微晶片科技 (MCHP) 2024 Q1 法說會逐字稿

Welcome to the First Quarter Fiscal 2024 Conference Call. I will now turn the call over to today's host, Eric Bjornholt, Chief Financial Officer of Microchip. You may begin.

歡迎參加 2024 財年第一季度電話會議。現在我將把電話轉給今天的主持人，Microchip 首席財務官埃里克·比約恩霍爾特 (Eric Bjornholt)。你可以開始了。

Good afternoon, everybody. During the course of this conference call, we will be making projections and other forward-looking statements regarding future events or the future financial performance of the company. We wish to caution you that such statements are predictions and that actual events or results may differ materially. We refer you to our press release of today as well as our recent filings with the SEC that identify important risk factors that may impact Microchip's business and results of operations.

大家下午好。在本次電話會議期間，我們將對未來事件或公司未來財務業績做出預測和其他前瞻性陳述。我們希望提醒您，此類陳述僅為預測，實際事件或結果可能存在重大差異。我們建議您參閱今天的新聞稿以及我們最近向 SEC 提交的文件，其中確定了可能影響 Microchip 業務和運營業績的重要風險因素。

In attendance with me today are Ganesh Moorthy, Microchip's President and CEO; Steve Sanghi, Microchip's Executive Chair; and Sajid Daudi, Microchip's Head of Investor Relations. I will comment on our first quarter fiscal year 2024 financial performance. Ganesh will then provide commentary on our results and discuss the current business environment as well as our guidance and Steve will provide an update on our cash return strategy. We will then be available to respond to specific investor and analyst questions.

今天與我一起出席的有 Microchip 總裁兼首席執行官 Ganesh Moorthy； Steve Sanghi，Microchip 執行主席；以及 Microchip 投資者關係主管 Sajid Daudi。我將評論我們 2024 財年第一季度的財務業績。然後，加內甚將對我們的業績發表評論，並討論當前的商業環境以及我們的指導，史蒂夫將提供我們現金回報策略的最新信息。然後我們將可以回答具體的投資者和分析師的問題。

We are including information in our press release and on this conference call on various GAAP and non-GAAP measures. We have posted a full GAAP to non-GAAP reconciliation on the Investor Relations page of our website at www.microchip.com, and included reconciliation information in our earnings press release, which we believe you will find useful when comparing our GAAP and non-GAAP results. We have also posted a summary of our outstanding debt and our leverage metrics on our website.

我們在新聞稿和電話會議中提供了有關各種公認會計原則和非公認會計原則措施的信息。我們已在我們網站www.microchip.com 的投資者關係頁面上發布了完整的GAAP 與非GAAP 調節表，並在我們的收益新聞稿中包含了調節信息，我們相信您在比較我們的GAAP 和非GAAP 時會發現這些信息很有用。公認會計準則結果。我們還在我們的網站上發布了未償債務和槓桿指標的摘要。

I will now go through some of our operating results, including net sales, gross margin and operating expenses. Other than net sales, I will be referring to these results on a non-GAAP basis, which is based on expenses prior to the effects of our acquisition activities, share-based compensation and certain other adjustments as described in our earnings press release and in the reconciliation on our website.

我現在將介紹一下我們的一些經營業績，包括淨銷售額、毛利率和運營費用。除了淨銷售額之外，我將在非公認會計原則的基礎上提及這些結果，該結果基於我們的收購活動、基於股份的薪酬和我們的收益新聞稿中所述的某些其他調整之前的費用。我們網站上的對賬。

Net sales in the June quarter were $2.289 billion, which was up 2.5% sequentially. We have posted a summary of our net sales by product line and geography on our website for your reference. On a non-GAAP basis, gross margins were a record at 68.4%. Operating expenses were at 20.3% and operating income was a record 48.1%. Non-GAAP net income was $905.3 million and non-GAAP earnings per share on a diluted basis was a record $1.64. On a GAAP basis in the June quarter, gross margins were a record at 68.1%. Total operating expenses were $655.3 million and included acquisition intangible amortization of $151.5 million, special charges of $1.7 million, share-based compensation of $37.7 million and a benefit of $0.4 million for other matters. GAAP net income was a record $666.4 million resulting in a record $1.21 per diluted share. Our non-GAAP cash tax rate was 14.2% in the June quarter. Our non-GAAP tax rate for fiscal year 2024 is expected to be about 14%, which is exclusive of the transition tax and any tax audit settlements related to taxes accrued in prior fiscal years.

六月份季度的淨銷售額為 22.89 億美元，環比增長 2.5%。我們已在網站上發布了按產品線和地理位置劃分的淨銷售額摘要，供您參考。按非公認會計準則計算，毛利率創歷史新高，達 68.4%。運營費用為 20.3%，運營收入為創紀錄的 48.1%。非 GAAP 淨利潤為 9.053 億美元，非 GAAP 攤薄每股收益為創紀錄的 1.64 美元。按 GAAP 計算，第二季度的毛利率達到創紀錄的 68.1%。總運營費用為 6.553 億美元，包括收購無形攤銷 1.515 億美元、特殊費用 170 萬美元、股權激勵 3770 萬美元以及其他事項福利 40 萬美元。 GAAP 淨利潤達到創紀錄的 6.664 億美元，攤薄後每股收益創紀錄的 1.21 美元。我們第二季度的非 GAAP 現金稅率為 14.2%。我們 2024 財年的非公認會計原則稅率預計約為 14%，其中不包括過渡稅和與上一財年應計稅款相關的任何稅務審計和解。

Our fiscal '24 cash tax rate is expected to be higher than our fiscal '23 tax rate for a variety of factors, including lower availability of tax attributes such as nonoperating losses, tax credits, lower tax depreciation and our expectation for lower capital expenditures in the U.S. in fiscal '24, as well as the impact of current tax rules requiring the capitalization of R&D expenses for tax purposes. We are still hopeful that the tax rules requiring companies to capitalize R&D expenses will be pushed out or repealed. If that were to happen, we would anticipate about a 200 basis point favorable adjustment to Microchip's non-GAAP tax rate in future periods.

由於多種因素，我們的24 財年現金稅率預計將高於23 財年的稅率，包括非經營性虧損、稅收抵免、較低的稅收折舊等稅收屬性的可用性較低，以及我們對2019 年資本支出較低的預期。美國 24 財年的情況，以及現行稅收規則（要求出於稅收目的將研發費用資本化）的影響。我們仍然希望要求公司將研發費用資本化的稅收規則將被推遲或廢除。如果這種情況發生，我們預計 Microchip 的非 GAAP 稅率在未來期間將進行約 200 個基點的有利調整。

Our inventory balance at June 30, 2023, was $1.336 billion. We had 167 days of inventory at the end of the June quarter, which was down 2 days from the prior quarter's level. Although we reduced inventory days in the quarter, we were not able to make as much progress as we would have liked to as we accommodated requests by customers to push out delivery schedules for products that were very far through the manufacturing process.

截至 2023 年 6 月 30 日，我們的庫存餘額為 13.36 億美元。截至 6 月份季度末，我們的庫存為 167 天，比上一季度的水平減少了 2 天。儘管我們在本季度減少了庫存天數，但我們未能取得我們希望的那麼多進展，因為我們滿足了客戶的要求，推遲了已經完成製造過程的產品的交貨時間表。

We also continue to invest in building inventory for products with long life and high margins, whose manufacturing capacity is being end-of-lifed by our supply chain partners and these last-time buys represented 8 days of inventory at the end of June. We expect dollars and days of inventory on our balance sheet to reduce in the September quarter. Inventory at our distributors in the March quarter -- excuse me, in the June quarter was at 29 days, which was up 5 days from the prior quarter's level. Compared to our other regions, inventory at our Asia distributors grew the most in the quarter as sell-through activity was down significantly on a sequential basis in this region, heavily driven by unfavorable business conditions in China.

我們還繼續投資建設壽命長、利潤率高的產品庫存，這些產品的製造能力正被我們的供應鏈合作夥伴淘汰，這些最後一次購買的庫存相當於 6 月底的 8 天庫存。我們預計資產負債表上的庫存美元和天數將在九月份季度減少。 3 月份季度我們經銷商的庫存 - 對不起，6 月份季度的庫存為 29 天，比上一季度的水平增加了 5 天。與我們的其他地區相比，我們的亞洲分銷商的庫存在本季度增長最快，因為該地區的銷量活動環比大幅下降，這在很大程度上受到中國不利的商業環境的推動。

Our cash flow from operating activities was $993.2 million in the June quarter. Included in our cash flow from operating activities was $106.1 million of long-term supply assurance receipts from customers. We have adjusted these items out of our free cash flow to determine the adjusted free cash flow that we will return to shareholders through dividends and share repurchases as these supply assurance payments will be refundable over time as purchase commitments are fulfilled.

