Thank you, Sherry. Good morning, and welcome to Vishay Intertechnology's second quarter 2022 conference call. With me today are Dr. Gerald Paul, Vishay's President and Chief Executive Officer; and Lori Lipcaman, our Executive Vice President and Chief Financial Officer. As usual, we will start today's call with the CFO, who will review Vishay's second quarter 2022 financial results. Dr. Gerald Paul will then give an overview of our business and discuss operational performance, as well as segment results in more detail. Finally, we'll reserve time for questions and answers. This call is being webcast from the Investor Relations section of our website at ir.vishay.com. The replay for this call will be publicly available for approximately 30 days. You should be aware that in today's conference call, we will be making certain forward-looking statements that discuss future events and performance. These statements are subject to risks and uncertainties that could cause actual results to differ from the forward-looking statements. For discussion of factors that could cause results to differ, please see today's press release and Vishay’s Form 10-K and Form 10-Q filings with the Securities and Exchange Commission. In addition, during this call, we may refer to adjusted or other financial measures that are not prepared according to Generally Accepted Accounting Principles. We use non-GAAP measures because we believe they provide useful information about the operating performance of our businesses and should be considered by investors in conjunction with GAAP measures that we also provide. On the investor relations section of our website, you can find a presentation of the second quarter 2022 financial information containing some of the operational metrics Dr. Paul will be discussing. Now I turn the call over to Chief Financial Officer, Lori Lipcaman.

