Venk Nathamuni - Managing Director, Investor Relations Tunç Doluca - President and Chief Executive Officer Bruce Kiddoo - Senior Vice President and Chief Financial Officer

Romit Shah - Nomura Securities John Pitzer - Credit Suisse Gabriela Borges - Goldman Sachs Aashish Rao - Bank of America Ambrish Srivastava - BMO Atif Malik - Citigroup Craig Ellis - Riley Caris Ross Seymore - Deutsche Bank Shawn Webster - Macquarie Mark Lipacis - Jefferies Craig Berger - FBR Capital Markets Joanne Feeney - Longbow Research Christopher Danely - JPMorgan David Wong - Wells Fargo Securities

Good day, ladies and gentlemen, and welcome to the Maxim Integrated Products' reports and results for second quarter of fiscal year 2013 earnings conference call. (Operator Instructions) I would now like to introduce your host for today's program, Mr. Venk Nathamuni, Managing Director, Investor Relations.

Thank you, and welcome everyone to Maxim Integrated's fiscal second quarter 2013 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, I'll turn the call over to Bruce.

Thanks, Venk. I will review our second quarter financial results. Revenue for the second quarter was $605.3 million, down 3% from the first quarter. Our revenue mix by major market in Q2 was approximately 46% for consumer, 25% industrial, 15% communications and 14% computing. Our consumer business was down in all markets. Industrial was up slightly as weakness in general purpose products was offset by strengths in medical and smart meter vertical markets. Our communication business was down due to our telecom business and computing was down due to our notebook business. Gross margin, excluding special items, was 61.5%, down as expected from 63.4% in the prior quarter due to lower factory utilization. Special items in Q2 gross margin were intangible asset amortization from acquisitions. Operating expenses, excluding special items were $216 million, up slightly from the prior quarter due to the full quarter impact of our annual compensation adjustment. Special items in Q2 operating expenses included the normal acquisition-related charges, plus charges for impairment of manufacturing equipment, restructuring and contingent consideration. Q2 GAAP operating income, excluding special items was $157 million or 26% of revenue. The Q2 GAAP tax rate, excluding special items was 19% compared to 21% in the prior quarter due to higher international mix of business. Special items in our Q2 tax provision were a result of this change in business mix. The Q2 tax rate does not include any benefit from the R&D tax credit, which became law in our fiscal Q3. GAAP earnings per share, excluding special items was $0.42, down from $0.47 in Q1 due to lower revenue and gross margin. Turning to the balance sheet and cash flow. During the quarter cash flow from operations was $255 million or 42% of revenue. This increased significantly over the prior quarter due to our annual employee bonus paid in September and a reduction in accounts receivable. Inventory was 101 days, down from 103 days in the prior quarter. Inventory in the channel, excluding catalogue distributors increased slightly from 51 days to 53 days due to lower resales. In dollar terms, channel inventory declined by 1%. Net capital additions totaled $51 million in Q2, down for the second consecutive quarter after significant investments in the prior fiscal year for long-term manufacturing capacity and new facilities. Share repurchases totaled $50 million in Q2 as we bought back 1.8 million shares. Finally, in Q2 we paid $70 million in dividends to our shareholders. Overall, total cash, cash equivalents and short-term investments increased by $105 million in the second quarter to just over $1 billion. Moving on to guidance. Our beginning Q3 backlog declined to $353 million. Based on this beginning backlog and expected turns, we forecast Q3 revenue of $580 million to $610 million or up 1% to down 4% from Q2. Q3 gross margin, excluding special items is estimated at 60% to 63%. Q2 fab utilization declined slightly due to lower demand and inventory management, impacting Q3 gross margin. Other variables that may influence Q3 gross margin include product mix and inventory reserves. Special items in Q3 gross margin are estimated at $8.5 million, primarily for amortization of intangible assets. Q3 operating expenses, excluding special items are expected to be down 1% to 2%, consistent with revenue due to tight spending controls. Special items in Q3 operating expenses are estimated at $4 million for amortization of intangible assets. This excludes potential items that may occur during the quarter. Our Q3 and future tax rate, excluding special items is estimated at 15% to 20%. This is lower than our previously estimated long-term tax rate due to higher international mix of business. Special items in our Q3 tax provision will include the benefit of the R&D tax credit for prior periods. For Q3 GAAP earnings per share, excluding special items, we expect a range of $0.39 to $0.43. Net capital expenditures in Q3 are expected to be flat with Q2. Finally, our Board of Directors havie approved payment of a cash dividend of $0.24 per share, approximately a 3% yield at yesterday's closing stock price. I will now hand the call over to Tunç to discuss our business. Tunç Doluca: Thank you, Bruce, and thank you all for joining our call, and good afternoon. Today, we're conducting this conference call from two locations. Bruce and Venk are in San Jose, California. Every year I spent two weeks in each continent, discussing our company direction and strategy with employees and soliciting their inputs. Today, I happen to be in Munich, Germany, as part of this global office visit. Let me start by highlighting three key December quarter's financial results. One, revenue was near the midpoint of the company's guidance range, despite the uncertain macro environment. This was due to the breadth of our products and the diversity of the end-markets that we serve. Two, the company continued to control operating expenses as OpEx increased very modestly, despite the full quarter impact over annual merit increase. And three, our tax rate declined by about 200 basis points sequentially, as we benefited from our international structure. We believe