Q4 2021 Maxlinear Inc Earnings Call

Greetings and welcome to the Max linear incorporated fourth quarter 2021 earnings conference call. At this time all participants are in a listen only mode. A brief question and answer session will follow the formal presentation. If anyone should require operator assistance. During the conference. Please press star zero on your telephone keypad.

As a reminder, this conference is being recorded it is now my pleasure to introduce your host Nicolas Abernathy, Vice President Finance and Investor Relations. Thank you Nicolas you may begin.

Thank you operator, good afternoon, everyone and thank you for joining us on today's conference call to discuss Max Linear's fourth quarter 2021 financial results.

Today's call is being hosted by Dr. <unk>, Dr. Kishore, <unk>, CEO , and Steve Litchfield, Chief Financial Officer, and Chief Corporate strategy Officer.

After our prepared remarks comments, we will take questions. Our comments today include forward looking statements within the meaning of applicable securities laws, including statements relating to our guidance for first quarter 2022 revenue revenue growth expectations in our principal target markets GAAP and non-GAAP gross margin.

GAAP and non-GAAP operating expenses effective tax rate and interest and other expense. In addition, we will make forward looking statements relating to trends opportunities and uncertainties in various product and geographic markets, including without limitation statements concerning opportunities arising from our broadband.

And wireless infrastructure and connectivity markets and opportunities for improved revenues across our target markets.

These forward looking statements involve.

Substantial risks and uncertainties, including risks arising from competition.

Ply constraints facing the semiconductor industry global trade and export restrictions the impact of the COVID-19 pandemic, our dependence on a limited number of customers average selling price trends and risks that our markets and growth opportunities may not develop as we currently expect and then our assumptions concerning these opportunities.

May prove incorrect.

More information on these and other risks are outlined in the risk factors section of our recent SEC filings, including our Form 10-K for the year ended December 31st 2021, which was filed today.

Any forward looking statements are made as of today and Max linear has no obligation to update or revise any forward looking statements in the fourth quarter 2021 earnings release is available in the Investor Relations section of our website at Max linear Dot com.

In addition, we report certain historical financial metrics, including net revenues gross margins operating expenses income or loss from operations interest and other expense income taxes, net income or loss and net income or loss per share on both a GAAP and non-GAAP basis.

We encourage investors to review the detailed reconciliation of our GAAP and non-GAAP presentations in the press release available on our website we.

We do not provide a reconciliation of non-GAAP guidance for future periods because of the inherent uncertainty associated with our ability to project certain future charges, including stock based compensation and its associated tax effects.

non-GAAP financial measures discussed today do not replace the presentation of Max Linear's GAAP financial results. We are providing this information to enable investors to perform more meaningful comparisons of our operating results in a manner similar to management's analysis of our business. Lastly, this call is also being webcast.

First and a replay will be available on our website for two weeks and now let me turn the call over to Kishore <unk> CEO of Max linear.

Nick and good afternoon, everyone. Our Q4 revenue was $247.9 million up 8% sequentially and 20, 27% year on year with strong contributions from our connectivity and infrastructure end markets, most notably Wifi and Ethernet product categories and breakout performance.

And grew in excess of 40% quarter on quarter.

We exited Q4 on a $100 million annualized Wifi revenue run rate and expect to build upon this momentum throughout 2022.

In infrastructure <unk> network build outs are driving relative strength in Pfizer novartis axes, RF transceiver ramp along with strong demand for wireless backhaul modem and RF transceivers.

Our growth in Q4, and 2021 was driven by strong secular growth and company specific drivers, including silicon content increases market share gains and solid traction with our new products across all our end markets.

This momentum gives us strong confidence in our ability to drive solid growth into 2022.

In Q4, 2021 non-GAAP gross margin was 61.7% and our non-GAAP operating margin hit a five year high of 31%.

Our Q4 end market revenue consisted of broadband access at 52% connectivity at 21% infrastructure at 13% and industrial multi market and flipped at 14% of overall revenues.

Now turning to some of the Q4 business highlights and market fundamentals within broadband and connectivity space show robust growth trends as carrier and cable operators increase the capital expenses to expand network infrastructure in home CPE equipment capabilities to support the proliferation of bandwidth intensive consumer.

Applications and services.

