Ladies and gentlemen, thank you for standing by, and welcome to the Allegro MicroSystems Q2 Fiscal 2022 Financial Results. At this time, all participants are in a listen-only mode. After the speakers’ presentation, there will be a question-and-answer session. I would now like to hand the conference over to Katie Blye. Please go ahead.

Good morning, and thank you for joining us today for Allegro's second quarter results for fiscal year 2022. 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 webcasted, and a recording will be available on our IR page shortly. Please note that comments made during this conference call will be forward-looking statements as defined by 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 issued today and other documents filed by us with the SEC, including the risk factors discussed in detail in our most recent 10-K filed on May 19, 2021. 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're providing this supplemental information because it may enable investors to make meaningful comparisons for operating results and more clearly highlight the results of our core ongoing operations. For a 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'll now turn the call over to Allegro's President and CEO, Ravi Vig. Ravi?

Thank you, Katie, and good morning, everyone. Record revenue and profitability in FQ2 reflect our alignment to multiple growth vectors and very strong franchises in magnetic sensors and power ICs as well as in automotive and industrial. Revenue grew 3% sequentially to $193.6 million, exceeding our expectations due to favorable mix relative to our available inventory. As a result of structural improvements from our transformation, gross margin improved again, well ahead of our target model timeline. We experienced broad strength across our magnetic sensor and power IC products in an increasingly diverse set of applications and end customers. Magnetic sensor revenue was up nearly 50% year-over-year, achieving record highs due to growth across all product categories. Our current sensors, in particular, are experiencing tremendous market adoption. Power ICs were up 30% year-over-year, with motor control products achieving record revenue as customers adopt our leading embedded motion control solutions. Finally, design wins continue to be a key measure of our growth potential. Our design win revenue increased nearly 50% on a rolling 4-quarter basis. Emerging growth markets continue to represent the majority of these new design wins, accelerating the company's transition to xEV, ADAS, Industry 4.0, and data center applications to enable outsized revenue growth and high levels of profitability. As we'll discuss, the recent COVID-related supply chain disruptions present what we expect will be a one-quarter pause in our sequential growth in Q3, but supply recovery is already underway, and we expect to return to growth in Q4 with approximately 28% annual growth in fiscal '22. The strength of our franchises in power, magnetics, automotive, and industrial gives us confidence in our ability to deliver low to mid-teens annual revenue growth in fiscal '23 at nearly target model gross margins. Now I'll turn the call over to Paul for more color on the financials. Paul?

