Q1 2025 Monolithic Power Systems Inc Earnings Call
Genevieve Cunningham: Welcome everyone to the MPS first quarter 2025 earnings webinar.
Welcome everyone to the MTS first quarter 'twenty twenty-five earnings Webinar. My name is Genevieve Cunningham and I will be the moderator for this webinar joining.
Genevieve Cunningham: My name is Genevieve Cunningham and I will be the moderator for this webinar. Joining me today are Michael Hsing, CEO and founder of MPS, Bernie Blegen, EVP and CFO, and Tony Balow, Vice President of Finance. Earlier today, along with our earnings announcement, NPS released a written commentary on the results of our operations.
Joining me today are Michael thing CEO and founder of M. P. S. Bernie Blegen, EVP, and CFO and Tony Ballew, Vice President of Finance.
Earlier today, along with our earnings announcement N. P. S released a rich and commentary on the results of our operations. Both documents can be found on our website.
Genevieve Cunningham: Both documents can be found on our website.
Genevieve Cunningham: 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 within the meaning of the Private Securities Litigation Reform Act of 1995 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 2025 earnings release and in our SEC filings, including our Form 10-K, which 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 within the meaning of the private Securities Litigation Reform Act of 1995 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 'twenty twenty-five earnings release and in our SEC filings, including our Form 10-K, which can be found on our website.
Genevieve Cunningham: Our statements are made as of today, and we assume no obligation to update this information.
Our statements are made as of today and we assume no obligation to update this information.
Bernie Blegen: Now I'd like to turn the call over to Bernie Blegen. Thanks, Jen.
Now I'd like to turn the call over to Bernie Blegen.
Bernie Blegen: Thanks, Janet and good.
Bernie Blegen: Good afternoon, and welcome to our Q1 2025 earnings call. In Q1, NPS achieved record quarterly revenue of $637.6 million, slightly higher than the fourth quarter of 2024 and 39.2% higher than Q1 2024. This performance reflected the ongoing strength of our diversified market strategy, consistent execution, continued innovation, and strong customer focus.
Bernie Blegen: Good afternoon, and welcome to our Q1 2025 earnings call.
Bernie Blegen: In Q1, MTS achieved record quarterly revenue of $637 $6 million slightly higher than the fourth quarter of 2024, and 39, 2% higher than Q1 2024.
Bernie Blegen: This performance reflected the ongoing strength of our diversified market strategy consistent execution continued innovation and strong customer focus.
Bernie Blegen: Let me call out a few highlights from the first quarter. On our March 20th, Investor Day, we showcased MTS innovation across a range of areas, including new opportunities in robotics, automotive, data center, building automation, medical, and audio. In Q1, storage and computing segment revenue increased 38% quarter over quarter on strong demand for both memory and notebook solutions. We continue to win designs across all major enterprise data customers with revenue ramps expected in the second half of this year. Finally, Q1 2025 automotive revenue increased 13% from Q4 2024, the third consecutive quarter of sequential double digit growth.
Bernie Blegen: I call out a few highlights from the first quarter.
Bernie Blegen: At our March 20th Investor Day, we showcased MTS innovation across a range of areas, including new opportunities in robotics automotive data Center building automation medical in audio.
Bernie Blegen: In Q1 storage and computing segment revenue increased 38% quarter over quarter on strong demand for both memory and notebook solutions.
Bernie Blegen: We continued to win designs across all major enterprise data customers with revenue ramps expected in the second half of this year.
Bernie Blegen: Finally, Q1, 'twenty five automotive revenue increased 13% from Q4 2000 and for the third consecutive quarter of sequential double digit growth.
Bernie Blegen: MTS continues to focus on innovation, solving our customers most challenging problems and maintaining the highest level of quality. We continue to invest in new technology, expand into new markets, and to diversify our end-market applications and global supply chain. This will allow us to capture future growth opportunities, maintain supply stability, and swiftly adapt to market changes as they occur.
Bernie Blegen: MTS continues to focus on innovation solving our customers' most challenging problems in maintaining the highest level of quality.
Bernie Blegen: We continue to invest in new technology expand into new markets and diversify our end market applications and global supply chain.
Bernie Blegen: This will allow us to capture future growth opportunities maintain.
Supply stability and swiftly adapt to market changes as they occur.
Bernie Blegen: Our proven long-term growth strategy remains intact as we continue our transformation from being a chip-only semiconductor supplier to a full-service silicon-based solutions provider.
Bernie Blegen: Our proven long term growth strategy remains intact as we continue our transformation from being a chip only semiconductor supplier to a full service silicon based solutions provider.
Bernie Blegen: I will now open the webinar up for questions. Thank you, Bernie.
Bernie Blegen: I will now open the webinar up for questions.
Bernie Blegen: Thank you Bernie.
Genevieve Cunningham: Analysts, I would now like to begin our Q&A session. As a reminder, if you would like to ask a question, please click on the participants icon on the menu bar and then click the raise hand button.
Speaker Change: 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.
Tore Svanberg: Our first question is from Tore Svanberg of Stiefel. Tore, your line is now open. Yes, thank you, Jen. And congratulations on a strong quarter, especially during this environment. And especially the cash flows.
Speaker Change: Our first question is from Torrey Svanberg of Stifel. Tory Your line is now open.
Torrey Svanberg: Yes, Thank you John.
Speaker Change: <unk> relations on a strong quarter, especially during this environment.
Torrey Svanberg: And especially the cash flows.
Michael Hsing: First question is on enterprise data. So it did come in line with expectations. But you talked about some second half design wins ramping. Should we infer by that that this is sort of the low point for enterprise data this year? Well, yeah, at this time, we feel, of course, when they're close to a second half of a year, we feel a lot better. And overall numbers can be better. But at this time, we're not forecasting how good is good. And so we have a lot more confidence than at the beginning of the year. I think it's important to say that we're engaged with many different programs, either that we have the design wins or the qualification.
Torrey Svanberg: First question is on enterprise data. So it did come in line with expectations, but you talked about.
Torrey Svanberg: Some second half design wins ramping should we infer by that this is sort of the low point for enterprise data this year.
Torrey Svanberg: At this time, we feel of course.
Torrey Svanberg: Close to a second half of the year. So we feel a lot better and the overall numbers and that can claim that can be better if at all.
Torrey Svanberg: But.
Torrey Svanberg: At this time, but we're not forecasting okay.
Torrey Svanberg: How good is good okay.
Torrey Svanberg: So we'll have a more a lot more confidence okay.
Torrey Svanberg: At the beginning of the year.
Torrey Svanberg: I think yes go ahead.
Torrey Svanberg: I think it's important to say that we're engaged with many different programs either that we have the design wins are the qualification.
Michael Hsing: So it's very broad-based, but as Michael says, while our visibility is improving, clearly the improvement is second half-weighted. Yeah, that's a good comment. We do win many design, have many design wins, and customers design it in, and we're just waiting for the rest.
Torrey Svanberg: So it's very broad based but as.
Michael: Michael says, while our visibility is improving.
Torrey Svanberg: The improvement is second half weighted.
Michael: That's the law.
Torrey Svanberg: It's a good comment.
Torrey Svanberg: We do wing.
Torrey Svanberg: Manny.
Torrey Svanberg: I will have many design wings.
Speaker Change: Customer the design they need and that we just are waiting followed a rep.
Tore Svanberg: Great.
Tore Svanberg: Can I ask a follow up? Yeah, go ahead. Yeah.
Torrey Svanberg: Great can I ask a follow up.
Torrey Svanberg: Yeah I'll go ahead, yes, so as my follow up Michael I know over the last decade, or so you know you've been working really hard.
Michael Hsing: So as my follow up, Michael, I know over the last decade or so, you know, you've been working really hard to diversify globally, whether it's R&D centers, manufacturing partners, and so on and so forth. I was hoping you could talk a little bit about those efforts, you know, especially given the current tariff environment. And, you know, how, how are those efforts really impacting, you know, your position right Yeah, that's a good question.
Torrey Svanberg: To diversify globally, whether it's R&D centers manufacturing partners and so on and so forth.
Torrey Svanberg: I was hoping you could talk a little bit about those efforts, especially given the current tariff environment.
