Q2 2025 Monolithic Power Systems Inc Earnings Call
Welcome everyone to the MPS second quarter 2025 earnings webinar.
My name is Arthur Lee and I will be the moderator for this webinar.
The risk, 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 Q2 2025 earnings release, our Q2 2025 earnings commentary, and in our 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 would like to turn the call over to Bernie been
Thanks. Arthur.
Good afternoon, and welcome to our Q2 2025 Monolithic Power Systems Inc. earnings call.
Quarter of 2025 and 31.0 higher percent higher than Q2 2024.
This performance reflected the ongoing strength of our Diversified Market strategy, consistent execution, continued Innovation, and strong customer focus.
Let me call out a few highlights from the second quarter.
We continue to see Diversified Revenue growth across all of our end markets.
We began the initial shipments of our Power Solutions to support our customers new asic-based, AI products.
MPS continues to focus on innovation.
And solving our customers, most challenging problems we continue to invest in new technology.
Expand in the new markets.
Yes, thank you. And congratulations on another record quarter. Um, Michaela. Bernie, I was hoping you could uh uh, talk a little bit more about the September quarter, what the setup is there? You guiding for 8% sequential growth at the midpoint, I was just hoping you could give us uh, some, some puts and takes of the 6 and markets uh, in in the September quarter.
Sure happy to Tori. So um when we look at uh uh Q3, um, we've got Enterprise data, growing between 20 and 30% sequentially. Um, we also see if seasonal uplift in consumer
Um, and then with the, uh, exception of storage and compute all of our other lines of business are up high single digits in storage and compute. We just have a little bit of caution uh primarily because you're coming off a 2, very strong orders in q1 and Q2.
That that's a great caller and, and just as my follow-up, you mentioned, uh, the a AIA Asic programs now, starting to to ramp. Um, I was hoping you could add a little bit more color there. Are we talking about uh, you know, multiple customers, um, or or these primarily vertical, power architectures. And, and, and I guess a really important question is, you know, back at the analysts that you gave us, that 4 billion dollar Sam, uh, for your, uh, Enterprise data market. And there's a lot that's happened since then. Uh, so I was just wondering if, uh, if that number is, uh, starting to move quite a bit upward.
Yeah, uh, you're right. Um,
since the endless days are things are changing fast.
And uh, um
Everything's good.
and uh,
um, after a couple of years of these, uh,
Enterprise, uh, of data segments. And, uh, clearly you establish a a
You you establish a winner or losers, okay? And The NPS is appear to be a winners.
Um,
we have we, we do engage
multiple.
Customers if it's not all large customers or large customers or uh, potential customers like me. And uh, um, we have a lot of design wings.
and design activities and uh, well, they are threatened their in the near terms and uh, um
um,
All also, a lot of small emerging players.
and uh,
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see, the peripheral of not only the in the data centers, but all kind of applications
And that's what we are very excited about in the long term. The short-term ones, and I said a year terms, it doesn't mean to not. Okay, next 6 months, the next 12 months. Okay. I keep saying Zen. Okay, our forecast revenues, and okay, we're in, is always a plus minus.
6 to
12 months.
So you said earlier is a 4 billion dollars, okay? That's what we said that, that's what we see it, and we're going to get there.
Great, thank you and congrats again. Okay, thank you.
Our next question is from Chris Castle. A full research Chris, your line is now open.
Yes thanks. Good evening. Uh I guess the first question is with regard to Enterprise data you know previously you had provided some guidance on that to be flat plus or minus 20%. Um, you've talked about guidance for the September quarter, uh, any any more visibility with regard to the full year guidance for that? Uh uh you know, any any any more narrowing of that range and and you know whatever kind of color you can provide on your expectations there.
Sure, Chris the market is Michael just said remains Dynamic. Um, we have a fairly short lead times.
So even for Q4 uh we don't believe we um have our arms around all the business it's likely to to occur.
Um, so that that's just the, the nature of the dynamic of this fast moving market. So, um, at Q2 we identified, um, the range as being flat to down potentially 20%. Um, and while we're not guiding on Q4, uh, in addition to the uh, you know, growing Q3 sequentially by 20 to 30%, uh, I can say that, uh, Q4 will be up sequentially.
Well, whatever we said in the beginning of the year with pre, we feel comfortable.
Okay, that's that's helpful. Um, you know, just in general, uh, and, you know, you you've, you know, obviously law listened to the calls from from some of your peers that there's, uh, some some degree of of macro uncertainty out there. Um, you know, some of the customers, some of your competitors, rather have expressed some caution and, and some concern about some pullings in certain areas, uh,
I wonder if you could comment on that with respect to your business and in general, you know, as compared to 90 days ago, uh, is, is there anything that's changed in your view, uh, of the overall markets or your expectations with respect to the year?
Well, I'll give you a arrogant answer, sorry. I don't listen to any other cost.
Arthur Lee: Welcome, everyone, to the NPS second quarter 2025 earnings webinar. My name is Arthur Lee, and I will be the moderator for this webinar. Joining me today are Michael Singh, CEO and founder of NPS, Bernie Blegen, EVP and CFO, and Tony Ballou, Vice President of Finance. Earlier today, along with our earnings announcement, NPS released a written commentary on the results of our operations. Both 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 within the meaning of the Private Security Litigation Reform Act of 1995 that involve risk and uncertainties.
Maybe, I don't know from you, so okay. And, uh, um, we focus ourselves as a ...
As always Market conditioning is a market conditions, okay, we've provided the components to the multiple segments. That's, that's where we focus on it and we focus on the internal, uh, internal executions and a secretions with our, uh, customers, uh, demanding in the, in the future. And, uh, so we always do and, uh,
Whatever happens, happens. As long as the web is much better than everybody else.
If I could add to that.
the um, uh,
Arthur Lee: The risk, uncertainties, and other factors that could cause actual results to differ from this forward-looking statement are identified in the safe harbor statements contained in the Q2 2025 earnings release, our Q2 2025 earnings commentary, and in our 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 would like to turn the call over to Bernie Blegen.
