Q4 2024 Marvell Technology Inc Earnings Call

Good afternoon, and welcome to the Marvell technology incorporated fourth quarter and fiscal year 2024 earnings Conference call. All participants will be in a listen only mode should you need assistance. Please signal conference specialist by pressing the star key followed by zero. After today's presentation, there will be an opportunity to ask questions.

Operator: Good afternoon, and welcome to the Marvell Technology Incorporated 4th Quarter and Fiscal Year 2024 Earnings Conference Call. All participants will be in a listen-only mode.

Operator: Should you need assistance, please signal conference specialists by pressing the star key followed by zero. After today's presentation, there will be an opportunity to ask questions. Please note this event is being recorded. I would now like to turn the conference over to Mr. Ashish Saran, Senior Vice President of Investor Relations. Please go ahead, sir.

Please note. This event is being recorded I would now like to turn the conference over to Mr. Ashish Saran Senior Vice President of Investor Relations. Please go ahead Sir.

Ashish Saran: Thank you and good afternoon, everyone welcome Tomorrow else fourth quarter and fiscal year 2024 earnings call.

Ashish Saran: Thank you and good afternoon, everyone. Welcome to Marvell's fourth quarter and fiscal year 2020 earnings call. Joining me today are Matt Murphy, Marvell's Chairman and CEO, and Willem Meintjes, our CFO. Let me remind everyone that certain comments made today include forward-looking statements, which are subject to significant risks and uncertainties that could cause our actual results to differ materially from management's current expectations. Please review the cautionary statements and risk factors contained in our earnings press release, which we filed with the SEC today and posted on our website, as well as our most recent 10-2010-10-Q filings. We do not intend to update a forward-looking, A reconciliation between GAAP and non-GAAP financial measures is available in the investor relations section of our website.

Ashish Saran: Joining me today are Matt Murphy, Marvell, chairman and CEO and maintain our CFO let.

Ashish Saran: Let me remind everyone that certain comments made today include forward looking statements, which are subject to significant risks and uncertainties that could cause our actual results to differ materially from management's current expectations.

Please review the cautionary statements and risk factors contained in our earnings press release, which was filed with the SEC today and posted on our website as well as our most recent 10-K 10-Q filings, we do not intend to update our forward looking statements during our call today, we will refer to certain non-GAAP financial measures a reconciliation between our GAAP and non-GAAP financial measures is available in.

Ashish Saran: The Investor Relations section of our website.

Ashish Saran: Earlier today, we announced our Accelerated Infrastructure for the EI Era Investor Event, which will be held in New York on April 11. Please refer to our press release for more details. We look forward to updating investors on the exciting opportunities we see in front of us from growth and accelerated infrastructure. Let me now turn the call over to Matt for his comments on the quarter.

Ashish Saran: Yesterday, we announced our accelerated infrastructure for the <unk> at our Investor event, which will be held in New York on April 11. Please.

Ashish Saran: Please refer to our press release for more details we look forward to updating investors on the exciting opportunities we see in front of us from the growth in X stomach infrastructure I mean, I'll turn the call over to Matt for his comments on the quarter Matt.

Matt Murphy: Thanks, Ashish and good afternoon, everyone for.

Matt Murphy: Thanks, Ashish, and good afternoon, everyone. For the fourth quarter of fiscal 2024, Marvell delivered revenue of $1.43 billion, growing 1% sequentially above the midpoint of guidance. In addition, on a non-GAAP basis, the Marvell team drove a substantial 330 basis point sequential increase in gross margin, completed execution on the OPEX reduction plan we outlined earlier in the year, and delivered earnings per share of 46 cents, growing 12% sequentially. As Willem will tell you in greater detail, we also drove another strong quarter of operating cash and increased share repurchase. We are pleased to report these results to you in what remains a challenging macro environment.

Matt Murphy: For the fourth quarter of fiscal 2020 for Marvell delivered revenue of 1.43 billion growing 1% sequentially above the midpoint of guidance.

In addition on a non-GAAP basis, the Marvell team drove a substantial 330 basis point sequential increase in gross margin.

Matt Murphy: Completed execution on the Opex reduction plan, we outlined earlier in the year and delivered earnings per share of <unk> 40 success growing 12% sequentially.

Matt Murphy: As well and we'll tell you in greater detail. We also drove another strong quarter of operating cash and increase share repurchases. We are pleased to report these results to you and where it means a challenging macro environment.

Matt Murphy: And our data center end market for the fourth quarter, we drove record revenue of $765 million above our guidance growing 54% year over year and 38% sequentially.

Matt Murphy: In our data center and market, for the fourth quarter, we drove record revenue of $765 million, above our guidance, growing 54% year-over-year and 38% sequentially. The strong revenue growth in the quarter was driven by the cloud portion of our data center and market. Well, AI has been a key growth driver. I am pleased that our standard cloud infrastructure revenue has also grown every border, and we see that continuing next year. Our 800 gigabyte PAM solutions led our growth in the fourth quarter. We also benefited from higher sequential demand for our storage products as that portion of our data center and market continues its recovery. Revenue from our TeraLinks Ethernet switches also grew sequentially in the quarter.

Matt Murphy: The strong revenue growth in the quarter was driven by the cloud portion of our data center end markets.

Matt Murphy: AI has been a key growth driver I am pleased that our standard cloud infrastructure revenue has also grown every quarter and we see that continuing next year.

Matt Murphy: Our 800 gig Pam solutions led our growth in the fourth quarter. We also benefited from higher sequential demand for our storage products as that portion of our data center end market continues its recovery.

Matt Murphy: Revenue from our Terra links Ethernet switches also grew sequentially in the quarter.

Matt Murphy: Turning to the first quarter of fiscal 2025, we expect our overall data center revenue to grow in the low single digits sequentially on a percentage basis. We expect revenue from both AI and standard cloud data centers to continue to grow sequentially. We project our electro-optics revenue to continue to be strong, and we also expect to benefit from the initial shipments of our cloud-optimized AI silicon program. Partially offsetting this growth, we are projecting a more than seasonal sequential decline in revenue from enterprise on-premise data.

Speaker Change: Turning to the first quarter of fiscal 2025, we expect our overall data center revenue to grow in the low single digits sequentially on a percentage basis.

Speaker Change: We expect revenue from both AI and standard cloud data centers to continue to grow sequentially.

Speaker Change: We project, our electro optics revenue to continue to be strong and we also expect to benefit from the initial shipments of our cloud optimized AI silicon programs.

Speaker Change: Offsetting this growth were projecting a more than seasonal sequential decline in revenue from enterprise on premise data centers.

Speaker Change: Over the past several years Marvell has strategically invested in technology, both organically and through acquisitions to become a critical enabler of accelerated infrastructure.

Matt Murphy: Over the past several years, Marvell has strategically invested in technology, both organically and through acquisitions, to become a critical enabler of accelerated infrastructure. The seismic shift driven by AI in the data center market is creating new opportunities, and we are actively investing to lead the next wave of innovation. We have in place a full suite of solutions across data center interconnect, switching, and compute, and the ability to uniquely stitch these together into a unified platform, a true one-stop shop for our data center customers. While our 100 gigabit per lane 800 gigabit PAM products are currently the workhorse for interconnect inside AI data centers, customers will begin qualifying our next generation 200 gigabit per lane 1.6T PAM We expect the first deployments to start toward the end of this year.

Speaker Change: The seismic shift driven by AI in the datacenter market is creating new opportunities and we are actively investing to lead the next wave of innovation.

Speaker Change: You have in place a full suite of solutions across data center interconnect switching in compute and the ability to uniquely stitch. These together into a unified platform a true one stop shop for our data center customers.

Speaker Change: While our 100 gig per lane 800 gig Pam products are currently the workhorse for interconnect inside AI data centers customers have begun qualifying our next generation 200 gig Berlin, One point 60, Pam solutions, we expect first deployments to start towards the end of this year.

Speaker Change: Complementing our optical interconnect solutions, we expect to start ramping our Pam DSP for active electrical cables.

Matt Murphy: Complementing our optical interconnect solutions, we expect to start ramping our PAM DSPs for active electrical cables. This is a new and completely additive market for Marvell. We expect to be shipping products to multiple Tier One cloud customers this year. Our DCI products, which provide connectivity between data centers, are critical to our customer success and continue to do very well.

Speaker Change: This is a new and completely additive market for Marvell, we expect to be shipping products to multiple tier one cloud customers. This year.

Speaker Change: Our Dci products, which provide connectivity between data centers are critical to our customer success and continued to do very well.

Speaker Change: We see exciting new opportunities ahead of us from growth in generative AI applications driving cloud customers to build new data centers.

Matt Murphy: We see exciting new opportunities ahead of us from growth and generative AI applications driving cloud customers to build new data centers. We also expect a positive uplift from increased investment in inferencing, which will drive more bandwidth between data sets. We are shipping our 400 gigabit DCI products in high volume today and are seeing strong interest for our next generation 800 gigabit product. I'm also very pleased to report to you that, in fiscal 2024, we significantly expanded our DCI customer base with design wins at multiple data center customers. We expect these design wins to begin ramping next year. As you will remember from prior calls, Marvell Silicon Photonics Technology has been a critical enabler of our DCI module.

Speaker Change: We also expect a positive uplift from increased investment in inferencing, which will drive more bandwidth between data centers.

Speaker Change: We are shipping our 400 gig Dci products in high volume today and are seeing strong interest for our next generation 800 gig products.

Speaker Change: I'm also very pleased to report to you that in fiscal 2024, we significantly expanded our Dci customer base with design wins at multiple datacenter customers.

Speaker Change: We expect these design wins to begin ramping next year.

Speaker Change: As you will remember from prior calls our Bell Silicon Photonics technology has been a critical enabler of our Dci modules, you'll hear more at OFC and our upcoming AI event about how we plan to deploy our field proven silicon Photonics technology to enable next generation higher density lower power Interconnects.

Matt Murphy: You'll hear more at OFC and our upcoming AI event about how we plan to deploy our field-proven silicon photonics technology to enable next-generation, higher density, lower power interconnect. For data center switching, our Terralinks 12.8T products continue to ship in high volume, and we are on track for production shipments of our next generation 51.2T switch later this year. The TeraLinks product line, you will recall, came from the Arnovium Act.

In data center switching or Karen Lynch 12, eight key products continue to ship and high volume and we are on track for production shipments of our next generation 51.2 T switched later this year.