Torrey Svanberg: How are those efforts really impacting your position right now.
Torrey Svanberg: Yeah, that's a good.
Michael Hsing: Started 10 years ago, we started to emphasize, okay, you have a local manufacturing for local customers. And the US was out of China, particularly started the last couple of years. And right after the pandemic, okay, man, the volumes and we almost double more than double volumes and that we need to expand the fab capacities and the serendipities and that we all expanded in the outside of China okay and at that time the inside of China was full and So now they give us a very good, good position, okay, for outside of China, for supplying the U.S.
Speaker Change: Good question. So look Amy Tan started 10 years ago, we start to emphasize okay.
Speaker Change: Do you have a local manufacturing for local customers.
Speaker Change: And.
Speaker Change: The U S was the auto China, <unk> startup, particularly started in the last couple of years.
Speaker Change: And.
Speaker Change: Right after pandemics okay.
Speaker Change: <unk>.
Speaker Change:
Speaker Change: We almost doubled more than doubled volumes and that we need to expand.
Speaker Change: Fab capacities and the Serendipity Soma, we are expanded and outside of China, Okay and that time. These virus, China was a full and.
Speaker Change: So not all of that gave us a very good position so far outside of China for supply in the U S side and as well as the inside China.
Tore Svanberg: side and as well as the inside China. So now that we're in a much better position now. Great, thank you. Congrats again.
Speaker Change: And.
Speaker Change: So now that we're in.
Speaker Change: Much better positions.
Great. Thank you congrats again, sorry, the only thing I would add right from the addition to the supply chain diversification approach has really been on the front end as well around R&D. So as we've been looking both the design and the supply that's really been the hallmark of our strategy over the long haul here.
Tony Balow: Sorry, the only thing I'd add right from the addition to the supply chain, right, the diversification approach has really been on the front end as well around R&D. So looking both the design and the supply. That's really been a hallmark of the strategy over the long haul here. Yeah. Great. Thank you. Yeah.
Speaker Change: Great. Thank you.
Quinn Bolton: Our next question is from Quinn Bolton of Needham. Quinn, your line is and I'll offer my congratulations as well on strong results and outlook. I guess, Bernie, Michael, maybe a follow-up on Tori's question just on enterprise data. I think you came into the year thinking enterprise data could be anywhere from flat plus or minus 20%. Sounds like you feel a little better about the business now. Wondering if you might be able to sort of tighten up that range on enterprise data. And then specifically, one of your large customers, sounds like there may have been a platform change.
Speaker Change: Our next question is from Quinn Bolton of Needham Cowen Your line is now.
Speaker Change: Thank you and I'll offer my congratulations as well on the strong results and outlook I guess Bernie Michael maybe a follow up on <unk> question just on enterprise data.
Speaker Change: I think he came into the year.
Speaker Change: Thinking enterprise data could be anywhere from flat plus or minus 20%. It sounds like you feel a little better about the business now wondering.
Speaker Change: If you might be able to sort of tighten up that range on enterprise data and then specifically one of your large customers. It sounds like there may have been a platform change and I think some investors are concerned that that platform change on their next generation GPU could have an impact on your shared I'm wondering if you.
Michael Hsing: And I think some investors are concerned that that platform change on their next-generation GPU could have an impact on your share. I'm wondering if you might be able to address just your thoughts about how you're positioned in share as you come into the second half of the year. We were told by many customers we offer a breadth of a product that meets our customer needs.
Speaker Change: Be able to address just your thoughts about how you are positioned in share as you come into the second half of the year.
Speaker Change: We all told by many customers we offer a breadth.
Speaker Change: Product mix.
Michael Hsing: Okay, we don't comment on a specific customer. And also, the matter of fact is that we don't know which of our customers' projects are going to ramp, or they're changing, as you said, and they're changing the schedules. These are out of our we winning, we feel better is because our customers recently qualified many of our, our, our product from the IC levels or to module level. They passed many rigorous testings, and they feel good about it, and we feel good about it, and we expect it to have a rep. So at this time...
Speaker Change: Meet our customer needs we.
Speaker Change: We don't comment on our Pacific customers.
Speaker Change: Yeah.
Speaker Change: And we.
Speaker Change: We don't comp and also the matter of fact that there is a week dawn knowlton, okay in which our customers in the market.
Speaker Change: Our projects are going on.
Speaker Change: Okay all of the changing as you said, the Mecca and changing the schedule some of these.
Speaker Change: Ottawa, our concerned and.
Speaker Change: We don't know.
Speaker Change: And that's their decision.
Speaker Change: We have enough product.
Speaker Change: We can meet that demand.
Speaker Change: We are winning.
Speaker Change: We feel better is it because.
Speaker Change: Our customers the reason kind of quantified or many of our.
Speaker Change: Our product farm, the IC levels Ultra module levels.
Speaker Change: They passed many rigorous testing to Mecca.
Speaker Change: And they feel good about it.
Speaker Change: We see some so we feel good about it.
Speaker Change: Have we.
Speaker Change: We expect it to have a rent so at this time.
Michael Hsing: um we i'm not going to forecast what's the half years and okay what in the past and that we said on the last year we said this year could be a flattish in our numbers we can let's see some okay Let us deliver members, hopefully, better than we expected.
Speaker Change: We now have in our forecast whats the half of the year.
Speaker Change: In the past and that we said on the last year with this year it will be a flattish in our numbers, we can let's see semi came.
Now, let's deliver members hopefully that better than we expected.
Speaker Change: Yes, and I think that.
Speaker Change: Michael is right that we have increased visibility because the design win in the qualification process is down.
Speaker Change: Down the road another month.
Speaker Change: But still as far as when the actual product ramps occur is outside of our control. So while I think that we feel more confident overall the timing as far as the plus minus against the range.
Speaker Change: Let's leave it wide open for right now.
Bernie Blegen: Yeah, and then maybe a follow up question just Bernie on the on the second quarter guidance, looks like gross margin ticks down by about 20 basis points at the midpoint.
Speaker Change: And then maybe a follow up question just Bernie on the second quarter guidance. It looks like gross margin ticked down by about 20 basis points at the midpoint wondering if you could just sort of address that is that just sort of a mix shift within the product groups are.
Bernie Blegen: Wondered if you could just sort of address that? Is that just sort of mixed shift within the product groups? Are you starting to see either tariff costs and or pricing pressure? You know, what accounts for the slight drop in gross margin in the second quarter?
Are you starting to see either tariff costs and or pricing pressure what accounts for the slight drop in gross margin in the second quarter. Thank you.
Bernie Blegen: Thank you.
Bernie Blegen: Sure.
Bernie Blegen: There's not a specific event that we're pointing to. We're just saying that there's a mix of different things that may or may not be inside of our control. And so we're just being basically 20 basis points more conservative. Yeah, overall.
Speaker Change: Sure.
Speaker Change: Theres not a specific event that there were pointed to we're just saying that there is a.
Speaker Change: A mix of different things that may or may not be inside of our control and so we're just being basically took 20 basis points more conservative.
Speaker Change: Yes.
Speaker Change: Overall.
Bernie Blegen: All the new products we released have higher margins. The higher volumes, the margins are lowered. But we're not going to intend to operate much below our corporate average. That's our goal. We stay within the range. Yeah, we stay with our model. Yeah.
Speaker Change: All the new products, we released or that have a higher higher margins okay.
Speaker Change: The higher volumes.
Speaker Change: But the margins.
Speaker Change: Okay.
Speaker Change: But we now intend to operate in the middle are much below our corporate average that's how it'll stay within the range, we're staying with our model yes perfect.
Bernie Blegen: Perfect. Thank you.
Speaker Change: Perfect. Thank you.
Ross Seymour: Our next question is from Ross Seymour of Deutsche Bank. Ross, your line is now open. Hi guys, congrats on the resulting guide. Thanks for that question. Bernie, in the first quarter, you had a very wide and divergent performance by segment to get you still to upside overall. Just wondering if there's any large segment moves in your second quarter guide, any kind of big divergent moves that you'd like to highlight? No, actually, the range of variance for all the groups is, you know, plus minus five percentage points. So actually, we're seeing very narrow change sequentially.
Speaker Change: Our next question is from Ross Seymore of Deutsche Bank Ross Your line is now.
