SMTC - Earnings call transcript Q3 2020

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Operator

Greetings and welcome to the Semtech Corporation Fiscal Year 2020 Third Quarter Conference Call. At this time, all participants are in a listen-only mode. A question-and-answer session will follow the formal presentation. [Operator Instructions] Please note this conference is being recorded. I will now turn the conference over to your host, Sandy Harrison, Director of Business Finance and Investor Relations. Mr. begin. may you Harrison,

Sandy Harrison

Semtech's welcome for conference fiscal the today's Mohan Speakers and our Chief year on Chief press Officer. semtech.com. our to was fiscal after for Maheswaran be website will release results third Chukwu, call and to today you call close results A the unaudited Semtech's at discuss Financial XXXX. President Thank quarter market Executive our and Emeka Officer; issued and our announcing is available of

statements forward-looking cause include will include differ risks from could call Today's anticipated that uncertainties that statements. actual materially and to results in the results these

For our a release detailed of recent with filed most press Risk and and Harbor Safe uncertainties, these risks Other more periodic review Commission. reports the please today's Securities discussion included the in of in Exchange section statement the and Factors

As as comments obligation this current change. or today's of undertakes call update circumstances today call the a are no made Semtech from information facts to and reminder, on should only

During to accordance the non-GAAP not with generally principles. call, in are that accounting we prepared financial accepted measures will refer

considers press why to results to non-GAAP otherwise GAAP on presentations management in to measures measures comparable refer and the non-GAAP team in non-GAAP with such of unless references noted. of Discussion along most financial measures measures included are Emeka's formal financial release. detailed reconciliations All the today's useful such Mohan's financial this call

Financial Officer, Emeka? I that, Chukwu, call will over With Emeka now Chief turn Semtech's to the

Emeka Chukwu

sales, and represented a shipments Thank QX X%. XX%. above represented sales Europe million, which of was Total In our distribution approximately and XX%, Asia XX% sales midpoint sales of approximately America you, year $XXX into Sandy. represented to afternoon, XX%, sequentially increased Good everyone, for represented represented QX, X% net to fiscal direct North the net XXXX guidance.

markets. balanced industrial end remains the total business end of from and total and with and the computing XX% markets, coming enterprise from POS high-end coming communications the XX% consumer distribution of POS Our

that bookings quarter. sequentially sequentially in XX% efforts levels. associated bill our X]. to declined Turns during declined the to XX.X%, GAAP to Bookings absorption XX points QX lower [above margin approximately inventory reduce for shipments to resulted with our accounted gross book due a of basis

to decreased non-recurrence and expense expense of due occurred X% to restructuring that operating compensation expect expense between sequentially, share-based In in QX, due X% GAAP to primarily lower X% charges performance-based expenses. compensation QX sequentially, the GAAP operating to higher increase we QX.

down U.S. related resulting issuance from GAAP additional QX tax QX, XXXX reserves the XX.X% which XX.X%, changes. to from the law tax regulations tax final was reflected rate in of

for range to We GAAP in fiscal expect rate remain our tax the range for QX in to and this XX% XXXX. to year be XX%, of

stock from Our the rate impact of GAAP forecast including deficiency items, excludes options. any discrete consideration exercise or from benefit tax tax excess of

at to results, slightly, impact to non-recurring Also on Moving amortization QX due decline consumer a higher mid-point to non-GAAP non-GAAP share-based to mix compensation, margin sequentially intangibles and our the points expected, points of of the of which our and XX gross the credit gross other charges. exclude declined non-GAAP approximately expect XX basis revenue. margin of we XX.X%, QX acquisition-related guidance,

sequentially margin year non-GAAP operating to normalized lower due QX from decreased to improves. margin to engines gross performance-based more levels fiscal demand million, expect – In overall as higher to our compensation. $XX.X and we return our XXXX, demand recover gross expense non-GAAP X% growth

expect sequentially. our to non-GAAP we be QX, In expense flat operating

the at expecting roughly revenue fiscal half For XXXX rate expenses is planning our with year operating operating purposes, to we model. are consistent growth, increase which our of target non-GAAP

the XX% rate tax XX% to our fiscal expect to We non-GAAP in range. year XXXX remain

stands and XX% remained approximately $XX.X XXX,XXX at authorization during repurchased shares million. for the approximately operations from of quarter now $XXX flow cash million net approximately stock we QX, solid In at sales, repurchase our

increased We use due debt. In investments and target XX accounts cash XX expect repurchase pay shares, which below sales, mainly receivable strategic opportunistically to to days XX of of slightly represented make QX, down our to sequentially, continue net and our is days. X% sales days range approximately to our to our higher

Net inventory QX, in in days. to X dollars XXX days. absolute of expect X% be flat decreased inventory our we which days of days dollar inventory and to XX terms days decreased days, range above remains to net XXX sequentially, and target In

results strength guidance, execution QX of XXXX. macro on of despite summary, difficult in believe to were above position the continue growth engines, return the the secular growth our remain focused to us pleased we In to year environment. deliver We and mid-point to fiscal

