Q3 2024 Semtech Corp Earnings Call

December 6, 2023

Good day and thank you for standing by welcome to some Tech Corporation's third quarter 'twenty 'twenty four earnings conference call. At this time, all participants are in a listen only mode.

Good day, and thank you for standing by.

After management remarks, there'll be a question and answer session. Please be advised that today's conference is being recorded I would now like to hand, the conference over to Mark when executive Vice President and Chief Financial Officer. Thank you. Sir. Please go ahead.

Do some tech Corporation's third quarter 2024 earnings conference call. At this time, all participants are in a listen only mode. After management remarks, there'll be a question and answer session. Please be advised that today's conference is being recorded.

Thank you operator.

I'd like to hand, the conference over to Mark Blinn, Executive Vice President and Chief Financial Officer. Thank you. Sir. Please go ahead.

Good day, everyone and welcome to all those joining todays call, including analysts investors and my fellow employees I'm, Mark Lynn Executive Vice President and Chief Financial Officer, and I'm joined today.

Thank you operator, good day, everyone and welcome to all those joining todays call, including analyst investors I'm, a fellow employees I'm, Mark Lynn Executive Vice President and Chief Financial Officer, and I'm joined today, Pickle, President and Chief Executive Officer.

<unk>, President and Chief Executive Officer.

Today after market close we released our unaudited results for the third quarter of fiscal year, 'twenty 'twenty, four which are posted to our investor website at investors thought some tech dot com.

Today after market close we released our unaudited results for the third quarter of fiscal year, 2024, which are posted to our investor website at investors about some tech dot com.

Supplemental earnings materials, including net sales data by end market reportable segment and geography.

What was the share count table bucking potential share issuances from our convertible notes at various stock prices are also posted to our investor website.

Supplemental earnings materials, including net sales data by end market reportable segment, and geography, as well as the share count table, reflecting potential share issuances from our convertible notes at various stock prices are also posted to our investor website.

Unless otherwise noted all income statement related financial measures will be non-GAAP.

Yes.

A discussion of why the company considers such non-GAAP financial measures useful along with reconciliations of such non-GAAP measures to the most comparable GAAP financial metrics are included in today's press release.

Unless otherwise noted all income statement related financial measures will be non-GAAP other than net sales.

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

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

These statements.

For a more detailed discussion of these risks and uncertainties. Please review the Safe Harbor statement included in today's press release and in the risk factors section of our most recent periodic report filed with the Securities and Exchange Commission.

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

As a reminder comments made on today's call are current only as of today and center undertakes no obligation to update the information from this call.

With that I will turn the call over to Paul to discuss our business and end markets. Thank you Mark.

<unk> or circumstances change.

<unk> Q3 financial performance generally met my expectations with net sales slightly above the midpoint of guidance.

With that I will turn the call over to Paul to discuss our business and end markets. Thank you Mark.

<unk> Q3 financial performance generally met my expectations with net sales slightly above the midpoint of guidance.

Provide a bit more color on end market performance, which we believe improves understanding and comparability of our business before turning the call back to <unk>.

I'll provide a bit more color on end market performance, which we believe improves understanding and comparability of our business before turning the call back to Mark.

Infrastructure net sales were $43 2 million a sequential increase of 2%.

Hyperscale data center applications benefited from continued momentum of AI, driven applications and grew both sequentially and year over year.

Infrastructure net sales were $43 2 million a sequential increase of 2%.

Hyperscale data center applications benefited from continued momentum of AI, driven applications and grew both sequentially and year over year.

We recorded growth in general compute data center applications as well, we had record shipments and 200 gig 400 gig and 800 gig applications with our tri edge and fiber edge products, having been well received in data centers around the world.

Net sales for other products in the infrastructure end market, including passive optical network wireless and infrastructure focus transient voltage suppression faced a headwind from elevated channel inventories, though P. O S for each of these products grew sequentially.

As stated previously.

PON tenders are expected in our fiscal fourth quarter and we have seen some early channel poles in anticipation of this timing.

As stated previously.

PON tenders are expected in our fiscal fourth quarter and we have seen some early channel poles in anticipation of this timing.

We believe we continue to lead the pawn space.

Last March we announced the world's first 50 gig PON chipset, which enables multi gigabit broadband services for multi tenant locations and we will drive new use cases for the PON market, including enterprise applications for small business needs.

We believe we continue to lead the pawn space.

Last March we announced the world's first 50 gig PON chipset, which enables multi gigabit broadband services for multi tenant locations and will drive new use cases for the PON market, including enterprise applications for small business needs.

This chipset is currently sampling with module vendors and system integrators with positive feedback. We have also started sampling 1.6, terabyte and linear plug able optics applications at optical module vendors and system integrators with early success.

This chipset is currently sampling with module vendors and system integrators with positive feedback.

We have also started sampling 1.6, terabyte and linear plug a bull optics applications at optical module vendors and system integrators with early success.

We believe our technology solutions have meaningful advantage in AI applications, offering lower cost lower power and lower latency net sales from these leading edge applications are expected to begin in the second half of calendar year 2024.

On the automotive front, while net sales are currently small we believe we are making inroads with the next generation Ethernet protection devices.

Adoption of automotive Ethernet continues to accelerate and our leading products in this space are positioning us for future growth.

For the fourth quarter, we expect net sales from the infrastructure end market to be flat slightly down as the market further digest channel inventory.

Adoption of automotive Ethernet continues to accelerate and our leading products in this space are positioning us for future growth.

For the fourth quarter, we expect net sales from the infrastructure end market to be flat to slightly down as the market further digest channel inventory.

High end consumer net sales were $37 6 million, a sequential increase of 10% benefiting from seasonality and TBS products, primarily directed at smartphone applications sales from these TBS products increased both sequentially and year over year with corresponding increases in Pos strength in the quarter was driven by measurable.

High end consumer net sales were $37 6 million, a sequential increase of 10% benefiting from seasonality and TBS products, primarily directed at smartphone applications.

From these TBS products increased both sequentially and year over year with corresponding increases in Pos strength in the quarter was driven by measurably greater protection content and current generation products at a leading north American smartphone manufacturer compared to prior generations.

Greater protection content and current generation products at a leading north American smartphone manufacturer compared to prior generations.

Design wins also grew 10% sequentially for handheld devices and Wearables further validating our recent innovations in this space.

Sales from proximity sensing products declined slightly on a sequential basis, but grew year over year, while encouragingly Pos grew on both a sequential and year over year basis.

Our per se sensing solution provides capacitive touch and user sensing capabilities for wearables per se sensors improve the user experience by providing automated functionality and rapid response interactions such as smart assistant activation noise cancellation control and media player management.

Our per se sensors also provide the industry's best performance of Minerva minimizing end users' exposure to RF energy. This allows equipment manufacturers to achieve compliance with specific absorption rate or SAR regulations, while maintaining optimal signal connectivity.

Well per se is well known in the smartphone space efforts to reduce our have opened opportunities in design ins for applications, including notebook computers tablets and wearables for the fourth quarter. We expect net sales from the high end consumer market to be down due to the aforementioned seasonality and channel inventory.

Justin.

Industrial net sales were $120 2 million down 26% sequentially, but within expectations with the bulk of decrease in the ISP modules business <unk> delivers product leadership and low power wide area and broadband applications and will continue to leverage these areas to return.

Justin.

Industrial net sales were $122 million down 26% sequentially, but within expectations with the bulk of the decrease in the ISP modules business <unk> delivers product leadership and low power wide area and broadband applications and will continue to leverage these areas to returns.

The business to growth.

Iot connectivity services reported net sales of $24 2 million up one 4% sequentially, highlighting the stickiness and relative stability of this recurring revenue stream.

Business to growth.

Iot connectivity services reported net sales of $24 2 million up one 4% sequentially, highlighting the stickiness and relative stability of this recurring revenue stream.

Within Air Vantage Smart connectivity, we continue to see growth in our advanced service lines.

Which offers global access through a multi UMC multi profile single Sim solution.

Within the air Vantage Smart connectivity, we continue to see growth in our advanced service lines.

Our carrier plus offering which simplifies the regional deployments with multiple tier one carriers is showing growth, particularly in Australia and New Zealand. These growth areas are partially offset by the sunsetting of legacy technologies, but nets to stable sales.

Which offers global access through a multi UMC multi profile single <unk> solution.

Net sales of Lora enabled industrial products declined sequentially, but Pos and bookings increased providing some indication of market recovery.

Connected gateways increased 3% sequentially and we are encouraged by substantive increases in Pos for end node products adoption of Lora based solutions in the utility space gained further traction in Q3 with multiple European based utilities announcing rfps with a requirement for our Lora solution.

We are also integrating lora into custom sfc's for a customer which has expanded opportunities in hearing aid applications, returning to our hardware business and expanding on the regulatory environment I discussed in our last quarter's earnings call.

We are also integrating lora and <unk> for a customer which has expanded opportunities in hearing aid applications, returning to our hardware business and expanding on the regulatory environment I discussed in our last quarter's earnings call.

As the largest north American module supplier of <unk> is definitely seeing a meaningful share shift and pipeline from our competitors to us and pipeline is translating to design wins.

Customers in this market have varying degrees of risk tolerance, most sensitive as critical infrastructure, such as such as industrialized laptops used by first responders and cellular routers used by utilities.

We are now benefiting from the next wave of concern with applications that involve payments or personal identifiable information.

Point of sale devices are a Prime example, where there was perhaps a hyperfocus on costs for point of sale applications. The security of some tech as a north American supplier has resulted in design wins that translates to revenue in the second half of next year.

We are now benefiting from the next wave of concern with applications that involve payments or personal identifiable information.

Point of sale devices are a Prime example, where there was perhaps a hyper focus on cost for point of sale applications. The security of <unk> as a north American supplier has resulted in design wins that translates to revenue in the second half of next year.

Our near term headwind for our router business is government spending constraints under the current federal budget situation with traditional end of year public sector spend lower than trend.

For the fourth quarter, we expect industrial net sales to be flat to slightly down with continued inventory digestion and the aforementioned public sector headwinds, but stable net sales from our managed connectivity offerings.

