Venk Nathamuni Bruce E. Kiddoo - Chief Financial Officer and Senior Vice President Tunc Doluca - Chief Executive Officer, President and Director

Romit J. Shah - Nomura Securities Co. Ltd., Research Division Parag Agarwal - UBS Investment Bank, Research Division John W. Pitzer - Crédit Suisse AG, Research Division Vivek Arya - BofA Merrill Lynch, Research Division Jeffrey A. Schreiner - Capstone Investments, Research Division James Schneider - Goldman Sachs Group Inc., Research Division Shawn R. Webster - Macquarie Research Tore Svanberg - Stifel, Nicolaus & Co., Inc., Research Division Christopher B. Danely - JP Morgan Chase & Co, Research Division JoAnne Feeney - Longbow Research LLC Christopher Caso - Susquehanna Financial Group, LLLP, Research Division Blayne Curtis - Barclays Capital, Research Division Craig Berger - FBR Capital Markets & Co., Research Division Craig A. Ellis - Caris & Company, Inc., Research Division David M. Wong - Wells Fargo Securities, LLC, Research Division Sumit Dhanda - ISI Group Inc., Research Division Brendan Oliver Furlong - Miller Tabak + Co., LLC, Research Division Mark Lipacis - Jefferies & Company, Inc., Research Division Ross Seymore - Deutsche Bank AG, Research Division Mark Delaney - Goldman Sachs Group Inc., Research Division Terence R. Whalen - Citigroup Inc, Research Division Doug Freedman - RBC Capital Markets, LLC, Research Division Elizabeth Howell

Good day, ladies and gentlemen, and welcome to the Maxim Integrated Products Fourth Quarter 2012 Earnings Release Conference Call. [Operator Instructions] As a reminder, this program is being recorded. I would now like to introduce your host for today's program, Mr. Venk Nathamuni. Please go ahead, sir.

Thank you, operator, and welcome, everyone, to Maxim Integrated Products Fiscal Fourth Quarter 2012 Earnings Conference Call. With me on the call today are Chief Executive Officer, Tunç Doluca; and Chief Financial Officer, Bruce Kiddoo. During today's call, we will be making some forward-looking statements. In light of the Private Securities Litigation Reform Act, I would like to remind you that these statements must be considered in conjunction with the cautionary warnings that appear in our SEC filings. Investors are cautioned that all forward-looking statements in this call involve risks and uncertainty and that future events may differ materially from the statements made. For additional information, please refer to the company's Securities and Exchange Commission filings, which are posted on our website or available from the company without charge. Now, before we discuss our results and guidance, I'd like to remind everyone that Maxim will be hosting its 2012 Investor Day Meeting in New York City on September 5. Details of the event and registration information are available on Maxim's Investor Relations' website at maxim-ic.com/investorday2012. We look forward to seeing you there. Now, I'll turn the call over to Bruce. Bruce E. Kiddoo: Thanks, Venk. I will review our fourth quarter financial results. Revenue for the fourth quarter was $605 million, up 6% from the third quarter. Our revenue mix by major market in Q4 was approximately 43% for consumer; 26%, industrial; 16%, communications; and 15%, computing. Our consumer business was up strongly due to smartphones. Our industrial business was up slightly due to automotive and Control and Automation. Our communication business was flat, as an increase in base stations was offset by weakness in legacy businesses. Computing was up due to our notebook business. Gross margin, excluding special items, was 63%, up from 60.4% in the prior quarter. The increase was due to improved variances from higher fab and end-of-line utilizations. Part of the increased utilization was due to inventory build to meet seasonally strong demand in consumer. Special items in Q4 gross margin were intangible asset amortization from acquisitions. Operating expenses, excluding special items, were $214 million, flat with Q3. Employee benefit year-end accrual credits offset higher employee profit sharing expense. Special items in Q4 operating expenses included a $22 million impairment for buildings held for sale, plus the normal acquisition-related charges, offset by a reduction in the payroll tax accrual. Q4 GAAP operating income, excluding special items, was $167 million or 28% of revenue. The Q4 GAAP tax rate, excluding special items, was 20% compared to 24% in the prior quarter due to normal variations from our international structure. GAAP earnings per share, excluding special items, was $0.45, up from $0.33 in Q3 due to higher revenue and gross margin and a lower tax rate. Turning to the balance sheet and cash flow. During the quarter, cash flow from operations was $190 million or 31% of revenue. Inventory increased to 99 days from 89 days in the prior quarter, within our target range of 90 to 100 days. We are at the high-end of our range due to an inventory build to meet seasonally strong demand in our consumer business. Inventory in the channel, excluding catalog distributors, declined from 57 days to 53 days, well below our target of approximately 65 days. In dollar terms, channel inventory declined by 1%. Net capital additions totaled $78 million in Q4, as we invested in long-term manufacturing capacity and new facilities. Free cash flow was $115 million. Share repurchases totaled $56 million in Q4 as we bought back 2.1 million shares. Finally, in Q4, we paid $64 million in dividends to our shareholders. Overall, total cash, cash equivalents and short-term investments increased by $20 million in the fourth quarter to $956 million. Moving on to guidance. Our beginning Q1 backlog is $393 million. Based on this beginning backlog and expected turns, we forecast Q1 revenue of $605 million to $635 million or flat to up 5% from Q4. Q1 gross margin, excluding special items, is estimated at 61% to 64%. Variables that may influence Q1 gross margin include utilization, product mix and inventory reserves. Special items in Q1 gross margin are estimated at $9.5 million, primarily for amortization of intangible assets. Q1 operating expenses, excluding special items, are expected to be up around 3% sequentially, approximately in line with revenue growth. The increase in OpEx is due primarily to higher compensation costs for our annual merit process and employee benefit accrual credits in Q4 that will not repeat in Q1. Special items in Q1 operating expenses are estimated at $4 million, again, primarily for amortization of intangible assets. This excludes potential items that may occur during the quarter. Our Q1 tax rate, excluding special items, is estimated at 20% to 22%. For fiscal year '13, we are expecting a tax rate, excluding special items, in the same range. For Q1 GAAP earnings per share, excluding special items, we expect a range of $0.41 to $0.45. Capital additions in Q1 are expected to decline over Q4. Finally, I am pleased to announce that our Board of Directors has approved a 9 percent increase in our quarterly cash dividend from $0.22 per share to $0.24 per share. This is approximately a 3.8% yield at yesterday's closing stock price. I will now hand the call over to Tunç to discuss our business.