Bernie Blegen: Thanks, Arthur. Good afternoon, and welcome to our Q2 2025 earnings call. In Q2, NPS achieved record quarterly revenue of $664.6 million, 4.2% higher than the first quarter of 2025, and 31.0% higher than Q2 2024. This performance reflected the ongoing strength of our diversified market strategy, consistent execution, continued innovation, and strong customer focus. Let me call out a few highlights from the second quarter. We continue to see diversified revenue growth across all of our end markets. We began initial shipments of our power solutions to support our customers' new ASIC-based AI products. Storage and compute revenue grew sequentially off a strong Q1, as we continue to see demand for both memory and notebook power solutions. NPS continues to focus on innovation and solving our customers' most challenging problems.
Kind of helpful. Thank you.
Our next question is from Quinn. Bolton of neon Quinn. Your line is now open.
Bernie Blegen: We continue to invest in new technology, expand into new markets, and to diversify our end market application and global supply chain. This will allow us to capture future growth opportunities, maintain supply chain stability, and swiftly adapt to market changes as they occur. 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. I will now open the webinar up for questions.
Thank you and uh congratulations on another good quarter uh Michael Bernie Tony, I guess, uh, Michael Oher. Bernie just wanted to ask as you start to shift into some of these A6 platforms. Can you give us a sense? Are the ASC platforms? Do they tend to be sourced, uh, by multiple pics suppliers? Or do you tend to see Soul, you know, Soul Source, uh, sockets, you know, for a given generation of an Asic and then the Asic vendor may, you know, Source, the first generation with yourself and say a second generation with a competitor. Um, that's a question. I've gotten a fair amount and so just wondering if you could give us some sense on whether those Asic programs tend to be single sourced or multiple sourced.
uh,
yeah.
we we see, um,
A variety of, I have a sequel sauce that and most double sauce multiple sources.
high cost Source in the low cost sources all sorts and and um,
Arthur Lee: Thank you, Bernie. And let's 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 in the menu bar and then click the right-hand button. Our first question is from Tory Swenberg of Stifel. Tory, your line is now open.
We do we deliver what our customer. We develop. Assisting vertical Powers. Okay. And which is a more module like the, um, Solutions and uh, um, even the, uh, chip site, okay? And uh, we do whatever our customers demand, okay? Maybe I can say that. Okay too big okay Mana. Uh I disappointed that you didn't ask any any more specific technical questions.
Tony Ballou: Yes, thank you, and congratulations on another record quarter. Michael or Bernie, I was hoping you could talk a little bit more about the September quarter, what the setup is there, you guiding for 8% sequential growth at the midpoint. I was just hoping you could give us some puts and takes of the six end markets in the September quarter.
I'll say those for, for analyst day or maybe they call back. Okay? Let let me add real quickly. There is that each of the End customer. Uh,
Bernie Blegen: Sure, happy to, Tory. So when we look at Q3, we've got enterprise data growing between 20% and 30% sequentially. We also see a seasonal uplift in consumer. And then with the exception of storage and compute, all of our other lines of business are up high single digits. In storage and compute, we just have a little bit of caution, primarily because you're coming off of two very strong quarters in Q1 and Q2.
Has their own reasons for, uh, how there there's selecting, uh, their supply suppliers. Uh, some of them, it's supply chain, uh, resilience, uh, others want Innovation. Uh, again like every opportunity we have, uh, we provide, uh, strong customer, focus, and consistent execution. Um so that that's what makes this uh feel that we're very well positioned across all of these opportunities.
Tony Ballou: That's great, Color. And just as my follow-up, you mentioned the AI ASIC programs now starting to ramp. I was hoping you could add a little bit more color there. Are we talking about multiple customers? Are these primarily vertical power architectures? And I guess a really important question is, you know, back at the analyst day, you gave us that $4 billion SAM for your enterprise data market. And there's a lot that's happened since then. So I was just wondering if that number is starting to move quite a bit upward.
Yeah, when I tell you that, when I tell you that high cost and low cost of multiple cuts of 1, 1/2 of the year, what are the biggest drivers of growth? I think you have a couple of platforms with Western, oems set to ramp, where you have some pretty good content. Wondering the extent that those ramps does that right Drive, growth, half over half in the automotive business. Or are you looking for sort of more of a, a flattish app over half in that segment, uh, in in the second half?
Michael Hsing: Yeah, you're right. Since the analyst days, things are changing fast. And everything's good. And after a couple of years of these enterprise data segments, and clearly you establish your winner or losers, okay? And NPS appears to be a winner. We do engage multiple customers. If it's not all large customers, all large customers, all potential customers, like me, we have a lot of design weights and design activities. And while they are threatened ramping up in the near term. And also a lot of small emerging players. And we see the peripheral of not only the data centers, but all kinds of applications. And that's what we are very excited about in the long term. The short-term ones, and I said in the near terms, it doesn't mean to, okay, next six months, the next 12 months, okay?
So automotive and we've been very consistent on how we've described, uh, the, the rollout for uh, calendar. 25 that, uh, we enjoyed a, a, a nice step up uh, sequentially from Q4 to q1. Uh, we anticipated that that would be flattening a little bit, uh, uh, in the middle part of the year and then picking up, uh, end of the, uh, Q3 Q4 as these new content opportunities come online. Um, so while there is some back and forth on the tsar and units, uh, and in particular, uh, with individual companies, we're less affected by that than the timing of these new content.
10 reps.
And uh quit I think just wanted to add on that, right? I know we're hyper focused just on the year but I think if we step back and look longer term into 2026, the opportunities around 48 bold, some of the zonal architectures. I think they continue to be opportunity for us going forward. This will be a growth area for us over the long term.
Thank you. Okay, there's too many things I can't remember. Okay.
Or next question is from Ross Seymour of Deutsche Bank. Ross, your line is now open.
Both 2q and 3Q.
Um,
Michael Hsing: I keep saying, okay, our forecast revenues, okay, it's always a plus minus six to 12 months. So you said earlier, it's a $4 billion, okay? That's what we said, and that's what we see it. And we're going to get there.
