Allegro MicroSystems, Inc. (NASDAQ:ALGM) Q1 2024 Earnings Call Transcript

Vineet Nargolwala : Yes, Quinn, what we commented on was that there is a phenomenon happening right now in China where there is a transition to a more stringent emissions standard. And that has driven some excess inventory of the leftover models that are perhaps not compliant to the new emission standard. So that’s going to take a little bit of time to work through. This is pretty consistent with what OEMs have commented publicly as well as other tiers have. So we’re not alone in seeing this phenomenon. Having said that, we see the EV market continue to grow nicely and the added incentives that exist in China or were renewed in China around EVs, I think are going to be really good for the long-term growth of the EV market.

Quinn Bolton : Perfect. And then just maybe for Derek, just on the wafer allocations among TSMC, UMC and Polar, is there any sort of mix shift that you see this year among your suppliers that could create either margin tailwinds or headwinds? Or do you think that the margin outlook and foundry pricing is pretty stable?

Derek D’Antilio : So I don’t anticipate a significant shift in the mix. In Q1, it was about 20% Polar, 70% UMC give or take, 10% TSMC. That will vary a bit quarter-to-quarter. And pricing and the revenue per wafer will vary as well. So I don’t anticipate that having a significant impact on our gross margins. As Vineet mentioned, we also continue to work with our customers and our vendors to make sure we’re marching towards our target financial model point. But I don’t anticipate the wafer allocation itself, they have a significant impact on our gross margins this year.

Operator: [Operator Instructions] All right. I’m not showing any further questions. I will turn it back to Jalene Hoover for her final remarks.

Jalene Hoover : Carmen, I’m not sure if you can hear us or not, but thank you so much.

Operator: Go ahead.

Jalene Hoover : Okay. Thank you so much. We appreciate everybody for taking the time to join us today. This concludes this morning’s conference call.

Operator: Thank you all for participating, and you may now disconnect.