Ladies and gentlemen, thank you for standing by and welcome to the ON Semiconductor Second Quarter 2020 Earnings Conference Call. I would now like to hand the conference over to your speaker for today, Mr. Parag Agarwal. Sir, please go ahead.

Thank you, Jay. Good morning and thank you for joining ON Semiconductor Corporation's second quarter 2020 quarterly results conference call. I am joined today by Keith Jackson, our President and CEO; and Bernard Gutmann, our CFO. This call is being webcast on the Investor Relations section of our website at www.onsemi.com. A replay of this webcast along with our 2020 second quarter earnings release will be available on our website approximately one hour following this conference call, and the recorded webcast will be available for approximately 30 days following this conference call. The script for today's call and additional information related to our end markets, business segments, geographies, channels, share count and 2020 and 2021 fiscal calendars are also posted on our website. Our earnings release and this presentation includes certain non-GAAP financial measures. Reconciliation of these non-GAAP financial measures to the most directly comparable measures under GAAP are included in our earnings release which is posted separately on our website in the Investor Relations section. During the course of this conference call, we'll make projections or other forward-looking statements regarding future events or future financial performance of the company. The words believe, estimate, project, anticipate, intend, may, expect, will, plan, should or similar expressions are intended to identify forward-looking statements. We wish to caution that such statements are subject to risk and uncertainties that could cause actual events or results to differ materially from projections. Important factors which can affect our business, including factors that could cause actual results to differ from our forward-looking statements are described in our Form 10-K, Form 10-Qs and other filings with Securities and Exchange Commission. Additional factors are described in our earnings release for the second quarter of 2020. Our estimates or other financial – or other forward-looking statements may change, and the company assumes no obligation to update forward-looking statements to reflect actual results, changed assumptions or other factors except as required by law. We plan to host our Analyst Day on March 5, 2021. At this time, our intent is to hold the event virtually. However, if conditions improve and risks related to COVID-19 pandemic subside substantially, we will hold the event in person in Phoenix, Arizona. We will provide additional information on the event in due course. During the third quarter, we plan to attend four virtual conferences. This includes Keybank Capital Markets Future of Technology Series on August 11; Jefferies Virtual Semiconductor IT, Hardware and Communications Infrastructure Summit on September 2; Citi Global Technology Conference on September 10; and Deutsche Bank Technology Conference on September 15. Now let me turn it over to Bernard Gutmann who will provide an overview of our second quarter 2020 results. Bernard?

Thank you, Parag, and thank you everyone for joining us today. During the second quarter, we saw a moderate improvement in business conditions as macroeconomic activity picked up across the world. We're seeing improvement in order activity across most end markets and geographies as the global community adjusts to changed business and social conditions brought about by the pandemic. The COVID-19 pandemic continues to be a significant headwind to our results. However, through strong execution and unwavering commitment from our employees, customers and supply chain partners, we believe that we are successful in navigating the current environment. Despite near-term challenges, long-term drivers of our business remain intact. We're seeing strong momentum in our key end markets driven by accelerating design wins for our power, analog and sensor products. At this time, improving our gross margin is the primary strategic priority for the company. As evidenced from our most recent press releases, we have accelerated our plans to optimize our manufacturing network. In addition, we're making strong progress in the ramp of our 300-millimeter manufacturing processes at East Fishkill fab. Keith will later provide additional details regarding our progress on the manufacturing front in his remarks. Now let me provide you with details on our second quarter 2020 results. Total revenue for the second quarter of 2020 was $1.213 billion, a decrease of 10% as compared to revenues of $1.348 billion in the second quarter of 2019. The year-over-year decline in revenue was driven primarily by a slowdown in global macroeconomic activity due to the COVID-19 pandemic. GAAP net loss for the quarter was $0.00 per diluted share as compared to a net income of $0.24 per diluted share in the second quarter of 2019. Non-GAAP net income for the second quarter of 2020 was $0.12 per diluted share as compared…

