Earnings call transcript Q2 2023

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Operator

Welcome, everyone to today's webinar entitled Vicor Corporation Earnings Results for the Second Quarter Ended June 30, 2023. My name is Robin and I'll be your operator for today.

During the presentation all attendees will remain in listen-only mode. [Operator Instructions]

And with that, I would like to hand over to Jim Schmidt, Chief Financial Officer Please proceed.

Jim Schmidt

you. Thank welcome June earnings XX, and second for Vicor ended quarter XXXX. to afternoon call Corporation's the Good I'm Jim Phil Schmidt, Andover President, with Chief Sales Financial Officer Vinciarelli, Global Executive and Chief Officer Marketing. and and Davies, Vice Patrizio Corporate I'm in

today, months Investor website, After three has press release for six been press Relations release months our ending posted issued summarizing the we a the financial page our of www.vicorpower.com. markets results This on closed and the June XX.

X-K Form press a We related to this filed also of issuance today release. the

in I is for Securities remind purposes matters contained for growth, well remarks potential events profitability, may Corporation. statements uncertainties. forward-looking Reform Litigation information remind listeners recorded expansion our call, this regarding call current historical including are conference spending call XXXX. Private potential capacity and this statements various copyrighted I of and market Act is and of being any involving the you on we and and for planned this forward-looking statements Vicor make safe sales opportunities, during management's property harbor Except expected of expectations products, and customers, constitute call, current under risks also and provisions discussed announcements as this as

differ via on website. XXXX. This Form risks on XX, the which is with discussed of by we from Item available of we these SEC implied The in XA in may risks correct. those of today. uncertainties offer XX-K, In and/or will light that the our the XXXX remarks explicitly we forth any and can and materially forward-looking are be assurance results system face February Actual SEC's statements uncertainties, set any EDGER no document fact our to prove filed

statements call. of note Tuesday any XX, the obligation during July of website. this Vicor today, such of as call statements is this only A on page to rely will today's information of after shortly call. undertakes update forward-looking be this call the including statements no our conclusion should upon not Relations Please XXXX. conference available accurate webcast made And during you replay provided Investor the

a and and information. review take After review items, will you focus performance. financial In your will Phil will and developments Patrizio, sequential recent P&L press or remarks, release Form questions. to of sheet additional on our turn refer I balance market which, mostly XX-Q changes I quarterly now I'll QX for the to our and for upcoming Phil my

X.X% quarter revenue first XXXX stocking increased up prior today's XXXX sequentially increased million. a sequentially $XX.X Vicor of to to a million, $XXX.X press approximately up to and Brick decreased from year-over-year. increased the total XX.X% products million. $XXX.X stated sequentially quarter quarter of Shipments the revenue XX.X% decreased million, Advanced As products Exports release, sequentially as sequentially $XX.X quarter percentage the recorded the second from XX.X%. XX.X% for the XX.X% X.X% to revenue $XX.X from while distributors second quarter second million, in revenue of of X.X% and total for total of total of

the QX, revenue. total share XX.X% of product XX.X% advanced to compared with XXXX, revenue XX.X%, total products to of correspondingly for first For of decreased share to increased Brick quarter

of prior quarter. XX.X%, to the profit from margin, basis a gross gross a Turning recorded QX consolidated XXX increase we margin is point which

duty During of drawback the paid approximately quarter, recovered in previously we tariffs. $X.X million

previously reduce and tariff overall duty to recover paid expense continue work to We drawback.

respectively, included of to expense $X.XXX first total increase $XXX,XXX and expenses. of R&D QX $XXX,XXX, QX increased was equity-based The for turn Total of spending. from I'll in approximately due primarily an increase R&D million sequential sequentially goods, million. The $X million. compensation XXXX now $XX.X quarter to X.X% to operating in and expense cost SG&A, was operating the amounts totaling

million, $XX.X of income operating of recorded operating representing we margin an QX, XX.X%. For