Well, but it isn't cat is are in the early stages of a multiyear network upgrade cycle, which is validated by the recent earnings commentaries on capital expense increases.

We also expect the U S federal government initiatives, such as the rural digital opportunity fund to stimulate additional demand for delivering fixed broadband services to millions of underserved homes.

We are well positioned to grow solidly and to outperform broadband connectivity market growth rates through share gains content increases and new product ramps.

Our industry, leading suite of platform level solutions, including our U R X family of Gateway S. Ocs and network processors for supporting 10 gigabit per second van access Ethernet pawn or coaxial cable and our Wifi six six E and next generation Wifi seven in home wireless distribution products.

Recently, our latest Wifi Bp's extended Cds to chipset was selected by the Wifi Airlines as its access point Testbed device, but it's Wi Fi six relates to certification.

In 2022, we expect early stage fiber ramps of new and existing design wins to more than double our share in the large fiber to the home market than we had historically underpenetrated.

Additionally, we have several Wi Fi six design wins outside of our core operator, gateway, which will drive solid connectivity growth in the second half of 'twenty to 'twenty two.

Moving to infrastructure markets in 2020 , one our revenues exceeded $120 million in fighting wireless axis Q4 marks the fourth consecutive quarter of 20% plus revenue growth, which is primarily driven by five D. RF transceiver shipments to North America.

Also in wireless backhaul fiber network build outs are driving strong secular growth tailwind for our microwave and millimeter wave band.

Backhaul transport RF, Transceivers and modem deployment.

Our microwave RF transceivers or the industry's only integrated backhaul solutions to support multi gigabit links using channel aggregation and we are rapidly replacing legacy discrete RF solutions.

Microwave RF transceiver revenues doubled in 2021 on a year on year basis, and we expect them to double again in 'twenty, what do you do.

In the optical high speed data center interconnect market be shipped modest volumes during Q4 with a more meaningful future Ram dependent on the availability of better federal components to build full system solutions.

The lack of visibility on supply in the near to midterm, we expect subdued contributions from our border gig Pam four DSP products in the first half of 'twenty to 'twenty two.

Despite the continuing delays to the optical Ram we have high confidence in our long term success.

400 gigabit per second Pam four market is still in its infancy.

Meanwhile, we have new customers designing in our 16 nanometer owner gig Pam four solution in parallel with our next generation five nanometer Cmos illusion.

In the optical data center market and Tony when you wanted to we have expanded our portfolio to include.

Gee I as lead time is in support of active electrical cables. It also bullish on our position in the 800 gig bamboo D. S. P C's with our industry, leading first five nanometer Cmos Keystone product families.

In summary, our company specific growth drivers, which include market share gains new markets and product cycles and increase silicon content per platform are fueling growth in our target markets.

These company specific growth catalysts are prevalent across both new and existing customers and all of our end markets. Our continued focus on developing new and disruptive technologies like ours are high valued end markets should enable us to outperform semiconductor industry growth rates over the long term also.

With that let me turn the call over to Mr. Steve Litchfield, Our Chief Financial Officer, and Chief corporate strategy opposite.

Thanks Kishore.

I'll first review, our Q4 2021 results and then further discuss our outlook for Q1 2022.

Total revenue for the fourth quarter was $247 9 million up 8% versus Q3 and up 27% year over year.

Broadband revenue in Q4 was in line with our outlook at $129 million up 3% versus Q3, and 14% higher year over year, driven by solid demand across our full portfolio of gateway solutions, including cable fiber hybrid DSL and fixed wireless access our connectivity and <unk>.

Market had a breakthrough quarter in Q3 with a revenue of $53 million.

Which was up 39% quarter over quarter, and 53% year over year, driven mostly by strength in Wi Fi and Ethernet or.

Our infrastructure end market had a solid Q4 with revenue of $32 million up 10% versus the prior quarter and up nearly 80% year over year, largely driven by strengthened <unk> wireless access and wireless backhaul.

Lastly, our industrial and multi market revenue declined 7% to $34 million in Q4, but increased by 16% year over year coming off a robust performance in the prior period.

GAAP and non-GAAP gross margin for the fourth quarter were approximately 57, 2% and 61, 7% of revenue.

non-GAAP gross margin was up 40 basis points versus the previous quarter, driven by product mix and continued operational efficiencies the delta between GAAP and non-GAAP gross margins in the fourth quarter was primarily driven by.

