Diodes sees 12% year-over-year revenue growth in Q3 2025, driven by AI and strong demand across key markets, signaling positive outlook for 2026.

Company finalizing its closing procedures and customary quarterly review by the Company's independent registered public accounting firm. As such, these results are unaudited and subject to revision until the Company files its Form 10Q for its quarter ended September 30, 2025. In addition, management's prepared remarks contain forward looking statements which are subject to risks and uncertainties, and Management may make additional forward looking statements in response to your questions. Therefore, the Company claims the protection of the safe harbor for forward looking statements that is contained in the Private Securities Litigation Reform act of 1995. Actual results may differ from those discussed today and therefore we refer you to a more detailed discussion of the risks and uncertainties in the Company's filings with the securities and Exchange Commission, including Forms 10K and 10Q. In addition, any projections as to the Company's future performance represent Management's estimates as of today's November 6, 2025. Dodds assumes no obligation to update these projections in the future as market conditions may or may not change except to the extent required by applicable law. Additionally, the Company's press release and management statements during this conference call will include discussions of certain measures and financial information in GAAP and non GAAP terms. Included in the Company's press release are definitions and reconciliations of GAAP to non GAAP items which provide additional details also throughout the Company's press release and management statements. During this conference call, we refer to net income attributable to common Stockholders as GAAP Net Income. For those of you unable to listen to the entire call at this time, a recording will be available via webcast for 90 days in the Investor Relations section of Diodes website at www.diodes.com. And now I'll turn the call over to Diodes' President and CEO Gary Yu. Gary, please go ahead.

Welcome everyone and thank you for joining us on today's conference call. As announced in our press release earlier today, revenue in the quarter increased 7% sequentially and 12% year over year driven by strong demand across the general computing market, including for AI related server applications as well as data center and edge computing. Our global point of sales increased the strongest in Asia followed by North America. Additionally, our channel inventory is at healthy level decreasing again this quarter in terms of dollars and weeks with overall inventory dollar decreasing over 25% from peak levels. Even though the rate of recovery in the automotive and industrial market continues to be slower than expected, revenue increased both sequentially and year over year in both of these end markets. When coupled with the computing market growing the strongest along with the consumer also increasing sequentially product mix unfavorably weighted on the gross margin during the quarter. Future margin expansion will be driven by ongoing improvement in the product mix as the pace of recovery accelerate in our higher margin automotive and industrial end markets, combined with increased new product introductions in all target markets as well as improved loading across our manufacturing facilities. At the midpoint of our fourth quarter guidance, we expect to achieve approximately 12% growth for the full year. Looking forward, we are gaining increasing confidence in broader demand improvement in the automotive and industrial market. Diodes is gaining increasing market share in the automotive market with new programs scheduled to launch early next year combined with increasing content in industrial applications like AI, robotics, power management, medical and factory automation. With that, let me now turn the call over to Brett to discuss our third quarter 2025 financial results as well as our fourth quarter guidance in more detail.

