Q2 2022 Diodes Inc Earnings Call
Good afternoon and welcome to dio's incorporated second quarter 2022 financial results conference call.
At this time, all participants are in a listen-only mode. At the conclusion of today's conference call, instructions will be given for the question-and-answer session.
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As a reminder, this conference call is being recorded. Today there is day, August fourth, 2022. I would now like to turn the call over to lian FE vers of shelfton group andinvestor relation. lian, Please go ahead. Good afternoon and welcome to diode's second quarter 2022 financial results conference call on lean ceivers's, President of shelton group, diialde's Investor Relations firm. Joining us today are diode' Chairman, President and CEO , DR caseation Lu, Chief Financial Officer. Bret whatmeer, Senior Vice President, worldwide sales and marketing, and Le Yang, Senior Vice President of business group. Gary you and Director of Investor Relations for mute dolv. Before I turn the call over to DR Lou, I'd like to remind our listeners that the results announced today are preliminary as they are subject to the company finalizing its closing procedures and customary quarterly review by the company's independent registered public accounting firm. As such, these results are unaudited and subject to revision until the company files its Form 10 -qw for its 2022 fiscal quarter ending June thirtieth 2022. in addition, manage's prepared remarks contain forward-looking statements which are subject to risks and uncertainties, and management' may make additional forward-looking statements and response to your questions. Therefore, the company claims the protection of the safe harbor for forward-looking statements that is contained in the Private Securities Litigation Reform of thousand 900 inety five actual results may differ from those discussed today and therefore, we refer you to a more detailed discussion of the risks and uncertaines in the company's filings with the Securities and Exchange Commission, including forms 10 -k and 10 -q.
In addition, any projections as to the company's future performance represent management's estimates as of today, iaullgust forth 2022. thatou assumes no obligation to update these projections in the future, as marks' conditions may or may not change, except to the extent required by applicable law. Additionally, the company's ress release and management' statements during this conference call will include discussions of certain measures and financial information and GAAP and non-GAAP terms included in the company's press release, or definitions and reconciliations of GAAP to non-GAAP items, which provide additional details also throughout the company's press release and management's statements during this conference call. We refer to net income attributable to comments stockholders as GAAP net income. For those of you unable to listen to the entire call this time, a recording will be available V webcast for 90 days in the Investor Relations section of do's website at W dio com. And now I'll turn the call over to doo Chairman, President and CEO , DR case lieu. Dr Lu, Please go ahead.
Thank you the an welcome everyone, and thank you for jouning us today.
I'm pleased to be reporting today our achievement of the sixth consecutive quarter of record revening gross profit and earnings.
This accomplishment is a strong testimony to our team's continuous execution.
especiially considering the cot relative quarantine in China and Taiwan.
That constrained production during the quarter.
In the Shanghai area and other major cities.
We shift our manufacturing facility to close doop operations for two months in the quarter.
It still delivered results above the midpoint of our guidance.
Notably second quarter revenue grew approximately 14% year-over-year file adjusted earnings per shares grew 48% over the same period.
Our execution was also evidenced by our achievement of 41% gross margin.
Which was the fifth consecutive quarter of improvements.
And the second consecutive quarter above our target model of 40%.
doy due to products mix improvements.
Contributing to this improvement was our industrial and automotive end marke.
Reaching a comanded total of 41% of revenue for the first time.
Which exceed our 2025 bites more del target of 40%.
The automotive market, which represented a RIC of 14% of the revenue in the quarter.
We main a key focus area for dios as we continue to gain strong traction with both new and excreasing customers in all regions.
Also during the quarter.
We successfully cross our acquisition of omsemmis southporand men withave a fir facility.
Which provides additional a variable capacity to support our future growth.
espeatially in automotive and industrial end markets.
We will prached to welcome the SP FAB workforce to dios family as we continue to maintain operational efficiency and fully integrate this facility into our global manufacturing operation.
With our third quarter expectation, indicating our tenense consecutive quarter of revenue growth and, over all, record results.
dio has solid posent, it is served. Not only has to be diverse of prior.
And the partner to our customers.
But also a consistent performing investment for our shareholders.
With that. Let me now turn the call over to brea to discuss our second quarter financial results.
And our third quarter 2022 guidance in more detail.
Thanks DR Lou, and good afternoon everyone. As part of my financial review today, I will focus my comments on the sequential change for each of the line items and will refer you to our press release for a more detailed review of our results, as well as the year-over-year comparisons.
