Good evening and thank you for joining us today for Allegro's third quarter results for fiscal year 2021. I'm joined today by Allegro's President and Chief Executive Officer, Ravi Vig; and Allegro's Chief Financial Officer, Paul Walsh. We will review our quarterly financial performance and provide a summary of our outlook. Our earnings release and the accompanying financial tables are available on the Investor Relations page of our website. This call is being webcast, and a recording will be available on our IR page shortly. Please note that comments made during this conference call include forward-looking statements within the meaning of federal securities laws. These forward-looking statements include projections and other statements about future events that are based on current expectations and assumptions, and as a result, are subject to risks and uncertainties that could cause actual results to vary materially from our projections. Please refer to the earnings press release we issued today and other documents filed by us with the SEC, including the risk factors discussed in detail in our final IPO prospectus filed on October 30, 2020. The Company assumes no obligation to update any forward-looking information presented. The non-GAAP financial measures that are discussed today are not intended to replace or be a substitute for the presentation of Allegro's GAAP financial results and may be calculated differently than similar measures used by other companies. We are providing the supplemental information because it may enable investors to make meaningful comparisons of core operating results and more clearly highlight the results of our core ongoing operations. Reconciliation of GAAP to non-GAAP financial measures referenced during today's call can be found in our earnings press release, which has been posted to our IR page. I will now turn the call over to Allegro's President and CEO, Ravi Vig. Ravi?

Thank you, Katie, and good evening, everyone. We're pleased to report results well above expectations and a strong outlook for the March quarter. Demand momentum accelerated throughout fiscal Q3, resulting in $164.4 million of revenue, a record for our current business. Strong customer demand was driven in part by the end market recovery, particularly in automotive, coupled with customer restocking. Non-GAAP gross margin was up nearly 200 basis points sequentially, and non-GAAP operating income was up approximately 38% sequentially. Non-GAAP diluted EPS came in at $0.13 per share, ahead of our guidance. All considered, it was a great start in our first full quarter as a public company. I'm also pleased to report that we remain on track with the strategic objectives we have outlined. In the coming quarter, we expect to continue to benefit from these efforts and from the strong end market tailwinds within a tightening supply chain. With record backlog and bookings, we have extended visibility into the first half of fiscal '22. With that in mind, fourth quarter revenue is anticipated to increase again sequentially to a new record for the business to $167 million, plus or minus $2 million. Non-GAAP gross margin for fiscal Q4 is also anticipated to move upwards of 50% to 51%. And non-GAAP diluted EPS is expected to be in the range of $0.13 to $0.15. I'll now turn the call over to Paul Walsh for a detailed review of the financials. Paul?

