ALGM Allegro Microsystems

Katherine Blye Investor Relations
Ravi Vig President and Chief Executive Officer
Paul Walsh Chief Financial Officer
Quinn Bolton Needham & Company
Gary Mobley Wells Fargo Securities
John Pitzer Credit Suisse
Alessandra Vecchi William Blair
Srinivas Pajjuri SMBC Nikko Securities
Blayne Curtis Barclays
Vijay Rakesh Mizuho Securities
Mark Lipacis Jefferies
Call transcript
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Ladies and gentlemen, thank you for standing by, and welcome to the Allegro MicroSystems Q2 Fiscal 2022 Financial Results. At this time, all participants are in a listen-only mode. After the speakers’ presentation, there will be a question-and-answer session. [Operator Instructions]. I would now like to hand the conference over to Katie Blye. ahead. go Please

Katherine Blye

Vig; thank second and joined joining today Officer, us by Paul Financial Good Walsh. results you for Allegro's Ravi Executive Chief quarter President I'm Allegro's fiscal for Chief Allegro's Officer, morning, and for and year today XXXX.

our performance will outlook. a our and summary review We provide of quarterly financial

will ongoing filed operating assumes may more our is be may as documents We're update statements press forward-looking risk are meaningful Our than and from highlight subject filed substitute financial accompanying a replace to a results securities for forward-looking differently providing Investor page include in Allegro's it the earnings that and measures information are information for being note GAAP our be intended results earnings May laws. could made SEC, that The calculated the supplemental website. webcasted, and of that risks of clearly to on today XX-K not and enable forward-looking including because federal The future the page most during us and presentation measures based call and make discussed core to to uncertainties the other in or our These tables other results and other detail release actual this with operations. factors used our XXXX. financial comparisons as XX, financial Relations today similar materially expectations be statements vary non-GAAP investors a on by issued no shortly. companies. of to recent Please by this obligation that recording company the the release results current presented. any defined are to refer by discussed the IR events will and This result, about are call on cause available our statements are projections assumptions available Please comments on be conference projections. and

referenced during Ravi reconciliation release, For a our CEO, of found be can over which GAAP and our Ravi? the IR press posted page. turn call in today's President Allegro's been Vig. to to has financial measures non-GAAP I'll now call to earnings

Ravi Vig

and to Record in reflects ICs available our favorable power well our inventory. everyone. due revenue to vectors Katie, in in Revenue and good growth you, sensors $XXX.X to as our very exceeding Thank multiple morning, profitability to strong million, expectations industrial. X% FQX automotive and sequentially alignment relative and grew and magnetic franchises mix as

of well diverse increasingly IC up all sensor was gross from result improvements magnetic due year-over-year, target product broad improved set and strength highs experienced categories. revenue our customers. to applications growth and of transformation, Magnetic structural our margin our sensor across end again, products XX% achieving in model power a line. As record ahead nearly time of We an across

sensors, leading in particular, customers were control market up embedded year-over-year, adoption. current as motor motion solutions. Power Our with products adopt revenue tremendous control XX% achieving record a are experiencing ICs

growth potential. our Finally, design of a key be wins to measure continue

center Emerging to levels transition continue revenue high on xEV, and XX% markets revenue the accelerating design of basis. design growth and to win applications data Our rolling the ADAS, increased profitability. these X-quarter of X.X nearly Industry a company's majority outsized represent to wins, new enable growth

a growth sequential QX return disruptions is our we already to pause chain As we'll X will in growth we supply discuss, to the present ability recent gross us auto to revenue fiscal nearly at in XX% model and mid-teens be growth underway, expect our in in confidence and industrial recovery to QX, annual but fiscal quarter approximately what strength and and low growth expect COVID-related in power 'XX. franchises in target our deliver The annual 'XX and in give of margins. supply mag

the financials. the Paul? Now over Paul I'll on turn to color more for call

Paul Walsh

the you, is We the QX single Customer than the a electrified revenue end gains demand powertrains. global the the lighter our more business than mix in this diversity mix, customer highlight trend accelerating which higher-value, X% $XXX sequentially, down represented served remains of of of attribute no model. and strong and shift Auto OEM's our represented content towards XX% percentage strength record declined end results markets, of again, which XX% revenue, favorably of Ravi. revenue and quarter. including vehicles once compares revenue both car typical. to feature-rich was but Thank production, across to towards in production Automotive million our XX%.