Now I'll turn the call back over to Mark.

Thank you Paul.

Turning to our Q3 results recorded net sales of $209 million slightly above the midpoint of our guidance.

Now I'll turn the call back over to Mark.

Thank you Paul.

Paul discussed end market net sales performance with infrastructure up 2% sequentially.

Turning to our Q3 results recorded net sales of $209 million slightly above the midpoint of our guidance.

High end consumer up 10% sequentially and industrial down 26% sequentially.

Paul discussed end market net sales performance with infrastructure up 2% sequentially.

I'll refer participants to our Investor website for the last five quarters net sales data by end market reportable segment and geography.

High end consumer up 10% sequentially and industrial down 26% sequentially.

I'll refer participants to our Investor website for the last five quarters net sales data by end market reportable segment and geography.

Gross margin was 51, 3% a sequential increase of 170 basis points and above the high end of our guidance for the quarter.

Gross margin reflected well negotiated supplier concessions to reduce third quarter manufacturing costs offset by incremental inventory reserves and unfavorable mix.

Supplier agreements, particularly benefited Iot systems for the third quarter.

Netting these items consolidated gross margin would have approximated the midpoint of guidance.

Supplier agreements, particularly benefited Iot systems for the third quarter.

Operating expenses were $82 5 million favorable to the midpoint of guidance with R&D expense sequentially, increasing about $900000 in SG&A sequentially decreasing by $4 $1 billion.

Netting these items consolidated gross margin would have approximated the midpoint of guidance.

Operating expenses were $82 $5 million.

Favorable to the midpoint of guidance with R&D expense sequentially, increasing about $900000 in SG&A sequentially decreasing by $4 1 million.

Net interest expense was $22 $3 million with only about one weeks benefit from the capital structure change completed at the end of October.

We recorded net earnings per share of <unk> <unk> based on a diluted share count of $64 3 million shares.

Changing gears to the balance sheet, we ended Q3 with a cash balance of $123 8 million and.

We recorded net earnings per share of <unk> <unk> based on a diluted share count of $64 3 million shares.

And undrawn revolver capacity of $280 million.

Changing gears to the balance sheet. We ended Q3 with a cash balance of $123 8 million and undrawn revolver capacity of $280 million.

Working capital moved in a favorable direction with inventories decreasing $19 $6 million.

Principal outstanding on our debt was $1 $4 billion with a weighted average interest rate of 557%.

Working capital moved in a favorable direction with inventories decreasing $19 $6 million.

At the end of our third quarter, our consolidated net leverage ratio calculated in accordance with our credit facility with $6 49, and we expect to maintain compliance with the debt covenants for the next 12 months.

Principal outstanding on our debt was $1 $4 billion with a weighted average interest rate of 557%.

At the end of our third quarter, our consolidated net leverage ratio calculated in accordance with our credit facility was $6 49, and we expect to maintain compliance with our debt covenants for the next 12 months.

Including the effects of our convertible notes and interest rate swaps loan principal was about 83% fixed and 17% floating at the end of Q3 and all of the loan principal was long term.

At the end of Q3, there are no scheduled principal payments on our senior secured credit facility until January 2028, and no scheduled principal payments on our convertible debt until November 2027.

I'd like to discuss the five year $250 million, 4% convertible note we issued this past October.

In addition to the benefits of increasing our mix of fixed to floating rate debt and eliminating scheduled principal payments on our term loan.

I'd like to discuss the five year $250 million, 4% convertible note we issued this past October.

The emphasis on reducing cash interest costs.

In addition to the benefits of increasing our mix of fixed to floating rate debt and eliminating scheduled principal payments on our term loan we placed emphasis on reducing cash interest costs.

Our federal reserve rollback in interest rates may occur when I turn on the high beams I expect to be in a protracted elevated interest rate environment.

A federal reserve rollback in interest rates may occur when I trauma high beams I expect to be in a protracted elevated interest rate environment.

As I mentioned all of our loan principal is long term.

Deleveraging use of excess cash to convert eliminated $67 million in scheduled principal payments next fiscal year, providing optionality.

As I mentioned all of our loan principal is long term.

Deleveraging is a key use of excess cash.

Also addressing dilution these refer to the convertible notes dilution table closer to the <unk> investor website.

<unk> eliminated $67 million in scheduled principal payments next fiscal year, providing optionality.

This table provides incremental dilutive shares on both the 2027 and 2028 convertible notes.

Also addressing dilution please refer to the convertible notes dilution table posted to the <unk> investor website.

On both the notes par value or principal is paid in cash and conversion of what par is settled in cash or shares at centex discretion.

This table provides incremental dilutive shares on both the 2027 and 2028 convertible notes.

On both the notes par value or principal is paid in cash and conversion of what par is settled in cash or shares at <unk> discretion.

Assuming the conversion of both notes was settled in shares dilution of 20% is reached at a stock price a bit above $85 with no effect on diluted shares today.

On the date, we priced at 2020 notes offering a $250 million raise would be the equivalent of $50 6 million shares or an immediate 24% dilution, which I do not believe counteracts the benefit reduce interest expense.

On the deep with price of the 2020 notes offering a $250 million raise would be the equivalent of $50 6 million shares or an immediate 24% dilution, which I do not believe counteracts the benefit reduced interest expense.

I hope this extended explanation provides some insight into management's calculus and issuing to convert.

Free cash flow.

I hope this extended explanation provides some insight into management's calculus and issuing to convert.

<unk> use of cash, reflecting ongoing restructuring and integration activities, but sequentially improved $6 $5 million adjusted EBITDA was $28 1 million compared to $39 million in the second quarter.

Free cash flow was a $12 $4 million use of cash, reflecting ongoing restructuring and integration activities, but sequentially improved $6 $5 million adjusted EBITDA was $28 1 million compared to $39 million in the second quarter.

Now turning to fourth quarter guidance. We currently expect net sales of $190 million, plus or minus $10 million or.

Our industrial end market is expected to be flat to slightly down.

Now turning to fourth quarter guidance. We currently expect net sales of $190 million plus or minus $10 million our.

The high end consumer end market is expected to be seasonally down in the infrastructure end market is expected to be flat to slightly down.

Our industrial end market is expected to be flat to slightly down.

The high end consumer end market is expected to be seasonally down in the infrastructure end market is expected to be flat to slightly down.

While end customer demand consisting of direct shipments plus Pos has improved our net sales guidance reflects a thoughtful reduction in channel inventories.

This unexpected product mix gross margin is expected to be 48% plus or minus 100 basis points.

Operating expenses are expected to decrease 10% at the midpoint to $74 million plus.

This unexpected product mix gross margin is expected to be 48% plus or minus 100 basis points.

Plus or minus $2 million.

Primarily reflective of cost reduction actions, we've already implemented in the third quarter.

<unk> expenses are expected to decrease 10% at the midpoint to $74 million plus or minus $2 million.

SG&A is expected to sequentially decline, 13% to $33 $5 million at the midpoint research and development expense is expected to sequentially decline, 8% to $45 million at the midpoint and we do not believe we have materially impacted projects that result in near term revenue or materially affect any of our customers' roadmaps.

Primarily reflective of cost reduction actions, we have already implemented in the third quarter SP.

Okay.

Net interest expense is expected to be $21 million.

Reflective of timing of interest rate reset periods relative to quarter end.

Net interest expense is expected to be $21 million.

These amounts are expected to result in a diluted loss per share of <unk>, <unk> plus or minus <unk>.

Reflective of timing of interest rate reset periods relative to quarter end.

And now I'd like to turn the call back over to the operator for Q&A.

These amounts are expected to result in a diluted loss per share of <unk>, <unk> plus or minus <unk>.

Thank you and I will be conducting a question and answer session.

And now I'd like to turn the call back over to the operator for Q&A.

Like to ask a question. Please press star one on your telephone keypad, a confirmation tone will indicate that your line is in the queue.

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 queue. You May press star two to remove a question from the queue for participants using speaker equipment. It may be necessary to pick up your handset before pressing the star keys.

Star two to remove a question from the queue for participants using speaker equipment. It may be necessary to pick up your handset before pressing the star keys.

We ask that you please limit yourself to one question and one follow up thank you.

While we pull for questions.

We ask that you please limit yourself to one question and one follow up. Thank you one moment, while we poll for questions.

And the first question comes from the line of Quinn Bolton with Needham <unk> Company. Please proceed with your question.

Hey, guys. Thanks for taking my question I guess first question, Paul you talked about the growing pipeline on the module side.

Hey, guys. Thanks for taking my question I guess first question, Paul you talked about the growing pipeline on the module side for North American operators I'm. Just wondering can you give us a sense of how big is that total Tam how much of the North American market, maybe currently supplied by the Chinese module vendor.

North American operators, just wondering can you give us a sense of how big is that total Tam how much of the North American market, maybe currently supplied by the Chinese module vendors.

Just trying to get a sense of how big this opportunity is that you cited last quarter at $200 million. It sounds like it's bigger than that now and then I've got a follow up for mark. Thanks.

<unk>.

Just trying to get a sense of how big this opportunity is that he cited last quarter at $200 million. It sounds like it's bigger than that now and then I've got a follow up for Mark.

Yes, Thank you Quinn by the way.

I think you got the best title on.

The Harry Potter reference on your notes.

Yes, Thank you Quinn by the way.

Nice quarter.

I think you get the best title on.

Okay. So getting to your question on the pipeline.

Loved the Harry Potter reference on your note.

I would put that market worldwide just over $6 billion, if you want to kind of.

Last quarter.

Okay. So getting to your question on the pipeline.

Strip out APAC and automotive in particular, you're talking about just north of $3 billion I'd be excluding NB Iot in that as well. So if you look at the North American portion of that there is a significant automotive number in North America.

I would put that market worldwide just over $6 billion, if you want to kind of.

Strip out APAC and automotive in particular, you're talking about just north of $3 billion it'd be excluding NB Iot in that as well. So if you look at the North American portion of that there is a significant automotive number in North America.

And another analysts put.

But quick tell at about.

About $4 billion over five years in terms of revenue into North America. So excluding automotive we look at it about a $400 million opportunity.