Thank you, Ravi. Net revenue in fiscal Q3 of $164.4 million was up 20% sequentially and 21% compared to the same period last year for our core end markets. Demand surged to record levels across our end markets, but particularly in automotive. We saw bookings accelerate as the quarter progressed and backlog strengthened with extended order visibility into the first half of fiscal '22. Automotive revenue increased to 69% of our mix or $113.9 million, increasing 27% sequentially and 15% year-over-year. Our industrial revenue was also strong, increasing 9% sequentially to $23.7 million or 14% of total revenue, and was up 11% year-over-year. Industrial customer demand accelerated, and we continue to see very healthy backlog. Our other business was $26.9 million for the quarter or 16% of revenue. This was an increase of 5% sequentially. Despite meaningful growth across our top customers, we did not have any customers greater than 10% in Q3. GAAP gross margin for the quarter was 45.3%, up sequentially and compared to the year-ago period. Our non-GAAP gross margin was 49.6%, which does not include adjustments for $1.2 million in expected future cost savings related to the closing of our AMTC manufacturing facility in Thailand, which totaled 0.7% of net sales. Non-GAAP gross margin adjustments include $4.7 million in mostly one-time IPO-related stock compensation charges, transfer pricing of $1.5 million for the Polar fiscal '21 commitment, $0.6 million of one-time costs associated with exiting our AMTC facility and $0.3 million of intangible asset amortization for Voxtel. The strong margin performance occurred despite a rapid acceleration in demand, highlighting the strength of our gross margin profile across all of our product lines. Gross margin improvements also reflect the results of our manufacturing efficiency initiatives, we just completed the relocation of all production from AMTC ahead of schedule, and we are now in the final wind down phase for this facility. Gross margin was impacted by an increasing mix of wafers supplied by Polar, resulting from the rapid recovery in demand versus our prior expectations. For the next few quarters, we expect to continue to source a higher mix of wafers from Polar, enabling us to quickly respond to demand, but at a higher cost than wafers sourced from our Asian foundry partners. That said, we fortunately made strategic investments in additional sources of capacity last year, which will provide some additional supply and cost benefits later in fiscal '22. Taking into consideration all of these factors, we expect non-GAAP gross margin to increase to the 50% to 51% range in fiscal Q4. We continue to anticipate incremental non-GAAP margin improvements throughout FY '22, broadly in line with our prior expectations, resulting from the benefit of the backend manufacturing consolidation noted earlier. Longer term, we maintain conviction in increasing our non-GAAP gross margin towards the mid-50% range as we augment manufacturing efficiency gains with ongoing revenue mix shifts towards higher-margin and higher growth markets. Total GAAP operating expenses increased sequentially to $98.6 million, with R&D of $31 million and SG&A of $67.6 million. The increase includes significant one-time items related to our IPO, including $38 million in stock-based compensation acceleration and $3.7 million in one-time items associated with the transformational activities we've discussed. The result was a GAAP operating loss of $24.2 million in Q3. Due to our strong performance in the second half, Q3 non-GAAP operating expenses were impacted by a $5 million year-to-date catch-up expense for variable compensation, increasing non-GAAP OpEx to $53.9 million. Fiscal '21 has been a uniquely nonlinear year with revenue in the second half now expected to be 32% higher than the first half. This was not anticipated even quite recently. The catch-up aligns our variable compensation accrual to where we now expect to finish the year. As a result, non-GAAP R&D investment was $28 million and non-GAAP SG&A expense was $25.9 million. Even with the variable compensation catch-up, non-GAAP operating income increased sequentially by 38% or $7.7 million to $27.7 million, representing 16.8% of revenue. Again, this does not include adjustments for the $1.2 million of expected future cost savings related to the closing of our AMTC manufacturing facility in Thailand, which totaled 0.7% of net sales. We expect non-GAAP operating expenses to come down in Q4 to be closer to 31% of revenue, which is below the levels our core business operated at throughout fiscal '20. We believe this will be the beginning of improved leverage on the step function increase in revenue experienced in Q3. The fiscal Q3 effective tax rate was a negative 85.8% and GAAP net loss for the third fiscal quarter was $5.1 million or $0.04 per diluted share. Non-GAAP net income in Q3 increased to $23 million, which excludes the impact of two months of interest expense on the $300 million of term loan repayment executed in late November. Only $25 million of that debt remains, and we expect interest expense of about $250,000 to $300,000 per quarter as a result. The Q3 non-GAAP effective tax rate was 15.9% and is expected to be 15% to 17% in fiscal Q4. Weighted average diluted share count for Q3 was 181.2 million shares as we only had two months of the additional 25 million shares offered in the IPO. This resulted in non-GAAP diluted earnings per share of $0.13 above the high end of our guidance range. Our current diluted share count is about 190.2 million shares, and we expect the diluted share count to increase nominally to 190.5 million in the fiscal fourth quarter. Our strong execution and business fundamentals continue to be evident in our balance sheet. Cash and equivalents in Q3 were down $44 million sequentially, but operating cash flows exceeded our expectations given the offset of $72 million in net financing cash flows from the various transactions undertaken in the quarter. We generated $35 million in operating cash flow in the quarter, and our quarter-ending cash balance was $164 million, inclusive of restricted cash. Accounts receivable balances were $89 million, and we ended the quarter with DSO of 49 days, which was down two days compared to the second fiscal quarter and consistent with historical norms. Net inventory decreased sequentially by $11 million to finish at $94 million, reflecting accelerating demand. Channel inventories remain at historic lows, while POS sell-through is at historic highs. In summary, we are approaching spending with a high level of discipline while continuing to focus on our long-term objectives related to our business transformation and margin expansion story. Ravi?

