MPWR - Earnings call transcript Q2 2022 | Monolithic Power Systems, Inc.

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Genevieve Cunningham

Welcome everyone to the MPS Second Quarter 2022 Earnings Webinar. Please note that this webinar is being recorded and will be archived for 1 year on our Investor Relations page at www.monolithicpower.com. My name is Genevieve Cunningham, and I will be the moderator for this webinar.

Joining me today are Michael Hsing, CEO and Founder of MPS; and Bernie Blegen, VP and CFO. In the course of today’s webinar, we will be making forward-looking statements and projections that involve risk and uncertainty, which could cause results to differ materially from management’s current views and expectations. Safe contained the release the to today. published refer Harbor in statement earnings Please other could found statements factors to and filings in uncertainties Risks, that and XX-K website. identified QX release XX-Q the our the latest differ can cause in Safe our in Harbor be contained that earnings and on are results actual information call. assumes MPS on provided no obligation to today’s update the

with net SG&A income discussing non-GAAP financial table between gross in in SEC for earnings basis. which the currently before have margin, reconciliation expense, and measures GAAP. financial our operating outlines release, a we or measures should and be R&D to income non-GAAP income, to with in be will furnished A accordance a QX We of income superior measures that both considered is substitute expense, the measures taxes, GAAP financial and to on available a prepared website. GAAP as income, the financial other operating performance GAAP earnings not are on and included our not is XXXX non-GAAP These accordance and prepared

over Now Blegen. the I’d call to like turn to Bernie

Bernie Blegen

the revenue and quarter MPS consistent against second Gen. record was result higher of growth This a broad-based $XXX.X XXXX. our XX.X% of of execution quarter quarter achieved XX.X% million, than higher Thanks, than second strategies. first XXXX, of the year-over-year revenue

ramp in center by primarily sales. of now XXXX, the enterprise Turning an quarter $XX.X from quarter data XX.X% and market, market, to our increased first second due our computing second revenue XXXX XXXX accelerated million to data workstation quarter revenue the in of

revenue with and second revenue reflected XXX.X% up represented of higher notebook data quarter $XXX.X revenue quarter XX.X% commercial the computing The increased XXXX. second first XX.X% sales. revenue of compared of the revenue storage quarter from MPS’s sequential Second in and of XXXX. improvement quarter Enterprise million Storage XXXX year-over-year. XXXX XX.X% was

up in was represented second revenue computing XX.X% Second XXX.X% XXXX. MPS’s quarter year-over-year. second XXXX XX.X% the of revenue XXXX of with and quarter quarter compared Storage revenue

$XX.X consumer home Second was sequential quarter XX.X% and million particular in noted gaming. quarterly first quarter increased XXXX. market revenue from The revenue strength improvement appliances of broad-based of with the

up Second XXXX quarter revenue XXXX second Consumer was compared revenue in second XXXX. of XX.X% with represented year-over-year. quarter quarter XX.X% XX.X% of revenue the MPS’s

and increased Second quarter the million of industrial of of reflecting sales $XX.X XX.X% increased source quarter first XXXX security revenue XXXX, products for from applications. power

the revenue revenue XX.X% XX.X% revenue XX.X% with quarter in was of XXXX. our compared up Industrial year-over-year. second represented quarter second of Second quarter XXXX XXXX total

of sales XXXX. $XX.X digital cockpit quarter applications from the Second primarily automobile revenue and first million of to due – increased system driver systems, of advanced increased products. for XX.X% the lighting Primarily quarter

MPS’s represented of second quarter Automotive Second XXXX up the XX.X% year-over-year. of compared XX.X% revenue revenue XX.X% with was quarter in quarter revenue second XXXX XXXX.

communications of million $XX.X increase of first X.X% Second of related infrastructure. was up quarter XXXX revenue revenue sequential XXXX. the Most was XG the to from quarter

with represented XX.X% Communications revenue the quarter total XXXX compared in of our quarter up XXXX quarter Second second year-over-year. sales second revenue XXXX. was of XX.X% XX.X%

gross and XXXX a quarter quarter first than XXXX. the XXX the basis margin was higher basis few second margin. higher on than XX Moving now to XX.X%, comments of GAAP points points gross of

points and reported XXXX. quarter Our $XX.X from the in XXXX quarter favorable GAAP gross year-over-year to sales The in attributed and the a efficiency margin gross a quarter second increases margin XX.X%, operational reported and was XXXX $XXX.X first second margin gross the of both compared the from non-GAAP million $XX.X GAAP and XX gains of income was largely the million for of second basis reported up operating ago. Non-GAAP quarter-over-quarter to in XXX basis million points for first higher more quarter XXXX quarter the than and of mix. year is