I will over hand to the call Mohan. now

Mohan Maheswaran

and year Thank you, and fiscal XXXX Emeka. $X.XX. over non-GAAP market provide performance share group QX our X% diluted margin and earnings for everyone. increased per posted fiscal year $XXX QX In QX of We of by fiscal our will by prior year net the non-GAAP of end gross I revenues XXXX, quarter XX.X%, product outlook million. discuss of to XXXX. Good then afternoon,

net sequentially, represented weakness In increased net strong represented enterprise of XX% computing offset driven XX% QX XX% year the rebound total a LoRa and our business was revenues, by industrial as the broad in revenues. from of X% of demand XXXX, PON by decreased growth market total market fiscal industrial sequentially demand and

sequentially, total XX% to revenue and market revenues Net XX% end high-end was the revenues Approximately attributable over other total and communications Net systems. revenues. X% to decreased from approximately X% X% attributable revenues. and from was prior devices, of XX% decreased of net mobile net consumer represented market represented consumer consumer quarter high-end of the net the

markets. fiscal industrial broader performance data of were X% XXXX, represented our Integrity Product of our discuss product and Signal station QX from of of will from over Group Stronger the the PON net each demand year the offset quarter In by prior revenues. base increased from total hyperscale and revenues center groups. net segments I the weakness now XX% and

progress low-cost, power low-power, ideal made demonstrated. delivers Communications, platform interoperability performance our Tri-Edge low-latency optical Tri-Edge the modules. of emerging interest strong PAMX was based our recent European savings PAMX significant Optical Conference and we the QX, Customer on and as with activity for platform. platform Tri-Edge PAMX At is our In and

first system center and is trials silicon sampling with data gig applications customers. in in Tier XXX X gig XXX Our Tri-Edge and currently PAMX

Tri-Edge have in production to and fiscal QX expect QX of XXXX. year of production We in silicon PAMX revenues year first XXXX, fiscal our

excited very analog are We solutions. our about prospects PAMX the for

recently shipping, are are gig its which XXX our at PAMX linear XXX of FiberEdge product momentum full platform PMD gig PAMX our joins gig optical customers. and modules. announced FiberEdge modules. targeted EML continued module driver This linear XXX We targeting Our platform also and XXX positive optical also PAMX currently gig TIAs that at optical

FiberEdge following and Our our which is largely first continue performance. strongly driven products, we FiberEdge rebounded Tri-Edge year of to complement half CDR ramp fiscal In expect in nicely China fiscal year PON QX to by platforms see a XXXX. and XXXX, business, ClearEdge our weak

X remains leader in deployments providing and We XX next infrastructure be gig that The for to highly a solutions in overall recently driver gig, and fiber systems. for conjunction X.X generation Semtech PON deployments. year introduced to our XG deployments the gig expected PON market gig, PON XGS-PON PON China. XX the is with as increase market key PMD enterprise OLT next to improve chipset integrated home is expected demand

market fiscal In XXXX, wireless base demand QX. over weakened station from the slightly year QX of

base weak, We has XG versus in both to to expect FY higher in deployments XXXX. due the opportunity fiscal and CDR station base and XXXX be triple While do that XG XG demand additional been XG, station content. market we stronger XG year believe could volumes

several wins good current Our are at design XG with module front-haul solutions suppliers. tier top momentum gaining

SIP expensive standard which focused SDVoE. IP gigabit group software video proprietary audio, over equipment to AV its Our Ethernet XX per chip on second video from announced is the equipment or new transitioning Pro industry product based recently using pro, defined platform,

a in be believe and grow enterprise to infrastructure to XXXX. transition chip chip primary this the expect and target are year lower our enable in business for new driving this industry significantly new and Pro its due We AV platform we The to fiscal healthcare business key enabler eSports platform our cost. power markets will

The is demand ever-increasing products. data higher demand rates greater signal driving integrity for Semtech's for

expansion continue, gig global and stations, the software The secular this PON, defined trend centers. global data hyperscale expect to acceleration video the XX of base emergence We of to XG the of transition driven over by Ethernet.

the We years, expect over our significant trend this to headwinds next SIP year. fiscal from benefit several this product group despite

Signal For our QX of weakness revenues fiscal all to year XXXX, broad-based we Integrity across Product expect driven segments. by decline net from Group

net in Group, net prior Moving XX% of on Group XXXX, from Product Protection QX over the Product were our year revenues. of total flat represented quarter, Protection revenues and our fiscal to

industrial and benefited from increasing strength penetration and consumer from business while our business Protection mobile our markets, softened. broader automotive the Our business of

as network grow local to continues segment driver targeted vehicles are high-speed at automotive the from increasing protection devices see momentum. performance win and in network higher deployed of to for systems, new assist Demand number controller strong continue area design interfaces Semtech an advanced interconnect interfaces

