Paresh Maniar - Executive Director of IR Alan Hale - Interim CFO Tunc Doluca - CEO Vijay Ullal - Group President Pirooz Pavarandeh - Group President

Sumit Dhanda - Banc of America Securities Romit Shah - Lehman Brothers Ross Seymore - Deutsche Bank Gurinder Kalra - Bear Stearns Louis Gerhardy - Morgan Stanley Deepak Sitaraman - Credit Suisse David Wu - Global Crown Capital Steven Smigie - Raymond James Chris Danely - J.P. Morgan Michael McConnell - Pacific Crest Securities Simona Jankowski - Goldman Sachs Craig Ellis - Citigroup Craig Hettenbach - Wachovia Securities Uche Orji - UBS John Wright - Consumer Equity Doug Freedman - AmTech Research

Good day and welcome to the Maxim Integrated Products Fourth Quarter 2007 Earnings Release Conference Call. Today's call is being recorded. At this time for opening remarks and introductions, I will turn the call over to Mr. Paresh Maniar, Executive Director of Investor Relations for Maxim Integrated Products. Mr. Maniar, please go ahead.

Thank you, operator and welcome to our fiscal fourth quarter 2007 Earnings Call. With me on the call today are Chief Executive Officer, Tunc Doluca; Group President, Pirooz Pavarandeh; Group President, Vijay Ullal; and Interim Chief Financial Officer, Alan Hale. There are some administrative items that I'd like to take care of before we cover our results. First, we will be making forward-looking statements on this call and in light of the Private Securities Litigation Reform Act, I'd like to remind you that statements we make about the future, including: our intentions or expectations, or predictions of the future, including, but not limited to possible statements regarding bookings and terms orders, revenues and earnings, inventory and spending levels, manufacturing efficiency or capacity, projected end market consumption of our products, the estimated time to complete our restatement project and any other future financial results are forward-looking statements. If we use words like anticipate, believe, project, forecast, plan, estimate or variations of these words and similar expressions relating to the future, they're intended to identify forward-looking statements. It is important to note that the company's actual results could differ materially from these projected in the forward-looking statement. Additional information about risks and uncertainties associated with the company's business are contained in the company's SEC filing on Form 10-K for the year ended June 25, 2005. Copies can be obtained from the company or the SEC. Second, in keeping with the SEC's fair disclosure requirement, we have made time available for a question-and-answer period at the end of the call. This will be your opportunity to ask questions of management concerning the quarterly results and expectations for the next quarter. And operator will provide instructions at that time. Fiscal Q4 of 2007 contain 14 weeks instead of our typical 13-week quarter. The first three quarters of fiscal 2007 were 13-week quarter and the first quarter of fiscal 2008 will also be a 13-week quarter. Consistent feedback that we have received indicates that the investment community would like us to shorten the length of our conference call. We would therefore like to limit the length of the call to about one hour. Consequently we are reducing our prepared remarks and in turn request that participants limit themselves to one question and one follow up question during the Q&A session. Before I hand the call over to Alan, I want to remind you of the content of our January 31, 2007 press release, which reported that due to stock option accounting matters, Maxim expects to restate its financial statement. Since the company has not yet issued restated financial statement. We are unable to provide detailed GAAP or non-GAAP financials for the quarter ended June 30, 2007. As a result, all numbers contained in our press release and discussed on this call exclude all stock based compensation. These numbers should be treated as estimates only and are subject to change. Regarding the restatement project, Maxim's management has completed its review and analysis of the appropriate transmission date for accounting purposes. We are in the second phase now and the outside auditors are constructing their audits. While we have made considerable progress the completion date is now expected to extend beyond the summer timeframe. We are currently on track for completion in the next three to six months. No additional comments can be made regarding this issue. I will now pass on the call to Alan Hale.

