Conference Transcript - MCHP 2026-06-09

Vijay Rakesh, Analyst — Mizuho

Good afternoon, everybody. I'm Vijay Rakesh, Senior Semizan Autos Analyst for Mizuho. And joining me is CEO Richard Simonsik from Microchip and Sajid Daudi, Heads Up Investor Relations for Microchip. Thank you for joining us at the Mizuho Tech Conference, gentlemen. Really appreciate it. Just to give a quick background, Microchip obviously makes a tech that works in the background. It's intelligent connectivity, timing management, control, synchronizing, basically managing an orchestra of industrial, comm, space, networks, everything together. It's my pleasure to welcome back Microchip CEO Richard Simonshik. Richard, we had you last year. Yes, we did. Let's make this an annual event. So, and Sajid, Microchip is obviously seeing a very strong rebound. Margins are recovering nicely. Revenues are still on a rebound. With that, again, my pleasure welcoming you guys to the tech conference here. Thank you. Maybe I'll start off with a couple of quick, you know, big picture questions on what you guys are seeing. If you can go through some of your end markets, obviously, you had a, you know, 24 was, 23, 24 was a big year. and then 24 it started to kind of you had some of the inventory normalizing issues going on across and then 24 25 we started to see that inventory normalization happen 26 we are starting to see some sort of recovery but maybe you can set the level set what's happening in the different markets from industrial aerospace defense comms okay consumer etc and go from there all right so So before I begin, I wish to remind you that during this presentation, we may be making some projections and other forward-looking statements.

Speaker 2

These are predictions, and the actual results may vary materially. I refer you to our filings with the SAC regarding some important risk factors about the company. Okay, Richard, I thought I was the only one supposed to read from him. I always read that just to make sure I get it right. No, so, you know, markets that are doing well for us right now are within, obviously, data center, you know, within data center, you know, we have Ethernet connectivity, USB connectivity, we have atomic clocks that are growing in growth there, our power controllers are growing within data centers, you know, And not to mention more specifically our CXL, PCIe switches and read timers are starting to grow within that marketplace. And then within the A&D complex, microchip is the largest supplier of radiation and rad tolerant types of devices out there to that complex. And with the missile replenishment and defense replenishment, we've been asked to scale up almost 4x what we're doing in terms of products, in terms to replenish some of the arsenals. And so we're very involved in trying to ramp up manufacturing on all of our A&D products. And not to mention aerospace. In a typical Boeing or Airbus, we have over $100,000 of content, if not more. And that's also ramping up pretty considerably for us.

Vijay Rakesh, Analyst — Mizuho

Got it. Let's start off with the most interesting segment, I guess, which is aerospace defense. I think as you look at the space market, you have a big content in some of the low-energy satellites, radiation-hardened devices.

Speaker 2

You obviously are one of the biggest suppliers in space, I guess. maybe you can talk to what you're seeing there how's the backlog, how's the pipeline, how's that growth there's a lot of focus on that space given a massive pipeline of satellite launches that are probably as people look out, so maybe you can talk to what as you start to build out some of the LEO satellites and longer lasting satellites those are all going to be somewhat radiation hardened product You know, if you're talking really the low earth, you know, cheaper satellites that you may have an expected lifetime of two to three years, if that, then those are really COTS or off the shelf type products. But if you're looking for a high reliability that will last a little bit longer, then you're going to be looking at radiation tolerant or radiation hardened products. data centers, once they start doing those, will be radiation hardened. Sajid just let me know that Artemis 3 was just announced today, and that's literally thousands of our products are on Artemis on those launches.

Vijay Rakesh, Analyst — Mizuho

Any way to size the content? Is it 10,000 to 20,000?

Speaker 2

Yeah, we don't typically break out that content to that degree.

Vijay Rakesh, Analyst — Mizuho

Typically, these are radar devices which carry a high margin and fairly sticky, I guess.

Speaker 2

Yeah, you know, a typical satellite, you know, it may have 30 plus products from us, right, margin, you know, like when, you know, an Artemis rocket, you know, has thousands of our products on it, literally.

Vijay Rakesh, Analyst — Mizuho

And in the past, I think, last year you guys sized the aerospace defense industry as a 750 billion dollar industry by 2035. Where do you think it is today? What is the growth in that market? Do you expect to grow in line or faster than that market, I guess?

