Seeking Alpha
We cover over 5K calls/quarter
Profile| Send Message|
( followers)  

Cypress Semiconductor (NASDAQ:CY)

Q2 2012 Earnings Call

July 19, 2012 11:30 am ET

Executives

T. J. Rodgers - Co-Founder, Chief Executive Officer, President, Director, Director of Cypress Envirosystems, Director of Agiga Tech, Director of Bloom Energy and Member of Board of Trustees at Dartmouth College

Brad W. Buss - Chief Financial Officer, Principal Accounting Officer, Executive Vice President of Finance & Administration and Corporate Secretary

Christopher A. Seams - Executive Vice President of Sales and Marketing

Cathal Phelan - Chief Technical Officer and Executive Vice President

Dana C. Nazarian - Executive Vice President of Memory and Imaging Division

Analysts

Ruben Roy - Mizuho Securities USA Inc., Research Division

Betsy Van Hees - Wedbush Securities Inc., Research Division

Doug Freedman - RBC Capital Markets, LLC, Research Division

Blayne Curtis - Barclays Capital, Research Division

Ian Ing - Lazard Capital Markets LLC, Research Division

John W. Pitzer - Crédit Suisse AG, Research Division

Delos Elder

Christopher B. Danely - JP Morgan Chase & Co, Research Division

John Nguyen Vinh - Pacific Crest Securities, Inc., Research Division

Sujeeva De Silva - ThinkEquity LLC, Research Division

Steven Eliscu - UBS Investment Bank, Research Division

William S. Harrison - Wunderlich Securities Inc., Research Division

Srini Pajjuri - Credit Agricole Securities (NYSE:USA) Inc., Research Division

Rajvindra S. Gill - Needham & Company, LLC, Research Division

Sidney Ho - Nomura Securities Co. Ltd., Research Division

Jeffrey A. Schreiner - Capstone Investments, Research Division

Charles L. Anderson - Dougherty & Company LLC, Research Division

Dale Pfau - Cantor Fitzgerald & Co., Research Division

Operator

Good morning, and welcome to Cypress Semiconductor Second Quarter 2012 Earnings Release Conference Call. Today's conference is being recorded. If you have any objections, you may disconnect at this time. I would now like to turn the call over to Mr. T.J. Rodgers, President and CEO of Cypress Semiconductor. Thank you. Sir, you may begin.

T. J. Rodgers

Good morning. We're here to present the second quarter. The press release says second quarter "highlights." That's a euphemism. We will start out with the finances and Brad Buss.

Brad W. Buss

Thanks, T.J. Thanks, everybody for attending our call. As usual, these are preliminary unaudited results. We encourage you to take a look through our 10-Q, which will be filed in the middle of August. And obviously, a lot of forward-looking statements, a lot of risk running around in this macroeconomy and we encourage you to take a look at all the risk factors. And as standard, we have full GAAP to non-GAAP recon in this release and on our website. So I'll jump into a little bit of housekeeping, go through the current quarter and then give our guidance.

So with respect to Ramtron, I think everybody knows we have an open tender. It expires at midnight tonight and the tender rules are pretty tough. There's not a lot that we can comment on the call, so we don't plan on taking any questions. And we do plan on providing a status update tomorrow morning, so take a look at that. Just as a side note, our nonvolatile business that competes directly with Ramtron and a few other people had a very strong quarter as we gained market share and we grew that revenue north of 25% sequentially.

So now I'm going to dive into our quarter. Our revenue for Q2 was $201.3 million. While it was at the low end of the guidance, it increased a strong 9% sequentially, which is much better than our normal seasonality, albeit off a much smaller revenue base in Q1. We had all divisions, all major product lines and most end markets growing. The only end market that did not grow for us was the Wireless Communications, and I'm sure that's no surprise to anybody as you're seeing results from other companies. If you look at it by division, our MPD division increased 1%. And again, it was slower than expected due to this lack of rebound in the comm customers offset by the strong growth in our nonvolatile SRAM business that I talked about. DCD increased 2%. Again, we had solid increases in our USB products led by 3.0 that were offset by a decline in West Bridge as we continue to end the life of the one major customer there and again, I don't believe there is any surprises there for anybody. PSD was the shining star, it increased 18%. We had strong demand for TrueTouch as we had expected in the handset, tablet and eReader customers. And we also had strong growth in CapSense. We're -- we've got very good design penetration, some leading high-end Android smartphones there, so that was a good benefit for the quarter. Our touchscreen revenues increased 21% sequentially. PSD is our largest division as measured by revenue. MPD is our largest division as measured by profit dollars. And TrueTouch is once again our largest product line by revenue.

If you look at the end markets, I'll skip over most of that right now and Chris will handle some of that, but basically we saw good growth in handsets and computation. Our direct sales channel decreased sequentially and we also have strong growth in our distribution channel and it accounted for 76% of our revenue, which was a new record for us. And once again, we have the same greater than 10% customer as we have had in the prior quarters.

On a profit basis, we had a net income of $5 million on a GAAP basis, that was $0.03 per share. That was up 123% from the loss in the prior quarter. On our non-GAAP net income, we had very strong growth of 48% sequentially, that yielded $30.3 million and a diluted earnings per share of $0.18. If you exclude the Emerging Tech division business, our core business would have drove $0.21 in EPS. So as you can see, I mean we were very pleased with the earnings growth. It was more than 4x greater than the rate of the sales growth, something that's pretty hard to do in the semi- business. And the team's working very hard and I expect to see that continue going forward.

We had very nice gross margin at 57%. It was at the high-end of our guidance even though our revenue was at the lower end. So we had good product and end customer mix. We had great execution from our factories, and our world-class cost program that we've discussed continues to work and drop benefits to the bottom line. If you exclude the Emerging Tech division from the margins and look at our core business, it was 58% and again, that's up 100 basis points sequentially. So again, very pleased with what we're doing in that area.

Our utilization in our fab in Minnesota based on wafer starts was around 81%, that was up 8% from Q1. And I expect to see utilization stay flat to slightly up as we go into the next quarter. Wafers from our foundry partners were about 37%. Again, up from 24% in Q1 but down from our average of 48% in the prior year. Operating expenses were $83.7 million, that was within our guidance. We had a couple of non-reoccurring expenses in Q2 that will allow us to keep our OpEx flat to down in Q3. We're extremely focused on OpEx and leverage as you can see in our results and we will commit that, that will continue going forward. Our OIE was a loss of 200K. We have some nominal interest income on our lower cash balances, offset by a little interest expense. And remember the full expense related to the revolver will not hit until Q3, and I'll cover that in the guidance.

The non-GAAP tax expense was 900K, approximately 3%, and that's pretty much consistent with our expected cash tax rate. On the balance sheet, we had cash and short-term investments of $210 million, that increased $102 million from Q1. We closed on the revolver. As most of you knew, we drew down $153 million. We used $50 million to close out the SBB line, so that's totally gone now. We bought 1.5 million shares in the quarter. And as you know, we didn't have a ton of excess cash so that's now changed. And we exited Q2 with $202 million left on our share repurchase buyback authorization. We paid our dividend today as well, that was $0.11 per quarter, and that was $16.7 million. And we have about 80% of our cash onshore just as an FYI. We generated $43.3 million in cash from ops. We had free cash flow of $33.6 million and that was a 4x increase over Q1. So again, the incremental profits are turning into cash. And if you look at our Q2 annualized non-GAAP return on equity, it was north of 60%. Again, I think one of the highest that you'll see in the semiconductor universe. Inventory was -- did pretty well. It was $91.4 million. It was down $6.6 million or 7% from Q1. And as you know, we've got some last time builds and capitalized 1, 23 our cost in there. So if you exclude that, we really had an effect of operating inventory of about $71.2 million and that equates to about 75 days.

Our distributor inventory finally increased. As you know, it declined 3 quarters in a row. It popped up 12% in dollars, 16% in units and we are actually very glad to see that after being drained for the last 3 quarters. Weeks of inventory in the channel went down slightly to 6.2 and they remain at the low end of our model. So that's why you're seeing the deferred income. It popped up around $20 million to $148 million and that's consistent with the rise in accounts receivable. I think as most of you know, we do not recognize any revenue from distribution until they've resold it. So them taking on inventory has no impact to us from a revenue perspective.

AR, as I talked about, was up $24 million. Again, consistent with the linearity in the channels. And subsequently, the DSO went up 7 days to 57 days and our aging continues to be extremely good.

Okay, so debt. We ended the quarter with $167 million in long-term bank debt. And like I said, that includes what we took down on the revolver. The revolver is a 5-year senior secured facility, about $430 million, it's backed by 11 top banks. The interest rate, as you need to now start putting into your model. So anything that's drawn down is LIBOR plus 2.25, so that's about 2.5% for Q3 and most likely for the next year and maybe a couple of years. The standby fee on the undrawn amount, which is $277 million at the end of the year is 37.5 basis points per year. And all the leverage, fixed charge ratio, et cetera, covenants are pretty standard, we have a lot of flexibility. We have no covenant issues and I don't expect to see any going forward.

CapEx was $9.7 million, of which only $6.5 million was for the core business. As we started ramping up at Deca, depreciation was 11.7%. On the share count, the weighted basic shares were 151.8, fully diluted was 167.8. And this is our lowest fully diluted share count in over 3 years. We took out 1% of the Q2 outstanding shares in the quarter, that was 1.5 million shares. We ended the quarter with 151.5 basic shares and I expect the basic and fully diluted shares to decrease again in Q3.

