Thank you for standing by. My name is Jonathan, and I will be your conference operator today. Welcome to Silicon Labs Fourth Quarter Fiscal 2023 Earnings Call. As a reminder, today's program is recorded. And now I'd like to introduce your host for today's program, Giovanni Pacelli, Silicon Labs Senior Director of Finance. Giovanni, please go ahead.

Thank you, Jonathan, and good morning, everyone. We are recording this meeting, and a replay will be available for 4 weeks on the Investor Relations section of our website at investor.silabs.com. Our earnings press release and the accompanying financial tables are also available on our website. Joining me today are Silicon Labs, President and Chief Executive Officer, Matt Johnson; and Interim Chief Financial Officer, Mark Mauldin. They will discuss our fourth quarter financial performance and review recent business activities. We will take questions after our prepared comments, and our remarks today will include forward-looking statements that are subject to risks and uncertainties. We base these forward-looking statements on information available to us as of the date of this conference call and assume no obligation to update these statements in the future. We encourage you to review our SEC filings, which identify important risk factors that could cause actual results to differ materially from those contained in any forward-looking statements. Additionally, during our call today, we will refer to certain non-GAAP financial information. A reconciliation of our GAAP to non-GAAP results is included in the company's earnings press release and on the Investor Relations section of the Silicon Labs website. I'll now turn the call over to Silicon Lab's Chief Executive Officer, Matt Johnson. Matt?

Thanks, Giovanni, and good morning, everyone. The Silicon Labs team delivered fourth quarter results above the midpoint of our guidance. During the quarter, we saw reductions in both channel and end customer inventory. We expect end customer inventory destocking to continue in Q1. On a unit basis, Disty inventory is now at lower levels than during the supply crisis. We believe Q4 of 2023 represents our low point of revenue. We expect to return to sequential growth starting in Q1 as our customers' inventory start to normalize, and we begin to see further benefits of design wins ramping production. We've also seen slight improvements in our weekly bookings activity, but the management ability continues to be low. We are encouraged by another year of outstanding design win achievement despite the challenges of the current operating environment. The projected lifetime revenue of our 2023 design wins was up low double digits year-over-year, in line with the ambitious targets we set. These design wins span a broad range of technologies, applications and customers, and we are expecting strong growth in earnings power as market dynamics improve. Before we turn the call over to Mark, I would like to take a moment to express our gratitude to John Hollister, who has stepped down after 20 years of dedicated service to Silicon Labs, 10 of those years as CFO. John's financial stewardship has been instrumental to our success over the years, and his insights and partnerships have been invaluable. On behalf of the entire team, thank you, John, for your outstanding work and commitment, and we wish you the best as you join GlobalFoundries. In addition, I would like to thank Mark Mauldin for stepping in so effectively during this transition. I can also share that the search for our new CFO is going well, and we're impressed by the caliber and potential fit of the candidates we're engaged with and look forward to concluding the search as quickly as possible. Now, I'll hand it over to Mark for the financial update. Mark?