Thanks, Bernard. I will start with structural changes we are making to drive margin expansion and then I will provide an update on current business environment. To drive gross margin expansion, we have accelerated the pace of our manufacturing footprint optimization. We announced a plan to explore potential sale of our 6-inch fab in Niigata, Japan. Production from the Niigata, Japan fab is expected to be transitioned to other fabs in our network. This announcement comes on the heels of our announcement in February regarding our plan to transition production from our 6-inch automotive-centric fab in Belgium. With manufacturing optimization plans we've announced thus far, we expect to see significant improvement in our manufacturing cost structure and gross margin. Our 300-millimeter manufacturing capability in the East Fishkill fab has afforded us significant flexibility which has enabled us to optimize our network. During the second quarter, we started our first 300-millimeter wafer production at the East Fishkill fab. We are currently sampling our 300-millimeter products to customers, and we expect to recognize our first 300-millimeter revenue in the third quarter. As we've noted in our earlier calls, we are very pleased with our accelerated progress in ramping our 300-millimeter manufacturing processes. The yields have been spectacular and we expect to see a meaningful positive impact on our gross margins as our 300-millimeter manufacturing ramps up in the coming years. We've made substantial progress in key initiatives for driving gross margin expansion. We have launched new products and built a robust design win pipeline in automotive, industrial and cloud power end markets to drive richer mix. We continue to optimize our portfolio to ensure healthy margins for the company. We've accelerated the optimization of our manufacturing network. In addition, we will continue to work on expanding our gross margin through operational improvements…

Thank you, Keith. Based on product booking trends, backlog levels and estimated turns levels, we anticipate that total ON Semiconductor revenue will be in the range of $1.2 billion to $1.33 billion in the third quarter of 2020. Our third quarter revenue has been impacted moderately by geopolitical issues related to a particular customer. At this time, near to mid-term expectations related to this customer have been de-risked to a large extent and we don't expect to see any further meaningful decline in revenue from this customer beyond the third quarter. For third quarter of 2020, we expect GAAP and non-GAAP gross margin between 32% to 34%. Our third quarter gross margin outlook includes COVID-19-related costs of approximately $11 million. We expect total GAAP operating expenses of $307 million to $327 million. Our GAAP operating expenses include the amortization of intangibles, restructuring, asset impairments and other charges which are expected to be $30 million to $34 million. We expect total non-GAAP operating expenses of $277 million to $293 million in the third quarter. We anticipate third quarter of 2020 GAAP net other income and expense including interest expense will be an expense of $42 million to $45 million which includes a non-cash interest expense of $9 million to $10 million. We anticipate our non-GAAP net other income and expense including interest expense will be an expense of $33 million to $35 million. Net cash paid for income taxes in the third quarter of 2020 is expected to be $17 million to $22 million. For 2020, we expect cash paid for taxes to be in the range of $54 million to $60 million. We expect total capital expenditures of $80 million to $90 million in the third quarter of 2020. We're currently targeting an overwhelming proportion of our CapEx for enabling our 300-millimeter capability at an accelerated pace. For 2020, we expect total capital expenditures of approximately $400 million. We also expect share-based compensation of $17 million to $19 million in the third quarter of 2020, of which approximately $2 million is expected to be in the cost of goods sold, and the remaining amount is expected to be in operating expenses. This expense is included in our non-GAAP financial measures. Our GAAP diluted shares for the third quarter of 2020 is expected to be 460 million shares based on our current stock price. Our non-GAAP diluted share count for the third quarter of 2020 is expected to be 411 million shares based on our current stock price. Further details on share count and earnings per share calculations are provided regularly in our quarterly and annual reports on Form 10-Q and Form 10-K respectively. With that, I would like to start the Q&A session. Thank you. And Jay, please open the line for questions.

Thank you, sir. The first question comes from the line of Ross Seymore of Deutsche Bank. Your line is open.

Hi, guys. Thanks for letting me ask a question. First question I had is on the gross margin line. It's good to see no negative surprises on that for the first time in a couple quarters. So I just wanted to look at, in the near-term, how you expect those COVID-related charges to trend. You still have a bit in the third quarter. Do they go away in the fourth quarter? And then much more importantly, longer-term, with the Belgium fab and the Niigata fab potentially being sold or shut down, how do we think about the long-term gross margin potential? When do those benefits come in? What's your new target, etcetera?