Speaker Change: The <unk> product line, you'll recall came from our <unk> acquisition we.

Matt Murphy: We combine the Inovium team with Marvell's very successful Enterprise and Carrier Switching organization. This larger scale now enables Marvell to accelerate its development to address new cloud opportunities, particularly in switching for AI deployment. We are encouraged by the traction we are seeing with both existing and new customers, which has expanded our opportunity funnel for cloud switching dramatically over the past year. Now, turning to our cloud-optimized silicon platform.

Speaker Change: We combine the Adobe EM team with Marvell is very successful enterprise and carrier switching organization.

Speaker Change: This larger scale now enables barbell to accelerate our development to address new cloud opportunities, particularly in switching for AI deployments. We are encouraged by the traction we're seeing with both existing and new customers, which has expanded our opportunity funnel for cloud switching dramatically over the past year.

Speaker Change: Turning to our cloud optimized silicon platform.

Speaker Change: We're seeing significant progress with the first set of design wins outlined during our last Investor day.

Matt Murphy: We're seeing significant progress with the first set of design wins outlined during our last investment. We expect initial shipments for our two AI compute programs to start in the first quarter and are on track for a very substantial ramp in the second half of the fiscal year. Customer introduction of these programs is going extremely well, and we are tightly aligned with them on volume expectations and working in lockstep to enable production. We now have a clear view of demand for both this fiscal year as well as fiscal 2026.

Speaker Change: We expect initial shipments for our two AI compute programs to start in the first quarter and are on track for a very substantial ramp in the second half of the fiscal year.

Speaker Change: Customer bring up these programs is going extremely well and we.

Speaker Change: We are tightly aligned with them on volume expectations and working in lockstep to enable the production.

Speaker Change: We now have a clear view of demand for both this fiscal year as well as fiscal 2026, we have been working closely with our suppliers and are confident that we have secured capacity for the ramp.

Speaker Change: With the visibility we now have for these programs along with many new opportunities. We are very excited about the potential scale of long term revenue for marvell from this business.

Matt Murphy: We have been working closely with our suppliers and are confident that we have secured capacity for the ramp. With the visibility we now have for these programs, along with many new opportunities, we are very excited about the potential scale of long-term revenue for Marvell from this. As the initial set of design wins reaches full run rate, we expect annual revenue from cloud optimized silicon to have the potential to rival our fast growing data center optics business, which, for reference, grew to over a billion dollars in fiscal 2024. With the exploding investment in AI and accelerated computing, the demand for cloud-optimized silicon has grown significantly.

Speaker Change: As the initial set of design wins reach its full run rate, we expect annual revenue from cloud optimized silicon has the potential to rival our fast growing data center optics business, which for reference grew to over a $1 billion in fiscal 2024.

Speaker Change: With the exploding investment in AI and accelerated computing the demand for cloud optimized silicon has grown significantly.

Speaker Change: We have successfully executed multiple five nanometer designs in the last few years and are deeply engaged with cloud customers on many new three nanometer opportunities. These engagements are driving a substantial increase in the size of our design funnel.

Speaker Change: AI is increasing the cadence of new chip releases and this plays well to marvell strength as a key partner for our cloud customers with a proven a Sikh platform.

Matt Murphy: We have successfully executed multiple five nanometer designs in the last two years and are deeply engaged with cloud customers on many new three nanometer opportunities. These engagements are driving a substantial increase in the size of our design funnel. AI is increasing the cadence of new chip releases, and this plays well to Marvell's strength as a key partner for our cloud customers with a proven ASIC platform. We have a broad suite of differentiated IP, including ultra-high-speed SERTIs, ARM compute, security, storage, and advanced packaging, including dye-to-dye interconnects and chiplets.

Speaker Change: We have a broad suite of differentiated IP, including ultra high speed <unk> arm compute.

Speaker Change: Security storage and advanced packaging, including guided I Interconnects and triplets.

Speaker Change: We are well positioned to act as a force multiplier for our cloud customers, enabling them to scale multiple custom programs in quick succession.

Speaker Change: Now, let me turn to barbells carrier and enterprise end markets together.

Speaker Change: As we have been communicating these end markets have been dealing with a period of soft industry demand as a result, both were down sequentially in the fourth quarter and we expect them to decline again in the first quarter on a sequential basis, we expect revenue in the first quarter from carrier to decline by approximately 50% in enterprise networking declined by approximately 40%.

Matt Murphy: We are well positioned to act as a force multiplier for our cloud customers, enabling them to scale multiple custom programs in quick succession. Now, let me turn to Marvell's Carrier and Enterprise End Markets together. As we have been communicating, these end markets have been dealing with a period of soft industry demand. As a result, both were down sequentially in the fourth quarter, and we expect them to decline again in the first quarter. On a sequential basis, we expect revenue in the first quarter from carrier to decline by approximately 50%, and enterprise networking to decline by approximately 40%.

Yeah.

Speaker Change: Looking ahead, we expect revenue declines in these end markets to be behind us after the first quarter and forecast a recovery in the second half of the fiscal year.

Speaker Change: Longer term these are large and enduring end markets, which are critical to the global economy. As a result, we expect both of these end markets to eventually return to contributing over $1 billion. Each in revenue on an annual basis once demand normalizes and we began to realize the benefits of upcoming barbell specific product cycles.

Speaker Change: Turning to the consumer end market revenue declined in the fourth quarter as expected and is projected to decline approximately 70% sequentially in the first quarter. This forecast reflects the completion of deliveries for an end of life program in the prior quarter as well as significantly weaker demand from the game console market.

Matt Murphy: Looking ahead, we expect revenue declines in these end markets to be behind us after the first quarter and forecast a recovery in the second half of the fiscal year. In the long term, these are large and enduring end markets that are critical to the global economy. As a result, we expect both of these end markets to eventually return to contributing over a billion dollars in revenue on an annual basis once demand normalizes, and we begin to realize the benefits of upcoming Marvell-specific products. Turning to the consumer end market, revenue declined in the fourth quarter as expected and is projected to decline approximately 70% sequentially in the first quarter.

Speaker Change: Turning to our automotive and industrial end market revenue in the fourth quarter was $82 million declining 17% year over year and 23% sequentially.

Speaker Change: As expected the sequential weakness was primarily driven by a sharp decline in the industrial portion of this end market were order patterns can be lumpy in any given quarter.

Speaker Change: In fiscal 2020 for our automotive business delivered another strong year with revenue growing in the double digits year over year on a percentage basis.

Speaker Change: We are benefiting from growth in marvell content, driven by an increase in the number of Ethernet connected endpoints in cars, coupled with the need for more bandwidth.

Matt Murphy: This forecast reflects the completion of deliveries for an end-of-life program in the prior quarter, as well as significantly weaker demand from the game console market. Turning to our automotive and industrial end market, revenue in the fourth quarter was $82 million, declining 17% year-over-year and 23% sequentially. As expected, the sequential weakness was primarily driven by a sharp decline in the industrial portion of the send market, where order patterns can be lumpy in any given quarter. In fiscal 2024, our automotive business delivered another strong year, revenue growing in the double digits, you over a year on a percentage basis. We are benefiting from growth in Marvell content driven by an increase in the number of Ethernet-connected endpoints in cars, coupled with the need We've continued to accumulate new Ethernet design wins across a broad swath of automotive OEMs. While the initial wave of our automotive revenue was driven primarily by EVs and hybrids, we now have also won high-volume internal combustion vehicles with major auto OEMs. These wins tend to be multi-platform in nature, covering numerous models simultaneously.

Speaker Change: We've continued to accumulate new Ethernet design wins across a broad swath of automotive Oems.

Speaker Change: While the initial wave of our automotive revenue was driven primarily by Evs and hybrids. We now also one high volume internal combustion vehicles with major auto Oems.

Speaker Change: These ones tend to be multi platform in nature covering numerous models simultaneously.

Turning now to our forecast for the first quarter fiscal 2025, we expect revenue from our overall auto and industrial end market to be flat sequentially.

Speaker Change: In summary in fiscal 2024, we delivered total revenue of $5 5 billion.

Speaker Change: Our datacenter revenue accelerated throughout the year growing from about a third of total company revenue in the first quarter to more than half exiting in the fourth quarter.

Speaker Change: As customers continue to shift investment from traditional to accelerated infrastructure, we expect data center to drive the majority of our revenue growth going forward. This transition underscores marvell transformation into a leading data center company.

Speaker Change: AI was a key driver of our datacenter growth in fiscal 2024 contributing over 10% of total company revenue well above our initial forecast.

Speaker Change: This was a substantial increase from approximately 3% in the prior year.

Speaker Change: Our momentum accelerated throughout the fiscal year with AI revenue well over $200 million in the fourth quarter driven mostly from optics.

Matt Murphy: Turning now to our forecast for the first quarter of fiscal 2025, we expect revenue from our overall auto and industrial end market to be flat sequentially. In summary, in fiscal 2024, we delivered total revenue of $5.5 billion. Our data center revenue accelerated throughout the year, growing from about a third of total company revenue in the first quarter to more than half exiting the fourth quarter. As customers continue to shift investment from traditional to accelerated infrastructure, we expect data center revenue to drive the majority of our revenue growth going forward. This transition underscores Marvell's transformation into a leading data center company. AI was a key driver of our data center growth in fiscal 2024, contributing over 10% of total company revenue, well above our initial forecast. This was a substantial increase from approximately 3% in the prior year.

Speaker Change: In fiscal 2025, we expect this trend to continue driving another strong year for our data center end market.

Speaker Change: We expect a substantial base of electro optics revenue from AI should remain correlated to accelerator shipments and as those continue to grow.

We expect to benefit accordingly.

Speaker Change: In addition, we project significant revenue contributions from our AI cloud optimized programs well in excess of our prior estimate of a couple of hundred million dollars in fiscal 2020 five.

In fact, as our cloud optimized AI silicon programs reach high volume production.

Speaker Change: We expect our overall cloud optimized revenue to exceed $200 million exiting the fourth quarter.

Speaker Change: As a result on a run rate basis. This momentum would put our overall cloud optimized silicon revenue above the annual $800 million target. We had provided at our last Investor day, and with a full year of contributions in fiscal 2026, we expect to be way ahead of the prior target.

Speaker Change: In aggregate we see.

Speaker Change: A favorable setup for the second half of this fiscal year driven by continued growth from our data center end market ongoing growth from automotive and a recovery in carrier enterprise and consumer.

