MXIM - Earnings call transcript Q3 2020 | Maxim Integrated Products, Inc.

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Operator

Ladies and gentlemen, thank you for standing by. Welcome to the Maxim Integrated Third Quarter of Fiscal 2020 Conference Call. At this time, all participants are in a listen-only mode. After the speaker's presentation, there will be a question-and-answer session. [Operator Instructions] As a reminder, today's program is being recorded.

to President, host Investor like Kathy today's now Vice Ta, Relations. would introduce for your program, I Please go ahead, Kathy.

Kathy Ta

Thank you, quarter call. third Integrated's Maxim Jonathan. Welcome XXXX everyone earnings to fiscal conference

Tunç today White. Chief call Officer, the on Chief Financial me Executive Joining Officer, Doluca; and Brian are

of this process, we part earnings financial in presentation financial accompanies a have website. relations press usual external on our call. our the to investor our this release The a posted supplemental As presentation information conference and in disclosures

call call, be involve like Litigation statements and the our Corona pandemic will of the forward-looking you with In including SEC conference warnings virus risks some today's Securities During the the Investors impact these made. in from that differ that Private light we materially that conjunction filings. may Reform this future all statements. statements making must considered that events of and cautioned to in the cautionary uncertainty, appear be in I'd Act, are remind forward-looking statements

additional For posted to website. and Securities our on which company's Commission the filings Exchange are please information, refer

call to turn the over I'll Tunç. Now,

Tunç Doluca

Thank interest are your us during to participants. current all you, you the appreciate crisis. in your safeguarding Maxim global We Integrated. today health that hope and Kathy. joining Good We afternoon you our

of Let largely the weeks The from quarter. me as results. last first progressed the summarized March we two quarter last quarter’s apart had expected

with and the manufacturing concerns Given distancing our Philippines. work employees growing about of the social protect governments. precautionary COVID-XX took in measures to mandates we operations test impacted These measures

our were solid financial Maxima within range However, guidance. team of execution due our results global the quarter to the by March

has global location. depending on varying is We geographically have that impact supply a diverse a than the flexible pandemic chain

internal related have wafer in partners our to network chains fabs our we without staffing operational supplier capacity and supply foundry Our work flexibility disruptions. In constraints. assembly, in at footprints currently through is both

to tests Thailand at capacity. operations Our continue full are currently able

measures. impacted are social test Philippine our by However, distancing operations

expect we will XX% quarter, the In our approximately the test normal run Philippines June at in from rate. operations run

customers and factored for shipments planning. Additionally, we pandemic medical expediting has product been our fight to the are into our test this

external doing are optimizing the internal great Our work Maxim's teams operations and in crisis. during manufacturing

including QX Let automotive. June our and the our quarter, commentary In Philippine COVID-XX effect March June that market our our automotive Please note fiscal market up business overview. sequentially systems. by to infotainment, body me quarter QX of the quarter the will with test was I BMS driver Due electronics, revenue on includes we demand with across applications expect our automotive start will of turn growth end of impact shipments. the X% all assistance soften. and automotive auto to constraint

world Our automotive stopped impacted customers many customers mandates temporarily around and significantly cars. by shelter-in-place have been the producing have

XX% market in in growth of return continue this the believe opportunities power decline We electric content in of we than Due rich given will content down ADAS continue these to from resulting invest sequentially. lower to and management, in BMS constraints the and growth COVID-XX anticipation automotive our for to test be in for the and vehicles strongly business factory closures anticipate OEM demand our applications. greater

OEMs. We due expect business of to BMS the our automotive all the lowest at in demand impact markets declines in with of Chinese resumption our

uptick quarter. related days. weeks prior of The disruption and COVID-XX channel the well test declines target the Let Days sharp and inventory remained equipment. by me shipments quarter. prior next in turn from were saw an two distributors our similar of In was to during We the to offset quarter, in the decline caused which XX the the quarter the flat test were automatic industrial the broad-based operations to March market. below industrial modest of last

more provide our at the were a we distribution inventory right not to business able As Brian replenish will previously on channel detail result forecasted. afternoon. rate

