Advanced Energy Industries, Inc.

Thank you for standing by. Welcome to the Advanced Energy Industry's first quarter 2021 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. To ask a question during the session, you will need to press star 1 on your telephone. If you require any further assistance, please press star 0. I would now like to hand the conference over to your speaker today, Edwin Locke, Vice President of Strategic Marketing and Investor Relations. Please go ahead.

Thank you, operator. Good morning, everyone. Welcome to Advanced Energy's first quarter 2021 earnings conference call. With me today are Steve Kelly, our president and CEO, Paul Odom, our executive vice president and CFO, and Brian Smith, our director of investor relations. If you have not seen our earnings press release, you can find it on our website at ir.advancedenergy.com. There you'll also find the Q1 slide presentation. Before I begin, I'd like to mention that Advanced Energy will be presenting at several investor conferences in the coming months. As events occur, we will make the announcement. Let me remind you that today's call contains four looking statements that are subject to risks and uncertainties that could cause actual results to differ materially and are not guaranteed of future performance. Information concerning these risks and uncertainties is in our SEC filing. All forward-looking statements are based on management's estimates as of today, May 5th, 2021, and the company assumes no obligation to update them. Long-term targets presented today, including our aspirational goals and long-term vision goals, should not be interpreted as guidance. On today's call, our financial results will be presented on a non-GAAP financial basis unless otherwise specified. Excluded from our non-GAAP results are amortization, stock compensation, integration and transition costs, unrealized foreign exchange gains or losses, and restructuring items. A detailed recommendation between GAAP and non-GAAP measures can be found in today's press release. With that, let me pass the call to our President and CEO, Steve Kell.

Thank you, Edwin, and good morning, everyone. Thanks for joining the call today. First quarter of revenue was $352 million. We had record sales into the semiconductor market, where we are benefiting from our leadership position and process power delivery systems. We entered the second quarter with a record order backlog. Demand is increasing across all of our target markets, and we continue to win new design slots at an impressive rate as customers adopt our industry-leading products. In the short term, our most pressing tactical challenge continues to be dealing with constraints in the supply chain, particularly shortages of certain integrated circuits. These constraints limited our upside in the first quarter, as we forecasted. Our second quarter guidance also incorporates the impact of these constraints. However, given the proprietary nature of most of our products, we believe that nearly all of the demand which we can't satisfy in the second quarter will shift into the second half of the year. Also, we expect that the actions that we took in the first quarter to address choke points in the supply chain will begin to have a positive impact in the third quarter. Now we'd like to provide additional color for each of our target markets. In the semiconductor market, we generated record revenues in the first quarter, growing 35% year-on-year and 9% sequentially. This strong growth was driven by higher demand for our process power delivery systems and key enabling technology for advanced etch and deposition processes. We've maintained our leadership position in the process power market by working closely with our customers and by continuously innovating. Advanced Energy's technology and products enable our customers to improve yields, increase throughput, reduce cost, and lower power consumption. Over the past year, we have launched a series of next-generation products into the market. Our latest high-powered RF generators, our unique EVOS plasma system, and our Maxstream RPF system are all highly differentiated and are currently being evaluated by our customers. We believe that these next-generation products will drive market share gains for advanced energy in the coming years. In the first quarter, we won multiple design slots at major OEMs for both etch and ALD platforms. In addition to winds and process power, our traditional area of strength, we also secured winds for artisan-branded embedded power products. To summarize, we expect that 2021 will be a record year for sales into the semiconductor market. And we are bullish about 2022 and beyond, given our strong lineup of differentiated next generation products. Now we'll move to the industrial and medical markets, where our revenue was up 27% year on year. In industrial applications, we saw strength in flat panel display, battery production, carbon fiber manufacturing, and horticulture. In medical, demand for diagnostic and life science applications began to improve during the quarter. Looking forward, We expect the industrial and medical markets to strengthen through the course of the year due to improving economic conditions as well as increased acceptance of our new products into a wide variety of applications. In the first quarter, we confirmed that our Ascent MS platform has been designed into multiple solar cell manufacturing applications. In addition, our Thyro A-plus power controller has been incorporated into a flat-panel manufacturing application. Moving to the data center computing market, revenues were down in the first quarter, as expected, due primarily to ongoing inventory digestion by specific hyperscale customers. Looking forward, we see increased demand in the second quarter, followed by a strong uptick in demand in the second half of the year. We continue to make good progress on new product qualifications and expect to have additional tier one hyperscale customers later this year. We want another board-mounted 48-volt DC-to-DC design in the first quarter and continue to focus on 48-volt server opportunities. Now I'll shift to the telecom and networking market, where first quarter revenue was down sequentially and roughly flat year on year. Our first quarter revenue reflected the full impact of portfolio actions we executed in late 2020. Moving forward, We expect to grow revenue by targeting higher-end applications where we can differentiate. We are focused on 5G infrastructure, and in the first quarter, won two critical 5G design slots at a leading telecom OEM. In closing, I'd like to share some personal observations. Since joining Advanced Energy in March, I've visited most of our North American manufacturing and development sites and spoken face-to-face with many members of the team. My general takeaways from those initial meetings are, first, that we have a high level of employee engagement. And second, that we have some excellent engineers and scientists at Advanced Energy who foster a culture of technical excellence. In my first 60 days, I've also had the opportunity to meet the two of our largest customers and channel partners. Our customers have a genuine appreciation for Advanced Energy's technologies, products, and services. They know the company well, since our technical teams work closely together during new product development cycles. To grow our business, we will focus on continuously improving our customer value proposition. We need to deliver industry-leading technologies and products in a timely fashion with best-in-class quality, reliability, and service levels. We have a strong balance sheet and will deploy capital where it makes strategic and financial sense for the company. The power supply industry is highly fragmented, and we think that supplier consolidation will benefit both Advanced Energy and our customers. In conclusion, I am delighted to be part of the Advanced Energy team. We are targeting the right markets. We have a strong lineup of differentiated products, and we have a great culture. We are focused on accelerating revenue and earnings growth and are on track to meet or exceed our aspirational goals in longer-term financial targets. Paul will now review our financial results and provide detailed guidance.