Thank you, Paul. Strong third quarter demand supported the early innings of the market recovery, has put us about a year ahead of our prior internal revenue expectations. As Paul mentioned, our operations team responded well to the rapidly increasing demand, and we were able to maintain good margins. Revenue is at new highs. We are raising our outlook, and we expect a year-over-year growth that our year-over-year growth will outperform market forecast in fiscal '22. Unique to Allegro will be the benefits of our manufacturing transformation that are expected to reduce our cost and improve our profitability while maintaining our supply flexibility in fiscal '22 and beyond. Coming back to the third quarter, Power IC products were up 8% sequentially and 25% year-over-year, representing 23% of the revenue. As you know, we are the market leader in magnetic sensor ICs, which represented 67% of revenue. Third quarter automotive strength helped drive 27% sequential magnetic sensor IC growth, and 19% year-over-year growth. Taking a closer look at our automotive end markets, our revenue was up 27% to $113.9 million. We believe that half of our growth reflects automotive production rates. Industry automotive production forecast increased by about $2 million during the quarter, and the consensus now is that about 23 million cars were produced. Based on our customer history and the relatively low inventories at customers coming into the quarter, we believe that the remainder of our sequential automotive revenue growth reflects market share gains and restocking in about equal measure. Our automotive customer order rates continue to be well ahead of car production suggestive of continued restocking into fiscal Q4. While the global recovery provides nice tailwinds, we have focused on long-term sustainable growth, and I'm happy to report that design wins increased over 60% sequentially in Q3 overall and 81% for automotive. This type of momentum is indicative of real progress towards our market share and growth objectives. ADAS and xEV represent approximately 1/3 of our automotive business, and these applications continue to grow at long-term rates that outpace our foundational business in ICE and safety convenience. Last quarter, we had some terrific design wins in both ADAS and xEV, securing an electric power steering program for customers in Korea, including both our magnetic sensors and power ICs. We also won new xEV inverter and steering system business at multiple Japanese Tier 1 customers, the global vehicle platforms. These program wins are expected to start contributing to revenue as soon as the fourth quarter. Our foundational business, ICE and safety convenience both grew double digits sequentially and year-over-year in Q3. We believe we are gaining share in these applications, giving us further confidence in the longevity of this revenue. We also see market share momentum as we expand our leadership position with our innovative XMR on silicon technology that enhances energy efficiency in powertrains for both electrified and ICE vehicles. A back bias GMR speed sensor ICs offer market-leading installation flexibility, improving performance and reducing the overall system size, complexity and cost in transmission systems. Last year, we began servicing production and orders for these products, and we believe the rapid adoption of this emerging technology demonstrates we are further distancing ourselves from the competition. Our Industrial business was up 9% sequentially and 11% year-over-year. This includes our strategic focus areas like Industry 4.0, green energy, data center and a long tail of business we call broad-based industrial. Heightened global customer demand across our industrial end markets exceeded our supply and incoming order rates remained strong during the quarter with signs of pent-up demand exiting Q3. Within industrial, broad-based grew nearly 50% sequentially in Q3, addressing a broad range of small customers and applications. This business is mainly serviced through the distribution channel, and we've seen great pull-through, as Paul mentioned, with record POS levels and declining channel inventories. Sequentially, data center and Industry 4.0 growth took a pause as expected, but we see continued future momentum. Data center was double the revenue level compared to the same time last year. This reflects market share growth resulting from our unique IP and high-voltage capabilities that are perfectly intersecting the demand for higher efficiency and 48 volts in data center cooling. And finally, renewable energy was up 10% sequentially. We sell our current sensors and motor drivers into renewable energy applications, like solar inverters, photovoltaic combiner boxes, solar panel tracking systems, and wind inverters. These are applications where reduced power dissipation, high-voltage isolation, and small form factors are important, exactly where our products shine. A key element of the industrial story is our market-leading current sensor family. We recently released the second generation of our innovative power monitoring chip, which has been a game changer in energy measurements. The new device further simplifies power measurement in AC and DC powered applications, particularly IoT devices, building-at-home automation, and even server and telecom power. This product, like many in our portfolio, supports our mission to leverage technology to deliver a more sustainable future. In the third quarter, we were acknowledged by the 2020 Carbon Disclosure Project for taking coordinated action on climate and water issues. Allegro is proud to be committed to cleaner skies and, of course, reflect the outperformance for our sector and regional averages. Allegro's other business was up sequentially by 5%. The near-term growth is due primarily to the end market recovery, with notable growth in IoT applications. We expect the COVID-specific momentum in printers and peripherals that has contributed to higher run rates in the other business will steadily decline as the end markets normalize. Now for the fiscal Q4 guidance. As we discussed, we continue to see strong momentum to date in the fourth quarter with record backlog. However, as you know, we are closely monitoring demand and navigating through the supply chain challenges created by the rapid recovery in the industry. Balancing these factors, we expect both automotive and industrial revenue to be up low single digits sequentially, and we expect other to be flat with company revenue expected to be in the range of $165 million to $169 million. We expect non-GAAP gross margin to be in the range of 50% to 51%, trending upwards from Q3. We expect non-GAAP operating expenses to decline to $51.5 million to $53 million. We expect non-GAAP diluted earnings per share to be in the range of $0.13 to $0.15 per share. Just to wrap up, we are extraordinarily excited about the team's ability to respond to the increasing demand and contribute to a record quarter. Good visibility and backlog are giving us confidence in delivering another record quarter in fiscal Q4. With progress on our manufacturing efficiency initiatives, driving margin improvements and strong momentum in our design funnel, we continue to believe we are well positioned to deliver on our long-term objectives. We will now be happy to take your questions. Katie?