Thank you, Bruce. Thank you all for joining our call, and good afternoon. Let me start by highlighting 3 key developments: one, gross margin increased 260 basis points from the prior quarter and exceeded our guidance. Our gross margin was better than expected because of higher factory utilization and lower manufacturing costs. Two, in response to the macro environment uncertainty, we tightly controlled operating expenses and held OpEx flat. As a result, operating margin rose nearly 500 basis points quarter-on-quarter to 28%. Due to the combination of higher gross margin and operating margin, we delivered better earnings per share than projected. Three, our Board of Directors approved a 9% increase in quarterly dividends from $0.22 to $0.24 per share. We continue to aggressively return capital to shareholders. Let me next turn to our just-completed quarter and give you an overview of lead times and bookings. During the June quarter, our delivery lead times remained steady. The customer order lead times declined slightly from the prior quarters. Bookings decreased as well, resulting in a book-to-bill ratio slightly below 1. However, weekly bookings have improved in the first 3 weeks of July and were at a higher average weekly run rate than the June quarter. I will next provide some color on our major markets. Let me start with consumer. We expect this market to be up, led by continued strong growth in our mobility business. The strength is driven primarily by the Galaxy S III production ramp. Here, we sell our Power SoC chipset that provides all power management, charging and USB multiplexing requirements and powers the applications processor. And in some models, also the baseline processor. Our dollar content in this new platform is meaningfully higher than in prior successful smartphones due to higher levels of complexity and integration. Beyond smartphones, we have secured additional design wins for power management and battery management in new tablets. We continue to execute on our long-term strategy of analog integration with sensor fusion. Recently, we introduced an array of optical sensors for mobile devices with as many as 7 sensors integrated into 1 compact optical package. These products measure red, green, blue light levels; ambient light; proximity; infrared; and temperature, all in one package, and provide the latest example of Maxim delivering on our vision of sensor fusion. We started production shipments to a Tier 1 customer during the June quarter, with volume production ramping in the current quarter. Second, let me discuss the industrial market. We project September quarter industrial revenue to be up slightly. We expect growth in the smart meter and automotive segments. In smart meters, we continue to experience increased demand from the China power meter customers for our highly integrated solutions, as these customers produce for the China market and also win export designs. In automotive, we see strength driven by entertainment applications and distribution of video content inside the car. We are expecting some new near-term production ramps with our battery charging and monitoring ICs used in several electric vehicle systems. The control and automation segment within industrial has a broad customer base, buying predominantly through the distribution channel. Inventory in the distribution channel declined sequentially with days of inventory at 53 days at the end of the June quarter, well below our target model. Over the past few weeks, we experienced an increase in orders from our distributors, as we believe distributors are beginning to order at levels that match end consumption rather than reducing inventory. Third, let me cover communications. We project revenue to be flat as orders from the base station end market are returning in line with end consumption after a strong uptick in the June quarter. We expect growth from the networking end market, offset by weakness from the traditional telecom market. Fourth, in the computing market, revenues will be down, with growth from financial terminals more than offset by a decline in notebook computers and peripherals. In financial terminals, we're experiencing strength from the China point-of-sale market, as the design win at a major Chinese customer is continuing to ramp into volume production with our secure microcontroller. In closing, during fiscal year 2012, we've continued to execute very well despite an uncertain macro environment. Looking back, we completed many key changes in the company, and I would like to remind you of 5 of these accomplishments: one, we completed the alignment of our business unit groups along our major markets. This alignment provides better planning, coordinated product development and marketing, and clear market ownership for each senior executive. Two, we aligned all our advanced manufacturing process and package development, electronic design automation and disrupted key technology development activities in a unified group led by our Chief Technology Officer. Three, we advanced our supply chain performance, reduced our delivery lead times and are meeting customer requirements far better than any time in our history. Our flexible manufacturing strategy enabled us to ramp production of our newest high integration products at breakneck speed, and we successfully delivered on customer promises. Four, we completed the acquisition and integration of SensorDynamics, opening up a great market opportunity for sensor fusion products. And last but not least, we've continued to grow revenue better than our peers, thanks to successful execution of our strategy. In fact, much of our revenue growth during the last 3.5 years resulted from successful development and design wins of high integration products across multiple end markets. That concludes my prepared remarks. I will now turn the call back to Venk.

Thank you, Tunç. That's the end of our prepared comments. We would now welcome your questions. [Operator Instructions] Operator, please begin polling for questions.

[Operator Instructions] Our first question comes from the line of Romit Shah from Nomura. Romit J. Shah - Nomura Securities Co. Ltd., Research Division: I had a question just on your guidance. The expectation for low single-digit growth, it's better than some of your peers', but it's below what I think you would normally do for the September quarter. I know this is a big quarter. It's supposed to be a big quarter for consumer, you said it would be up. Can you quantify how much? Bruce E. Kiddoo: So Romit, this is Bruce. I think from a guidance point of view, we said our consumer business would be up strongly. I don't think we ever quantified that exactly. We also indicated industrial would be up slightly, but I think that was tempered somewhat by the economic uncertainty out there. The comm business being flat and computing, down. I think those together sort of get you to the kind of a flat to up 5%. Romit J. Shah - Nomura Securities Co. Ltd., Research Division: I would've expected industrial to just be up slightly. I mean, I don't think Q3 is supposed to be a strong quarter for industrial. Correct me if I'm wrong. Bruce E. Kiddoo: Generally, no. You're correct. Romit J. Shah - Nomura Securities Co. Ltd., Research Division: So is the -- what's -- I guess, what is the biggest change this quarter in the segment? Is it the computing piece being down? Or would you expect communications normally to be up a lot more? Bruce E. Kiddoo: I would say generally, we would expect comm up a little bit more, computing is down, it's unusual for the September quarter, as well. Romit J. Shah - Nomura Securities Co. Ltd., Research Division: And you mentioned notebooks being down, how big is notebooks as a percentage of your business? Bruce E. Kiddoo: It's not a large percent, but it was up, reasonably strong in the June quarter. And so now that -- and we're still very selective in where we ship there. So we had 1 design win that sort of ramped, and now, we're going to see that fall off a little bit in the September quarter.