Thanks Gary and good afternoon everyone. Revenue for the third quarter 2025 was $392.2 million, an increase of 12% over $350.1 million in the third quarter 2024 and a 7.1% increase over $366.2 million in the second quarter 2025. Gross profit for the third quarter was $120.5 million, or 30.7% of revenue, compared to $118 million or 33.7% of revenue in the prior year quarter and $115.3 million or 31.5% of revenue in the prior quarter. GAAP operating expenses for the third quarter were $108.9 million or 20% of revenue and on a non GAAP basis we're $103.1 million or 26.3% of revenue, which excludes $5.9 million amortization of acquisition related intangible asset costs. This compares to GAAP operating expenses in the third quarter 2024 of $96.1 million, or 27.5% of revenue and $105.9 million, or 28.9% of revenue in the prior quarter. Non GAAP operating expenses in the prior quarter were $99.8 million, or 27.3% of revenue. Total other income amounted to approximately $7.5 million for the quarter, consisting of $8.5 million of interest income, $2.4 million in unrealized gains from investments, $0.4 million in other income, $3.3 million in foreign currency losses and $0.5 million in interest expense income before taxes and non controlling interest in the third quarter 2025 was $19 million compared to income of $18.8 million in the prior year period and $53.2 million in the previous quarter. Turning to income taxes, our effective income tax rate for the third quarter was approximately 18.7%. We continue to expect the tax rate for the full year to be approximately 18% plus or minus 3%.. GAAP net income for the third quarter was $14.3 million or $0.31 per diluted share, compared to net income of $13.7 million or $0.30 per diluted share in the prior year quarter and net income of $46.1 million or $0.99 per diluted share last quarter. The share count used to compute GAAP income per share for the third quarter of 2025 was 46.4 million shares. Non GAAP adjusted net income in the third quarter was $17.2 million, or $0.37 per diluted shareholder, which excluded net of tax $4.8 million of acquisition related intangible asset costs and $1.9 million of unrealized gain on investments. This compares to non GAAP adjusted net income of $20.1 million or $0.43 per diluted share in the third quarter 2024 and $15 million or $0.32 per diluted share in in the prior quarter. Excluding noncash share based compensation expense of $5.4 million for the third quarter, net of tax, both GAAP net income and non GAAP adjusted net income would have increased by $0.12 per share. EBITDA for the third quarter was $46.6 million or 11.9% of revenue compared to $46.9 million of or 13.4% of revenue in the prior year period and $84.5 million, or 23.1% of revenue in the prior quarter. We have included in our earnings release a reconciliation of GAAP net income to non GAAP adjusted net income and GAAP net income to ebitda, which provides additional details. Cash flow provided by operations was $79.1 million for the third quarter. Free cash flow was $62.8 million, which included $16.3 million of capital expenditures. Net cash flow was a positive $59.3 million. Free cash flow per share was $1.35 for the quarter and $4.02 per share for the trailing twelve months, approaching the historical high of $4.34 per share in 2021. Turning to the balance sheet at the end of third quarter cash cash equivalents restricted cash plus short term investments totaled approximately $392 million. Working capital was approximately $890 million in total debt, including long term and short term was approximately $58 million. In terms of inventory at the end of the third quarter, total inventory days were approximately 162 as compared to 173 last quarter, down approximately 11 days sequentially. Finished goods inventory days were 62, a decrease of 9 days from the 71 days last quarter. Total inventory dollars decreased $11.8 million from the prior quarter to $470.9 million, consisting of a $17.3 million decrease in finished goods and a $1 million decrease in work in process and a $6.5 million increase in raw materials. Capital expenditures on a cash basis were $16.3 million for the third quarter, or 4.2% of revenue, which was below our targeted annualized range of 5 to 9% of revenue. Now turning to our outlook for the fourth quarter of 2025, we expect revenue to be approximately $380 million plus or minus 3%. at the midpoint. This is better than typical seasonality from third quarter and represents a 12% increase over the prior year period and will be the fifth consecutive quarter of year over year growth. GAAP gross margin is expected to be 31% plus or minus 1%. Non GAAP operating expenses, which are GAAP operating expenses adjusted for amortization of acquisition related intangible assets are expected to be approximately 27% of revenue plus or minus 1%. We expect net interest income to be approximately $1 million. Our income tax rate is expected to be 18.5% plus or minus 3%. and shares used to calculate EPS for the fourth quarter are anticipated to be approximately 46.4 million shares. Not included in these non GAAP estimates is amortization of $4.8 million after tax for previous acquisitions. With that said, I now turn the call over to Emily Yang.

