Q1 2024 Monolithic Power Systems Inc Earnings Call - Q&A
Sir Michael thing CEO and founder of M. P. S. Bernie Blegen, EVP, and CFO and Tony Veilleux VP of finance.
Earlier today, along with our earnings announcement N. P. S released rich and commentary on the results of our operations. Both of these documents can be found on our website.
Before we begin I would like to remind everyone that in the course of today's presentation. We may make forward looking statements and projections that involve risk and uncertainty risks uncertainties and other factors that could cause actual results to differ from these forward looking statements are identified in the safe.
Harbor statements contained in the Q1 earnings release and in our latest SEC filings, including our Form 10-K, which can be found on our website.
Our statements are made as of today and we assume no obligation to update this information now I'd like to turn the call over to Bernie.
Thanks, Jim.
Something a little different with today's earnings call.
A detailed recital performance metrics is included in the Companys earnings commentary accompanying the earnings release I'll use this time to provide just a few comments on our Q1 2024 performance and our outlook before opening the call up to Q&A.
Our financial performance improved in the first quarter of 2024 with revenue up both sequentially from Q4, 'twenty three and year over year from Q1, 'twenty three or.
During patterns consistently trended upward through the quarter.
Visibility into the second half of 2024, However is limited in many of our customers remain cautious.
Despite this uncertainty around the second half of 2024 customer engagement across all of our end markets remains high and our design win pipeline continues to grow stronger. Additionally.
Additionally, we are continuing to expand our product portfolio and diversify our supply chain globally. We believe both actions position our company for further growth as the market improves.
In summary, we saw consistent improvement through the first quarter, but we continue to be cautious about the second half of 2024 business conditions. Overall are proven long term growth strategy remains intact, and we can swiftly adapt to market changes as they occur.
I will now open the webinar up for questions.
Thank you Bernie.
I would now like to begin our Q&A session. As a reminder, if you'd like to ask a question. Please click on the participants icon on the menu bar and then click the raise hand button.
Our first question is from tore Svanberg of Stifel. Your line is now open.
Yes, Thank you and congratulations on this enviable consistency.
Two questions. My first question is on share gains and historically, Michael monolithic power tends to really accelerate share gains during downturns and I know theres a lot of focus on enterprise data right now, which is a third of your revenue, but can you maybe call out some other verticals or applications where.
You are seeing more share gains in the current downturn.
Clearly, we just the way.
If we haven't got out of this.
Downturn so lucky.
You'll see it as a we would compare compare the rest of the industries that we like a 10% up.
<unk>.
Yes.
So that's really a share gain.
And.
So in terms of archive. So then what's our vertical market.
<unk> is clearly is the one we won that many sockets in there and NPS is still small compare all of these.
These are established.
Our competitors and.
Other ones.
And the other ones, even the servers and notebooks areas and.
These are all gaining shares and the.
The last one.
Consumer.
Although we said it.
<unk>.
A year ago also.
We give up some of those shares because the capacity constraints now some okay. We have a lot more capacity now and you will see some growth.
In the near future.
And if I could add one.
Additional comment there is that we've had a number of greenfield opportunities.
<unk> been waiting to launch in the <unk> and <unk>.
Improved macro environment so.
So in addition to the end markets that Michael just referenced I think that Youll also see share gains in both communications and industrial.
Thank you and for my follow up question and specifically in enterprise data, which is now with 30% of revenues.
Some chatter lately about lower power management content in next generation AI data centers due to liquid cooling and other techniques.
To lower overall power.
Is this impacting NPS broadly.
Or is this more sort of a very specific use case.
In the server power management market.
All of these are cooling systems, a new a new format or vertical power.
NPS involve all of them.
And.
If they transition to those markets.
This us.
Systems.
And the NPS.
MSA engaged okay, and we will again.
And.
Well.
We will grow with it.
And any other comment.
Tony's time okay.
Yes.