Revenue for the second quarter 2022 was a record $501 million, an increase of 4% from the $482.1 million in the first quarter of 2022.
Gross profit for the second quarter was also a record at $206.5 million, representing a record 41% of revenue, increasing five percentor 40 basis points from $196.7 million, or 40 point eight percent of revenue in the first quarter 2020 -two.
Gaap operating expenses for the second quarter 2022 were $100.3 million or 20% of revenue, and on a non-GAAP basis were $99.7 million or 20% of revenue, which excludes $4 million of amortization of acquisition related intangible asset expenses, zero $2 thousand of acquisition related costs and a $3.6 million gain on insurance recovery. This compares to non-GAAP operating expenses in the prior quarter of $99.5 million or 20 point six percent of revenue.
Total other expense amounted to approximately $5 million for the quarter, consisting of seven point eight million of unrealized loss on investments.
$1.6 million in interest expense.
A $1.8 million foreign currency gain, a $1.6 million of other income and $861 thousand of interest income.
Income before taxes and noncontrolling interest in the second quarter 2022 was $101.2 million, compared to $90.8 million in the previous quarter.
Turning to income taxes our effective income tax rate for the second quarter was approximately 18% and.
Gaap net income for the second quarter 2022 was a record $80.2 million, or $1 and 75 cents per diluted share, compared to GAAP net income of $72.7 million, or $1 and 59 cents per diluted share in the first quarter 2022.
Gaap earnings per share in the quarter increased 43% year-over-year from the $1 and 22 cents per diluted share in the second quarter 2021.
The share count used to compute GAAP diluted EPS for the second quarter 2022 was 45.8 million shares.
non-GAAP adjusted net income in the second quarter was a record $86.9 million, or $1 and 90 cents per diluted share, which excluded net of tax.
$6.2 million of noncash mark-to market adjustment of investments.
three point three million of acquisition related intangible asset costs, zero two thousand of acquisition related costs and $2.9 million gain on insurance recovery.
This represents an 9% improvement from last quarter of $1 in 75 cents per diluted share for $80.3 million, and a 58% improvement from $1 and 20 cents per diluted share, or $54.6 million, in the second quarter 2021.
Excluding share-based compensation expense, a $6.6 million for the second quarter. Both GAAP earnings per share and non-GAAP adjusted EPS would have increased by 14 cents per diluted share for the second quarter.
Ebitda for the second quarter was $130.6 million, or 26% of revenue, compared to $118.2 million, or 24% of revenue, in the prior quarter.
On a year-over-year basis, EBITDA increased 31% from $99.4 million in the second quarter 2021, highlighting our continued improvements over the past year.
I'd like to make the point that if we excluded noncash gains and losses on securities from our EBITDA calculation for a more accurate assessment of our operating performance, it would have been a record $137.2 million, representing an increase of 10% sequentially and 45% year-over-year.
We have included in our earnings release a reconciliation of GAAP net income to non-GAAP adjusted net income.
And GAAP net income EBITDA, which provides additional details.
Cash flow generated from operations was $85 million for the second quarter of 2020 -two.
Free cash flow was $45.5 million, which included $39.6 million for capital expenditures.
Net cash flow was a positive $1.5 million, including capital expenditures, as well as additional borrowings of $35.1 million related to the purchase of the on-semiwafer facility.
Turning to the balance sheet, at the end of second quarter cash, cash equivalents, restricted cash plus short-term investments total approximately $316 million.
Working capital was $715 million. In total debt, including long term and short term, was $265 million.
In terms of inventory, at the end of second quarter, total inventory days were approximately 115, as compared to 113 last quarter.
Finished goods inventory days were 32 compared to 34 last quarter.
Total inventory dollars increased one point three million to approximately $371.4 million.
Total inventory in the quarter consisted of a $7 million decrease in finished goods, a $3.1 million decrease in raw materials and an $11.5 million increase in work in process.
Capital expenditures on a cash basis for the second quarter 2022 were $39.6 million, or 8% of revenue, which is within our target model of five to 9%.
Now turning to our outlook.
With our excellent execution and product mix improvements. We are guiding for our tenth consecutive quarter of sequential growth and expect revenue to be approximately $521 million.
Plus or minus 3% and GAAP gross margin to be 42% plus or minus 1%.
non-GAAP operating expenses, which are GAAP operating expenses adjusted for amortization of acquisition related intangible assets, are expected to be approximately 20% of revenue, plus or minus 1%.
We expect net interest expense to be approximately $3 million.