Turning quarter share million, XX, $X.XX the earnings income $X.X rate XX.X%. representing a diluted shares. ago. approximately XX% approximately recorded income share XX% EPS based of quarter first on effective for year for Net fully an Fully we earned with provision per to increased sequentially $X.XX of the tax share approximately compared diluted in XXX,XXX from the million. and tax $X.XX increased of in per GAAP of a account QX a diluted QX for taxes, XXXX, totaled quarter same to $XX.X

totaled expenditures were and with ended approximately turns $XX Capital X.X. million for construction $XX DFOs to quarter. sheet. quarter We and totaled $XXX.X $X.X XX balance, totaled manufacturing approximately balance for for Cash primarily the reserves million at net to $XX cash Annualized million. quarter million. days. account of Operating for remaining end, our million equipment receivables inventory Turning Inventories, million, equivalents net cash decreased the progress reserves trade with be QX, at $XXX.X and flow of and cash with $XX.X QX of receivable spent. totaled to sequentially at a X.X% flow million

now from quarter, decreased in prior address year closing backlog. to came XX.X% the and backlog and $XXX.X I'll at QX book one one, bookings bill below million.

quarter Turning to XXXX, gross we to revenue expect be and approximately flat. margin the of third

by non-isolated to over patents expected cases associated legal expenses our these computing and are royalties are, related We covering in District in associated primarily however, licensees systems Eastern result expenses work next Trade foreign year. substantially in manufacturers filed than with International of this against federal Texas, bus of the cases, power also grow and and of infringing month court NBMs. Legal expect Commission, less the to of a sequential the work funding converters, increase patents. with paid operating the at modules Legal expenses, as a VICOR VICOR earlier legal the

precluding AI patents. case, ITC importation willful seeking into district modules, are In exclusion the we our servers, order, an seeking are for court States case, we power our our cards of United patent infringe damages In that or infringement.

and will related take Phil, so follow-up in questions. your ask time to limit can we you as I available. that an will of many that Phil and respond one market provide and recent that, as possible developments, you With the overview of I to a question limited Patrizio, yourselves

back one than to address, queue. topic more have you in Phil? please get If the

Phil Davies

Jim. Thank you,

Let by messages four meeting begin summarizing ago. Boston weeks the me key from we annual in held shareholders the

Our and of markets. XX-volt have the move stronger never opportunities both growth business automotive future distribution AI high-performance to the and been in power given the computing

in and module investments position packaging and Our power XX key VICOR distribution power past in property distribution technology. have to power with systems, topologies, vertical including a technology delivery, XX-volt in factorized put power over the power innovations conversion and architectures, control unique years power intellectual powertrain

setting world's as we their scalability integrated online shipping for September, lead and Our unprecedented for customers new initial the the coming stage first fab chip of start vertically quantities is to qualification. in chips

our program QX GPUs, third-generation advanced power power Our platform lateral lateral provides chipset network vertical generation using of fourth-generation shipping systems distribution factorized expected into ramps a markets. to lateral In HPC earlier a chipset high-performance in position performance supplier next-generation the superior AI down, is our an or as our vertical AI short, in for in strengthening PDN. as start

higher through processors be pioneered vertical second-generation current AI opening VICOR processor levels that The development and lateral key XX% supported and will defense require can complex accelerators. for PDN to performance. which power patented. and efficiency power with Advanced and VPD, XXX% industrial, advance only including are system markets. in delivery soon aerospace, technology and current enables currently up autonomy high-performance With in vertical a VPD markets that superior will stacked fifth-generation a electrification The Vicor's density, be provide more us, scalable other structures nearly mature

is a to of of the commitment chip entire fab, customers achieving set company. by Our supported operational our globally, top focus game. you. is An the execution the excellence, of our Thank now new XXX name

now and questions. Jim, take Patrizio your , I will

Jim Schmidt

now. ready for questions we're Operator,

Operator

And coming line question Please proceed, from first Instructions] the is [Operator Bolton. is open. Quinn your

Quinn Bolton

hear Patrizio, Phil, can Jim, you guys me?

Jim Schmidt

Yes.

Quinn Bolton

great. Okay,

for you very sense a part? our with power Can any give share a First this the can high a is mid-range platform details Have the design you be this you is, any power details more can it customer? in a for this Is fourth helpful. mentioned lateral power share new press the Is you you release AI distribution previously? worked that Any say, us what that consumption customer it question quarter Can ramps of new on in is would guys card? you card? XG

Patrizio Vinciarelli

losses with It's the a highly improves number new an of the X,XXX rise lateral existing It deployed within in which the lateral solution, to vertical the And it either is perspective which point the the customer. gives it within by in that of that of the of element it enable into system the And losses GPU, delivery, using or to vertical can substrate same the be a delivery it can lateral a at relating performance. unique, generation XX%. that differentiated, large a for substantially a to level. It's limitations a chipset power existing that system process capability, limits with copper handicapped a it improves we about efficiency the XG same limitations power power that or customer. lateral of is power it's process PDN, to system in solution performance, handicaps, applied With itself, further powers. to rise chipset, amp gives chipset, a a from

