Q1 2024 MaxLinear Inc Earnings Call
Operator: Greetings and welcome to the MaxLinear First Quarter 2024 Earnings Conference Call. At this time, all participants are in a listen-only mode. A brief question and answer session will follow the formal presentation. If anyone should require operator assistance during the conference, please press star zero on your telephone keypad.
Greetings and welcome to the Max linear first quarter 'twenty 'twenty four earnings conference call. At this time all participants are in a listen only mode. A brief question and answer session will follow the formal presentation. If anyone should require operator assistance. During the conference. Please press star zero on your telephone keypad as a reminder, this conference is being recorded.
Operator: As a reminder, this conference is being recorded. It is now my pleasure to introduce your host, Leslie Green, Investor Relations. Thank you, Leslie. You may begin.
Now my pleasure to introduce your host Leslie Green Investor Relations. Thank you Lesley you may begin.
Leslie Green: Thank you, Paul. Good afternoon, everyone, and thank you for joining us on today's conference call to discuss MaxLinear's first quarter 2024 financial results. Today's call is being hosted by Dr. Kishore Seendripu, CEO, and Steve Litchfield, Chief Financial Officer and Chief Corporate Strategy Officer. After our prepared comments, we will take questions. Our comments today include forward-looking statements within the meaning of applicable securities law, including statements relating to our guidance for the second quarter of 2024, including revenue, GAAP and non-GAAP gross margin, GAAP and non-GAAP operating expenses, GAAP and non-GAAP interest and other expense, and GAAP and non-GAAP diluted share count.
Leslie Green: Thank you Paul and good afternoon, everyone and thank you for joining us on today's conference call to discuss next linear first quarter 'twenty 'twenty four financial results today's call is being hosted by Dr. Keefe sourcing reboot, CEO and Steve Litchfield, Chief Financial Officer, and Chief Corporate strategy Officer. After our prepared comments, we will take question.
Leslie Green: Our comments today include forward looking statements within the meaning of applicable securities laws, including statements relating to our guidance for the second quarter of 'twenty 'twenty, four including revenue GAAP and non-GAAP gross margin GAAP and non-GAAP operating expenses, GAAP and non-GAAP interest and other expense and GAAP and non-GAAP.
Leslie Green: Diluted share Count. In addition, we will make forward looking statements relating to trends opportunities execution of our business plan and potential growth in uncertainties in various product and geographic markets, including without limitation statements concerning future financial and operating results opportunities for revenue end market.
Leslie Green: In addition, we will make forward-looking statements relating to trends, opportunities, execution of our business plan, and potential growth and uncertainties in various product and geographic markets, including, without limitation, statements concerning future financial and operating results, opportunities for revenue and market share across our target markets, expected production ramps and timing for the launches of new products, our design wind pipeline, demand for the adoption of certain technologies, our serviceable addressable market, the effects of cost reduction measures, and These forward-looking statements involve substantial risks and uncertainties, including risks outlined in the risk factors section of our SAC filings, including our Form 10-Q for the quarter ended March 31, 2024, which we intend to file later today.
Leslie Green: Sure across target markets expected production ramps and timing for the launches of new products, our design win pipeline demand for and adoption of certain technologies, our serviceable addressable market the effects of cost reduction measures and product announcement.
Leslie Green: These forward looking statements involve substantial risks and uncertainties, including risks outlined in our risk factors section of our SEC filings, including our Form 10-Q for the quarter ended March 31st 2020 for which we intend to file later today any forward looking statements are made as of today and lax linear has no obligation.
Leslie Green: Any forward-looking statements are made as of today, and MaxLinear has no obligation to update or revise any forward-looking statements. The first quarter 2024 earnings release is available on the Investor Relations section of our website at MaxLinear.com.
Leslie Green: To update or revise any forward looking statements. The feature of the first quarter 'twenty 'twenty four earnings release is available on the Investor Relations section of our website at Max linear Dot Com. In addition, we report certain historical financial metrics, including but not limited to gross margin operating margin operating it.
Leslie Green: In addition, we report certain historical financial metrics, including but not limited to growth margin, operating margin, operating expenses, and interest and other expense on both a GAAP and non-GAAP basis. We encourage investors to review the detailed reconciliation of our GAAP and non-GAAP presentations and the press release available on our website. We do not provide reconciliation of non-GAAP guidance for future periods because of the inherent uncertainty associated with our ability to project certain future changes, including stock-based compensation and its related tax effects, as well as potential impairments.
Leslie Green: Spencers and interest and other expense on both a GAAP and non-GAAP basis, we encourage investors to review the detailed reconciliation of our GAAP and non-GAAP presentation and the press release available on our website we.
Leslie Green: We do not provide reconciliation of non-GAAP guidance for future periods because of the inherent uncertainty associated with our ability to project certain future changes, including stock based compensation and its related tax effects as well as potential impairments non-GAAP financial measures discussed today are not meant to be.
Leslie Green: The non-GAAP financial measures discussed today are not meant to be considered in isolation or as a substitute for comparable GAAP financial measures. We are providing this information because management believes it is useful to investors as it reflects how management measures our business.
Leslie Green: Considered in isolation or as a substitute for comparable GAAP financial measures. We are providing this information because management believes it is useful to investors as it reflects how management measures our business.
Leslie Green: Lastly, this call is also being webcast, and a replay will be available on our website for two weeks. And now, let me turn the call over to Dr. Kishore Seendripu, CEO of MaxLinear. Kishore? Thank you, Leslie.
Lastly, this call is also being webcast and a replay will be available on our website for two weeks and now let me turn the call over to Dr. Turkey short Gingery boots CEO of Mac funnier Kishore.
Kishore Seendripu: Thank you, Leslie. And good afternoon, everyone.
Turkey Gingery: Thank you Leslie and good afternoon, everyone. Our Q1 revenues were at $95.3 million posting a non-GAAP gross margin of 66%.
Kishore Seendripu: Our Q1 revenues were $95.3 million, posting a non-GAAP gross margin of 60.6%. Overall, we believe that our revenues have reached a bottom, and we are now poised for sequential growth in 2024. Our conviction is the result of improving market conditions and exciting new product launches in high-growth markets, including optical data center interconnect, enterprise Ethernet, and storage accelerators, 5G wireless, multi-gigabit PON broadband access, and Wi-Fi connectivity. All of these new products have been launched in the market today and will begin to reshape our revenue profile toward high-value data infrastructure applications. Well, this market recovery driving improved revenues, and strong fiscal discipline will help us position ourselves to deliver highly favorable leverage in our business model.
Speaker Change: Overall, we believe that our revenues have reached a bottom and were now poised for sequential growth and 24.
Speaker Change: Our conviction is the result of an improving market conditions and exciting new product launches in high growth markets, including optical data center interconnect.
Speaker Change: Enterprise Ethernet and storage axle readers five G wireless multi gigabit born broadband access and Wifi connectivity.
Speaker Change: All of these new products have been launched in the market today and will begin to reshape our revenue profile towards high value data infrastructure obligations.
Speaker Change: But this market to get really driving improved revenues are strong fiscal discipline.
Speaker Change: Help us position to deliver a highly favorable leverage in our business model.
Kishore Seendripu: Highlighting our infrastructure business, which we believe is on track to become a $300-500 million business over the next several years, led by Solid Traction, the high-speed optical interconnect market. Coming into 2024, we expect to deliver revenue in the $10-$30 million range for the year. We now expect to exceed the high end of the revenue range in 2024. As we demonstrated and announced at the Optical Fiber Conference in San Diego, our 5-nanometer CMOS Keystone 800-gigabit PAM-4DSP is in several reference designs for virtually all of the leading module makers, including JBL for silicon photonics-based pluggable modules and OptoMine for LRO modules, which we announced last month. Collectively, we are building an exciting AI-related design wind portfolio within the hyperscale and large enterprise markets.
Speaker Change: Our infrastructure business, which we believe is on track to become a dream to do 500 million dollar business over the next several years.
Speaker Change: Led by solid traction in high speed optical interconnect market.
Speaker Change: Coming into 'twenty 'twenty, four we expect to deliver revenue in the $10 million to $30 million range for the year.
We now expect to exceed the high end of the revenue range in 2024.
Speaker Change: As we demonstrated and announced at the optical fiber conference in San Diego are fine nanometers, Cmos Keystone eight gigabit Pam four DSP.
Speaker Change: Is in several different designs.
Speaker Change: Virtually all of the leading module makers.
Speaker Change: Joining jabil for Silicon Photonics based blockable modules and opt to a mine for L. R O modules, which we announced last month.
Speaker Change: Do you believe we are building an exciting E really the design win portfolio within the Hyperscale and large enterprise markets.
Kishore Seendripu: Early stage revenues have already begun, and we expect new production ramps later in the second half of the year to drive meaningful run rate growth in 2025. The ongoing adoption of AI in the cloud is providing a strong catalyst for the transition to 800 gigabit and beyond speeds. During Q1, we were very pleased to announce a Rushmore family of 200Gbps lanes, PAM430s, and DSPs. Built on Samsung's leading-edge CMOS, it delivers best-in-class power consumption, doubles the data rates, and significantly reduces latency across optical transceivers.
Speaker Change: Early stage revenues have already begun and we expect new production ramps later into the second half of the.
Speaker Change: To drive meaningful run rate growth in 2025.
Speaker Change: The ongoing adoption of E. R. In the cloud is providing a strong catalyst for the transition to agents at gigabit and beyond speeds.
Speaker Change: During Q1, we were very pleased to announce a rush for a family of 200 gigabit per lean Pam four cities and D. S. P's.
Speaker Change: Built on Samsung's, leading edge Cmos it delivers best in class power consumption double the data reads and significantly reduce legions vehicles optical transceivers.
Kishore Seendripu: Active Optical Cables and Active Electrical Cables. Industry estimates indicate that shipments of PAM-4 DSPs are expected to grow at a CAGR of 50% through 2027, providing an exciting opportunity for us to significantly grow our revenue and market presence over the next several years. In 5G wireless infrastructure, the expanding global rollout of new millimeter wave, microwave, and hybrid backhaul technologies to upgrade the data rates of wireless transport links continues to drive our growth and our silicon content per platform. At Mobile World Congress in February, we announced our new and differentiated CRF family, a single-chip platform for 5G open-RAN radio units for both massive MIMO and macro base station solutions. The response has been overwhelmingly positive.
Speaker Change: Active optical cables and active electrical cables industry.
Speaker Change: Industry estimates indicate that shipments of Pam four DSP are expected to grow at a CAGR of 50% through 2020 seven providing an exciting opportunity for us to significantly grow revenue and market presence over the next several years.