And another analysts put.

Put quick tell at about.

About $4 billion over five years in terms of revenue into North America. So excluding automotive we look at it about a $400 million opportunity.

On an annual basis, yes.

Yes.

Got it perfect and then Mark you.

On an annual basis.

Guided the gross margin of 48% down.

Yes.

Down from over 51% Im just I guess, a little bit of difficulty.

Got it perfect and then Mark you.

Guided the gross margin of 48%.

Kind of.

Reconciling it quarter to quarter change it sounded like there were.

Down from over 51% Im just I guess I'm, a little bit of difficulty kind.

Some benefits.

Kind of.

The fiscal third quarter that may not repeat but it also sounds like there were some inventory charges.

Reconciling that quarter to quarter change it sounded like there were.

You took in the third quarter. So can you walk us through what are the what are the major puts and takes going into the fourth quarter from either.

Potentially some benefits in the fiscal third quarter that may not repeat but it also sounded like there were some inventory charges that.

That you took in the third quarter. So can you walk us through what are the what are the major puts and takes going into the fourth quarter from either.

The increased.

Inventory reserves mix.

Among product buckets.

And whatever else might might account for the change quarter to quarter. Thank you.

The increased.

Inventory reserves mix.

Thanks, Glenn I'll also point out that our guide for Q3 was a 40% gross margin. So we're guiding the equivalent margin. So there's quite a bit of noise going kind of up and down but.

Among the product buckets.

Yeah, whatever else might account for the change quarter to quarter. Thank you.

Thanks, Glenn I'll also point out that our guide for Q3 was a 40% gross margin. So we're guiding the equivalent margin. So there's quite a bit of noise going kind of up and down but.

Quite a quite a bit mix sensitive maybe you take the mix.

Normalized mix at 40% translates to 40% target for the next quarter.

Quite quite a bit mix sensitive maybe you take the mix.

Normalized mix at 40% that translates to 40% target for the next quarter.

So really 300 plus.

Points of a benefit in Q3 that you don't expect to repeat in Q4.

So really 300 plus.

All right.

Okay got it thank you.

Points of benefit in Q3 that you don't expect to repeat in Q4.

And the next question comes from the line of Torrey Svanberg with Stifel. Please proceed with your question.

Right.

Okay got it thank you.

Yes, Thank you Paul.

And the next question comes from the line of Toy Swanberg with Stifel. Please proceed with your question.

So it sounds like Pos is starting to improve.

Yes, Thank you Paul Mark.

Broadly speaking, but it also sounds like this does some channel inventory out there so.

So it sounds like Pos is starting to improve.

Could you maybe quantify that for us.

During the weeks or percentages or anything like that because it.

Broadly speaking, but it also sounds like there's still some channel inventory out there so.

It does sound like Pos is a really encouraging data at this point.

Could you maybe quantify that for us.

Either in weeks or percentages or anything like that because it is.

Yes, I think if you reflect on my comments from our last earnings call, we talked about an improvement in.

It does sound like Pls is a really encouraging data at this point.

Yes, I think if you reflect on my comments from the last earnings call, we talked about an improvement in.

Improving bookings trend over the last four quarters I would say at this point, we're five quarters and if we look at just the IC portion of the business.

On improving bookings trend over the last four quarters I would say at this point, we're five quarters and if we look at just the IC portion of the business and.

And the component portion so hardware, we obviously took a significant decline this past quarter. So it's a little hard to judge where that's going to settle out so I'll separate the two for the time being.

And the component portion so hardware.

<unk> took a significant decline this past quarter. So it's a little hard to judge where that's going to settle out so I'll separate the two for the time being.

If we look at it.

In some cases the channels quite.

Right wing, we're in we're well positioned to respond to any kind of market demand or market upside in other cases.

If we look at it.

In some cases the channels quite quite lean we're in we're well positioned to respond to any kind of market demand or market upside in other cases.

Consumer we've seen that come back the inventory pools have been quite good so the channels relatively healthy.

Hard for me to put a number on it overall because it really does depend on the product line.

Consumer we've seen that come back the inventory pools have been quite good so the channels relatively healthy.

But.

If I work.

It's hard for me to put a number on it overall because it really does depend on the product line.

Speak philosophically.

Would want roughly eight to 12 weeks in the channel in some cases, we're right at that 12 week number in some cases, we're over that number and we're really kind of watching Pos.

But.

If I were to speak philosophically, we would want roughly eight to 12 weeks in the channel in some cases, we're right at that 12 week number in some cases, we're over that number and we're really kind of watching Pos lastly on the component portion I would say that for the first time we have.

Lastly on the component portion I would say that for the first time, we've kind of crossed that one to one book to Bill thresholds. So that's very encouraging for us in terms of where we sit in the recovery on the hardware side I have less visibility on the module business.

Crossed that one to one book to Bill thresholds. So that's very encouraging for us in terms of where we sit in the recovery on the hardware side I have less visibility on the module business.

<unk> seen a significant decline this past quarter.

And the reason for that is it's largely a direct business and those customers don't report the inventory numbers back to as we we obviously do talk to them and we do hear what they are saying in terms of what their inventory levels are but we have seen some decline in the industrial end markets similar to what we've seen in routers roughly 30% we think our customers are.

Seen a significant decline this past quarter.

And the reason for that is it's largely a direct business and those customers don't report the inventory numbers back to us.

We obviously do talk to them and we do hear what they are saying in terms of what their inventory levels are but we have seen some decline in the industrial end markets similar to what we've seen in routers roughly 30%. We think our customers are experiencing the same as a result.

Experiencing the same as a result.

The inventory.

Level of that in terms of weeks on demand.

Our weeks on hand have have kind of gone up and so I think it's still early to kind of look.

Inventory.

Levels in terms of weeks on demand.

Look at what we're what we might characterize as a correction there, but we would expect that to play out over the next quarter or two.

Our weeks on hand have have kind of gone up and so I think it's still a little early to kind of look.

Look at what we're what we might characterize as a correction there, but we would expect that to play out over the next quarter or two.

No that's helpful color and as my follow up.

On the infrastructure business.

The guidance there flat to down but could you maybe talk about some of the sub segments. There you were expecting.

No that's helpful color and as my follow up.

On the infrastructure business I appreciate the guidance there flat to down but could you maybe talk about some of the sub segments, there and what youre expecting.

Especially datacenter is that expected to still grow and perhaps that's being offset by still weak PON and wireless.

Yes, so yes.

If the data center definitely we're still expecting some positive things I will highlight that we're fairly early on though.

Yes so.

If the datacenter definitely we're still expecting some positive things I will highlight that we're fairly early on though.

With a no change in data centers. So the traction has been quite good.

<unk> been pulling those orders in anticipation of usage and most of the stronger production ramps are really kind of slated for Q1 calendar.

With a no change in data centers. So the traction has been quite good the channel has been pulling those orders in anticipation of usage and most of the stronger production ramps are really kind of slated for Q1 calendar.

So while we're seeing a nice uptick last quarter, we saw a 112% increase in terms of the datacenter numbers. We saw an increase this quarter in terms of data center numbers.

So while we're seeing a nice uptick last quarter, we saw a 112% increase in terms of data center numbers. We saw an increase this quarter in terms of data center numbers.

I would expect a little bit of absorbing the pools, and then kind of a resumption of growth as we kind of look at next calendar year. So.

The datacenter number is going quite well PON is a little bit steady state until we get a look at those tenders, we're expecting those tenders to come in in the January timeframe.

That's about a one month delay still ahead of Chinese new year, but we were expecting to kind of see those in December. It has now been moved to January So we will see those those.

That's about a one month delay still ahead of Chinese new year, but we were expecting to kind of see those in December. It has now been moved to January So we'll see those those tenders and we will be able to respond accordingly.

Those tenders and we'll be able to respond accordingly.

But overall I'd say infrastructure is.

<unk> fairly well positioned there are some bright spots most of its moving sideways.

But overall I would say infrastructure is is fairly well positioned there are some bright spots most of it is moving sideways.

But those increases that we're seeing definitely offset as we kind of look at the module business. Although I don't expect significant further decline, we just expect that to move sideways at this point.

Sounds good and congrats on the progress. Thank you. Thank.

Thank you.

And the next question comes from the line of Craig Ellis with B Riley Securities. Please proceed with your question.

Sounds good and congrats on the progress thank you.

Thank you.

Yes, thanks for taking the question and Mark Thanks for the.

And the next question comes from the line of Craig Ellis with B Riley Securities. Please proceed with your question.

Transparency.

The convert dilution things you've posted on the website. So Paul I wanted to start off with one for you and follow up a little bit on <unk> question, but.

Yes, thanks for taking the question and Mark Thanks for the.

Transparency with the.

The convert dilution things you've posted on the website. So Paul I wanted to start off with one for you and follow up a little bit on <unk> question.

Maybe take a longer term view what would be helpful. If you could provide some more color on things that you see as we look out over the course of calendar 'twenty four.

Maybe take a longer term view what would be helpful. If you could provide some more color on things that you see as we look out over the course of calendar 'twenty for in data Center. For example, what are some of the things that you're really excited about.

In data Center for example, what are some of the things that you're really excited about it.

Traditional data center versus Hyperscale.

And then similarly, what are some of the things you have your eye on ISR and base station and then in Pine.

And traditional data center versus Hyperscale.

Okay, Yes, thank you for that question.

And then similarly, what are some of the things you have your eye on ISR and base station and then in Pine.

I will say the datacenter, we're pretty excited I am personally.

Okay, Yes, thank you for that question.

<unk> excited about data center, what we're seeing there is just an absolutely rapid Sam expansion report expansion.

I will say the datacenter, we're pretty excited I am personally <unk>.

<unk> excited about data center, what we're seeing there is just an absolutely rapid Sam expansion report expansion.

In data center, and I would really kind of bifurcate data center or Hyperscale data centers into a general compute bucket and an AI bucket. Those are two very different applications, they have different needs and and right now the appetite and AI is pretty insatiable, so, we're making ground and general compete.