Thank you, Ross. Let me first address the – the COVID-related expenses is a little bit difficult to predict exactly when those are going to go away. As we said, a lot of those are related to freight expenses which are at a premium right now as well as safety protocols that we have put in place. Obviously, it will be a function of how the COVID pandemic progresses over time, and we expect those gradually to come down, but we are projecting that those will continue during the third quarter. We have typically assessed the savings associated with a 6-inch fab to be in the $25 million to $30 million of fixed costs that go away per year. The timing of the savings is really a function of business dynamics, and we don't have a perfect timeline from the time we conclude a sale. It will still take us probably about 1 to 1.5 years until we get full savings, but that depends on really when we get these deals concluded. Long-term, we still are aspiring and still are targeting to achieve our long-term goal of 43% that we enumerated in our 2019 Analyst Day, albeit probably a little bit delayed with the fact that 2019 and 2020 were obviously not very good years from a top line point of view.

Got it. Thanks for the color. And then my follow-up, I just wanted to hit on the revenue side. In the last couple quarters, you talked about supply disruptions, and I think everybody understands that. But they were, in the first quarter, a bit over $100 million; I think it was about the same in the second quarter is what you originally said. So did you have those supply disruptions impacting revenue in the second quarter? And then potentially more importantly, if you don't have any in the third quarter, are those revenues just gone? Or like so many of your peers, are you actually expecting to catch up on some of the formerly delinquent shipping?

So we did continue to have supply constraints or pandemic-induced supply constraints in the second quarter that was reflected in the total numbers. They are much less in the third quarter and we're hopeful that there will be none before the end of the year. But at this stage, again, everything is still unknown if there's flare-ups or changes around the world; there's still risk.

Thank you.

Thank you. Next question comes from the line of Chris Danely of Citigroup. Your line is open.

Thanks, guys. First question is you managed to do a really good job keeping the OpEx down in Q2, and you're – you've given us some good guidance for Q3. How about longer-term trends in OpEx with some of these restructuring plans? What can we expect for the next, I guess, several quarters?

So, indeed, we did take some significant actions that helped us over-achieve our second quarter and third quarter guidance. In the long run, we're still targeting to achieve the 21% of OpEx as we have enumerated in our Analyst Day. However, we have to be aware that at some point of time, depending on business conditions, some of the temporary actions as well as some of the variable comp will come back and will cause a temporary blip that will be gradually leveraged through as we increase revenues.

Got it. And then for my follow-up, any commentary or color on the Koch Industries' investment? Why did you adopt the shareholder rights program? And do you expect them to be a passive or active shareholder?

They have indicated publicly their passive intent as a shareholder and had no further communication.

Okay. Thanks.

Thank you. Next question comes from the line of Chris Caso of Raymond James. Your line is open. Chris Caso - Raymond James & Associates, Inc.: Yes. Thank you. Good morning. I wonder if you can comment on the linearity of bookings through the quarter, and it sounds like you're expecting some improvements as you go through the end of the year. If you could elaborate on that a little bit more. Thank you.

Yeah. We had good linear pickup through the entire second quarter and we continue to see good activity here in the third. So at this stage, we don't know when they stop ramping. But so far, it's been quite strong since the middle of the second quarter. Chris Caso - Raymond James & Associates, Inc.: And what about with regard to Q4 seasonality? And I guess given all the ups and downs we've had this year, I'm not sure that that normal seasonality generally applies. But any thoughts on how we should be thinking about the quarter in light of all what's going on right now?

Yeah. In our comments, we mentioned we expected conditions to continue to improve. We really only give guidance one quarter at a time, but we see no reason to believe there should be any retraction of the current trends. Chris Caso - Raymond James & Associates, Inc.: Okay. Thank you.

Thank you. Next question comes from the line of Raji Gill from Needham & Company. Your line is open. Rajvindra S. Gill - Needham & Co. LLC: Yes. Thank you for taking my questions. Congrats to the accelerated transition to 300-millimeter; I think that's very good progress. If you could remind us the cost savings, the potential cost savings as you transition to 300-millimeter. I believe that 12-inch facility has a revenue capacity of about $2.2 billion or about 40% of your revenue. So I'm just wondering if you can maybe outline what are the cost savings – what would the cost savings be once you ultimately transition to 300-millimeter? And given kind of the accelerated timeline you've had, and you're starting to see revenue from a 300-millimeter customer in the third quarter, should we expect the transition to happen a little bit sooner than later? Thank you.