Quinn Bolton

quarter, solution sometime vertical. guess sounds going can or is production vertical lateral be say deployed So the next like Can first to fourth either it it potential the is year? that follow with to lateral lateral Patrizio, I up, the lateral in to to you switch

Patrizio Vinciarelli

is vertical. followed first to be lateral It likely lateral by

Quinn Bolton

press said of a that XX%. improves power saving. Great. sort you a watt And had would by in then efficiency you a vertical release, mentioned enable And think XXX I little

could So Is right that this watts? am right platform a be the that ballpark? thinking consuming be XXXX to nearly I AI

Patrizio Vinciarelli

flow with somewhat detail while differentials across the be a context system in comment a field substrate voltage are is about number current substantial XX% total one distances should that that to But the not consumption implied it's a in a gradients to lateral keep by about is efficiency. in on to difficult in sufficient a in effect or articulate But I'm whether in which it lot, today. that in save XX% of or resistance the of in we're expect sound mind that comments, brought dissipating some to across pin is in not about amount power which respects by the and that what is the silicon watts is of platform technical discussed which approximately a really power we within respects the substrate before. caused your up lot substrate represents may that going point, dissipation a self-heating somewhat something like we improvement beyond would power substantial earlier XXX of the about that the a above, talking and this

just It's blocks You that my kinds accomplished pointing of constraints of lateral. to conventional can and be with a these power might ago. what challenges of and many, distribution fundamental technology realm limitations indicative sampling moves network the recall many its is within to

Quinn Bolton

else Understood. a back and the ask Thank queue you. I'll in let go somebody question.

Patrizio Vinciarelli

Thank you.

Operator

The is Dillon. next question line Please of from John coming is open proceed, now. your line the

John Dillon

you hear me? Can Hello?

Patrizio Vinciarelli

Yes.

John Dillon

up question great. bit. Quinn's follow a Okay, on want little I to

Regarding a lower of volume coming the, opportunity me now high the vertical customer? that is production is volume QX, a lateral or can to more Regarding modest you of volume better? customer a in that's hear more

Patrizio Vinciarelli

when is ramp. constant So, to set, the first. now, of to Based same that but expectation chip And which lateral you was and on be will lateral. earlier, vertical. as that's supports I is anticipating I've implementation the QX the it one can't lateral a going that lateral tell the after lateral expectation, production, both be go the the XG clear, we're is chip suggested for my input would the the vertical set,

John Dillon

be to significant volume more this is or expect? a going you're this is but incremental that of customer to an Yes, going

Patrizio Vinciarelli

customer. This is significant a

John Dillon

Great, great. That's excellent.

qualification Patrizio factory? Okay. new rebound think strongly are the completion of and going bookings And, your you to upon the do

Patrizio Vinciarelli

last from online not processes expect unique to referenced first the on your challenges in pick that it's platform with had of up, we of couple be point, bookings of particular ramps. other and we've history capacity Products to relying ramp, the as our contributing outsourced. within Advanced years And being because just limitations operational least We elements, had to which,

bottlenecks whether a and bookings of in So be of of back uniquely and substantially. this of equipped and in blocks the delivering It's know common to itself kind shareholders not provide we as and up in at concern that imply for being that would were that backlog concern. overcome the solutions capable sense these point build time may will quite minds there worth. I some it's my stumbling

John Dillon

get so the I'll Thank Excellent. in back you much. queue.

Operator

Bolton on coming There's proceed. one Please from the Quinn more WebEx. question

is line Your now. open

Quinn Bolton

the about in I large current you ITC It ask and at latest least manufacturer you’re guess the to actions, relationship a Electronics wanted one generation effect be both this courts. the and the to I after modules at Texas recent Delta Foxconn, know legal guess services, from the think power in its and might Delta going I you seems industry, to I platform, Patrizio do Electronics like the on extent suppliers? GPU actions against with I'd on what GPU potential module like your its of manufacturer you're guess

Patrizio Vinciarelli

incurring that NBMs, put without specific otherwise So those not I'm in it's and prudent for licensees for risks a do the get have themselves at and out they it to infringement. position public you implied our to licensees technology, find going read and infringe of source license difficult We the acquire patents the the to reasons, disclosures, including and to be where obvious could can by of but were would ITC. It's complaint yourself. products, enough

you So part all or it one boat. to not the OEMs license. comes notable of because that assume AI The the not in should when same center it's one a the is they're