be In year design year China to end we our down of addition, Protection slightly, smartphones the customers. continues smartphone seeing where globe manufacturers be In customer from at business by the the momentum win impacted of we are due leading with to [Huawei fiscal inventory exception all the negatively of strong across QX the band]. reductions XXXX, Korean our position smartphone our to expect

increased from revenues. the in XXXX to IoT QX led included respective the sequentially, LoRa demonstrates net X% of cases and Dish of globe our in revenues by Intel, notable represented and in industries. LPWAN LoRa their LoRa emerging in LoRa to year Group Product Turning adoption Sensing our our Group, Wireless in business The QX, numerous all and total Product new of Wireless XX% are In of who tremendous and market. Sensing across fiscal Alliance additions leaders growth the used Amazon, value fast net

used primary require QX, WiFi applications. WAN at LoRA in tracking the the broadband smart and included cases that smart LoRa building, wireless transportation, smart joint home, and with Alliance, together numerous used smart connectivity. articulating The least cases white smart city, asset alliance Also, paper a both

new gateway, driving into these wins on We opportunities earnings to be WiFi on opportunities integrated and and will we calls. same LoRaWAN globally and emerge future comment functionality are seeing already the

examples its simplifying low without LoRa of geolocation deployment GPS-free tracker at connectivity power. legal GPS Some very cellular released provides on include, consistent recent or data and Alibaba cases based cost used LoRaWAN that system

sensor based supplier and a for the of new cost secure air utility variety Mondo, LoRaWAN and provider the tracking networks. create smarter, Digi its starter LoRaWAN, customers provides industrial utilities efficient, package platform. leading lower and more to IoT of released software on solutions which real-time including The gas, industry utility leading an bridge, necessary announced new a data applications, and monitoring. accurate hardware IoT a enables software smart Radio of quality, sensor based armed sensors, oil of end-to-end

smart and utility segments that Andrea Europe informate, electricity smart Asia IHM Pacific, for solution lines. metering together the LoRaWAN building developer a new IoT its announced and and sentinel a CAHORS new and of targeted LoRaWAN-based sub-metering overhead faults at and technologies monitors predict for utilities developed provider a Group, failures energy with voltage solutions for cases in based grids system used leading

used targeting LoRa's smart momentum smart underscored In addition also is partners the being to the Along these applications. and of IoT with cases, other smart agriculture, LoRa home, track. by cases, solutions increasing metrics utility, we number industrial key numerous announced used

number XX key countries. of increased metrics with more countries the networks than includes Our to LoRa update

to QX in increased at of By the year countries at XXX operators and number XXXX, LoRa end fiscal Network of is public the around end XXX or networks, now XXXX. LoRa year of operators fiscal the have up network we the XXX, which XXXX. XX of year up from XX year from private fiscal expect The end XXXX, of fiscal to expect approximately by we LoRa end

number of nodes. gateways connected more XXX,XXX. The approximately X These will gateways increased LoRa estimated deployed billion than support to end

We exceed year deployed end XXX,XXX LoRa number the fiscal expect of of gateways the by to XXXX.

full LoRa number end over XXXX. will pipeline leads and feeding trending to timeline. to nodes the pipeline. XXX And that pipeline million now additional convert XX% of on million over to anticipate XXX with average end XX-month a deployment increased $XXX XX% fiscal to million of million We eventually The of the an the by deployed this of opportunity year opportunity is $XXX cumulative is LoRa

opportunities move use industrial with volumes the includes of more rapidly pipeline Americas of those and could Europe be consumer growing from and cases opportunities the well-balanced XX% of could the significantly deployment Our in remains geographically the over higher and use cases than to with a number markets. coming

between volume year moved fiscal XXXX enabled year expecting Several XXXX of $XX use year a result these fiscal end and to XXXX, fiscal and cases from revenues to million. $XX million we as our out are LoRa

at global XXXX, year LoRa the exit continued a on a a a to range. and to standard quarterly Despite in next POS five multi-billion-unit used anticipate positive adoption in of LoRa the expect industry. be run the weaker-than-anticipated based high-end becomes year We the this expect QX over record de rate the facto of we LoRa, fiscal years XX% we still above CAGR what LPWAN as cases a for

In stable. for XXXX, QX sensing demand of fiscal proximity was our year platforms

While a as stringent from business health fully increasingly challenge, to with our be SAR Huawei is understood. business continue proximity benefiting regulations smartphone will radios risks increasingly powerful XG become sensing global associated our

smartphones in few sensors we Europe their designs. system North and Over years, of to the wearable to devices included the America next shipped and SAR expect majority have

broad-based stronger by LoRa from market Sensing our fiscal demand For Wireless Group and be be a down to weakness. will QX of year net offset slightly, enabled Product expect we XXXX, revenues

In to achieved design new on X,XXX released [indiscernible] new products XXXX, year achieved of QX, we products QX wins. wins. Moving new POS a fiscal record. design and and XX also In new

Now, the fourth of let outlook discuss our me quarter fiscal XXXX. for year

We net guidance or range net are currently beginning needed approximately of approximately at we orders estimating $XXX To of terms to million revenues QX. and million. $XXX XX% between of attain $XXX midpoint the the be our million, QX

to earnings and non-GAAP QX $X.XX our diluted expect per between We be $X.XX share.

no Our quarter. direct in this to assumes fiscal further guidance QX Huawei shipments

will the I to the I and will questions. answer happy now be to call any hand Sandy, operator, and Operator? Emeka, back

Operator

with first your [Operator we Tore question a time, Stifel question. proceed will Instructions] conducting Svanberg, this please question-and-answer At from is be Our session.

