Wolfspeed, Inc. (WOLF) Earnings Call Transcript & Summary

Good morning or good afternoon, wherever you are. My name is Rob Sanders. I'm the Head of Tech Hardware Research here in Europe at Deutsche Bank. I'm delighted to welcome today, Gregg Lowe, the CEO of Wolfspeed, a company at the heart of the transition to silicon carbide in the EV powertrain and electrification more broadly. Joining Gregg today is Tyler Gronbach, Vice President and Head of Investor Relations. So thank you so much for agreeing to join our Seventh AutoTech conference, Gregg and Tyler.

Well, thanks a lot, Robert. It's terrific to be here and really appreciate the invite.

Thank you.

Great. So the format of today's discussion will be a fireside chat. There is a chat -- a question-and-answer box for those joining online from the conference website. So do ask through that kind of opportunities area to ask questions. But I'll kick off. I guess the first topic that I'm getting a lot of questions on, Gregg, is around the 200-millimeter story. And I'd love just to go through the 200-millimeter advantage. You are uniquely, going fully -- in full speed, shall we say, at 200 millimeter. And I guess I'd love to kind of just get a bit of a sense of the kind of key milestones that you've achieved in terms of getting to die crossover with 150-millimeter, because obviously, that's what people are kind of super focused on.

Well, thanks a lot. And there's been a lot of hard work by the team on 200-millimeter. And I would say probably 6 or 8 months after joining the company 5 years ago, we began a monthly 200-millimeter program review that I hosted. And because I knew we needed to get the team moving forward and accelerating our 200-millimeter project. And that really started with crystal growth and growing the crystals themselves at 200-millimeter and then obviously getting them into the right quality level, et cetera. So a huge amount of effort over the last really 5 years to get us to the point now where we're basically fully committed to 200-millimeter in the Mohawk Valley Fab. The quality of crystal that we have in terms of defectivity, and so forth, that 200-millimeter is exceptional. It actually is better than where we're at on 150, which is a pretty good benchmark. And so we feel real good about that. And we're now in the process of ramping up production for 200-millimeter crystal growth or the epi associated with that just had a nice review with our epi manufacturing company. The equipment supplier had dinner with them last night, and things are basically in pretty good shape there. Now the cost advantage is pretty nice when you move to a greater diameter. And it's basically higher square [Indiscernible]. So the -- you basically get 70% more chips per wafer. And what that translates to typically, and what we're certainly planning on, is about a 40% cost reduction at the chip level. And so it's a pretty nice advantage. For us, there's an incremental advantage. As we move to 200 millimeter, we're also moving to a new wafer fab, and that's our Mohawk Valley Fab. And so we get an incremental advantage because we're going from kind of a subscale manual fab to a very large automated fab. So not only are we getting the benefit of the area increase, we're also getting the benefit of a new wafer fab that's modern and fully automated. So it's going to be a nice advantage for us. And like I said, the number that we've publicly talked about is a 40% cost reduction, which is pretty good cost reduction.

Got it. And that 40% cost reduction, just to be clear, does it assume the same level of defectivity or is it slightly less? Because obviously, it's a thicker but potentially more unstable wafer? Or are you assuming kind of a stable like-for-like kind of substrate quality?

No, we're starting off with a slightly thicker substrate. And so we're going to be working on getting cost of those substrates down. And we're pretty heavily focused on that. But basically, the 40% is -- conservative is a wrong word to say, but we feel pretty good about achieving that.

Okay. So what about the tool sets that you are using? Are they exclusively 200 millimeter? Obviously, some people are -- I think some of your peers seem to be more kind of hedging their bets using tools that are fungible between 150, 200. Is -- do you have some flexibility there? Or are you kind of so all in on 200, because you're so confident on it, it doesn't really matter to you guys, but it obviously does to others.

Yes. So the Mohawk Valley Fab is a 200-millimeter fab. And so there's not a 150-millimeter lane or anything like that. We've built it as a 200-millimeter factory. And what's really nice about that, it's obviously the newest 200-millimeter factory by probably many, many years, because people haven't really been building 200-millimeter factories. And it's also using essentially 300-millimeter automation. So all of the automation is very, very modern. And so in some respect, as people are staying on 150-millimeter, you're not only competing with that -- with that wafer dimension, you're also competing with a much more modern wafer fab as well. So now, we're fully committed to 200-millimeter. It's -- we feel pretty good about that for sure.

