Microchip at Citi’s Conference: Strategic Recovery and Growth

On Thursday, 04 September 2025, Microchip Technology Inc. (NASDAQ:MCHP) outlined its strategic recovery plan at Citi’s 2025 Global Technology, Media and Telecommunications Conference. CEO Steve Sanghi presented a balanced overview, highlighting both challenges and growth opportunities. The company is addressing inventory issues while aiming for a robust future with an ambitious business model.

Key Takeaways

• Microchip is implementing a nine-point plan to optimize operations and improve margins.
• The company is reducing inventory levels significantly, targeting below 200 days by the end of September.
• Strong growth is anticipated in the aerospace and defense, industrial, and data center sectors.
• Microchip’s China business is expected to see an uptick this quarter.
• The company is reassessing its Preferred Supplier Program (PSP) for future cycles.

Financial Results

• Gross Margin Target: 65%
• Operating Expense Target: 25% of revenue
• Operating Margin Target: 40%
• Inventory Reduction: Aiming to reduce from 266 days to below 200 days by the end of September
• Distribution Inventory: $103 million reduction in March; $49 million reduction in June
• Operating Expense Reduction: From 39% to 32% currently

Operational Updates

• Manufacturing Footprint: Downsized, including the closure of one fab and downsizing of two others
• Production Levels: Producing less each quarter than shipping, aiding rapid inventory reduction
• Capacity Increase: Utilization and capacity expected to rise by 15-20% per quarter starting in December
• Distribution: Terminated some underperforming small distributors
• Customer Relations: Improved engagement with global customers
• CHIPS Act: No funding received; negotiations on hold

Future Outlook

• Revenue Growth: Expects above-seasonal growth in December and March quarters
• Inventory Correction: Continued correction expected across direct and distribution channels
• Market Growth: Strong performance anticipated in aerospace and defense, connectivity, and data center markets
• China Business: Growth expected this quarter
• PSP Program: Plans to learn from past cycles and improve management in future upturns

Q&A Highlights

• Aerospace and Defense in Europe: Benefiting from increased NATO spending
• Industrial Sector: Includes medical markets
• Automotive Sector: Healthy car production but impacted by customer inventory levels
• China Business: Anticipating growth; more than half of the business involves multinationals
• Lead Times: Challenges in data center products due to substrate and packaging constraints

To explore the full details of Microchip’s strategic plans and insights from the conference, refer to the complete transcript below.

Full transcript - Citi’s 2025 Global Technology, Media and Telecommunications Conference:

Chris Dainley, Semiconductor Analyst, Citigroup: Thanks for coming out so early. I’m still Chris Dainley, your friendly neighborhood semiconductor analyst here at Citigroup. Next up is our top pick, Microchip. Now why is it our top pick? I’m simple man despite everything that my wife and kids say.

Basically, we see the highest margin and earnings expansion in our coverage universe. It’s really no more complicated than that. And it’s my distinct pleasure to have one of the living legends of the semiconductor industry up here, Steve Sanghi, the chairman and CEO. We also have Nawaj Sharif, who’s the VP of finance for Europe. In case anybody wants to ask specifically about Europe or anything else about Microchip.

And I hate, you know, giving a plug or recommending or even talking about one of my dastardly competitors. But I think, you know, one of the sort of examples of why Steve is so good is he made a presentation at one of our competitor conferences last like, late November, early December when he was back in the seat for literally less than a month. And the analyst said, hey. So, you know, what’s the plan? And Steve spoke contemporaneously for probably ten or fifteen minutes.

You know, there’s obviously no teleprompter at these conferences or specifically when it comes to to Steve. And he went through his nine point plan and the restructuring. And to me, it was pretty amazing and how plugged in that that Steve is. So, Steve, thanks very much for coming. Thank you, Chris.

And let’s, you know, let’s jump right into the nine point plan. Maybe just run through it again and talk about where we are on on those nine points, how things are going, and then we’ll we’ll go ahead and run from there.

Steve Sanghi, Chairman and CEO, Microchip: Great. Thank you, Chris. And I just want to say that during this presentation, we might might be making some projections and other forward looking statements, and these involve a lot of estimates and predictions, and actual results may vary materially. So I refer to you to you to our filings with the SEC that identify some important risk factor. Now, Chris, answering your question about the nine point plan, the first part of the nine point plan was resizing our manufacturing footprint.