Thank you, Ravi. Q2 record results highlight the diversity and strength of our business model. Customer demand remains strong across our served end markets, and once again, no single end customer represented more than 10% of our revenue in the quarter. Automotive revenue of $126 million represented 65% of total revenue, which is a lighter percentage of mix than typical. Auto revenue was down 6% sequentially, but compares favorably to global car production, which declined 16%. We attribute this to both content gains and the trend towards higher-value, feature-rich vehicles in the OEM's production mix, including the accelerating shift towards electrified powertrains. Our strategic focus areas of xEV and ADAS increased again as a percent of our automotive mix, exceeding 35% of our automotive revenue in Q2, a critical metric. Offsetting volatility in automotive due to industry supply chain challenges, our industrial revenue was up double digits sequentially to $36.3 million, increasing to 19% of total revenue. We saw broad strength across all of our industrial categories, which all grew 20% sequentially. The investments we've made in this area continue to complement our overall growth strategy. Other represented 16% of revenue, rising to $31.3 million on stronger seasonal demand. Backlog continues to grow, sitting at historic levels and with extended visibility. Like many of our peers, we have implemented actions to reduce backlog and provide assurance for us to procure additional capacity. We've been successful in maintaining considerable pricing power of our products, helping to offset rising input costs. Demand continues to far exceed our ability to supply. In this environment, we are pleased to share that we've now begun shipping TSMC products to customers, and our three foundry partners are delivering at or ahead of planned levels. Recently, we experienced COVID-related supply disruptions, particularly in Malaysia, that are impacting our Q3 outlook and offsetting the current benefits of increased wafer supply. However, with very high vaccination rates at our assembly partners, we are already seeing supply recovery, giving us confidence in a return to growth in Q4. We continue to make progress towards our target model, particularly with expanding gross margin. Structural margin improvements from successful execution of our manufacturing and product portfolio transformations and increased mix towards our key investment areas are enabling us to make faster progress to our target model. GAAP gross margin of 53% was up 300 basis points sequentially. After excluding $0.7 million of stock compensation expense and $0.9 million of other charges, non-GAAP gross margin was 53.8%, up sequentially by 160 basis points. We expect margins to remain at these higher levels in Q3. GAAP operating expenses were $64.0 million, up from $61.9 million in fiscal Q1. GAAP R&D expense was $29.6 million and GAAP SG&A expenses were $34.4 million. Total non-GAAP operating expenses for fiscal Q2 were $57.5 million, or 30% of revenue, an improvement of 30 basis points, and at the lowest level as a percent of sales in recent memory. Non-GAAP adjustments include stock compensation expense of $5.5 million and $1.1 million of other charges. Resulting non-GAAP R&D expense was $28.6 million, and non-GAAP SG&A expense was $28.9 million. The sequential increase was due primarily to higher variable compensation driven by outperformance on the top and bottom lines. We expect non-GAAP operating expenses to be about flat in Q3. GAAP operating income for the quarter increased to $38.6 million, or 19.9% of sales. Non-GAAP operating income increased to $46.6 million, or 24.1% of sales, rising by 11.3% sequentially and significantly outpacing the solid top line growth of 2.9%. Revenue growth, structural gross margin improvement, and good operating discipline are driving meaningful progress toward our target model for profitability. Second quarter GAAP net income was $33.2 million with an effective tax rate of 15.6%. GAAP earnings per diluted share increased by $0.03 over fiscal Q1 to $0.17 in Q2. Non-GAAP net income increased to $38.6 million, or 20% of revenue. The Q1 non-GAAP effective tax rate was 15.5% and is expected to be in the 16% range for the upcoming quarter and throughout fiscal '22. Non-GAAP earnings per diluted share increased 11% to $0.20, exceeding our guidance. Q2 diluted share count was $191.7 million and is expected to increase to $192.1 million in the third quarter. Our balance sheet reflects strong execution and business fundamentals. Cash and equivalents in Q2 were up by $26 million sequentially to end at $256 million, a historic high. We generated $31.4 million in operating cash flow in the quarter. Accounts receivable balances were $99 million, and we ended the quarter with DSO of 46 days, consistent with prior quarters and in our target range. Net inventory ended the quarter at $78 million, a decrease of $4 million and at 77 days versus a target of 100 to 110 days. Our shipments into the channel continue to be strong at 39% of sales for the quarter. Channel inventories continue to hover at historic lows, while POS sell-through was at historic highs. With that, I'll turn the call back to Ravi for more color on the business and our outlook.