Okay. And then the second topic that I think investors are starting to try and getting better, getting smarter on is the whole device performance advantage, things like the planar versus trench topic, A100 volt. I mean, where do you guys -- what do benchmarks tell you about where you stand versus peers on things like RDS(on), these kind of key performance metrics. What do they tell you when you see these benchmarks?

What customers basically do is they look at the specs that you have, and it includes all of these ones that you just mentioned. And then they look at how your device performs in their system kind of in a real-world scenario versus what your specifications are. And I would say that when the customers give us the feedback, we basically end up in the top tier of performance. Sometimes, we're there with somebody else, but we're at least in that top tier because our devices are designed in such a way that they're going to perform pretty well at the system level. So I feel pretty good about where we are going. And then the best measure of how they feel about it, is design-ins. And of course, we've had a tremendous run in design-ins over the last couple of years. Cumulatively, $15 billion worth of design-ins and of course, our revenue ramp associated with that takes our power device business from $300 million to $2.9 billion or roughly $3 billion, so almost 10x just by 2027. So it seems like to me the customer as someone have done the evaluations, they're putting us in that top echelon and the whole mosaic that they use to make a choice of who they're going to go with is leaning towards us.

Got it. Yes. And that dovetails to my next question, which is about capacity. You've obviously had a huge design in level, I think, $3.5 billion just in the last quarter alone, which is an incredible number. But obviously, now you're doing your forward planning, you're having to start thinking about capacity beyond Mohawk. You've announced your Chatham County facility, and Tyler in North Carolina for substrates, 10x, if I remember, the increase in capacity. But there's still a lot of debate about where and when you're going to announce a new fab. So is there anything you can say more about whether you would consider, for example, Europe for a location and when we could -- when we may hear about when you're going to make that decision?

Yes. We are looking at multiple locations, including Europe and the U.S. for a next fab. And what we've said about that is government funding is going to be a key element of that. And we also have stated that based on our revenue projections, the demand that we're seeing from the business that we need to have a new fab, this next fab up and running by 2027, which if you then backtrack to when we need to put a shovel in the ground that says we need to put a shovel in the ground in 2023. And so basically, we'll need to make a decision probably in the first half of '23 and hopefully in the early part of the first half of '23, but still a lot of work to be done there. We're very engaged with people on that, and we've got some sites selected that we really like, but no decision as of this point.

I think, Rob, the other important consideration is geographic diversity, because that's what customers [Indiscernible]. So that's -- that will also factor in mix too.

Got it. And then can you just talk a bit about the nature of the agreements you've got? And I'm just going to have to switch headsets if my audio is going, but -- the -- if you could just talk about the nature of the agreements you've got with companies like BorgWarner, their take-or-pay terms. And do you have dual sourcing embedded within those? I would love to hear about that. And I'm just going to switch headsets...

Yes. No worries, Rob. Yes, go for it. So what I would say is -- let me give Rob just a second to get his new headset on. All right. I assume he is back with us. So basically, when we do programs, what we call our assurance of supply program, generally speaking, there is an upfront cash sort of deposit from customers to help us fund the capital and in return from that, the customers get a capacity corridor. And in the case of BorgWarner, we publicly stated that, that capacity corridor was up to $650 million a year of supply that we would be obligated to supply them. There's also a lower limit too. So there's sort of a nominal limit, and then there's plus a little bit and minus a little bit. And up to that max, we're obliged to sell and down to that lower limit, they're obliged to buy and it's take-or-pay kinds of things, terms that are associated with that. And that's largely how we've been doing business across even our materials customers are -- there's an upper limit and the lower limit and so forth. But yes, that's generally speaking how those arrangements work. And so when you see us announce assurance of supply programs, that's generally the equation.

And I think, Rob, what I think is important to clarify on, in the case of BorgWarner, as Gregg just described, they invested $500 million in our convertible bond offering. And what that then secured them was the right to purchase up to $650 million a year of devices. Now that certainly -- it's going to scale up over time. Think about that as a traditional automotive time frame for purchasing. But I think that that's the most important thing. There is a long-term supply agreement with a key Tier 1 that has a floor and a top and that top being $650 million annually of devices. So that's a committed revenue stream that we're very excited about.