Matt Murphy: Our momentum accelerated throughout the fiscal year with AI revenue well over $200 million in the fourth quarter, driven mostly from opt-in. In Fiscal 2025, we expect this trend to continue, driving another strong year for our data center in Markov. We expect our substantial base of electro-optics revenue from AI should remain correlated to accelerator ship.

Speaker Change: As we continue to drive revenue growth, we remain focused on strong cash flow generation and returning capital to investors as you saw earlier today Marvell has board has approved the largest repurchase authorization in our history.

Speaker Change: We view the emergence of accelerated infrastructure is one of the most significant technology inflections of our time.

Speaker Change: I, thank all our dedicated employees and leaders for executing on our strategy to fully capitalize on this remarkable opportunity.

Matt Murphy: And as those continue to grow, we expect to benefit accordingly. In addition, we project significant revenue contributions from our AI cloud optimized programs, well in excess of our prior estimate of a couple hundred million dollars in fiscal 2025. In fact, as our cloud-optimized AI silicon programs reach high-volume production, we expect our overall cloud-optimized revenue to exceed $200 million exiting the fourth quarter. As a result, on a run rate basis, this momentum would put our overall cloud-optimized silicon revenue above the annual $800 million target we had provided at our last Investor Day. With a full year of contributions in fiscal 2026, we expect to be way ahead of the prior target.

Speaker Change: During a tumultuous period for the semiconductor industry, we have taken control of our destiny and are strategically investing to win.

Speaker Change: Earlier today, we announced the extension of our long standing collaboration with TSMC to develop the industry's first technology platform to produce two nanometer semiconductors optimized for accelerated infrastructure.

Speaker Change: This new platform will enable marvell to deliver substantial advancements in performance power and area critical for next generation accelerated workloads.

Speaker Change: We are very optimistic about our growth prospects and our role in enabling accelerated infrastructure.

Speaker Change: We look forward to updating investors on the massive opportunity in front of us at our accelerated infrastructure for the AI era event on April 11th in New York City.

Matt Murphy: In aggregate, we see a favorable setup for the second half of this fiscal year driven by continued growth from our data center and market, ongoing growth from automotive, and a recovery in carrier, enterprise, and consumer. As we continue to drive revenue growth, we remain focused on strong cash flow generation and returning capital to investors. As you saw earlier today, Marvell's board has approved the largest repurchase authorization in our history.

Speaker Change: With that I'll turn the call over to William for more detail on our recent results and outlook.

William: Thanks, Matt and good afternoon, everyone.

William: Let me start with a summary of our fiscal year 'twenty 'twenty four results.

William: Mobile delivered $5 5 billion in revenue with a strong second half performance from our data center and market driven.

William: Driven by AI applications data center revenue in the second half grew by approximately 50% over the first half.

Matt Murphy: We view the emergence of accelerated infrastructure as one of the most significant technological inflections of our time. I thank all our dedicated employees and leaders for executing on our strategy to fully capitalize on this remarkable opportunity. During a tumultuous period for the semiconductor industry, we have taken control of our destiny and are strategically investing to win. Earlier today, we announced the extension of our longstanding collaboration with TSMC to develop the industry's first technology platform to produce two nanometer semiconductors optimized for accelerated infrastructure.

William: GAAP gross margin was 41, 6% GAAP operating margin was negative 10, 3% and GAAP loss per diluted share was $1.08.

William: Our non-GAAP gross margin was 61, 2%.

William: non-GAAP operating margin was 29%.

William: And our non-GAAP earnings per diluted share was $1.51.

William: We returned 357 million to shareholders through dividends and buybacks.

Speaker Change: Moving on to our financial results for the fourth quarter.

Matt Murphy: This new platform will enable Marvell to deliver substantial advancements in performance, power, and area critical for next-generation accelerated workloads. We are very optimistic about our growth prospects and our role in accelerating infrastructure. We look forward to updating investors on the massive opportunity in front of us at our Accelerated Infrastructure for the AI Era event on April 11th in New York City. With that, I'll turn the call over to Willem for more detail on our recent results and outcomes. Thanks, Matt. And good afternoon, everyone.

Speaker Change: Revenue in the fourth quarter was $1 47 billion exceeding the midpoint of our guidance growing 1% on a year over year and sequential basis.

Speaker Change: Data Center was our largest end market driving 54% of total revenue.

The next largest was enterprise networking with 19%.

Speaker Change: Followed by carrier infrastructure at 12% consumer at 10% and auto industrial at 5%.

Willem A. Meintjes: Let me start with a summary of our fiscal year 2024 results. Marvell delivered $5.5 billion in revenue with a strong second half performance from our data center and market. Driven by AI applications, our data center revenue in the second half grew by approximately 50% over the first half. Gap gross margin was 41.6%, gap operating margin was negative 10.3%, and gap loss per diluted share was $1.08.

Speaker Change: GAAP gross margin was 46.6%.

Speaker Change: non-GAAP gross margin was 63, 9% growing 330 basis points sequentially, driven by a significantly better product mix as we had expected.

Speaker Change: Moving on to operating expenses.

Speaker Change: Operating expenses were $697 million, including stock based compensation amortization of acquired intangible assets restructuring costs and acquisition related costs.

Willem A. Meintjes: Our non-GAAP gross margin was 61.2%, our non-GAAP operating margin was 29%, and our non-GAAP earnings per diluted share was $1.51. We return $357 million to shareholders through dividends and buybacks. Moving on to our financial results for the fourth quarter. Revenue in the fourth quarter was $1.427 billion, exceeding the midpoint of our guidance, growing 1% on a year-over-year and sequential basis. Datacenter was our largest market, driving 54% of total revenue. The next largest was enterprise networking with 19%, followed by carrier infrastructure at 12%, consumer at 10%, and auto industrial at 5%.

Speaker Change: non-GAAP operating expenses were 429 million in line with our guidance. These results reflect the successful completion of our fiscal 'twenty 'twenty forecast reduction than we had outlined at the beginning of the year.

Speaker Change: GAAP operating margin was negative two 3%, while non-GAAP operating margin was 33, 8% for.

Speaker Change: For the fourth quarter GAAP loss per diluted share was 45 cents.

Speaker Change: non-GAAP income per diluted share was 46 cents growing 12% sequentially.

Speaker Change: Now turning to our cash flow and balance sheet.

Speaker Change: Cash flow from operations in the fourth quarter was 547 million.

Speaker Change: I'm pleased to report to you our second straight quarter, delivering robust operating cash flow of over 500 million.

Willem A. Meintjes: Gap growth margin was 46.6%. Non-GAAP gross margin was 63.9%, growing 330 basis points sequentially, driven by a significantly better product mix as we had expected. Moving on to operating expenses, GAP operating expenses were $697 million, including stock-based compensation, amortization of acquired intangible assets, restructuring costs, and acquisition-related costs.

Speaker Change: Our inventory at the end of the fourth quarter was 864 million decreasing by $77 million from the prior quarter D.

Speaker Change: DSO was 77 days decreasing by a day from the prior quarter.

Speaker Change: We returned 52 million to shareholders through cash dividends.

Speaker Change: In addition, we repurchased 100 million of our stock during the fourth quarter doubling from the prior quarter we.

Speaker Change: We expect to further increase repurchases in the first quarter of fiscal 2025.

Willem A. Meintjes: Non-GAAP operating expenses were $429 million, in line with our guidance. These results reflect the successful completion of our Fiscal 2024 Cost Reduction Plan we had outlined at the beginning of the year. Gap operating margin was negative 2.3%, while non-gap operating margin was 33.8%. For the fourth quarter, gap loss per diluted share was $0.45.

Speaker Change: As you saw earlier today <unk> Board has approved the largest repurchase authorization and our history, increasing our current plan by 3 billion, which brings our total available authorization to $3 3 billion.

Speaker Change: Our total debt was 4.17 billion.

Gross debt to EBITDA ratio was 2.19 times and net debt to EBITDA ratio was 1.69 times.

Willem A. Meintjes: Non-GAAP income per deleted share was 46 cents, growing 12% sequentially. Now turning to our cash flow and balance sheet. Cash flow from operations in the fourth quarter was $547 million. I'm pleased to report to you that we have delivered our second straight quarter delivering robust operating cash flow of over $500 million. Our inventory at the end of the fourth quarter was $864 million, decreasing by $77 million from the prior quarter.

Speaker Change: As of the end of the fourth fiscal quarter, our cash and cash equivalents were 951 million increasing by $225 million from the prior quarter.

Speaker Change: Turning to our guidance for the first quarter of fiscal 2025.

Speaker Change: We are forecasting revenue to be in the range of 1.15 billion plus or minus 5%. We expect our GAAP gross margin to be in the range of 44, 5% to 47, 2%.

Speaker Change: We expect our non-GAAP gross margin to be in the range of 62% to 63%.

Willem A. Meintjes: Our DSO was 77 days, decreasing by a day from the prior quarter. We returned $52 million to shareholders through cash dividends. In addition, we repurchased $100 million of our stock during the fourth quarter, doubling from the prior quarter. We expect to further increase repurchases in the first quarter of fiscal 2025. As you saw earlier today, Marvell's board has approved the largest repurchase authorization in our history, increasing our current plan by $3 billion, which brings our total available authorization to $3.3 billion. Our total debt was $4.17 billion, our gross debt to EBITDA ratio was 2.19 times, and our net debt to EBITDA ratio was 1.69 times. As of the end of the fourth fiscal quarter, our cash and cash equivalents were $951 million, increasing by $225 million from the prior quarter.

Speaker Change: We are forecasting a sequential decrease in non-GAAP gross margin due to lower revenue impacting fixed cost absorption.

Speaker Change: Looking forward, we expect that the overall level of revenue and product mix will remain key determinants of our gross margin in any given quarter.

Speaker Change: For the first quarter, we project, our GAAP operating expenses to be approximately $676 million.

Speaker Change: We anticipate our non-GAAP operating expenses to be approximately $455 million.

Speaker Change: This forecast includes a step up from the prior quarter due to typical seasonality in payroll taxes and employee salary merit increases.

Speaker Change: For the first quarter, we expect other income and expense, including interest on our debt to be approximately $48 million we.

We expect our non-GAAP tax rate of 7% for the first quarter.

We expect our basic weighted average shares outstanding to be $866 million.