Okay, now we'll zip over to the guidance, which we kind of gave you a little bit of a preview on the press release. So again, I don't think the macro is a real no surprise to anybody. Lead times continue to be low. We're seeing the end customers and distributors continue to be cautious. Our Q2 ending book-to-bill was 0.87, obviously lower than Q1 and it's actually lower than our 5-year average that we normally have at this point in time so hence, a little bit of caution. We're 77% booked, which was pretty good. It's up near our higher range of where we expect to be. So we expect revenue to be kind of flat to plus or minus 2%. So that would do a range of 197 to 205. And obviously, that's below seasonal for us but we're hoping it's a conservative number going forward. And we would expect all divisions again to be flattish plus or minus a smidge. So it's fairly consistent across the board.

Gross margins have continued to do well. I think we can keep them flat to up slightly. So I think 57 to 57.5 is a good range. And obviously that's going to vary with mix and manufacturing reserves et cetera. OpEx, like I said, we're doing a very good job there. I think we can see that go lower in Q3 and be around a range of $82 million to $83 million.

Net interest expense, okay? So that's $1 million and that's due to the revolver that I just walked you through. And a minority interest benefit of 300K, tax expense should be around 3%, CapEx of 8 to 10, depreciation of 12. I would take the fully diluted share count to decrease to say, 165. And again, that's going to fluctuate with the stock price and what we do on the buyback. You mush all that together, our non-GAAP EPS should be in the range of $0.18 to $0.21. So flat to an actual increase of potentially up to 17%, if we get near the high end of it. So I'll leave things there and I'll turn it over to Chris for a discussion of our end markets and the sales trends.

Christopher A. Seams

Thanks, Brad. The revenue splits by geography first. Our recovery was driven by growth in Asia-Pacific. It increased to 59% of our sales from 54% last quarter. That came out of the Americas and Europe, both geographies declined to 18% and 9% respectively. Japan held its own at 14% and that's what strengthened the handset end segment. Units were up 21% quarter-on-quarter. That's greater than our 9% revenue growth. A lot of that was driven by expansion of our CapSense business in the high-end Android handset segment. This mix shift also was the primary driver in our ASP decline to $1.19 from the prior quarter of $1.32. Beyond the shift in product mix, the quarterly part-by-part price reductions were in the normal levels that we've seen in the past.

Brad talked about the handset segment. It was our strongest growth segment during the quarter followed by computation. Looking forward, it looks like all of our end segments will be flat, up or down a little bit but around the flat point.

In terms of booking trends, after a very strong March quarter with the 1.33 book-to-bill, that trend actually continued in April but slowed in May and June. And the overall book-to-bill, as Brad said, finished below unity at 0.87.

By division, MPD was 1.01, just above unity. DataCom was 0.88 and PSD was 0.75. Bookings for the first 3 weeks of July have been slightly stronger than June with orders both for turns within the quarter, as well as into the December quarter. Our lead times have been low, 48 weeks. Cancellations, pushouts and expedites were at average levels as well. Let me hand the call back to T.J. for some more highlights on the quarter euphemistically.

T. J. Rodgers

Yes. First, couple comments on the quarter, then I'll go into some technical stuff, one very important point there and then we'll go to questions. We had a mixed quarter and we're not happy with it. The dark spot is revenue. We did grow quarter-on-quarter, but not as much as we forecasted. We were hoping to grow again Q3 and Q2, but we're forecasting flat. Right now our internal forecast are to go up, but we didn't want to disappoint. So we gave a conservative forecast, which may happen.

The nose dive of revenue in Q1 was the general market's malaise, compounded with the fact as we said last time. Our fourth generation touchscreen chip, G4, was late and we lost some design wins and our revenue in closing [ph] in Q1 was pretty much all about touchscreens. We grew in revenue in this quarter. But the biggest factor in growth is in Q2. The biggest factor in growth was touchscreen taking back share. There are people who like working with us and have worked with us for years and now that our chip is there, we're muscling our way back in. We expect the touchscreen generation 4 to gain in Q3 and that's why we were expecting to see a quarterly revenue growth, especially in the third quarter. I think the overall reason we're not saying growth in Q2 followed by growth in Q3 is not too much about any one of our chips or product lines. It's really about the general malaise we're seeing in the marketplace. Our book-to-bill is down across the board. There's not one business unit with the exception of SRAMs that's got a book-to-bill -- it was high. And I believe that's driven a lot of people to bill last quarter, right? So if you look at SRAM, their book-to-bill is 1.01. But if you look at a 2-quarter average, they're -- they just showed us the same thing, which is the general slowdown in the marketplace. So I say in the mix here, that the revenue is the thing we're worried about.

With regard to profit, and I guess that's the bottom line really, no pun intended, we're doing well. Profit's up in Q2 and it's going to be up again in Q3, even on a flat revenue. The reason for that is that one thing Cypress does, one of the sort of DNA traits in us, is that when times are tough, we're very good at managing tough times. We're clear-eyed and we don't panic and we go do things that need to get done. I'll give you one example, headcount control. We have a turnover rate in the high-single digit percents, which is better, slightly better than the industry. But that causes us to lose by attrition about 7 people every week. And in most companies, that every company I've ever been in except for Cypress and even Cypress up to 2 months ago or 2 quarters ago, when somebody left, you'd replace them. We don't do that. The rule of Cypress is when somebody leaves, you make do. You figure out how to make your organization more efficient. And over the last couple of years, as the time period I should've said, we have turned over about 1,000 people. And I would estimate that only 100 or so of them actually went back to replace the jobs that was left. So the company is basically burning calories through attrition and the other 900 people. Now we didn't replace all 900. We replaced a little over half of them. And the way we replaced them is the thing I talked about in the annual report called the hiring auction. Where every Wednesday, at 8:00 A.M. in my staff meeting, the executive VPs and I ask ourselves the question if we're going to hire 7 people -- and of course, it's done on a dollar basis. But if we're going to hire 7 people this week, which 7 people are the most critical for the corporation? So we have managed to recycle 1,000 jobs, of attrition jobs, into about 700 new positions, 100 of which are replacements and 600 of which are people where we need them. That's an example I went into length on. We have other systems, and in particular for gross margin and improvement cost control, where we're working on literally hundreds of parallel programs, each one of which is only $10,000 or $20,000 a quarter under dozens of managers each having their piece of the action to drive down costs. So we're going north in profit because we're getting better, and you would think at some point, you'd run out of things to work on because we've been doing this for years. But the fact is the better we get at it, the more we organize, the more we can see. So there's things coming in the future. We're also, in manufacturing, hitting a high point for yields. Our yields in the company are becoming exceptional where we literally ship -- one of our divisions set a record, where they ship 98.4% of all units on wafers. So in other words, you take 100 bytes on a wafer after sort and 98.4% are shipped to the world. Meaning, they go through assembly, tests, mark, QA and shipped with those kind of yields. So our economic yields are going up in the company. That's why we've got a tailwind with regard to profit, even when we're kind of stagnated on revenue.

In the third quarter, we're going to have the last quarter of Cypress Envirosystems costs in our books. We're spending about $1.5 million on Enviro. Some of that will stay behind because there are some expenses incurred in the company that are built to Enviro. But I have decided that by the end of this quarter, Enviro will be off our books. And that will be worth about $1 million a quarter to us, and we're working on that right now. Cypress Envirosystems makes systems using Cypress chips to -- for environmental purposes. And their products that bragged about before are pretty good products. For example, going into the 80% of buildings in the country, which have old air-powered pneumatic thermostats, and making them radio-controlled and connected to the Internet such that you can have a sophisticated temperature control system in a building and they've deployed tens of thousands of units and they've turned old buildings, big buildings in Silicon Valley that have legacy air conditioning systems and heating systems into energy saving -- systems for heating -- HVAC. But it turns out, like most green technology these days, it doesn't take the rent. So the other problem is the Cypress Enviro's exceptional on thermostat. There's another company, or 5 or 6 companies exceptional in light. There are other companies exceptional on other things. And one of the things we're finding in the industry is that there needs to be a major company that's an aggregator, that has the ability to save energy in 5 or 6 dimensions. And it's big and has mass, the facilities people we sell to aren't the private we've dealt with. And the concepts of return on investments based on saving energy works there in Silicon Valley. But elsewhere in the country, it doesn't work that well. So we're not -- we think the concept's good. We think they can make money. They've got positive gross margin. We just don't ever think they'll get big enough to move the needle for Cypress and therefore we are going to part ways this quarter.

Okay. In the annual report, I've got a long bullet talking about Design Win Replication and I'd like to spend most of the rest of my time discussing that program. Design Win Replication, the purpose of the program, is to find a market where we've had some success, analyze why we've had success in the market, create a full system design, a referenced design for the market that allows the smaller companies in that segment to have a product and then launch the product with a major push to sell something where we've succeeded. Every company in the world has a Design Win Replication process, so I'm not talking about anything new. I think what's different about what we're doing is 2 things. One is, we're going to be methodical about it. I'm personally involved in it several hours a week. And we are going to really push programs typically there, their words and the collateral material and the design wins that come out aren't that good. That will not be the case here. But I think the more important point is that we have a weapon for Design Win Replication that is much more important, much more powerful than the weapons of our competitors. We have PSoC. So for example, if you find the market for, let's say, CapSense, a touch button is hot. The first thing you do is design a PSoC to be a CapSense chip. And in the beginning, you can get away with the overhead of having a general-purpose chip in a socket for a specific purpose and you're first to market then you learn. And then you design other PSoCs still maintaining the PSoC advantage. So the general point that I just made, the generalization of the point I just made, is that you can get in the markets quickly with PSoC. And therefore, your Design Win Replication program gets an earlier start, which is critical for dominating the market. The CapSense that I just discussed is one of our 2 examples, it's the business unit now onto itself. We found out that we could program a PSoC to detect human touches. It's now over $100 million a year. It's got its own business unit manager, it's own P&L, and it's got 40% market share. We're #1 in the world and we're not planning on leaving that behind. And that's an example of the PSoC business that was a design win in 2005. Literally, it was the design win at Apple on the iPod in 2005 and it's turned into business for us. The second business you all know about is TrueTouch, where we're taking the capacitive touching technology. It's the difference that technology's slightly and it's turned into a cellphone touchscreen business for us, which again is over $100 million of real business, with a manager and a business unit. So our take on Design Win Replication is that we will do the industry-standard thing. But we will get there first with PSoC because we're a firmware program away from having a product, not a chip design away where we are weeks away as opposed to a year away from having a product. And then, now we will methodically exploit that. So we are formally known in the business of finding the next CapSense or TrueTouch out there.