Thank you, Matt, and good morning, everyone. Fourth quarter revenue was $87 million, which is above the midpoint of our guidance but down 66% compared to last year. The Industrial and Commercial segment saw a sequential decline, mainly due to changes in product and customer mix, and unit volume also decreased sequentially. Revenue declined year-over-year for both business units in this quarter. The Industrial and Commercial unit finished at $60 million, a decrease of 62% from the same period last year and 51% sequentially. All three product groups in Industrial and Commercial experienced a downturn in the fourth quarter, with the broad industrial category facing the most significant drop. On a positive note, for the full year, the smart cities and commercial product segments reached record revenue levels, largely driven by demand for electronic shelf labels and metering. The home and life markets are still experiencing weak demand and high customer inventories, with Home and Life revenue down 73% year-over-year and 67% sequentially to $27 million. Even with this near-term weakness, we are well-positioned as demand improves and inventories get back to normal, with growth expected in smart home and particularly strong performance in Connected Health. Our successful market initiatives are leading to design wins in Home and Life that exceed our revenue projections for their lifespan. Distribution revenue was 63% for the fourth quarter, which is down sequentially and below our usual levels. Channel inventory declined to 79 days, and unit inventory has reached its lowest level since the divestiture. The change in the testing mix during the quarter was due to a temporary shift towards direct customers while channel partners reduced their inventories, which also affected average selling prices in the quarter. Our top 10 end customers constituted about 42% of quarterly revenue, which is more than what we've seen historically due to lower revenue levels and the mix shift. Non-GAAP gross margin was lower than anticipated at 51% as a result of the product and customer mix. We continue to observe a generally stable pricing and input cost landscape, with no major changes expected in the next quarter. Non-GAAP operating expenses were $91 million, better than anticipated largely due to the early effects of the restructuring that started in November. We reported a non-GAAP operating loss of $47 million, and our non-GAAP effective tax rate for the quarter was 14%. Our non-GAAP loss of $1.19 was worse than our guidance due primarily to the expenses and favorable tax rate. For the full year, our non-GAAP operating margin stood at 8%, and non-GAAP earnings for the year were $1.65. On a GAAP basis, gross margin remained at 51%. GAAP operating expenses were $117 million, also better than expected, leading to a GAAP operating loss of $73 million for the fourth quarter and $24 million for the year. The GAAP results included approximately a $9 million charge for workforce separation costs incurred during the fourth quarter. Regarding our balance sheet, we closed the year with cash and investments totaling $439 million. Our accounts receivable fell to $29 million this quarter, reflecting the reduced revenue levels. Days sales outstanding returned to 30 days, indicating strong collections and no known bad debts. We increased our net inventory by $27 million this quarter to $194 million and expect our internal inventory to stabilize in the first quarter. Inventory turns remain around 1x. We hold a significant portion of our inventory in a die bank, which gives us flexibility for various end-use applications and helps to mitigate inventory obsolescence risk. We still owe $45 million on our revolving credit facility. Our Board of Directors has approved a $100 million share repurchase program for 2024, and we will continue to approach share repurchases opportunistically as we manage liquidity and optimize working capital. Overall, our balance sheet remains robust and well-prepared to execute our strategy and handle the current market conditions. As we shared last week, we have identified a material weakness in our internal controls concerning the operation and documentation of certain inventory controls, but this had no impact on our current or historical financial statements. We are currently planning enhancements to improve the design and operation of our internal controls and expect to file our Form 10-K on time. Before handing the call back to Matt, I’d like to provide guidance for the first quarter. We anticipate revenue to be between $100 million and $110 million, with both business units projected to grow during this period. We expect the non-GAAP gross margin for the first quarter to be around 52%, and this lower margin reflects fixed cost absorption at reduced revenue levels. Our non-GAAP operating expenses for the first quarter are expected to be approximately $96 million, and we project a non-GAAP effective tax rate of about 20%. Our non-GAAP loss per share for the first quarter is anticipated to be between $0.92 and $1.04. On a GAAP basis, we expect gross margin and GAAP operating expenses to be approximately $18 million, with GAAP loss per share estimated to be between $1.89 and $2.05. I will now turn the call back over to Matt.