June customers same on our driven primarily from in help be have the a stronger by the test impact medical expedited Once year. demand. expect our constraints surge industrial of products quarter our quarter, growth achieved. last we to up sequentially to guidance, could In meet the be again up be Industrial to we otherwise is expected weighing

data applications. in strong Let and by XXG weakness me products next the We in was base was and optical stations products data partially peripherals. demand March computers sequentially. discuss communications quarter for XXXG comms products X% and for In optical The center. in center ramp for up center experienced offset notebook and data optical growth

centers being products and data deployed XG rapidly hyper uplinks. laser scale station Our base are at driver

more Our to products limited budgets. links power enable within move these data staying while

remote optical in the around work. should world quarters benefit business to adjust employees future Our as

are in to center new ramp hyper of design We data for wins power a scale server leading starting shipments customer.

ramp a in quarters. this expect to We for the be business tailwind future

for last anticipate data data revenue the In by demand centers. and up the June center data is quarter prior to up year. server for hyperscale optical comms and the Comms be driven power from we quarter, products increased to expected quarter primarily and same center be from strongly

and data station year-on-year to contribute XG We strong for and to optical growth. center expect applications power base and XG

the and related me epidemic let impact consumer soft by seasonal due expect June the other with smartphone shipments be and consumer consumer more the uptick sequentially to March In In an lower very market spending content. Finally, down in turn quarter, consumer. declines than was the to we on consumer to X% quarter, electronics. smartphone offset COVID-XX

and the supply productive would strongly greater our from product I'm remain employees be employees ability down our chain global test We shown their navigate portfolio. as unprecedented to of these to like and outstanding our expected of at recognize is model I than times. diversified homes. this to partners are sites, by to wafer fab resilience hard-working profitable Maxim's very remaining proud company highly sequentially. our XX% Consumer due who manufacturing work business they and our as well

growth mixed the in analog long signal high products and our which are deliver on performance, drive our Maxim and long term. focus will to value We maintaining for sustainable live customers

over the turn I'll Now Brian. call to

Brian White

Thanks the hope listening you are staying Tunç. and that for thank of call I today. all you safe joining

of working to I'm are to to as prioritize while diligently of we in operations mentioned business Tunç continuity supply our challenging keep efficiently ensuring doing as possible proud we're customers our the and our safety that As the critical running environment. work this employees with products.

$XXX for and QX up up Revenue X% a from quarter fiscal same sequentially was million, year the ago. X%

approximately industrial, comms Our center by revenue automotive, QX XX% data major XX% in and markets consumer. was XX% mix and XX%

turn Now distribution the I'll to channel.

long-term channel days. of the below XX% the ended up of one comprised quarter days just We revenue prior target from Maxim's XX Distribution XX QX. and well of our inventory, day in with quarter

products our able last to capacity and run the test two not were manufacturing ability mentioned, at Tunç operations our of distribution. As to full customers to ship weeks to impacting direct during both quarter the

distribution increased Additionally, quarter. from the resales prior

quarter was was Turning XX.X%. points of slightly disruptions prior to our gross the XX from to due items special to P&L. guidance weeks the the This a two midpoint XX in points manufacturing Maxim's quarter. basis Gross midpoint below of was margin the below the basis our COVID-XX but excluding margin last guidance. our operations

to safe down decrease and we when lower from controllable of items special Operating expenses the was $XXX A this excluding million, for intend prior expenses. portion employees customers. resume reflecting approximately million travel quarter $X discretionary were which

higher lower from prior GAAP margin income XX% our expenses. was QX tax and the $X.XX percentage XXX quarter. basis GAAP due points The to guidance quarter operating million. the from prior of special of revenue, earnings excluding to midpoint range. excluding items special $XXX revenue point XX%, with QX special prior excluding Operating items one per up operating rate was equal the down was share GAAP items

the prior free Total equivalents revenue. XX% cash flow to capital quarter. was $X.X Trailing $XXX million XX-month of sheet cash, cash million turning defined Now term cash as the and were balance operations or flow. investments and from $XX down of billion, less cash expenditures short

was share X% Free yield cash cash stock yesterday's free flow at our is flow and $X.XX price. closing per