Another angle we have with PSoC in doing Design Win Replication is creating what we'd call Components, and please bear with me as I just go technical for a second, it's not that technical but it's -- try to stay away [ph] with words you're not familiar with, please.

A component is a thing inside of PSoC, which is like a chip. One component is an analog-to-digital converter. When you need an analog-to-digital converter, which takes real work, a real thing like a temperature measurement or a brightness in the -- brightness or some real world parameters of analog. It turns it into digital so it can be handled by a computer and stored and put on the Internet, et cetera. When you want an analog-to-digital conversion, you can go to Analog Devices or Linear Technology or 10 other companies and you can buy a chip. And the chip will cost you anywhere from $1 to $10 depending upon the type and the accuracy of it. And then you take that chip, along with a bunch of other chips you buy from other people, you put them on a green printed circuit board and you make equipment. And your engineers then debug the system and some of the components could change then they buy other components or a better component or a cheaper component and they spin the board, then they debug it for a while and then they spin the board again. And eventually, they have a system, which is 5 or 6 or 7 components on it to do some function.

Our component, when I say component I mean external IC as discreet IC, integrated circuit. Our components are all inside a PSoC. So when we see a design, we go look and we say, "Well, that's inside a PSoC. That's inside a PSoC" and very typically, we will find anywhere from 3 to 10 chips that they're using on a board. In a complicated multivendor design, we will find 3 to 10 chips that are just components inside a PSoC. So now instead of designing on a board and spinning the board and debugging the board, you go on the PSoC software, a design software which is called the PSoC Creator, and you have a thing that looks like a printed circuit board and you have these little icons which says it's a little square. This is the analog-to-digital converter, 16 bits down in the corner, for example, and you drag and drop it, and you put it in there and you click and you put wires on it and you in effect create your own printed circuit board in PSoC Creator and you pull out these, the 3, 4, 5, 10 components and hook them up the same way. And then you press the button literally, and you program the PSoC chip in those 10 components hooked up the way you want to come out. And you're just as likely to screw up there as you are on the board except the difference is you test the PSoC chip by detaching the 1 chip in 1 test bed, find out if it works. And if it doesn't work, the next morning you go back to your designer. You change the box. You change the hook up and you do it again. So you can work your way through a design, a 1-chip design, that's the key, 1-chip PSoC design, with multiple components in it in hours, or days, as opposed to weeks. You can have a design done before the first orders of sample products gets to your company from the components you've chosen from your vendors.

The next level up after that is really what this initiative is about. And that is we realize that all of our components to date has been to replace somebody else's chip. And in particular, we want those nice fat, high margin analog chips and we want them to go inside and become trouble-free as opposed to extricate ICs on a board. But we realize that for given applications, we can create special components that make us unique in the application. There are no competitors. We're not copying an analog device to view [ph], we're creating a component that's unique. The primary example is their MFi, Made for iPod/Pad component. MFi is an Apple program. It creates the products you've seen in the Apple stores. And basically it takes that 30-pin plug that is -- that hooks up to Apple and it talks to us and it hooks stuff up. So you've all seen the application. They're ingenious. You hook up to an iPhone or an iPad. You can measure your blood pressure. You can look at the instruments on your airplane. There are thousands of applications in MFi. It turns out the hook-up is that 30-pin plug is difficult. The Apple spec for MFi is 800 pages long and they update it. And it turns out, it takes a microcontroller and a bunch of components to hook up to Apple. So if you've got -- if you're in a small company and you've got B- engineers that's not at all clear. They're not going to burn the next 6 months figuring on how to hook up. So what we did was we took a crack team of engineers and they hooked up to Apple one time and they made a component called MFi. So like the analog-to-digital converter, it's a little box. You grab it and you say MFi, you put a wire on it, and that thing does everything inside of PSoC, all the hardware, all the connections, all the logic and even the firmware required to talk to MFi. And it's guaranteed to work, and it's certified by Apple.

So when we came out with MFi, we have 2 pitches. You can take 6, 8, 10 components and put them on a board and not have all discrete ICs. But you can drag-and-drop our MFi component and it will automatically hook you up to Apple and you can do that in minutes and you don't have to think about it. That's the guts of our Design Win Replication program that's powered by PSoC and the flexibility PSoC. I apologize for going on long about it.

We introduced our first 2 examples in the program this quarter, one called the Power Monitor. The Power Monitors are things that are in boxes. The box will be a router or blade server system or any box that's got a bunch of electronic components, an ethernet switch, et cetera. So it's pretty much every box that all the big OEMs make. And it turns out inside of those boxes, even inside your cellphone, there are so many kinds of chips that you have. Oftentimes, very often, 20 or more power supplies in the box, 3.3 volt power supplies, 1.2 volt power supplies, et cetera. In today's world those power supplies must very precisely controlled. So the 1.2 volt power supply is 1.2000 plus or minus 0.050 volts, really tight control. Secondly, in these complicated systems, if you get a brownout, one the power supplies dips in voltage because it's being overloaded. Or if you get a glitch, there's a transient, something turns on and puts a glitch, a glitch or a brownout can crash these big systems and of course, as you all know, when your ethernet goes away, when your e-mail goes away, nobody's happy. So companies are forced to make these power supplies extraordinarily reliable and very precise. And the final point is, when you turn on one of these things, this is also true inside your cellphone, you can't just flip on the light switch and turn it on. You turn on power supply 1, which turns on the load. Then you turn on power supply 2, which puts the power supply to the load. So you don't turn it on backwards and cause a short in the circuit, et cetera. So -- and then finally, when you turn on these power supplies, you can't just turn them on and off, however fast they turn on or off. They're turned down at a ramp rate. You have so many volts per microsecond and that ramp rate is controlled. So short form in a box today, there are 20 power supplies. They are precisely controlled. They are monitored for events that can harm the system. And when you turn on and turn off the system, they must -- each power supply must ramp up in sequence at the right rate to turn on the chip.

Now what I just described is not rocket science. It's for any B electrical engineer, but it is 10 chips. The supply, the game stages that adjust the reference supply to the exact voltage you want, the monitoring chips, analog-to-digital converters that tell you if your supply is where you want it to be, et cetera. As I described earlier, all of those components are in PSoC. What we've done here is create the ultimate component, again a component being that little square inside of our design system that does the function for you like the MFi component. We design a voltage sequencer component. It's got 16 inputs and 16 outputs. And it creates 16 power supplies for you. And instead of going through all the stuff I just described, you click that and it automatically configures PSoC, thousands of configuration, there's thousands of connections, hooking up the right analog-to-digital converter to the right notes, et cetera and then you configure it. And the way you configure it isn't to go in there and adjust the voltage on each rail and then to adjust some timing circuits to turn on each power rail at the right time. You go in there and in a graphic user interface, you fill in the numbers. Power supply 1 turns on first. Power supply 2 [ph] turns on second. Power supply 1 needs to ramp at 5 volts per microsecond. Power supply 2 needs to ramp at 2 volts per microsecond. And you go on and you simply type numbers in your GUI. And with that component and filling in those numbers, which can be done in less than an hour, you dump that into your computer. Yes, you dump that into your PSoC Creator design, which is on a personal computer and it will program the PSoC to do exactly what you want. And if it isn't exactly what you wanted, you get a surprise. That afternoon, you change some of the parameters and you do it again. And that, we believe, will cause us to be the preferred chip in Power Monitoring in for design because we offer an overwhelming advantage that happened to be our PSoC 3 chip is the one that breeds [ph] on that market.

I've been talking a long time and I'll say the last one more quickly. Fans are critical. No longer do you have a noisy fan that turns on and off when you flip on your personal computer. You go to a bigger system, it may have 8, 10, 12 fans. They don't all run at the same speed. They're trying to achieve an airflow, you have to control the fans precisely RPM. So you have to measure the RPM of the fan, which modern fans have. And if you want the fan to run at 800 RPM, you have to have a circuit that knows what 800 RPM is, watches the fan and increases or decreases the power to the fan to create exactly 800 RPM fan, if that's what you want. What do you want? Well, you also have temperatures measurements in the system and you choose what fan speed you want to run, but what temperature you've got at some critical note that has to stay cool. So your personal computer, for example, the new ones you notice are much quieter than the older ones and that's because those fans are running at sometimes 30%, 40%, 50% speed, very much quieter because they're being controlled realtime to be only running as fast as they need to be, multiply that times 16, put 16 fans in a big box and you've got a problem. And we have the power -- a fan controller that does exactly the same thing. So our first 2 big introduction in the Design Win Replication program are for the thermal -- are for the voltage -- system controllers for voltage power supplies and for fan controllers.

I apologize for the length of that. But it's probably the most important thing we've done in several years. And the purpose of it is to use PSoC, the great scout to find out what the next big market's going to be, get there and bring the products out first to add revenue to the corporation, which is our problem right now as I said earlier.