During the go go days post COVID, our manufacturing footprint became too large, and we were building a large amounts of inventory producing well well above what we were shipping. And the inventory got as high as two hundred sixty six days. So first thing I needed to do was to downsize the manufacturing footprint. We closed down one of our older, smallest fabs and and downsize the other two fabs and also downsize somewhat assembly and test. And today, we’re producing significantly less every quarter than what we are shipping.

So therefore, inventory is dropping rapidly. And second point of the nine point plan was the inventory reduction two hundred sixty six days in at the December. We were two hundred fifty one days at the March, two hundred fourteen days at the June, and are expected to be below 200 at at the the end end of of September and will continue to go down from there. And at this point in time, we are producing well below what we are shipping, and and we have said that we will start growing our capacity again starting the December. Utilization will start increasing, and capacity increase will be about 15 to 20% per quarter starting the December.

The third and fourth point of the nine point plan was to do a deep dive on all of our business units as well as look at all of our megatrends, you know, key corporate growth initiatives, and essentially essentially go through every one of them in a deep dive fashion to either reconfirm what we’re doing or to change what we need to change. And and we made some changes. We made some changes to the megatrends, and we made some changes to our business units. So those things are all completed. The fifth part of the plan was to look at our channel strategies with distributions around the world.

As you know, we have a very, very broad distribution around the world. We use global distributors, which are Arrow, Avnet and Future, and we also use large number of regional distributors in China, in Taiwan, in Korea, in Japan and in Europe. So unlike some of our competitors, we have a very broad distribution network and we want to take a look at that. We want to look at the margins we are giving it to them and made some changes which were made and have been implemented. Also terminated a couple of small distributors that were not performing.

The six point of the plan was really, you know, reconnect in a meaningful way with all of our customer base worldwide. With some of them during the go go days became very transactional, parts were hard to get, and everybody was just looking for where I can get, you know, parts. So we put a major effort to improving our relationship with our customers worldwide, which is still an ongoing process. But as a big project, it was completed, and I would say our customer relationships today are very healthy. We’re reengaged.

Our funnel is growing design funnel is growing and we’re doing extremely well. The seventh part of our nine point plan was to unveil a new long term business model. The business model that was on the street prior to me coming back to do this job really had a remnants of peak performance. You know? During peak performance, we were charging customers a lot of expedite charges.

There were a lot of capacity reservation charges. There were just all sorts of stuff, and prices had gone up, you know, some beyond reasonable. And we didn’t believe that that business model in a steady state fashion was doable. So we unveiled a new business model to the street, which I think we did it in March, And that was a long term gross margin of 65%, operating expense of 25, and operating margin of 40%. And we’re making a very good progress towards that, And I’ll cover one of that gross margin.

And the number eight was I’ll come back to gross margin. Number eight was operating expenses. So our operating expense at at that time was 39% of our business, and our long term model was 25% of our business. And I didn’t think we can get from 39 to 25 without doing something meaningful during the peak performance days when so much of the revenue was driven by inventory shipments to customers and distributors, and lot of the inventory is still there, you know, still high. A growth in operating expenses driven by that revenue really wasn’t the right thing to do, and and therefore, we must correct it.

So we made that correction in the March by a worldwide layoff, which was our first in twenty five years, but but that needed to be done. So with the help of that and with the revenue improving on operating expenses, are halfway there. 39 has come down to about 32. And the rest, taking it from 32 to 25 will happen through mainly through revenue improvement, revenue coming back to the entitlement when the inventory goes away, but there is some attrition built in there also. So that was the number eight.

And number ninth was the Chips Act. We haven’t taken any money from the CHIPS Act. We were still negotiating when my predecessor left. I put that negotiation on hold pending review of the entire business, review of our capacity, And then the administration changed, and Chip’s office really didn’t have, you know, any directions regarding what to do. So they never really reengaged with us, and so we never got any chipset money.

And now it looks like to get any chipset money, you have to give equity. So not interested in that.

Chris Dainley, Semiconductor Analyst, Citigroup: No plans for the government to take a stake in Microchip. Good. I like that. So let’s just sort of jump into how the year has gone. I mean, sales are largely growing faster than your peers after this, you know, big, bad, ugly downturn.

Why do you think that is? Do you think that some of it is just, you know, sort of the law of the of the bounce in semis because your sales declined a little faster than peers, or is there something else going on out there that’s enabling you guys to put up these good growth numbers so far this year?