Speaker Change: And finally, novartis infrastructure, the expanding global rollout of new millimeter be microwave and hybrid backhaul technologies to upgrade the data reads of wireless transport links continues to drive our growth and our silicon content per platform.
Speaker Change: Well, we won't Congress in February, we announced our new and differentiated CRM family.
Speaker Change: A single chip platform for fight you open ran radio units for both massive mimo and macro base stations illusions.
Speaker Change: The response has been overwhelmingly positive and we expect a growing portfolio of wireless backhaul and accident was extract your products.
Kishore Seendripu: We expect our growing portfolio of wireless backhaul and access infrastructure products to drive significant revenue expansion over a multi-year cycle. Within our infrastructure revenues, our Panther 3 Series Hardware Storage Accelerators for the Enterprise All-Flash Array and Hybrid Storage Enterprise Appliance Systems are providing exciting incremental growth opportunities, particularly with the growth in high-speed computing and AI. Our Panther 3 GPU is the only hardware-based solution in the market delivering 12-to-1 ratio data compression, ultra-reliable data protection, low latency, and low power performance.
Speaker Change: To drive significant revenue expansion over a multi year cycle.
Speaker Change: With respect to revenues or bantered, three Cds hardware storage accelerators for the enterprise all flash array and hybrid storage enterprise applying systems is providing exciting incremental growth opportunities.
Clearly with the growth in high speed computing and AI.
Speaker Change: Our patented three GPU is the only hardware based solution in the market delivering 221 ratio data compression.
Altra reliable data protection lull agency and lube oil performance.
Kishore Seendripu: This month we were excited to announce a collaboration with Dell Technologies to integrate our Panther 3 storage accelerator into Dell's PowerMax storage platform to deliver unparalleled performance gains for mission-critical workloads. We are currently in production ramp with the solution and expect additional customer product ramps later this year. We're confident that we can double our storage-related revenues in 2024 with continued strong growth through 2025 and beyond in Ethernet connectivity with the recent launch of a new Octel 2.5 gigabit Ethernet PHY and switch product.
Speaker Change: This month, we were excited to announce a collaboration with Dell technologies to integrate their patented three stories accelerator into Dallas power Mac storage platform too.
Speaker Change: To deliver Unparallel performance gains for mission critical workloads.
Speaker Change: We are currently in production ramp with your solution and expect initial customer product ramps later this year.
Speaker Change: We are confident that we can double our store isn't really the revenues in 'twenty four with continued strong growth through 2020 five and beyond.
Speaker Change: In Ethernet connectivity with the recent launch of our new Arctic two points like gigabit Ethernet Phy and switch products.
Kishore Seendripu: We expanded our addressable market by $300 million to include both the enterprise and small and medium business switch markets, in addition to our traditional gateway and router markets. Customers are expected to upgrade today's more than 2 billion copper 1 gigabit Ethernet ports to 2.5 gigabit Ethernet speeds over time using the existing standard Cat5 cabling.
Speaker Change: It expanded our addressable market by 300.
Speaker Change: To include both the enterprise and small and medium business, which markets.
Speaker Change: In addition to our traditional gateway and router markets.
Speaker Change: Estimates are expected to upgrade to these more than 2 billion copper one gigabit Ethernet ports to 2.5 gigabit Ethernet speeds over time, using the existing standard cats cabling.
Kishore Seendripu: We are seeing exciting design win activity for our solution, including a Tier 1 North American Enterprise OEM customer that is expected to ramp to production in late 2024. As we look ahead, we believe our Ethernet business could reach $100 million over the next 18 to 24 months. Turning to broadband, we continue to gain traction in the fiber PON market with new design wins driving our growth. As many of you know, in 2023, we began ramping our single chip integrated fiber PON plus 10 gigabit processor gateway SOC and connectivity solutions with the major tier 1 North American service providers.
Speaker Change: We are seeing exciting design win activity for our solution, including a tier one north American enterprise OEM customer that is expected to ramp to production in the late 2020 full as.
Speaker Change: As we look ahead, we believe our Ethernet business could reach $100 million over the next 18 to 24 months.
Speaker Change: Turning to broadband we continue to gain traction in the fiber build.
Speaker Change: PON market with new design wins driving our growth.
Speaker Change: As many of you know in 'twenty to 'twenty, three we began ramping our single chip integrated fiber pawn, let's 10 gigabit process of Gateway associates and connectivity solutions with a major tier one north American service providers.
Kishore Seendripu: We're now ramping up a new opportunity with the second major GFN North American service provider. Together, these wins confirm our competitive product offering and demonstrate significant growth opportunities for us in the coming years. Last year, our porn revenue was approximately $50 million. We expect to be able to more than double that over the next two years. In connectivity, our Wave 700 single-chip tri-band quad-MIMO Wi-Fi 7 device continues to do extremely well in qualifications.
Speaker Change: But now ramping a new opportunity with the second major tier one North American service providers.
Together these wins confirm our competitive product offering and demand still significant growth opportunities for us in the coming years.
Speaker Change: Last year, our phone revenue was approximately $50 million, we expect to be able to more than double that over the next two years.
Speaker Change: Connectivity are waived 700 single chip Tri band God Mimo Wifi seven device.
Speaker Change: <unk> used to do extremely well and qualifications, we expect service providers to begin the initial rollout late this year.
Kishore Seendripu: We expect service providers to begin their initial rollout late this year, with their adoption peaking in two to three years. For MaxLinear, Wi-Fi 7 has the exciting potential to drive significant ASP growth and higher attached rates in a broadband access platform versus previous generations. Overall, as we finally project a return to sequential revenue growth, it is both gratifying and exciting to see years of product development and business execution begin to culminate in our next stage of growth as a data-centric infrastructure company.
Speaker Change: Adoption, peaking in two to three years for Max linear Wifi seven is the exciting potential to drive significant ESP growth.
Speaker Change: Higher attach rates in our broadband access platform versus previous generations.
Speaker Change: Overall as we finally project a return to sequential revenue growth. It is both gratifying and exciting to see years of product development and business execution begin to culminate in our next stage of growth as a data centric infrastructure company a.
Kishore Seendripu: Across our portfolio, we have the right solution production today to meet high-value market trends and drive significant revenue growth. With that, let me turn the call over to Steve Litchfield, our Chief Financial Officer and Chief Corporate Strategy Officer. Steve? Thanks.
Speaker Change: Across our portfolio, we have the right solution in production today to meet the high value market trends.
Speaker Change: And drive significant revenue growth.
Speaker Change: With that let me turn the call over to Steve Litchfield, Our Chief financial Chief.
Steven Litchfield: <unk> corporate strategy officer, Steve Thanks Kishore.
Steven Litchfield: Total revenue for the first quarter was $95.3 million, down from $125.4 million in the previous quarter, including both product and IP revenue. Broadband revenue for the quarter was $33 million, and connectivity revenue was $10 million.
Steven Litchfield: Total revenue for the first quarter was $95 3 million down from $125 4 million in the previous quarter, including both product and IP revenues.
Steven Litchfield: Broadband revenue for the quarter was 33 million connectivity revenue was $10 million.
Steven Litchfield: Infrastructure revenue was $33 million, and our industrial multi-market revenue was $20 million. Gap and non-gap gross margin for the first quarter was approximately 51.7% and 60.6% of revenue. The delta between GAAP and non-GAAP gross margin in the first quarter was primarily driven by $8.2 million of acquisition-related intangible asset amortization. First quarter GAAP operating expenses were $123.9 million, and non-GAAP operating expenses were $74.8 million. The delta between GAAP and non-GAAP operating expenses was primarily due to stock-based compensation and performance-based equity accruals of $24.2 million combined and restructuring costs of $22.6 million related to the workforce reduction initiated in Q4.
Steven Litchfield: Infrastructure revenue was $33 million and our industrial multi market revenue was $20 million.
Steven Litchfield: GAAP and non-GAAP gross margin for the first quarter was approximately 51, 7% and 66% of revenue.
Steven Litchfield: The delta between GAAP and non-GAAP gross margin in the first quarter was primarily driven by $8 2 million of acquisition related intangible asset amortization.
Steven Litchfield: First quarter GAAP operating expenses were $123 9 million and non-GAAP operating expenses were $74 8 million.
Steven Litchfield: The delta between GAAP and non-GAAP operating expenses was primarily due to stock based compensation and performance based equity accruals of $24 2 million combined and restructuring cost of $22 6 million related to the workforce reduction initiated in Q4.
non-GAAP loss for operations for Q1, 2024 was 18% of net revenue GAAP interest and other expense during the quarter was <unk> 5 million non-GAAP interest and other expense during the quarter was point $6 million.
Steven Litchfield: The non-GAAP loss for operations for Q1 2024 was 18% of net revenue. GAAP interest and other expense during the quarter was $0.5 million. Non-GAAP interest and other expense during the quarter was $0.6 million. In Q1, cash flow generated by operating activities was $16 million. We exited Q1 of 2024 with approximately $193 million in cash, cash equivalents, and restricted cash. Our day sales outstanding for the first quarter was approximately
Steven Litchfield: In Q1 cash flow generated in operating activities was $16 million.
Steven Litchfield: We exited Q1 of 'twenty 'twenty, four with approximately $193 million in cash cash equivalents and restricted cash.
Steven Litchfield: Our day sales outstanding for the first quarter was approximately 121 days our gross.
Steven Litchfield: Inventory was down versus the previous quarter with inventory turns out 0.9 times.
Speaker Change: This concludes the discussion of our Q1 financial results.
Speaker Change: With that let's turn to our guidance for Q2 of 'twenty 'twenty four we currently expect revenue in the second quarter of 2024 to be between $90 million and $110 million.
Steven Litchfield: Our gross inventory was down versus the previous quarter, with inventory turns at.9 times. This concludes the discussion of our Q1 financial results. With that, let's turn to our guidance for Q2 of 2024. We currently expect revenue in the second quarter of 2024 to be between $90 million and $110 million. Looking at Q2, by end market, we expect infrastructure, connectivity, and industrial multi-market to be up, while broadband will be expected to be down.
Speaker Change: Looking at Q2 by end market, we expect infrastructure connectivity and industrial multi market to be up.
Speaker Change: While broadband will be expected to be down.
Speaker Change: We expect second quarter GAAP gross margin to be approximately 52, 5% to 56, 5% and non-GAAP gross margin to be in the range of 58, 5% and 61, 5% of revenue.
Speaker Change: Gross margin continues to be relatively stable with the expected range being driven by a combination of near term product customer and end market mix.