The issues arise the as with that effective ones are are that are, covered to close problems. copy products by to manufacturers, they foreign as intellectual deal other have going when

Quinn Bolton

you. anticipated customer the customer still that Thank Thank shareholder an the you to you. number Understood. the got you is on on third at into is And and think still said qualifications handover for audits? track visits increase I quarter Is here. as track, you just that that those meeting, customer September, qualification, clarify, that in you the customer and of see qualification,

Patrizio Vinciarelli

from to We've make in respect September, for August, about question, starting going late of doing, are trip. to first had praise we've modules back able the one to progress that on to any your customer complete to had the part and we're essentially yes, visits now, what month track we're so and we with be play it, September, going

Quinn Bolton

Patrizio. much, Excellent. Thank you very I'll back. go

Operator

will right. [Operator now. on start phone questions I taking first The the All Instructions]

Please attendee open now. line is proceed.

Don McKenna

McKenna. Hi, D.B. Patrizio. This is McKenna, Don

Patrizio Vinciarelli

afternoon. Good

Don McKenna

to lead in third run for you'll follow quarter XG be are up times orders expect we're quoting roughly Do wanted you're talking on. of going to backlog the you these the in a worth rates. I the ramp is point at now, if six receiving What that When on you months' time? chipset coming in current quarter? fourth this

Patrizio Vinciarelli

but get do you backlog with to Phil, additional comment have to backlog, for already we So that? maybe the upcoming on want ramp, respect

Phil Davies

No, I think that's exactly right.

the our existing the increased We in with then backlog, have we'll backlog, get for QX, and XXXX. plan is to that bookings QX, begin ramp obviously and particular follow-on

Don McKenna

in Right. generated your you has down for quoting is shorter and backlog bookings you? times, seen, And already are now, lead because that turn have you additional

Patrizio Vinciarelli

that, were still, going we're catch and So again, remind still catch of this that placed call, quite put to things us bottlenecks because that We're of orders let's time But the in up. of of the up. playing we're completing perspective. We're be still some up in playing catch play capacity early we're respect quarter. ago, to with aware

come case, down. are to in come our while our lead is Gap] the which our imminent, still with caught being we lead will first get control destiny once going then but that end to benefit times once and an relatively soon, So up, long, fab, that's is [Audio and the of of times

Don McKenna

do we're diminish, guess for I million at quarter in where them as Do going to you foresee to the when we're you see XX range. or revenues past concern the a the continuing are the somewhere this look forward? quarter, bookings is, going period you increase the

Patrizio Vinciarelli

be nearly that very out not in capacity some long put a year times, quite revenues also booked we an bottlenecks, with light were, and in things if general our had this pointed That's obviously rations back are almost had, expect we a We expectation. we've we industry to of sustainable. Jim in and this go to quarter. with of pointed ago, half essentially context, which and we Again, lead think out two, bookings, and situation, conditions. respect time, flat I to

for been down half, backlog, bring the a will time, back sustainable bringing with up on has a bookings to and level where additional building a timescale a literally now some the going of back up. a there's backlog process of year So that it

a relationship projective of that business anomaly, condition. in and backlog than but was Obviously our rather In lot terms revenues, year we terms a and now the ago, between backlog we're had not again, the comfortable an a position. right sustainable a more

Don McKenna

Understood. can I'm the just any will, our the hate you for along lower the than see quarter. sure way. that see the incoming you dips so we concern, when to revenues are or appreciate orders much if I nervousness,

Patrizio Vinciarelli

with, It's with kind, certainly as be justifiable, take have the it's concern in relevant these important over this the view the factors. but and objective harbor sympathize of in happened last an half, effect, all I when of of locations year of to again, safe a the very nervousness. a place

earlier out in we press operating that's from. and of of the] positioned comments, basis sustainable in, equipped exploit. So release, looking by as as harbor the profitability. his is forward, convergence uniquely to Vicor that's uniquely the pointed post to suggested And we're for are Phil trends improving anticipated, and And [in invested my the that that safe for technological because

Don McKenna

Thank you.

Operator

the before asking second Please company All a phone your name and right, I take question. will now question. state name

now. open Your line is

Jon Tanwanteng

any lateral CJS. my I the Hi, good from was color is behind of you was if detail taking wondering product. for more or the there questions. implementation This afternoon. Thank Jon Tanwanteng why

there. helpful product ad Has this more delay lateral the new a be commentary there in So Any been first. be launching will will vertical?

