Good afternoon and thank you for joining our third quarter 2020 earnings conference call. For any of you who missed the release, you can find it on our website at ti.com/ir. This call is being broadcast live over the web and can be accessed through our website. A replay will be available through the web. This call will include forward-looking statements that involve risks and uncertainties and that could cause TI's results to differ materially from management's current expectations. We encourage you to review the notice regarding forward-looking statements contained in the earnings release published today as well as TI's most recent SEC filings for a more complete description. Our Chief Financial Officer, Rafael Lizardi, is with me today, and will provide the following updates. First, I'll start with a quick overview of the quarter; next, I'll provide insight into the third quarter revenue results with more details than usual by end market, including some sequential performance since it's more informative at this time; and then lastly, Rafael will cover the financial results, capital management, and our guidance for the fourth quarter of 2020. Let me start with a quick overview with three key points. Revenue was higher than expected and grew 18% sequentially, with notable strength from the rebound of automotive and growing demand from personal electronics. Revenue increased 1% from the same quarter a year ago. In April and again in July, we explained we would maintain high optionality with our operating plan so we could support customers, particularly during a time when their ability to forecast will be limited. This approach has served us and our customers well and we'll continue this posture in the fourth quarter. Finally, while visibility for the near-term demand has improved, we remain cautious as the broader economic impact of the global pandemic could continue for several years. Our approach in an environment like this is to maintain high optionality with our operating plan in the short term, to continue critical investments in R&D and in new capabilities like those for ti.com, and finally, to invest to ensure long-term manufacturing capacity, particularly for the 2022 to 2025 timeframe. We've made these decisions with our overall ambitions in mind, which include running the company with the mindset of a long-term owner. These decisions have continued to serve us well. Looking at our segments, Analog grew 18% and Embedded Processing grew 19% sequentially. On a year-over-year basis, Analog grew 7% and Embedded Processing declined 10%. Our Other segment declined 19% from a year ago, primarily due to lower calculator sales or COVID-19 impacted back-to-school sales. Moving on, I'll now provide some insight into our third quarter revenue by end market. First, the automotive market rebounded with about 75% sequential growth and returned to levels similar to a year ago. Revenue has grown from the bottom we saw in May as North American and European automotive assembly plants resumed operations. Next, the industrial market was down low single-digits sequentially, roughly a sequential decline and about even from a year ago. Not surprisingly, there were areas of strength and there were areas of weakness. The diversity within industrial results in relative stability, reinforcing the attractiveness of this highly diverse market. Personal electronics was up more than 20% sequentially and up about 15% compared to a year ago. The strength was broad-based across personal electronics, combined with TI being in a position to support unforecasted demand in the third quarter. Next, comms equipment was down about mid-single-digits sequentially and up mid-single-digits from a year ago and enterprise systems was down both comparisons. Lastly, I'll note a housekeeping item. We've simplified our Analog business structure into our power business and our signal chain business. Starting this quarter, our reporting will reflect these changes.

Thanks Dave and good afternoon, everyone. Third quarter revenue was $3.8 billion, up 1% from a year ago. Gross profit in the quarter was $2.5 billion, or 64% of revenue. From a year ago, gross profit margin decreased 60 basis points. Operating expenses in the quarter were $793 million, up 2% from a year ago and about as expected. On a trailing 12-month basis, operating expenses were 23% of revenue. Over the last 12 months, we have invested $1.5 billion in R&D. Operating profit was $1.6 billion in the quarter, or 42% of revenue. Operating profit was up 1% from the year-ago quarter. Net income in the third quarter was $1.4 billion, or $1.45 per share. Let me now comment on our capital management results, starting with our cash generation. Cash flow from operations was $1.4 billion in the quarter. Capital expenditures were $146 million in the quarter. Free cash flow on a trailing 12-month basis was $5.2 billion. In September, we announced we would increase our dividend by 13%, marking our 17th consecutive year of dividend increases. In the quarter, we paid $825 million in dividends and repurchased $15 million of our stock. In total, we have returned $6.4 billion in the past 12 months, or 123% of free cash flow. Over the same period, our dividends represented 64% of free cash flow, underscoring their sustainability. Our balance sheet remains strong with $5.5 billion of cash and short-term investments at the end of the third quarter. Regarding inventory, TI inventory dollars were down $64 million from the prior quarter, and days were 137. Distribution-owned inventory declined in the third quarter by about $100 million, the eighth consecutive quarter of planned reductions, as we have continued the transition to have fewer distributors and bring more customers direct. As a reminder, as we build closer, direct relationships with our customers, we further strengthened one of our competitive advantages, the reach of our market channels. Tactically and strategically, we are pleased with the progress of the transition and the impact for our customers. For the fourth quarter, we expect TI revenue in the range of $3.41 billion to $3.69 billion and earnings per share in the range of $1.20 to $1.40. Our annual operating tax rate has not changed much, but now rounds up to 14% for the year, and that's what you should use for your models in the fourth quarter. For next year, we expect our annual operating tax rate to remain at about 14%. In closing, we continue to invest to strengthen our competitive advantages and in making our business stronger.