Willem A. Meintjes: Tune into our guidance for the first quarter of fiscal 2025. We are forecasting revenue to be in the range of $1.15 billion, plus or minus 5%. We expect our GAAP gross margin to be in the range of 44.5% to 47.2%. We expect our non-GAAP gross margin to be in the range of 62% to 63%. We are forecasting a sequential decrease in non-gap gross margin due to lower revenue impacting fixed cost absorption. Looking forward, we expect that the overall level of revenue and product mix will remain key determinants of our gross margin in any given quarter. For the first quarter, we project our gap operating expenses to be approximately $676 million.

Speaker Change: Diluted weighted average shares outstanding to be $875 million.

Speaker Change: We anticipate GAAP earnings per diluted share in the range of a loss of <unk> 18 cents to a loss of 28 cents. We expect non-GAAP income per diluted share in the range of 18 cents to <unk> 28 cents.

Speaker Change: Operator, please open the line and announce Q&A instructions. Thank you.

We will now begin the question and answer session.

Speaker Change: Ask a question you May press Star then one on you touched on phone if you're using a speakerphone. Please pick up your handset before pressing the keys.

Speaker Change: To withdraw your question. Please press Star then two.

Speaker Change: In the interest of time, please restrict yourself to one question only if you have additional questions. Please rejoin the queue at this time, we'll pause momentarily to assemble our roster.

Speaker Change: Our first question will come from Ross Seymore with Deutsche Bank. Please go ahead.

Ross Clark Seymore: Hey, guys. Thanks, you May ask your question.

Ross Clark Seymore: And a tale of two cities the data center and AI side is going to be really strong the rest of it not so much. So let me just get the bad news out of the way first Matt the magnitude of the drops extra data center, our tenant shocking can you just walk us through how much of that is something that is not going to come back you know some of the southern five G et cetera.

Willem A. Meintjes: We anticipate our non-GAAP operating expenses to be approximately $455 million. This forecast includes a step up from the prior quarter due to typical seasonality in payroll taxes and employee salary merit increases. For the first quarter, we expect other income and expense, including interest on our debt, to be approximately $48 million. We expect a non-gap tax rate of 7% for the first quarter. We expect our Basic Weighted Average Shares Outstanding to be $866 million and our Diluted Weighted Average Shares Outstanding to be $875 million. We anticipate gap earnings per diluted share in the range of a loss of $0.18 to a loss of $0.28.

Ross Clark Seymore: Versus what do you view it as just taking the cyclical medicine and then a snapback.

And soon thereafter.

Yeah, Hey, great. Thanks, Ross on yet, but definitely a tale of two cities.

Matt Murphy: On the.

Matt Murphy: On the carrier enterprise and consumer side.

Matt Murphy: The way to think about it is sure the drops are pretty steep in Q4 and Q1, we're definitely going through a cyclical downturn in the industry <unk> been doing this a long time, so we've seen that happen.

Matt Murphy: And that's what we're going through the way to think about both of those businesses is at their peak together they were about two and a half billion in revenue and this would sort of be during the.

Operator: We expect non-GAAP income for Delhi to share in the range of $0.18 to $0.28. Operator, please open the line and announce Q&A instructions. Thank you. We will now begin the question and answer session. To ask a question, you may press star and then one on your touch-tone phone. If you're using a speakerphone, please pick up your handset before pressing the keys.

Matt Murphy: Pandemic and some of the supply chain.

Matt Murphy: The issues that went on.

Matt Murphy: You can now see we're shipping well below that and so I said in my prepared remarks, you know both of these are very solid businesses Ross for Marvell, both will recover to greater than 1 billion in revenue.

Over time the question is when.

Ross Clark Seymore: To withdraw your question, please press star then two. In the interest of time, please restrict yourself to one question only. If you have additional questions, please rejoin the queue. At this time, we'll pause momentarily to assemble our roster. Our first question will come from Ross Seymour of Deutsche Bank. Please go ahead.

And remember as well within these businesses. These are very long product life cycles typically like seven years in production. So these are designed in some cases, we won three or four or five years ago. Some of them. We just won a year or two ago.

Matt Murphy: So we feel good about those businesses, but they are going through some demand softness and some inventory correction, but we expect to see that behind us and.

Matt Murphy: Hi guys. Thanks for asking the question. Clearly, it's kind of pale in comparison to cities; the data center and AI side is going to be really strong; the rest of it, not so much. So why don't we just get the bad news out of the way first?

Matt Murphy: Doing very specific none of this is due to any.

Matt Murphy: Business, that's not quote coming back or share loss and in fact when.

Matt Murphy: When things recover back to a normalized run rate.

Matt Murphy: Matt, the magnitude of the drops at your data center is kind of shocking. Can you just walk us through how much of that is something that is not going to come back? Some of the stuff's in 5G, et cetera, versus what do you view as just taking the cyclical medicine and then a snapback should ensue soon thereafter?

Matt Murphy: We do have.

Matt Murphy: Marvell product growth drivers in both of those segments carrier and enterprise to drive growth.

Matt Murphy: Going forward. So we're just managing through it in the short term.

Speaker Change: Thank you.

Speaker Change: The next question will come from Matt Ramsay with TD Cowen. Please go ahead.

Speaker Change: Okay.

Matthew D. Ramsay: Thank you very much good afternoon guys.

I guess a kind.

Matt Murphy: Hey, great. Thanks, Ross. And yeah, definitely A Tale of Two Cities.

Matthew D. Ramsay: Kind of a two part question on the custom silicon business.

Matt Murphy: On the carrier enterprise and consumer side, the way to think about it is, sure, the drops are pretty steep in Q4 and Q1. We're definitely going through a cyclical downturn in the industry. You've been doing this a long time. So have I; we've seen that happen.

Matthew D. Ramsay: The first part of it Matt.

Matt: Dave US some good color in your script that as to how you see 200 million exiting the year and exceeding the 800 million for next and you kind of referenced the.

Matt: $1 billion at scale and I, just wonder if you could maybe square the rest of that circle is that just for business. Once a day for fiscal 'twenty six or is there more to come and I guess the second part of the question My observation as you guys probably have.

Matt Murphy: And that's what we're going through. The way to think about both of those businesses is, at their peak, together, they were about two and a half billion in revenue. And this would sort of be during the pandemic and some of the supply chain issues that went on. You can now see we're shipping well below that.

Matt: A more shots on goal for custom silicon it'd be each one of the shots on goal could be potentially a very large or larger than expected piece of business given what's happening.

Matt Murphy: And as I said in my prepared remarks, both of these are very solid businesses, Ross or Marvell. Both will recover to greater than 1 billion in revenue. Over time, the question is when. And remember, as well, within these businesses, these are very long product life cycles, typically seven years in production. So these are designed to be, in some cases, we won three or four or five years ago. Some of them, we just won a year or two ago.

Matt: In the AI trend, but my I guess my concern is as you evaluate those opportunities when those programs will be shipping to three or four years in advance and trying to figure out how those programs would sort of.

Matt: Aligned with the dominant player in this space is roadmap two or three years out and the pace of that innovation like how do you guys evaluate the potential for the size of the business win.

Matt Murphy: So we feel good about these businesses, but they are going through some demand softness and some inventory correction, but we expect to see that behind us. And to be very specific, none of this is due to any, you know, business that's not coming back or share loss.

Matt: Lots of shots on goal, but the probability of each of those shots on goal being successful might be hard to gauge given how quickly the industry's moving hopefully that makes sense I'm just trying to get an idea of how you're scaling the business and taking on orders given all the volatility and rapid technology advancements in the space.

Matt Murphy: And in fact, you know, when things recover back to a normalized run rate, we do have product growth drivers in both of those segments, carrier and enterprise, to drive growth going forward. So we're just managing through it in the short term. Thank you. The next question will come from Matt Ramsay with TD Cowan. Please go ahead. Thank you very much.

Speaker Change: Yeah, Yeah got you Matt Okay, Let me just tackle them both on the first one yes super excited about the the ramp we're seeing now on the custom silicon or silicon programs. We won a couple of years back. So we're shipping in Q1 on both programs fantastic.

Speaker Change: We gave some color in the prepared remarks on the exit rate.

Matthew D. Ramsay: Good afternoon, guys. I guess I'll go. Kind of a two-part question; the first part of it, Matt, gave us some good color. Year, Unknown Attendee, Karl Ackerman, Nathaniel Bolton, Ambrish Srivastava, Achyut Shah, Alan Weckel, Loi Nguyen, Marvell Unknown Attendee, Karl Ackerman, Nathaniel Bolton, Ambrish Srivastava, Achyut Square.

Speaker Change: Being 200 million plus.

Speaker Change: You know I don't want to cap that at this point, but that's.

Speaker Change: But certainly that sort of the way to think about it as the floor and then we go from there so that would imply obviously in fiscal 'twenty six a much larger number than the 800 million, we had called out and again I think it's still dynamic and still early but we're very excited from the bullish forecast, we're seeing from our customers. So 26 looks very strong.

Speaker Change: From the programs that we've won and.

Matt Murphy: The rest of that circle is just for business you've won today. 26, or is there more to come? And I guess the second part of the question, my observation is you guys probably have A, more shots on goal for custom silicon, and B, each one of the shots on goal could potentially be a very large or larger than expected piece of business given what's happening in the AI trend, but my, I guess my concern is as you evaluate those opportunities. Programs will be shipping 2, 3, 4, and trying to figure out how those programs align with the dominant player in the space's roadmap two or three years out and the pace of that innovation. Like, how do you guys evaluate the potential for the size of the business? Lots of shots on goal, but the probability of each of those shots on goal being successful... might be hard to gauge given how quick. Hopefully that makes sense; I'm just trying to get an idea of how you're scaling.

Speaker Change: And we should be way ahead of the plan that we had articulated.

Speaker Change: Ways back on the second question Yeah.

Speaker Change: I don't think I've ever seen more design win activity in my career as right now.

Speaker Change: In AI custom silicon networking optics, you name. It this whole transformation that's going on in data center architectures is creating this.

Speaker Change: Massive opportunity for Marvell, specifically on the custom portion of it I mean, we're talking about a tam creation, that's going to be in the tens of billions of dollars range and we'll talk more about that at our AI day, but very significant sort of opportunity that's emerging in front of us.

Speaker Change: And that being said I view that as very complementary to the merchant leader in this space I think both are have a place given the workloads that are required given the scale of computing that's needed and I don't think it's a zero sum game I've been saying this for a while I think both segments the merchant side as well as the custom side are going to grow.

Matt Murphy: Rapid Technology. Yeah, gotcha, Matt. Okay, let me just tackle them both.