Longcheer is a new Cypress customer. We have a design win for a touchscreen there. It uses a single layer capacitive touchscreen. Most touchscreens, almost all, are double layer. You put your finger down and the thing detects what row and what column, X and Y, you're on. You can do that with a single-layer, which is cheaper. As a matter of fact, the cost difference between the single and double layer sensor is more than the price of the PSoC chip that drives it. So the Chinese are obviously driving costs and this is going to China Unicom. So this one of the new customers we have in touch. And it's part of the recovery we are going through for our market share loss we suffered in Q1 in touch.

IDS Imaging Systems has -- they're a machine vision company, medical, a machine vision company. They picked FX3 as their standard streaming video. If you look at your television, your television has what's called compressed video. Even though your television set at HD is a gigabit per second to keep the screen alive or 2 gigabits per second, the flow of data into that screen through a satellite is 100x or 20x smaller than that. And that's compression and these are algorithms that take the video data and reduce the number of bits and send a picture that's almost as good as the original. That's pretty complicated and expensive. And now with USB 3.0 it's 5 gigabits per second, you can put HD video directly on the bit. So the new paradigm is get rid of the compression and all the compressing and decompressing algorithms and simply take your picture and zoom it over USB. That's going to be a trend. USB 3.0 is going to be driven by streaming video. IDS is one of the leading companies where they're doing high-quality video of medical and machine vision, high frame rate, et cetera. And they're one of our first customers.

For the general market, Altera has a board which features our FPGA and they've chosen our USB 3.0 chip, which we call FX3 to go in their board. And it's the same thing. It allows it to stream video on and off the board and demonstrate the functionality of Altera's FPGA. By the way, Xilinx has a board we announced a few quarters ago that does the same thing. So we are the USB of choice for those boards.

We now have crossed the 50,000 user mark in our PSoC development community. If you talk to Freescale, for example, they'd tell you that's nothing. Our development community is a lot bigger. But the fact is we now have 50,000 people, 140 videos and 12 blogs and we've now reached the critical mass of where we can start growing and we will start knocking on their door over the next couple of years.

We're in a lawsuit with GSI. We usually don't talk about it. One of their strategies was to try to invalidate one of the patents that we asserted against them. They requested a reexamination by the patent office. That happened. They lost. The patent was valid, point one. Point two, the quid pro quo of having your patent examined is you can write more claims. You can go back and say, "Oh, by the way 8 years ago I should have written the following claims, which are all justified by the patent and that we wrote 64 new claims, all of which became part of the patent." So we now have a very strong patent with more claims in that particular lawsuit.

Finally, Kazu Yamada has become the Head of Cypress Japan. It's one of the biggest wins we've ever had in terms of getting the right guy in a country where having the right head person really matters. Kazu ran himself [ph] as embedded business division, which arguably, along with Freescale and a couple of others, is the most important microcontroller company in the world. The division Kazu ran is twice as big as Cypress. And he decided to come to Cypress and run Cypress Japan for us. So we really worked -- lucked out on that one, and we're very happy to have him on board. By the way, he replaces Dr. Yoshizawa. Yoshi, as we call him, who's been there, with -- how long has he been? 5 years. He came from Xilinx, another big guy. And he's the guy that turned around the Cypress Japan for us and we're expecting that to continue. So while I'm not happy with the revenue, either what we did or what we forecasted, we're running the company right and our profit's good and it's going to go up farther and I have given you some of the reasons and there are good things happening in the development side of the company, which won't matter for a year or so but they will be important when they do start to matter. We're ready for questions.

Question-and-Answer Session

Operator

[Operator Instructions] Our first question today is from Ruben Roy.

Ruben Roy - Mizuho Securities USA Inc., Research Division

Mizuho. T.J., you talked about Gen4 design wins and I guess you're a little more than ¼ in. I'm wondering if you could talk about how you feel about the quality and maybe the quantity of the design wins for Gen4 versus previous generations?

T. J. Rodgers

Cathal Phelan is the new EVP of CCD, Consumer Computation Division, which is the division that is the separate from our other PSoC division and he can talk about that.

Cathal Phelan

Ruben, yes, Gen4, we have some very good design wins at the same sort of customers that Gen3 got designed into. Similar sort of handsets, similar sort of volumes expected. So I see us right now, from a design win point of view on a very similar term.

Ruben Roy - Mizuho Securities USA Inc., Research Division

All right, and just a follow-up on that with the book-to-bill for PCD at 0.75, and entering the quarter, I think going back to April, you guys were looking for 25% or better growth. You came in a little bit below that, strong quarter, nonetheless for touch. But I'm just wondering, how the macro is impacting the touch business and if there is a big difference between touch bookings versus PSoC bookings if you can kind of get into that? And what your expectations for touch for the rest of the year might be?

Christopher A. Seams

Ruben, it's Chris Seams. The macro's impacting the handset segment, I think, a bit as well as it's doing in the other segments, and we're frankly being impacted a little bit by some of the design wins that we're in. They're problematic for other reasons at our accounts and a little bit of customer pushout on those designs and the ramp is what is making us a little worried and concerned right now. But they'll come. They'll ramp. It's a question of whether they'll hit this quarter or the fourth quarter.

T. J. Rodgers

Our book-to-bill last quarter was 1.31. Quarter-to-quarter -- excuse me our book-to-bill last quarter is 0.85. If you take the weighted mean of those 2, it works out to be about 1. And if you ignore the ups and downs in the various divisions, all of the divisions are about 1 for a 2-quarter book-to-bill ratio. So it's just kind of long, hot, summer. Nothing is catastrophic but there sure is -- aren't any bright spots. This is -- that's the statement of the macro and the touchscreen business is not that different.

Brad W. Buss

Ruben, the other thing I'd comment, I mean the lead times for touch are very low. So there really isn't any monster need to put them in and as we look at everything, even with the macro weighing, we still expect the second half to be 40% to greater or greater -- growth over the first half of the year. So we still feel like things are on track from that perspective. And like we said, we'll be in a very nice position in exiting the year and returning to good growth in '13.

Ruben Roy - Mizuho Securities USA Inc., Research Division

Got it. Brad, that was helpful. And just to finish up, T.J., thank you for the update on the GSI situation. Is the antitrust part of the lawsuit, should we think about that differently? And I'm just wondering, if the consortium, the KDR consortium would be responsible if the ruling was found in favor of GSI or if they're just kind of going after Cypress?

T. J. Rodgers

Normally, when you have active litigation going on, you dodge questions or mumble platitudes because if on the sly you make a mistake, it will be recorded and then your enemies will get it and use it against you in a place where the heat of the moment doesn't matter. Having said that, their antitrust suit is a joke and it always has been a joke. That they're saying that we had a consortium, what does that mean? That means that Cisco asks the companies making static RAMs to get together and gave us a spec for what they wanted the RAM to do and asked us as a group to make SRAMs that fit in the Cisco routers. So a bunch of us got together. At the time it started, it was 4. Now it's down to 2 and created the spec and Cisco agreed to it and we made that RAM. That's what the "consortium" mean. Meanwhile, GSI did the same thing. They created a consortium of a different group of companies making different static RAMs, SigmaQuad I think is called and that consortium included them and IBM and who else?

Brad W. Buss

Samsung, originally.

T. J. Rodgers

And Samsung. So somehow, the fact that Cypress and Renaissance and IDT did antitrust by creating a RAM that they all agreed to second source and they didn't do the exact same thing with Samsung no less and IBM means antitrust is a joke. We've been through a real antitrust case one time and we've become pretty knowledgeable on it. And I can just tell you, there's nothing there, it's something talk about. What they need to talk about is how they have no patents, 6 patents total, they have fewer patents by a factor of 3 than I personally have. They have no intellectual property protection and they have violated their patents and despite 2 years of discussing and asking them to do something about it, they've done nothing. That's what they need to worry about. The fact that they've blatantly stolen intellectual property and that I could have spent not a minute and certainly not a dollar with my cost control programs worrying about this fictitious antitrust case.

Operator

Our next question is from Betsy Van Hees.

Betsy Van Hees - Wedbush Securities Inc., Research Division

Wedbush Securities. I was wondering, I understand you can't talk about the tender offer for Ramtron. But can you refresh our memories as to what the rationale is behind the reason why you want to acquire Ramtron? That's my first question.

T. J. Rodgers

We can only say things that have already been given to the public, as Brad said earlier, the rules are pretty tight. And we have a nonvolatile memory division that's smaller than we like. They are a nonvolatile memory company that is small and suffering from overhead, and we believe the combination of the 2 nonvolatile memory companies would be a bigger, better group that would be more of a force, it's more efficient and improved service and cost to customers. So in the banker world, they call that a tuck-in acquisition.

Betsy Van Hees - Wedbush Securities Inc., Research Division

Okay. And at least my next question in terms of the Memory Products Division itself. So revenue grew slightly in the quarter and -- but your book-to-bill was 1.1. And then you said that your divisions were going to be either up or down slightly given your revenue guidance. So I was wondering if you could talk a little bit about what the puts or take are within the Memory Products Division between SRAM and your nonvolatile memory business?

Dana C. Nazarian

Betsy, it's Dana. Actually, I have to correct you. You said, book-to-bill is 1.1, our book-to-bill is actually 1.01.

Betsy Van Hees - Wedbush Securities Inc., Research Division

Well, I'm sorry 1.01.

Dana C. Nazarian

Yes. And we're continuing to gain share as we always have. That was offset a little bit by the slowness in the communication markets, specifically wireless, which has slowed the rollout on new deployments. So our design wins aren't coming up and ramping as fast as we'd like. At the same time, the nonvolatile business is growing. It actually grew by more than 25% last quarter. So we had a more of a mixed shift to the higher-margin proprietary side of the business. But the Memory Products Division in general is steady and growing market share as usual.

Operator

Our next question is from Doug Freedman.

