website approximately one hour following this conference call, and the recorded webcast will be available for approximately 30 days following this conference call. Additional information is posted on the Investor Relations section of our website. Our earnings release and this information include certain non-GAAP financial measures. Reconciliation of these non-GAAP financial measures to the most directly comparable GAAP financial measures, and a discussion of certain limitations when using non-GAAP financial measures, are included in our earnings release, which is posted separately on our website in the Investor Relations section. During the course of this conference call, we may make projections or other forward-looking statements regarding future events or the future financial performance of the company. We wish to caution that such statements are subject to risk and uncertainties that could cause actual events or results to differ materially from projections. Important factors that can affect our business, including factors that could cause actual results to differ materially from our forward-looking statements, are described in our most recent Form 10-Qs and other filings with the Securities and Exchange Commission and in our earnings release for the fourth quarter and full year 2025. Our estimates or other forward-looking statements might change, and the company assumes no obligation to update forward-looking statements to reflect actual results, change assumptions, or other events that may occur except as required by law. Now, let me turn the call over to Hassane. Hassane. Thank you, Parag. Good afternoon, and thank you all for joining us on this first call of the year. In 2025, amid a challenging demand environment, we delivered $6 billion of revenue and non-GAAP gross margin of 38.4% by staying disciplined in our execution and tightly aligning to our long-term strategy. With focused investments, we advanced our technology leadership while positioning ourselves better in the growth markets that define our future. We strengthened our portfolio through organic investments, acquisitions, and partnerships. We launched a multi-market growth engine with our Treo Platform. We delivered more than $250 million in AI data center revenue across the power tree. We expanded our content and automotive for Zonal Architecture. We further optimized our cost structure through FabRight actions, and we returned $1.4 billion of free cash flow through share repurchases. Over the last five years of our transformation, we have evolved from a manufacturing company to a product-centric company, launching more breakthrough products than we had in the prior decade and strengthening our portfolio with technologies that position us to win the most critical market transitions. Our disciplined investments, combined with our FabRight actions, have created operating leverage in our model and set the foundation for long-term growth and margin expansion. On the new product front, market proliferation continues with our Treo platform. We doubled the number of products sampling year-over-year, reinforcing Treo as a key contributor to our long-term mixed shift towards high-margin product revenue and supporting our new design funnel, which is now over $1 billion. Treo is already being designed into a broad set of automotive applications, including zonal architecture ultrasonic sensors and LED drivers, and we are proliferating into industrial applications like HVAC, Energy Storage Systems or ESS, and Medical, with customers like Dexcom who designed our low-power analog front end in their continuous glucose monitors or CGM. We broaden our leadership in wide-bandgap technologies by introducing our lateral and vertical GaN or V-GaN strategy with a differentiated product roadmap, solving our customers' problems at favorable margins. This year, we are preparing to sample more than 30 new GaN devices spanning 40 V-1,200 V, including both discrete devices and integrated driver-plus-GaN solutions. To deliver lateral GaN to the market, we announced new foundry partnership to broaden regional supply options, giving us the product breadth and manufacturing flexibility to serve high-growth applications with revenue beginning in 2026. For V-GaN, we are already collaborating with GM on the development of electric drive systems. As a reminder, V-GaN is built on proprietary GaN-on-GaN technology, is manufactured in our fab in the U.S., and positions us for multi-year competitive advantage in high-voltage and high-power density applications spanning AI data centers, EVs, renewables, and aerospace defense and security. We expect first V-GaN revenue in 2027. Turning to the demand environment, we are seeing seasonal patterns and are encouraged by improving order trends across our core markets, contributing to fourth quarter revenue of $1.53 billion, non-GAAP gross margin of 38.2%, and earnings per share of $0.64, both exceeding the midpoint of our guidance. Automotive inventory digestion is largely behind us. AI data center is increasingly becoming a meaningful growth engine for the company, and we believe we have seen the bottom for industrial, with global PMI trends pointing to early signs of expansion. In automotive, we continue to expand our content as the industry accelerates towards a zonal architecture for software-defined vehicles and autonomous driving. We are proliferating our 8 MP image sensor for front-facing vision and have introduced our Treo-based advanced ultrasonic sensors for ADAS. In zonal, we have already exceeded $400 million in design funnel for our SmartFETs, eFuses, and 10BASE-T1S Ethernet transceivers as customers re-architect their vehicles. Most OEMs have already started their migration towards zonal, and industry estimates suggest that in the next five to eight years, nearly 40% of new vehicles will feature this architecture. All of this is incremental to our existing leadership in silicon and silicon carbide devices in xEVs. In industrial, we are expanding our opportunity in machine vision, factory automation, drones, and robotics with new families of image sensors with competitive performance, differentiated features, and strong interest from customers seeking a U.S.