Monolithic Power Systems Q4 2025 Monolithic Power Systems Inc Earnings Call | AllMind AI Earnings | AllMind AI
Q4 2025 Monolithic Power Systems Inc Earnings Call
Arthur Lee: Welcome everyone to the NPS Q4 2025 earnings webinar. My name is Arthur Lee, and I'll be the moderator for this webinar. Joining me today are Michael Hsing, CEO and founder of NPS; Bernie Blegen, EVP and CFO; Rob Dean, Corporate Controller; 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'd 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 uncertainties.
Arthur Lee: Welcome everyone to the NPS Q4 2025 earnings webinar. My name is Arthur Lee, and I'll be the moderator for this webinar. Joining me today are Michael Hsing, CEO and founder of NPS; Bernie Blegen, EVP and CFO; Rob Dean, Corporate Controller; 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'd 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 uncertainties.
Speaker #1: earnings announcement, MPS released Earlier today, along with our everything commentary on the results of our operations, both documents can be found on our website.
Speaker #1: everyone that in the course of today's Before we begin, I'd like to remind presentation, we may make forward-looking statements and projections within the meaning of the private securities litigation reform act of 1995 that involved risk and uncertainties.
Arthur Lee: The 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 Q4 2025 earnings release, our Q4 2025 earnings commentary, and in our SEC filings, including our Form 10-K and Forms 10-Q, which can be found on our website. Our statements are made as of today, and we assume no obligation to update this information. Now, I'd like to turn the call over to Tony.
Arthur Lee: The 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 Q4 2025 earnings release, our Q4 2025 earnings commentary, and in our SEC filings, including our Form 10-K and Forms 10-Q, which can be found on our website. Our statements are made as of today, and we assume no obligation to update this information. Now, I'd like to turn the call over to Tony.
Q4 2025 Monolithic Power Systems Inc Earnings Call
Speaker #1: factors that could cause actual results The risk, uncertainties, and other to defer from these forward-looking statements are identified in the safe harbor statements contained in the Q4 2025 earnings release, our Q4 2025 earnings commentary, and in our SEC filings, including our form 10-K and forms 10-Q, which can be found on our website.
Speaker #1: Our statements are made as of today, and we assume no obligation to update this information. Now, I'd like to turn the call over to
Speaker #2: Thanks, Q4 2025 earnings call. Today, we made an Tony. announcement that after 15 years at MPS and 10 as the CFO, Bernie will be retiring.
Tony Balow: Thanks, Arthur. Good afternoon and welcome to our Q4 2025 Earnings Call. Today we made an announcement that after 15 years at NPS and 10 as the CFO, Bernie will be retiring. Before we begin our prepared remarks, I'd like to turn the webinar over to him for his thoughts on his time at NPS and the transition ahead. Bernie?
Tony Balow: Thanks, Arthur. Good afternoon and welcome to our Q4 2025 Earnings Call. Today we made an announcement that after 15 years at NPS and 10 as the CFO, Bernie will be retiring. Before we begin our prepared remarks, I'd like to turn the webinar over to him for his thoughts on his time at NPS and the transition ahead. Bernie?
Speaker #2: Arthur. Good afternoon and welcome to our
Speaker #2: our prepared remarks, I'd like to turn the webinar over to him for his thoughts on his time Before we begin at MPS and the transition
Speaker #2: ahead. Bernie? Thanks,
Bernie Blegen: Thanks, Tony. As I was preparing for today, I realized that this is my 40th earnings call as NPS's CFO. That's a nice round number to finish up with. It's been my pleasure and honor to have worked closely with Michael for so long, and to have been a part of NPS's leadership team. I want to thank our investors and analysts for the trust you placed in me. It is natural for all businesses to go through cycles. Your support has been consistent regardless of the circumstances, and I have greatly appreciated it. As I look ahead, NPS's prospects remain bright. With our unique culture, our dedicated employees, and a fantastic portfolio of products, NPS is well positioned to sustain the broad-based growth you've come to expect from us during the last 10 years.
Bernie Blegen: Thanks, Tony. As I was preparing for today, I realized that this is my 40th earnings call as NPS's CFO. That's a nice round number to finish up with. It's been my pleasure and honor to have worked closely with Michael for so long, and to have been a part of NPS's leadership team. I want to thank our investors and analysts for the trust you placed in me. It is natural for all businesses to go through cycles. Your support has been consistent regardless of the circumstances, and I have greatly appreciated it. As I look ahead, NPS's prospects remain bright. With our unique culture, our dedicated employees, and a fantastic portfolio of products, NPS is well positioned to sustain the broad-based growth you've come to expect from us during the last 10 years.