Steven Litchfield: We expect second quarter GAAP gross margin to be approximately 52.5% to 56.5%, and non-GAAP gross margin to be in the range of 58.5% and 61.5% of revenue. Gross margin continues to be relatively stable, with the expected range being driven by a combination of near-term product, customer, and end-market mix.
Speaker Change: We expect Q2 2024, GAAP operating expenses to be in the range of 103 million to $113 million.
Speaker Change: We expect Q2 2024, non-GAAP operating expenses to be in the range of 72 million to $78 million.
Steven Litchfield: We expect Q2 2024 GAAP operating expenses to be in the range of $103 million to $113 million. We expect Q2 2024 non-GAAP operating expenses to be in the range of $72 million to $78 million. We expect our Q2 GAAP and non-GAAP interest and other expense to be in the range of approximately $0.5 million to $1 million each. Additionally, we expect our Q2 GAAP and non-GAAP diluted share count to be approximately $83.5 million.
Speaker Change: We expect our Q2, GAAP and non-GAAP interest and other expense to be in the range of approximately <unk> 5 million to $1 million each.
Speaker Change: We expect our Q2, GAAP and non-GAAP diluted share count to be approximately $83 5 million.
Speaker Change: We're pleased to show progress on our new products expanding our position in these exciting new growth markets, our customer traction and design win momentum are producing tangible results that will be increasingly evident in our business in the coming quarters and will reshape our future as a data infrastructure company.
Steven Litchfield: We're pleased to show progress on our new products, expanding our position in these exciting new growth markets. Our customer traction and design win momentum are producing tangible results that will be increasingly evident in our business in the coming quarters and will reshape our future as a data infrastructure company. The world is undoubtedly moving toward accelerated data architectures, and MaxLinear's core competencies centering around seamless integration and low power efficiency are perfectly suited.
Speaker Change: The world is undoubtedly moving towards accelerated data architectures, and Max linear as core competencies, Sydney centering around seamless integration and low power efficiency is perfectly suited.
Speaker Change: Our optimism and sense of purpose within this new generation of technology is high and we remain deeply committed to delivering strong value to our customers and our shareholders.
Speaker Change: With that I'd like to open up the call for questions Paul.
Paul: Thank you well now be conducting a question and answer session. If you'd like to ask a question. Please press star one on your telephone keypad.
Paul: Information tone will indicate your line is in the question queue. You May press star two if you'd like to remove your question from the queue for participants using speaker equipment and may be necessary to pick up your handset before pressing the star keys.
Steven Litchfield: Our optimism and sense of purpose within this new generation of technology is high, and we remain deeply committed to delivering strong value to our customers and our shareholders. With that, I'd like to open up the call to questions, Paul. Thank you.
Paul: One moment, please while we poll for questions.
Paul: Our first question is from Quinn Bolton with Needham <unk> Company. Please proceed with your question.
Quinn Bolton: Hey, guys congratulations on the infrastructure progress, especially on optical I guess I wanted to start there you know could you give us some sense. Yeah. You know the the revenue ramp this year exceeding now 30 million.
Operator: Thank you. We will now be conducting a question and answer session. If you would like to ask a question, please press star 1 on your telephone keypad. A confirmation tone will indicate your line is in the question queue. You may press star 2 if you'd like to remove your question from the queue. For participants using speaker equipment, it may be necessary to pick up your handset before pressing the star key.
Quinn Bolton: You know how how concentrated are diversified is that 30 million is that over several module partners does it is it pretty concentrated with one or two and I guess more importantly, as you start to get into volume production in the second half of the year and what kind of growth could you be looking at in calendar 'twenty five with that business.
Operator: One moment, please, while we poll for questions. Our first question is from Quinn Bolton with Needham & Company. Please proceed with your question.
Quinn Bolton: Double or more as you hit volume production for the full year on some of these design wins and then I've got a follow up.
Quinn Bolton: Hey, guys. Congratulations on the infrastructure progress, especially on Optical. I guess I wanted to start there.
Speaker Change: Hey, Duane Yes, you know I, you know and our optical fiber conference in San Diego, We demonstrated a number of top tier OEM module makers and Oems themselves or whose products. We had on demo all of our 800 gigabit you know Keystone product line as we speak.
Quinn Bolton: Can you give us some sense, you know, the revenue ramp this year exceeding $30 million, you know? How concentrated or diversified is that $30 million? Is that over several module partners? Is it pretty concentrated with one or two? And, more importantly, as you start to get into volume production in the second half of the year, you know, what kind of growth could you be looking at in calendar 25? Would that business double or more as you hit volume production for the full year on some of these design wins? Thanks. And then I got a follow-up call.
Speaker Change: Designing a velocity is pretty strong and the revenues we have described and shifting our high end of the range for our forecast for this year.
Speaker Change: It is driven by more than one customers and I would I would like to see that those are initial.
Speaker Change: Revenue lands with some good confidence developing on the performance and stability of the solution. So I think that there's more to come actually. This is this is just the beginning but it is not concentrated in one customer.
Kishore Seendripu: Hey, Quinn. Yes, at our Optical Fiber Conference in San Diego, we demonstrated a number of top-tier OEM module makers and OEMs themselves, whose products we had on demo, all for the 800-gigabit keystone product line. As we speak, the design-in velocity is pretty strong, and the revenues we have described as shifting the high end of the range for our forecast for this year are driven by more than one customer. And I would like to say that those are initials.
Speaker Change: Oh, you know as you are enquiring about no heading into 2025, you can imagine that they would even many more of these customers will be launching into production, while some will be maturing into a peak run rate based on a whole exit Q4. So I expect that you should see a multiplier effect of the revenues of <unk>.
Kishore Seendripu: Revenue ramps up with some good confidence developing on the performance and the stability of the solution. So, I think that there's more to come. Actually, this is just the beginning, but it is not concentrated in one customer. You know, as you were inquiring about now heading into 2025, you can imagine that even many more of these customers will be launching into production, while some will be maturing into a peak run rate based on how we execute.
24, we're heading into 25, and 26 and we hope to be in pretty much all the major platforms out there that are going to be.
Speaker Change: You know pulling up pulling in with the <unk>.
Speaker Change: Backing up the data as it has been a I or the front end with all the major data center.
Speaker Change: Layers in the market.
Speaker Change: So it sounds like certainly.
Speaker Change: Line of sight towards 100 million kind of run rate sometime in either 25 or 26 basis based on those comments.
Kishore Seendripu: So, I expect that we should see a multiplier effect of the revenues of 2024 heading into 2025 and 2026, and we hope to be on pretty much all the major platforms out there that are going to be, you know, pulling in with the backend of the data, be it AI or the frontend with all the major data center players in the market.
Speaker Change: That's my you know expected optimism naturally right. So based on these revenues that would not be.
Speaker Change: You know something that would be far out in projecting.
Speaker Change: Got it and then I just wanted to step back.
Speaker Change: And in the script gave you you. Both I think you know sounded more confident that revenue has reached the bottom that you will see sequential growth through the year and I guess I was just wondering if you could provide some more detail what gives you confidence that revenue rebound sequentially or grow sequentially through the year or is that based on design.
Quinn Bolton: So it sounds like you certainly have a line of sight towards a hundred million kind of run rate sometime in either 25 or 26, based on those comments.
Kishore Seendripu: That's my, you know, expected optimism, naturally, right? So, based on these revenues, that would not be, you know, something that would be far out in projecting.
Speaker Change: Design win ramps you can you can you give us some sense of what you're seeing in terms of bookings activity is backlog starting to build you know it is visibility.
Quinn Bolton: I got it. But then I just wanted to step back.
Quinn Bolton: In the script, you both, I think, sounded more confident that revenue has reached the bottom and that you'll see sequential growth through the year. And I guess I was just wondering if you could provide some more detail. What gives you confidence that revenue rebounds sequentially or grows sequentially through the year? Is that based on design wind ramps?
Speaker Change: Ability into the second half starting to extend any of those types of comments would be would be helpful. Thank you.
So I'll take it take this question then I will hand, it over to Steve a little more color what are the two things happening right. Firstly, we have been under shipping the market.
Steven Litchfield: Demand for a while now and as we look at the sell through a process of the product right now it's very clear that.
Kishore Seendripu: Can you give us some sense of what you're seeing in terms of booking activity? Is the backlog starting to build? Is visibility into the second half starting to extend? Any of those types of comments would be helpful. Thank you.
You know the rate at which we're shipping is now.
Steven Litchfield: <unk> fallen behind what the sell through rate is in the channel so to speak right. So we feel optimistic that our process is started where we are we are going to develop the ability to now start shipping more and you're going to start seeing some equilibrium developing between sell through and sell in revenues. If you will so.
Kishore Seendripu: So, you know, I'll take it, take this question, and then I will hand it over to Steve in more detail. But there are two things going on, right?
Kishore Seendripu: Firstly, we have been under-shipping market throughput demand for a while now. And as we look at the sell-through process of the product right now, it's very clear that, you know, the rate at which we're shipping is now falling behind what the sell-through rate is in the channel, so to speak, right? So we feel optimistic that a process has started where we are going to develop the ability to now start shipping more, and you're going to start seeing some equilibrium developing between sell-through and, you know, sell-in revenues, if you will. So that's the reason, and that is on the existing.
Steven Litchfield: That's the reason and that is on the existing.
Steven Litchfield: Rabbit design that had been shipping, but last few years is our new product revenues and then the other leg to our revenues as the new products, which we talked about being optical be it you know infrastructure products.
Internet stories accelerated is that all going to be ramping as well. So I think it is a combination.
Steven Litchfield: While we cannot speak for the trajectory or the next second half of the year, but we definitely feel we have entered a phase of sequential growth in 2020 for now so I would say that that is the color. Steve do you want to take the question on the bookings or anything like that the color on that.
Kishore Seendripu: The design that I've been shipping for the last few years is our new product revenues. And then there's the other leg to our revenues, which is the new products that we talked about, be it optical, be it infrastructure products, Ethernet, storage accelerators; they're all going to be ramping as well. So I think as a combination, while we cannot speak for the trajectory or the next second half of the year, but we definitely feel we have entered a phase of sequential growth in 2024 now. So I would say that is the color. Steve, do you want to take the question on the bookings or anything like that, the color on that? Yeah, I think Kishore covered that.
Steven Litchfield: I think you've covered it.
I think we're definitely feeling a lot better about bookings.
Steven Litchfield: That's kind of been over multiple quarters, we'd seen improvement on on that front and I think the other aspect is some of the new products that Kishore mentioned are going to be ramping in the second half of the year, including some of the optical products. Those orders have already been placed so we've got visibility and so we're starting to see those improvements.
Speaker Change: Thanks, guys.
Speaker Change: Thank you. Our next question is from Christopher Roland with Susquehanna International. Please proceed with your question.