-based supplier. In aerospace, defense, and security, revenue increased 70% year-over-year, driven by North America and Europe. We secured a strategic design win for a solid-state circuit breaker using our SiC JFET, demonstrating our ability to win in high-barrier industrial segments where mission-critical performance depends on resilient, reliable power distribution and optimized size and weight. Turning to our AI data center business, as previously mentioned, we delivered more than $250 million in revenue in 2025. With the rapid expansion of AI compute infrastructure and our unmatched ability to deliver power efficiency across all stages of power conversion, this market remains one of the strongest and fastest-scaling opportunities for us. Over the last year, we have reinforced our role as the only broad-based U.S. power semiconductor supplier, addressing power density bottlenecks that limit AI growth, aligning with national priorities for resilient AI infrastructure. With a broad portfolio of silicon, silicon carbide, SiC JFET, GaN, and our newest VCore assets, we are perfectly positioned to deliver the power efficiency requirements our customers need. Going through the power tree, starting outside the data center, we lead the utility string ESS market with more than 50% worldwide share. We are ramping our IGBT hybrid power module to multiple global customers and seeing strong interest in our next-generation SiC MOSFET hybrid power module, delivering even higher power efficiency nearing 99.5% and the highest power density at 430 kW, with a first win at Sungrow in their global platform. We are already sampling our 1,200 V ultra-low RDS SiC JFET for AI data center platforms, and our AI data center funnel is increasing as AI workloads scale and more platforms move to higher-voltage bus architectures, expanding opportunities from power supplies to battery backup disconnect and hot swaps. At the UPS stage, we want a high-end design with a leading U.S. power supplier that cuts their system footprint by about 50% using our SiC power module to increase power density and improve thermal performance. We expect production volumes to begin this quarter. At the rack level, we have secured designs for our SiC and silicon MOSFET and our SiC JFET in both the BBU and PSU systems with Delta, Lite-On, and Great Wall to serve both their Western and China customers as the AI ecosystem continues to build out. At the XPU board level, we extended our reach by securing several next-gen design wins with our multi-phase controllers, smart power stages, and point-of-load devices. We began sampling our dual 5x5 VCore solutions as well as two-phase power modules using a next-generation regulator architecture that dramatically improves transient response for AI and server processors, referred to as TLVR for trans-inductor voltage regulator. As we integrate our recently acquired VCore assets, we are strengthening our portfolio and positioning ourselves to win the next-generation architectures. As we move into 2026, we are encouraged by a market environment that is showing clearer signs of improvement across automotive, industrial, and AI infrastructure. The groundwork we have laid out over the last several years has positioned us to benefit as demand conditions continue to get better. Our portfolio is aligned to the highest growth opportunities in power and sensing. Our manufacturing footprint is structurally stronger, and our customer engagements are deeper and more strategic. I'll now turn it over to Thad to give you more details on our results and guidance for the first quarter. Thanks, Hassane. In 2025, our teams remain focused on disciplined execution and long-term value creation for all stakeholders against a backdrop of uncertainty and limited demand visibility. We strengthened our financial foundation through structural cost actions, tighter operational rigor, and a relentless focus on expanding our customer base. These efforts allowed us to navigate the macro environment, maintain our strategic investments in intelligent power and sensing, and position the company for margin expansion as market conditions improve. There are three key areas I'd like to highlight as we exit 2025. First, we delivered record free cash flow margin of 24% in 2025. Free cash flow increased 17% year-over-year to $1.4 billion due to tight expense control and lower CapEx as our large capacity investments are behind us. We returned approximately 100% of our free cash flow to shareholders through share repurchases in 2025, demonstrating a disciplined capital allocation strategy. We also announced a new $6 billion share repurchase program in November after repurchasing $2.6 billion under the prior program that expired at the end of 2025. Second, we are improving the quality of our revenue and margins through investments in differentiated products. We have been reshaping our product mix through targeted investments, improving long-term margin potential while supporting our leadership in high-growth markets. We continue to rationalize our portfolio by exiting volatile non-core businesses while reallocating investments to differentiate power, sensing, and analog mixed signal technologies. The third point, we have positioned the company for margin expansion by aligning our manufacturing footprint and product mix, enabling meaningful operating leverage in our model. As part of our FabRight strategy, we reduced our fab capacity in 2025 by 12% as we improved our operational efficiency. In the fourth quarter, we announced additional measures to further rationalize our manufacturing footprint. These actions together will lower our 2026 depreciation by approximately $45 million-$50 million, and we expect to see the gross margin impact in the second half of the year. Our Q4 gross margin includes approximately 700 basis points