Doug Freedman - RBC Capital Markets, LLC, Research Division

RBC Capital Markets. Can you guys talk a little bit about how I reconcile sort of long-term gross margin trends? When I look at your business by division, I see that the fastest-growing is clearly PSD and that has got below-average company margins. Can you discuss just how I should be thinking about your business model progressing as you see revenues climb back to past peak levels, call it $1 billion?

T. J. Rodgers

The question is one we actually discussed this morning, it's pretty straightforward. You've got the high gross margin in Memory Products. You got lower gross margin in PSD. PSD is growing. Memories aren't therefore, the weighted average gross margin has got to go down as time goes on. The things that are buried in the numbers that aren't visible are: a, there is a one-time event in the Memory margins that pushes them up a little bit; and there are certain factors in the gross margins of PSD and CCD. Internally, we have 2 divisions. We report it externally as PSD, Programmable Systems division. But we have PSD internally, which is generic PSoC, the Design Win Replication group I discussed earlier. CCD, which handles the high volume spinouts of PSoC, the touchscreen, et cetera. So, Brad, maybe you could address the factors that make those 2 margins skewed from each other.

Brad W. Buss

Yes. So Doug, remember, if you look at the 1 fab that we have left in Minnesota, the dominant tenant is in the PSD group. So that fab's underloaded. And remember, as they get loaded back up and we get back to that $240 million, $250 million range, when we have the gross margins up in the high 50s for the company, that was because we have a lot more foundry business, which this group benefits from big time. The other element is in PSoC 3 and 5, there's a decent amount of fixed overhead that's in there, and that business is just ramping. As we've talked about, it's ramping very nicely, it's going grow huge sequential numbers every quarter off a small base. But we probably need a couple more quarters to start absorbing that overhead. And then we also have the Trackpad and the ONS, i.e. kind of like our module type business. That's part of that right now, and it's the same issue. We've got a decent amount of fixed overhead in there, and those businesses are just ramping up. So I'm very comfortable that you'll see that group go back up into the high 50 range where we want to be as a company, as we continue to grow back to that rate. And even wrapping it up, like I said, even where they're at this level, we still had to combine 58% gross margin in the core, which is at the bottom end of the 58% to 60% that we want to be running. So I'm very pleased where that thing's going, and there is a lot of leverage still to come from margin and OpEx as we grow because there's no -- we don't really have a need to grow our OpEx at anywhere near rate of sales for the next foreseeable future.

T. J. Rodgers

So the -- I'd say the biggest factor is PSoC 3 and 5 are in that awkward phase of their life where we're starting to ship products. We therefore have a manufacturing organization internal to the product line to make sure yield, quality, reliability, new product introduction, and therefore, our gross margin is hit by double-digit percentage points for that subgroup of the PSoC division. We have a model in the company, 60% gross margin. All divisions and the business units that comprise the divisions are held to that standard, and we expect PSoC actually to have the best leverage going forward as they fill up the fab and get big enough to amortize their manufacturing overhead.

Doug Freedman - RBC Capital Markets, LLC, Research Division

Great. If I could, you just made a comment about sort of your investment rate and what it's going to take to support the business going forward. Can you give us a little bit more clarity on where you see the investments required and maybe what sort of that investment rate is going forward? How tightly can you hold the OpEx over the next couple of quarters and the next couple of years?

Brad W. Buss

Yes, Doug, this is Brad. I mean, very tightly, if you think about it, we just support [ph] 3.0 in USB, right? So that was a pretty big investment. 3 and 5 have been big investments. The TSG4 that's out in the market and TSG5 that's coming soon are already in the baseline, right? So really, in every group, the baseline spending to continue to drive innovation is really part of the core spending already. The internal -- the Emerging Tech, I should say, is the only area where I think there's incremental expense that could come, and I think it will be managed and offset by the incremental GP dollars, if that group will start to grow, or else they won't be around longer-term. And the Emerging Tech runs about 5% of our OpEx right now. So like I said, we're very comfortable in driving that leverage through every business division. There's no Broadcom-like expense kind of coming out of the blue anywhere over the foreseeable future.

T. J. Rodgers

We actually turned the problem around, as I described earlier. We decide how much we can afford and hold ourselves to that, and then we argue about what we do and what we can afford. So if you saw a hundred [ph] -- you wouldn't see overinvestments, and therefore, high OpEx, what you would see would be underperformance due to starving for resources. And the churn that I described earlier, how we move people from one place to another, is designed to feed those business units. And then the other thing we do is we call business units, that was the Cypress Envirosystems story I told earlier, we call business units and we move that money back into our most promising point.

Doug Freedman - RBC Capital Markets, LLC, Research Division

Just one clarification on Enviro. Is that $1 million quarterly or annual?

Brad W. Buss

Quarterly.

T. J. Rodgers

Quarterly.

Operator

Our next question is from Blayne Curtis.

Blayne Curtis - Barclays Capital, Research Division

Barclays. Maybe just first, I wanted to go back to what you said, Brad. I just want to, one, clarify. You said that the touch business would be 40% higher in the back half, and then I just -- I mean, I was under the impression that I guess Q2, Q3 were the bigger quarters. Obviously, handsets do have a big Q4, you're expecting some new ramps. Just how you're thinking about the seasonality in that business?

Brad W. Buss

Again, part of it, like we said, this macro part of it has been some customer ramps, pushing between quarters, and part of it again is just new designs that we're seeing. There's new customers we're going into, and we're also looking at the timing of the Gen4 ramp. So again, based on what we know right now, based on customer current ramp plans they've given us, we expect the second half to be 40% or greater than the first half, and that's just for TrueTouch. I had an e-mail from someone thinking that was the whole company. Please do not think that, it was TrueTouch only. And again, we've got the design stuff but we're -- you're at the mercy of the customer to roll out on time, not have challenges and then do well. So hopefully, we've put enough buffer in that.

Blayne Curtis - Barclays Capital, Research Division

And then I guess a little clarity. The -- you said all segments are basically flat. I mean, it looks like CapSense is probably growing. So I'm assuming touch is not growing in Q3.

Christopher A. Seams

Blayne, this is Chris. When I was speaking segments, it was end market segments for us, and we got several products that go into most of those. So I didn't speak product-specific.

Brad W. Buss

There's puts and takes on all of them.

Blayne Curtis - Barclays Capital, Research Division

Got you. Okay. And maybe moving to SRAM. Obviously, that end market is not healthy. We all get that. Just maybe, probably decline in June, given the strong nonvolatile. Can you talk about the share gains? And is some of this going on below the surface and you can come out at a higher run rate or kind of when -- can you still get back to the $90 million you were doing at some point or are we even at a higher run rate that's kind of masked by just this low end market?

Dana C. Nazarian

Yes. Blayne, this is Dana. I don't want to project too far out. I can't see more than this quarter. But the share gains continue to happen. Specifically, the biggest competitor historically, Samsung, has exited the market. So that share gets redistributed, and we're in the best position to capture it. We have been capturing it. But again, that end of life doesn't happen. Their final shipments don't happen until the end of the year. So that's the biggest opportunity, and that won't be a step function. That will be a gradual thing that happens over time.

Operator

Our next question is from Ian Ing.

Ian Ing - Lazard Capital Markets LLC, Research Division

Lazard Capital Markets. Just parsing this touch commentary, up 40% second half. It looks like Q4 could still be some record revenues for that quarter. Full year revenues should be -- could still be up year-over-year, but you're backing off to Q3 being a record. I just want to confirm that. And then in terms of these customer pushouts, I mean, what kind of inventory have they taken up to this point? Has it been sort of preproduction samples or some initial production ramps? Just want to get a sense of how much they're sitting on at this point.

Brad W. Buss

Ian, it's Brad. Just so we're clear, I mean, the touch business is not going to be up year-on-year. It's going to definitely be down even with those numbers that we quoted you, just to kind of frame that for everybody. And then I'll let Chris or Cathal deal with the second half of that.

Christopher A. Seams

Ian, it's Chris. I would say they have taken the initial ramp quantities and nowhere near what their demand is going to be in the second half. So they're sitting on a small fraction of what they're actually going to eventually consume.

Ian Ing - Lazard Capital Markets LLC, Research Division

Okay, great. And in terms of OpEx, you have some cost controls in place, down about 1% or 2%. I mean, how much leverage do you have on OpEx side? I mean, how much do you think is fixed cost? How much -- is there some variability in terms of things like bonuses or shutdowns, et cetera, given where macro is?

Brad W. Buss

Yes, I mean, we've got, yes, a very good cost. I mean, you guys have seen it, right, over this whole year and into last year. And our OpEx is running lower than it was in '08, and we're driving higher profit level. So I would say about 18% to 22% of it tends to be variable in nature or easily tweaked, and you're seeing us manage some of that right now. But we're not doing anything extraordinary or crazy or not investing or pushing stuff for Q3. It's literally decisions on where we're going to spend and things that we're going to do and some costs that are able to roll off that don't need to be replaced. We're not doing anything unnatural in the quarter.

T. J. Rodgers

We're holding our OpEx $81 million to $83 million a quarter. We have good systems for doing that, too, which I described earlier in the meeting, and the way we're running the company right now is $82 million. Plus, minus of OpEx is what we can afford. The economy is bad. The economy doesn't look like it's going to get better because we're spending way too much money in the least productive sector of the economy, government. And until that changes, we're going to hunker down. So the name of the game for us is how you take $82 million and turn it into the most revenue and the most profit that you can. And so that's going to remain under control. We simply -- unlike -- if you want to control your weight, you can say don't eat as much. But if you go and you only buy 7,500 calories a week at the grocery store and put it in your refrigerator and never eat anything that you don't buy at the grocery store, you're going to lose weight. And that's where we are. We don't buy anything we can't afford, and then we manage the assets the economy has given us the best we can. So we're going to control that expense. There is some variability where if we have some sort of emergency, like there's another crash, Q1s I've crashed or Q4 of last year I've crashed, we do have some things we can do. But that's going to just work for you, and the question is, can we turn it into -- we're turning it into a nice profit right now. Our problem is I'd like to be bigger and have a nicer profit.