Steven Litchfield: I think we're definitely feeling a lot better about bookings. That's kind of been going on for multiple quarters. We've seen improvement on that front. And I think the other aspect is some of the new products that Kishore mentioned are gonna be ramping in the second half of the year, including some of the optical products. Those orders have already been placed. So we've got visibility, and we're starting to see those.
Christopher Rolland: Hey, guys. Thanks for the question the long term infrastructure guide the 300 to 500 was pretty interesting Hum.
Christopher Rolland: When when we get there are you know what does this look like in terms of components is the majority D. S. P. A.
Christopher Rolland: In your estimate or how does that break down.
Operator: Thank you. Our next question is from Christopher Rolland with Susquehanna International. Please proceed with your question.
Chris: So Chris.
Chris: Well you know we have been talking about I find it a million dollar revenue for infrastructure.
Chris: Quite some time now and really the three major legs of growth vectors for our infrastructure revenue.
Christopher Rolland: Hey guys, thanks for the question. The long-term infrastructure guide, the 300 to 500, was pretty interesting. When we get there, what does this look like in terms of components? Is the majority DSP in your estimate, or how does it break down?
Chris: Firstly today. The revenue is about you know give or take you know, let's say, it's in the $200 million run rate for the infrastructure revenues.
Chris: It comprises primarily of our wireless infrastructure revenue and a little bit of infrastructure and Ethernet and you know so and then if you are if you know lay it on top of that the optical products, which you talked about it could be in the next three to five years somewhere between $100 million to $300 million.
Kishore Seendripu: So, uh, Chris, uh... We have been talking about $500 million in revenue for infrastructure for quite some time now, and really, there are three major legs of growth vectors for our infrastructure revenue. Firstly, today the revenue is about give and take, let's say it's at a $200 million run rate for the infrastructure revenues, and it comprises primarily our wireless infrastructure revenue and a little bit of infrastructure and Ethernet. And then, if you now layer on top of that the optical products we talked about, which could be in the next three to five years, somewhere between $100 to $300 million, depending on our market share.
Chris: On a market share there.
Chris: Then over and above.
Chris: About that you layer in a story that we've been very confident that we will do some maybe in the $50 million to $75 million revenue over the next two years then the recent activity and design wins for our Ethernet on the enterprise side.
Chris: You know we have a number of legs of growth drivers. So I do not expect it to be a DSP Pam four dominated Howard I would I would conclude that our DSP back or if it is not the number one it would be number two next or wireless infrastructure, followed by our stories accelerators and Ethernet enterprise solutions. So.
Kishore Seendripu: And then, over and above that, you layer in a storage accelerator, which we're very confident that we will do somewhere between $50 to $75 million in revenue over the next two years. Then, the recent activity and design means for Ethernet on the enterprise side, you know, we have a number of legs of growth drivers. So, I do not expect it to be DSP PAM-4 dominated. However, I would conclude that DSP PAM-4, if it's not number one, it would be number two, next to our wireless infrastructure, followed by storage accelerators, and Ethernet enterprise solutions.
Speaker Change: Thank you.
Speaker Change: There are a few more components to those revenues, but I think I just wanted to highlight to the big chunks of revenues for infrastructure and.
Speaker Change: They know we feel really excited that all these years of dredging on the development. The last several years is now fully in the marketplace and who gathered traction.
Speaker Change: Thanks for that Kishore Secondly, do you now believe you have a good view into inventory at various levels in the supply chain.
Kishore Seendripu: So, I think there are a few more components to those revenues, but I think I just want to highlight the big chunks of revenues for infrastructure. And, you know, we feel really excited that all these years of dredging on the development, the last several years, are now fully in the marketplace and will gather traction.
Kishore: Where do you think inventory you know in terms of sub segments are our normalized or close to normal and where do you think there is still work to be done.
Christopher Rolland: Thanks for that, Kishore. Secondly, do you now believe you have a good view of inventory at various levels in the supply chain? Where do you think inventory, you know, in terms of subsegments, is normalized or close to normal, and where do you think there's still work to be done?
Kishore: Yeah, Chris I'll take that one.
Kishore: So look I think we continue to see improvements on the inventory side I mean, particularly in the channel, we're making progress on our own maturities, but specifically to your questions around the channel inventory I think we've seen a lot of improvement our biggest headwind have been broadband and connectivity as we've stated I think this is playing out more or less where we are.
Christopher Rolland: Yeah, Chris, I-
Steven Litchfield: Yeah, Chris, I'll take that one. So look, I think we continue to see improvements on the inventory side, particularly in the channel. We're making progress on our own inventories. But specifically, your questions around channel inventory, I think we've seen a lot of improvement. Our biggest headwinds have been broadband and connectivity. As we've stated, I think this is playing out more or less where we expected that we would still see some headwinds kind of through the first half of this year.
Kishore: Expected that we would still see some headwinds.
Kishore: You know kind of through the first half of this year I think that's still the case, but I think we're making good progress we're really seeing in channel inventory come down.
Kishore: Industrial multi market is probably the other area that we definitely saw a softness last quarter, we'd expect to see.
Kishore: You know some continued headwind, particularly in some of the the China markets, but that being said it doesn't feel quite as bad as some of the challenges that we've had on the broadband connectivity.
Steven Litchfield: I think that's still the case, but I think we're making good progress. We're really seeing channel inventory come down. Industrial multi-markets, probably the other area that we definitely saw in this last quarter, we'd expect to see some continued headwinds, particularly in some of the Chinese markets. But that being said, it doesn't feel quite as bad as some of the challenges that we've had with broadband and connectivity.
Speaker Change: Thanks, Steve.
Steven Litchfield: Thanks, Chris.
Steven Litchfield: Thank you. Our next question is from Tories Lundberg with Stifel. Please proceed with your question.
Tories Lundberg: Yes, congratulations on the progress on the infrastructure side.
Tories Lundberg: So I do have questions, but I want to start with the Dsos.
Operator: Thank you. Our next question is from Tore Svanberg with Stiefel. Please proceed with your question.
Tories Lundberg: So there is still quite elevated.
Tore Egil Svanberg: Yeah, congratulations on the progress on the infrastructure side. So I do have questions, but I want to start with the DSOs. So they're still quite elevated. Is this just purely linearity, where customers are basically ordering really last minute, or anything else going on there?
Tories Lundberg: Just purely linearity, where customers are basically ordering really last minute or anything else going on there Steve.
Tories Lundberg: The simple answer is yes, I mean, I think we continue to see linearity to be a challenge.
Steven Litchfield: The simple answer is yes. I mean, I think we continue to see linearity to be a challenge, and as much as that's a bad thing, you're also starting to see some encouraging signs there that I mentioned last quarter about some last-minute shipments, and this is where customers don't have great visibility, and at the very end, they recognize that they don't have the right products to be shipping, so we've definitely continued to see that, and those are some of the signs that I think give us confidence that we're, you know, now on track to kind of work our way out of this, right, that the inventory levels are getting down to lower levels, the bookings have improved, and those are the encouraging signs, albeit the quarter was definitely still back in.
Tories Lundberg: And as much as that's a bad thing Youre also starting to see some encouraging signs there that I mentioned last quarter about some last minute shipments in your chip.
Tories Lundberg: This is where customers are.
Tories Lundberg: I don't have great visibility and at the very end they recognize that they don't have the right products to be shipping. So we definitely continue to see that and those are some of the signs that I think give us give us confidence that we're now.
Tories Lundberg: Now on track to kind of work our way out of this right that the inventory levels are getting down to lower.
Tories Lundberg: The level of bookings have improved and and those are the encouraging signs, albeit.
Speaker Change: Got it.
Speaker Change: The quarter was definitely still back end loaded.
Steven Litchfield: Very good. And, you know, I thought connectivity had bottomed, but I guess it came in at $10 million this quarter. Could you talk a little bit about what's going on there? I mean, are there still really that much excess inventory? Or would you say that $10 million is sort of like a firm bottom in that part of the country?
Speaker Change: Very good.
Speaker Change: Connectivity had bought them, but I guess it came in at 10 million this quarter.
Speaker Change: Could you talk a little bit about what's going on there I mean are those still really that much excess inventory.
Speaker Change: Or would you say that $10 million is sort of like a bottom in that part of the business.
Steven Litchfield: Yeah, no, no. I understand your comment. Believe me.
Speaker Change: Yes, no no.
Speaker Change: I understand your comment believe me.
Steven Litchfield: You know, we continue to talk about both of these kind of together, at least right now anyway, as far as the inventory that's sitting in the channel. So, that's continuing to be challenging. We're seeing good, encouraging signs out there for broadband as well as connectivity, Wi-Fi specifically. You know, Kishore included some of his comments around Wi-Fi 7, but certainly Wi-Fi 6 is going to continue to ship in volumes over here for the next couple of years.
Speaker Change: We continue to talk about both of these kind of together at least right now anyway as far as the inventory that's sitting in the channel. So that's continued to be challenging.
Speaker Change: We're seeing good encouraging signs out there on broadband as well as connectivity Wi Fi specifically you know Kishore included in his some of his comments around why five seven but certainly Wifi six is going to continue to ship in you know volume is over here for the next couple of years. So so that's going to continue and.
Steven Litchfield: So, that's going to continue, but then a majority of our design activity right now is on Wi-Fi 7. And then don't forget Ethernet. Ethernet is something that's getting a lot of traction in our gateway products as they upgrade from 1 gigabit to 2.5 gigabit, but you're also seeing this in the enterprise space, in the industrial space.
Speaker Change: But then a majority of our design activity right now is on Wi Fi seven and then don't forget either at.
Speaker Change: Ethernet is something that's getting a lot of traction in in our in our gateway products as they upgrade from one gig two five gig, but you're also seeing this in the enterprise space in the industrial space and I think we've really got a great product that's ramping at the right time, we will see a lot of growth and revenue growth from that in <unk>.
Speaker Change: 2025, specifically as we do have a couple of new customers that will be ramping.
Tore Egil Svanberg: Great. If I could just finish up a question for you, Kishore,
Speaker Change: Great if I could just finish up a question for UK sure. So obviously Keystone finally, seeing some good traction that you announced the Rushmore last month 200 gig per lane.
Tore Egil Svanberg: So obviously, Keystone is finally seeing some good traction. Now you announced the Rushmore last month, 200 gigabits per lane. I mean, it sounds like this product is going to be much more, let's say, target more segments of the market, right? So I think you mentioned going after the AAC market, you know, potentially LRO. Help us understand, you know, the difference between those two product offerings and how broad you can become with 200 gigabytes.
Speaker Change: It sounds like this product is going to be much more.
Speaker Change: Let's say.