Thank you, Paul. Our Q2 performance highlights two key differentiators in the Allegro business model that provide us with a multifaceted growth and profitability engine. Our diversification into high-growth markets and the transformation to achieve structural improvements in gross margins. Let's start with the product transformations paying dividends on both the top and bottom line. Magnetic sensor ICs represented 66% of revenue in Q2. All of our magnetic sensor portfolio has experienced sequential growth with current sensors growing the fastest, up 16% sequentially. As the number one supplier in the market, Allegro continues to be the customer's supplier of choice across end applications. For example, our current sensors are being designed into next-generation applications, including green energy, EVs, and EV charging infrastructure. We have excellent market penetration in xEV inverters, which are a rapidly growing opportunity for us. Today, one out of every two xEV inverter sockets uses an Allegro current sensor. We also achieved record revenue levels with our magnetic position sensors in Q2. Customers value our motion control expertise and position sensing, particularly in ADAS where our high-speed angular position technology for steering systems provides unmatched levels of safety and accuracy. And beyond automotive, our magnetic position sensors are growing in a variety of broad-based applications, thanks to our successful transformation to improve our scale and focus in the broad market. Power ICs have been a key investment area. We have targeted developments that are highly differentiated from the competition and that are complementary to our magnetic sensor business. Revenue was up 30% year-over-year, representing 34% of our revenue in the quarter. We are seeing strong growth in key applications such as 48-volt mild hybrids, where we have the broadest portfolio of ASIL-compliant products, and we continue to leverage our innovative high-voltage technology to expand our power IC content in adjacent applications like power tools, where we see a strong transition to battery operation that aligns with our motor drivers and 100-volt process expertise. Moving to end markets, industrial performance was strong across all categories, from green energy to factory and building automation. We expect to see continued growth across our industrial categories over the coming quarters, but particularly in data center infrastructure. Success in data center applications is a great example of the technical leadership I was speaking about with our power ICs. Over the last two quarters, we have successfully secured long-term agreements with three of the largest customers to support major hydro scale build-out and 5G applications. As a result, we expect to see a step function increase in our industrial revenue, which will allow us to more than double our data center revenue over the course of the contract, further strengthening and diversifying our fiscal year '23. Within automotive, revenue was up 41% year-over-year and end customer demand remains very healthy, even extraordinary. Carmakers have had to become very nimble, adjusting production lines as parts become available, resulting in significant variability in demand and product mix. The accelerating transition to feature-rich vehicles and EVs has not slowed and continues to benefit Allegro and increase our content per vehicle. While production forecasts have been revised to reflect industry-wide supply chain challenges, there continues to be pent-up demand, and from our vantage point, customers still do not have the luxury of building inventory. We continue to see acceleration in electrification and advanced safety feature adoption by OEMs, and we continue to win new strategic high-value sockets. Last quarter, we secured additional current sensor wins in xEV inverters at a major Japanese OEM, displacing a competing solution, thanks to our market-leading accuracy and proven track record in this application. We also launched our latest automotive-grade battery cooling fan driver IC for advanced EV and hybrid battery cooling systems. We're already designed in at a market-leading battery manufacturer using our solution to reduce fan noise and improve cooling performance and miles per charge. It's a great outcome for our customer, their customers, and for the environment, and that's the type of impact we aim for with our innovation. As we look ahead, I see great alignment with our differentiated technology and the value it brings to our customers across all markets, but particularly in xEV, ADAS, Industry 4.0, and data center. We've made outstanding progress towards our long-term financial model as a result of strategic transformation and are well ahead of our initial plan. Our asset-light model allows us to be nimble and supports demand at record levels, while also enabling our gross margin expansion. Our regional diversity, customer diversity, and strong product and end market franchises enable us to deliver strong performance in any macro climate. As Paul mentioned, despite healthy demand in backlog, we expect to see a temporary impact on our revenue outlook for fiscal Q3 from the supplier factory closures we discussed. We expect Q3 revenue to be in the range of $180 million to $185 million. For Q3, we expect automotive and industrial will be down mid-single digits sequentially, while other will be seasonally down, returning to prior revenue levels. We expect non-GAAP gross margin to be roughly flat at the new higher levels. We anticipate non-GAAP earnings per diluted share will be in the range of $0.18. With recovery already underway at our third-party assembly suppliers augmented by new ramps and additional third-party wafer suppliers, we expect a return to sequential growth in Q4, ending fiscal '22 with about 28% revenue growth. When combined with content increases in high-growth applications, significant new design wins ramping, continued gross margin expansion, and accelerated earnings, we believe we are well positioned to deliver low to mid-teens revenue growth and strong gross margins for fiscal '23. With that, I'll turn the call back over to Katie.

Thanks, Ravi. That concludes our prepared remarks, and we'll now open the call for questions. Operator, will you please review the question-and-answer instructions for our participants?

Our first question comes from Quinn Bolton of Needham & Company.

Congratulations on the nice results and strong margin performance. I guess a couple of questions. As you look into fiscal 2023, it looks like you're expecting pretty good revenue growth in low to mid-teens. I'm wondering, as you look across both your foundry and assembly and test network, do you feel like you have the capacity support today in place allocated to you to support that growth? Or are you still working to secure capacity to meet that kind of revenue outlook for fiscal '23?

Thank you, Quinn. As previously discussed, we have had a long-term development project with TSMC. TSMC has been installing wafer processes to our specification. We've just begun the shipments of wafers from TSMC last quarter, and we will continue down a slower ramp until the middle of next year, where we've secured a higher run rate for these processes. This was a long-term strategy for us, not a reaction to the near-term market conditions and has been supported by TSMC. So in short, the projections that we have align with the commitments we have received from our foundry partners.

Understood. And then the second question I had is, obviously, your revenue growth in automotive, I think, is up something like 40%, 41% year-on-year, while auto production may be down mid-teens, given some of the supply shortages we all know about. And I guess it's hard for folks to think that there isn't perhaps some inventory building going on when your revenue is up that much, and actual production is down. I'm just wondering if you can help us bridge the gap to your comment that you don't think inventory is accumulating either in the channel or at customers?