of underutilization charges, which will dissipate with increasing utilization as market conditions improve. These actions, along with other operational improvements, position us for margin expansion in 2026. As we look ahead, our financial priorities remain consistent: drive sustainable and predictable results, expand margins, and increase earnings and free cash flow. Shifting to results for the fourth quarter, we met the midpoint of guidance with revenue of $1.53 billion in line with normal seasonality. Automotive revenue was $798 million, up approximately 1% quarter-over-quarter. We continue to see stabilization in the automotive market as much of the inventory digestion is behind us. Revenue for industrial was $442 million, up approximately 4% quarter-over-quarter, driven largely by the traditional industrial business and factory automation. Following eight quarters of year-over-year declines, Q4 marked the first quarter of year-over-year growth in our industrial revenue, increasing 6% over the fourth quarter of 2024. Our AI data center revenue, which is classified in the other segment, grew quarter-over-quarter and contributed more than $250 million for the full year. For the fourth quarter, revenue for the other category decreased 14% quarter-over-quarter due to seasonality and soft demand conditions in areas outside of AI data center. Looking at the fourth quarter split between the business units, revenue for the Power Solutions Group, or PSG, was $724 million, a decrease of 2% quarter-over-quarter and a decrease of 11% year-over-year. Revenue for the Analog and Mixed Signal Group, or AMG, was $556 million, a decrease of 5% quarter-over-quarter and 9% year-over-year. Revenue for the Intelligent Sensing Group, or ISG, was $250 million, a 9% increase quarter-over-quarter, driven largely by the industrial market and a decline of 17% over the same quarter last year as we repositioned the business for the long term. Turning to gross margins of the fourth quarter, GAAP gross margin was 36% and non-GAAP gross margin improved to 38.2% as we're seeing the initial impact of our FabRight actions executed in 2025. As planned, manufacturing utilization is down quarter-over-quarter to 68% to align to seasonal revenue trends in the first half of 2026. We expect utilization to increase to the low 70% range in the first quarter and additional FabRight actions to drive margin expansion through the year. GAAP operating expenses were $351 million, including $59 million in restructuring expenses. Non-GAAP operating expenses declined 3% sequentially to $282 million at the lower end of our guidance range. GAAP operating margin for the quarter was 13.1% and non-GAAP operating margin was 19.8%. Our GAAP tax rate was 16.2% and non-GAAP tax rate was 16%. Diluted GAAP earnings per share was $0.45, and non-GAAP earnings per share was $0.64 above the midpoint of our guidance. GAAP and non-GAAP diluted share count was 402 million shares. We repurchased $450 million of shares in the fourth quarter. As I indicated earlier, in 2025, we deployed approximately 100% of free cash flow to repurchase $1.4 billion of shares. Turning to the balance sheet, cash and short-term investments was approximately $2.5 billion, with total liquidity of $4 billion, including $1.5 billion undrawn on a revolver. Cash from operations was $555 million, and free cash flow was $485 million. 2025 free cash flow was a record at 24% of revenue, and we expect to deliver strong free cash flow in 2026. capital expenditures were $69 million, or 4.5% of revenue. Inventory decreased by $58 million to 192 days from 194 days in Q3. This includes 76 days of strategic inventory, which is down from 82 days in Q3 as we continue to deplete this inventory over the next two years. Excluding the strategic builds, our base inventory is healthy at 117 days. Distribution inventory increased slightly to 10.8 weeks from 10.5 in Q3 and is within our target range of nine to 11 weeks. Looking forward, let me provide the key elements of our non-GAAP guidance for the first quarter of 2026. As a reminder, today's press release contains a table detailing our GAAP and non-GAAP guidance. We anticipate Q1 revenue will be in the range of $1.44 billion-$1.54 billion, in line with normal seasonality at the midpoint. This marks the first quarter with expected year-over-year growth since the downturn started over three years ago. We expect to exit $50 million of non-core revenue in the first quarter. Excluding these exits, our revenue would be above seasonal. Our non-GAAP gross margin is expected to be between 37.5%-39.5%, which includes share-based compensation of $7 million. Our FabRight actions that I described earlier and other operational improvements are expected to contribute to gross margin expansion of 30 basis points at the midpoint in a quarter in which margins have historically declined with seasonality. Non-GAAP operating expenses are expected to be between $285 million-$300 million, which includes share-based compensation of $29 million. We anticipate our non-GAAP other income to be a net benefit of $7 million, with our interest income exceeding interest expense. We expect our non-GAAP tax rate to be approximately 15%, and our non-GAAP diluted share count is expected to be approximately 397 million shares. This results in non-GAAP earnings per share in the range of $0.56-$0.66. We expect capital expenditures in the range of $35 million-$45 million. To close, with stabilization across automotive and industrial markets and our momentum in AI data center, we are entering 2026 from a position of strength. We have built a structurally different company with a more resilient model, a sharper product mix, and a clear strategy to expand margins and generate strong free cash flow. As demand improves, we are positioned to scale efficiently and convert that demand into profitable growth. With that, I'll turn the call back over to Carmen to open it up for questions. Thank you so much. As a reminder, to ask a question, press star one one on your