Yes. And BorgWarner actually just presented at a conference earlier today. So maybe moving on from that. I mean, I guess, how do you think the types of deals will change? Obviously, it seems like in this early phase of silicon carbide, the BorgWarner, ABB, these kind of intermediary Tier 1s have been important to help kind of get this market to develop. But whereas obviously, Tesla is doing its bare die thing in its in-house way. How do you think that will evolve? Because obviously, your competitors like Infineon are talking about how their module expertise will become a key differentiator. And I'm trying to sort of tie that off with companies like BorgWarner being a real success and how you play into that? Because obviously, that seems to be -- it could change quite a lot through the decade.

We don't -- I don't have a particular, here's how it's going to go. I do know that there's going to be lots of different models, engagement models in between now and whenever there's a final engagement model. So we're pretty flexible. We sell bare die to customers who make their own modules. We sell bare die to module manufacturers, who then sell modules to inverter companies. We're engaging directly with folks like BorgWarner. We've got engagements directly with OEMs like Jaguar or Land Rover. So there's going to be a bunch of change, I think, in terms of how this all goes. And I think it's best for us to stay pretty flexible. We also sell modules to customers, and that's what we do in the case of Lucid. So I think it's -- there's going to be a dynamic that's going to transition the business and where it goes, I don't exactly know. There are some customers that have great module capability, and they just want to buy bare die from us. And I've been very, very clear with all of our customers, we're pretty flexible. You tell us how you want us to engage, we're going to be flexible. And then we'll ebb and flow with whatever ends up being the correct engagement model.

Great. I'm going to turn to the questions we just received -- we received, and guys keep -- and ladies, please keep on putting those questions in. So we've had 3 questions so far. So I'll just through them one by one. And actually one picks up on what you just mentioned. So this is a question. Can you speak to your back-end strategy? How does this evolve over time? Are there any investments you're making here to improve packaging, throughput, reliability of modules? I think this refers slightly to what we were just discussing.

Yes, absolutely. Yes. And we are investing there. We largely do our module manufacturing and our packaging through packagers. And that's kind of the strategy that's been pretty successful across most semiconductor companies. There's some amount of outsourcing of that. And there are some pretty good players there. We've been definitely investing in that, engaged with some of the big OSATs that are very good at doing that. One of the key priorities that we've had recently is diversifying that supply primarily out of China, because of all the lockdowns and all the issues that we've had this week it's Shanghai, next week it's someplace else. And so having an alternative to that has been a key priority for us, and we're making pretty good progress there. But we're definitely investing, but we're investing through working with those OSATs. I think we've got enough capacity expansion on our own to do with wafer fabs and Siler City and so forth that working in partnership with those packagers is a pretty good step for us.

Okay. And I think the second question kind of relates to that we just had to what you just answered, so I won't ask that one. But the third question is just that we've had so far is about the -- how do you think about supplying substrate externally over the coming years, given your design pipeline versus using it in-house, specifically on 200-millimeter competitors like Coherent are accelerating their plans to ramp 200-millimeter now and have customers already. Will this development make it more or less likely for you to also sell 200-millimeter substrates externally?

Yes. So our strategy on selling substrates has been pretty consistent over the last 5 years. And that is, we prioritize engaging with customers over long periods of time, and we sign long-term agreements with them. You can kind of think of these as kind of half a decade kind of thing. And our -- and we've specifically stayed out of being a spot market player, where we'll do a reverse auction on our capacity or something like that. You can make some good money in the short term on that. But long term, it's not really a sustainable place. So to the extent that customers want to continue engaging on those long-term agreements, we're all ears. We've primarily focused our 200-millimeter efforts internally. And that's primarily because the commercial aspects of it, if we added a margin on top of it, don't make much sense for us to sell them externally at this point. So we're working on that, and we have enough demand inside our own business to do that. On the 150-millimeter that's something where we'll continue engaging in long-term agreements. Now many of the device competitors out there are attempting to build their own internal supply of silicon carbide wafers. And from my perspective, I think that's a smart thing for them to do. The bill of materials for a silicon carbide MOSFET is heavily weighted towards the substrate and epi and so forth. So it's kind of a smart thing for them to do. And so what we've laid in our plans is the assumption that they're going to be successful achieving what they say they're going to do. Some are talking about wanting to in-source 40%, some want to in-source 60%, some want to do all. So we've just basically taken back the word and say, okay, they're going to be successful in doing that. And so as you look at our plan going forward, you see us ramping up our device business pretty substantially. And then the materials business has a much somewhat slower growth because the assumption is they're going to absorb more of that internally.