Thank you, Peter. Good morning, everyone. I am sure that most of you have had a chance to review our earnings press release. I will focus on some highlights and key metrics. Vishay reported revenues for Q2 of $864 million, a quarterly record despite a temporary closure of two key facilities in Shanghai, China, for over two months. EPS was $0.78 for the quarter; adjusted EPS was $0.82 for the quarter. We have identified certain charges for the COVID-related shutdowns of our facilities in China during Q2. The cost of these government-mandated shutdowns in China are incremental to and separable from normal operations. These items impacted cost of goods sold by $6.7 million and selling, general and administrative expenses by $0.5 million. They are added at net of tax when calculating our non-GAAP adjusted EPS. We do not include in this amount indirect costs of the pandemic, which are normal costs of doing business in 2022. During the quarter, we repatriated cash from Israel as part of a program we initiated in response to a change in Israeli tax law. We repatriated $81 million to the United States net of withholding and foreign taxes of $13 million. We also paid Israeli claw-back tax of $12 million. These taxes had been accrued in Q4 2021 when the new tax law was enacted. The payment of these taxes is reflected in operating cash flow on the statement of cash flows. The repatriated cash is used to fund our stockholder return policy. As we announced in February, Vishay has adopted a stockholder return policy, which calls for us to return at least 70% of annual free cash to stockholders, directly in the form of dividends, or indirectly in the form of stock repurchases. For 2022, we intend to return at least $100 million. During Q2, we repurchased 1.4 million shares of common stock for approximately $26.3 million. We paid $14.3 million for our quarterly dividends for a total stockholder return of $40.6 million. Year-to-date, we repurchased 1.9 million shares of common stock for approximately $36.2 million and paid $28.8 million in dividends for a total stockholder return of $65 million. Revenues in the quarter were $864 million, up by 1.1% from the previous quarter and up by 5.4% compared to the prior year. Gross margin was 30.3%; adjusted gross margin was 31.0%. Operating margin was 17.5%; adjusted operating margin was 18.3%. EPS was $0.78; adjusted EPS was $0.82. EBITDA was $192 million, or 22.2%; adjusted EBITDA was $199 million, or 23.0%. Reconciling versus the prior quarter, adjusted operating income Q2 2022 compared to operating income for the prior quarter, based on $10 million higher sales, or $24 million higher sales excluding exchange rate impact, adjusted operating income increased by $12 million to $158 million in Q2 2022 from $146 million in Q1 2022. The main elements were average selling prices had a positive impact of $24 million representing a 2.9% ASP increase. Volume decreased with a negative impact of $1 million equivalent to a 0.1% decrease, primarily due to the COVID-related plant shutdowns in Shanghai. Variable costs increased with a negative impact of $15 million, primarily due to higher metals and material prices. Fixed costs were flat quarter-over-quarter; inventory impacts had a negative impact of $1 million, and exchange rates had a positive effect of $4 million. Reconciling versus the prior year, adjusted operating income Q2 2022 compared to operating income in Q2 2021. Based on $44 million higher sales, or $78 million higher excluding exchange rate impacts, adjusted operating income increased by $33 million to $158 million in Q2 of 2022 from $125 million in Q2 2021. The main elements were average selling prices had a positive impact of $64 million representing an 8.1% ASP increase. Volume increased with the positive impact of $14 million representing a 1.6% increase. Variable costs increased with a negative impact of $30 million, primarily due to increases in the cost of materials and services, labor, silicone, metals, and logistics not completely offset by manufacturing efficiencies and cost reduction efforts. Fixed costs increased for the negative impact of $17 million, primarily due to annual wage increases, as well as general inflation. Selling, general and administrative expenses for the quarter were $110 million, slightly less than expectations due to foreign exchange effects. For Q3 2022, our expectations are approximately $107 million of SG&A expenses at current exchange rates. For the full year 2022, our expectations are $440 million of SG&A expenses. The debt shown on the face of our balance sheet at quarter end is comprised of the convertible notes due 2025 net of debt issuance costs and $6 million outstanding on a revolving credit facility at the end of the quarter. No principal payments are due until the expiration of the revolving credit facility in June 2024. We had total liquidity of $1.6 billion at quarter end; cash and short-term investments comprised $847 million, and $744 million is available on our credit facility. Total shares outstanding at quarter end were $143 million. The expected share count for EPS purposes for the third quarter 2022 is approximately $143 million, excluding any impact of share repurchases. Our US GAAP tax rate for the quarter and year-to-date was approximately 24%. Our normalized effective tax rate, which excludes the tax effect of the COVID costs in China, was also approximately 24% for the quarter and year-to-date period. We expect our normalized effective tax rate for the full year 2022 to be between 23% and 24%. A consolidated effective tax rate is based on an assumed level and mix of income among other taxing jurisdictions; a shift in income could result in significantly different results. Also, a significant change in US tax laws or regulations could result in significantly different rates. Cash from operations for the quarter was $75 million. Capital expenditures for the quarter were $60 million. Free cash for the quarter was $15 million. For the trailing 12 months, cash from operations was $391 million. Capital expenditures were $253 million split approximately for expansion $161 million, for cost reduction of $16 million, and for maintenance of business $76 million. Free cash generation for the trailing 12-month period was $139 million. The trailing 12-month period includes $15 million cash taxes paid for the 2022 installment of the US tax reform transition tax and $25 million cash taxes paid pursuant to our Israeli repatriation program. Vishay has consistently generated in excess of $100 million cash flows from operations in each of the past 27 years and greater than $200 million for the past 20 years. Backlog at the end of quarter two was at $2,425 million or 8.4 months of sales. Inventories increased quarter-over-quarter by $46 million excluding exchange rate impacts. Days of inventory outstanding were 95 days. Days of sales outstanding for the quarter were 45 days, days of payables outstanding for the quarter were 37 days, resulting in a cash conversion cycle of 103 days.