By $10 8 million of acquisition related intangible asset amortization.

Fourth quarter GAAP operating expenses were $112 4 million up sequentially and above the high end of our $105 million to $109 million guidance range due to higher than expected stock based compensation and performance based equity accruals driven by strong fundamentals and stock performance during FY 'twenty.

One.

GAAP operating expenses included stock based compensation and performance based equity accruals of $28 4 million combined amortization of purchase intangible assets of $5 9 million and excluded 2 million of R&D costs funded by outside parties.

non-GAAP operating expenses were $75 9 million up $1 4 million versus Q3 and were slightly above the midpoint of guidance range of $73 million to $77 million.

non-GAAP operating margin for Q4, 2021 of 31% was up 210 basis points sequentially and reached the highest level since Q2 of FY 2016, when operating income was less than half of today's levels.

Looking into FY 'twenty two we believe we can continue to drive strong strong operating leverage and operating margins above our Q4 exit levels.

GAAP interest and other expense during the quarter was <unk> 9 million and non-GAAP interest and other expense was $2 8 million, which excluded a $1 $9 million nonrecurring gain related to the sale of a legacy asset.

Cash flow generated from operating activities in the fourth quarter of 2021 was $16 million.

In total for 2021, we generated 168 2 million of operating cash flow.

During Q4, we made a $20 million prepayment against our long term debt position and we have since made an additional $20 million debt prepayment during the month of January .

Within the quarter, we also purchased $15 $4 million worth of stock and continue to be active with our buyback program and we would expect to see some real similar levels spent during Q1.

We expected Q4 of 2021 with $132 million in cash cash equivalents and restricted cash.

Our days sales outstanding for the fourth quarter was approximately 44 days up slightly from Q3 levels due to shipment linearity. Our inventory turns were three three times down slightly from the previous quarter.

With that let's turn to our guidance for Q1 2022.

We currently expect revenue in the first quarter of 2022 to be approximately 255 million to $265 million up approximately 5% at the midpoint of the range versus the previous quarter and up approximately 24% versus the prior year.

While we continue to expect supply chain tightness to continue throughout FY 'twenty. Two we are expecting to see incremental improvements to better support the success of our customers.

Looking at Q1 by end market, we expect broadband revenue to be up quarter over quarter, driven by growth in gateway SFC for both cable and fiber applications connect.

Connectivity is expected to be up versus Q4, driven by continued strength in our Wi Fi end market.

We expect infrastructure revenue to be up in Q1 is wireless backhaul and <unk> Z wireless access shipments continued to ramp.

Lastly, we expect our industrial multi market revenue to be flat quarter over quarter.

We expect first quarter GAAP gross profit margin to be a prop approximately 57% to 59% and non-GAAP gross profit margin to be between 61 and 63% of revenue.

As a reminder, our gross profit margin percentage forecast can vary within a quarter, depending on product mix and other factors.

We expect Q1, 2022, GAAP operating expenses to be up quarter on quarter to a range of $108 million to $114 million.

We expect Q1 2022, non-GAAP operating expenses to be above Q4 levels within a range of 76 million to $82 million we.

We expect our GAAP tax rate to be in the range of 15% to 20% and our non-GAAP tax rate of 6%.

We expect GAAP and non-GAAP interest and other expense to be roughly $2 7 million.

In closing, we delivered a strong fundamental performance in FY 'twenty, one and made significant progress towards our long term ambition of delivering sustainable and profitable growth at a pace faster than our semiconductor peer group, we continue to target and invest aggressively in key markets with the goal.

We are expanding our total addressable market by delivering innovative new products, while also increasing our market share position by winning new designs and expanding our silicon content per platform.

Furthermore, our end markets are poised to grow strongly over the long term driven by proliferation of global networking and ever increasing consumer dependency unreliable and robust connectivity.

Finally, we remain steadfast in our goal of garnering significant value for our innovative and differentiated technology portfolio.

Looking into FY 'twenty, two we anticipate continued revenue expansion and operating leverage to drive margin accretion and ultimately create value for shareholders.

With that I'd like to open up the call for questions operator.