Brad W. Buss

I'm going to try that diet.

Ian Ing - Lazard Capital Markets LLC, Research Division

Okay. If I can throw one last in here. Perhaps you can compare, contrast, I don't know if you can talk about this, but SRAM versus your Emerging Technologies, AgigA, it looks like they're solving the same problem, storage without external power. Would this be sort of complementary or competitive products or how do we -- how should we think of those 2?

T. J. Rodgers

The SRAM group has a business unit, nonvolatile RAMs. A nonvolatile RAM is different than a flash chip. A flash chip stores data nonvolatilely without power. But it does it on a single transistor for NAND Flash, for example, and it takes a long time to store the data. And therefore, as the disk drive is slow relative to a computer, nonvolatile flash memories are slow in electronic time relative to SRAMs. SRAMs run at computer speed, nonvolatile memories do not. So then the question is, can you have the best of both worlds? Can you have an SRAM that runs at full computer speed but also will hold the data when the power goes off? So that's a nonvolatile SRAM. It's a different animal from flash, which is much cheaper bit. Our RAM group makes a flash and nonvolatile SRAM, which is a 12-transistor cell. So basically, it's a nonvolatile cell and a normal SRAM cell together. So when you run the SRAM side, it's as fast as an SRAM, very high performance, and when the power goes off, there's circuitry on the chip that dumps the data from the SRAM cell into the nonvolatile cell and vice versa when you turn the thing on. So if it weren't expensive, it's the world's best memory. Got everything going for SRAM and it's nonvolatile. 12-transistor cell means it's hard to make big ones. So what's the biggest one?

Dana C. Nazarian

16 meg.

T. J. Rodgers

And how big can you go?

Dana C. Nazarian

32 or higher.

T. J. Rodgers

So you're looking at 32, maybe 64 megabits in an advanced node, 8 megabytes. So the memories are -- although they perform well, are miniscule on the scale of -- I saw an ad for 5 electronics for a 1 terabyte disk, 8,000 billion bits for $90, and a 64-gigabyte flash stick also for $100. So these memories are miniscule relative to the slower nonvolatile memories. Next point, AgigA Tech is trying to solve a problem. When you can't make it monolithically in a chip anymore, what's the next step? And it has the same stick, which is having fast memory that works right and then have circuitry when the same power is done, move the data from the memory that is a good memory into a nonvolatile space to protect it. So 2 memories moving stuff back and forth. The difference with AgigA is their memories are 1,000x bigger than we can make monolithically, and they use commercially available DRAMs. As the memory slip to the user, the AgigA Tech memory looks like a DRAM, and then behind the DRAM, they've got -- they got a flash memory, that's the cheap one I talked about earlier. And then they've got circuitry that can systematically move the data from the DRAM back to the flash memory to save it in case of a power outage, and it detects the power outage. And it stores enough energy, and the energy comes from super capacitors that's sort of latest invention for storing energy. And so they are doing the same function, but it's a totally different architecture and a totally different price per bit point. It's an important market, and we've got 2 plays on 2 different parts of the market. Can we go to the next question, please? And hey guys, if we could do one each so we circle through everybody, that would be great. And then if there's time, we'll circle back for follow-ups.

Operator

Our next question is from John Pitzer.

John W. Pitzer - Crédit Suisse AG, Research Division

Crédit Suisse. Brad, I want to talk a little bit more on the gross margin front.

Brad W. Buss

John, we're having a hard time hearing you.

[Technical Difficulty]

John W. Pitzer - Crédit Suisse AG, Research Division

Just want to follow back up on the gross margin front from Doug's earlier question. When you look sequentially, you had really nice growth in the Programmable Systems Division, and yet gross margins were down. And you talked about kind of fixed cost absorption. But you guys have done a really good job on the D&A front over the last couple of years, and yet gross margins keep trending down. And so I'm just kind of curious, is your comfort level that you've kind of reached the bottom on the gross margins in the TrueTouch business, especially against the backdrop that a lot of investors are concerned that smartphone ASPs at the OEM level start to really get -- come under crunch next year. And so can you walk me through that a little bit as to why you're confident in sort of the gross margin targets, and again, specifically what happened in the June quarter with gross margins down sequentially on pretty decent revenue growth?

Brad W. Buss

Yes, I mean, I think a big part of it is the mix, number one. Number two, we do need that foundry lift. I mean, like I said, it's a very important piece as we cross over that revenue level for that group. That adds a lot. But I mean, ASP-wise, I think most of the changes we've seen in ASPs have really flown through really into our revenue. I mean, there's downward pressure like any other semiconductor business, but I think the big jumps really pretty much are behind us. And I think that is a floor from a gross margin standpoint. Cathal, do you have anything to add differently?

Cathal Phelan

No, I think that's right. And I think we have a very good roadmap of cost reduction and moving the customers to parts that makes sense for us, margin-wise.

Christopher A. Seams

Yes. One thing to remember, John, it's Chris, is that our innovation is not just on the controller side. We innovate with sensors, and we've done a great job of introducing less and less costly sensors to our customers. And that wave is not finished yet.

T. J. Rodgers

So the issue that's come up again and reasonably so is that the MPD gross margin is 64% in the quarter on $83 million. And the PSD, Programmable Systems Division, which includes both CapSense, both the TrueTouch and its classic PSoC and the platform PSoC, was 54% and $96.1 million. There are 2 impacts on gross margin in PSD, and they're different. One we've already said. So Design Win Replication, things I talked about which run the PSoC platform, are ramping our new products, PSoC 3 and 5, and they're in their lower overhead latent gross margin phase, which they will take a couple of quarters to grow out of. They're actually at the bottom of that curve right now. The other half is CCD, which is the year that TrueTouch CCD no longer exists externally, but it's the other half of our PSoC group. In CCD, the prices are going down, and we expect them to go down. And it would be abnormal if they didn't go down. If you want to look at what happened there, TrueTouch or CapSense is the same thing, really, move back in time about 5 years. And our CapSense division has good gross margin, and its average selling price is $0.49, okay? So you can buy multi-button chips from Cypress for $0.50, and we make good margins. So while the TrueTouch market is still growing, as the market gets bigger and as it expands to the more consumer-oriented cheaper cellphones, the price has got to go down and the industry has got to make chips for that. Okay, throw me the briar patch. You want to have a price war, we're a RAM company, we do not have price wars. We're not going to cut pricing, but we're going to cut our costs. We're going to do it methodically. So -- and that's the dynamic we see happening, and we're, I'd say, midpoint right now in that market. And we intend -- just as we did with CapSense, with the exact same dynamic, we intend to emerge #1 on the other side of this war.

Operator

Our next question is from Glen Yeung.

Delos Elder

This is Delos for Glen. This is with Citi. I just want to ask a question about the mix impact you saw during the quarter and how we should expect that mix to trend over the year and any impact we can see.

T. J. Rodgers

Mix is normal, right? Is it much different?

Brad W. Buss

Yes. I mean, I don't see anything outside the norm, I mean, other than the touch stuff is going to grow.

T. J. Rodgers

If you look at the mixes, we're basically 45, 45, 10, PSoC memory and DCD, USB. And those numbers are stable within a few percentage points. Over time, the 10 is going to grow the fastest, and then the 45 for PSoC is going to grow. Memory, I still think memory will be about flat. I think the clients we may have seen with memory TAM will be offset by our share gain.

Delos Elder

Okay. And then just as a follow-up, I just wanted to...

T. J. Rodgers

[indiscernible] it's been jumping around. It's pretty stable, and over time, look for USB and PSoC to grow.

Brad W. Buss

Yes.

Delos Elder

Okay. Just finally, how would you rank the source of growth for your touch business with respect to handset, tablet, eReader, other applications?

Cathal Phelan

In the medium or long term?

Delos Elder

Over the next 2 or 3 quarters.

Cathal Phelan

I think the next 2 or 3 quarters, I think we're going to see good growth from the eReader section first. And then in the low-end smartphone section, high-end feature phone would be the 2 -- the second area of growth.

Operator

Our next question is from Christopher Danely.

Christopher B. Danely - JP Morgan Chase & Co, Research Division

JPMorgan. Can you just talk about your share in touch? And, I mean, are you feeling any pricing pressure from all these folks jumping into the market and how you expect your share in touch to trend second half of this year and through next year?

Cathal Phelan

Okay. So you know that the Q1 was our low point. I still think -- we said it was our low point. I still believe it is our low point. We're going to continue to grow share from that point, thanks to our Gen4 and other products growing. And was there something else you asked?

Brad W. Buss

On the competitive thing.

Cathal Phelan

The competitive front, it's the same people at most accounts that we've seen historically, that we see continuously. Every now and again, you see a new name pop up in an account and disappear 2 cycles or 1 cycle later, but it's the same names, the same competition front. And to the first order, we're considered as very, very, very high-performing solution to our customer.

Christopher B. Danely - JP Morgan Chase & Co, Research Division

And for my follow-up, T.J., can you just give us your sense of are we through most of it or the worst of it from this macro slowdown?