Thanks, Rafael. Operator, you can now open the lines for questions. In order to provide as many of you as possible the opportunity to ask your questions, please limit yourself to a single question. After our response, we'll provide you an opportunity for an additional follow-up. Operator?

Hi, guys. Good afternoon and thanks for taking the question. Rafael, Dave, my first question is on automotive. You guys saw very strong results in the September quarter. I think you spoke to a 75% sequential increase in revenue in the automotive end market. What's your view on December as it relates to automotive? And how are you thinking about sustainability into the early part of 2021? And then I've got a quick follow-up. Thanks.

Sure, Toshiya. Yes, I think that, that 75% sequential obviously was very strong, but it's probably best explained by looking at the previous quarter. And as we talked about last quarter, the majority of the automotive revenue is on consignment. So as the North American and European manufacturers had closed plants, that revenue reacted very quickly and we were down 40% sequentially and year-on-year, and so as those factories opened up, we saw the bottom in May. And we expected revenue to grow, and as they opened up, obviously, that revenue reacted very quickly in the other direction. So that's really the story that we saw in the third quarter. Again, as we've given color last quarter on the automotive market and talked about how that was moving pretty significantly in the fourth quarter, we're not breaking out any particular end market or specific color on that front. So there's not a reason to as we look into the fourth quarter. So, you have a follow-on?

I do. Thanks, Dave. My follow-up question is on gross margins in Q3. Rafael, you mentioned that gross margins were down 60 basis points on a year-over-year basis. And I was just trying to better understand what the puts and takes were. Overall revenue, I think, was up 1%. Your mix of businesses improved with Analog up 7% year-over-year, embedded processing down 10%. And 12-inch versus eight, and so I'm guessing, 12-inch was up year-over-year. So I'm just trying to understand what the negatives were on a year-over-year basis that drove gross margins down a little bit. But I appreciate you guys don't run your business for gross margin, but just curious. Thank you.

I'm happy to answer that. On a year-on-year basis, revenue increased by 1%. Gross margin dollars also rose, albeit by about 0.5%. With such large figures, the small difference makes it challenging to assess the pull-through as we typically do. In the grand scheme, both revenue and gross margin dollars saw slight increases. Additionally, I want to highlight that the mix of personal electronics revenue was higher in the third quarter compared to the same quarter last year and even the second quarter.

Great. Thanks, Toshiya. And we’ll go to the next caller please.

Yes, thank you. Maybe just a follow-up on the last point on the strength in personal electronics. Really, as you look out to Q4, Dave, how do you feel about inventory versus end demand sell-through? And then as part of that and perhaps other segments as well, how you think about Huawei in terms of perhaps last shipments there and how you're seeing that as you go forward?

Let me begin, and then Dave can respond to the Huawei question or anything else. At the highest level, we are well-equipped to handle any challenges that may arise, whether in personal electronics or other markets. Our inventory strategy has given us the flexibility we've discussed over the past 180 days, and the last two quarterly releases have positioned us remarkably well. This is not just about having a tactical approach; it’s also about our strategic advantage as a supplier of diverse catalog parts that cater to a wide range of customers. With over 100,000 customers and 80,000 different parts, we can build inventory and make informed decisions. If revenue is strong, we can support it; if it isn’t, we can hold inventory slightly longer, which is manageable as it just represents some working capital. Furthermore, we believe that inventory is a vital strategic asset. As mentioned earlier, we are comfortable maintaining high inventory levels. We will provide an update on our inventory range during the next capital management call in February. Dave?

Sure. Yeah, I'll make the comment on Huawei. So Huawei was about 2% of our revenue in the third quarter. That was a little higher than what they were in the first half of 2020. So certainly we're in compliance with U.S. export restrictions and stopped shipping to them on September 14th, and they are not included in our fourth quarter revenue guidance. So do you have a follow-on, Craig?

Sure. No, thanks for all the color there. I guess, just how you think about as the business rebounds, just from an OpEx perspective, any puts and takes there for Q4 and into next year?