For quarter. capital we or shares. approximately bought was million repurchases an prior in increase from share as X.X $XXX the XX totaled back of XX% This million return million QX

repurchase buys matrix more which QX Our share combined shares back accelerated at by with free repurchases share lower in driven prices flow. increased cash our

and the per stock cash $X.XX XX-months quarter. of Total repurchases Dividends dividends basis. yield XXX% of trailing X.X%. is $XXX share Based on price return of through dividend on dividend and quarterly million totaled our was in a free our flow to share, yesterday's closing cash

track are in commitment flow We to on to return XXXX. fiscal at exceed shareholders free of to our least cash XXX%

the were from down prior quarter. QX and inventory expenditures XXX $XX days from X% down X ended Capital dollars at inventory days QX million. were

year-over-year We midpoint. I'll down to between X% outlooks $XXX quarter turn and the X% forecast million from down prior the fiscal revenue to Now the June million, and be our at to $XXX quarter. QX

the to equal beginning QX revenue fiscal million range. our almost backlog guidance $XXX was of Our midpoint

to this achieve not On that turns apply would required our forecast. revenue would the surface, be

level we and anticipate will be provided. in expected to range limiting our our However, related impacted revenue Philippine the of constraints COVID-XX some to we backlog outs operations, this test push ability our satisfy within outlook by orders

more special margin factory points lower the the XX.X% items up at offsetting forecasted midpoint quarter is loading excluding at mix QX XX.X%, front-end growth product than with revenue. and basis prior Fiscal to from XX favorable

quarter becomes which ship to to test increase available. we products capacity of the our ahead as inventory accelerate During test to plan ability internal finished our

QX travel down items revenue approximately cost QX items a controls to of X% from flat expenses excluding Fiscal of and rate be lower tax capital approximately remain special and continued to expected are to expenses. our is Fiscal expected expenditures QX to operating QX benefit excluding are XX%. expected $X with million be at special

we $X.XX $X.XX. share excluding fiscal per special expect QX items, of earnings Our a GAAP range to

and strong in summary, times. enabling resilient is challenging In to Maxim focus our operational model these be financial

health. are customers safeguarding focused products to while delivering our critical employee on We

continue strategy free more to free to return committed We to our XXX% flow strong cash cash our of to and than flow generate investors. remain

call back I'll Kathy. to over that the turn With

Kathy Ta

Q&A for remarks we concludes to will from first caller could now That questions. like get process the Brian. previous people calls. one I please Thanks take possible. continue open Jonathan we in can question? our same have would each our we've call so to as question We'll and the used many prepared that as we

Operator

Certainly.

first from from question Bank. Deutsche Our Seymore of comes Ross line the

question please. Your

Ross Seymore

dig in things. just into want Hi the guys. a little Congrats uncertain on deeper bit side the times. solid results the to industrial I of

I Tunç as guess in in impressively and As did a said, more even little well there. medical June. it it you you're that March expediting surprised as holding it's

how is pulling? So that? Philippines do Thank medical as around you you just actually headwinds guess that can Any And color more in to percent? the of is a big you. test talk I aggregate, expect about How much go away? when

Tunç Doluca

All Ross. right

is in the somewhere company. general was digits COVID-XX of what to in So it percentage medical. in mid our just It's the sales begin well single before somewhere, rates

gives it idea. So you some

surge a our really terms during what's is In products. demand wanting of happened and in all customers pull of in kinds quarter this to

have and follow go in portfolio We strong didn't products monitoring, ultrasound but lot medical equipment in of where pulse remote used many we of actually really product that that patches disposable anesthesia into equipment, a oximeters ventilators, machines; used, patient designed them are lot our was for in actually a into. they're

of came increased orders lot bookings and in. a in obviously pulled their those So and customers both

responding those we are them. essentially So priority to customers products giving to deliver

the of you terms market, seeing to ship that are we all of ship effect In we some last industrial clearly rest quarter. needed couldn't the

had, in going in like catch customer experiences general a we've reaction some consumer would there's So speed up like, very is not industrial quick previous and on be. that's customers their

long continuing them we as in So on that's I seeing a think advanced still business their lot information as of factories have and as what that are automotive like that space. don't usual open we're

group some pull-ins fueled is giving by priority for we're high So these medical. and other

kind remaining Some of it also not environment. going this demand and down frankly general of stable in is by

Ross Seymore

you. Thank

Tunç Doluca

You are welcome.