Thank you, Lori, and good morning, everybody. Despite the pandemic and the further accelerating rate of inflation globally, the second quarter for Vishay has been even more successful than Q1, which had been one of our best quarters ever. Following the increasing market demand, we steadily expanded critical manufacturing capacities. In Q2, we achieved excellent results in the quarter with a gross margin of 30.3% on the level of Q1. Adjusted gross margin of 31.0% versus 30.3% in Q1; operating margin of 17.5% of sales versus 17.1% in Q1; adjusted operating margin of 18.3% versus 17.1%; earnings per share of $0.78 versus $0.71 in Q1, and adjusted earnings per share of $0.82 versus $0.71 in Q1. Due to some temporary increases of receivables and inventories in the context of the Shanghai shutdown, free cash generation in the quarter was modest at $15 million. For the entire year, we again expect solid performance concerning free cash. Vishay continues to operate under extraordinarily good economic conditions; orders and backlogs are at historically high levels. All regions remain principally strong, with a currently not transparent situation of the Chinese market. Most of the market segments are performing well, with exceptions in computers and smartphones. Major shortages of supply continue to exist for many product lines. In light of increased inflationary pressures on the costs of manufacturers, the market continues to accept price increases. Global distribution overall remains in good shape. The midterm business outlook continues to be strong. POS in the quarter was 13% below Q1, which clearly represented a spike, and 2% below prior year. POS in all regions declined from the unusually strong first quarter. Global inventories in the second quarter increased by $54 million or by 10% versus Q1 and were 28% above prior year, characterized by a rather extreme shortage. This increase illustrates pricing impact, indicating a lower increase in terms of pieces in particular compared to the prior year. Inventory terms of global distribution in the second quarter were at a good level of 3.6, noticeably down from 4.2 in the first quarter and down from 4.4 in prior year. The Americas showed 2.1 turns after 2.3 in Q1 and 2.1 in prior year. Asia had 4.6 turns after 5.6 in Q1 and 7.4 in prior year. Europe had 4.3 turns after 4.9 in Q1 and 4.6 in prior year. Summarizing, the extremely lean supply chain of prior quarters is in process to normalize. Regarding the industry segments, automotive customers in general continue to be impacted by component shortages. We expect strong demand in the second half as customers will start to work down the high vehicle backlog based on an improving supply situation. Growth in the automotive market is expected to remain strong midterm, with electronic vehicles gaining market share due to a further growing electronic content in general. Furthermore, significant investment is still to be made in charging infrastructure. Industrial market sectors are expected to show continued growth in view of an accelerated move to clean energy, smart home automation systems, factory automation, and growing investments in traditional power infrastructure projects. As mentioned, demand for notebooks is declining, but growth is expected to continue in server and storage hardware. 5G continues to provide growth opportunities, but some slowdown is apparent due to supply chain issues. Sales with smartphones are presently declining. Extraordinary growth is noted in military hardware, which can be expected to continue, and we also realize an ongoing recovery in commercial aviation markets. The medical business remains on a steady growth trend, returning to a more traditional segmentation. The markets for air conditioning and smart TVs are presently in decline, but increasing applications in white goods for control and communication are noted. Wearable electronic products and Internet of Things applications continue to drive growth. The second quarter sales of Vishay, excluding exchange rate impact, came in above the midpoint of our guidance. We were able to manage the quite severe pandemic-related issues in China, especially in Shanghai, better than expected. We achieved sales of $864 million versus $854 million in the prior quarter and $819 million in the prior year. Excluding exchange rate effects, sales in the second quarter were up by $24 million or 3% versus the prior quarter, and up by $78 million or 10% versus the prior year. Despite historically high backlogs, the book-to-bill ratio in the quarter was 1.07 after 1.14 in the prior quarter. Book-to-bill for distribution was at 1.05 after 1.16 in the first quarter, 1.11 for OEMs after 1.13; 1.07 for semis after 1.14 in Q1; 1.07 also for passive after 1.15 in Q1; and 1.02 for the Americas after 1.24 in the first quarter. 