Speaker 2

I think faster right now because of the replenishment of stockpiles.

Vijay Rakesh, Analyst — Mizuho

Yeah.

Speaker 2

Right. That is, you know, whether it's in missile defense or missiles themselves uh or drone defense systems you know those are microchip has a lot of content in those particular product areas yeah uh and so just because of replenishment alone over the next uh three to five years yeah we're going to see pretty good growth for at least the next five years yeah i mean i think among the semiconductor suppliers you are globally the biggest aerospace, I mean, defense aerospace supplier, I mean, 16, 18 percent of revenues from aerospace, I don't think anybody has that high of a proportion.

Vijay Rakesh, Analyst — Mizuho

When do you start to see that replenishment cycle start to pick up? Because it's been fairly flat. I mean, granted, it's lumpy. When do you actually see?

Speaker 2

We're actually starting to see those orders roll in now. Right. And, you know, so when you it actually is a fairly long lead time for some of these radiation tolerant or radiation hardened products, the typical lead time to make their cycle time to make them or anywhere from 12 to 24 months. Right. So, you know, that will start to layer in over next fiscal year.

Vijay Rakesh, Analyst — Mizuho

Got it. So that's really the you're seeing the orders now, but the revenue ramp might be more open.

Speaker 2

And yeah, you don't start to ship those for, like I said, 12 to 24 months.

Vijay Rakesh, Analyst — Mizuho

And that's got to be pretty margin accretive too, right? Given, you know, you're already seeing a good margin rebounding. We'll talk about that. But they should layer on top of that margin.

Speaker 2

Those are typically, because of the amount of work that goes into them, the amount of effort. And it's actually quite a bit of testing and the scrap associated with it too, that they typically command much higher margins.

Vijay Rakesh, Analyst — Mizuho

Right. We used to work at an analog company and we used to do RADHUD and things didn't change for like 30 years. So we used to make like 500 percent margins on some of this stuff.

Speaker 2

The amount of difficulty involved in it is quite high. It's not that simple.

Vijay Rakesh, Analyst — Mizuho

Yeah, you don't want satellites falling out of the sky. OK, great. I want to move to the data center side. You know, obviously, AI data center has been a big focus among analog guys. You guys, you know, it's about 300 million last year. This year you talked about it going to 500 million, almost 65, 70 percent year-on-year growth. Maybe you can talk to what are the key buckets you supply on the AI data center side.

Speaker 2

So there's actually, I think when we first announced that, there's $303 million of just dedicated PCI switches, retimers, and CXL devices. And then there's another $484 million of the timers and DSPs and controllers for power supplies. For the rack and Ethernet and USB connectivity in the rack. So the total last year was almost $800 million. And what we tried to take out of that was just the PCIe switches and retimers and those in CXL devices. That was $303 million last year and it's expected to exceed $500 million this year coming up.

Vijay Rakesh, Analyst — Mizuho

How about the total by the $800 million? What does that do?

Speaker 2

That also continues to grow, but not as fast a rate as the PCI switches and CXL devices.

Speaker 3

So, PJ, we break down the data center and compute at 18%, and so then we kind of provided a pure play split, and then there's a compute portion still in that 16%, but there's the insulated products that kind of come with the data center solutions. So, the pure play is the PCIe connectivity switches, retimers, there's the memory controllers, and then the storage part. So, those are the three kind of pure play.

Vijay Rakesh, Analyst — Mizuho

So 800 million last year in total, I mean, this year, you know, PCI is obviously going a lot faster, but expect this to be 20% of revenue, something like that. I mean, you guys are doing like five.

Speaker 2

You know, we're not projecting that, but it's going to continue to grow.

Vijay Rakesh, Analyst — Mizuho

Got it. On the retimer PCI side, obviously, you know, you have competition there. You are bringing out PCI Gen 6. I think you guys have talked about six to eight CSP and ODM wins, right? Maybe you can talk about the company landscape, you know, the Broadcom, Sestralabs. How are you competing with them? Are you getting traction on the rack, in scale-up, in copper, or is it somewhere else?

Speaker 2

So we're up to about eight major wins on PCI-E Gen 6 switch. And we're at our first win on our retimer. uh uh and and we've just launched these products uh so we still have lots of design activity that's taking place yeah uh and and we're also seeing some uh newer wins on some of our older generation products too our our gen 4 products within uh robotics uh industrial 4.0 and automotive and we're also seeing our gen 5 products uh you know there's still quite a bit of business in that area, too, where those are being picked up in some new designs, too.