Thank you, Paresh. Net revenues for the fourth quarter were $531 million, an 11.6% increase from the third quarter of fiscal 2007 and a 4.0% increase from the same quarter last year. I remind you that the fourth quarter fiscal 2007 was a 14 week quarter for Maxim. The sequential quarterly net revenue increased on a 13 week equivalent basis would have been 3.7%. Excluding stock based compensation and nonrecurring charges Q4 gross margins improved by 0.9% compared to Q3. This improvement was primarily due to lower inventory reserves. Turns will expand later on other initiatives that have had a stabilizing impact on our margins. I now want to discuss a nonrecurring charge affecting gross margins in our fiscal Q4. As you may recall Maxim announced a new Japan based manufacturing partnership with Seiko Epson in February 2007. In light of the performance, economics, and scalability of this partnership, we reached a difficult decision to ideal a portion of our wafer fabrication capacity located in San Jose. The impact of this decision resulted in onetime charges for asset impairment and accelerated depreciation of approximately $23.3 million. There will be further nonrecurring charges of $8.4 million and $2.6 million in Q1 and Q2 of fiscal '08 respectively of accelerated depreciation and severance costs related to this action. The current plan is for the San Jose fab to continue to produce wafers albeit at a lower rate since it is our primary technology development location. Operating expenses increased 7.7% sequentially primarily due to the additional week, and there is a smaller increase than the 11.6% sales increase, I mentioned earlier. I will now highlight some items on our balance sheet. Total cash, cash equivalents and short-term investment decreased by $24.9 million during fiscal Q4. Significant uses of cash during the quarter included $50 million in dividends, $143.3 million in payments for property and equipment, and $49.5 million for income tax payments. Accounts receivables decreased $6.7 million during the quarter to $244 million, and our days of sales outstanding decreased from 50 days in Q3 to 46 days at the end of the June quarter. Inventory increased modestly during Q4 and as well with in our operating guidelines. Moving on to certain other items of interest, during Q4 additions to property, plant and equipments were $119.6 million, this brings our fiscal 2007 capital spending total to $380.7 million or 19% of sales. This level of capital spending was driven by a conscious decision to expand capacity and invest in engineering productivity tools as the means that not only full capacity in place for future growth, but also reduce our manufacturing and new product introduction cycle times. Each investments during fiscal '07 are expected to strengthen our competitive position as we move forward. We expect our capital spending in FY '08 to moderate, to approximately $200 to $250 million, including approximately $80 million for fiscal Q1. Additionally during the June quarter, inventories in the distribution channel declined modestly, while distribution resales increased. Regarding bookings and backlog, as we have explained previously the few items routinely cause a small reduction in the revenue we actually realize from every dollar we book. Shipment endowed adjustments to our distributors of the primary contributor to this delta. So that a more accurate book-to-bill ratio can be calculated, we will only provide a net realizable portion of our bookings and backlog going forward. During Q4 Maxim recorded net realizable bookings of $540 million up 16.6% from the $463 million in Q3. Our beginning current quarter backlog of net realizable revenue for Q1 is $350 million, unchanged from the beginning 90 day backlog for Q4. I will now hand over the call to Tunc to provide additional comments and guidance.

Thank you, Alan. Good afternoon. I will pick up from where Alan left off by providing a break down of our bookings. Orders from the industrial, communications, and computing end markets were up sequentially in Q4 with computing exhibiting the strongest percentage increase. Sequential bookings from the consumer end market were down due to normal seasonality and the bookings strength we experienced from this segment in Q3. Turns orders received to-date in Q1 indicate that ordering from the consumer segment may now be in full swing as we approached the holiday build season. Based on beginning backlog and orders received so far, we expect Q1 revenues to be between $510 million and $530 million. This would be a 3.4% to 7.5% sequential increase over Q4 '07 when normalized to 13 weeks. We anticipate that our Q1 gross margin will be approximately in line with our Q4 gross margin. And our goal is to manage Q1 operating expenses to be in line with sequential revenue percentage change from Q4. We recently completed a comprehensive review of our annual business plan. I will next summarize the major components of this plan. Firstly, our business units based long range product development plans include continued technical hiring and stable operating margins, while attaining mid teens long-term average revenue and profit growth. Our market study concluded that Maxim served the viable market will grow at close to 12% annual rate in the next three years reaching $2.5 billion in the year 2010. This growth is due to the combination of organic growth of these markets, as well as expansion into new product areas. Our manufacturing plan includes sufficient capacity, flexibility and shorten cycle time. Additionally, we have put in notion, significant cost reduction plans for wafer fabs and end of line test that result in annual savings to counter ASP declines customary in our industry. Our infrastructure upgrade plan will rollout and modernize our engineering design automation tools during fiscal year '08. We selected our ERP vendor and are launching a two year project to build a scalable foundation resulting in productivity enhancements as we grow our revenue. Turning to our February initiatives, we have made significant progress on the five that we had mentioned before. Number one, gross margins have been stable due to measures put in place a year ago taking effect. These measures included an improved pricing approval process, timely offshore transfer production, and test and yield improvements in wafer fabs. However quarter-over-quarter fluctuations will continue to exist due to a variety of factors including pricing, mix change, manufacturing new variations and inventory reserve actions changes. Two, we covered significant ground in our improved customer delivery support initiative. The three week reduction in manufacturing cycle times was achieved ahead of plan. Small order support also known as our prototype order fulfillment initiative improved significant recently. We exceeded 95% fulfillment within the one week of customer shipment request date for target products. Thirdly, changes in the product line organizations outlined previously as well as emphasis of inter business unit collaboration efforts that allowing Maxim to leverage its strength, and a number of disciplines to provide better solutions to our customers. Vijay will discuss one of our many successes at a later point in the call. Number four, the long range plan sets targets for our business unit executives for operating margin, operating profit for the next three years. A significant component of the year one and year two executive compensation is now tied to achieving these targets. Number five, our global sales and distribution plan is almost complete with four of our six regions done. This plan includes improved support of small to midsize customers through the distribution channel with various changes to disti programs, disti management, training, and resource editions. Due to the confidential nature of these changes, I can not discuss the details of these programs right now. We believe addressing this set of higher margin value-oriented customers will assist in maintaining company wide gross margins. While, I am pleased that we have made rapid progress on these initiatives. I am confident, we will make further improvements going forward. We have made progress on the CFO search. Alan Hale has been working day and night towards the completion of the restatement and the company appreciates his dedication and hard work. However, for family reasons, he has decided to remove his candidacy from consideration. We are within a week or two of announcing our next CFO. Alan will continue to serve as the Interim CFO until the restatement is complete. I will close by saying that the results of the recently completed long-range plan we are ingratiating, we unidentified many opportunities to add value via our unique engineering talent and product definition, design, process technology, especially in applications where we can leverage our vast existing set of library, know-how, and intellectual property. Maxim will continue to benefit from a position that few semiconductor makers enjoy. We can constantly balance our portfolio between high margin, broad appeal, highly innovative building block products and fast growth application-specific high-integration products. Having the ability to change our mix of these products gives us great flexibility to make trade-offs between revenue growth and margins. And to take advantage of emerging opportunities without departing from a stable product base. We are not limited in our growth options nor are we stuck in businesses that become low margin for us. I would now like to ask Pirooz and Vijay to join me in informing you about a few exciting design wins we achieved during Q4 that will contribute to Maxim's revenue and earnings growth in the near future. Vijay?