that the lower tax rate is sustainable and project a range of 15% to 20% in future quarters. Let me next turn to our just completed quarter and give you an overview of lead times and bookings. During the December quarter, our delivery lead times remain steady, but customer order lead times ticked up slightly from the prior quarter. Bookings decreased during the quarter, resulting in a book-to-bill ratio of less than 1. However, our bookings have improved appreciably since the beginning of the New Year. This resulted in a higher average weekly bookings rate in the first three weeks of the current quarter compared to the average for the prior quarter. I will next provide some color on our major markets. Let me start with consumer. The March quarter is traditionally weak in consumer. However, we expect above the seasonal trend and project consumer end-market revenue to be up, driven by strength from our mobility business. Our strategy is to continue to grow our mobility business by selling a diverse array of technologies across the diverse array of product platforms. To that effect, we have expanded our technology portfolio beyond power, such as sensors, touch and IO, and into platforms beyond smartphones, such as tablets and hybrid devices. At the Consumer Electronic Show earlier this month, we showcased several optical sensor products such as Ambient Light, Proximity, RGB, Infrared and Gesture Sensors for smartphones, tablets and hybrids. These sensor products feature accurate sensing with excellent signal-to-noise ratios and combined performance with lower power consumption. Overall, we remain positive about our prospects for continued growth from the smartphone and tablet end-markets. Second, let me discuss the industrial market. Our shipments were up slightly quarter-on-quarter in the December quarter. This result was better than industry since we improved delivery performance to customer request dates. We project March quarter industrial revenue to be down slightly as strength from the automotive end-market is offset by decline from the general purpose industrial categories. In automotive, the sequential strength is driven by production ramps as well as new design wins of our serial link products, which are beginning production at several customers. Additionally, we continue to gain traction with our RF tuners and power management products for automotive infotainment applications. Industrial has a broad customer base, buying primarily through the distribution channel. Following a few quarters of sequential declines, inventory days in the distribution channel increased quarter-on-quarter in the prior quarter. Days of inventory was 53 days at the end of the December quarter versus 51 days at the end of the September quarter. However, distribution inventory still remained below our target model of 65 days. I would like to point out that we remain excited about our industrial business. Let me refresh you on our differentiated strategy within industrial. Roughly half the business is focused on targeted vertical markets that require ASSP solutions, while the other half is focused on the general purpose market. The ASSP approach entails providing high levels of integration in select end-market segments such as automotive, smart meters and medical. Here, we develop system-on-a-chip or SoC solutions for specific applications. We believe we are well positioned to continue our growth momentum in this ASSP business. Turning to the other half of our industrial business, the General-Purpose Analog segment features high performance analog building blocks. This segment has served predominantly through distribution. This business is highly correlated to the macro economy, which should enable us to fully participate in a global economic recovery as and when it unfolds. I would also like to take this opportunity to highlight the five-year anniversary of our global engagement with our distribution partner Avnet. Since the commencement of our partnership in the December quarter of 2007, the Avnet collaboration has enabled us to engage with over 5,600 new customers and delivered significant growth in design wins. The revenue resulting from distributor design registrations has grown steadily. This revenue grew 133% in fiscal '11, 59% in fiscal '12 and is expected to grow over 77% in fiscal '13. I will quote, Harley Feldberg, President, Avnet Electronics, Global Marketing; he said, although the market environment has not been our friend, our Maxim sales over the last few years have clearly outgrown the balance of our business. As a result of all these factors, we believe we remain well positioned in the industrial market. Third, let me cover communications. We project revenue to be down during the March quarter. We expect an increase in business from the base station and femtocell end-markets, offset by weakness from traditional telecom. We have seen market strength in indoor small cell deployments mainly in the form of 3G consumer femtocells, with momentum gaining for enterprise femtocell deployments. We continue to play a key role in the development of this market with our high performance, high integration, RF transceiver solutions. In the December quarter, we saw a strength in both orders from our existing femtocell engagements as well as new design win activity. Maxim is positioned to capitalize on the growth of small cells, as this technology develops over the next several years in the consumer, enterprise and outdoor markets. We have technology to deliver highly integrated solutions across a broad range of product lines, such as power management, optical and RF transceivers. This will help drive system-level benefit that enable next generation networks for improved coverage, capacity and lower power consumption. Fourth, in the computing market, revenues will be down significantly with a decline in notebook computers. In closing, we remain positive about our prospects for sustained growth from the smartphone and tablet end-markets. And believe, we are well positioned for long-term growth in the industrial and communication major markets. We will continue to focus on delivering products and technologies that provide highly differentiated solutions to our customers. I'll now turn the call back to Venk.