Our income tax rate is expected to be 18% plus or minus 3%, and shares used to calculate diluted EPS for the third quarter are anticipated to be approximately 46.2 million.
Not included in these non-GAAP estimates is amortization of three point two million after tax for previous acquisitions.
With that said, I will now turn the call over to emilya.
Thank you, bread and good afternoon. Second quarter revenue increased 4% sequentially and above the midpoint of our guidance which, as DR Lu mented, was a notable accomplishment considering the cot-related lockdown in Taiwan and China that resulted in shifting our manufacturing facilitate close through operation, primari in Shanghai and major surrounding locations.
Looking more closely as second quarter revenue, we have record revenue across all regions. whileyq revenue was down slightly, mainly due to the weakness in the euro. Asia POS was supported by very strong demand and increased sequentially, even despite the COVID-related lockdown in Asia.
Distributor invent, ory in terms of weeks increased slightly quarter over quarter, which is still within our defined normal range of 11 cent to 14 weeks. Overall demand and backlog remain very stronglooking at the global sales in the second quarter, Asia representcented 74% of revenue, Europe 14% and North America 12%. In terms of our end market industrial reper: cent twentytwenty-seven percent of dios product revenue, computing 24% COVID-19%, communication 16% and automotive 14% of the product revenue. We achieve the record revenue in automotive industrial, consumer and communication market. Our percom product also set that new revenue record which is the seven consecutive quarter. I would also like to point out that our automotive industrial end market combined total 41% of the revenue, which exceeds our 20 per to 20 five target of 40% of the total revenue.
Our record revenue in multiple end markets demonstrate the dio strength in our execution. Despite the reported slowdown on low MPC and smartphone segments, we have been able to quickly adjust a support to the high demend market segments like automotive in industrial, as well as other area within the communication market that are seeing growth, like five G, optical and networking. This has been a key advantage for dios that has contributed to our consistent quarterly growthnow let me review the end market in greater details.
Starting with, automotive market revenue reach a record for the eighth consecutive quarter and total 14% of the revenue for the first time. Revenue growth 36% year-over-year, driven by our ongoing demand creation efforts as well as market share gain. Additionally, our expanding dollar comp per vehicle continued to feel our automotive growth.
In connected driving, which consists of ADAS telematter infotainment systems. We continue to expand our compact opportunities with new design wings for analos switches CMOs, lddos and dcdc converters in at ADAS, as well as three points, three vo, uusb reddrivers infotainment telematic as smart copics, our PCI clock buffer, oscillator and crystals, also providing total timing solutions for infotainment applications.
We also win number of the scis for S, B shalky dios rectifier, USB switches and TVs products in the connected driving, LCD displays, door control units and ioo expanders in telematics applicationsfor the comfortce, style and safety. We continue to see solid demand for our CMOs, LDOs and switching dis for the highlights and body control modules.
Volume for our L drivers continue to renamp for indicator light, while back led drivers dcdc, Bu converters and diials would design into several interior exterior lighting applications.
In power train, which covers conventional hybrid electric vehicles. A power TVs product when multiple ddesigning applications such as search protectors will display pano, power lines, water pumps, dcdc fans, multor fans and voltage regulators and battery management system. We also continue to expand our protection product portfolios with 17 new auto gray products that when multiple ddesigns as several keyoem account. We are also seeing traction for a high site in teified products in power protection and mechanical relay replacement.
In our industrial market revenue also a record and increase: 43% year over year, representing growth for the fifth consecutive quarter. Our PCI express three packket, S which continue to gain tractions by enabableling mass video data transfer and Rich PCI three connectction. flexibilityour newly released packkets which can switch multiple serial protocol like PCI expressed by O and staff four sals and are winning new designs in test and measurement equipmentsadditionally are high voltage step down converters are being design into applications like IoT and smart lighting, while our current suppressor are gaining momentum in the L lighting.
Our viying adeal product family also continued to see solid demands for power tools and smoo detection systems. We also saw continued growth for our TVs and switching dis product family for using hv AC systems, as well as strong demand for power zener dis in uncurable power supplies for industrial power system applications, and our mosfeare also continued to gain market share in the inverter applications.
In the computing market are USB sono switches and data line protection productsare seeing strong traction in storage, enterprise D and enterprise surfer applications. V and shockkey product have see strong demand in power over easurfer and high performance computing applicationswe are also seeing increasing adoption of USBC linear Re drivers in high and tablets and also winning ddesign for our 20 -k USBC Re drivers and display marx switches in gaming laptop and desktop applicationsdio power switches achieve multiple ddesign me USB power source applications in Noble ao and desktop. Also our L drivers with D design into Noble applications for facehas recognition and the rlse zenar dios also post a solid growth in computing power supply and DC F application for desktop and Noble PC.