六月季度我們的經營活動現金流量為 9.932 億美元。我們的經營活動現金流量包括來自客戶的 1.061 億美元長期供應保證收入。我們已經從自由現金流中調整了這些項目，以確定調整後的自由現金流，我們將通過股息和股票回購將其返還給股東，因為隨著購買承諾的履行，這些供應保證付款將隨著時間的推移而退還。

Our adjusted free cash flow was $776 million in the June quarter. As of June 30, our consolidated cash and total investment position was $271.2 million. We paid down $413 million of total debt in the June quarter and our net debt was reduced by $450.2 million. Over the last 20 full quarters since we closed the Microsemi acquisition and incurred over $8 billion in debt to do so, we have paid down $6.76 billion of debt and continue to allocate substantially all of our excess cash beyond dividends and stock buybacks to bring down this debt. In the June quarter, we retired $1 billion in bonds that matured using our line of credit to do so. Our line of credit had $725 million of borrowings against it at June 30, 2023 after paying off the $1 billion in bonds. During the June quarter, we also retired $38 million of total principal amount of our 2025, 2027 and 2037 convertible bonds for a total cash payment of $90.1 million. The amount paid above the principal amount essentially works like a synthetic stock buyback reducing any current and future share count dilution that will result if these convertible bonds were ever converted into shares. The over $50 million we paid above the par value for the convertible bonds was in addition to our normal share buyback activity that we executed during the quarter, resulting in an additional reduction in the diluted shares outstanding.

六月季度調整後的自由現金流為 7.76 億美元。截至 6 月 30 日，我們的綜合現金和總投資頭寸為 2.712 億美元。我們在第二季度償還了 4.13 億美元的總債務，淨債務減少了 4.502 億美元。自從我們完成對美高森美的收購併為此承擔了超過80 億美元的債務以來，在過去20 個完整季度中，我們已經償還了67.6 億美元的債務，並繼續分配除股息和股票回購之外的幾乎所有多餘現金，以降低這種情況債務。在第二季度，我們使用我們的信貸額度償還了 10 億美元到期的債券。在償還了 10 億美元的債券後，截至 2023 年 6 月 30 日，我們的信貸額度有 7.25 億美元的借款。在 6 月季度，我們還償還了 2025 年、2027 年和 2037 年可轉換債券本金總額 3800 萬美元，現金支付總額為 9010 萬美元。高於本金的金額本質上就像合成股票回購一樣，減少了這些可轉換債券轉換為股票時可能導致的當前和未來的股票數量稀釋。我們為可轉換債券支付了超過票面價值超過 5000 萬美元，這是我們在本季度執行的正常股票回購活動之外的，導致攤薄後的已發行股票進一步減少。

Our adjusted EBITDA in the June quarter was a record at $1.172 billion and 51.2% of net sales. Our trailing 12-month adjusted EBITDA was also a record at $4.473 billion. Our net debt to adjusted EBITDA was 1.29 at June 30, 2023, down from 1.45 at March 31, 2023, and down from 2.05 at June 30, 2022. Capital expenditures were $111.1 million in the June quarter. Our expectation for capital expenditures for fiscal year 2024 is between $300 million and $400 million as we still have a lot of equipment that was ordered with long lead times that we will be receiving over the next year. We expect that our capital investments will continue to provide us with increased control over our production during periods of industry-wide constraints. Depreciation expense in the June quarter was $50.5 million. I will now turn it over to Ganesh to give his comments on the performance of the business in the June quarter as well as our guidance for the September quarter. Ganesh?

我們第二季度調整後的 EBITDA 達到創紀錄的 11.72 億美元，占淨銷售額的 51.2%。我們過去 12 個月的調整後 EBITDA 也創下了 44.73 億美元的紀錄。截至2023 年6 月30 日，我們的淨債務與調整後EBITDA 之比為1.29，低於2023 年3 月31 日的1.45，也低於2022 年6 月30 日的2.05。第二季度的資本支出為1.111 億美元。我們對 2024 財年資本支出的預期在 3 億至 4 億美元之間，因為我們仍有大量訂購週期較長的設備將在明年收到。我們預計，在全行業受到限制的時期，我們的資本投資將繼續增強我們對生產的控制力。六月季度的折舊費用為 5050 萬美元。我現在將其轉交給 Ganesh，以發表他對 6 月季度業務業績的評論以及我們對 9 月季度的指導。加內甚？

Thank you, Eric, and good afternoon, everyone. Our June quarter results were strong in the context of a slowing macro environment, marked by our continued disciplined execution as well as our resilient end markets and diversified customer base. Net sales grew 2.5% sequentially at 16.6% on a year-over-year basis to achieve another all-time record of $2.29 billion. The June quarter represented our 11th consecutive quarter of sequential revenue growth. Non-GAAP gross and operating margins were both records at 68.4% and 48.1%, respectively. Our consolidated non-GAAP diluted earnings per share was $1.64 per share, another record by a whisker, and up 19.7% from the year ago quarter. Adjusted EBITDA was a record 51.2% of net sales and adjusted free cash flow was 33.9% of net sales in the June quarter, continuing to demonstrate the robust cash generation characteristics of our business. Our net leverage exiting June dropped to 1.29x. We returned $349.2 million to shareholders in dividends and share repurchases in the June quarter, representing 67.5% of our March quarter adjusted free cash flow.

謝謝你，埃里克，大家下午好。在宏觀環境放緩的背景下，我們六月季度的業績表現強勁，這體現在我們持續嚴格的執行力以及我們富有彈性的終端市場和多元化的客戶群。淨銷售額環比增長 2.5%，同比增長 16.6%，再創歷史新高 22.9 億美元。 6 月份季度是我們收入連續第 11 個季度增長。非 GAAP 毛利率和營業利潤率均創歷史新高，分別為 68.4% 和 48.1%。我們的綜合非 GAAP 攤薄每股收益為每股 1.64 美元，再創歷史新高，比去年同期增長 19.7%。六月份季度，調整後 EBITDA 占淨銷售額的 51.2%，調整後自由現金流占淨銷售額的 33.9%，創下歷史新高，繼續證明了我們業務強勁的現金生成特徵。 6 月份退出時我們的淨槓桿率降至 1.29 倍。我們在 6 月份季度通過股息和股票回購向股東返還了 3.492 億美元，佔 3 月份季度調整後自由現金流的 67.5%。

Our capital return to shareholders in the September quarter will increase to 72.5% of our June quarter adjusted free cash flow as we continue on our path to return 100% of our adjusted free cash flow to shareholders by the March quarter of calendar year 2025.

隨著我們繼續努力在2025 年3 月季度將100% 的調整後自由現金流返還給股東，我們在9 月季度向股東返還的資本回報率將增至6 月季度調整後自由現金流的72.5% 。

My profuse thanks to all our stakeholders who enabled us to achieve these outstanding results despite the increasingly challenging macro environment, and especially to the worldwide Microchip team, whose tireless efforts and agility to adapt are what enable us to navigate effectively through the business cycles.

我衷心感謝所有利益相關者，他們使我們在面臨日益嚴峻的宏觀環境的情況下仍能取得這些出色的成果，特別是感謝全球Microchip 團隊，他們的不懈努力和適應敏捷性使我們能夠有效地度過商業周期。

Taking a look at our June quarter net sales from a product line perspective, our mixed-signal microcontroller net sales set another all-time record, coming in sequentially up 0.8% in the June quarter and up 22.5% on a year-over-year basis. Our analog net sales also set another all-time record, coming in sequentially up 2.5% in the June quarter and up 9.2% on a year-over-year basis. Our FPGA net sales, which we comment on from time to time, had another record quarter with annualized revenue growth continuing to be in the double digits.

從產品線的角度來看我們 6 月季度的淨銷售額，我們的混合信號微控制器淨銷售額再創歷史記錄，6 月季度環比增長 0.8%，同比增長 22.5%基礎。我們的模擬淨銷售額也創下了另一項歷史記錄，六月份季度環比增長 2.5%，同比增長 9.2%。我們不時評論的 FPGA 淨銷售額再次創紀錄的季度，年化收入增長繼續保持兩位數。

Now for some color on the June quarter. While our overall business remains steady, our customers continue to feel the effects of slowing economic activity and increasing business uncertainty. Starting in early June, we saw business conditions deteriorate in 3 areas. First, our China business was much weaker than our expectations and has not recovered from the shutdowns of last year and the Lunar New Year holidays in the March quarter. This manifested in weak sell-through activity and the building of inventory in the distribution channel in China.