telephone and wait for your name to be announced. To remove yourself, press star one one again. One moment while we compile the Q&A roster. Our first question comes from Ross Seymore with Deutsche Bank. Please proceed. Hi guys. Thanks for asking a couple of questions. I guess the first one's going to be a near-term and then the second will be a longer-term question. On the near-term question, what was going on in the other category? Everything else was better than expected, but other was pretty weak. And then I guess you sound better on your tone about everything to do with the cycle and secular, et cetera, but you're kind of still at seasonal. So when do you think you could be above seasonal given the point of the cycle that we're at right now? Yeah, two things, Ross. One is if you exclude the exits, we are above seasonal, right? So if you look at the reported numbers, they're in line with seasonality, similar to what we've been saying for a couple of quarters here. But if you exclude the exits, we are above seasonal. On your question about the other buckets, so we saw strength in AI data center. There's clearly growth there. We have normal seasonality in Q4 in that other bucket that's down, and then there are also about $40 million of exits that are in there. So that's why that bucket was down sequentially. Got it. Thanks for that. And I guess as my longer-term question, perhaps for Hassane, you talked about the AI data center side of things. The $250 million are slightly more than that. I know you don't want to get anchored to a specific number for this year, next year, et cetera, but can you just talk a little bit about the TAM you think you can address in that? When do you think it could be 10% of sales or something larger like that? And how ON differentiates to give you the confidence that you can gain that share? Yeah. So obviously, I will stick with I'm not guiding specifically in 2026 or the AI data center yet, but I'll give you why the confidence in the continued growth, I would say, at a pretty good rate because our growth rate accelerated from 2024- 2025 and will continue. I described a little bit on how we tackle from a technology perspective from the wall, from the outside data center all the way to the board. With that is how we differentiate. If you look at it, we're the only company or one of the very few companies that are able to do the high voltage, think 800 V with our 1200 V devices, all the way to the SPS-type devices closer to the core. You have to be able to do that conversion with the highest efficiency at every step of the conversion. But more importantly, architectures moving forward are collapsing the conversion tree, which means you have to be able to do high voltage and low voltage. We're the only company that has vertical GaN, which is the highest power density at the highest voltage. Again, a competitive advantage, we will flex to continue to gain share with the high-voltage power supply makers. And closer to the XPU, we're in with the standard companies you talk about, not only with the standard GPUs, but also the non-standard GPUs or ASICs and so on. So we're approaching it with a broad portfolio, number one. And more importantly, we're targeting where the market is going to be in a few years, which is the high-voltage rail, which is exactly where we play very well in automotive already. Those two are angles we are flexing. They're the angles that already delivered the $250 million in 2025 from almost nothing, and that will continue to grow with the proliferation of the roadmap. Add to that, of course, the VCore, which we've acquired in 2025. That will add cumulatively to the power devices we have. Thank you. Thank you. One moment for our next question. It comes from Vivek Arya with Bank of America Securities. Please proceed. Thanks for taking my question. You mentioned, I think, $40 million of non-core exit in Q4, I think $50 million in Q1. Is this the kind of quarterly run rate that we should expect through 2026? And Hassane, if we set kind of these things on the side, then can ON get to your long-term 10%-12% kind of top-line growth target conceptually for this year if the macro environment is getting better? Yeah. So first off, on the exits, we talked about the $50 million. If you think about it for the whole year at $300 million, you have the couple of quarters, kind of Q2 and Q3, would be higher than that. And then you can apply kind of the seasonality where we'll be exiting. But it's not flat at $50 million because it's a $300 million total. So that's point number one. Point number two on the growth. So if I take into account the exits for Q1 or even for the year, Vivek, you can think about our core business has been growing above market even in the downturn almost. This is the stuff we've been investing in, and that's delivering already over or multiple of market growth. That's why in Thad's prepared remarks, he clearly articulated that if you account for the $50 million exit in the first quarter, we're actually above seasonality as a baseline. That's what products that we've been introducing over the last few years are starting to contribute on a base. So to answer your question, longer term, we expect 2027 to resume that over-market growth if you think about it that way now that we net out the exits. Does that make sense? Yeah. Thank you for that, Hassane. And then maybe tied on gross margin, I think you gave your number for depreciation. I was hoping you could just give us kind of a walk of for gross margin. So let's say conceptually, if you do go through these exits and you are in kind of the run rate of your long-term model, how should we think about your fab utilization and then gross margin kind of broad bracket this year? Yeah. So for Q1, we expect utilization to be in that low 70% range. Depending on what this market does and what this potential recovery looks like, we'll match utilization to whatever the market does. Sitting here today, I think we're going to be for Q2 and beyond, we're going to be running