Also during the quarter, we introduced several new products, including timing generators, buffers and marx' switches that supports the PCI five ll protocolsts, and redrivers that supports PCI five ll, as well as SaaS four and CX protocolsts.
In the communication market. We achieved a quarterly revenue record which especially no four FE, considering the general slowdown in the smartphonesduring the quarter. We're able to gain strong traction across a number of high growth applications, including five G otopo and the networking. In particular, we are winning increasing designs for sbr products in five G modules, shoary and dios in five G base station and pcipress la.opeacts switches in five gcp, four G and five G. mobile phone applications are also driving design activities and demand for the 12 CV battery fatwith the release of our new ultramo jitter crystal oscillators.
diio has expanded our portfolio as well as pushed the gitfer into the sub hundred centanto. seconddiio crystal oscillators are designed into optical modules and other networking applications with high-speed interface, such as 200 G, 400 G and a hundred G enet. We are also seeing designings for uusbc V drivers CMOs, LDs and TVs product in marartphone applications.
Lastly, in the consumer market, we also achieved a quarterly record revenue, despite the lockdown in Taiwan and China. Our leded drivers are gaining design wins in the smallart home applications like floodlights, security cameras and wifiice. dcdc converters continue to see solid demands from the consumer and home application market, while our CMOs, ldl and smallfab has a number of wins in wearable devices.
Also during the quarter. We securure design wins for power switches TVs xener, dis and audio amplifiers for TVs, gaming councils headlights, blue U trackers, large displays, smoke alarms and security system applications, including cameras, motion sensors and vibration sensors.
Additionally, dial' acdc uusbc power delivery product portfolio and application ecosystem supported a newest EU regulation which is mandating a common charging PO for smartphones and tablets by the fall of 2024 and laptops by 2026. our complete U usc power delivery solutions provides the source and sync fast charging capability for diadverse set of devices. We also saw strong designing activities and revenue growth for mosfeads for wireless charging.
In summary, with our six consecutive quarter of record results, dio continues to prove our ability to consistently execute. We are successfully expanded margin 490 base point over the past year through the product ikesx improvement, with an increasing contribution from our key focus areas in the automotive industrial end market. Additionally, our global manufacturing footprint, including recent addition of on-site wafer famab, provides a expanded capacity that we need to contribute drive our future growth and expansion towards our 2025 target of two point five billion in revenue and one billion in gross profitwith that, we have now openened the floor to questions operator.
At this time. I would like to remind everyone, in order to ask a question, press star and the number one on your telephone keypads. We will pause for just a moment to compile the QA roster.
Your first question comes from the line of trendgara with birair.
Your line is now open.
High good afternoon. In the context of some of your lead times start to come down. What the centage of your demand you believe exceed your supply right now and how does that compare versus the beginning of the year.
Hi chrisisten, this is Emily. I think, over all our demand, our backlog still extremely strong, like ion in my speech, that there's pockets of areas that there's definitely some slowness, like the low mpcs or the smartphone or some of the consumer are. But what we've been doing is actually utilize and balancing the demand and focus on the strong demand areas like automotive, industrial- and you can actually see from the rell that we just shared, just along for automotive, we actually have 36% year over year growth industrial, 43%. So I would say allwing all right, the demand still stronger than our supply at this moment.
Gre and then anyway, we could quantify your exposure to aggbt maybe as a percent of who revenue and remind us of potentially, how you get to SA and car ide, the technology of a time.
Well this is Gary. Let me try to incidence CRI PR you. They said he don't have IGB.
Okay.
Yes we don't have igbd and we working very hard try to get a secondickon Kabi and in place and we don't have our design team first us in kabbi and possibly we're going to have our sific on Kabi a product releasase to the market at end of this year.
Great that's their useful. Thank you.
Your next question comes from the line of williamstein withdtruis. Your line is now open.
Great Thank you, Emily. As always, so many great details, but sometimes a little bit hard to to make sure we're capturing the big picture. It correct me if I'm wrong, but it sounds like are seeing downturn and demand in certain parts of consumer compute.
