MTSI - Earnings call transcript Q3 2024 | MACOM Technology Solutions Holdings, Inc.

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Operator

Welcome to MACOM's Third Fiscal Quarter 2024 Conference Call. This call is being recorded today, Thursday, August 1, 2024. [Operator Instructions] I will now turn the call over to Mr. Ferranti, MACOM's Vice President of Corporate Development and Investor Relations. Mr. ahead. go please Ferranti,

Stephen Ferranti

our Good financial welcome fiscal for to Litigation harbor Reform differ XXXX. results results would everyone XXXX. Olivia. statements are Act statements contain to the quarter our subject discuss as I that materially in remind the to MACOM's may for like today morning, you, will to forward-looking discussed risks and of call of discussion certain which contained Thank the today. from uncertainties in and defined safe forward-looking Securities those Private Actual third

a risks differences, could For more MACOM's uncertainties detailed you refer the discussion filings those and in the SEC. of result to with that we

reconciliation during include X-K, non-GAAP will call also adjusted SEC to Steve this the adjusted results of turn discussion are statements President that, provided non-GAAP CEO filed the press was call today. Form GAAP MACOM. related of With release and I'll and in to certain Management's the A with company's which of financial Daly, information. over

Stephen Daly

finished, and good After fiscal will morning. update. call will and a results. today's with I our Financial happy Jack begin be revenue for take then will will company QX When is and to our provide review Jack general Officer, earnings Kober, that, questions. guidance you, Chief we I QX Thank some

$XXX.X adjusted EPS and XXXX was million Revenue diluted the was of per share. quarter for fiscal third $X.XX

and free investments million over $XXX generated of During and sheet. cash $XX we with flow, balance on the short-term the approximately we quarter, cash million in our ended quarter

while investing to continue and flow remains in cash Our opportunities. profitable, business healthy strong we and future growth generate

important of future bookings orders within was business, In the are of our volatile. our most Booking can one metrics QX, was XX% book-to-bill revenue. revenue. and we track shipped We they In a indicator be total are as the where leading trends booked of quarter turns ratio our X.X:X. recognize

a book-to-bill a in XX bookings It's third that achieved is X.X. improved. time pleased of However, we row this also quarterly that the ratio the quarter we are in that second our months

demand by million, order million. as and end and I&D at our and $XX.X at Data at $XX.X Center revenue was performance QX Center expected, million New in end with Defense was Telecom markets. Industrial strongest market Data $XX

trends Data up For was had the sequentially, the that and market, been are our X.X% our sequentially. prior quarter, favorable few note I&D was and largest market Center revenues our was Telecom for the over record are up XX.X% growing the strategies Industrial years. revenues steadily our is the I'll and business and growth quarter. believe Defense past have I&D I&D secular I&D in We sequentially flat working.

our the Our focus has capabilities to better customers. been engineering these last serve few years over strengthening

IC standard engineering we suppliers needs. embraced doing offer relationships components. we custom high-performance example, Defense solutions way so, custom merchant IC as which of with and teams. projects, approach customers build strong great view support to as and their We we a design packaged our For customers' our In to

proprietary optic specialized process high technologies. XX foundries we typically expertise, trusted We in use MACOM In wafer only Defense MACOM component have own microwave approximately to access RF customers technologies. access are like designers, around foundries they to subsystem millimeter IC differentiated filtering to power, their where our and very high DoD also and customers instances, our which content solutions, custom areas offer switching fiber and Defense but true design wafer some but to or offer subsystem and and revolves and module subsystems. process manufacture inclined wave, IC have in we our fabs And

opportunities We anti-drone highlighted X which examples across of utilize as of other defense MACOM's these I call, last technology. large and On areas warfare can customers. at integrated our Defense applications, major a systems quarter's and radar electronic battlefield application number see

reminder, has be highest frequency, and for and products data developing highest the focus power technology As continue our rate to will applications. been a and highest

pleased are customers. by and leading evaluated adopted products and being We are defense OEMs our latest and technology that newest government

pleased to announce during I'm processing. were contract, and a technologies Force. we research Air the contract quarter, awarded from novel development finally, semiconductor on Under microwave And that filter the using the will conduct we U.S. epitaxial development special and

defense We systems, and filtering. will we more believe efforts precise of performance are the to our begin improve which the work, excited help require next-generation

We see have I'll of telecom few market not our stabilized, submarkets. that a weak note, signs albeit for a core we end are broad to are revenues our of seeing environment recovery. pleased in Telecom generally a

However, may result are which months. lead the for our opportunities last customer, we next platform quarter, seeing in at XX XG over as noted growth MACOM revenue shifts

In we certain are addition, at share market we XG accounts. believe gaining key

still XG are we spending While global network about networks. have CapEx excited opportunities peaked, in may growth XG the

as number MACOM's see or are customers. which broadband which systems transmit well Communications, existing at as and operate to high-speed spot sell more and and portions plays delivering SATCOM. wave We bright satellite products opportunities XG typically side telecom Satellite the the MACOM A to Our is our radios receive market strengths. are Internet to optical of direct millimeter These to the services customers opportunities microwave network. global the in of or digital on providing into of a growing sell constellations, frequencies,

end with Data for are for number next-generation that movement are The increasing data market combined interconnects rates, and Center be higher significant networking a to meaningful to high-performance applications, opportunities. growth required opportunities of with MACOM. industry's continues market computing The creating dynamic

across hundreds equipment GPUs cluster compute racks. or single of thousands a example, of hundreds of cores use could For

potential fiber volumes MACOM. copper opportunity of for optic Connecting requires interconnects, large together creating and/or everything a