Think that.
The point that we've demonstrated particularly with enterprise data is the ability to leverage up.
Content.
As we go into higher value technology for example.
Water cooled and vertical.
Represent opportunities not threats and if you look down the line are not far out will also be going into a rack of power as well.
Speaker Change: Absolutely that's good.
Speaker Change: Good answer.
Speaker Change: Great. Thank you I'll go back in line Congrats again guys.
Speaker Change: Our next question is from Quinn Bolton of Needham Quinn. Your line is now open.
Great.
Nathaniel Quinn Bolton: Add my congratulations on very steady performance in a challenging macro environment I guess I wanted to follow up on <unk> question on enterprise data lots of your competitors, making noise about perhaps gaining share at your largest enterprise data customer and wondering if you could just sort of address your latest thoughts on.
Speaker Change: Competitive landscape in both lateral power and then <unk>.
Speaker Change: Looking forward to vertical power and then I've got a follow up.
Speaker Change: Yeah.
Speaker Change: As you May remember 2016, we have a power curve.
Speaker Change: Versus the.
Speaker Change: The power curve.
Speaker Change: CPU.
Speaker Change: Computing capability and the vs.
Speaker Change: The power densities and.
Speaker Change: We projected that for 2018 or 19 that would be the crossover point that NPS product.
Speaker Change: For those.
Speaker Change: Common footprint.
Speaker Change: And the use of Java Moss couldn't fit into the <unk>.
Speaker Change: Turning to the peripheral powers.
Speaker Change: Around 700 Watts, if you remember that we 2016, we say that and that.
Speaker Change: At the time, we projected was a CPU was wrong, it's actually turned out to be a gpus, but the power the power power densities.
Speaker Change: <unk>.
Speaker Change: 2018 on 19th and <unk>.
Speaker Change: And that's.
Speaker Change: Pretty much the peripheral powers and reached the limit.
Speaker Change: And <unk>.
Speaker Change: Now from that time.
Speaker Change: Everybody goes to our verticals, so I'm looking for even higher power.
Speaker Change: AI computation.
Speaker Change: All our learning.
Speaker Change: So all of these power go to vehicles.
Speaker Change: <unk>.
Speaker Change: Peripheral powers reached the limit and.
Speaker Change: Hello Hugh.
Hugh: I can't comment on our come our competitors so far.
Hugh: Yes.
Hugh: Well as always we want to.
Speaker Change: Bring them the best technologies.
Speaker Change: And we are not we're not a champion of our volumes. Okay. We don't do that and that came in we want to and whatever.
Speaker Change: Whatever we do we do the best.
Speaker Change: <unk>.
Speaker Change: Not.
Speaker Change: Not volumes.
Speaker Change: Delaware ship.
Speaker Change: <unk>.
Speaker Change: So when the.
Speaker Change: When the market become a normalized.
Speaker Change: End of <unk>.
Speaker Change: Normals.
Speaker Change: Not not not like it.
Speaker Change: Last couple of last year also.
Speaker Change: There will be more people more solution come on come on board.
Speaker Change: A lot of.
Speaker Change: Our competitors start to copy our product so be it that's fine.
Speaker Change: We are we sticking our NPS model will have a very diversified our growth.
Speaker Change: I think it's important to keep in mind when you look at our history as Michael just referenced there that we've always one opportunities due to our innovation.
Speaker Change: And as we look at the next generation of GPU or TPU or ASIC products that are in this.
Speaker Change: Hi, Hi.
Speaker Change: Power end market.
Speaker Change: We're in enabling technology, meaning that at the front of the design cycle.
Speaker Change: Were consulted were integrated in fact with the development of the next generation of products. So we believe that strategically that yes, there will be competitive influences the market, but we want to continue to position ourselves as the leader.
Speaker Change: Yes, maybe just a quick follow up just any comments you have on when you think vertical power may go to volume production is that something that happens later in 'twenty four or is that not in volume until.
