Delighted and honored to have the team from Texas Instruments, Rafael Lizardi, the Chief Financial Officer, and Mike Beckman from the investor relations team. Very delighted that-
Good to be here.
Thank you very much.
Thank you.
What I'll do is start with my questions, but please feel free to raise your hand if you had something that you would like to bring up. But maybe, Rafael, let me just kick it off at the high level. Perhaps give us the state of the union now we are, you know, almost kind of middle of the year. How has the demand and the inventory situation developed so far this year?
Yeah, well, let me step back and just remind everyone of our plans, our investment plans that we've put in place and where we are on those and why we're doing that. First, the why, we're putting this plans in place, we put these plans in place and we're executing to them, is, one, the secular growth in semiconductors, in Analog and Embedded, and in particular, in auto and industrial. And we all can see and have a lot of examples of what's going in there and what's driving that with automation, electrification, safety, that's driving that secular growth. Second, our position in those markets is tremendous. So about three-quarters of our revenue now is in auto and industrial. So we're playing in the best places.
And then the last piece of that is the geopolitically dependable capacity that we're putting in place that our customers are clamoring for. And that just puts us in a great place to have capacity at scale outside of China and Taiwan.
Okay. So maybe let's, let's kind of pick up from that. From what you said, does it mean that the $5 billion per year CapEx plan that you have, is there any scenario in which it can change?
Let me first, I'm gonna answer that question directly. But first, let me walk you through what we're getting for that investment. I'm gonna break it down in about four pieces, okay? First is RFAB2. RFAB2, we built that factory four or five years ago, and we've been equipping it since then. We have about two years left of putting equipment in that factory. That's the factory that's gonna be the workhorse of the next upcycle. Because that factory, if you go back to 2020, we actually left some money on the table. You know, we could have done more, and had we had RFAB2 ready, we would have done more. So we don't wanna miss out on that. So that's RFAB2.
We're also, RFAB2 is one where we're shutting down an older factory, a 150-mm to 200-mm factory, and we're moving those products to RFAB2. And as they move from 150-mm and 200-mm to 300-mm, they're a lot more cost-efficient, okay? So that's RFAB2. LFAB1 is the factory that we bought from Micron in 2021, and we have been qualifying and equipping, since they already had equipment, but we have to put additional equipment on that. Think of that factory as a transfer factory. We don't need growth to fill that factory. All we're doing is moving loadings that we've had, and we continue to have to a large degree, in TSMC and UMC, and we're moving them internally. When we do that, the trade-off, the cost trade-off is huge.
We go from paying about $2,500 per wafer to essentially a $200 per wafer cost on a variable cost basis, because the factory is already there, right? The people are already there. That factory is in the middle of it; it has already qualified some processes. We still need to qualify additional processes, and then we have to go part by part and qualify this and send samples to customers. That's why it takes a while. Let me tell you one more point on RFAB2 and LFAB1. But the ITC, the 25% ITC credit applies to those only; expires in 2026.
So that's another consideration that we have to take into account, that we from that standpoint, we wanna maximize the equipment that we put there through 2026, because anything that we put in 2027 and beyond does not get a 25% credit. Okay, so that's for those two factories. Now let me go to SM1 and 2. That's the new Sherman facility. At some point, it's gonna have 4 fabs, 1, 2, 3, and 4. For now, we're building 2, 1 and 2. One is gonna be a full fab. In fact, it's almost done. It's gonna start getting equipment in third quarter. And then, and by equipment, I mean a pilot line.
So it's essentially, think of it as, excuse me, 5% capacity worth that we have to put in place, one-of-a-kind tools, so that we can have a pilot line and start churning out products, and then we send samples to customers so they can qualify them. That's SM1. SM2, think of a bare concrete shelf. Okay, that is just a shelf. That is just so that it's there, ready for a potential, if we need it, we can then move very quickly, to, to put a clean room and then equipping that. Then the last piece of that is LFAB2. LFAB2 is gonna be a three-level fab, a pretty large fab in Lehi, in Utah, right next to LFAB1, but it's gonna behave like an extension of LFAB1, meaning that we don't have to qualify it separately.