現在我們來了解一下六月季度的一些情況。雖然我們的整體業務保持穩定，但我們的客戶繼續感受到經濟活動放緩和業務不確定性增加的影響。從 6 月初開始，我們看到 3 個領域的商業狀況惡化。首先，我們的中國業務遠弱於我們的預期，並且尚未從去年的停產和三月份季度的農曆新年假期中恢復過來。這體現在中國分銷渠道的銷售活動疲軟和庫存增加。

Second, we started to see initial signs of weakness and uncertainty in the automotive and industrial segments, reflecting the impact of high inflation and high interest rates driving more cautious spending. And third, we are seeing early signs of an impending slowdown in Europe, exacerbated by some of our European customers being dependent on exports to countries like China, whereas we noted, the business environment is much weaker than expected. As a result, we continue to receive requests to push out or cancel backlog as customers sought to rebalance their inventory in light of the weaker business conditions and increased uncertainty they were experiencing.

其次，我們開始看到汽車和工業領域出現疲軟和不確定性的初步跡象，反映出高通脹和高利率的影響促使支出更加謹慎。第三，我們看到歐洲經濟即將放緩的早期跡象，由於我們的一些歐洲客戶依賴對中國等國家的出口，加劇了這種情況，而我們指出，商業環境比預期要弱得多。因此，我們不斷收到推遲或取消積壓訂單的請求，因為客戶鑑於業務狀況疲軟和不確定性增加而尋求重新平衡庫存。

We were able to push out meaningful amounts of non-reschedulable backlog to later quarters to help many customers with inventory positions. While the rate of cancellation and pushout requests appears to be stabilizing, we expect requests to push out or cancel backlog will likely be with us through the rest of calendar 2023 as customers adjust to the new demand environment and attempt to derisk their inventory position commensurately.

我們能夠將大量不可重新安排的積壓訂單推遲到後面幾個季度，以幫助許多客戶解決庫存狀況。雖然取消和取消訂單的比率似乎趨於穩定，但我們預計，隨著客戶適應新的需求環境並嘗試相應地降低庫存狀況風險，我們預計在2023 年剩餘時間裡，我們可能會收到取消或取消積壓訂單的請求。

We are also seeing an increase in direct and indirect impact from the cumulative effect of U.S. export control actions, especially in China. These actions were less of an issue over the last few quarters when demand was significantly higher than supply, but are more of an issue now as demand and supply come more into balance.

我們還看到美國出口管制行動的累積效應所帶來的直接和間接影響不斷增加，特別是在中國。在過去幾個季度，當需求明顯高於供應時，這些行動並不是什麼問題，但現在隨著需求和供應更加平衡，這些行動就成了一個更大的問題。

Despite all the factors mentioned so far, in the June quarter, we were able to reverse the growth in days of inventory on our balance sheet, with inventory dropping by 2 days to 167 days, of which 8 days of inventory were from an investment in last-time buys of high-margin, long-life products whose manufacturing capacity was being end-of-lifed by our supply chain.

儘管到目前為止提到了所有因素，但在 6 月份季度，我們能夠扭轉資產負債表上庫存天數的增長，庫存減少 2 天至 167 天，其中 8 天庫存來自投資最後一次購買高利潤、長壽命的產品，這些產品的製造能力已被我們的供應鏈淘汰。

Reflecting the slowing macro environment, especially in China, our channel inventory grew by 5 days to 29 days. We continue to take actions to further reduce the days of inventory on our balance sheet while maintaining absorption in our internal wafer fabrication factories. We're also working with our channel partners to find the right balance of inventory required to serve customers and to be positioned for an eventual strengthening of business conditions.

由於宏觀環境放緩，尤其是在中國，我們的渠道庫存增加了 5 天至 29 天。我們繼續採取行動，進一步減少資產負債表上的庫存天數，同時保持內部晶圓製造工廠的吸收。我們還與渠道合作夥伴合作，尋找服務客戶所需的適當庫存平衡，並為最終加強業務條件做好準備。

Finally, while our overall inventory is still a bit higher than our target, we made excellent progress to position our inventory at the best locations in manufacturing to be able to rapidly respond to demand growth when the macro environment strengthens. Consistent with the slowing macro environment and the higher than target level of inventory on our balance sheet as well as with some of our customers and channel partners, most of our internal factory expansion actions remain paused. This we expect will result in lower capital investments in fiscal year '24 and fiscal year '25. During a period of macro weakness and business uncertainty, we believe shorter lead times are the best way to help customers navigate the environment successfully and improve the quality of backlog placed on us.

最後，雖然我們的整體庫存仍略高於我們的目標，但我們在將庫存定位在製造業的最佳地點方面取得了巨大進展，以便能夠在宏觀環境轉強時快速響應需求增長。與宏觀環境放緩、資產負債表上的庫存水平高於目標水平以及我們的一些客戶和渠道合作夥伴的情況一致，我們的大部分內部工廠擴張行動仍然暫停。我們預計這將導致 24 財年和 25 財年的資本投資減少。在宏觀經濟疲軟和業務不確定的時期，我們相信縮短交貨時間是幫助客戶成功應對環境並提高我們積壓訂單質量的最佳方式。

We have been able to reduce average lead time from roughly 52 weeks at the start of 2023 to roughly 26 weeks by the end of the June quarter. And we expect to continue to drive lead times down further in the coming months. We have heard concerns from some of the investment community about falling lead times because it results in lower backlog. While this is often true, we believe the level of backlog does not equate to true end market consumption. And in the final analysis, shorter lead times enable our customers and Microchip to navigate an uncertain environment with agility and more effectively.

我們已將平均交付週期從 2023 年初的約 52 週縮短至 6 月季度末的約 26 週。我們預計未來幾個月將繼續進一步縮短交貨時間。我們聽到一些投資界對交貨時間縮短的擔憂，因為這會導致積壓訂單減少。雖然這通常是事實，但我們認為積壓的水平並不等於真正的終端市場消費。歸根結底，較短的交貨時間使我們的客戶和 Microchip 能夠靈活、更有效地應對不確定的環境。

Now let's get into the guidance for the September quarter. Although our backlog for the September quarter is strong, we are continuing to take active steps to help customers with inventory positions to push out their backlog. Taking all the factors we have discussed on the call today into consideration, we expect our net sales for the September quarter to be between up 1% and down 3% sequentially. At the midpoint of our net sales guidance for the September quarter, our year-over-year growth for the quarter would be 9.3%. We expect our non-GAAP gross margin to be between 68.3% and 68.5% of sales. We expect non-GAAP operating expenses to be between 20.1% and 20.5% of sales. We expect non-GAAP operating profit to be between 47.8% and 48.4% of sales. And we expect our non-GAAP diluted earnings per share to be between $1.60 and $1.64. At the midpoint of our non-GAAP earnings per share guidance, our year-over-year growth for the September quarter would be 11% despite a much higher tax rate than the year ago quarter.

現在讓我們來看看九月季度的指導。儘管我們九月季度的積壓訂單數量較多，但我們仍在繼續採取積極措施，幫助有庫存的客戶消除積壓訂單。考慮到我們今天在電話會議上討論的所有因素，我們預計 9 月份季度的淨銷售額將比上一季度增長 1% 到下降 3% 之間。按照我們 9 月份季度淨銷售額指引的中點計算，該季度的同比增長率將為 9.3%。我們預計非 GAAP 毛利率將在銷售額的 68.3% 至 68.5% 之間。我們預計非 GAAP 運營費用將佔銷售額的 20.1% 至 20.5%。我們預計非 GAAP 營業利潤將佔銷售額的 47.8% 至 48.4%。我們預計非 GAAP 攤薄後每股收益將在 1.60 美元至 1.64 美元之間。按照我們的非 GAAP 每股收益指引的中值，儘管稅率遠高於上年同期，但 9 月份季度的同比增長率將為 11%。

As supply and demand come into balance, we expect normal seasonality to return to our business. Historically, the December quarter has been our seasonally weakest quarter. This year, we expect that our normal seasonality in the December quarter will likely be amplified by the macro weakness and business uncertainty that our customers are experiencing. As a result, we anticipate further business headwinds in the December quarter. However, notwithstanding any near-term macro weakness, we are confident that semiconductors remain the engine of innovation for the markets and applications we serve. Our focus on total system solutions and key market mega trends continues to fuel strong design win momentum, which we expect will drive above-market long-term growth.