Speaker Change: Sometime in 2025, and then the follow up Bernie is.
Speaker Change: Look at the consensus estimates the street's models.
Speaker Change: Up 9% sequential growth in your December quarter. Your typical seasonality I think is down 1% to 3% wondering if you have any comments as to.
Speaker Change: That that's sort of a seasonal pattern out in Q4, I know youre not guiding out that far but I'm wondering if you could make any comments about that sort of atypical growth.
Speaker Change: I answered the first part of the vertical power happening now.
Speaker Change: There is a multiple of our customers they are launching.
Speaker Change: The vertical power announced I'm not going away.
Speaker Change: We are shipping the product.
Speaker Change: Yes.
Speaker Change: The second part of your question there is that.
Speaker Change: Seasonality, particularly as you're exiting a downturn.
Speaker Change: It's hard to predict and what we tried to indicate with our prepared comments is that there are signs of optimism from the standpoint of improved ordering patterns, but how that translates into the second half is.
Speaker Change: Hard to predict.
Speaker Change: So we have more of a profile of.
Speaker Change: The guide that we've given for Q2.
Speaker Change: But that really as far as the difference between Q3 and Q4, we see them higher than Q2, perhaps but between the two of them flattish.
Speaker Change: Yes.
Speaker Change: We see AI.
Speaker Change: We still continue to grow and grow very fast rate.
Speaker Change: Great. Thank you.
Speaker Change: Our next question is from Rick Schafer of Oppenheimer. Rick Your line is now open.
Richard Ewing Schafer: Hi, Thanks.
Richard Ewing Schafer: Yeah.
Richard Ewing Schafer: I'll add my congratulations guys and I just had a couple of questions. The first one just since we're talking about power.
Richard Ewing Schafer: And sort of appointed one on server CPU power.
Richard Ewing Schafer: Some of the new <unk> six platforms that are due out later this year.
Richard Ewing Schafer: Pushing 500 watts a certain expectation.
Richard Ewing Schafer: Just like to call you made back in 2016, maybe there was a little premature but is there expectation that X 86 is eventually going up to 48 volt still in.
Richard Ewing Schafer: And if so I guess where are we in that transition in Europe, how far off.
Richard Ewing Schafer: Do you think that is.
Speaker Change: Yes, Okay now I can see you're making on 2016, I cant, but go back to earlier.
Richard Ewing Schafer: 2014 were not involved outside the doors in 2016, we can John Okay.
Richard Ewing Schafer: We were invited as a guest and.
Richard Ewing Schafer: And give us some tokens.
Richard Ewing Schafer: So you can play out.
Richard Ewing Schafer: And.
Richard Ewing Schafer: So the transitions and the VR 13.
Richard Ewing Schafer: 13, five to 14.
Richard Ewing Schafer: Then this this pipe this time when these are new new.
Richard Ewing Schafer: New UCP.
Richard Ewing Schafer: <unk> powers will have a significant market shares that will keep it.
Richard Ewing Schafer: And it's not reflected into our revenue yet.
Richard Ewing Schafer: And then once those CPU release.
Richard Ewing Schafer: Well again significant amount of shares.
Richard Ewing Schafer: And any comment Michael on the transition to 48 volt power for <unk> 86.
Michael: That we don't know that probably.
Richard Ewing Schafer: Sure.
Michael: The higher powers as over 700 walk I think those are all transitioning to total vertical powers and which are already in.
Michael: Otherwise the below that we believe are stews and they're using our traditional rack powers them. Okay.
Michael: Is a portable product.
Speaker Change: Got it thanks.
Speaker Change: And just as a follow up shifting gears, a little bit to auto I was just curious what your expectations are.
Speaker Change: For your auto business this year.
Speaker Change: Obviously that market is under a little bit of pressure near term, but.
Speaker Change: I believe you guys have been pretty open about some of your material share gains for <unk>.