Kathy Ta

Thanks Ross.

Operator

you. Thank

from comes question next Our Sur Harlan line JP of from the Morgan.

please. question Your

Harlan Sur

housekeeping afternoon. Good just the flow strong and taking cash congrats Maybe quick question generation. question. my for on free Thanks a

points in morning BMS guys talked this are of production is guys recently same China June. and to auto a the have your basis on your to reflected in my guides June that auto the constraints inflect and you rank if trends global data Maybe third-party pick to and September quarter auto closely capacity in one pretty test production main that up. having to quarter addition how is keeping you then China in you June in are given the started like quarter to guys just up start here trends? auto of anticipate you out like IHS in recent global reported sales presence picking about back seeing automotive and U.S. up as back is given back ADAS, your in vehicle to production semi Europe relatively see of and much question, the the and impact peers production lean your research they that in for starting on the revenue the like customers’ to Would You then with Japan see track would shipments expected Are strongly forecasts this inventories? strong

Tunç Doluca

Okay a Harlan That questions was I'll that. of here. lot take in

I thing, do it's answer a I second a question, recall question we is Ross part one didn't asked when expect test So the better. our constraints get to just to which two-part

Let first. getting have. working the and is we shifting more as get me team Philippines work other to do as that Obviously, our well facilities in in answer factory tests that the whole operators changes to in to

for average I the So was my about of quarter. an remarks XX% in talked prepared kind

up by end of a starting catch quarter. we're the So lower the we'll and number from

in these our I it in our think delayed shipments, basically to terms we'll catch I plan. with think QX is that of up able in So be current

about In actually are a your from of terms customers. questions seeing we automotive, mix

them and of have online. Some of them because coming one BMS begun customers which China are in to factories back you their mentioned was order

partially still our in factories of completely customers are closed. of or condition operating Some the either

not essentially from products taking Maxim. they're So

So the as by it’s it's on a some our constraints. mix said in is test really area limited that's going also automotive of I and

world automotive, delayed has in be and there's the in terms segments for or happening think you fewer think I general demand lot of So give whole answer of frankly being some the of cars I I a back because built things in coming but constraints. any correct would

an product that take impact to that on have are to customers us. essentially amount So has the of going from

said weakness heavily ones it their but in a remarks. is I our depend in product we're It example feeling still us and continue does general this prepared that in more a that in be all order in quarter think ones that to that the market at will tier for next. in are it's I good maybe Having products term will I but prioritize doing we inventory invest on others, what the need the their think levels even and long the mentioned to really there for lines than our best

directionally but you So your how question think It's of for I I test constraints hard answers maybe was that versus quantify some other is revenue much demand. your to can that me help. give and will

impact of the the of our terms all impact. constraint of in across First end each test is markets

and think are market of I guidance up would strongly build industrial have instead the to able been just them. up, products you all ship if

primarily unaffected I both softness weakening center both. by relatively of constraint. both think and weakness comms demand much constraints. really test constraints and affected not automotive with that consumer data that demand and It's is is the is from and by we're The the them seeing test

all from have we things had the of of So revenue I if as hesitated of are kind actual why that think could it's were numbers what some to of in remarks we're kind been that's that the well. goes giving as fluid be prepared quarter might of the some Brian have as mentioned on backlog because pushed the we quarter suspecting of out as that his constraints

So it's a of for a bit that reason. mix

Harlan Sur

the for insight Tunç. Thanks

Tunç Doluca

You're welcome.

Kathy Ta

you Thank Harlan.

Harlan Sur

Thank you.

Operator

Thank you.

question next from of comes from Our Ambrish line the BMO. Srivastava

Your question please.