Thank you Brad and good afternoon. Revenue in the third quarter was up 7.1% sequentially and at the midpoint of our guidance, mainly driven by strong demand in Asia, especially in Taiwan for the AI computing applications. Our global point of sales increased in Asia, followed by North America, and our channel inventory decreased both in dollars and in weeks. During the quarter we continued to drive our new product initiative with approximately 180 new part numbers, of which 60 were for automotive applications. Looking at the global sales in the third quarter, Asia represented 78% of the revenue, Europe 12% and North America 10%. In terms of our end markets industrial was 22% of Diodes product revenue, automotive 19%, computing 28%, consumer 18% and communications 13% of the product revenue. Our automotive industrial revenue combined was 41% which was 1 percentage point lower compared to the last quarter. Even though automotive industrial revenue increased quarter over quarter, the computing end market experienced stronger growth than the 7% of the company average for the quarter and the industrial market grew at a lower rate than the average. Now let me review the end markets in greater details starting with automotive revenue in the quarter grew 8.5% sequentially and 18.5% in the first three quarters over last year, even though as a percentage of the total product revenue was flat to the last quarter due to the growth in the other markets. The revenue increase during the quarter served as a further evidence that that the inventory situation continue to improve even though the overall demand remain dynamic and the pace of recovery is slower than expected. The other positive news is that we are starting to see more new programs scheduled to ramp early next year. Our controllers and MOSFET combination from the low voltage MOSFET product line has established a strong presence in the automotive DC source applications. Our newly released 50amp 650 volt automotive grade silicon carbide Schottky Schottky barrier diodes are specifically seeing traction in energy storage systems and our small signal bipolar junction transistors devices packaged in DFN are proving to be valuable for general purpose signal switching offering flexibility and compactness for various electronic designs. Additionally, our latest NPM and PNP bipolar junction transistor products feature industrial leading low saturated voltage making them ideal for a range of automotive applications. These products are ideally suited for voltage regulation, DC DC converters, motors as well as LED lighting and engine control units, power management and linear controllers styles. TVS products are being designed into battery management system applications providing robust surge and offer voltage protection for reliable automotive battery performance. In addition to our TVS products, our switching diodes, Zener diodes and SBR products have design wins in autonomous driving, telematic and infotainment applications and our USB 2.0 signal booster devices are being adopted for in car charging solutions and other copic electronics enabling stable signal transmission in long cable environments. We have also seen strong demand for our low quiescent current LDO operating at 40 to 60 volt driven by increased production of MCU power supply system. Our automotive hall effect sensors including latch and Omnipolar switch variants have experienced double digit growth driven by new design wins in the C motors, window and tailgate lifters, cooling fans and glass break sensors this momentum is expected to continue as automotive design become increasingly more sophisticated. And lastly, our LED driver are seeing solid demand supporting a diverse range of applications such as gear shift control indicators, interior cabin lighting and mood lighting. Turning to Industrial Market Similar to the automotive market, the inventory situation continues to improve gradually. With revenue in this market grow almost 4% sequentially and 13% for the first nine months, we continue to expect the overall inventory situation will begin to normalize next year. We are seeing applications such as AI, robotic, medical and factory automation gaining strong demand moment with the increasing power consumption by new systems, the importance of power supply and backup power solutions for AI surfers is becoming increasingly critical. Next generation server power supply systems are transitioning from the current 48 volt system to 400 volt and 800 volt systems and adopting a standalone power rack design. Diode's SBR products Silicon Carbide MOSFET Ideal diode controllers are gaining traction in this innovative applications are increasingly being adopted by a range of power supply customers. Additionally, Our portfolio of 50m 1200 volt silicon carbide Schottky Schottky barrier diodes products are achieving success in energy storage applications delivering efficient and reliable performance and our silicon carbide MOSFETs are also seeing increasing adoption especially for applications such as EV chargers and power supply for AI surfers and data center applications. Also in the industrial diodes TVS products are being integrated into power adapters to provide robust ESD and surge protection, enhancing device reliability and our high voltage sensors, low dropout regulators and voltage reference solutions are demonstrating strong momentum and in a variety of industrial applications including fan motors, household appliances, power tools and E meters. In the computing market we saw the strongest growth this quarter, increasing almost 17% sequentially and 22% in the first nine months compared to last year. The highlight continues to be the strong demand momentum for AI related applications. Applications with the chipset refresh cycle underway, we are gaining strong traction and market share across our connectivity and timing product line with particular strength in PCI Express 5.0 and 6.0 clock solutions. This growth is fueled by increasing demand within AI data center and edge computing applications. Our level shifter products are also seeing notable expansion and especially in server applications with major customers. Additionally, our signal integrity and high speed switch portfolio including USB 4 and PCIe 5 and 6 has gained significant traction. These products are being widely adopted in key applications such as AI cars for server and solid state drivers. Our ESC protection devices are also increasingly being integrated into SSD applications, showing a positive ramp up. We also continue to secure design wins for our PCI Express 4.0 and 5.0 RedRiver solutions and are now entering solid production phase in both notebook and SSD applications and our power switches are in high demand for the data center SSDs while USB C source switch are being utilized and in power ports for the desktop and docking stations. Our linear LED drivers are also seeing increased deployment in servers in the consumer market. Revenue also increased 8.5% sequentially and 7% for the first nine months even though flat as a percentage of the total product revenue diodes. Bridge rectifiers are being designed into multiple power adapters that are ramping up fueled by increased demand in the gaming systems. The adoption of DP2.0 redrivers is on the rise in high resolution gaming monitors supporting enhanced image quality and faster refresh rates. Additionally, adoption of our MIPI switches and redrivers is also ramping up as they are being incorporated into into augmented reality glasses signaling rapid growth opportunities in variable display technologies. Lastly, in the communication market, overall growth was relatively flat sequentially and a slight decrease for the first nine months. We are however seeing pockets of growth driven by the AI and high speed interconnect applications. This demand is being driven Dio's introduction and of new crystal oscillators that offer significant lower jitter less than 60 femtoseconds and also support higher frequency now reaching 312.5 MHz in addition to the previous 156.25 MHz. These advanced oscillators are gaining adoption in the optical transceiver modules which are integral to the high speed and 800g and 1.6t optical communications within data center and the auto directional level shifter and the low dropout regulators experience strong demand driven by the growth of AI enabled smartphone applications. In summary, our continued year over year growth momentum is a result of our past design wins and content expense expansion initiative across our target end markets. Additionally, our continuous investment in new product introduction in our high margin end markets of automotive industrial position us well for a return to strong growth in those markets as the recovery accelerates and with a return to more healthy inventory level and shipments more closely reflecting true end demand, we expect to see increased loading at our manufacturing facilities and improving margin over the coming quarters. With that we now open the floor to questions. Operator.