So to be very enormous Tam.

Matt Murphy: On the first one. Yeah, super excited about the ramp we're seeing now on the custom silicon programs we wanted a couple years ago. So we're shipping in Q1 on both programs. Fantastic.

Speaker Change: And so yeah, we're right in the mix on all the major opportunities and programs. We have assembled an incredible team an incredible portfolio of technology, we announced today.

Matt Murphy: We gave some color in the prepared remarks on the exit rate, you know, being 200 million plus. You know, I don't want to cap that at this point, but that's, Unknown Attendee, Karl Ackerman, Nathaniel Bolton, Ambrish Srivastava, Achyut Shah, Alan, And we should be way ahead of the plan that we had articulated a ways back. On the second question, yeah, I don't think I've ever seen more design win activity in my career as right now in AI, custom silicon, networking, optics, you name it; this whole transformation that's going on in data center architectures is creating this massive opportunity for Marvell. Specifically on the custom portion of it, I mean, we're talking about a TAM creation that's going to be in the tens of billions of dollars range.

Speaker Change: Our continued partnership with TSMC with a very full and robust roadmap of IP and technology to specifically address AI and accelerated computing applications for the next generation. So that's got a lot of excitement with the customers as well. So yeah. Overall, we're very bullish and we think we think the whole all the boats are going to lift on this one.

Speaker Change: And certainly for Marvell creates a huge new Tam opportunity that we really didn't have just a few years ago.

Speaker Change: Thanks, Matt Thank you.

Speaker Change: Yeah.

Speaker Change: The next question will come from Christopher Roland with Susquehanna. Please go ahead.

Hey, Thanks, guys I guess first of all Matt Thanks for giving that the the the custom ASIC opportunity numbers are again I think that means probably means you guys have a pretty strong pipeline.

Matt Murphy: And we'll talk more about that at our AI day, but that's a very significant sort of opportunity that's emerging in front of us. And that being said, I think that it's very complementary to the merchant leader in this space. I think both have a place, given the workloads that are required, given the scale of computing that's needed. And I don't think it's a zero-sum game.

Christopher Adam Jackson Rolland: But would love would love to drill down on that a little bit more.

Christopher Adam Jackson Rolland: So I guess first of all maybe you can talk about these opportunities training versus influence how you see that versus perhaps just compute and then what's kind of the do you have a secret sauce that landing. These like your competitor has really use.

Matt Murphy: I've been saying this for a while. I think both segments, the merchant side as well as the customs side, are going to grow to be very enormous TAMs. And so, yeah, we're right in the mix on all the major opportunities and programs. We have assembled an incredible team, an incredible portfolio of technology. We announced today our continued partnership with TSMC, with a very full and robust roadmap of IP and technology to specifically address AI and accelerated computing applications for the next generation. So that's got a lot of excitement among the customers as well.

Christopher Adam Jackson Rolland: There at the time, leading edge certainties IP as a driver of those wins is there something that you have some special sauce that are winning these things.

Yeah, Thanks, Chris and great to hear from you.

Speaker Change: Hopefully some of the custom numbers, where we're helpful. Investors last year and this year was a lot of interest in sort of what the size of that was in <unk> and now that we've got the visibility it's great to start articulating, where we think that is.

Christopher Adam Jackson Rolland: So, yeah, overall, we're very bullish, and we think all the boats are going to lift on this one. And certainly for Marvell, it creates a huge new TAM opportunity that we really didn't have just a few years ago. Thank you. Yeah. The next question will come from Christopher Rolland of West Susquehanna. Please go ahead.

Speaker Change: I think on your second sort of piece of your question around training versus inference and compute.

Speaker Change: At this point I would just put it in a very large bucket of what I'm, calling back $1 billion in Tam creation.

Speaker Change: I don't know that we're out on this call certainly prepared to slice it out and I don't even think we know.

Matt Murphy: Hey, thanks guys. I guess, first of all, Matt, thanks for giving us the custom ASIC opportunity numbers again. I think that probably means you guys have a pretty strong pipeline, but I would love to drill down on that a little bit more. So I guess, first of all, maybe you can talk about these opportunities, training versus inference, how you see that versus perhaps just compute. And then, what's kind of the secret sauce that's landing these, like your competitor has really used their, at the time, leading edge, SerDes IP, as a driver of those wins? Is there something that you have some special sauce?

Where this is going to be in three to five years relative to that exact split, but I would say the opportunity set for US crosses all of those applications. Okay, and then relative to where we are in terms of our technology. Our competitiveness I mean, it's pretty astonishing. If you think about it when we won the designs we one Chris at five nanometer.

Speaker Change: That was really our first.

Speaker Change: Time with as Marvell to compete in this segment, especially in the data center.

Speaker Change: The origins of this business go back to our purchase of Avera in 2019.

Speaker Change: We pivoted that roadmap during the pendency of the close in right. After from 14 nanometer technology, all the way to five.

Matt Murphy: That are winning these things? Yeah, thanks, Chris, and great to hear from you. And yeah, hopefully some of the custom numbers were helpful. You know, investors last year and this year were a lot of interest in sort of what the size of that was. And now that we've got the visibility, it's great to start articulating where we think that is. You know, I think on your second sort of piece of your question around training versus inference and compute, you know, at this point, I would just put it in a very large bucket of what I'm calling decabillions in TAM creation. I don't know that we're on this call, but certainly prepared to slice it out.

Speaker Change: And even though it was our first time out you know <unk> was competitive packaging technology interconnect manufacturing scale.

Speaker Change: Strategic partnerships up and down the supply chain and that enabled us to win a significant share of apex in business, which is now coming to fruition here in fiscal 'twenty five and 'twenty six.

Speaker Change: We followed that up with our three nanometer platform, which has now been.

Speaker Change: A big part of the opportunity set in the funnel, where we're competing in today.

Speaker Change: In completely different position now relative to five nanometer because we had the learnings we had the readiness and now we're really leaning in okay in terms of being.

Speaker Change: Our first mindset around not just nanometers, but die to die interconnect packaging Dirty technology optics, and really in ship lifts and thinking about how to stitch all of this together.

Matt Murphy: And I don't even think we know where this is going to be in three to five years relative to that exact split, but I would say the opportunity set for us covers all of those applications.

And on top of that with the scale of Marvell and our strategic partnerships, we really look to our customers like an incredibly solid trustworthy long term partner for their needs to really help them realize their AI silicon ambitions. So that's where we are today I mean, we did great on five we're going to do great on three but where we're at and we're going to do great.

Matt Murphy: And then relative to where we are in terms of our technology, our competitiveness, I mean, it's pretty astonishing if you think about it. When we won the designs, we won, Chris, that five nanometer. That was really our first, you know, to compete in this segment, especially in the data center. The origins of this business go back to our purchase of Avera in 2019. We pivoted that roadmap during the pendency of the close and right after from 14 nanometer technology all the way to five. And even though it was our first time out, you know, SIRDIS was competitive.

Speaker Change: You know in the future. Thanks.

Speaker Change: Congrats thanks, Matt.

Speaker Change: Yeah.

Speaker Change: The next question will come from Quinn Bolton with Needham and company. Please go ahead.

Nathaniel Quinn Bolton: Hey, guys.

Nathaniel Quinn Bolton: To follow up on the cloud I was a sick a question as well, but I guess I'm coming at it from a margin perspective, Matt you know you look at some of these programs on the cloud compute side to the extent that they integrate them high bandwidth memory. It certainly does nice things to the a S. P. But there's also a pretty significant cost.

Matt Murphy: Packaging technology, interconnect, manufacturing scale, and strategic partnerships up and down the supply chain have enabled us to win a significant share of the ASIC business, which is now coming to fruition here in fiscal 25 and 26. We followed that up with our three nanometer platform, which has now been a big part of the opportunity set in the funnel we're competing in today. We are in a completely different position now relative to five nanometers because we had the learnings, we had the readiness.

Speaker Change: Costs that you may have to pass through and so I'm wondering can you talk about the gross margins on some of these AC platforms, how does that compare to the corporate average and as you ramp, especially if it's cloud a six get to be similar in size to the optics, which I know are good margins.

Matt Murphy: And now we're really leaning in, okay, in terms of being, you know, a first mindset around not just nanometers but dye-to-dye interconnect, packaging, SIRDIS technology, optics, and really in chiplets and thinking about how to stitch all this together. And on top of that, you know, with the scale of Marvell and our strategic partnerships, we really look to our customers like an incredibly solid, trustworthy, long-term partner for their needs to really help them realize their AI silicon ambitions. So that's where we are today. I mean, we did great on five, we're gonna do great on three, but we are, and we're gonna do great, you know, in the future. Thanks. Congratulations!

Speaker Change: How do you see the margin mix changing with with this now very very strong ramp of cloud a sick programs and then I've got a quick follow up if I can sneak it in.

Speaker Change: Sure Yeah I mean.

Speaker Change: On the way, we've talked about that business actually extensive era in 2019 is that it would always due to the nature of custom business be at a lower gross margin overall than the company average in the target at the same time.

Speaker Change: Because of the the NRA and nonrecurring engineering that we receive as part of the customer funding in these programs. The operating margins of this business tend to be very competitive and.

Nathaniel Quinn Bolton: Thanks, Matt. Yeah. The next question will come from Quinn Bolton with Needham and Company. Please go ahead.

Speaker Change: Over time in line with our company targets. When you start talking about these very very large programs you've got opportunity.

Matt Murphy: Hey guys, I'm going to follow up on the cloud ASIC question as well but I guess I'm coming at it from from a margin perspective Matt, you know you look at some of these programs on the cloud compute side to the extent that they integrate high bandwidth memory it certainly does nice things to the ASP but but there's also a pretty significant cost that you may have to pass through and so I'm wondering can you talk about the gross margins on some of these ASIC platforms how does that compare to you know the corporate average and as you ramp especially if cloud ASICs get to be similar in size to the optics which I know are good margins you know how do you see the margin mix changing with with this now very very strong ramp of cloud ASIC programs and then I've got a quick follow-up if I can sneak it in, Sure. Yeah, I mean, on the way we've talked about that business, actually, since Avera in 2019, is that it would always, due to the nature of custom business, be at a lower gross margin overall than the company average and the target.

Speaker Change: Given the volume and scale on the O&M line to really drive a lot of leverage in the model, but the Gms just due to the nature of that business model will always be.

Speaker Change: We'll be a little bit lower than that than the total.