Thank you we will now be conducting a question and answer session. If you'd like to ask a question. Please press star one on your telephone keypad, a confirmation tone will indicate that your line is in the question queue.

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One moment, please while we poll for questions.

Yeah.

Thank you. Our first question comes from Tories Farnborough with Stifel. Please proceed with your question.

Yes. Thank you.

Great relations on the strong results.

First question for you Kishore can sure. When you are talking about Wi Fi you talked about some design wins ramping second half of the year, perhaps outside of your traditional sort of cable markets could you just elaborate a little bit on that and is this really the result of trying to diversify that business beyond traditional care.

Yeah.

Oh hi.

Hi, Dori. Thank you and yes, you read that absolutely right. You know we have one of the most valuable assets in Wifi technology across the world.

And it would be really in our interest to expand and address the entire market that's available for Wifi.

And so we have been trying to penetrate markets outside of the operator platforms and we've had very very good success and we're gathering momentum on that and these are on target to start shipping in the second half of our 2022 and and I am you know outside of the supply constraints, we are facing we would be.

We would be able to even ship a lot more product than we are actually.

Sort of are trending in a positive direction. Our commentary here. So you know one of the things I do want to mention is that Wi Fi six E and six are the premium access points illusions and you must have seen the most recent announcement of the Wi Fi Alliance with one of the three platforms to be selected as a testbed so that really lends a lot.

Credibility and with the proliferation of our gateway to our interoperability.

The platform is also very strong so we're very pleased with the way our connectivity portfolio is evolving.

Great. Thank you for that and as my follow up for you, Steve Steve last quarter. I know you entered the quarter with a pretty strong backlog position could you just.

Talk a little bit about how the visibility is now going into the March quarter. Please.

Yes, sure absolutely I mean, the actually we're very excited about the bookings I mean, they are continue to be very strong backlog. We've got solid through through you know kind of at the beginning of 2023, and so you know we've never been positioned better with regard to visibility.

On the backlog.

Great. Thank you guys and congrats again.

Great. Thanks Jordan.

Thank you. Our next question is from Quinn Bolton with Needham <unk> Company. Please proceed with your question.

Hey, guys. Congratulations on the nice results I guess, the first question Wi Fi you you guys talked about hitting the 25 million dollar level in Q4 hundred million dollars annualized it sounds like Wi Fi should grow sequentially in March and I know, you're not giving guidance, but you talked about these additional sort of non carrier plan.

For him is beginning to ramp in the second half, which sounds like there is additional growth that layers on it. So I guess I'm just sort of thinking about why five for the year. It feels like you're on pace to do well north of 100 million am I kind of reading the tea leaves right on that.

So yeah, absolutely. So we are excited we've seen a lot of good traction.

We've talked a lot about that attach rate, we're still I would say you know, we're not yet closer to that 100% point on the attach rates. So theres still a lot of upside coming from that we've got our fiber platforms that are just beginning to ramp. So we will see a lot of growth from that this year and the third party that we mentioned earlier so all of that combined yeah. It.

Does feel kind of.

Feel very good going into the year, there will be north of 100, and then I think we were already starting to look out into 2023, and I think you can see the potential of being up north of 202023.

Great and second question, just I know you've gotten this question from investors are kind of across the semiconductor industry to look into 2022.

How much of your growth in 'twenty. Two do you think comes from your ability to pass along higher input costs in the form of higher asps versus how much of the growth is coming from units.

So queen that's a very complicated question to answer right. So obviously, we you know.

It's a very very competitive landscape, we are in and our satellite is a very important element of it. So we try to be strategic about what we can how much of that cost increases. We're incurring we can pass where it does not but ultimately that's not a sustainable strategy for growth right. The growth is going to come through market share expansion in new markets.

Product cycles, and quantity increases right and for US the focus has been about connectivity connectivity connectivity infrastructure to grow and our new markets in broadband and fiber is a huge area of focus for us and we're having very good succes as we speak here. So I think that ultimately when you talk about.

Revenue increases are on ESP expansions of our strength comes from our product offering and the value we create.

More importantly, the question that really buried underneath is what happens after capacity is restored and you aren't seeing supplier cost right as a company. We've always had a very very long term strategic view, we were upfront of these shortages at least in the beginning of the shortages, where we have deployed engineering resources are heavily actually been spending a lot of money.

