Q4 2021 Texas Instruments Inc Earnings Call

January 25, 2022

Good day and welcome to the Texas Instruments fourth quarter '21 earnings release conference call. Today's conference is being recorded.

At this time I'd like to turn the conference over to Mr. Dave Paul. Please go ahead, Sir.

Good afternoon.

And thank you for joining our fourth quarter and 2021 earnings conference call. Raphael Lusardi TI's Chief Financial Officer is with me today.

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.

It 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 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.

First, let me provide some information that's important for your calendars.

We plan to hold a call where our capital management update on February 3rd at 10 am Central time.

Similar to what we've done in the past, Raphael and I will summarize our progress and provide some insight into our business and our approach to capital allocation.

For today's call, let me summarize what Rafael and I will be reviewing.

I'll start with fourth-quarter revenue results, including some details of what we're seeing with respect to our customers and markets.

Then provide the annual summary of revenue breakout by end markets.

And lastly, Raphael will cover the financial results some insights into onetime items and our guidance for first quarter 2022.

Starting with fourth quarter results and the market environment.

The company's revenue grew 19% year over year, driven by strong demand in the industrial and automotive markets.

Analog revenue grew 20% year over year and embedded processing grew 6%.

Our other segment grew 35% from the year ago quarter.

Let me now comment on the current environment to provide some context of what we're seeing with our customers and markets.

Overall, the quarter came in stronger than we expected.

The strength was across most product families, end markets and geographies.

The market environment is similar to what we reported 90 days ago.

Lead times for the majority of our products remained stable, but hotspots continue to exist.

However, customers continue to be selective in their expedite request increasingly focusing on products that complete a matched set rather than expediting products across the board.

This behavior is not specific to any product family end market or geography. Discussions with customers confirm our high level of interest and our commitment to expanding our internal manufacturing capacity roadmap.

Including 300 millimeter wafer fabs or fab two and LFAB.

Our recently announced plans for a multi fab site in Sherman, Texas.

And the associated assembly test expansions.

These investments to strengthen our manufacturing and technology competitive advantage.

Will provide lower cost and greater control of our supply chain.

And while there is a growing recognition that the near term supply-demand imbalance will end at some point.

Secular growth of semiconductor content per system will continue to increase and this requires a robust manufacturing capacity roadmap for 2025 and beyond.

Moving on, I'll now provide some insight into our fourth-quarter revenue by end market for the year-ago quarter.

First the industrial market was up about 40% driven by broad based strength across all sectors.

The automotive market was up high single digits with strength in most sectors.

Personal electronics was down upper single digits off a strong compare from a year ago.

Next, communications equipment was up about 25%.

Finally, enterprise systems was up about 50% off a weak compare from a year ago, driven primarily by data center and enterprise computing.

And lastly, as we do at the end of each calendar year, I'll describe our revenue by end market for 2021.

We break our end markets into six categories that are grouped by their life cycles and market characteristics.

The six end markets are industrial automotive.

Personal electronics, which includes products such as mobile phones, PCs, tablets and TVs.

Communications equipment. Enterprise systems, and other which is primarily calculators.

As a percentage of revenue for the year, industrial was 41% automotive.

Automotive 21%.

Personal electronics 24.

Communications equipment, 6%. Enterprise systems, 6%. And other was 2%.

In 2021, industrial and automotive combined made up 62% of TI's revenue.

Up about five percentage points from 2020.

And up from 42% from 2013.

We see good opportunities in all of our markets, but we place additional strategic emphasis on industrial and automotive.

Our industrial and automotive customers are singly, turning to analog and embedded technology to make their end products smarter safer more connected and more efficient.

These trends have resulted and will continue to result in growing chip content per application, which will drive faster growth compared to the other markets.

Raphael will now review profitability capital management and our outlook.

Raphael. Thanks, Dave and good afternoon, everyone.

Gross profit in the quarter was $3.4 billion.

Or 69% of revenue.

From a year ago, gross profit increased primarily due to higher revenue.

Gross profit margin 440 basis points.

Operating expenses in the quarter were $793 million.

Up 1% from a year ago and about as expected. On a trailing 12-month basis, operating expenses were 18% of revenue. For the year, we have invested $1 6 billion in R&D, an important element of our capital allocation.

We are pleased with our disciplined process of allocating capital to R&D, which we believe will allow us to continue to grow our top line over the long term.