In data center, and I would really kind of bifurcate data center or Hyperscale datacenters into general compute bucket and then AI bucket. Those are two very different applications, they have different needs and and right now the appetite and AI is pretty insatiable, so, we're making ground and general compute.

And four by 100 applications as well as as you kind of look at just breakneck speeds in AI and so most of the volume that we ship today really is.

You are in four by.

By 100 applications as well as as you kind of look at you know just.

Breakneck speeds in AI and so most of the volume that we ship today really is.

More 50 gig single Lambda I know, we kind of throw out 400 gig 800 gig, but we kind of look at for US. It's a generational device thing we look at it 50 gig devices were shipping 100 gig devices.

More 50 gig single Lambda.

Kind of throw out 400 gig 800 gig, but we kind of look at for US. It's a generational device thing we look at the 50 gig devices were shipping 100 gig devices and we've got out in the market, but are not shipping against those devices quite yet today 200 gig single Lambda.

We've got out in the market, but are not shipping against those devices quite yet today 200 gig single Lambda.

Performing quite well and POC.

So as I kind of look out over the next several years.

The massive growth that we expect to happen in AI AI driven data centers is just a significant upside opportunity for us and we're well positioned to take advantage of that so to me. This is across the board small customer set very exciting opportunity to say the least.

Performing quite well and POC, so as I kind of look out over the next several years.

The massive growth that we expect to happen in AI.

AI driven data centers is just a significant upside opportunity for us.

We are well positioned to take advantage of that so to me. This is across the board small customer set very exciting opportunity to say the least.

Got it and then you talked a little bit about needing to see tenders in PON.

On the base station side of the business or.

Got it and then you talked a little bit about needing to see tenders in PON.

Anything standing out as you look at 2024.

Yes.

On the base station side of the business.

You go back the Econ, we did we did a one six terabits test case with coherent Devin.

Things standing out as you look at 2024.

Yes.

I should say demonstration.

If you go back to <unk>, we did we did a one six terabits test case with coherent.

And this was for 10-K.

Let's call it mid haul type applications. So.

I should say demonstration.

In terms of pushing up the speed or.

This was for 10-K.

The availability to implement high speed connections in both short reach as well as mid reach or long reach applications both of them.

Let's call it mid haul type applications. So.

In terms of pushing up the speed or.

The availability to implement high speed connections in both short reach as well as mid reach or long reach applications both of them.

We're well positioned to take advantage of it so as infrastructure just drives.

Data connectivity up and Theres that last mile that will happen naturally as well in both European and North American countries as well China is important to US there has been with all the infrastructure growth in multi tenant dwelling growth. Their data connectivity has been really key we would expect share in North America and Europe.

We're well positioned to take advantage of it so as infrastructure just drives.

Data connectivity up and Theres that last mile that will happen naturally as well in both European and North American countries as well China is important to us or has been with all the infrastructure growth in multi tenant dwelling growth their data connectivity has been really key.

To creep up as they look to implement higher speed applications as well. So just released a 50 gig part as well we're looking at 25 gig adoption.

We would expect share in North America and Europe.

To creep up as they look to implement higher speed applications as well. So just released that 50 gig part as well we're looking at 25 gig adoption.

But I think for from my standpoint, the tenders in January we're going to give us a bit.

<unk> term effect as we continue to.

But I think for from my standpoint, the tenders in January we're going to give us a bit of a near term effect as we continue to.

Gain market share in other territories, which will give us a little bit more of a long term tail as well.

Got it and then I'll flip it over to Mark for.

Gain market share in other territories, which will give us a little bit more of a long term tail as well.

The second topic, and that's an operating expense from our very impressive guy.

Got it and then I'll flip it over to Mark for.

Decreasing opex by.

The second topic and it's on operating expense from our very impressive guide decreasing opex by.

10% quarter on quarter to $75 million and it sounds from the color that you provided that.

That decrease the structural but I wanted to confirm that and then.

10% quarter on quarter to $75 million and it sounds from the color that you provided that.

If you could just any color on things we should expect this we'd look to 2024 with Opex for example.

That decrease is structural but I wanted to confirm that and then.

If you could just any color on things, we should expect as we look to 2024 with Opex for example.

Impacts early in the year or any other optimizations that you might see coming thank you so much.

Thanks, Thanks for the question Greg.

Impacts early in the year or any other optimizations that you might see coming thank you so much.

But at 74 million next quarter.

Pretty confident hitting that number because the actions that we need to hit that number have already been taken.

Sure. Thanks for the question Craig.

But we've got at $74 million for next quarter, and we're pretty confident in hitting that number because of the actions that we need to hit that number have really been taken.

This of course is can be seasonality in the <unk>.

Calendar Q1 with things like FICO resets.

But we're pretty comfortable staying at AR.

This of course is going to be seasonality in the calendar Q1 with things like FICO resets.

And Rob this neighborhood.

Terms of Opex, there may be some incremental increases slight incremental increases in R&D.

But we're pretty comfortable staying at.

And Rob this neighborhood.

But that's just really timing.

In terms of Opex, there may be some incremental increases slight incremental increases in R&D.

Got it guys congratulations on the progress. Thank you. Thank.

Thank you.

But that's just really timing.

And the next question comes from the line of Anthony Stoss with Craig Hallum. Please proceed with your question.

Got it guys congratulations on the progress. Thank you. Thank.

Thank you thanks.

Hey, guys, Paul I wanted to follow up on the whole fill either module side of the business and your commentary I'm. Just curious a lot of these design wins at Youre lapping now wanted to turn to production.

And the next question comes from the line of Anthony Stoss with Craig Hallum. Please proceed with your question.

Hey, guys, Paul I wanted to follow up on the whole fill either module side of the business and your commentary I'm. Just curious a lot of these design wins at Youre lapping now when do they turn to production and I'm curious if any of those customers are contemplating are having conversations with you about rip and replace kind of the existing products that they already have with <unk>.

If any of those customers are contemplating are having conversations with you about rip and replace kind of existing products that they already have with say quick Joe or is it just kind of go forward products in it.

Yes.

So as we kind of look at it most of the the programs today that we're bidding on or have captured there really kind of talking about production starts.

Or is it just kind of go forward products in it.

Yes.

So as we kind of look at it most of the programs today that we're bidding on or have captured there really kind of talking about production starts.

Near the end of the calendar year, So I would not characterize those as rip and replace.

However, if there is.

Near the end of the calendar year, So I would not characterize those as rip and replace.

I'll note that on the customer side Theres, a little bit of hesitancy in terms of forecasting just because of.

However, if there is.

I'll note that on the customer side, there is a little bit of hesitancy in terms of forecasting just because of.

Some market uncertainty. So if there is a little bit of bolstering and market confidence I think people will start to March some of these a little bit early but right now the kind of slated at the end of the calendar year.

And there are additional wins and pick up.

That we're noting not not additional follow on programs that we've classically held.

If we get some additional scrutiny out of the China Select committee, it's highly possible that we'll see some of those critical infrastructure applications look for an acceleration of nextgen or that next design and.

And there are additional wins in pickups.

That we're noting not not additional follow on programs that we've classically held.

That I would characterize a little bit more in terms of.

Rip and replace because I don't think somebody will pull module out of existing hardware without refreshing that hardware as well at least at this point.

That I would characterize a little bit more in terms of rip and replace because I don't think somebody will pull module out of existing hardware without refreshing that hardware as well at least at this point.

Got it and then just.

Broader question on visibility and also if you think your January revenue guide down will be sequentially do you think that marks the low on a quarterly basis going forward.

Got it and then just.

Broader question on visibility and also if you think your January revenue guide down will be sequentially do you think that marks the low on a quarterly basis going forward.

Yes.

I think I.

Hi.

Im remembering my comments from the last earnings call.

Yes.

It was pretty compound last earnings call that we hit a bottom on the IC business. We continue to see that we're making progress in moving forward on the IC business I think even though some of our peers may be are not seeing that we corrected a little bit earlier in the cycle and we continue to see that strength.

I think I.

Sure.

Im remembering my comments from our last earnings call.

I was pretty confident on the last earnings call that we hit a bottom on the IC business. We continue to see that we're making progress in moving forward on the IC business I think even though some of our peers maybe are not seeing that we corrected a little bit earlier in the cycle and we continue to see that strength.

At this point I don't anticipate the hardware business getting any worse.

Say that.

Last quarter was a little early we are just starting to see that decline we've seen some pretty good.

At this point I don't anticipate the hardware business getting any worse.

Lets say steady numbers out of the routers business. The modules business did pull back as we saw a little bit of a knee jerk reaction out of the customer base, where a lot of that direct business has had.

Can say that.

Last quarter was a little early we are just starting to see that decline we've seen some pretty good.

Let's say steady numbers out of the routers business. The modules business did pull back as we saw a little bit of a knee jerk reaction out of the customer base, where a lot of that direct business has had.

And the fed buying I think was a little bit of a surprise as well for some of that customer base, where our product goes into.

We've seen a little bit of sluggishness coming into.

And the fed buying I think was a little bit of a surprise as well for some of that customer base, where our product goes into.

The fed buying season and so.

So I don't anticipate it getting worse, if anything we might get a little bit of a pickup.

We've seen a little bit of sluggishness coming into.

The fed buying season, and so I don't anticipate it getting worse, if anything we might get a little bit of a pickup.

Sooner rather than later, but I think it's a little bit early to tell.

Very good best of luck guys.

Thank you. Thank you.

Sooner rather than later, but I think it's a little bit early to tell.

And the next question comes from the line of Christopher Roland with Susquehanna. Please proceed with your question.

Very good best of luck guys.

Thank you. Thank you.

Hey, guys. Thanks for the question.

And the next question comes from the line of Christopher Roland with Susquehanna. Please proceed with your question.

I wanted to talk on AI as well just given the attention.

Hey, guys. Thanks for the question.

All are getting.

So last quarter, you guys mentioned, a large U S. Hyper scaler I think could place. Some initial orders for some CD ours and <unk> for <unk>, a lot of T L a or sorry.

I wanted to talk on AI as well just given the attention.

It's all getting so last.

Last quarter, you guys mentioned, a large U S. Hyper scaler I think could place some initial orders for some CD ours.