kind of mid-70s ±. If there's a sharper recovery, we will match that very quickly, and that will all fall through to gross margin. As I said in my prepared remarks, we believe there's margin expansion through the year. We have the FabRight activities that will start to hit the company later in the year. And as utilization goes up, that will impact later in the year as well. So sitting here today, we feel good about the gross margin progression from this point. Okay. Thank you, Thad. Thank you. Our next question is from Alex Fernandez with Jefferies. Please proceed. Sorry. It's Blayne Curtis. Thanks for taking the question. I just want to ask on the AI data center, obviously a huge focus. You did throw out a kind of target for the year that you exceeded. I was just curious, thoughts about growth in that segment for 2026? Yeah. So Blayne, as I mentioned, we will see growth. Actually, we're starting off the year with better growth than we did starting off last year. So I'm very bullish about that segment, but I'm not giving a guidance on that segment specifically. But it will be a driver of our baseline revenue net of the exits. We do expect that our AI data center revenue in Q1 will grow high teens percentage-wise, to give you an indication of our trajectory here. Awesome. Thanks. And then I wanted to just ask on the exits of the business, I mean, assuming these are lower margin, but I was just curious the impacts to utilization. Can you kind of net that out for us? You're walking away from $90 million a quarter over two quarters. Is that a positive or a negative for gross margin? It's neutral today. So the margin on that business today is near the corporate average. The reason we're exiting is because we're seeing margin pressure and pricing pressure on that business that's been volatile historically. And part of the business, why we've called it our non-core business that we would exit over time. So it really doesn't have an impact on gross margin. We've got the capacity. It's not going to be a headwind to utilization. So you can see that even with the net of these exits, what I answered in the previous question is that our utilization we expect to go up throughout the year. Thanks, Thad. Thank you. Our next question comes from the line of Joshua Buchalter with TD Cowen. Please proceed. Hey guys. Thanks for taking my question. Maybe can you quickly walk through the puts and takes on gross margins into Q1? I mean, utilization rates are coming up, but margins are down sequentially. I know there's a timing element, and it doesn't immediately match utilization rates, but any other puts and takes on, excuse me, pricing or other factors or mix we should be considering when we're thinking about gross margins? Thank you. So yeah. So Josh, the key element here is that the midpoint of our Q1 guidance is up 30 basis points on gross margin. So if you go back to our utilization in Q3, which was 68%, if you remember, I'm sorry, we took it up to 74. Q4 was 68. So we took it up to improve the mass market. So we've got a number of things. Typically, Q1 is seasonally down and gross margins are down. The fact that we're actually expanding gross margins 30 basis points shows you that our FabRight initiatives are taking cost out or offsetting the headwind. So it's actually up quarter and quarter. Okay. That's been my mistake. Sorry about that. Could you maybe provide an outlook by end market for Q1? In particular, I was hoping you could comment on the auto market. It sounds like the inventory restock is sorry, the inventory correction is complete. Should we expect autos to grow sequentially in the March quarter? Thank you. Yeah. I'll give it to you by end market. So auto is roughly flat. As you remember, the Chinese New Year has a little bit of a headwind on auto. So when we think about sequential, it's roughly flat. Industrial, we're planning on it being down low teens. And that's primarily due to seasonality and energy infrastructure, again, with the Chinese New Year and some lumpiness in the factory automation. Our traditional industrial will be seasonal within that bucket. And then our other bucket is up low single digits, and that's driven by the AI data center that I referred to, up high single digits, and offset by seasonal declines as well as our non-core exits. The AI data center is up high teens. Sorry. Got it. Thank you both. Thank you. Our next question comes from the line of Quinn Bolton with Needham & Company. Please proceed. You said just a clarification on the first-quarter gross margin. You saw the uptick in utilization rates in the third quarter, and you said it usually takes a quarter or two to flow through. So is the first quarter really the benefit you saw in that utilization in Q3, or is it more product mix and other factors in Q1? It's a combination of both. I mean, you got mix, but you got a combination of the utilization impact as well. Now, Q4 stepped down. Then you have our cost benefits as well with the FabRight activities. With the Q4 stepdown in utilization to 68, would that hit you more in Q1, or would it hit you more in Q2? I know utilization from here is trending in the right direction. Just trying to get is it a three-month lag or a six-month lag usually on that utilization effect? It's about two quarters. But sitting here today, I think we're going to have the kick-in of that depreciation that I mentioned, and I don't see that as a headwind in Q2 of next year. Got it. Okay. Yeah. So basically, to drive it for you, in Q4, the utilization going down would have hit us in Q2. But sitting here today, we don't see that because we're offsetting it with cost actions and the FabRight that will offset any utilization. So that's back to the strength of the gross margin based on the work we've been doing. Got it. Then, Hassane, your prepared comment, I think you said you're going to be introducing over 30 GaN-based solutions this year. Wondering if you could just give us through most of those target sort of mid or low voltage applications in the data