隨著供需平衡，我們預計我們的業務將恢復正常的季節性。從歷史上看，12 月季度是我們季節性最弱的季度。今年，我們預計 12 月季度的正常季節性可能會因宏觀疲軟和客戶所經歷的業務不確定性而放大。因此，我們預計 12 月份季度將出現進一步的業務阻力。然而，儘管近期宏觀經濟疲軟，我們仍然相信半導體仍然是我們所服務的市場和應用的創新引擎。我們對整體系統解決方案和主要市場大趨勢的關注繼續推動強勁的設計獲胜勢頭，我們預計這將推動高於市場的長期增長。

Finally, as you can see from our June quarter results and our September quarter guidance, our Microchip 3.0 strategy, which we launched 21 months ago, continues to be the foundation of our results as we continue to build and improve what we believe is one of the most diversified, defensible, high-growth, high-margin, high-cash-generating businesses in the semiconductor industry. However, we recognize that we operate in a cyclical industry and that we're not immune to the business cycle.

最後，正如您從我們 6 月季度業績和 9 月季度指導中看到的那樣，我們 21 個月前推出的 Microchip 3.0 戰略仍然是我們業績的基礎，因為我們繼續構建和改進我們認為是半導體行業最多元化、最具防禦力、高增長、高利潤、高現金產生的業務。然而，我們認識到我們是在一個週期性行業中運營，並且我們無法免受商業周期的影響。

If you review Microchip's peak to trough performance through the business cycles over the last 15-plus years, which is included in the investor presentation posted on our website, you will observe our robust and consistent cash generation gross margin and operating margin results. Although we don't know what exactly the future holds, if we were to experience a semiconductor inventory correction, like what the industry has seen in the past, we are highly confident that our non-GAAP operating margins will remain well above 40% and we expect our cash generation, non-GAAP gross margin and non-GAAP operating margin to once again demonstrate consistency and resiliency through the cycle.

如果您回顧一下Microchip 在過去15 年多的商業周期中從高峰到低谷的業績（包含在我們網站上發布的投資者演示文稿中），您將觀察到我們強勁且一致的現金生成毛利率和營業利潤率結果。儘管我們不知道未來到底會怎樣，但如果我們經歷半導體庫存調整，就像行業過去所看到的那樣，我們非常有信心我們的非 GAAP 營業利潤率將保持在 40% 以上，並且我們預計我們的現金產生能力、非公認會計原則毛利率和非公認會計原則營業利潤率將再次表現出整個週期的一致性和彈性。

And with that, let me pass the baton to Steve to talk more about our cash return to shareholders. Steve?

接下來，讓我將接力棒交給史蒂夫，更多地談談我們對股東的現金回報。史蒂夫？

Thank you, Ganesh, and good afternoon, everyone. I would like to reflect on our financial results announced today and provide you further updates on our cash return strategy. Reflecting on our financial results, I continue to be very proud of all employees of Microchip that have delivered another exceptional quarter while making new records in many respects, namely record net sales, record non-GAAP gross margin percentage, record non-GAAP operating margin percentage, record non-GAAP EPS and record adjusted EBITDA. And all of that in a continuing challenging environment. The Board of Directors announced an increase in the dividend of 36.2% from the year ago quarter to $0.41 per share. During the last quarter, we purchased $140.3 million of our stock in the open market. We also paid out $208.9 million in dividends. Thus, the total cash return was $349.2 million. This amount was 67.5% of our actual adjusted free cash flow of $517.3 million during the March 2023 quarter. Our paydown of debt as well as record adjusted EBITDA drove down our net leverage at the end of June 2023 quarter to 1.29x from 2.05x at the end of June 2022.

謝謝你，Ganesh，大家下午好。我想回顧一下我們今天宣布的財務業績，並向您提供有關我們現金回報策略的進一步更新。回顧我們的財務業績，我仍然為Microchip 的所有員工感到非常自豪，他們又創造了一個出色的季度業績，同時在許多方面創造了新記錄，即創紀錄的淨銷售額、創紀錄的非GAAP 毛利率百分比、創紀錄的非GAAP 營業利潤率百分比，創紀錄的非公認會計準則每股收益和創紀錄的調整後 EBITDA。所有這一切都是在持續充滿挑戰的環境中進行的。董事會宣布股息較去年同期增加 36.2% 至每股 0.41 美元。上個季度，我們在公開市場購買了價值 1.403 億美元的股票。我們還支付了 2.089 億美元的股息。因此，現金回報總額為 3.492 億美元。這一金額佔 2023 年 3 月季度實際調整後自由現金流 5.173 億美元的 67.5%。我們的債務償還以及創紀錄的調整後 EBITDA 將我們的淨槓桿率從 2022 年 6 月末的 2.05 倍降至 2023 年 6 月季度末的 1.29 倍。

Ever since we achieved an investment-grade rating for our debt in November 2021 and pivoted to increasing our capital return to shareholders, we have returned $2.686 billion to shareholders through June 30, 2023, by a combination of dividends and stock buybacks. In the current September quarter, we will use the adjusted free cash flow from the June quarter to target the cash returned to shareholders. The adjusted free cash flow excludes a net $106.1 million that we collected from our customers for long-term supply assurance payments. These payments are refundable when purchase commitments are fulfilled. The adjusted free cash flow for the June quarter was $776 million. We plan to return 72.5% of, or $562.6 million, of that amount to our shareholders with the dividend expected to be approximately $223 million and the stock buyback expected to be approximately $339.6 million. Going forward, we plan to continue to increase free cash flow return to shareholders by 500 basis points every quarter until we reach 100% of adjusted free cash flow returned to shareholders. This will take 6 more quarters and dividends over time we expect will represent approximately 50% of our cash returned. With that, operator, will you please poll for questions?

自從我們於 2021 年 11 月獲得債務投資級評級並轉向提高股東資本回報以來，截至 2023 年 6 月 30 日，我們通過股息和股票回購的方式向股東返還了 26.86 億美元。在當前的九月季度，我們將使用六月季度調整後的自由現金流來確定向股東返還的現金。調整後的自由現金流不包括我們向客戶收取的長期供應保證付款淨額 1.061 億美元。當履行購買承諾時，這些款項可退還。六月季度調整後的自由現金流為 7.76 億美元。我們計劃向股東返還其中的 72.5%，即 5.626 億美元，股息預計約為 2.23 億美元，股票回購預計約為 3.396 億美元。展望未來，我們計劃繼續每季度將股東的自由現金流回報增加 500 個基點，直到達到 100% 調整後的自由現金流回報股東。這還需要 6 個季度的時間，隨著時間的推移，我們預計股息將占我們現金返還的約 50%。那麼，接線員，請您投票提問好嗎？

(Operator Instructions) Our first question is going to come from Tore Svanberg with Stifel.

（操作員說明）我們的第一個問題將來自 Stifel 的 Tore Svanberg。

I was hoping you could talk a little bit more about your orders. I mean backlog and the backlog, that all make sense. But I was just wondering if you could update us on orders, especially by region. And are you seeing any sort of signs of life at all from China? Because obviously, they are trying to stimulate the economy. And I'm just wondering if you've seen any data points there at all?

我希望你能多談談你的訂單。我的意思是積壓和積壓，這都是有道理的。但我只是想知道您是否可以更新我們的訂單信息，特別是按地區的訂單信息。您是否在中國看到任何生命跡象？因為顯然，他們正在努力刺激經濟。我只是想知道您是否看到過任何數據點？

I think going through the month of July, we have not yet seen China recover. There are discussions, I understand, about things they may do in the rest of this quarter. Those have yet to be seen. So I don't have anything more to add with respect to China. Our bookings have been weak. We do expect in time that those will begin to strengthen. There is still a lot of backlog that we're carrying and we are pushing out backlog. So there's not an immediate requirement for bookings to spring back to where they used to be.

我認為整個七月，我們還沒有看到中國復甦。據我了解，正在討論他們在本季度剩餘時間內可能要做的事情。這些還有待觀察。關於中國，我沒有什麼可補充的。我們的預訂量一直很疲軟。我們確實預計這些將隨著時間的推移而開始加強。我們仍有大量積壓訂單，我們正在處理積壓訂單。因此，並沒有立即要求預訂量恢復到原來的水平。

Maybe I can just add to that. Bookings are a reflection of where lead times are. And with lead times coming down, the customers just aren't viewing that they need to put the backlog in place because our lead times are falling pretty rapidly.

也許我可以補充一下。預訂反映了交貨時間。隨著交貨時間的縮短，客戶並沒有意識到他們需要將積壓的訂單落實到位，因為我們的交貨時間正在迅速縮短。

Our next question is going to come from Vijay Rakesh with Mizuho.