Restructuring charges for $54 million in the quarter. This expense is driven by the Lehigh wafer fab purchase which closed in October.

Operating profit was $2.5 billion or 52% of revenue.

Operating profit was up 38% from the year ago quarter.

Net income in the fourth quarter with $2.1 billion.

Our $2.27 per share, which included a 4 cent cut that was not in our prior outlook, primarily due to the purchase I discussed earlier.

Let me now comment on our capital management results, starting with our cash generation.

Cash flow from operations was $2.4 billion in the quarter.

Capital expenditures were $1.3 billion in the quarter, which included about $900 million for the LFAB purchase.

Free cash flow on a trailing 12-month basis was $6.3 billion up 15% from a year ago.

Okay.

In the quarter, we paid $1.1 billion in dividend.

We have increased our dividend per share by 13%.

Marking our 18th year of dividend increases.

For the year, our dividend represented 62% of free cash flow underscoring its sustainability.

Our balance sheet remains strong with $9.7 billion of cash and short term investments at the end of the fourth quarter.

Total debt outstanding was $7.8 billion with a weighted average coupon of 2.6%. Inventory days were 116 up four days sequentially and remained below desired levels.

Now, let's look at some of these results for the year.

In 2021, cash flow from operations was $8.8 billion.

Capital expenditures were $2.5 billion or 13% of revenue.

Free cash flow for 2021 was $6.3 billion or 34% of revenue.

Our cash flow reflects the strength of our business model.

That's what we have said, we believe that growth of free cash flow per share is the primary driver of long term value.

Turning to our outlook for the first quarter, we expect revenue in the range of 4.5 to $4.9 billion.

And earnings per share in the range of $2.1 to $2.29.

We expect our 2020 annual operating tax rate to continue to be above 14% and our effective tax rate about a percentage point lower than that.

This is based on current tax law and would be about the same as we saw in 2021.

Next, let me help you model our expectation for expenses for the LFAB purchase.

As we have said, we expect to have about $75 million of cost per quarter until we start production, which is still expected in early 2023.

This cost continued to be mostly reflected in the restructuring line on the P&L. So we'll be visible each quarter to you and therefore part of our operating profit results.

Once that facility begins production, this cost will move and be primarily reflected in cost of revenue.

As I close, let me explain why we're so excited about this capacity investments as they strengthen our manufacturing and technology competitive advantage. First, we have significant 300 millimeter capacity coming online with RFS II and LFAB in 2022, and 2023. Second, with the announcement.

Of the Sherman complex, we have a 300 millimeter roadmap to support growth from 2025 to 2035.

Third, customers are excited that our capacity investments are in 45 nanometer to 130-nanometer process technologies that are optimized for analog and embedded and will support our growth in the decades ahead.

It is clear that owning and controlling our manufacturing and technology will give us both lower cost and greater control of our supply chain.

It is with this confidence we look forward to sharing with you more details of our plans and our capital management call next week.

With that, let me turn it back to Dave.

Thanks, Raphael. Operator, you can now open the lines up for questions. In order to provide as many of you as possible an opportunity to ask your questions. Please limit yourself to a single question.

After our response, we'll provide you an opportunity for additional follow up. Operator.

Thank you. If you'd like to ask a question, please send them by pressing star one on your telephone keypad. If you are using a speaker phone. Please make sure that your mute function is turned off to lay your signal to reach our equipment.

As mentioned, in order to accommodate as many questions as possible. Please limit yourself to one question and one follow up before reentering the queue. Once again that is star one if you'd like to ask a question.

We will take our first question from John Pitzer with Credit Suisse. Please go ahead.

Yes. Good afternoon, guys. Congratulations on the solid results, David Raphael, last quarter was the first quarter, you talked about customers being a little bit more selective about the ordering patterns and that was somewhat reflected in upside in September which was a little bit muted you characterize Q4 as being the same.

But the upside was a little bit stronger. I'm wondering if you could help me just square that circle as to what drove.

The magnitude of upside in December quarter above that of September.

Yes, John I'll take that.

Yes. The upside that we saw in the fourth quarter was very very broad base.

Upside that we saw in the fourth quarter.

Was very very broad base.

As we described it, it was across.

Our product families across our end markets.

And geography, so really wasn't one thing that was driving it.

And it was very broad-based. So that was the difference that we saw between last quarter and this quarter.

Do you have a follow up?

Yes, just as a follow-up. Notwithstanding the impressive growth you put up in your analog business in calendar year '21. If I comp that against the SIA, it's going to end up having been.