Yes. This year has seen a significant shift towards more feature-rich vehicles. When considering the production that has been lost in the automotive sector, it has mainly affected lower-feature and lower-content vehicles. The products and systems we support, particularly in electric vehicles and advanced driver-assistance systems, are contributing to substantial growth in content for these more advanced vehicles. Although there may be disruptions throughout the supply chain, including our customer bases due to the flexibility required in car production as platforms change based on component availability, we do not view these disruptions as serious. Currently, we believe the industry is facing challenges regarding the fundamental demand for car production.

Next question comes from the line of Gary Mobley of Wells Fargo Securities.

I wanted to inquire about the factors affecting your revenue guidance for the third quarter. I assume the constraints are mainly due to insufficient inventory on your part and for your distributors. My question is whether the lost revenue in the third quarter will be fully compensated in the fourth quarter, along with the expected sequential revenue growth. More importantly, when do you anticipate that you and your distributors will be able to begin replenishing inventory?

Do you want to take it?

Yes. Gary, this is Paul. So the guidance that we have for Q3 really relates to specific instances that occurred at our subcons in Malaysia. As we pointed out, they're already back online and they're ramping. And so we have confidence in the fact that we will return to growth, and that our 28% year-over-year growth compared to fiscal '21 should allow us to achieve the growth targets that we've had in place for much of the year. As it relates to distribution, distribution is a good proxy for the broader market. And we get data from our distribution partners every month. We know what the channel levels of inventory are. They remain at historic lows while the POS or MCell continues to be historic highs. Currently, we don't see that changing anytime soon. So what we ship goes right to the end customer, and we don't foresee that changing anytime in the near future.

Got you. Okay. And so you're running close to 54% gross margin currently, which is pretty good considering that I believe you're somewhat forced to take a lot of wafer supply from maybe a lower or rather higher-cost source. And so my question is under sort of a blue sky scenario where you get things back on track, you source more lower-cost wafers from external UMC, TSMC specifically, is 55% gross margin, which I believe is your historical target. Is that best case or with more wafers flowing from these lower-cost sources? Is there potentially upside to that in the out years?

Thanks, Gary. Yes, we're very pleased with how we've done in gross margin. It's certainly indicative of the structural transformations we've undergone in manufacturing. It's also indicative of the increasing shift towards higher-value products in our mix. We certainly believe we are on target to achieve 55%. And as we've talked about in various forums, when we get to 55%, we're not going to stop. We will continue to seek out ways to drive margin higher than that and push towards the upper 50s in the out years.

Next question comes from the line of John Pitzer of Credit Suisse.

Congratulations on the solid results. I guess, Paul, I apologize if I missed this in your response to Gary's question. But did you quantify the impact for the December quarter revenue? And again, does that all get made up as you go into the March quarter?

So the missed revenue that is impacted by the Malaysian subcon changes or delays is when we return to growth and drive towards 28%, that's a target that we've maintained in line with what our expectations were for fiscal '22. While it's hard to predict exactly what's going to take place in Q4, we do expect a return to growth. As I mentioned, these factories are already back in full production, and we expect to catch up in Q3 and Q4.

Yes. And John, just as an additional clarification in fiscal Q3, if it weren't for the impact, we would have been on target on our growth trajectory. So the impact is real, but it's onetime. We already see the factories running. We already see the vaccination rates at extraordinarily high levels. We're not concerned at this point about this part of the supply chain. But as you know, as we go on, I think the second part of your question was, do we augment our next quarter with what has happened this quarter. We continue, as every other semiconductor manufacturer, to be challenged with limitations across the entire supply chain. At this point, the supply chain is unable to make up any misses. We factored that into our expectations for the year, and we're expecting to be in that 28% year-over-year growth rate.

Next question comes from the line of Alessandra Vecchi of William Blair.

Congratulations on the strong results. Just to circle back on inventory levels, you touched based on customer and channel inventory. But can you maybe walk us through, given the constraints, how we should be thinking about your on-balance sheet inventories and sort of what levels you're comfortable with and what the long-term target there should look like once we get back to a more normalized date?

Sure. Alex, this is Paul. As we pointed out, channel inventories remain at historic lows, and this question was also raised earlier today. In the near term, we don't foresee that changing given the supply situation. But there is a lot of activity in that channel. As it relates to our own inventory, we're at 78 days, $78 million. We would like to be considerably higher than that. I alluded to a 100 to 110-day target. At the moment, we don't foresee that getting to that point in the near term. But because essentially, what we get for supply will address the strong demand we have. However, over the longer term, we would expect to return to levels in that range.

Okay. That's helpful. And then just on the data center growth and the wins there, can you go a little bit more in-depth on maybe what products you are gaining traction there? Is this really some of the 3-phase fan announcements? Or does it extend beyond that product portfolio-wise?