我們的下一個問題將由 Mizuho 的 Vijay Rakesh 提出。

Just a question. I was wondering, when you look at your supply chain, where are you seeing any -- what are you seeing on the pricing side, if you were to look at China or just globally?

就一個問題。我想知道，當你審視你的供應鏈時，你在哪裡看到了——如果你看看中國還是全球範圍內，你在定價方面看到了什麼？

Supply chains are stable in most places where we buy wafers from, where we buy some of our assembly and test services from. Clearly, on some of the materials, there may have been some movement in certain cases. I don't think we track it at the level that perhaps you may be interested in. But I would say supply chains are stable, lead times have come down, we're able to get what we need.

在我們購買晶圓、購買一些組裝和測試服務的大多數地方，供應鏈都是穩定的。顯然，在某些材料上，在某些情況下可能發生了一些移動。我認為我們沒有達到您可能感興趣的水平。但我想說供應鍊是穩定的，交貨時間已經縮短，我們能夠得到我們需要的東西。

Got it. And in general, if you look at trends as you look out on the pricing side, any thoughts you could share? I mean what has been trends? And what do you see in the last 2, 3 years and how you see that going forward? I guess that's it.

知道了。總的來說，如果您在關注定價方面時關注趨勢，您有什麼想法可以分享嗎？我的意思是趨勢是什麼？您在過去兩三年中看到了什麼？您對未來有何看法？我想就是這樣。

In our business, for the embedded solutions business, pricing tends to be a lot more stable. Pricing is something you establish at the point of doing your new design-in activity, not at the point at which you're fulfilling demand that's coming in. And outside of the last 2 years where there was significant inflation that we faced and that we passed on to our customers, pricing is usually relatively stable over time. We're not looking to reduce pricing or to increase pricing. And as we go forward, I don't expect that is going to change in the way that our business runs.

在我們的業務中，對於嵌入式解決方案業務，定價往往要穩定得多。定價是您在進行新的設計活動時確定的，而不是在滿足即將到來的需求時確定的。在過去兩年之外，我們面臨著嚴重的通貨膨脹，我們隨著時間的推移，價格通常會相對穩定地傳遞給我們的客戶。我們不打算降低價格或提高價格。隨著我們的前進，我預計我們的業務運營方式不會發生改變。

Our next question is going to come from Vivek Arya with Bank of America Securities.

我們的下一個問題將來自美國銀行證券公司的 Vivek Arya。

Sort of a multipart but related, Ganesh. When I look at the September quarter outlook, it's kind of flattish even though you're describing the situation as getting somewhat tougher. And then as I look out to the December quarter, I think you mentioned it could be worse than seasonal. But even with the headwinds, do you see a scenario where Microchip could continue to grow year-on-year? Or you think we should be thinking about the first quarter of year-on-year declines? And if they were to, right, decline year-on-year, what would be the effect on gross margins?

有點多部分但相關，Ganesh。當我查看九月季度的前景時，儘管您將情況描述為變得有些艱難，但它還是有點平淡。然後，當我展望 12 月季度時，我認為您提到它可能比季節性更糟糕。但即使面臨逆風，您是否認為 Microchip 可以繼續實現同比增長？或者您認為我們應該考慮第一季度的同比下降？如果它們同比下降，會對毛利率產生什麼影響？

We haven't modeled what the December quarter nor are we guiding to what the December quarter is going to be. There are a range of scenarios that we are working with. And I don't really have any more color to offer on it. With respect to the gross margins, as we have said many times, we have a pretty strong resilience to the way the gross margin works. If you look at our inside outside mix, we still have a 60% outside mix. We are continuing to run our fabs -- where, for absorption purposes, we are building the product that we need to build and building some inventory. So really, I'm not trying to provide any guidance for December that you might have. But you're absolutely right. We are expecting that the December quarter is going to be weaker than normal seasonality.

我們還沒有對 12 月季度的情況進行建模，也沒有對 12 月季度的情況進行指導。我們正在處理一系列的場景。我真的沒有更多的顏色可以提供。關於毛利率，正如我們多次說過的，我們對毛利率的運作方式有很強的彈性。如果你看看我們的內部和外部組合，我們仍然有 60% 的外部組合。我們將繼續運營我們的工廠——出於吸收的目的，我們正在生產我們需要的產品並建立一些庫存。所以說實話，我並不是想為您提供任何 12 月的指導。但你是絕對正確的。我們預計 12 月份季度將弱於正常季節性。

Our next question is going to come from Ambrish Srivastava with BMO Capital Markets.

我們的下一個問題將來自 BMO 資本市場的 Ambrish Srivastava。

I wanted to ask about automotive and industrial. Industrial has weakened for some of your competitors for quite a few quarters and auto continues to be strong, more or less, although the growth rate seems to be decelerating? What's your take on navigating through several cycles? We just started here and lead times are contracting, so how many quarters do you think the weakness in autos, and for that matter, industrial business, we should expect to last?

我想問一下汽車和工業方面的問題。您的一些競爭對手的工業已經疲軟了好幾個季度，而汽車仍然或多或少地保持強勁，儘管增長率似乎正在減速？您對經歷幾個週期有何看法？我們剛剛開始，交貨時間正在縮短，所以您認為汽車以及工業業務的疲軟應該持續幾個季度？

It's very difficult for me to answer that question. There is a question of which part of this is just inventory digestion that's taking place and how much of it is consumption changes and how consumption changes might change? So just using China as the example, China consumption was weak or weaker than anyone expected in the June quarter. How does it come back in the September or December quarter is anybody's guess on where it's at. So I don't have a clear view of how long does automotive or industrial stay weak. We've gone through many cycles. They don't last forever, obviously, and there are some typical cycles you can look back on and see how they performed.

我很難回答這個問題。存在一個問題，其中哪一部分只是正在發生的庫存消化，其中有多少是消費變化以及消費變化可能會如何變化？因此，僅以中國為例，中國第二季度的消費疲軟或弱於任何人的預期。任何人都猜測它在 9 月或 12 月季度會如何回歸。因此，我不清楚汽車或工業的疲軟會持續多久。我們經歷了很多輪迴。顯然，它們不會永遠持續下去，您可以回顧一些典型的周期，看看它們的表現如何。

True. Just had a quick follow-up, Ganesh. I'm struggling with the R part of the NCNR. What's the learning here? Has it allowed you to reduce the volatility that usually used to occur when we were going into a downturn? Because you keep rescheduling these. I shouldn't say keep -- a couple of quarters, you've rescheduled these, then you expect another reschedule next quarter. What's the right way investors should think about this? Because we've seen NCNRs by many companies and so I don't know what's the learning from this.

真的。剛剛進行了快速跟進，Ganesh。我正在與 NCNR 的 R 部分作鬥爭。這裡有什麼學問？它是否可以幫助您減少在我們陷入低迷時期時通常發生的波動？因為你不斷地重新安排這些。我不應該說保留——幾個季度，你已經重新安排了這些，然後你預計下個季度會再次重新安排。投資者應該如何思考這個問題？因為我們已經看到很多公司的 NCNR，所以我不知道從中可以學到什麼。

Well, the purpose of the NCNR was to get a mutual commitment of investment we were going to make and benefit a customer was going to get. It's based on a set of assumptions about where business is going to go. And I think as lead times go farther and farther out, everybody's visibility gets to be less clear. And the vast majority of the customers who were part of the NCNR programs have been extremely happy with what they were able to get in an extremely (inaudible) environment in 2021 and 2022. No program is perfect. I believe that our programs have had substantially more benefit than issues with them. We're at a point of the cycle where the demand curve has changed. And as that demand curve changes, we have to adjust. And by the way, the same demand curve will change again as we go into 2024. So I think we have to look beyond a short-term view of where this all ends up and look at how do these programs provide mutual benefit in the medium to long term.

嗯，NCNR 的目的是獲得我們將要進行的投資以及客戶將獲得的利益的共同承諾。它基於一系列關於業務發展方向的假設。我認為，隨著交付時間越來越長，每個人的能見度都會變得越來越不清晰。參與 NCNR 計劃的絕大多數客戶都對 2021 年和 2022 年在極其（聽不清）的環境中所獲得的成果感到非常滿意。沒有一個計劃是完美的。我相信我們的計劃帶來的好處遠遠多於它們帶來的問題。我們正處於需求曲線發生變化的周期點。隨著需求曲線的變化，我們必須進行調整。順便說一句，當我們進入 2024 年時，同樣的需求曲線將再次發生變化。因此，我認為我們必須超越短期觀點來看待這一切的最終結果，並看看這些計劃如何在中期提供互惠互利長期來看。

(Operator Instructions) Our next question is going to come from Joe Moore with Morgan Stanley.