Once LFAB1 is qualified and a customer says, "Check, I'm gonna take products from LFAB1," LFAB2 is just another floor of LFAB1. It's just an extension. We do our own, install the tools, do our own simple qualification, tool by tool, and then we start ramping. That, we broke ground this year, but that can be done on a modular basis. Of course, the concrete, you kind of put in place all at once. You don't have to... But the clean room, you can do more modularly, and of course, the equipment, you can also do very incremental. And then to answer your question, you know, we're gonna spend $5 billion this year and next year to do those things that I described. For 2026, can we accomplish what I just described with less than 5?...
Possibly, in fact, very likely, but we're in the process of understanding that. We'll give you more information on that over time.
Okay. What is changing that view versus three months ago?
You know, time has passed, and we have more information and to assess where we wanna go. And at the end of the day, look at the big picture, right? We spent about $2.5 billion in 2021, $2.5 billion in 2022, $5 billion in 2023. We're gonna spend $5 billion this year, $5 billion next year, and then the remaining $5 billion that we just talked about in 2026. You add that up, that's $25 billion. So, you know, could we potentially shave $1 billion or $2 billion from that and still accomplish everything that we wanna accomplish? That's a possibility. But in the big scheme of things, it's $1 billion or $2 billion out of $25 billion investment cycle.
I see. And then, Rafael, even longer term, I think the plan was that you would have a few years at this $5 billion, and then the exit would be 10%-15% kind of CapEx intensity, right? So that's more kinda top-line based. But even that 10%-15% is much higher than what TI used to have, right? Like, in the past, you were kinda low, mid-single digit, right, type of CapEx. So why is it so much more inflationary to put this kind of capacity-
Yeah
-now versus before?
I tell you what, forget about that 10%-15%, frankly, because that is, that 10-15 was a function of revenue growth. So if revenue was headed towards a very high number, then, of course, we would have to put additional CapEx in order to equip those factories. Just as I mentioned, SM2 , we would then have to equip, LFAB2 , we would then have to equip. But if, but that depends on revenue growth. So if revenue growth is not there, then we don't have to spend anywhere near that.
Okay, but I mean, doesn't 10%-15% automatically take care of what that revenue level is?
Well, depends on the revenue. You tell me the revenue, and I'll tell you what, I'm saying it-
Right
... precariously, but-
Right
depending on that revenue growth. So, for example, the 15% corresponded to a 10% CAGR from 2022 at $20 billion. You do 10% CAGR out to the end of the decade, that would have corresponded to a 15% CapEx at that point. If instead of that, we're at a 7% CAGR, that would have corresponded to a 10% CapEx intensity.
Right.
If you're lower than that, then it's less than that.
Okay, so let's say we get past this inventory correction. Do you think that your addressable opportunity is growing at a 7% CAGR or a 10% CAGR?
Let me put it this way: Go back to peak-to-peak analysis of the last two semiconductor cycles, so 2014 to 2018, 2018 to 2022. What happened in those years? From 2014 to 2018, of course, that's four years, we grew at 21%, the peak to peak. From 2018 to 2022, that's another four years, we grew at 27%. If you fast forward, you use that same math and get to potentially what could be the next peak in 2026, you can get to roughly $24 billion-$26 billion of revenue. You also should consider that in 2022, we were constrained as far as how much we could have shipped, so we could have shipped more than the $20 billion.
While we're talking about this, let me also comment on the flow-through to gross margins. If you look at our flow-through to gross margins in those peak-to-peak years, so 2014-2018, these are just in our financial statements. I'm not making any predictions. This is. I'm just telling you what the actuals are. 2014-2018, that flow-through, ex depreciation, was about 90%. It was actually a little more than 90%. And then you go 2018-2022, do the flow-through again, ex depreciation, it was also about 90%. So now, is it gonna be 90% in the future? Not necessarily. For example, part of the reason we moved so high was as we were doing less personal electronics and more auto and industrial.
Now that we're 75% auto and industrial, there's less tailwind on that, but we should still do very well on that fall-through.
Got it. I thought one of the reasons, TI suggested, you know, kinda move towards a 10% growth model was that a lot more of the business is coming from auto and industrial. Like, even in those years, your auto and industrial, right, definitely grew at a very nice kinda double-digit CAGR, where some of the weakness and the volatility was on the consumer, side. Like, for some of those years, a large smartphone customer was the largest customer for TI, right? Not as much so, I would imagine now. So doesn't that make the shift towards auto and industrial make it more likely that you can grow at that 10% pace?
I tell you what-
Or not go about it the right way.