Nothing significant to highlight. In operating expenses, research and development plays a major role, amounting to about $1.5 billion annually. This is a crucial part of our competitive advantage, as we maintain the most extensive portfolio in the industry. We consistently release high-quality products across automotive, industrial, personal electronics, and the communication market, further strengthening that advantage. Additionally, within operating expenses, we are investing in ti.com to enhance our channel reach. We are continually improving this tool to connect better with customers, keep them engaged for longer, and increase product sales. Overall, operating expenses have been around $3.1 billion to $3.2 billion a year on a trailing 12-month basis. I anticipate this will remain above that level, possibly increasing by 1% or 2% year-on-year, but staying roughly within that range.

Great. Thank you. And we’ll go to the next caller please?

Hi guys. Thanks for taking my questions. So the first one, I wanted to touch on the strength from PE. I wanted to know, if you can give us a little more color on how much of that would be PCs versus smartphones? I know that you had talked about some of that strength coming from your ability to satisfy unexpected demand. I assume that was maybe more a PC statement, but any color you could give us on sort of the relative mix and growth of those two sub-end markets would be helpful.

Yes, Stacy, I'd say that as the pandemic first started back in March and even in last quarter, a lot of the strength was initially driven by PCs and tablets. But we have seen that strength broaden, so even to TVs and smart speakers and other things that are used in the home. So, our best estimate or guesstimate of what's going on is that as people are spending more time at home, they're upgrading the things that they're using more. So, that spend is broadening beyond just the PC. And as Rafael was talking about, our portfolio of products serves us well and puts us in a position to be able to support that demand. Do you have a follow-on?

Thank you. I understand that you plan to maintain high inventory levels and high service into Q4 and beyond. Could you provide more details on what this means for your utilization and loading moving forward? I assume your utilization increased sequentially in Q3. Please confirm if that was the case and share your plans for utilization and factory loadings as we approach Q4 and the end of the year.

Sure. Stacy, we typically discuss utilization only when there's a significant change or an unusual circumstance. We mentioned it back in April as we entered the second quarter because many of our competitors reduced their loading, whereas we maintained our levels from the first quarter to keep our options open, which has proven beneficial over the last six months. Since then, we've slightly increased our loadings from the second to the third quarter, and we're likely to continue this upward trend into the fourth quarter as well. While this increase isn't substantial, it allows us to keep our options available and maximize revenue while supporting our customers in case they have opportunities that wouldn't otherwise be supported.

Okay. Thank you, Stacy. We’ll go to the next caller please?

Thanks a lot. I guess my first question is on the share buyback. It was quite small, even lower than in the depths of the financial crisis back in 2008. Yet your business has already snapped back a lot. What's the thinking there? You've always been pretty astute about the intrinsic value of your stock, so how should investors sort of read that? Thanks.

Yes. First, let me take a moment to explain how we approach cash returns. We discuss this during our annual capital management review every February and in our meetings with investors. Our goal regarding cash returns is to distribute all free cash flow to the company's owners through buybacks and dividends. We utilize both methods. Over the last trailing 12 months, which is the best way to assess this, we generated $5.2 billion in free cash flow and returned $6.4 billion. This means we returned $1.2 billion more than what we generated, indicating a strong return relative to our generation. Do you have a follow-up?

I did, I did. So I wanted to double-click just a little bit on the drop-through in Analog. It seemed like the drop-through in embedded was fine, but you're still a little below where the op margin was back in sort of the late 2018 time frame at sort of similar levels. Is there something going on with mix? Is that maybe the PE mix that you were talking about before within Analog? Thanks.

There’s nothing unusual to address. Clearly, analog is our largest segment, so any comments at the company level are likely influenced by analog. They experience a significant impact from personal electronics, especially since embedded contributes very little in that area.

Okay. Yes. And embedded is essentially industrial and automotive for the most part. Probably 90% of those two. So that's where that growth would come from. So thank you Tim and we’ll go to the next caller please.

Good afternoon. Great job on the quarterly execution. Can you guys just give us the quarter-on-quarter and year-over-year trajectories by geography? I know they're just shipped to locations, but I think it's still useful as a proxy for demand and overall economic activity, just depending on the breadth of the participation?

Sure, Harlan. Yes. A year ago, Asia was up and all of the other regions were down. And sequentially, all of the regions were up, and Japan was down. Do you have a follow-on?

Yes. So you guys mentioned last quarter that there may have been some industrial customers that were building some inventory to potentially buffer against future supply chain disruptions and just prudent business continuity planning. Did you guys continue to see that in Q3? Or are these customers starting to work down these inventories, or just sustaining the higher levels as we head into the winter months and flu season?