Tony Ballou: Great. Thank you, and congrats again.
again, and something that we've talked about, uh, as it relates to Enterprise data is that the lines between traditional CPU and AI are getting a little blurry. Um, so it's it's very hard to uh, make clear, uh, statements of uh, relative growth or importance. Uh, having said that, I think that the overall profile uh,
Michael Hsing: Okay, thank you.
Arthur Lee: Our next question is from Chris Castle of Wolf Research. Chris, your line is now open.
Both for the near-term or mid-term and the long term, uh remains very positive.
Speaker 6: Yes, thanks. Good evening. I guess the first question is with regard to enterprise data. You know, previously, you had provided some guidance on that to be flat, plus or minus 20%. You've talked about guidance for the September quarter, and any more visibility with regard to the full-year guidance for that, you know, any more narrowing of that range, and you know, whatever kind of color you can provide on your expectations there.
Great, I guess as my follow-up, uh, there's been a decent number of concerns about Poland's and tariff related activity. Obviously, you haven't mentioned anything on that, but outside of the Enterprise data segment, when we think about the cyclical recovery that's happening, are you seeing any evidence of of that kind of tariffs, influenced Behavior Andor? Uh, do you think this the cycle itself is really what's driving demand?
Bernie Blegen: Sure, Chris. The market, as Michael just said, remains dynamic. We have fairly short lead times. So even for Q4, we don't believe we have our arms around all the business that's likely to occur. So that's just the nature of the dynamic of this fast-moving market. So at Q2, we identified the range as being flat to down potentially 20%. And while we're not guiding on Q4, in addition to the growing Q3 sequentially by 20% to 30%, I can say that Q4 will be up sequentially.
Uh, we believe the cycle is driving demand. Uh, we really don't have enough information to support, uh, you know, a change in our customers' ordering pattern that would be related to tariffs. We don't want to potentially know that.
Yeah, these are all our controls. Look at me and whatever happens happens.
Perfect. Thank you guys.
Oh, by the way, our inventory is low, Raw.
I didn't want to go there but uh I was nice to see volunteers.
Thank you.
Our next question is from Rick Shaffer of Oppenheimer. Rick, your line is now open.
Michael Hsing: Well, whenever we said it in the beginning of the year, we feel comfortable.
Yes, thanks guys. And congrats on another nice quarter to you guys. You guys make it look easy. Um, I, I, I wanted to ask a quick follow-up on, on the 4 billion Enterprise data. Sam number, I was curious. If that considers the eventual, um, conversion of server CPU to 48 volt. Does that factor that in or is that incremental to that number? And
Speaker 6: Got it. Okay, that's helpful. You know, just in general, and you know, you've obviously listened to the calls from some of your peers that there's some degree of macro uncertainty out there. You know, some of the customers, some of your competitors, rather, have expressed some caution and some concern about some pull-ins in certain areas. I wonder if you could comment on that with respect to your business. And in general, you know, as compared to 90 days ago, is there anything that's changed in your view of the overall markets or your expectations with respect to the year?
second part of that question. I'm curious how much does hvdc, uh, increase. That that Sam or that Tam. And when do you expect, you know, direct current rack power to, to start, you know, really take it off. I think you started sampling last quarter. If I'm correct.
Yeah. Okay. That was a these are the 800 volt systems and the 400 volt systems.
and,
Uh, yes, the West Auto sampling. These are not in the factors and the post. What you mentioned? The 48 volts? Uh, 48 volt. Um,
A servers and also the 48 volt systems are and uh 800 volt system.
Michael Hsing: Well, I'll give you an arrogant answer. Sorry, I don't listen to any other calls. You tell me that. Maybe I learn from you. And we focus ourselves, as always, market condition is a market condition. We provide the components to the multiple segments. That's where we focus on it. And we focus on the internal executions and executions with our customers' demand in the futures. And that's what we always do. And whatever happens, happens. And as long as we're much better than everybody else.
Where this, uh, far in the future. So when we find the Futures, maybe a couple years a year. Um,
18 to 24 months kind of things are, maybe even longer and okay. Uh,
We don't want to call the Market, okay. We are the only solution providers and, uh,
these 1 We Believe ultimately all data centered,
Will convert into this type of a 48 volt and a and a 800 volt systems. And uh that's the what we targeting go down. So we emerge uh and uh um focus. Our our our developments I can not really in the last couple years, we said many years ago since like you even 20
Bernie Blegen: If I could add to that, in Q2, we used the phrase that we were cautiously optimistic about the outlook for the balance of the year. And I think that still describes how we feel from the standpoint that we have seen a broad-based, strong, continued strong demand profile in all of our end markets. However, the ordering pattern, because there is a little bit different risk pattern to remain with short lead times. So as a result, we're not necessarily building backlogs that we have visibility out beyond two quarters. So that's about a little bit different from most recoveries that we've experienced. But again, I want to stress that we feel very good about our overall positioning for the remainder of the year.
16 with 4C 48 volts, that would be the solution and we we became a 1 of the key suppliers in the in that and uh last couple years. Okay.
3 years ago, we start to working working on the, uh, the 800 volts systems.
And, uh, also not, not, not only that. Also, the BMS, uh, the very, uh, Management systems. And uh, these are absolutely fits for that type of application. And uh, um, not only for vehicles, energy storage, and the data centers is all about the energy. Um, uh, utilizations
Speaker 6: Helpful. Thank you.
Arthur Lee: Our next question is from Quinn Bolton of Needham. Quinn, your line is now open.
Eric, the only thing I got to add, I know you're asked a very specific Enterprise data question. But remember we kind of think about the overall data center opportunity and you know, whether that's Optical module growth, whether that's going to be Memory, all those things I think play in as opportunities for us. So I'm just trying to get us to step back a bit from only focusing on the Enterprise data segment.