Thank you, Steve, and good morning, everyone. We delivered solid financial results in the first quarter with revenue, profitability, and cash flow up significantly year-over-year and above the midpoints of our guidance. Overall customer demand was very strong, resulting in record backlog of over $400 million, giving us increased visibility to customer requirements over the next several quarters. We executed well to meet customer commitment, but industry-wide supply constraints limited upside in the quarter and will be the pacing factor in our revenue outlook in the near term. As Steve mentioned, semiconductor revenue set another record, given by both customer demand and share gains for our full suite of sending power solutions. Overall, earnings grew 42% year-over-year, as gross margins continued to approach our long-term target of greater than 40%, partially offset by increased R&D investments to fuel future growth. Return on invested capital continues to be above 20% on solid profitability and working capital additions. First quarter revenue was $352 million, up nearly 12% year-over-year, but down 5% sequentially as we had anticipated. Semiconductor sales were $181 million, up 35% from last year and up 9% over last quarter, as our operations team was able to respond to strengthening customer demand. Revenue from our industrial and medical markets grew 27% from a year ago to $78 million, but declined 16% sequentially, mostly due to supply constraints. Data center computing revenue was 59 million, down 31% from the very strong quarter a year ago, and 9% sequentially. However, demand for our product started to recover, with several customers placing orders late in the quarter, signaling a return to growth in demand after just two quarters of digestion. Telecom and networking revenue was $33 million in the quarter, essentially flat with last year, and down 28% from Q4, reflecting a new baseline going forward as we streamline our portfolio to focus on higher value applications. Non-GAAP gross margin for the quarter was 39.7%, up 190 basis points from a year ago on higher sales and realized synergies. Gross margins were 20 basis points higher sequentially primarily due to improved product mix, partially offset by lower volume, and some added supply chain costs. We expect the logistics and supply chain costs to continue to be a headwind to gross margin in the near term. Non-GAAP operating expenses were $79.5 million, up $2.5 million from last quarter on higher R&D as we fund investments and multiple new growth opportunities. Operating margins for the quarter were 17.1%, up 300 basis points from last year, reflecting improvements in gross margin and SG&A as a percentage of sales. While we expect OPEX to increase modestly going forward, operating margins should expand in the second half as revenue growth accelerates. Non-GAAP other expense was $2.6 million, including $1.1 million of interest expense, and $1.2 million of FX losses on settlement of year-end positions. We expect other expenses to be in the $1.5 to $2 million range going forward. Our non-GAAP tax expense was $7.9 million, or 13.8%, primarily on favorable discrete items. Looking forward, we expect the GAAP and non-GAAP tax rates to remain in the 15% range. Non-GAAP earnings for the quarter were $1.29 per share, of 42% from $0.91 a year ago, but down from last quarter due to lower revenue. Turning now to the balance sheet, we ended the first quarter with cash and marketable securities of $513 million, up $30 million from Q4. Inventory increased by $26 million, and turns were 3.7 times. Accounts payable rose to $163 million, with associated DPO of 68 days. largely offsetting the increased level of inventory. Inventories and payables should remain at higher levels on our expectation for increased volume and as we pursue supply of critical components. Receivables rose slightly to $237 million, and DSO was 61 days. Total days of networking capital were 96, up one day from last quarter. Operating cash flow from continuing operations was $54.3 million. Capital expenditures for the quarter were $8.8 million, and depreciation was $7.3 million. We continue to expect capital expenditures to be about 2% to 3% of sales for the year. During the quarter, we repaid $4.4 million of principal amortization on our debt, ending with total bank debt of $318 million and a net cash of $195 million. our trailing 12-month gross debt leverage increased to 1.1 times. We did not repurchase any stock in Q1, and we paid $3.9 million for our first quarterly dividend of $0.10 per share. Now let me turn to guidance. We expect demand to remain strong and increase sequentially across our market, driven by growing investment in semiconductor, improving macroeconomic conditions, and strengthening orders in hyperscale. However, in the near term, industry-wide supply constraints on specific components are limiting upside to our revenue. As a result, we are guiding Q2 revenue to be $360 million, plus or minus $15 million. We expect non-GAAP gross margins to decline around 100 basis points sequentially on less favorable product mix and higher near-term material and rate costs, which could last through the end of the year. Operating expenses are expected to be $81 to $82 million as we continue to invest in R&D and see natural increase in annual costs, partially offset by Synergy actions. As a result, we expect non-GAAP earnings to be $1.25 per share, plus or minus 15 cents. Looking beyond Q2, we believe demand will remain strong in the second half of 2021 and into 2022. Given the current supply chain environment, we expect second-half revenue to grow 5% to 10% over the first half, with upside if conditions improve. In conclusion, we are more excited than ever about the opportunities across our markets. We are well-positioned to continue to gain share and are seeing strong adoption of our new products. We remain focused on executing our strategy to accelerate revenue and earnings growth over time. With that, let's take your questions. Operator?