An unusual year for you guys, because you would have undergrown the industry by a fairly wide margin at least versus history. And I'm wondering if you could help me understand, is that a function of peers being a bit more aggressive on pricing than you? Is it something that we shouldn't take the trend or how do you explain the difference there?

Yes, I think whenever we look at the SIA data in RA.

<unk> data in RA.

Regardless of which direction that it's trending.

And you'll know that I'll always be consistent that.

They say never look at one.

If you look at one.

One quarter or sometimes even one year on specifics. It really needs to be something that is looked at over time.

Especially we go through a period.

The last 4 or 6 quarters through COVID and the choppiness, that's been going on.

Four six quarters.

Through through Covid and the Choppiness, that's been going on.

Just be real careful.

Get too precise on measuring things in this type of time period. So I think.

With our competitive advantages with the investments that we're making.

We're very confident that we are making progress in the markets.

That we're making those investments.

And we really believe that we've made progress over this time period.

We really believe that we've made progress.

Over over this time period.

Thank you, John, and we'll go to the next caller, please.

Thank you. We'll hear next from Vivek Arya with Bank of America Securities. Please go ahead.

Thanks for taking my question.

I'm curious how would you characterize the demand environment.

Would you call it early mid or late cycle? Or if I ask the question.

Differently. Do you think any of your end market is overheated right now in any way?

Yeah, Vivek. I would say that the demand environment is similar to what we saw 90 days ago.

So we have seen strength in orders in our backlog.

It continues to be strong those types of things.

<unk>.

The upside that we saw of course this quarter was it was very broad-based.

And so that was different here.

So that was.

Different here in.

In the fourth quarter. I would say that we did see the match set behavior last quarter.

And again, we did see it again this quarter.

And that's where customers are really looking to complete that.

Instead of expediting across the board and you could.

You could describe that behavior as being symptomatic of growing customer inventory that's out of mix.

Behavior is being symptomatic of.

Growing customer inventory that's out of mix.

But as we've talked about previously, we don't have direct visibility into customer inventory.

So that's not something that we could measure over time.

Okay, a follow on, Vivek?

Yes. Thank you, Dave.

The other question is now on the supply side.

There is investor concern that the semiconductor.

Industry is over-investing at a time when demand might be peaking. And I know you guys have made it clear that you invest for the longer term, but how are you thinking about your current.

The acceleration on the investment side? When does that translate into actual useful capacity? And what are you doing to make sure that you don't over invest at least in the next couple of quarters?

at least in the next couple of quarters?

Yes, I'll go ahead and take that.

As you alluded to the beginning of that question, we think of.

Beginning of that question, we we think of.

The long term, while we make this decision. So this is not about 2021 '22, or even '23.

This is over the long term and the secular trends in our industry.

We are confident of where those are pointing and it's specifically in our products analog and embedded and end market.

Are pointing and it's specifically in our products analog and embedded and end market.

Where we put a strategic priority industrial automotive.

On the manufacturing investments that you alluded to, we're very excited about those as I mentioned during the prepared remarks, they're going to strengthen our competitive advantage on manufacturing technology.

First, we're going to have significant 300 millimeter capacity coming online we have our fab two and Lehi that's going to have been actually this year and then going into next year.

With Lehi.

Second, with the announcement of the Sherman complex, we're going to have a roadmap that is kind of support us out to 2035.

Finally, customers are very excited about our investments specifically in 45 to 130 nanometer process technologies that are optimized for analog and embedded and will support our customers growth for decades.

Great. Thank you, Vivek, and we'll go to the next caller, please.

Thank you, we'll hear next from Toshiya Hari with Goldman Sachs.

Hi, guys. Thanks so much for taking the question.

Your days of inventory came in at 116, and as you pointed out.

You're still below where you'd like to be but to the extent you have visibility into customer inventory, how would you characterize where they are today and where do you see them going forward?

Well, so I'll start and I'll comment on our own inventories and Dave do you want to if you want to add to that but yes. As you pointed out is our inventory days at 116.

That is higher by about four days from last quarter, but still well below where we wanted to be and our goal is to be significantly higher than our guidance of 90 to 130 or 90 days.

Just know that that's a very tactical.

Tactical.

Metric because it is just based on one quarter the bottom lines that we want to have more inventory.

And in that measure, I would not be uncomfortable at the very high end or even above the high end of that and measure at some point a 190 days of inventory.