Thank you very much. And to our audience joining today over the phones at this time, if you would like to ask a question Simply press the star followed by the digit 1 on your telephone keypad. Pressing star and 1 will place your line into a queue and I will open your lines one at a time. Once again, ladies and gentlemen, that is Star and one. And if you find your question has been asked or answered, you may remove yourself by pressing star and one. Once again. Again, ladies and gentlemen, that is star n1. We'll take our first question today from the line of David Williams at Benchmark.

Hey, good afternoon everyone and congrats on the solid results here. I guess maybe first question. Emily, you kind of touched on this at the end on the increased loadings. But as you kind of think about. The gross margin for the year and what those loadings could look like, can you kind of give us a sense of what your expectations are for growth and maybe how those loadings should look as we move through next year?

Yeah. So I think if you look at the gross margin. There are a couple of areas that we believe is going to improve over time. Right. So number one, we do expect the product mix will continue to improve throughout the quarters. Right. With a lot of pipeline, we have a lot of success in the automotive with the key focus introducing a lot of new products. We are actually confident that the combination of the product mix will continue. Right. And then if we look at the Paracom products product family, we continue to focus on the AI areas. We believe that will continue to help us from the product mix. On top of that we have new product introduced throughout the quarters, especially focusing automotive area and some other areas. So again. Right. That's part of the product mix for the longer term. 2026, we do expect the revenue to be a growth year. Right. So naturally when we do that will increase the loading of our factories. Right. We also aggressively porting our product into our factories from outside to inside and balance overall the loading as well. So gradually that will show some improvement. Right. I think going down to manufacturing efficiency, I think overall Gary and the company is driving very aggressively from cost down and continue improvement that area. So I would say if you add all these things together, that's actually the reason that we believe. And then on top of that, right. I also talk about that if we look at the channel inventory, we believe the shipping the ship out is going to be more balanced moving forward. We have been depleting quite a lot for the last few quarters and that's actually going to get more stabilized. So I would say that's another angle to think about. About it.

Yes. Okay, great. And then maybe on the tariff side, it seems like some of your peers have had a challenging time kind of sidestepping some of the earlier in the year pull ins. But that doesn't seem to have impacted you and we're not seeing it here in the fourth quarter. Maybe talk about that, how you're able to navigate that. But are you seeing that impact or could you potentially see that as we move move into next year? Is there anything I guess from that perspective that we should be thinking about? Thank you.

So David, I want to make sure you are talking about the tariff importing into U.S. Yes, the general demand trends as we saw with the tariffs that were driving some earlier loadings for production to come to the US Just that it's the demand dynamics around that and the channel inventory associated with it. I would say overall we didn't really see the big spike or change overall for the demand point of view. I think tariff is not new just for last quarter. It has been in place for quite some time. I think we are working aggressively leverage our flexible manufacturing site and moving through things around to minimize the tariff overall impact for U.S. revenue. I think on top of it, right majority or there's quite a lot of revenue within North America is actually importing into Mexico or Canada. So that's actually also a different story. I would say all in all, if you look at the overall percentage of the business for North America, still a very small percentage. So that's a reason that we are working different angles. But the overall impact is relatively small for Diodes. But I would like to add a comment on that. The market is very dynamic, especially like country to country these kinds of geopolitical issue. So Dios always want to give our flexibility to support customer anywhere they want it.

Okay, all right, very good. I certainly appreciate that. And maybe just lastly for me is on the automotive side, you've talked about things getting better there. Inventory is better. How do you see maybe your position given your content growth and these programs that are ramping next year? How do you think we should look at the revenue growth trajectory for automotive specifically as we get into next year? Thank you.