Speaker 6: Thank you, and congratulations on another good quarter, Michael Bernie and Tony. I guess, Michael or Bernie, just wanted to ask, as you start to shift into some of the basic platforms, can you give us a sense, are the ASIC platforms, do they tend to be sourced by multiple PMIC suppliers, or do you tend to see sole source sockets, you know, for a given generation of an ASIC, and then the ASIC vendor may, you know, source the first generation with yourself and say a second generation with a competitor? That's a question I've gotten a fair amount, and so just wondering if you could give us some sense on whether those ASIC programs tend to be single sourced or multiple sourced.
I know it's not your your largest segment, but
Communication seems to be firing on all cylinders. I mean, satellite Wi-Fi, 5G, and transceiver power that you just mentioned and I didn't know if you guys can elaborate at all or talk at all about order to order Trends order velocities, their outlook for that segment. Like just basically, any color you'd be able to
Their.
Michael Hsing: Yeah, we see a variety of, I would say, co-sourced and double sourced, multiple sourced, high-cost sourced, and low-cost sourced, all sourced. And we do, we deliver what our customer, we develop a system vertical powers, and which is a more module-like solutions, and even chip sites. And we do whatever our customers demand. Maybe I can say that, okay, too vague. I'm disappointed that you didn't ask any more specific technical questions.
Sure. So, if you, if you look at the about a year ago, we saw a uh, large step up uh, from Q2 24 to Q2 of 23. And, uh, a lot of that was, uh, in the core networking Telecom business, um, and that's sort of a plateau that element has plateaued. But at the same time, we saw growth in the optical, uh, modules, uh, within the data center. That's been growing very nicely. So, um, right now, I think that, uh, uh, we're positioned very well, uh, but I don't necessarily have a strong signal of additional investment in in the network, uh, category.
Okay, thanks guys.
Our next question is from Josh Butler of Cohen. Josh, your line is now open.
Speaker 6: I'll save those for analysts there, maybe to call back.
Bernie Blegen: Okay. Let me add real quickly there is that each of the end customers has their own reasons for how they're selecting their suppliers. Some of them, it's supply chain resilience. Others want innovation. Again, like every opportunity we have, we provide strong customer focus and consistent execution. So that's what makes us feel that we're very well positioned across all of these opportunities.
Hey guys, thank you for taking my question and congrats on the record results as well. Um it's my chalky but I'm also going to ask about Enterprise data. Um as we get into the back half of this year, um any metrics or or guidelines you can give us on how much um this new AI Asic is contributing to the back half of the year, how it compares to you know, your lead GPU customer. I mean is this opportunity comparable in size to to what you uh you know you've been able to generate on the the the GPU side. Thank you.
Well, all these questions are being asked, uh, being uh, being similar questions that we all answered. Okay, we're looking
Uh, in the future even in the US and future, looking good.
and uh, and uh, um
But that that's that's only about what 25% of MPS business.
and uh,
Michael Hsing: Yeah, what I tell you is that when I tell you the high cost and low cost, multiple customers, one source, two sources, multiple sources, they all choose, but nothing but choose.
the bigger Revenue growth.
Is the rest of the company.
and uh,
I, I hope we should have a more more question on the, on the rest of the business.
all right, I'll take the
Speaker 6: Okay, got it. And then the second question, I'll move to the automotive end market. Kind of wondering if you guys can give us your outlook for the second half of the year. What are the biggest drivers of growth? I think you have a couple of platforms with Western OEMs set to ramp where you have some pretty good content. Wondering, to the extent that those ramp, does that drive growth half over half in the automotive business, or are you looking for sort of more of a flattish half over half in that segment in the second half?
There, and ask about autos.
Is the auto and enterprise data together? Maybe only 40%.
All right.
Bernie Blegen: So automotive, and we've been very consistent on how we've described the rollout for calendar 25, that we enjoyed a nice step up sequentially from Q4 to Q1. We anticipated that that would be flattening a little bit in the middle part of the year, and then picking up end of the Q3, Q4 as these new content opportunities come online. So while there is some back and forth on the SAR and units, and in particular with individual companies, we're less affected by that than the timing of these new content ramps.
We can take this anywhere. Um, okay, no, I'm just joking after whatever you want to ask with storage and compute. Then I mean you mentioned some caution there into the back half of the year is that sort of an inventory Dynamic and, and you had gained a bunch of Cher. I believe on ddr5 to start the year, is there still more room to run with from that on the share and content side and the DDR side within uh storage and compute? Thank you.
Tony Ballou: And Quinn, I think just wanted to add on that, right? I know we're hyper-focused just on the year, but I think if we step back and look longer term into 2026, the opportunities around 48-volt, some of the zonal architectures, I think they continue to be opportunity for us going forward, and this will be a growth area for us over the long term.
Yeah, Josh. It's an excellent question because we had a very significant step up uh, in our position competitively as well as uh, uh, from revenue, uh, in both storage and notebook. Um, so again the the the the reason that I use the term, uh, cautious is because, um, both in markets, uh, tend to be, um, uh, a different demand profile from like Automotive. Uh, for example and what I mean by that is historically notebooks have always been like consumer and been, uh,
Michael Hsing: Thank you. Okay. There's so many things I can't remember.
Arthur Lee: Our next question is from Ross Seymour of Deutsche Bank. Ross, your line is now open.
Speaker 6: Hi guys, congrats on the quarter and guide. Just wanted to dive first into the enterprise data side. You mentioned in your preamble or the press release that both the AI side and the server side were strong. Can you talk a little bit about any differences between those two growth rates, composition, kind of the breakdown of ED between those in both 2Q and 3Q?
Expansion in Q3. But we had such a atypical seasonality with a buildup in uh, q1 and Q2 that, it just pays to be a little bit cautious there. Likewise on memory, I have nothing to indicate that there. There's a Slowdown or a change of Market positioning. Um, but again it's just that, uh, uh, in in the, in the past they've had historic Bloom and bust Cycles. Um, so that that's the only reason that I'm offering. Now, having said that we were pleasantly surprised in Q2 that the, the results for that particular group came in better than expected.
Yeah, in the auto.
Bernie Blegen: Again, and something that we've talked about as it relates to enterprise data is that the lines between traditional CPU and AI are getting a little blurry. So it's very hard to make clear statements of relative growth or importance. Having said that, I think that the overall profile, both for the near term or midterm and the long term, remains very positive.