Steve Sanghi, Chairman and CEO, Microchip: So so there are two things going on. You know? One is during the Google days, everybody had some sort of program with their customers where they were taking long term backlog and either all of it or portion of it was noncancelable and nonreturnable. Everybody had a different name for the program. You know, our name was PSP, preferred supplier program.

Some other people called it NCNR, noncancelable, nonreturnable. You know, the the sentiment of the program was fine when it began. Customers wanted it. We wanted it. You know, customers wanted some surety that they will get the right allocation, so they were willing to make a longer term commitment.

But nobody really knows what they need a year from now. You know? I don’t know what we need a quarter from now, you know, but somebody knows what do you need need for a year from now. So demand changes a lot. When the lead time started to come down, then the program should have been brought down rapidly from a year of frozen backlog to nine months to six months to to three months, and that’s what Microchip did not do.

And when the customers, you know, wanted a change to their schedule, what I’m told by customers, and I visited a huge amount of them, that we were inflexible with the customer than some of our competitors were. And that, you know, obviously caused some problems. So, therefore, when we eventually started to bleed out that backlog that was not real and the customers didn’t want it, our sales fell much more than other people because we started almost a year late in correcting that. So therefore, as we speak, we still have, you know, high inventory at the end customers. We still have somewhat high inventory in the distribution channel, although distribution has corrected a lot more than the direct has corrected.

But the distribution customers have inventory because distributors passed on some of those programs to their customers. So distributions customer is sitting on significant amount of inventory, and all that correction is still underway. So but, you know, we do business with 110,000 plus customers, so it’s a very, very long tail. And everybody is not always at the same line. So every month almost thousands of customers complete their correction and start buying.

So therefore, there’s a constant wind on the back with increasing number of customers completing their inventory correction and starting to buy again. So that’s that’s one factor why sales are doing very well. The the second factor is I think we are in a number of markets that are doing extremely well better than sort of the average market. And three I would mention is one is aerospace and defense. Our aerospace and defense business went from 9% of our business just a couple of years ago to it was 18% of our business last year.

There are three pieces of aerospace and defense. There is aviation, commercial as well as military. There is military hardware, you know, offensive and defensive hardware, and third is space. And all three are just doing extremely well. US just passed the largest defense budget ever exceeding a trillion dollars, and they’re rebuilding all the ammunition that has been depleted by two wars, building drones and missiles and tanks and planes and navy ships and radars and everything else, and our parts go into everything.

You know, we’re the largest defense supplier, you know, to to US defense, offensive, and defensive, and nobody even is close enough to us. The the second piece of that is aviation. Now for a while, you know, Boeing wasn’t building a bunch of planes, you know, MAX planes were shut down and all that. Now it’s all rebuilding, and they have a huge backlog of nearly a trillion dollars going fifteen years forward, and and we have a heavy content in every plan. And the third portion is space.

So space rate is race is heating up again, not only by NASA, a lot of other companies. India just landed a rover on the dark side of the moon. Who would have thought that India will land a have a space program and land a vehicle on the moon, and it was loaded without chips. And and then they’re all what what’s described as new space with all the new companies like Amazon and Elon Musk companies, SpaceX, and other everybody trying to go to space. So so that part of the business is very good.

So aerospace and defense is one. Second part is industrial. It’s doing very well. It has lot of new stuff going on, robotics and AI and, you know, automation of the factories and, you know, a lot of stuff happening, a lot of factories coming back to US. So we’re we’re really doing very well in that area.

We’re also doing very well in the data center business unit. There is huge growth in data centers. Looks like you cannot ever make enough of them. And there, we are core travelers with CPUs and GPUs and others. We don’t make CPUs and GPUs for the data center, but we’re core traveler providing power management, providing PCI Express bus, providing Ethernet connectivity, lot of other things in the in the servers and in the data centers.

And the third piece of the business that is doing very well is what we, in general, call it network and connectivity. Networking at in the factories, networking at home, networking in the cars, networking in the data centers, and those are USB hubs and Ethernet and various conversion from one protocol to the other, connectivity in the car, CAN bus, LIN bus, TenBased t one s. So those are segments of the business which are really doing very, very well compared to the others.

Chris Dainley, Semiconductor Analyst, Citigroup: Great. Alright. I have a series of questions on on all of those comments you just said. I did have some of your larger shareholders demand that I ask a couple of different questions. Number one, on the aerospace and defense.