Thanks, Mark. Looking ahead in 2024, we're excited about several trends in wireless connectivity, including more matter certified products coming to market as well as strong growth in our life, smart cities and commercial segments. In Q4, the CSA released Matter 1.2, which extends the benefits of matter to a wider array of devices, including household appliances, air conditioning and smoke alarms. At CES this year, we are encouraged by the strong level of engagement with customers, ecosystem partners and ISPs regarding the matter protocol. It's clear that interest in matter and the availability of matter-enabled devices is accelerating. As part of this, we announced our collaboration with Arduino to make matter protocol in advanced IoT development more accessible to all. We are partnering to integrate Arduino’s first-ever matter software libraries with Silicon Labs hardware so developers get our leading security, energy efficiency and processing power for matter in an intuitive ease of use development environment. Additionally, Samsung recently announced matter label connectivity in the smart TVs and selected appliances that includes our Silicon and are currently hitting the market. We are excited to work with Samsung on their SmartLink platform as they expand their matter-enabled ecosystem. Wi-Fi is in an increasingly important role in IoT devices, including in conjunction with matter. In Q4, we expanded our portfolio of industry-leading Series 2-based products with a soft launch of our ultra-low power Wi-Fi solution to 91%, which was selected as non-RE in the embedded category of the CES Innovation Awards. The 917 has the lowest power consumption of any competing Wi-Fi 6 products on the market, enabling meaningful longer battery lives to a whole new class of applications. We believe this will continue to drive new opportunities and design wins as customers look to integrate Wi-Fi into their products. In our Life segment, we are securing new wins in Connected Health and APAC where we are engaged with more than a dozen customers for continuous glucose monitors. The demand for connected health devices is growing rapidly, driven by demographics and an increase in chronic illnesses or diseases like diabetes. We are confident that our solutions will continue to gain traction and serve this market well. In 2023, we achieved record revenue in our commercial product group as the retail environment continues to digitize. For example, in electronic shelf labeling, we ramped new designs with SES-Imagotag and other groups. In addition, we have also secured new design wins in the ESL space for shelf labels, cameras and sensors with our moves solutions. The smart cities also had a record year, driven largely by meter. However, we're also gaining share in the solar market with integrated solutions for both wireless activity and compute and solar panels, which helped to optimize energy production. 2023 was a difficult year characterized by weak demand and high inventory levels. While we're seeing things moving in the right direction, the market is still working through its correction. As we stated, we believe Q4 represents our volume, and we expect to return to sequential growth starting in Q1. In closing, I want to thank the Silicon Labs team for their execution in securing significant design wins and gaining share, prudently managing our expenses, and advancing industry-leading technology solutions for IoT. Despite the near-term challenges, the long-term growth trajectory of our end markets and within those markets remains unchanged. As inventory normalizes, demand improves, and design wins ramp into production, we are well positioned to return to growth. I'll now hand it back over to Giovanni for Q&A.

Before we open the call for Q&A, I'd like to announce our participation in Morgan Stanley's 2024 TMT Conference in San Francisco on March 5.

Jonathan?

For my first question, I wanted to get an update on the inventory situation. We see the statistics published regarding your inventory and channel inventory. Matt, I've noted your comments on customer inventory, but I assume this reflects an average across products where you might have excess inventory for some items in specific markets, while possibly facing escalations in others, given the diverse range. Could you provide some insights into the areas where you've managed to clean everything up and returned to normal lead times and overall inventory levels? Are there specific areas where this isn't the case? Please share more details, focusing on specifics by end market rather than just average metrics.

Sure. I understand. I'm going to start by discussing our internal inventory, which we have been building up for the ramp following the current market conditions. As Mark mentioned, we expect this to peak now, and we're pleased with the current status. We have a lot of flexibility since we maintain our inventory in a die bank and can adjust it as necessary. The next part of our inventory channel is also clear. We noted a decrease in our days, which is notable considering we went from around $200 million to $87 million in Q4, and the actual material in the channel has decreased significantly. It's actually lower than the supply chain prices, indicating a clear trend as the industry, including us, works to reduce inventories. The real challenge is monitoring end customer inventory because it's difficult to obtain precise reports. Given the various geographies, technologies, applications, and the large number of customers we have, it's much harder to quantify this compared to other inventories. If we compare this to last quarter, we sample our top customers, increasing that from 40 to 50. We believe that customer inventory is decreasing, which we are pleased about. While I won’t claim precision, we do see the average across all customers declining, and even the number of customers holding excessive inventory is decreasing. We expect this trend to continue, which also reflects that our consumption of products is higher than our revenue suggests as we work through the channel and end customer inventories. Hopefully, that provides some clarity without specifying numbers that aren’t precise, but we definitely see it heading in a positive direction, which is encouraging.