Ambrish Srivastava

very on I the turns guide backlog. had my Hi, only the the and thank and question. the much a you for commentary around taking question

the perspective in a in your what understand current of know have downturns we've are of others past in Again versus you're morning order understand this also trying the we have sharp no that just how you. us push the in NXP we this us, but percent help are help before on seeing terms outs you’re same and and Thank growth fundamentals out seeing the importantly, Q-over-Q out. this seen based seen of patterns you're I from calling was in recovery Just reversal more kind for playing downturn what that such downturns seen to and cancellations, just seeing sharp two XQ.

Brian White

Brian. one. that is take will This Sure. I

of start if quarter typical with from turns, include within quarter. us would turns we the So revenue about for a coming XX%

equal this do XX% as mid would backlog some as as of have the for quarter backlog to the we but beginning guidance was a is environment raised given where quarter have supply movement some but our So had norm. guidance we the well issues constraint we've of again unusual current been kind potential historical of clearly a

our thing our it relates of here we down, guidance, XX the think factor days As one in push that is that from to that working are outs have customers. commitment and we our trying into is to favor I lock

and XX So non- a reschedulable. within days non-cancelable where we've orders are moved to practice

So of into quarter forward of we end in that exposure gives contemplate bit a what trying move quarter as the we're of which the to tail little reasonable guidance. leaves the the amount us is a certainty at

downturns demand think revenue. here that difficult have of just is supply makes compare try this to the of the demand But areas and a to dynamics correlations I prior strengths areas constrained It's particularly supply we because necessarily in decrease in side very other softness draw prior not to pockets to in that downturns. have to are I it are the non-comparable think things but we

Tunç Doluca

Yes.

that. to So will add maybe I things

First well. part of in shape your the as that of I of think terms of question was all recovery, the

the supply the that been recession effect pandemic industry. will never general As some said industry issue think faced general and the of the our different I really because amount on Brian so from cause be have I a we with but complication came of industry has quickly think in

within time, long take quarter-over-quarter this exceeded model the Recession year in or a the saw though back Great the recession also even had remember a quarters. within within five already you year. remained semiconductors if the We numbers really of a XXXX, I We the bounced for economy

we is we're really project at and that well place can't short in most and taking let's a a this a more say few doing very orders recovery. account into assuming we're quick that then is assuming for months the there shelter-in-place So preparing all what remain time, that

we're so terms ship So ability supply and of a recovery. on, really to quick our chain in for our preparing

resilient. We to continue a will manufacturing for the preparing today. analog be serving difficulties are I the unlike had to we market structure products, we recovery built and we you to might that might a XXXX important high-performance recall along mean business flexible ready to able quick We'll that I respond economy. have we're overall so in essentially compared on also we're a spending what with we that recovery be careful It but the and quicker to is the are think. happen of in semiconductor be

Ambrish Srivastava

both perspectives. you Thank for

Tunç Doluca

You welcome. are

Kathy Ta

Ambrish. you Thank

Operator

Thank you.

Our of next the question comes Bank line America. from from Arya of Vivek

please. Your question

Unidentified Analyst

for letting question. me on automotive the Zakalik market. Vivek, on thanks question My the is also ask end for

auto So into guide even Thanks. so more XX% your with that's your production wondering particularly QX softer much feeling customer headed about business autos the resilient down first compared in industry auto half. I guess appears you're with or in the I'm space. inventory June how

Tunç Doluca

will Yes. take I one. that

good test we board they constraints don't newer many have So about levels the growing not inventory into of fact product lines. on limited new really but ask you faster were tell and don't products, which but maybe inventory our They don't that on our really especially by also customer do across with inventories are. insights us. we what questions have actually the We that share the

performing that it's well attributing to products; really it good faster well. BMS ADAS, that we're well are automotive that wins we're pretty link compared are and particular design this but our of doing serial and put market do all growth to very these and in of segments our content overall numbers some our examples we're doing notice So in really we to the products, hard on

getting we're would we're in therefore it market. And we're than content doing market since overall that better reasonable to what for be share the more gains, assume seeing

quarter outlook predict and pretty lay we're that we Now in going hard automotive said we’re is therefore forecasting to cautious as to happen what's current the going decline on Brian us having happen in in. that said serious a to it with it a for very more what's out all

Unidentified Analyst

Got it. Thanks.