0.88 for Asia after 1.02, and 1.35 for Europe after 1.23. Backlogs in the second quarter remained at a record level of 8.4 months, close to the prior quarter which had been at 8.5 months; 9.5 months in semis after 9.3 in Q1; 7.3 months in passives after 7.6. Quite broad price increases continued to be implemented, up 2.9% versus the prior quarter and up 8.1% versus the prior year, which includes a positive effect from an unusually high fluctuation of distribution incentives at semis. Semis themselves were up 4.7% versus the prior quarter and up 12.9% versus the prior year. Passive prices increased by 1.1% versus the prior quarter and by 3.7% versus the prior year. Despite high transportation costs, high material prices and further accelerating inflation, Vishay was able to defend its traditional level of variable margin percentage. Additional price increases and good plant efficiencies contributed. SG&A costs in the second quarter came in at $110 million. Manufacturing fixed costs for the quarter were $139 million. Fixed costs in total, both SG&A and manufacturing fixed costs, were according to expectations when excluding exchange rate impacts. Total employment at the end of the second quarter increased to 23,780, up 1.5% from the prior quarter. Excluding exchange rate impacts, inventories in the quarter increased by $46 million, with $10 million in raw materials and $36 million in WIP finished goods. The increases in WIP and finished goods were caused mainly by interruptions of the supply chains and factory shutdowns in Shanghai. Inventories are expected to normalize for the most part in the course of the year. The temporary inventory build caused inventory turns in Q2 to decrease to 3.8 as compared to 4.2 in the prior quarter. Capital spending in the second quarter was $60 million versus $32 million in the prior year; $38 million for expansion, $4 million for cost reduction, and $18 million for the maintenance of business. We continue to prepare ourselves for further accelerating growth rates. For 2022, we continue to expect CaPex of about $325 million. We generated cash flow from operations of $391 million on a trailing 12-month basis, which includes $25 million in taxes paid for repatriation of cash. And we generated in the second quarter free cash of $139 million on a trailing 12-month basis again, including $25 million in taxes paid for the repatriation of cash. Despite increased CapEx and some inventory and receivables increases, we also expect solid free cash generation for the current year. Concerning resistors, we enjoy a very strong position in the automotive and medical market segments. We offer virtually all resistor technologies and are globally known as a reliable high-quality supplier of the broadest product range. Vishay's historically growing business runs at record levels. Sales in the quarter were $230 million, which includes $3 million from our new acquisition Barry Industries, up by $11 million or by 5% from the prior quarter, and up by $30 million or 16% from the prior year. This excludes exchange rate impacts. The book-to-bill ratio for resistors in the second quarter was 1.05 after 1.24 in the prior quarter. Backlog is at 7.6 months, quite on the level from the first quarter which was at 7.8 months. Gross margin in the quarter improved to 33% of sales, up from 31% of sales in the first quarter. Inventory turns in the second quarter were at 4.0, down from the prior quarter at 4.4. There was a temporary increase of raw materials safety stocks. Selling prices continue to increase by 1.3% versus the prior quarter and by 3.2% versus the prior year. We are continuously raising critical manufacturing capacities mainly for resistor chips and shunts. We continue to broaden our business with specialty resistors through targeted acquisitions like ATP and recently Barry Industries. Regarding inductors, this business consists of power inductors and magnetics. Exploiting the continuously growing need for inductors in general, we should develop the platform of robust and efficient power inductors and lead the market technically. With magnetics, we are well positioned in many specialty businesses, demonstrating steady growth in this field. Sales of inductors in Q2 were $90 million, up by $8 million or by 9% versus the prior quarter and up by $6 million or by 7% versus the prior year, excluding exchange rate effects. The book-to-bill in the second quarter was 0.97 after 1.14 in the first quarter. Backlog for inductors has decreased to 5.6 months from 6.3 months in the prior quarter. Gross margin in the second quarter increased to 33% of sales, compared to the prior quarter at 30% of sales. Inventory returns were at a good level of 4.7, slightly up from 4.6 in the prior quarter. Further price increases have now also become apparent for inductors, up 1.0% versus the prior quarter and up 1.9% versus the prior year. We continuously expand our manufacturing capacities for power inductors and remain open for acquisitions, particularly in the field of magnetics. With regards to capacitors, our business with capacitors is based on a broad range of technologies with a strong position in American and European market niches. We also enjoy increasing opportunities in the fields of power transmission and electric vehicles, particularly in Asia, China. Sales in the second quarter were at $132 million, up $7 million