Thank you, Ravi. Operator, will you please review the question-and-answer instructions with our participants.

Thank you. Your first question comes from Gary Mobley from Wells Fargo. Your line is now open.

Thanks for taking my question. And let me extend my congratulations on a strong finish with calendar year. I wanted to start out by asking about gross margin. So Paul, you did a pretty good job of sort of walking us through the variance in the reported December quarter relative to gross margin guide, and you're obviously expecting an improvement. But I was wondering if you can break down for us, what sort of capacity limitations you have with UMC? How that may be forcing you to take more than your purchase amendments with Polar and how that overall played out in the gross margin impact in the December quarter and into the March quarter? And then I have a follow-up.

Sure. Thanks, Gary. Yes, one of the drivers for gross margin in the quarter was the mix of wafers towards Polar. We actually consider ourselves fortunate to be able to have that as a safety valve, if you will. And we've indicated that in the coming quarters, we'll rely on a heavier mix from Polar. But long term, we're committed to continuing to expand at UMC and with other foundry partners as well. So, I think it's something that we can work through. We don't have any capacity limitations necessarily that will impede us in our near-term growth. So, we feel pretty good about it.

Okay. As a follow-up and related to the topic, I wanted to ask you guys about your qualification in your eventual transition of manufacturing at TSMC. Could you give us some sort of update there?

So Paul, I'll take that.

Sure.

So our TSMC activity has been ongoing. We expect to have revenue from that activity in our next fiscal year in FY '22, getting wafers to supply-demand in the second half, and we expect it to ramp up into fiscal '23. This is as expected, given the long qualification cycles that we have in automotive; we had projected this particular stock rate.