With all of this, you know, sort of NATO spending going on, how do

Steve Sanghi, Chairman and CEO, Microchip: you feel like your exposure is to Europe on the aerospace and defense and ability to take advantage of of that? So I actually forgot to mention that not only The US budget is above a trillion dollars, Trump has been pushing NATO to increase their spending, and most NATO countries are doubling or tripling their spending over the next two or three years. And we’re designed into all sorts of stuff there also, drones and missiles and tanks and radar installations and on and on on and on. In fact, you know, the day we announced we’re going to close down one of our fab, one of the European customer that is in the aerospace and defense business came to see me and said, we heard you’re closing down a fab, and we’re planning to triple our business. You know, how are you gonna do it?

I said, don’t worry. Your person had made in that fab.

Chris Dainley, Semiconductor Analyst, Citigroup: We’ll make it happen.

Steve Sanghi, Chairman and CEO, Microchip: So so there is a there is a huge growth going on driven by additional NATO spending as they’re trying to shore up their defenses.

Chris Dainley, Semiconductor Analyst, Citigroup: Great. And then just to run through the numbers, so aerospace and defense was around 18% of business last year. I think industrial is 41 Or 30.

Steve Sanghi, Chairman and CEO, Microchip: 30. Sorry. So in some presentations, company has included aerospace and defense and industrial like some other companies do. So if you, you know so numbers change. But if you look at if you leave aerospace and defense out, then industrial is about 30% of our business.

Industrial includes medical.

Chris Dainley, Semiconductor Analyst, Citigroup: Got it. So industrial 30, and then aerospace and defense is another 18.

Steve Sanghi, Chairman and CEO, Microchip: And data center is 19. So that’s data center is number two. Aerospace and defense is number

Chris Dainley, Semiconductor Analyst, Citigroup: three. Automotive is about, what, 18? Automotive is about 18, and the rest is communication and consumer. Great. One other question was, you know, given the issues that happened with PSP, whenever the next upturn happens, contrary to popular belief, I do believe there’s gonna be another upturn in in analog and semis.

Is it fair to say probably not gonna be another PSP program in the next in the next upturn?

Steve Sanghi, Chairman and CEO, Microchip: It certainly won’t have a PSP name on it. I don’t know what kind of program it will be. You know, I just would say that, you know, every cycle is different. I have seen so many of them and navigated so many of them, and we’ve had unit recessions. We have had pricing recessions.

We have had recession with wars and famines and y two k and others. You you have to look at and study each cycle as it comes and respond to it with with quickness and vigor. And and here, I think, you know, we’ve we put it in place, but then we didn’t manage it well enough to undo it as the requirements of the business changed. And that program was no longer valid. We allowed it to run for a year, year and a half longer.

So I I don’t know what the next cycle would bring, but I I assure you that we’ll manage it like we manage many other business cycles except the last one.

Chris Dainley, Semiconductor Analyst, Citigroup: Great. And then you’ve been on point as to when this recovery first started about saying, hey, you know, our bookings this month were better than last month, and this quarter was better than last quarter, and, you know, this week is the best in thirty six months or something like that. Can you give us the sort of a rundown of those statistics?

Steve Sanghi, Chairman and CEO, Microchip: Sure. So bookings started really increasing starting the March. And if you look at, bookings were pretty stable all last year at a very low level. And then January, February, March, one was higher than the other. They were meaningfully higher in January, February, March.

April, May, June continued, it was higher than the March. July was higher than any of those months, it was the best month in thirty six months. Now historically, August is one of the worst months because you know, Europe goes on vacation and there are a lot of vacations in US and other parts of the world. So we always count on a weak August and then a very strong bond, but not December September, sorry. August was better than what I would have thought.

It was very strong in the beginning, then it was weak in the middle as everybody goes on holidays, and the last week was really very strong. So overall, it ended better than I would have expected. So I think we are we’re doing very good. September came out very strong with first day was a holiday. So we only have had one day of data for September.

It was very strong. So I would think that September won’t disappoint and we’ll end up with a good quarter.

Chris Dainley, Semiconductor Analyst, Citigroup: Mhmm. And then, you know, given this strength in bookings, I know you came out and said on the previous conference call that you expect above seasonal growth in the December and the March quarters. Maybe give us some of the reasons why you have confidence in that. Does it tie back to your comment earlier where you said, you know, every month we’ve got, I think you said, thousands of customers starting to order again? Are those tied in?