Thank you, Tunc. Good afternoon, everyone. I would like to talk to you about two specific examples of these design wins. First, we recently secured an audio design win at a major mobile phone manufacture for the next generation super thin phones. These phones use ceramic speakers that are third of the thickness of current speaker technology. The product that we introduced and got design win, drives the speakers directly from the battery with twice the efficiency of the competition and the solution that we provided is 30% smaller than the competition. What's particularly encouraging and exciting about this and we are really proud of it, is that it was a result of a collaborative effort between two business units. The second example occurred in the WiMAX arena, where we introduced the industry's first 2.5 gigahertz transceiver. We ramped this product rapidly into volume production for a large US telecom company. The high level of integration and low power consumption of our solutions allows wireless Internet access at 1.5 megabit per second from a notebook PC. The innovative nature of this product was recognized by Microwaves & RF magazine and it was featured on the cover. With that I turn it over to Pirooz.

Thank you, Vijay and good afternoon everyone. I will give three other examples of the many design wins we had in the quarter. First we had a significant design win with our internal FET power supply circuits at a tier 1 server manufacture. We won against our competition because our products are smaller by factor of two and they offer significant efficiency benefits, while reducing the overall system cost. As a second example Maxim is enabling automotive manufactures to rapidly innovate consumer electronics into car. We won a number of significant sockets at a major car manufacture for this key application. These wins spend multiple product lines within Maxim's broad product offerings. In this application a number of consumer electronics devices such as cell phones, and DVD players and other USB enable devices can be easily interfaced to the car. In the MP3 area, we had a major win for PMIC Power Management Integrate Circuit socket at a leading Japanese consumer electronics company. This multi-channel PMIC is optimized for MP3 applications, it provides a high level of integration and improves battery life. We developed this product in record time by leveraging our existing cell library and extensive in electro property base. Now I hand it over back to Tunc.

All right thank you, Vijay and Pirooz. Well, I'm extremely pleased with the company's execution during Q4 gross margins and operating margins improved during the quarter, and our revenues came in above the mid point of our guidance. I would like to finish by saying that these are really exciting times at Maxim for all of us, for myself, and all the employees, and we look forward to a brighter future.

That is the end of our prepared remarks. We would now welcome you questions. Please limit yourself to one question and one follow-up. Operator, will you please begin polling for questions?

Certainly. (Operator instructions). Our first question comes from Sumit Dhanda from Banc of America Securities. Sumit Dhanda - Banc of America Securities: Couple of questions. First, can you give us an update on --

Can you hold on? We can barely hear you. Hello? Sumit Dhanda - Banc of America Securities: Yes. Hello. Can you hear me?

I can hear you. But that question we could barely hear. Sumit Dhanda - Banc of America Securities: Okay. Let me repeat that. I apologize.

Okay Sumit Dhanda - Banc of America Securities: Could you have been at there for sometime now, if you give us an update on what's your long-term targeted operating model for the companies at this point, do you have a better sense of that now?

Yeah, I do. And that was essentially part of this annual business plan process that we go through with our business units. And the plan that we come up with will essentially provide us with a gross margin that's in the low 60s. It has about a 15% pre-year revenue growth. And also below the line spending that grows at a slightly lower pace in revenue growth. So that's our model. Sumit Dhanda - Banc of America Securities: But no official operating margin model turns?

No. Not until we go through this restatement. Sumit Dhanda - Banc of America Securities: Okay. Just can I ask a follow up?

Sure. Sumit Dhanda - Banc of America Securities: Your outlook for the third quarter on a apples-to-apples basis implying roughly 5% growth at the midpoint although the 90 day backlog is flat is it because you think the turns business is coming stronger here to the first month of the quarter or I am miss interpreting the backlog?

Well, essentially if you look at the first four weeks of the quarter, the order rate has been fairly significant, as I mentioned in the call before and that's giving us the reason to believe that we can achieve what we stated as the range for our revenue. Sumit Dhanda - Banc of America Securities: Okay. Thank you very much.