Next question is from Mark Lipacis with Jefferies. Your line is now open.

So my first question is about the backlog. It seems that the backlog has increased significantly. Paul, can you discuss how the profile of that backlog has changed compared to 90 days ago? To what extent do you have visibility into the backlog that extends into the June quarter and two quarters ahead instead of just the first quarter? Additionally, I am hoping you can help me understand the contrast between the increased backlog and your guidance for about 2% growth at the midpoint, especially since it doesn't seem that there are major constraints from your suppliers. Could you clarify the differences between the strong backlog, the growth in the backlog, and the lower sequential growth outlook? Thank you.

Thank you, Mark. Yes, in ordinary times, we have very good visibility into our backlog. We continue to have excellent visibility into what we've seen. Certainly, the demand has accelerated, like everyone has seen. So, we have good visibility, certainly, and it gives us great confidence in the current quarter, but we get visibility into the June quarter as well. So, I think it gives us a lot of confidence, and it certainly helps with our planning going forward.

Okay. Great. That's helpful. And a lot of times when you get into demand environments like this, people start worrying about double ordering and building inventory, safety stocks are pretty high. Can you give us a sense of what kind of visibility do you have into your products once you ship them? Do you have visibility all the way to the production line? Does it end of before that? And how you've been through the cycles before, how do you kind of manage or assess when you get to a point where you get concerned about the risk of double ordering and inventories building up out there? That's all I had.

Sure. We closely monitor our ordering patterns, demand trends, and backlog on a weekly basis, which has been our practice for quite some time. We have strong visibility into the distribution channel, and as mentioned earlier in the call, inventories there are quite lean. However, our visibility at the customer level beyond distribution is different. I would likely turn to Ravi to provide any insights on what we might observe from that channel.

Yes, I believe, as Paul mentioned, we have been closely monitoring our customers. We maintain constant communication with many of them due to the rapid growth of our backlog, and we have been analyzing the demand signals. There is a significant pull from end customers at this time, along with substantial restocking and increases in their production rates. It's a combination of factors. However, during times like this, as we have experienced in previous semiconductor cycles, there is a risk of our shipments outpacing demand. Therefore, we are carefully monitoring the situation and are cautious to ensure that customers do not get ahead of their order patterns.

Your next question is from Blayne Curtis of Barclays. Your line is now open.

I'm curious about the gross margins and inventories. It seems that inventories have decreased, and I assume you are trying to manage the Polar mix, which is impacting the gross margin. How do you plan to manage the inventories going forward? Additionally, could you provide some insight into the improvements expected in the March quarter? It would also be helpful if you could elaborate on the timeline for when the Polar mix may change and when we might see better allocations.

Sure, Blayne, I'll explain that. Yes, inventory has decreased, which was expected due to the increase in demand and revenue. We are focused on maintaining the right inventory levels, and we are monitoring this for the March quarter and beyond. We're considering both our capacity with UMC and the need to manage any requirements from Polar, as mentioned earlier. Looking ahead, our long-term strategy regarding when we might phase out Polar is somewhat uncertain due to the demand landscape. However, it is not a long-term strategic objective for us, as our goal is actually to gradually reduce our reliance on Polar, which would significantly benefit our gross margin in the long run.

Okay. I want to ask about Photonics. It's a small part of the business, but it has performed a little under $1 million over the last two quarters. Could you share any comments on its performance? It seems to be doing a bit better than I expected, so I'd like to hear about the drivers of Photonics and what the outlook looks like. I know it's a small segment, but its performance seems to be improving compared to my initial expectations.

Yes. I think Photonics is a segment where, at this point, it's really in a reinvestment phase. So, we are focused on product development and re-architecting that business to be more applicable to automotive LIDAR. As we've said in the past, our real metrics for this particular business will come down to product releases and customer engagements in the automotive front. Yes, we have small revenue, but our real revenue is going to come from. And our real focus is on the automotive LIDAR, which we expect to start progressing in terms of products and design wins over the next couple of quarters.