（操作員說明）我們的下一個問題將來自摩根士丹利的喬摩爾。

I guess you're describing an environment in which you're seeing weakness in multiple regions, weakness in multiple end markets and you're characterizing that as kind of early signs of that. And yet you're only guiding down 1% quarter-on-quarter. So I guess it's like [see] a level of demand that's lower than this? I mean you have a lot of backlog right now. What happens as that backlog runs out? Can you just give us a sense for what type of drawdown we might be looking at over the course of the next few quarters? Just anything qualitative you can help us with that would be great.

我猜你描述的是一種環境，在這種環境中，你看到多個地區、多個終端市場的疲軟，並且你將其描述為這種情況的早期跡象。然而，您的指導僅比上一季度下降 1%。所以我想這就像[看到]低於這個的需求水平？我的意思是你現在有很多積壓。當積壓的訂單用完後會發生什麼？您能否讓我們了解一下在接下來的幾個季度中我們可能會考慮哪種類型的縮減？只要您能幫助我們做任何定性的事情，那就太好了。

We call it as we see it. We've given you a guidance for September quarter that brackets between plus 1% and minus 3%, and that reflects what we see today in our backlog and what we see in the tone of the business. We're giving you a sense that the December quarter is going to be seasonally weaker than normal. And again, it has a number of puts and takes that could go into it. I don't know what more I can say, Joe. It's the best that we're able to peer into the future and provide some insight as to where we think business is going.

我們按照我們所看到的方式稱呼它。我們已經為您提供了 9 月份季度的指導，該指導範圍在正 1% 到負 3% 之間，這反映了我們今天在積壓訂單中看到的情況以及我們在業務基調中看到的情況。我們讓您感覺到 12 月季度的季節性表現將弱於正常水平。再說一次，它有許多可以納入其中的投入和投入。我不知道還能說什麼，喬。最好的是我們能夠展望未來並提供一些關於我們認為業務發展方向的見解。

I can appreciate that. And then in terms of the 40% operating margin, can you give us a sense for what the parameters are of that? Like how much -- is that kind of a normal revenue weakness that you might have seen 2 or 3 years ago? If -- could you still do a north of 40% if it's worse than that? Can you just give us a sense for your confidence in the durability of that number?

我很欣賞這一點。那麼就 40% 的營業利潤率而言，您能否讓我們了解一下其中的參數是什麼？比如有多少——這是你兩三年前可能看到的正常收入疲軟嗎？如果——如果情況比這更糟，你還能做到 40% 以上嗎？您能否告訴我們您對這個數字的持久性有信心嗎？

Our confidence is pretty high. We have looked at a number of scenarios. We've looked at how other cycles have gone and I think we'll be well above 40% in the way that we have modeled it in the different scenarios that we have brought. Eric, do you want to add more to it?

我們的信心非常高。我們已經研究了許多場景。我們已經研究了其他週期的進展情況，我認為按照我們在不同場景中建模的方式，我們的進展將遠遠超過 40%。埃里克，你想添加更多內容嗎？

Yes. I think you've summed it up well, Ganesh. We've done scenario planning and do not see a scenario where our operating margins on a non-GAAP basis could fall below 40%. So we're very comfortable in making that statement. Maybe the other piece that I would add to Ganesh's first response is I think it's a little bit tricky for investors to understand what is normal seasonality for Microchip because of the supply constraints we've been under for the last couple of...

是的。我認為你總結得很好，Ganesh。我們已經完成了情景規劃，並沒有看到我們按非 GAAP 計算的營業利潤率可能下降到 40% 以下的情​​況。所以我們很樂意做出這樣的聲明。也許我要在 Ganesh 的第一個回應中添加的另一件事是，我認為投資者要理解 Microchip 的正常季節性是有點棘手，因為過去幾年我們一直受到供應限制......

(technical difficulty)

（技術難度）

Seasonality didn't play a part in that. And then we've done a lot of acquisitions historically, right? But we would say that probably a normal December seasonal might be down 3% or 4%. So hopefully, that provides some context and we're saying that based on the conditions that we're seeing, it likely could be -- what's the word, Ganesh? Yes, amplified.

季節性因素並沒有影響其中。然後我們歷史上做過很多收購，對嗎？但我們會說，正常的 12 月份季節性可能會下降 3% 或 4%。因此，希望這能提供一些背景信息，我們是說，根據我們所看到的情況，它很可能是——這個詞是什麼，Ganesh？是的，放大了。

Our next question is going to come from Joshua Buchalter with TD Cowen.

我們的下一個問題將由 TD Cowen 的 Joshua Buchalter 提出。

In the past, you've thought -- you've sort of given us rough levels of where you expected inventory to come in, in the quarter. I guess given we're going through this digestion period, can you give us any level that you would feel comfortable with? What sort of targets are you thinking about for on books and in the channel, when you would feel more comfortable that you're shipping closer to end demand?

過去，您曾想，您已經向我們提供了本季度預計庫存的粗略水平。我想考慮到我們正在經歷這個消化期，你能給我們一個你覺得舒服的水平嗎？當您覺得更接近最終需求時，您會在書籍和渠道中考慮什麼樣的目標？

I think the channel inventory is driven by in part what the channel wants to carry, what we can supply and what their demand intensity is. So we don't try to guide where the channel inventory is going to go. It goes where it goes based on those factors. We do take a lot of effort on the internal inventory inside Microchip. And we have an added factor at this point, which is we are trying...

我認為渠道庫存部分是由渠道想要運輸的東西、我們可以供應的東西以及他們的需求強度決定的。因此，我們不會試圖指導渠道庫存的去向。它會根據這些因素去往何處。我們確實在 Microchip 的內部庫存上下了很大的功夫。此時我們還有一個額外的因素，那就是我們正在嘗試......

(technical difficulty)

（技術難度）

Customers who have inventory positions and are looking for pushout help. And that has caused us to go slower than we would normally have liked, but it's the right long-term answer for us and for our customers. And we do expect, as Eric said, to have both a reduction in absolute and days of inventory on our balance sheet in the September quarter.

有庫存頭寸並尋求推出幫助的客戶。這導致我們的速度比我們通常希望的要慢，但這對我們和我們的客戶來說是正確的長期答案。正如埃里克所說，我們確實預計九月份季度資產負債表上的庫存絕對值和天數都會減少。

I appreciate the color there. And as my follow-up, I mean given that dynamic, your gross margin suggests that there's no real material cut, at least on your internal utilization rates. Can you talk about how you're thinking about running your factories through this period of digestion? And I guess the same question for your foundry partners as well.

我很欣賞那裡的顏色。作為我的後續行動，我的意思是考慮到這種動態，您的毛利率表明沒有真正的材料削減，至少在您的內部利用率方面是這樣。您能談談您在這段消化時期如何經營您的工廠嗎？我想你們的代工廠合作夥伴也有同樣的問題。

Sure. So our internal fabs are continuing to run relatively unchanged. These products are very long-lived products, in many cases, had been depleted in the inventory points that we typically need to be able to serve at a high level of certainty as well as the lead times we want. So our internal factories and the internal fabs in particular, are continuing to run. And our foundry partners, depending on where the inventory levels were, in some cases, we will be adjusting and have adjusted the purchasing to bring that inventory into line with where we want to be long term.

當然。因此，我們的內部晶圓廠繼續相對不變地運行。這些產品是壽命非常長的產品，在許多情況下，我們通常需要能夠以高水平的確定性以及我們想要的交貨時間提供服務的庫存點已經耗盡。因此，我們的內部工廠，特別是內部晶圓廠，正在繼續運行。我們的代工合作夥伴，根據庫存水平，在某些情況下，我們將進行調整併調整採購，以使庫存與我們希望的長期水平保持一致。

Our next question is going to come from Chris Caso with Wolfe Research.

我們的下一個問題將來自沃爾夫研究公司的克里斯·卡索。

First question is about, so I guess something we haven't spoken about in a while, the potential for the requirement for turns? And can you speak about that given the reduction in lead times, the fact that customers are booking closer -- I know we had a situation...

第一個問題是，所以我想我們已經有一段時間沒有討論過的問題了，轉彎要求的潛力？鑑於交貨時間縮短，客戶預訂時間越來越近，您能談談這一點嗎——我知道我們遇到了一個情況……

Chris, we may have lost you. Can you hear us?