or 6% above the prior quarter, and $90 million or 7% above the prior year, excluding exchange rate impacts. The book-to-bill ratio in the second quarter was 1.17 after 1.02 in the prior quarter. The backlog remained at a very high level of 8.1 months. Gross margin for capacitors in the quarter remained at 25% of sales. Inventory turns in the quarter were at 3.2, in line with the prior quarter. For capacitors, we see continued price increases, up 0.9% versus the prior quarter and 5.8% compared to the prior year. We are confident for capacitors also in light of the growing military business and recovery of the oil and gas sector. Concerning OPTO products, Vishay’s business with OPTO products consists of infrared emitters, receivers, sensors, and copters. Sales in the quarter were $78 million, down $1 million or 2% compared to the prior quarter, but up by $6 million or 9% versus the prior year, excluding exchange rate impacts. The book-to-bill in the second quarter was at 0.86 after 0.78 in the prior quarter. Backlog still remains at a fairly high level of 9.1 months after 9.4 months in the first quarter. Gross margin for OPTO products in the quarter normalized to an excellent level of 34% of sales, down from 40% of sales in the prior quarter which represented clearly a spike. We continue to raise selling prices also for OPTO products, up 2.5% versus the prior quarter and up 8% versus the prior year. OPTO products continue to be a very relevant element of Vishay’s performance. Moving on to diodes, for Vishay, this represents a broad commodity business where we are the largest supplier worldwide. Vishay offers virtually all technologies as well as the most complete product portfolio. The business enjoys a very strong position in the automotive and industrial market segments and has been growing steadily and profitably for years. Sales in the quarter were $192 million, up by $13 million or 7% versus the prior quarter and up by $24 million or 14% versus the prior year, again excluding exchange rate effects. The book-to-bill ratio in the second quarter was at 1.10 after 1.16 in the prior quarter. The backlog decreased to 9.3 months from 9.7 months in the prior quarter which represented the record. Gross margin in the quarter improved further to 28% of sales compared to 25% in the first quarter, positively impacted by better ASPs, a higher volume, and some inventory build. Inventory turns in the second quarter were at 4.0, close to the prior quarter at 4.2. We continue to raise ASP substantially, plus 5.2% versus the prior quarter and plus 13% versus the prior year. Our large and profitably growing business with diodes is the most relevant part of Vishay’s volume base. Finally, with MOSFETs, Vishay is one of the market leaders in MOSFET transistors. We enjoy a strong and growing market position, particularly in automotive, which, with an increasing use of MOSFETs, will provide a very successful future for this line. Demand has reached extreme levels and is expected to increase rapidly in the years to come. In the quarter, we had sales of $158 million, which was down $13 million or 8% below the prior quarter and down $6 million or 4% below the prior year, without exchange rate impacts. Naturally, we were severely impacted by an extended COVID-related plant and warehouse shutdown in Shanghai. The book-to-bill ratio in the quarter was at 1.14 after 1.28 in the first quarter. Backlogged increased to another record of 10.1 months from 9.0 months in the prior quarter. Gross margin in the quarter increased further to 35% of sales after 34% of sales in Q1, also supported by some inventory build. Inventory turns in the quarter dropped to 3.4 compared to 4.4 in the prior quarter. A substantial but temporally increase of WIP and finished goods was a consequence of the Shanghai shutdowns. We continue to implement price increases in a substantial way, plus 5.3% versus the prior quarter and plus 15.3% versus the prior year, which includes the major part of the previously mentioned effect on distribution incentives. MOSFETs remain key for Vishay’s growth moving forward. We intend to keep a proper balance between in-house manufacturing of wafers and purchases from foundries. Let me summarize, despite substantially growing political instabilities, a strongly accelerating rate of inflation, and ongoing disturbances still caused by the pandemic, we continue to enjoy very high market demand. Backlogs and lead times remain at record levels, and our industry clearly benefits from an acceleration of the electronification in most of our market segments. The move to electric vehicles is one of the drivers, but to a similar extent the move to clean energy and the accelerating automation of factories. We expect this trend to continue long-term. Vishay is well positioned and competitive in terms of product range and costs. We keep investing in new processes and manufacturing capacities. We are confident about the third quarter and we guide to a sales range between $860 million and $900 million at a gross margin of 29.0% plus minus 50 basis points. Thank you very much.