Patrizio Vinciarelli

I I'm sorry, question didn't your Jon, fully there. get

little Can a repeat? muffled. through you coming bit You're

Jon Tanwanteng

you me hear now? Hi, can better

Patrizio Vinciarelli

Yes.

Jon Tanwanteng

compared lateral vertical to new why first wondering of product lateral is product. higher the performing version the only was launching this I

Patrizio Vinciarelli

even development start its after year started because development and the ahead which that it kind the fact on in fact a power to nearly lateral early ago even as good belief, but out be of of confined system catch start heels “competitive the same its the But play, on based a performance, started of though got time just that to. of PDN as it's in to that up was predicated effect of to become but it multi-source, proving the from to it soon, have earlier. a version, had months still processor falling vertical multi-phase, the been I So is the of multi-source will of But though catching we again a that about of believe, because because the perspective, was seven had of effect it's we projected advanced gathered have, development, the are stronger terms on the line in started multi-phase, six, was developments trends, solutions it belated, more be only lateral of that that benefits a its over not alternatives”, PDN solution in rapidly as to and had up proving it's out the advertised my in much choice. solution finish and performance year

Jim Schmidt

a gets very because the advantages that very is do the the improved you exactly that same vertical. being is layout, for it's so with VTMs that this PDN the set can lateral of the vertical, the set as lot benefits. lateral qualified processor key is for much, adept, same packaging And chip it's lateral. thin, gets a said lateral much It's of got [Schmidt] one the placing which better the John, chip earlier, we and this underneath the thermally

Jon Tanwanteng

launched chip vertical when higher you same product? per get the this that AI the with for a set, Can does card dollar content I lateral ask actually you product

Patrizio Vinciarelli

being chip or lateral now vertical that price over the quoted that for implementations. chip goes and and set set a fixed No, is is a year for lateral

Phil Davies

a But more the get vertical until recommended did performance. lot the other not to later, implementation, but had which started earlier delivers been customer

much anticipated of in the is of terms particularly at performance. the look greater, So if session value processor you it

Jon Tanwanteng

Got it.

replacement source should for to product product has and which similar performance, of solution maybe a your drop-in type later? as efficiency think vertical skew the the as existing multi-phase higher a lateral a second we may lateral higher So then launch a

Phil Davies

shares “the multi-phase was, with fundamentally on itself set solution lateral the which same different had floor a a different solution. chip PDN, done, the because even that So been the predicated not, components, is it but is planning drop-in” the common multi-source, floor again, layout using lateral planning

is So, fitting we're the general, much first, better in which in performance PDN. within in better the but same general respects, many by floor handicap effect, lateral noise, lower plan, a in solution

So that common be limitation is can a overcome. that handicap denominator

close that PDN things outputs Phil of current pointed for supports, also taking tertiary and the by, a GPU overall location As secondary it that vertical with position reducing that output center current improve the of PDN output ago do system percentages but redeploying just wonderful in high performance. and one the high of VTMs a into terms out primary can moment in and primary the very the not and the it losses large loss slash that the in by to are also

So this which performance will could be six started did the earlier but superior all of outcome get started it it better a system ago, overall. not with months have until effort,

Jon Tanwanteng

in you. back jump the Thank I'll Understood. queue.

Operator

of Dillon. question John the line The coming is from next

Your line open is now.

John Dillon

better me little now? a you hear Can

Patrizio Vinciarelli

Yes.

John Dillon

high-volume number designs here. talked got I great. as One that they come re-spend were third call were customer, a or Phil, lateral are believe. had, doing coming vertical the the coming other they out. that but you customers existing Are out five to Okay, vertical or coming I quarter, still the It that that designs vertical? discussed, you a lateral was about, think, in supposed out last you like your conference you've out it's of sounds

Phil Davies

five but workloads. those processor using slightly The They're to same types count about different there the again, the are four designs. the so technology. lower currents same lateral lateral Yes, implementations Yes, lower. are there applications, are is basically customer John, of but customers performance those

John Dillon

quarter also? in expect third the you start those And to production

Phil Davies

next expect mostly to production in of like those I QX No, year. be

John Dillon

expect, or those orders we quarter you on are see we things already those? that have would for will for the bookings bookings next So

Phil Davies

on We few quantities early a prototype have then QX. bookings the a backlog, and type just maybe small initial to the for be for I ramps expect amount those million QX, dollars

John Dillon

that as they're the as correct? other Okay, you but were not talking high-volume orders about,

Phil Davies

Correct.