quarter the income in was million million of $XXX.X operating non-GAAP to reported compared $XXX.X Our XXXX. first

our operating review expenses. Let’s

Our million $XXX.X GAAP in of $XXX.X second the operating expenses of were $XXX.X in compared million quarter and million XXXX quarter the first second XXXX in XXXX. quarter the of with

operating loss Our non-GAAP spent million in the were second $XX.X the from differences we quarter are operating quarter GAAP expenses the quarters primarily million, The the here XXXX. stock and income of unfunded XXXX quarter XXXX compensation compensation discussed and in expenses and plan. up deferred million $XX.X for from up between or first of reported the second operating on expenses $XX.X an expense non-GAAP

including with $X.X $XX.X XXXX, total of $XX.X compensation in of million XXXX. cost to goods of charged stock sold quarter approximately was the recorded quarter second million the compared expense, For million first

other – XXXX with of income million expense quarter the in second quarter $XXX,XXX other compared XXXX. $X.X was GAAP Our first

increase Our first in the a XXXX of $X,XXX in partly quarter contributions, was expense income other million second quarter non-GAAP The with other million of non-GAAP compared decrease is charitable to compensation $X.X exchange due to $X of favorable in Switching other line. income the offset income bottom GAAP on loss by currency unfunded The impact the an rates. the deferred plan. and or difference is other non-GAAP income XXXX.

second quarter income XXXX per million million or or XXXX. of per or XXXX $X.XX net share quarter million $XX.X was of fully per in $X.XX compared with quarter in share $XXX.X the $X.XX and Second diluted the GAAP share first $XX.X

XX.X QX per share $X.XX on XXXX. at XXXX share diluted was per per quarter of quarter second a income or – per $XX.X $XXX.X and XXXX of with compared Fully share million XXXX or the or diluted $X.XX were Second fully diluted end outstanding first fully fully net the diluted million shares million. in non-GAAP share the $XXX.X in quarter $X.XX million, of

balance the the second million quarter of $XXX.X quarter $XXX.X cash the sheet. XXXX at XXXX. million investments look at were equivalents end of the with let’s end Cash, first and the Now, compared of of at

XX XXXX of quarter XXXX days days in sales second than of $XXX.X of cash For the the approximately outstanding, days at end the operating days ended flow at of quarter $XXX.X XXXX. operating representing lower receivable compared million the than higher QX X first quarter of XXXX of day XX quarter, cash which $XXX.X reported of was Accounts with and MPS the the X generated million, XX flow million. second the

of of which revenue On see basis, were days match. at of days quarter’s levels inventories first the economic higher the and of quarter were a million, hand I XXXX. the of XXXX XXXX. internal XXXX the a XXX days second revenue. higher end the you now the of than third XXXX, the outlook days quarter quarter Our of of million inventory end $XXX.X of XXX inventory function provides on calculated for quarter the inventory better end to of $XXX second the quarter days the XXXX. comparing as quarter the of inventory of We XXX at of following second first XXXX current second X would the end with like at lower days we end can this days of the were days XX than Historically, the from days quarter the current have than XX at order up first believe of the at at XXXX. at end quarter of of XXX the Days of of to the of turn of the end our

and of XX.X% to of total the in margin interest million; In between XX.X%; and range other from we for $X.X million income $XX.X in in million XX.X growth goods compensation revenue of XX.X%; of to I in non-GAAP countries. non-GAAP range the the R&D of expenses QX $X.X and $XXX continuing manufacturing in the of forecasting be up would million, expansion will strategies, the execute gains range range including in $X.X including expense to now range are gross SG&A the partnerships XX.X of webinar million and of shares. centers range to multiple margin before in $XX.X losses; approximately million; foreign are XX.X% questions. range the to diversification to $XX.X $XXX.X to expense and million on litigation million; our our in $X.X million; and million million to the diluted that open million in gross $XXX.X and sold; conclusion, to fully exchange $X.X million We stock-based between million $XXX range $XX.X shares R&D and cost million expenses R&D SG&A charged GAAP the GAAP

Genevieve Cunningham

Instructions] Thank Analysts, Bernie. you, first question Oppenheimer. open. begin [Operator from our Our would is Rick, Rick I Schafer of session. Q&A now is like to now line your

Rick Schafer

and congratulations you Thanks to guys.