No, that context does help. I realize that we're going through a transitory period. But I guess as my second question, I wanted to ask a little bit about gross margin, there's a lot of pieces moving around, and I got a few investor questions this morning. So first question is just to confirm, I didn't see it in any of the releases and you guys didn't mention it. So I think this is true. But just to confirm that there weren't any kind of explicit inventory write-downs? And I guess the second question is, any kind of rule of thumb of how gross margin might trend as we come out of this, like revenue levels where we can get back within the long-term range I imagine it has a mixed component between the 2 segments as well. But if you could give us any kind of guidance there. You mentioned in the prepared comments, there was a little bit of movement on pricing. So I was curious about that as well. But anything on margins would be helpful.

Sure. I'll start with the details and then move to the broader perspective. Initially, the low-level gross margin is influenced by fixed cost absorption at lower revenue levels, which turned out to be below expectations. This was primarily due to a lumpy customer mix at $87 million of revenue, a typical operating level for us. However, we do not anticipate this to become a permanent trend. In Q1, we'll still face challenges with lower consumption revenue levels, which will affect our ability to cover fixed costs. Therefore, while we foresee slight improvements, gross margin challenges will persist in Q1. Regarding the bigger picture, it's important to view gross margin at both the peak and trough of these cycles as indicators of long-term trends. During the peak of supply chain prices, we exceeded 60 significantly, leading some to believe that could be our new normal; we clarified that it was a temporary situation, which has been validated. Currently, we believe we are at a trough, and similarly, this is transient. We do not see this as indicative of our long-term gross margin. Our commitment to our gross margin model, which we've consistently expressed, remains steadfast, and we envision a continued path towards achieving that. We just need to navigate through this cyclical downturn, which is what we expect to experience.

I just wanted to first check out in the March quarter. Could you give us some color as to which of your segments you're expecting to grow more into the March quarter just to get to your guidance of $105 million? And then also, you mentioned in the fourth quarter that units and ASPs were both down as expected with the reset. But can you talk about what you're seeing kind of through the quarter thus far from a pricing perspective and just how that's playing into the March guidance?

Sure, Thomas. This is Matt. In terms of segments for the first quarter, I expect both of our end segments to grow. Overall, it's challenging to predict the market environment, but we believe that Home & Life is further along in its cycle compared to Industrial and Commercial. If I had to make a prediction, I would lean towards growth in that area, although we're not providing specific numbers in our guidance. Regarding the pricing environment, there are no significant changes. We are experiencing price discussions that align with the current market conditions, with no surprises. It's worth noting that one competitor has engaged in atypical behavior, such as setting lower price points to quickly fill capacity. However, this competitor does not significantly overlap with our portfolio, so it isn’t a major concern for us. That said, it would be misleading to say that everything is typical without mentioning it. Overall, we’ve seen expected behavior from others in the industry trying to stimulate business and increase demand. However, the main issues are not related to pricing but rather to inventory and the current market cycle. Our outlook and expectations remain unchanged based on what we have observed thus far.

Super helpful. And then I just wanted to follow up. Obviously, you moved the report here due to inventory controls issues. It looks like you're not really seeing any impact of that in the quarter. A couple of things. One, could you maybe give us a little bit more color as to what's going on there, if you can? And two, you mentioned that most of the inventory that you're carrying right now is die bank. Could you maybe give us the split of how much of that inventory is die bank because I would assume that if you were looking at inventory controls, it would be more for products. So I would assume a smaller portion of your overall inventory. Any color there would be helpful.