Speaker Change: With China within China.
Speaker Change: Gas.
Speaker Change: And also with some of your top auto Youre top auto customer you've also got some pretty significant share gains.
Speaker Change: I believe ramping later this year, but I was curious if you could provide any update there.
Speaker Change: Eric.
Speaker Change: We saw as part yet.
Speaker Change: Go ahead.
Speaker Change: Alright.
Speaker Change: Curious if you could add in there what's your expectations are from I know you had a couple of launches.
Eric: Some Oems delayed in the second half last year and I didn't know if you still expect it to benefit from from those this year I know that's kind of a lot in one question, but theres a lot going on in your auto business.
Eric: Suddenly width.
Eric: We we actually can less than what the share gain what the what the revenue expectations of course, whether prepare all of the inventories in that came in and that's the only thing we care whenever there is a whatever it is okay. We want to do if we're not the.
Eric: We're not the best we will not win those the market segments.
Eric: Particularly these are new applications and new <unk>.
Eric: New features.
Eric: So far we can't tell what can tell you that.
Eric: In England.
Eric: This year is our end of the last years.
Eric: And the Chinese.
Eric: EV makers, they produce a lot more and with those features that we are we are E. They export it Inc.
Eric: Not to use but there too.
Eric: Other possible word the increase and some was somewhere 5% to six mailing units, okay, many cost and.
Eric: We always see the.
Eric: The upside so far.
Speaker Change: Alright. Thanks.
Speaker Change: Yeah.
Eric: Our next question is from Ross Seymore of Deutsche Bank Ross. Your line is now open.
Ross Clark Seymore: I'll Echo the congratulations on the stability just a question on the visibility into the second half I understand the caution, especially given everything going on in the broader market, but you also said that your bookings are improving.
Ross Clark Seymore: Order rates, the engagements et cetera et cetera. So.
Ross Clark Seymore: Is the visibility improving it's just not as good as it used to be I'm, just trying to reconcile the booking side, improving but the visibility not.
Speaker Change: Sure Ross.
Speaker Change: If we can kind of reflect that.
Speaker Change: Over the course of about the last six quarters.
Speaker Change: Ordering patterns have been well below.
Speaker Change: Whatever you call normal.
Speaker Change: And.
Speaker Change: When were seeing improvement.
Speaker Change: It doesn't mean that we are seeing that <unk> necessarily stabilized.
Speaker Change: Or that they are as predictive as when you have like five or six consecutive quarters of strong ordering pattern.
Speaker Change: All we're trying to do right now.
Speaker Change: As remain.
Speaker Change: Cautiously optimistic.
Speaker Change: Hey, Ross, it's Tony the only the only thing I'd, probably add on that right I was really focused on the design win engagement, making sure that pipeline is healthy because it's difficult to call when the market would come back as Brian said, it's still pretty choppy, but if we have that strong design win pipeline as well as having the supply chain diversification. We were talking about were set to take advantage when the markets do come back.
Ross Clark Seymore: Thanks for that Tony and Bernie I guess as my one follow up a nearer term question for you any outliers in the growth that youre guiding to in the second quarter by end market segments.
Speaker Change: First is the 7% total.
Speaker Change: No.
Speaker Change: That means that stuff yeah, yeah, as I said earlier, we're still.
Speaker Change: We still see a lot of growth sake.
Speaker Change: We are getting trying to get all the inventory already started.
Speaker Change: Okay.
Speaker Change: Start to go even further okay.
Speaker Change: If I have a lot more upside okay.
Speaker Change: Look sequentially between Q2 and Q1, we do see the continuing demand profile for enterprise data and I think we see.
Speaker Change: Also some contribution from automotive.
Speaker Change: But the rest of our end markets are pretty flattish.
Speaker Change: Thank you.
Speaker Change: Okay.
Speaker Change: Our next question is from William Stein of Truest.
William Stein: Your line is now open.