Thank you, Dr. Paul. We will now open the call to questions. Sherry, please take the first question.

Good morning. Thank you for taking my questions. Dr. Paul, I wanted to start with gross margins. They were better than your guidance, and you mentioned the inventory build. Of the 70 basis points improvement from Q1 to Q2, how much was due to the inventory build? Can you elaborate on what this inventory build includes? Is it all in distribution? How soon do you expect that to normalize? Regarding the third quarter, you're guiding to 29%, which is lower than the 31% reported, but that comes with $20 million higher revenues. What factors are influencing the gross margins between Q2 and Q3?

Yes, the inventory build, not only, but by far for the most part happened in MOSFETs. This was the place when our plant was shut down for eight weeks during the quarter. You can imagine, the primary production in the Western Hemisphere was unable to package for a large extent. This increase happened in MOSFETs, not in distribution, really in-house, because our internal supply chain had been distorted. We are going to work this down, of course, but the quarter benefited financially from this inventory build to the extent of approximately $8 million. In the third quarter, the opposite will happen by nature. We're going to start working this inventory down, which could adversely impact the results by a similar magnitude.

So sorry, just that 200 basis points of gross margin compression. How much of that is because of the inventory work down? And how much of that is due to other factors?

It's calculated; the impact quarter-over-quarter was $10 million. When you compare the two quarters, $10 million divided by $900 million sales is approximately 0.22 points.

I see. Okay. Understood. And then maybe can I ask on diode. The margins on the gross margins on diodes have been trending higher, and they were 28%, which seems very high. Can you just elaborate on what is driving the higher margins? And is this level sustainable going forward? Because we typically think of diodes as commodity products. But just your thoughts on that.

It was, first of all, we had better prices, which is the number one reason for diodes. We had higher volume also. So all this together, including some good efficiencies, gave us a 28% margin, which I agree for a commodity product is not bad. I see if volume remains and prices hold. This can be defended in the future. This was no spike. But we will see. I would say that 28% indeed was a good result.

Understood. And then lastly, you repatriated $81 million from Israel. What is the plan for that cash? I mean, should we expect any increased buybacks, a dividend increase, or increased M&A? Please share thoughts on how you plan to use that $81 million.

Yes, this is Lori speaking. We identified that we would fund our stockholder return program using this repatriated cash from Israel. As announced, we plan to return 70% of free cash or a minimum of $100 million in either case, and we will continue along that same route.

Hey, team. Thanks for taking my questions, and congrats on a stellar set of results in a tough macro backdrop while navigating China issues. My first question is, you guys have previously guided for exchange rate to grow roughly 5% this year. Even with FX headwinds, given the print and guide, I think that implies a sharp decline in sequential growth in the fourth quarter. Any particular reason why we should expect that given the still strong environment? Any changes to that growth expectation for the year? Thank you.

If I understood you right, you doubt the outlook for the fourth quarter and ask whether there could be the danger of a downturn. If I understood you right?

It was more about the assumptions being made, and whether we should be concerned about that.