Tunç Doluca

You are welcome.

Kathy Ta

Thank you.

Operator

Thank you.

of from Stanley. comes question the Morgan from next Our line Hettenbach Craig

please. question Your

Craig Hettenbach

targets Yes. the want that Thank closer kind quarter, channel was of resale you. mentioned I the on in to and at follow were the had just back around and up didn't March or you to least get you in happen. the going to commentary inventory expectation your

see do update for out any just things quarter of the you So playing the on month June and resales April? how in

Brian White

the or Brian. Sure. This there. towards extent assumption little some bit had I would more we is targeted to for built replenish moving will March our that a Yes, the take that. guidance channel an we range quarter

day As quarter. resales. one it channel prior XX by stronger That essentially days the just turned out driven from inventory flat, remained was up

So ship it the from that but end fact resales were the to prior our constrained ability the were up by towards we also the channel into a in the products quarter. of bit quarter was driven

assuming tremendous when and ultimately think shipments what so direct quarter trying is forecast less even us it about today's to Again with are it the the shipment. it's moving and accuracy environment, even more how that. of was question channel a Your June think macro amount out to it's in combined I for relates difficult play in of it's to to difficult predict our of as into will then related the versus mix the challenging challenge uncertainty there environment we current resells with quarter, I is

channel I what it been our inventory. the the So over managing of target seen us very you've that quarters We've and well course our management think from keeping in very prudent range. last of is disappointed several within

expect should to do to You us that. continue

in fall June think it us valuable various would I uncertainties. try given will where the for days but predict the to channel to to be inventory We exactly of the quarter don't likely

Unidentified Analyst

Craig. you Thank

Operator

Thank you.

comes question Evercore. CJ Muse line from from the of next Our

please. question Your

CJ Muse

guess question for question. the another of assembly on Good test Yes. side. afternoon. the taking Thank I you

adding then speak other can for test social to you related could to talked impact issues being qualify quarter? potentially margins perhaps guess vision strictly Your you that? about as you of you you Southeast the And there, Asia I us, distancing with Can backlogs in on mean related it any to that? tests. or by Thank So assembly? really outside for you Is is would logistics just improvements XX supply think about to and June share what redundancies like pushed also related you. it out

Tunç Doluca

Yes.

comment margin can about that. me you add add, and let manufacturing general gross effects Brian in So can to

So overall of just in you fabs, foundry own terms wafer our wafer shape. to in supply give and an summary partner good is our chain, network fabs our our

seeing disruptions So there. we're not any

Our assembly is almost multiple XXX% able to couple because been out sourced into multiple there around vendors we in affected multiple there's had are, we we've for shift countries countries where and even a though those load sources packages. of

So distancing working tests then about general In fine. some social by Of the care we tests, two is really we've sources assembly outsource. affected being to and able have the final take these in internal of measures. outsource been

the Our running staff by working mandates and because in employees restrictions the into we or Philippines of the were in the Thailand operation because Philippines is get fine the all XXX government. basically factories can't we're that not %

our and the employees. some do back well. expect with we in a and is our the sure running to staffing safe from at or of factory the government many expect plan result the into unless by be restrictions as the get the we a increase to quarter level probably run other catch-up output are that to protecting other So issues able they're by and levels making to we also and really that we as we of to increase do We're measures were end environment

that So it It's number the is to on. not really staff so really can a get and of related equipment to factory.

is So hopefully most other questions. looking Was any you're sufficient for? detail answered that you of there or that

CJ Muse

helpful. Very Yes.