Yes. I think just I'll follow up with. As I commented before.

I think just I'll follow up with.

As I commented before.

We just don't have direct visibility into

customer inventory so it's not something that we can measure directly. A follow-up, Toshiya? Yes, I do, thank you.

I wanted to ask about opex, fairly mundane item, but you've done an incredible job in leveraging opex over the past couple of years during which revenue has gone up significantly.

Particularly considering kind of inflationary environment and the competition for talent.

What's driving the flattish opex and how should we think about potential upside to opex going forward given the current backdrop? Thank you.

Yes, so I'll take that first. Yes, we've been running opex at about $3.2 billion per year, a little lower a little higher than that but for the last five years essentially they have rounded. The number was rounded to that opex. Most of Opex is an investment that's how we think about it obviously R&D.

Continues to strengthen our broadest portfolio in the industry that we have both analog and embedded.

But even instead of SG&A. There are several key pieces there that are key investments. TI.com is one that comes to mind and we will talk more about at the end of the call specifically at the capital management call.

Next week.

So.

So opex fuels our future growth, we don't really think about it from a percent

Of revenue standpoint.

But to help you with that we have guided that over the long term should trend between 20 and 25% of course, we are right now we're about 18% or so.

<unk> guided that over the long term should trend between 20 and 25% of course, we are right now we're about 18% or so.

So that's 3.2. I wouldn't expect it to change significantly in the short term, but over time over many years. It should add 20% to 25% is probably the right way to look at it.

Okay, great. Thank you.

We'll go to the next caller, please.

Thank you, we'll hear next from Ross Seymore with Deutsche Bank.

Hi, guys. Congrats on the strong result, and guide, but wanted to ask about the gross margin side of things I know one quarter doesn't make a trend, but the incremental gross margin was way bigger in the fourth quarter than expected and it seems like the first quarter is also guided for the gross margin to perhaps rise again sequentially. So whether it's a short term or kind of a longer-term.

Description or answer. What are the big drivers of the upside that you are seeing in the near term and how much of that do we expect to continue going into 2022 and beyond?

Yes, so a couple angles on that question on gross margin. First, as you know you followed for a long time, we do not manage to gross margin, we manage to the growth of free cash flow per share. We think that's the key.

Driver of value for the long term owners of the company.

And you can do that with higher gross margins you can do that with lower gross margins.

So that's our focus.

But specifically on gross margins.

Our guidance has been and continues to be, think about it on a fall through basis over the long term, 70%, 75%.

We have been doing pretty well on that front. The key driver of course is revenue growth.

But then beyond that 300 millimeter capacity that continues to be.

A great tailwind as we have more and more of our capacity on 300 millimeter we had.

As a structural cost advantage and we'll be continuing to add to that with [RFAB 2], Lehi and the Sherman complex.

The last comment I'll make is.

And we'll give you more details on that next week on capital management, but Capex has been going up and will continue to go up over a number of years.

With those investments that I mentioned.

Those are long term investments. Those are going to set us up great for the next 15 plus years, so I'm very.

Happy about those. I'm pleased with that. We are confident about those but yes that does flow through the P&L as higher depreciation so expect Capex to go up in depreciation will follow and that will have an impact on

On gross margins, but frankly I, at the end of the day.

That's the accounting. The investment is happening now and it will happen over the next few years without additional Capex and I will just put us in a great position to grow the top line have really great fallthroughs over a long gun to come.

A follow on Ross?

Yes, just wanted to pivot back to the revenue side, and whether it's industrial or automotive you're too focused markets. They looked like they both grew kind of 30% to 35% year over year in 2021 as a whole.

That's significantly faster than the secular growth rate that you guys have delivered but not terribly different than the peer group for the year. So I just wonder how do you guys explain that level of growth? You don't seem to see any inventory anywhere the end markets don't seem to be growing that fast, but whether it's for ti specific groups.

I wonder if the sector as a whole. I wonder how you would explain that growth and the sustainability of it.

Yes, so I think it's clear.

As we look at those markets overtime.

We believe that there is going to be content growth. So let me just talk about the long term.

The prospects of both of those markets. So it's very easily seen in the automotive market that there is content growth. We can see the cars today just have more semi content per vehicle than what we drove five years ago 10 years ago.

And it's very clear that that's going to continue. That same phenomenon. It's just a lot harder to see is going on in the industrial market and that's what we love about it it's not one thing we've got.