I prefer not to speculate on that, but what I'm confident, I can confidently tell you is that if it grows 10%, we'll be ready. That is what this plan gives us, okay? That is why it's so important that we complete this investment that we're making as I described, RFAB2, LFAB1, LFAB2, SM1, the shell in SM2. Because if, in fact, we have a 10% CAGR or even a higher CAGR, because of the factors that you just described, we don't wanna leave any revenue on the table.
I see.
We wouldn't. Just like I described, we would have tremendous optionality to put more equipment in SM1, more equipment in LFAB2, and even finish, accelerate the clean room in SM2 and ramp that up as well.
I'll just add that automotive and industrial, that is a factor in it. But that didn't happen by accident. That was a bias toward auto and industrial from an R&D perspective. And it's not just a one-year bias, it's been a longer-term bias. So, as you pointed out, those markets have grown at a faster rate than the overall. They're a higher percentage of our revenue today. Is that potentially something that's gonna drive our growth faster over time? We wanna be ready for it, and it's, again, not by accident.
All right. If more than half of the customers for automotive and industrial are outside the U.S., why do I need to have all of my capacity in the U.S.?
'Cause the. Well, you don't need to have it all in the U.S. You wanna have it where it's geopolitically dependable. But the U.S. is a great place to have fabs, okay? Now that we're at par with the CHIPS Act on the 25% ITC, and we'll see what happens on the grants, we don't have anything to announce on that, but at some point, you know, we should hear, and we should have something. But now that that is at par on an even playing field, the U.S. is a great place to put fabs. Texas, in particular, we get tremendous advantage in there. Of course, we have fabs there. It's easier to deploy additional fabs. Electricity cost is very favorable there. The access to talent is also really good.
So I put Texas next to any country at this point in terms of building additional semiconductor fabs.
Got it. Absolutely. So I can understand that from a supply perspective. I'm trying to think that, does it become... is it a factor in terms of share gains? Because when we talk with a number of your peers, right, who have a hybrid strategy where they are, you know, sure, many of them are still dependent on Taiwan, but TSMC is building out more fabs in Japan. So why isn't the capacity access they have in Japan-
Yeah.
-you know, give them that geo, you know, that dependable capacity at a much lower capital intensity-
Yeah
-than what TI is doing?
You know, the difference is, a good question. The difference is, how many fabs are TSMC building in Japan? Like, one, right? How many are they building in Europe? Like, one. How many are they building... So, you know, a customer that's looking for a check-the-box, A, I have dependable capacity because I'm, I'm building my-- you know, I'm buying from ADI, and they're, they're sourcing out of, they could source out of Japan. They could check a box on a PowerPoint slide. But if something actually happens where the fabs are not, the supply is not available coming out of China or Taiwan, all those customers are gonna be asking for the same parts from the same fabs in Japan and Europe and other places. Now, we don't have that problem, okay?
We're gonna have those, fabs in the United States, as I described earlier, and all available with plenty of capacity.
So, scale at scale is essentially what, right?
But have you, Rafael, actually seen that in practice? So I understand the concept, but if practically our customer is saying, "Yes, I was planning to give a part to whoever else, but I would rather give it to TI because you have that fab capacity in the U.S.
It's an excellent question. CEOs of our customers will tell you that twice a day and, and three times on Sunday. But when it comes down to the designers actually putting in the part, you have to be competitive. You have to be competitive with price, you have to be competitive with the part that you're, you're putting out, you have to have good deliveries, inventory available. So it gets more tactical when it comes down to.
Right
... to the actual designing and winning the sockets. But at the high level, the CEOs and the CP, the chief purchasing officers, and they're influencing on the designers, yes, we are seeing that.
I see.
With deadlines, dates, they wanna get certain percentages, too. I mean, they are actively trying to do this.
Which by the way, we're doing the same thing with our supply chain.
Right.
Okay? And we are largely diversified and dual, triple source. But in places where we're not fully or not to the level that we want, we're doing the same thing. We're looking for other sources so that we have our own geopolitically dependable capacity when it comes to mold compound, lead frames, wire, et cetera, for our various operations.