Comes what I think you're saying is that you're making up that shortfall in industrial and automotive is that correct and maybe more to the point are there pockets within those three weaker end markets the three sees as I think you've called them. In the past are there pockets of those that are that are strong enough to capture or to or to require the demand for products that were in you know. Other parts of those end markets that you know where there's weakness and is it sustainable. I think that's the more important thing is that is that something you think is sustainable beyond Q3 or or do you think we're heading to a phase where.
We're perhaps we times continue to fall andbacklog and demand UE to fall in these and markets and it have a contagion to other areas. Right, So we are. Yes, let me explain a little bit more details. Right, So we specifically talk about 3, see consumer communication and computing. If we just refer to the Q to Re, we actually still have a record revenue with the consumer and within the consumer we still see certain are shows a little bit more weakness than the others. So Yeah you, absolutely right, within the same market and market there're still different, are that we strong men and definitely some softness. So what, what we've been doing in order to achieve the record is actually shifting. You know our capacity is to really support the good focus areas that we continue, like within the consumer we've been talking about I O, areaas and stuff like that. We still seeing a lot of strength right with communication. I think you know everybody knows that we have slow down, especially tryininga smart phone are. But withinthink communication, again we have a record right. So how do we do that? We still seeing a lot of strrength related to five G, enterprise related networkking, optical area. So again, that's how we achieve the recordds, So basically utilize the capacity. And that again is actually one advantage for dios is we do have that kind of flexibility, can dynamically just the support and focus on the right are, which the area we've been talking about giving us the focus right computing, even within computing, low M P C's mother Board, definitely we see soft softness. But anything related to enterprise computing, surface storage, we still see, you know, strainth in that are. So you know, I think is's kind of maing what we've been seeing all along. You know, on top of the automotive in industrial focus, you know this withthink to the stem and we actually have specific PO ket areas of focus. So we continue that dri to wardsse the talking about one additional clage. We have been talking the ball. ok, we done the poort.
We design it.
Such that they go to smart tipo a market.
Okay So for example you, if you design a pll out for this prey in the PC, that that pou up.
Can be ussaid in automotive.
When you Re talking about, you know, for ceale phone.
Not like a MO Fed.
The same mirror product can go to automotive.
And that's what, when we- when amberly talking about, we- adjust our, put our capacity to support.
The demand for different. A market is by that okay. So if, if for the cell phone slowdown, but we take that capacity, you will write that porter.
To support automotive and you can see our automotive growth.
Is first strong.
Similar thing of inderusttirial and also the strategy we use in is we force the designer to design the product for M high market.
Okay I appreciate that. Thank you, and I can ask one brief follow-up. I'm hoping you can help us understand what's going on with the South Portland FAB. I assume it seems pretty clear you have to have a manufacturing services agreement in place and so you probably got some revenue from that in the quarter, So can you help us understand- maybe help us SI that and understand how long that support agreement last and be timing to run your own products in that FAB. Thank you very much.
Or actually this kindled the that the qu support for.
For the sller onsema is actually a good for both. Site is a wound-win strategy.
The important is for us to to qualify the product into that it tech a while including the be the process, and qualify the product and reduce the product for production it tech.
one year or even dongle.
And during that time period.
We can pick the capacity.
To support the failors and that way helping us to deduce the cost.
And so this is the wining.
And the. We believe you know we should be able to. When they, when they throll down of, when they reduce the loadin, we can pick up the doorin at the same time. So you know, and if you talk about how much, we are not announce the or we are no risks. Close the. The percent of the reimmin are for our country, bitiness from there, but it one thingse we know we can tell you is not materialless. Is bris small among the number, the key important. If you look at our third quarter guidance, we still shall. You know, almost 4% growth M is.
Is we saw a record revenue and continue.
The tenth Executive quarter of revenue growth.
And that's all how enough. Organic majority of the growroth will be coming from organmic years.
Thank you.
Your next question comes from David William. With benchmark, your line is now open.
Hey Thanks so much. appreciifly M the question called Des the background this year. But I wanted to ask for quickly, maybe just on, maybe on the automotive side, how you see that that's tintding. Over time was' making really good progress and now you have a little supply to that market. Just kind of curious. Think about that growth trajectory.
Well I think David, if you just look at our track record, we've been consistently growing from 2013. our compound annual growth rate to 2021 is 30% and with the Q2 resell is actually 30, six percent a year-over-year growth. So with all the demand creation, all the pipelines and all the engagement that expanding in this area with strategic customers, we're pretty confident that projection of the growth will continue.