13 sectors that make up that market. We have hundreds of of end equipments that that we're working on and tens of thousands of customers that we're working for and our product portfolio is positioned perfectly for that so.

It's really a strategic focus that's on it. Now, is there going to be noise around growth rates in any one given year? And John pointed out with SIA data bounce around. That's going to happen.

But we're going to put in place growth.

And capacity to support that growth for the long term.

And.

Because we've got the confidence that those markets are going to grow in those secular trends are going to going to continue. So thank you Ross and we will go to the next caller, please.

Thank you, we'll now move onto our next question from Tore Svanberg with Stifel.

Yes. Thank you and congratulations on the solid execution here.

First question is on customer behavior, perhaps on the ordering front. So I think there are a lot of investors that are worried that inflation is falling.

The economies globally.

Are you not seeing any change at all in your customers behavior from from higher prices? Because obviously there is inflation in the semiconductor industry to so have you have you not seen any.

change in order behavior at all sequentially.

Well, yes, I'll start and Rafael do you want to add anything I would say that the environment.

As we mentioned before is very similar to 90 days ago.

The customer behavior that we talked about with the match set continued.

So really not in a 90 day period has there been a change nothing that.

In a 90 day period has there been a change nothing that.

That we could measure on that front so.

Raphael, anything to add to that?

Yeah. So you have a follow up?

Yes, no. Thank you for that.

When we think about your capacity expansion, you talked a lot about the front and then Rafael you mentioned, you're also doing some assembly and test expansions. Could you elaborate a little bit on that?

Especially how it would impact the Capex number going forward.

Yes, no. Thanks for that question, we are as you alluded to a lot of.

Conversations on Capex it tends to be on the fab side, Thats, because thats where.

A disproportionate amount of the money goes to.

This is very capital intensive.

And it's also because the lead time to build those are much longer.

The type of structure that you have to build et cetera, but we're also spending a lot of time internally on the backend. And what we need to do on that front, we're going to give you more details on that next week, but essentially we do have plans going on at various.

Countries, where we already have operations to continue

to expand capacity.

To match that front end capacity and always be ahead of demand.

On that front end capacity and always be ahead of demand.

Great. We'll go to the next caller, please.

We'll take our next question from Harlan Sur with JPMorgan.

Good afternoon. Thanks for taking my question and congrats on the solid results and execution. As you guys mentioned relative to your view 90 days ago. It looks like things didn't change all that much from a fundamental perspective right selective hotspot.

Lead times stable, broad-based demand so how much of the upside was actually driven by an increase in supply availability both from your internal manufacturing and outsourced partners? Because it looks like you guys were capacity constrained starting from about the middle of last year. So just wondering if you're able to bring on some additional supply in Q4.

Which drove some of the upside.

Yes, so I'll start and Dave, you want to chime in but.

I would tell you first as Dave mentioned during the call.

Our prepared remarks, and during a couple of questions. The strength was.

broad-based across geographies and end markets et cetera. On your specific comment on capacity.

As we have said probably for the last four quarters or longer.

Over the last four quarters of resolve any longer.

We have been and will continue to bring capacity incrementally. Incrementally meaning relatively small steps.

But nevertheless, those make a difference, especially on accumulative basis right. So we have been doing that for some time.

And that's obviously helping. I mean you could see not only are our revenue has improved.

During this cycle, but we went from draining inventory to now the last two quarters, we've actually increased inventory, albeit at a relatively low level, but still much better than draining inventory. So that gives you.

An appreciation for what the incremental this does incremental additions to capacity have done. We expect to continue to increase incrementally again relatively small steps for another two quarters and then RFS II comes online sometime in the third quarter of this year in 2022 and that will give us.

More legroom on those tailwind and then about six months later first year '23 we will have Lehi LFAB.

Come online once it's qualified and that will give us also more leg room on that front.

And a follow on Harlan.

Yes. Thanks for letting me ask a follow up. So when the team announced the purchase of the Lehi 200 millimeter Fab you noted that Lehi was 65, and 45 nanometer analog and embedded processing products, which is somewhat of a strategic change right. Because you guys have always been focused on 200 millimeter.

2 engine millimeter analog products, so the ti, bringing embedded in house because you have some sort of competitive differentiators on the manufacturing side for your next-generation embedded portfolio? Or is it just a focus on lower-cost versus outsourcing and moving the manufacturing mix towards more in sourced over time?

Yeah, I'll start and Rafael, if you want to add please do.