Tore Svanberg

you. thank Yes,

Mohan, talked plus. about [between] the million about question funnel pipeline or $XXX LoRa of First you being

consumer more examples where a see on to So, like starting elaborate that's some maybe $XXX sounds like lower consumer can it and that give could little in at that, also to adding sounds growing least adoption? it us is more you you potentially bit you're million,

Mohan Maheswaran

in significant of in Yes. range I interior replacement ZigBee, just also yes, outside say types the pipeline it And, Europe. house, is would the smart Tore. Wave Americas, Yes, the Z pipeline's the house. really is are of beyond longer of the mostly of home of And part cases. of getting use home the smart but replacement

and like lighting, lighting security, of things that's cases, So, use also including number smart but that. smart irrigation,

North So, lot a and we're the those majority Europe. America would vast I seeing are say, globe the of but across think in I

Tore Svanberg

on this follow-up, my was segments obviously that Signal PON most turn is or Sounds center that we just seasonal think going Integrity is be data that's I quarter, you and PON there I anything especially quarter, it but good. thought down starting And to yet? sustainable to are mentioned just a as but going mentioned you mean because pretty like not we're else strong corner, next that seems

Mohan Maheswaran

very think has issues come year pretty next that all I say PON there know they're would I say centers' healthy, all it's been soft say we think starting wouldn't kind I and reasonably market doing starting I year softness Tore, it's is any things the PON. is okay general – is are significant for as viewing just Yes, pick tied and to you of mentioned like growth back that is say I to data would I that. year just would legacy there. good of up, as Base station, to I being equipment’s kind potentially

quarter little know, bringing don't down So, event. I think a it's one of the the kind bit, a but I number

that I I the that up. think next main all talked year, back we segments, should the see pick segments about

Tore Svanberg

go line. you. Sounds Thank back good. I'll in

Operator

from your now Mitch Markets. Our proceed Steves, next your line is Please question RBC live. Steves, is Mitch with Capital question.

Mitch Steves

Can me? you hear

Mohan Maheswaran

Yes. Mitch. ahead, go Yes,

Mitch Steves

seeing little kind you however phrase you maybe the or but calendar what ramp earlier Yes, that lighter right, seeing to want wanted guys next to guide temperature seeing, side to you I in back, you of I comment end you're in guess guys year, just smartphone sorry. a year you're you you of smartphone XXXX the on the and a bit QX, QX Yes, improve expect for to the sales are of handset throughout XG but like circle XXXX? know what to can if it, to expect

Mohan Maheswaran

smartphone I doing to manufacturers but bring all QX that well. in in their Korea, We the general say all, tend the see normal reasonably of do expect that's Korea would so, doing is okay. of market that first We are particularly strength, hand Yes, the of I pockets think inventory down. and regions smartphone

So, we're with of obviously some issues QX some anticipating that we guidance, Huawei as in our well. unique on have with China going

I into looking I than like impacts it's it's be it year to two business those – other fairly, is certainly it that, and but say general, seems looks healthy going next a a there So, in year. better like fairly year, would smartphone next think

Operator

is... next Our question

Mitch Steves

you. Got Thank it.

Operator

is with Our Please your question question. proceed from Karl Ackerman, next Cowen.

Karl Ackerman

Hi, And First that was approach or I the think Eye sort out – one garnered you analog mode luck, have PAMX I partnerships predominant question, Open may? have you thanks. modules to your at do the of what XX-gigabit spec? you hoping, if two of for design questions become leading DSPs providers. misperceptions PAMX, one that DSP investors if adoption you released think discuss I has by single with is may of think, you the wins have are but a I of least I based now

Open have follow-up. of perhaps could Eye that you investor kind be if and regard MSA are at concern And just with where appreciative? So, to would address you the I

Mohan Maheswaran

Yes.

very approach, good confident FiberEdge, Tier center which are seeing with of solution. products, are that products year just momentum, some once I get will sampling are proposition obviously we laser we're next over now. So, let's and have drivers mentioned, this We're as which in with significant X sampling partnered data those going those QX we customers there. – are start that we TIAs momentum that the PAMX and PMD types with of release our of year is DSP QX we DSP just Tri-Edge I we the parts, The and mentioned, platform partners have as be to is think current value full production DSP

and into and have produce the products we in in. but production get to them So, out designed get them

to the – towards plays year, of how also customers XXXX until timeline the half most have year and the deployments. out. the So, moved of see PAMX data that's our It's first then of that in that next going of be their belief end the within goal out the we'll most fiscal center

think it I think see quite is view the but And that's how have. plays so, our good. I out, We'll timing we

Karl Ackerman

I appreciate that.