reduce our backlog are customers, rising maintaining provide continues offsetting for of exceed additional to are shipping investments at levels. of Recently, many The of automotive Our in sequentially to procure sequentially. increased made grow, TSMC this metric. industrial ADAS historic revenue strategic to disruptions, at this levels ahead planned industry due critical percent we that share that we've mix, strategy. or our power a XX% Demand as our delivering to and all actions In far we continue supply to focus X which and chain areas current us wafer revenue exceeding pricing COVID-related particularly growth impacting been Offsetting products our supply. Like all input in and XX% rising represented ability implemented complement in experienced challenges, our to overall to digits our Malaysia to increased of revenue. automotive are revenue grew a and helping to industrial in our again double saw peers, supply. of partners foundry million sitting seasonal of volatility on strength have We've pleased stronger was of area of benefits visibility. continues We begun assurance QX outlook to capacity. QX, categories, Backlog to million, costs. successful across we've offset of supply we considerable of our to products to our and now XX% our increasing extended Other $XX.X environment, up in with broad automotive xEV XX% $XX.X demand. the

vaccination high rates very in partners, QX. giving in assembly us seeing already we are growth supply recovery. return with our to confidence Now at

to margin. margin make our our towards model, investment are points. points model. margin towards sequentially. progress sequentially continue million manufacturing compensation XX% expense gross was XX.X%, improvements successful GAAP to gross our to charges, margin excluding areas basis other portfolio gross million us progress $X.X expanding was Structural After of up faster XXX non-GAAP $X.X increased of execution our by up make from target basis and mix We and with stock of target of particularly product transformations and key XXX enabling

from variable lowest increase non-GAAP expense million, million by a in XX outperformance We expense was driven operating of these Non-GAAP were points GAAP recent percent for $XX.X The sales in Resulting sequential QX. of remain fiscal was million was and and include and QX. expense other as lines. in at Total level and was million memory. levels improvement charges. higher $XX.X at $XX.X of top non-GAAP compensation $X.X of fiscal basis on $X.X R&D SG&A the QX expenses $XX.X primarily adjustments million to revenue, expect expense or million. R&D the due million. margins stock compensation $XX.X operating expenses were and were XX% non-GAAP million, higher $XX.X up GAAP million expenses $XX.X to of SG&A GAAP an bottom

of We to gross XX.X% income about XX.X% margin rising model for for $XX.X of expect sales, outpacing discipline solid in or non-GAAP by of sequentially are increased and the million growth, to improvement flat operating good growth top operating profitability. progress QX. driving our meaningful sales. Revenue and XX.X% income line operating structural toward expenses significantly GAAP million the to increased be operating or quarter $XX.X Non-GAAP X.X%. target

the $XX.X QX tax to Second million the share is to increased QX our range an third fiscal per count of is was quarter in tax exceeding or XX% XX.X%. diluted to quarter. income $X.XX GAAP $X.XX the increased $XXX.X to 'XX. be rate to $XX.X $X.XX, Non-GAAP earnings diluted over QX. diluted net effective XX% increased The quarter million was and per effective XX.X% million and non-GAAP GAAP $XXX.X and expected in increase Non-GAAP rate net throughout to fiscal was XX% in of income for million share by revenue. expected QX share earnings with upcoming guidance.

target of Cash of We we Accounts inventory million, flow in Our ended and $X the and fundamentals. balance business up strong $XX range. QX $XX million, quarter days days, versus up XX by of and our execution a million were in a operating XXX quarter receivable at a end equivalents the with XX -- XXX historic in sheet sequentially million ended at $XXX quarter. to at and cash with decrease Net target quarters generated $XX.X to and DSO in the million days. prior by consistent were reflects $XX balances million, high.