are from question am lot mean you than seeing content your Rapids? Another I content. the great your impact launch of seem core the quarter. power curious, just like Sapphire a higher This is a CPU any But may guidance. silly given accelerator I delayed know I

sort guide. into I the just puts know monster just I me drag sort if this correct it’s – year, I curious of our think XX-volt and this XX-volt, I at But $XXX delayed and a math guess any think shows I takes. that track wrong, am launch? I were so there much a million I’m seeing looking you am a if please from of is little pretty

Michael Hsing

next okay. fields. see were All you we designed so. products few these mean, is in or I own it, all far, And are know, don’t we divulging mean like last whatever years, So the for again, it year I – growth of are growing the for that as our these – the the

of that care processor And market And control. MPS segments. less provide – has overall, one so power we it’s much higher to new is have and can benefit if we there the is MPS a and a higher a out delay a – thing those actually but

don’t have grow about shares. it gain a where for way, we off it’s in in this growth. plenty business notice existing from more this So, years as and and we we years of X that And to it and X.X period market we

Rick Schafer

Okay. back Thanks China, supply could in I majority you still maybe a big the question, have your if wafer lot, pay your supply end color. the follow-up facility. on got And plus to Chengdu is Michael, of for

to on as how could that, to you So equipment if and where thoughts your there? of supply sense watching curious, I trying stand headlines about and now derisk trying with plans timing as maybe maybe are Thanks. a TSMC So just talk And etcetera everything government and U.S. things restrictions, there? of concerned keep the if give capacity part in we chain with tighten with guess, you China?

Michael Hsing

Yes.

of our transition, And like manufacturing last years other companies. we And started China in transitioning Just a other engineering like We we we we this from up. to just from started other be manpower. to earlier. from are places. built any okay, all first actually, infrastructure are the Like companies, so had are clearly, XX out transitioning

manufacturers, that ago years X So and out – ago. X and X, And or ago X we you okay, And of – years use a as started edge of fabs. X we about came X okay transitioned node, nanometers years in we higher like XX XX or a are a fab. years okay, trading ago, and fab, X clearly, always DRAM digital nanometers know, these

years engaged And segment are the opens a be, it’s a still say now, now. of in all next one will a with And of few China. from all and okay, – we okay. fab have Taiwan a we can’t soon, are – now only be have revenues in again careers our will we okay. XX% large And will in still so they And these we as – reputation, these market bigger MPS, China move and the capacity, a talking Okay, about out and our mean we it fill are I – I fab. the up places okay, this up

So in very the diversified. a probably or year, of be we will years next couple later, year next

Bernie Blegen

for just market a a the China for one as general, add strategy. to diversification of that, plus customers in as that in the becoming And are less restrictions asking concern to are capacity

lines are working in expanding capacity. along we overall to our So those companion

Michael Hsing

that’s Yes. game. region – where their the customer we They That’s local are mean request. require center our all supplied. playing require each I

so aware are of that. fully we And

And Korea Europe so South these all we and with And engage and Asia okay, across Japan. and fabs.

And so that’s how I see it.

Rick Schafer

lot Okay, thanks for the again. Congrats color. a

Genevieve Cunningham

line Matt is Ramsay your Matt, question Cowen. is open. from next now of Our

Matt Ramsay

you Hopefully, okay. very results. me on much, can guys. Congratulations hear Thank you the

go just calls multiple tonight. got at I’ll time think and and we’ve the ask questions, both because I two ahead had I So same going

they Michael could The sales accelerator your power you so sell the by uses first things in give the the would in of would unit Thanks, burning the like I’m the – the completely is of if your actually of like server $XXX or question, that data of of case. guys. you have power helpful? in us the through one, core new some you second segment far there, Michael, and could some to ahead some if say enterprise unit But both unrelated, versus walk million any inventory, reported us And indication products customers? or new there. cash, of to cash sure CPU in power be PC business, really which to the kind end take, always give how business, shipments the get kind build that

Michael Hsing

a players powers, multiple awake. okay? very care. track. honestly, power, And question, more and goes are like as first these mean And do XX-volt segment. – it’s difficult. areas, long We you good that sell for And pretty your generic dominant server high data first, up, – to really center or can don’t I these And know, know. Well, for we a revenue have in it’s in frankly, and really they don’t be And hard as we right? And building used blocks. parts, and less power these are more as our I we are and

versus And they mean the because don’t mean in we CPU future, can versus I devices, through X mostly be ramp number will a And X mean really assets hasn’t I – the notebooks, – be – selling mentioned power high-performance more. about mostly – notebook. we’re the note. we also commercial I gaming think hard be or in recently. in – lot mentioning match be they just I can less. so phase. about you these be also phase, there in in will a started X And it’s quite CPUs, and the But of They phase, can care to we we’re

difficult And so to it’s answer it.

the and gaming high all the these all and notebooks notebooks gaming end, are So high-end side commercial.

these so have ones the a a are And they that variety of use.