As members would my your do and to you one this members, as complementary $XX for revenue of or LoRa if LoRa have that LoRa your additive, follow-up, recently million you. that additive be million LoRa view XXXX? of sidewalk, is you new $XX introducing offerings LPWAN cannibalistic Thank that to to opportunity

Emeka Chukwu

that's first do we all in So, of specific let that the can can't but talk in can't form, out me first benefit through Cloud every LoRa business thing royalties that, or what the IP alliance]. through [ecosystem there, remember. services or customers like licensing direct or to Semtech chips, that's so that, specific either say, some partners something We either say is I about shape or

to rather of penetrate, the is but that five of lot four this home to do billion extremely and value we an is, a in range is the part we’re that and yes, just we pipeline talk an revenue. network the a proposition is business large, like And Second dollar beyond very believe going types space. the why and that's but a and the proposition confidence our that our example difficult billion $X.X of I because terms the to in about of the a confident pipeline Smart so, think in be cost business thing turn that into of power drives level. fact two go what that the smart and pipeline, LoRa it's I it become years can is and flexibility the versus brings LoRa in Home, time belief next is competitive the – just if question things do as can the because things of that to value It's

bodes So, revenue The pipeline of the is pipeline the of now if future is and and the you China. today, outside still, I consider as of most XX% of That balanced mean mentioned our XX% that quite well revenue from China. really revenue is I for growth. nicely is

vector four So, next we on than there lies plan the on for the executing XX% CAGR years. growth

Karl Ackerman

much. very you Thank

Operator

Please is Our Craig Ellis, next question with Riley. proceed B. your from question.

Craig Ellis

the revenue point Yes, taking wanted for the the thanks to you to question Mohan, made about year. guys. I for this go expectation back

those So, million push some like go midpoint the $XX million that, down a is could consumer outs. thought of revenue it was kind signaled, a LoRa I from to and $XX were related Could common you the you think that looks there the might you further denominators on deployment color the what in been to out the provide some for were going base extent any things on what and saw? have which in that

Mohan Maheswaran

every would the end Yes, that as To Craig, of and first have weak the POCs gateways on see the year that it's impacted expectation out this you is this mostly stab timing but half, how it's and China. there, particularly to and can play they out. follow. exactly the a are very say, quarter, I will and largely was know, dramatically. first to weak, very which which opportunities when to to gateways project There going the the year We many year, know deployed, of an [difficult be how tried going we was is do call]. We by with when at you, increased driven just make points number you is it largely honest installed of

see higher some difficult that think a year year. just think to we'll use of outs next I this it's been push has next recover some with made year challenging that year, kind into benefit but I volume but cases, that that, So, of combined do

yes. So,

Craig Ellis

period that to And XX% to just five-year think is we four-year that time. related about follow-up of Mohan growth compound a a over

that joining XX question some that we that typically moves a are So, the as here, some next The does huge clearly Alliance. year opportunity from or for in with global way, over there’s the there’s growth that would but expectation rest next LoRa business to should blue the business? an give what a have for incremental to a XX% you closer XX, $XX where such be doesn't we Thank that is is, that macro underlying chips discontinuity be expectations of have growth big the still you. year, million would XX% large the

Mohan Maheswaran

Yes, I think is with what's be call to to China, difficult honest you.

that how look think year, next you year, next know it's many going to for confident demand year year about this going to I pretty is reasons look has out but been challenging our… what a calling and we’re like

Craig Ellis

[Indiscernible] domestic, thank you.

Mohan Maheswaran

the …we’re about opportunity China pipeline within current we both growth have confident based on our and momentum XX% our China. outside and

that's next drive still broader XX% outlook. kind market cases this can relying way is at still macro we obviously quite I some I think confidence we're current needs We growth industrial use on, the would look the high it. in IoT but based year that that general, So, that of our on think

Craig Ellis

Thank you.

Operator

from Searle, Roth. is question your question. next Please Our Scott proceed with

Scott Searle

Thanks afternoon. questions. taking good Hi, my for

Just a quick clarification.

an smartphone or is off, And heard fourth clarification. had of China then thought mention on the a was outlook Huawei Huawei in for the in quarter. follow-up? additional protection terms front the and in quarter I you and there the sensors of First I I there Did proximity expectations any terms no exposure your and

Mohan Maheswaran

Yes.

day and do well, too said reason any think bookings Huawei I we've part? it to Huawei our ban there's to just the we our I the, make risk Huawei built need more So, guidance. that our tons what guidance already have into was a much the that day is guidance the and away, that, that why last we upside guidance to number business provides The but then if around it go standpoint what Scott then if quarter to second we was build the into is as obviously the don't and doesn't, it uncertainty quarter from into it said

Emeka Chukwu

look and [Indiscernible] in QX could QX like? what

Mohan Maheswaran

about $X $X.X that. shipped builds about QX into $X guidance million we in about million, the or So, million

that's So, have the we backlog and that's what on currently position.