Yes. And, Harlan, I think our comments last quarter were one, just more of an observation of history in our industry, that basically it's taught us that whenever we've seen supply constraints, that customers react by building some inventory. So it's just our belief that it would be naive that this would be the first time that, that wouldn't happen, right? So, I think, that those supply constraints in our industry still exist. So to that extent, that could still be the case. And now our lead times have remained stable. Our product availability is still very high. I think today, you can go to ti.com and get immediate availability of over 40,000 different devices. And that doesn't mean that we don't have pockets of delivery problems. We'll always have that at any time. But, overall, our lead times are very solid. And availability is high, but that's not true for the industry. So, yes, I think it just would be naive to believe that, that wouldn't be the case. So thank you, Harlan. We’ll go to the next caller, please.

Yes. Good afternoon, guys. Thanks for letting me ask some questions. Congratulations on the solid results. David, if you look at kind of your guidance over the last two quarters, it looks like you sort of rightfully discounted kind of what the bottoms-up bookings was telling us. You said as much when you guided for the June quarter. And just given the magnitude of beat in September, it kind of feels the same way. And that to me seems to make sense in the midst of a global pandemic. I'm just kind of curious, you're guiding the December quarter to plus or minus about seasonal, inclusive of what sounds like a 200 basis point headwind from Huawei. But, I guess, I could argue maybe phone builds started a little bit later this year that should help December. I guess, as you forecast the December quarter, was seasonal kind of the metric you were going for? And are you discounting kind of your bottoms-up in the December quarter as much in hindsight as you did in June and September?

Yes. No, I think, you've covered a lot of good points, John. And like you point out, in any quarter there's puts and takes. You've got the headwind of Huawei. We've got the unwind of the distributor program, which in fact we've actually wound that up this past quarter, and just with the growing demand and the inventory needs and positions that we've essentially completed that. So we depleted about, as Rafael, I think mentioned, about $100 million worth of inventory in that quarter. So you've always got puts and takes. But I'll tell you that the most important thing that we see and the most important input that we get is the demand that our customers tell us they want. And we get that from the orders in the backlog that our customers provide us as well as demand fees that we get through consignment. And so that is really what drives and informs the outlook that we provide. So you have a follow-on, John?

Yes. Dave, it's fair to say that there's been nothing typical this year, but you and I have talked about this in the past. If you look at the year-over-year growth discrepancy between analog and embedded, it's fairly wide. And I'm wondering now that we're 90 days more into this kind of difference in year-over-year growth, is there a good explanation in your mind? And importantly as we look forward, when do you expect the embedded business to kind of catch up to analog on a year-over-year basis?

Yes, certainly. The embedded business has not been meeting our expectations over the past several quarters. However, we are encouraged by the recent progress shown in the numbers. We are committed to turning this business around and ensuring it performs as we envision. We are making investments because we believe it will be a significant contributor in the years ahead. We are focused on strengthening this business, but it will take time. Success will not be evident in this quarter or the next, but will be measured over a longer period. Thank you, John. Now, let’s move on to the next caller.

Hi, everyone. I wanted to follow up on John's previous question regarding the embedded side. Dave, last quarter, you mentioned that embedded was weak both sequentially and year-over-year, and you pointed out the over-representation in automotive and industrial. However, since automotive saw a 75% sequential increase, I'm surprised that embedded remained relatively flat compared to analog on a sequential basis. Were there any offsets in that business? I know you mentioned a slight decline in industrial, but it doesn't seem significant enough to counterbalance the over-indexing in automotive.

Yes, embedded grew slightly faster than analog. As you noted last quarter, there were no offsets affecting the business, so we are left with industrial. These two end markets are driving performance, and with the return of revenue, embedded is performing similarly to analog.

So it doesn't have nearly as much PE or in fact hardly any PE, personal electronics. And personal electronics was a big contributor to growth in third quarter, sequential growth.

That's right. That's right. Do you have a follow-on?

Good afternoon. Great job on the quarterly execution. Can you guys just give us the quarter-on-quarter and year-over-year trajectories by geography? I know they're just shipped to locations, but I think it's still useful as a proxy for demand and overall economic activity, just depending on the breadth of the participation?

Sure, Harlan. Yes. A year ago, Asia was up and all of the other regions were down. And sequentially, all of the regions were up, and Japan was down. Do you have a follow-on?