Bernie Blegen

probably of as enviable our it of And far that table, which, million to the cash equivalents. let’s on at. there cash over we an position, $XXX have position and things put as three the is it’s issue cash And look on sort

$X The routine higher operating year. even level. to – This full quarter, increases dividend. a generally first for expect our it’s year, is per sustainability the again paying February, with out results the this do a evaluating we’re we’ve been and $X consistently we’d in We year. $X.XX QX so and dividend announced comparing at

additional have added finally, customers’ and order may Another is area then some avenues making And is capacity. said that in sure to require hand build us we inventory cases, to on And that additional adequate key found is investment. And capacity. order building Michael earlier, working very looking, capital, as sustain we’re in strategic you in we as out different that for also to our demand profile. out

we’re And inventory. days XXX target so of right to of now, XXX still below our

continue we inventories in So to well. will as be investing

Michael Hsing

generate add Yes. compared small – Might the compare as expenses, relatively every year. they all cash these all are Bernie are well, we that the that

years, past don’t revenue we some consistent. and want will in to MPS been yearly. – our And revenues. give probably what we is best, And the we And want so to do few acquisitions, doing not also, we but what – for the acquisition so. increase have do continue we And do that’s be know that’s we will

Genevieve Cunningham

line now next of William Our from is Truist. question your Stein is William, open.

William Stein

my taking great question for Thanks and and on results congrats Great. outlook. the

us I on tend that is Something in because can the the the hoping please? and that’s you the traction margins. about maybe that ask in module I growth is helping business, revenue to update something I’m know boost business traction this

Michael Hsing

will pipeline, well, what dollars, few I or triple in but a seen in grow activities. in mean, small. it. next I but still And Yes. It’s in The win that’s the module – we’ve the design is doing the know double is hundred-some revenue but the quite million years

we to few okay, these years true and programmable do modules ago, a it e-commerce do customers so we benefits truly And realize our we as in show end. said the

Bernie Blegen

lowest customers that Yes. been for on are had a for we I’d our the looking historically the provider. cost particularly supply/demand just enabling decision win this process had technologies say as also earning that design imbalance and where

very the programmability, we the larger the to in cost positioned take market, ownership of strategically that total are the things a like time and the decision change we’re the advantage Now to market. like in feel taking process, flexibility, of weighting

William Stein

long My on That’s about that and have if last, your in if comments of it customers wondering Any advantage. sort a that’s a know changed lead can. as times that you guys. don’t I of understanding might from so the competitors’ away a that switch times lot? update I is to makes a the are follow-up, have talk months offering you’re competitive to great. lead that or Thanks, now enable and sense how products And am couple I they degree which times that suddenly would to to can that help lead switch. been

Michael Hsing

changed still delinquencies, okay, lot all Bernie of really And lead a thing, own in still the good we’re – Our in that of as time And hasn’t that’s technologies. our okay? a product much. earlier, we because benefit said

new only that our our finally, demand. due realize a And had globally, increase demands. think I design And China customer this really that’s win what And it’s of time, now we and to and methodologies. our And the even customers the switch benefit I to or activities. technology became new MPS. high same it, to new not all a though from mean it capacities. and Okay, at type design they

Bernie Blegen

product have we invested And so coming off times lead from don’t the different to many have were the availability advantage and where curve, didn’t. is products new having the just in market, necessarily Yes. that else that’s we necessarily answer But of anybody top that when able Greenfield others opportunities, were ahead of the that our I think to industry. on we

William Stein

guys. Thanks,

Genevieve Cunningham

now Quinn, of Quinn open. next is from Our your Needham. is question line Bolton

Quinn Bolton

ask, Congratulations love seen I and outlooks we’ve space compute some half. the Intel Micron nice offering I in guess the subdued to guys. results. the more much on would obviously, second for Hi,

data clearly and just think And broader your the obviously, in inventory got changes Intel from as have you some channel. I guidance in is see I’m I’ve storage any segment or to heard started we’ve enterprise purge center September and folks like a is the wondering, there comments look on in might book, market? the follow-up. And strong. order you notebook But and at Micron the computer some that going the echo then of very