But would love.

TIAA is for <unk>.

An update there on any purchasing and then.

Lot of Tls there sorry.

You talked about sampling someone 60 products.

But would love and.

On an update there on any purchasing and then you talked about sampling some 160 products.

Or were those was that linear direct drive analog Pam four <unk>.

And just maybe talk about your 801.6 opportunities you see it.

Were those was that linear direct drive analog Pam four <unk>.

Yes, I think so last quarter, we talked about initial orders, but we actually saw some shipments for that large U S based hyperscale or so that are 400 gig application.

And just maybe talk about your $801 six opportunities you see it.

Yes, I think.

So last quarter, we talked about initial orders, but we actually saw some shipments for that large U S based hyperscale or so that is a 400 gig application.

Those.

And I'll be a little bit cautious in terms of their ramp.

First half is going to be a bit sluggish, but we expect it to pick up as it goes through the end of the year December was final qualification.

Those.

And I'll be a little bit cautious in terms of their ramp.

First half is going to be a bit sluggish, but we expect it to pick up as it goes through the end of the year December was final qualification.

Hardware and then it sets the forecast.

The forecast get set according to that so right now things are moving rather nicely for that.

Hardware and then it sets the forecast.

Let's say roughly a $30 million.

The forecast get set according to that so right now things are moving rather nicely for that.

Annualized upside once it gets the full production and we would expect that that.

Let's say roughly a $30 million.

Sales cycle, the spend three to five years or so.

Annualized upside once it gets the full production and we would expect that.

So things are moving rather nicely there.

In terms of looking at.

That sales cycle to spend three to five years or so.

We will see occasionally.

So things are moving rather nicely there.

Or do you see four by one hundreds we do see occasionally eight by one hundreds.

In terms of looking at.

We will see occasionally.

But really the next node in AI that we're talking about is 200 gig single Lambda devices.

<unk> four <unk> four by one hundreds we do see occasionally eight by one hundreds.

That's where you would start to see one six terabits in any appreciable volume we're looking at those.

But really the next node in AI that we're talking about is 200 gig single Lambda devices.

Those speeds at both mid reach 10-K type applications as well as short reach but.

That's where you would start to see one six terabits in any appreciable volume.

Looking at those.

Those speeds at both mid reach 10-K type applications as well as short reach but.

Right now, it's just a really frothy opportunity environment for me to put a number on when those things start to translate the volume I think is a little bit early but we are seeing.

Right now, it's just a really frothy opportunity environment for me to put a number on when those things start to translate the volume I think is a little bit early but we're seeing it.

Really some nice numbers coming out of the POC and some demonstrations so.

Given the environment I think it is going to be.

Really some nice numbers coming out of the POC and some demonstrations so.

I would expect this to be pretty.

Quickly picked up.

But I see that more of a second half calendar year 'twenty four phenomenon rather than something in the short term, but we're going to see steady uptake of the 400 gig.

Given the environment I think it is going to be.

I would expect this to be pretty.

Quickly picked up.

But I see that more of a second half calendar year 'twenty four phenomenon rather than something in the short term, but we're going to see steady uptick of the 400 gig.

Modules certainly in the first half of the year and then it will strengthen in the second half and then that's when we'll start to see some really some nice plans around 800 gig.

Excellent good progress there.

I wanted to look at your segments also another way here.

If I'm reading the tea leaves right here on the signal integrity side, you would expect that to fall.

Excellent good progress there.

I wanted to look at your segments also another way here.

If I'm reading the tea leaves right here on the signal integrity side, you would expect that to fall.

And then protection sensing maybe up in the other two Iot related down is that kind of how we think about it.

Thank you.

Yes, I think if we look at the Aps we saw.

Some strong pulls a little bit of digestion.

Okay.

Into that ramp.

Yes, I think if we look at the Aps we saw.

Or that smartphone.

Some strong pulls a little bit of digestion.

North American Smart phone manufacturer I think we will see a little bit of a pullback, but largely due to some seasonality that's really strong pulls up until the launch.

Into that ramp for that smartphone.

North American Smart phone manufacturer I think we will see a little bit of a pullback, but largely due to some seasonality that's really strong pulls up until the launch.

And then a little bit of a pullback so that's that's protection.

Protection should have a baseline component that's going to steadily improve from here. So we've seen some nice stability in the base numbers, especially as it relates to the proximity detection and so we'll see that slowly strengthen.

And then a little bit of pullback. So that's that's protection protection should have a baseline component that's going to steadily improve from here. So we've seen some nice stability in the base numbers, especially as it relates to the proximity detection and so we will see that slowly strengthen.

I kind of look at a 13 week.

Looking average by product line and it has just been steadily improving not really snapping back, but just steady improvements as those inventories come off and our channel partners kind of anticipate some of those production runs.

I kind of look at a 13 week.

Booking average by product line and it's just been steadily improving not really snapping back, but just steady improvements as those inventories come off and our channel partners kind of anticipate some of those production runs.

<unk> is a little bit of.

Digestion signal integrity is a little bit of digestion on a really strong data center number.

ZIP is a little bit of.

We could probably see some surprises to the upside, but I would right now were anticipating.

Digestion signal integrity is a little bit of digestion on a really strong data center number.

Our revenue being a little bit softer on that channel inventory digestion for the initial launch they usually like to validate.

We could probably see some surprises to the upside, but I would right now we are anticipating.

The hardware and the numbers that they are seeing and then they kind of resume and additional schedule. So.

Our revenue being a little bit softer on that channel inventory digestion for the initial launch they usually like to validate.

Protection.

The hardware and the numbers that they are saying and then they kind of resume and additional schedule. So.

And Sip, both kind of moving a little bit sideways at this point, but slightly down.

Protection.

Thanks, So much Paul appreciate it.

And Sip, both kind of moving a little bit sideways at this point, but slightly down.

And the next question comes from the line of Rick Schafer with Oppenheimer <unk> Company. Please proceed with your question.

Thanks, So much Paul appreciate it.

Thanks, Paul.

And the next question comes from the line of Rick Schafer with Oppenheimer and company. Please proceed with your question.

<unk>.

I guess my first question, if I could just maybe high level and Paul I was just hoping that you could share a little more about your strategic vision.

Thanks, Paul.

<unk>.

Just my first question, if I could just maybe high level and Paul I was just hoping you could share a little more about your strategic kind of.

And what the company you think it's going to look like and do you expect it to look like say in <unk>.

Three years from now I mean, what role the modules in particular play long term and.

Vision percent Tech and what the company you think it's going to look like or do you expect it to look like say in.

Year to date growth opportunities there I mean do they justify the.

Three years from now I mean, what role the modules in particular play long term and.

The associated margin pressure or do you see a path maybe.

It may be improving those margins demonstrably sort of more kind of classic.

Near the growth opportunities there I mean do they justify the risk with the.

The associated margin pressure or do you see a path to may be improving those margins demonstrably sort of more kind of classic.

Corporate average.

So thats it.

That's a good question and you're putting me on the spot. So I certainly appreciate that.

Okay.

Corporate average.

So thats it.

So what do we look like three years from now there is no doubt that our core competencies really does kind of come from components and I do think that it makes sense to move in the module products as long as you can pick up additional.

Good question and you're putting me on the spot so I certainly appreciate that.

So what do we look like three years from now there is no doubt that our core competencies really does kind of come from components and I do think that it makes sense to move into module products as long as you can pick up additional <unk>.

Stacking margins so to have.

And produce a module that essentially has component.

Content that you produce does makes sense.

Stacking margins so to have that.

Participated in businesses before where a lot of times you have to produce a reference design in some cases. It just makes sense to go out and sell that reference design commercialize it manufacture and sell it.

Produce a module that essentially has component.

Tenant that you produce does makes sense.

<unk> participated in businesses before where a lot of times you have to produce a reference design and in some cases. It just makes sense to go off and sell that reference design commercialize it manufacture and sell it.

This gets a little bit more complicated generally speaking from a semiconductor standpoint, it gets a little bit more complicated when you start talking about Iot because of the diversity.

This gets a little bit more complicated and that's generally speaking from a semiconductor standpoint, it gets a little bit more complicated when you start talking about Iot because of the diversity.

Use cases, you end up having to pull a lot of broad range of technologies through in order to produce an entire solution.

<unk> use cases, you end up having to pull a lot a broad range of technologies through in order to produce an entire solution.

If I had to be a module maker in and of itself today.

Today.

The business model would be very different and I think my investor base would be very very different so does it justify in and of itself. The margin pressure I think the answer to that is no, but if we can pull together a bit more of a comprehensive Iot strategy in which it becomes an enabling component.

If I had to be a module maker in and of itself today.

Today.

On higher margin sales, then, yes, I think it's quite possible that.

A bit more of a comprehensive Iot strategy, and which had becomes an enabling component.

That can happen it doesn't necessarily mean that we have to own it.

On higher margin sales, then, yes, I think it's quite possible that.

Sure.

The entirety of that three year five year play.

That can happen it doesn't necessarily mean that we have to own it.

But.

Cellular backhaul is always going to be a part of an Iot strategy and I do think that we have a rather large iot opportunity in front of us that we need to kind of re imagine that strategy and how we're going to capture that.

Four.

The entirety of that three year five year play.

But.

In the marketplace. So if we can combine it and it becomes a part of the story along with software along with components and I think it makes it's perfectly fine makes sense.

In and of itself no it doesn't justify the margin pressure and.

We would look in the meantime, we would look to continue to capture the opportunity or do you think that theres tremendous upside opportunity associated with modules.

In and of itself no it doesn't justify the margin pressure and.

We would look in the meantime, we would look to continue to capture the opportunity or do you think that there is tremendous upside opportunity associated with modules.

In some cases, when you're engaging with utility companies they'll want an LP W. L PWA solution.

In some cases, when you're engaging with utility companies they'll want an MPW MPW a solution.

Or they might gravitate towards private network like Laura.

Solution, so having the opportunity to do both.

Or they might gravitate towards private network like Laura.

As an advantage as well as long as you build together a bit more of a broader product offering or solution and story. So hopefully that gives you a little bit of a color without.