Speaker Change: Target more segments of the market right.
Speaker Change: You mentioned going after the ASC market potentially <unk> help.
Speaker Change: Help us understand the difference between those two product offerings and how broad.
Speaker Change: You can become in 200 gig.
Kishore Seendripu: So Tore, I just want to clarify that even our Keystone product is a pretty broad application. I think in my part of the script, I was trying to suggest that even the 200 gigabit will be pretty broad. At the OFC conference, we demonstrated active electrical cables. We demonstrated Y-junction copper cables.
Speaker Change: So tori.
Speaker Change: I just want to clarify that even our Keystone product is a pretty broad application I think in my part of the script I was trying to refer the even the 200 gig will be pretty broad and the OFC conference. We demonstrated activate optical cables be demonstrated why are the why junction corporate cables.
Kishore Seendripu: And we have also demonstrated a number of other configurations and use cases. And we also demonstrated LROs at the conference. So, in fact, we may be one of the first ones to demonstrate a fully functional LRO for the market.
Speaker Change: And you know we are also demonstrate a number of other configurations and you use cases, and we also demonstrated our OS right in the conference. So in fact, we made one of the first ones that Oh, who have demonstrated a fully functional L. R. O for the market. So I E E.
Kishore Seendripu: So what I was trying to get across at the 200 gigabit per lane is that we are going to do the same thing for the Rushmore product line as well. So yes, the spread is now pretty broad. And those tertiary markets are large in a dollar way. But as a percentage share of the market, even though they're smaller, we'll be playing in all of those markets.
So what I was trying to get to the 200 gig per lane is that we're going to do the same thing for the Rushmore product line as well so yes, the the spread is not pretty broad.
And those tertiary markets by themselves are large in a dollar we but as a percentage share of the market.
Speaker Change: Even though they're smaller so it will be playing in all of those markets.
Tore Egil Svanberg: Yeah, thanks for clarifying. Thank you.
Speaker Change: Yeah. Thanks for clarifying thank you.
Speaker Change: Okay.
Operator: Our next question is from David Williams with Benchmark Company. Please proceed with your question.
Our next question is from David Williams with Benchmark Company. Please proceed with your question.
David Williams: Hey, good afternoon, and thanks for taking my question. I guess, Kishore, if you kind of talk about your focus on the data infrastructure side, should we think that maybe there's other segments or portions of the business that maybe aren't as positive or maybe do not fit that as well going forward, or is this really, should we just consider this everything kind of growing and fitting into that bucket of data infrastructure as you go forward?
David Williams: Hey, good afternoon, and thanks for taking my question.
David Williams: I guess, Keith where if you just kind of talk about your focus on the data infrastructure side and should we think that maybe there's other segments or portions of the business that maybe arent as positive where maybe you offset that as well going forward or.
David Williams: Is this really a.
David Williams: Should we just consider just everything kind of growing at and fitting into that bucket of data infrastructure as you go forward.
Keith: Could you repeat the question for me. Please I missed the early part of it.
David Williams: Could you repeat that question for me, please? I missed the early part of it.
Keith: Sorry, just about the data infrastructure focus here and if there's other segments of the business today that maybe aren't as did not fit that bucket is nicely.
David Williams: Sorry, just about the data infrastructure focus here and if there's other segments of the business today that maybe aren't as, do not fit that bucket as nicely.
Kishore Seendripu: Well, you know, I think the buckets we talked about are pretty pure and clean. There is no part of the data center infrastructure that is not directly a PAM-4DSP related product in our portfolio. Typically, it is a PAM-4DSP along with the TIA. We have the laser drivers fully integrated into our solution. So, it is a very clean fit to the PAM-4DSP addressable market.
Keith: No I think that's the bucket has been talking a pretty pure and clean there really is no part of the data center infrastructure that is not directly our Pam four DSP related product in our portfolio.
Keith: Typically it is our Pam four DSP along with the P. I E. We have the laser drivers fully integrated solutions. So so you need a very clean fit to the Pam four DSP addressable market.
Keith: Okay.
David Williams: Thanks. And then maybe, Steve, just how the bookings trended over the last few months, and if there's any way to kind of disaggregate some of the legacy products relative to the new products, just to get an idea of how the older products are, the demands. Yeah, um,
Speaker Change: Great. Thanks, and then maybe just how the bookings trended over the last few months and if theres any way to kind of disaggregate sort of the legacy products relative to the new products just to get an idea of how the older products are but the demand is picking up there. Thank you.
Steven Litchfield: Yeah, David, I mean, with regard to bookings, we've definitely seen multiple quarters of improvements on the bookings front. You know, some of the newer products now, we mentioned in our prepared remarks about how these are all in the market in some form or fashion, some at earlier stages than others. So several of those, I mean, like the optical one that I mentioned a little bit earlier, you know, it's going to ramp up in the back half of the year; we need to have orders now.
Speaker Change: Yeah, David I mean with regard to the bookings, we've definitely seen multiple quarters of improvements on the bookings front.
Speaker Change: Some of them the newer products now we mentioned in our prepared remarks about how these are all in in the market in some form or fashion summit earlier stages than others. So several of those I mean like the optical and that I mentioned, a little bit earlier.
Speaker Change: It's going to ramp in the back half of the year, we need to have orders now so we're definitely seeing that happen some.
Speaker Change: Some of the more.
Steven Litchfield: So we're definitely seeing that happen. Some of the more, you know, the broader market offering that we do have that we've seen inventory in the channel, we are seeing kind of recent bookings pick up, which gives us confidence that we'll see some continued improvement in Q3 and Q4 later this year.
Speaker Change: You know the broader market offering that we do have that we've seen inventory in the channel we are seeing.
Speaker Change: Kind of.
Speaker Change: More recent bookings pick up and which kind of gives us confidence that we'll see some.
Speaker Change: Continued improvement in Q3 and Q4 later this year.
Speaker Change: Okay.
Speaker Change: Okay.
David Williams: Maybe next question?
Speaker Change: Maybe next question.
Operator: Our next question is from Ross Seymour with Deutsche Bank. Please proceed with your question.
Speaker Change: Our next question is from Ross Seymore with Deutsche Bank. Please proceed with your question.
Ross Seymore: Hey guys, thanks for having me ask a question and congrats on returning to growth. First, I want to ask about the cyclical side of things. You talked even in the prior question, Steve, about some better visibility as bookings come up, and I know you're still working through inventory on the broadband and connectivity side, but now that the bookings have improved, do you have any better idea as to kind of what a normalized revenue run rate is for those businesses, because they're down so much? Was, you know, the prior high artificial? Is the current low artificial? Where do we meet in the middle?
Ross Seymore: Hey, guys. Thanks for letting me ask the question and congrats on returning to growth.
Ross Seymore: Just wanted to ask about the cyclical side of things you talked even in the prior question, Steve about some better visibility bookings come up and I know, you're still working through inventory and on the broadband and connectivity side, but that was the bookings have improved do you have any better idea as to kind of what a normalized revenue run rate is for those businesses.
Ross Seymore: Down so much was the prior high artificial as the prior as the current low artificial where do we meet in the middle of any sort of color on that would be helpful.
Ross Seymore: Any sort of color on that?
Steven Litchfield: Yeah, Ross, as you know, we've been talking about this a lot and, you know, recognizing as customers kind of burn through the rest of that channel inventory, kind of what that revenue run rate that you return to. So we're watching that closely. I mean, there's some other dynamics that start to influence that. And I mean, if I think of broadband specifically, we talked a lot about the pawn business. So that'll start to influence that.
Steven Litchfield: Yeah, Ross as you know we've been talking about this a lot and.
Recognizing as as customers kind of burn through the rest of that channel inventory kind of what that revenue run rate that you return to.
Speaker Change: So we're watching that closely I mean, there are some other dynamics that start to influence that in I mean, if I think of broadband specifically, we've talked a lot about.
Speaker Change: The pawn business, so that'll start to influence that the higher content per box starts to influence that as Wi Fi seven comes into play.
Steven Litchfield: The higher content per box starts to influence that as Wi-Fi 7 comes into play. You know, market share, I would say, you know, for the most part hasn't changed too much. You know, there's not a lot of customers in this market. You know, those dynamics really haven't changed. There's a limited set of competitors on the Wi-Fi side as well, and that's a story that's still early days, albeit, you know, our Wi-Fi or our connectivity revenues in general were not as strong in the quarter, but I do feel confident that we're, you know, with the newer products, with the higher ASPs, that over the next couple of three years, as Wi-Fi 7 gets traction in the market, that you're going to see, you know, nice revenue growth coming from those parts of the business.
Speaker Change: Market share I would say you know for the most part hasn't changed too much.
Speaker Change: Not a lot of customers in this market so.
Speaker Change: Those dynamics really Havent changed there's a limited set of competitors on Wi Fi side as well.
And that's it's a story that's still early days, albeit Wi Fi connectivity revenues in general were not as strong in the quarter, but I do feel confident that were you know with the newer products with the higher ASP fees that over the next couple of three years as Wi Fi seven gets traction in the market.
Speaker Change: We're going to see.
Speaker Change: Nice revenue growth coming from those parts of the business.
Speaker Change: Okay.
Ross Seymore: I guess as my follow-up then, on the OPEX side of things, you guys run a tight ship on that, you always have, but with all these opportunities that Kishore talked about, are those things where the predominance of the OPEX has already been spent, or is that something that you think you need to ramp up the OPEX to take advantage of all these data center infrastructure opportunities?
Speaker Change: I guess as my follow up then the Opex side of things you guys run a tight ship on that you always have.
Speaker Change: With all these opportunities that Kishore talked about are those things, where the predominance of the Opex has already been spent ore.
Speaker Change: Is that something that you think you need to ramp the opex to take advantage of all these data center infrastructure opportunities.
Kishore Seendripu: Look, there are one or two product areas, Ross, where we still will be at a pace of investment where we need to catch up and leapfrog the market, right, especially in the new markets we enter. However, most of the initiatives that we started five to six years ago, be it wireless infrastructure, optical data center, the big TAM-defining products, have already been launched now. They're showing good LV momentum, so it would be normal sustaining R&D work to get to the next generation of products.
Speaker Change: Look there are one or two product areas, Ross, where we still will be at a pace of investment there we need to catch up and leapfrog the market right. There's a the especially the new markets we entered.
Speaker Change: Most of the initiatives that we've started into five to six years ago bead wireless infrastructure optical data center, the big Tam defining products have already been launched now they're showing good early momentum. So it would be normal sustaining R&D work to get to the next generation of products and the time cycles of these markets.