typically a can distance, range Within DCI customer, GPO, network links. to wide Connectivity to NIC compute switch requirements, connectivity to there by protocol or requirements medium. are complex GPU card architectures, interface these including including of physical vary switch, switch and and linked

a PAMX, modulations utilizing Ethernet, carrying multimode portfolio optic market bring other is or protocols. fiber high-speed analog As PCIe that designed support or both We deployments, to modulators and our photonic support of single offers customer to and EML connections, short- mode to DSPs. for product replace differently, a coherent lasers. result, lasers NRZ, proprietary can that course, chips solutions our long-distance work to retimed or products DSPs sell using VCSEL well we we as And and as conjunction said silicon with to both or linear offer CW analog ICs DML, architectures, in with strategy

fast of a within is there pace believe the center data We industry. innovation

same data deployed, and being operating XXXG and designed, demand XXXG applications. new production being increasing seeing these for systems XXX per today, to utilizing X.XT the lane are our example, lane also gig deployed for XXXG per systems at up At gigabits center our time, are products. and we XXX both ramped chipsets are For and

network ACCs, to per XXXG designing adopting thermals part power in our the XXXG As networks of active architectures, and and we copper per lane their linear cables, of and customers LPO, deployment see improve or or pluggable lane consumption. optics, latency,

Our in be can space. products been and this very have received helpful leading applications, these customers they well by in

Demand we legacy ahead, optical primarily by growth our Data business across our data see per As copper. modest and of part recently and pleased XXG and see are positive we a in lane, improvements, shown our these XXXG to Center look solutions center which XXXG Data and smaller for XXG products lane our Ethernet being revenue, Center we per trends. become has at driven has

International our teams this to products booth June, Symposium, our XXXG per the already the we organized most business designing which MMIC like diode, support Microwave of shows for and lane lane to engineering well across RF showcase This product from products core to per venue XXXX units a And our XXXG become MACOM. as at have finally, as our XX products demonstrations recent attended X.XT from now lines. latest use the trade started with as discuss acquisitions. we a our In And one important the applications. recent of few reality, power was I'd We next-generation product and year year, highlights.

Some how our portfolio associated their recent and these core and demos integrate of business. into illustrate our seamlessly technologies acquisitions

amplifier we conjunction silicon with IC. power a carbide efficiency this package XXX-watt or GaN-on-silicon the in over-molded PMIC, in We example, with the demonstrated of one XX% For power-added an C-band is power believe MMIC management combine its silicon technology management business able by carbide power amplifiers power our team GaN-on-silicon efficiency highest our to the together analog acquisition, our designed RF technology in with class, recent IC was from and designers. the

LNAs of The We one demonstrated low with processed our the attractive times GaN-on-silicon use figure, and electronic recovery warfare. make radar for in of time in recovery combination at or fab. the industry, fastest noise wafer superfast LNA, amplifier, noise new ruggedness French and low our

applications of successfully teams pleased sales new product this can exploit are the and our product. that that line North introduced We to the key features American customers existing have

has X with how our it's efficiency strategy power to note, created the applications. just are our demonstrated our especially progress together These support strong from GaN X with pallet optimize amplifier our technology highlight we SATCOM and I'll making recent to over a we the Wolfspeed plus past M&A linearity, finally, and we acquisitions, with Linearizer want And examples to are X acknowledge very results. equals X simultaneously I technology output the of where in quarter. pleased are power-added possible

investors I to moment a Funding. activities our would update CHIPS take on Act to pursuit like for

for fab. for MACOM previously, Carolina wafer developing plans, these report Lowell, our and the completed the completing full can documentation our Today, capture for application the we also to completed Congratulations compelling North reported putting team process As application applications. fab. wafer I process Massachusetts the full forward RTP,

European pursuing In France. MACOM and French technology support we capital at near Center, government development and domestic MESC, Union Paris, seek projects or funding, state our investments to European Semiconductor addition to funding

but support industrial, heart is small Europe situated strategic and customers. Our defense automotive of in located to and telecom, ideally is semiconductor center European the

have line. spring MESC's to the wafer existing working our X-inch and of qualify I'll been XXXX, in note, acquisition production teams since actively bring online the

expect while manufacturing costs. increase We activity to lowering this our manufacturing capacity

it expansion goal facilities external and our our reminder, a make stronger is of modernization to MACOM is more and long-term and by dependent on As driven funding. strategy our competitive, not of

four, to I Before is our to long-term report in completed always that turning pleased which on positioning market our two, franchise; to plan update order is in in to while be around that to And look market competition the to for to semiconductor we industry. essential to themes, plan. successful strengthen share few the focus the Jack, differentiate three, planning an and that our We one, development; I strategic win believe on capitalize ourselves July, central discussion can technology over detailed am execute confidential, ways X-year advanced it from share. are: a trends; revolves

Our unique, which semiconductor is enables a share to MACOM portfolio, long-term of best-in-class the diversified to larger and market. capture build goal a

confident review provide a can financial now share. will about we excited detailed future We continue results. are more Jack our the and market gain to of

