The Texas Instruments earnings call will now begin. Welcome to the Texas Instruments Q3 2022 earnings release conference call. I'm Dave Pahl, Head of Investor Relations, and I'm joined by our CFO, Rafael Lizardi. For any of you who missed the release, you can find it on our website at ti.com/ir. This call is being broadcast live over the web and can be accessed through our website. In addition, today's call is being recorded, and you'll be able to get it via replay on our website. This call will include forward-looking statements that involve risks and uncertainties that could cause TI's results to differ materially from management's current expectations. We encourage you to review the notice regarding forward-looking statements contained in the earnings release published today, as well as TI's most recent SEC filings for a more complete description. Today, we'll provide the following updates. First, I'll start with a quick overview of the quarter. Next, I'll provide insight into Q3's revenue results with some details of what we're seeing with respect to our customers and markets. Lastly, Rafael will comment on results and our guidance for the Q4 of 2022. Starting with a quick overview of the Q3. Revenue in the quarter came in about as expected at $5.2 billion, an increase of 1% sequentially and 13% year-over-year. Analog revenue grew 13%, Embedded Processing grew 11%, and our other segment grew 20% from the year ago quarter. Now I'll provide some insight into Q3 revenue by market. This quarter, I'll focus on our sequential performance as it's more informative at this time. First, Personal Electronics declined mid-teens% as we continue to see the weakness we described in the Q2. Industrial was about even sequentially as we saw weakness begin to broaden in the industrial market. The automotive market remained strong and was about 10%. Next, Communications Equipment was up high single digits%. Finally, Enterprise Systems was up mid-single digits%. Turning to our expectations for the fourth, we expect that most of our end markets will decline sequentially, with the exception of the automotive market. Lastly, we and our customers remain pleased with the progress of our expansion of our manufacturing capacity, which was outlined in our February capital management, and will support the long-term secular trend of increased semiconductor content per system. Customers especially value the geopolitically dependable footprint of our manufacturing additions. We are now in production in RFAB2 and expect production in LFAB later this year. In addition, construction of SM1 and SM2 in Sherman, Texas, continues as planned. Rafael will now review profitability, capital management, and our outlook. Thanks, Dave, and good afternoon, everyone. As Dave mentioned, Q3 revenue was $5.2 billion, up 13% from a year ago. Gross profit in the quarter was $3.6 billion or 69% of revenue. From a year ago, gross profit margin increased 110 basis points. Operating expenses in the quarter were $862 million, up 8% from a year ago and about as expected. On a trailing twelve-month basis, operating expenses were $3.3 billion or 16% of revenue. Restructuring charges were $77 million in the Q3 and are associated with the LFAB factory that we purchased in October of last year. These charges will move to cost of revenue as we start production. The assets associated with the acquisition of the factory will begin to depreciate at the same time. Moving on, operating profit was $2.7 billion in the quarter or 51% of revenue. Operating profit was up 16% from the year ago quarter. Income in the Q3 was $2.3 billion or $2.47 per share. Earnings per share included a $0.02 benefit for items that were not in our original guidance. Let me now comment on our capital management results, starting with our cash generation. Cash flow from operations was $2.8 billion in the quarter. Capital expenditures were $790 million in the quarter, and $3.1 billion over the last twelve months. Free cash flow on a trailing twelve-month basis was $5.9 billion. In the quarter, we paid $1.1 billion in dividends and repurchased $1 billion of our stock. In total, we have returned $7.1 billion in the past 12 months. In September, we announced we would increase our dividend by 8%, marking our 19th consecutive year of dividend increases. We also increased our share repurchase authorizations by $15 billion. These actions reflect our commitment to return our free cash flow to our owners. Our balance sheet remains strong with $9.1 billion of cash and short-term investments at the end of the Q3. In the quarter, we issued $700 million in debt. Total debt outstanding was $8 billion with a weighted average coupon of 2.8%. Inventory dollars were up $205 million from the prior quarter to $2.4 billion, and days were 133, up 8 days sequentially and below desired levels. For the Q4, we expect TI revenue in the range of $4.4 billion-$4.8 billion and earnings per share to be in the range of $1.83-$2.00. This outlook comprehends the market conditions that Dave previously mentioned. We continue to expect our 2022 effective tax rate to be about 14%. As you are looking at your models for 2023, without additional changes to tax law, we would expect our effective tax rate to remain about what it is in 2022 with a similar quarterly