Yes. So you guys mentioned last quarter that there may have been some industrial customers that were building some inventory to potentially buffer against future supply chain disruptions and just prudent business continuity planning. Did you guys continue to see that in Q3? Or are these customers starting to work down these inventories, or just sustaining the higher levels as we head into the winter months and flu season?

Yes. And, Harlan, I think our comments last quarter were one, just more of an observation of history in our industry, that basically it's taught us that whenever we've seen supply constraints, that customers react by building some inventory. So it's just our belief that it would be naive that this would be the first time that, that wouldn't happen, right? So, I think, that those supply constraints in our industry still exist. So to that extent, that could still be the case. And now our lead times have remained stable. Our product availability is still very high. I think today, you can go to ti.com and get immediate availability of over 40,000 different devices. And that doesn't mean that we don't have pockets of delivery problems. We'll always have that at any time. But, overall, our lead times are very solid. And availability is high, but that's not true for the industry. So, yes, I think it just would be naive to believe that, that wouldn't be the case. So thank you, Harlan. We’ll go to the next caller, please.

Yes. Good afternoon, guys. Thanks for letting me ask some questions. Congratulations on the solid results. David, if you look at kind of your guidance over the last two quarters, it looks like you sort of rightfully discounted kind of what the bottoms-up bookings was telling us. You said as much when you guided for the June quarter. And just given the magnitude of beat in September, it kind of feels the same way. And that to me seems to make sense in the midst of a global pandemic. I'm just kind of curious, you're guiding the December quarter to plus or minus about seasonal, inclusive of what sounds like a 200 basis point headwind from Huawei. But, I guess, I could argue maybe phone builds started a little bit later this year that should help December. I guess, as you forecast the December quarter, was seasonal kind of the metric you were going for? And are you discounting kind of your bottoms-up in the December quarter as much in hindsight as you did in June and September?

Yes. No, I think, you've covered a lot of good points, John. And like you point out, in any quarter there's puts and takes. You've got the headwind of Huawei. We've got the unwind of the distributor program, which in fact we've actually wound that up this past quarter, and just with the growing demand and the inventory needs and positions that we've essentially completed that. So we depleted about, as Rafael, I think mentioned, about $100 million worth of inventory in that quarter. So you've always got puts and takes. But I'll tell you that the most important thing that we see and the most important input that we get is the demand that our customers tell us they want. And we get that from the orders in the backlog that our customers provide us as well as demand fees that we get through consignment. And so that is really what drives and informs the outlook that we provide. So you have a follow-on, John?

Yes. Dave, it's fair to say that there's been nothing typical this year, but you and I have talked about this in the past. If you look at the year-over-year growth discrepancy between analog and embedded, it's fairly wide. And I'm wondering now that we're 90 days more into this kind of difference in year-over-year growth, is there a good explanation in your mind? And importantly as we look forward, when do you expect the embedded business to kind of catch up to analog on a year-over-year basis?

Yes, certainly. The embedded business has not been performing as we would have liked it to over the past several quarters. However, looking at the most recent quarter, we are encouraged by the progress reflected in the numbers. We have been working diligently to turn that business around and enhance its performance. We are making investments because we believe it will significantly contribute in the years to come. We are focused on strengthening that business, but it will require time. Success in this area will not be measured in this quarter or the next few quarters, but rather over a longer period. Thank you for that, John. Now, let's move on to the next caller.

Hi, everyone. I wanted to follow up on John's previous question regarding the embedded segment. Dave, last quarter, embedded performance was weak both sequentially and year-over-year, and you mentioned the heavy reliance on automotive and industrial sectors. However, given that automotive saw a 75% sequential increase, I'm surprised that embedded remained roughly parallel to analog on a sequential basis. Were there any offsets in that business? I know industrial was slightly down, but it seems unlikely that would be enough to counteract the strong performance in the automotive sector.

Embedded grew slightly faster than analog. As you noted last quarter, there were no offsets to the business, and now primarily it's just the industrial sector remaining. So these two end markets are what we are focusing on. With the return of revenue, embedded is performing similarly to analog, which are the main components contributing to this growth.

So it doesn't have nearly as much PE or in fact hardly any PE, personal electronics. And personal electronics was a big contributor to growth in third quarter, sequential growth.

That's right. That's right. Do you have a follow-on?

Good afternoon. Great job on the quarterly execution. Can you guys just give us the quarter-on-quarter and year-over-year trajectories by geography? I know they're just shipped to locations, but I think it's still useful as a proxy for demand and overall economic activity, just depending on the breadth of the participation?

Sure, Harlan. Yes. A year ago, Asia was up and all of the other regions were down. And sequentially, all of the regions were up, and Japan was down. Do you have a follow-on?