John Dillon

Excellent.

to Okay, be ready? production XG and then when actually do you expect

Patrizio Vinciarelli

in have digestion to select internal with systems to for demo and begin customers QX expect We share some QX. in

John Dillon

Like QX would that you to Are then your to those their of when QX, ship year? we customers would be next talking expect take able customers? and those

Patrizio Vinciarelli

As cycle, customers, there's know, in you a their -- time of numbers gestation year. period, own right, to constant round from availability a a has design which

So we XG expect, I contributor should 'XX. to to revenues not not expect, should be a in

think respect to a to XG contributing with is revenues I expectation 'XX. reasonable

the I that, Now, might me say this you heard have and meeting. said at having shoulder's the would say following

first competitors a expect more had to process we I generation vertical And have with are in the are as been applications were, without stacking level. enabling to chasing With card have of challenges XG terms power immature much expect a those designing once delivery. they way technology, system. have I of ways delivery trouble do [indiscernible] power enabling vertical of implementing we our because VPD solutions of notable do much better a scalable system XG, number power again, high at a a and with run our truck that have into

of rescue challenges. find sometime once IP trouble of there a technical XX, of ceiling be or variety again, So next the year, customers could themselves, where to that come because could intersect in situations we or

John Dillon

you. Got

that vertical may there into. and system, there are come with So are think challenges going challenges see a we competitor to out you technical a are run also to IP but they

Patrizio Vinciarelli

have technical they both IP and have problems. problems They

got the they with MBMs. think problems I

John Dillon

if problems? go and IP they customer like a technical with would a that Why solution are

Patrizio Vinciarelli

is another some OEMs few dependent technical my in extent, the property intellectual at be I of And that go heart those to that through That's it's ownership industry. their or be one suppliers can revolution be issue intellectual terms solution. work shipped solutions about Technically so a to think through expectation. on a the the the customer to that are follow is to OEM of bring on work. going its to is the customer, going of able because issue, or Well, support whether industry revolutions of able in or firms to to failure in an property a

John Dillon

Great, thank you very much.

Operator

I All Please next question is the will line phone open open. right, your now. proceed,

Unidentified Analyst

Hello.

hear me? You

Patrizio Vinciarelli

Yes.

Unidentified Analyst

about you ground Capital. the and to this are if to customer the fully running, be going factory new Alan up running fully [indiscernible] question and their the from hit in fourth a I able meet with had quarter demand?

Patrizio Vinciarelli

as a give and capabilities already the facets in I we advanced there that which other incremental be in products haven't the turn certain earlier, with to many clear, mentioned within to you've capabilities comments will as and we being those that of last the The starting in validated. months packaging factory process earlier added year whole integrated. are In into of September, to on and respect So respect for be particular has have running. up been made significant expected those August equipment the our and deployed capital integrated have before equipment half, next my with destiny all on year, that the of the a of processes are been as at that two end of to reflected vertically that control vertically had the us, steps. end this seen dependent total capacity But And investments and, and quarter. are

Unidentified Analyst

on do needle of revenues? the So expect more graphical move really a or in QX, ramp you

Patrizio Vinciarelli

and have in a that ramp. equipment think the ramp capacity we have Well, to support to the going we're I

Unidentified Analyst

you quarter. that question Okay. a your What this And do over then points attribute on to? gross four up margins last are

Jim Schmidt

a million $X.X as with costs, of freight a gross That's, and we well associated function in that's is to also in have processing none favorable and so margin. in lower drawback, mix. duty volume of tariff reduction up And as this outside improvement leverage Jim of benefit the the a the here, of increase volume, costs, in also added a all that

Phil Davies

Increase all. in

Jim Schmidt

royalties in, increase increase well. Yes, as

Unidentified Analyst

my was next That Okay. question.

they lumpy And is continue going royalties what two going quarter last to this to pretty grow? over had to that Is and quarter? seem be pretty were much year. that You last or royalties be fast ramping your to

Jim Schmidt

Xth. it No, see on think August the it I we file you'll XX-Q in when

Patrizio Vinciarelli

Let's let's So put way. reserve judgment, okay? it this

As technology. million us hundreds, takes bring we've what it major made why over the XX to all investments technology, years, about. And we've they that's you in heard last in $XXX say, the licensing with to the this terms at ROI property of seen of EMS of respect their and in of terms that stage is use number still involved in international both of

lumpy. go be So we it numbers the make fully unfold should we're to our lumpy times, to respected. that those we'll word respect the upon at Use Yes, gets see have and that to embarked assertional to the up. it events see campaign sure expect IP to with wait could

Unidentified Analyst

Okay, you much. thank very

Operator

I take proceed. question now. Please phone next the will

line open. Your is

Unidentified Analyst

was answered. question My

Jim Schmidt

Thank you, Doug.