I see. At a recent conference, Haviv mentioned that, you know, that there is, you know, whether it's a plan, whether it's a trend line or, something that can get Texas Instruments to potentially above this $12, right, per share, but—and you manage your business for free cash flow per share. So, where does that $12 number come from? Is that a trend line? Like, what needs to happen for TI to hit those-
Okay, go back to the peak-to-peak comment that I made earlier, okay? 2018 to 2022, or you can do 2014 to 2018, do the growth rate there. And by the way, it happens to be 4 years in between those, and 4 years from 2022 happens to be 2026. So it actually works out pretty well. Do that, do the fall through at similar rates. In fact, do it a little less. Don't, don't use 90%. Use 80%-90%. Pick 85%. Do that, model it away, and it's not hard to get to. And, and once and the CapEx, you know, as I said, you know, I haven't given you a number, but it doesn't have to be $5 billion in CapEx.
You do that math, you get to a very healthy free cash flow per share.
I see. Is that, is that how you are kind of putting all your, you know, CapEx and OpEx plans in place, to get to that number conceptually, at some level?
Conceptually, yeah. And, oh, we wanna be able to maximize the revenue opportunity. So as I, you know, if you, if you account for... You know, the math that I just gave you doesn't even account for the fact that our revenue was compressed in 2022. Doesn't account for potential issues of geopolitical tensions that could give us an even bigger opportunity. Doesn't account for the fact that auto industrial could accelerate growth. This is why we wanna be prepared to do even more than that.
I see. And does this change in CapEx plans, Rafael, change the depreciation schedule that you have given for the next several years?
At this point, I've only given depreciation for this year and for next year.
Okay.
I haven't given anything beyond that. So that is not changing because the CapEx for those years, it's not changed. But at some point, we'll give you 26 and beyond, or at least 26. We'll see how often we give that. And of course, that, you know, if we spend less CapEx, that's gonna drive, you know, the increase in depreciation lower. And then we also have to take into account the grants whenever we hear about that and how that affects that. Clearly, it can only bring it down, right? Versus what it would've been.
Got it. And from what we have seen, right, many other companies who have gotten the CHIPS Act funding, it has been. So of course, ITC, you mentioned, right? So that is already part of the, the financial that you're reporting, right, so far. But what we have seen with others is about that 15%, right, or so broken out in terms of grants and, and loans. Is that sort of the structure that, that we should contemplate for TI?
Well, what you have seen so far is less than 15% on average. We've seen roughly-
10%-15%, right?
Yeah. But it depends. You know, it depends on the timing of projects. So we'll have to see what the Department of Commerce offers and where we land on that.
I see. And when we look at that denominator of that CapEx, is that all of RFAB2 and LFAB, and all the Sherman fabs and LFAB2? Like, what is that denominator that Department of Commerce could be potentially looking at and say, "Okay, I need to fund-
Yeah
percent of that?
What I'd tell you in that is, I think their focus is projects that are happening now through 2030. So they're focused on the short term. So for example, Sherman 3 and 4, they're not even, they're probably not gonna be in the picture, right?
Right.
Because we're not talking about building any of those anytime soon.
I see. So if I look at CapEx, let's say $5 billion towards $4 billion, right? Somewhere 20-25, and is that kind of the rough map between now and 2030?
We will comment when we get the information. You're trying to ask me different questions than that, but I don't have any information to give on the grants.
Okay. Just the last thing. Let's say you get a grant, does that also then impact your depreciation schedule?
Yes.
Because then it will be net CapEx.
Yeah.
So even what you have given for this-
That's right
Next year could be-
Well, I doubt that it would affect next year, because it would most likely be longer term than that. But it would affect, for sure, 2026 and beyond, versus what it would've been.
Oh.
That doesn't mean it's gonna be lower than 2025. It may just not increase as much as it would have otherwise, the depreciation.
I see. Right. Because where I was going with that is, because that formula does affect, right? As much as you manage the business for free cash flow, we look at gross margin-
Right
for sure.
So on that point, let me just give you a quick update on that. At the last earnings call, I think I told you, depreciation for this year between $1.5 billion and $1.8 billion, but we're gonna be at the lower end of that. For next year, $2 billion-$2.5 billion, we're also gonna be at the lower end of that.
Got it. Okay. So whenever you hear about the grant, does that kind of move that a little bit, or that's more a twenty-
It should not move 2024, definitely not 2024, and unlikely that it moves 2025. It will likely move 2026, which I haven't given an update on.
Got it. So that only changes. Okay. The second thing I wanted to ask you is, you know, back to the demand side. So you did guide June to grow, right, sequentially?
Our midpoint at our midpoint.
At the midpoint. Would you consider that seasonal? Would you consider it non-- Like, should we think June is now a normal quarter, or you still think you are battling inventory headwinds that the end market has not really stabilized? So I'm just trying to understand where we are in the spectrum-
Yeah
Moving to normal. Are we there?