Thank you. Our next question comes from Romit Shah from Lehman Brothers. Romit Shah - Lehman Brothers: Yeah. Thanks for taking my question. Just back on the outlook for Q3, I mean, it looks like revenue growth is accelerating adjusting for 13 weeks in this period. Can you elaborate more on the booking initiatives in terms of computing and consumer handset what's leading the way quarter-to-date that's essentially driving the better than seasonal forecast?

Okay you said Q3, but I assume you meant calendar Q3? Romit Shah - Lehman Brothers: Correct.

As I said on the call if you look at last quarter we had three market segments, where we had strong bookings the only one that lagged was consume. So and that one lagged mainly because we had pretty high order rates for the consumer market especially from Korea in the previous quarter. So, if you look at this geographic we were up in all regions in the world except in Korea, in our bookings rate from fiscal Q3 to fiscal Q4. Romit Shah - Lehman Brothers: Okay. And Alan, sorry I missed it, but could you tell us what was the change in operating margin in the prior quarter?

We did not indicate an operating margin number. What we did say is that on a sequential basis gross margins increased by 0.9% and operating expenses grew by 7.7% sequentially, which is at a slower rate and the sales grew, which was an 11.6% increase. Romit Shah - Lehman Brothers: Okay, great. Thank you.

Thank you. Our next question comes from Ross Seymore of Deutsche Bank. Ross Seymore - Deutsche Bank: Thanks. Guys you talked about the 90 basis points improvement in gross margin being driven by the lower inventory write downs. How much inventory write downs is still in the COGS and therefore might be able to tile going forward and basically what's kind of normalized level for that reserve?

Ross, I don't think it's good for us to answer that, because its very dynamic and it depends a lot on how our long-term ship demand forecast is changing. So I'd gather give a number guidance on that. Ross Seymore - Deutsche Bank: Nearly, is it down to kind of normalized level or is there still some cleanup occurring in your innovatory that is going to make that either go up or down going forward. Just kind of more your qualitative thing, quantitatively if you can do that?

Last quarter I think I was asked the same question and I said, what are the chance, that it might go down something that happened. This quarter I think, I given the same answer, there is some chance that it might go down slight amount.

Thank you. Our next question comes from Gurinder Kalra from Bear Stearns. Gurinder Kalra - Bear Stearns: Thank you very much. Now you mentioned some design wins in the later half of the prepared remarks. Can you just let us know where you are getting share and from what kind of players, are that just new products, where you are not seeing any competition?

Okay. It may be a on a short term basis that's really difficult to answer, but I would venture to say that the wins we are seeing are in both, in existing markets, where we do have product presence, but also we have a lot of new products, where we've got very unique and innovative functions and Vijay improves, I think I elaborated. And only four of these in this call because of time limitations. So we are winning both because of some of our new products, but also some of our old products in various markets are also getting design wins. So it's a mix. Gurinder Kalra - Bear Stearns: And what kind of companies would you be getting share from?

Well, it's a very long list of competitors. So it's hard for us to quantify and say. We are winning this much from this competitor and so on. So that's pretty much all that I can say, it's a whole host of competitors.

Thank you our next question comes from Louis Gerhardy from Morgan Stanley. Louis Gerhardy - Morgan Stanley: Yeah, good afternoon. A couple of questions. First just on your fab strategy with what you announced in San Jose with what you picked up in Irving with the Seiko Epson. Can you just review your manufacturing strategy and what facilities we could expect to see the increased utilization end?

I think Vijay should better for Vijay to answer that.

So, I think in the short-term the manufacturing capacity will be expanded in Seiko Epson, and in the longer-term it will be expanded in the Irving facility. Louis Gerhardy - Morgan Stanley: Okay. And then in terms of the OpEx guidance Alan, could you just start to reiterate what you said I didn't catch it?

OpEx.

Yeah. We mentioned that our operating expenses grew sequentially by 7.7%, which is lower than our sales increase. Sorry, I apologize. We think that operating expenses for Q1'08 our fiscal Q1'08 would be increasing at about the same rate that our sales will increase, and we will strive to manage it to be in line.

Thank you. Our next question comes from Michael Masdea from Credit Suisse. Deepak Sitaraman - Credit Suisse: Thanks. Good afternoon. This is Deepak Sitaraman for Michael. First just a clarification Tunc, did you say that you expect gross margin to be flat in fiscal Q1?

Yeah. We said they would be in line with what we had in Q4. Deepak Sitaraman - Credit Suisse: Got it. Okay. And then based on where you are with respect to your various operating efficiency initiative that will have an impact on gross margin. Do you feel like going forward the benefits of these initiatives will be enough to offset the betterments associated with unfavorable mix?

When we completed our business plan the pricing reductions are predicted by the business units versus the cost savings that we are planning to do in manufacturing. They were roughly offsetting each other. Deepak Sitaraman - Credit Suisse: Okay. And then just a follow-up on the last call you had expected your own lead time to shorten a little bit, how did that play out, and what are your expectations for the current quarter?