克里斯，我們可能失去了你。你可以聽見我們嗎？

It looks like Chris' line has dropped. So until he calls back, we'll just move on to the next person in queue. And that's going to be Harlan Sur with JPMorgan.

克里斯的線路好像掉線了。因此，在他回電之前，我們將繼續處理隊列中的下一個人。那就是摩根大通的哈蘭·蘇爾。

The team had a target to get average lead times down to 26 weeks in the second half. I mean you're there now, given the scheduling activity, kind of near-term demand weakness, improving foundry capacity, right? I think normal average historical lead times for you guys have been in that 8- to 12-week range. Is this that kind of a range that you expect as you move to the second half of the year now? And just a quick follow-up. Do you guys expect to see your channel distribution inventories continue to rise from the 29-day level in this weak environment?

該團隊的目標是在下半年將平均交付週期縮短至 26 週。我的意思是，考慮到調度活動、近期需求疲軟、鑄造產能提高，你現在就在那裡，對嗎？我認為你們的正常平均歷史交貨時間在 8 到 12 週範圍內。當您進入今年下半年時，這是您所期望的範圍嗎？只是快速跟進。在這種疲軟的環境下，你們預計你們的渠道分銷庫存會繼續從 29 天的水平上升嗎？

So first to take the lead times. We are continuing to drive lead times down. As I mentioned in my prepared remarks, we believe that short lead times is what makes us all effective and agile in an unpredictable business environment that we're in. And we're on average, at just under 26 weeks right now. I think we will end the year at well under 13 weeks, could be under 10 weeks by that time. But we'll know how we progress in that time. 4 to 8 weeks is where our [up] lead times are for 90% or so of our line items as a historical benchmark for where we were. With respect to distribution inventory, as I mentioned a little earlier on, it has many functions. It's a function of what kind of sell-through are they seeing, what kind of inventory do they want to carry, what are we able to supply that maybe they've been asking for some time to be able to do it. So I don't have any color on what distribution inventory is likely to be doing outside of what we've provided so far for June. Chris, are you back?

所以首先要搶占領先時間。我們正在繼續縮短交貨時間。正如我在準備好的發言中提到的，我們相信較短的交付時間使我們能夠在不可預測的商業環境中保持高效和敏捷。目前我們的平均交付時間略低於 26 週。我認為今年結束時的時間將遠低於 13 週，到那時可能會低於 10 週。但到那時我們就會知道我們的進展如何。 4 到 8 周是我們 90% 左右的訂單項的[up]交貨時間，作為我們所處位置的歷史基準。關於分銷庫存，正如我之前提到的，它有很多功能。這取決於他們看到什麼樣的銷售量，他們想要持有什麼樣的庫存，我們能夠提供什麼，也許他們已經要求了一段時間才能做到這一點。因此，除了我們迄今為止提供的 6 月份信息外，我對分銷庫存可能會發生什麼情況一無所知。克里斯，你回來了嗎？

Yes. Chris Caso, your line is open again.

是的。克里斯·卡索，您的線路又開通了。

Yes. Not sure what happened, but thank you. So the question was on the turns environment. It's obviously, you haven't seen turns in several quarters given the high backlog. Is that something you contemplate either for the September quarter and December quarter? And can you tell us how you're thinking about that, the turns business, under the context of shortening lead time?

是的。不知道發生了什麼，但謝謝你。所以問題是關於轉彎環境。顯然，鑑於積壓量很高，您已經有幾個季度沒有看到轉變了。您是否會在 9 月季度和 12 月季度考慮這樣做？您能否告訴我們，在縮短交貨時間的背景下，您如何看待輪換業務？

Yes. We certainly expect that turns will be a requirement as we go into the December quarter. And it's a normal part of the business that we have done with. And so most things are starting to normalize again with respect to lead times, what kind of backlog coverage we'll have and turns is just something else we'll have to manage as we normally do, starting from the December quarter onwards.

是的。我們當然預計，當我們進入 12 月季度時，輪流將成為一項要求。這是我們所做的業務的正常部分。因此，大多數事情在交貨時間方面開始再次正常化，從 12 月季度開始，我們將有什麼樣的積壓覆蓋率和周轉率，這只是我們必須像往常一樣進行管理的事情。

Okay. But it starts in December, not in September?

好的。但從12月開始，而不是9月？

There may have been small parts in the September quarter. And we're 1/3 of the way in through the September quarter.

九月季度可能有小部分。 9 月季度已完成 1/3。

Right, right. That's helpful. As a follow-up, I wonder if you could expand on some of the comments about Europe. And we've heard from various others in the industry, obviously, weakness about China. There's been a bit here and there about industrial and auto, but really, not any comments about Europe. That's something new. And if you can expand upon what you're seeing there?

是的是的。這很有幫助。作為後續，我想知道你是否可以擴展一些關於歐洲的評論。顯然，我們從業內其他人士那裡聽到了有關中國的弱點。到處都有一些關於工業和汽車的評論，但實際上，沒有任何關於歐洲的評論。這是新事物。您是否可以擴展您在那裡看到的內容？

Yes. As I mentioned, I think Europe is more -- as I look forward, there are more headwinds that European economies are facing. I believe technically, Germany is now in a recession. It's had 2 consecutive quarters of negative GDP. And interest rates are still high. Inflation is still high. There's energy inflation, which is larger than in the U.S. And some of the large European economies rely on export, China being one. And to the extent China is weak, we're going to see some of that weakness in China, but we'll also see some of the weakness in Europe, when their exports are not quite that. So that's the addition of all of what we see as we look into where are things going and the impact from Europe.

是的。正如我所提到的，我認為歐洲在我看來，歐洲經濟面臨著更多的阻力。我相信從技術上講，德國現在正處於衰退之中。 GDP已連續兩個季度為負值。而且利率仍然很高。通貨膨脹率仍然很高。能源通脹比美國還要嚴重。歐洲一些大型經濟體依賴出口，中國就是其中之一。就中國的疲軟程度而言，我們將看到中國的一些疲軟，但我們也會看到歐洲的一些疲軟，而歐洲的出口並不那麼疲軟。這是我們在研究事態發展和歐洲影響時所看到的所有內容的補充。

That's helpful. And thank you for coming back to my question.

這很有幫助。感謝您回到我的問題。

You're welcome. Thanks, Chris, and welcome back.

不客氣。謝謝克里斯，歡迎回來。

Our next question is going to come from Timothy Arcuri with UBS.

我們的下一個問題將由瑞銀集團的蒂莫西·阿庫裡提出。

I had a question on cancellations. And in the past or you've been working with customers on allowing pushouts, but in the past, you sort of -- you've been offering customers to cancel for a fee. So if you want to bring down backlog, are you sort of increasingly forcing cancellation versus just allowing customers to push out shipments? I guess if you want to bring down backlog, 1 quick way to do that -- force them to cancel versus just allowing them to push things out.

我有一個關於取消的問題。在過去，或者你一直在與客戶合作允許取消，但在過去，你一直在向客戶提供收費取消服務。因此，如果您想減少積壓，您是否會越來越多地強制取消訂單，而不是僅僅允許客戶推遲發貨？我想如果你想減少積壓，有一種快速的方法可以做到這一點——強迫他們取消而不是僅僅允許他們把事情推出去。

We're not intentionally trying to bring backlog down. We are trying to help customers who have backlog placed on us, but would prefer to receive it, in some cases, later than what it's presently scheduled for. Backlog will, over time, has been coming down as the fever of what was in 2022 and 2021, where people were placing huge amounts of backlog out in time, starts to settle out, especially as these times starting to come in, as the industry starts to normalize, backlog will get back to what it used to be normally, pre-COVID. And so that's really what's happening with backlog. We're not trying to force it down in any way.

我們並不是故意試圖減少積壓。我們正在努力幫助那些積壓訂單的客戶，但在某些情況下希望比目前計劃的時間晚一些收到訂單。隨著時間的推移，隨著2022 年和2021 年人們及時處理大量積壓訂單的熱潮開始平息，積壓訂單將逐漸下降，特別是隨著這些時間開始到來，隨著行業的發展，積壓訂單將逐漸下降。開始正常化，積壓將恢復到新冠疫情之前的正常水平。這就是積壓的情況。我們並不想以任何方式迫使它下降。

And then just as a quick follow-up. In China, do you think any of the weakness in China, are you seeing examples of locally-sourced product that is being -- that you're being displaced by? I know that you don't have very much exposure there. If you net out the proprietary stuff, it's probably only 5% that's kind of subject to some sort of going local. But are you seeing any of that?