Michael Hsing

our slow and side, okay. orders good, still we I side, for down delinquency. than And We orders new for a is the and lot format, side, before. And think as have I facing – for for of mean, and there but shortages is demand now. memory and the the still we’re notebooks, still – pretty okay, like still And good still starting, memory

Bernie Blegen

if always is are that a might size business today keep relative or is in be any our could And at areas pushed either our of I that It’s susceptible any And cancellations the looking of add just backlog very a to that to mind influence are we fact is that that to of backlog Yes. a canceled the is out. not is, is one-time new part companies. semiconductor just the And of overall minor. all matter or event. that

what’s confident given for that’s second... so outlook And the us very

Michael Hsing

very years. I the of I quarters, the cancellations a yes. booking of mean similar in last The last few they rate would few rate and are and say

Quinn Bolton

Okay.

you’re push-outs, saying? is So sounds no cancellations like noticeable what uptick it in or

Bernie Blegen

Yes.

Quinn Bolton

it. Got

drivers I’m the us, think you Greenfield for showing second and over And growth, The given going of just the very the sort what’s equally for do Do CPU both volt gain business the size the XX-gig the and larger biggest trying data dataset? next that’s just to on than strong share opportunities. couple you can is the of enterprise guys just think card – the for of opportunity be of to driver, – think, accelerator enterprise is the you I one years, biggest question driving sort growth? are they power?

Michael Hsing

ramp. of gain And And and said server And gain And the talk start not into side. since market But small size then percentage, – as and for this know, And couple one that’s you still a to or distance, stepped we’re share. CPU the ‘XX. is it’s but years We servers, think we they from the XXXX the very – bigger both. the we far a game that we I inevitable and of need only we the suppliers. – about in trend. a ago, it. talked a that XX-volts, we we about

move we trend. forefront go volt. the to now And anybody, had XX are of, market not replacing You set in We and okay? this to we’re up

I provide volts And the AC and volt. XXX and so revenue and backup, volts the we data the a provide from center there, itself ramping the guess, the also rack power, battery – for and and from XX is cooling these convert we battery – to opportunities MPS and XXX also big input in are into the same are side. and And solutions management also

place so almost is And MPS shopping for data center. one-stop

Quinn Bolton

Thank you, Michael.

Genevieve Cunningham

Svanberg Tore, your Our next question Stifel. line Tore is of from is open. now

Tore Svanberg

Yes. Thank you.

so and this, get Michael. talked continuous you’re and innovative try and you’ve and forth. dynamics now thinking about so for are more the for know one bit but think working to models on you business your secure to adding capacity little growth? models for $X driving new to of I First or a a on given capacity to geopolitical business new Michael, as billion, start lot about known we

Michael Hsing

than more programmable fill can at right? we’re And for And but couple bigger will years the use. have multiple increased lot our that of have same fab, the We the the one because to do DRAM going MPS will a more outside engage – futures, are fabs, and mobile. of revenues. a are time, of in these up And less of use require years thing, with Well, actually some ago, of we course, We we ago. also – now a we okay? about we semiconductors products next capacities And years. more and growing couple We started of China. couple we have

more lot than semiconductor. a selling We’re

we’re food the of the play competing the in, new provide just we with And solutions, move chain power selling up as the not requirement And We’re market, solutions. we so in – modules. we anybody. comes kind more

clearly different. And up MPS qualifications, so modules. they unprecedented. the those assemble And designed of manufacturer. lot are are new a from And it’s for building modules. these system a testings, These a are ground okay, whole are They partnerships, – of sign up. And lot we

are no there facility is out there. – such the And a these so

had to that we invent So it, work.

Bernie Blegen

Yes. And price And think point revenue that I you that year echo in was just to if and for one our a the for we at XX%. look we’ve there X%. quarter, grew increase, had keep is, mind in February this

you if volume other revenue the so the ASPs came where is about of source selling. And it growth of are value and products the actually look at from, half related, because higher is half higher

supply So means we’ve differentiated our that that chains.

not So silicon-based It’s we’re dependent products. just solutions. making total on

Michael Hsing

– – lot ground would particularly, are place the are we taken – a be of of else down effect work as to do these of okay? the And so is bigger and year we as testing That build effect road, bigger or these yet. a new kind of new developed a ahead couple really the qualifications it. We’re well Nobody couple But manufacturing the things, – of us. – develop and these even modules. part up, are of will and hasn’t of years lot types a a there see a the much you