Sure. This is Mark. For the controls issue, late in January, we identified some areas within our inventory accounting process that needed some improvements. We are working to develop that plan to address it going forward. The way these things work, generally speaking, we're going to have to have the new controls in the process and show it's effective at least for more than one quarter. So we'll have that item open out there, at least through the first quarter. But in general, it just had to do with having more documentation and reviews over some of the assumptions that go into the judgmental aspect of the inventory valuation.

And just to comment, the meaningful majority of our inventories in Die Bank because for people out there, just importantly understand while we have a remarkable diversity in our end customers and applications. What we try to do is not have that same diversity in Silicon. So in Silicon, we'll have SoCs that address as much market as possible, and they can be tailored and customized to figure in Silicon to address, for lack of a better term, different part members of SKUs and applications to customer needs. And on top of that, there's software flexibility that is substantial as well. So it's really an advantage for us to carry a die bank and gives us the maximum flexibility to respond and to manage inventory responsibly by taking that approach. So quick answer is that most of it is in.

First question is on the Home & Life business. So Matt, I know this is a difficult question to answer, but I'll ask it anyway. So I think it peaked at a run rate of $0.5 billion. Now the run rate is $100 million. So it's quite stunning. And I'm just wondering if you could unpack a little bit as you had that $0.5 billion peak, what was cyclicality and what was more secular businesses? And if you look at the mix today, that $27 million, how much of that is 'more secular business versus cyclical business?' I know, again, it's difficult, but if you can unpack some of that, that would be great. And I assume you're not going to give us a true consumption number of that business, but any more color you could add would be really helpful.

Yes, I understand your question and I'll try to provide some clarity. At a high level, we haven't shared specific consumption numbers for the company or the segment. However, it's worth noting that we made significant operational expense adjustments in the last quarter, which were designed with our consumption levels in mind. It's crucial to ensure that any cuts maintain a breakeven point below those consumption levels. In terms of the home segment, we've experienced declines over the past four to five quarters. However, I've noticed cautiously optimistic signs of improvement in bookings, shifting from push outs to full ends. Visibility remains limited as customers are ordering on much shorter timelines, which suggests they're still managing their inventory and feeling a bit uncertain. While I believe we are progressing through this cycle correction and observing positive signals, I want to emphasize that we are not entirely out of trouble yet. Throughout this journey, we have witnessed a notable transition from demand for services to goods, and back to services, where expectations for sustained demand were once high. Many built up their inventory during this period. There are various underlying trends that are challenging to dissect, but we see strength in the end market and critical secular positions. The 'Matter' initiative is beginning to show substantial strength, and we’ve talked about how the Life segment has remained resilient due to this ongoing support. Although we are starting to see some design win momentum in Life, the full impact of this growth is still ahead of us. Regarding the Home segment, we are seeing significant progress and potential for growth, influenced by trends like Matter and Amazon Sidewalk. I want to stress that our confidence in this market remains robust, and we feel optimistic about our position as we gain share in Bluetooth and aim to do the same in Wi-Fi. This will not only stabilize but also foster growth in the home segment moving forward. Ultimately, our confidence in this area is strong, and we are excited about the growth opportunities presented by various trends, including Bluetooth and Wi-Fi advancements.

No, that’s really helpful. I appreciate that, Matt. As my follow-up, so I know, obviously, there’s a cyclical balance coming here. That’s pretty obvious. But I know on top of that, you also have a lot of new design wins. You have some new secular business that are ramping. You talked about some of the glucose metering, smart metering, shelf labeling, then you go Wi-Fi. So I guess the real question that I have here is if you look at some of those newer businesses, any update there? And could these be really material to revenues for calendar ‘24, especially in light of perhaps some of the more cyclical businesses at such a low level?