So the first question on the long-term benefit of East Fishkill, definitely a 300-millimeter fab gives us a sizable good improvement in gross margin, somewhere in that 20% to 25% of total finished goods cost. Now obviously, that is when you have a fully-loaded fab. In the interim period, we are paying a foundry cost, so the savings that we get are simply a function of the price that we're getting. We do and are very excited about loading the fab. As Keith mentioned in his prepared remarks, we're seeing wonderful yields as we're running it through, and we expect to have first revenues in the third quarter. However, meaningful revenues will come in the years to come. Now having said that, even the foundry costs that we're getting from them is quite attractive. Rajvindra S. Gill - Needham & Co. LLC: Okay. Thank you. And as for my follow-up, we're starting to see a recovery in automotive, particularly in US and Europe. Wondering if you could discuss kind of what's your view on global auto production ending this year? And are there any thoughts in terms of what the rebound could look like in 2021?

Yeah. I guess we don't have any firm opinions on 2021 yet. But I would expect that if you don't have the shutdowns that we had in 2020, there's a very significant improvement year-on-year for next year. We're looking at something in the minus 20% in automotive sales decline year-on-year in 2020. Time will tell, but all of our customers are telling us they're pretty much back to full capacity sometime during the third quarter of this year. Rajvindra S. Gill - Needham & Co. LLC: All right. Very good. Thank you

Thank you. Next question comes from the line of Vijay Rakesh from Mizuho. Your line is open.

Yeah. Hi, guys. Just a couple of questions, one on the automotive side. I think you mentioned LIDAR will be shipping in 2021. Just wondering what your expectations are there second half. And also, on the EV silicon carbide, now that it's ramping, are you still trying to do internal silicon carbide wafers or would this be mostly all external? And how do you see that ramp into next year given it looks like multiple catalysts or subsidies on the EV side going forward? Thanks.

Okay. Yes. Automotive LIDAR would be in the launches for vehicle OEMs in the second half of next year with the new launches they've got after the summer, and we do expect to see a significant contribution. On the EV side, with silicon carbide, our intent is to have both internal and external supply on an ongoing basis. This year and next year, it should be mostly external supplies and then as you transition to 2022 a larger percent of internal supply.

Got it. And I think you mentioned one customer delay with geopolitical tensions. Is that the same customer that's impacting you on the industrial and the comms side? That's it. Thanks.

Yeah. It's a very large customer in China that is a broad-based customer and it impacted several of the segments.

Great. Thank you.

Thank you. Next question comes from the line of Christopher Rolland from Susquehanna. Your line is open.

Hi, guys. Some questions about Niigata, I guess. What is the revenue contribution there? And then how are you guys looking at the odds of successfully selling that facility? Thank you.

So we actually are expecting to have success there. We've seen good progress with interest in our Belgium factory. And so these assets still have interest in the marketplace and we're expecting to have good results. Percentage of revenue, I'm not sure I have that number.

While we probably don't have a precise number. It is a relatively small facility compared to the total footprint. As I mentioned earlier, the savings that we'll get that from that facility is around $30 million per year.

Understood. For the remainder of your capacity, you still have quite a bit of extra there. Have you considered serving new products, some sort of fab filler product or something like that in fact growing out of your footprint organically? Or have you even considered the foundry model? I know you're doing that on a temp basis at Fishkill. I wonder if you could also give us an update on those temporary foundry customers that you have. Have they actually decided to continue with you as well? But, yeah, how you can fill that extra capacity would be great.