In trying to find robust long term sustainable supplier relationships through diversifying our production base and I think ultimately the drive cost excellence and sustainable profitability as well. So I think the improvements you're seeing on our side is very unique it very clearly the product portfolio and I think.

Because.

We have an exciting transformation that's happened in the last two three years and you are seeing the benefit of that.

Army passing some costs through of course, we have to ensure our customers doing the same it's part of life right. So yes, I hope I addressed your question comprehensively.

Comprehensively.

Yeah, No I understand the strategy last quick one for Steve It looks like you bought back $15 million of stock in the December quarter looking for something similar again in March are you guys sort of thinking now that the buybacks are going to become more of a you know steady our shareholder return.

Program or are you just being opportunistic here.

Oh well.

So I mean, the board kind of prove this back last March and I think we've been active in the market over the last couple of quarters. So things have picked up there I think as far as returning cash to shareholders. We will continue to pay down debt. We will continue to buyback the stock just to offset the dilution and then ultimately we remain.

Very interested in doing more acquisitions on a go forward basis.

Yes. Thank you.

Yeah.

Yeah.

Thank you. Our next question comes from David Williams with the Benchmark Company. Please proceed with your question.

Hey, good afternoon. Thanks for let me ask a question.

First it sounds like the the <unk> build out or maybe that the fact that your wireless is beginning to kind of break lose can you talk maybe about the puts and takes there and how this business ramps as you see over the next maybe three to four quarters.

Yes.

Yeah, David I mean I'll start.

Yeah, I mean, we're very excited we've seen a lot of really good progress saw a nice pickup in Q4 from our <unk>.

Wireless access expect that to follow through this year.

These five markets are slowly evolving so they've probably taken a little bit longer, but we're seeing really.

Good progress at this point I think we've got some of the earlier dynamics.

Around China have kind of are behind us at this point and so we're starting to see some good traction we got the four by four ramping eight by eight coming.

As far as contributing to revenues on a go forward basis, So and then our <unk> solutions or something else that are also contributing as well.

Yeah.

And then maybe just from a on the gross margin what levers do you have that are still available to you. Obviously pricing is helping a bit I guess, how sustainable are the margins and how do you think about the cadence of that progression as we head through this year is this sustainable at these levels or will there be some maybe get back as we start thinking about pricing.

Kind of getting back is a is the supply chain normalizes a bit.

Yeah.

Yes, so David I mean, so we've talked a lot about this I mean going back over a year or so ago. I mean, we've been working diligently to get our costs down and really move these gross margins up I mean, a big contributor here is just the product mix. So we've got a big growth driver coming from infrastructure and a couple of other of our products that are contributing.

And those margins up and then and then of course I always working for operational efficiencies Kishore mentioned, a little bit earlier about getting you know new qualifications, new vendors up and running so we've got to keep doing that I think that continues to pay rewards out the rest of this year and next year and as we continue to work.

Towards that kind of mid 60% number which we think is our long term goal.

Great. Thanks again appreciate it sure.

Sure David.

Thank you. Our next question comes from Ananda Baruah with loop capital. Please proceed with your question.

Hey, guys. Good afternoon, congrats on the stratification of the strong results.

For taking the question a couple if I could.

Anyway can you just give us some context around how your various businesses.

Which one do you think will be the key it contributing to the revenue growth. This year. The most significant contributing to the revenue growth it sounds like it sounds like Wifi for sure but will it be some of the some of the key other ones.

Yeah, Yeah sure Ananda it's good to talk to you absolutely I mean, the connectivity really saw a nice breakout performance last quarter. So that's going to be a big driver as Wi Fi continues to grow I mean from a dollar standpoint, that's probably a big one Ethernet is something else. That's really contributed a nice I mean for that matter. Our moca G. HN are all growing right now and expect to grow this.

Year and next year, our broadband is doing extremely well infrastructure is doing extremely well. So it's really good to see the contribution of some of the investments that we've made over the year is starting to pay off on the infrastructure front.

And then industrial Multimarket, I mean, it's kind of a even on that front I mean, I'd say that we can see kind of mid single digit growth rates. This year. So.

Thank all of our end markets are doing very well in some of these investments are starting to really pay off.