profile. Let me now make a few comments on the CHIPS Act that was recently signed into law. The combination of the investment tax credit, the grants, as well as funding for research and development, will help make the U.S. semiconductor industry more competitive. We accrued about $50 million on the balance sheet in Q3 due to the 25% investment tax credit for investments in our U.S. factories. This will eventually flow through the income statement as lower depreciation, and we will receive the associated cash benefit in the future. In closing, we will stay focused in the areas that add value in the long term. We continue to invest in our competitive advantages, which are manufacturing and technology, a broad product portfolio, reach of our channels, and diverse and long-lived positions. We will continue to strengthen these advantages through disciplined capital allocation and by focusing on the best opportunities, which we believe will enable us to continue to deliver free cash flow growth over the long term. With that, let me turn it back to Dave. Thanks, Rafael. Operator, you can now open the lines for questions. In order to provide as many of you as possible an opportunity to ask a question, please limit yourself to a single question. After our response, we'll provide you an opportunity for an additional follow-up. Operator? Thank you, sir. A reminder to the participants, if you would like to ask a question, please signal by pressing star one on your phone keypad. If you are using a speakerphone, please make sure your mute function is turned off to allow your signal to reach our equipment. Again, press star one to ask a question. We pause for just a moment to allow everyone the opportunity to signal for question. We will take the first question from Timothy Arcuri from UBS. Your line is open. Please go ahead. Hi. Thanks. Dave, I wonder if you can sort of go into any detail within distribution versus consignment. Maybe, you know, what I'm trying to get at is sort of any differences in, you know, demand pull as measured by bookings inside distribution or demand pull from the consignment segment. Is, you know, one better than the other? Also, is there any cancellations inside distribution? On the first part, Tim, we didn't see really anything different between the direct business without going through distribution. As you know, you know, we have had an effort over the past few years to have closer direct relationships with our customers, so the amount of revenue going through distribution is much lower today. Probably only about 30% of our revenue actually goes through distribution. We did see cancellations increase from the quarters, you know, just as customers work to align the backlog to their needs. Do you have a follow-up? His line has been removed, sir. We will take the next question from Vivek Arya, Bank of America Securities. Your line is open. Please go ahead. Thanks for taking my question. For the first one, it seems like the consumer electronics is your biggest area of headwinds in Q3. I think you said down mid-teens, and I imagine about the same kind of, you know, double-digit down in Q4. You think are we past the worst of the consumer, or should we be expecting, you know, the seasonal decline again for consumer in Q1? I know it's a little bit further out, but I just wanted to check what you're seeing in terms of consumer right now. I guess the bigger picture question there is TI more exposed to the cyclical downturn versus your peers because you have the highest consumer exposure? If that is the case, do you need to do something different, given that, mix headwind? Yeah. Vivek, thanks for that question and the opportunity to clarify. Personal Electronics last year was 24% of our revenue. You know, if you look at the market overall, Personal Electronics are a little more than 50% of the semiconductor market without memory. We have, you know, less than half of the exposure there. You know, if you look at industrial and automotive, that makes up 62% of our revenues, and inside of the market, you know, that's 26% of the market. We're really highly exposed to both industrial and automotive, and that's not by accident. As you know, probably more than a decade ago, we began allocating more of our resources to automotive and industrial, and the emphasis there. We're very pleased with our exposure and, you know, we believe that will be where, you know, there just will be more content added into those systems. Now, that said, there's great opportunities inside of Personal Electronics, Communications Equipment and Enterprise Systems, in the decades ahead, but we'll just have those secular tailwinds, you know, more than average inside of industrial and automotive. You have a follow-on, Vivek? Yeah. Thank you, Dave. Kind of similar question, but on automotive, you know, which you suggested grew 10% sequential in Q3, and interestingly, you're suggesting it can grow again in Q4. What's your sense of kind of the supply-demand balance in automotive among your tier one and then the auto OEM customers? You know, many investors are concerned that this kind of rolling correction that we are seeing in semis is going to eventually hit automotive, which has been a very strong area over the last, you know, one to two years. What's your