Scott Searle

as to back I plus LoRA looked you're figure consumer, of start does out me, aggregate you. product excuse thank benchmarks to on other What portfolios. to XX% it lines normalized. growth put revenues to starting when the commercial starting product wondering you of terms is We then PAMX it are or starting some looks given areas some we're how certainly in growth, data like we that you see the I but some down, and new in to sounds you should kind gave get flat, you. up recovery number smartphones growth feeling areas more that year we if the be particularly having are in and fiscal fiscal around specifically improvements us could XXXX, certain an a are XX% product we Got more some content. And you like, like growth looking we're And think XXXX. for you key don't then and see was looking to of they of center,

going we're into So, XG Thanks. a cycle.

Mohan Maheswaran

platforms I and are difficult year. think our that's had in coming is, both early markets to been and we currently and the obviously, good been to hyperscale FiberEdge year, guide what's as clearly XXXX a center now happen FY of out a different it's normalized there. data back PAMX has this say has and you Tri-Edge in we kind if especially FY bit of ClearEdge Yes. XXXX, year has to confident in and should but opportunities, layer kind PON segment inventory and have going the and a

XX fiber year the XX back also I home, come as to more but fiber more China, accelerate. as gig gig, the to that PON enterprise mentioned expect We starting next in to the deployments, to particularly

as I'm XG and growth the little XG Pro as expecting And be our nicely SIP today, XG, and there XXXX. sure this that very we're you've think That's AV year and that accelerate. it growth business for business year. we’re to year about better next to from mentioned, a LoRa strong growth. than is then expecting really Base in position next for others good that I feel grow us small mostly We prospects going a business to there. obviously for stations, but and but we products both well bit heard should start FY

more globe the the should And yes, side, design next good the but are a growth that the then smartphone a call side, smartphone good on there protection well. mentioned XG X across really challenging Tier volume feel side, more see manufacturers the mobile and shipping bit we we with good the wins as what's I to going as little on pretty to and year out year happen in about XG

So, again, lot depends feel macro, are about lot we on A where we depends the on today. China. but good

Scott Searle

you. Thank

Operator

Bolton, next Needham Quinn proceed is Our question Company. Please & your question. with from

Quinn Bolton

Hi, guys.

clarification. did I say metering? in of some to what couple missed the LoRa it, [CYXX from applications of applications? CYXX] a And is or quick follow-ups. of Or the newer that smart had the you consumer of or So, China traditional some pushed I've more, got then Perhaps business is types that

Mohan Maheswaran

second quite think Yes, more just but normal tend half and in levels it's it's China I will really came more I to it's industrial, more business those time. anyway, go and they're for more first weak would The back applications, half say in to was the LoRa the consumer the time some metering environment – once take on there, they they markets longer Quinn. and

think to significant. more be predict when smart come, think they consumer-ish the the I difficult a it those, but more bit tracking, timing of asset I smart will homes, little

Quinn Bolton

year? is, second at wondering in type we for ClearEdge question that just mentioned is modules deploy family, going into XG greater those XX, next product the networks scale the big CWDMX are demand XG Great. you much as And single typically lanes are they in your how the a growing then opportunity front-haul

Mohan Maheswaran

center XX-gig Yes, It's a increase is are actually and versus content follow, more mid-haul days, we platform the of to drives a use these early more, links market. that fact us are feel for ClearEdge more about that's the these base good main stations but proven the which in and number the the platform, as CDRs, so going probably I volume well. for it's then links data think I driver require – the stations. base links front-haul it's will And just us, probably of think the, – all XG

and about we that. position good stations the like in these drivers integrated feel have so, CDR of things And our and most base really

clear So, quite really for the is in markets. the us differentiation

we're shape. think yes, I So, good in

Quinn Bolton

or modules And future? based the do mostly the you NRZ or signaling see that then, for front-haul that's you for the foreseeable FiberEdge do PAMX any mid-haul think in applications

Mohan Maheswaran

Now we see FiberEdge as well.

I front-haul, mostly. again think

at role opportunity station, in think well. the base and base we seeing play CDRs I will the the being moment, we ClearEdge station. also FiberEdge as Tri-Edge and think in a Eventually, as PAMX the are

Quinn Bolton

Great, thank you.