Ross Seymore: Hi, guys. Congrats on the results and guide thanks for the answer to question turning the first quarter, you had a very wide and divergent performance by segment to get you still to upside overall, just wondering if theres any large segment moves in your second quarter guide any kind of big divergent moves that you'd like to highlight.
Speaker Change: No actually.
Speaker Change: The range of variance for all of the groups as well.
Speaker Change: Plus or minus five percentage points so actually.
Speaker Change: We are seeing.
Speaker Change: Very narrow change.
Bernie Blegen: And it's worth commenting there that, you know, I believe that if we were heavily influenced by Pullens, for example, that we might have seen a more dramatic fall off in a particular market segment. But when we when we look against, particularly year over year, our strength is fairly broad based with enterprise data, as we've talked about, you know, still looking for the ramp in the second half of the year.
Speaker Change: Sequentially.
Speaker Change: And it's worth commenting there that.
Speaker Change: I believe that if we were heavily influenced by Poland for example.
Speaker Change: That we might have seen a more dramatic falloff in a particular market segment.
Speaker Change: When we look against particularly.
Speaker Change: Year over year.
Our strength is fairly broad based with enterprise data as we've talked about.
Speaker Change: Still.
Speaker Change: Looking for the ramp in the second half of the year.
Ross Seymour: Got it. And I guess that leads to my second question, which was going to be something you kind of just touched on, which is the tariff side of things. I know you talked earlier about diversifying your manufacturing and Tony mentioned about diversifying the R&D side of things.
Speaker Change: Got it and then I guess that leads to my second question, which was going to be something you kind of just touched on which is the tariff side of things I know you talked earlier about diversifying your manufacturing and Tony mentioned about diversifying the R&D side of things, but as far as the pull ins push outs any sort of different behavior from your customers I've been.
Michael Hsing: But as far as the pull-ins, push-outs, any sort of different behavior from your customers, I've been surprised how little of that has been admitted to or has actually occurred by some of the other analog companies. And so I just. If it happens that some pushing the pull out and I came in pulling a pull out and I push out And those numbers are small enough, but we don't clearly understand it. Okay. And the overall numbers are very consistent. As you see it, well, Bernie mentioned the Q1s and the computing segments and the growth, the revenue growth.
Speaker Change: Prize how little of that has been admitted to or has actually occurred by some of the other analog companies and so I just wondering what you guys are saying.
Speaker Change: And for us are happening some pushing the pull out or not.
Speaker Change: Putting a pull out a pushout.
Speaker Change: And those are small nimble small enough so that we Don.
Speaker Change: Clearly understand okay and.
Speaker Change: The overall numbers very consistent.
Speaker Change: I think youll see it well.
Bonnie: Bonnie mentioned as of Q1.
Speaker Change: The.
Speaker Change: Computing the computing segment.
Speaker Change: Grow the revenue growth okay.
Speaker Change: And.
Michael Hsing: So that's also as expected from the previous quarters. I mean, we have a lot of design we need in those areas, and we are turning to our revenue. And Ross, like in that area, for sure, right, there's a lot of other, you know, business factors beyond, you know, just tariff, potential tariff related pullbacks, because there's AIPC, there's the end of Winten support, there's gaming, there's a lot of things that are driving the good business there as well.
Speaker Change: So that's also as expected.
Speaker Change: From a loss of <unk>.
Speaker Change: <unk> quarters.
Speaker Change: We have a lot of.
Speaker Change: <unk> may paying those areas.
Speaker Change: <unk> attorney and attending to our revenues.
Speaker Change: And also like in that area for sure right. There's a lot of other business factors beyond just tariff.
Speaker Change: <unk> related pull that's because the IPC is the end of winter and support those gaming there's a lot of things that are driving the good business there as well.
Michael Hsing: Yeah, the key is diversification. The best things that I can. I can't look at the numbers. I can't have any target numbers that I want to analyze. Okay, everything looks very smooth. Well, let's hope it stays that way.
Speaker Change: The key is the diversifications.
Speaker Change: And.
Speaker Change: The best thing I can.
Speaker Change: I can look at the numbers and I can't I don't have I can't have any positive numbers that I'll want to analyze okay everything looks very smooth.
Speaker Change: Well, let's hope it stays that way thanks, guys.
Ross Seymour: Thanks, guys. Yeah, you guys.
Rick Schafer: Our next question is from Rick Schafer of Oppenheimer. Rick, your line is now Thanks, Jen. And congrats guys on the solid quarter.
Speaker Change: Our next question is from Rick Schafer of Oppenheimer. Your line is now.
Rick Schafer: Thanks June.
Speaker Change: And congrats on the solid quarter.
Rick Schafer: I guess my first question if I could really on data center or server power, rack power, to be specific. You talked about your 400-volt rack power solution at Analyst Day. I think you highlighted, like, 600 kilowatts within a couple years. I mean, we're seeing more in the press about even megawatt racks within the next, you know, handful of years.
Speaker Change: I guess my first question if I could.
Speaker Change: Really on data center or server power rack power to be specific you talked about your 400 volt railcar solution at analyst day.
Speaker Change: I think you highlighted 600 kilowatts.
Speaker Change: Within a couple of years I mean, we're seeing more in the press about even megawatt racks within the next handful of years. So I'm just curious if you could elaborate on the expected.
Michael Hsing: So, you know, I'm just curious if you could elaborate on the expected market opportunity, or TAM there, and sort of when rack power sales are expected to become material for NPS. Yeah, our customer asked us to put in, I think, I believe with this month, we start, if not this month, next month, we deliver a sample. I think it's this much. Okay, we deliver. modules. Each module level is like 120 kilowatt levels. And for each module, you add it together is somewhere is about 600,000 kilowatt to a million watt power. And so we do have a product for that.
Speaker Change: The market opportunity or Tam, there and sort of when.
Speaker Change: Our sales are expected to become material for NPS.
Speaker Change: Our customer absent us supporting us and I believe with this month's emphasis not just amongst next momentum with delivery samples.
Speaker Change: I think as this month's okay, we deliver.
Speaker Change: Modules each module levels that I've got 120 kilowatt levels.
Speaker Change: <unk>.
Speaker Change: And for each of modules you add up together.
Speaker Change: Some will as about six to 600000 kilowatt to are mainly.
Speaker Change: What powers.
Speaker Change: And.
Speaker Change: So we do have a product for that okay.
Michael Hsing: Okay. And while we do have a initial development, now we have samples. Okay.
Speaker Change: While we do have.
Speaker Change: Initial.
Speaker Change: Oh.
Speaker Change: Development some of them now have samples okay.
Michael Hsing: Michael, not to press you on it too hard, but would we see revenues, like material revenues this year? Or is this more of a, you know, sample year, qualification year, and it's more of a 2026 revenue driver? I believe it's 2026. Okay. And if you, we expected to have a higher good revenue come from that type of modules. And so at the same time, we prepare our production ramps, okay, production qualifications. So there's a lot of work in the second half of the year, but we fully expected it. And we anticipated that part of a growth.
Speaker Change: But Michael not to press you on it too hard but would we see revenues like material revenues. This year or is this more of a.
Speaker Change: Sample year qualification year end, it's more of a 2026 revenue driver.
Speaker Change: I believe in the 2026.
Speaker Change: And.
Speaker Change: If you.
Speaker Change: We will.
Speaker Change: We expected to have a higher gold revenue that come from that.
Speaker Change: What type of our modules and.
Speaker Change: So at the same time zone.
Speaker Change: Our our production ramps up production qualification, so theres a lot of work in that.
Speaker Change: In the second half of the years by the way fully expected and anticipated that part of our growth.
Rick Schafer: Thanks for all that, Michael.
Speaker Change: Thanks for all that Michael and then my second question is really on auto.
Michael Hsing: And then my second question is really on auto you know, to me, I think you have several like material content drivers, you know, ramping this year, you know, you look at 48 volt transition to DNA, 800 volt battery transition. You know, you've talked about power isolation modules. I know you talked about that at analyst day. Also, I guess I'm curious, kind of a similar question in terms of like, you know, how much do you expect BMS to contribute to that segment, you know, to auto segment revenues this year? You know, and I guess I'm curious if there are any regions favored within that Yeah.