So, let see in Q4. Our lead times, we give to our customers did shorten by a small amount maybe about 0.3 weeks or so few days. And at the same time just for you to know that lead time given to us by our customers went up very slightly within our normal range. So, two things happened last quarter. But the lead times according to our customers did comedown slightly, and they were pretty close now to what our customers are requesting from us on average.

Thank you. Our next question comes from David Wu from Global Crown Capital. David Wu - Global Crown Capital: Yes, good afternoon. I was trying to ask question on the Tunc on the mix of business. As we go into the seasonal Q3, Q4, I assume that the industrial will not be so strong compared with consumer, computer, and the handset part of the communications. And I was wondering in the comp group approximately, what is the break down between handset and infrastructure in enterprise networking?

Okay. So David, the handset part of communication we actually count in consumer. So handsets are in consumer, infrastructure is in communications. David Wu - Global Crown Capital: Okay. So I assume that infrastructure would be sequentially down in the September quarter and the handset, which is as you said part of communication, consumer would be sequentially up. Am I getting the profile right and does it have any implications for Q4?

Well, first of all the booking are indicating that consumer bookings were down sequentially, Q4 versus Q3. And all three others industrial, computing and communications were up sequentially from Q3 to Q4. David Wu - Global Crown Capital: I see, okay.

And that those bookings obviously a portion of them will dictate, what happens in shipments in our fiscal Q1. David Wu - Global Crown Capital: Oh, I see.

However, I also commented that our consumer bookings were pretty strong in the first month of this quarter. David Wu - Global Crown Capital: The reason I ask that is because the mix of something to do gross margins, if consumer and computing is strong, gross margin tend to go down and yet you are saying that its looks like a flat gross margin quarter coming up?

You know that's what its looks like, but also obviously the influence by other turns come in, in the remainder of the quarter. That's why I have indicated that we think its in-line, but we could have quarter-over-quarter changes because of this mix change.

Thank you. Our next question comes from Steven Smigie from Raymond James. Steven Smigie - Raymond James: Great, Thank you. In the gross margin model you talked for going forward you mentioned low 60 is that on a GAAP basis or is that a pro forma basis excluding option expense?

Well, it's pro forma. We can't provide any GAAP based numbers at this time. Steven Smigie - Raymond James: It's just in terms of the model you are talking about, and how was, so you are saying.

The model was pro forma. And you asked about the long-term model? Steven Smigie - Raymond James: Yeah, right the long-term model. So that's.

That was pro forma. Steven Smigie - Raymond James: Pro forma okay and what would cause at the sort of stable ways continue to cost reductions or just?

We have continued cost reductions. We also are very careful about how we price our products now. We have put in place plans to make sure that if there are areas, where our value added is less and eventually ending up to low margins, that we don't stubbornly remain in those markets. We put a whole host of measures in place probably about a year ago. And those are beginning to take effect and will continue to have an effect on the company's margins going forward as well.

Thank you. Our next question comes from Chris Danely from J.P. Morgan Chris Danely - J.P. Morgan: Hi, thanks guys and congratulations on getting the margins going up. Hey you given your long-term revenue growth rate at 15%, keeping the margins flat. If something happens to where you either have to choose between keeping that revenue growth rate at 15% and may be sacrificing margins or lowering the revenue growth, but keeping your margins intact. Which would you choose and why?

Well, that's a question that really has to be decided upon at the business unit level because the reasons in addition to just margin and revenue growth there are other reasons to keep or exit a particular product line of business. So essentially I'm going to leave that up to the business units as long as they achieved what they promised in terms of revenue growth and operating profits. Chris Danely - J.P. Morgan: Tunc, which is more important to you margins or revenue growth?

What's most important to me is profit growth and it can be achieved with those variables changing in different ways.

Thank you. Our next question comes from Michael McConnell from Pacific Crest. Michael McConnell - Pacific Crest Securities: Tunc, if you look at the initiatives you put in place you've outlined a few of them, where are we with the backend moving that's offshore is that largely been completed, where are we with that?

Backend meaning tests operations? Michael McConnell - Pacific Crest Securities: Correct.

Well, test operations are essentially 95% is that right?

98%.

98% is offshore. And our issue is not being whether it's that percentage being high or not. Its new products that ramp quickly, those are initially released in the US. And if they quickly ramp that ends up with those having to test a lot of units on onshore facilities, which increases their cost. So, and actually many of these new products that are high volume applications internally we've changed their announcement rule, so that we announce them only after they have been qualified to be tested offshore. So that's going to drive this 98% number even higher. But you can tell I mean, 98% is already a very high percentage of our production being offshore. Michael McConnell - Pacific Crest Securities: And if we think about the gross margins longer-term, it sounds like you think, run out of point whether stabilizing as the kind of progress may be multiyear should we start to expect the front half of the year given the mix of industrial to give your company higher margins. And then declines in the second half of the year, as your mix moves more towards PCs and consumer?