Thank you, Tunç. That's the end of our prepared comments. We would now welcome your questions. Please limit yourself to one question with one follow-up. Operator, please begin polling for questions.

(Operator Instructions) Our first question comes from the line of Romit Shah from Nomura Securities. Romit Shah - Nomura Securities: Just looking at the guidance, you guys have a very good track record of making your numbers, so forgive me for asking this question. But the turns requirement goes from $200 million in the December period to I think $240 million, $245 million in the March period. Can you help us get comfortable with a step-up in turns for this quarter?

You're right. We're currently at about 59%, both going into the quarter compared to, say, 64% a year ago or so. Our largest customer, obviously everybody knows they sort of manage inventory and bookings in the December quarter, and then that business typically increases in the March quarter. And as we've indicated, we're actually forecasting consumer to be up in the March quarter and consumers are our high-turns business. And I guess, the final point there is, as Tunç indicated, we have seen strong booking so far quarter-to-date. So while there is a little bit higher turns than normal, we are confident that kind of based on that mix of business and our history and the ability to turn and have product staged from a supply chain point of view, we're comfortable in our guidance. And as you said at the beginning of your question, we take a lot of pride in hitting our numbers and guiding to what we think the most likely number is. Romit Shah - Nomura Securities: And then just, Tunç, a question for you, with the expanded product portfolio you talked about, sensors and touch and audio, all these things going in the mobile. How do we think about the impact of your average content per phone this year and what impact that might have in driving the mobile business? Tunç Doluca: As I said, we've got some new technologies that we introduced and those technologies are received well by our customers. So those will absolutely be able to help us to increase our content and maybe more importantly diversify the technology that we sell in this market from really being predominantly power to other components inside of the handsets. In terms of the ASPs that we get per phone, we really prefer not to comment on that, because it really varies a lot from phone-to-phone and it's really difficult to pin it down frankly. In addition to that we are also finding some of the components we sell are now going into different types of equipment, the same product might sell into tablets, it might sell into notes or which are kind of between a tablet and a phone. And therefore it is getting more difficult for us to exactly pin down where these products are going. So, Romit, we kind of preferring not to talk about, what ASPs we're getting per phone, because it doesn't make sense, there is so much variation in it now. Romit Shah - Nomura Securities: Last question, just you mentioned design wins for new model launch is in mobility. I guess as you look at the highest volume opportunities for Maxim. Are you pleased with the level of design wins as compared to what you got in the previous generation? Tunç Doluca: If you look at the design wins that we're getting, they're good compared to the previous generation. And I said they're also not just power now, which is nice. And we're glad to see also that the major supplies that we sell into is also doing well in the market, so those are all positives for us. And those are the reasons that we're really optimistic about this year and the future.

Our next question comes from the line of John Pitzer from Credit Suisse. John Pitzer - Credit Suisse: Maybe as a follow on to Romit's question, Tunç, as you think about kind of the non-power area in the consumer market, how much revenue could that be as a percent of the total bucket by the end of this year? And Bruce, as sort of the non-power products start to grow is there any sort of margin implication that we should be thinking about? Tunç Doluca: Well, these new wins we're getting, obviously are incremental to power, in terms of the totaled available in a phone, if you include all of the components we're talking about, include all the optical and all of the other components we mentioned, I mean, yes, almost equivalent to what you get in power. So they're sizeable, but we will not be able to get all of that in one year by the way. So we talked about optical sensors, we talked about motion. I think we're going to see significant revenues from optical increasing this year, but if you look at motion for example that's probably most likely in 2014.

And to your question, John, you're question about margin impact, whenever there is innovation and we're delivering products that are new to the marketplace, and I think you're going to see around some of these optical sensors some highly innovative products. Generally, when we're delivering value to our customers, we're able to maintain a good margin on that business. And so I think to the extent that we're moving beyond power. I actually think sensors, our audio, generally that's a positive thing from a margin point of view, and fundamentally allows us to maintain the margin structure that's kind of 61%, 64% that we've been able to achieve very consistently over the last couple of years. John Pitzer - Credit Suisse: And then, Bruce, as my follow-up, you talked about fab utilization declining slightly in the fiscal second quarter. Kind of curious, are we now at a trough in utilization, and how much of a hit to margins are you taking because of under-utilization today?