Thanks. the impact state great. can that be you If just would margin

Tunç Doluca

So that? Brian can you comment on

Brian White

Sure. Yes.

we June guiding midpoint. the actually the up are quarter margin at points basis gross XX For

the are with consumer will on significant lower perspective. quarter we with in level. to lower providing So and associated a from getting gross margin higher a automotive mix That's operations continue benefit we a manufacturing at mixed a and run fairly June the tailwind

manufacture. continue we're going some end I front our build to We're the at particularly as to prepared going said to remarks. inventory in So

continue front we some front build resolved. the for because position of in be bottleneck that we will We'll So end work. a to want tests to inventory

Philippines possible in is a out we that be push to bottleneck have. the adjust to position goods and of a that once bit as as quickly So we as finished result the backlog want

CJ Muse

Thank you.

Kathy Ta

you Thank CJ.

Operator

Thank you.

question of next Our from Pitzer Suisse. John the line Credit comes from

Your question please.

John Pitzer

here. for Thanks afternoon things ask Yes. of Couple letting me Good the question. guys.

First I follow you quarter what the the March in confused the midpoint Tunç, you million to the assume impact have little quantify the two-week so can I of I been as hit a to, I'm by a Would assembly was from $XX was bit kind at a then and test want guidance. about issue issues? can on that, just June

you're some and inventories backlog with lean. are expecting in a cancellations until where so and supply out cancel pushed heading build are the Why backlog cushion to You're start things June push is that that will environment June the that maybe Why customers in September? constrained very healthy really inventory confident isn't the you quarter to customers out? try quarter actually

Tunç Doluca

backlog now April the did push of allow and orders. automotive made, before around XX weeks their few their put confident I is likely did We most notice backlog did construct word is our the guidance we the move thing the which but happen to see that we quarter. we confident that Brain of some way used in you is the that's did we're think to I in not in that customers there days comment think customers what for locked Well, the of the and first we

a push that we're subtle So those as be there suspecting out. more might in of

not first behaved weeks So that's really seen. Whether why or in sure. how we're the We're doing. We're will that customers, continue few basing really of the to it be the on automotive they what not quarter. is

about question I can other one. Your Brian quarter that answer last think

Brian White

the the did if weren’t be Sure disruption end to midpoint that gross margin. test the basis of quarter have XX were in it on March Philippines impact. We we expected impact at operations would shy John. points to at Yes, the for an the have and the at the midpoint

John Pitzer

the of testing guide. hit Brian the I rev guide Would issue? the without was rev to midpoint more of midpoint the the you have talking

Brian White

at make We the tracking to were midpoint. quarter the

John Pitzer

Perfect. Thank you.

Tunç Doluca

a to were grow. about just at from million. think one. bit One XX XX Brian. you look lateness that give We deliveries I to They way of did it tracking color absolutely said, on we grew million, much how correct more as

that that shows you were I tracking. So we guess

John Pitzer

Perfect and thank you.

Tunç Doluca

welcome. are You

Kathy Ta

Thank John. you

Operator

you. Thank

comes RBC next of the line from from Markets. Our Steves question Mitch Capital

question Your please.

Mitch Steves

guys. for my just Hey wanted versus just demand question. of bit to on taking focus kind dynamic. supply a Thanks I a

pretty but what supply you a sounds do million let's because noticeable by it just we're impact erosion? is about call plus. how quarter is million March guys So XX demand COVID-XX the constraint talking get XX supply decline to impacted sequential the comfortable really issue like June due on to What

much out can issues and believe reoccurring supply the do of and you that too far? June early So how of automotive do you think that kind or demand consumer that's secondly in be market in that then look of to kind weaker XXXX

Tunç Doluca

I think you going know longer give out to for XXXX time. guidance as that don't we

especially than are said but talking for would focus the investments economy, what in expect I months stay-in-place but about implications a hard and have in that our to long coming on pretty all have our the those chain. if things terms think really more see R&D flexible orders Maxim. of it's kind as I'm of the term supply to those if orders We in we Maxim recover I eased about now are personally the I

a to chain the isn't or then huge but the flexible in we whether able all margin on there's have react ‘XX dependence on gross So we quick of a there because level of if be should recovery revenue. don't

for there. we any that think be, out should So I eventuality occurs prepared well we're

Mitch Steves

sorry, the the Got QX June is in supply the much you. guide quarter And back guide? how

Tunç Doluca

Well, not including know but project quarter backlogs quarter. to it's the as we backlog hard as to to to actually the our us it's in grow to with do that But on XX% the us going not for average, like we because the [stipulate]. don't able I'm quantify stable the be it deliveries with lateness running in orders June expect I

Mitch Steves

you. Thank Understand.