Yes, it's about mid-single digits percent or so. Bruce E. Kiddoo: Yes.

Your next question comes from the line of Uche Orji from UBS. Parag Agarwal - UBS Investment Bank, Research Division: This is Parag for Uche. Just a follow-up from the previous question. Since you indicated that in the industrial end market, you are shipping to demand, if I understand that correctly. So going forward, what kind of seasonal back end we should see in the industrial business?

Well, first of all, I think that we -- what's happening today in the industrial business is really very far from what happens typically because of all this uncertainty. What we notice is that the customers in general are very cautious, and so -- were the distributors, by the way -- I think that's why they reduced their inventory throughout last quarter. So we really expect distributors to be cautious. And what we're seeing is what they're ordering from us, it's pretty much what their end demand is. So I think the general caution is continuing in that market. And we're not seeing order patterns that would indicate that they’re actually replenishing, we're building back up to our normal models of 65 days of inventory. I think that until some of this global uncertainty is quelled, I think we're going to be in this pattern of caution throughout the broad market. Parag Agarwal - UBS Investment Bank, Research Division: Okay. And the second question is about your consumer business. How do you -- I mean, are you able to see any diversification beyond your traditional call-in customer? And also, you indicated wins on tablet platforms. I assume it was those are on Android, is that right?

We -- it's not just on Android. Let me answer the tablet question first. There are some other operating systems as well. So pretty much as we've said almost 1.5 years ago, we've got a ton of tablet wins, but it's really difficult for us to figure out which one is going to be successful. So that -- beyond that, we can't really predict what kind of revenue growth that's going to help us with. We, actually -- in terms of your question about the smartphone market, we have design wins at other customers and content, pretty much at all of the smartphone suppliers. But essentially, you're right. Our concentration is with this 1 customer currently, and that's because mainly 2 customers have been very successful. So if other customers are also successful, I think our -- we will be able to diversify our customer base because the design wins are there.

Our next question comes from the line of John Pitzer from Crédit Suisse. John W. Pitzer - Crédit Suisse AG, Research Division: Bruce, just getting back to the gross margin line, you talked about a couple of tailwinds in the June quarter. At the low-end of your revenue guidance for September, revenue would be flat, but the low-end of your gross margin would be about 200 basis points lower. Might I take it that some of the onetime benefits in the June quarter added up to about 200 basis points of margin improvement. Is that how we should think about it? Bruce E. Kiddoo: No. I think the guidance we gave, the 61% to 64% is our -- that's our long-term model. And if you recall, prior to this kind of recent downturn, we always sort of guided at the 61% to 64% range. I think when we look at some of the items, and really, the 1 tailwind that we had in the June quarter was the kind of a seasonal inventory build. That probably was -- probably just 40 bps or so, less than 0.5%. It wasn't a huge number there. So when we kind of look at the Q1 gross margin, I think -- I don't think that's going to be a big impact to it. I think the couple things that may impact it. We'll actually probably see our fab utilizations down a little bit. And that's just strictly because 1 of our older manufacturing processes is ramping down faster than we are able to ramp up our newer process technology at our internal fab. So I think that will provide a little bit of pressure on us. But that said, revenue was up, and it really all depends on sort of what the end environment from the -- whether some of this macro uncertainty clears up and allows the utilizations to go up further. John W. Pitzer - Crédit Suisse AG, Research Division: Makes sense. And as my follow-up, Tunç, you said in your prepared comments that bookings for the first 3 weeks of July have improved to a higher average in the weekly run rate for the June quarter. How broad based was that improvement? Or was that mainly what you've been seeing in distribution as if kind of made the decision not to bleed inventory any lower and at least order at a rate that equals end demand or was it broader-based than that?

No, it was broader-based than that. I mean, clearly, we did see the distribution uptick that you mentioned, but it was also from other markets as well.

Your next question comes from the line of Vivek Arya from Bank of America. Vivek Arya - BofA Merrill Lynch, Research Division: Generally, your largest customer goes to an inventory adjustment at year end. How do you see that playing out this year? Because we have not really seen a big inventory buildup, although sell-through trends are not -- been somewhat slower due to macro pressures. So how do you see that trend playing out this year?

Well, first of all, that inventory correction usually occurs in November and December. We're pretty far out from November and December. And how much inventory they build or if they build any at all will be determined by how successful they are with their newest platform. So it's very difficult for us to predict that from this point. But it is likely that there will be some kind of inventory correction, but it's tough to say how big it's going to be. Last year, for instance, it wasn't a very large number. The year before, I think it was pretty significant. Vivek Arya - BofA Merrill Lynch, Research Division: Got it. And as a follow-up, Tunc, we have seen some of these traditional digital players, Qualcomm, Broadcom, enhancing their power management offerings. Qualcomm has made some acquisitions recently. I understand that they are probably at the lower end of the market, you are at the higher end of the market. But at what point does that become a threat for you either in the share gains or pricing? Or is it too early to say that?