We do think this was the low point certainly from a fab utilization point of view. The F18 or 180 nanometer qualification in San Antonio was successful, that is ramping, and started to ramp in the Q2, the December quarter. It's going to ramp significantly in the March quarter. So we do expect utilization to increase in the March quarter from a fab point of view. I think you saw the impact of that, right when we kind of went down 200 bps in the December quarter. We're in essence that the midpoint guiding gross margin flat in the March quarter, and that's really because, you still sort of have that bottom from a utilization point of view in December, which will put some pressure on gross margin, that's offset by the increasing utilizations in the March quarter. So overall, we've got the gross margin flat, but clearly utilizations are improving.

Our next question comes from the line of James Covello from Goldman Sachs. Gabriela Borges - Goldman Sachs: This is Gabriela Borges on behalf of Jim Covello. I wanted to ask about the consumer part of the business, I was hoping you could expand upon the better than seasonal expectation for 1Q. Is that a broad based customer dynamic, and are there any Maxim specific drivers in the quarter that you think can help buck the trend? Tunç Doluca: So in the consumer market we're projecting growth, which just kind of not normal in the general marketplace for this. Essentially we're expecting increase, driven from our major customer. They've gone through the inventory corrections basically in the December quarter. And as a result of that we're expecting to get more revenues as they sell-through the smartphones and the note, and several other models in this quarter. The other pieces which are small enough for us are actually declining, what we call that home entertainment and appliance. But our consumer business is now very highly dominated buy mobility. So we're really being helped by the fact that the inventory corrections are over for Samsung and we're seeing ramps again from them for their major lines of phones. Gabriela Borges - Goldman Sachs: And then just as the follow-up, if I may. Last quarter you mentioned that distributors were reluctant to begin restocking, given the uncertain macro environment. I was hoping if you could give us an update on what you're hearing from distributors today in terms of inventory?

The days of inventory actually did go up from 51 days to 53 days, but that was actually really driven by retails going down, inventory in absolute dollar terms actually declined by about 1% in the quarter. So we're still hearing some level of caution from our distributors, certainly from an inventory point of view. That said, we are seeing some good retail forecast, primarily in our industrial markets through distribution, really which is the U.S. and EMEA, where our partner there is Avnet. So from that point of view, we're starting to see some pickup in end-demand and resale. I don't think they're going to restart significantly. I think they're going allow inventory, they'll manage that along with the increase in demand at this point in time. So I don't think we're seeing a big restocking. I think they're still cautious at that point of view at this time. And now we're just kind of waiting and see if there is continued momentum with what we're seeing early in the quarter around in resales.

Our next question comes from the line of Aashish Rao from Bank of America. Aashish Rao - Bank of America: Tunç, when you look at the smartphone supplier landscape, most of the other suppliers are in the 45% to 50% or so gross margin range. What are the long-term risks of Maxim being able to maintain the current 60% or so levels, especially given the shrinking pool of handset OEMs? Tunç Doluca: Well, this is all really a function of whether if supplier can provide the types of features and the types of benefits that those customers want. And what we're finding is that we as a company really have the technology and we have the design capabilities to be able to provide these technologies. And if you're really the main supplier for these types of performance, then you can continue to get the types of margins that we're used to. If you look around most of the suppliers that have are not able to get the types of margins that we are, they're usually building block type suppliers and there is more sources for those. Whereas if you look at us, most of our revenue in this space is coming now from these highly integrated, very complex products that are difficult to do. And we're successful because we have the broadest library of IP. We have industry-leading integration capabilities in this space. We have very fast development cycle times, even though these are very complex chips. And we've also build this trust between us and our partner customers over years of working together and successfully delivering the products that we need to. So if we continue to do that we'll be able to get to the level of margins that help us out. And I think the main difference between the companies you're comparing us to is the fact that we're doing very specialized complex ICs and most of the other companies that are in the market are essentially building, building-block type products. Aashish Rao - Bank of America: And then one question also, when I look at your outsource wafer mix, I mean, it used to be like 10% four years ago, now it's probably 50% or so. How has this changed affective to production cycle times, and is this a reason that could be causing the tickup in customer order lead times? I mean can you talk about how you managed this change internally and any actions that you can take to reign in the customer order lead times? Tunç Doluca: First of all the customer order lead time uptick was very slight, and you can get this pretty easily, if there is a mix change in the ordering patterns. I mean, for instance, because of the inventory correction that Samsung made, if they reduced their orders that quarter, they had very short lead times and the others customers and longer ones, so that things like that have an effect on order lead times. We really wouldn't read anything into the slight changes that we mentioned. The other part of your question was is our manufacturing in our partner fabs is that changing of our cycle times? It really isn't. I mean, internally and externally we're achieving pretty good cycle times from our wafer fabs. So that really is not affecting our manufacturing cycle time.