Yeah. So current percentage for automotive for us based on the Q3 result is 19%. Right. We definitely expect our automotive percentage will continue to improve in 2026, especially with the market share gain and the content expansion that you just mentioned.

Thanks so much.

Thank you.

Next we will hear from the line of Tristan Guerra at Baird.

Hi, good afternoon. You mentioned insourcing as a gross margin catalyst for 26. How should we look at the gross margin benefit for a Analog product currently outsourced in Korea or in Japan versus once it moves internally and Is it fair to say that the qualification process for your South Portland Maine fab is ongoing and it sounds that perhaps it's more of a second half of next year dynamic given that industrial and automotive are still somewhat in recovery mode.

Okay, Tristan, this is Gary. Let me help to answer this question for you, right? And by moving external to external definitely going to benefit dios a lot, right? For example, if I subcontract to my wafer to the our subcontracting partner, they definitely gonna earn some premium from diodes and this we can save the premium and by loading internally with our like kind of very, very effective cost now this kind of model on that. So definitely we can enjoy the benefit of moving external to internal. As for the analog part, you know, we continue loading or qualify the process new product into our spfab and we do see a very, very good progress so far. And we do have our new product or requalified product from this wafer fab being qualified in our key customer side. And we do see the PO coming in just recently from the previous couple quarters. So to offset our OEM customer under load issue or continue to drop the demand, we do significantly improve our loading in those particular SP fab to offset the sky and the loading issue in the cost. So for year 2026 I do believe, I do believe loading will be improved and the GP coming from this wafer pad will improve too.

Great, that's very useful. And then you mentioned AI as a key driver of computing, but you also mentioned computing being a negative on mix. What percentage of your computing revenue right now is data center? And then any way to quantify how much of the growth is coming from AI related products?

Yeah, Tristan, this is Emily. We're sorry, right now we actually don't have the breakdown information but if you look at our Q3 result, computing is the strongest growth market segment for us. We actually achieved 70%, 17% sequentially sequentially and 22%. Just compare the first three quarters. Right. And majority of this growth is driven by AI. So you know, I think the other thing, I want to point it out, right, AI is not just in the computer segments, right. We also, for example seeing AI related in the industrial power supply, you know, or some other edge AI applications that's driving some of the refreshments cycle. That's actually the reason we haven't been able to break it out. I think on top of that, if you really think about our product, it's really fitted for a lot of application, not just limited to AI, right. But I would say all in all it's really positive. We actually excited to see the performance and the growth, especially in the computing market segment.

Yeah. And just like Emily said, no matter AI in compute or industrial, we do see this kind of market segment will continue growth next year and even a year after next year. And at the same time we continue to introduce a new product into this segment. And this new product usually we can enjoy much better GP on that. So that's really what going to put R and D focus on that for the continuity to grow our GP percent in the future.

Okay, great. And just one quick last one. Do you see yourself as a benefit from the disruptions around Experia? Because my understanding is that it's a lot of discrete product. And are you second sourcing some of that? Is that a tailwind for next year?

Yeah, Kristin, we're definitely aware of the situation. Discrete diodes, stratifiers, MOSFETs, logic, definitely part of our broad portfolio. And it does cross over to some of our appears like Nexperia. Right. Like I mentioned before, anytime there's a change of supply situation, strategic decision, whether you know, change price or supply or low margin focus, it always creates opportunity for diodes. And we always utilize this type of opportunities to really expand and build a stronger relationship with our strategic customers. And always the focus in automotive market segment. Right. We do review all this business very carefully and engage in the areas that fit into our overall long term strategy and focus. So our goal at the end is really better serve the customers overall.

Very useful. Thank you very much.

Thank you, Tristan. And a reminder ladies and gentlemen, that is star and one, if you would like to ask a question, we'll hear next from from William Stein at Truist.

Hi, this is Elliot on for Will. Thanks for letting me ask a question, you mentioned 2026 being a growth year and it looks like recent top line growth is holding in around plus 10% year over year. Is that a reasonable level for us to expect through 2026? And I'm wondering if you could give us some examples of end markets or products or applications that could maybe trigger a more robust recovery than say plus 10%.

All right, this is Gary. Let me try to help answer this question. Yeah, the answer to you is yes, for sure. We do believe the year 2026 will be another good year for Diodes. Not only the revenue growth like a double digit, I want to drive on that way but also I want to make sure our profitability also grows aligned with our revenue growth. That's our commitment to the shareholder. And as for which segment we are looking for the most aggressive growth one mentioned about in the previous answer. Another one will be automotive plus industrial because we do see the automotive and industrial in the near future. Not only the segmenting increase but also we do do have a newer product introduced into this segment and been designing since the past couple quarters. So we do see the revenue is going to be significant growth in these two segments.