Yes. Understood. Quick answer is yes. That is our expectation that we’ve been unwavering in our view that we’re going through a particularly vicious market cycle that has impacted demand. Inventory destocking that’s substantial. And we’re trying to be clear, we’re not calling the market bottom here. We’re not out of the woods yet. It’s clearly these cycles have worked fully through, but we are calling it. And the reason we’re comfortable doing that is we’re not calling the rate necessarily, but we do see the confluence of all those things that the inventory and stocking going in the right direction. We do see our position in the market is strong, and those designs are starting to ramp. We just – last earnings call, we called out a few that people were unaware of. We just called out a couple more on this call that people are unaware of. And there’s more intended to give some perspective that they’re happening. Yes, there’s a massive counterbalance with this market cycle. But at some point, those 2 things will – the ramps are going to continue and normally get stronger, and the market will work through its cycle. And when those things come together, it looks like we’ll be positioned for strong growth when those two happen.

Maybe you can talk about just your order linearity throughout the last 90 days. You mentioned that orders are coming in with less than your typical turns request. Can you just talk about that pattern of orders and how that gives you visibility to the bottom?

Sure. I want to make a comment. It's challenging for us right now because what is considered normal has really been disrupted throughout this cycle. To directly answer your question, over the last 90 days, we've observed a trend moving in a positive direction, although not at the level we would prefer to say that we are past this phase. However, we remain optimistic that things are heading the right way, which is crucial. Our visibility remains limited due to our lead time being just over a quarter, and most customer behavior falls within that timeframe. This offers some insight into our observations. Additionally, it's important to note that based on our assessment of the cycle, the order patterns appear to be more reflective of the consumer and home segments, which seem to be further along in the cycle compared to industrial and commercial sectors. Nevertheless, as I mentioned earlier, we anticipate growth from Q4 to Q1 for both segments. I hope this provides helpful context and perspective. The overall message is that we are heading in the right direction, but there is still progress to be made.

Last quarter, you talked pretty optimistically about Series 3. That has been a little absent this quarter. Can you just give us an update on how that platform has progressed this quarter?

Yes, certainly. We are in the midst of a lot of work, and regarding Series 2, we continue to roll out products and are very pleased with the positive impact it's having on the market. The design wins and momentum have been excellent, meeting all expectations. Series 2 is still in a strong position in its life cycle, which will drive our growth for a long time. As for Series 3, we are making progress and are on track with our plans. We anticipate it will have a significant impact not just on our company, but across the industry as well. To put it simply, Series 3 builds on the successful Series 2 platform, allowing users to take advantage of everything we excel in, whether it's wireless performance, scalability, flexibility, computing needs including AI and machine learning, or industry-leading security, including quantum readiness. Our customers are excited about this combination. I should note that while we’re enthusiastic about Series 3, it’s still a work in progress and will be for years to come. We’re comfortable with our position in that cycle, and we will continue discussing both Series 2 and Series 3 for many years. They will run in parallel for at least the next 5 to 10 years, so it’s important to keep this perspective. Neither one is going away, and neither one is replacing the other, so we are very encouraged by where Series 3 stands and how the market is responding.

I wanted to ask about the encouraging orders you're seeing in home and life, and your progress with the inventory correction. Can you provide more details on what you observe in the industrial commercial segment? Since home and life is around 4 to 5 quarters in, should we expect industrial and commercial to also experience a similar 4 to 5 quarters of pressure before returning to more normalized levels?

Yes, I understand the question. The straightforward answer is we don't know for sure. There is some interesting behavior happening in the marketplace. We noticed that industrial started to show signs of decline much later than the consumer segment. For us, it was around the time we began to notice signs of softening. What was remarkable is that historically, this process has been much more gradual and less widespread. However, across thousands of customers, we observed that segment slow down significantly from Q3 to Q4, which was reflected in our guidance. We're a few quarters into this cycle correction as we perceive it, but it hasn't been typical in terms of its severity. We assume it will continue for the next few quarters. Even so, we still view this as our lowest point and believe we can achieve sequential growth from here. However, I wouldn't say the market is finished, and we think the industrial segment still has some time to go. That said, we also haven’t seen a decline as abrupt as we experienced in this current sector.