Yes, as a matter of fact, we believe that the year will pull through very nicely. And the deepest reason is, first of all, our responses from customers. If you look at the backlog, it is still sky high. We have all reasons to believe that this will be a very good year, a record sales year for Vishay.

Understood, thank you. And then you maintain the $325 million of CapEx expectations, which also implies a sharp uptick.

I confirm the $325 million.

Yes, so it suggests there will be increased spending in the second half. Have you encountered any issues with procurement in the first half?

Oh, no. As a matter of fact, we have a cycle; capital spending in Vishay is always by far higher in the second half than in the first half. This would not differ from a normal procedure in Vishay. Now, we confirm the $325 million CapEx.

Given your indication of strong demand, especially for your MOSFETs, can we anticipate higher spending in 2023 compared to previous years?

Yes, at the moment, it's not only MOSFETs; it's broader. MOSFETs for sure show the hottest demand at the moment among all our products. What we hear from the market is a further acceleration in the requirements for MOSFETs in the years to come. Therefore, we are preparing to build additional capacity in Germany to follow the lead and maintain a balance between own production and purchases from foundries.

Yes, thank you. Good morning. Dr. Paul, I wanted to double-check some of the numbers that you gave initially on the distribution of POS. I think you said it was down year-over-year and quarter-on-quarter. Could you give me those numbers again?

Sure. The POS was 13% below Q1, which represented a spike, and 2% below prior year. This was close to prior year; the first quarter was abnormal.

I'm just wondering why the book-to-bill was positive if it sounds like the demand from the distributors stabilized or was even down.

The book-to-bill was 1.05 for distribution. It's true that Asia currently shows some weakness, but this can be attributed to an extraordinarily strong first quarter. There were many pull-ins in Q1 due to uncertainties they had. All together, we expect for the third quarter for POS in Asia to increase compared to the second quarter.

Got it, okay. And then on the pricing, which obviously is benefiting you, are you done yet? Are there still ASP increases that you're pulling through in any of your areas?

Yes, we expect some further price increases, but at a slower rate. It's also true that if inflation accelerates, we will increase our price increases again, but there will be price increases in the third quarter at a lower rate than in the second quarter.

I wanted to get back to the previous question about the outlook for the December quarter. Typically, you're up in North America or down. There's some seasonality in Asia. Are you looking ahead? You have very strong backlog and lead times are 50 weeks out. Do you have visibility into the December quarter? Do you expect it to be more or less seasonal?

No, it's better than seasonal. The backlog will make it non-seasonal. We do not hear signs from any customer that they want to slow down ordering or shipments. In fact, automotive insists on their higher forecast. We are adding capacity. The backlog is there; capacity will be higher in the fourth quarter, and we do not hear signs of weakness from customers.

Okay, and then on gross margin, you talked about why it would be down. It still sounds conservative as you look forward given your expectation for further growth. Can we get back to that 30% plus gross margin number sustainably?

Principally, yes. It's a matter of volume; we are investing in capacities. We're not known for raising fixed costs dramatically. If the volume comes up, you automatically get better gross margins. The 30%, which we have shown, or 31% even in the previous quarter, was favored by inventory build. Now we see the opposite with inventory reductions leading to an adverse effect.

Lastly for me, Dr. Paul, there is a major management transition going on in the next couple of quarters as you pass the baton. I’m wondering if you could give us any idea in terms of planning there and what expectations you have for any significant changes in the company's strategy, use of capital, or anything else?

I know all the new people very well and since many years. I have full trust in all of them. I do not expect that Vishay will change its direction. We will lay even more emphasis on growth. I believe the markets we mainly deliver to make us very optimistic that we are not wrong in this expectation. Expansion of capacities will be a major subject even more than it has been in recent years.

Thank you for joining us on today's call. And for your interest in Vishay Intertechnology.

Thank you. This does conclude today's conference. You may disconnect your lines at this time. And thank you for your participation.