Vijay Rakesh, Analyst — Mizuho

So in terms of data center where you're seeing the PCI retimer wins, is the architecture actually specified by the CSP and the ODM just runs with it, or are both wins separate? Like, does the CSP specify the PCI Gen 6 separately for their scale-up and the ODM?

Speaker 2

I think I've seen a little bit of both. It doesn't. There's no particular side to that.

Vijay Rakesh, Analyst — Mizuho

Got it. Okay. And how do you see that? I mean, do you guys think you start to gain share versus some of the incumbent PCIe retimer suppliers?

Speaker 2

I mean, Microchip, we were the predominant supplier on Gen 3, Gen 4, Gen 5. We missed the window. We rectified that with what we did with coming out with the three nanometer device on gen six and which actually gives us the ability to stay in the forefront with gen six and then gen seven will follow very quickly because we're already on three nanometer node so it allows us to to catch up quickly and then move from there but the the tool suite the chip link tool suite is still considered one of the best in the industry We continue to make that chip link tool suite even better for our memory CXL devices and for our PCIe devices. So I think customers are happy to see us back there from a support perspective and knowing that we've already got Gen 7 well down that path to get it released.

Vijay Rakesh, Analyst — Mizuho

And just to take a step back, when you look at the space, A&E, Aerospace Defense, and the data center PCI retimer, do these run through your own fab? Because you have a substantial foundry component as well. Do these run through the fab? The reason I ask is these are obviously going a lot faster. They are margin accretive, but they also drive better utilization for you. And that should also help on the margin line. So just wondering how...

Speaker 2

So the aerospace and defense, majority of the discreet, power, those devices all run through our own fabs. So we run those out of multiple wafer fabs that we have. And then our FPGA, RAD hard, RAD tolerant products are done at a foundry partner on US soil. And that's on a 12-nanometer FinFET technology. For the RADHARD devices. For the RADHARD devices. And then we're also doing our high-performance space compute, the Octal RISC-5 64-bit device for JPL and NASA. That is also on that 12-nanometer FinFET technology on U.S. soil.

Vijay Rakesh, Analyst — Mizuho

Got it. So if I look at the gross margin trajectory, where you guys are already back to like 62. You talk about 300 bps of underutilization. Once you get to that, you get to the 65%, which is kind of close to your long-term target or what you were close to that in the last three years back, I guess. But that is just part of the story, right? I mean, that's just utilization.

Speaker 2

When you layer in the margin, in the higher margin contribution from some of these faster growing markets, wouldn't that argue for a much for a higher margin as you start to fill the fabs with these products so yes we will have a richer mix but we're not trying to to really target the overall company to that that higher margin device we don't want to fall into that margin trap of leaving growth on the table, right? And so I think that 65% really is used to send a message to a lot of our internal BU to not get stuck that it has to be at this 70 or 75 or 80 so that we continue to grow.

Vijay Rakesh, Analyst — Mizuho

Yeah. But, you know, in aerospace defense, you guys lead by a mile, so you don't have to be price competitive.

Speaker 2

Well, you know, but you still have to be reasonable, right? Not everything runs at, you know, I think everybody thinks just right away that it's, you know, outrageous margins and some of it is not, right? It has to be, you know, competitive or reasonable. And because of the amount of testing and hardening and just the amount that you throw away to get to those few that work, you know, some of them are great, some of them not so great.

Vijay Rakesh, Analyst — Mizuho

Yeah.

Speaker 3

And I would just add to Richard's point is that think of it as a through cycle margin, Right. So, you know, again, we had a very broad band last cycle. Obviously, we didn't manage that effectively. And that's really where the thinking is that there'll be moments in time that might be higher and then, you know, lower, but just kind of narrowing that bandwidth. And then over time, I think you can potentially address it. But at this point, I'm going to say this to the target levels. Yeah.

Vijay Rakesh, Analyst — Mizuho

I want to hit the, I mean, the faster growing market. So we hit AI data center, I guess. We hit the aerospace defense, right? Robotics. I think this is another market where you seem to, where there seems to be a lot more investor attention as a longer term roadmap, either from factory automation industrial 4.0 or humanoid robots and quadrupeds and all that other stuff. Maybe you can talk to what you are seeing on the robotics side, what your content is, what's your exposure to the big humanoid robot.