Our shipments for the at at into With color to was inventories I'll that, turn to quarter. historic continue POS continue hover lows, historic call more be Channel the XX% to of while at sales business the highs. for channel outlook. strong sell-through back Ravi the and on our

Ravi Vig

Paul. Thank you,

business a Our provide QX us multifaceted in key the Allegro performance that engine. and model with differentiators X growth highlights profitability

and gross Our in achieve transformation diversification high-growth the to improvements markets into structural margins.

represented with in both sensor XX% transformations line. the ICs the on start product and revenue bottom dividends top paying Let's Magnetic QX. of

fastest, up experienced has current XX% with sequential portfolio the sensor magnetic our sequentially. of growing growth sensors All

the applications. supplier Allegro to choice in #X be end As the customer's continues of the market, across supplier

being applications, including charging infrastructure. EVs current and example, into designed are sensors For EV next-generation energy, our green

are in inverters, inverter X have Allegro of every us. sensor. We penetration which socket excellent Today, rapidly opportunity market current xEV growing an uses a X out for xEV

the transformation investment beyond sensors improve in value broad-based our and are magnetic in with key We for position result and scale have where in And levels our our growing ICs position expertise our unmatched Power variety a also Customers revenue our the of of record safety our technology been sensing, angular steering sensors successful applications, position in broad levels QX. systems motion accuracy. market. area. a focus and provides particularly control physician to automotive, of high-speed magnetic ADAS achieved

are targeted competition have magnetic the are XX% revenue differentiated highly up Revenue XX% from of our our in that was quarter. that business. and year-over-year, the complementary to sensor developments We representing

innovative products, applications strong hybrids, a the continue motor technology mild tools, expertise. to our leverage strong to we XX-volt broadest where power operation as seeing power our in an growth are battery applications adjacent key like our such high-voltage IC expand XXX-volt ASIL-compliant transition we we where We and with portfolio in to content process to of alignment and see have drivers

Industrial energy Moving to was performance factory strong categories across building and automation. end all markets. from to green

speaking was growth infrastructure center success example over with a center power particularly data categories the We see technical our leadership across the industrial I great in expect in continued is to about but quarters, data coming applications our ICs. of

Over largest hydro successfully the last with have XG long-term quarters, of secured agreements scale we support build-out major X X to applications. the customers and

expect very function accelerating and diversifying has extraordinary. demand and data XX% and vehicle. FY we believe lines to than us not variability the we step year-over-year transition the content had to industrial demand our increase continues become product and production Within EV result, further adjusting double revenue our Allegro end over mix. benefit revenue healthy, in Carmakers vehicles in significant which a strengthening resulting in feature-rich customer even increase revenue, to a as The was As up nimble, contract, per of and remains available, our will automotive, have course more to parts see slowed very allow our to 'XX. and become center

forecasts reflect inventory. still industry-wide building do not pent-up our to supply have chain from challenges, luxury been have be point, vantage continues there the of revised and to customers production While demand

electrification to and quarter, xEV at adoption a advanced in Last we in major OEM, see additional to sensor strategic competing a proven track to application. thanks current OEMs, our win accuracy to sockets. solution, and continue market-leading safety this displacing continue we and We new acceleration Japanese in by high-value secured wins see inverters feature record

battery market-leading of solution performance advanced It's outcome cooling innovation. hybrid their charge. impact EV cooling automotive-grade per customers with for and designed battery using improve at miles for great to cooling already latest battery and and the systems. our our launched driver fan aim IC type for environment, manufacturer also in noise we We're our reduce customer fan our and for a the and for We a that's

transformation our all X.X progress see great Industry to ahead, and xEV, financial differentiated our customers value and the center. look outstanding long-term across it model I we of particularly strategic technology data initial alignment ahead in well towards brings a As of but and are our with plan. as We've our markets, result made ADAS,

Our gross also record expansion. asset-light at nimble model allows us and margin supports our to while demand be enabling levels,

strong and us strong macro diversity, to customer end enables climate. market franchises any regional deliver product and diversity Our in

a for in As supplier demand from impact closures we Paul temporary despite fiscal our mentioned, healthy see the QX we on to backlog, expect factory discussed. revenue outlook