Steve Sanghi, Chairman and CEO, Microchip: Yeah. So it’s the same two reasons why I expect December and March to be better than seasonal is that inventory continues to correct, and we have lots of additional customers coming to production where where we have a design win. They were buying parts, have excess inventory. And when the excess inventory depletes, they start buying it again. And most customers, you don’t have just one design, you know.

Some customers are buying 50 different parts from us and 50 different designs. The largest one is, I think, 950 designs. But that’s, you know, that’s not everybody. So what happens is some parts that are out of inventory, and then they start buying those parts again. Then every month, more and more parts they start buying.

So I think that phenomena will continue, which will lead to a, you know, better than seasonal both for December and March. So so inventory correction is one of them. And inventory correction is in three different places. It’s in our direct customers, it’s our distribution customers, and it’s in distribution itself. Because you you may recall that in the March, distribution shipped out $103,000,000 more than what we shipped into distribution.

So huge sales in, sales out difference. So So distributor inventory went down by $103,000,000 in the March. That number dropped to about half. It was $49,000,000 difference in the June, where sales out was stronger than sales in. So distribution inventory is declining, and I think over the next couple of quarters, that number will match, basically.

So that is another wind on the back where sales in, which is really the GAAP revenue, is increasing driven by distribution buying more and more because their inventory is dropping. So that’s number one. And the second reason, I think, is, you know, all these strong segments that I described, the aerospace and defense, connectivity, data center builds, they’re all, you know, adding market forces with which our business is growing, and I think it’s only going to strengthen in the coming quarters, and there would be wind on

Chris Dainley, Semiconductor Analyst, Citigroup: the back. Great. Another sort of area you’ve been a leader in is the lead times. I think you made some comments on the last conference call that you’re seeing some, I guess, lead times of certain products start to extend. I don’t know if anybody else has seen that yet, although we’ll see what happens in October.

Can you maybe talk about the circumstances that surround that? And do you expect to be able to get that under to to get that under control, or will we see more lead times extend as, you know, business continues to improve?

Steve Sanghi, Chairman and CEO, Microchip: Certainly. You know, for for forty years in the business, I’ve been trying to teach the customers the difference between lead time and cycle time unsuccessfully.

Chris Dainley, Semiconductor Analyst, Citigroup: I don’t think it’s just you, Steve. I think every some exact same thing.

Steve Sanghi, Chairman and CEO, Microchip: You know, cycle time is what it takes to build a product from wafer start to finished goods and shipping to the customers. And that depending on, you know, a given process technology, you know, can be anywhere from, you know, twelve months to twelve weeks to twenty weeks. And for aerospace and defense product, sometime it can be more than that because you gotta build a part and take a sample, burn them in for three months, you know, depending on what the requirement of the customer is, and then ship it to them. So the cycle time can be quite different. Lead time is if I have, you know, a 100,000 parts in the inventory and I get an order of 5,000 pieces, lead time is essentially zero.

And and if I have them in the die form and I have to assemble and test them, I can assemble and test in, you know, four weeks, two to four weeks depending on whether I’m doing it internally or doing it externally. So what happens is when that inventory, let’s say, 100,000 parts of inventory starts going down and the inventory is now 30,000 pieces and I get an order of 50,000 piece from somebody and the same customer a month ago was buying it with four weeks lead time, and now I say, well, you know, it’s gonna take sixteen weeks, and they don’t understand it, and they go crazy. And that’s the difference between the lead time and the cycle time. When do I have to build it? And we build a large amount of our parts as do the the rest of the industry which builds standard catalog parts.

You don’t all build them to order. You build them to a forecast because we enter a quarter with not the quarter fully booked. So therefore, you know, we rely on having a good forecast and have a good judgment, make the right kind of wafer starts. So when the order comes, we can finish them in four to eight weeks and give it to the customer. If every part you know, if you start a quarter with a low backlog and every part had a sixteen weeks lead time, you’ll blow every quarter, you know, that would be very difficult.

So in general, you know, we we’re in good shape where we can match the customer demand to the parts we already have in the web. But on some specialty parts and other places where you get a bluebird from the customer and they want a large quantity where you don’t have it, then the lead time immediately goes to the cycle time and the customer goes crazy. And, you know, that starts to happen incrementally when the cycle changes. And when it becomes very broad based, that’s everybody says, hey. Lead times are long.

Lead you know, and and customer gets it, and their lines are down, and then they start placing backlog. So that broad based lead time increase hasn’t happened yet and is not happening. Lead times are fairly short. What you’re starting to have is spotty problem there and there Yeah. Driven by here and there.