I mean, if you look at our performance, you can clearly see that we're competing with multiple suppliers. We are competing with the chipset suppliers that you mentioned. But we also compete with traditional mixed-signal companies as well. In terms of our competitiveness, we've demonstrated that we do make the best Power SoCs in the industry compared to anybody else, and we've got the best combination of performance, as well as integration. And you might ask, why is this and is this really sustainable? Three reasons should be pretty evident. I mean, we have a very broad analog IP portfolio. The second one is that we really have the deepest analog integration experience of all of our competitors and the chipset companies. And we're really structured to be able to develop products faster than others, so that's the third reason. In other words, we're organized by market, we've got a common manufacturing platform, we've got -- advanced our design automation. So for all these reasons, we believe that we have a significant lead. And yes, other companies, including chipset makers, obviously, are going to advance as well. But we're not standing still either. We keep adding new capabilities to the company. I just mentioned one of them, sensor capabilities, for example. And there's even more that are coming that we haven't even talked about. So I think that, obviously, we always have to stay ahead, but we definitely have the firepower to do that successfully.

Our next question comes from the line of Jeff Schreiner from Capstone Investments. Jeffrey A. Schreiner - Capstone Investments, Research Division: I was wondering, the strength within mobile that you've been seeing, is that really being driven more from unit growth or the content increase that you've referenced within the Galaxy S III design?

Well, we can definitely say that our content has increased. The products that we sell into that design are far more complex and they got much more functions, and it's actually a chipset, it's not a single chip that we sell. So we know that's the case. To determine whether it's more units, you really need to look at market shares of these customers that are competing for that, and you can see that, that platform appears to be very successful and is being accepted well in general. So it's a combination of the 2, the one that really gets us more excited is the fact that we've increased our dollar content for smartphone. Jeffrey A. Schreiner - Capstone Investments, Research Division: And what is the average content in a smartphone right now?

It's still in a range. I mean, in some smartphones, we still do sell building block products, so if you're looking at those types of phones, it's in the sub-dollar range for sure. And when you get to these very complex phones, you're talking above $5 or $6.

Our next question comes from the line of Jim Covello from Goldman Sachs. James Schneider - Goldman Sachs Group Inc., Research Division: It's Jim Schneider calling in for Jim Covello. I was wondering if you can maybe address -- on the consumer electronics space outside of handsets, what you're seeing in that market now, are you seeing the same kind of sluggishness along with our broad macro economy or are there any specific design wins or new kinds of products that you're ramping in, in the back half of the year?

Can you repeat the question first, I missed the beginning? James Schneider - Goldman Sachs Group Inc., Research Division: It's about consumer electronics outside of the handset space.

The amount of revenues we get from outside of the mobility space is pretty small. And it's -- the biggest portion really used to be LCD TVs, and that's not that large anymore for us. But it's really -- we get all kinds of products we sell for battery management, some power ICs, some USB chips and so on. But usually, it's really not a very significant portion of our overall consumer sales. Jeffrey A. Schreiner - Capstone Investments, Research Division: Fair enough. And then I'll follow up on the computing segment for a second. You talked about a decline in the September quarter. Can you maybe talk about whether that decline is being driven by inventory drawdown in the channel or your OEM customers? And do you expect that to come back up potentially in the December quarter? Bruce E. Kiddoo: Yes, this is Bruce. Our computing business, and specifically our notebook business, is a small percent of our business today. And so, from that point of view, in -- our quarterly trends are really driven more by activity at the few select customers we still sell into, and not really representative of the overall market. So I think our decline in the September quarter is really just based on the activity where we had a strong quarter in June, and it's just kind of balancing out in the September quarter.

Our next question comes from the line of Shawn Webster from Macquarie. Shawn R. Webster - Macquarie Research: I think you said your utilizations were up for fiscal Q4. I was wondering if you could quantify that for us, I think it was 76% in Q4. And also what your mix of external wafers was in the quarter? Then I have a follow-up. Bruce E. Kiddoo: Sure. It was -- in the third quarter, we were at 76%, and for Q4, we were right around 80%, so it was up and that -- and it was close to what we thought. As far as external, it's still right around 50%. About half is -- of our fab activity was outsourced. Shawn R. Webster - Macquarie Research: Okay. And then as a follow-up on the consumer business and the growth outlook going forward, it's growing quite a bit as a mix of your business. I was wondering if you could share your thoughts and if that's going to get to, let's say, 50% of your business from what you can tell in terms of the initiatives that you have in place or if you're going to try and cap it or grow the other areas to contain the consumer segment to be at a certain level?

Well, the short answer really is, what it's going to grow to, it's hard to predict. It depends a lot on the success rate of our customers, as much as ours do. Currently, when we look at our higher growth market, we're talking about the summation of computing and our consumer markets. And that's actually remained relatively constant because computing has declined and we built a mobility business where we believe we can add more value than in computing. So from that standpoint, it's been relatively constant if you add those 2 up. And we have significant investments that we've made in industrial and comms. And we think that in those markets, with these investments we've made, we'd be able to grow them as well and continue to try to keep the balance. So we want to adhere to our balanced business model. I -- we really believe that's the way to grow the company, as well as provide stability for the company in the long-term.

Our next question comes from the line of Tore Svanberg from Stifel Nicholas. Tore Svanberg - Stifel, Nicolaus & Co., Inc., Research Division: Yes, just a few questions. First of all, can you -- I mean, you talked about like your backlog, but I assume that's for the June quarter, so any indication on how backlog is firming up so far this quarter? Bruce E. Kiddoo: Sure. We went in and we have about 43% still to go from a backlog point of view. And so actually to be clear, right, so the beginning backlog was at 63% of revenue. And that's about consistent with what we've seen in prior quarters. So I think from a churns point of view, I think we're in a normal position compared to prior quarters. Shawn R. Webster - Macquarie Research: Very good. And my follow-up, I'm not sure if you covered this already, but do you have an update on the percentage of products that are now integrated? Bruce E. Kiddoo: Yes. That number has went up. It's probably right around 40%.

Yes. So if you look at it from an annual standpoint, last year was in the high-30s percent, fiscal year '12.