$XXX expect revenue be in QX to the million. to million We of $XXX range

For mid-single other QX, down expect digits be we automotive sequentially, industrial to seasonally will down, and will levels. be prior revenue returning while

gross return anticipate expect diluted levels. new at share ending fiscal are We ramps significant applications, third-party a and augmented already 'XX. to margin additional revenue new turn at suppliers growth $X.XX. we over low we earnings that, about range sequential new of back and wins with QX, content the positioned higher expect suppliers, When continued non-GAAP in to recovery We in accelerated mid-teens per Katie. roughly growth. growth be by in margin earnings, and gross will expansion design ramping, assembly high-growth margins with underway fiscal non-GAAP call believe XX% I'll be 'XX the With our third-party revenue to the flat to well strong for deliver we to gross combined With wafer increases

Katherine Blye

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


[Operator Instructions].

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

Quinn Bolton

results a nice on and I performance. Congratulations guess questions. the couple margin strong of

test as 'XX? have like you and like fiscal Or revenue of to across place that to network, it As capacity fiscal revenue feel growth? look support low and XXXX, you today your I'm in the mid-teens. to do capacity expecting look pretty foundry in good that are growth secure meet into assembly both you you allocated still looks you're you support working wondering, to to outlook kind for you

Ravi Vig

you, Quinn. Thank

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

received So that have in the foundry our projections commitments have short, from we aligned the with partners. we

Quinn Bolton

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

Ravi Vig

been -- vehicles. tremendous higher transition There's a feature-rich to Yes. this year

really So low predominantly in feature-rich at is content the and what we support, in forgone, low tremendous or higher in been it's the look production feature are on content systems that's xEV both we ADAS the we vehicles. automotive, -- expansion And it's been the that these support that that when and been products production you see displaced driving and that's vehicles.

entire of profiles at our believe for the are for industry in the platforms the believe basic production. there are is may point, that customer dislocations supply don't car components And this So the switching given available, just where significant. dislocations the we be these demand we nimbleness while chain, production including car challenged


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

Gary Mobley

constraints enough guidance. the presume of enough third have fact you the I sort have relate surrounding -- just revenue it's your about inventory, distributors quarter your ask to constraints to wanted the simply I that inventory. don't don't

the replenish I be revenue when so more fourth your do that will And gains start you you in fully is question being to sequential in up distributors and inventory? guess, a in fourth lost think third And to made importantly, the position the is, quarter and quarter in quarter? my the revenue

Ravi Vig

take to want it? you Do

Paul Walsh

Paul. Yes. this Gary, is

the at we So in relates QX guidance subcons our occurred instances Malaysia. have that really for specific to that

out, pointed ramping. they're they're we As and online already back

in fact and our XX% year-over-year allow for that have us we've so we to the 'XX to to And compared confidence growth will we achieve targets place that that the the return should in fiscal growth much of growth had year.

the POS MCell relates distribution remain at every broader data market. historic we inventory get to the it As our historic or proxy are. from for the a be distribution changing currently we is that levels good continues don't anytime highs. And the see We month. know lows partners They while distis, channel what of to And soon.

basically anytime whenever right ship we that to don't future. and -- the So changing the customer, foresee the near we in goes them end

Gary Mobley

you. Got


And cost so that considering somewhat from I you're XX% which to take to source. lower wafer higher rather supply currently, close a maybe good or lot running believe margin of forced a gross you're is pretty

is which so these of blue best source sky things is scenario more wafers from you get question your out with to that that or back target. And -- external you my from historical is margin, gross lower-cost years? track, lower XX% Is more on potentially under a sort cost that TSMC UMC, where the wafers in there flowing upside I Is case sources? believe specifically,

Paul Walsh

very get in Thanks, about in towards more believe but of we're manufacturing. indicative And not to our undergone target gross with we the Gary. pleased certainly clearly, mix. as XX shift how on stop. XX%, we're feature-rich going XX%. increasing It's in various products we've to forms, -- talked or certainly to the We we've higher quality, when we've achieve Yes, also margin. It's in -- not indicative of quality transformations done we're structural higher

out higher to and towards out push will seek the upper And XXs years. the continue to so drive ways than we in margin that