Speaker 2

So our exposure to the big humanoid robots, and you've probably seen it in some of our reference design partners, whether it's Qualcomm or whether it's NVIDIA or AMD. Within the robotics area, you'll find some of our FPGAs for sensor fusion. You'll also find our PCIe Gen 4 switches as well. So we're the only ones that are producing PCIe Gen 4 switches for industrial applications and automotive applications. And so when you're looking at most of the robots that are being built out there, they need PCIe switching in order to deal with the amounts of data that's traversing through that robot. And it's the same thing with our Ethernet products as well. So probably the two biggest product lines that we see growth in in robotics are PCIe switches, Gen 4, and Ethernet. And then what we're also seeing, too, is for the longest time, even within our own factories, we're using more and more robots because the AI-enabled software finally has met up with the hardware to give us a capability that actually gives us a very good ROI. So we're using material robots in our factories. We're looking at robotic arms at certain stations to take it from robots and then load it in equipment. And so these are older factories that need to be automated And it never really made financial sense. And for the first time in a long time we were doing the analysis, it actually makes sense. So I imagine if it's making sense for our factories to do more automation on older types of equipment, that it's probably going to start to make sense for many other companies as well.

Vijay Rakesh, Analyst — Mizuho

And so when you look at the PCIe Gen 4 switches and sensors, and obviously there's probably a lot of microcontrollers in there too for all the actuators and stuff. What is the dollar content you're looking at on the humanoid robot side? And on the factory automation side, you know, what's the opportunity there? How do you size that whole market?

Speaker 2

We haven't published a number on that in terms of robots, because, you know, most of the robots that were designed into there, they're claiming that there won't be real production volumes of those until 29 or 30. Right. And so nothing. You haven't spoken to Elon Musk yet. Yeah. I'm just kidding. I'm just joking. I think they're still out at that time too.

Speaker 3

And I sat with a team that just kind of trying to get the same answer, right? But the content opportunity here and stuff. And there's just a host of numbers that are out there. But really, I think what we identified, ended up identifying is kind of six critical layers where there'll be just a host of our products. So you mentioned actuation, you know, Sensing is another area. Connectivity, Rich mentioned on there. Compute, which is part of that, you know, FPGA style. Functional safety is another area where we have a lot of post-quantum crypto type of products. So those six or seven layers of robotic play is where we think our opportunity lies. And longer term, we'll see where it all kind of squares off.

Vijay Rakesh, Analyst — Mizuho

I mean, obviously, you are working with some of the leading U.S. robotics guys, too, human robotics guys, too. But what's your exposure between, you know, like China is making a lot of noise with Unitree and a whole bunch of other guys there, you know, running up the robotics side. Do you guys have a product?

Speaker 2

So our products that are mainly within those robots within that marketplace are PCI switches and our Ethernet devices. Right. Not so much on a microcontrollers or power. That's very much local content on that. But PCI switches and Ethernet products.

Vijay Rakesh, Analyst — Mizuho

Got it. So if you were to look at that bucket of your faster growing, you know, those three segments, would that come? Obviously, you already sized the data center side about, you know, 800 million last year, you know, put some nominal growth. You can see where that should be. You know, you obviously have the aerospace defense side, which is a pretty big chunk, 80% that can ramp on that 18-month leave time. And you have robotics. All of these are creative margins. How do you size those faster growth market as a bucket within, you know, within your outlook as you look at 27, 28?

Speaker 2

The problem with, especially with robotics, we can put numbers around A&D, we can put numbers around, but with robotics, we have a team of people that's working on it. We collected all of the robots that we're designed into and what devices and put together a plan in terms of when they may go to production. Yeah. But it's so new is when does that actually happen? Got it. So we've not committed to anything to the street or investors yet because we have to start to see some of those roll out. You know, even, you know, some of our companies that, you know, have some of the larger installations of our chips in there, you know, their their comments are that they won't start to do production rollouts until the twenty nine time frame. And even then, you're having to sign up or pre-invest in there to be on the list to get an initial robot to actually try that within your factories. So I think we're still a little bit premature in terms of trying to size it.