Our next question comes from the line of Christopher Danely from JPMorgan. Christopher B. Danely - JP Morgan Chase & Co, Research Division: Assuming we get back to some semblance of normality in the December quarter, can you just talk about what sort of typical growth would be in the December quarter and how you would expect your utilization rates and margins to trend in that type of environment? Bruce E. Kiddoo: Yes. I think for probably the last 2 or 3 years, we haven't had a normal seasonal quarter yet. And so, I think it's probably too early to predict what the December quarter will be. That said, when we think about utilization rates, as we ramp the new manufacturing process at our San Antonio fab, I think as the demand environment improves, I think as the distributors begin to restock, I mean, I think all of these have the opportunity to drive utilizations higher. We said we are at about 80% in this last quarter. A year ago, we were probably closer to 90% from a utilization point of view. So I think there's continued levers that will help kind of support our gross margin and keep it in our target range while we continue to kind of strongly grow the top line. Christopher B. Danely - JP Morgan Chase & Co, Research Division: And for my follow-up, fee for the year ago utilization rates were 90%. Is 90% about as high as you will let utilization rates go before you start being on new capacity or will they get any higher? And if you could continue and talk about, could we see a new high in margins if you get back to that 90%, 95% utilization rate range? Bruce E. Kiddoo: Yes. I think from a mix point of view within the factories, I think it's hard to get sustainably above 90% because you're never going to kind of run every line fully. And so I think 90% is probably a reasonable level for us to estimate and plan for. Obviously, from a flexible manufacturing strategy, we continue to manage both our internal capacity and external capacity. And in fiscal year '12, we actually made some investments in our fab to allow us to run our newest process technologies internally and maintain that balance. As far as gross margins, I think you've seen over the last couple of years, we've actually done a good job and for the most part, lived within the high-end of our range with the exception of when utilizations dropped. I think we believe that, that's the right range and that we would rather kind of focus on above-average top line growth while staying within our 61% to 64% range.

Our next question comes from the line of JoAnne Feeney from Longbow Research. JoAnne Feeney - Longbow Research LLC: Question on the Skype TV opportunity that you talked about. You had mentioned a possible opportunity for this to develop in the summer of next year. I was just wondering if it's still on track for that. Bruce E. Kiddoo: So I think from the Skype opportunity, we have the design wins in the peripherals. We didn't get all the design wins in some of the initial implementations where it's built-in to the vessel. I think it's still pretty early for that market, so let's see how it fully plays out. JoAnne Feeney - Longbow Research LLC: Okay. And then a follow-up, on the notebook side. So you see a design win you had earlier tailing off this quarter. Is that a business that you expect to continue to decline? And if not, what kind of R&D investments are you making there? How do you view that part of the business strategically at this point?

So on that notebook side, we really look at any opportunity that we think we can make a differentiated product that the customer will value. We will put engineering resources onto that. But having said that, I can tell you that the resources we allocate today are not very high into that market. They're much, much smaller than we do in many of our other markets. So it's really not a huge investment area for us, unless we find a socket that's interesting. And this particular design we had was in an area where we could add value and the number of competitors were fewer without naming what it was, that's all that I want to say.

Our next question comes from the line of Chris Caso from Susquehanna Financial. Christopher Caso - Susquehanna Financial Group, LLLP, Research Division: I just wondered if you could talk a little bit about the diversification of your handset business. You've talked about some design wins outside of your top customer. Could you give us a bit of progress on that? And how much of that we see in the September quarter guidance, and how much we can expect that to ramp this year.

So within -- I assume you're asking about diversification within smartphones, right? Christopher Caso - Susquehanna Financial Group, LLLP, Research Division: Yes.

So in terms of that, what we have done -- I mean, we've really worked very diligently over the past, I'd say, 2 or 3 years and really developed products that worked with multiple customers' phone designs. Because each customer has a little bit different architecture in terms of how they do battery charging, for example, or how they sequence their power. And we've really developed our products for multiple customers and multiple platforms. And many of those designs we've actually -- have won. So it's really a matter of more customers. The market share is being distributed differently for us to be able to diversify, but within the smartphone market. So it is something that we actively try to drive to get design wins at multiple customers. And as I've said, we've been successful at getting the design wins, but all the volume we expected did not. We couldn't realize it, and that's why we're pretty concentrated right now. And we continue that strategy, we've got products that we've designed, again, for multiple customers to make sure that we are in a position to benefit if the market share shift around. Christopher Caso - Susquehanna Financial Group, LLLP, Research Division: Okay. And I guess as a follow-up, could you talk a little bit about how -- as the mix shifts between the different businesses, either due to different growth rates or due to seasonality, how that affects the mix within your gross margins, basically that -- this sort of incremental margins in the different product areas? Bruce E. Kiddoo: Sure. This is Bruce. The mix side of various end markets actually doesn't have much impact. I think when you think of our range of 61% to 64%, maybe the mix can move it 100 bps up or down. But really, if you think about our end markets today, our consumer business and really our mobility business, as we've indicated, is reasonably close to the corporate average. So as we've seen that business grow, and over the last couple of years, we've continued to stay within our range and really in the upper half of our range. So we don't see a big impact from a product mix point of view on a quarter-to-quarter basis.

Our next question comes from the line of Blayne Curtis from Barclays. Blayne Curtis - Barclays Capital, Research Division: Not to keep going back some old business, but as you look back here, against consumer business the last 5 years, I think it's been down last 4, last 5. And probably aligns pretty well with that of your largest customer there. When you look at this year, I think you have a bit more diversification, you have a content story that's pretty meaningful and a large SKU. How do you look at that business into December and is this year a bit different, given you have some offset?