Yeah, I think on top of that. Right. We went through a period of inventory adjustment. We believe that by 2026 even with few customers inventory situation will continue to improve and that naturally is going to drive some of the demand as well.

Exactly.

Okay, thanks. And one more if I can on we've talked previously about a 20% operating margin target. I'm wondering if you could give us some color and maybe be a little more prescriptive in terms of the different variables you gave earlier about margins improving of how you can get to potentially that 20% range again from the call it mid single digits today. What's the lion's share? Anything like that you can provide. Thank you.

Okay, let me try to give you a very high level direction. I want to drive on that first one. Drive top line means like revenue going to be gross. Right. And along with the GP and gross profit percentage improvement on that direction on the gross mode at the same time and I really want to keep our SG&A flat or last percentage while the revenue growth but I really want to put more focus on R and D expenditure along with the revenue growth. With that I do believe we can improve more on our bottom line. So let me emphasize again revenue growth and along with gross profit percentage GPM growth we keep SGA percentage flat or reduced and at the same time I want to focus on invest more on R&D.

Yeah, a couple things I would add to that this is Brett, is that when you think about that 20% margin, the building blocks to that are principally two things. Our gross margin continuing to improve and working its way back to 40 plus percent. And you basically got the OPEX that we have that we've shown that at the higher revenue levels will be around 20%. And as Gary mentioned the goal is to and what you can see in our investment is leaning heavier into the R and D piece than we are on the sga. And so I think that's. Those are the two main components and the biggest one we spend the time on is on the gross margin and the real drivers to that by building on differentiated more quality products across our portfolio while then in addition not adding to our manufacturing footprint. While we do that, but getting the entitlement of it, as you know, that's in place. So those things together, it will accelerate the margin improvement and will basically transition back to margin that we saw a few years ago.

Thank you.

Thank you. And now we'll take a Follow up from Mr. David Williams at Benchmark.

Hey, thanks again for letting me ask another one here.

No problem, David. Thanks Gary.

On the AI side, is there a way to kind of parse out the demand or new demand that you're seeing relative to maybe the content expansion? And the reason I ask, I'm just trying to understand are you driving and I get that you're probably driving both, but what is the bigger one? Is it just increased demand all around or are you just able to sell more products into each one of these solutions?

I think it's really combination of both. Right. I think it's important that we continue to drive new products product introductions. You know, like I mentioned, there's a lot of change Even with the AI data center with some shifting of transition from 48 volt to 400 volt and 800 volt which also means that there's new set of requirements that need to be fitted into the application. So I think it's important for Diodes continue to focus on the technology, continue focus on new product introduction that will be well fitted into the new application. Right. At the same time the volume will continue to grow. When you combine these two together, it's going to get the best result overall.

Yeah. Another important information I like to share is like Diodes advantage is very good relationship with those tier one customer, no matter any company or other company. Right. And that's why we understand from their architecture, from our system point of view, we know what they want three years or five years from now. That's why we cooperate with them to develop the product they wanted.

Okay, fantastic, great color there. And then maybe just on the inventory side, do you get a sense that some of your customers have started to replenish? If you look across your inventory levels and is that something that's helped here or do you think that is still in front of us just kind of given where inventory levels are today.

I believe a lot of customers inventory situation changed a lot. There are still some pockets of customers, you know, especially I would say in the industrial market segment that still going through some corrections. But we also expect situation should be improved or completed by the beginning of next year.

So David, one way to think about that too is that you've seen the last two quarters the internal inventory as well as as we've described our channel inventory continue to come down and as long as that is happening this way you're not getting the full entitlement of the market on our margins and so I think going forward we feel a more balanced basically ship in and ship out and then the ability to have the entitlement of the full demand coming through our margin. As Emily said we think you'll start to see that as we transition into probably second quarter next year especially as we start to see the strength.

Fantastic. Keep it the good work. Looking forward to seeing your success. Thank you.

Thank you David.

Thank you. And we have no further questions from our audience today. I'm happy to turn the floor back to Mr. Gary Yu for any additional or closing remarks.

Thank you everyone for participating on today's call. We look forward to reporting our progress on next quarter's conference call. Operator. You may now disconnect.

Ladies and gentlemen, thank you for joining today. You may now disconnect your lines.