Yeah. So I'll try and get at what I think your question is. We do foundry services for many customers that are generally specialty processes that use our analog and sensor capabilities. They're not temporary; they're permanent relationships that we have with those customers. We continue to be excited by servicing them. As far as looking at low-margin products to fill up factories, we're not looking at that. We don't think we need to look at that. We think the demands that we've talked about coming up for their power products, our sensor products will more than meet the needed amount of ramp over the next few years. So the trends in electric vehicles, in factory and automation, etcetera, we've been talking about, we think they're more than sufficient. And then with the closure of two of our wafer fabs, we believe the balance in the medium-term will be quite good.

Thanks, guys.

Thank you. Next question comes from the line of Craig Ellis of B. Riley FBR. Your line is open.

Yeah. Thanks for taking the question and, guys, thanks for all the color on COGS initiatives. I just wanted to follow-up on a few of the fabs questions. Keith, so from your last question, can we deduce that there are no other fabs that the company would sell if we don't have a strong recovery? Or are there some things that you could execute on if we had a lackluster rather than a strong recovery?

Yeah. We have no current plans. The outlook that we've got right now, we think the remaining network is appropriate. But as always, we will see what the future holds.

Got it. And then perhaps touching on two end market issues with one question. One, it looks like compute in the third quarter will be back to record highs. Can you give us a sense for how the mix of PC versus server power is evolving therein? And then with auto, I know you don't want to give a specific outlook for calendar 2021. But do you feel with all the design wins you have in your secular growth areas that exiting 2021 that business could be back towards prior record levels? Thanks for the help, guys.

So yes, we're seeing good results there and I think I would give kind of two pieces of color. One, the infrastructure piece for the cloud continues to grow and we see very sharp growth there. We think there was certainly some COVID-related acceleration on the client side. We don't see that diminishing here this year. We think that continues with a lot of the remote learning and remote interactions that are going on, people continuing to upgrade various parts of their appliance systems. So I would say as we enter into the first quarter of next year, we still see a strong compute environment and should expect next year to be as good, if not better from a growth perspective.

And then on automotive?

Automotive, certainly, we've seen major interruptions as you know in the first part of the year with manufacturing. As I mentioned, our customers are telling us that they are full steam ahead here as they've gone into Q3. And in each of those major customers around the world, their efforts in electric vehicles are accelerating and their efforts from an ADAS perspective are accelerating. So we are expecting to see a return to the above-market growth for our products in automotive next year.

That's helpful. Thank you.

Thank you. Next question comes from the line of Matt Ramsay of Cowen. Your line is open. Matthew D. Ramsay - Cowen & Co. LLC: Yes. Thank you very much. Good morning everybody. Keith, I wanted to follow-up on some of the PC and server power stuff. There's been some fairly big disruptions with one of the big microprocessor suppliers there and their future roadmap. And I just wondered maybe you could step back and tell us how you guys are aligned on the server power side regardless of chip vendor or of OEM or ODM mix and if that might change any of your forward outlook there. Thank you.

No. We're well-aligned with the various processor options for PCs and servers and very well-aligned with the model changes that they have in their portfolio. So we frankly think that it does change things for them, but from our perspective all of them still need power and we're well-positioned. Matthew D. Ramsay - Cowen & Co. LLC: All right, great. Thanks for the help there. And just as a follow-up, I guess you're one year on from closing Quantenna now. And if you just kind of step back and look where the design win traction has been and maybe the revenue trends since you closed the deal, just kind of level-set where you were versus your expectation, I think that would be helpful. Thank you very much, guys.

Okay. On the Quantenna, we are not achieving the revenue growth we had hoped. Certainly, the market events have had an impact on that. We are quite excited about the progress we're making with our new combination products for the appliance market, and the teams there on the engineering side trying to drive a low-power combination product for that market are making great progress. So what we're seeing out there is good excitement for the future designs but less revenue than we had hoped for originally.

Thank you. Next question comes from the line of Harlan Sur of JPMorgan. Your line is open.

Good morning. Thanks for taking my question. Within the Intelligent Sensing Group, we tend to focus on the automotive piece which is the largest segment growing at a double-digit CAGR. But it looks like the industrial and edge applications are seeing strong adoption – robotics, machine vision, smart retail. So excluding some of the legacy businesses, do you guys still see a double-digit growth CAGR in industrial and edge over the next few years? And what's the current mix of industrial and edge within ISG?