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

John Pitzer

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

Paul Walsh

-- and line by a think, essentially, subcon return that's, is in or revenue the that's -- for what XX%, 'XX. growth is we were our that we've when So to towards fiscal Malaysian -- that delays impacted the the we target with drive missed changes I the expectations

it's going to place exactly as a in QX, in And expect full while what's to these we XQ XQ. we and hard mentioned predict back So are and do I take catch in production, to up expect to return growth. already factories

Ravi Vig

as target just if in growth on impact, on it would an trajectory. John, QX, additional have And Yes. fiscal been for the clarification wasn't we our

impact the real, but onetime. So is it's

the we We We are high factories -- see extraordinarily see already levels. already rates vaccination at running. the

part So of you But happened we're was, your at go this with chain. next our second as supply on, quarter. think I augment this not the this quarter we what of we question concerned the as point of has know, do part

manufacturer, We semi is to to misses. continue, at the make unable across entire challenged chain And with limitations continues the other be point every as this supply chain. supply up

we the into you to see factored our XX% we're year, is rate. expecting year-over-year our in growth expectations what be So that and for -- that

John Pitzer

there's run year That's a to you have you a lag growth renegotiate as of year? fiscal guide drive kind with actually from place that's are to the profile have imply would role customers? talk that's $XX be is low that north curious wins? second if fourth next segue design about the up us rate visibility oftentimes bigger to million fiscal mean play To perspective. Is the Ravi. of pricing rate supply off I that And the which this a for of of growth. in you do And run be revenue just a help helpful, able 'XX quarterly of kind of mid-teens quarter to to confidence. And kind of implied question, could because effect the on able just you you good extent what my ASPs confident to that I'm understand a

Ravi Vig


the with supply. Let's just start

factored we've that is supply we partners. based the foundry in And our availability into expectations. of supply So our we speak availability on commitments already have that from

adoption see -- the great systems xEV of tailwind we automotive we It with along will growth In tailwinds ADAS sophistication or low of terms as rebound coming, levels. a as give of of sophistication will its well a see ADAS the where of systems systems the us vehicles. increased production increased the as increased in

spoken really We've secured. content. where but drive about function we them year, contracts coming step to a of next through that we both growth the have centers data So expect

coverage -- to be fairly that with ensuring expect back or and legitimate. is our through of order we our perspective capacity aligning working And to has So there enough that our customers, our activity much an our back come commitments from targets.


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

Alessandra Vecchi

on strong results. Congratulations the

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

Paul Walsh

is this Paul. Alex, Sure.

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

Alessandra Vecchi

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

Ravi Vig

Thank over gaining you, now embedded -- our we been few the that X-phase we've and about Yes. talking are about associated as expect, been last it's traction it Alex. control real products. motion quarters, with we've fact exactly you No, is the talking story contracts those the

So control specifically motion in it is area. that

Alessandra Vecchi

Great. And just I that, one as of extension can. if

earlier, think of accelerated that a I wins were some of that design running you maybe win industrial you said basis. of XX% and Can xEV, Paul, X-quarter momentum on rolling up coming or design percentage from newer tell us sort ADAS is the what platforms? increased

Paul Walsh

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


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

Srinivas Pajjuri

questions. of couple A

all First the time, production, your the on out. it's the their than X%, disruptions time pointed given which that lowering Ravi, I a have are we're customers believing the as autos orders is -- difficult at not But you much I think, down are same in the seeing. quarter. better that

issue? just Is why I'm declined this as sequentially? curious So auto supply to that is a

Ravi Vig

Yes. right now What match we've the challenge -- available with is to real demand. Srini, supply our

supply where the customers need aligning most are we So our to products.

at moving when shutting from example, going are which be down, ones great been focused inflection which auto, So there we look cetera. platforms et now on, to are between for this has

of seasonal business. the our with reallocating we've parts take requirements material to the of the growth our fulfill pretty been nimble some our associated true able also opportunity we've And been of in so -- to production. other And use

and on of inventory not into key the demand. been our customer supporting So us focusing segments in building about cognizant chain certainly, all all expense markets Demand general, in really for we've exceeds supply. at