Yeah, that's awesome to hear and just a quick follow up any any context, new contexts to share on our 800 G. Five nanometer conversations that you guys have to go not only you have silicon at maybe all of that out.

The Big U S guys right now and that's it for me. Thanks.

So thanks.

Let me take the question.

So the H energy.

Sampled our shape almost a year ago, the the finance or Keystone product family.

The first five nanometer solution for the data centers in the in the in what they consider a the next next transformation in place for data bandwidth Burb, partly right.

100 gigabit per lane and these design different data center guys are working on a different cadence and so that's going to evolve over the next two to three years. So we are getting design. These into these into these modules working with the data center folks. So I don't think it delivers revenue for it. It's like please we have to we have to capture.

Place for the future of the roadmap reverting back to where we started this journey the optical data center, we would try to leapfrog what was the ramping marketing 200 gig and move to 400 gigabit market.

And no I'm being new to the market, even though we were the first ones to get there we've had challenges getting oh, our share of the market early on owing to income and strength in the in the data Center places and then even though we are getting qualified.

We went into supply chain constraints that has become as you know in my script, we talked about dependents and if we'll get solution that is subdued. However, if you look at the breadth of the portfolio in the meantime has really expanded to include Ti as are we.

Could you be wanted we've always had we now we expanded to doing some kind of re timers supporting active electrical cables and so on to expand the addressable market. So we're really feeling very very bullish about the long term prospects of our data center initiatives.

You know just like <unk> is right it seems that as infrastructure markets take a little longer than we would all like but we are feeling very excited about where we are.

That's great context. Thanks.

Thanks, Kishore I appreciate it.

Thanks Ananda.

Thank you Heather.

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Our next question comes from Christopher Roland with Susquehanna. Please proceed with your question.

Hey, guys. Thanks for the question I wanted to dig in a little bit more on the supply chain commentary and any constraints that you guys had there it sounded like there were some companion components for Pam four that might've been constrained.

Maybe talk about that.

And how those may come loose, but also where you're seeing some other.

Constraints as well.

Yes, Chris.

So on the on the optical side, yes.

I guess I would say in this case, our customers are seeing those constraints and so its other components in their system that is limiting them.

You know kind of broader than that I mean, we've definitely see other situations as many have seen throughout the industry, we're seeing where peers arent able to deliver you know whether it's analog components or.

I mean, there's a variety of shortages out there.

On the competitive landscape.

From a supply standpoint side. So still you know we expect to still be constrained on the wafer side substrates are still very challenging out there and we're working diligently to get other vendors up and and other packaging.

Completed in order to get more product out and I think we've been really effective for that I mean, we've continued to see really nice increases over the last probably nine months are much higher than what those original expectations, our engineering and our operations team have done a fabulous job. So we've got to keep doing that and but I think things are going to continue to show it.

<unk> throughout this year.

Having said that we still have.

Gaps between what our customers need and want versus what we're able to supply.

And you know, while we get slow relief video and TV catch up to the full full scale demand, whether it's connectivity our infrastructure, which are two big growth vectors for us.

And you know in terms of you know what we can really do it based on our design wins and content degrees versus what the reality on the ground and so I think this is going to have battled through 2020 do but you know are we feel very good that compared to 2021 via the company will grow pretty substantively.

Thanks, Kishore and then my second question is around both the Wi Fi and Ethernet opportunities here. So I think Steve you said that the attach rate for Wi Fi wasn't quite 100% I I don't know if you wanted to hazard a guess for us on what that might be.

Also the Ethernet attach here as well and then just overall you know coming off of 40% year.

Would you like to throw out maybe a expected growth range for for that product for for 'twenty, two as well. Thanks.

So yes, Chris I mean look we're I do think it's still early days I mean, maybe were getting about you know probably just above half of the <unk> that were shipping are shipping with our our Wi Fi products. So I think we definitely got some more upside there.

Frankly really excited about the fiber PON opportunity right and we have just as much attach there I mean, we've talked about fiber and PON being less than $10 million of our revenue last year. So now going into this year, you're talking tens of millions of dollars coming from fiber and Pan and I do think it's pretty pretty early days on that front.

And so so that's exciting and then earlier, we talked about Wi Fi, even starting to ship on a standalone basis as well so that'll start to contribute more in the second half of this year and into 'twenty three of course so.