T. J. Rodgers

No. I think we're going drag along the bottom. I've been saying that for a couple of years. Right now, we are spending literally twice as much at the federal level as we're taking in revenues, and then that's piling up record deficits. It's not a Democrat, Republican thing. Obama is worse than George W. Bush, but they are #1 and 2 all time in spending and piling up deficits. And until we stop with the candy, government will give you this at the expense of everybody, and until we turn back to free markets, the economy is not going to recover. It's just that simple. I think it's a big election. I think it's a big election coming up, and if we decide to maintain large government going forward, then we're going to hunker down and not expand because that would be very risky, not expand our expenses. We will continue to work on making the most money we can. Spending $80 million a quarter is not exactly being proper. We should be able to significantly increase our revenue and profit with the team we've got together right now. I'd like to go back to the good old days, but I don't see the macro economy increasing until somebody decides they're going to stop spending at the federal -- on the state level. Most of you guys -- many of you, most of you aren't in California here, but we've got a governor running around talking about buying $1 billion -- how many billion? $80 billion train. And they're going to build it from goddamn Modesto to Westwood City.

Brad W. Buss

Bakersfield.

T. J. Rodgers

Bakersfield. So you're going to be able to go. All 3 of you, if you care about it, it's going to be able to go 160 miles an hour from Modesto to Bakersfield. That's the kind of stuff we're doing right now, and then you ask me, we're sitting there and that -- think about the absurdity of asking me, "Well your mix average gross margin is 57.0%, is it going to go down by a fraction of a percentage point? As your mix changes from product A to product B, we have less gross margin." And I'm sitting there telling you that -- I didn't tell you today, but I'm sitting there screwing around with the material I make wires and the package with and the diameters of wires to knock milli-cents per lead out of the packages to try to tune up efficiency of the corporation, while the governor of this state is pissing away $80 billion on a train, okay? And he just got it passed. So basically, what I do isn't going to matter until we change what they do, and that's out of my control. And other than listening for the 5 or 6 minutes I can tolerate on the radio in the morning of what's going on, I'm not connected to it.

Operator

Our next question is from John Vinh.

John Nguyen Vinh - Pacific Crest Securities, Inc., Research Division

Pacific Crest. Just 1 question for me is just to clarify your outlook for TrueTouch. I know you previously have talked about TrueTouch being down roughly about 10% to 15% this year. How are we tracking to that?

Brad W. Buss

We are definitely going to be down this year is all we're saying. That's the plan.

Operator

Our next question is from Suji De Silva.

Sujeeva De Silva - ThinkEquity LLC, Research Division

ThinkEquity. So on the TrueTouch, can you talk about where the mix will end up this year, smartphones versus eReader tablets and where that was maybe a year ago? I just want to understand how that will shift this year.

Cathal Phelan

I think by the end of the year, we'll be 99% -- 90% to 95% in handsets and 5% to 10% in eReader tablets. That's my guess. And last year, it was slightly bigger actually in tablets.

T. J. Rodgers

Yes. There was a blip in tablets last year because there was a period of time when there were no single-chip tablets or eReader solutions, and there was a generation of tablets that used anywhere from 3 to 6 chips to cover the bigger screen. So there was a revenue blip. There was a unit blip, but there's a revenue blip. And I think the market, if you look at units, is 90, 10, cellphones to tablets, and that's about where our revenue is.

Brad W. Buss

And I think as we exit the year and go into next year, the -- go on tablet-y, eReader, stuff like the cameras, the cars and that -- and other applications, you'll start seeing that show up more. But it's still predominantly going to be cellphones because we're plowing into that low end of the market, 1 billion cellphones that don't have touch. And we're getting very good traction in that area, and that's going to continue to be a growth area that I think will keep the cellphone percent high, even though these other areas are going to grow very nicely for us.

Operator

Our next question is from Steven Eliscu.

Steven Eliscu - UBS Investment Bank, Research Division

UBS. I just wanted to focus a question around this Design Win Replication discussion. It suggests that perhaps you've undergone some sort of strategic shift, looking at touch as not the main growth driver, but as a growth driver among a number of others. And just trying to get a sense here of you getting back to your model of driving growth at 2x the rate of the industry. And at least in 2013, what are going to be some of the growth drivers to achieve that?

T. J. Rodgers

I restate your synopsis of our position a little bit. Our platform PSoC division and the DWR process is designed to scientifically and systematically explore the marketplace and quickly react to hotspots and create the next touch or the next CapSense. Again, those are both on separate divisions over $100 million a year. And we believe that creating new markets like those is the best way to grow. And to be first means you'll dominate the market as we have in CapSense and hope to do in touch. Right now, we're one of the big 4 in touch, and we want to be #1. Having said that, the people who run the touch division, Cathal Phelan, and the people who run -- and they also run the CapSense, they want their market to grow. So they're pushing revenue into their market, but that dynamic is not a lot different from the RAM guys trying to gain share in their market, such guys trying to gain share in their market. In CapSense, for example, once you get to 40%, a RAM's worth 40%, the growth kind of levels off if these people just weren't any more than 40% market, unless you're Intel, kind of an anomaly. So I'm trying to create more of those with the DWR program. And at the very same time, we have people whose only job is to make what [ph]? The ones we've created get bigger. If you just went back to these meetings in 2005, the same way we're getting a lot of detailed triangulating questions on touchscreens today, we got detailed triangulating questions on CapSense from those meetings because CapSense is getting rid of mechanical buttons and flaggers and switches and replacing them with these new surfaces with capacitive touch. It was a big deal. And winning an Apple disc or converting printers at Canon from mechanical buttons and high-volume products, the touch button was a big deal. So we have to be in the middle of the touchscreen -- cellphone touchscreen conversion right now, and it's a hot topic. But in a macro level, one click up from that, I'm looking for the next one, and I'm trying to find it as early as I can.

Steven Eliscu - UBS Investment Bank, Research Division

So is there going to be a gap between when you're able to get all those new things going and the kind of growth that maybe we should expect next year?

Brad W. Buss

No, not at all. I mean, what T.J. is talking, there was an incremental program that's been ongoing and we're refining, and he wanted to talk to you guys on it as only he can do. And our growth drivers really aren't changing. I mean, like I said, 3 and 5, I mean, the percentage growth we're seeing in that is phenomenal, albeit off a small base. And like we said, even if the economy sucks and we become the new Japan for the next 10 years, he's going to be chewing into that $15 billion TAM for years. The USB 3.0 again is just ramping. He's going to ramp for 6 quarter. Dana's got his share. The touch is going to continue to grow way faster than anything in the industry by far. And then we've got the whole Emerging Tech, we got the Trackpads coming. All the stuff we've talked about continue to remain on track and I think will allow us even in a shitty economy to outgrow the average guy because we're going into so many new markets. We do butt-kissing in notebooks, tablets right now. So whether you pick a tablet or Win 8 this or that, we have an opportunity to go make a couple of bucks in a couple of hundred million devices.

T. J. Rodgers

The answer is, no, I don't expect a gap. I expect the divisions we have, which have an identified business, to grow at a rate exceeding the market. What I was really talking about is I can push on each of them to grow. You pick a number, 8% per year, 2% per quarter, and they all have targets to do that. What I was talking about really was finding the next one that will grow from 0 to $5 million to $10 million to $20 million a quarter as a new vector of growth, above and beyond what we've got now.

Operator

Our next question is from Sandy Harrison.

William S. Harrison - Wunderlich Securities Inc., Research Division

Wunderlich. A couple of questions for the group. Real quickly, as you talked about how the quarter progressed, is there any real differentiation between what you saw as far as cancellations and what you saw as far as pushouts and that potential impact on your book-to-bill? Because book-to-bill is really sort of the amalgamation of that.

Christopher A. Seams

Sandy, it's Chris. Actually, cancellations and pushouts, I said they were at normal levels. They were slightly below that. So what we just had was a slowdown in order rates and it's starting to recover at least in the first 3 weeks, and beyond that, we'll see as the quarter progresses.

T. J. Rodgers

Then I want to go back to my comment about the average book-to-bill for the prior 2 quarters. Even though our book-to-bill was at ugly 0.85, the fact is we entered the quarter with 77% booked. So how can you have a lousy book-to-bill and come in with 77% booked to day 1? Well, the answer is, you carry a lot of stuff across from last quarter. And that's another way to say that, as last quarter's book-to-bill was 1.31, and there is this factor slowing it down to come up to an average. We've got the backlog for the quarter we forecasted, which is flat. We like more.

William S. Harrison - Wunderlich Securities Inc., Research Division

Got you. And then you would also -- I can't remember who talked about kind of the wireless sector as being the slowest of the comp space. Can you provide any other color? Was the wireless sector more slow on -- in the international side, in North American side? Just trying to glean [ph] anything we can from your guys' view as far as where the weakness in general is coming from or if it's geographically located.

Dana C. Nazarian

Sandy, this is Dana. I made that comment, and I'll tell you, it was pretty much across the board. We shipped into the wireless segment, in the significant big guy in United States, the 2 big guys in China and several guys in Europe, and they're all pretty weak right now.

William S. Harrison - Wunderlich Securities Inc., Research Division

Got you. And then lastly for me. On the 21% growth you guys saw in the quarter for touch and you had targeted 25%, could one surmise that in order to do the 25%, you needed to have the design wins to do it, and coming in at 21% suggests you got the wins, the issue was the customer maybe didn't put as many parts out into the channel on the shelves?

Brad W. Buss

Bingo.

Operator

Our next question is from Srini Pajjuri.

Srini Pajjuri - Credit Agricole Securities (USA) Inc., Research Division

CLSA. Brad, assuming that macro doesn't improve, just wondering how we should think about your December quarter seasonality. I guess you said touch is going to grow sequentially, but wondering if there are any other product cycles that could help you in December.

Brad W. Buss

I mean, our normal Q4 seasonality has been down a few percentage points. And with this back where we're right now, I mean, I couldn't tell you that it would be any different. To be honest, we may have some stuff growing, like obviously the touch and a few other things, but there's a lot of stuff that normally offset. So right now, I'm figuring Q4 is probably going to be down seasonality, and I don't have anything to tell me the opposite. But again, we don't have visibility enough to say, right?