Thank you, Alex. Yes, it is exactly as you expect. We have been discussing our 3-phase embedded motion control story over the last few quarters, highlighting the traction we are gaining and the real contracts we are now pursuing related to those products. This specifically pertains to the motion control area.

Great. And just as one extension of that, if I can. I think earlier, Paul, you said that design wins were running up 50% on a rolling 4-quarter basis. Can you tell us what percentage of sort of that increased or accelerated design win momentum is coming from xEV, ADAS, and maybe some of the industrial newer platforms?

We haven't disclosed that publicly, Alex, at this point.

Next question comes from the line of Srini Pajjuri of SMBC Nikko.

A couple of questions. First on the autos in the quarter. Ravi, it's down 6%, I think, which is much better than production, as you pointed out. But at the same time, I have a difficult time believing that your customers are lowering their orders given all the disruptions that we're seeing. So I'm just curious as to is this a supply issue? Is that why auto declined sequentially?

Yes. Our current challenge is aligning available supply with actual demand. We are focusing our supply on areas where customers need products the most. In the auto sector, for instance, there has been a significant shift regarding which platforms are being phased out and which ones will be prioritized. We have been agile in reallocating our materials to align with true production needs. Additionally, we have also seized opportunities to meet some of the seasonal growth demands from other parts of our business. It's important for us to avoid building excess inventory in our customer chain at the cost of addressing key demand. Generally speaking, demand in all segments and markets surpasses supply.

Makes sense. And then my next question is on gross margins and pricing, etc. Obviously, very strong performance here. And a couple of things, on the cost side, as it gets more wafers from TSMC and UMC, I know you said they are going to be lower cost. But also at the same time, recently, there has been some speculation that the foundries are raising their wafer prices for next year. So just curious if that's going to have any potential impact as we think through the next year's gross margins? And then a broader question, I guess, Ravi, on the pricing. Some of your peers are talking about potential cost mitigation actions by raising prices selectively and then some folks are more broadly. So I'm just curious, as you look out to your customer base and your product mix, etc., how you think about potential mitigation actions given that some of the design wins that you have may be longer-term in nature, to what extent do you have the ability to pass through some of the incremental costs that you might be seeing?

Srini, this is Paul. I'll start the response to this. I mean, we're in an inflationary environment. Everyone is aware of that. We are seeing input costs rising. We've seen that throughout the year. What we've been able to do is to offset that with price increases where it makes sense strategically. We are well aware of what's coming, and we balanced all of those puts and takes, and we remain very confident in our 55% target for gross margin.

And Paul, maybe if you could clarify for the quarter, you said a mix helped the gross margins. When you talk about the mix, are you referring to the mix within the segments? Or is it just the auto versus industrial because as we look through the next few quarters, I suspect auto will probably rebound at some point, will that have any impact on gross margins as auto rebounds?

Sure. The strength in gross margin we've seen is along the lines of what we've been talking about for a long time on the structural transformations we've seen in our own supply chain and in manufacturing. Certainly, we've also talked about mix within auto, and that was a benefit. The auto and industrial mix also had some benefits as well. But we're well on track to achieving our targets that we've talked about. On gross margin, we made tremendous progress in the past 12 months, and we're excited to continue to drive improvements there.

Next question comes from the line of Blayne Curtis of Barclays.

I want to revisit a couple of previous questions. For the September quarter, I recall you indicated that auto would be flat, but it ended up slightly down. I was wondering if supply issues contributed to that decline, or if it was related to customer behavior.

Yes. The customer platform strategy has been affected by sporadic line downs due to component availability. As factories adjust their production levels across different platforms, we are focusing on meeting the genuine demand in other areas. Currently, we do not have the capacity to manufacture for inventory replenishment. The demand in the market across all segments is extremely strong, and our top priority is to keep production lines operational in all market segments.

Got you. And then just a follow-up on the issues in Malaysia, is that impacting any particular end market more than others? I mean you're, I guess, guiding them all down in December, but I was just curious if it's impacting one versus the other.

We do have quite a bit of assembly activity done in Malaysia. So it is quite broad in terms of where it is affecting. Half of our assembly is done in the Philippines, so that particular piece of the business is not affected, but Malaysia will affect our higher pin count packages, some of the more commercially available packages that we service, which basically go across all market segments for us.

Next question comes from the line of Vijay Rakesh of Mizuho.