Tore Svanberg

ASP growing there, and X% adding Thank for Bernie, value I which my related is follow-up, know as That’s just great, great higher and more mentioned products. to But you’re increases. that, this obviously you by perspective. price pricing. Michael, you that mentioned you what is

that than I well competitors think that. your have it’s raised prices more by documented

So in price your your I lot engage because share competitors, of didn’t my sorry. mean, I simply are as just a increases some gaining of guess is aggressive question customers? you you that,

Michael Hsing

share, in because similar it’s if price betters, gaining our to a you the Gaining is And and – shares. is going equals difficult gaining so product. to a share count – our better, gaining – be we’re product share performance gaining share,

Okay.

power get is is Now things. something And price sensitive, MPS, more more a we we we – how separate, we we sell have compete less lot have ago, those quality, offer unique to integrated. now performance and have want controller said – who completely product years we power. we And we’re talking that. And And – important. digital, market And company talking on do lot our we is different we you’re with? MPS silicon but to we difficult And we And there very a side. a memory, what who than now they XX the MOSFET, say display. it. are segments in have a we not that about even do okay, microcontroller, about It’s

use Now it’s total getting to silicon-based these migrate of of became a solutions. type provider technology, we out. We

we difficult okay, how who do very So – we do market It’s gain display, and to share? say. we how

Tore Svanberg

No, you’re Yes. it like more sounds displacing more and companies than before.

the in Most China Just one companies’ this later being the lockdowns, up because of you, shipments last were quarter Bernie. one for quick DSOs quarter.

quarter. went actually down DSOs Your this

you way, Thanks. bit you I can the any how little just us, a it that you? it the can So, be mean China but about obviously, talk lockdown same didn’t would color impacted great? with share impact other

Bernie Blegen

our if an from of chains some impact above impact, shutdown. China there were well is customer the is concern we it, supply didn’t might marginal. we very the to we But No, record our hit revenue felt And sure able industry am much if continue we got that we it growth And but I average. impacted. schedules. was delivery have to was have had Obviously, really the

Tore Svanberg

strong on congrats and you results. Thank Right. the

Michael Hsing

Thank you.

Bernie Blegen

you. Thank

Genevieve Cunningham

is Seymore Ross, is Bank. question of open. line Our your Deutsche Ross from next now

Ross Seymore

for asking guys question. Thanks

question First really high-level a of kind is one.

wasn’t or points year, Over that of growth delta range. seems etcetera, by year like it doubles the maybe and probably years, you guys at Even something etcetera. maybe XX least, last XX have the generally percentage gain analog market outside this of more. outperformed share, But that terribly

that So, ship increased and ordering. then to to I be shipping that double versus can it do availability your you allows peers concerned double response investors are get the in the

do it’s you you think off despite gap. about you operating Can gap that’s continue widening a is And just gap that fact to that the reasons think looking will of so talk the grow And cyclical sustainable? larger forward, base? phenomenon are a you that then that

Michael Hsing

Yes.

said a again, you side, as have even a different. the ship, where from these these inventories centers. of Tier shipped give what see majority think side are we they And And especially X lot year, we in products, mean a intend failures, and units, our the we the lot. okay, test from I backup last we company big the has things industrial have and a supplier, a a to partially years, correct. have companies us particularly, they other I they didn’t to is ship automotive very a all don’t ship. to to – couldn’t has we MPS are And okay. But this and data – the as bigger capacity

better quality are they – and took else, We when than everything. they far The that’s quality have thing. is one shortages. a And but chance everybody of –

And bigger products so proved proved we as opportunity. a give We us that, it, these better.

And good this new the as better last in whatever than start to that And can change all – year, the year, cannot them out. our parts reconfigure design see at, it, the And new we the continue Okay, segment handle will it up. we continue, we as we as to it. projects. product, product as the And out. all they we our or grow grow can

and so the And to these products foreseeable features grow. continue will in

Bernie Blegen

that facing we ourselves. are And still keep large delinquencies in mind

as opportunistic order to be we we cautious our have and in far so demand. customer wafer real meet as to how allocate starts And very had

half at when as look that of then very the been don’t we we the very we the clear I cleanup lean very we the double healthy. during insight, we have And year, there. have I So, shelves believe inventory we on remains earlier, at are did orders only you It’s shipments MPS’ that confirmed, customer have backlog the lean. a still and in of lows. channel, partial said think the perfect And is inventory have doing our because been likewise first

stay opportunities But it. opportunities. notebook just growth customer markets growth it’s to feel or us, up in the from as Michael close really could And we that’s its Tier the building shelves. these evaluate or the in some are new said, and our lot far as a So, on trying consumer are we give And impact. large that as confident, of of secular very channel to different driving that’s that obviously, X reasonably