sense of what the kind of the supply-demand balance is in this automotive end market? Thank you. Yeah. You know, I'd say, you know, first, I think when you look at the secular trends inside of automotive, I think all of us know that it will be a great grower for us, you know, and we're investing very broadly. We're just thrilled with the position. You know, if you look at Q2 of 20, our growth there has, you know, off the bottom been, you know, very, very strong. You know, will that market eventually roll over? It will. I mean, that's just what happens. We're not trying to predict, you know, when that'll happen. We'll continue to ship product to customers as they request it. We're really focused on making sure we've got capacity in place for them over the long term. We're not really trying to worry about when that will happen. Thank you, Vivek, and we'll go to the next caller, please. Next question from Joshua Buchalter from Cowen. The line is open. Please go ahead. Hey, guys. Thanks for taking my question. I wanted to double-click on the industrial market. Did anything change materially through the quarter? Or anything give us on linearity or by geography, as we think about what's baked into the guide? You know, is it more, I guess, conservatism on the macro, or was there really a material change in your customers' order patterns? Thank you. Yeah. Joshua, thanks for that question. I would say if you look at the Q3 results across the board and also inclusive of industrial, you know, the quarter came in as we expected. If you look at, you know, an even sequential is not unusual inside of industrial. That's about what we were expecting. As we described it, the weakness began to broaden into that. You know, there wasn't one place that we could put the finger on to say it was, you know, one thing or one group of customers, but we did see just different signals inside of there that is leading us to that conclusion that it is that weakness is broadening. In fact, we expect that weakness to broaden into most of the other markets as well as we move into Q4, of course, with the exception of auto. That's really what we're seeing. It's order rates. If you look at order rates quarter to date, they are of course consistent with our outlook, but they are weak quarter to date. It's those types of signals that are leading to the outlook. Really those are the types of signals that really best inform you know what our shipments in the quarter and in the short term are going to be. You have a follow-up, Joshua? Yes. Thank you. That's very helpful. I also wanted to clarify the comments on the CHIPS Act. You mentioned $50 million was accrued on the balance sheet. Was that from the investment tax credit only? Because I know there's a second bucket for manufacturing incentives. If not, when would you expect to, I guess, get more clarity on how much you'll be able to accrue for the manufacturing incentive portion of the CHIPS Act? Thank you. Yeah. First let me step back. You know, big picture, the combination of the investment tax rate, the grant, as well as the funding for research and development will help U.S. semiconductor more competitive. We accrue the $50 million that we talked about in the prepared remarks that you referred to. That was for the 25% investment tax credit. That is for manufacturing assets that will go into service in 2023 and beyond. That was for $200 million, so a quarter of that is what we accrue that we will receive from the government at some point in the future as lower taxes. In the P&L it flows, it will flow through lower depreciation. I think maybe what you're referring to when you talk about manufacturing is the grants portion. Is that what you're referring to? Well, maybe we lost him. If you're talking about the grants, that is part of the CHIPS Act, but it's separate from the investment tax credit that remains to be seen. That's more on. We will apply for those. The application window doesn't open till February. We'll apply for those, and as we learn more, you know, we'll let you know. Big picture, when we get to February, the next capital management call, we will talk about the CHIPS Act, the overall investment. We'll try to quantify that and what benefit we'll get. At the same time, you know, since the last capital management call, our confidence around the long-term growth prospects in our industry, the secular trends that Dave talked about earlier, that confidence has only grown, so we feel really good about that. We'll tell you about the net impact between those two, the benefits of the CHIPS Act and the growing confidence and at the next capital management call, and then any changes to our numbers based on that. Great. Thank you. I think he dropped off, so yep. Yep. Thank you. We'll go to the next caller, please. We will take the follow-up question from Timothy Arcuri, UBS. Your line is open. Please go ahead. Thanks a lot, Dave, for letting me come back in. My follow-up was on China, and I'm wondering if you can talk about your business there. Are you seeing any signs of pull-ins or push-outs as a result of some of these bans? Are you seeing any changes sort of in the linearity around the bans getting announced? I think also you had talked about China being like high teens of consumption of your product. Is that still where you see it? Thanks. Rafael maybe want to add to it, but on the bans, the recent changes in some of the bans, you know, there were companies added to the Entity List overall. We don't expect that there's really much if any impact due to those changes, really to that or in any of the restrictions overall from that. Anything to add on that? Yeah, correct. 