Kathy Ta

Thank You Mitch.

Operator

Thank you.

Stifel. question comes from of Svanberg from next Our Tore line

question Your please.

Tore Svanberg

XX-day you. in commitment Yes. was I to on schedule. Thank hoping bit little the a zoom

this new going be is should a when phenomenon all ongoing. we to was and that of and First assume instituted this that is

new if very policy era? understand if is this to now only have or sort this try during you it's that a of Just uncertain

Tunç Doluca

will Yes. that take one. I

correct were is if them April the we're loading XX that wanted it something to was backlog in or because sure building test backlog put of we and is the place, loading first correct it within that because constraints. remember is on limited. done the make the our test So and assembly to enough products I that to We were sure two time we we make days week

place because conditions the constraints in think current through was maybe So we the it days the and we were XX test I of it was of living April. that and first put in I

Tore Svanberg

should of going is the I believe this thing a ratios change this or and one-time And because forward norm if understand that right? to will sort we backlog turns be to expect going your forward,

Tunç Doluca

it change I make will quarter. the I I in not it it pretty don't backlog or it's too that to this it. come change make at think with the we'll because would beginning we of decision. usually think early permanent wouldn't think Whether a reasonable

and and direction see long to happen I'd reasonable conditions customers this. we them very term was these what explained going basically doing under We on how say and didn't how things to developed react. would it follow they Just our talk found frankly. why of really customers they most about said see And we're

Tore Svanberg

you Sounds Tunç. good. Thank

Tunç Doluca

are You welcome.

Kathy Ta

Thanks Tore.

Operator

from you. Instructions] the next Cowan. to Thank Matt [Operator question comes line Our of Ramsey

Your question please.

Unidentified Analyst

talk Ethan there. for the about on to This constant center Matt hi want business. Yes, is data Potasnick I Ramsey.

As growth you you the touch business June lumpy guys the and some quarter. as have drivers of previously described on for the

kind wondering products. talk CapEx Any activity gig gig could was the and and I year? per into XG XX of be and half if and XXX heads between would So the hyperscale, out flows helpful. of calendar optical back Are these color sustainable about parse the trends some you these heading

Tunç Doluca

Sure.

connect data inside customers our their need at and speed the there robust you consists These center. is products. to primarily summarized products they the investing hyperscale growth our from have together high -- we on business and help storage made as are So servers for to optical most nice growth products do and their the coming data of good side of of that in a we centers connect that

investments signals going growth at we're are getting is pretty their and So to that's moment that from robust the them the continue.

was powered products server the quarter, these This addition for applications. to that we some high power ramp began

our initial weak is that years should So has the at help enterprise and and and been center also products multiple least we're customer. seeing essentially power this data for ramp that that from one

should center continued cloud. is invest In two our to has a market So added data grow. that which world us and like those it help really the seems

will nicely lumpy station the accepted that rented think our rollouts but continuing side last are are XXG products single well I the very transceiver market piece in that be year. and we and lane On throughout base

but There future that has be continue going this kind think a minds in so. lumpy probably in a been stations will no that little of our to at are quarter overall base that be the continue things of decline always and I the question as there's will to market stabilize but bit for business upgrading of

keep has in rate it So say grown I wouldn't really direct at let's the it last the growing to that year.

Kathy Ta

Thank right. All Ethan. you

Operator

Thank you. session program. hand this to today's to remarks. further program I'd any of the Kathy conclude back the for like does And Ta question-and-answer

Kathy Ta

Jonathan. today's participation conclude Okay. call. in and does conference Thank interest for you for Maxim. your That Thank you

Operator

participation conference. gentlemen and for today's ladies the you This does program. Thank your conclude in

day. Good disconnect. now may You

Maxim Integrated Products (MXIM) 28 Apr 202020 Q3 Earnings call transcript