We grow significantly this year, right? Yeah, our, our full year results are going to be well above uh what we've been doing 40%. Yeah, we're probably in for the full year will be between 40 to uh 50% growth for the year. Yeah.
That's the reason Bernie has used it. Okay, if you have more cautious, okay, not going to be 100% next quarter. Okay, that's a that's all. It means that relatively what cautious means. Okay, cautious is not expected another. Okay, 50 or percent or higher. Yeah.
Speaker 6: Great. And I guess as my follow-up, there's been a decent number of concerns about pull-ins and tariff-related activity. Obviously, you haven't mentioned anything on that, but outside of the enterprise data segment, when we think about the cyclical recovery that's happening, are you seeing any evidence of that kind of tariff-influenced behavior, and/or do you think the cycle itself is really what's driving demand?
I got it. Thanks, guys. Next quarter's questions on TVs. Okay, all right. Thank you.
Our next question is from Gary moly of Luke capitals. Gary your line is now open.
Hey guys, thanks for taking my question.
Bernie, I appreciate the fact that you don't have a lot of visibility out into the fourth quarter, but.
Bernie Blegen: We believe the cycle is driving demand. We really don't have enough information to support, you know, change in our customers' ordering pattern that would be related to tariffs.
I want to ask about the seasonality of the fourth quarter, typically Q4 might be down what mid single digit percent sequentially. How do you see it shaping up this year?
Michael Hsing: We don't want to potentially know that. Yeah, yeah. These are our controls, and whatever happens, happens.
Speaker 6: Perfect. Thank you, guys.
Michael Hsing: Oh, by the way, our inventory is a little low.
Bernie Blegen: I didn't want to go there, but it was nice to see.
I don't have a seasonality anymore. Yeah, I've got 20 minutes and, you know, okay. I I think Michael said it all there, uh, you know, uh, again, uh, if you look at that historic Trend, and I don't know, the last time we actually fulfilled the, uh, being down, it's in a fairly narrow range. So, I I think, you know, flattish is probably the, the easiest way to describe the Outlook,
Michael Hsing: Thank you.
Helpful. All right. Um,
Arthur Lee: Our next question is from Rick Schafer of Oppenheimer. Rick, your line is now open.
Speaker 7: Yes, thanks, guys, and congrats on another nice quarter. You guys make it look easy. I wanted to ask a quick follow-up on the 4 billion enterprise data SAM number. I was curious if that considers the eventual conversion of the server CPU to 48 volt. Does that factor that in, or is that incremental to that number? And the second part of that question, I'm curious, how much does HVDC increase that SAM or that TAM? And when do you expect, you know, direct current rack power to start, you know, really taking off? I think you started sampling last quarter, if I'm correct.
So, it sounds like you've got plenty of capacity and plenty of inventory. Can you remind us what sort of annual revenue you could support with your internal and external capacity?
Can you confirm you know whether or not the book? The Bill ratio is in fact, you know, trending above parody
Yeah. So 2 separate questions but I'll try to address pretty quickly. I think I I answered a first. Ah, the second part. Our inventory is a lot.
our um, uh,
Current capacity. And we've talked about this in the past.
is to be able to support, uh, $4 billion of revenue.
Michael Hsing: Yeah, okay, now these are the 800 volt systems and 400 volt systems. And yes, we're starting to sample them. These are not in the factors. And both what you mentioned, the 48 volt servers and also the 48 volt systems and the 800 volt system, where it's far in the future, so it might be far in the future, maybe a couple of years, a year, 18 to 24 months kind of things, or maybe even longer. We don't want to call the market. We are the only solution providers. And these ones, we believe ultimately all data centers will convert into this type of a 48 volt and 800 volt systems. And that's what we're targeting, but that's where we emerge and focus our development.
With diversification of uh 50% of that uh outside of China. Um so what we're trying to do is be able to support all of our customers requirements, uh in in in whatever, you know, supply chain profile. They're looking for. Um, when you look at the book to Bill ratio and I commented on this earlier,
That we're having sort of an atypical ordering pattern, when you consider that we we do believe we're uh in the middle of a cyclical recovery. That's very broad-based. And what I mean by that is the ordering patterns are uh much more short-term. We're not building a a book to Bill ratios of like 1.4 1.5 where we'd have uh backlog continuing out into q1 and Q2 of next year.
Year. Um, it's really a more near-term Focus. So with those short lead times uh that that's the only reason I have a little bit of, uh, you know, concern about Q4 and I don't want to you know, uh send a negative signal. It's just that that that's the nature of the demand profile. That's it. I wanted don't want to send a negative.
Michael Hsing: Not only in the last couple of years, we said many years ago, even in 2016, we foresee 48 volts, that would be the solution. And we became one of the key suppliers in that. And the last couple of years, okay, three years ago, we started working on the 800 volt systems. And also, not only that, also the BMS, the battery management systems. And these are absolutely fit for that type of application. And not only for vehicles, energy storage, and the data center, it's all about the energy utilizations.
Thing, uh, signal either for the, uh, low inventories and, okay, we don't, we are expanding our supply chains. Yeah. And, uh, um, we can meet it in Q4 and, uh, our customer demand and, uh, and the for.
for next year's we start to talk about even now since like okay we're continuously qualifying, the new
The newer supply and, uh, um.
Whenever it takes.
To meet the customer demand.
That's what we always do.
The only thing I'd add, I don't know if it was part of your question. Was in addition to the overall capacity, the geographical uh, balance of it. But what we said is we would buy the end of the year, have half of that capacity outside of China half of it inside. And to Michael's point we just want to be able to and believe we can meet customer demand, no matter how they want to Route their product.
Thank you guys.
Tony Ballou: Hey, Rick, do you want to add? I know you asked a very specific enterprise data question, but remember, we kind of think about the overall data center opportunity. And you know, whether that's optical module growth, whether that's going to be memory, all those things, I think, play in as opportunities for us. So I'm just trying to give us the step back a bit from only focusing on the enterprise data segment.
Our next question is from Kelsey Chia a city research, Kelsey your line is now open.