99% of our parts fall in the very lowest category of restrictions, just given the nature of the types of parts that we sell. You know, we don't have restrictions on those. Of course, there are restrictions specific to entities. There's the entity list that you hear about, the FDPR, that's another list. We of course follow all the regulations when it comes to that. When an entity goes listed in there, we take that into account and restrict shipments according to the law. Given how that works, we don't expect any meaningful or significant impact to our revenue with those export laws. Yeah. That was the first part of your question, Tim. The second part, you had mentioned high teens. It's actually about 25% of our revenue comes from customers that are based in China. That's the number. Thank you, Tim. We'll go to the next caller, please. Next one from Stacy Rasgon, Bernstein Research. Your line is open. Please go ahead. Hi, guys. Thanks for taking my questions. For my first one, I just wanted to verify, are there any changes to the trajectory of the near to medium term CapEx plan just given changes in the current environment? I guess related to that, the LFAB headwinds that are coming, do you have any of those embedded in Q4? 'Cause you said it's coming online starting in Q4, and I'm getting implied gross margins down a few hundred basis points sequentially. Yeah. Let me answer that first one, the last one first. You see on our P&L $77 million of restructuring charges in Q3. That is all because of those. Those are the LFAB costs that we've chosen to put in there before it qualifies. Once it qualifies, that cost will move to cost of revenue, so it will move to gross margin. Is that in Q4, though? Does that happen in Q4 or Q1? Well, it will happen during Q4. Of course, it's not changing, it doesn't affect EPS, so it's just gonna move. We don't guide the specific lines, right? But if it qualifies in, you know, December first, a third of that will go into COR, and then all of it will be there for Q1, right? If it qualifies December thirty-first, then all of it will be in restructuring in Q4, and then all of it will move in Q1. Yeah. Right? Just to clarify, that's already in. It is in operating profit in Q3. Right. It's been there. It It's just moving. Right above the lines and into the gross profit. Right, into gross profit, right. It's been. Yeah in profit from operations the entire time, all of this year. Right. The first part of your question, big picture, we will give you an update in about four months at the capital management with all the puts and takes. What I would tell you is that, short term, we expect our CapEx expectation for 2022 have not changed. That is, $2.6 billion-$2.8 billion for this year. Depreciation about $1 billion for this year. I'm talking 2022. Bigger picture, as I said earlier, the CHIPS Act, great legislation. We're very excited about that. That is gonna decrease, on a net basis, our investment, because we're gonna get a 25% reduction from the investments that qualify, the manufacturing investments in the United States. On the other hand, as I alluded to earlier, our confidence surrounding our long-term growth prospects have only grown over the last 6-12 months based on the secular trends, based on input from our customers. We feel really excited about that. The net effect of those two, and whatever that does to our CapEx plans, we'll tell you about that in February. You have follow on, Stacy? I do. Thank you. I wanted to ask about OpEx. It's been running in, you know, $800 million range plus or minus for quite a while. Frankly, people are wondering how you've been keeping it there in such an inflationary environment. It is now ticking up, but it's ticking up as revenues are falling. I guess why is it increasing now, whereas it didn't increase before? What happens going forward? Because if I were to just hold it flat on the revenue guide, going forward, it'd be something like 19% of revenue. It is still below your kind of what you've talked about in terms of long-term targets for OpEx. How do we think about that? Why is it growing now versus before? How do we think about where the range might go going forward? Here's how we think about it. Step back, you know, for the last five and a half years, really, we've been running OpEx on a trailing twelve-month basis, which is how I prefer to look at it, at $3.2 billion. Pretty consistently, we're a really steady hand over that time. Our hiring has been very consistent during that time, and that is underpinned by our long-term expectations on growth. Inside of that, R&D has actually moved up, SG&A has moved down inside of that 3.2, but it's been really consistent on that. This last quarter, for the first time, it ticked up to $3.3 billion on a trailing twelve-month basis, and I would expect that to continue ticking up over the next many quarters and years as we continue stepping up our investments. That