Michael Hsing

to come will Yes. back questions. I your

Okay.

was we that a that going happened. the seriously, a grow a or okay, And it, me, have time limit are said at you people actually it’s And $XXX are was going limit. are billion, billion, anymore. at large ‘XX, $X mind, accelerate within difficult million, And grow. time. $X a said That’s mind, your that’s of see $XXX $XXX And early that’s I yourself, do. to you not told it the now, basis, are It you okay, then one it’s don’t MPS, okay, kind you okay, the to everybody’s you And I grow, wasn’t it. so the to people what we okay, when barriers. to growing in tell okay, $XXX yes, we it. XXXX In I time, silicon need how selling at my Now And XXXX, time, okay? barriers, is get of barrier slowdown. on ‘XX, million at to million me, it million, to like built

silicon, growth. We raw and more selling than not accelerating are why the the

lot a engineering to lot semiconductors. course, have thing almost. not execution. depend not So, dwell on still that’s okay, of manpower, selling it. the limited, things And on but is it’s semiconductor our – can saying our not That’s is can – – you now of of when unlimited service benefit But a am mindset I we only that customers selling

Bernie Blegen

we capacity the of And the by would that execution ago, focus we that point quarters end seven revenue and that’s and QX supporting there, And of or the done. exactly might there made run ‘XX that six remember to is think rate. have we $X key statement the you I the a Michael’s have quarters support what billion

Ross Seymore

of higher guys margin that look go from at going gross is a that? you I margin big seems in the you entire a the be gross say DC, all color would solutions consistency the gross in do some delivered you stuff business. a on. we guess like gross I follow-up sounds cooling, But it the to to want margin margin with have beyond expand systems, in mix Hi. perspective. would Thanks as a know tailwind the lived and get this for you more all talked rack, mantra expansion – That about doing the AC all or guys. hopefully, you And by above. I the of for but don’t like into quicker to What tail forward semiconductor of side, general, the that big

it’s about talk versus means, or margin? market in just your end to revenue whether solutions chips what gross So, system changing your mix this

Michael Hsing

say, available, – that stay this we charge things that’s in of to half can to as will to as are I kind okay. our That’s okay, reality we high-XXs the and we think kind can is BS [ph], customers XX% XX% but I of Yes. And mid a And going of are all I comfortably course much around okay. the range. –

us. that’s spot I sweet think for a

grow the We we to corners are over that, that, And to print when not for okay. us XX%. going get we get to

we we don’t I now. I around the model headwinds. far, couple this of are opportunity as to think the that In going stay think years, are So And drives the next have we itself.

have So, a have the maybe up least slide – don’t at later. don’t headwinds. mean I move we we

change years so And or we X years after see models. how our X will we

Bernie Blegen

XX.X%. of revenue as think growth. that model allows sort our just in gross sweet that area margin that I is accelerate for our add somewhere of reported rate And would the Right. we said, I of also us Michael to that spot

will we think now, very model. we being comfortable evaluate. something this it’s are right But continue that to I with our So,

Michael Hsing

going We down. chasing volumes are not the

our not is MPS actually good not are at We chasing volume.

these MPS not manufacture forte. and manufacturing, okay. high-volume MPS the Actually, things, are not doesn’t that’s We anything doing

Ross Seymore

Thank you.

Genevieve Cunningham

Our next question now line is James. from open. of your Melissa, Melissa Fairbanks Raymond is

Melissa Fairbanks

Thanks for just will congratulations another Hi the quick on echo great really quarter. had I very you. much. ones I two guys.

term of First, clear would maybe order a inventory levels CapEx absolute in your target longer growth to us your or we somewhat on second, should And And thinking this what requirements or or you to note, revenue be what’s then related be what in then could inventory demand plans? ideal order your remind you either some need for year, a the of of as meet delinquencies? percentage investment. the about

Bernie Blegen

questions. Good

situation that in have upside around decision. We so believe up needed end So, an in we we having as for XXX lots our so growth is if XXX an keep demand, of of disruption is compensate our positioning that but aren’t that that far unfortunate that in that also manage as any as we inventory customer to much production risk being mind to inventory, where of that can sort lines. we sellable can days a what’s inventory days customers’ management of without

times. And spending then own are as on million been these we and as of And we being what purchase purchasing $XX difficult testing buildings, I the office be can million with if be tends lot somewhere delinquencies It a have $XX to space. a per equipment quarter or think our rate that even far that we our between to in past the run of normal the big in in probably quarterly run-rate. bit good is. capital year as XX, our basis, this far I purchase, to talked while building XX requirements, think first as little So, inventories think order a I absent a our rate. a was But we lighter a done than have increasing is think half manage good pretty it’s I unusual support model. to really job But

Melissa Fairbanks

Thanks very all me. Okay, much. That’s great. for

Genevieve Cunningham

Vecchi next [ph], [Operator Alessandra is question Instructions] line Alex William is from your Blair. now of Our open.