Our next question comes from the line of Ambrish Srivastava from BMO. Ambrish Srivastava - BMO: Tunç, could you just talk about the progress of the integration SoC approach in the non-mobile segment? And then where do you see that percentage in calendar '13 versus calendar '12, based on design wins. And then I have a follow-up as well, please. Tunç Doluca: So if you look at our major markets, in each one of these markets we actually have some efforts in terms of providing highly integrated products to our customers. We already spoke a lot about the mobility market. But if we turn to other markets like industrial, there is some verticals that we will do benefit from the types of integrated products we can make. And good examples are in the smart meter applications. We provide very highly integrated products. We also do so in financial terminals. In automotive we're providing these highly integrated products, for example, for receivers, for satellite, for power management products to power the infotainment systems. We're also providing such products in the comms market. I mentioned it in my prepared remarks, where we make transceivers that really convert RF-to-Bits and vice versa in small base stations and sent-to applications. Similar products in our fiber communications products, very high integration that not only do the analog transmissions, but also can do all the calibration on chip with onboard microcontrollers and so on. So what we're seeing is that in many areas, in communications, in automotive and so on there is a need for the types of products that we make. And we're seeing customers really asking for these solutions from us, because they're really asking for partners, instead of compliment suppliers. In terms of the percentage of our business that's highly integrated, that's been steadily rising and it was in the mid-teens, maybe in 2007. It's increased significantly. And if you look at because of the mobility business has grown significantly as well, we've gotten all the way to the mid-40s or so in recent quarters, in terms of highly integrated products from coming and adding to our revenue. So we're pretty happy with our progress in the space, not just in mobility but in all of our other markets as well. Ambrish Srivastava - BMO: Then my follow-up was on the actually unrelated. You talked about diversification away from power. Could you please address diversification of customers? And so these, new wins whether in tablets or in sensors, are you getting it outside of Samsung or they are mostly with Samsung? Tunç Doluca: Obviously part of our strategy was to be able to diversify as much as we could our customer base as well. But as all of you know two suppliers that really dominated that market in recent years. So that made it a little bit difficult for us. If you look at our diversification, some of it is really extending into other types of mobile products in our largest customer like a note or a tablet at that customer. But also some of it is design wins at other customers, but only time will show, which models and which customers are going to be successful. So we're doing our best to be able to sell through multiple customers, but in the end, the market determines where consumers are going to determine who is the more successful one. So as I said some of our wins in diversifications within through largest customer, but some of them are at other customers as well.

Our next question comes from the line of Terence Whalen from Citigroup. Atif Malik - Citigroup: Your top consumer customer stocking about 50% year-over-year smartphone growth this year, and I wanted to know what this means for the full year outlook for your consumer business and outside of that top customer if you can talk about your penetrations in terms of content and share it with other customers.

First of all, I think part of your question was what's their outlook for the smartphone business for next year. Actually, it's really difficult for us to project that. It's tough to see which models are going to succeed, which customer is going to be the ones who take market share and so on so. In the past, and most likely in the future, we're really going to reframe from talking about anything but the current quarter in terms of forecast, in terms of giving numbers. Your other question I think already answered, it was asked by the previous caller, unless they misunderstood it, maybe you can restate the second question? Atif Malik - Citigroup: Just wanted to know outside of that top customer, can you talk about your positioning at the other handset makers and customers? Tunç Doluca: Well, we've got activities going on with all of the handset customers that are on the list frankly. And if you'll look at all of those customers and we've got various wins in them. But in general, we respect that these customers really don't like us talking about our design wins in their particular phones. And we essentially have to wait until some tear down, tells investors and our competitors actually as well, where we've won stock. So I'm afraid, I won't be able to comment on where the wins are, at what customer until we see them publicly in a tear down. And the good news is that these things get tear down reports almost instantly when they get into the market. So it's easy to see.

Our next question comes from the line of Craig Ellis from Riley Caris. Craig Ellis - Riley Caris: A little bit loner-term, Bruce, you mentioned that utilization looks like it probably bottomed in the December timeframe. And it sounds like, it moved up as we go through this quarter about a flat year-on-year profile. Can you just help us with some of the gives and takes as we think about gross margin dynamics from here, whether its activities with new fabs or fabs that are coming out or anything that would be related to mix?