Got it. Yes. That makes sense. So as of today, the Siler City facility is basically for internal use only basically for now.

Largely, yes. And that's -- again, as we just try to satisfy our own demand for those wafers.

Yes. Okay. So I wanted to talk a bit about automotive expertise, because I think, look, you've said your top quartile on the device. You're obviously the company with the most experience on the material by far. But obviously, one of the potential Achilles' heel could be that other companies with more automotive know-how can, I don't know, cross-sell, for example, like they say, we give you a massive -- a great price on silicon carbide, if you take all our micro controllers, for example. So -- or just because they understand and have relationships in that industry for longer. So how long are you in terms of building out that capability? Obviously, you can't curtail, but you can do the automotive I mean you know how side.

Yes. No, exactly, Rob. I think that's a really legitimate question. And quite frankly, that definitely was an Achilles' heel that we have had historically. The relationships that, ST, ON, Infineon have had with automotive guys goes back 30, 40 years. So you can't get that overnight. And basically, there are 2 elements that I think are kind of helping us here. One is self-help, and that is we're hiring people from the industry that have automotive knowledge. So as an example, Lisa Fritz runs our quality organization. She ran automotive quality at TI. And so she was there for 25 years, something like that. And so when automotive customers come and audit our facilities, it may be the first time that they've met the Wolfspeed team, but they know her and trust her and so forth. And we've got lots of different folks that we brought in. It's actually been pretty beneficial for us in bringing people in, because they look at our opportunity and go out, this is an industry transition, and I'd like to be part of this industry transition. So I think we're doing some self-help in that regard. But the second thing that's happened is those suppliers, all of the suppliers in the silicon side of things in automotive, have basically been shorting the automotive customers for the last 2 years. And so this whole -- I've relied on these folks for 40 years and they've never let me down. That all broke over the last 2 years. And so now it's less of a, I've always relied on them, and it's more of a, hey, are you really investing in the capacity. Let me see what your plans are, what is your CapEx spend, where is the new fab, that's more of the question. So we obviously didn't anticipate what was happening with the supply shortages and so forth, but it certainly has made that argument less prevalent, because there's just been -- I'm not blaming anybody, but there's just been all these supply shortages for silicon in the last couple of years that have just driven the automotive guys nuts.

Okay. I've got -- I had another question and keep on sending them in. This is a question I'm afraid, I think, refers to Infineon's commoditization payments, which I think has obviously been a hot topic whether they're saying that, because it's in their interest or whether it's actually happening. So the question is, what is the risk that silicon carbide material supply will be commoditized as other entrants, especially in China start to ramp? I guess, and there's a bit more to the question, but that's essentially the main question.

Yes. I think commoditization is a pretty strong word. And I -- as the leader in silicon carbide and we've got about 62% share. I can tell you this stuff is really difficult to do. And it's a very, very tricky technology. So I think commoditization is probably a pretty strong word there. What we assume, though, and what we have baked in our plans is that other people will figure out how to do this and that they will have their own internal supply and so forth. And so that's just part of our plan. And right now, if you look at the world's suppliers of silicon carbide substrates, we're #1 at 62-ish percent share. Number 2 is Coherent or a company that used to be called II-VI, and they're a great company, and they do about 14% share. A large part of what they do is RF, but they're a good company that makes good silicon carbide substrates for power as well, and they're about 14%. And then next up is ROHM through their SiCrystal operation, they're about 13%. So when you add up the top 3 players, you're talking about 90% share of the silicon carbide substrate business. So trying to get into this business, you're going to be doing it with pretty low scale and there's all sorts of barriers to entry. So it's probably going to be trickier than most people think. But like I said, Rob, we've just got an assumption that says folks are going to get into this business. They're going to be able to supply 40%, 60% all of their internal capability, whatever it is they're expecting to do. And our assumption is they're going to be successful, and that's what we got out as our plan.

Okay. And we've had another question, which is to do with one of your other competitors on semi. This is -- I'm just saying this for [Indiscernible], this may not be, true or not true. I'm not sure. ON Semi has made some unique investments in certain testing equipment that improves the reliability of its products at scale. What investments is Wolfspeed making to improve device reliability at scale?