John Kober

for QX revenue profit million Revenue sequentially. increase on morning. and of recently Adjusted Steve, in within was sequentially, I to a improvement costs our basis fiscal Defense our across control margin. markets the QX. helping X.X% the everyone company, you, Industrial Thank gross our from thanks this Data revenue, sequentially for fiscal XX% in able also plans including entire and gross for QX. end to XX.X% markets. of from operations up On businesses, fiscal growth been the XX from XX.X% up up geographic Telecom acquired flat execute QX would and basis, were based was that million, domestic third like joining team represented our points has U.S. customers approximately to fiscal XX% $XXX.X increasing results, or highlight in quarter to call and $XXX.X our Center

by As our to for our adjusted get prior levels third and time, revenue Total to selling, additional development of we quarter foundries, due our better. $XX.X better expense million, product primarily operating initiatives. to investments utilize research million of of operating million. administrative fiscal improvements, over our operational $XXX,XXX was Total consisting XX% wafer margin were in gross $XX.X expense expenses up grow back we new $XX.X implement general R&D and expect and and sequentially, expense or of

was management margin Depreciation up expenses. from points EBITDA sequential million $XX.X revenue, QX in sequentially. fiscal approximately our $XX.X Adjusted higher and of million, XX%, was XXXX. on or $XX QX. improved XXX increase Adjusted sequential was $X.X million, XX% Adjusted was fiscal operating QX operating for million up essentially million, from fiscal in gross up expense fiscal operating by margin was driven $X.X The flat basis QX income a basis.

$XXX,XXX adjusted higher months million. net was prior balances. Adjusted was quarter, growing XX cash roughly $X.X QX interest income and fiscal for the investment Trailing to due million, EBITDA $XXX.X than primarily

in Our X% income QX and adjusted of $X.X million. an approximately rate tax resulted fiscal was in expense

$X.X approximately million payments quarter. were third tax for cash net the Our

to rate was year net fiscal to XXXX income QX $XX.X tax QX XXXX. at our for Fiscal compared in million expect through We fiscal income remain and adjusted X% $XX.X million fiscal adjusted year XXXX.

the share diluted share price share diluted million shares of that QX. a our the utilizing a to result our fully would average count increased of per $X.XX adjusted third by XX.X highlight stock of of earnings quarter. quarter, per strike to earnings compared notes, Adjusted as share $X.XX above was as approximately X% count being our prior price the like during convertible fiscal to I in compared

Now moving on sheet operational items. balance cash flow and to

QX million, receivable accounts $XXX.X down million QX Our in balance XXXX. was $XXX.X from fiscal

higher turns outstanding at XX prior days quarter sequential business, down up anticipated end, XX demand of program to X.Xx, builds were certain quarter. to our QX million. sales balance The quarter. shipments from compared days increase and by $XXX.X timing result, were driven the million in days support revenue. our was X.Xx in in a were the in sequentially also $XXX.X Center inventory sequentially future Inventory within the Data As from inventory Inventories prior

quality We inventory mix the and to continues feel strategic and backlog. support of is our strong our

We to revenue improve increases. next quarter turns expect as inventory our

X the Fiscal net to $XX partners. at continued $XX.X million we channel and cash QX flow of adjusted last to Additionally, from operations due inventories sequentially have quarters, our approximately from AR income held reduce was certain up improved collections. higher million, over

the XXXX excess be expenditures million. for first We expect fourth million. of X of months quarter from cash fiscal $XX operations $XX.X the flow to Capital totaled in in

and process, associated our approach that on which capital returns. necessary meet are projects rigorous to helps we ensure expenditure with absolutely spending a our only also have required are We

fiscal initiatives. and primarily our expect facilities be in We expenditures million, year manufacturing XXXX to $XX capital to approximately R&D due investments

$XX.X to sheet our short-term fiscal balance than our cash net items. Comparing third on of now up quarter equivalents by driven cash convertible moving the we notes, operations. million $XXX.X Next, million, cash million. more net were and in a sequentially, for Cash, cash value the investments investments to of from are other $XX book and position short-term

recently that time. we compelling stockholder and noted, over focused strategic management developing strategic is previously and team executing will long-term completed As drive a our our value planning process, on plan

a Steve. business conversation strategy profitability out sets cash our plan the revenue, expand I billion turn the Our back $X to increase over now grow beyond generating while positive in to flow. SAM, will

Stephen Daly

the share XX, Thank QX range Adjusted in expected expects million. diluted revenue to margin million range XX to you, the XXXX, to based expected $X.XX $XXX and Jack. of and fiscal is million gross fully earnings on $XXX MACOM to September ending in to be per XX%, shares. be between is in $X.XX be of XX% adjusted

expect in of revenue We our growth end markets. sequential all

growth. low lead Telecom will with followed by and Center Data expect with We and single-digit low mid-teens to Defense Industrial growth

now I full to up like Based XX%, slightly Center be year on I&D any these Data on approximately would QX a 'XX, basis operator would to down questions. and FY projections take year-on-year. to for the Telecom be around we up expect XX% to ask

Operator

& from question of from Quinn the Instructions] Now Needham Bolton Company. line first [Operator coming

Unknown Analyst

for on questions me. Two from Bolton. It's Quinn

are First, for process could you in share where the active you copper qualification cables?