Operator

line open, All I'll your the right, open next then proceed. question, is please

Unidentified Analyst

Patrizio, dollar can the of the sales due to loss estimate value the you give us of infringement? an

Patrizio Vinciarelli

Well.

Unidentified Analyst

you, I say I you. shouldn't should will say can

Patrizio Vinciarelli

growing licensing issue dealt So I'm first details. it those from in issue can, never but NBM with Again, go deriving not amount. sense well the into of or sure the I again they and to to is significant, as not NBMs income even we're be make whether a kinds mind is

every be value very of beyond built in line So really out and a of and there and be our range we a the broad very we time to me need is do the that a wait to scenarios necessary to top executing the of think and I because line. we've to [began] I in it through in inappropriate do and XX it IP to a going statement, outcomes so bottom it. We variety predictions plan vague have attitude. contributor more years next just is see expect strong spec began make with would But that thought think well to even take a our

So wait let's see what and happens.

Unidentified Analyst

thank you. fine, Okay,

Operator

All right, line All please proceed. open the next phone now, is right.

will question. We next to the move

proceed. Your line is open. Please

Jon Tanwanteng

wondering up organically part number I the Hi, you that levels and forward margins move if again. or as it's is one back that? Jon you I is expected have a to Tanwanteng current after of changing the some stay follow at there was crawl

Jim Schmidt

I There in front been a approximately of was loaded as as that paid of past. in because rate years we the would be of said the going have is end declining duty Jon, of So well. expect worth flat recovery I part margins guidance, think we growth just at drawback to to tariffs say be it

Jon Tanwanteng

Understood.

the be case. underlying should going the forward, So increasing Understood. that's if margin

you and however you be quarter, it? expense then to actually where to Okay, do the want compared coming phrase expect this quarters litigation to in

Phil Davies

actions brought We're that to so going about need take is attitude operating the a said with to quantitative respect beyond to we see which may be legal Jim be we're wait and not significant and at the have There next expenses. what more outset very going year. to

Jon Tanwanteng

qualified factory generation that you your qualified Understood. for Do need orders last orders talking ship the to next if not? see you're with one is products. about, those or the And me, the for just you products lateral factory the existing then you the currently those factory fully be vertical or before regardless can

Phil Davies

occurring is and qualification so because up moving weeks line much we're a program. forward next pretty QX two four the QX, in the think new on into I No,

it well. up about pretty timing, So the it's same lines so

Jon Tanwanteng

you very Thank much. Understood.

Operator

coming Quinn one Okay, Bolton. from is the next

line Your open. is

Quinn Bolton

a source vertical will Hey, a second multi-phase sort skew that time guys, the to product lateral or that there factorized share power Should follow-up and and the going business of you power over this be just new of platform, as this through wanted multi-phase sort will of to and on QX. it solution think about based can Vicor forward? convert quick as or sole a on we hopefully new ask skew factorized AI

Patrizio Vinciarelli

of So the vertical is be something or a one, power XX% in a type of far improvements two PDN the a lateral using of not superior systems, that, talking, capacity PDN talking PDN a supported What call with within we that's major difference. perspective from have But We're we've system again, differ been certain power components again, allocated proven percentage mean, okay. is baseline might typically, we're is part about can a platform. And efficiency. points and that lateral by I you efficiency. the what a performance share

that differences with benefits a of fundamental I power the tell speculate I I kinds major from can, if dwarfs, So characterize way components, as don't to that PDN I And So could to with to can customers you perspective it the often respect system that. with is independently would minimal what right? I want or you. difference different OEMs, the do did, that architected know the system it's performance. know and would in

Jim Schmidt

for great to want PDN. I in thing is are its And the to vertical right? obviously performance option the One job say, I lateral limited the increasing gives Quinn, be customer that would terms of GPUs lateral our by customer give our think a options,

remember, it's again, savings to AI XXX watts card. and So, very it's per important about

in eight XXX watts That's have It's huge. a these RAC savings. of of system. power You

really go performance can you after savings. those so And with start GPU to

what happens. So customer we've We'll options. given see

Quinn Bolton

Understood. you. Thank

Operator

Dillon. last And our coming very we question proceed. John from Please have

John Dillon

Quinn's to up question. Follow guys. Thanks

with lateral, existing then improvement Can, the see then, going I that customer, lateral this with only and performance then customer, with resets this lateral your, solution, throttling customer initially they with vertical. I initially vertical have, will still mean, that your with For is clock? in and an your new lateral Will problems mean, solution?