Speaker Change: I'd say, though at the same time because of the sort of follow on sometimes as well Gee if that happens what happens to the overall company gross margin profile and remember we still have very strong gross margin merchant businesses in storage and networking automotive.

Speaker Change: Some of those were even under shipping demand right now so as the year plays out some of those businesses will come back and that should be a little bit of a margin offset with some of the custom stuff. So were still managing to our long term target model, but yeah. The clouds, especially at these volumes certainly well lower gross margin.

Speaker Change: A quick one for the second we can do it otherwise we got a quick one on and Tony you mentioned sort of a ramping eight he sees at multiple hyperscale or is this year. Just wondering if you might be able to give us some some sensors that meaningful of any any.

Matt Murphy: At the same time, because of the NRE and non-recurring engineering that we receive as part of the customer funding of these programs, the operating margins of this business tend to be very competitive, and, Over time, in line with our company targets, when you start talking about these very, very large programs, you know, you've got opportunity, given the volume and scale on the OM line to really drive a lot of leverage in the model, but the GM I would say, though, at the same time, because the sort of follow-on sometimes is, we'll see if that happens, and what happens to the overall company gross margin profile.

Speaker Change: Since I'm on the magnitude of that ramp.

Tony: Yeah, I think what I'd say is it's absolutely a real market, we felt that way for some time even back when we acquired <unk> that was that was sort of shot on goal. We thought was possible I think the big news is that we're qualifying at multiple Hyperscale is now we're starting to go into production. This year, we will get a very nice solid kind of more.

Tony: Full year ish ramp in fiscal 'twenty, six, but it's definitely an incremental.

Tony: Additive category to Marvell and it really leverages our high.

Tony: Our high speed D S. Our high performance DSP, and Pam technology, which is really now inflicting and this wave of AC before it was based on the older modulation techniques, which where we didn't participate so yeah.

Matt Murphy: And remember, we still have very strong gross margin merchant businesses and storage and networking, and automotive. Some of those are even under shipping demand right now, so as the year plays out, some of those businesses will come back, and that should be a little bit of a margin offset to some of the custom stuff. So we're still managing to our long-term target model, but yeah, the cloud stuff, especially at these volumes, will definitely happen. Namaste. If we got a quick one for the second, we can do it, otherwise we got to... Yeah, quick one on the second one: you mentioned sort of ramping up AECs at multiple hyperscalers this year. Just wondering if you might be able to give us some sense of that, is that meaningful? Any sense on the magnitude of that ramp?

Speaker Change: We're really excited about it but.

Speaker Change: Lets let it play out for a few more quarters. Thanks. Thanks, Matt.

Speaker Change: The next question will come from harsh Kumar with Piper Sandler. Please go ahead.

Harsh V. Kumar: Yeah, Hey, guys. Thanks for letting me ask a question Matt. So AI is hot Theres no other way to put it you are in kind of a pole position with your optical piece field in <unk> can you give us a sense of the magnitude of the size of that business either quarterly or last year anything you can provide us that helps you size it and also kind of what kind of growth.

Speaker Change: Right you expect to see from this business and then Matt when you say that the bottom is.

Matt Murphy: Yeah, I think what I'd say is it's absolutely a real market. We felt that way for some time, even back when we acquired Infi, you know, that was sort of a shot on goal that we thought was possible. I think the big news is that we're qualifying for multiple hyperscalers. Now, we're starting to go into production this year, and we'll get a very nice, solid kind of more full-yearish ramp in fiscal 26. But it's definitely an incremental, you know, additive category to Marvell.

Speaker Change: Some of the pieces by consumer and networking the bottom wont be this one two timeframe what pieces do you think will come off the bottom and too few or do you expect all the pieces to come off the bottom in Tokyo.

Matt: Okay. Let me do this I'll take the first one and I'll, let well I'll take the second one so I can take a breather and he cannot you can also answer your question.

Speaker Change: Yeah on the first one I think we gave some pretty good color I mean, if you think about it the Q4 exit rate.

Speaker Change: AI right was was was well north of $200 million and the bulk of that as we said was was in optics.

Matt Murphy: And it really leverages our high-speed DSP, our high-performance DSP, and PAM technology, which is really now inflecting this wave of AC before it was based on the older modulation techniques, which we didn't participate in. So yeah, really excited about it. But let's let it play out for a few more chords. Thanks, man.

Speaker Change: So if you just and then you can start extrapolating well Geez, then you'd have to add in.

Speaker Change: How much revenue is marvell getting standard cloud side in optics and Thats, another very nice chunk.

Speaker Change: And then you've got some of the stuff that we have that shows up on the carrier side, because I imagine by now on the coherent DSP.

Harsh V. Kumar: The next question will come from Harsh Kumar with Piper Sandler. Please go ahead. Yeah, hey guys, thanks for letting me ask a question. Matt, so AI is hot, there's no other way to put it.

Speaker Change: Theres some 86 that we have so the overall <unk> business. If that's what you were asking since we bought it has clearly outperformed the deal model and is just become an incredibly strategic asset for US. Both in terms of just the technology, we picked up but the team the synergy with the other tech portfolio.

Matt Murphy: You are in kind of a pole position with your optical piece, the old InFi piece. Can you give us a sense of the magnitude of the size of that business, either quarterly or last year, anything you can throw at us that helps us size it and also kind of what kind of growth rate you expect to see from this business? And then Matt, when you say the bottom is, you know, for some of the pieces like consumer and networking, the bottom will be this one-Q timeframe. What piece do you think will come off the bottom in two-Q, or do you expect all the pieces to come off the bottom? Okay, let me do this. I'll take the first one, and I'll let Willem take the second one.

Speaker Change: The other product lines, we have and so just super positive about that it just looks like that whole opportunity is going to be much larger than I think we are in five thought just a few years back willing do you want to take I'll take the second part of it yeah. Thanks, Thanks, Matt Hey, harsh yet so we're really working with customers to focus on on Q.

Harsh V. Kumar: One being the bottom really confident that that's the bottom and then we see.

Speaker Change: Resuming in the second half across enterprise networking carrier and consumer.

Speaker Change: So yeah, we're really just trying to make sure that we put this behind us pretty quickly and see growth in the second half.

Willem A. Meintjes: So I can take a breather and he can; he can also answer your question. Yeah, on the first one, I think we gave it some pretty good color. I mean, if you think about it, the Q4 exit rate on AI right was was well north of 200 million. And the bulk of that, as we said, was in optics. So if you just, and then you can start extrapolating, you know, well, geez, then you got to add in how much revenue Marvell is getting on the standard cloud side and optics, and that's another very nice chunk. And then you've got some of the stuff that we have that shows up on the carrier side, which we're talking about InFi now. On the coherent DSPs, there's some ASICs that we have.

Speaker Change: Thank you.

The next question will come from Vivek Arya with Bank of America. Please go ahead.

Vivek Arya: Thanks for taking my question one more on the electro optics I think near term. It seems in Q1, that's probably a little bit of a breather after several strong quarters.

Vivek Arya: But the more important question is that.

Should we assume that your electro optics that is related to OE I should grow somewhat proportional to the growth in accelerators. So for example, if you look at accelerated growth. This year I've seen various numbers between 50% to 100% kind of year on year growth. So it shouldn't be a part of your electro optics grow.

Willem A. Meintjes: So the overall InFi business, if that's what you're asking, since we bought it, has clearly outperformed the deal model and has just become an incredibly strategic asset for us, both in terms of just the technology we picked up but the team, and the synergy with the other tech portfolio. The other product lines we have, and I'm so just super positive about that, and it just looks like that whole opportunity is going to be much larger than I think we were in FIFA just a few years ago. Willem, do you want to take the second part of it? Yeah, thanks, Matt. Hey, Harsh.

Vivek Arya: Kind of commensurate.

Vivek Arya: With that or is there something different and then vendors one six to 116 $1 63, when does that start to payroll and electro optics business.

Speaker Change: Yes, thanks for that well I think it depends on how you how you.

Speaker Change: But the definition of breather, you use I mean, basically it's ramped up so significantly right the electro optics business.

Speaker Change: Q2, Q3, Q3 to Q4 and staying strong in Q1, maybe it's a breather from the sequential growth point of view, but but.

Vivek Arya: Yeah, so we're really working with customers to focus on Q1 being the bottom, really confident that that's the bottom, and then we see growth resuming in the second half across enterprise networking, carrier, and consumer. So, yeah, really just trying to make sure that we put this behind us really quickly and see growth in the second half. Thank you. The next question will come from Vivek Arya with Bank of America. Please go ahead.

Speaker Change: But we still have not seen that slow down.

And then on the let's see I got your second one third one was on one point 60 on the come back to your second one in a second that is going to ramp up later this year.

That's gone really well the quality and the product bring up we announced the let's see last year and a lot of demand and interest and then sorry. Your second question on AI.

So should your electro optics, a grill kind of purple alrighty abroad et cetera.

Matt Murphy: Thanks for taking my question. Matt, one more on electro-optics. I think near-term, it seems in Q1 there's probably a little bit of a breather after several strong quarters. But the more important question is that should we assume that our electro-optics that are related to AI should grow somewhat proportionally to the growth in accelerators? So for example, if you look at accelerator growth this year, I've seen various numbers between 50 to 100% kind of year-on-year growth. So should the AI part of your electro-optics grow kind of commensurate with that, or is there something different? And then when does 1.62, 1.16, 1.60, sorry, when does that start to play a role in your electro-optics? Yeah, thanks Vivek. Well, I think it depends on how you define the definition of breather you use.

Speaker Change: Yes, yes, sorry, yes, the accelerator, but yes, so yeah for sure the the way we think about it is the.

Speaker Change: That business year over year should grow in line with accelerator.

Speaker Change: Accelerated unit growth should we think it's we view it as very correlated obviously, there's some timing issues in terms of supply chain and things like that but that's a.

Speaker Change: That's a simple way to think about it and everyone's got a little bit of a different model at this point about what that number is but our view is were highly correlated to accelerator shipments.

Speaker Change: In our optics business.

Speaker Change: The next question will come from Gary Mobley with Wells Fargo. Please go ahead.

Hey, guys. Thanks for taking my question.

As a way to think about when or hit rate or your customer ASIC business, when engaging with prospective customers in the future.

Gary Wade Mobley: Should we think about the increasing competitive environment from the army ecosystem arm, specifically with <unk>.

Board versions of New Yorkers.