Stephen Daly

Sure.

customer depends data on So and particular rate that the the the application. really and

So it really varies.

ramping customers have products. up our We

We have starting products, with have and our we customers qualifying our customers products. to just design

course, So much very customer, it the their depends on application of and data rate. really the

Unknown Analyst

if talked you gains quarter, about gains last XG. wondering size share opportunities. you about station talked I end excuse then talked those base in could more And specifically, in market. about market then share -- you the power me, And market market Okay. share was you

Stephen Daly

Sure.

stations, higher revenue above significant. of in So XX larger products opportunity the vast power. is over the tap RF the is devices, a XG And a macro power have the so time on see which that opportunity we generally power XG tremendous in base platforms, majority the are us MIMO Today, to really we watts that portion into market. massive be of may for

X years, is that the over RF X next market double could say than would there. revenue, more power that I to So our we

that at power billion and market primarily Some and Telecom, Industrial half in $X as other half being $X of XG. market. of the RF being a in to About the people look sort Defense GaN billion

say, only are And so to that there's compared to as our small And very -- Industrial let's the only not MIMO, macro also in we think or market is we side Defense. today but size. overall gain winning market on market share, opportunities, share well as the the and

Operator

with And line our Piper next Sandler. the of question coming Harsh Kumar from

Harsh Kumar

had two well. solid, First solid on I of execution. all, again as congratulations

me the up a that Let follow on way. different was just slightly in but question asked,

what winning are stagnant. and and be you follow-up. something it Wolf that Wolf you just you're admittedly, about was to Telecom interested the And market the of do that the you Can is Or because you is able grow that a opportunities there business low-hanging then the So not space? business? or business? talk into to else focused acquired grow going easy can on on have I for sockets Is try to that sort

Stephen Daly

Right.

there's doubt in on the as side. significant So as markets RF defense well Wolfspeed the that telecom no was player a for power

And with MACOM has so really to more allowed coupling us scale. get

larger have are we We seeing team. opportunities. a Collectively, engineering more

at There on sure also made to execution comments development speaks on be to performance market technology about within the work done to market. and that So gaining the share. also I telecom additional forefront that has we the of stay make

X you'll today. than to market I think years, that definitely over have even we So to what are GaN more coming next-generation competitive see next X the processes

as stay same on side core would better, with by in portfolio. existing I as apply So way, It's development execution the that to well the as as the Defense side. Telecom supporting And to the themes and leading customers it's a edge. combination of existing better engaging volumes completely customers terms stronger of more technology a well

Harsh Kumar

had I follow-up -- that. on a I can So

the X I might is nothing think There Steve, you mentioned in supposedly happening in to be hasn't lot Telecom is the where of the to business broad X commentary, that investment. market able you level. a This years. been double a at

better under is will it that So big just the coming share so MACOM? to deal? that of doubling is small is fact and gain, operations from the function a share of just Or all that refocusing a what predominantly is driver? be not sort your I want understand

Stephen Daly

these volume OEMs of kind the though it's while and the are -- radio density of changing of What's radios. building Well, the same speaking, or is building both the the a that radios, combination understand are generally that Telecom itself. RF XG of

channels, more So there's get there's more opportunities to content.

while number overall is of is staying regions still the increasing. are And capacity exists the of So radios of the sort of that that really one the of number globe there thing is limitations. that same, channels the have many

And coverage, not it's XG the for expand deployment actually just so to new of capacity. is

there's is I just And doing I'll then a to the that many thing one be So And to highlight say not qualified certainly the that. suppliers GaN really of to this leading support and be want that last are want market. companies that. leader we

Operator

our Bank with Arya of America. Vivek And from question next coming

Vivek Arya

we or and was think And AI dig would XXX I Steve, versus is look consider generically. hoping XXX-gig into one at AI plus between could them components whatever I the people the would what mix call Data Center. what non-AI?

was we if center is to it way, year? now? So your it And business what right segment that have data last what

Stephen Daly

Yes.

question. it's -- interesting an that's So

whether about end say, clusters. selling center typically the don't a or newer, of traditional where of we So whether let's it's and of more configuration a our a products in, data application publicly AI deployment say, it's speak we're

the opportunities are on our that revenue parse way there publicly. clear both we It's Ethernet. that So don't on traditional both sides, tremendous

XXG But interest we for And the are As on the my deployments an of seeing higher certainly, Ethernet. XXXG data demand rate increased to in tending sophisticated seeing more I uptick for XXG in we're and XXXG highlighted traditional applications. and are be those also products remarks, and sort products. prepared

Vivek Arya

of the think, company a some think And this of follow-up, muted think Or -- kind conversely, specific? telco still you in I starting quarter. you I book-to-bill I you think see Okay. these parity you think recovery called state more a closer with in areas out this these Which And a are think areas -- to right Are I last you do X.X still areas? pickup? sort which is now. was, for kind of are you then muted? being more are of to said

Stephen Daly

we back the strongest Data And the That's looking bookings was then saw right. Center on and market Telecom. within segments, the Industrial by being the followed Defense QX, X and weakest

to on as is very a collectively, We expect have quarterly So of indicator. leading a this to And we do X.X. be basis certainly there a I book-to-bill highlighted, were pleased variation.

or we'll contract XX-month large Sometimes, book a XX-month contract. is a that

the So timing in future the of quarters. that revenue the into factors

solid as of of SATCOM on and programs. where would of on seeing a I a large weak we're But say, lot out, And lot generally Data industry demand Center. the activity Strong and is is strength. the Defense mostly Telecom pointed Industrial in engagements relatively I have exception for really of with speaking, Defense, the we lot a side where

of we last begin that fiscal awarded $XX I a 'XX. of the right is we end contract revenues flow One those was quarter, expect to our in million. which for the and phase development towards contract which to now, That were discussed

Operator

with Paribas. BNP from coming line Karl Ackerman question of next the our And

Karl Ackerman

may. I have I if as two well,

But on call. business? about update opportunities opportunity of you timing on about and it's spoke that, about how that It your you Just last the track new regard satellite end see up talk of discussions with sounds that following opportunity, you within here fiscal the SATCOM? the program? on Could opportunities within 'XX. still to like for Any that SATCOM some

Stephen Daly

Sure.

looking supplying support the to space, level, with range I customers level certainly chip the within actively at at module their particular we say wide So can needs. that are engaged of a the

millimeter systems want at constellations, satellite seeing to and engaged are these direct to we that in and and only that, but with at are wave not be bands. We activity platforms cellular that there's cell-type also more operate

support those customers. payloads in participate to want we that and -- so those And

active. So very would we're I say

transmitters SSPAs. many our ground systems, the the to the linear module and those most of on efficiency more linearizer unit to or are out more side TWTs business of of know, as you ground of through station transmitter. power prefer a either Additionally, use And using get in the customers

more demands as up, can also ground And that linearizers. infrastructure imagine, you or more more going so satellites communicating those there's stations and there's deployments

level, active level. we're side the at so the the chip on satellite and on way the And end, ground the module to all

So very active there.