Kishore Seendripu: And the time cycles of these markets, outside of the data centers, are pretty, what I call, nothing aggressive. So I would say outside of the data center, our investment pace is going to be quite moderated, and so I don't see an extraordinary step up just to keep up with the next product outside of the optical data center market.
Speaker Change: Outside of the data then dessert are pretty what are they called nothing aggressive.
Speaker Change: So I would say the outside the data center or our investment pace is going to be quite moderated.
Speaker Change: And so I don't see an extraordinary step up just to keep up with the next product outside of the optical data center markets.
Ross Seymore: If I could sneak in one more question, I think I know the answer, but any update on the arbitration process, either in timing or any other news?
Speaker Change: Got it if I could sneak in one more I think I know the answer but any update on that.
Speaker Change: The arbitration process, either in timing or any other news.
Kishore Seendripu: Yeah, really nothing, nothing meaningful to update as expected, Ross. That's what I thought. Thank you. Yeah, no problem. Thank you.
Speaker Change: Yeah, It really nothing nothing meaningful to update is expected Ross.
Speaker Change: That's what I thought thank you.
Yeah no problem. Thank you.
Operator: Our next question is from Tim Savageaux with Northland Capital Markets. Please proceed with your question.
Speaker Change: Our next question is from Tim <unk> with Northland Capital markets. Please proceed with your question.
Timothy Paul Savageaux: Hi, good afternoon. Sorry, I wanted to go back to the optical data center market opportunity and try to get a little more color on what's led you guys to this kind of increase and your guidance range for the year. I know you had a good OFC show or, you know, I guess, how recent is this?
Tim: Hi, Good afternoon, sorry, I hope, we get wanted to go back to the.
Tim: Optical data center.
Tim: Our market opportunity.
Tim: To get a little more color on what led you guys to kind of increase.
Tim: And your guidance range for the year.
Tim: I know you had a good OFC show or.
Tim: I guess, how recent is this.
Timothy Paul Savageaux: sort of renewed confidence or increased confidence. And to what do you attribute that? You know, I'm thinking of factors, whether it's a bigger than expected market opportunity or a stronger-than-expected competitive position. As you look across those, what would you? How would you describe what's led to this increase in estimate?
Tim: Sort of renewed confidence or increased confidence.
Tim: And to what do you attribute that.
Tim: Thinking of factors, whether its a bigger than expected market opportunity.
Tim: Stronger than expected competitive position.
Tim: As you look across those what would you.
Tim: How would you describe what's what's led to this.
To this increase.
Kishore Seendripu: So Tim, I think you have seen a developing optimism and a positive tone starting in Q4 last year. And to be honest, now looking backwards, we had a backlog to sort of support that developing optimism. The concerns we had were, was it going to be one customer or two customers or three customers? Were we going to have an accumulating roster of customers going into production?
Tim: On an estimate.
Speaker Change: So Tim I think you have seen a developing optimism and a positive tone and starting in Q4 last year and to be honest now looking backwards, we had backlog to sort of support that developing optimism that.
Speaker Change: The concerns we had was is it going to be one customer or two customers or three customers are we going to have.
Speaker Change: And accumulating roster of customers going into production. So you.
Kishore Seendripu: So at this point, we did not expect that, at that point in Q4, we would get to the conference place where we are, where we have already shipped product that would indicate that we are on, definitely on to the 10 to 30, and then now developing a conference that will exceed that. So I think the backlog is the first way to look at the situation, saying, hey, there's a backlog already somewhere where we can meet the numbers that we had originally forecasted, number one.
Speaker Change: At this point, we do not expect to at that point in Q4 that we will get to the conference. Please made we are very we already shipped product that would indicate that we are definitely on a you know.
Speaker Change: Definitely onto the 10 to 30, and then now developing concepts that we'll exceed that so I think the backlog is the first way to look at the look at the situations. They hate this backlog already somewhere you know where we can meet the numbers that we had originally forecasted number one number two and theres more sockets that are converting and then.
Kishore Seendripu: Number two, and there are more sockets that are converting, and the ones that have been converted are ramping strongly, and they're inquiring about lead times and bookings. So that's what it's done. It's really the facts on the ground. And so, yeah, in Q4, we had some backlog to support this, some developing optimism, honestly. So it just means that every quarter we have had, we have strengthened our confidence as we started shipping in numbers.
Speaker Change: The ones that have been converted or ramping strongly and their enquiring about lead times in bookings. So that's what it's done is really the facts on the ground.
And so yeah in Q4, we had some backlog of to support this as some developing optimism honestly. So it just mean that every quarter. We have we have strengthened our confidence that just started shipping.
Speaker Change: In numbers.
Timothy Paul Savageaux: Great, and maybe somewhat along those lines, you know, as you look at your guidance for Q2, um, to the extent that you're looking for some sequential growth in the middle of the range. Should we assume? that that's driven by new products, and you've mentioned a number, you know, whether it's storage, ethernet, or data center. Um, and are there other factors at work? Obviously, you have broadband coming down. And then, you know, as you look toward the higher and lower end of your ranges, kind of what are the swing factors, you know, driving that range? Yeah, Tim.
Great and maybe somewhat along those lines.
Speaker Change: You look at your guidance for Q2.
Speaker Change: To the extent Youre looking for some sequential growth in the middle of the range should we assume.
Speaker Change: That's new product driven and you've mentioned a number whether it's storage Ethernet or data center.
Speaker Change: Or are there other factors at work.
Speaker Change: Obviously, you've got broadband coming down.
Speaker Change: And then as you look towards the higher and lower end of your range is kind of what are the swing factors driving that range.
Steven Litchfield: Yeah, Tim, so you're right. We kind of highlighted where we thought the in-market growth would be from. It's certainly some of these newer products that we've been talking about that will definitely have an impact on Q2. But I'd say overall, it's probably the recovery itself that's probably helping a little bit more in Q2. And some of the newer products kind of have a layering impact throughout the year.
Speaker Change: Yes, Tim.
Tim: So youre right I mean, we've kind of highlighted where we thought the end market growth would be from its certainly some of these newer products that we've been talking about.
Tim: They will definitely have an impact on Q2.
Tim: But I'd say overall, it's probably the recovery itself, that's probably helping a little bit more in Q2 and in some of the newer products kind of have a layering impact throughout the year.
Timothy Paul Savageaux: Okay, great. Thanks very much.
Speaker Change: Okay, great. Thanks very much.
Speaker Change: Thanks, Tim.
Operator: Our next question is from Ananda Baruah with Loop Capital Markets. Please proceed with your question.
Speaker Change: Our next question is from Ananda Baruah with <unk> capital markets. Please proceed with your question.
Ananda Baruah: Yeah, thanks, guys. Good afternoon.
Ananda Baruah: Yeah. Thanks, guys. Good afternoon, thanks for taking the questions.
Ananda Baruah: Thanks for taking the questions. I guess, two for me, if I could, the new products that you have ramping through the year that you highlighted, and, you know, maybe just, you know, you can even keep it to sort of Ethernet, you know, optical and storage, if you want, if those are the most important ones, but I guess the question is, when during the year, like first half, second half, should we expect, you know, each of those to begin to make an impact?
I guess two for me if I could.
Ananda Baruah: The new products that you have ramping through the year that you're highlighting.
Ananda Baruah: Yes, maybe just you can you can keep it to.
Speaker Change: So sorry to Ethernet.
Speaker Change: Yes.
Speaker Change: Nichol.
Speaker Change: Storage if you like.
Speaker Change: But most importantly, I guess the question is it.
Speaker Change: When during the year like first half second half.
Speaker Change: Should we expect each of those to begin to make an impact.
Speaker Change: And.
Ananda Baruah: And Kishore, I know you talked about collectively they're each making an impact and giving you consequential growth, but do you think for the year there's one or two in particular that will make the most meaningful impact, or is it collectively for the year also? Thanks, and I have a quick follow-up.
Kishore I know you talked about collectively.
Speaker Change: They each making impact sequentially.
Sequential growth, but yeah. Thanks for the year, there was kind of one <unk>.
Kishore: I think there is one or two in particular that will make them more the most meaningful impact.
Kishore: Oh, I think collectively Cynthia awesome, Thanks, and I have a quick follow up.
Steven Litchfield: Yeah, Ananda, maybe I'll take a stab at it. I mean, look, the storage accelerator business. We've been in this business for a while. We have a new product that's ramping up this year. It'll start kind of mid-year and then definitely grow throughout this year and into next year. I mean, a lot of these customers take a little bit longer to ramp because there are multiple product families, but really encouraging signs as we get more design wins and see more traction there. I mean, on the optical front, I think we've been talking about, one of the big drivers around optical is 800 gigabits.
Kishore: Yes.
Speaker Change: Maybe I'll take a stab at it I mean look the storage accelerator business.
Speaker Change: We've been in this business for a while we have.
Speaker Change: From a new product that's ramping this year it'll start kind of mid year, and then definitely grow throughout this year and into next year I mean, a lot of these customers take a little bit longer to ramp because there's multiple product families.
Speaker Change: But really encouraging signs as we get more design wins and see more traction there I mean, the optical front I think we've been talking about I mean, one of the big drivers around optical is 800 gig and so 800 gig is certainly going to start this year, but youre going to see more of those volumes happened in 2025, which.
Steven Litchfield: And so 800 gigabits is certainly going to start this year, but you're going to see more of those volumes happen in 2025, which is exciting, right? I mean, that but the work itself, you know, that work's gonna be done this year. These are really long qualifying cycles.
Speaker Change: Which is exciting right I mean, that's but the work itself. So that work is going to be done. This year. These are really long qualifying cycles, and so that work's being done right now a lot of that a lot of those.
Steven Litchfield: And so that work's being done right now. A lot of that, a lot of those opportunities are being given right now. And so we've got to close on those opportunities. And you'll certainly see that revenue contribute in the back half of this year, but it's also going to be a big driver in 2025. And on the ethernet side, I would say there's some existing 2.5 gigabit business that's recovering kind of on the gateway front as the inventory improves.
Speaker Change: Those opportunities are being awarded right now and so we've got a close on those opportunities and you'll certainly see that revenue contribute in the back half of this year, but it's also.
Speaker Change: Going to be a big driver in 2025 and on the Ethernet side, even though I would say you know there are some existing two five gig business it's recovering.
Speaker Change: Kind of on the Gateway front as the inventory improves but then some of the newer products like in the industrial markets specifically in the enterprise Ethernet market, that's where we're seeing a lot more adoption and we've got a couple of really large customers that will be ramping probably more in 2025 and in 2024. So so again each of them kind of have.