Speaker Change: To me I think you have several like material content drivers ramping. This year you look at 48 volt transition began 800 volt battery transition you've talked about how isolation modules I know you talked about that at the analyst day. You also I guess I'm curious kind of similar question in terms of.
Speaker Change: How much do you expect <unk> to contribute.
Speaker Change: So that segment to auto segment revenues this year.
Speaker Change: I guess I'm curious if there any regions Sanford within that.
Michael Hsing: Of course, China's model changes much faster than any other regions. But we do see in the US and Europe, even Korea, we're changing it. And changing not only from 400 volts to 800 volts, and also from 12 volts to 48 volts. And those segments start very early. These are still at the very early stage. And we do ship those products now to those segments. I believe all the early changes, okay, we're all in it, in every model. Yeah, well, what you mentioned about 800 volts, 48 volts, and those are probably worth a lot more than the 2026 and the 2027.
Speaker Change: Yes.
Of course in China.
Speaker Change: Although changes much faster than that than any other regions, but we don't see in the U S and.
Speaker Change: Europe, even careers, okay, we changing and that changing.
Speaker Change: Changing not only from a.
Speaker Change: For the pharma 400 volts 800 volts and also pharma 12 volt to 48 volts.
Speaker Change: And.
Speaker Change: Those second microphone startup Barry these are still early at the very early stage and we don't ship the product announced okay to those segments.
Speaker Change: And.
Speaker Change: I believe as all the early changes okay. We're all in it.
Speaker Change: Every model.
Speaker Change: Yes, and I think in automotive in particular here.
Speaker Change: Because we've heard some concerns about unit volumes from North American and Chinese Evs in particular, but when we look at our second half a lot of the momentum.
Speaker Change: Momentum will be design wins, we secured in previous years that are coming to market.
Speaker Change: Particularly in North America and in Europe.
Speaker Change: So we have a really it's a content driven second half story for automotive.
Speaker Change: Yes.
Speaker Change: What you're mentioning about 800 volt 48 volt and also probably won't see a lot more in that 20.
Speaker Change: Six and 27.
Michael Hsing: Great to face you guys. Okay.
Speaker Change: Great. Thanks, you guys.
Speaker Change: Okay.
Joe Quatrochi: Our next question is from Joe Quatrochi from Wells Fargo. Joe, your line is now open. Yeah, thanks for taking the questions. I wanted to follow up on your comments on the storage and computing segment. I can appreciate you guys are seeing some design wins ramp.
Speaker Change: Our next question is from Joe could Troche from Wells Fargo. Kelly. Your line is now open.
Speaker Change: Yes, thanks for taking the questions I wanted to follow up on your comments on the storage and computing segment if.
Speaker Change: I can appreciate you guys are seeing some design wins ramp.
Joe Quatrochi: I guess as we look forward here, just given like the abnormal seasonality, you know, strength that you saw in 1Q, how do we think about that business kind of, you know, throughout the rest of this year? Hi, are you talking about seasonality?
Speaker Change: I guess as we look forward here just given like the abnormal seasonality strength that you saw in <unk>, how do we think about that business kind of throughout the rest of this year.
Speaker Change: Are you talking about feeling that the assay.
Michael Hsing: I don't know, nowadays, okay, I've been in the public, NPS has been a public company for 21 years, okay, and in recent years, I don't know what the seasonality is. But we've talked about the design wings in the memory side, okay, in the memory part of power management. and we're talking about for the last year or two or so and like even Um I think at one time, I even said that, okay, we're going to ramp up this year, but we don't know. These are the kind of things that are plus or minus a quarter.
Speaker Change: I don't know the now nowadays.
Speaker Change: In the public NPS of being a public company.
Speaker Change: <unk>.
Speaker Change: Plenty of one can hear us okay.
Speaker Change: In recent years.
Speaker Change: I don't know what the season.
Speaker Change: Cash and.
Speaker Change: But we talk about the design wins in the memory side, Okay, and then memory.
Speaker Change: One of our power management.
Speaker Change: And we're talking about for the last year or two or thoughts on that came in.
Speaker Change:
Speaker Change: I think at one time.
Speaker Change: Okay, and one that will ramp up this year some okay.
Speaker Change: But we don't know okay.
Speaker Change: These are kind of things.
Speaker Change: Plus or minus of quarters okay.
Michael Hsing: The way you get it close to us, you get orders, but at the end of the quarter, they don't push out. Now, here's the numbers. We're not very good at forecasting the numbers, but we're pretty good at delivering.
Speaker Change: And the way you get across to us.
Speaker Change: <unk> got orders on a year.
Speaker Change: By the end of the quarter, they don't push out now here's a members okay and we're not very good at forecasting our numbers.
Speaker Change: We're good.
Speaker Change: Pretty good.
Speaker Change: Delivering St. Louis.
Michael Hsing: But I think a really important point here as well is how broad-based this is. So we're looking at DDR5, SSD, even HDD on the memory side. And then, as Tony pointed out previously, that within the notebook, that there are a variety of factors that are driving that end market as well. CPU side, desktop, and notebook side, I'm not kidding. When Bernie mentioned all these segments, okay, these are pretty evenly growth and okay, maybe memory size and okay, the DDR5 is a little bit more than that, more than the other ones. Okay. And, but they're pretty much like a consistent, okay, and evenly growth in all each segment.
Speaker Change: But I think really important points here as well is that.
Speaker Change: How broad based this is so we're looking at DDR five.
<unk>, even HDD on the memory side, and then as Tony pointed out previously that within the notebook that there are a variety of factors that are driving that end market as well so side Eagle bulk side, the CPU side desktops and notebooks site market.
Speaker Change: And.
Speaker Change: Bonnie.
Speaker Change: Now all of these segments.
Speaker Change: These are pretty evenly growth I'm, not saying maybe memory sides in the DDR five is a little bit more than that more than any other ones. Okay.
Speaker Change: Yes pretty much okay. Okay.
Evenly growth in all of them.
Speaker Change: All each segments.
Joe Quatrochi: Yeah, and Joe, just relative to what Bernie said before going into Q2, you know, everything's plus or minus a couple of points kind of thing. So you would infer from that that that segment would, you know, not see a sharp fall off necessarily in Q2.
Speaker Change: Yes, Joe just relative to Alberto said before going into Q2, everything is plus or minus a couple of points kind of thing. So you would infer from that that that segment would.
Speaker Change: Sharp falloff necessarily in Q2.
Joe Quatrochi: Yep, that's helpful.
Speaker Change: Yes, no that's helpful. I appreciate it maybe as a quick follow up.
Joe Quatrochi: I appreciate it.
Joe Quatrochi: Maybe as a quick follow up, you know, looking at the enterprise data side, maybe maybe on the non AI, you know, segment of that, that market, how are you thinking about traditional server CPU demand this year? They're doing good. And as you you probably know what and okay, all these a lot of servers has a refresh. Okay, I mean, adopting whatever the Intel's latest models and, and we expected that like, as we said, Beautiful! last year. And I think just to stay on that point for a little bit longer is that, again, much like the other areas of our business, we're seeing consistent, steady growth.
Speaker Change: Looking at the enterprise data side, maybe on the non AI.
Speaker Change: Segment of that that market. How are you thinking about traditional server CPU demand this year.
Speaker Change: Doing good.
Speaker Change: As.
Speaker Change: You probably know Watson, okay. All these a lot of us.
Speaker Change: Uh huh.
Speaker Change: Service has a refresher okay.
Speaker Change: Adopting whatever the Intel's latest models.
Speaker Change: We expected that like we said.
Speaker Change:
Speaker Change: They gave me over the last year the year before.
Speaker Change: Will it.
Speaker Change: Increase our market shares in that.
Speaker Change: Now some okay would pretty much okay.
Speaker Change: Yes.
Speaker Change: We see other way said.
Speaker Change: Okay.
Speaker Change: Last year Okay.
Speaker Change: And I think just to stay on that point for a little bit longer is that.
Speaker Change: Again, much like the other areas of our business, we're seeing consistent steady growth.
Michael Hsing: It's not like a spike or a hockey stick. Well, gangsters and the next year. I think we even get a higher percentage in the silver market. Perfect.