Srinivas Pajjuri

Obviously, on the are I time, lower for foundries UMC, been to at know And from But a year. more things, next strong here. gross speculation also side, be you there cost And it very then Makes same is on cetera. recently, et cost. gets pricing, and their raising question my wafers the some of margins sense. next prices said couple performance that as has and TSM wafer going they're the

question, if potential curious next pricing. going we have Ravi, any just think that's a the then as margins? I So through to on year's impact broader guess, And gross the

potential some peers actions raising broadly. folks then are your cost talking by of Some more selectively mitigation are and about prices

So how given look base potential, I'm just your to what maybe wins out that pass curious, in through costs nature, of the have that you you you the product of ability have, guess, term do your seeing? think as you that might be the about extent customer some et cetera, mix, longer I some mitigation to to and you design actions incremental

Paul Walsh

the is we're this Srini, Paul. of aware to environment. I inflationary this. -- mean, take Everyone an that. in I'll is I'll start response

and rising. all those it in we puts for sense that We with we've are that We've margin. what's confident seeing do offset input balanced remain year. seen and target -- cost does of the to it XX% throughout and our strategically. takes, very price is we're where we able well And to what been And increases makes gross of aware and coming,

Srinivas Pajjuri

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

Paul Walsh


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


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

Blayne Curtis

I on up just want to follow back of questions. prior a couple

the auto up and flat thought you it down a for ended Just quarter, I September bit. guided

is demand trying was just I to exceeding that said was was if you still I curious So -- supply. --

the So is I to that for issues the that was Or it was down? trying the factor -- -- customer being behavior? just was supply

Ravi Vig

much strategy, pretty that level customers It's we've Yes. taken from been factories they've other readjusted as platform the segments. as these one And that customer Blayne, line the service platform -- at have true sporadic in the downs as opportunity the as demand you've seen customer the production to far next, due to to component availability. created

for all this The at don't all -- first strong. manufacture from is running purposes ability highest filling segments. market extraordinarily our And So segments native perspective inventory. the our to lines we point, of is capacity priority across demand market a production keep in the see to we in

Blayne Curtis

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

Ravi Vig

We quite bit a done assembly do of Malaysia. have in activity

in Philippines. And We of assembly of where so quite done -- broad in is it it terms the our is is affecting. half

all So which of market business will segments higher pin but we commercially count more the affected, go basically available some that not across is Malaysia that of our us. the particular service, affect piece for packages, packages


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

Vijay Rakesh

execution quarter, great Paul, here. good and Ravi

et of Just look the Polar would hear at obviously, -- calendar cetera? to between and thoughts TSMC, part wondering be year, any DSM exit, long-term 'XX, strategy. you mix But UMC, ramping, next and what good when you on as your say,

Paul Walsh

Vijay, is year. source will year, And to Polar exit continue of this we strategic supply. a TSMC fortunate us have provided that's throughout The the Paul. to grow So been we've the as

that the but say, to grow basically confidence said haven't in gives will percentage now, a us outlook. to be, We publicly TSMC 'XX fiscal be from additive continue our what it supply would and year

Vijay Rakesh

looks solid pretty on a leadership sole-sourced had guess. And again automotive, your think down the the sensors chain, I XX%, like ADAS. current But you for you Texas differentiate -- versus it. Instruments magnetic be to it EV your talking is guys XX%, build Got an sensing in some where it. I and think and many in are et cetera, we there's XX% And you LVP obviously, supply inventory concerns the quarter I might of

to your wondering order because a I point, was know what to And really wondering wants. less was sole-sourced that order sensing the much you or proprietary kind sole point, But when customer ADAS there? how of into to so think double exactly that of magnetic because opportunity source, access I EV you

Ravi Vig

Vijay. you, Thank

In applications xEV, typically terms products, specific our when bit interface with or have products do work, They're them, of our utilize quite are a of to ADAS to very software they sole-sourced. products. typically our it's whether to it's mechanical whether and designs customers

not or interchangeable. So they're replaceable easily

predominantly to So question, they they your source. -- so are sole

the market. in understand very We it little us we understand we helps us So to than are, do have even and most It really we et have are don't levels inventory but closely. a customers' visibility cetera. engage than clear -- usage the better on visibility, the don't what get though gives most, what better rates


[Operator Instructions].