That's really very difficult to model for us. But I could see fluctuations like that happening and maybe measured over the long time, you could see a trend. But it's not in our current model. We're just modeling on a fiscal year basis. Michael McConnell - Pacific Crest Securities: But I guess overall at this point from what you can see, you feel very confident that margins has stabilized?

Yeah. Michael McConnell - Pacific Crest Securities: Thanks.

Thank you. Our next question comes from Simona Jankowski from Goldman Sachs. Simona Jankowski - Goldman Sachs: Hi, thank you. Looking at your margins again, in the last year or so you had commented at various points about having some very low margin products in your mix. I think these were some more high volume integrated products that ramps quickly, before your costs were able come down, and that had contributed to a lower margin. Those kinds of products still in your mix or is that sort of lower hanging fruit from your margin improvement already been picked, and from hereon instead of other operational improvements?

I'd say that some of those products are still in our mix, and essentially we had to leave them in our mix because we did not want to dimension of our key customer relationships. But overtime, they will reduce, but they are still in there. Simona Jankowski - Goldman Sachs: Sure. And I guess thinking of these kinds of products rolling off quarter-by-quarter and also having your revenues in presumably utilization increasing next quarter. And I almost sort of expected your gross margin to maybe pick up a little bit for those couple of reasons and these things mix is offsetting that or are there any other factors that play.

Well, that there is mix offsetting that and granted we are getting some operational leverage, but there is also constant negotiation on prices with customers as well. Simona Jankowski - Goldman Sachs: Okay. Thank you very much.

Thank you. Our next question comes from Craig Ellis from Citigroup. Craig Ellis - Citigroup: Thanks for the color on the long-term model Tunc. As I look at the parameters, what's surprise me was the guidance for operating expense growth to be very close to revenue growth double-digit certainly. How much flexibility is there in the expense growth that you see, do you expect that SG&A and R&D will be growing about equally and as we think about big projects like an ERP implementation is that influencing the operating expense guidance that you are getting?

I think that our R&D growth will be fasters than the growth rate of SG&A. What is you pointed out, there will be projects that we need to resource properly and ERP is a good one that you picked up on that might cause SG&A to get bumped up for some periods of time. Craig Ellis - Citigroup: Can you identify what any of the other projects would be?

I think ERP is the biggest one right now. And I don't think right now in the horizon there is a bigger SG&A project now. We do have some of these plans, we've got to execute on our sales channel plan. That also might add some SG&A as well. Craig Ellis - Citigroup: Okay. And as we think about the increases in expense, so should we think about that being increases in employee count or promotional activity. How do we think about the drivers there?

I would model as mostly as an increase in employee count. So, direct expense.

Thank you. (Operator Instructions). Our next question comes from Craig Hettenbach from Wachovia Securities. Craig Hettenbach - Wachovia Securities: Yes, the follow-up on some of strength you see in the consumer market, the start of this quarter and addition of handset. Can you talk about any other products that you are excited about and consumer products that you expect to drive growth through calendar Q3?

Calendar Q3. Of course we do have any additional approximate I mentioned.

Well, we've had. I look at the various business units I oversee and I think in the consumer area again cell phones and MP3 players we have a number of other design wins that are we considered to be pretty significant. The basis for these design wins is wider becoming more significant is because we've gotten into some of our strategic customers. We started a design activity. We won some sockets and then the sockets are now proliferating into various platforms within that company. So within consumer, I would say cell phones and MP3 players I am seeing, some pretty good activity within that. In addition to that we had pretty good success in the flat panel TV this market. So, we got some good penetration there, and some good momentum. There is some good promise with regard to that set of activities. And then I am trying to see if there is any other that would fall into the consumer arena, and I can't really, I think those are probably the biggest drivers that we have right now in my business units.

Then in computing, you have some audio products, the question was more about consumer?

Question was primarily about consumer. But I don't know if there is other segments that you want further color on. Craig Hettenbach - Wachovia Securities: That's the case. I could just follow-up on the lead time increasing just a little bit any differentiation between end market or products for lead times, as you move into back half of the year?

I don't think we've that data. So maybe we can get back to you with Paresh. So, your question is the difference in lead times being given to us from the different market segments. Craig Hettenbach - Wachovia Securities: Yes.

Yeah. So, we will get back to you on that.

Thank you. Our next question comes from Uche Orji from UBS. Uche Orji - UBS: Can I just ask a few questions on the CapEx. And before I ask this, can I just ask you to give us an update as to where your arrangement with Seiko Epson now? Are you now shipping with the customers from Seiko or? And also if I can get more clarity as to what really happened with the CapEx this last quarter that was ended? And do you think the reason why it should have come down a little bit more into 2008, just thinking about it little bit longer. I mean, still it had CapEx sales ratio, it sounds like was 10%. Is there any target as to how you want to think about CapEx sales ratio in longer-term basis?

This is Vijay. Let me answer the first part of your question. Uche Orji - UBS: Sure.

The first process, first technology that we transferred into Seiko Epson is qualified in shipping to customers. Tunc, do you want to answer the question on CapEx?

So, in terms of CapEx, I heard multiple questions there, but Uche Orji - UBS: Yeah.