Got it. No, that's helpful. I have a question about the distribution inventory. You mentioned it decreased to 79 days, which is significantly lower in terms of dollars due to the reduced revenue. Do you have a target for that distribution inventory? I assume that as revenue begins to recover, if you maintain the distribution inventory, the days will decrease nicely. I would appreciate any insights on how you want to manage the distribution inventory moving forward.

Yes, understood. Yes, I think we've said over the last past few quarters, in normal times, whatever those happen, we'd be somewhere in the 60- to 70-day range as a target. It's not an absolute or a hard target, but something in that range. But right now, it's obviously higher than that but on a much lower revenue level. And as you pointed out, that could spike very quickly as things start to ramp back up. But you have to counter-balance that with the whole industry spooked by inventory right now, right? And everyone is trying to work down the inventory, and that's what you see out there. So if we're honest about it as an industry, we'll probably swing the pendulum a little too far. Maybe this will be one of the times that it doesn't happen, but it's possible that you'll see those inventory levels go down, and then there'll be a balance on the other side that's faster than anticipated because we take it too far as an industry. We're trying to watch that. We're trying to be responsible and do our best to manage it. But the real focus for us and problem child is end customer inventory, which is going in the right direction, which is encouraging, but not done.

Matt, you briefly covered this in your prepared remarks, but I missed it, to be honest. I was hoping that you could share with us more metrics on design wins in retrospect, specifically to what the growth in lifetime value was for the design wins captured in the period. And as well whether or not there was a particular emphasis on any one wireless standard or module generation. I would presume the majority of it is on Series 2. Any color would be helpful.

Yes, I can provide that. In our prepared remarks, we stated that we met our target, which is significant. As we entered this year, we expected a favorable market, but we didn't foresee it being this substantial. We set our design win target in a different market environment. Typically, when the market experiences a drop and significant volatility, it impacts design win performance. Currently, customers are managing their inventory and many are making cuts to R&D, which affects project timelines. While we are not satisfied with our revenue performance in 2023, the team succeeded in achieving design win performance that aligned with our initial plan, which is exceptional. To be straightforward, this is serious business. We are not yet fully engaged in the Series 3 design win phase, but in Series 2, as I mentioned earlier, we are performing exceptionally well, driving design wins. This activity is essential for the growth of our opportunity funnel, which leads to revenue growth. We are excited about Series 3 because our position in the market allows us to leverage software compatibility and portability, making investment in Series 2 also beneficial for Series 3. We are building critical mass with our platform in the industry, which will be advantageous. Regarding the other question, all our geographic areas and wireless technologies are making good progress, as are our targeted market segments. Notably, we are seeing significant advancement in the growth areas discussed earlier with Tory. Bluetooth is a strong area for us, showing growth in design wins, and we anticipate gaining market share there. We also recently launched a soft launch for Wi-Fi, where we expect to see similar advancements as we introduce industry-leading capabilities. These are the key drivers, Gary, and I hope that provides clarity. Bluetooth stands out for its strong demand, but all focus areas have performed well and we achieved our market goals. Sure. I don't fully understand the question. We've been very intentional about building our internal inventory and die bank to manage this situation. Before the supply crisis, we had much lower levels. Our goal with this strategy is to create a smoother response rather than abrupt monthly changes. We maintain strong relationships with all our foundry partners, including our largest ones. To be straightforward, we've managed to navigate the supply challenges thanks to these partnerships, and I am confident we will manage the current downturn as well. We're in a much better position now, having learned a great deal. We have different die bank strategies in place and improved our forecasting by monitoring customer inventories. All these factors position us well, and I believe we are very well-prepared from a supply standpoint to handle everything moving forward.

This does conclude the question-and-answer session of today's program. I'd like to hand the program back to Giovanni Pacelli for any further remarks.

Yes. Thank you, Jonathan, and thank you all for joining us this morning. This concludes today's call.

Thank you, ladies and gentlemen, for your participation in today's conference. This does conclude the program. You may now disconnect. Good day.