Vijay Rakesh, Analyst — Mizuho

I mean, I want to quickly hit the FPGA side. I mean, you have the Polar Fire FPGA, and it's been, you know, having some good traction, aerospace defense. as you mentioned, robotics and a lot of other markets, you have a peer out there, which is private. And as you had mentioned before, they have gone through a significant atrophy because people were not invested in Altera. Is there any part of that that makes sense or is that a market that's just coming your way?

Speaker 2

I think that's a market that's just coming our way. We're We're finding a lot of customers that, you know, they're choosing AMD and they're choosing microchip.

Vijay Rakesh, Analyst — Mizuho

Right. Even on the quantum side, you need FPGA switches, right? Right.

Speaker 2

And so, yeah, so they're, you know, we're finding a lot of customers when they want really high security, PQS. And, you know, that's when we come into play. when they're looking at needing extremely low power nodes or medical or, you know, that's when we come into play. So we're finding a lot of customers are, you know, choosing, you know, AMD on the super high end and then, you know, language for that next mid-tier, low power type of applications.

Vijay Rakesh, Analyst — Mizuho

I want to quickly hit some of the macro trends that you're seeing. Obviously, a lot of your peers have been out there, raised pricing a couple of times already, right? I mean, the price increase in months, there's one in April, there's one supposedly coming up mid-year here. Your input costs have gone up. You have been fairly disciplined. You kind of mended your fences. You had burned some bridges, I guess, in the last. But now you kind of come back, have kind of established some good relationships again. But you have to transfer some of those, pass on some of those costs, right? The input costs. How are you seeing, are you assuming a price increase here? How should we look at that?

Speaker 2

You know, so it's really interesting. You know, we spent a lot of time installing first principles in terms of how to work with customers and make sure we mend all these fences. And then we threw out the old playbook that we had on raising prices from COVID. And it seems that, you know, ironically, all of our competitors picked up a playbook that we threw away and have reinstituted it. And I find fascinating. And so knowing that we failed with that playbook, we threw it out and we're doing it differently here. So we're looking at where are the price increases, where are the cost increases. And then we're, you know, working with customers to adjust each of the products individually. And so there's a more truer measure in terms of what that cost impact is to each customer. And customers have responded favorably to that. Okay, you know, you've held off for a long time. Most of our competitors are on a third round of price increases. And we're just entering a first. And so I think a lot of customers have responded extremely favorable to that. And we're seeing a great deal of design win activity and hoping to regain any possible share that we may have lost on some of the applications that we had before. I just came back from South Korea and Singapore going through this with a number of customers, and they seem to really like the approach that we're doing. No one likes price increases, but they like that we're doing it with transparency and candor and not just slapping 10% on them and saying thank you very much.

Speaker 3

And just for clarity, so we did put out a press release regarding this topic earlier last week, and really our guidance for June is unaffected by it. You know, this would be a September type of September quarter type of event, so really December quarter where we'll be fully reflected in that.

Vijay Rakesh, Analyst — Mizuho

I want to ask one quick question and then maybe open it up for the audience. When you look at inventories, maybe you can help characterize what you're seeing in inventories at the customer level on industrial, automotive, it's small for you, but how you're seeing inventory levels there, what you're seeing on the DIST side, where are inventory levels now versus last year, and how are lead times looking this time versus last year? Just three.

Speaker 2

Okay, so, you know, during COVID, a lot of industrial customers, and those fit in that small to medium-sized customers, when they were able to get product, they wound up buying as much as two to three years worth of product, right? So, when you think about it, you know, someone that may buy 100,000 chips for a particular injection mold equipment, they bought 300,000, right? And they were behind all of the large companies to some degree. And when they finally got their chance, they said, you know what? We can't chance it. Let's just buy a bunch. And what we found, and talking to one of our largest distributors, I just did a review with them, that middle ground of 10,000 to 100,000 people have finally started coming back to buy, which means that they finally depleted inventory. uh uh you did in and it sort of in a way it makes sense because december was three years uh since uh the covid peak right and uh and so it's taken about three years to flush out that inventory our customer accounts are coming back at an extremely fast rate like thousands uh you know literally coming back and our distributors are saying the same things to us uh and where

Speaker 3

they had written off material that was written off well over a year or two years ago uh they're starting to see that come down at a very rapid rate too and we're seeing you know our written off material starting to to start to sell through as well now but lead times of the kind of bouncing around the bottom four to eight weeks and then now it's some of the tightness that we're seeing and starting to inch up here but still we don't think we think distributions largely cleared out at 26 days and in fact maybe running a little lean on average distribution days tends to be high 20s low 30s so um you know and you know you started seeing this replenishment activity starting to layer in so um yeah so as at least time expand i think that'll be kind of the next

Speaker 2

thing but it's it's moving up as things are i think you know we keep using that word replenishment it's really not replenishment it's run rate yeah you know we're starting to see customers just order to run rate. I don't think there's much replenishment. It's just that they finally ran out of inventory. They're not racing to put more inventory in place. They're just placing orders to get back to run rate.