We this a our the compelling of frequency, very can technologies, technologies, is millimeter North of power U.S. which high-volume, that RF where supported capability transceivers have one of manufacturing, really we very best-in-class by including few process. are of and MESC very competitive the wave the high Carolina from course, really And is the low-cost all microwave produce onshore power Wolfspeed companies acquisition. at or in

but our commercial And base defense customer so base, not likes customer also our base, only customer this.

Karl Ackerman

used whether hoping follow-up, could my you perhaps then of linear talk you optics? compute would mainly secondly, linear I a or be scale-out deployments? pluggable interact datacom. And discuss have engagements they was back with perhaps could scale-up Could about pivot be your to for For in applications? breadth you Or the equalizers

Stephen Daly

Yes.

sort So linear pluggable of or for significant the MACOM. optics, opportunity LPO, is

spec adopted one industry. of the really it As for members LPO of was the so create organization -- could brought together was an MSA industry of founding an And was last MSA. the interop by may of this be a the year broadly a in all the MACOM purpose with that industry. of of consortium there leading was you the consortium that the members or a within know, standardization sort to

as in try to there who's to so and And heavily We're manufacturers, who users, enterprise system that. are industry talking right we OEMs, supporting of we're to switch of LPO adopt certainly the sort engaged looks manufacturers, in end the broadly. it module

people And so We higher think power XX it's gets. solution data And do watts more the some that not over XXX-gig, day potentially point of rate, module. opportunity. XXX-gig. only we about the to the modules, there's but And a interesting this also as think big X.XT do a at to a we run the necessary talk just think that

in solution, that the XX If you select an be of LPO could watts. range

We support So power chips savings. the to have that's a that significant implementation. happen that

you is our working we the are approach very being classic also highlight that DSPs, leaders try with is DSPs. with high-speed sure early. chips and be will why this very that that's I So used solutions. to But our are I adopt using get deployed to also can adopt that The today and them traditional highlighted to

And so want -- we're customers with both of you and but to use able solutions. terms equalizers stick a where LPO, play with of is see this sides to And electric. of to then analog copper our sort the ACC, market and in leading cousin linear some wanting you not optical,

at And mission so lower electrifying has proven cables the been is And data really that their what is. certainly rates.

done We have that.

We have been shipping product.

same And applications. working so now or the for rates we are at the higher similar data

solutions at growth line, just ranges shorter expect XX significant this X-meter area. fair little we XXX-gig do reach very and and of in XXX-gig next We say of to for in some for months lots that sort engagement. a have it's so product bit XX the to And interesting

Operator

of Williams with David Company. question Benchmark line the coming our And from The next

David Williams

part I think seeing to you're a about do the little kind and think wanted over Steve, overall business adoption that bit SIFO your of ask how become that I guess, of a time? big there? business Just could portion where the can where you and you go

Stephen Daly

to And silicon photonics, just be you're referring SIFO, clear? to

David Williams

Yes.

Stephen Daly

Okay.

a decision deemphasizing So past been made parts focus and I have the other of would years, the area an market. we strategic over that few to on we is say that, this

to our product we And time, was been experience say so trying photonics. over painful. would get have in spending I the silicon less that on market

our for primarily in limit activity we defense. to decided have And high-value so applications, are silicon only which with photonics

that So we silicon photonic specialized to work with on to nonstandard us work want applications. want with customers

and the we need support silicon market a many they also an customers we a are they optical need still photonics, implementing amplifier, photonics. tapping silicon silicon laser. they driver are that So with commercial is said, CW a that With and a of using for if of application still need out transimpedance sort photonics. And module

are X to do we so that applications. And these into the puzzle these sell pieces

lot end in really we pan years many the out. at of the But investing a spent for didn't silicon day, photonics. of It money

our the past pivoted few strategy focus and we so And specialized very over applications. on years to defense

David Williams

then the any of caution? next of all And maybe quarters? demand you several the through We're little how if customers your some maybe are the more feel about Great. maybe seeing the bookings thinking. becoming and do on that curious we're on the secondly, hearing patterns. I'm are Okay. caution optimistic ordering a maybe you're at least just Or and like just destocking trends through customers

Stephen Daly

Thank for question. the you

it some the think or see markets end demand. on I that there's no limited market. believe we depends We really

And there's it's not that no spending issue deployments. an CapEx or inventory. fact of It's demand. either through There's channel infrastructure just no so catalyst the clearing

would them so a catalyst. there's many And markets are that we down, until there's stay and expect to down

up then -- programs, other so are programs. not existing we have customers extremely but that ramping And only busy, new launching