William Stein: Great can you hear me.
William Stein: Yes.
William Stein: For question.
William Stein: Question Congrats on the good results.
Speaker Change: Thanks for the change in format, it's a breath of fresh air.
William Stein: Yes.
William Stein: I appreciate it.
William Stein: We try to make it make it easy for you.
Speaker Change: Okay. Thank you.
Speaker Change: I'm, hoping you can update us on the progress you pursue to try to diversify your manufacturing geographic footprint and.
Speaker Change: Both on the front end back end and then I can follow up.
Speaker Change: Yeah, I'll start and then I'll, let Michael and Bernie pick up so I think we continue to make progress on diversification of our supply chain globally, and so I think that is proceeding as planned.
Speaker Change: And I think that we're satisfied customers would ask for that capability that we have it have it ready for them right now so I think based on what we said in the past I would say no change in the expectation there.
Speaker Change: Michael anything you want to yeah.
Michael: The capacity is our customer demands.
Michael: There's a few of them are really demand outside of China.
Michael: We have a more capacity.
Michael: So thats sort of comment okay.
Speaker Change: Okay, Let me try.
Speaker Change: Our topic.
Speaker Change: Some product types that I know have been.
Speaker Change: Ramping.
Speaker Change: Maybe over a long period of time, one is convert data converters, which say cat.
Speaker Change: Category Theres I think theres really one very dominant supplier, but you guys have.
Speaker Change: Starting to get into that area and then the other is.
Speaker Change: The modules that you make with when these are much more complex.
Speaker Change: We have many many chips I think can each one if you can talk to us about the recent growth in those newer categories that would be helpful. Color. Thank you yes, okay.
Speaker Change: Let me answer the first one is the data converter market data converters, though.
Speaker Change: If it's a technology that we're talking about.
Speaker Change: We we developed in the last few years and we won design wing, we stopped shipping products market.
Speaker Change: And.
Speaker Change: However, it's only in one or two products. Okay, now we're going to release.
Speaker Change: Our family of our product and.
Speaker Change: Emma.
Speaker Change: Less than a year.
Speaker Change: Let's say you attack.
Speaker Change: I will.
Speaker Change: <unk>.
Speaker Change: Hello.
Speaker Change: Meet a more general market.
Speaker Change: The other the other topic.
Speaker Change: When you're talking about there is a module okay, yes, so call it e-commerce modules in okay.
Speaker Change: And we actually doing well, so I'm not exactly that e-commerce, when we talk about 2018.
Speaker Change: And.
Speaker Change: It is going over well over $100 million okay.
Speaker Change: Yeah.
Speaker Change: But these are multi chip modules.
Speaker Change: The more than $100 million.
Speaker Change: Actually all of these are the AI product.
Speaker Change: We're shipping these all modules.
Speaker Change: And vertical powers and also the rack powers with shipping all of these are modules so I in.
Speaker Change: In the past.
Speaker Change: I've said on the second Toyota selling silicon only.
Speaker Change: Want to leverage our <unk>.
Speaker Change: Our leverage and monetize our our Knowhow will sell these.
Speaker Change: Our module sales solutions.
Speaker Change: And I think that we've sort of hit on one of the strategic differentiators between NPS and a lot of our competitors.
Speaker Change: Is that we can offer the most flexible architecture, whether it is delivering a module or <unk>.
Speaker Change: Silicon die.
Speaker Change: So however, the customer wants to.
Speaker Change: Build our silicon or our modules in their end application, we have the flexibility to do just that.
Speaker Change: Thanks Scott.
Speaker Change: Our next question is from Matt Ramsay of Cowen Matt. Your line is now open.
Matthew D. Ramsay: Hey, guys.
Matthew D. Ramsay: Good afternoon.
Matthew D. Ramsay: I guess as my first question.
Matthew D. Ramsay: I wanted you to maybe talk a little bit about.