<unk> solution, so having the opportunity to do both.

As an advantage as well as long as you build together a bit more of a broader product offering or solution and story. So hopefully that gives you a little bit of a color.

Specifically nailing everything down after five months.

No I appreciate that there's a lot of color Paul and it actually is a great segue to my next question, which is more.

Without.

Specifically nailing everything down after five months.

If you wouldn't mind, maybe give a little bit more on the order trend side sort of order velocities. However, you want to describe it.

No I appreciate that there's a lot of color Paul and it actually is a great segue to my next question, which is more.

But I'm curious it sounded like that business is starting to pick up I believe its a.

If you wouldn't mind, maybe you can give a little bit more on the order trend side sort of order velocities. However, you want to describe it.

Last call I think you talked about it being stable sort of around $100 million or so a year I'm curious if that's still kind of where you see that business for the foreseeable.

And I'm curious it sounded like that business was starting to pick up I believe it's.

Last call I think you've talked about it being stable sort of around $100 million or so a year I'm curious if that's still kind of where you see that business for the foreseeable.

And if you could talk at all about sort of your strategy.

If you feel comfortable talking about a strategy to grow that business.

And if you could talk at all about sort of your strategy.

Maybe even a sense of revenue funnel, if youre sharing those kind of metrics are you talking about lora in particular.

If you feel comfortable talking about a strategy to grow that business.

That was a more specific question, yes, yes, so I kind of Bill Laura is about $100 million business. So thank you for that yes.

Maybe even a sense of revenue funnel, if youre sharing those kind of metrics. Thanks. So are you talking about lora in particular.

That was a lora specific question, yet so I kind of Bill Laura is about $100 million business. So thank you for that yes.

So I do think as we kind of look there is a significant opportunity for components or semiconductor content.

In.

In Iot and.

It becomes because of the diversity of use cases, it really becomes a multi pronged strategy you do have to have.

<unk>.

In Iot and it becomes because of the diversity of use cases, it really becomes a multi pronged strategy you do have to have a software component. This is where we do have a rather mature.

A software component. This is where we do have a rather mature cloud platform, we do have a rather mature.

Let's call it gateway software team as well and so as we kind of look at that.

<unk> platform, we do have a rather mature.

There is there is an overall theme that I do think that there is an opportunity for us to capture.

Let's call it gateway software team as well and so as we kind of look at that.

But we need to we need to adopt this tenant of making private network deployment a lot easier. If we look at the connected in node connected gateway numbers those increased sequentially this past quarter.

There is an overall theme that I do think that there is an opportunity for us to capture.

But we need to we need to adopt this tenant of making private network deployment a lot easier. If we look at the connected end node connected gateway numbers those increased the sequentially this past quarter.

It further shows that there is a rather large opportunity and continued wave even through a downturn.

Seeing numbers from an end market standpoint that continue to migrate up where people are wanting an alternative of connectivity for.

Still seeing numbers from an end market standpoint that continue to migrate up where people are wanting an alternative of connectivity for.

Let's say low bandwidth low power devices, and so that is still an opportunity that we believe in.

However.

Let's say low bandwidth low power devices, and so that is still an opportunity to do that we believe in.

I believe I've said this before that we need to fill out.

Technology portfolio, a part of the reorganization that we're going through is to kind of group R&D competencies for us to take advantage of that and so we're in the middle of formulating that strategy in order to capture that vision of what we see making private network deployment very easy and part of that.

However.

I believe I've said this before that we need to fill out.

The technology portfolio, a part of the reorganization that we're going through is to kind of group R&D competencies for us to take advantage of that and so we're in the middle of formulating that strategy in order to capture that vision of what we see making private network deployment very easy and.

<unk> story is certainly lower along with a few other components in the technology portfolio.

We're formulating that today and we'll be working on that over the next couple of quarters reorganizing around it and then at the appropriate time, we'll be laying it out so that we can kind of talk about what that market opportunity that looks like exactly why we have a right to win that market opportunity what that timeline looks like.

Part of that story is certainly Laura along with a few other components in the technology portfolio.

We're formulating that today and we'll be working on that over the next couple of quarters reorganizing around it and then at the appropriate time, we'll be laying it out so that we can kind of talk about what that market opportunity looks like exactly why we have a right to win that market opportunity and what that timeline looks like.

In terms of overall opportunity I know that it's been said that.

Roughly we had a $1 $1 billion pipeline in the past.

In terms of overall opportunity I know that it's been said that it's roughly.

Rather than qualifying debt number I'd say roughly today, we're around $400 million.

We had a $1 $1 billion pipeline in the past.

On that more base pipeline and it continue we continue to work. It we continue to see the opportunity and the use cases, we need to look for use cases to have a lot of commonality in solution product solution and then we need to start to work on delivering our standard solution to that end market rather than just simply a component.

Rather than qualifying that number I'd say roughly today, we're around $400 million.

On that more base pipeline and it continue we continue to work. It we continue to see the opportunity and the use cases, we need to look for use cases that have a lot of commonality in solution product solution and then we need to start to work on delivering a standard solution to that end market rather than just simply a component.

Thanks, a lot for all the protocol good level.

And the next question comes from the line of Tristan <unk> with Robert W. Baird. Please proceed with your question.

Thanks, a lot for all the costs of all good luck.

Hi, Good afternoon, just as a follow up to your commentary on <unk>.

And the next question comes from the line of Tristan <unk> with Robert W. Baird. Please proceed with your question.

On wireless.

Just looking at.

Hi, Good afternoon, just as a follow up to your commentary on scale on wireless.

Where we see.

Revenue run rate before any type of synergies, including with Noah.

Just looking at it.

Where we could see the revenue run rate before any type of synergies exiting with Noah.

It looks like your quarterly run rate right now is probably a little bit below what it was two years ago before they get ramped up its last.

Last year, so and you've talked about the up to the.

It looks like your quarterly run rate right now is probably a bit below what it was two years ago before the big when I put that last here, so and you've talked about the up to the quarter being presume would be a trough. So is a 100 million a quarter, Ken that's a good base of which we should be basing assumptions vitro.

Quarter praise.

Presumably be a trough so is a 100 million a quarter, Ken that's a good base of which.

We should be facing assumptions vitro.

You build any costs heading opportunities and then.

If you could elaborate a little bit on the share shift within.

Yes.

You build any costs hitting opportunities and then.

Businesses.

Wireless thank you.

If you could elaborate a little bit on the share shift within.

Yes, so I'll comment on the share shift I don't think we've noted any share loss or share shift if anything we would expect.

The different businesses, so simo awareness. Thank you.

Yes, so I'll comment on the share shift I don't think we've noted any share loss or share shift if anything we would expect to gain some share in.

To gain some share in.

In modules, especially.

If we look at the routers thats pretty steady the one piece. If you if you want to call Sierra wireless a $400 million business I said on the last earnings call.

In modules, especially.

If we look at the router thats pretty steady the one piece. If you if you want to call Sierra wireless a $400 million business I said on the last earnings call.

I believe after recovered I would put it right around $4 60.

I still think that's probably a good number of them, though in the short term I think your number is probably a little bit better.

I believe after recovered I would put it right around $4 60.

So, let's take the 400 million basically $100 million of it is going to be pretty steady very predictable that connectivity business. It's recurring great visibility we're growing it.

I still think that's probably a good number of them, though in the short term I think your number is probably a little bit better.

But so let's take the 400 million basically $100 million of it is going to be pretty steady very predictable that connectivity business. It's recurring great visibility we're growing it.

Not going to be a barn burner in terms of growth rate.

But it's just going to be steady pick up the gross margin and contribution so the the routers right now we've seen about a 30% pull back I'd say, that's largely industry wide I would expect that recovery to bounce back a little bit from that from that base, but certainly not be what it was the.

It's not going to be a barn burner in terms of growth rate.

But it's just going to be steady pick up good gross margin and contribution so the the routers right now we've seen about a 30% pullback I'd say thats largely industry wide I would expect that recovery to bounce back a little bit from that from that base, but certainly not be what it was the.

The previous.

The previous year, if you go back a little over a year those numbers were a little bit elevated in a frothy buying season.

The previous.

And the modules.

The previous year, if you go back a little over a year those numbers were a little bit elevated in a frothy buying season.

That has fluctuated quite a bit.

We'd probably put it somewhere around.

And the modules.

<unk> 60, or so on a normalized basis and with some potential upside.

That has fluctuated quite a bit.

We'd probably put it somewhere around.

We look at it that's about a $393 $70 million upside opportunity in North America, but we don't expect to get 100% of that business. So we'll be pursuing that rather aggressively it will take some time for us to realize that.

$2 60, or so on a normalized basis and with some potential upside.

Look at it but about a 390 $370 million upside opportunity in North America, but we don't expect to get 100% of that business. So we'll be pursuing that rather aggressively it will take some time for us to realize that.

And we would probably look to deliver those in.

Two years out.

Great very useful and then.

And we would probably look to deliver those in.

From a follow up questions who debentures.

Two years out.

Taking private network adoption Mckee here.

Great very useful.

<unk> is that <unk>, 100% of your focus on low I'd like now as it sounds like the bulk of the.

From a follow up question. So you mentioned.

Making private network adoption that Chi here as it is an opportunity for Noah is that really 100% of your focus on low I'd like now as it sounds like the bulk of the <unk>.

Inventory collection associated with CGM is behind.

The feedback not only from the things conference is that.

Inventory collection associated with helium is behind.

There is basically much easier.

The feedback not only from the things conferences that.

It has to go on Asia.

Just a few years ago with a fairly clear.

There is basically much easier access to lower implementation then.

Clear path.

Kind of a one to two year.

Just a few years ago with the.

Estimates for one that you can pretty much lower so could you expand a little bit.

Fairly clear path.

Kind of a one to two year ally.

Thank you.

Lola at what your run rate admittedly is lower than the prior management team.

Customers, who want to implement Lola so could you expand a little bit tell him. What you think is still holding.

Guidance for a few years ago in Indianapolis, <unk>, where do you see opportunities to improve the adoption.

Eddie what your runway that admittedly is lower than the prior management team was.