Operator

your from Our question. Christopher question Susquehanna. next with Please proceed is Rolland,

Christopher Rolland

question. for guys, the Hi thanks

So, trade Chinese Thanks. on but think you great? bunch in say for then semiconductor would that I a LoRa you into could in you played here do year? that Comcast U.S. past also, this of be build for it update know looking that and is tensions, particular China and adoption that said, I And maybe an you the the as think and year, this would LoRa guess was policy, give over well just non-China us the on if consumer, out domestic you where network

Mohan Maheswaran

in and of design-ins of Chinese immune NB us continued we you, issues think just think be LoRa. headaches, a give competitive The think in not very us even for that local I Chinese customers continue be though business. LoRa our headwind the technologies end is clear. momentum Yes. design-ins the honest China, clearly some pushes is to concern supporting have there of LoRa good and more all it's LoRa. are with proposition but to a kind and value don't IoT I that, on To China I obviously The

long-term the half seems gone I in to for impact away now. have there first don't any issues, sure, that year some see was for this but So,

we've profile growth pipeline, that, come continued and it's large, very of little for kind should XX% which create China, one a of through and think LoRa. better revenue we I I forward reasons going in see to I and quite, the bit better Americas of opportunity think on that's is in opportunity, point of that out being XX% us the but is balanced enables a opportunities that Europe

but out Comcast network, enterprise those of not now, and on markets, with think on enterprise enterprise they focused building a larger the focused where only and then customers is segments then market. in Comcast – in is really – in our have And markets I partnerships the other space the

early days. think it's I still

still the of where think they them, have play in they bring playing already partnerships out cases where value for as do Theme they used but have they success that to pockets the are very locations. and I the in have nice some market enterprise such those Parks

days, I front, on well think. but enterprise early the moving still So,

Christopher Rolland

direct was that you high. at little in quarter there if seemed that think or – bit particularly that? another. also, some then guess [indiscernible] heard a for weren't Were or Great. And reason correctly, some for I a there customers reason heavy XX% typically the behind what's I [indiscernible] I

Just what's that? behind

Mohan Maheswaran

a for I we has the function just slow us. that of been the think business Yes, for have most that part, account Huawei. with direct Huawei Chris, was a

of elevated not not so, in And mix strong gas been the, been somewhat the is the distant business with of of a revenue with – the the past has that. as with them because them because our result our of ban situation,

Christopher Rolland

fair. guys. that's so Thanks, Yes, much

Operator

Kumar, next your with is Please Harsh Jaffray. from Our proceed question Piper question.

Harsh Kumar

Yes, hi, thanks.

in quick to ramp expect expect U.S. ramp curious a kind next, year first wins you on type been call question of from, wins these and a it of i.e. half most you fiscal next a it European to fiscal a ramp in second out XXXX? call had the you quick the couple into or side, the the Mohan, LoRa of this would if mentioned year, pushed half of I’ll So, the consumer the

Mohan Maheswaran

second start then Harsh. in the would I probably. volume one a be And QX real will momentum difficult see we'll in probably to yes. say, half, That's the call ramp the to

Harsh Kumar

then, one. had And you. thank Great, another I

we the products that's are from some – are sort function, going there just for happened I'm for you RF or proximity phones products you market, you else OEMs protection because think that not guys yet? that say Tier or that you are So, hearing for is X do sensing, something quality hasn't there XG a opportunity would Chinese you up it's they do an those that curious, local Chinese on deploying in competition the are even that the export for your and applications. for European gearing of

Mohan Maheswaran

value an guys, these lot value of I understand it's happening don't of [saw opportunity Harsh, of think protection. a yet]. that's the the understand They but don't they

starting in of think a to successful I – educated it's get America on they’re outside lot North haven't China or them Europe. it, and region, especially for been

And regions. deploy phones so, when in start they these to

the for a doesn't that process. that they I protected regulations example, phone, a that so need and and cases phone phones and a are meets learning of – realize some last think they'll a SAR can better-quality that there's well, bit longer little

the go have you back back out out recall, taken put times are like there returns if you lot customers things history, protection then that then a to realize protection protection, and they cost save and and If have and back in when taken have of Semtech this in they're go protection that. to getting

eventually but sensing not it's get for surprise [saw] not in protection put manufacturers will there think. or a will that in we So, proximity to they the us the the put all

Harsh Kumar

Mohan. you, Thank

Operator

from your Khorsand, Please is Hamed question. Financial. question next Our with proceed BWS

Hamed Khorsand

with technology the delay deploying there that, are take a questions, is Hi, in adopting customers the just of is one couple or seeing Tri-Edge, you a longer the is in trials just it? on

Mohan Maheswaran

just no, we have, silicon we're and so show now we some yet. sampling Hamed, it's – and production Well, demonstrations we sampling are we first just the we products have did [indiscernible] now don't trial – at so

have in will QX. We

I These the trials it's and out in now that been time to are going use the test. timing and starting PAMX it because So, testing opportunity have get an data within really Tri-Edge center the on. the is think to pushed system and system customers we I has that such is out think real

I'm some the of up half year. second the in see comfortable, they're sure once we'll ramp So,

Hamed Khorsand

Okay. were you why asking. was quarter QX. That's In last revenue suggesting see that I you might the in

Mohan Maheswaran

Yes, think think sample kind production just in I QX the very I were revenue engineering beyond. some but of ramps and be small, will

Hamed Khorsand

pipeline, is pipeline? the in acceleration that now XX% that China, regarding bad just some my last outside some of outside you're in China, the is of due and was, from to purely And then taking or is of about question China, weakness LoRa talking

Mohan Maheswaran

acceleration Yes, outside I more say would it's China.

metering cases they are very we that We in different early number in so the been more revenue you today. for of – one have, strong China on a significant why China the for are the driver if and early technology of used recall, and used has in is why that's us very in adopters LoRa of reasons they were just, us the used

Europe. coming larger been our to technology particularly significantly late use and bit be roll technology, North and the it's has regions, larger going cases once the value America their out a other occurs that in view, in adopt to understand the companies starts The really but of once – America and really it's to little the and it's

Hamed Khorsand

Okay, thank you.