Matthew D. Ramsay: The content per socket progression that you see for the company in the AI business in particular.
Matthew D. Ramsay: Silicon providers that are.
Matthew D. Ramsay: Driving these platforms make.
Matthew D. Ramsay: Generational transitions there I think there is.
Matthew D. Ramsay: A little bit of confusion the big primary Gyn AI is not just launching one product, but they're launching three different ones.
Matthew D. Ramsay: And then I expect to have a slightly different content.
Matthew D. Ramsay: And you obviously have other customers there.
Matthew D. Ramsay: Not just in video, but others. So if you could talk generally Michael about just.
Matthew D. Ramsay: What youre seeing from a content perspective.
Matthew D. Ramsay: Generation to generation there.
Matthew D. Ramsay: Maybe what are the variables on sort of blended content increases that you might see.
Matthew D. Ramsay: As we move forward.
Michael: Yes, I cant talk about the quarter I'm talking the we don't know how our customers and these are AI.
Matthew D. Ramsay: GPU providers, how they use it okay.
Matthew D. Ramsay: So they have a different model they have a different model to have a different number.
Matthew D. Ramsay: A variety of our product.
Matthew D. Ramsay: <unk>.
Matthew D. Ramsay: As long as we know so I'm not saying they use some of.
Matthew D. Ramsay: They use the IC.
Matthew D. Ramsay: In general for peripheral power and <unk>.
Matthew D. Ramsay: Verticals is all more than summer you'll walk powers over following the law powered Sanaga These awesome modules and.
Matthew D. Ramsay: How many modules plus Cpus and that we'd have a rough idea as a bundle we don't know exactly.
Speaker Change: And to follow up on your second point.
Speaker Change: It's a very content rich environment for US. It also includes memory for example in the CPU process and processor and additionally, optical and optical.
Speaker Change: So I think it's really too early to put limits.
Speaker Change: On content availability in fact were finding new areas in order to deploy.
Speaker Change: Oh, yes.
Speaker Change: So far.
Speaker Change: We just want to handle the growth yes, all the all the demand from our memory side have a marked it goes for me I mean, the GPU CPU powers and.
Speaker Change: This this period is really the growth period.
Speaker Change: Got it thank you guys.
Speaker Change: That's helpful. I know theres a lot of moving parts.
Speaker Change: Can you kind of step back and ask a little bit about.
Speaker Change: Gross margin trajectory it comes up.
Speaker Change: In my conversations I know, you're kind of in that 55 range.
Speaker Change: I guess Bernie what are the puts and takes here I know there are big customers ramping in enterprise data in their variables around that Theres also.
Speaker Change: Mixed between your segments.
Speaker Change: And where are you sourcing supply from there's a lot of variables here, so what would I mean.
Speaker Change: Are we kind of.
Speaker Change: A relative floor in the 55 or slightly above the range and what would be the variables that could drive the margin back higher.
Speaker Change: Sure. This is a pretty simple question so.
Speaker Change: As you know the range that we target is between 55 and 60% we've demonstrated that during the post pandemic stimulus that our margin was able to go to the higher end of that limit and right now for the last couple of quarters as well as our guidance here.
Speaker Change: We've maintained our non-GAAP rate of $55, seven and really what will enable us to go up.
Speaker Change: A change in the mix of business.
Speaker Change: Alright, Thank you very much guys.
Speaker Change: Yes.
Speaker Change: Okay.
Speaker Change: Our next question is from Gary Mobley of Wells Fargo. Gary Your line is now open.
Gary Wade Mobley: Hey, guys congrats and thank you.
Gary Wade Mobley: <unk> consistently seen expectation.
Gary Wade Mobley: Most of the interesting questions have been asked and answered, but I wanted to touch on pricing trends I know you don't overlap a whole lot with the analog chip market leader, but the <unk>.
Gary Wade Mobley: Nearly there they're being aggressive on price. So maybe if you can speak to the different product groups or business segments that might be affected by that and then as well just generally speak about the pricing environment for your broad set of products.