And I customers. would many say that our of applies Defense to

or sensors customers applications of The are to is, in producing, for the defense whole in are comments, it industrial terms what those tolling. applications similar industry. busy wide of or particular automotive I traffic a would or your We it's in depends test extremely equipment market factory range automation supporting whether say, really

really it depends. So

feel We have been market comments, And few his past don't business. we sort Jack pretty the an reacting level over of here, as we're our quarters. said overhang point our our much demand. bringing there's to we inventory inventory end From like in down now in think

said quarters. you I think X

down to for our levels. demand. channel has been catalysts of inventory And and And manageable really really now we're so end looking applications brought

lot is say concentration. And then We the have last of diversified customer we very a I'll don't have business. a thing

We more create customers. strategy a have even an thousands supplier. global our diverse is of And We're portfolio. to

is story, be front We're to will growth customer goal in product-driven grow our the a billion. story. $X and to market. a sales $X -- Today, next X think X address fast $X think in it's to to products, optimize ultimately, market very more billion we're about share, to about billion to Our and market. able launch our to the $XX we growth capture to We billion we applications sure large a in market make our And years. is stand very needs that more of

And things, long term. if the we we'll think over do booking have things these some we that are And of those trends all core on. we of the work favorable

Operator

of question And line from the coming with Tore Stifel. our Svanberg next

Tore Svanberg

the And here. execution on congrats steady

you stale So question, I I that when disclose. It's $X But Steve, out lot of my a can't there's -- know there. it's SAM have sort number plan, have first is know quite bit a X-year I do you you with your billion. since that you a us you And by investors. could number if you shared this potentially segment assume what know do number, has grown a point? also it let that at obviously

Stephen Daly

Yes.

I would -- work X I we've a commented years. is that next think our sort high timely single-digit X believe the So a the I to rate say as just question. it's moment expanding. ago, over We that And of do that and -- done it's SAM expansion we is

in SAM billion around our about to X put $X mark. that billion to X So would $XX years

We it the are by assumptions where really There's break SAM to the lot you there's and very -- hesitant of end draw out line. depends a market.

to We see extremely large many and trying SAMs, get how number. talk they heads out companies about to figure our scratch that we

X lines. the portfolio have is very, size so have that market is bottoms-up a sort They SAM conservative approach. our so different way And the do to we very of more with business we're what take sort on how increase And of technologies. look be going more approach, we different by and at you if our the which adding But said, units. product we opportunity today,

X, to business we with diverse would If more to the of technology, can significantly capture after allow more wall, which progress. those There many years against industry capital take into. we expect in talked are units of ahead on put reallocation our I what actions an X, photonics. really would we more look we markets to the parts forward us successful. internal way a have tapping market. making just where way, to that by a about the is we silicon not head not were plan And beating now, we're great go We together from X of be feel example And

had a pivot front revenue increased those of R&D we an success, same else decided in we finally, use perhaps probability to to where do large And dollars something market. time and and shorter to of a

Tore Svanberg

my very That's a you mentioned, in as great [Indiscernible] follow-up, sits can I perspective. because, you And as infrastructure. center MACOM in position think optical and unique participate about in specifically data asking

How and I same? or it Do evolving that you will to see engineers between think your you skew you for direction the do optical said will mix it Or go we one are copper? stay other? the in As and know X.X. X.X, working

Stephen Daly

too about the highest center, it's the and typically, think has Copper limitations. shorter think you to tell. if that the its it's interconnects the But are I data reaches volume. within have So early volumes where

so if And of many is to has obvious that suggest you copper proven win. stay could for be out a cost out. optical, could yet savings But that There reasons. that tremendous

-- are you to But can you an elegant would limitations. electrified come customers if up with the use copper want So want there that. then cable, would

depends It on data it And will to again on rate. higher go another so data remember, really the And things challenges. of rates, as reach. depends copper set and higher have the

believe And know that. XXX-gig We per can copper lane. we get you at work to so

that. of We real have examples

to so to work Whether And and multiple the have We'll lanes XXX-gig be can and see. be using per wait lane. that's you're XXX-gig that of get lanes? obviously, done per at same X.XT, to successful

be to a there's going mix. think I But

our universe. the that think be of analog are majority in the I chips that. retime don't our DSP with participate complementing the Today, and solutions market, always the will we contribution

opinion, but we early and over with on leader to maintain X at XXX-gig, to that the seem analog solutions, participating XXX-gig, position to our analog only want be, We we also side. and a the adopters, next we leadership in have And not years. are X

Operator

our the And coming line with of JPMorgan. next question from Peng Peter

Peter Peng

end on I the to Is strong -- of any opportunities, Telecom of emphasize X-year, market? you given the updates one you there any I Centers fastest of always on to the And guess, your is kind changes ask want just historically, as the are how look of follow but But and some up growth Data that? question at quarter. the going the any there I solid growing. differently. on asked, just that know, on be congrats your thoughts about

Stephen Daly

changes no term, will be the the markets. our over X that thinking and long and XX general there's we're years we No, talking to that on believe I&D Telecom leading that

you've going fiscal a year, about year. Center be MACOM under And Now just at that running said, since XXXX have million million. was we're year, business with $XXX $XXX to that this seen that Data

almost we've in So doubled years. Center the revenue Data X

like be market the The X see do long larger that wait how we pans why And obviously, next term we'll we'd But out. because diversity to the over will within Telecom of the over think the to a that and years. again have is space. reason

XG, As range of and today whole we talked about, them. you have you of applications, wireless a which involved have get in not to in, we want we're many involved SATCOM,

we also for and be successful. We or can wireless believe automotive as is markets mixed-signal analog applications that adopting more silicon other such area an solutions

diversity in Data than the within that the Center. the think that see the the we overall opportunity, market just is larger we So Telecom opportunity