Vijay Rakesh, Analyst — Mizuho

The point of sales is picking up nicely.

Speaker 2

The point of sales is picking up. Customers are coming back. That's what we're seeing.

Vijay Rakesh, Analyst — Mizuho

Okay, maybe we can take some questions from the audience. Jordan, go for it.

Speaker 2

There's a lot of excitement that the underlying power architecture of the data centers will change over the next few years um given your dna in analog power management do you have an opportunity there yeah so uh you know we are probably one of the predominant controllers that is used for ac to dc conversion and dc to dc so we're seeing an awful lot of uh activity and growth in our our dspic microcontrollers right our dual core DSPs. That's growing extremely well. And we just launched some new for solid state transformers based on silicon carbide to help build out solid state transformers within data centers. And that's something that we've been working on for quite some time with several universities within the US. So technology has been there for a long time. It's been in development. But, you know, to try to get municipalities to really launch solid-state transformers, they've not really been as motivated. But we think that data centers will truly be motivated to move to solid-state transformers. Lots of benefits. It takes a long time for people to make a move in power, right? It takes years, right? And so there's going to be a lot of testing. There's a lot of review on it because the last thing you want to do is take down a data center, right? Because your transformer blew up or power supply chain. So when it comes to power, the movement is very slow and conservative. Well, 800 volts is here, right? It's trickled down from automotive to some degree, right? So that was the main powertrain for most of the cars out there was 400 volts and then it was 800 volts. So a lot of the technology that was developed for the inverters for cars is what's going into data centers, right? And there's definite real merit there. And that's not, you know, it's not as new as like a solid state transformer, but that type of power conversion is understood and can be done.

Speaker 1

Hi, so maybe give us a bit of an update on what you're seeing in China, how that's changed, you know, since maybe the start of the year, if at all, and anything on your end, in terms of go to market, you know, we hear a lot about that market. But I'm always curious from your product and market standpoint, if there's anything new or exciting there. And then M&A, it seems like with all this new opportunity for some of this lagging edge mature technology or semi-content, there's a lot of opportunities. I mean, Vijay's talked a lot about them. you seem to have a lot of this already in your portfolio and steve seems pretty content to you know delever the balance sheet and you know pay the dividends so doesn't seem like mna you know is something that you would be thinking about but i guess never say never some of your peers have reacted a little bit more aggressively and i'm just curious um since you've been acquisitive in the past if would there be some technology that you know would excite yeah that was a good question is, you know, we've been still acquisitive, by the way.

Speaker 2

You know, we bought a driver product line, TF Semiconductor from Diodes. We've done some smaller acquisitions, and we typically do probably one every two or three months. Nothing, though, on a very large scale. So a lot of them have been tucking pieces of technology that roll into microchip and where We're still looking at some today. But in terms of large transformative acquisitions, our preference would be to pay down debt for a period of time and then continue with these smaller ones for quite some time. We've got large high growth drivers in front of us between PCIe Gen 6, read timers, Ethernet, you know, what's happening in post-quantum security with RFPGAs, you know, I could go down a whole list of where we're number one and we're growing. And so when you've got a lot of, you know, intrinsic growth built into the organization now, you know, doing a very large acquisition just is defocusing. And so we've definitely chosen to do these smaller ones that kind of add to our total system solution. It seems more prudent. So in China, many years ago, probably, I'm going to say almost six, seven years ago, we started focusing on just what was the export out products. And so we try not to compete with the local brands locally. That just doesn't seem to work. So a lot of what we focus on is what is not made in China and what we can sell there, like PCIe switches, Ethernet, export products being our microcontroller products, or, you know, where we have people that have designed in and are building in trade zones within China. That's where our focus has been.

Vijay Rakesh, Analyst — Mizuho

Great. Thank you, everybody. i think the top of the hour so okay thank you richard and for coming always a pleasure thank you for