One of them was the number that in Q4 was really driven mostly by fab. So, we had the Irving fab that we paid for, and also some equipment that we had ordered in previous quarters that we received and paid for. So that's largest portion of CapEx in Q4. Going forward in Q1, the CapEx in fabs is very small, but we are embarking on some projects namely the ERP project that we mentioned. And we also have an upgrade plan or spending on our electronic design automation tools. So, there is lot of software spend. And also, end of the line, we need some test equipment to expand our production levels in offshore tests. And you also asked about the entire year spending, correct? Uche Orji - UBS: Yes, you are right. Is there any target to CapEx sales ratio if that's how you manage your business? And then just give us an idea of how to think about CapEx on a longer-term basis?

The model has worked for us in the past, is CapEx that's somewhere around 10 to 12%. Its fluctuated year-over-year because of how demand change, then how we've to respond to capacity requirements from customers. So next year, we said that we spend somewhere between $200 and $250 million, which is about 8% or 9%, to what is that 12 or 13, which is about maybe a 11%, from 9% to 11% range. So it's lower than our average in the past.

Thank you. Our next question comes from [John Wright] from Consumer Equity. John Wright - Consumer Equity: Hi, thanks for taking my questions. With a long-term capital plan complete what's the new working capital required to run the company with the reduced CapEx revenue growth strong margins in the $1.3 billion in cash? And then how quickly can you initiate the buyback once the restatements finalized?

Well, in terms of making any significant changes to our capitalization that really need to wait until after the restatement is completed. And in the meantime, we've really had been very aware and looking at all the models that are being used by some of our peers. However as I said, we can't really take any action until the restatement. So in the meantime, we are discussing with the board in the coming months, what the right capital structure for the company is going to be. John Wright - Consumer Equity: And then as a follow-up, could you comment on the discontinued business this quarter. If it was stable or down and how we should see that going forward?

With discontinued… John Wright - Consumer Equity: [ATD], that got off of last quarter. You said you're going to continue to produce the product, but what roll off over the period of time. I just want know that was still material part of your growth in the quarter and we should see that going forward.

It really, first of all it was pretty insignificant. It was about $4 million or so. And that's the older rate in the consumption really hasn't changed. And as I said it's not a significant part of our revenue. John Wright - Consumer Equity: Thank you.

Thank you. Our next question comes from Doug Freedman from AmTech Research. Doug Freedman - AmTech Research: Hi, guys thanks for taking my question. If I could focus a little bit on the expenses related to the option investigation and after the bonus plan that presently underway, because the options are frozen. Can you discuss what those expenses are?

Bonus okay, but what was your first question, it was what our expenses because of the restatement? Doug Freedman - AmTech Research: Correct, related to the investigation that are ongoing. So I believe the operating income lines are being burden by an expense related to the investigation, auditing expenses above average or above normal.

I see, so currently on, there is a losses and the restatement process, the some of those we spend last quarter about $11 million. Did I answer your question or. Doug Freedman - AmTech Research: Yes, it does absolutely. And then because of your options---

Alan wants to clarify something.

I just want to clarify that the amount that Tunc, just mentioned is not included in the operating expense guidance that we disclosed earlier in the call. We treat these as non-recurring items and once we have our restatement accomplished, you will see those amounts as non-recurring items. What we've been focused on is discussing not the pro forma numbers excluding stock based comp, and excluding nonrecurring items. I wanted to clarify that Doug Freedman - AmTech Research: Thanks for clarifying that. That's right.

Thank you. Our next question is a follow-up question from Craig Ellis from Citigroup. Craig Ellis - Citigroup: Thanks for taking the follow-up. Alan, I am not feel you can comment on this but the outlook for the restatement wrap up in a three to six month period is it a pretty wide window. Can you give us any color on what might lead to a conclusion either at the near or far end of that timeframe?

Well, fortunately we're not excerpts at restating financial statements. And as I've gotten into it and as we've studied the requirements of documentation and analysis that the auditors need to signup on our restatement, that's a bigger project than we had originally estimated. So, we've learned a lot about what restatement requires. But we still don't know all of the variables. And I've learned new ones as we progress. So, that's why we've indicated a range of completion date because we don't know yet what we don't know, and that's why we've to give a range of possible completion date. Craig Ellis - Citigroup: Because it's reasonable that things that the expense intensity would be similar to what you saw last quarter through the duration of the restatement, excuse me?

Yeah. I think that's a reasonable assumption.

Thank you. (Operator Instructions). Our next question is a follow-up question from Uche Orji from UBS. Uche Orji - UBS: Can I just ask about the there have been discussions about your Analyst Day, and should we assume that is of course obviously push that also with the restatement not yet being completed, is there any new dates in you timeframe when this will be set?

Well, your assumption is correct. We do have to push it out, and I'm going to wait some more to see how the restatement is going before you really set a date instead of setting other date and push it out again. So, soon after the restatement is complete, we will have an Analyst Day. Uche Orji - UBS: Thank you.