Steven Litchfield: But then some of the newer products, like in the industrial markets, specifically in the enterprise ethernet market, that's where we're seeing a lot more adoption. We've got a couple of really large customers that will be ramping probably more in 2025 than in 2024. So again, each of them kind of has their own time frame that they're coming in, but we have a lot of confidence around each one of them.
Speaker Change: Their own timeframe that theyre coming in but we have a lot of confidence around each one of them.
Ananda Baruah: That's super helpful context Steve, and I guess the follow-up is you guys' long-term, 35% operating margin target. Like, what needs to happen over the next, you know, kind of couple years for you to achieve that? And I think the last time you were sort of Kissing that the, you know, sort of quarterly revenue run rate was high, 200, you know, 280 plus. And so, with the new product, you still need to get back to that revenue level to sort of approach the mid-30s operating margin. So, any context there would be helpful. Thanks a lot.
Speaker Change: That's super helpful context.
Speaker Change: And I guess the follow up is just sort of you guys long term.
Speaker Change: 35% op margin target.
Speaker Change: Like what needs to happen over the next kind of.
A couple of years for you to achieve that and I think the last time your children.
Speaker Change: Kissling that he's.
Speaker Change: Set a quarterly revenue run rate was high at 200.
Speaker Change: Yes, 280 class and so with the new products, you still need to get back to that revenue level.
Speaker Change: The approach.
Speaker Change: The mid Thirty's operating margin so any context, there would be helpful. Thanks a lot.
Kishore Seendripu: So, first and foremost, right, there was a lot of spend even when we were kissing the, as you call it, the 35% operating margin, right? There was a lot of investment that was being spent in the new areas that we entered five years ago from a development perspective. Secondly, we acquired our connected home business, and there were a lot of what I call old, stale products that really needed to be upgraded, which usually in the Silicon Valley world means a redesign, right?
Speaker Change: No.
Speaker Change: It is there is first and foremost right. There was a lot of spend even when we were kissing the as you call. It 35% operating margin right. There was a lot of investment that was being spent in the new areas that we are the we have entered five years ago from a development perspective secondly.
We had acquired our connected home business and there was a lot of what I call old scale products that really needed to be upgraded and it's usually in silicon world means that redo right, which is so that all big cities saw was.
Kishore Seendripu: Which is, so the Allpex saw was, had the burden of all of these big undertakings on our own organic side and the ones we had to undertake organically from the acquisition front. So first and foremost, now the OPEX is being brought into control, or what I want to call it, not control, is now being right-sized for a normal cadence of investment. So that's the first and foremost benefit of this downturn, if you will.
The burden of all of these big undertakings on our own organic side and the ones. We had to undertake organically from the acquisition front. So first and foremost now the opex is being brought into control or what what do you want to call. It Noncontrolling is is is now being right sized but a normal cadence of investment so that's.
Speaker Change: First and foremost benefit of this downturn, if you will and then when the revenue is growing so you started getting leverage out of that because we've already got a much of this product portfolio behind us.
Kishore Seendripu: And then when the revenue is growing, you start getting leverage out of that because we've already got much of this product portfolio behind us. So I think that's going to accelerate the march toward the 30-35% operating margin. So Steve, if you want to add any color on that beyond...
Speaker Change: So I think that's going to accelerate the March toward the 30, 35% operating margin so Steve.
Steven Litchfield: If you want to add any color on that beyond so no I think that's right I mean.
Steven Litchfield: No, I think that's right. I mean, maybe I should refresh some history here. But we also had a pretty clear path getting to that number, to that, you know, over 30% number, long before we saw a billion dollars worth of revenue. So I'm confident that we can get back at a much lower revenue run rate than the billion dollars you represent. Nice. Okay, that's an awesome context, guys. Thanks.
Steven Litchfield: Maybe.
Steven Litchfield: Refresh some history here, but we.
We also.
Steven Litchfield: <unk> had a pretty clear path getting.
Steven Litchfield: To that number to that over 30% number long before we saw a $1 billion worth of revenue so I'm confident that.
Steven Litchfield: That we can get back at a much lower revenue run rate than the $1 billion you referenced.
Speaker Change: Right, Okay, that's awesome.
Ananda Baruah: Nice. Okay, that's an awesome context, guys. Thanks a lot.
Speaker Change: Thanks, a lot.
Speaker Change: Great. Thanks Ananda.
Speaker Change: Yeah.
Speaker Change: Our next question is from Karl Ackerman with BNP Paribas. Please proceed with your question.
Operator: Our next question is from Karl Ackerman with BNP Paribas. Please proceed with your question.
Karl Ackerman: Yes. Thank you.
Karl Ackerman: Yes, thank you. Steve, I think you said broadband revenue will be down in FQ2, but you're starting to see an improvement in bookings. Are those bookings on the cable side or more on the fiber side? I ask because you've been more weighted toward cable or, you know, co-actors, and fiber, and some investors have worried that the declines in broadband are more secular than cyclical in nature. And so I guess as you address that question, could you discuss your design engagements with customers on PON that can help drive a much larger recovery in broadband as we think about not just the second half of this year but also going into fiscal 25?
Karl Ackerman: Steve I think you said broadband will be down on revenue in F Q2, but you are starting to see an improvement in bookings.
Karl Ackerman: Are those bookings on the cable side or more on the on fiber I asked because you've been more weighted toward.
Karl Ackerman: Cable or co actress fiber and some investors have worried that type of a decline in broadband are more secular than cyclical in nature.
And so I guess as you address that question can you discuss your design engagements with customers on PON that can help try they are much.
Karl Ackerman: Much larger recovery and broadband as we think about not.
Karl Ackerman: Not just the second half of this year, but also going into fiscal 'twenty five.
Karl Ackerman: Yeah, Karl, great question. And you're exactly right.
Yes.
Speaker Change: Great question, and you're exactly right, we've been more exposed on the cable side, but we're certainly seeing recovery on both the PON and cable I mentioned earlier, the excitement around the PON side, but we're seeing plenty of activity on the cable side and Theres lots of.
Steven Litchfield: We've been more exposed on the cable side, but we're certainly seeing recovery on both PON and cable. I mentioned earlier the excitement around the PON side, but, you know, we're seeing plenty of activity on the cable side, and there's lots of, you know, hype around some of the upgrades that are happening in that market. I mean, I don't think we really care one way or the other about where that growth comes from in broadband, and there's certainly tons of investments happening out there that we'll be able to benefit from.
Speaker Change: Hype around some of the upgrades that are happening in that market I mean, I don't I don't think we really care, one way or the other where that growth comes from in broadband and there are certainly tons of investments happening out there that we will be able to benefit from.
Speaker Change: Okay.
Karl Ackerman: For my follow-up, you introduced several new optical products leveraging your existing 5nm 800GB DSP technology, including half-retimed and full-retimed DSPs, really for, well, AEC and AOC products. I guess, you know, given the confidence that you have on this ramp this year and next year, is most of that coming from half-retimed DSPs and AEC products? Will that be the strongest growth that we see this year? But, you know, I don't think so...
Speaker Change: For my follow up you introduced several new optical products leveraging your existing five nanometer a gig.
Speaker Change: <unk> DSP technology.
Speaker Change: Including half re timed and full <unk> DSP.
Speaker Change: Really for AUC and ASC products.
Speaker Change: I guess.
Speaker Change: Given the confidence that you have on this on this ramp this year end.
Next year.
Speaker Change: Is most of that coming from <unk> and AUC products will that be the strongest growth that you've seen this year.
Speaker Change: But you know I don't think anybody would volunteer that Humphrey diamond would be any meaningful revenue in this category of products I would say its fully driven by full full read retirement products. If you will agents gig band four or 400 gig Pam four single Lane 100 gigabytes right. So that's that.
Kishore Seendripu: I don't think anybody would volunteer that. Half a re-timer would be any meaningful revenue in this category of products. I would say it's fully driven by full rate re-timer products, if you will, the 800 gigabit PAM-4 or 400 gigabit PAM-4, single lane, 100 gigabits. So that would be it. It's pretty simple, other than the customer design-ins with the various optics they use. That becomes a pretty challenging problem, right? So the DSPs need to be versatile to manage all the various optics every customer uses, and then the yield management of that. So I don't see a half free timer being a big revenue generator, at least through 2025.
Speaker Change: It is pretty simple other than the customer design ins with the Veda as optics, they use becomes a pretty.
Speaker Change: Challenging.
Speaker Change: The problem right Oh, the DSP as need be worse until to manage all the videos optics every customer uses and then the yield management of that so I don't see a half lead time or being a big revenue generated at least in the at least through 2025.
Operator: Thank you. Our next question is from Sujeeva Silva with Roth MKM. Please proceed with your question.
Speaker Change: Yes.
Very helpful. Thank you.
Yeah.
Speaker Change: Thanks, Paul.
Suji DeSilva: Thank you. Our next question is from <unk> Desilva with Roth. Please.
Sujeeva De Silva: Hi Kishore, hi Steve. Just maybe a little bit of a follow-up on some of the recent questions here, but broadband declining but connectivity increasing. I thought, kind of mentally, that they were kind of coupled in terms of in the same boxes for broadband, but maybe that's the wrong way to think about it. Can you just talk about that potential disconnect in the guide?
Desilva: Please proceed with your question.
Desilva: Sure Hi, Steve just maybe a little bit of follow up from the recent questions here, but broadband declining but connectivity increasing I would I thought kind of mentally those were kind of coupled in terms of in the same boxes and broadband, but maybe that's the wrong way to think about it can you just talk about that potential disconnect in the guide.
Steven Litchfield: Yeah, So you're right there they're fairly connected a lot of the gateways of course incorporate our Ethernet and Wi Fi products and so.
Steven Litchfield: Yeah, so you're right. They're fairly connected. A lot of the gateways, of course, incorporate our Ethernet or Wi-Fi products in them, so they normally trade together, but they vary a little bit, too. We can certainly go out. I mean, there are a lot of opportunities to win more connectivity business in Wi-Fi. I mentioned a little earlier in the session about Ethernet and some of the opportunities that we're growing in the Ethernet market with 2.5 gigabit adoption within the enterprise market and within the industrial market. So from time to time, yeah, I mean, they don't necessarily always trade together.
Steven Litchfield: Normally trade together, but I mean, they vary a little bit too I mean, we can certainly go out I mean, there's a lot of opportunities to win more connectivity business.
Steven Litchfield: And Wi Fi.
Steven Litchfield: And a little earlier in the session around Ethernet and some of the opportunities that we're growing in the Ethernet market with two point gig five gig adoption within the enterprise market within the industrial market. So so from time to time.
Steven Litchfield: They don't necessarily always trade together.