Ravi and Paul, great quarter, good execution here. I'm curious about the ramp-up of DSM as part of your long-term strategy. As we look ahead to next year, do you have any thoughts on the mix between Polar and TSMC, UMC, and others?

So Vijay, this is Paul. As we exit the year, we've been fortunate to have Polar provide us a strategic source of supply. TSMC will continue to grow throughout the year. We haven't publicly said what percentage TSMC would be, say, a year from now, but it will continue to grow and basically be additive to the supply that gives us confidence in our fiscal '23 outlook.

Got it. It seems that in the automotive sector, you had a strong quarter with growth of 30% to 40% while the light vehicle production was down by 20%. There are some concerns about inventory buildup in the supply chain, particularly with Texas Instruments. However, I believe your strength lies in your leadership, and many of your current sensing and magnetic sensors for electric vehicle advanced driver assistance systems are sole-sourced. With that in mind, I'm curious about how much of your magnetic sensing for electric vehicle ADAS is proprietary or sole-sourced. This approach may limit the chances of double ordering or excess orders since you have a clear understanding of customer requirements.

Thank you, Vijay. In terms of our products, xEV and ADAS products are typically sole-sourced. They're typically very specific to applications and designs, and when our customers utilize them, they have to do quite a bit of work, whether it's mechanical or software to interface with our products. So they're not easily replaceable or interchangeable. So to your question, they are predominantly sole-source, thus providing us visibility in the market. It helps us engage very closely. We do understand better than most what the customers' inventory levels are and what their usage rates are, etc.

Next question comes from Mark Lipacis of Jefferies.

Maybe a question for both Ravi and Paul. Do you think that the supply chain challenges experienced by the industry over the past year will result in any structural changes in how you, your customers, or suppliers conduct business? Or do you believe that once things stabilize, behaviors will return to the way they were before, and this situation will be seen merely as a temporary issue? I could imagine that your customers might choose to increase their own inventories to prepare for future disruptions. You mentioned long-term supply agreements, and I'm curious if they are related to the challenges faced in the supply chain, or if we are seeing primarily longer order lead times or more orders on your books. Could you also share your thoughts on any potential structural changes in how you operate? Are you considering longer-term supply agreements with your suppliers?

Thanks, Mark. In general, we always focus on long-term supply agreements with especially our foundry partners in order to secure capacity given that we have such a heavy automotive business. We believe that we have an obligation to ensure that the supply flow is adequate. The problem, as you know, is that the transition occurring to higher value-added vehicles and higher electronic content vehicles is accelerating far beyond what was anticipated. From a supply chain perspective, customers would like to start building inventory for sure. However, the availability at foundries and assembly houses is a key consideration. Everyone is being cautious about overinvesting to feed a bubble. This will result in a disciplined ramp in supply, limiting the ability of customers to build inventory quickly. So we don't see that in our own profile. Our supply availability that we've negotiated is being consumed by real demand. For sure, at some point, there will be more discipline in the entire chain, and customers will have a little more cushion in their operations.

Great. And a follow-up, if I may. Regarding the recent issues in Malaysia, it appears that you are in a better position. Are you able to respond to the increased demand potentially better than some of your competitors due to the way you have been transitioning your supply? Do you think anything has changed over the last year in terms of your competitive position or market share compared to your traditional competitors?

The market share data is too early to tell. But for sure, we've been extraordinarily focused on the resilience of our operating model. I think over the last few quarters, including at the point we came out of the IPO, we spoke about having three foundries that are capable of running similar wafer process technologies that give us a bit of nimbleness and the ability to expand capacity wherever possible. This resilience of the model has allowed us to take limited advantage of the opportunities that have presented themselves. When we look at the back end, our realignment into a single facility in the Philippines has helped us with efficiencies. It's helped us with being nimble. We've been able to move equipment around within a single facility to take advantage of mix changes, etc. This has also helped us from responding to the marketplace. Customers value supply. At this point, their priority is technology. We are supremely confident in our technology differentiation, and wherever we can support them in supply, they have come to us. It's a complex world right now in terms of how you manage this whole supply-demand imbalance along with the growth trajectory of the company.

No further questions at this time, and I would like to turn the call back to Katie Blye for closing remarks.

Okay. Thank you, Jake. That does conclude today's conference call. Thank you, everyone, for joining us today and for your interest in Allegro.

Ladies and gentlemen, this concludes today's conference call. Thank you for participating. You may now disconnect. Have a great day.