If you look we do manufacture Embedded today and [demos set] so part of our

Manufacturing footprint today.

Includes Embedded.

So with the Lehi factory, we will be able to build additional product there.

Additional product there.

And I would say over time.

Foundry will continue to be a portion of our footprint.

But as our revenue grows as a percentage of revenue.

Could that move summit, it could.

But we will continue to build products both

We will continue to build.

Products.

Both.

Internally and externally and I will just say that as we invest in 300 millimeter both for Analog and Embedded.

Invest in 300 millimeter both for.

For analog and embedded.

That brings the same cost advantages to us.

It allows us better control of our supply chain.

And certainly in periods like this.

It shows why that that's an important advantage for us.

So okay. Thank you Harlan and I think we've got.

Time for one more caller.

Thank you. We'll take our next question from [inaudible]

with BMO.

Hi, thanks for squeezing me in, David and Rafael. I had a question on end markets.

And specifically in auto.

There is a lot of concern. it has been for more than a couple of quarters about semi components going into the industry.

More than a couple of quarters about semi components going into b.

Industry.

And the, also units, the big gap and if I look at your automotive.

The year over year change at least rapid. I think it was up 2x a couple of quarters ago. That seems to be decelerating. So can you just help us kind of [inaudible]

It seems to be some parts of [inaudible].

The concerns that the [inaudible] collectively is holding up on a lot of inventory so just I'd love to get your perspective.

Collectively is holding up on a lot of inventory so just with.

Love to get your perspective.

I think last quarter, you had given us a pre pandemic.

level, and you had kind of contrasting what you shipped last quarter versus that number.

Yeah. So [inaudible].

Maybe I'll start and Raphael if you want to add to it.

Wanted to add to it.

And first, I'll just make a comment that our team has done a good job supporting customers really across all of our end markets. When we look at that pre-pandemic level.

Of fourth '19, just picking that.

To fourth quarter '21. Revenue overall is up 40%.

And we grew shipments in all of our end market.

I think that that's important too important to point out. So we believe inside of that we've made strategic progress.

In industrial and automotive that will pay dividends for us for years ahead.

But our teams really have done a great job of supporting customers across that board and some of those year on year transitions.

Our teams really have done a great job of supporting customers across that board and some of those year on year transitions.

As you know.

Some of those really big numbers, I think one quarter, we had close to a 100% maybe even above that. That was more of a function of how low shipments have gotten.

The quarter before so.

That's where I talk about when things get really noisy, you really have to begin to look at it over these longer periods of time, but I think that that's a really good number to look at for our overall shipments.

So do you have a follow up to that?

<unk>.

I had a separate follow up.

I have never seen such a broad mention

That's a broad.

Thanks.

Of a TI [chip the short].

[inaudible]

And it.

It started Pcs and what we hear from pretty much every end market everybody is pointing to.

The question I get from investors and I have it myself as well so I don't want to say something.

Yes.

You guys are.

At least I hold you at the pedestrian in terms of ops planning supply chain management. How did you guys get to that point, where one part and I know, it's a small piece of it overall business, but more importantly.

Are you convinced us that this does not translate into potential share losses when people start to design your potentially because this time several quarters you couldn't supply the part.

Yes.

Fair question operation.

I'd point to maybe a couple of things first site.

The point that we've got.

<unk> portfolio in the industry, when we engage with customers.

Not unusual for us to have a dozen two dozen sometimes three or four dozen different components.

On any particular design and any particular system. So.

It takes one of those products.

Two.

For our teams to have to work closely with that customer on.

And as I talked about before.

Our teams have really done a great job supporting customers across.

Across the board across those products.

And.

That's what we'll continue to focus on I think as we look to this year, we've got capacity coming online.

Later, this year with with our fab two.

Those investments Brookdale talked about we're putting in capacity.

Every quarter of this year, we put in capacity every quarter last year incrementally. So you see that showing up in our results and then we've got follow that up with what the Lehigh fab in early 2023 so.

I think we're in a really good position to continue to support our customers' overall so.

We will continue to work really hard at that.

Yeah.

Deliver the results that follow with that.

So.

With that I'd like to remind everyone of our upcoming.

Okay.

Capital management call.

And it is on February 3rd at 10 Am Central time.

Replay of this call will be available shortly on our website good evening.

Thank you that does conclude today's conference. We do thank you all for your participation and you may now disconnect.

[music].

Yes.

[music].

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