Maxim Integrated Products, Inc.

Good day, ladies and gentlemen, and welcome to the Maximum Integrated First Quarter of Fiscal 2020 Conference Call. At this time, all participants are in listen-only mode. Later, we will conduct a question-and-answer session. To ask a question during the session, you will need to press star 1 on your telephone. As a reminder, today's program is being recorded. I would now like to introduce your host for today's program, Kathy Todd, Vice President, Investor Relations. Please go ahead, Kathy.

Thank you, Jonathan. Welcome, everyone, to Maxima Integrated's Fiscal First Quarter 2020 Earnings Conference Call. Joining me on the call today are Chief Executive Officer Tunj Deluja and Chief Financial Officer Brian White. As a part of our usual process, we have posted a supplemental financial presentation to our External Investor Relations website. The information in this presentation accompanies the financial disclosures in our earnings press release and on this conference call. During today's call, we will be making some forward-looking statements. In light of the Private Securities Litigation Reform Act, I'd like to remind you that these statements must be considered in conjunction with the cautionary warnings that appear in our SEC filings. Investors are cautioned that all forward-looking statements in this call involve risks and uncertainty, and that future events may differ materially from the statements made. For additional information, please refer to the company's Securities and Exchange Commission filings, which are posted on our website. Now I'll turn the call over to Tunch.

All right. Thank you, Cathy. Good afternoon to all our participants. We appreciate you joining us today and your interest in Maxim Integrated. Let me first summarize last quarter's results and our outlook. Our September quarter results met our expectations. while maintaining lean inventory levels. Looking forward to the December quarter, we expect sequential growth in communications and data center, in automotive and in industrial, partially offset by smartphone related headwinds and holiday seasonality in consumer. We continue to be cautious given the persistent macro and trade uncertainty, but demand trends are stable. Given the soft environment, we will continue to tightly manage inventory and spending in the December quarter. I'll next provide color by end market. As a reminder, we have improved our revenue mapping by end market to be a more automated system. All my commentary is based on our new mapping. In year-on-year comparisons, we also use the updated mapping methodology. I will begin with automotive. In the September quarter, our automotive business was down 9% sequentially and down 4% from the same quarter last year. This reflects the effects of a year-over-year decline in global car production. However, we continue to see strong growth in driver assistance and electric vehicle content compared to the same quarter last year. In the December quarter, we anticipate strong growth sequentially in automotive, driven by driver assistance and battery management system content, and a return to growth in our infotainment business. Growth in battery management system revenue is expected to come from a mix of geographies. In driver assistance, we expect to recognize revenue from new design wins at Chinese car makers with our serial link products. And finally, infotainment system revenue is expected to grow sequentially across a broad range of customers. Let me next turn to the industrial market. In the September quarter, industrial was down 8% from the June quarter. This was softer than seasonality and modestly below our expectations. We experienced this broad base weakness across our industrial markets. In the December quarter, we expect above seasonal sequential growth in industrial from a broad set of customers. This growth is from a low baseline in the September quarter and assumes continued stability in the run rate of bookings and lead times in the quarter. Let me next discuss communications and data center, which now includes computing. In the September quarter, comms and data center was down 7% sequentially. Broad-based weakness in communications infrastructure was partially offset by an uptick in demand for 100G laser driver products for data center applications. In the December quarter, we anticipate comms and data center revenue to be up strongly from the September quarter. We expect strong growth in 100G laser driver shipments for data centers and growth in 25G optical products for 5G base station applications. Finally, let me turn to consumer. In the September quarter, consumer was up 5% sequentially. We experienced weakness in smartphones offset by growth in tablets, wearables, and peripherals. Smartphones comprised approximately 35% of our consumer business in the quarter, with Samsung smartphone revenue declining less than expected. In the December quarter, we expect consumer to be strongly down sequentially, with the peak of the holiday shipments for consumer electronics having occurred in the prior quarter. To summarize, we have built Maxim to be resilient and to position the company to outperform in the next market upturn. While we are clearly in a period of soft demand and uncertain macroeconomic conditions, we expect sequential revenue growth in communications and data center, in automotive, and in industrial. We are executing on our strategy to grow revenue with new design wins in long-lived products in automotive and industrial. Our analog business model and flexible manufacturing strategy enable consistent company profitability and stability. Now I'll turn the call over to Brian for his first call as Maxim CFO. Brian.