Peter Peng

gross the X of how fruits margin. over over Great. you we your through next about just low-hanging X some going likely just there? in, my us Maybe follow-up are back XX% say, on quarters? those the getting back Talk get walk to whether levels to time. to And can And to question get is XX%

John Kober

Thanks question. for Yes. Peter, this the is Jack.

determined. historic of brought occurred that more that over acquisition that I So in that's in there the where margin had some been line, have time including be that our amount. business, XX% recent are had Obviously, gross business number past. some gross think things We've activity we the the to within MACOM margin in terms we below

margins over a So of improve the to focus shown that we've can activities go terms operational we on from how gross lot through a market higher a lot we're our doing think look of customer years things think of a in margin business that we continue I and margins. sequential perspective, perspective, But we'll these gross from over a expectation are you standpoint. gross improvements is to the near make driving term, I introduction our from new product if the

up well through do that got of try to lined as from activity basis There's the at some as and that acquisitions a margin. we've we our improve lot MACOM just here gross the of a things day-to-day

be margin it as continues focus is and look area well heavily opportunities to drive quite the improvements an operating more we to on think as So there that overall we at business.

Operator

line of Pajjuri with the Our James. Raymond next Srini question from coming

Srinivas Pajjuri

of questions. A couple

of cycle First, side? to your soon. guess, maybe the, XXX, optics you X.X? Center help as the X.XT then fairly can And go from, guess, been I content ecosystem, how own hearing on we readiness about the Data benefits understand the maybe starting from market. XXX I We've Steve, talk especially to us

be guess, for probably But I some integration. hand, the integrating hand, new just the on you. And that's on one LPO, I components. opportunity other hand, of suppliers we more I'm then, guess, the a some DSP analog to see, the other on of you seem have curious,

hear thoughts your to that So I want just on whole dynamic.

Stephen Daly

Right.

single-mode in the But So clear, -- an X EML to we photonics, camps solutions solution, side, sort if our of for have on you product silicon the and what typically EML on applications see an don't today. optical the X.XT for EML there. it's be market it's

We it. working are on actually

hurdle XXX-gig XXX-gig EML different test But right over that We to to going in think X now. I suppliers Today, have maybe be have probably get MACOM for laser tall that's there. a EMLs. X,

they're -- wins. They're that So today. the getting market in the

so the you're laser. silicon CW -- On CW a the We side, going on make need photonics to lasers.

range an that CW on MACOM and is so We there for opportunity have -- of today lasers lasers. a wide

side believe in be contribute on photodetector performance, only So that then the piece receive would the at we for the would XXX-gig, We technology at XXX-gig. last have but leading photodetector. we also not

the but if would is say have market and and successful, to we'll and for we'll bad, how we're that see that I wait out. not to so see works wait our timing that And have

course, customer on depending traditional And DSP. you might a classical pluggable a of building have approach using a the of the side, customer, with a a on module then, module -- sort analog

significant I TIAs. for today, That -- future. today use tell lane these But these because XXX-gig may are be you voltage most We using change components change that mostly customers may in to preferring driven with the external they the EMLs part, can preferring level, drivers the are to in need seeing platforms and a are future. per external that

in And We've and XX job. XXG. XXX-gig in XXX gig for with lower the integrated DSPs do some rates happen the that seen data even some at market lane see instances at per we that at the drivers modules,

the depending a active we so I done cable, on obviously look that a so think just have without job solution of there. copper we highlight applications. at opportunities get kind there's DSP, to for that. working we and And try understand you certainly there's different But the X.XT to want When

something, mention VCSEL The But question. typically case follow the full again, per the please shortages entrants VCSEL, side, When X.XT don't the is new up. you We're a I the that. -- not come applications. your you and I'm applications might seeing so that, mode sure lane, as last really I'll If I VCSEL sure some remain think on at answered at at market. demand we VCSEL thing make will I there's don't not that look are on play are into optics even we XXX-gig single heavy multi-mode have missed XXX-gig. argue

Srinivas Pajjuri

of not a That's very I then front, a helpful, demand. the said And Telecom it's it's quarters X Steve. probably Steve, growth you reflection know of on the here. broader know decent I

it specifically any guess, helpful? as you we into, of can Or few wireless be programs? that if would sustainability gains? what I go is Is new that exactly what to I Or do speak share have quarters, growth driving curious next is guess, wireline? growth? the as Just the that And more the, to versus you

Stephen Daly

as out well would would SATCOM I stand on increased areas be two the XG the radios side. growth as shipments that say that volume transmit into driving Yes.

wireline right now. areas quite So is those are driving growth. market The muted the two our are that

extension markets. cable be of would and infrastructure sort of the overseas that for So by some PON

So the on is side. really growth the wireless

Operator

question the O'Malley Barclays. Thomas from our And next with coming line

Thomas O'Malley

in, there, on again the gross fab. to just co-running you an you're the off of time. But bottom when September to start acquisition. get execute to improvement But improvement of putting going starting That from margin guys plan kind of I kind Is kind Wolf of helpful. that your are out the super kind kind you versus today? just you laid where help once wanted the update time takes much how break margin to be a gross the of frame pretty March we that own function back? of if the the products on originally Ultimately, But Obviously, you're well out side. would the of but volume frame time could are general coming

Stephen Daly

this are We at because delighted with that we're don't particulars on of at line doing look Tom. we we We business. Thanks, improvements the don't publicly the as probably level. product so Wolfspeed. with the to product want by the and said, break -- work a out With we break line, absolutely the that, don't out

works We committee, in have a with all fab. activities joint group basically the the fab that day-to-day is of a operating which