I mean, I do think in the near-term it is all about utilization. That's the largest single factor. And as we've said, right, as the fabs, I think the December quarter was sort of the low end. That even independent of demands, because we've now got S18, fully 180-nanometer process, fully qualified in San Antonio, so that's starting to ramp, so I think that will provide a benefit for the March quarter and going forward as well. Certainly, to the extent that demands picks up and specifically around industrial, and so kind of the early momentum that we're seeing now, certainly, we should get that continues bode well because of most of our industrial is done internally, up in our Oregon fab. And certainly to the extent, we see a recovery overall in the industrial business that will be helpful from a gross margin as well. The other items, as far as inventory reserves and mix, they aren't the as big of a contributions to sort of the quarter-to-quarter variances in gross margin. And I guess it's not to leave out the backend guys, I think we're also looking for improvements in that utilization as well. As we move forward certainly in the March quarter, as we sort of reduced inventories in the December quarter, and we managed due to this lower demand environment. Craig Ellis - Riley Caris: And then the follow-up question is for Tunç. Tunç has spend a lot of time on the consumer business, I have one follow-up issue, think about growth year, this year and we think about Maxim's skull to grow better than his peer group. We should think about growth in consumer this year, is that growth going to be driven more by power management, or will it be driven more by the new products, the sensors and the audio codec's that moving into your portfolio and being dissented by your customers? Tunç Doluca: Well, that's really actually not that easy to predict. But I would venture to guess that we will have some significant additions because of the sensor products this year. But as I said to previous caller, essentially I think again this year the power will be the largest portion of our sales. Again, this somewhat depends on, which models are successful in the market, because in some phones or tablets or phablets, we've got more power content, in others another we have more additional sensor products. So it kind of also depends on which model is going to be successful. I'm not trying to be evasive here, we really just exactly don't know, which one of these models are going to be the big hits.

Our next question comes from the line of Ross Seymore from Deutsche Bank. Ross Seymore - Deutsche Bank: Question first on the consumer side, in general if you guys give the percentage that Samsung represented of sales and then I guess as we look forward a little bit the last two year's have been very hyper seasonal, which is pretty typical in that business with the June and September quarters rising significantly. Anything that would smooth that out or be different this year, new products coming to the mix, et cetera that we should be aware of thinking as the year progresses?

What was the first half of your question, I was listening to the second. Ross Seymore - Deutsche Bank: Samsung percentage of sales, if you're willing to give it for the quarter?

No, as you know from our 10-K point of view we disclosed that annually, and as Tunç indicated many of our customers don't like to for us to give that information out. So no, we won't disclose that. And as for as that business continuing to grow overtime, certainly our view is for the reasons that Tunç talked about, right, I mean, we do expect to continue to grow our mobility business. We have a significant, both increased technology on increased platforms both that our largest customer and other customers, and it's certainly our goal long-term to continue to grow our business at our largest customers from that point of view. So I think at a high level we're optimistic to peg exact numbers, as Tunç said that's very hard to do. Tunç Doluca: I think, if I heard you right, you were also asking about is there anything special in seasonality that we expect to see? Did I get that right? Ross Seymore - Deutsche Bank: With the sensors coming on et cetera, I know that the seasonality of new product launches from your customers obviously drives revenue but given that you have the sensor portfolio ramping up et cetera, I didn't know if there is any difference in timing. Tunç Doluca: I think it will still follow the seasonality of our customer.

Our next question comes from the line of Shawn Webster from Macquarie. Shawn Webster - Macquarie: Couple of clarifying question, actually on the restructuring charge that you took in the quarter, what exactly was that? And does that affect your equipped capacity in revenue dollars?

So the restructuring charge, the bulk of that was related to the impairment of some factory tooling. It was primarily in the testers and handlers' point of view, and this was really just on some older products where the end-demand has declined. Shawn Webster - Macquarie: You said that your utilization rates were or had bottomed in December. Can you share with us what your utilization rates were? And then I had another quick one on tax. Tunç Doluca: Yeah, fab utilizations were around 72% which was down just a couple of points probably from the September quarter. Shawn Webster - Macquarie: And then the guidance for tax for the March quarter, the 15% to 19%, is that inclusive of the catch-up effect and if so, what would the June effective tax rate be?