Wanna take a shot at that?
Yeah, go ahead.
So I think it's important to remember that this cycle has had this end markets moving out of phase with each other dynamic. So it's probably hard to answer the question directly of was it seasonal in the current, you know, guide. But I think we're starting to see this first in, first out phenomenon kind of playing out, right? Because you saw personal electronics was the first to correct. You know, it started seeing some sequential growth middle of last year. You know, industrial had some sectors that began correcting late 2022. Had a set of sectors that kinda hung in okay in 2023, and then late 2023 joined and also began to correct, and everything further corrected fourth quarter. But then, you know, last quarter at first, you know, we saw, you know, mixed results.
There were some of those earlier sectors flat, some grew, some still down, you know, on the later sectors to correct down double digits.
Mm-hmm.
So more mixed results there, and again, kind of following that first in, first out, has been what seems to have been so far materializing. Automotive, you know, was the last to begin correcting for us. You know, I think fourth quarter was down mid-single digits. First quarter down, also mid-single digits. Obviously, you know, didn't fall off a cliff. You know, and, you know, we'll see where, where it lands, and obviously, I think the guide speaks for itself. But yeah, I think that's what we're seeing so far. I don't know if you have anything to add, Rafael?
Nope.
Okay. So automotive, you think that is in a better state than industrial? Like, if you had to think about where TI gets back to seasonal trends in the back half, is it more likely to happen with industrial or more likely with automotive?
Well, what I would tell you, just as Haviv said last week at the Bernstein conference, we expect a shallow dip in automotive.
I think we wanna be ready for whatever eventuality comes out of any of those markets from an inventory perspective. But, you know, obviously, you know, automotive has its own unique growth trends underneath it. You know, the secular growth there has obviously been very strong over the last several years. The EV transition is a piece of that. I also think there's an inventory component, and that supply chain evolved a bit over the last several years. So, you know, how all that plays into this could look like, as Rafael said, it probably has a little more of a shallow cycle to it, but we'll have to see.
Sorry, not to parse words. So have you seen a shallow dip in auto already, or is that shallow dip yet to come?
Well, you've seen some of it in our first quarter results and our guidance. Take our midpoint; it embeds that. I mean, auto and industrial are 75% of our revenue, so our midpoint reflects what happens to our midpoint, which is showing in our-
Are they both increasing?
Well, we're not gonna comment on second quarter.
Yeah.
I'm just saying our guidance, and if you look specifically at our midpoint in second quarter embeds, is consistent with what I just said.
Okay. Next thing, Rafael, there's a lot of debate about what does all this buildup of capacity in China mean, right, from a competitive perspective for you. So first of all, how much is China domestic kind of demand as a percentage of your sales?
Yeah.
Have you seen any design outs for TI based on the capacity that's being built up?
Yeah, no, good, good question. So let's talk about that. So roughly speaking, and we publish this in our Ks and our Qs, right? About 20% of our revenue comes from companies that are headquartered in China, okay? In fact, as of the last quarter, was 17%.
17
Okay? So that means that 83% of our revenue is obviously non-China, so United States and, and Europe, primarily. Those customers, let me start with those customers, care deeply about having geopolitically dependable capacity, okay? And, and it's largely- they are largely unaffected by whatever SMIC and HH over there decide to spend to build foundries, okay? Now, on the 17% that is in China, we compete there very well, okay? And just because a foundry throws money at something, doesn't mean they're gonna, they're gonna beat us, okay? We have our competitive advantages to rely on, and it starts with our manufacturing and technology, and we just went through our footprint and our 300mm footprint and cost leadership there. But it's not just about cost and the footprint, it's also about the broad portfolio-
Mm-hmm
... and the sales channels and the longevity. But let's talk about the portfolio, right? We have already over 100,000 parts and counting, right? So every year we're turning out more and better, parts and familiar parts. When you're competing, particularly in industrial automotive, you need a family, families of parts. You don't just need one or two parts. Personal electronics, frankly, it is easier to come out with one part that is perfect for-
Right
this particular application, and you optimize it just for that, for a phone that's gonna sell 100 million units. Okay, that's, it's hard. We can compete there, too, but it's easier for an entrant, a newcomer, to go in, partner with a foundry, and go after that. Industrial automotive-
Right
A lot harder. You need families of parts, and you need the reliability, you need the inventory position, the capacity. And then on top of that, many of those customers in China also export. They're not just selling to China, they export. So they care about the geopolitical ramifications of their, of their choices. Finally, let me go one more. It's not an all or nothing decision. Many of these customers have multiple boards, that they have some boards with TI, some boards with the local, and they can flex, I'm talking in China, and they can flex how much they have, depending on the situation, depending where they're shipping, et cetera.