At this time, if you'd like to ask a question, please press star followed by the number one on your telephone keypad. Our first question is from Quinn Bolton with Needham and Company. Your line is open.

Hey, guys. Just trying to look through the numbers. Obviously, it sounds like you're seeing some problems. limited upside on revenue to the capacity constraints. And I guess as I look at the June quarter, you guys are, you know, kind of $15 to maybe $20 million light of, you know, the consensus expectations for the June quarter. Is that the level, that $15 to $20 million? I mean, is that the level of, you know, revenue you're leaving on the table because of capacity constraints, or are there other factors going on?

Yes, it's a really good question, Quinn. It's hard to quantify exactly. Certainly, we are seeing strengthening demand. And our outlook is really based on what we believe we can get parts for and get out of the factory and core. Certainly, as we came into the year, we saw some supply constraints. We talked about that having some impact in Q1. And I would say, broadly speaking, it's sort of a similar impact in Q2. Now, that demand is still there. And we'll throw those parts become available. But it'll take a couple of quarters probably to catch it up.

Okay. And I guess, you know, just looking at the numbers, if, you know, you're missing some demand in Q1 and Q2 and that shifts to the second half, you know, it almost looks like what pushes from the first half into the second half could easily support 5% to 10% growth. And so I guess I'm just having – difficulties reconciling the forecast, especially if some of the demand is shifting into the second half?

We look forward and try to give some color to the second half because it's a strong demand environment and it's really limited by availability of parts. So when we looked at what moved forward, we think it's more like half of that forecast is fortified things that move forward that are in this year. But look at if But that's what we believe. At this point, we have line of sight, too, as we look forward to the next couple of quarters. And, you know, although the parts shortage is a challenge in the near term, it's our biggest tactical challenge, as Steve mentioned. We actually think that it bodes well, broadly speaking. It underscores the strength of the underlying command drivers and the fact that it's kind of an industry-wide challenge we think gives, you know, ultimately longer runway. Combining that with stronger demand throughout the year, we think that sets

Great. The second question I had is the VLSI market share data, I think, for power subsystems was out recently. Can you talk about just how you guys performed in 2020 in terms of market share in the RF power segment?