You said something at the beginning which we couldn't hear with Bruce? Blayne Curtis - Barclays Capital, Research Division: I'm saying your Consumer business has been down sequentially I think for the last 5 years, and -- it'll obviously align to your largest customer there. When we think about this year, are there any offsets? You have a content story, you've diversified a bit. Just the puts and takes there. Bruce E. Kiddoo: So Blayne, you're talking about the December quarter? Blayne Curtis - Barclays Capital, Research Division: Yes. Bruce E. Kiddoo: Okay. Yes, I think from our point of view, right, obviously, we have a large customer that's going through a large platform ramp right now. I think December is, in a very large part, going to be how well they do in the marketplace. Certainly, they're doing well. I think some of the early returns are positive for that platform. But I think it's too early to call what the ultimate success will be. I mean, I think, as you know, this is a customer who plans for success, right, so they're going to make sure they have sufficient product in the channel to support that success. So I think, as Tunç indicated earlier, I think there's some level of kind of year-end inventory balancing, it's probably reasonable to expect. I think it's just a question of the level of that. And I think it's solely dependent on their success in the marketplace. Blayne Curtis - Barclays Capital, Research Division: And just quickly, the follow-on on the content stories, obviously, sensors, year-end volume. Was is it really next year that you'd start to see material revenue there?

In terms of sensors -- or let's just divide it up. I mean, we've got senses for -- motion sensors and we also have sensors for optical and so on. So some of the revenue for the optical sensors and the products I mentioned in the prepared remarks, those are already beginning to show even their small levels right now, but I'm quite confident those are going to grow. In terms of motion sensing, yes, that won't be until our fiscal year, probably, '14 for it to be significant.

Your next question comes from the line of Craig Berger from FBR Capital Markets. Craig Berger - FBR Capital Markets & Co., Research Division: I guess, first of all, in the handset sector, what's your sense for finished device inventory out there among your various customers? And is that different than what you've seen in prior years?

So without really getting into the numbers, in terms of inventory that we can see -- and now, let me be really clear about this. The only inventory that we can see is, we do a little poll of the customers, and we can see inventory of our products at a customer and we can see inventory of their phones that they built. But we have no visibility into the inventory that's in the retail channel. So our information about retail is pretty much 0. So in terms of what we're seeing for phone inventory, it's really been flat for a pretty long time now. So this is at the manufacturers themselves, including compound inventory for Maxim. So it's been flat for -- I'm looking at the data now -- almost 1.5 years. So I think -- but I want to make sure everybody understands, our visibility is only into the manufacturer. We don't know beyond that, we have no information. Craig Berger - FBR Capital Markets & Co., Research Division: Got it. And then just as a follow-up, can you give us a little more color on what's going on in automotive. Are any of your customers de-stocking component inventory there? What are demand trends like and -- into the end of this year and next year?

Yes. So automotive, remember that this is an area where we're really growing. We're in a growth phase right now. And it's pretty hard for us to be able to be the bellwether for what's happening in the automotive market. All I can really say is what's happening with our products, and our products have been in a consistent ramp mode. And that's typical. When you're small, you're basically gaining market share and growing that way. So for us, it's been a successful growth story, especially in entertainment and video distribution inside the car, as well as new ramps that are starting for electric vehicle battery management-type products. So other than that, it's really difficult for us to be able to say what the stance is for car companies.

Your next question comes from the line of Craig Ellis from Caris & Company. Craig A. Ellis - Caris & Company, Inc., Research Division: Bruce, you indicated that you planned for on-hand inventory to be higher in the quarter, but the channel was low. If you look at the end of the current quarter, would you expect on hand channeling this very low? Bruce E. Kiddoo: Yes, I think it's harder. I think we -- we thought it was going to be flat in the June quarter, and actually it declined about 4 days from 57 to 53. What we're seeing now is really folks kind of ordering at consumption. And so that would tend to keep, say, inventory levels stay flat. At 53 days though, we know that's low, and so, I wouldn't be surprised if it actually went up a few days. But I don't think at this point, we're seeing a kind of a robust restocking. I think we're seeing it selectively where I think in certain geographies our distributors, they let it get too low, and they're starting to restock selectively. But overall, we're still seeing a relatively cautious outlook from these guys. Craig A. Ellis - Caris & Company, Inc., Research Division: And what about on hand? Bruce E. Kiddoo: Oh, on hand for us, I -- my sense is we'll probably see that come down a couple of days. The one thing that we are looking at doing is, as Tunç said, as far as one of our FYI '12 success stories is we've gotten much better from meeting our customers demand from a supply chain point of view, and so that's probably added a couple of days to our inventory level. Certainly, worth it from the ability to meet customer request dates. So I think those are the 2 things. So I think it probably comes down a little bit as we shift into a strong seasonal quarter and a little bit of inventory just to further improve the delivery performance to our customers.

Our next question comes from the line of David Wong from Wells Fargo. David M. Wong - Wells Fargo Securities, LLC, Research Division: Can you give us some idea of what percentage of your total revenues are smartphones, and what percentage of smartphones do go to a single customer? Bruce E. Kiddoo: So as far as the percent, it's still in the low 30s. It probably went up a little bit. So it's probably closer to 33%, 34%, somewhere around there. As you know, from a customer reporting point of view, we are required to do that in the 10-K, which you'll see coming out -- certainly, within a month. We'll be filing our 10-K and we'll report the -- our any 10% customers at that time. David M. Wong - Wells Fargo Securities, LLC, Research Division: Okay, great. And my follow-up, over the last couple of quarters, you've been quite successful in holding down your R&D expenses. Are you able to continue to save cost on the R&D line or should we expect to see R&D start to rise from here? Bruce E. Kiddoo: Yes, I think in general, like we've talked about this quarter, we have our merit increase that happens in the September time period. So that kind of rolls over into the December quarter as well. We are very aware of R&D spending and R&D as a percent of revenue and trying to be as efficient as possible. And so, I think you've seen where we've continued to invest, where we need to invest it from an innovation point of view, but also looked at from a portfolio management point of view, and we've divested some product lines where we thought it made sense. So I think there's some natural inflation in the R&D lines, just from salaries and the like. But at the same time, we're working very hard to manage our overall R&D efficiency.