The new guidance we gave of 15% to 20% does not include the catch up. So because that's sort of a one-time event and as an indicative of kind of our long-term trend, we'll exclude that as a special item. We do expect that to be roughly around $7.5 million, so that it will be about a five point benefit to the GAAP tax rate, but that's not part of, as I said. We'll exclude that benefit from the 15%to 20%. On a go-forward basis, the R&D tax credit gives us about one point benefit on a quarterly basis. So that 15% to 20% tax rate does take into account sort of the go-forward benefit of about 1% on the tax rate, but does not include the catch up. Does that make sense? Shawn Webster - Macquarie: The GAAP guidance you gave of $0.39 to $0.43 includes at $7.5 million benefit?

Yes, it does. And that's why the GAAP guidance is the same as the GAAP ex-SEI. We have our normal intangibles in there, but we get the benefit of the one-time catch up.

Your next question comes from the line of Mark Lipacis from Jefferies. Mark Lipacis - Jefferies: The question on the Gesture product, can you give us a sense of where you are and the design cycle and design win cycle, when the product goes into production systems? And also can you give us a sense on the relative opportunities you think there isn't it in the Gesture product versus the seven optical sensor package, that you started shipping last year. Tunç Doluca: So the Gesture products essentially, we've made this product. We've developed them. We sampled them. There is active design wins going on. And essentially, it's an interesting technology, obviously, for our customers, because they're actively working, I mean, to designs. In terms of the size of the opportunity, we actually are better-off not sharing that because it's very competitive information, in terms of what they sell for and so on. But it is a very nice technology. And as I said our customers are highly interested in these products. Mark Lipacis - Jefferies: And is it going into production systems this year? Is that what you meant when you said you had active design wins? Tunç Doluca: Yes. So we expect revenue from these Gesture Sensors in calendar year '13. Mark Lipacis - Jefferies: And then a follow-up question if I may. Tunç, you talked about improving orders in January versus December, and I'd missed it, if you'd quantify it that would be great. But other than that the question would be, we've heard this from some other companies, is this people just coming back from vacation or holiday and starting to order again or do you think something else is going on? Tunç Doluca: We actually did not quantify how much bookings had improved. We just said that it gone up appreciably from the previous quarter. We think that it's really not in our customers just coming back from vacation, kind of broke it down, I think in terms of mobility businesses and especially our largest customer, they've done their inventory correction and now they need parts. So they are ordering those. And I think in the other markets, we're also seeing some strength, especially from distributors and so on. So it doesn't feel like it is just then coming back from vacation or holidays.

Our next question comes from the line of Craig Berger from FBR Capital Markets. Craig Berger - FBR Capital Markets: I wanted to ask on inventories. I know you talked about it a little bit, but did you say how much your distributor inventories changed in dollars or days? And then can you also comment on, whether you think destocking has been happening at OEMs and by any particular end market?

The days of inventory actually, we had increased two days. They went from 51 to 53 days out in the channel. But that was really due to the denominator, right it was, resales went down. The actual inventory in dollars actually went down 1% from that point of view. So we have seen that basically, I'll say a very little change. And to your question, we haven't really seen any kind of active restocking at this point in time. I think there seems some uptick in end demand. So we're seeing that into those forecasts from a resales point of view, but I think people are going to wait and make sure this is a solid trend before they start restocking. Craig Berger - FBR Capital Markets: And then just as a follow up, can you give us any thoughts on first OpEx trends over the next three or four quarters as we look out to the calendar year? And then secondly kind of what your priorities are for roughly $250 or $300 million of cash you'll generate after dividends this year?

I think from an OpEx point of view, you've seen we've done a pretty good job, right. OpEx was up very, very modestly in the December quarter, even though we had kind a full quarter impact of our annual merit process. This quarter, we're actually going to take OpEx down 1% to 2% due to the just tight spending controls and actually in line with the decline in revenue. I think going forward our plan is about growing OpEx at some rate slower than revenue. I think we're going to be very cautious. We will continue to invest in key technologies. We will continue to invest in our growth opportunities. I mean, we're a technology company. We live up off of innovation. So we will do that. And that said, we are being kind of very active from our portfolio management point of view. You probably noticed that we sold off a video processing product lines at the end of year. We sold off two businesses last year, so I think you'll see from a modeling point of view, I think you can assume we'll continue to a good job managing our OpEx. We'll try very hard to grow at slower than revenue. And not to get out in front of any expected upticks in the market. As far as cash goes, I think we're going to continue to maintain the uses of cash that we have and that is we'll continue to do our tuck-in acquisition. We haven't done one in a while. That's not to say, we're not out there looking. We still have an active funnel and so we'll continue to do that and look for opportunities there, still strongly committed to our dividends. Obviously, we increased that 9% last year. We're still at about a 3% dividend yield. And then finally, the buyback, and looking forward sort of our metrics approach to buying back our stock. So as a company, we're still strongly committed to returning the cash to shareholders. We have our target of 15% to 20%. We were 21% in the last fiscal year. This year, year-to-date, I think we're right around 20%. So that commitment we're continuing to follow through on.