Yeah, this is Steve. I thought I'd make a comment on that one. We did take a look at the report, and we're very happy to see that AE is still the undisputed market leader in all the areas that we care about. So the areas are RF power, process power, and semiconductor power. This includes things like RF generators, RF matching networks, DC power, and remote plasma source power. It also showed that we grew semiconductor revenues faster than market last year. And certainly wasn't a surprise. We grew our revenues 52% in the semiconductor vertical in 2020. So it was a great year for advanced energy. We're very optimistic moving forward. We've launched, over the past year, some highly differentiated products in conductor etch, dielectric etch, RPS. And in addition, we've accessed cross-selling artisan products into the semiconductor vertical. So we're very bullish on semiconductor moving forward. Great. Thank you for that, Collar.

Your next question is from Krish Sankar with Cowen Company. Your line is open.

Yeah, thanks for taking my question. I have two of them. First one, Paul, or Steve, on this component tightness that's impacting a top line, is there any risk that you might lose shares to your competition, or do you think is that issue prevalent across the industry that, you know, your comps are also seeing the same kind of component tightness?

Yeah, I think if you look across our portfolio, most of our portfolio is proprietary. So if you look at semiconductors, industrial, medical, those are largely proprietary products. And so that's why we made the statement that most of that demand will shift into the second half, but we won't lose it. I think the only area where we risk losing some share based on the lack of availability of components is probably in data center computing. That business is more of a built-to-print business. And so if we can't catch up in that area in Q3, we may lose a little bit of share there. But in large part, speaking for the company as a whole, there's very little business that we think will disappear.

Got it. Got it. Thanks, Steve. And then as a follow-up, you spoke about data center computing kind of, you know, it was being used in inventory digestion, but it started turning around in the March quarter. I'm just kind of curious, what drove it is it just are you seeing like it enterprise budgets improving or or what are the reasons for the digestion you know getting done sooner than expected and along the same path did you quantify how much your hyperscale revenues grew in the marsh quarry i'll address the general question i'll let paul address the more specific question but uh you know i think we we saw

increased booking activity from the data center towards the end of the quarter and we anticipate we continue to pick up in Q2 and from what we see in our forecast today the second half is going to be quite quite strong the data center so that's what we're gearing up for yeah we didn't break out this time to change in hyperscale um

quarter-over-quarter bridge, but we did see orders start to come in strong towards the end of the quarter. That sort of gives us confidence that, you know, we've seen the bottom of that market from a digestion period, and we expect to see, you know, growth over the course of the year, and as you mentioned earlier, stronger growth as we go through the year. So, you know, that market went through a couple of quarters of digestion, but it's clearly coming back now. Thanks for taking my question.

When I look at the revenue mix by the end market, it seems to me that semis and industrial

actually did better than expected, and perhaps the shortfall was in the telecom and data center. And I'm just trying to reconcile the shortages with end markets. Would it be fair to say that perhaps in the semis you had the appropriate inventory of components so you were able to meet the demand and it was just this new market that you're trying to scale that the shortages hampered your ability to hit the targets?

That's a good question, Mehdi. I think if you look across our markets, our higher volume markets had a larger impact from the supply chain perspective. And look, we have some spot outages everywhere, but on balance, we were able to respond to increasing demand during the quarter and semi, even while we had some part shortages there as well. So broadly speaking, our higher volume businesses are more impacted by the part shortages than, say, our semi-business or a couple of the advanced markets were.

Sure. Okay. And then you highlighted OPEX increasing a little bit. Could we assume that maybe OPEX is up a couple of million in the second half versus the first half, and then there could be continued increase in OPEX into 22?

Yeah, if you look at the numbers we've been investing in R&D, obviously that's where all the growth is. You do have some annual costs that come in as the year goes on. So we'd expect to see OPEX up slightly from the growth as we go forward after Q2. Okay.

Thank you.

Your next question is from Amanda Scarnati with Citi. Your line is open. Good morning. Just touching in onto the data center side of the business, you know, you talked about the expectation to add some more hyperscale customers throughout 2021. Do you need to add those customers in order to start to see a reacceleration of growth, or do you expect that the digestion that you've been seeing, you know, the last two quarters should roll off and you can see some growth outside of adding new customers throughout the year?

Yeah, Amanda, I think the growth is thorough. we start relatively low volumes and it ramps up over a period of months. So we have line of sight on the growth that's coming from our existing customers.

And then on the industrial and medical side, obviously last year was pretty strong with some of the additions related to COVID on the medical side. Could we see a step up in year-over-year growth on the industrial side, specifically on the industrial side and not the medical side of the business this year?