And one specific case where there’s a problem is on, you know, very high end data center kind of products where we need substrates and very high end packaging. In that capacity, we are competing with, you know, the new cell phone build. This is a cell phone build cycle where new products get launched in November time frame and all the AI data center build. So we’re competing with that capacity. And and driven by that, we have some capacity shortages in the back end.

We got plenty of die, but, you know, we have some challenges in the back end. So that’s a unique problem that goes away, I think, after cell phone build is completed. But beyond that, we got spotty problems all over, not enough to wake up the customer. I actually even gave a plug at the conference call on warning customers to, you know, make sure you have sufficient backlog, but I don’t think anybody listened.

Chris Dainley, Semiconductor Analyst, Citigroup: All those pesky customers. I had two two questions for the sage of the Southwest. Yesterday, we had a whole bunch of analog companies talking about two areas where we got differing opinions, and I just wanted your take. First was on the automotive end market. As you said, it’s like, you know, mid high teens percent of your revenue.

Some companies are saying it’s good. Some companies are saying it’s not good. What’s the the microchip take on the state of the automotive end market? So, you know,

Steve Sanghi, Chairman and CEO, Microchip: I was in Detroit earlier this week and just came from there, you you know, yesterday and met with a lot of customers and, you know, have a, you know, fresh take on the automotive business, at least for The US. And many of these customers also do a lot of business in Europe. The the automotive business is healthy. It’s very healthy driven by the number of cars the automotive customers are building. The SAAR is very healthy.

It’s in that $16,000,000 range, you know, which is really as high as it ever gets. But the automotive business as semiconductor industry sees it is not doing as as well, you know, as well because there’s inventory. Every customer I visited had inventory. So our business with them is not as good because they have inventory, but the numbers of cars they’re building is very high, and that’s where the disconnect is. I think many people say, well, automotive business isn’t healthy, depending on which way you look at it.

You know, if you look at it by how much are we shipping, our automotive is behind industrial and behind aerospace and defense in being healthy. But if you look at the number of cars our customers are building, how much parts our customers are consuming, it is very healthy.

Chris Dainley, Semiconductor Analyst, Citigroup: Okay. And then another one was on demand in China. So there’s this, you know, constant drumbeat or fear of this China for China strategy. Apparently, people think this is brand new. I’ve been seeing it going on for about twenty five years.

But some companies are saying that their China business is good. Some companies are saying their China business is is hurting. Maybe talk a little bit about your China demand trends and then the China for China impact or nonimpact on a microchip.

Steve Sanghi, Chairman and CEO, Microchip: So our our China business is very healthy. And I think the China question has been asked for probably better part of the decade. You know, people have worried about China, you know, ten years ago, and they’re worried about it now. There’s a constant worry about China. Our China business is doing well very well.

More than half of our China business is really done with multinationals who just simply manufacture there and the parts are shipped outside. The parts we ship are in the export zone usually, which don’t have any tariffs. So that part of the business is very healthy, and these companies are designing western parts. There’s not a local competition in large part of the Chinese business. The other half of the Chinese business, you know, half of the half, which is another quarter, are fairly complex products where there is not a equal end Chinese local product available.

So these are not low end microcontrollers and analog and catalog parts. These are, you know, high end data center parts, FPGAs, you know, high end switches, PCI Express, high end microcontrollers, high performance analog, all sorts of products where we’re doing very well in those, which leaves the last quarter of our China business. So China is about 18% of our business. 9% is the first kind, largely in export zones. Half of the half, which is four and a half percent is a lot of this business where we don’t have the competition, which leaves the last four and a half percent where we do have, you know, some competition.

But, you know, we largely find customers. They want our product, and they’re simply saying, can I buy your product, but, you know, get it through a Chinese entity so I can check the box that I’m buying a local product? And I think there are various strategies being pursued in the industry, and and and we’re working on some techniques there where our product can be available to to look like a Chinese product that somebody can say, check the box and we’re buying it locally.

Chris Dainley, Semiconductor Analyst, Citigroup: Yeah. I think on the conference call, guys, did you say you expected the China business to be up this quarter?

Steve Sanghi, Chairman and CEO, Microchip: Or Yes. Yes. China business will be up this quarter.

Chris Dainley, Semiconductor Analyst, Citigroup: All right. Thanks, Steve. That’s all we have time for. Thanks, everyone. Appreciate it.

Steve Sanghi, Chairman and CEO, Microchip: Thank you.

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