Yes. So you guys mentioned last quarter that there may have been some industrial customers that were building some inventory to potentially buffer against future supply chain disruptions and just prudent business continuity planning. Did you guys continue to see that in Q3? Or are these customers starting to work down these inventories, or just sustaining the higher levels as we head into the winter months and flu season?

Yes. And, Harlan, I think our comments last quarter were one, just more of an observation of history in our industry, that basically it's taught us that whenever we've seen supply constraints, that customers react by building some inventory. So it's just our belief that it would be naive that this would be the first time that, that wouldn't happen, right? So, I think, that those supply constraints in our industry still exist. So to that extent, that could still be the case. And now our lead times have remained stable. Our product availability is still very high. I think today, you can go to ti.com and get immediate availability of over 40,000 different devices. And that doesn't mean that we don't have pockets of delivery problems. We'll always have that at any time. But, overall, our lead times are very solid. And availability is high, but that's not true for the industry. So, yes, I think it just would be naive to believe that, that wouldn't be the case. So thank you, Harlan. We’ll go to the next caller, please.

Yes. Good afternoon, guys. Thanks for letting me ask some questions. Congratulations on the solid results. David, if you look at kind of your guidance over the last two quarters, it looks like you sort of rightfully discounted kind of what the bottoms-up bookings was telling us. You said as much when you guided for the June quarter. And just given the magnitude of beat in September, it kind of feels the same way. And that to me seems to make sense in the midst of a global pandemic. I'm just kind of curious, you're guiding the December quarter to plus or minus about seasonal, inclusive of what sounds like a 200 basis point headwind from Huawei. But, I guess, I could argue maybe phone builds started a little bit later this year that should help December. I guess, as you forecast the December quarter, was seasonal kind of the metric you were going for? And are you discounting kind of your bottoms-up in the December quarter as much in hindsight as you did in June and September?

Yes. No, I think, you've covered a lot of good points, John. And like you point out, in any quarter there's puts and takes. You've got the headwind of Huawei. We've got the unwind of the distributor program, which in fact we've actually wound that up this past quarter, and just with the growing demand and the inventory needs and positions that we've essentially completed that. So we depleted about, as Rafael, I think mentioned, about $100 million worth of inventory in that quarter. So you've always got puts and takes. But I'll tell you that the most important thing that we see and the most important input that we get is the demand that our customers tell us they want. And we get that from the orders in the backlog that our customers provide us as well as demand fees that we get through consignment. And so that is really what drives and informs the outlook that we provide. So you have a follow-on, John?

Yes. Dave, it's fair to say that there's been nothing typical this year, but you and I have talked about this in the past. If you look at the year-over-year growth discrepancy between analog and embedded, it's fairly wide. And I'm wondering now that we're 90 days more into this kind of difference in year-over-year growth, is there a good explanation in your mind? And importantly as we look forward, when do you expect the embedded business to kind of catch up to analog on a year-over-year basis?

Yes, I think the embedded business hasn't met our expectations over the past few quarters. However, looking at the most recent quarter, there are encouraging signs in the numbers. We are diligently working to turn that business around and improve its performance. We're making investments because we believe it will significantly contribute in the coming years. We're focused on strengthening that business, but it will take time. Success in this area won't be evident in this quarter or the next few, but rather over a longer period. Thank you, John. Now, let's move on to the next caller.

Hi, everyone. I wanted to follow up on John's last question regarding the embedded sector. Dave, last quarter we saw weakness in embedded both sequentially and year-over-year, and you mentioned a reliance on automotive and industrial. However, given that automotive increased by 75% sequentially, I'm surprised that embedded was essentially unchanged compared to analog from a sequential standpoint. Were there any offsets affecting that business? I know you mentioned a slight decline in industrial, but it doesn't seem like that would be enough to counterbalance the strong performance in automotive.

Yes, embedded grew slightly faster than analog. As you noted last quarter, there were no offsets to the business, so the focus is really on industrial and those two end markets. With the revenue returning, it's performing similarly to analog. Those are the main components contributing to this.

So it doesn't have nearly as much PE or in fact hardly any PE, personal electronics. And personal electronics was a big contributor to growth in third quarter, sequential growth.

That's right. That's right. Do you have a follow-on?

Good afternoon. Great job on the quarterly execution. Can you guys just give us the quarter-on-quarter and year-over-year trajectories by geography? I know they're just shipped to locations, but I think it's still useful as a proxy for demand and overall economic activity, just depending on the breadth of the participation?