Alessandra Vecchi

can Apologies. Michael, hear you I you I me? muted. can Sorry, start was me? over. hear will Bernie,

Michael Hsing

Yes.

Bernie Blegen

Yes. Alex. Hi

Alessandra Vecchi

asked wanted question, are saying a of in the on products to the as customer about bit How expand we more complicated, space more little you as do solution particular, already if within user the in of competitive products sale. important here. Ross’ on that superior just the of error take dynamic Apologies someone terms guys to being those in assume I this as the your that to positioning more coupled I management, has the think I in these was would your again, terms competition well and apologies about question, and customer but conversations that becoming more becoming tightly board, conversation? power are those you up become of more

Michael Hsing

and – to the the segment MPS on a always we companies. is MPS, the kind of price, we period of comparables, a – little late we not much actually, efficiencies. Yes. We MPS, better mean a – that competing are of similar the compact, is without – And And matter so lot of of don’t we higher for from okay, course, the much and okay. Look, left a means time, pin-to-pin as anymore. that cost beginning, early fact, And we on we actually charge that as form known a the dollars in And we in I didn’t, market product. of armor like and also table. an it’s sell play a product, far the we that offer are one-time

sell are you electrical need power. solutions. if about you we up car centers, the MPS are use applications, with and are data and centers, if not whole build product electronics. they – And you competing And entire offer build for competes want And if to mostly And car, are a you product. okay, And data mentioning product the we provides Now can either – MPS value. are that on about do talking we we total we any that’s there. how this talking

it. have have We we game. interface, okay, software all software behind user the And changes that

per not competing with anymore. the We product se are

Bernie Blegen

thing afterthought. observing we up have after solution. board interesting the was that been and the is came you It always bad your with an you last that power an think dynamic designed was management least I

our And able is because develop we introduced is, Now, otherwise. at be would reason to than are enable power an customers the application. the they development solutions the end of front solutions very of to our higher-power

we an to So, more up of where the process come earlier in shared solutions. jointly and able relationship that’s twist the introduced are with to development interesting the being

Michael Hsing

that lot any you we and you existing far car the and than MPS controls, car the remember, management in car. the with see actually advanced like complex market. years more advanced a motor Built you than EV. same battery a as And As all a see time, very – built X ago,

we do – so years can a that. later, more can can we And demonstrate and we it than purpose, it. lot now And we just the can for X do actually, do

kind that’s of examples. so And

Alessandra Vecchi

strength, end notable And helpful. extremely any of or we any out? think markets in guidance, last the strength weakest end we about that quick just how then, things should That’s in – the strongest of should terms terms versus of question, call think versus one Bernie, market to

Bernie Blegen

Yes.

what are years enterprise I data exactly we Automotive no that very next automotive. in for and was we you that was half, new to as going the the looks our X healthy seeing expectations. surprise believe does think that There but years half, relatively a first had slow had the And X are data the the it in to there. themes second be that center.

Michael Hsing

customer will not Yes, a to that. We customer for do Yes, as to want – asked don’t will we see it. as And we okay, we provide, should what we okay, customers. do that, it? lead

should okay. So, really That’s need. playing, what the game are we you

like I that playing this think XX like all said that XXXX, And ahead futures, of volts, that. this cars, stuff is and that the said we we is anticipated okay, in the game. we anticipated are we We – Electrical power that.

see will few next see that in the we of happen. things so can, years, the all very will we And and similar we now will these

Alessandra Vecchi

you Congratulations again. Perfect. much. so Thank

Bernie Blegen

you, Alex. Thank

Genevieve Cunningham

now there like back are further no Instructions] questions, [Operator would over Bernie. to webinar I As turn the to

Bernie Blegen

third nice I to look again day. the to be us end will on you. Gen. you talking webinar Thank a joining quarter, and of would like likely the forward at Have Thanks which all thank Great. to during for October. you the

Monolithic Power Systems (MPWR) 2 Aug 222022 Q2 Earnings call transcript