So we do see a lot of strong growth coming. It's been offset by our pulling back from some of the very low-margin consumer-like security business, security cameras for homes, etcetera. So that's masked some of the great growth, but we're seeing the adoption there in the industrial area, in the automation area and in the robotics area actually pretty exciting. So we are expecting double-digit growth for all of those portions of the market and of course in automotive to continue. So after seeing the COVID impact this year plus some retraction from some of the security business, I would expect to see that double digits returning in 2021.

Yeah. Thanks for the insights there. And then on the cloud power, obviously benefiting from the strong cloud server spending trends, but especially in servers you guys are seeing a strong pickup in dollar content. I think it's been about like a 15% CAGR on dollar content over the past four years on the server platforms. You've got Sapphire Rapids from Intel ramping next year. I think you guys are anticipating about 25% dollar content step-up on the upgrade. Is that still how you kind of see dollar content improvements on a go-forward basis?

Yeah. We're seeing it go from about $60 to $75 next year is our expectation, growth per server.

Thank you.

Thank you. Next question comes from the line of John Pitzer of Credit Suisse. Your line is open. John W. Pitzer - Credit Suisse Securities (USA) LLC: Yeah. Good morning, guys. Thanks for letting me ask a question. Keith, I'm just kind of curious. You talked about the impact of the geopolitical in Q3. Can you quantify it? And in your prepared comments, you said that you think it's now been fully de-risked. Is that customer effectively now zero? And are you concerned that to-date the US has just been targeting a single entity in China? What are the risks if that broadens out?

Yeah. We are very concerned about some of the increasing tensions on global trade. Very much believe that global trade is essential for technology and the growth of semiconductors. So clearly, would not like to see further there. We don't comment on specific customers, but the answer is no. It's not zero our revenue expectations from China or those customers. But the pieces that look likely to be impacted we think have all been impacted at this stage. John W. Pitzer - Credit Suisse Securities (USA) LLC: That's helpful. And then Keith, as you guys ramp the 300-millimeter Fishkill facility, I'd be curious as to what end markets we should think about that fab supporting. And you've been a long-standing member of the SIA. I'd be curious to get your view of the CHIPS Act. Post the sale of the fab in Japan and in Belgium, what percent of your capacity is going to be US-based and how might that help you in the future if the CHIPS Act is passed especially around tax rate?

Okay. Two separate questions there. On the 300-millimeter, the market's there. We're ramping up initially power products, so all of the server and automotive and industrial applications that we talk about growing are going to be filling that up with power products, and then that will be followed afterwards with more and more sensor and analog products. The CHIPS Act we think is an important part of balancing out the supply chain. For ON Semiconductor, we actually have several facilities already here in the US. And with the addition of East Fishkill, the vast majority of our wafers will be coming out of the United States. John W. Pitzer - Credit Suisse Securities (USA) LLC: Thank you.

Thank you. Your next question comes from the line of David O'Connor of Exane BNP Paribas. Your line is open.

Great. Good morning and thanks for taking my questions. Maybe one or two follow-ups from some previous answers. Keith, you spoke about improved order activity in most end markets and geographies. Which are the end markets that are still impacted or still seeing pockets of weakness? And also in orders, the long lead time orders, has visibility there improved too or is it more just the short lead term (sic) [time] (00:51:20) orders? And I have a follow-up. Thanks.

Yeah. I'll start in reverse order. From the lead time orders and impact we're seeing there, clearly customers are using those lead times to place their orders. So we don't see any increase in long-term orders from a normal pattern; in fact, if anything a little bit less of that and more of the order as our lead times dictate. Relative to where we still see some softness, in general, as I mentioned, the handset business looks like it's going to be re-ramping later this year rather than earlier. And some of the business I mentioned earlier with security and industrial in China is a little bit softer than it was in Q2.

Thanks. That's helpful. And then maybe as my follow-up. It sounds like you're accelerating traction on silicon carbide with some of the inverter wins that you mentioned. When you look at your overall design wins on silicon carbide, what's the phasing of those wins when we look out over the next maybe three years, starting in 2021? Is the bulk of those wins ramping in 2022 or is it more spread out over the next three years? Thank you.