Sure, Harlan. Yes. A year ago, Asia was up and all of the other regions were down. And sequentially, all of the regions were up, and Japan was down. Do you have a follow-on?

Yes. So you guys mentioned last quarter that there may have been some industrial customers that were building some inventory to potentially buffer against future supply chain disruptions and just prudent business continuity planning. Did you guys continue to see that in Q3? Or are these customers starting to work down these inventories, or just sustaining the higher levels as we head into the winter months and flu season?

Yes. And, Harlan, I think our comments last quarter were one, just more of an observation of history in our industry, that basically it's taught us that whenever we've seen supply constraints, that customers react by building some inventory. So it's just our belief that it would be naive that this would be the first time that, that wouldn't happen, right? So, I think, that those supply constraints in our industry still exist. So to that extent, that could still be the case. And now our lead times have remained stable. Our product availability is still very high. I think today, you can go to ti.com and get immediate availability of over 40,000 different devices. And that doesn't mean that we don't have pockets of delivery problems. We'll always have that at any time. But, overall, our lead times are very solid. And availability is high, but that's not true for the industry. So, yes, I think it just would be naive to believe that, that wouldn't be the case. So thank you, Harlan. We’ll go to the next caller, please.

Yes. Good afternoon, guys. Thanks for letting me ask some questions. Congratulations on the solid results. David, if you look at kind of your guidance over the last two quarters, it looks like you sort of rightfully discounted kind of what the bottoms-up bookings was telling us. You said as much when you guided for the June quarter. And just given the magnitude of beat in September, it kind of feels the same way. And that to me seems to make sense in the midst of a global pandemic. I'm just kind of curious, you're guiding the December quarter to plus or minus about seasonal, inclusive of what sounds like a 200 basis point headwind from Huawei. But, I guess, I could argue maybe phone builds started a little bit later this year that should help December. I guess, as you forecast the December quarter, was seasonal kind of the metric you were going for? And are you discounting kind of your bottoms-up in the December quarter as much in hindsight as you did in June and September?

Yes. No, I think, you've covered a lot of good points, John. And like you point out, in any quarter there's puts and takes. You've got the headwind of Huawei. We've got the unwind of the distributor program, which in fact we've actually wound that up this past quarter, and just with the growing demand and the inventory needs and positions that we've essentially completed that. So we depleted about, as Rafael, I think mentioned, about $100 million worth of inventory in that quarter. So you've always got puts and takes. But I'll tell you that the most important thing that we see and the most important input that we get is the demand that our customers tell us they want. And we get that from the orders in the backlog that our customers provide us as well as demand fees that we get through consignment. And so that is really what drives and informs the outlook that we provide. So you have a follow-on, John?

Yes. Dave, it's fair to say that there's been nothing typical this year, but you and I have talked about this in the past. If you look at the year-over-year growth discrepancy between analog and embedded, it's fairly wide. And I'm wondering now that we're 90 days more into this kind of difference in year-over-year growth, is there a good explanation in your mind? And importantly as we look forward, when do you expect the embedded business to kind of catch up to analog on a year-over-year basis?

Yes, absolutely. The embedded business has not been performing to our expectations over the past few quarters. However, looking at the most recent quarter, we are encouraged by the progress indicated by the numbers. We have been making significant efforts to turn that business around and get it to perform as we desire. We are investing in this area because we believe it will become a significant contributor in the years ahead. We are focused on strengthening that business, but it will take time. Success in this area will not be assessed over this quarter or even the next few quarters, but rather over a longer period. Thank you for that, John. Now, let's move on to the next caller.

Hi, everyone. I wanted to follow up on John's last question regarding the embedded sector. Dave, last quarter we saw weakness in embedded both sequentially and year-over-year, and you mentioned a higher focus on automotive and industrial. However, since automotive grew by 75% sequentially, I’m surprised to see that embedded remained consistent with analog from a sequential standpoint. Were there some factors affecting that business? I know you mentioned that industrial was slightly down, but it doesn't seem like that would be significant enough to counterbalance the emphasis on the automotive sector.

Yes, embedded grew slightly faster than analog. Just like last quarter, as you mentioned, there weren't any offsets to the business. Essentially, we are left with industrial. So, those two end markets are driving the performance. With the return of revenue, it's performing similarly to analog. Those are the main components influencing that.

So it doesn't have nearly as much PE or in fact hardly any PE, personal electronics. And personal electronics was a big contributor to growth in third quarter, sequential growth.

That's right. That's right. Do you have a follow-on?