Speaker Change: Not like a spike or hockey stick, we will gain shares in the next year.
Speaker Change: I think as we even get a higher percentage in the silver market.
Gary Mobley: Thank you.
Speaker Change: Perfect. Thank you.
Speaker Change: Okay.
Gary Mobley: Our next question is from Gary Mobley of Lube Capital. Gary, your line is now open. Hey guys, thanks for taking my question and congrats on the solid first half performance.
Speaker Change: Our next question is from Gary Mobley of loop capital Gary Your line is now open.
Gary Mobley: Hey, guys. Thanks for taking my question and congrats on the solid first half performance.
Michael Hsing: On the topic of China, can you give us a sense of how big your business now is in China relative to, you know, local indigenous consumption? And, you know, given your China for China manufacturing supply chain, you know, how has that and how will that position you versus larger your your larger US competitor. If you know our stories, a lot of design and a lot of design activities and a lot of manufacturing happened in China 10-15 years ago.
Gary Mobley: On the topic of China can you give us a sense of how big your business now is in China realm.
Gary Mobley: Relative to local indigenous consumption.
Gary Mobley: And given your China for China manufacturing supply chain.
Gary Mobley: How has that and how will that position you versus <unk>.
Gary Mobley: Larger your larger U S competitor.
Gary Mobley: And so you know our story.
Gary Mobley: Okay.
Gary Mobley: Lot of our design and a lot of design activities and that came out of our manufacturing happening in China, 10, 15 years ago.
Gary Mobley: And.
Michael Hsing: Started in 2016, we diversified not only from the U.S., before it was the U.S. and the China.
Gary Mobley: Started 2016, we diversified not only from the U S. Before was the U S and the China and.
Michael Hsing: And started 2016, 17, we established placing in Europe, multiple places. Since then, and as I mentioned, before we contacted mostly our manufacturing partners that's in China, after the pandemic, we migrated out by serendipity, I said earlier, and as a result, there was the capacity within China, so we announced, and so I don't know how we engage with our competitors, okay, if there's any concentration, like concentrated in the U.S. for production, or concentrated in China, so okay, in the current environment, the need of a good, you need a really balanced, and in China, you're manufacturing, particularly manufacturing for China, so like in the U.S., this is outside China, and the same in Europe, okay.
Gary Mobley: 2016 17.
Gary Mobley: Established placing.
Gary Mobley: In Europe multiple places.
Gary Mobley: And.
Gary Mobley: As mentioned I'm not.
Gary Mobley: Yeah.
Gary Mobley: They fall, we compound, mostly our manufacturing partners in China. After the pandemic the way migrate it up by saying like I said earlier.
Gary Mobley: As a result of the was the.
Gary Mobley: The capacity within China, So wave now.
Gary Mobley: And.
Gary Mobley: So I don't know how we.
Gary Mobley: Gauge with our competitive okay.
Gary Mobley: Any concentration in my concentration are concentrated in the U S for productions.
Speaker Change: It's concentrated in China, Inc.
Gary Mobley: In the current environment.
Gary Mobley: But.
Gary Mobley: You need a really.
Gary Mobley: Balanced.
Gary Mobley: In China manufacturing, particularly manufacturing for China.
Gary Mobley: In the U S and the valve side.
Gary Mobley: Outside China.
Gary Mobley: And the same in Europe.
Gary Mobley: Okay.
Theodore Blegen: As my follow-up, I wanted to ask about Unknown Attendee, Theodore Blegen, Theodore Blegen, Theodore Blegen, Theodore Blegen, So as far as the inventory, let's take that on first off, is that we're a little bit, we are, our model is to hold about 180 to 200 days on our books, and we're well below that level right now. When we look at inventory in the channel, we also see that that is very lean against what we typically experience or what our model is. As far as the lead times, they're actually holding pretty well as far as what we're seeing in the supply chain.
Gary Mobley: As my follow up I wanted to ask about.
Gary Mobley: The capacity and customer order lead times. It appears as though you have almost a half a year's worth of inventory on your balance sheet.
Gary Mobley: And you probably have infinite manufacturing availability at least in the intermediate term.
Gary Mobley: Yeah. So we have it all.
Gary Mobley: Yeah go ahead, sorry, okay.
Gary Mobley: So.
Gary Mobley: Yes. It is.
Speaker Change: Have you seen any sort of uptick in customer order lead times and related has that improved your visibility or your backlog or any of those forward looking metrics.
Speaker Change: So as far as the inventory, let's take that on first off as it were.
Speaker Change: We're a little bit.
Speaker Change: Our model is to hold about 180 to 200 days on our books and we're well below that level right now.
Speaker Change: When we look at inventory in the channel. We also see that that is very lean against what we typically experience of what our model is.
Speaker Change: As far as the lead times.
Speaker Change: They are actually holding pretty well as far as what we're seeing in the supply chain and.
Theodore Blegen: And they've commented in prior comments that in certain of our end markets, they do demand short lead times. And so we have to build ahead of their demand. I think though, right now we have a lot of flexibility. We're very well positioned, regardless which way the market goes. Um, yeah, if you know our, um, what we try to, we targeted 180 days to 200 days, okay, for many, many years, okay. And for, because of the, for the new, all the new product ramp, okay.
Speaker Change: As I commented in prior.
Speaker Change: Comments that.
Speaker Change: In certain of our end markets. They do demand is short lead times and so we have to build ahead of their demand.
Speaker Change: So right now we have a lot of flexibility, we're very well positioned regardless, which way the market goes.
Speaker Change: Yeah, if you know our.
Speaker Change: What we try to target at 180 days to 200 days, Okay for many many years market and the follow up because of the fall then you have all of the new product.
Speaker Change: Okay and.
Theodore Blegen: And, uh, in Q1 I don't know if you remember, like I said, okay, in the inventory levels, very low, both from our, both from the DST levels, and as well as within NPS, okay, and at the very low levels, okay, I even, I may even say that, okay, it was unhealthy levels, okay, too low. And overall, our strategy way all the way in the hole. more inventory than in this and we have a federal management.
Speaker Change: In Q1.
Speaker Change: I don't know if you remember I said it in okay.
Speaker Change: Inventory levels are very low both pharma our bolstered.
Speaker Change: Both of them are 50 levels and as well as the.
Speaker Change: Within the NPS bucket.
Speaker Change: At the very low levels.
Speaker Change: Even.
Speaker Change: May even said that it was unhealthy levels okay.
Speaker Change: Two law and overall our strategy is.
Speaker Change: <unk> always a hole.
Speaker Change: Inventories in the industry.
Speaker Change: We have a better manage it manage my time.
Speaker Change: Thank you.
Joshua Buchalter: Our next question is from Joshua Buchalter of Cohen. Joshua, your line is now open. Joshua there. You can't hear. Oh, I cannot hear you. Now I'm better at it. Yeah, yeah, I know. No, now they're cutting out. Oh, that last try. Good. There you go. We can hear you. Okay. I'm sorry about that, guys.
Speaker Change: Our next question is from Joshua do culture of Cowen Joshua Your line is now open.
Speaker Change: Oh.
Speaker Change: Follow up on Joe's question.
Speaker Change: Got you there.
Speaker Change: I hope you can hear.
Speaker Change: Oh.
Speaker Change: I cannot hear you.
Speaker Change: Yes.
Speaker Change: No not on the cutting out.
Speaker Change: I would now try.
Speaker Change: Hi, Good morning, we can hear you okay I'm sorry about that guys. My first time on zoom.
Joshua Buchalter: My first time on zoom.
Speaker Change: Wanted to follow up on Joe's question from earlier on storage and compute.
Joshua Buchalter: I wanted to follow up on Joe's question from earlier on storage and compute. I totally appreciate the share gain that you mentioned, but the the, you know, 38% sequential growth in what's usually a sub seasonal quarter for certainly eye popping. Are there any more metrics you can give us as to maybe content or shareshifts that are going?
Speaker Change: I totally appreciate the share gains that you've mentioned.
Speaker Change: The 30.
Speaker Change: <unk>, 38% sequential growth in what's usually a sub seasonal quarter for Pcs is certainly eye popping are there any more metrics you can give us as to.