And your next question from John Pitzer of Credit Suisse. Your line is now open.

Congratulations on solid results. Paul, I wanted to go back and just revisit the fiscal third quarter gross margins to make sure. I understand the delta that's going on just relative to where the Street was versus where you reported, was most of it the 70 bps from the closure? And if that's it, why couldn't you recognize that in the December quarter? Or is this all being driven by incremental costs from things like Polar?

Good question, John. When I consider the revenue guidance range, we expected to have about 70 basis points as we entered the quarter, which was part of our guidance range of 50 to 51 set back in November. Without that, my guidance was towards 50%. With the actual result being 49.6%, we came close to the 50s. The reason we can't include it is that it's considered more of a pro forma adjustment than a non-GAAP one. Additionally, with the AMTC facility in Thailand nearly complete and moving into the wind-down phase, we won't have that going forward.

So effectively, the fiscal fourth quarter gross margin guidance includes the benefit from the Thailand closure.

Yes, exactly. Yes. That's the way in. We should see some benefit. We're in the wind down phase, and you know how those things are, there's a little bit of ramp-up, but we should be seeing that.

And then my second question for Ravi. Just on the auto side, you talked about kind of half of the strength you think being restocking. I'm just kind of curious, I think this is the first time that I can remember where major auto OEMs are being forced to shutter capacity because they can't get semiconductors, which tells you both how cyclically strong things are, but perhaps more importantly, how much more structurally important chips are to building cars. I'm kind of curious, do you think this will change how the auto guys view inventory? And will they just hold structurally more inventory? And especially given that your cost side of the equation is moving up, how do you think about pricing vis-à-vis your rising cost and tight supply right now?

Yes, I believe we're already noticing the effects of tightened budgets within the automotive supply chain during the COVID quarters. Inventories have dropped to incredibly low levels, a trend that actually began last year. Thus, we started this year with low inventory levels, which continued to decline throughout the COVID period. The recovery in automotive was not anticipated, and this significant rebound has severely affected, or is depleting, the semiconductor supply chain. As you've pointed out, semiconductors are becoming increasingly essential to vehicle operations, and we are currently observing changes in backlog trends. Our visibility into future demands is extending out a few quarters, which is quite unusual for us. I sense that something is happening with our automotive customers, as they are providing us with greater visibility and are likely addressing the supply shortfall by restocking. This situation does not directly impact us, but what we see is that high-end processors are facing competition from the demand driven by cellular and 5G technology. I think automotive customers are beginning to realize this. I'm sorry, what was the second part of your question?

Sort of your pricing philosophy right now, can you take pricing up to cover cost increases? Can you take it up beyond that? How are you trying to manage incremental costs with long-term customer relations?

Typically, we do not engage in transactional relationships with our suppliers or customers, meaning we are not a commodity company and we do not treat our purchasing or selling as commodities. We have long-term agreements with our key suppliers regarding pricing, which we believe will assist us in navigating any constraints faced by many companies. In addition, we have agreements with our customers that we assess regularly. When unforeseen situations arise, we discuss pricing with our customers. Currently, we are addressing pricing in a limited manner while we continue to observe the market and the costs associated with the supply chain. So yes, this is a discussion we are having with some of our customers.

And next question from Srinivas Pajjuri of SMBC. Your line is now open.

Congratulations on becoming a public company and your solid execution. Ravi, I want to revisit your comment about design wins. You mentioned that your design wins have increased by about 80%. You also noted that your ICE business is experiencing double-digit growth, which is somewhat surprising to me. Could you provide more details on the design win pipeline and where you are winning these designs? Are these related to ICE or xEV and ADAS? Additionally, in the past, you expressed optimism about improving gross margins with new products. Can you discuss whether these new design wins will create any additional margin opportunities?