Yes, I think 2020 was a down year for industrial medical for obvious reasons. And we're definitely seeing bookings pick up in both areas. And we think they'll strengthen every quarter this year. So we think those two markets, industrial medical, will be coming back to life over the course of 2021. Great.

Thank you. Our next question is from Scott Graham with Rosenblatt Securities. Can you run this open?

Yes, hey, good morning. Thanks for your time here, and Steve, welcome. Could you maybe quantify the impact on sales of your portfolio changes in the telecom and networking segment, the revenues?

Yes, Scott, it's Paul. You know, we haven't called that out specifically, but as you recall, we expected to be down in Q1, and it was. And we also commented that this kind of forms kind of a new baseline as we go forward. We'll see some growth from here. There'll be some, you know, kind of quarters could be a little higher, a little lower, but fundamentally we think this sort of establishes a new baseline post those actions. Most of those actions really took effect in late 2020, which had the effect of accelerating some business in 2020. And as we go forward, we think this is a reasonable baseline level.

Okay, thank you. I was also hoping for a little bit more color on some of the supply shortages, logistics issues, and what have you. Certainly everyone is feeling it, so we understand that. Could you kind of tell us which segments are being sort of affected, maybe sort of list them worst to least, if that's possible?

Sure, I'd be happy to comment on that. Obviously, the biggest issue we have is the semiconductor chips and microcontrollers, other ICs that we buy. Second would be ceramics, ceramic substrates and other forms of ceramic. Probably the third are passive, some passive components are in short supply. And so we're spending a lot of time with our key suppliers. We have almost the entire management team involved in expedite calls every week. That includes me. We're going out and bringing on new second sources where we can find them. We've signed a number of long-term agreements with our key suppliers. We did that in Q1 as we saw lead time stretch. And so we think that's going to start benefiting us in Q3. And we've secured our position as a preferred customer, essentially, for most of our key suppliers. We're also taking some actions in our factories. We're building some buffer capacity, assembly and test capacity. And the reason we're doing that is because there's a tendency for some of these fierce components to be delivered in batch fashion towards the end of the quarter. So we want to be able to take advantage of that and require some additional burst capacity.

That's very helpful. Thank you. I guess the last question is around, so we're funding a little bit more R&D. We have these supply chain issues, if you will. We have higher materials. And I guess I was just wondering maybe, is there going to be a renewed focus on managing SG&A down a little bit to, you know, prop up the earnings while, you know, we're going through this sort of transition period into the second half? And frankly, also in the second half, because I think as you said, Paul, that the second half, you know, the sales guidance is sort of up 5% to 10% sequentially as the as a previous question pointed out, was kind of what I think we were all expecting anyway. So this does look like it moves maybe into 2022. So how do we handle SG&A during this, you know, sort of these next three quarters to try to keep earnings propped up?

That's a good question. As you look from the numbers, we've pretty much been able to hold or reduce SG&A over the last four or five quarters, even despite other, you know, kind of pressures that would normally increase SG&A. So we expect to continue to do that. We continue to want to drive a lot of leverage. And in fact, we expect to see SG&A as a percentage go down over the course of the year. So that is something that we're working on. Clearly, our investments in R&D we think will drive future growth. We're committed to those. Some of the other headwinds we're seeing we think are transitory. They're going to last an interim period of time. And as we continue to execute our synergy plans, both, you know, in-off exit as well as the heavy list that we have to complete by the end of the year in manufacturing, you know, we think, broadly speaking, you know, we're back on our target model of growth, you know, kind of as we exit this year and going into early next year.

That's a great color. Thank you, Paul. Yeah.

You know, our next question interests us all. Thanks for taking the question.

In the context of the industry-wide supply tightness, I'm curious if that broadens the potential target list for acquisitions, given that some of the smaller players, especially in the industrial vertical, might be suffering particularly in this current climate.

You know, I really haven't thought about it that way, but I guess that would be a synergy, right? If we can come in and buy a smaller company and exercise our leverage in the supply chain. But just a general comment, we continue to be opportunistic. We continue to look for companies to acquire. And so I think you'll see us stay active in that area, looking for companies that have strong technology, strong technical teams, sticky product that tend to be proprietary. And we'll be looking for companies that are particularly exposed to semiconductor industrial and medical opportunities.

More kind of thematically, is there anything in the Biden infrastructure proposal that would be directly relevant, impactful to your business? that you can see?