Great Thanks so much, and I realize this is a shorter term view, but just kind of wondering how you think about the path in the near term and maybe what the impact the margin could completely be if we saw more grammatic lowdown in the acro. I realiz you guys are navigating this much better, But if we did see a significant back in the macro margin impact, maybe some of the pact is coming online. Thank you yes, So you know me. Let me answer that question. So if we look back, you know know, for the past few quarters we've being really emphasizing about the product mix improvement right, So that has always been D focus. You know we did have some price adjustgment but we talk about our focus is actually taking the opportunity to expand our engagement relationship with the customers So we have a longer term benefit. So with this approach, you know, with the self for the last few quarter and we'll continue to go down that path. So we pretty confident that you, you know, our margin will continue to improve. Just based on the Q3 guidance, you can actually see we continue guided higher 42%, you know, as a guidance. So youknow, that', S I think the key message is we believe our direction and vision was correct from the path and we will continue to drive the margin improvement from the product mix improvement. Meantime, manufacturing efficiency has always been our focus and we'will continue to drive that direction as well.
Well when am we talking about? You product mix? You know one thing I been emphasize: when you focus in automotive they are much higher margin. Automotive and industrial they are higher margin. Then consumer computing and you know, and communication, except the high end of the, those sicc area arrive when you're talking about then. So from we change the product mix, you can see we focus more of automotive, industrial. one evidence to show you: we already get to forty 1% of our revenue out of computing, out of automotive and industrial.
And because that if we continue growth in those segments, then we can continue improve our margins.
Thanks again.
Your next question comes from Matt Ramsey with Cowen. Your line is now open.
umthank you very much for taking my questions. The first question is.
I guess a.
Of how things are going with customers. Emily, maybe you can talk about this broadly and if you have any specific examples.
We've had a few conversations over the last couple of years about how your company was able to bring on additional supply and have.
Ample supply when many of your competitors did not when things got really tight during the pandemic and one of the.
Consequences of that is that diodes was able to.
Get qualified and break into a number of new customers in a lot of different end markets that.
Maybe you hadn't been able to get into two before because you guys had such supply, and I guess what I M. what I want to understand better is, in the instances where that it did happen, how have the, how have the business relationships develop since you broke into those new customers and how are you guys doing in sort of a land and expand design win point ofview?
If if you could kind of characterize how those things are going, that would be. That would be great, Thank you.
Yes So I think things is going well and continue. We actually seeing the momentum continueues right, for some of the customers we got opportunity to break into account. We actually continue to expand our overall dollar count within the same account. So, like I mentioned right, there's still some imbalance of supply and demand. There's still areas that with, like automotive, still shows really strong demand. So we definitely continue to grow the relationship dio. We are not interested to be a gap filler only So we work with a lot of customer with long-term agreements and commendments and stuff like that. I would say the momentum is still very, very strong.
rightgot it. Thank you as my follow up.
Surprised that wasn't asked yet, but'm just given some of the changes in.
The trajectory of end markets for your company, if you guys had any.
More specific commentary about how we should expect trends in each of the segments to go into the third quarter just quarter-over-quarter growth rates. That would be really, really helpful. Thank you very much.
ok So let me answer this question as well. So automotive, I mention this already- we still seeing a lot of strength over all. We continue to focus and drive industrial again, that're seeing a lot of strength, you know. So computing, I think we see more like a stable life and we Re hoping that, you know, when some of the inventory de pleted in the channel, that we can see some of the upside. There's also some of the new chips, large-ch, coming up soon So that will also drive some of the momentum in this sement. Consumer, I think it's- it's very depends on the actual application and customer demand- very ious a little, but again, we focus on the I major block with think, the consumer areas. So you know we continue to focus. I think communication, smartphone in China region and Asia have some slow down, but we also see, you know, one or two other smart phone venders still showing strong momentum. So I think it a makes a match. You know, like I said, read because you know we do have the capacity, like DR DR mention, we can chift things very quickly to really focus on the areas that we want to continue to drive and focus. I think that's definitely a very key advantage over our to dial approach, right? So I think that's pretty much about the five sements that you ask for. But the keep thing yes, it member, when every talking about for dial blocks still very strong, our de mand still very strong. So yes, we see, So down or adjustments, adjustment is that is's the inventory adjustment, but overall we still very, very con. You know, you know our guidance and that's the reason we still guy we Re going to have you know focus and go and- and this is really you know we be the.
Our strengths, our market demand still there.
Thank you both of the answers. I appreciate it, Thank you.
There are no further questions at this time. Dr Lu, I turn the call back over to you.
ok.
Thank you for your participation on today's call.
You may know, to disconnect.