center, does it target products across all three of the target end markets, just any more sort of color on where you're going to be targeting some of those GaN solutions that you're introducing this year? Yeah. It's basically across the voltage range that I mentioned, 40 V-1200 V. So that includes, obviously, the lower voltage that target the data center, call it closer to the XPU, all the way to high voltage, 1200 V that go into the higher voltage and in automotive and industrial. So broader range of voltages targeting a lot of our end markets. I mentioned one of the things we're working on, for example, with vertical GaN, with a vertical GaN-based next-generation traction with GM as an example. Got it. Thank you. Thank you. Our next question comes from the line of Joe Quatrochi with Wells Fargo. Please proceed. Yeah. Thanks for taking the questions. Maybe one on the data center side. I saw that you had an updated slide in your deck relative to last quarter. I think now your opportunity, you're talking about what that looks like per rack in 2030, which is a pretty significant increase versus the prior deck. I think you're at like $105,000 per rack versus like $50,000 for 2027. Just curious, what's driving that and the significant growth per rack from 2027 - 2030? Yeah. So as new generation architecture starts to firm up, and we are introducing a lot more products to address it, so our overlap of products availability that we're making and investing in or have invested in versus the opportunity of content in the rack has increased. And this is kind of the list of new products I've been talking about, whether it's silicon carbide JFET or the vertical GaN or even the 5x5 or SPS point of load. We have been heavily investing over the last year or so in order to capitalize on the content that the AI opportunity provides. So that's exactly the reason for the increase is more products mapping onto more content that we can address with our portfolio. Thanks. And then as a follow-up, you talked about strong free cash flow again in 2026. Just curious if there's any targets that we should be thinking about for this year and then how you're thinking about returning or what% of that returning to shareholders? Yeah. Our stated target is 25%-30%. In 2025, we delivered 24. I talked about expanding the free cash flow margin. So I think we're going to be in that range of within our target. Our plan, as you can see with our announced repurchase authorization of $6 billion, is to continue to return 100% of our free cash flow to shareholders. Thank you. Thank you. Our next question comes from the line of Gary Mobley with Loop Capital. Please proceed. Hey guys. Thanks for taking my questions. You're clearly signaling better revenue visibility, albeit met with some seasonal headwind and some business exits in the first quarter. But maybe if you can share with us a few more specifics on the forward-looking revenue KPIs like beginning of quarter starting backlog or any sort of customer expedites or just any sort of revenue visibility change that you've seen in just the last three months. Yeah. Yeah. This is Hassane. So like you said, visibility or kind of the outlook is better sitting here than we were 90 days ago. And this is across all the KPIs. Book to bill is trending up. We are walking into the quarter with less turns needed than the prior quarter. We're seeing more expedites than we did 90 days ago. So all of the metrics that you mentioned are exactly what is giving us that confidence in the outlook or improved visibility in the outlook. What we're talking about, for example, is we're not seeing the replenishment yet, but this is strong signals for stabilization in the market. And you've seen going back to seasonality, inclusive of the exit, highlights the strength of our base business, which is what we've been investing in. Thanks for that. And regarding your, I guess, refocus on GaN products, forgive me if that's not the right term, but in vertical GaN, you've got, I guess, your own manufacturing supply chain. In lateral GaN, it sounds like you've forged two manufacturing relationships with Innoscience and GlobalFoundries. And I assume that's the geographic specificity that you were hinting to in your prepared remarks. But the question is, do you feel like you've invested enough there? Do you feel like you've rebuilt the product portfolio to the degree you hope across the different voltage spectrum and whatnot? Yeah. I think if you look at it from a voltage range and a capability, having 40 V through 1200 V native and I say native is it's not about stacking two lateral GaN devices to get to the high voltage. This is a single 1200 V GaN-on-GaN high-voltage device, which gives you the power density. I say yes. What maybe wasn't clear here, and I did mention it in my prepared remarks, is the GaN with drivers, so not just the GaN devices. And those drivers, you can think about them as covered by Treo, which we already have invested in and is already in-house. So combined devices and the smart drivers that we do on Treo, that gives us the complete portfolio that we need to tackle GaN, whether it's in the AI data center, automotive, or the humanoids. Thanks, Hassane. Thank you. Our next question comes from the line of Christopher Rolland with Susquehanna. Please proceed. Hey guys. Thanks for the question. Mine is on silicon carbide, both EV and AI. I guess, first of all, on EV, if you could give us an update, particularly geographically, how that business is progressing and what to look forward to in the future. And then we're also on the AI side starting to hear about potentially using silicon carbide for substrates. This might require a movement to 300 mm, for example. Is this an opportunity that you guys might address? And is there an ability to convert your furnaces to 300 mm? So let me first cover on the silicon carbide in automotive. We still see the silicon carbide opportunity, although the xEVs, tapered down from a growth perspective, we're still a major share in