Okay. I think let me add to that, if I may. Our stance continues to be conservative and cautious for next year. When I say next year, I'm talking about fiscal year '13, which we just started. So in general, we're working hard to make sure that our operating spending doesn't grow. And definitely, our goal is to grow it less than our revenue. So that's the general stance we've got for next year. Now, if something changes and our revenues really grow faster, we'll look at whether we want to invest any more or not.

Our next question comes from the line of Sumit Dhanda from ISI Group. Sumit Dhanda - ISI Group Inc., Research Division: A question for you, either Tunç or Bruce, you noted that July orders have been trending higher on a weekly basis versus the June quarter average. Anything more you could add on the profile of the orders in June when you started to see the weakening in the calendar second quarter and perhaps, was it a modest weakening of the orders or something relatively significant? And then I had a follow-up. Bruce E. Kiddoo: Sure. I think April is actually a good bookings month for us. I think May and early June slowed down. I think there was a lot of macro uncertainty, headline uncertainty that sort of hit and people sort of tempered their bookings on us and we saw that. And then, sort of in the back half of June and in July, to date, we've seen sort of a resumption of I think some reasonable booking patterns. Sumit Dhanda - ISI Group Inc., Research Division: Excellent. The second question I had, I think you mentioned that lead times -- your quarter lead times I think have been running 6 weeks or slightly higher. And I think last quarter, your customer lead times were running 8 or 9 weeks. And you said that latter metric had been adjusted lower. Can you tell us what that number is now? How much closer are customer lead times to your quarter lead times? Bruce E. Kiddoo: Yes, we're right about -- the customer order lead times are right about 9 weeks, maybe a hair below versus, like you say, about 6 weeks or maybe a little bit below that for what we can deliver to customers. So I mean, I think we've seen some decline in the order lead times. But again, there is still that, say, 3-week gap between what we can deliver to customers and what they're ordering at. And I think that from this point of view, they're just comfortable at where they have their MRP set. Sumit Dhanda - ISI Group Inc., Research Division: Okay. And just 1 quick housekeeping item. I think, Bruce, you talked about smartphones as a percent of business and you said that's absurd. I just want to make sure that's smartphones and not consumer as a percentage of the business? Bruce E. Kiddoo: Yes. That was the -- what -- let's just call it, in general, cellphones, primarily, smartphones. Yes, it's about 1/3 of the business. Overall, we -- our consumer business was 43% of revenue in the June quarter.

Our next question comes from the line of Brendan Furlong from Miller Tabak. Brendan Oliver Furlong - Miller Tabak + Co., LLC, Research Division: A question for you on the tablet, I'm assuming there are tablets that are -- new tablets are going to launch in the fall kind of time period. And with those, in either dollar content or volume, do you think that could potentially offset the weakness -- the potential weakness of your largest customer that everybody's expecting in the December quarter?

Well, the short answer is no. I mean, one is a very large number and one is a small number, so -- in aggregate. So it's -- we will still be influenced a lot by what the extent of any inventory correction, if there is any, in our major customer. Brendan Oliver Furlong - Miller Tabak + Co., LLC, Research Division: Okay, understood. And then, the -- I had a question on your OpEx trends for the fiscal year. I don't know if I missed that on the -- early on the conversations. If you would give like a directional kind of guidance for the OpEx for fiscal year? Bruce E. Kiddoo: No, we didn't give one for the fiscal year. We said the upcoming first quarter, the September quarter, would probably be up around 3%, basically in line with revenue. And I think Tunç gave some color how, I think, overall we're looking to control OpEx very tightly. I mean it's up in Q1, primarily, because we have the issue around our annual merit process, and so -- but overall for fiscal year '13, I think we're going to work very hard to continue to control OpEx.

Our next question comes from the line of Mark Lipacis from Jefferies. Mark Lipacis - Jefferies & Company, Inc., Research Division: First, just a clarification. Is -- did you guys say that your lead times to your customers shrunk a little bit? Your lead times, you were quoting from 6 weeks to slightly below 6 weeks? Bruce E. Kiddoo: It's fundamentally flat. We've been at or slightly below 6 weeks for probably 3 quarters now -- 3, 4 quarters. So there's really been no change in that. Mark Lipacis - Jefferies & Company, Inc., Research Division: Okay, fair enough. And then, I think you talked a little bit about inventories to the extent that you can see them -- the limited extent you can see them at your handset customers being flattish. Do you think that's the case broadly across your customer base or do you think that the kind of more cautious behavior you're seeing at your distributors is also reflected at your OEM customers? And if so, what do you think it takes to get them to restock a little bit more? Is it your lead times going out or something else? Bruce E. Kiddoo: Yes. I think in general, we look into the other markets from an OEM or ODM point of view, and again, as Tunç said, this is just for the people we ship into, I think in general, the markets we've looked at it was relatively flat.

Yes, it's correct. That's what I remember. Bruce E. Kiddoo: Yes, in those markets. I think it's very difficult for us to forecast what it's going to take for these guys to start restocking. I think we thought there would be more -- there would be a level of restocking and distribution in the June quarter. Resales were up 5%, yet they continued to be cautious. And actually, inventory levels went down again in the June quarter. So I think probably the key thing is for these folks to get more confident about the overall economic environment.