Gary Wade Mobley: O'neill.
O'neill: I'll start, but Bernie jump in right I think what you've heard from us in the past is that for us because we compete on innovation and we're trying to work on the next generation platforms and work on.
O'neill: We really have a differentiated advantage of our technology, we're pumping less susceptible to pricing and some of the segments that are volume related or might be more mainstream. So I do know there is lots of reports out there about pricing right now, but I'd say right now.
Bernie: That's not impacting us in a way that's that's not.
O'neill: So not impacting us in any way you can kind of see that in outlook for.
O'neill: Tomorrow on that and fundamentally part of the issue that's driving prices.
O'neill: Both.
O'neill: Additional capacity in China, as well as additional capacity that's coming on with.
O'neill: A large north American company.
O'neill: And on the cost side, we've always been very very competitive regardless of the end market opportunity.
O'neill: The cost of the regardless of what the margin Miss we're always we're always to drive our costs down.
Speaker Change: Oh I've got to give you I can't.
Speaker Change: To give you more than you use you asked America and.
Speaker Change: It's a little bit of pharma futures and so far have nobody asked the question yet.
Speaker Change: We saw.
Speaker Change: In the near term market in the next couple of years.
Speaker Change: Truly trickle down to all applications.
Speaker Change: Not only in our cars and all the in the sensors all of these are in there.
Speaker Change: Building for our phones.
Speaker Change: All kind of a.
Speaker Change: Things that trickled down to a different levels and we see <unk>.
Speaker Change: Now all.
Speaker Change: All kind of activities.
Speaker Change: Going on now and.
Speaker Change: Because a lot of design.
Speaker Change: <unk>.
Speaker Change: Initial phase.
Speaker Change: And the performing the product ideas and these are request from our.
Speaker Change: Our customers and.
Speaker Change: We don't see that.
Speaker Change: In the end of last year, even even in the beginning of the beginning of this year recently, we see a lot more.
Speaker Change: So that will drive those product definitely way drive the gross margin up okay.
Speaker Change: Okay.
Speaker Change: Thank you for that comprehensive answer.
Speaker Change: Last quarter your distribution inventory I think you can characterize who wants it.
Speaker Change: I think you've characterized the distribution inventories being a little bit above.
Speaker Change: The target level.
Speaker Change: What is it now have you been able to work that down to more of a normalized level.
Speaker Change: Sure. So there's sort of two ways to look at our channel inventory right now if you.
Speaker Change: Keep it narrow too.
Speaker Change: Really the AI supply chain.
Speaker Change: Trying to keep that elevated inventory is basically available on demand.
Speaker Change: But then with regard to all of the other end markets.
Speaker Change: We've seen it coming down nicely.
Speaker Change: Thank you.
Tourist Farnborough: Our next question is from tourists Farnborough of Stifel. Your line is now open.
Touris Farnborough: Yes. Thank you I just had two quick follow ups.
Touris Farnborough: I'm intrigued by the consumer segment Michael.
Tourist Farnborough: That's surprising when everyone's talking about AI, but.
Farnborough: I think this is the lowest percentage has ever been.
Farnborough: But you did talk about gaining some share there in the downturn. So any particular applications that we should keep an island as you start to grow back in the consumer area.
Speaker Change: Yes, okay.
Speaker Change: Thats good question good question.
Speaker Change: Yes.
Speaker Change: I said earlier that so selling to unhealthy.
Speaker Change: We want to have a diverse buyer growth.
Farnborough: Neglecting our consumers okay.
Farnborough: On the other hand is.
Farnborough: During this period.
Farnborough: A lot of our competitor care less about cost and we have a lesser effect, but we did it lowered the price.
Farnborough: In a normal market segment and <unk>.
Farnborough: That's probably youll see announced and we grow the notebook revenues faster.