We have a lot of investments going on in that area. We've got a product road maps, technology road maps, Tesla of road maps, all of these things are coming to play. And quite frankly, this is a pretty normal thing that you need to do anyway as most semiconductor companies are investing in this technology. If you look at our R&D as a percent of revenue, you see that it's still quite high. And so despite the fact that we're growing like crazy, we're also investing quite a bit, too. And if you look at our model going forward, although our R&D as a percent of revenue will modulate over time, it's still going to be growing pretty significantly. So we're anticipating our power device business growing at a 60% compounded annual growth rate. It would be a lot of giddyup just to get half of that growth in R&D, 30% year-on-year growth over a 5-year period would be really challenging to do. But we continue -- we do have continued plans for increasing our investments in R&D in all of these sorts of areas. And all good companies are going to be doing that.

Okay. I just want to switch gears. We talked a lot about automotive, silicon and EVs, obviously, and implicitly, but I wanted just to address within industrial, I understand the Arrow relationship you guys have and how important that's been. But I just want to specifically address the application of renewables and EV charging, because other companies are suggesting their margins are way better in these kind of more industrial markets where it might cost a bit more to make, but the ASP is significantly better. So what is your story here? And what are you seeing in terms of market share or estimates of market share?

That is exactly the case, Rob. By the way, that, generally speaking, gross margins in the broader, more fragmented industrial businesses, are substantially higher than the more concentrated and larger businesses such as automotive. And typically, you're talking about 1,000 basis points at least. And so it's a pretty nice business. We've got a very nice set of design-ins right now, thousands of design-ins that we've gotten through the Arrow relationship that we have, and they're addressing customers that maybe they're going to buy $3 million worth of product per year. We don't have the bandwidth to go chase down all those customers. Arrow, of course, has a huge footprint and is fully committed to working with us to evangelize silicon carbide across those markets and get us designed in. And so we feel real good about that. I'm definitely a huge fan of the broader markets, and we've been designed into renewables such as solar farms and so forth. We're designed into server farms, industrial applications, other parts of transportation, so think of this as personal watercraft, so jet ski kind of things, which are much better for the environment, because you don't have the potential of oil spilling into some of these pristine areas. And so we're designed into things like that, vertical takeoff and landing kind of drone taxi type applications or using silicon carbide. So we're super excited about that. And quite frankly, we wouldn't be anywhere near where we are without the relationship with Arrow. I think -- I don't remember if this was exactly right, but I think they have more people in Spain than we have all of Europe. And it's just -- we just don't have the bandwidth to cover all these small accounts, whereas they do, and they've been a terrific partner.

Okay. I've got 2 more questions from clients, investors. The first is, can you please provide an update on the supply issues you encountered in the last quarter. I think this was to do with the taller crystal that you had an issue with and I think you said it would be a 1- to 2-quarter problem, if I remember rightly.

Yes, it will go through the P&L for a quarter or two. But we've made excellent progress in addressing the back end of the line for the taller crystals. And so now we've gotten improvements so that we're back to where we anticipated we would get to. And of course, we're still working on further improvements as we speak. It will take a quarter or two to flush through the system, but we're in pretty good shape on the back end of line. In terms of the spare parts, we still have challenges on a daily basis, getting spare parts for some of the older tools. And we're still wrestling that, I think we're going to be wrestling that probably through all of 2023. It seems like the supply chain issues are not going to solve themselves overnight.

Okay. And this is, I think the last question I can take from investors, which is, is there any way you can ask Wolfspeed, I think everyone calls you Wolf by now. Is anyone -- you can ask Wolfspeed, if there's an update on -- so that's the one we just did, sorry, my apology. The other one is looking at the design-ins in auto, how much of it is direct to OEM relationship through modules versus supplying dies, devices to module manufacturers. I don't know if that's quickly the right phrasing, but you know what I mean, is it direct versus intermediate, I guess.

Yes. So I would say that our device design-ins are largely dies and packages that we sell. And then either the customer provides their own module or they ask us to sell it to a module manufacturer. We do have module design wins as well. And we're excited about that. But like I said, we're super flexible on that at this point. And then -- so that's largely die related. But in terms of engagement with OEMs and with Tier 1s, the OEMs had a really big wake-up call the last 2 years about semiconductor shortages. And so they have been very engaged with the decision as to whose chip is going to be used in the system, whether they buy it directly or not, they want to have influence on it. Some people call this directed buy, where they kind of decide who's going to be the supplier, and then they let the -- let the Tier 1 know, okay, buy from this guy and so forth. And so that's kind of -- that's -- we're very engaged with companies there. We've announced relationships with Jaguar Land Rover, with General Motors, et cetera. So they're very engaged in that decision process.