Hi Michael. I'm Bernie congrats on a strong results.
Speaker 7: No, I appreciate that, Tony. And that actually leads me to my second question, which is, I know it's not your largest segment, but communication seems to be firing on all cylinders. I mean, satellite, Wi-Fi, 5G, and the transceiver power that you just mentioned. And I didn't know if you guys could elaborate at all or talk at all about order trends or velocities there, outlook for that segment, like just basically any color you'd be able to share there.
Um, so I have a question on customer concentration, so, it's great to hear that you guys are shipping to the A6 platforms. So does it mean that you know MPS sort of back to the historical kind of Diversified growth where there's no 1 customer? That's more than 5% of your sales by the end of the year.
Or is the A6 Ram sort of lumpy as well, that can sort of tilt that kind of customer concentration.
Bernie Blegen: Sure. So if you look at about a year ago, we saw a large step up from Q2 '24 to Q2 of '23. And a lot of that was in the core networking telecom business. And that sort of plateaued, that element has plateaued, but at the same time, we saw growth in the optical modules within the data center that's been growing very nicely. So right now, I think that we're positioned very well, but I don't necessarily have a strong signal of additional investment in the network category.
Particularly in Enterprise data. Uh, that was an aberration from our normal model of being, you know, broadly Diversified, uh, in terms of customers and markets and geography. Um, so I think now that, uh, uh, the portfolio of Market, uh, entrance is starting to build up and we're have exposure to all of those opportunities. Uh, you'll see us go back to a more normal profile of a customer is not, you know, uh, contributing more than, uh, uh, mid mid, High single digits.
Okay, got it. Um, my second question.
Speaker 7: Okay, thanks, guys.
Arthur Lee: Our next question is from Josh Buchalter of Cohen. Josh, your line is now open.
Speaker 6: Hey guys, thank you for taking my question. Congrats on the record results as well. My jockey, but I'm also going to ask about enterprise data. As we get into the back half of this year, any metrics or guidelines you can give us on how much this new AI ASIC is contributing to the back half of the year, how it compares to your lead GPU customer? I mean, is this opportunity comparable in size to what you've been able to generate on the GPU side? Thank you.
The growth rate. So it seems that you know the analog industry has sort of been going through a downturn in the last 2 years and you know, potentially for 2026 we could see pretty strong growth due to the cyclical recovery. Um, and you guys have a 10 to 15% outperformance Target versus peers. So that would imply sort of like a close to a 20%, um, growth rate. Um, perhaps for next year is that a right assumption. And if you can provide some color as to which end markets would be driving majority of that growth.
Based on the content or design wins.
Michael Hsing: Well, all these questions are being asked, being similar questions that we all answer. Okay, we're looking in the future, even the near-term future looking good. And that's only about what, 25% of NPS business? And the bigger revenue growth in the rest of our company. And I hope we should have more questions on the rest of our business.
Sure. I I I think that, uh, your rule of thumb as far as our traditional outperformance and also, um, what the broader Market looks like, uh, for, uh, 26 are both accurate. Um, so I think within, you know, plus minus a couple percentage points, uh, I, I, I can support that those numbers. Um, again, as far as the particular End Market drivers for next year, um, it it's, we, we believe it's going to be broad-based. Although with all of the, uh, Enterprise data opportunities ramping, uh, next year, that will probably be a key contributor.
Thank you.
Thank you very much.
Our next question is from William Stein of Truth, William your line is now open.
Uh, great, thanks for taking my question. Um,
Speaker 6: All right, I'll take the sudden hint there and ask about autos.
Michael Hsing: Oh, the auto is the autos and the enterprise data add together, maybe only 40%. How about something else?
Speaker 6: Okay. All right, I think I'll do the storage and compute then. Yeah, we can take this anywhere.
First, I wanted to clarify about the short lead times in the ordering patterns. Is it fair to say that the only thing that's really going to cause that to stabilize and lengthen is your extending the lead times that you quote to customers? Which, likewise, is sort of difficult, as long as revenue is...
Michael Hsing: No, I'm just joking. Ask whatever you want to ask.
You know, fairly meaningfully Blow, Your Capacity levels, that that fair way to think about it.
Speaker 6: Well, I'm going to stick with storage and compute then. I mean, you mentioned some caution there into the back half of the year. Is that sort of an inventory dynamic? And you had gained a bunch of share, I believe, on DDR5 to start the year. Is there still more room to run from that on the share and content side on the DDR side within storage and compute? Thank you.
Yeah, I don't know. It's a it's a
Correct. Mechanical calculation is the meaningfully below our capacities and okay. I don't know. That's the accurate statement or not.
but,
uh, it's
Bernie Blegen: Yeah, Josh, that's an excellent question because we had a very significant step up in our position competitively, as well as from revenue in both storage and notebook. So again, the reason that I use the term cautious is because both end markets tend to be a different demand profile from like automotive, for example. And what I mean by that is historically, notebooks have always been like consumer and then expansion in Q3. But we had such an atypical seasonality with a buildup in Q1 and Q2 that it just pays to be a little bit cautious there. Likewise, on memory, I have nothing to indicate that there's a slowdown or a change of market positioning. But again, it's just that in the past, they've had historic boom and bust cycles. So that's the only reason that I'm offering.
Overalls, it's a fast-changing market.
And uh, customers updating their models. Okay? We have just keep it up.
Yeah, yeah. I I think we're being responsive to real demand 1 thing we haven't touched on. Um, is that our Channel inventories uh, in each of the GEOS major GEOS for us uh are down in the quarter. So they're they're also very lean. So right now we believe we're meeting real customer demand.
Got it. That's great. Oh, by the way, uh, Michael, what I meant was comparing the...
Um, Revenue guidance Revenue results and guidance relative to a 4 billion level of capacity. There's a gap there, right? So that, that's all I know. Oh yeah, yeah yeah. Wasn't a criticism. It was Oh Yeah, Yeah, Yeahs 4,
4 Billings in. Okay. And it's not only for. Yeah. I mean, it's for Enterprise. Okay. These are
These are Web building capacity towards to it.