is, A, you know, driven by the higher investments, but B, you know, inflation is playing a factor. It's clearly wage inflation. We're not, you know, immune to that. That is also affecting and will continue to affect those trends. Okay. Thanks, Stacy. Go to the next caller. Thank you. We have Blayne Curtis from Barclays. Your line is open. Please go ahead. Hey, guys. Thanks for taking my question. I had two. Maybe just a clarification, though, on Stacy's question, because you said, but I didn't hear anything negative to net off of two positives. I'm just kinda curious, you know, I guess we'll see what March brings, and I'm happy if you wanna comment on that. It seems like at least Personal Electronics is back to where you were in 2019-2020. It seems like industrial's gonna kinda get back there. At that point, you're building inventories. You had more capacity than demand. If we do go back to those levels and you're adding more capacity, I'm just trying to understand, is still the view that you'll build inventory like you did in 2019 and 2020 and still roll out this capacity for the long term? Let me try to answer that. Frankly, I didn't fully understand the, you threw in several premises there. Let me just address it, the best way I can. In capacity. We've been adding capacity incrementally for a number of quarters. Now RFAB2 is in production. LFAB is about to start production within a few months. Clearly our incremental capacity is going up. At the same time, we've been increasing inventory very slowly, and now more recently, we added $200 million of inventory in this last quarter, but we are still below desired levels. Okay? Keep in mind, our business model is such where we target the vast majority of our parts sell to many, many customers. They're very broad in nature. The product life cycles of the parts is decades in many, many times. The products themselves last 10 years in inventory, most of them. The risk of obsolescence for the inventory is very, very low. The potential upside of having that inventory ready is very high. That's why we prefer to have more than less inventory. I would not be uncomfortable, as I said before, adding another $1.5 billion of inventory over the next several quarters to get us well-positioned for the next upturn that invariably comes at some point. You have a follow-on, Blayne? Thanks. I just wanna ask you specifically on the auto segment. You said that's the only one that's not down, and obviously it's very well known that it's been so tight. But just any more comments on why that market's taking a bit longer than, say, industrial to correct? Yeah. You know, I think it's well documented, I think as we went through the pandemic, it had the deepest correction from a starting point standpoint. You know, the mix of auto manufacturers to the high end, you've got EVs that are inside of that mix that are all adding to those secular trends. You know, I think that we're well-positioned as we make investments across our businesses. We're investing in powertrain, which would include electric vehicles and hybrid. We're investing in ADAS systems. We're investing in infotainment systems. We're investing in body and lighting. That doesn't get talked about a lot on conference calls, but we just get as excited about turn signals as we do about BMS systems. Then we also invest in safety systems. We're growing very broadly. We've got close to 1,000 different automotive OEMs that we service. We really believe that we've got, you know, probably decades of growth ahead of us that we're preparing for. Thank you, Blaine, and we'll go to the next caller, please. Thank you. We have Ross Seymore from Deutsche Bank. Your line is open. Please go ahead. Hi, guys. Thanks for letting me ask a question. I'd say a high-level one on your Analog business. Year to date, I think it's 15% year-over-year with the midpoint-ish of your guidance. It seems like this year might be up about 10%. That's roughly half of what the broader market is running at. Can you guys explain a little bit about why you would be undergrowing the market as defined by SIA? If you are, is that something that you expect to mean revert? Because you don't lose this amount of share in a year unless there's something unique going on. Any help in explaining that would be great. Yeah, sure. You know, I think that whenever I'm asked that question, and it's always a lot more comfortable to be answering it when we're up twice the rate of the market. You really need to look at it over a longer period of time. You know, look at the rate of growth of us versus the industry from Q4 of 2019. I just picked that because it's a pre-pandemic number, and we looked very good against those numbers. You know, we were, as you remember, as we went into the pandemic, we continued to build inventory. The numbers initially looked very, very strong as customers pulled product from us. When you look, some of those sequentials were harder, and that's not making excuses. When you look at our manufacturing footprint and how we're positioned, you look at the customer excitement around that manufacturing footprint, you and customers look at where that addition is coming, and the geopolitical dependable locations of where that footprint's coming on, we are very confident in where the