Matt Murphy: I mean, basically, it's ramped up just so significantly, right, the electro optics business. Q2 to Q3, Q3 to Q4, and staying strong in Q1. Maybe it's a breather from the sequential growth point of view, but we still have not seen that slow down. And then on the, let's see, I got your second one. Your third one was on 1.6p.

Gary Wade Mobley: It's a total design ecosystem, it's it's.

Gary Wade Mobley: Compete subsystems.

Gary Wade Mobley: And as well all of the AC design community first of all how do you feel about arm is actually becoming more of a competitor and then as well how do you think about.

Gary Wade Mobley: The way in which you compete against that and to see thank you.

Speaker Change: Yeah, Thanks, Gary I think.

Speaker Change: I think there's a there in this market today, there's there's obviously a lot of excitement because of the the opportunity in front of US I mean, the way that we were working as Theres a number of companies.

Matt Murphy: I'm gonna come back to your second one in a second. That is gonna ramp later this year. That has gone really well, the quals and the product launch. We announced it at OFC last year and there was a lot of demand and interest. And then, sorry, your second question on AI? Yeah, so should your electro-optics grow kind of proportionally to the growth and accelerate, yeah. Yeah, yeah, sorry, yeah

Our partners solution providers et cetera that may or may have their own offering or not whether it gets taken up or not is we'll have to see where we come together really is.

Speaker Change: We pull it all together.

Speaker Change: We're able to actually deliver with marvell intellectual property design methodologies and techniques.

Speaker Change: Our IP.

Speaker Change: And our Knowhow.

Matt Murphy: So yeah, for sure, the way we think about it is that business year over year should grow in line with accelerator unit growth. We view it as very correlated. Obviously, there are some timing issues in terms of supply chain and things like that, but that's a simple way to think about it. Everyone's got a little bit of a different model at this point about what that number is, but our view is that we're highly correlated to accelerators.

Speaker Change: Pulled together with our customers RTL in IP and partners. The total solution, which means we actually lay the chip out we package it up.

Speaker Change: Manufactured in high volume key way, we test it we yielded we drive reliability, we drive cost improvement and we drive it through the cycle and that is a very different business model than.

Speaker Change: Providing a piece that goes in and so arm has been our partner for a long time, we use them in our products are kind of all over the place and as they evolve and others evolved will will will.

Gary Wade Mobley: In our optics business, yes. The next question will come from Gary Mobley with Wells Fargo. Please go ahead.

Speaker Change: Figure that out too, but in the end it comes down to.

Matt Murphy: Hey guys, thanks for taking my question. It's a way to think about the win or hit rate for your custom basic business when engaging with prospective customers in the future. How should we think about the increasing competitive environment from the ARM ecosystem, ARM specifically with more versions of NeoVerse, its total design ecosystem, its compute subsystems. And as well, all the ASIC design community, you know, first of all, how do you feel about ARM essentially becoming more of a competitor? And then, you know, how do you think about the way in which you'll compete against that and succeed? Yeah, thanks, Gary.

Speaker Change: We believe for these large volume mission critical.

Speaker Change: Big compute silicon chips, it's going to require somebody like a marvell with the manufacturing scale the technique.

Speaker Change: Design techniques and knowhow to really to really execute it and so we haven't seen any change there and in fact I think at this sort of three nanometer node, where at and beyond it's going to be even more critical to have a partner who's got your back who can who can help you get to production quickly and spin derivatives quickly.

Matt Murphy: I think like I think there's a there in this market today, there's obviously a lot of excitement because of the opportunity in front of us. I mean, the way that we worked is that there are a number of companies that are partners, solution providers, etc. that may or may not have their own offering, or not, whether it gets taken up or not, as we'll have to see what our real strength is. We pull it all together. We're able to actually deliver with Marvell intellectual property, design methodology, and technique. R.I.P., and our know-how pulled together with our customers RTL and IP and partners, the total solution, which means we actually lay the chip out; we package it up. We manufacture it in high volume, we quality control it, we test it, we yield it, we drive reliability, and we drive cost improvement. And we drive it through the cycle.

Speaker Change: Which is now increasingly looking like what is going to be needed more skus.

Speaker Change: Higher faster beat right in terms of when products are released and then obviously wrapping them very hard and quickly given the competitive environment.

Speaker Change: Thanks, Matt.

Harlan Sur: The next question will come from Harlan sur with JP Morgan. Please go ahead.

Yeah. Good afternoon. Thanks for taking my question, Matt You mentioned initial shipments of your AI ASIC programs can you just clarify because I know last you updated us. These.

Harlan Sur: These programs. We're in qualification. So have you guys passed qual on both these programs and this is sort of the initial start up the full production ramp or maybe you're still in qual, but you've got enough line of sight to passing the calls just given you are at the tail end of this process and maybe more importantly have you guys secured the follow on AI program.

Harlan Sur: For these two initial projects.

Speaker Change: Yeah. Thanks for the question Harlan. So yes, we are in the initial start of the production ramp on both products.

Matt Murphy: And that is a very different business model than providing a piece that goes in. And so Arm has been our partner for a long time; we use them in our products, you know, kind of all over the place. And as they evolve, and others evolve, we'll figure that out too.

Speaker Change: And.

Harlan Sur: And then as far as the follow on like I said the opportunity funnel, we see across.

Harlan Sur: All of the various.

Opportunities right now is significant and we're involved in we believe we thank every single one of them.

Harlan Sur: But in the end, it comes down to, We believe for these large-volume, mission-critical..., big compute silicon chips, it's going to require somebody like Marvell with the manufacturing scale, the design techniques, and know-how to really execute it. And so we haven't seen any change there, and in fact, I think at the sort of three nanometer node we're at and beyond, it's going to be even more critical to have a partner who's got your back, who can help you get to production quickly and spin derivatives quickly, which is now increasingly looking like what's going to be needed, you know, more SKUs. ... The next question will come from Harlan Sur with J.P. Morgan. Please go ahead.

Harlan Sur: So.

Speaker Change: So, yes, and no and there'll be more to come sorted that are at our AI day, but I would just say our three nanometer funnel and our three nanometer hit rate in design win rate is very encouraging and it really gives us tremendous confidence in where this business is headed.

Speaker Change: It also has a side benefit by driving this advanced technology for the customer side is it's pulling along the technology development that benefits all of the other businesses and Marvell.

Speaker Change: Like our high performance switching our DSP for optics et cetera, So there's actually kind of a virtuous cycle happening where being at that bleeding edge is now we're able to show our other solutions that inter operate with this custom silicon really a best in class roadmap, there, but more on the overall strategy and opportunity side with da idle.

Matt Murphy: Yeah, good afternoon. Thanks for taking my question. Matt, you mentioned the initial shipments of your AI ASIC programs. Can you just clarify, because I know you last updated us? These programs were in qualification. So, have you guys passed QAL on both these programs? And this is sort of the initial start of the full production ramp. Or maybe you're still in QAL, but you've got enough line of sight to pass the QALs, just given you're at the tail end of this process.

Speaker Change: To give you some way Fortunately.

Speaker Change: Thank you Matt.

Speaker Change: Yes.

Speaker Change: The next question will come from tore Svanberg with Stifel. Please go ahead.

Tore Egil Svanberg: Yes. Thank you Matt I had a question on the 800 gig upgrade cycle. So you mentioned that ramping but you also mentioned bump when.

Tore Egil Svanberg: Six terabits ramping later this year.

Matt Murphy: And maybe more importantly, have you guys secured follow-on AI programs for these two initial projects? Yeah, thanks for the question, Harlan. So yeah, we are in the initial start of the production ramp on both products, and And then as far as the follow-on, like I said, the opportunity funnel we see across all of the various opportunities right now is significant, and we're involved in, we believe, we thank every single one of them.

Tore Egil Svanberg: We're studying it and we're still in the early stages of the 800 gig and I'm. Just wondering if you expect a more broad based 800 gig upgrade cycle.

Before 1.6 really starts to pick up or will they potentially she kind of both are ramping at the same time.

Speaker Change: Yes, I think theres three different pieces, we should talk about so the first is 160 I would just call that you know early shipments you know.

Matt Murphy: So yeah, and there'll be more to come sort of at our AI day. But I would just say our three nanometer funnel and our three nanometer hit rate and design win rate are very encouraging. And it really gives us tremendous confidence in where this business is headed. It also has a side benefit of driving this advanced technology for the custom ASIC side, which is it's pulling along the technological development that benefits all the other businesses. Like our high-performance switching, our DSPs for optics, etc.

Speaker Change: First volumes type of thing in the second half you'll end of the year and then more next year and that's really that's really I'd call. It the early adoption of that technology, but it is very promising because that's obviously, what's going to what's going to follow.

Speaker Change: The 800 gig for AI still got tons of legs, right and it's going to be very very strong. This year very very strong next year and then there'll be some transition over time and then I think what Youre also indicating is at some point.

Matt Murphy: So there's actually kind of a virtuous cycle happening where being at that bleeding edge is now we're able to show our other solutions that interoperate with this custom silicon, really a best in class roadmap there. But more on the overall strategy and opportunity side of AI. I'm going to give you stuff to look forward to, right? Thank you, Matt. Yeah. The next question will come from Tore Svanberg with Stiefel. Please go ahead.

Speaker Change: Youre going to see at 800 gig transition on traditional cloud infrastructure.

Speaker Change: From either 200, or 400 gig to 800 gig and that is also true.

Speaker Change: And something we're planning for so.

Speaker Change: They're going to end up happening kind of all of them in parallel a little bit right, you're gonna have bleeding edge people adopting one six you're going to have the bulk of the volume on AI still driving eight.

Speaker Change: 800 gig for the next few years, and then Youre going to have a transition on the on the traditional Pam side as well that's going to upgrade so I think they're all going to be in production in parallel for all for different reasons, which.

Tore Egil Svanberg: Yes, thank you. Matt, I had a question about the 800 gig upgrade cycle. So you mentioned that ramping, but you also mentioned 1.6 karabit, the bandwidth later this year. My understanding is that we're still in the early stages of the 800 gig. And I'm just wondering if you expect a more broad-based 800 gig upgrade cycle before 1.6 really starts to take off, or will we potentially see kind of both ramping at the same time? Yeah, I think there are three different pieces we should talk about. So the first is 1.6t.

Speaker Change: Which is great because it just ends up being multiple customers multiple skus and kind of a rich portfolio of solutions that we're offering so that people can optimize their systems for for the best <unk> in the best performance that they need thanks.