Speaker Change: Maybe content or share shifts that are going on.
Michael Hsing: um and you know to give us comfort that there's not inventory build happening. Well, in the past, we have a few eye-popping numbers, right?
Speaker Change: And to give us comfort that there's not inventory build happening here. Thank you.
Speaker Change: Good morning.
Speaker Change: So we have a field eye popping numbers right.
Bernie Blegen: Okay, so we didn't surprise them, okay? As we said, it's a pretty evenly growth in the segment, particularly a little bit more than the DDR5, as we said a few quarters ago, Bernie, do you want to say anything? Josh, you might recall from my comments from year end when we were looking at the Q1 outlook and I said that there was an atypical seasonal uplift anticipated in storage and compute, and against our internal expectations, we came in within low single digit performance to the upside. So while it may be counter to whatever seasonality we've experienced in the past, everything rolled out pretty much as anticipated.
Speaker Change: So within the surprises that came in.
Speaker Change: Ive always said <unk> is a pretty evenly growth growth in the EMEA segment, particularly a little bit more than a <unk> five.
Speaker Change: We've said it a few quarters ago, but yeah.
Speaker Change: Josh you might recall from my comments from year end. When we were looking at the Q1 outlook I've said that there was an atypical seasonal uplift anticipated.
Speaker Change: Storage and compute and against our internal expectations, we came in within.
Speaker Change: Low single digit performance to the upside.
Speaker Change: So while it may be counter to whatever seasonality, we experienced in the past everything rolled out pretty much as anticipated. Yes. We have a okay go ahead, Paul I should say.
Michael Hsing: Yeah, we have a- Okay, go ahead. Well, as I said, and Josh, just remember that storage and compute, you heard Michael say it before, it's growth from both the memory side as well as the notebook side. So it's not all notebook driven, that might apply to your seasonality question.
Speaker Change: And Josh remember that storage compute you heard Michael say before its growth from both the memory side as well as the notebook side. So it's not all driven that.
Speaker Change: Apply to your seasonality question I'm on desktop.
Michael Hsing: I'm on desktop.
Michael Hsing: Okay. And the theory is that we have always inked- Particularly in the last couple years. and the markets are very dynamic. And you see one segment is popping up, the other one segment, not so much. and, uh, and, uh, In the last couple of years, you see more. This quarter is storage and compute. Last quarter, I don't know, the auto model, before was the enterprise. And we keep running like a circle.
Speaker Change: And.
Speaker Change: A few areas that we have always.
Speaker Change: Inc.
Speaker Change: Particularly in the last.
Speaker Change: Couple of years.
Speaker Change: And.
Speaker Change: The markets are very dynamic.
Speaker Change: And you see one segment.
Speaker Change: The other one segment not so much.
Speaker Change: And.
Speaker Change: In the last couple of years, so you'll see more of this quarters okay.
Speaker Change: Our storage and the compute last quarter I don't know the automotive auto model.
Speaker Change: Before with <unk>.
Speaker Change: And the price okay.
Speaker Change: We keep it running at like a so-called Tanaka.
Joshua Buchalter: Thank you for the color.
Speaker Change: Thank you for the color and then I wanted to follow up on Enterprise data also you mentioned the increased confidence.
Joshua Buchalter: And then I wanted to follow up on enterprise data. Also, you mentioned the increase. um versus three months ago is is that coming from you know your your biggest customer in that segment or is that more some of the the newer platform wins that you expected to ramp. and within that, like, are lead times still measured in?
Speaker Change: Versus three months ago is is that coming from your biggest customer in that segment or is that more confidence in some of the newer platform wins that you expected to ramp in the second half and within that our lead times still measured in weeks. When would you expect I guess you have more visibility onto the <unk>.
Michael Hsing: And when would you expect to, I guess, have more visibility? the share in the enterprise data.
Speaker Change: Share in enterprise data.
Michael Hsing: Do you imply, Sanakay, we circle back? No, Sanakay, we feel as the time, as the closer to the second half, Sanakay, we feel better, Sanakay, as always. And we have a more clear visibility.
Speaker Change: Implies we'll circle back.
Speaker Change: Okay.
Speaker Change: As a kind of as a closer for the second half snuck in we feel better okay.
Speaker Change: As always and we have a more more.
Speaker Change: Clear visibility Yakin Pony, Okay, no that's exactly right we've talked about this in the past it's not just the main customer but.
Bernie Blegen: Okay, Bernie, okay. That's exactly right. We've talked about this in the past. It's not just the main customer, but some of our other customers are operating with shorter lead times. And as a result, we feel very good about the design wins, the qualifications, and as I mentioned earlier, it's really the timing of when they expect to ramp. But even within that, you know, we're getting, you know, increasing the more confidence. Oh, yeah, you're talking about large customers, small customers, okay. When we're looking at all these, they all can be very big. They can all be big.
Speaker Change: Some of our other customers are operating with shorter lead times.
Speaker Change: And as a result.
Speaker Change: Feel very good about the design wins, the qualifications and as I mentioned earlier, it's really the timing of when they expect to ramp but even within that.
Speaker Change: We're getting increasingly more confident or are you talking about large customers small customers.
When looking at all of these are they all can be they can all be better.
Michael Hsing: They all can be big, yeah.
Speaker Change: Yeah.
Genevieve Cunningham: Congratulations on the results and apologize for my technical Well, thanks, John, again.
Speaker Change: Congratulations on the results and I apologize for my technical difficulties again.
Speaker Change: Thanks, Josh.
William Stein: Our next question is from William Stein of Truist.
William Stein: Our next question is from William Stein of Truest William Your line is now open.
William Stein: William, your line is now open. Great. Thanks for taking my questions, guys. Two topics I wanted to hit on tariffs, and then I wanted to hit on some growth opportunities on the tariff side. I know people have asked a bunch of different questions, but I wonder if.
William Stein: Great. Thanks for taking my questions guys.
William Stein: Two topics I wanted to hit on tariffs and then I wanted to hit on some growth opportunities on the tariffs side I know people have asked a bunch of different questions but.
William Stein: I wonder if.
Bernie Blegen: You'd help us understand if there are any direct, as in unit costs and unit pricing impact that's influencing your Q2 guidance, and is there any indirect or unit demand impact No to both questions. Yeah, yeah.
William Stein: You could help us understand if there are any direct as in unit cost and unit pricing impact that's influencing your Q2 guidance and is there any indirect or unit demand.
William Stein: Impact influencing your Q2 guidance.
William Stein: No to both questions.
Michael Hsing: And then, you know, at the analyst day, you showed some pretty unique products for a semiconductor company. These sort of finished full, full up products. I'll, as I recall, there was a sonogram. I think you threatened to list that on Amazon, if I recall. But also, you know, building automation, you had audio amplifiers. I can't imagine that these are contributing meaningfully to revenue, but I wonder what your customer, either, you know, emerging customer reaction was to this.
William Stein: Yeah.
William Stein: And then.
William Stein: You know at the Analyst day, you showed some.
William Stein: Pretty unique products for semiconductor companies sort of finished full up.
William Stein: Yeah.
William Stein: Yeah.
William Stein: Products.
Speaker Change: As I recall, there was a sonogram I think you've threatened to list that on Amazon.
William Stein: I recall.
William Stein: But also building automation you had audio amplifiers I can't imagine that these are contributing meaningfully to revenue, but I wonder what your customer either established.
William Stein: This customer or emerging customer reaction was to this did you see any.
Michael Hsing: Did you see any anything worth noting that could drive future demand that we'd want to All I try to do is, as Bernie said earlier, we want to have a silicon-based solution company. I want to monetize our know-how. And for example, in building automations, that box, we did it. And you add a lot of chicken shit stuff in the box. We sell out of a sub $0.50 of all the products. We add it together, and we put some software on most of our products. It's the programmables, and now we're making MCUs. We put it all together.
William Stein: Anything worth noting that it could drive.
William Stein: For demand.
William Stein: Yes.
William Stein: Think about.
William Stein: So julien.
Speaker Change: Sandy earlier, so now we want to have a silicon based.
William Stein: Our solution company.
William Stein: I want to monetize our knowhow.
William Stein: And for example, some that came in the building automation stopped box. So we did it to market.
William Stein: And.