It's a, that's the process.
Uh, and the other thing I wanted to ask about was, uh, to comment on, um,
Bernie Blegen: Now, having said that, we were pleasantly surprised in Q2 that the results of that particular group came in better than expected.
Michael Hsing: Yeah, and although we grow significantly this year, right?
Bernie Blegen: Yeah, our full-year results are going to be well above what we've been doing.
Michael Hsing: 50%?
The product development and revenue trajectory in 3 areas that you've, um, you've highlighted in the past as sort of unique growth opportunities 1 is modules. The other is converters, uh, D-Day and a, to d converters, so, I think you hired a team. A couple years ago, we haven't heard that much about it in the other is emotion, which I know is ramped.
Bernie Blegen: Yeah, we're probably in, for the full year, we'll be between 40 to 50% growth for the year.
But I I wonder how meaningful that's become relative to your overall. Thank you very much.
Michael Hsing: Yeah. And that's the reason Bernie asked you to feel more cautious. Okay, not going to be 100% next quarter. Okay, that's what we mean. So relatively, what cautious means. Okay, cautious is not expected another 50% or higher.
Thank you very much, okay.
Uh, first thing, the e-commerce is the kind of flop. All right, that's kind of what's in the waiting that I I answer your question. That that part of your question is a few
Speaker 6: Yeah. Got it. Thanks, guys. Next quarter's questions on TV.
The module business is really growing, other than in the enterprise data.
Michael Hsing: Okay. All right, thank you.
Arthur Lee: Our next question is from Gary Mobley of Loop Capital. Gary, your line is now open.
Speaker 6: Hey guys, thanks for taking my question. Bernie, I appreciate the fact that you don't have a lot of visibility out into the fourth quarter, but I want to ask about the seasonality of the fourth quarter. Typically Q4 might be down what, mid-single-digit percent sequentially? How do you see it shaping up this year?
And uh, Industrials, okay? And uh, uh, industrial sites. Even consumers sites. I'm not. Okay. And uh, um, we offer those solutions that that are our customers doesn't want to get into the detail design.
And we provide a solution for them.
and uh,
these are revenues that
Michael Hsing: I don't have a seasonality anymore.
Bernie Blegen: I think Michael said it all there. You know, again, if you look at that historic trend, and I don't know the last time we actually fulfilled the being down, it's in a fairly narrow range. So I think, you know, flattish is probably the easiest way to describe the outlook.
Next year is about 10% to 15% of our total revenues. Okay, other than the Enterprise data, uh, uh, Power modules.
and uh,
These are actually the very much related um, to what we provide assisting Solutions.
Speaker 6: Helpful. All right. So it sounds like you've got plenty of capacity, plenty of inventory. Can you remind us what sort of annual revenue you can support with your internal and external capacity? And can you confirm, you know, whether or not the book-to-bill ratio is, in fact, you know, trending above parity?
and uh, so we're transforming a companies as Bernie said earlier, so we
assisting providers.
A solution provider. And, uh, that's what our customer wants if they want to chip. Also, we provide checks and.
and uh, um
The same time is the help of NPS the revenue growth. We're not, depending on only selling chip.
Bernie Blegen: Yeah, so two separate questions, but I'll try to address pretty quickly.
Michael Hsing: I think I answered the first, the second part. Our inventory is a lot.
Bernie Blegen: Yeah. Our current capacity, and we've talked about this in the past, is to be able to support $4 billion of revenue with diversification of 50% of that outside of China. So what we're trying to do is be able to support all of our customers' requirements in whatever, you know, supply chain profile they're looking for. When you look at the book-to-bill ratio, and I commented on this earlier, that we're having sort of an atypical ordering pattern when you consider that we do believe we're in the middle of a cyclical recovery that's very broad-based. And what I mean by that is the ordering patterns are much more short term. We're not building book-to-bill ratios of like 1.4, 1.5, where we'd have backlog continuing out into Q1 and Q2 of next year. It's really a more near-term focus.
A few years ago, I'm talking about, I'm a pilot. I'm selling chips. Only 10. Okay. And we, that's where our revenue goes, okay? And the other things you're talking about.
Uh, data converter, the well data converter, the the the the data coverage is kind of slow moving. So not a. And the way we are releasing a standard product for that. Okay. And um,
For.
Pony some billion dollar uh uh 2 billion dollars of revenues. I
Maybe contributes very little to like me. And that doesn't uh, will not move the needles but
but as a product, um,
And in the product categories that provide a total solution, that's a part of the picture.
That really benefits the Topline growth on the, on the, on the, in terms of a Solutions.
um,
emotions.
and uh, um
Bernie Blegen: So with those short lead times, that's the only reason I have a little bit of, you know, concern about Q4. And I don't want to, you know, send a negative signal. It's just that that's the nature of the demand profile.
Finally.
We're going to need them moving.
And it's been for a while.
um,
Michael Hsing: That's right. I don't want to send a negative signal either for the low inventory. We don't, we are expanding our supply chains. Yeah, and we can meet it in Q4 and our customer demand. And for next year's, we start to, even now, we continuously qualify the new supply and whatever it takes to meet the customer demand. That's what we always do.
we get so over about 100, some million dollars. Okay. Me and uh, in the in the past few years like a and they're not too
Bad and okay. It's a slow day MPS, total growth okay but
now, robot
and,
We see it, AI driven.
Robotics.
Will be okay, we see a lot of opportunities, okay? And a lot of potential to grow in in the next couple years.
and uh, we provide, uh,
We provide the total AI power, and we, uh, well, uh, not only...
Speaker 6: The only thing I'd add, I don't know if it was part of your question, was in addition to the overall capacity, the geographical balance of it. And what we said is we would, by the end of the year, have half of that capacity outside of China, half of it inside. And to Michael's point, we just want to be able to, and believe we can, meet customer demand no matter how they want to route their product.
AI power. We provide the, um,
All the actuators.
actually the uh Solutions and the motion controls and as well as the
as a as a as a barrier, uh,
Bernie Blegen: Thank you, guys.