trajectory of our market share is going longer term. You got a follow-up, Ross? I do. I just wanted to revisit the gross margin side. Not going into whether the LFAB charges are moving into COGS or not, but are there any other moving parts? Because it appears at the midpoint of your revenue guide and your earnings guide, if OpEx is roughly the same sequentially, that the gross margin would have to go down, you know, the better part of 2 or 3 points. Just wanted to know if there's any other unique aspects implied in that guidance. Yeah, no. I would tell you know, we're very pleased with our gross margin performance on a year-on-year basis. The Q3 that we just finished, the fall-through was 80%, and that is actually higher than the guidance that we've given on 70%-75%. What I would point you to is, as you can see in the cash flow statement, depreciation is increasing sequentially, has increased sequentially actually for a number of quarters. This last quarter, $20-some million, of course, that is a direct result of the CapEx investments that we're making. You should expect depreciation to continue ticking up. I said earlier in the call, we expect this year to be close to $1 billion. You can Obviously then do the math and get Q4 depreciation there. Clearly that is ticking up and the bulk of that depreciation goes into cost of revenue. Thank you. Okay. Thank you, Ross. We'll go to the next caller, please. Next one is Joe Moore from Morgan Stanley. Your line is open. Please go ahead. Yes, thank you. I wonder if you could talk about if the lead time environment has changed. I know you've talked about there being hotspots in the past few quarters. Has that gone now? Are your delinquencies kind of back to below normal levels, or where are you at with that? We still do have hotspots, you know, in any market environment. We've got hotspots. We still do have them, you know, probably still most pronounced in automotive. Lead times, you know, didn't change much, Q2 to Q3. At the same time, as we've talked about before, customers can get immediate availability of products on ti.com. You have kind of all those dynamics going on. You have a follow-up, Joe? Yeah. Thank you for that. You know, we're hearing from some of your industrial and automotive customers a desire to hold higher safety stock than what companies have historically held. Is that something that you guys see? Is that, I mean, do you think might affect TI? Just, you know, how do you think about that going forward? Do you think that's a normal state of affairs? Yeah. We, you know, we've seen and heard and been in those discussions before. You know, we know that some customers that are really taking a hard look at their supply chains, where their product is coming from, what technologies they're being built on, ensuring that they've got the supply of those technologies. Part of the reason why, you know, when they look at you know product being built and the capacity we're putting in place at you know 45 to 130 nanometer, they know they need that capacity for decades to come, so they you know they get excited about when they see that capacity overall. To change those supply, you know, those supply chains is really hard work. It will take a long time to be able to do it. It's not oftentimes just as simple as carrying more inventory, you know, on the balance sheet. You know, there probably will be some of those customers that, you know, do that hard work and restructure the supply chains. There probably will be some that, you know, once we get supply and demand in balance, they just kind of fall back into normal practices. You know, I think time will tell as that plays out. Rafael, you Yeah. I'll just add, you know, at the end of the day, customers will do what they wanna do, right? Of course, if they wanna hold more inventory, they're welcome to do that. What we believe is that for us to hold more inventory, we're in a great position to do that, given the nature of that inventory, that it's catalog in nature, that can sell to many, many customers. We're all better off, and our customers will be better off when we hold more of that inventory, and we can direct it where it's most needed. That's why, as I said earlier, our goal is to continue growing inventory. We're still below desired levels, and we will add significantly more inventory over the quarters to come. Okay. Be ready for the next upside. Great. Thank you, Joe. I will go to the next caller, please. We'll take William Stein from Truist Securities. Your line is open. Please go ahead. Oh, great. Thank you very much for taking my question. I wanted to ask about ti.com. In past quarters, I think maybe even a quarter ago, you talked about how percent of revenue from that channel had gone from less than 1% of sales to over 10%. I think that occurred in about a one-year timeframe. You just mentioned a moment ago, Dave, that this is the channel where customers can go for nearly immediate availability, so I would assume that they get that availability at a price, and that when things start softening, as you're alluding to on this call, that perhaps that channel sees a more precipitous decline. Did we see that during the quarter, and do you anticipate that to happen in the coming quarter or two? Yes. Yeah. We did see a decline there. You