Got it. But, you know, when we look at how much China was as a percentage of sales for a lot of the fab equipment, right, tool companies, it was over 40%. So what capacity are they building? Like, is it all consumer? Like, is it all... Like, there is zero overlap with what TI is doing?
Oh, I'm sure there's no zero overlap there. I mean, is it an ideal situation? Of course not. Okay, so it is a risk, but it's a risk that I think we can manage-
Right
and we are managing for the reasons that I described earlier.
Makes sense. Finally, on pricing, I think you have been kind of more measured in your approach, saying that industry pricing over time could get back to kind of the historical trends of low single digit. I think many of your peers have kind of maintained a flattish, you know, profile. So when you say low single digit decline, is that because that is what you are seeing, or is that just because of the conservatism in how you-
Frankly, no, that's what we're seeing. That's what we're seeing.
You are actually-
Yeah
... prices go down?
Yep. Yeah, we're seeing that.
And that is, as you design a new device to the customers, they open up their board, and you have opportunity. The pricing discussion has moved back into that engagement with customers. There was a period there during the 2021, 2022, where that wasn't in the conversation very much. Obviously, that's come back very much like it was prior to 2020. And so it, you know, our base case assumption is you start to see that. I would also add that, you know, we exercised a lot of restraint, I think, in pricing in 2021 and 2022.
Right.
Obviously, we did price to the market, and as market moved up, we moved with it, but I think there was more restraint from us.
Yeah.
So, I think over time, our, like I said, our base case assumption is low single-digit decline, and that's just based off similar trends that we've seen in engagement with customers that we saw prior to the last cycle.
Right. So quick, some clarification, this is not the price going back to what it was before, the rate of decline going back to what it was before the pandemic. Okay, so prices ran up, now they're declining 4%-5% a year or so. That's one clarification.
Probably two, three-ish.
Yeah. The other clarification, it depends on the end market, depends on the region, depends on customers. So there's some end market where you're not seeing much of that. And it also depends, you know, more than half of our revenue, I don't know, 60, 70% is multi-source parts, so those are more price sensitive.... the parts that are more ASSP, more unique, they're less price sensitive, okay? So, so it happens. But in aggregate, yeah, 2%-4% declines on an annual basis is what we are seeing so far and what we expect in the foreseeable future.
Do you think the fact that you're building a lot more capacity makes you a little more open to having the pricing discussion?
It gives us the ability to compete, but it doesn't drive us to that.
Okay.
We price to market. If our cost was 2x, 3x what it is today, there'd be some portions of the market where we wouldn't even be playing.
So are you then surprised when you hear your peers on public conference calls say that there is no change in pricing while you are giving a price discount?
Yes and no. I think I'm a little surprised, but there's some. You know, they, they don't, they don't compete with the American, our U.S. and European competitors, or at least some of them, don't compete to the extent we do in multi-source. Now, they like to say that we only do multi-source or even commodity. That's not true. We also compete in their backyard. But in addition to competing with the high-end, the innovation, the ASSPs, we also compete in the multi-source public space.
Got it. Okay, perfect. And before we close, Rafael, just, any update on, your, kind of return of cash plans, that as the free cash flow starts to, right, improve, from here, you think we should start to, you know, see buybacks start to resume, right? What, what, what changes?
So I don't have anything to announce on that front, but high level, I'll tell you the... Let me answer it this way. The reason why you have seen our buybacks decrease over the last couple of years versus what we've done before is because, primarily of this CapEx investment cycle. All else being equal, that's the most important capital allocation, more than buybacks. So that's why you have seen the buybacks decrease. You have also seen us take on debt, increase the cash on the balance sheet. So as the CapEx is behind us, or mostly behind us, right? We're almost past the midpoint at this point. In fact, we are past the midpoint. Then, it's likely that you see a shift on the capital allocation.
Excellent. On that optimistic note, thank you so much.
All right.
Thank you, Mike.
Thank you.
For your time. Thanks, everyone.