Next question Mark Jefferies. Lipacis comes from the of line of

Mark Lipacis

or decide their elevate know to about supply behavior do suppliers I talked to you in industry try change. question I or see this times is and whole out we you is, inventories things do your experienced you was orders just a maybe don't or about how anything has on at we that supply business? customers experience if You we've analysis both or longer how excited order or lead Or your do future? we Paul. maybe Ravi structural come about about also how That do -- always a the do fluke, think doesn't just to the like to is end supply of that any just can imagine to day it long-term the challenges primarily just lead something the Do you or over chain oh, of books are way to do the could whole customers agreement. the the -- about own changing a the to with that do structurally is mitigate when talk year, Maybe like thinking you the chain that that business. you kind and challenges the the going and that change you rather continue for past done. think your the --

your a first question. That's do follow-up. are about with suppliers? longer-term I you So thinking supply the do agreements -- had you

Ravi Vig

have flow the It levels start would chain anticipated. point, our that's that very partners at bubble. But the as we you one overinvesting more transition as Thanks, automotive far the is Mark. right content that And desire customer's electronic with know, what it's within always -- a to supply are this a supply with know, as the beyond for as That's availability ensure the you investment accelerating vehicles, From long-term to the In assembly the customers foundries sure, to to a believe was higher is now. for to general, that The we supply is heavy to problem, adequate. everybody that that's in have really foundry not occurring perspective, well value-added at a vehicles secure in building high business, And it's especially feed higher issue focus inventory. supply at conscious that such agreements an both we on sure. order chain. we houses. given about -- obligation like these is capacity

will not of go there limit in the customers -- the going a disciplined quickly. which and this very So to ramp -- of ability will to they're amount large build supply, probably inventory the a so off be is

little demand. by our So time, cushion that way in term little the operate. real in able supply customers a will have in more near they more consumed discipline in will is we there We profile. see that we've see negotiate being a some that our for and the point been don't in own entire at to be chain sure, availability But the

Mark Lipacis

for maybe think in or a share And Is better in competitors? how your impression -- based at demand in some supply. your from position how anything your have a your if may. you are relative seems Great. like competitors a Malaysia react -- -- of to share transitioning follow-up, you Your market has basis your perhaps changed recent this has to had competitive able position, is the customers this do better been? to just you, you than been that this Has on a been the at standpoint, that anything market it time year, on my upside notwithstanding issues actually you the been I you or have the in on competitive own competitive how changed last traditional the

Ravi Vig

to model. The market for extraordinarily resilience operating been too little our focused data of is early share it's own tell. we've sure, on But the a

we having point us out came to the few I that about X capacity within the model resilience advantage including last would single opportunities take we a the wherever take I with are into quarters, us in expand back being process this I helped foundries has the are we capable us of to bit technologies cetera. us of able again, IPO, our a around the really facility facility ability allowed and et move of a end, the say, And has limited that Philippines, to of that It's similar think advantage, help When been changes, to think over look an spoke It's running possible. at realignment efficiencies. at helped of little gives equipment presented nimble. mix to us. this nimbleness with wafer us single of

to confident for we technology come in are really point, them And supply, this us. differentiation. of have that wherever value so marketplace. responding their And support they supremely also we the this that's something At our they to from customers mind Wherever us And in can -- supply. helped is value sure, technology.

So of it's this supply-demand growth in terms imbalance complex world trajectory you how right of the whole and a manage along company? now the with


question and the I further to remarks. back [Operator Instructions]. like Katie this closing for time, No would call turn at to Blye

Katherine Blye

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


today's Ladies participating. conference gentlemen, concludes you call. for Thank this and

You day. may Have now a great disconnect.