Arthur Lee: Our next question is from Kelsey Chia of City Research. Kelsey, your line is now open.
As a BMS Solutions, okay? These are all combining all all together. The the motion will grow the long, um, a lot faster than the, than the in a, in a past few years.
Thank you.
Speaker 8: Hi, Michael, and Bernie, congrats on those strong results. So I have a question on customer concentration. So it's great to hear that you guys are shipping to the ASIC platforms. So does it mean that, you know, NPS sort of back to the historical kind of diversified growth where there's no one customer that's more than 5% of your sales by the end of the year? Or is the ASIC RAM sort of lumpy as well that can sort of tilt that kind of customer concentration?
Thank you.
If there are any follow-up questions, please raise your hand.
Bernie Blegen: Yeah, I think that when we had the high customer concentration, particularly in enterprise data, that was an aberration from our normal model of being, you know, broadly diversified in terms of customers and markets and geography. So I think now that the portfolio of market entrants is starting to build up and we have exposure to all of those opportunities, you'll see us go back to a more normal profile of customers not, you know, contributing more than mid-high single digits.
There are no further questions. I'd like to uh uh just say a few closing comments. Uh, I'd like to thank you for all joining us this conference call. I look forward to talking again during the third quarter 2025 conference call which will likely be held in late October. Thank you. Have a nice day.
Speaker 8: Okay, got it. My second question is on the growth rate. So it seems that, you know, the animal industry has sort of been going through a downturn in the last two years. And, you know, potentially for 2026, we could see pretty strong growth due to the cyclical recovery. And you guys have a 10 to 15% outperformance target versus peers. So that would imply sort of like a close to a 20% growth rate, perhaps for next year. Is that a right assumption? And if you can provide some color as to which end markets would be driving the majority of that growth based on the content or design wins.
Bernie Blegen: Sure, I think that your rule of thumb as far as our traditional outperformance and also what the broader market looks like for '26 are both accurate. So I think within, you know, plus minus a couple percentage points, I can support those numbers. Again, as far as the particular end market drivers for next year, we believe it's going to be broad-based, although with all of the enterprise data opportunities ramping next year, that will probably be a key contributor.
Speaker 8: Thank you. Thank you very much.
Arthur Lee: Our next question is from William Stein of Truce. William, your line is now open.
Speaker 6: Great, thanks for taking my question. First, I wanted to clarify about the short lead times and ordering patterns. Is it fair to say that the only thing that's really going to cause that to stabilize and lengthen is your extending the lead times that you quote to customers, which likewise is sort of difficult as long as revenue is, you know, fairly meaningfully below your capacity level? Is that a fair way to think about it?
Michael Hsing: Yeah, I don't know if it's a correct categorization is meaningfully below our capacities. And I don't know if that's an accurate statement or not. But overall, it's a fast-changing market. And customers are updating their models. Okay, we have just kept it up.
Bernie Blegen: Yeah, I think we're being responsive to real demand. One thing we haven't touched on is that our channel inventories in each of the major geos for us are down in the quarter. So they're also very lean. So right now, we believe we're meeting real customer demand.
Speaker 6: Got it. That's great. Oh, by the way, Michael, what I meant was comparing the revenue results and guidance relative to a 4 billion level of capacity. There's a gap there, right? So that's all I meant.
Michael Hsing: Oh, yeah.
Speaker 6: Yeah, it wasn't a criticism.
Michael Hsing: Oh, yeah, you have four billions. And okay, and it's not only for, yeah, it's for enterprise. Okay, these are we're building capacity towards to it. That's the process.
Speaker 6: Got it. And the other thing I wanted to ask about was to comment on the product development and revenue trajectory in three areas that you've highlighted in the past as sort of unique growth opportunities. One is modules. The other is converters, D-Day and ADD converters. I think you hired a team a couple of years ago. We haven't heard that much about it. And the other is emotion, which I know has ramped, but I wonder how meaningful that's become relative to your overall.
Michael Hsing: Thank you very much. Thank you very much. Okay. First thing is that e-commerce is kind of flawed, right? Okay, I want to know when I answer your question. That part of your question a few quarters ago, okay? But the good news is that the module business is really growing, other than in the enterprise data and industrials, okay, and industrial size, even consumer size. And we offer those solutions that our customer doesn't want to get into the detail design. And we provide a solution for them. And these are revenues that next year is about 10 to 15% of our total revenues, okay, other than the enterprise data power modules. And these are actually very much related to when we provide assistant solutions. And so we're transforming our companies, as Bernie said earlier, to be assistant providers, solution providers. And that's what our customer wants.
Michael Hsing: If they want a chip, also we provide chips. And at the same time, to help NPS revenue growth, we're not depending on only selling chips. A few years ago, I'm talking about I'm tired of selling chips only. And that's where our revenue grows. Okay. And the other things you're talking about.
Bernie Blegen: Data converter.
Michael Hsing: Well, data converter. The data converter is kind of slow-moving. And we're releasing a standard product for that. Okay. And for only some billion dollars, $2 billion dollars revenues, I maybe contribute very little, and it doesn't move the needles. But as a product in the product categories, that provides a total solution. That's a part of the picture. That really benefits the top line growth in terms of solutions. Emotions. And finally, we get a needle moving. And it's been for a while. We get over about $100 million, okay, in the past few years. And they're not too bad. It's slower than the NPS total growth. Okay. But now, robotics. And we see AI-driven robotics will be, okay, we see a lot of opportunities and a lot of potential to grow in the next couple of years. And we provide the total AI power.
Michael Hsing: And well, not only AI power, we provide all the actuators, actuator solutions, and motion controls, and as well as a battery, as a BMS solution. These all combine all together, the motion will grow a lot faster than in the past few years.
Speaker 6: Thank you.
Bernie Blegen: If there are any follow-up questions, please raise your hand. If there are no further questions, I'd like to just say a few closing comments. I'd like to thank you for all joining us this conference call. I look forward to talking to you again during the third quarter 2025 conference call, which will likely be held in late October. Thank you. Have a nice day.
Speaker 8: Goodbye.