Operator

Our next question is from Rajvindra.

Rajvindra S. Gill - Needham & Company, LLC, Research Division

Needham & Company. Just a question on TrueTouch. Maybe you can describe some of the drivers of how you can get back up to your TrueTouch levels in 2013 versus what you had in 2011. It would seem that there is more headwinds than there are tailwinds.

Cathal Phelan

Fair enough. The market is changing, and what we're seeing right now is not just only handset growth, what we call the true smartphone, but the low end of the smartphones or the high end of the feature phones are now where touch has been becoming a need for the end consumer. So actually, the number of units that are going to go out the door to customers next year is going to grow and grow particularly in that space, and that's a space that we have spent a lot of time dedicating our efforts, in particular, for example, our simple SLIM sensor, where we have a Single-Layer Independent Multitouch sensor that saves the end customer $0.50 to $1 in their bills. That's really important. We've got a lot of activity. We got 20 handsets being designed today using SLIM and low-cost sensors in general, and that I think is going to drive a lot of our growth in 2013 and 2014.

Rajvindra S. Gill - Needham & Company, LLC, Research Division

And just 1 follow-up, if I can. In-cell, any thoughts on in-cell? There's been a lot of speculation that Apple is incorporating in-cell. Do you think that's a game-changing technology in touch? And if so, where do you think you're positioned with that technology?

Cathal Phelan

It's a good question. I don't know what Apple is going to do. There's been a lot of talk about in-cell, on-cell, hybrid cells, Sensor on Lens. There's a lot of different ways to sell in this market. In general, our approach is to enable everybody to do what they want to do and how they address this market. The only one thing that I say we don't really address is where people are talking about true, true, true in-cell, which Apple is not, and where you go to 1 chip driving both the LCD panel itself and doing the touch. And in that case, right now, we don't have an approach. I think that's going to be a very small piece of the market in the near few years. Everything else, we've got a really good approach using our current products and our products on our roadmaps.

Brad W. Buss

And we've got designs coming, but it's a customer decision like Cathal said. I mean, there's nobody that has a competitive advantage or disadvantage. And it will be a customer choice, and we'll respond.

T. J. Rodgers

Apple is not in our equation right now. Apple's strategy is to design chips themselves or work with partners to design chips to get something new, which none of us know because their security is very good, and then surprise the world and have proprietary chip to make time to copy long. And those chips tend to be high-tech and expensive. Right now, we kind of come in below that. We're the guys who enable the next innovation to be brought to market as quickly as possible. That's our high-end. But I got to stress again in the low-end, SLIM, Single-Layer Independent Multitouch, it was an awful acronym, but the fact that I don't even what it is says it's an awful acronym, basically, it's 1 layer of ITO, 1 layer of conductor on a piece of film or glass. And it really does cut the cost of sensor in half, and it can really save you $0.50 to $1. Along with SLIM, we have a chip called Krypton that we shipped 200 million of that we sell for $0.50, that will run that cheap sensor with a $0.50 chip. And when the nuclear war comes in touchscreens, which I think will be in the next downcycle, I think this downcycle will be kind of draggy, then there will be another upcycle and the cycle after that, let's say, 2.5 years from now. With that nuclear war pricing, we're going to merge, making a super solution that's cheap, just like we did with CapSense. And that is our strength, and that's our staying power. And that's not going to get jacked around by really high-end stuff from leading innovators that makes proprietary chips.

Operator

Our next question is from Sidney Ho.

Sidney Ho - Nomura Securities Co. Ltd., Research Division

Nomura Securities. Staying with touch for a second. What are your thoughts on Windows 8 notebooks? I'm talking about touchscreen, not a touchpad. Intel talked about 40 design wins with touch and maybe a dozen that are convertibles. So how are you positioned there? And just to clarify, do you include those touchscreens in your eReader tablet bucket that is 5% to 10% of revenue this year?

Cathal Phelan

True ultrabook touchscreen, I think, will become important 2, 3 years away from now. I don't think they're going to be significant volume in the near term. And I think in that timeframe, we will be more than ready to play and actually have volume. Right now, it's not a phase we spend much time and energy on in the bigger, bigger screens that you're talking about. So are you talking about a tablet version? Are you talking about the Trackpad? And that's where we book. We've already worked with a partner to produce a personal, a laptop-sized device that's got touch in it. The technology is available. Our limit is the adoption rate by the market, and so far, it's not there.

Operator

Our next question is from Jeff Schreiner.

Jeffrey A. Schreiner - Capstone Investments, Research Division

Capstone Investments. I'm just trying to come back to this 40% growth in the second half versus first half. You just grew in the second quarter around 20% sequentially. And I'm wondering, with flat guidance into the third quarter, is this really going to be much more weighted to the December quarter? And is it all TrueTouch or is that TrueTouch and CapSense?

Brad W. Buss

No. When we talk touch, just so we're clear, CapSense has never ever been included in it. It's just stuff that drives touchscreen. Whether it's a cellphone, a tablet, a car, an eReader, it doesn't matter. So if we added that in there, we would probably be the leader in the touch end of it by far. And again, don't forget, Jeff, that Q1 was pretty gnarly, right? So -- and yes, I would say it's more weighted in the December quarter than the September quarter. But you never know.

Operator

Our next question is from Charlie Anderson.

Charles L. Anderson - Dougherty & Company LLC, Research Division

Dougherty & Company. Just a quick one from me. I wonder if you can give us any update on Deca Tech. It sounded like you put some CapEx into that in the quarter and kind of where we are on that trajectory.

Brad W. Buss

Actually, Deca is executing very well. If you look at the milestones we have from a technical design, et cetera, he's doing very good. He's managing his costs very well. We're extremely optimistic on that. He continues to secure big and bigger customers. I mean, his penetration and his target market is well over 50%, and I think you'll only see that grow as he goes into production. It's a long cycle, as we've said. I mean, getting them interested, getting wafers in, getting qualified and then turning it into revenue is a long cycle, but we should start seeing some decent revenue like we talked about in '13. And he's not putting any abnormal pressure on our cost or our capital structure right now.

Operator

Our final question is from Dale Pfau.

Dale Pfau - Cantor Fitzgerald & Co., Research Division

Yes. Cantor Fitzgerald. Back to touch again, could you give us kind of an idea what you consider to be a normal ASP erosion that you're seeing? And then you mentioned with the nuclear winter that's coming 2.5 years from now. What kind of ASPs drop or spike down would you expect to see in that period of time?

Cathal Phelan

So I think the ASP erosion this year and next is going to be in the 4% to 5% a quarter, and I think it will flatten out. And it will come into the 1%, 2%, 3% per quarter after that.

Brad W. Buss

Yes, the ASP is very obviously at the low-end cellphone, high-end, the tablet or a touchpad, but you're going to have ASPs in the blend that will fly all over the place. And I think like Cathal is talking, a lot of that -- the ASP you're seeing right now, as you go into a new market, it's high and it goes down. And then also, there's volume, right? As you start ramping to some of these, the volume has a big portion of that ASP. And another year or 2 out it's probably going to be a decently penetrated area, and you won't have the volume kicking in as much. But the good thing is, we're seeing cost reductions that allow us to keep the margins where we want them targeted between that and new features that we hope to get value for, should keep the margin stream up good. I mean, the low-end, I think, could be a very good margin opportunity for us. And like we said and like T.J. said, we could make shit really cheap as a company and have great cost structures that allow us to get a very good gross margin on it, and I think that's a competitive weapon, again, some of the other competitors that don't have the manufacturing prowess [ph] that we do.

T. J. Rodgers

Okay. We'd like to thank you for joining our call. We had flat revenue, we had up revenue forecasting flat. The profit picture is good, and we are managing the company the right way for these times. Thank you.

Operator

Thank you. This does conclude today's conference. Thank you for participating. You may disconnect at this time.

Copyright policy: All transcripts on this site are the copyright of Seeking Alpha. However, we view them as an important resource for bloggers and journalists, and are excited to contribute to the democratization of financial information on the Internet. (Until now investors have had to pay thousands of dollars in subscription fees for transcripts.) So our reproduction policy is as follows: You may quote up to 400 words of any transcript on the condition that you attribute the transcript to Seeking Alpha and either link to the original transcript or to www.SeekingAlpha.com. All other use is prohibited.

THE INFORMATION CONTAINED HERE IS A TEXTUAL REPRESENTATION OF THE APPLICABLE COMPANY'S CONFERENCE CALL, CONFERENCE PRESENTATION OR OTHER AUDIO PRESENTATION, AND WHILE EFFORTS ARE MADE TO PROVIDE AN ACCURATE TRANSCRIPTION, THERE MAY BE MATERIAL ERRORS, OMISSIONS, OR INACCURACIES IN THE REPORTING OF THE SUBSTANCE OF THE AUDIO PRESENTATIONS. IN NO WAY DOES SEEKING ALPHA ASSUME ANY RESPONSIBILITY FOR ANY INVESTMENT OR OTHER DECISIONS MADE BASED UPON THE INFORMATION PROVIDED ON THIS WEB SITE OR IN ANY TRANSCRIPT. USERS ARE ADVISED TO REVIEW THE APPLICABLE COMPANY'S AUDIO PRESENTATION ITSELF AND THE APPLICABLE COMPANY'S SEC FILINGS BEFORE MAKING ANY INVESTMENT OR OTHER DECISIONS.

If you have any additional questions about our online transcripts, please contact us at: transcripts@seekingalpha.com. Thank you!

Source: Cypress Semiconductor Management Discusses Q2 2012 Results - Earnings Call Transcript
This Transcript
All Transcripts