Guiding for a few years ago, and any elaboration on where you see opportunities to improve the adoption.

Yes.

I will say this I think the execution in Laura's pretty good let's say below expectations that were set by prior management, but I still think anytime.

Yeah, I will say this and I think the execution and Lora is a pretty good let's say below expectations that were set by prior management, but I still think anytime you grow a business from zero to $100 million in four years in semiconductor land, that's usually pretty special so it's a unique technology.

Anytime you grow a business from zero to $100 million in four years in semiconductor land, that's usually pretty special so it's a unique technology, obviously, it's technology that the market is there ready to adopt.

When you start bringing together a large ecosystem set of partners that all have to work together to drive a solution.

Obviously, it's a technology that the market is there ready to adopt.

When you start bringing together a large ecosystem set of partners that all have to work together to drive a solution.

It definitely is going to slow down, but as we look at adoption is continues to pick up there's a little bit of a blip in there in terms of helium gateway.

It definitely is going to slow down, but as we look at adoption. It continues to pick up there's a little bit of a blip in there in terms of helium gateway.

<unk> that.

Maybe.

A contributor to the numbers being a little bit larger than what actual market adoption showed so during that frothy buying season, but I still look at it as good steady adoption.

Gateways that.

Maybe.

Was a contributor to the numbers being a little bit larger than what actual market adoption showed so during that frothy buying season, but I still look at it as good steady adoption.

Overall, the market need something thats easy to implement if we talk to customers that are looking for something thats lower base Theyre.

Not necessarily in Iot theyre not necessarily somebody that has.

Overall, the market need something that's easy to implement if we talk to customers that are looking for something thats lower base Theyre.

The breadth of R&D in order to implement something from wounded June. So this is where we have done taken initiatives in the past in order to make it easier to adopt we are licensing the technology out in order to further that adoption and we will continue to evolve and.

They're not necessarily in Iot theyre not necessarily somebody that has.

The breadth of R&D in order to implement something for Munza terms. So this is where we have done taken initiatives in the past in order to make lora easier to adopt we are licensing the technology out in order to further that adoption and we will continue to evolve and.

Delivered to the market tools necessary to speed up that adoption, but I do think that there is a couple of holes.

In the delivery of that solution that we could fortify in order to speed things up.

Delivered to the market tools necessary to speed up that adoption, but I do think that there is.

A couple of holes.

Great. Thank you very much.

In the delivery of that solution that we could fortify in order to speed things up.

And the next question comes from the line of Christopher Roland with Susquehanna. Please proceed.

Great. Thank you very much.

Hi, guys just a quick follow up.

And the next question comes from the line of Christopher Roland with Susquehanna. Please proceed.

The amount.

The amount of turns business you guys expect to get.

Hi, guys just a quick follow up.

So in the quarter.

Pls turns.

The amount.

The amount of turns business you guys expect to get to our guidance in the quarter.

Alright.

Yes last quarter, we got just over 50% was slightly less than that this quarter.

Pls terms.

It's not something that.

Yes last quarter, we got just over 50% was slightly less than that this quarter.

We will be tracking and reporting on but its slightly better than it was last quarter.

It's not something that we.

Thanks, so much.

We'll be tracking and reporting on but its slightly better than it was last quarter.

And the next question comes from the line of harsh Kumar with Piper Sandler. Please proceed with your question.

Thanks, so much.

Yeah, Hey, guys. Thanks for signing in.

And the next question comes from the line of harsh Kumar with Piper Sandler. Please proceed with your question.

Quick question Mark.

In the analog space in the industry, we're seeing a variety of companies basically all of them start to guide down.

Yeah, Hey, guys. Thanks for signing in.

Quick question marks and.

I guess looking at your results you are hearing much better.

In the analog space in the industry, we're seeing a variety of companies basically all of them start to guide down.

My question to you is why is that is that a function of data center offsetting a lot of your traditional analog businesses.

I guess looking at your results you are faring much better.

Or is it because you started the correction in early or is there something else going on that is perhaps helping you do better.

My question to you is why is that is that a function of data center offsetting a lot of your traditional analog businesses.

Yes, it's both I'll have Paul.

Or is it because you started the correction in early or is there something else going on that is perhaps helping you do better yes, it's both I'll have Paul.

You provided a lot of color on the end markets.

<unk>.

For data center, but it is we did start to guide down before our peers in that group. So I think that's another big portion of why we are cutting down from 200 to 190.

You provided a lot of color on the end markets.

For data center, but it is we did start to guide down before our peers and that group. So I think thats. Another big portion of why we're cutting down from.

Yes, I think I said it in.

Set of Investor meetings, when time at the <unk>.

Bane of our existence as a an operations team that is really good so when we got all the orders.

200 to 190.

Yes, I think I said it in the.

Set of Investor meetings, when time is the bane of our existence as a an operations team that is really good.

Our team had been able to secure that capacity and deliver on it and I am saying that of course tongue in cheek they are phenomenal.

So when we got all the orders.

Phenomenally efficient team, but we did we were able to secure that capacity and delivered as a result, we shipped it all and saw the correction and a little bit early.

Our team had been able to secure that capacity and deliver on it and I am saying that course tongue in cheek they are phenomenal.

Phenomenally efficient team, but we did we were able to secure that capacity and delivered as a result, we shipped it all and saw the correction and a little bit early.

As a result, we are seeing the rebound a little bit early but we are getting helped out with a couple of key markets, where we do have beachheads. One surprisingly enough is TBS, where we continue to innovate on the next generation interfaces. We got some of the best specs out there and yes, you do kind of share this with competition over time.

Right now we are the only guy who can deliver and we're seeing upside as a result, and AI is just a gift.

It's phenomenal Sam expansion.

But right now we're the only guy who can deliver and we're seeing upside as a result, and AI is just a gift.

So on that.

On the AI stuff can I ask you. If you will visibility is extremely solid in other words you.

It's phenomenal Sam expansion.

So on on that.

Are you seeing orders just pile up and.

On the AI stuff can I ask you if you will.

Visibility is extremely solid in other words you.

For multiple quarters visibility.

Is it a situation where of course, you a hand to mouth, but.

Are you seeing orders just pile up and.

But the orders are coming in kind of spud several quarter.

For multiple quarters visibility.

Yes, I wouldn't say, it's the orders are piling up the design ends are piling up and we anticipate the orders piling up we did see.

Is it a situation where of course, you hand to mouth, but.

But the orders are coming in kind of spud several quarter.

Yes, I wouldn't say, it's the orders are piling up the design ends are piling up and we anticipate the orders piling up we did see a nice bookings increase this quarter. So it is early on in that trend. It will strengthen this next year as it rolls out but <unk> was.

A nice bookings increase this quarter. So it is early on in that trend. It will strengthen this next year as it rolls out, but <unk> was a nice valve.

Validation on a few fronts I think you might have seen some of the press releases that we put out but just had some amazing feedback that came back from that are 200 gig single Lambda devices, very well received very well positioned in the industry does have a decision on which.

A nice validation on a few fronts I think you might have seen some of the press releases that we put out but just had some amazing feedback that came back from that are 200 gig single Lambda devices, very well received very well positioned and the industry does have a decision.

Data center architectures Theyre going to implement every hyperscale is we'd be up a little bit differently, but.

Which.

The Bottomline is it really doesn't matter what direction. They go.

Data center architectures, theyre going to implement in every hyperscale, a hesitancy you'd be a little bit differently, but.

Re timed direct.

It's all going to add up to additional Sam and growth for us even it could be a bit more explosive if they choose a particular route but overall, it's just a very nice frothy environment and so we would start be starting that.

The bottom line is it really doesn't matter what direction. They go.

Timed.

Correct.

It's all going to add up to additional Sam and growth for us even.

It can be a bit more explosive if they choose a particular route but overall, it's just a very nice frothy environment and so we would start to be starting the discussions in terms of capacity securing the capacity for this next year that would be happening today, and then orders would follow.

The discussions in terms of capacity securing the capacity for this next year that would be happening today, and then orders would fall.

And if I can ask one last one do you think Paul that you had done cutting at this point in time, we reached.

I'm pretty happy threshold, if you will.

And if I can ask one last one do you think Paul that Youre done cutting at this point in time you reached.

I'd say.

Our goal was.

<unk>, we probably had another $40 million to go we did do that.

Pretty happy threshold, if you will.

I'd say my goal was.

At this point, we pulled out $140 million out of the business.

Intimated that we probably had another $40 million to go we did do that.

And that was done thoughtfully with.

At this point, we pulled out of $140 million out of the business.

Historical.

Budgeting exercise. So if you go back in time, you look at 2017, you look at what the budgets were at those appropriate stages and I think everything kind of comes down to just continual refinement and improvement at this juncture.

And that was done thoughtfully with.

With historical.

Budgeting exercise. So if you go back in time, you look at 2017.

Look at what the budgets were at those appropriate stages, and I think everything kind of comes down to just continual refinement and improvement at this juncture.

Comfortable with the cuts that we made anything that we do will just be.

Fine and improve our chances for growth in the future.

I'm comfortable with the cuts that we made anything that we do will just be to refine and improve our chances for growth in the future.

Great. Thank you Paul Thanks Soma.

Thank you.

And the next question comes from the line of Cody Acree with benchmark. Please proceed with your question.

Great. Thank you Paul Thanks Soma.

Thank you.

Yes. Thank you guys for taking my question.

And the next question comes from the line of Cody Acree with benchmark. Please proceed with your question.

The next one I guess, just a follow up too harsh <unk> question.

Yes. Thank you guys for taking my question.

Well what other segments, you said youre reviewing today that you believe or are near the bubble too.

The next one I guess, just a follow up too harsh <unk> question.

Paul what other segments, you said youre reviewing today that you believe are.

<unk> require less investment going forward.

Our near the bubble too.

So I'd say that I've got a I've got a practice or cadence.

To require less investment going forward.

Management that I've always implemented I'd review everything on an annualized basis. So if we don't have good projects to invest in we don't.

So I'd say that I've got a I've got a practice or cadence.

And my management that are always implemented I would review everything on an annualized basis. So if we don't have good projects to invest in we don't we.