Speaker Change: Excellent. Thank you.

Speaker Change: Okay.

Speaker Change: We will take our last question today from Sarine Pujari with Raymond James. Please go ahead.

Srinivas Reddy Pajjuri: Thank you Hi, Matt.

Srinivas Reddy Pajjuri: Just a follow up to one of the previous questions, Matt about the custom silicon opportunity going forward.

Matt Murphy: I would just call that, you know, early shipments, you know, first volumes type of thing, you know, in the second half, you know, end of the year, and then more next year. And that's really, that's really, I'd call the early adoption of that technology, but it's very promising because that's obviously what's going to follow. The 800 gigabyte for AI, you know, still has tons of legs, right, and is going to be very, very strong this year, very, very strong next year. And then there'll be some transition over time.

Srinivas Reddy Pajjuri: You know obviously there are four big cloud customers Hyperscale hyperscale customers and based on what we know so far most of them seem to be investing in custom silicon either one or two chips. So it does feel like you know the number of opportunities are relatively small of course these are very large opportunities.

Srinivas Reddy Pajjuri: I'm just curious how you see that evolving do you do you see this continuing with one or two programs for each customers, which are in a multibillion opportunities or are you seeing you know spreading out or kind of kind of you know more diverse opportunities as we you know I guess, you know as AI becomes bigger and broader.

Matt Murphy: And then, I think what you're also indicating is at some point, You're going to see an 800 gig transition on traditional cloud infrastructure, from either 200 or 400 gig to 800 gig and that is also true, in Something We're Planning. So I don't, I think they're going to end up happening kind of all of them in parallel a little bit, right, you're going to have bleeding edge people adopting 1.6, you're going to have the bulk of the volume on AI still driving, you know, Unknown Attendee, Karl Ackerman, Nathaniel Bolton, Ambrish Srivastava, Achyut Shah, Alan Weckel, Loi Nguyen, Marvell Which is great, because it just ends up being multiple customers, multiple SKUs, and kind of a rich portfolio of solutions that we're offering, so that people can optimize their systems for the best TCO and the best performance that they, Thanks, Tori. Excellent. We will take our last question today from Srinivas Pajjuri with Raymond James. Please go ahead.

Speaker Change: Just want to hear your thoughts on that.

Speaker Change: Yeah. So the way I'd think about it is if you go back just a couple of years.

Speaker Change: When AI was emerging there was kind of one ship one program that would sort of happen. It would take several years then you gear up for the next one and there was definitely a a serial type of approach and that was probably fine.

Speaker Change: I think what we've seen to your point is really multiple programs now across all the key customers and that's kind of where I'd leave it I think getting more specific.

Speaker Change: I don't really want to do that with respect to my customers, but I would just say what we here is very much in need for.

Srinivas Reddy Pajjuri: Thank you. Hi Matt. Just a follow-up to one of the previous questions, Matt, about the custom silicon opportunity going forward. You know, obviously, there are four big cloud customers, hyperscale customers. And based on what we know so far, most of them seem to be investing in custom silicon, either one or two chips. So it does feel like, you know, the number of opportunities is relatively small. Of course, these are very large opportunities. Just curious, how do you see that evolving?

Speaker Change: Each of them meeting their own very differentiated unique solutions needing more skus and at a much more rapid rate by far than we've seen so far and so I just think it's creating.

Speaker Change: I know, it's it's creating just a very significant now opportunity and custom silicon that really wasn't there before in terms of the total dollars that are available the number of chips and then the speed that they want to go and that's why earlier I'd said, if you look at this kind of three nanometer cycle. We're in.

Matt Murphy: Do you see this continuing with one or two programs for each customer, which are, you know, multi-billion opportunities? Or are you seeing, you know, spreading out or kind of, you know, more diverse opportunities as we, you know, I guess, you know, as AI becomes, you know, bigger and broader? Just want to hear your thoughts on that.

Speaker Change: Significantly larger than we saw back at five nanometer, even if you account for the fact that some of these five nanometer Pam have gone up a lot because the market went up to even if you sort of factor that in what we're looking at is a lot more and I think that's just going to continue for the next few years.

Matt Murphy: Yeah, sure. The way I think about it is, if you go back just a couple years when AI was emerging, there was, you know, kind of one chip, one program that would sort of happen. It would take several years, then you gear up for the next one. And there was definitely a serial type of approach, and that was probably fine. I think what we've seen, to your point, is really multiple programs now across all the key customers. And that's kind of where I'd leave it. I think getting more specific, you know, I don't really want to do that with respect to my customers.

Speaker Change: But sure but by design I think any of the high volume data center applications are always going to.

Speaker Change: In any product line by the way always constant trade down to a few key partners. That's just the way the business works, but super exciting time, Theres a lot of activity here.

Okay. Thanks, Matt.

Speaker Change: Okay.

Speaker Change: Alright was that the last question Justice.

Justice: Yes, Sir.

Speaker Change: And if it makes them working.

Speaker Change: Oh perfect yes. Thank you.

Speaker Change: Go ahead to take the floor.

Speaker Change: Excellent thanks, Alright so.

Matt Murphy: But I would just say what we hear is very much a need for, each of them needing their own very differentiated, unique solutions, needing more SKUs and at a much more rapid rate by far than we've seen so far. And so I just think it's creating, I think, I know it's creating just a very significant opportunity in custom silicon that really wasn't there before in terms of the total dollars that are available, the number of chips, and then the speed that they want to go. And that's why earlier I had said, you know, if you look at this kind of three nanometer cycle we're in, it's significantly larger than we saw back at five nanometers, even if you account for the fact that some of these five nanometer PAMs have gone up a lot because the market went up. Even if you sort of factor that in, what we're looking at is a lot more.

Speaker Change: First everybody appreciate the participation on the call today.

Speaker Change: Hey.

Speaker Change: Very exciting time in the semiconductor industry relative to sort of the opportunity that's in front of us.

Speaker Change: We see a huge transformation underway right now with fundamentally a complete overhaul of data.

Speaker Change: Data centers and data center architectures and.

Speaker Change: Marvell, we've been on this journey for the last four or five years to really travel trends transition and transform ourselves into a data center company and as you've seen from our recent results now that is our largest end market, it's where we're putting the majority of our R&D effort.

And we're positioning the company to win Big here.

Matt Murphy: And I think that's just going to continue for the next few years. But, by design, I think any of these high-volume data center applications are always going to. In any product line, by the way, I always concentrate on a few key partners. That's just the way the business works.

Speaker Change: We chose the strategy years ago to be really levered to.

Speaker Change: Accelerated.

Speaker Change: Puting and infrastructure part of the market, which includes in the most prominent piece being AI, it's become much larger of an opportunity than we thought a few years ago, but it's it's a it's a market we clearly chose to invest in.

Matt Murphy: But it's a super exciting time. There's a lot of activity. Thanks, Trini. Thanks, Matt. Alright, was that the last question, operator?

Speaker Change:

Speaker Change: There's a we're expecting a lot of growth in the coming year in our data center business. We're very excited about that and some of these programs and they indicated they are just getting started and some of them are ramping in the second half some of them are.

Operator: Yes, sir. Yeah, yeah, I'm going to make some quotes. Oh, perfect. Yeah, thank you. Go ahead, sir. Take the floor.

Matt Murphy: Excellent. Thanks. All right.

Speaker Change: Turning to ramp now, but it really gives us a great setup for our fiscal 'twenty six.

Matt Murphy: So first, everybody, I appreciate your participation on the call today. It's a very exciting time in the semiconductor industry relative to the sort of opportunity that's in front of us. We see a huge transformation underway right now with fundamentally a complete overhaul of data centers and data center architectures, and Marvell. You know, we've been on this journey for the last four or five years to really transition and transform ourselves into a data center company. And as you've seen from our recent results, now that is our largest end market. It's where we're putting the majority of our R&D effort, and we're positioning the company to win big here. We chose the strategy, you know, years ago to be really levered into the accelerated computing and infrastructure part of the market, which includes the most prominent piece being AI.

Speaker Change: And kind of a final couple of comments.

Speaker Change: Get a lot of thought about.

Speaker Change: And we did it we did a lot of work with our customers over the over the break this past December and early January.

Speaker Change: Fireside chat with Heartland at J P M.

Speaker Change: And there was a lot of excitement after that call because we had gained confidence at that point about some of the production ramps.

Speaker Change: I would say just a couple of months later now sitting here on this call our confidence and our growth this year and the robustness of these programs has only gotten stronger and only increase.

Speaker Change: So we're very excited about where the company's position I appreciate everybody's support and interest in Marvell and I look forward to seeing everybody at the AI day.

Speaker Change: The team is working extremely hard and they will not disappoint. So thanks, everybody, we'll see you soon.

Matt Murphy: It's become much larger of an opportunity than we thought a few years ago, but it's, It's a market we clearly chose to invest in. Um, We're expecting a lot of growth in the coming year in our data center business. We're very excited about that. And some of these programs, as I indicated, they're just getting started.

Speaker Change: Yes.

Speaker Change: Thank you for attending today's presentation you may now disconnect.

Speaker Change: [music].

Matt Murphy: And some of them are ramping up in the second half; some of them are Unknown Attendee, Karl Ackerman, Nathaniel Bolton, Ambrish Srivastava, Achyut Shah, Alan, Get a lot of thought about, you know. And we did a lot of work with our customers over the break this past December and early January. You know, I did a fireside chat with Harlan at JPM, and there was a lot of excitement after that call because we had gained confidence at that point about some of the production ramps. I would say just a couple months later now, sitting here on this call, our confidence in our growth this year and the robustness of these programs has only gotten So we're very excited about where the company is positioned. I appreciate everybody's support and interest in Marvell. And I look forward to seeing everybody at AI Day. The team is working extremely hard, and they will not disappoint.

Speaker Change: Yes.

Speaker Change: Yeah.

[music].

Operator: So thanks, everybody. We'll see you soon. Bye. Thank you for attending today's presentation. You may now disconnect. Thanks for Watching... Rolland, Srinivas Pajjuri, Ambrish Srivastava, Achyut Shah, Alan Weckel, Loi Nguyen, Marvell Srivastava, Achyut Shah, Alan Weckel, Loi Nguyen, Marvell Srivastava, Alan Weckel, Alan Weckel, Loi Nguyen, Copyrightdn.com

Speaker Change: Okay.

Speaker Change: [music].