China, which is all silicon carbide because they all are on the 800 V. We are still gaining share in North America, and we continue to proliferate in European OEMs. Those, obviously, are still trending up from a unit perspective. So overall, the work is done. The design-ins are done. Now we're working on proliferation within the OEMs and within the geographies. I spoke a lot about silicon carbide JFET, which is in the AI data center. We've seen tremendous design and growth. Part of that $250 million in AI data center is driven by silicon carbide JFET, so that continues to go there. As far as the 300 mm, we are not going to be converting furnaces to 300. I think from an internal silicon carbide manufacturing, we're happy with our footprint. Remember, this was more on supply and regional resiliency than anything else. We will continue to focus on that from a resiliency, but you're not going to see a CapEx cycle going to the furnaces or substrate manufacturing. Perfect. And as a second question, one of your competitors is buying Silicon Labs, and the rationale behind it was to fill out other parts from their catalog on their customer's boards, but in addition to fill their fabs. And from either of these perspectives, does this compel potentially an acquisition on your part or push you even more towards doing a deal, or is the environment just, from a valuation perspective, just a little too elevated right now? Yeah. So I'll give you kind of our view. So one, you're not going to hear me talk about doing M&A to fill a fab. For us, M&A is more strategically driven and portfolio-driven. You've seen us do that over the last few years, very targeted M&A regardless of size, but to fit a purpose of either portfolio completion or acceleration of something we were doing. We'll continue to go down that path. From a compute perspective, I don't know if I've talked about it on these calls, but our Treo Platform already provides for an embedded compute capability. Our focus for now is really embedding compute where it makes sense to control the output, which is at the power stages or at the analog mixed-signal or at the DSP for hearing aids and so on. We have microcontrollers that are fit for purpose already, going down to 22 nm all the way to 65 nm. Where we see a gap, we are targeting that gap organically, and we already are in the market with that. As a general comment, we're always looking for value, and we're always looking at complementing and being a full-service provider for our customers. So that's strategic conversation, but it's not to fill a fab or to bridge an immediate need. It'll be more for a margin or a market expansion than anything else. Thanks, Hassane. Thank you. Our next question comes from the line of Vijay Rakesh with Mizuho. Please proceed. Vijay, are you there? Sir, can I move to the next question? Yes, please. All right. Oh, sorry. I was on mute. Hassane said just on the FabRight and the EFK utilization improvement, as you look out to 2027, do you expect gross margins to get back to the low 40s% looking at the margin equation from EFK and FabRight? Yeah. In the short term and even the long term, I mean, gross margin is going to be driven by utilization. So as I was saying earlier, we can match our utilization to whatever this recovery looks like. We've got lean inventory in our balance sheet, lean inventory are right in our sweet spot on the distribution channel. We don't need to wait to burn through inventory before we can adjust utilization. And we can match that very closely. If you think about the progression, yeah, getting to something with a 40 handle is within sight, assuming that the market continues to recover. Got it. And then on the AI data center side, sorry to keep harping on it, but as you look out, given how big that market could be, do you expect that to get to a 10%-15% of revenue run rate, given some of the peers seem to be targeting somewhere like that? Thanks. Yeah. I mean, look, it's a matter of the when, not the if, because we have the products. The market is there. The question is, how quickly do we get in there? Remember, we started that journey last year with new products. So you give a design cycle and proliferation of products, and I see that happening. Again, it's a question of when. Got it. Thank you. Thank you. Our next question comes from the line of Joe Moore with Morgan Stanley. Please proceed. Great. Thank you. I saw you reiterated the long-term targets, the 53% gross margin, 40% operating margin. I know it's been clear for a while that was going to take a little longer than your original thoughts. Can you talk to those targets, and is that an achievable number? It seems like utilization gets you partway there. Can you remind us what it takes to get to those levels over time? Yeah. Let me walk through the bridge and kind of relates to Vijay's question there as well. So as I said in the prepared remarks, there's about 700 basis points of headwind from underutilization just in the Q4 margin. So if you take our utilization from the 70% range up into the low 90s, you're going to get 700 basis points. So back to the market recovery, matching that. And so that's just a matter of time to be able to get that. In addition, we believe there's another 200 basis points of FabRight activities that we can continue to execute to. So we're not done there. That's driving efficiencies in our manufacturing footprint. And you can tell we've been working on that for several years, and now it's starting to pay off. Another thing is we've got the fab divestitures from a couple of years ago. It was $160 million of fixed costs when we start manufacturing that inside. So that's roughly another 200 basis points. And then with the new products that are coming out that are all favorable gross margins that we're talking about here, you've got another 200 basis points plus that we can get out of that. So you start adding that all up, you're getting pretty close to that 53% gross margin target. And that's why we're holding that target out there. That's