Sujeeva De Silva: That's helpful, Steve. And then my other question is on the optical side. I'm just trying to draw a path from the prior effort, WarnerGig, and now InterGig. Is that lead customer continuing and kind of building on the traction you had with that customer? Do you have additional customers or different customers? Just to understand how the customer base and traction... is developing here. So I just want to clarify here that the customers, the end customers who are driving 400 gigabit versus 800 gigabit is a completely different sequence now.
Steven Litchfield: Okay.
Speaker Change: Okay. That's helpful. And then my other question is on the optical side I'm, just trying to draw path from the prior effort 40 gig 800 gig is that lead customer continuing and kind of building on the traction you had with that customer do you have additional customers or different customers.
Speaker Change: To understand how the customer base and traction is developing here.
I just wanted to clarify you said that the customers. The end customers that were driving 400 gigabit versus 800 gigabit is a completely different sequence now.
Sujeeva De Silva: So they are not the leaders anymore in terms of trying to move aggressively ahead with the higher speeds right now. So I would say that is a different set of customers driving 800 gigabit PAM-4 revenues, 100 gigabit per lane, or 400 gigabit PAM-4 revenues with 100 gigabit per lane. So it's a totally different set of customers, but there are only a few sets of customers in the marketplace. So it's a very small group. Kishore, can you just remind us of the competitive landscape and your advantages quickly? I know we talked about it at OFC, but a refresher would be helpful.
Speaker Change: So they're not the leaders are anymore.
Speaker Change: In terms of trying to move aggressively ahead with the higher speeds right now so I would say that is a different set of customers driving 800 gigabit Pam four revenues 100 gigabit per lane, all our 400 gigabit Pam four revenues with 100 gigabit per lane so.
So it's a totally different set of customers, but theres only a few set of customers in the marketplace. So it's a very small group.
Speaker Change: Yes, sure can you just remind us the competitive landscape in your advantaged quickly I know you talked about at OFC, but a refresher would be helpful.
Speaker Change: Yes.
Kishore Seendripu: Yes, from our perspective, you know, we are the only solution that has got a 5 nanometer CMOS PAM-4 DSP with integrated laser drivers that's fully in production and is increasingly qualified by others. But we were not the first ones with 800 gigabytes of PAM-4.
Speaker Change: From our perspective, you know we're the only solution that is good at five nanometer Cmos, our Pam four DSP with integrated laser drivers.
Speaker Change: That's super lean production.
Speaker Change: And is increasingly qualified by others now we were not the first ones within the lead time for our competitive solutions are in seven nanometer.
Speaker Change: And is increasingly qualified by others now we were not the first ones within the lead time for our competitive solutions are in seven nanometer.
Kishore Seendripu: Our competitive solutions are in 7 nanometers. They have, therefore, the incumbency advantages for the competition to continue from being ahead on the timing of the sampling of the product. But the good news here is that outside of the NVIDIA market base and supplier base, the rest of the data centers are moving at the normal cadence of adoption of 800 gigabit PAM-4. So we are not late to the market. We are in the beta phases of trials and qualifications.
Speaker Change: We have therefore in income is the advantages for the company to continue from being.
Speaker Change: You know I had on the timing on the sampling of the product, but the good news here is that outside of outside of the Nvidia <unk>, you know customer a market based supplier base.
Speaker Change: And the rest of the data centers are moving at the normal cadence of adoption of 800 gigabit Pam forward. So we are not late to the market. We are in the beta phases of trials and qualifications. So we feel that we have not lost any.
Kishore Seendripu: So we feel that we have not lost any timing-related positioning with our fine anemometer solution, even though we are later by several months compared to our competition about two years ago. The big disadvantage is the lack of incumbency. The advantage is product superiority, where the power is significantly lower than our competition by almost 30%. And so, whether it's a module or the chip level positioning, it can vary between 20% and 30% in power reduction.
Speaker Change: Timing advantage timing related positioning.
Speaker Change: With our finance solution, even though we're later buys several months compared to our competition about two years ago right. So.
Speaker Change: So the big disadvantage either lack of incumbency the advantages the product superiority with a power is significantly lower than our competition by almost 30%.
Speaker Change: And at the end and so whether its a module at the chip level positioning it can vary between 20 and 30% in power reduction so the low power matters a lot.
Kishore Seendripu: So the low power matters a lot, and that is a big advantage. I think everybody needs to meet the performance requirements and go through the interop cycle. And frankly, even today, the RDE is the biggest mountain we are climbing now, even as we are recording revenue with victories in increments as we ship these products.
Speaker Change: And that is a big advantage I think everybody needs to meet the performance requirements and go through the same drop cycle and frankly, even today that he's a big the biggest mountain climbing now even as we are recording revenue with victories in increments as we ship these products.
Sujeeva De Silva: I appreciate the call, Kishore. Thanks.
Speaker Change: I appreciate the color. Thanks.
Operator: Thank you. Our final question will be from Richard Shannon, with Craig Hallam. Please proceed with your question.
Speaker Change: Yeah.
Speaker Change: Thanks, Susan.
Thank you our final question will be from Richard Shannon with Craig Hallum. Please proceed with your question.
Richard Cutts Shannon: Well, thanks guys for taking my questions. Maybe I'll throw one out here in the storage space.
Richard Cutts Shannon: Well, thanks, guys for taking my questions, maybe I'll throw one out here in the storage space. So you reiterated your comments about kind of revenues doubling this year getting the chip to the 75.
Richard Cutts Shannon: You reiterated your comments about revenues kind of doubling this year, getting to 50 to 75. And I think you've said in the past and today that this is largely based on a single customer. I guess there are a couple of interlocking questions here. First of all, was the announcement with Dell last week, is that just this single customer? And then maybe you can talk about building new customers to help maybe provide upside to those numbers over time. How that's going.
Richard Cutts Shannon: You've said in the past and today that this is largely based on a single customer I guess a couple of interlocking questions. Here first of all is the announcement with Dell last week is that the single customer and then maybe if you can talk about building new customers to help maybe provide upside to those numbers over time, how thats going.
Kishore Seendripu: So, I think that we did not... The current shipments of Panther 3 are based on a single customer would be a fair conclusion based on a press release, I suppose. However, we have always talked about expanding our accelerator products beyond the enterprise market and, over time, into data centers with partnerships, uh, with other players, right? So when we talk about 50 to 75 million dollars in revenue, the question is whether that revenue forecast is based substantially or wholly on the enterprise storage appliance market and not data center-based market revenue.
Richard Cutts Shannon: So I think that we do not.
Richard Cutts Shannon: The current shipments Panther three are based off of a single customer would be a fair conclusion based on our press release as oppose however, we have always talked about expanding our accelerator products beyond the enterprise market and over time, the data into the data as industry partnerships.
Richard Cutts Shannon: With other players right. So when we talk about a $50 million to $75 million revenue. The question that the it is true that there.
Richard Cutts Shannon: Net revenue for gas is based.
Richard Cutts Shannon: Substantially almost wholly on enterprise storage appliance market and not datacenter based market revenue.
Richard Cutts Shannon: Okay, fair enough. Thanks for that clarification.
Richard Cutts Shannon: Okay.
Speaker Change: Fair enough thanks for that clarification.
Richard Cutts Shannon: The second question is in wireless infrastructure. You have talked about, I think, for at least a couple quarters now talking about calendar 25 being a strong year. Obviously, you've had some inventory burn here on both sides of that business. I guess my question, just from a modeling perspective, is will calendar 25 be a record year for wireless infrastructure? Seems like you're down fairly strongly in revenue. Run rates would seem like a big bar to jump, but I'd just curious whether you think that's possible.
Speaker Change: Second question is in wireless infrastructure, you talked about I think for at least a couple of quarters now talking about calendar 'twenty five being a strong year, obviously, you've had some inventory burn here on both sides of that business I guess my question just from a modeling perspective is.
Speaker Change: Ken calendar 'twenty five be a record year for wireless infrastructure.
Speaker Change: It seems like Youre down fairly strongly in revenue run rates.
Speaker Change: Seemed like a big bar to jump, but just curious whether you think thats possible.
Kishore Seendripu: I would say that 2025 will not be a record year. We are growing here, and I think we'll continue to grow our wireless revenues from our current levels to a doubling of those revenues based on the roadmap and the products we are launching. So I believe, you know, from an infrastructure point of view, if it's $500 million in revenue, you should see the wireless infrastructure optical being 80% to 90% of the revenue, and the remaining 20%, if you will, of being, you know, the Ethernet that we already talked about, but if you're an Ethernet storage, but, you know, really, each of those individuals has a bigger potential than that I'm identifying.
Oh.
Speaker Change: Oh, Hey, I would say that 25 will not be the record year, we are growing year and I think we will continue to grow our wireless revenues from our current levels to doubling of those revenues based on the roadmap and the products we're launching.
Speaker Change: So I believe you know from an infrastructure, it's a $500 million revenue you should see a video wireless infrastructure optical will be 80% to 90% of the revenue.
Speaker Change: And the remaining 20%. If you will are being you know Ethernet that we already talked about but if you're and Ethernet and storage, but you know really but each of those individuals have a bigger potential than that amount of defined so a 500 million.
Kishore Seendripu: So $500 million of revenue for infrastructure is a sort of imbalance of things based on timing and, you know, how time develops, so to speak. No, absolutely not. 2025 is not going to be a record year because that'd be a good thing, and we'll grow beyond that.
Speaker Change: Our revenue per infrastructure needs as sort of a balance of things based on timing.
Oh, the Tam develop so to speak no absolutely not <unk> not going to be a record year because that would be a good thing and will grow beyond that.
Richard Cutts Shannon: Okay, I appreciate the perspective, guys. Thank you.
Okay I appreciate the perspective guys. Thank you.
Speaker Change: Thank you. Thank you.
Kishore Seendripu: Thank you very much. With that last question here, I just want to wrap up this session here. And I would like to thank you all, and we hope that this quarter we're going to see you again. We will be present at the Steeple Cross-Sector Insight Conference in Boston and Northland Security's Virtual Growth Conference as well. With that, thank you all for joining us today once again and look forward to speaking with you soon.
Speaker Change: Thank you. Thank you very much.
Speaker Change: With that last question there I just wanted to wrap up this session here.
Speaker Change: And I would like to thank you all.
Speaker Change: And we hope that this quarter are we going to see you again, we will be present at the Stifel Cross sector insight conference in Boston and with Northland Securities Virtual Good conference as well with that thank you all for joining us once again and look forward to speaking with you soon.
Operator: This concludes today's conference. You may disconnect your lines at this time. Thank you for your participation.
Speaker Change: Alright.
Speaker Change: This concludes today's conference.
Speaker Change: Connect your lines at this time.
Speaker Change: Thank you for your participation.