Chris Danely

Steve confirmed substrate constraints are touch and go, with some relief as cell phone build competition for substrates subsides. Impact is meaningful but not hundreds of millions of dollars, with some shipments pushed a quarter.

Steve clarified bookings remained strong throughout the quarter but customers scheduled deliveries for January instead of December to dress up balance sheets. The difference between expectations and guidance was timing of turns, not demand weakness.

Eric expects incremental gross margins and fall-through to operating profit to remain roughly similar to June quarter levels when fabs ramp in December.

Steve reported Microchip grew MCU revenue ~double digits sequentially vs industry ~6.5%, implying share gains. Corrected weakness in entry-level 32-bit MCUs, enabled industry-standard tools, and launched AI coding assistant.

Steve cited extreme urgency in execution, acknowledged 8-to-32-bit low-end gap being corrected, and highlighted shift to third-party development platforms removing a barrier to design wins.

Eric said sell-through of reserved inventory provides a margin tailwind but timing is unpredictable. Benefits expected to materialize as FY2026 progresses.

Steve said all issues are fixable, manufacturing, inventory, business unit optimization, but some product gaps take two years to address.

Ganesh argued Microchip's sharper decline mirrors its sharper increase during the up cycle, with total revenue under the curve being comparable to peers.

Eric firmly dismissed dividend cut and major inventory write-down risk, citing long product lifecycles and confidence in eventual recovery.

El-Khoury said both markets have growth vectors. Lumpiness is purely market timing. Industrial headwinds from solar in China are temporary. AI-driven industrial growth emerging.

El-Khoury said too soon to call specifics. ON supporting shared customers as requested but not redirecting any changes from current strategy.

Trent said SiC margins below corporate average due to underutilization. Exit business is around corporate average today but would be dilutive at 50%+ target. Short-term neutral.

El-Khoury declined to break out China auto specifically but reiterated 50% SiC share in China EVs. Wins driven by product performance, not pricing.

El-Khoury reiterated SiC market share leadership goal. Gross margin hit by underutilization but standard margin and pricing value remain unchanged.

Trent confirmed $50M exited in Q1, $300M expected for the year. Market dependent, will keep if margins remain favorable.

El-Khoury said no change to SiC margin or market share leadership targets. Acknowledged possible capacity reviews but structural strategy unchanged.

El-Khoury said it's too early for rest-of-year outlook, noting designs are won and qualified, it's purely end-market demand timing.

Rich confirmed no meaningful change in relative end market margin profiles, industrial remains most profitable and the key lever for corporate gross margin expansion.

Vince attributed the utilization dip to a one-time event at a European fab, now resolved. Pricing steady and industrial mix improvement expected to drive gross margin back to 70% in Q4.

Mike clarified base OpEx was flat, with variable comp tied to YoY operating margin growth driving the increase. Expects more leverage in FY2026 off a smaller variable comp base.

Rich cited three sequential quarters of industrial growth, continued ATE and ADA strength, stabilization in automation/healthcare/energy, and broad market pickup driving upside vs expectations.

Management provided detailed color on China auto demand drivers including EV volume, share gains, and BMS recovery. Also broke down China revenue mix by segment.

Haviv explained two drivers: closure of last two 250mm fabs (last wafers this month) and R&D site consolidation. Benefits expected in 2026 with OpEx flat Q3-to-Q4 as savings ramp.

Haviv said industrial's low single digit sequential growth was healthy after a very strong Q2, and auto's shallow trough meant the up/down pattern was expected. Both came in as expected.

Haviv said no restructuring needed, Embedded is in transition with manufacturing shift to LFAB. Rafael confirmed revenue decline and LFAB underutilization are temporary.

Haviv declined to forecast but noted PE, enterprise, and comms are on upturn while industrial and automotive at 70% of revenue haven't found bottom yet.

Sanjay confirmed HBM3E/HBM4 calendar 2026 pricing and volume are fully locked in, with strong profitability on both HBM and non-HBM portfolios.

Sanjay declined to give timing or specifics but emphasized the new multiyear contract structures include specific commitments from customers, and reiterated Micron can only meet 50-66% of several key customers' medium-term demand.

Sanjay attributed the shortfall almost entirely to NAND industry supply/demand dynamics, pointing to HBM/D5 mix and industry supply discipline as the path back to structurally higher margins without committing to a return to the 50s.

Kurt expressed strong optimism on auto growth drivers, particularly S32 processors for SDV and radar for ADAS. Highlighted electrification at 43% global EV penetration forecast.

Kurt affirmed 8-12% growth targets for both auto and industrial, with catch-up potential in 2026-2027 given below-target 2025. Rafael added industrial growth becoming broad-based across all geographies.