Michael Lucarelli: Thanks, Vivek. Next question please.
Operator: Thank you. Our next question comes from the line of Tore Svanberg from Stifel.
Tore Svanberg: Yes, thank you and congratulations on the results. So on Maxim now that we’re sort of moving from the cost synergies to the revenue synergies, are there any particular areas that we should keep an eye on there, whether end markets or product categories where you expect to see that $1 billion in synergies?
Prashanth Mahendra-Rajah: Yes, let me €“ let’s do that in two parts. I’ll give you a little bit of context so that everyone remembers what we talked about and then hand over to Vince. So we’ve closed on the cost synergies. We feel great about that. So we’re focusing now on revenue synergies, and we’re tracking ahead of schedule. We think about that synergy in stages. So first we need to identify the socket, we need to win the socket, we begin shipping to the customer, and then we hit volume. So we are tracking all of those stages through our internal material. As I said, Anelise gave you a target in April to come €“ to deliver $1 billion of incremental. Vince is holding her to a higher bar than that. So she’s on track to hit that $1 billion.
And we’ve got €“ we’ve seen early success. I think you’ve heard Vince share a couple examples over the last couple quarters. For example, in the €“ our ability to cross sell A to B as well as put GMSL into non-auto customers which is new. So let me pass off to Vince here for what are some of the other areas that we’re thinking about?
Vincent Roche: Yes. When we announced the combination, Tore, with Maxim, we pointed out two particular market areas where we thought ADI was underweight, where power in particular, power management was really important, power in data center, for example. And as the compute density skyrocket, and in fact in the compute area, performance and power are pretty much one and the same thing. So we have now a very competitive power portfolio that we can bring to more application specific areas such as data center as well as automotive. The €“ I think a very positive surprise is that the connectivity portfolio based on GMSL, the multi gig serial link is that not only are we gaining more and more traction in automotive, but also we’re bringing it to other areas such as industrial, as Prashanth mentioned.
BMS, we’ve got 16 of the top 20 wired BMS OEMs sockets in the top 20 OEMs. And Maxim strengthens that portfolio as well. So in industrial, I mentioned in the prepared remarks that the I/O link technology is very, very, that Maxim brings to bear is very, very complementary with ADI’s data path solutions. So I think there are multiple areas and I think the message I want to convey here is that I was always optimistic about what we could do with a greater channel, more cross connectivity to the ADI portfolio. But I’m more enthusiastic than ever based on what I’m actually observing now with the various markets and customers in which we’re playing.
Tore Svanberg: That’s very helpful. Thank you.
Operator: Thank you. One moment for our next question. Our next question comes from the line of Chris Danely from Citi.
Chris Danely: Hey, thanks guys. Just a little more clarification on the lead times and the shortages. So you mentioned that half of the portfolio has lead times of less than 13 weeks right now. Can you talk about what that was three months ago? And then when would you expect the lead times to, I guess, €œlargely normalized€ and with a couple flat quarters? And it seems like you got plenty of inventory. Why aren’t these lead times normalizing a little bit faster? Thanks.
Prashanth Mahendra-Rajah: Sure. Chris let me €“ Michael have to remind me where we were three months ago. But the €“ so the supply demand balance is getting better. And we’re getting that €“ we’re getting more wafers, so €“ in addition to our internal production. The way to think about the lead times is we’ve got half the portfolio shipping within the quarter. And certainly in the next quarter or two, we will have the overwhelming majority of that down to within one quarter. The inventory build as I mentioned, is in part due to our desire to kind of keep more inventory on ADI’s books because we are clearly in a period of great uncertainty and we’re being very mindful of putting too much to our channel partners when there’s this much uncertainty out there.
So that will €“ as lead times improve, our channel partners can count on us to get what they need in quick terms, and then we’ll be able to more reliably think about what’s the right stocking level for the channel.
Michael Lucarelli: Okay. And Chris to your question, where was it beginning the quarter. If you look at that metrics under 13 weeks, beginning of the quarter was probably about 25% of the portfolio. So we doubled that number and Prashanth laid out, we want to get it close to a 100% exiting this year. And I know Vince is pushing hard to get even sooner than that. I think the biggest takeaway at lead times is the short lead times, the more high quality the bookings are. I think that’s what we want to see is the true underlying of what demand is as those lead times continue to come in and why does it take so long while demand is strong, right? Demand is strong, it’s harder to reduce lead times in a strong demand environment.
Chris Danely: Great. Thanks guys.
Operator: Thank you. One moment for our next question. Our next question comes from the line of Stacy Rasgon from Bernstein Research.
Stacy Rasgon: Hi, guys. Thanks for taking my question. Maybe it’s a dumb question. But I’m having a little bit of trouble squaring the majority of the portfolio getting to be within 13 weekly times together with a year’s worth of backlog. How do I square those two things? It feels like the backlog should be shorter if the lead times are actually like getting back to normal. Maybe the other way to ask it is when the majority of the portfolio has 13-week lead times, where do you expect that backlog to be?
Prashanth Mahendra-Rajah: Yes, so Stacy, I think perhaps the missing elements of your €“ of how you’re thinking about it is the assumption that that backlog is delinquent. It is not. The €“ when the lead times get extended, customers put the orders on us, but they also tell us when they want that product delivered. So there’s a visibility curve to that backlog. It is not that it is all past due and needs to be shipped against.
Stacy Rasgon: Oh, I see. Okay. So you’re €“ okay, so you’ve got orders out. We know that we’re going to be shipping this to you in six months and they placed it . So I guess where do you expect that backlog to be standing given what you see for demand once, say we’re in a quarter to pass this and the majority of the portfolio is shipping within a quarter. Where do you expect the backlogs to be?
Prashanth Mahendra-Rajah: Well, let’s go back to the €“ if we get to €“ if we return to what was normal for us pre COVID, let’s say that’s the best perspective we can give you. If we return to what does normal look like then at the start of a 13-week quarter, we would have about 10 weeks of that quarter in backlog. And then there would still be some incremental backlog out there for future quarters, but it would be meaningfully smaller because customers know that they can put that order on us in essentially less than a quarter’s notice. So that’s what normal looks like. Now, given the supply, demand challenges and the increasing importance of Analog’s products to our customers, we may benefit from some greater visibility in the future, but I don’t want to call that today.