I think the most interesting part for us is the additional investment in semiconductors. So you see that happening basically trying to establish a stronger US manufacturing base. And if that happens, then obviously that creates even more demand for a semiconductor process power solutions. So yeah, we're very enthusiastic about that part.

Right. Maybe some of the industrial verticals you've sold into metallurgy and sort of glass and other things that could benefit from a more active industrial policy.

Yeah, I'm not really familiar with the details beyond semiconductor at this point, but I hope you're correct. Okay, fair enough.

Thank you very much.

Again, if you'd like to ask a question, please press star-closed as the number one on your telephone keypad. Your next question is from Paratash Nisra, Woodburn.

Good morning, and thanks for taking my question. Steve, as you look at the cost structure at Advanced Energy, especially your manufacturing footprint, the different facilities that you have,

and i know you know you haven't had that much opportunity to look at that but uh do you see there are opportunities for further optimization or cost cuts that could uh drive a margin expansion yeah so so basically we have three centers of excellence in the company's manufacturing ones in china one's in malaysia and one's in the philippines and uh we're in the process of uh consolidating our chinese factories into one location So we'll be exiting Shenzhen by the end of this year. I think you're probably familiar with that process. I think moving forward, we're very comfortable having China, Malaysia, and Philippines in place. And our approach there will be to try to fully utilize each of those factories. And the good news is, if we get to that point, we have the ability to expand our operations in each of those sites. So I think we're pretty well positioned.

Understood. Thanks for that. And maybe as a follow-up, if you could talk a bit more about your industrial medical segments as to what you're seeing. In other words, which of the two sub-segments, industrial versus medical, you're seeing faster growth? Any sense on revenue or any particular end market where you're seeing... strong orders and strong revenue growth?

Yeah, I'll make some general comments about industrial and medical. The reason I like those two markets so much is they tend to be smaller or medium-sized companies, smaller or medium-sized opportunities. But each opportunity typically wants something a little bit different. So we start with our standard products, our configurable products. and then we tune them to the customer's needs. And that creates a very good relationship between AE and the customer. It creates a very sticky product situation. So typically these applications are very long lifecycle applications. And so once we get those ideas, we'll continue to ship for many, many years. So we're going to continue to scour the market and look for more of those types of opportunities. Okay, great. Thank you.

Our next question is from Weston Twigg with KeyBank Capital Markets. Your line is open.

Hey, thanks for taking my question. First, I just wanted to start with gross margin. Last quarter, I think you said it would exceed 40% for the year. You're guiding it down a little for Q2, and you didn't mention that again. So I just wanted to get your thoughts on the gross margin in the back half of the year and if you still think you can hit that 40% target exiting in the year. Yeah, I think what we said, Wes, is that as we execute our manufacturing consolidation, that we believe we could exit the year at that 40% or better range. That's still, I would say, broadly our goal, but certainly with the logistics and some of the supply chain constraints, that's a headwind that we didn't see a quarter or two ago. Now, we think that's transitory. It's not going to last, but how long it does last is less clear. So, look at We think that those headwinds are maybe 100 to 200 basis points. And I would say they're more than even what we experienced last year with COVID. Some reimbursement and other things with COVID. This is, you know, supply chains are very full. The logistics channels are very full. So in the interim, we're going to face these headwinds. But at those sides, and as we... confident we'll be able to be on that target model. Okay. Yeah, that makes sense. And then just when you talk about revenue growth in second half, can you help us understand which are the stronger growth segments relative to the first half? Is it semi? Is it data center? Et cetera. If you could help us understand which ones are growing a little faster in the second half and driving that upside, that would be helpful.

Yeah. The good news is we see strong growth in all sectors, quite frankly. So we see semiconductors seem to stay in full speed ahead, essentially. You know, the customers we have in semiconductors are very bullish about demand in the second half into 2022. So our challenge there is just going to be keeping up with their demand. Obviously, I've come in on data center. We see that coming back strongly in the second half. um industrial medical is going through a recovery phase and we think that's going to be very strong i think the only market where we may not see as strong growth is probably telecom and networking i think we'll stay steady there again as we focus on 5g designs we think most of that revenue will probably come in 2022 and 2023. okay that's very helpful color thank you

Well, thank you very much for joining us on the call today.

We see increasing demand across all of our target markets for the rest of 2021. And although supply issues are limiting our upside in the second quarter, we see increased commitments from our suppliers in the second half that I hope that we can enter the year at a very high velocity. Thank you very much.