Operator

Our with your Please is Tristan proceed next question Gerra, Baird. from question.

Tristan Gerra

Hi, good afternoon.

seasonal. So, looking guidance, your bit than better quarter actually January at it's a

down anything a provided you in what in a there revenue it's revenue takes quarter terms it and bit guidance? else though for for even than of a continued all sequentially like driven LoRa puts the ago. is lower rebound the your lower bit So, Is sounds driving guidance by more implied a little

Mohan Maheswaran

No, I comment. think, Tristan, that's a fair

think coming I bit a although and SIP station base our PON the think and still up, tenders to back waiting is business, back that. come going I but on weak up little things still is like

is little QX unknown. depends inventory going the how much usually to is of Samsung And of is it bit on happen much – brings at its where and and the how that end then the a lot quarter side what impacts brings regional kind down year just of are. on of inventory a down So, and QX smartphone

of as wait guidance well. we're not plays are those things of ban we'll continues see say out and main the would kind out. Obviously, Huawei kind the that sure I taken and our So, how that of about we’ve

well pretty positive So, And as be QX next expect beyond but, and things a yes, should we we certainly have QX. going good. after be to few year think I

Tristan Gerra

the that quarter at as Okay. quarter reason but guide time, follow-up, backlog, make that any on seasonality will or the a any you there I this that And visibility know then to and April seasonality, based new different seasonality. ramps there a is normal on outlook current believe program than will your or that than differently track is look will normal make point, at

Mohan Maheswaran

kind a war ban would things related major I business. stuff, the there's there's the uncertainties of The any macro really. good related concerned be are see in trade those. but China environment, going Huawei around stuff I of lot to the still say on. outside don't about Not the positive stuff and reason

Tristan Gerra

thank Great, you.

Operator

your proceed with question next Our Stifel. Please question. Svanberg, from is Tore

Tore Svanberg

Yes, thank you.

quick two Just follow-ups.

networking happening? what closer all, of mean that you where of road? alliance can you the you is First working give for examples some and get maybe the LoRa to maybe LoRa could this on broadband WiFi Could sort down adoption And of elaborate talked about there.

Mohan Maheswaran

things things LoRa Yes, smart the security, are a usually is just of kind joint just WiFi like established covers things. building to that, and like is connectivity a thinking smart white streaming boxes quite boxes those is that occupancy paper the functioning and retail WiFi – of the they Things that alliances enables cases few outlets used there fundamentally, enterprise and there kind like video Internet plenty used a but already out being adding things like things did and higher of of there the for or that. of of spaces lot like bandwidth and types the things, those around lighting, and

in limitations to LoRa were when rather of makes So, WiFi, it range power using which a of to and cases when it there's the consumption comes then lot than use has sense the node. a lot comes end

you LoRa to an WiFi. like IoT makes – of or to a about do think trying for may in if sense where connectivity installation you you like adding So, would or airport lot have at start but already end something versus that power nodes, like an that, to to have want a area you low WiFi

Tore Svanberg

follow-up. my and good Very

lighting You LoRa mentioned devices the in primarily as other or area for to some you're well? ZigBee, is gains and expense in share Z-Wave see starting of the that

Mohan Maheswaran

range The it's say are end the would I board, power really the across with the the of Tore. ZigBee devices. and associated consumption limitations

but question it where more – time range devices that's replace I only it's technology, need a probably like lower that more will will things that so, time, think and need requirements you you take those the then going you have happen. and eventually, of what just it's power that's or And what – to LoRa

Tore Svanberg

thank you. Great,

Operator

is Jaffray. Kumar, proceed question your question. Piper next Please with from Harsh Our

Harsh Kumar

Actually, you. answered. my questions have been Thank

Sandy Harrison

Operator?

Operator

question-and-answer the closing reached turn over will session, and for to the the end call now of remarks. Maheswaran I We have back Mohan

Mohan Maheswaran

data should despite weakness headwinds ban, macro growth uncertainty the IoT, in the center, in the our and the underlying and Huawei the behind closing, of engines ongoing drivers from In and remain secular from we mobile confident geopolitical headwinds strength support markets, all the and that next deliver overall growth to forward double-digit of continued and that, we appreciate Semtech remain us quarter. confident our in balance product geographical, your to enable look market, With fiscal we end year updating Thank you and XXXX. you.

Operator

concludes conference. This today's

time. your your lines for Thank you may at You this participation. disconnect

Semtech (SMTC) 4 Dec 192020 Q3 Earnings call transcript