Okay. I just want to spend the final time of -- that we have talking about financing, because obviously you have this huge CapEx plan -- significant CapEx planning. You are going to be burning through a lot of capital for the next sort of 3 years or so. You've just had a successful convertible issuance. I think it was $1.55 billion. But obviously, there's still a bit of a funding gap and people are still wondering if the customer, if the government, is there going to be another debt financing or equity financing. So is there anything you can tell us on when the next milestones are to sort of bridging this funding gap?

There's several different buckets that we're -- and maybe, Tyler, you could add a couple of points here. There are several different buckets we look at. Obviously, customer funding is an element of that. And BorgWarner was obviously participating in our convert there. But there'll be other kinds of customer funding where there is upfront cash deposits based on capacity corridors, this whole assurance of supply program that I talked about. There's obviously a government-supported funding. We were able to successfully achieve that with Mohawk Valley with the State of New York, where they paid for roughly 1/4 of the cost of putting that facility in place. And that's kind of the benchmark that we're letting governments know that we expect for the next one. Project-based and kind of private funding is an area that we're looking at as well. And then, of course, there's equity possibilities like we just did with the convert. So those are kind of the different buckets that we're looking at. We're working all of them as we speak. And we feel pretty good that we'll be able to get the funding we need to build out this capacity.

Sorry, go ahead.

I was just going to say -- and the important thing for people to remember, we talked about CapEx of about $1 billion this year. Fiscal '24 is probably going to be something north of $2 billion, and then it will start to step down in '25 and '26. But remember, there's a split there between fixed and variable, right? So the facilities cost those are hard costs that we're going to have to put into construction, but tooling can be modulated depending upon demand and market conditions, and that's kind of how we're thinking about it.

Okay. So is it something that -- because I think investors felt that the topic kind of took the shine off a really good Capital Markets Day, because there was this sort of a little bit of uncertainty. So is it something that is going to be there for a while? Or do you think it's something that we can sort of, in 6 months' time, just say, okay, that's done and dusted. We've got that topic done, and we can move on.

I don't know if exactly -- I can't answer that exactly. But obviously, it's our desire to get this behind us so that we can be focused on the execution of the plan.

Okay. Makes sense. Okay. Well, then, in that case, I just wanted to ask one more question that I had, and I think that will be it, which is -- and other than to say, thank you very much guys for doing this. Really appreciate it. It was just to say, how do you think these OEMs -- so these OEMs all have a very aggressive EV plans. And when I look at '25 '26, they're all kind of building in huge ramps. How do you think it's all going to be settling down? Are people going to be using single vendors or 2 vendors or 3 vendors? Is it going to be platform by platform? Because obviously, when I see Infineon saying that they can also grow very fast, I sort of think to myself, well, is that just because these OEMs are now sharing business rather than initially, they were just using 1 vendor. So how do you think it's all going to settle down over time?

Traditionally what the automotive guys do is they pick a lead supplier and then they work with that lead supplier to get into production. And then after they get into production, they bring on a second source. Generally speaking, the lead supplier gets about 75% of the business. The second source gets 25%. And that's kind of the model that they like working in, and it's one we're comfortable with. When we do assurance of supply programs, we are the lead supplier, and it's that 75% kind of number. And we understand at some point, they're going to bring on a second source. So that's pretty normal. The one thing that I might mention, though, is that we now have -- as we engage with customers, we, of course, want to win their business and we want to be their prime source, but we are pretty clear with them that if we're not chosen as the prime source that we actually don't have the capacity available to be a second source. So we're actually not bidding on second source programs anymore. And it's not -- I'm going to take my ball and go home kind of thing. It's just we just don't have the capacity. So where they pick us as the prime supplier, that's great. We love it. We want to be the prime supplier. If they pick somebody else as a prime supplier, they shouldn't count on us as being a second source.

Got it. I think that might explain one of the biggest second source decisions that was taken in the last couple of years, but that will remain nameless. I think we know who we're talking about. Okay. Well, look, thank you very much, Tyler, and Gregg. It was really, really informative, and I hope everyone on the line has a great conference, and hope to do this again next year.

Thanks, Rob.