We don't just have.

Assign budgeting two business unit, just because they had it before so every project requires a justification every project would have an opportunity attached to it so at this point.

We don't just.

Sign budgeting to a business unit just because they had it before so every project requires a justification that every project would have an opportunity attached to it. So at this point I scrutinize everything on a regular basis obviously.

Scrutinize everything on a regular basis obviously.

Look at market expansion in certain areas and certainly feel a lot more comfortable.

The risk profile associated with that investment.

I can look at market expansion in certain areas and certainly feel a lot more comfortable.

But we would look to.

As we kind of pullback opex overall, we'd look to re fortifying the beachheads if those beachheads have.

The risk profile associated with that investment.

But we would look to.

As we kind of pullback opex overall, we'd look to re fortifying the beachheads if those beachheads have.

Have some let's say some sunsetting attached to them, we would look to take those investments and put them in other areas that are a bit.

Yeah.

Have some let's say some sunsetting attached to them, we would look to take those investments and put them in other areas that are a bit.

Deferred topline growth.

Thank you for that and I guess.

Secondly, just if you can summarize.

Stiffer topline growth.

<unk>.

Improving demand.

Thank you for that and I guess.

Noted in the press release about your high end consumer business and data center.

Secondly, just if you can summarize.

<unk>.

Improving demand that you noted in the press release about your high end consumer business and data center.

How much of that is or near term visibility for the current quarter or the next months.

<unk>.

And what.

How much of that is for near term visibility for the current quarter in the next six months.

What.

Detail can you provide that's offsetting those two businesses.

And to what.

I think your guidance for both was flat sequentially down.

Detail can you provide that's offsetting those two businesses.

Yes, yes that is correct.

I'd say data center came in a bit.

Thank you your guidance for both was flat to sequentially down.

Higher in Q3 than we.

Yes, yes that is correct.

Fully anticipated.

I'd say data center came in a bit a bit higher in Q3 than we.

When I when I speak to improving demand I'm really not talking about revenue I'm talking about end market consumption. So that'd be direct shipments plus Pos and so you just have to kind of.

Okay.

Fully anticipated.

When I when I speak to improving demand I'm really not talking about revenue I'm talking about end market consumption. So that'd be direct shipments plus Pos and so you just have to kind of.

Qualify that to me that's the best measure of where business is doing and it eliminates all the channel inventory noise. So when I say, we have an improving demand. It's it's modest sequential improving demand that has been for the most part improving over the last four quarters.

Qualify that to me that's the best measure of where our business is going and it eliminates all the channel inventory noise. So when I say, we have an improving demand.

It's modest sequential improving demand that has been for the most part improving over the last four quarters.

I look to see corresponding booking rates that <unk>.

13 week trailing average booking rates that that <unk>.

I would look to see corresponding booking rates that 13 week trailing average booking rates that that match that and I am seeing that correlation. So anything that would give you is not forecasted it's in the rears its in the rearview mirror its demand continually sequentially improving demand that we have.

Match that and I'm seeing that correlation so anything that I'd give you is not forecast it.

In the rears its in the rearview mirror demand continually sequentially improving demand that we've seen over the last four quarters at least.

Alright, Thank you very much.

And the next question comes from the line of Scott <unk> with Roth. Please proceed with your question.

<unk> seen over the last four quarters at least.

Alright, Thank you very much.

Good afternoon. Thanks for taking my questions Sneaking me in nice job on the restructuring efforts.

And the next question comes from the line of Scott <unk> with Roth M. Can please proceed with your question.

Maybe go.

Go back to modules.

Good afternoon. Thanks for taking my questions Sneaking me in nice job on the restructuring efforts. Thank.

It sounds like you don't necessarily need any sort of a formal.

Maybe.

Exclusion list on <unk> to win business because it seems like customers are diversifying away from that anyway, but I am wondering I don't think I heard any comments on that front is there an update on that front and it sounds like based on the normalization of that business at around $260 million or so.

Go back to modules.

Yes, it sounds like you don't necessarily need any sort of a formal.

Exclusion list on capital due to win business because it seems like customers are diversifying away from that anyway, but I am wondering I don't think I heard any comments on that front is there an update on that front and it sounds like based on the normalization of that business at around $260 million or so.

That you are basically running at less than half that rate right. Now when would you expect normalization on that front I think last quarter, you talked about the middle of calendar 'twenty. Four is that we should still be thinking about so in the second half of 'twenty four we're getting back to levels like that before you start to add on some incremental capital business.

Yeah, I was trying to give you color in terms of what the calendar year is going to do for us. So if if you do the math on that $2 60, and kind of tip my hand, and when I. When I think that this is going to recover and I would put it in the second half. So this is after some feedback from customers.

Yeah, I was trying to give you color in terms of what the calendar year is going to do for us. So if if you do the math on that $2 60, and kind of tip of my hand him when I. When I think that this is going to recover and I would put it in the second half. So this is after some feedback from customers.

We expect that as well as some additional.

Uptake from new design and so.

Yes.

We expect that as well as some additional.

On the on the exclusion list front, no we don't need.

Uptake from new design and so.

Quite tell a fiber com to be officially excluded.

On the on the exclusion list front, no we don't need.

In order to benefit from this we are benefiting from it we will continue to benefit from it I think it has.

Quite tell a fiber com to be officially excluded.

In order to benefit from this we are benefiting from it we will continue to benefit from it I think it has.

Even if the China Select committee came out Tomorrow and said, Okay. Everything's fine, we're not going to put them on the list were still going to benefit from this theres been enough shift.

Even if the China Select committee came out Tomorrow and said, Okay. Everything is fine and we're not going to put them on the list were still going to benefit from this there has been enough shift.

Because of the overall tensions.

That exists with China, and the U S, especially around networking equipment and it's been going on for years. So it's just now finally coming to a head where people are not willing to jeopardize their company's business on the basis of using a particular supplier that might be 10% cheaper just doesn't make any sense. So we're getting a lot of pick up.

Because of the overall tensions.

That exists with China, and the U S, especially around networking equipment and it's been going on for years. So it's just now finally coming to a head where people are not willing to jeopardize their company's business on the basis of using a particular supplier that might be 10 cents cheaper just doesn't make any sense. So we're getting a lot of pickup.

Not to mention we have good relationships with Qualcomm I come with those relationships.

Because of the previous work done in compute and so we're leveraging that in order to.

Not to mention we have good relationships with Qualcomm I come with those relationships.

To pick up very heavily on those leads.

As of the previous work done in compute and so we're leveraging that in order to.

And I should mention that we also sell quite a few Sony chipsets with the <unk> modules as well have a fantastic relationship there.

To pick up very heavily on those leads.

And I should mention that we also sell quite a few Sony chipsets with the <unk> modules as well have a fantastic relationship there.

Great and lastly, maybe to just wrap up on the lower front.

Thanks for calibrating it sounds like the annualized run rate now was down at about $100 million.

Great and lastly, maybe to just wrap up on the lower front.

I'm wondering what the growth rate on that business looks like and what the composition of that is today in terms of sales outside of China, I know, that's where a lot of design activity has been going but I'm wondering how that's building at this point in time and lastly, just on the asset sale front I know you guys are reluctant to do anything.

Thanks for calibrating it sounds like the annualized run rate now was down at about $100 million.

Essentially under under pressure.

The balance sheet, but now that you solve the covenant issues for the immediate future.

Essentially under under pressure.

Are there some assets now that you're starting to reevaluate the long term impact.

The balance sheet, but now that you solve the covenant issues for the immediate future.

Okay, Yes, Laura I will say.

Are there some assets now that you're starting to reevaluate that may not be part of the long term syntech. Thanks.

We were probably still report very strong China based number just because we're manufacturing typically is but if we look if I look at that where that revenue originates.

Yes.

I will say.

We will probably still reported very strong China base number just because we're manufacturing typically is but if we look if I look at that where that revenue originates we're.

We're seeing quite a bit of adoption outside of APAC in particular.

So what would the growth rate be I definitely expect it to be on the order.

We're seeing quite a bit of adoption outside of APAC in particular.

15% in the near term, we could see some acceleration of that as a couple of technology pieces come together and it becomes a little bit easier to implement but we've seen steady adoption and infrastructure applications.

And so what would the growth rate be I definitely expect it to be on the order of 10% to 15% in the near term we could see some acceleration of that as a couple of technology pieces come together and it becomes a little bit easier to implement but we've seen steady adoption and infrastructure applications.

Especially outside China, we do have some China based wins as well.

But Europe definitely seeing some nice adoption there as well so 10% to 15% I think is the is the long term our long term.

Especially outside China, we do have some China based wins as well.

But Europe definitely seeing some nice adoption there as well so 10% to 15% I think is the is the long term our long term growth rate then we would probably target for that and we can adjust that as time goes on in terms of balance sheet.

Growth rate that we would probably target for that and we can adjust that.

As time goes on in terms of balance sheet.

We are definitely hyper focused on.

Getting the leverage ratio down we will continue to be I won't comment on any particular.

We are definitely hyper focused on getting.

That sale.

But I'll just say that all cards are on the table in terms of driving that leverage ratio down to the benefit of our shareholders.

Getting the leverage ratio down we will continue to be I won't comment on any particular asset sale.

But I'll just say that all cards are on the table in terms of driving that leverage ratio down to the benefit of our shareholders.

Great. Thank you.

There are no further questions at this time I'd like to turn the floor back over to management for any closing comments.

Great. Thank you.

Thank you for joining and have a good day.

There are no further questions at this time I'd now like to turn the floor back over to management for any closing comments.

And that concludes today's teleconference. You may disconnect. Your lines at this time. Thank you for your question.

Thank you for joining and have a good day.

Okay.

And that concludes today's teleconference. You may disconnect. Your lines at this time. Thank you for your participation.

Yeah.

Hum.

Yes.

Yeah.

Yes.

Hum.

[music].

Hmm.

Hum.

[music].

Hum.

Oh.

[music].

Hum.

[music].

<unk>.

[music].

Hum.

Hmm.

[music].

Okay.

[music].

Okay.

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