William Stein: You add a lot of checking shifts stuff Zane the box that we sell all of our sub 50 on a product okay.
William Stein: And the way we have put us on software all most of our products.
The programmable some ACA and now we're making it is to use the marker we put all together it can be a very good viable solution fell.
Michael Hsing: It can be a very good viable solution sell for a lot higher dollars.
Ross Seymore: Hi, Ross.
Michael Hsing: and uh same as the ultrasound area and uh and these are to me is a very interesting okay we can leverage our know-how sell instead of sell dollar two dollar parts now you start to selling them okay thousands and thousands of dollars stuff and uh Our customers and the Sometimes, and they are related to our customers, our customers, they buy, we're talking to a different level of people, we're not talking to an engineer anymore, we want to have cooperating with a large company, we have those solutions, and you can sell, you can buy the entire solution, you can have like a white box, you label it, or another way is you buy our module.
Ross Seymore: And the standards are ultra small areas and.
Speaker Change: And then these are to me is a very interesting. Okay. We can leverage our knowhow sell instead of sales dollars $10 parts now you start selling thousands and thousands of dollars stuff.
Ross Seymore: <unk>.
Ross Seymore: Our customers and.
Ross Seymore: Sometimes they are related to our customers our.
Ross Seymore: Our customers.
Ross Seymore: They buy it.
Ross Seymore: We are talking to a different level of people, we're not talking to engineer any malls and okay. We all walked out of our core cooperating with a large company like we have those solutions and you can sell you can buy the entire marketing solution that you can have as a backup.
Ross Seymore: Wi Baps you label it.
Ross Seymore: And I'll ask another way if you power modules.
Michael Hsing: and rather than the tip. It just take much of an effort from their hand. and we do things because we do silicon. We do silicons and then we know that we can know the module levels and we structure it out a little bit with adding more software. It's the entire global system. And depending on the level of our customers' interest, we can engage with them in the chip levels, in the module levels, on the system levels. And we just want to provide more. And that's our know-how. We leverage our know-how, leverage on the silicon. I contacted several very, very large companies, they are the leaders in the area.
Ross Seymore: And.
Ross Seymore: Rather than a chip.
Ross Seymore: Just to take a much of our efforts form their hand.
Ross Seymore: And.
Ross Seymore: We do things because we do a silicon we doing silicon and we know that we can northern module levels, and we structured a little bit with the adding of more software market.
Ross Seymore: Pi for all systems.
Ross Seymore: And.
Ross Seymore: Depending on the level of our our customers interest in I can we can engage.
Ross Seymore: With them in a chip levels and a module levels, an assistant levels and we just want to provide more.
Ross Seymore: And thus.
Ross Seymore: Our knowhow, we have leveraged our knowhow leverage on our silicon.
Ross Seymore: <unk>.
Ross Seymore: I contacted several very very large companies.
Ross Seymore: Neither in the area.
Michael Hsing: There's much much welcome to these kind of solutions. They want to work with us.
Speaker Change: As of March Marcia well well comes in that came in to these kind of solutions they want to work with us.
Michael Hsing: and they want to work with us and this is at the very beginning that kind of things we're transforming a company to from a silicon only to a solution company these are the ones and things that we we that's how we from a silicon to module We grow out of the silicon company, then the former modules and okay, we probably stay in the module level. We are never going to sell blinds in the shade, blinds and air conditioning. We are not, these are still in the module levels.
Speaker Change: And they want to work with US and this was at the very beginning.
Speaker Change: That kind of things that we are transforming our company to a farmer select them only up to a solution company. These are the ones.
Speaker Change: So have we.
Speaker Change: That's how we form our silicon to module.
Speaker Change: We grow out of the Silicon company than the former module marketing, we've probably seen a module level, we're never going into <unk>.
Speaker Change: <unk> blinds and shades Brian.
Speaker Change: And air conditioning.
Speaker Change: These.
Speaker Change: These are still in the module levels.
William Stein: Great, thank you.
Great. Thank you.
Chris Caso: Our next question is from Chris Caso of Wolf. Chris, your line is now open. Yes, thank you. First question is with regard to, you know, the power for some of the custom AI projects this year. Could you detail, you know, how significant that is for the enterprise data segment this year? And, you know, maybe some idea of what the content is on that as compared to, you know, the largest customer in So when I look at the opportunities, particularly with AI, the products are only getting higher power and they're getting smaller footprints. And it's that area of innovation where we can help lead our customers to their end solutions in a way that our competitors aren't.
Speaker Change: Our next question is from Chris Caso of Wolf, Chris Your line is now open.
Speaker Change: Thank you.
Speaker Change: First question is with regard to that.
Speaker Change: The power for some of the custom AI projects.
Speaker Change: This year could you detail.
Speaker Change: How significant that is.
Speaker Change: The enterprise data segment this year.
Speaker Change: <unk>.
Speaker Change: Maybe some.
Speaker Change: Idea of what the content is on that as compared to the largest customer in that segment.
Speaker Change: Okay.
Speaker Change: So when I look at the opportunities, particularly with AI.
Speaker Change: The products are only getting higher power and theyre getting smaller footprints and it's the area of innovation, where we can.
Speaker Change: Help lead our customers to their end solutions in a way that.
Speaker Change: Our customer our competitors art.
Michael Hsing: So right now, the market has been dominated with really one main customer. And now as we see the second half of the year in particular, there's going to be a number of new market entrants. And they're all with the same formula. Including a big and small. Yeah. And the small looks like it's going to be a big sucker. And the dollar content is... In half a year, a few hundred million dollars, it's 500, 600 million dollars. It's not unthinkable for half a year.
Speaker Change: So right now the market has been dominated with really one.
Speaker Change: Main customer and now as we see the second half of the year in particular theres going to be a number of new market entrants.
Speaker Change: And they're all with the same formula.
Speaker Change: Big and small.
Speaker Change: And the small.
Speaker Change: Looks like going to be a big okay.
Speaker Change: And.
Speaker Change: The dollar content.
Speaker Change: It's in half of the year as the years a few hundred million dollars came in.
Speaker Change: 500 $600 million.
Speaker Change: These are.
Speaker Change: Not.
Speaker Change: And think of a half full half years, yes.
Chris Caso: Got it.
Speaker Change: Got it.
Michael Hsing: As a follow up question, maybe I'll dig into some of what you talked about on the confidence on the enterprise data as you go through the year. And I guess maybe a little more detail of the why you feel a little more comfortable now as compared to where you were at the beginning of the year. Is it simply a matter of qualifications where you're not qualified on platforms that you may not have been qualified on at the beginning of the year? Is it more confidence with regard to market share on those? Just a little bit of what is driving the confidence for the year as compared to where it was 90 days ago?
Speaker Change: As a follow up question, maybe I'll dig into.
Speaker Change: Someone you talked about on the confidence on the enterprise data as you go through the year end.
Speaker Change: I guess, maybe a little more detail of the why you feel a little more comfortable now as compared to where you were at the beginning of the year is it just simply a matter of qualifications, where youre not qualified on platforms that you may not have been qualified on at the <unk>.
Speaker Change: <unk> of the year.
Speaker Change: Is it.
Speaker Change: More confidence with regard to market share on those just just a little bit of what is driving the confidence for the year as compared to where it was 90 days for the year half of the year.
Michael Hsing: The year is half a year. And now the half a year, almost half a year later, and you'll feel the better, feel good. And it's all going to happen as we're getting closer. And so we see the result as we expected. Yeah, and say that we've got we've got more positive data points that we can look at, but still how that converts in the year. You know, but that's why I mentioned earlier that we're operating within a range of outcomes. Yeah, and just we always one thing we're good at in the look in the past, we're pretty good at it to do as we said.
Speaker Change: And now as a half a year almost half a year later and you'll feel the bad I'll feel good that we're all going to happen.
Speaker Change: As a way of getting closer something okay.
Speaker Change: So we see the results.
Speaker Change: As we expected it to okay.
Speaker Change: Yeah, and I would say that we've got we've got more positive data points that we can look at but still.
Speaker Change: Still how that converts in the year.
Speaker Change: That's why I mentioned earlier that we're operating within a range of outcomes.
Speaker Change: Yeah.