Your next question comes from the line of Joanne Feeney from Longbow Research. Joanne Feeney - Longbow Research: One question more on the mobility side, so you talked about new design wins in tablets and hybrids. So I guess, the first question, if these are new and so I wouldn't imagine significant revenues are going to come along. But perhaps you could give us sense of how much you expect that to develop into, say, by the end of the year? How notable that would be? And then secondly related to that given your wins in hybrids, does this signal perhaps a renewal of interest in notebooks. I mean, particularly the ultra thin variety of notebooks.

Well, I'll take the last question first. When we say hybrids, we're really just talking about those handhelds that are kind of really large phones or really small tablets. And the comments would really not related to notebook computer class, or I'd call them more like products with keyboards, I guess are notebooks, so that's the family that we're talking about, when we say hybrids. The amount of revenue we get from each one of these, it really varies from model-to-model. And even though, we've won these designs as I know, you're trying to predict how much revenue in each class we would get, but that's really hard for us to do. And as I said before, and there are cases where we've got the same product actually going into multiple versions of these types of parts. So it's really tough for us to predict, what the volumes are going to be of these three classes of products. But I mean large-size phones are selling very well. And traveling in Europe right now, and I see it on people using them, they looked too large to me, and I preferred the smaller screen sizes. But they are pretty popular. And we've got design wins with those models, as well as those ones that are tablet or somewhere in between. So to really cut to the chase, it's really tough for us to be able to tell which ones of these are going to be successful. Joanne Feeney - Longbow Research: And then the follow-up on the industrial side, you've mentioned now a couple of times signs of returning momentum. I'm wondering if you could be more specific about those signs or what you're seeing in order trends, perhaps by the type of industrial market, and perhaps any insight you might have into the end demand of some of the larger customers with whom you deal directly.

So I think a couple of areas we've talked about sort of how we split our industrial business. Half of it is in some verticals and the other half is general purpose. Within the verticals, we think our automotive business we expect to be up nicely in the March quarter and we've seen the bookings to support that. And so I think we're positive out there. On the general side, I think we're clearly seeing the bookings coming out of and really when we think about our industrial business, that's really a U.S. and Europe are the two largest areas where our partners is Avnet there. And again I think we're seeing some good orders coming out of those markets.

Our next question comes from the line Christopher Danely from JPMorgan. Christopher Danely - JPMorgan: Given the current mix of business, what should we be thinking about as a normal seasonality going forward after the March quarter for the rest of the calendar year?

It's real hard for us to predict that. I think Tunç had the famous comment on an earlier call that when the variances is greater than the main, it's really hard to say that's something you can peg to. So from that point of view, when we look at, say, like the March quarter, right, if you just look at the numbers on a five-year average is down 5%. That said, it goes from anywhere from a down 17 to an up 7. So from that point of view, there is huge variance. Generally speaking, when we look at the June quarter, that's June and September, are usually our better quarters out of the four. But so much is determined on what's happening from a macro point of view. Christopher Danely - JPMorgan: So if we assume that if you look at your calendar Q2 or fiscal Q4 is usually up in the mid-to-high single digit. So could you assume that we'll get back above the revenue that you guys had in Q1 of this fiscal year. Can we assume that gross margins would go back into the 61.5% to 62% range? Is there anything else that would be changing that dynamic?

I think what really is going to drive the gross margin is utilizations. And as we've said just getting the S1A qualified in San Antonio and ramping is probably the biggest factor. The second factor will be an uptick in industrial business. So that will help about the Oregon factory. And so those are the really the two key things, obviously, as revenue increases, that's helpful, but it's sort of a mix of revenue matters as well.

Our final question comes from the line of David Wong from Wells Fargo Securities. David Wong - Wells Fargo Securities: Can you give us an idea of what percentage of your revenues in the December quarter were from the smartphones specifically? And when you said you expect consumer to grow because of mobility, but then noted things outside smartphones, do smartphones grow or do smartphones go down in the March quarter in your expectations?

So we talked about consumer was 46% of revenue and smartphones are probably about three quarter of that or so. So there is still major increase there. As far as consumer being up in the March quarter, certainly as Tunç kind of indicated in his prepared comments, we do expect to see some growth in the smartphone area. Our largest customer does their inventor correction in the December quarter and both across all of their platforms, whether it's smartphones or hybrids or tablets. We're expecting to see growth there as well, so definitely growth in smartphones in the March quarter.

That concludes the call. Thank you, operator. This concludes Maxim Integrated conference call. We'd like to thank you for your participation and for your interest in Maxim Integrated.

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