Our next question comes from the line of Ross Seymore from Deutsche Bank. Ross Seymore - Deutsche Bank AG, Research Division: If we look at the consumer guidance, up strongly I think is what you guided it to. Seems like if I put all the mix together to get to the midpoint of your overall guidance, that it still implies the consumer business wouldn't quite grow double-digits sequentially. I'm not trying to nitpick on anything, but considering the last couple of years, it's been up 10% to 15% sequentially, I guess, one, is my math in the right ballpark? And two, if it is, is there an offset to the phone business in that other roughly 10% of the consumer segment that's not phones that would be bringing that sequential growth rate down a little? Bruce E. Kiddoo: Yes, so Ross, this is Bruce. I think, a couple of things: one, I think there is some uncertainty out there. And I think the second thing is, we are kind of in the middle of a very large product launch right now, and I think we're trying make sure we have a balanced forecast on that product launch and not kind of balancing both upside and any potential risks of how well that launch goes. Mark Delaney - Goldman Sachs Group Inc., Research Division: Great. And as my follow-up, Bruce, you talked about CapEx coming down directionally in the first quarter. Could you give us any guidance to the magnitude of that? And then, potentially more importantly, just what your idea is for fiscal '13 as a whole for CapEx dollars, please? Bruce E. Kiddoo: Sure. I think it's going to come down, obviously, in the first quarter. It's hard to predict exactly how that ramp, how it's going to slow down. I think we still have some items that we have to finish off. I mean, I think overall, we've completed sort of the office, the facility investments. We completed the investments from a test capacity point of view. We still do have to finish off some of the manufacturing additions, the adding of the 180-nanometer capacity at our internal fabs. And we always have some technology investments that we need to make in our fabs and things like sensors and areas like that. So in general, for fiscal year '13, we expect it to come down and start heading down towards our long-term model of 5% to 7%. I think it's still a little early to call exactly where it ends up for fiscal year '13.

Our next question comes from the line of Terence Whalen from Citi. Terence R. Whalen - Citigroup Inc, Research Division: This one is digging into the composition of the communications business. It looks like after a fairly strong fiscal '11, communications in fiscal '12 declined on the order of 15% or 20%. I wanted -- I understand part of that is due to carrier CapEx and to your customers' customers. But I wanted to understand what your perspective is on, what are the elements of control within the communications business that you can drive growth over the coming years? And also, are there areas within comms that are still legacy areas that perhaps you'll deemphasize or divest over time?

So from the businesses that we see growth in into the future, I'd say the 2 most important ones are small cells, the small cell base stations. And when I say that, it's a pretty broad range actually, they're all the way from femto to microcells. We firmly believe that, that is going to be a growth area in general and in terms of adoption and rollouts. And we believe that it's an area where we can add value because we do have -- it's a market where the -- our capability to integrate RF and data convergence and so on will be valued because they need low power and they need small solutions. So that's 1 area, in base stations. The other area that we believe we're going to have good growth opportunities is in general optical or fiber communications where we make much of the electronics, that interfaces signal processing to the optical itself, whether it's laser drivers or receivers and serializer and deserializer chips. So these 2 areas, I think, are probably -- we see them as the areas where we can add value and there's growth that's going to happen. We believe that there will continue to be growth in macro base stations as well, although that's not going to be at the high rate of these small cells that I mentioned. We still have some legacy telecom business, and those products seem to sell forever, and we'll continue to sell those, even though we really have -- we're not really investing from an R&D standpoint in them. So we're essentially continuing to sell products that were developed, some of them 10 -- some of them, even 10, 15 years ago. In terms of the other part of the question with divestitures, and it's -- it'd be too early for us to talk about any of those. But the major ones, we've done basically already, last year. Terence R. Whalen - Citigroup Inc, Research Division: Okay, Tunc. And then, my follow-up I think is for Bruce. I think in the past 2 10-K's, Samsung was about a 12% customer. Can you give us the number of what the -- what percentage is this year given that the K will be released shortly? Bruce E. Kiddoo: Yes. Unfortunately, I can't disclose that early. And I think that's part of the K. I think it's reasonable to assume though that fiscal year '12 was a good year for our consumer business and was actually a weaker year for industrial and comm, so I think it's reasonable to expect the Samsung increases year-over-year.

Our next question comes from the line of Doug Freedman from RBC Capital. Doug Freedman - RBC Capital Markets, LLC, Research Division: Many of them have been asked and answered. But Tunç, can you touch on what you're seeing in the competitive landscape? One of your, I'd call it, your largest competitor, TI, seems to have a much lower utilization rate today. And I think there's some concerns out there that they might need to get price-aggressive to do some fab filling. Are you seeing any signs of -- any early signs of that? And any thoughts you have towards what the market dynamics are looking like?

So essentially, we -- if you look at the analog business in general, pretty much all of the high-performance companies are making proprietary products. So it's really difficult to replace products with one another. And especially in areas where we add value and there's not multiple suppliers of these functions, we really don't see any kind of out-of-the-ordinary erosion in pricing. Of course, when there are multiple suppliers and there's little differentiation between the products, those are the areas that we try to stay away from. And in those areas, I'm sure there's a lot of price competition going on, whether it's from the supplier you mentioned or from other suppliers that might be trying to vie for those same sockets. But our general philosophy has been to try to stay away from those areas and continue making value-add products. And in those areas, we're not seeing any abnormal price erosion. Doug Freedman - RBC Capital Markets, LLC, Research Division: Great. And for my follow-up, if I could, just when you look at what is normal seasonal patterns to bookings, I know nothing has really been normal. What would your booking pattern for the balance of this quarter look like? Bruce E. Kiddoo: Yes, Doug, as we've said, we haven't had a seasonal quarter, let alone seasonal linearity in quite a while. So I don't think I can give you a good answer to that. Sorry.

Our final question comes from the line of Elizabeth Howell from Raymond James.

Most of my questions have been asked as well, so I just have 1 sort of longer-term question. Regarding the 40-, 100-gig optical systems market, I think you only go as high as a 40-gig offering currently. When can we expect you, you'll move into the 100-gig space? And can you talk a little bit about what you're seeing in the 40-, 100-gig market generally? Some reports suggest companies are moving right from 10-gig to 100. And are you seeing the demand for the 100-gig solution or do you think that is a limited case right now?

I think the best answer I can give you right now is that I need to look into that. I don't -- off the top of my head. I really don't have an answer for you, frankly. So maybe if you call back and we find out, we can give you an answer. Bruce E. Kiddoo: Yes, I'll certainly follow up with you after the call.

Okay, great.

All right, sorry.

Thank you, operator. Before we end the call, I'd like to mention again that we look forward to seeing you at the Maxim's 2012 Investor Day in New York on September 5. This concludes Maxim's conference call. We'd like to thank you for your participation and for your interest in Maxim.

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