Yes. In terms of design wins, we experienced a 60% increase quarter-over-quarter, mainly in our xEV or ADAS sectors. xEV includes both hybrid and battery electric vehicles. Some of these design wins are significant, and we anticipate a meaningful revenue impact starting this quarter, with growth expected to accelerate thereafter, similar to our ADAS victories. Typically, our xEV and ADAS segments are emerging markets with higher margins compared to our more established ICE business. We are very encouraged by this trend, as our xEV and ADAS products are being recognized as best-in-class by leading customers globally, including in Japan, Korea, and Europe. Regarding ICE, the quarter-over-quarter growth reflects a rebound in car production and current inventory restocking, rather than content growth at this time.

Got it. One question for Paul regarding gross margin. There have been a lot of inquiries about this topic. Looking beyond fiscal Q4 as we approach the next fiscal year, could you discuss the factors influencing gross margin? I want to understand if the benefits from the Thailand factory are fully accounted for in fiscal Q4, and if there are any additional benefits expected in June and beyond. Additionally, are there any other factors that will influence this beyond the next quarter?

As Thailand transitions and we become a single back-end manufacturing facility in fiscal '22, we expect to see gradual improvements throughout the year. This is a significant advantage for us. However, the Polar wafer mix presents a short-term challenge that balances this out. Like many of our peers, we're assessing various areas where costs may increase and exploring ways to mitigate those impacts. We also expect certain efficiencies to contribute positively throughout the next fiscal year.

Next question is from Vijay Rakesh of Mizuho. Your line is now open.

Hi, Ravi and Paul, congrats on a good 2020. It's a question on your autos. When you look at the combustion engine ICE versus EV, wondering what the split was of that in auto in September and how it trended in December? Is the mix shift significantly or how the shift moved?

Yes. So Vijay, as we've spoken before, ICE dominates the market in terms of car production and car volumes. So it has a much larger established base. EV is an emerging segment, rapidly growing. We are extraordinarily excited about it, but it's still coming off a small car production base. So the best thing I can tell you is that our xEV business grew 57% year-over-year, which for the quarter. So it's talking about extraordinarily strong momentum. We are seeing rapid acceleration in the adoption of our products in this particular area. We're very excited about some of the new products that we've released, and we will continue to focus our R&D in this particular area.

Got it. Looking at the December quarter, it seems that autos grew 15% year-on-year. EBITDA for electrical LVP increased by 2% year-on-year. How should investors consider the outperformance compared to LVP as we move forward?

Yes, we have been analyzing this data ourselves. One challenge for us as a semiconductor supplier is that our numbers related to the automotive market can be affected by the supply chain strategies of our customers. Inventory buildups tend to inflate the figures, while inventory reductions can lead to decreases. In 2019, there was a significant reduction in automotive, particularly in the analog and sensor sectors, largely due to inventory cutbacks. As a result, some of the data may appear to be higher than anticipated due to these inventory adjustments, but we are seeing growth in content. For instance, my xEV data indicates a positive trend for our growth. We are also observing increases in ADAS, which is important for us as it adds to our content. Therefore, we expect to continue outperforming the overall automotive market statistics.

And next question from Quinn Bolton of Needham & Company. Your line is now open.

Hi, Ravi and Paul, congratulations on the nice revenue and strong backlog. Wanted to ask, Ravi, I think you mentioned in the script that auto production is back to 23 million units in the fourth quarter. If I annualize that, it looks like we're kind of back to pre-COVID levels. Wondering, as you look forward into March and June, do you expect some of the semiconductor shortages that are pretty well known? Does that take the auto production down for a couple of quarters until the supply chain can work through those issues? Just wondering if you had any thoughts on kind of where production goes the next couple of quarters?