Speaker Change: Just we always one thing we're going to look in the past well, they're pretty good at it.
Speaker Change: As we sit.
Michael Hsing: Yeah.
Michael Hsing: Got it.
Jack Egan: Thank you.
Speaker Change: Got it.
Speaker Change: Thank you.
Jack Egan: Our next question is from Jack Egan of Charter. Jack, your line is now open. Great, thanks so much for taking the question. So I was hoping you could talk a bit about the margin outlook for some of the new accelerators. They're really like a structure. Profile for those products. whether better or for worse. to how that kind of long.
Speaker Change: Our next question is from Jack Egan of charter Jack Your line is now open.
Jack Egan: Great. Thanks, so much for taking the questions.
Jack Egan: So I was hoping you could talk a bit about the margin outlook for some of the new accelerated ramps in the second half and into 'twenty six 'twenty seven is there really like a structural difference in the margin profile for those products going into custom Asics and Gpus versus Gpus, whether better for worse, I mean really just any similarities or.
Jack Egan: Differences as to how that kind of a long term trajectory plays out would be helpful.
Bernie Blegen: I wouldn't say that there's a structural change. Now you have individual opportunities that could be plus or minus. Yeah. So this this market there but there isn't a fundamental change in our margin model because of it. Yeah, NPS operate, we want to operate well within our module, our model, whereas the lower end, and we're very much aware of that. And, and What we want to do is we're not going to a high volume, low margin business. Doesn't matter what area. All these new products I said earlier, we released, okay, we all have a higher margin.
Jack Egan: I wouldn't say that there is a structural change.
Jack Egan: Now you have individual opportunities that could be plus or minus yes.
Jack Egan: So there's this market.
Jack Egan: But there isn't a fundamental change in our margin model because of it.
Jack Egan: Yes, <unk>, we want to operate it.
Jack Egan: Well within our molecule our.
Jack Egan: Model, whereas the low end.
Jack Egan: And we're very much aware of that and.
Jack Egan: And.
Speaker Change: We want to do is we're not going to have higher volumes.
Speaker Change: <unk> low margin business it doesn't matter what area.
Speaker Change: And.
Speaker Change: All of these are new products I'll say the earliest we released it okay. We'll all have a higher margins.
Bernie Blegen: And we want to stay on the best performance. We're not competing on the price.
Speaker Change: <unk>.
Speaker Change: We want to stay on the best performance, we're not competing on the price.
Speaker Change: Okay got it. Thanks, that's helpful and then I guess for my follow up.
Bernie Blegen: Don't forget to awesome that you subscribed! If you kind of strip out monolithic, you know, new design. that, you know, and demand broadly in maybe some of the more downtrodden markets is starting I'm not sure if you can really separate those factors. I think for MPS, it's impossible to strip out the revenue ramps from new products. I know that we've had a competitor or two that have announced that they've seen a bottoming out or potential improvement. Again, our story has to do with the new product revenue ramps. And in particular, we've talked a lot about the second half as far as enterprise data.
Speaker Change: One relates to just the broader analog cycle across end markets.
Speaker Change: If you kind of strip out model with it.
Speaker Change: No new design wins that are ramping and share gains or are you seeing any signals of that.
Speaker Change: And demand broadly and maybe some of the more downtrodden markets is starting to increase I mean I'm not sure. If you can really separate those factors out but.
Speaker Change: If youre looking at markets like automotive and industrial is there anything that gives you confidence that maybe those markets are actually turning around.
Speaker Change: I think for MTS its impossible to strip out the revenue ramps from new products.
Speaker Change: I know that we've had a competitor or two that have been announced that.
Speaker Change: They've seen a.
Speaker Change: <unk> potential improvement.
Speaker Change: Again, our story has to do with the new product revenue ramps and in particular, we've talked a lot about the second half as far as enterprise data.
Michael Hsing: But I don't want to ignore all of the other opportunities in all of our other end markets. So we feel very well positioned, regardless of the macro, for both the second half of this year, as well as the momentum we're carrying into 2026. Yeah, if you know the history, for 21 years as a public company, we only have one year, 2010. We, the year we didn't grow, we missed $3 million. Every year we grow.
Speaker Change: But I don't want to ignore all of the other opportunities in all of our other end markets. So.
Speaker Change: So we feel very well positioned.
Speaker Change: <unk> for the macro for both the second half of this year as well as the momentum we're carrying into 2026 yeah.
Speaker Change: If you know the history for 21 years as a public company, we only have a one year 2010.
Speaker Change: We.
Speaker Change: The year, we Didnt grow mid 3 million every year.
Speaker Change: We grow.
Michael Hsing: Okay, that's super helpful.
Speaker Change: Right. Okay. That's super helpful. Thanks, so much.
Speaker Change: Okay.
Kelsey Chia: Our last question is from Kelsey Chia of City Research. Kelsey, your line is now open. Hi, Michael and Bernie. Thanks for taking my question.
Speaker Change: Our last question is from Kelsey <unk> of Citi Research Kelsey. Your line is now open hi.
Brian: Hi, Michael I'm, Brian Thanks for taking my question.
Kelsey Chia: So I'd like to dive deeper on the gross margin side. So it seems that legacy wafer pricing is trending down and also you're talking about new RAMs in enterprise data and auto. So is there room for gross margin expansion going forward in the second half? Of course, there is room for gross margin expansion. For second half, no. Yeah, we're not going to increase the price for our customers. Okay, for next year, that's very possible. Yeah, yeah. Right.
Brian: So I would like to dive deeper on the gross margin side. So it seems that legacy wafer pricing is trending down and also is that talking about and you ran in <unk>.
Brian: Price data and auto.
Brian: So is there room for gross margin expansion going forward in the second half.
Brian: Of course, there is room for gross margin expansion for second half.
Brian: Yeah, we're not going to increase the price of oil our customer okay for next year.
Brian: Very possibly yeah yeah.
Brian: Hum.
Michael Hsing: And I'll also like to tap into on on the communications and market. So I believe that segment is also benefiting from the AI infrastructure build out. I believe on the optical module side, could you provide more color on those applications? And also, when can we expect, can we expect sort of like a similar ramp to the enterprise data that second half objects? Bye, thanks here. Sure, it was interesting because the way we look at our communications market is we have, obviously, the network telecom exposure, we have, you know, the router, wireless modems, and more recently, we have optical fiber optics.
Brian: And I would also like to tap into an R&D communications end market I believe that segment is also benefiting from the air and fresh I could throw it out.
Brian: I believe on the optical module side could.
Speaker Change: Could you provide more color on those applications and also when can we expect.
Brian: Kind of a similar ramp.
Brian: <unk> enterprise data in the second half uptick.
For this year.
Brian: Sure It was interesting because the.
Brian: The way, we look at our communications market.
Brian: As we have.
Brian: Obviously, they are not where telecom exposure.
Brian: We have the router wireless modems and more recently, we have optical fiber optics, and I would say that when I look at the last two quarters and the outlook for Q2, it's been very balanced.
Michael Hsing: And I would say that when I look at the last two quarters in the outlook for Q2, it's been very balanced. It hasn't been, you know, weighted by any one component. And that's what we're seeing. We already talked about that as far as storage and computing and an automotive in particular. Okay, thank you.
Speaker Change: It hasnt been.
Brian: Weighted by any one component.
Brian: And that's what we're seeing we already talked about that as far as storage of computing and automotive in particular.
Brian: Okay. Thank you.
Brian: Yes.
Bernie Blegen: All right. It concludes our Q&A session.
Brian: Alright.
Bernie Blegen: I'd now like to turn the webinar back over to Bernie. So I'd like to thank you all for joining us on this conference call.
Bernie: It's our Q&A session I would now like to turn the webinar it back over to Bernie.
Bernie Blegen: So I'd like to thank you all for joining US on this conference call I look forward to talking to you again during our second quarter 2025 conference call, which will likely be held in early August.
Bernie Blegen: I look forward to talking to you again during a second quarter 2025 conference call, which will likely be held in early August. So thank you. Have a nice day. All right. Okay.
Bernie: Thank you have a nice day.
Bernie Blegen: Alright, okay.
Bernie Blegen: Goodbye.
Bernie Blegen: Goodbye.