know, we'll finish up the year and provide an update in our capital management on how it did for the year. It won't be something that we'll be reporting out on a quarterly basis, but there was a decline there, and not that it was unexpected. Yeah. Now, longer term, it's a fantastic channel, right, to engage customers on a number of levels, and customers are very pleased. You know, there will be fluctuations quarter to quarter, maybe even year to year. Yeah. Over the long term, we're very pleased with that channel and what it's doing to get us even more directly engaged with customers. Absolutely. You have follow-on, Will? Yeah. Sort of along the same lines, you know, there has been some speculation in the press, for example, that this has been a channel for companies that you might call brokers, or some people call it the gray market of distribution to get their hands on TI product, and that perhaps there is still inventory that was acquired by such parties that is still sort of floating around and waiting to be sold on to end customers. I wonder whether you've found a better reason to maybe track that and measure it, and any observations you've made with regard to that. Thank you. Yeah. Well, as you know, I spent eight years of my career in sales and, you know, there have always been brokers in our market. As Rafael talked about, you know, we've long believed that owning and controlling our inventory is a strategic advantage. You know, in having policies of like non-cancelable orders and things like that, as customers take product that they don't need, that's typically the source of that product going out the back door for brokers. You know, can brokers go on to ti.com and get product? You know, they can. But you know, that's pretty minimal in comparison to other sources that they might be able to get it. You know, overall, the majority of customers that we serviced are customers that we have large engagements with directly. Thank you. We'll go to the next caller, please. We'll take CJ Muse from Evercore. Your line is open. Please go ahead. Yeah, good afternoon. Thank you for taking the question. I guess a question on end markets into December. If I adjust the down 12% sequential for the strength in auto, it looks like all your other businesses are tracking at least down kind of mid-teens. So curious what parts of the market are down seasonally? I would think the calculators would be one. And what's maybe more down sequentially in terms of the correction that you're seeing? CJ, just to clarify, you're talking about the Q4 guidance? Yeah. Yeah. Or Thanks, Dave. Again, you know, we're not trying to provide guidance by quarter or by each market inside of that. We, you know, are obviously with the guide overall. It is, you know, a weaker Q4 than a typical Q4. With the exception of auto as we've talked about, we'll continue to see weakness inside of Personal Electronics, but we will see the other markets weaken as well. You know, we're not trying to get specific on that. We'll finish up the quarter and report that out. We do expect the weakness to broaden across those markets. Do you have a follow-on? Yes, please. I guess as a follow-on question to China and, you know, obviously you talked about very little impact from the embargo on your business, but curious, you know, as you contemplate China's ability to invest in the lagging edge and, you know, it's, I'm assuming it'll take years if not decades to try to compete in high-performance analog. But just, you know, curious how your thoughts are evolving for China as a competitor to you know, in the coming decades. Yeah, you know, I'll start, Dave, if you wanna chime in, but I would tell you at the end of the day, it all comes down to our competitive advantages, right? It starts with the broad portfolio that we have in the Analog and Embedded space. You need a huge portfolio to compete effectively, particularly in industrial and automotive. We have, you know, 80,000 or so parts that we sell to 100,000 different customers. You need that type of diversity. Second is manufacturing and technology. This investment that are positioned 300-mm first, but all the investments that we're making are just building on that, right? We have RF Two coming, that just came online, our new factory in LFAB and the mega site that we just broke ground in Sherman that's gonna have, 4, factories, each one the size of, RF Two. That really puts us in a very strong position to compete against anyone, whether it's in the United States or in China. Okay. Very well. Thank you. That’s. Thank you, CJ. With that, we’ll wrap it up and, Rafael? Yeah. Let me wrap it up. At our core, we are engineers, and technology is the foundation of our company. Ultimately, our objective and the best metric to measure progress and generate long-term value for owners is the growth of free cash flow per share. While we strive to achieve our objective, we will continue to pursue our three ambitions. We will act like owners who will own the company for decades. We will adapt and succeed in a world that's ever-changing, and we will be a company that we're personally proud to be a part of and would want as our neighbor. When we're successful, our employees, customers, communities, and owners all benefit. Thank you and have a good evening.