Eric Bjornholt: Yes. I was just going to make the point is I view this as inventory correction on steroids, right? I mean we had not seen our lead times for the vast majority of our products go to 52 weeks before and then they contracted over a period of 12 months down to these very short lead times that we have today.
Mark Lipacis: Very, helpful. Thanks everybody.
Eric Bjornholt: Thank you Mark.
Operator: Thank you. Our next question is from Joe Moore with Morgan Stanley. Please proceed with your question.
Joe Moore: Great. Thank you. Can you give us some color on the FPGA business. And I wonder, it sounded like some pretty good growth relative to the peers for the fiscal year. Can you talk about the trajectory of that? Have you seen — it’s obviously been a tough patch for FPGAs as well. Has that looked similar to the rest of your business? Has there been an outperformance relative to that? And can you talk about your market share prospects going forward in there?
Ganesh Moorthy: Sure. So our FPGA business has, in fact performed better than our other businesses. And in part, it’s because our FPGA business has historically had a large aerospace and defense component and continues to. Now we have, over the last four, five years, been creating the new design opportunities for FPGA in the longer term to grow in industrial and automotive and the historical end market strengths that Microchip had before we got the FPGA business. And so this — it is not immune to market forces and where things are going to go. But it has got a better end market mix than some of our other businesses and therefore, has performed better. And of course, we are picking up designs that in the long term that are falling off of Erstwhile, Xilinx and Erstwhile [Ultera] (ph), as they take focus away from the mid care over many years that they have done or end-of-lifeing products, right?
Those are all creating opportunities for our FPGA business. And so I am very, very optimistic about prospects for our FPGA business.
Joe Moore: Great. Thank you.
Operator: Thank you. Our next question is from Christopher Rolland with Susquehanna. Please proceed with your question.
Christopher Rolland: Hi guys. Thanks for the question. I guess, first of all, Ganesh, like in terms of this inventory, are there any products or markets that have surprised you either that they burn inventory and a normalized quicker than you expected or that this is going to take longer for these products or markets?
Ganesh Moorthy: I think not so much my product, but I think if you look at specific customers, in many cases, even in the same market, right? So we can have an end market, say, industrial. And we have examples of certain customers who have burned through their inventory and they’re back asking for new orders at expedited times. We also have other customers, same industry who are still burning through inventory and taking longer where it goes. So I think a lot depends on a customer, their market prospects, what did they do to create and grow their business and how well are they executing? And so that’s really been the difference is that it’s customer by customer, the stories are different.
Christopher Rolland: Yes. Understood. And then if I’m hearing you correctly, you think June is the bottom. A lot of that is inventory based. I’d like an idea of how you’re looking at the inventory position in September at your customers more generally? Do you think we can get back to seasonal trends in September and going forward? Or is there still this inventory drag overall?
Ganesh Moorthy: No, I think there’s going to be customers at different points in the correction cycle. Some will have corrected and moved on, others will still be correcting. So I think seasonality is perhaps one of the things which you need a level of normalcy for some period of time before you can say, okay. We now have all these variables that have been taken out. So I can’t say we have seasonality in the September quarter. I can say that incrementally, on a weighted average basis, there are more customers who are going to be out of their inventory correction, but not that they’re all done.
Christopher Rolland: Great. Thank you Ganesh.
Operator: Our next question is from Tore Svanberg with Stifel. Please proceed with your question. Please proceed with your question.
Tore Svanberg: Yeah, thank you. Just one quick follow-up. Ganesh, you said that you still need quite a bit of turns this quarter. Just wondering what is the churn’s requirement? And how does that compare with the previous cycle troughs? Thank you.
Eric Bjornholt: So we are not going to break out the amount of turns that are required, but we do have turns and take to meet our guidance, and our guidance is obviously to have another down quarter. But lead times are short. We are getting these requests for pull-in. I don’t have a good comparison to give you in terms of prior cycles. If this turns out to be the bottom for us, which we believe it will, we can probably give some commentary when we talk about our September guidance as we kind of hit and move through that bottom.
Ganesh Moorthy: So one of the things which is more difficult to do is most people talk about turns in a normal environment where there isn’t inventory out there. And it’s harder to — we can say, hey, the turns are x-percent from a historical basis. But when there is inventory, we know those turns aren’t going to show up because people will burn though inventory before they begin to place it. And I think that’s some of the hesitation we have and trying to provide some insight where we know there’s a lot of uncertainty. What we have done is done the best of our assessment of what those are going to be, where they’re going to be and build it into the guidance. And so I think that’s the best way to think about it is that we have taken into account the risks that are present from inventory that would otherwise cause headwinds to turns in the quarter.
Tore Svanberg: Very clear. Thank you.
Operator: Thank you. Our next question is from Vivek Arya with Bank of America. Please proceed with your question.
Vivek Arya: Hi, thanks for the quick follow-up. I just wanted to clarify what is the contribution of the acquisitions in the June quarter or in fiscal ’25? And then, Ganesh, back to the September quarter, I think you did say that you expect it to grow. I understand that it’s had to put a seasonal number on it. But based on what you have seen in prior downturns, just the fact that Microchip has gone down so much from peak to trough, should we also expect kind of sharper recovery back to when you do start recovering?
Ganesh Moorthy: So to answer your first question, these are small tuck-in acquisitions. They’re intended to accelerate our effort on design-ins and design-wins and all of that. So they don’t have any revenue contribution in the June quarter or in the September quarter, for that matter. In terms of the revenue and what happens as the correction happens, yes. You should think that at some point, and I can’t tell you is it in September or is it in December, you will see — we will see a sharper recovery. That’s how it has played itself out in many other cycles as well. And there are two stages to it. There’s the first stage, which is just people needing to get back to — they’ve burned through most of the inventory and they need to get back to at least buying to consumption.
And then there is a second phase, which is what is the macro doing? And is the macro driving further growth for them above just what their flattened consumption line alone might tell us. And I think all of that, if you look forward into a likely environment over the next 12 months, should give us a sharper recovery.
Vivek Arya: Thank you.
Operator: This concludes our question-and-answer session. I would like to hand the floor back over to Ganesh Moorthy for any closing comments.
Ganesh Moorthy: Great. I want to thank everybody for joining us on the call. I know we ran over a little bit. But I appreciate the questions, and we look forward to seeing and talking to many of you in the coming days as well as many of the conferences that are coming up. Thank you.
Operator: This concludes today’s conference. You may disconnect your lines at this time. Thank you for your participation.