然後作為快速跟進。在中國，你認為中國有什麼弱點嗎？你是否看到過本地採購的產品正在被你取代的例子？我知道你在那裡沒有太多的曝光度。如果你去掉專有的東西，可能只有 5% 的東西會受到某種本地化的影響。但你看到這些了嗎？

In fact, it's a timely question. We just had a review with our China team here yesterday on exactly that topic. And there is little to no loss to the local China producers that we're able to see, either in design or in things that are in production today. So no, it is actual consumption that is weak. There is a lot of uncertainty in China with respect to what the amount of debt people are carrying are, what kind of stimulus is going to take place. And I think there is a consumption that is waiting to happen and I hope it will open up at some point in time. But at the moment, I think things are uncertain enough that consumption is being held down.

事實上，這是一個及時的問題。昨天我們剛剛在這裡與我們的中國團隊就這個主題進行了審查。我們可以看到，無論是在設計還是在目前生產的產品中，中國本土生產商幾乎沒有損失。所以不，是實際消費疲弱。中國的人們所背負的債務數額以及將採取何種刺激措施存在很多不確定性。我認為消費正在等待發生，我希望它會在某個時間點開放。但目前，我認為事情的不確定性足以導致消費受到抑制。

Our next question is going to come from William Stein with Truist.

我們的下一個問題將由 William Stein 和 Truist 提出。

I wanted to address the similar question about cancellations, that we understand with PSP and the NCNRs, you've been much more flexible, at least somewhat flexible on rescheduling, but much less so on canceling, which I think we all respect. But when we look at the growth rate of a wide variety of competitors, they've seen this downturn in...

我想解決有關取消的類似問題，據我們了解，對於 PSP 和 NCNR，你們更加靈活，至少在重新安排方面有一定的靈活性，但在取消方面則更靈活，我認為我們都尊重這一點。但當我們觀察各種競爭對手的增長率時，他們已經看到了這種低迷......

Okay. William Stein's line has disconnected as well. So our next question is going to come from Janet Ramkissoon with Quadra Capital.

好的。威廉·斯坦因的線路也已斷開。因此，我們的下一個問題將來自 Quadra Capital 的 Janet Ramkissoon。

Steve, Ganesh, there is somewhat of a different tone over this question. Could you provide a little bit of color on your efforts with RISC-V and the PolarFire SoC FPGA program? Anything you could share with us about design win activity, end markets where you're gaining traction with this program? And any sense where we're likely to -- any sense of when we're likely to see any real revenue growth from this area? My understanding is that there's a lot of interest in RISC-V for embedded applications.

Steve、Ganesh，對於這個問題的語氣有些不同。您能否介紹一下您在 RISC-V 和 PolarFire SoC FPGA 項目方面所做的努力？關於設計獲勝活動、您通過該計劃獲得吸引力的終端市場，您有什麼可以與我們分享的嗎？以及我們何時可能看到該領域的任何實際收入增長？我的理解是，人們對嵌入式應用的 RISC-V 很感興趣。

Sure. Thank you, Janet. So we were among the very early proponents of using RISC-V for our FPGA solutions, as you mentioned. Those products have been in production. They are ramping. In fact, the PolarFire family, as you mentioned it, it's the fastest-growing FPGA that we have. If you look like-for-like, what is it doing after X amount of quarters and where it's at? It is winning in the traditional markets that FPGA -- that came to us from Microsemi was winning, which is in aerospace and defense, some in the communications space, but also increasingly, it is winning quite significantly in industrial and it is winning in some automotive applications as well. So quite broadly present. It is doing exceedingly well. It is contributing to the results that we have been quoting on FPGA, both last quarter for the fiscal year and this quarter to reflect that it is hitting new records every quarter. And we are very, very optimistic about how RISC-V based FPGAs, along with all of the other elements that we have integrated on the solution, is going to play out. And it will be a huge growth driver for Microchip.

當然。謝謝你，珍妮特。因此，正如您提到的，我們是在 FPGA 解決方案中使用 RISC-V 的早期支持者之一。這些產品已投入生產。他們正在加速。事實上，正如您提到的，PolarFire 系列是我們增長最快的 FPGA。如果你看起來很相似，那麼 X 個季度後它在做什麼以及它在哪裡？ FPGA 在傳統市場上取得了勝利——來自Microsemi 的FPGA 正在贏得勝利，其中包括航空航天和國防領域，以及通信領域的一些領域，而且它在工業領域和某些領域也日益取得了顯著的勝利。汽車應用也是如此。所以相當廣泛地存在。它的表現非常好。它對我們在本財年上個季度和本季度引用的 FPGA 業績做出了貢獻，以反映它每個季度都在創下新記錄。我們對基於 RISC-V 的 FPGA 以及我們在解決方案中集成的所有其他元素的發揮非常非常樂觀。這將成為 Microchip 的巨大增長動力。

Good to hear from you, Janet. This is Steve.

很高興收到你的來信，珍妮特。這是史蒂夫。

Nice to hear from you, too, Steve. But just 1 quick follow-up, if I may. Given the capability that is made possible by this new architecture and its ability to integrate analog and digital functionality in a very effective way, shouldn't this also be -- you have positive implications for gross margins on these products, above corporate average?

我也很高興收到你的來信，史蒂夫。但如果可以的話，只需快速跟進 1 次。考慮到這種新架構所帶來的功能及其以非常有效的方式集成模擬和數字功能的能力，這是否也應該對這些產品的毛利率產生積極影響，高於企業平均水平？

So I wouldn't place the RISC-V architecture as the reason for the gross margin or the performance of the product line. The product line is an enormously complex product, comes with lots of software, lots of tools, a lot of application information that we put together. How we put it all together and turn it from a complex capability to an easy-to-use solution is what determines design wins, revenue growth, gross margin adoption, et cetera. So it's much, much more than anything about RISC-V or any other core for that matter.

因此，我不會將 RISC-V 架構作為毛利率或產品線性能的原因。該產品線是一個非常複雜的產品，配備了我們整理的大量軟件、大量工具和大量應用信息。我們如何將所有這些整合在一起並將其從復雜的功能轉變為易於使用的解決方案，這決定了設計的成功、收入增長、毛利率採用等。因此，它比 RISC-V 或任何其他內核的意義要大得多。

The product lines' gross margins are definitely well above corporate average, but as Ganesh said, they're not because of the RISC-V. It's because of the overall architecture of the FPGA, the tools, the value we provide in the markets we sell into.

這些產品線的毛利率肯定遠高於企業平均水平，但正如 Ganesh 所說，這並不是因為 RISC-V。這是因為 FPGA 的整體架構、工具以及我們在銷售市場中提供的價值。

Did we -- were we able to get Will back?

我們——我們能讓威爾回來嗎？

Yes. William Stein, your line is open again.

是的。威廉斯坦，您的線路又開通了。

I'll try to do a shorter preamble and just say Microchip has clearly experiencing this down cycle later than others. I think it's pretty clear it's because you've had these -- the PSP and other flavors of NCNR and you've been clear that you're allowing customers to reschedule and not so flexible on the cancellations. If we look at number guidance, I'm guessing that if you told every customer that wanted to reschedule or cancel, no, then you would have had higher revenue, or rather, higher guidance. Likewise, if you allowed everyone to...

我將嘗試寫一個更短的序言，只是說 Microchip 顯然比其他公司更晚地經歷了這個下行週期。我認為這很明顯，因為您已經擁有了 PSP 和其他風格的 NCNR，並且您已經明確表示您允許客戶重新安排時間，並且在取消方面不那麼靈活。如果我們看一下數字指導，我猜如果你告訴每個想要重新安排或取消的客戶，不，那麼你會獲得更高的收入，或者更確切地說，更高的指導。同樣，如果你允許每個人...

Unfortunately, it looks like his line has dropped again.

不幸的是，他的線路似乎又掉線了。

We have no idea why the lines are dropping. Will can just call us back after the call and we'll take his question.

我們不知道為什麼線路會下降。威爾可以在通話結束後給我們回電話，我們會回答他的問題。

Were there other questions or other callers that are still in the queue?

是否還有其他問題或其他呼叫者仍在隊列中？

No, there are no more questions in queue.

不，隊列中沒有更多問題了。

Okay. Well, thank you, everyone, for attending today and for your questions. And we have follow-up meetings with many of you as well. But I look forward to talking to you either at those calls or in the many events we will be at during the course of this quarter. So thank you.

好的。好的，謝謝大家今天出席並提出問題。我們還與你們中的許多人舉行了後續會議。但我期待著在這些電話會議或本季度我們將舉行的許多活動中與您交談。所以謝謝。