So yes, I mean really excited we've seen that business double and hoping to see another doubling in 2023, so exciting times on Wi Fi front end and I think you'll hear more about our Ethernet solutions as well because Ethernet wallets and attach product we have a lot of opportunities with two five and five gig.

Going beyond those existing gateways that we're shipping into.

Thanks, Steve.

Thanks.

Thank you. Our next question comes from Richard Shannon with Craig Hallum. Please proceed with your question.

Well, thanks, guys for taking my questions maybe the first one here on Wi Fi a follow up from your prepared comments about Wi Fi outside of your base markets here Kishore, maybe if you can discuss a little bit about the kind of the approach to the markets.

You're winning here is this more of just kind of a socket by socket win or do you have to deal with the kind of bundling aspects as you go through that if you can discuss also the markets and the Tam opportunity there and then how much of your overall Wi Fi growth Youre expecting from these new markets. This year would be great. Thank you.

I appreciate that that's a lot of questions. There. So let me try to just keep it simple are in terms of markets. You. All know is a big market.

Clearly because of the handset market is right we will never be he's my my thesis right.

And then but today what do we have we have one of the premier access points illusion. The latest generation in fact, even in Wi Fi six.

We have a solution that is double the bandwidth of anybody else's Wi Fi six because it was designed to support access point so.

And it turns out that.

So we had one of the only solution that can do that with Wi Fi six products. So we are winning them socket by socket and why do I say that because outside of the operator, we don't have the benefit of the bundling of solutions right, operator, gateways, and so performance matters and and and.

<unk> performed performance. So we have the performance, but the category of products. We are now sort of you know.

We are winning in the marketplace.

And one of the missing pieces in our portfolio right now he's but these markets are processor family, which is when you can talk about bundling opportunities.

However, we sell our Mifi. We also have a unique product with a torn up gigabit Ethernet Phy and we also have a quad Ethernet phy that as opposed to 10 gigabit rate. So that's very very really really valuable portfolio to have our routers.

Primary victories on the router router side and and that's a huge opportunity for us in front of us.

And longer term.

Longer term I mean, there's a I think I mean did about adding a bigger portfolio play bid processes and so on but that's going to take a little bit <unk> to develop and looking forward. There is a next generation Wifi, seven which had a very very competitive product that brings in all the technologies debated and debated and our integrated platform and I think there also will be meeting quite.

Substantially.

Okay, well look forward to hearing more about that rest of the year I guess my follow up my follow on question. Your second question design that on the fiber market here you talked about a.

Kind of a flagship win here and wanted to get the update on the status there and then any follow on opportunities.

Do you want to characterize the comments you've made today and in the past I think about kind of tens of millions of dollars of fiber pawn related revenues any way you can help us think through that a little bit more that'd be great. Thanks.

Yeah, So look with regard to fiber and Pan I mean that business is really just beginning to ramp it is still pretty early days, but that being said we've shipped into some of these customers over the years just in smaller volumes starting to ramp. This year. So we've got several customers are already ramping in the first half of the year.

We've talked about a large north American carrier that will start to ramp this year as well.

That's on track and very excited to see that grow I think frankly, Richard I mean, this is kind of early days.

We have a lot you're seeing and hearing a lot more about these carriers rolling out more fiber around the world moving to 10 gig.

That's exciting for us because these are all new platforms.

That we're winning and we're winning with similar content as we have in cable right. I mean, we're seeing cable content up in the $30 range now you've also got that.

Level or similar opportunity with the fiber and pan guys as well to get that 30, plus dollars of content. So we can get all of those chips in those same gateway opportunity. So.

Early days I I've said several times that we see this is hundreds of millions of dollars over the next few years and I would reiterate that.

Okay, great. Thank you guys.

Thanks Richard.

Thank you there are no further questions at this time I would like to turn the floor back over to Kishore <unk> syndrome, Puma for any closing comments.

Thank you operator, we will be participating at the falling upcoming conferences. During Q1, the Susquehanna 11th annual Technology Conference on March 3rd and 34th annual Roth Conference on March the deemed with that being said, we thank you all for joining us today, and we look forward to reporting on our progress to you next quarter.

Okay.

This concludes today's conference you may disconnect your lines at this time. Thank you for your participation.