Farnborough: <unk> market growth.
Farnborough: And.
Farnborough: These are low margin products again, but what are you.
Farnborough: Looking.
Farnborough: Looking forward.
Farnborough: Audio product line as it relates to our consumer products, maybe Tony you can mention.
Tony: Best of luck.
Tony: Okay. I'll go ahead, and microcontroller talk a lot more but I'd point, you back to what we announced last quarter, either our client acquisition and we're really.
Farnborough: Look at their technology and saw an opportunity to participate at the high end audio market and MTS is scale in science technology really offer the opportunity to go after customers and we're seeing some traction that area. So consumers got a wide base of potential applications and I think we'll continue to pick our shots, where we can really add value with our innovation.
Speaker Change: I can tell you.
Speaker Change: With oil will start to shipping <unk>, but <unk>.
Speaker Change: Excellent.
Speaker Change: NPS together as a as a bundle.
Speaker Change: That's exciting and my last question is on communications.
Speaker Change: Actually up sequentially. This quarter everything that we're hearing of course is that that market is still very weak in your prepared remarks, you said that that growth is driven by networks.
Speaker Change: So can you elaborate a little bit of what's going on there or are you actually starting to see the market turning or is this just your share gains.
Speaker Change: At.
Speaker Change: Remains.
Speaker Change: A flattish market I think that.
Speaker Change: Quarter by quarter, we're going to see infrastructure go up or down.
Speaker Change: The full year outlook is that it will probably be flat with 23.
Speaker Change: Since they are trading on a on a.
Speaker Change: Indication market it will trickle down from the end of a.
Speaker Change: The speed and the.
Speaker Change: The main.
Speaker Change: Of our highest speed will trickle down all these segments and we.
Speaker Change: We have a lot of design wings.
Speaker Change: <unk> <unk> <unk>.
Speaker Change: High speed Wi Fi and.
Speaker Change: We're ready for that.
Speaker Change: So Michael what you mean is AI will trickle down and as that happens the comms sector will rebound.
Michael: Right Yeah it has to.
Speaker Change: <unk> okay.
Speaker Change: Another color. Thank you.
Speaker Change: Our last question is from Melissa Fairbanks of Raymond James Melissa Your line is now open.
Melissa Ann Dailey Fairbanks: Hey, guys, Michael I Love a no brainer.
Speaker Change: Right.
Speaker Change: Yes.
Speaker Change: Yes, I don't need to talk about it.
Speaker Change: Yes.
Speaker Change: Sure.
Speaker Change: Adjusting my model Accordingly.
Speaker Change: So I know you guys addressed auto earlier.
Speaker Change: I know everyone is focused on the enterprise data, but I would like to understand better we're coming up on the model year Bill.
Speaker Change: For like model year 'twenty.
Speaker Change: 25.
Speaker Change: I would like to know where you feel comfortable guiding the auto right now from here.
Speaker Change: Yes, So let me take that one.
Bill: A lot of the exposure, we have with new content.
Bill: As.
Speaker Change: With the EV companies and so Michael touched on the opportunity, particularly as it relates to Chinese Oems were.
Speaker Change: We have a good installed base, particularly as it relates to Ada.
Speaker Change: The officer Thomas driving.
Speaker Change: Those tend not to be.
Speaker Change: Seasonally driven as the.
Speaker Change: Internal combustion.
Speaker Change: Right.
Speaker Change: So while we're seeing.
Speaker Change: Some sequential improvement quarter by quarter during the year.
Speaker Change: Not necessarily we are not looking for that hockey stick that used to occur with that with automotive sales in Q3, okay. Okay got it. Thank you very much guys alright.
Speaker Change: Alright, thank you.
Speaker Change: I would now like to turn the webinar back over to Bernie.
Bernie: So I'd like to thank you all for joining US on this conference call and look forward to talking to you again during the second quarter conference call, which will likely be in late July. Thank you have a nice day.