Good afternoon. Great job on the quarterly execution. Can you guys just give us the quarter-on-quarter and year-over-year trajectories by geography? I know they're just shipped to locations, but I think it's still useful as a proxy for demand and overall economic activity, just depending on the breadth of the participation?

Sure, Harlan. Yes. A year ago, Asia was up and all of the other regions were down. And sequentially, all of the regions were up, and Japan was down. Do you have a follow-on?

Yes. So you guys mentioned last quarter that there may have been some industrial customers that were building some inventory to potentially buffer against future supply chain disruptions and just prudent business continuity planning. Did you guys continue to see that in Q3? Or are these customers starting to work down these inventories, or just sustaining the higher levels as we head into the winter months and flu season?

Yes. And, Harlan, I think our comments last quarter were one, just more of an observation of history in our industry, that basically it's taught us that whenever we've seen supply constraints, that customers react by building some inventory. So it's just our belief that it would be naive that this would be the first time that, that wouldn't happen, right? So, I think, that those supply constraints in our industry still exist. So to that extent, that could still be the case. And now our lead times have remained stable. Our product availability is still very high. I think today, you can go to ti.com and get immediate availability of over 40,000 different devices. And that doesn't mean that we don't have pockets of delivery problems. We'll always have that at any time. But, overall, our lead times are very solid. And availability is high, but that's not true for the industry. So, yes, I think it just would be naive to believe that, that wouldn't be the case. So thank you, Harlan. We’ll go to the next caller, please.

Yes. Good afternoon, guys. Thanks for letting me ask some questions. Congratulations on the solid results. David, if you look at kind of your guidance over the last two quarters, it looks like you sort of rightfully discounted kind of what the bottoms-up bookings was telling us. You said as much when you guided for the June quarter. And just given the magnitude of beat in September, it kind of feels the same way. And that to me seems to make sense in the midst of a global pandemic. I'm just kind of curious, you're guiding the December quarter to plus or minus about seasonal, inclusive of what sounds like a 200 basis point headwind from Huawei. But, I guess, I could argue maybe phone builds started a little bit later this year that should help December. I guess, as you forecast the December quarter, was seasonal kind of the metric you were going for? And are you discounting kind of your bottoms-up in the December quarter as much in hindsight as you did in June and September?

Yes. No, I think, you've covered a lot of good points, John. And like you point out, in any quarter there's puts and takes. You've got the headwind of Huawei. We've got the unwind of the distributor program, which in fact we've actually wound that up this past quarter, and just with the growing demand and the inventory needs and positions that we've essentially completed that. So we depleted about, as Rafael, I think mentioned, about $100 million worth of inventory in that quarter. So you've always got puts and takes. But I'll tell you that the most important thing that we see and the most important input that we get is the demand that our customers tell us they want. And we get that from the orders in the backlog that our customers provide us as well as demand fees that we get through consignment. And so that is really what drives and informs the outlook that we provide. So you have a follow-on, John?

Yes. Dave, it's fair to say that there's been nothing typical this year, but you and I have talked about this in the past. If you look at the year-over-year growth discrepancy between analog and embedded, it's fairly wide. And I'm wondering now that we're 90 days more into this kind of difference in year-over-year growth, is there a good explanation in your mind? And importantly as we look forward, when do you expect the embedded business to kind of catch up to analog on a year-over-year basis?

Yes, certainly. The embedded business has not been performing as we would like over the past few quarters. However, in the most recent quarter, we are encouraged by the progress and the figures we are seeing. We have been working diligently to turn this business around and align its performance with our expectations. We are making investments there, as we believe it will be a significant contributor in the years ahead. We are focused on strengthening this business, but it will take time. Success in this area will not be determined by this quarter or even the next few quarters, but will be assessed over a longer timeframe. Thank you for that, John. Now, let's move to the next caller.

Thanks, Dave. Let me wrap up by emphasizing what we have said previously. At our core, we're engineers and technology is the foundation of our company. But ultimately our objective and the best metric to measure progress and generate long-term value for our owners is the growth of free cash flow per share. Our strategy to maximize free cash flow per share growth has three elements: A great business model focused on Analog and Embedded Products and built around four sustainable competitive advantages; two, discipline in allocating capital to the best opportunities; and lastly, efficiency, which means constantly striving for more output for every dollar spent. While we strive to achieve our objectives, we will continue to pursue our three ambitions. We will act like owners who will own the company for decades. We will adapt and succeed in a world that's ever changing. And we will be a company that we are personally proud to be a part of and would want as our neighbor. When we're successful, our employees, customers and communities and owners all benefit. Thank you, and have a good evening.

This concludes today's call. Thank you for your participation. You may now disconnect.