Yes, that's a good question. We rely on IHS and LMC for insights, and they have a solid track record in forecasting automotive production. For the upcoming year, the expectation is between $85 million and $88 million. Since we finished last quarter with a vehicle production of $23 million, they foresee a slight flattening in production rates. Currently, we are experiencing strong demand, with auto customers eager for every unit we can ship. The visibility for the next few quarters looks promising, especially as our backlog provides us with more clarity than the usual 90-day outlook. Overall, the situation seems robust at the moment. It appears to be a mix of increasing content and some restocking activity, but I don't expect significant growth from LDP. Therefore, production will likely be flat or just modestly declining, but nothing major.

Great. The follow-up question I have is about the restocking activity. It appears that we've reached very low levels in the supply chain during the second half of 2020. Based on your experience with previous auto cycles, how long does the restocking activity usually take? Is it typically a two-to-four-quarter phenomenon, does it happen more quickly, or can you provide any insight on the duration of the restocking process?

Yes, it's interesting, but I don't think history really applies here. With the growing reliance on semiconductors, we might be witnessing a shift in the near- to mid-term strategy among automotive customers. They may be opting for higher inventory levels now to safeguard against the supply constraints they are currently experiencing. I don't have a better answer than that, so we will just have to wait and see how it unfolds. We don't anticipate significant pullbacks during this year. We expect our fiscal '22 to remain strong, which is exciting for us, and we are pleased with the visibility we have.

And the last question from Mark Lipacis of Jefferies. Your line is now open.

Thank you for bringing me back into the queue. I have a question regarding the industrial markets. During your roadshows, this appeared to be a largely untapped opportunity, and you're anticipating significant growth in that sector. Could you clarify to what extent you are adapting chips initially designed for automotive use to find opportunities in the industrial market, as opposed to creating entirely new products for this market? Additionally, could you explain the sales cycle and process in the industrial sector compared to the automotive sector? Should we expect a shorter sales process in the industrial market?

Yes. So, yes, it's a great question. Our Industrial business is actually a mix of both targeted design products as well as a leverage of products that apply very well across the automotive and industrial spaces. So for example, our current sensors that we do for automotive, they have similar types of requirements in the industrial space. They are in the solar inverters as well as in the HEV inverters in vehicles. So, there is some synergy, there's more synergy than we would expect in our electrification product portfolio. There's also more synergy that we would expect in our motion control product portfolio. But we are particularly proud of the activities that we've done in data centers where we've developed and released a family of quiet motion fan drivers that include embedded algorithms and address the three-phase plan cooling leads for data centers and service. And this particular product line is growing dramatically. It is up substantially year-over-year. I think it's almost up 200%. And it speaks to both the increased needs of data centers, including needs of data centers, but it also speaks to the adoption of our technology and how well it's been targeting this particular market space. So it's a blend. We see both types of activities. Our 48-volt automotive activities line up very well with the 48-volt industrial activity. So our wafer technologies lined up very well. We do not work very deeply in the 5-volt and sub-5 volt levels. So, there is a lot of synergy over there. The design cycles certainly are quicker. And what I would say is that once you get designed into a platform at one of these large industrial customers, the selling cycle, then all of a sudden becomes very quick when you win a new project on that same platform, the ramps happen very quickly. We sometimes get very little notice in this particular space. Katie?

Great. All operator, I think that is our last call or last question. So thank you all for joining us today.

And I just want to thank everyone in our first earnings Q&A session as a public company. We're very excited, and we talked a lot today about bookings and our visibility, and it's we feel fortunate that this is where we are and having this in our initial launch as a public company. So, it's very exciting for us, and we look forward to speaking with you as soon.

And thank you, Paul. And I just wanted to wrap up. I wanted to second Paul's comments. It is an exciting journey that we've been on. And we're particularly proud of the quarter we've had. We're particularly proud of the visibility we have into the next year, both on the top line as well as in gross margin and the continued initiatives that we have that hopefully help us deliver good quarters in the future, good and great quarters in the future. Thank you all for attending, and have a great evening.

Ladies and gentlemen, this concludes today's conference. Thank you everyone. You may now disconnect.