Thank you. Our next question is a follow-up question from Sumit Dhanda from Banc of America Securities. Sumit Dhanda - Banc of America Securities: Alan, I just wanted to clarify your OpEx guidance for your fiscal first quarter, are you saying it will grow sequentially in line or slightly slower than revenues that impact your revenues are declining. Are you suggesting that the apples-to-apples growth on a 13 week basis will be similar, but if so than what base do we assume for Q4 for OpEx?

Okay. You're right. On the apples-to-apples comparison that's the context of our guidance. So, you must use a 13 week equivalent for Q4 and extrapolating what Q1 operating expense level will be when we are offering this guidance.

Sumit, essentially what I said was that the change in below the line spending will be the percent of change will be about the same, as the percentage change in revenue. Sumit Dhanda - Banc of America Securities: So, if you have a dollar number for Q4 OpEx, and we divide that by 14 and multiplied by 13 that gives us the right base to work with and then grow that sequentially?

That's correct. Sumit Dhanda - Banc of America Securities: And second question on the CapEx, its coming down substantially into this fiscal year. Is there anything you could guide us to in terms of, reduced capital intensity if and when it will have any kind of impact on your future gross margins?

No, it's too early to be able to predict that for.

Thank you. Our next question is a follow-up from Doug Freedman from AmTech Research. Doug Freedman - AmTech Research: Tunc, if you could, I think in the past we've heard long-term operating plan that of Maxim and they were rather I guess I just used the word aggressive much a word of good words uses. When Jack was running the company, how should we think about your operating plan and how it differs, I mean in the past we've heard some great huge numbers of growth opportunities out there? It sounds like this plan is a lot more manageable. Can you just give us your input on how it's changed in since you've taken over?

Well, we've still continue to be a very aggressive company. I want to make sure that everybody understands that. But we've also realized that we have grown to be a fairly large company and at this point I given the direction to the [BU] executives to give me a plan that very confident that they can achieve. And that's what they provided to me and that's the basis of this new growth plan that we put in place. And essentially I also want to clarify something from before, I want to clarify that our long-term goal is to grow our earnings per share inline with our revenue growth. So when I said we are going to trade in specific business unit, when they have to trade margin versus growth. Overall the company wants to grow earnings per share inline with its revenue. So we want to fairly stable gross margin model.

Thank you. Our next question is a follow-up David Wu from Global Crown Capital David Wu - Global Crown Capital: May be Vijay should answer this question. As I look at the company's capital facilities you have a pretty much San Antonio plant has improved yet, right? I assume that still got capacity for ramp up and you got an Irving facility, which is not being equipped. Can you talk about Seiko Epson, what percentage do you think its going to be of your total production capacity utilized capacity rather in next fiscal year in long-term. How much of your production will be in-house versus a kind of a partnership range like the Seiko Epson type.

Okay. So I think the first question was on San Antonio's. San Antonio is almost completely full. Okay, so it's about 90% full about 90% utilized. As far as Epson is concerned the utilization is very low percentage of what we have available to us as capacity, if we choose to use it. So it's about 10, we actually making use right enough mainly only about 10% of the total available capacity in Epson. What is the other question? Please help me. David Wu - Global Crown Capital: What percent I think David ask, what percentage would be done in outside fab?

Longer term David Wu - Global Crown Capital: In the future, long-term.

Yeah. I mean, I think it's reasonable to assume that somewhere between 25% to 30% of our fab capacity over the next three or five years will go to outside locations mainly because we don't really want to be in the business of doing deep submicron wafer fabrication, and this is not our thing. I mean we will continue to do the high performance mixed signal and analog processes that we are expert at we will continue to do those. But as our product mix switches to 0.18 or 0.130 smaller we will definitely realize ourselves the cheapest manufacturing capacity in the word, and that is necessarily going to be within inside Maxim. So, the number looking out is probably about 25% to 30%.

No. That's a pretty long term number.

Yeah.

But we're not talking about next two years.

Five years.

Thank you. Our next question is a follow-up from Simona Jankowski from Goldman Sachs. Simona Jankowski - Goldman Sachs: Hi, thank you for taking my follow-up as well. I just wanted to ask you a question on the Santa Rose transition. Can you comment on if you see your market share in dollar content is increasing or decreasing in that transition and just overall how meaningful is it to your margins or sales?

Well, I really do not want to talk about how our market share is changing. But I do want to mention that the notebook market is not, I would not counted as a high margin market for Maxim especially in the motherboard power area. Simona Jankowski - Goldman Sachs: And is that changing moving from one platform to the other. In other words is the new platform offering better margin, and more interesting opportunities or is the long-term sense still one of lower margin opportunities in that market.

Really in the product lines that I have seen in that particular market, we are not observing a big drive for innovation or a differentiation on the power management products.

Thank you. (Operator Instructions). And final question comes from Uche Orji from UBS. Uche Orji - UBS: My questions have been answered. Thank you.

Thank you, operator. This concludes our conference call for Q4 of '07.

Thank you, ladies and gentlemen for your participation in today's conference. This does conclude the program. You may now disconnect. Good day.