So yeah. We have ramps every year and the accelerate, I would say significant acceleration in 2022. But we're actually starting to ramp here at the end of this year, through all of next year, but I'd say the biggest impact is 2022.

Thank you. Next question comes from the line of Tristan Gerra of Baird. Your line is open. Tristan Gerra - Robert W. Baird & Co., Inc.: Hi. Good morning. Longer-term structural question on gross margin. I understand the low utilization rates and the COVID-related charges. But your gross margin earlier this year came down below the 2011-2012 which I think was around 32% at the time and yet your revenue base was about one-third lower than it is now. So is that mostly attributed to ramping capacity in 2018 or are there mix or pricing effects as well? And also, what was the pricing decline year-over-year and quarter-over-quarter in the just-reported quarter?

So we attribute the impact mostly due to COVID and due to the underutilization that's driven by as a result of that. Long-term, we still are aiming and we are confident that we can achieve that long-term goal of 43%. We don't see any pricing issues as we go through. Pricing has been pretty healthy. I think that's it. Tristan Gerra - Robert W. Baird & Co., Inc.: Okay. And then any update that we should get on your acquisition strategy? Is that something that is basically going to remain unchanged with what we've seen in the past decade or is there any changes as a result of the environment and the manufacturing shift that's ongoing right now at the company?

So no change in basic philosophy. When the time is right and the opportunities are right, we certainly will be an interested party. But at this stage, there's no activity. Tristan Gerra - Robert W. Baird & Co., Inc.: Great. Thank you.

Thank you. Next question comes from the line of Kevin Cassidy of Rosenblatt Securities. Your line is open.

Thanks for taking my question. When you announced the acquisition of the East Fishkill fab, you had said it was about $300 million in investments you're going to make into the fab. Out of the $400 million in your CapEx for this year, how much of that is going towards the $300 million for East Fishkill?

It is a significant portion of it that we are devoting and that should really give us the ability to ramp-up in a faster and more meaningful way.

Okay. Great. And in the Niigata fab, what process nodes were being run there?

Those were mostly analog nodes for various mixed-signal products, and the markets for that were everything from automotive to consumer.

Okay. Great. Thank you. Congratulations on the progress.

Okay. Thank you.

Thank you. Next question comes from the line of Gary Mobley, Wells Fargo Securities. Your line is open.

Yeah. Thanks. Good morning. Thanks for fitting in everybody. In the interest of time, I'll pose both my questions. I'm curious to know how the potential divestiture or sale of the Niigata fab might impact any relationship that you have with some Japan-based automotive OEMs. And Bernard, you mentioned that distributor inventory was down a little quarter-over-quarter. Remind us of how far you need to go before you're back into your long-term range goal, and would you expect that distributor inventory to decrease again in the third quarter?

Yeah. So I'll take that question before – so we are at the high end of our guide, so we're not really outside of our bounds. We also build the inventory in anticipation of a recovery, so that should help us to serve customers in the third and fourth quarter.

Yeah. And on the relationships, clearly value our customers and we're going to make sure that the transitions there do not impact them. We have a much larger 8-inch facility in Aizu, Japan. And so what we intend to do is use that for those customers in Japan that need that continuity of local supply.

Thank you. Next question comes from the line of Nik Todorov of Longbow Research. Your line is open.

Hi. Thanks, guys. I wonder – I think last quarter, you announced a $50 million cost saving program. I just wonder how much of that has gone through and how much is left to go.

Well, we did accelerate and did that. So our guidance for the third quarter shows that we are continuing to be at the low point that we achieved in the second quarter. So for the most part, it's done.

Okay. Great. And a follow-up quickly. I think the gross margin – the free cash flow generation was much stronger than expected. I wonder if you have any thoughts on how should we think about 2020 outlook for free cash flow, and then any thoughts on resuming the buyback.

So at this stage, on a prudent way, we'll still keep the share buyback program on hold. We're still prudent on that front. That will be for later on. The free cash flow, we talked about our CapEx being $80 million to $90 million for the third quarter and $400 million for the year, and the rest should come directly from the P&L. Don't expect any other significant disruptions in the free cash flow, so it should be mainly a result of the P&L minus the CapEx of $80 million to $90 million in the third quarter and $400 million for the year.