Some of part on committee. MACOM of the this is

that for and So the future. and people in running business transfer ready fab of getting in are we supporting engaged day-to-day the have hands-on, that the

the be the priorities to are, fab, the starts what running through getting So the need and addressed. what fab that what the might is issues are, an includes material in wafer of how understanding are pinch that points

going it today we're to fab. so of And in to sort and improve to takes the where we're we're taking here performance whatever overall an approach help, do

nice relationship And really to have of Wolfspeed working MACOM a sure so think make and that all I happens.

improved performance. of is say the that, would the I output I we fab seeing think of increasing. that signs with so And are

yields, general the doing. assembly We the outside benefits inside have that the we're fab and some back-end and fab, test some both seen of on including

would And margins. can business. to in the to the that. margins working say much overall the of trajectory improve stages with so Jack of we the track issue broader on about are gross I of gross our speak pretty And maybe early And we're

John Kober

off that the MACOM look earlier, introductions and legacy gross the indicated across the doing corporate to product line improve have Yes. I there's margins new the where the try we're entire had but as The also things average. definitely including acquisitions, of a higher help number organization, products we Tom, that and businesses coming are new that is area those than gross the generally an margins. to

So hope gross improvement point we've that go as shape in us for of from seeing and we that are helping view. forward been as to see things those of to overall terms well margin an

Thomas O'Malley

Helpful. And then follow-up. just as one a more

grow? slightly. year, if you at this to Steve, for fiscal kind and you 'XX of year Obviously, you months you're think were up look at your ago and the expectation look XX have So said 'XX has until kind Telecom, would of sounds what's think world do in anyone occurred rewind When much destruction that Telecom demand? ending think I changed down to of is into that that recovery of kind positive, kind fiscal do you that the don't out of I the hearing kind you're you we're Or think year what's that next the from this fiscal a of which pushing year?

a of just And Obviously, that there based up? of bit may the little could and substantial best out pick because pushed recovery your a estimate you when quarters been sequential but bit. give today more just growth, just recovery it think clearly you a couple it's is you on had

Just would thoughts. love your

Stephen Daly

Yes.

not think being it's that, I of today. unfortunately, demand is probably our end former about posture the case there comment probably your

way we talk certainly to doing quarter. growth. adding We're you in could for as about reasonable highlighted, a Telecom. cycles highs and year the year be so in we're of that But coming where be as new going and on. low And over be next million new off we kick year, products winning There'll were think will large slightly next down we $XX growth contracts single-digit a year-over-year, the

and Obviously, we acquisition. just in MACOM's talked portfolio Wolfspeed be way, markets about a new opportunities. and a major there'll strengthens the really major That's

that, going think we what's I like So collectively, on.

the We of have moving but the assume gone And are And our we're older to do legacy point applications. A next they going view, Telecom back. from lot bottom. coming down. programs, not programs we're if at a that of on to great, they're

Operator

with Shannon the question Craig-Hallum. Richard of next line from our coming And

Richard Shannon

questions guess Steve. you, of I for couple a

question you're Center. sense of visibility part one the guess get changes in first wanted in And maybe here. AI-related and with components The of end volatile large has more is, any a see this of this strength if We couple farther market I here. the good quarters and clusters modules suppliers and a deployed off. is to of to see seen the high we've a higher-end into point and I falls some of out We're the seeing market number seeing specific it Data orders a obviously then in results.

Or Curious you're degree do for, say, you here kind that going increasing of next see to worried the volatility? out so? monotonically a it which the year outlook to about more or of

Stephen Daly

we're the that sockets. are typically, Data Center So sockets high-volume winning

And pretty inventories revenue so of Jack that. that planning lot expectation I say there's is growth. the good into would a of increasing visibility market. about future talked into with our the goes

their that take That's want lead on know don't and plan they to what parts of So our have risk lines, don't to if manufacturing and customers are, accordingly and our a times they production ship. sort have can't disaster. they they

working ISPs can when when from be out very large of market demand volatile. ready every Center quarter, new that's we important talked nature or deployed regard. So customers the build where But we've a point, the this about getting with you the there's been is that to very sort backlog make in when sure highlight to secure see the which you they're we've orders of Data which do -- And infrastructure. build of sort

So that volatility flows down.

is to out market, needs Tomahawk XXX-gig. about in remember, the entire because out or just Now we year the ecosystem the at over beginning the so, ago the switch switch of are to news good a a X getting there XXX-gig which ramp just means came

will the a of of generally which per for then layering core you market, Ethernet, add setup the be And MACOM. of as advanced So top that at It's mainstay. XXX-gig coming pretty some lane is good XXX-gig the technologies in on the that is and on well. that

the core the say, and is want -- question, of a switchover lower we your at yes, the I would with agree could of -- could rate. be. the we to your volatility, there from always beginning data are But data But be higher there which do rates to I

Richard Shannon

Great Okay. one My very here. there, a simple second Steve. perspective question,

segment part Is guided in the for Defense in baked You quarter. single-digit here Industrial there the sequentially growth into any I&D low the versus the difference major that?

Stephen Daly

no. Generally,

Operator

now to any with I the call Steve Mr. turn Daly over And will back for that, remarks. closing

Stephen Daly

results would entire the closing, for and to has which these In made you. I continued Thank Jack possible. like thank team dedication, their MACOM

you, customers' as and will We team to strategic nice execute continue and our to Thank needs to work a a meet day. our have plan.

Operator

Ladies participation. conference that conclude gentlemen, Thank your does for for our and today. you

You may now disconnect.

MACOM Technology Solutions (MTSI) 1 Aug 242024 Q3 Earnings call transcript