helpful. Thank you. And then I've asked you a couple of times over the course of this quarter, but it seems like there's a number of indications that the automotive inventory is kind of lean. You had a Nexperia kind of cause people a lot of trouble a few months ago. Now, DDR4. And I know you're not in those direct product areas, but does that catalyze at some point a restocking in the automotive space? And maybe why aren't we seeing that yet? Well, I think I gave the answer. You'd think it would, but it's not because I think a lot of the automotive market, especially on the tier one layer, they're running on thin margins, and they can't afford the capital. Right or wrong, it's irrelevant. But neither me, and I think most of my peers that are exposed to auto have talked about the same thing, that we're not seeing the restocking, whatever the reason may be, which I think is setting automotive to a risky ramp when the demand does pick up. Great. Thank you. Thank you. Our next question comes from the line of Chris Caso with Wolfe Research. Yes. Thank you. The first question, I wanted to ask a bit more about GaN and specifically the manufacturing strategy. I think what you said there is that the Treo products, you would do in-house. But what about the GaN switches? What's the manufacturing strategy there, and where do you think you are from a competitive standpoint in that technology? Yeah. So if I understood correctly, so from the GaN switches, this is what we have: two sources. We have an engagement or a partnership with Innoscience and a partnership with GlobalFoundries. So we'll be doing the switches or the switching element with those partners and then combining it with, call it, the control and drive on the Treo side of it, combined in a smart switch. So the customer only sees a smart switch as far as the market from an onsemi product. So we'll be going to market with 100% onsemi product with a, call it, a foundry model, bringing the switches from a third party, Global and Innoscience. So that's our go-to-market today. And with that, we have a full coverage of what the GaN market needs and what customers are expecting. Understood. Thanks. Just a follow-up question, just so you can perhaps level set us as to what you consider to be normal seasonality for the June quarter. And you've already mentioned some of the exits in the June quarter, which are a little higher than the March quarter. Is there anything else that we should consider looking into the June quarter, understanding that you're not providing guidance? Yeah. The June quarter is typically up 3%-4% naturally. I believe the exits are probably going to be somewhere around $100 million, so doubling over the Q1, $50 million. But I think Q2 and Q3, you're probably looking at 100 million+ exits for both quarters. But to answer your question, seasonality is up 3%-4% in Q2. Got it. Thank you. Thank you. Our next question comes from Harsh Kumar with Piper Sandler. Yeah. Hey. I wanted to ask about the relative velocity of your two key end markets, Hassane. As you look at automotive and industrial, in the near term, it looks like industrial is rising faster. But I would think with the content and just the growth in the markets, is it not fair for me to assume that maybe 12 months out, that it flips over and automotive is a bigger driver of growth? And then I'll ask my second one as well, maybe right now for Thad. Is the 700 points of underutilization I wanted to just understand a little bit better. You've had a lot of exits, divests. You're writing off a bunch of products, $300 million this year. What is the right level of revenue for me to think about getting rid of all of that $700 million, I'm sorry, 700 basis points of underutilization on a quarterly revenue run rate basis? Yeah. So Harsh, let me give you first the revenue. Your assumption is correct. If you think about it, our and let me give you numbers to illustrate and to support it. So if you look at our content growth, we've always said we have content growth. So we're not as tied to the SAAR as we are to content from an automotive growth perspective. We have added more products to that lineup in automotive, like 10BASE-T1S Ethernet, SmartFETs, and so on. So that will continue to expand our content. Over the last five years since we started this journey, our automotive actually grew 70% five years. That's pretty much on a flat SAAR. So that gives you kind of our target of the high single-digit growth on top of SAAR. So what you can think about it in the long term is we will resume that growth in automotive, and we are sticking with the model and the outlook we've given in our last analyst day, which is high single-digit growth in auto driven by content above the SAAR. And we've delivered that over the last five years. Of course, there's lumpiness given the cycle, but we've delivered on that. So you would expect that from onsemi with the additional content moving forward as well over a multi-year period. Yeah. And Harsh, on the utilization and the charges for underutilization, the 700 basis points. So as that dissipates, we've got to get up into the low 90% utilization. In order to get there, if you take a consistent mix of where we are today, it's roughly about 25% higher in revenue to get to a fully utilized based on a consistent mix. So obviously, as new products ramp, that will help us as well. Thank you, guys. Thank you. This just concludes the Q&A session for today. I will pass it back to Hassane El-Khoury, President and CEO, for closing comments. All right. Thank you again for joining us today. I'd also like to thank our employees around the world whose focus and commitment drive these results. Their innovation and execution are the reasons we continue to strengthen our position in intelligent power and sensing and deliver for our customers in the most important market transitions. As always, we appreciate your support, and we look forward to our next update. Concludes our conference. Thank you for participating. You may now disconnect.