Got it. Thanks.

Thank you. Next question comes from the line of Vivek Arya of Bank of America Securities. Your line is open.

Thanks for taking my question. I think, Keith, you mentioned that automotive customers will be at full production rates in Q3. I just wanted to make sure if I heard that properly. Or the real question behind that is how far below do you think your auto customers are below their prior peaks of production, and how does that compare to your automotive sales versus the prior peak?

Yeah. So my comment there is that during the third quarter, they should all reach full production. They weren't all full production from day one, so that's going to vary a bit by end customer. But like I said, they're all bullish of getting back to what they consider full production during the third quarter.

But if they are at full production, then why are your automotive revenues still 15%, 20% below your prior peaks?

I'll try again. So they aren't full production for the entire quarter; they're achieving full production rates during the quarter. So they're still ramping I guess is the simple way to interpret that.

Got it. Thanks. And as a quick follow-up, if say conceptually your Q4 sales are flattish, should we assume that gross margins also stay flattish or are there other trends that could take them higher or lower?

So I'm not postulating on revenues in Q4, but you should see continued improvement on the gross margin front as the expenses around COVID go down and we continue to get traction in our factories from Q2 levels.

Okay. Thank you.

Thank you. Next question comes from the line of Shawn Harrison of Loop Capital. Your line is open.

Hi. Good morning and thanks for taking my question. Keith, I want to go back to auto as well but more of – it looks like in the first quarter, ON outperformed production by about 15 points; it was about 20 points in the second quarter. It looks like you picked up $5 to $7 of content per vehicle on average this year. Just maybe you could highlight where you've seen the content increase year-over-year and do you expect – I mean, I know it's typically a high single-digit outperformance in production, but it looks like you'll be well ahead of that down 20% for the year if this content trend continues.

Yeah. As I mentioned, the two trends on electrification and the ADAS, the safety side, continue to drive more dollar content for us. And as you pointed out, I think it's showing up in less declines than the marketplace overall as opposed to big gains. So hopefully as the market turns around, you'll see those turn into big gains. But it really is electric power in the EV side and all of the ADAS applications starting to grow that continues to drive those trends.

Okay. Thank you. And then Bernard, did you say you would expect internal inventory dollars to decline sequentially in the third quarter or was that just distribution?

We expect distribution down and we expect to remain probably flattish in terms of inventory dollars in the third quarter but down in terms of days.

Okay. Thank you very much.

Thank you. Next question comes from the line of Craig Hettenbach of Morgan Stanley. Your line is open. Craig M. Hettenbach - Morgan Stanley & Co. LLC: Yes. Thanks. Keith, just a question on EVs. Since you do both IGBTs as well silicon carbide, I just want to get a sense of how you're seeing that market develop. And particularly from a silicon carbide adoption, what are some of the signals you're getting from customers that they're moving forward versus that trade-off with IGBTs?

We're still seeing the predominance of the lower-cost vehicles go IGBT and the high-end vehicles going to silicon carbide is the trend that we're seeing, a very definite bifurcation going on there, and that is geography-independent. So we think there will be good growth in both sectors going forward. Craig M. Hettenbach - Morgan Stanley & Co. LLC: Got it. And then just a follow-up to some of the questions that have been asked on the geopolitical issues. Do you have a rough sense so you can quantify roughly for Q3 what the impact is to the guidance? And then do you think there were any pull-forwards ahead of that to Q4 as those issues arose?

So I'll start with the end of that. We're not expecting any additional issues there. We think that the new rule is kind of at a pause for a bit, so I'm not expecting any further impacts or surprises on that number. I don't know that we've got a number we're prepared to handle because it is a specific customer and we don't share that type of information. Craig M. Hettenbach - Morgan Stanley & Co. LLC: Thanks.

There are no further question at this time. Presenters, you may proceed.

Thank you, everyone, for joining the call today. We look forward to seeing you at various conferences during the quarter. Goodbye.

Ladies and gentlemen, this concludes today's conference call. Thank you for participating. You may now disconnect. Have a great day.