Jim Schmidt

What we've us to looking that is teams performance. at It's higher lateral version from version. engineering is our of back better the this reported seen a and

John Dillon

see won't with solution? the degradation much multi-phase they as the seeing they're as So

Jim Schmidt

better a solution. it's Yes,

way. put me Let that it

Patrizio Vinciarelli

PDN with be be the associated to to enough capping clear, to handicap elephant handicap, the If in just play is room role got PDN. the that's But, of And equalizer, tends an really the right? the you've around. it tends the in all

John Dillon

better is that? the Correct. am bit going sounds only or than assuming I PDN existing solution, correct that lateral But solution. like in give Am hearing to a your it little I lateral

Patrizio Vinciarelli

of words, would power on capability current the system answer system and differences performance this significant a power is factorized multi-source, be lateral other between the performance. the the scale limiting not these lateral all In multi-phase lateral, of of vertical. at that me in I way. to removes levels process and the that benefit it handicap the expect a a Let vertical fundamentally lateral

John Dillon

would for the understand wait as multi-phase vertical? just from current an trying I'm switch your to customer the why Why Correct. lateral solution solution wouldn't to they intern. lateral your

Patrizio Vinciarelli

earlier. got vertical. earlier started got still it lateral the than though the Even got lateral late, it started started Because

Jim Schmidt

suppliers. need They suppliers. need they And

John Dillon

Okay. you. suppliers Got need too. They

Okay.

the that? like, it wondering, for end multi-phase? from I'm I Okay. of multi-phase line the end really mean, just this And improvements. is truly the keeps line of sounds the is making this

Patrizio Vinciarelli

current can case few brought next multi-phase up I between underdeveloped leveraging for what systems with industry respect suddenly decision-vaulted it time, performance factorized No. John. It's with what a with are of but can't systems up that not going XX not we line can around competing as multi-phase. Sorry for There It's in multi-phase, of a system, saying a long fundamental full right? die. the multi-source a the the the the components performance years. requirements a it and It up see end before. and going are and keep systems. step of multi-phase, and power over type role into delivery to particularly is power all the particularly escalating market keep been the need have support, density, you better this been Nor, disconnect to get vertical Multi-phase for for the has to AI to are demands XG be much at with current around. will

past lateral Even vertical.

multi-source, XG talented, a more multi-phase, whole into what generation by left the cost kinds which solution we VPD approach, effective. full simpler, complexities, the get to much call from Vicor behind better, we constrained have you with much these of challenges VPD, but are system, vertical going our much of solutions, first makes be which As pioneer,

issues standing is standing So a with it there below. the It's way that to current also element also the PDN, down the different the multi-phase. as levels, the in It's multiplication. and of methodology, there then multi-phase opposed to averaging at handicaps power are conversion VPD is related IP

John Dillon

you. Got

the really levels, expect the higher don't with much see progress? multi-phase to So you making current

Patrizio Vinciarelli

expect don't to I go away. it

going improved but technology system I the that I am confident XG relative has capabilities XG. year performance with end generation keep power it as and able factorized between the improvements on think technology components to with deliver all are early multi-phase be, the that we that to step-up to not gap next we chipset up to but it's expect using are going to to alternative, the our remain an one in solutions going gap those should be

John Dillon

Thank very Good guys. much, you color.

Phil Davies

Thank you.

Okay.

Jim Schmidt

you, to we're Thank I call now. Operator, ready end the everyone. think

Operator

Thank that nice for right. and your webinar day. Everyone, All for you concludes have a joining, today.

Jim Schmidt	CFO
Phil Davies	VP, Global Sales and Marketing
Patrizio Vinciarelli	CEO
Quinn Bolton	Needham & Company
Jon Tanwanteng	CJS Securities
John Dillon	D&B Capital
Don McKenna -
John Dillon -

Vicor (VICR) 25 Jul 232023 Q2 Earnings call transcript