Speaker #3: for today, I realized that this is Tony. As I was preparing my 40th earnings call as MPS's CFO. That's a nice round number to finish up with.
Speaker #3: It’s been my pleasure and honor to work closely with Michael for so long. And to have been a part of MPS’s leadership team, I want to thank our investors and analysts for the trust you placed in me.
Speaker #3: through cycles, but It is natural for all businesses to go your support has been consistent regardless of the circumstances. And I have greatly appreciated it.
Speaker #3: I look ahead, As MPS's prospects remain bright with our unique culture, our dedicated employees, and a fantastic portfolio of products. MPS is well positioned to sustain the broad-based growth you've come to expect from us during the last 10 years.
Bernie Blegen: I have a lot of confidence in the team I am transitioning my responsibilities to, starting with Rob Dean, who will be our interim CFO. While many of you may not know Rob, we have been partners in this enterprise for the last nine years. Like my predecessor and for myself, Rob continues the NPS tradition of transitioning from NPS's controllership to CFO. This ensures a lot of continuity in the role. Likewise, I will remain with the company to support a successful transition. Rob, would you like to say a few words?
Bernie Blegen: I have a lot of confidence in the team I am transitioning my responsibilities to, starting with Rob Dean, who will be our interim CFO. While many of you may not know Rob, we have been partners in this enterprise for the last nine years. Like my predecessor and for myself, Rob continues the NPS tradition of transitioning from NPS's controllership to CFO. This ensures a lot of continuity in the role. Likewise, I will remain with the company to support a successful transition. Rob, would you like to say a few words?
Speaker #3: the team. I am transitioning my responsibilities I have a lot of confidence in too. Starting with Rob Dean, who will be our interim CFO.
Speaker #3: know Rob, we have been partners While many of you may not in this enterprise for the last nine years. And like my predecessor and for myself, Rob continues the MPS tradition of transitioning from MPS's controllership to CFO.
Speaker #3: ensures a lot of continuity in the role. Likewise, I will remain with the company to support a This successful transition. Rob, would you like to say a few words?
Rob Dean: Yes. Thanks, Bernie, and I'm grateful to you and Michael for this opportunity to continue the tradition and to have been part of the NPS finance team while you have been CFO. I know I speak for the entire finance team, and I thank you, Bernie, for everything you've done over the last 15 years. He's not only helped guide the business to consistent growth and execution, but he's grown a great team around him. I've worked closely with Michael and the executive team for close to a decade. We've developed a strong relationship, which I expect to continue as we grow the company and take on the opportunities ahead. I appreciate the confidence they have placed in me in this new role. I look forward to meeting all of you in the coming days and weeks. With that, I'll pass it over to Tony.
Rob Dean: Yes. Thanks, Bernie, and I'm grateful to you and Michael for this opportunity to continue the tradition and to have been part of the NPS finance team while you have been CFO. I know I speak for the entire finance team, and I thank you, Bernie, for everything you've done over the last 15 years. He's not only helped guide the business to consistent growth and execution, but he's grown a great team around him. I've worked closely with Michael and the executive team for close to a decade. We've developed a strong relationship, which I expect to continue as we grow the company and take on the opportunities ahead. I appreciate the confidence they have placed in me in this new role. I look forward to meeting all of you in the coming days and weeks. With that, I'll pass it over to Tony.
Speaker #4: continue the tradition and to have been part of the Yes. Thanks, Bernie. And I'm grateful to you and Michael for this opportunity to MPS finance team while you have been CFO.
Speaker #4: I know I speak for the entire finance team, and I thank you, Bernie, for everything you've done over the last 15 years. You've not only helped guide the business to consistent growth and execution, but you've grown a great team around him.
Speaker #4: I've worked closely with Michael and the executive team for close to a decade. We've developed a strong relationship, which I expect to continue as we grow the company and take on the opportunities ahead.
Speaker #4: I appreciate the confidence they have placed in me in this new role. I look forward to meeting all of you in the coming days and weeks.
Speaker #4: With that, I'll pass it over to
Speaker #4: Tony. Thanks,
Tony Balow: Thanks, Rob. I'll now move to our prepared remarks before going to Q&A. In 2025, NPS posted its 14th consecutive year of growth with a full-year revenue of $2.8 billion, up 26.4% from 2024. For Q4 2025, we had a record quarterly revenue of $751.2 million, 1.9% above Q3 2025, and 20.8% higher than the fourth quarter of 2024. This performance reflected our consistent execution, continued innovation, and relentless customer focus. Let me call out a few highlights from 2025. Our non-enterprise data and markets grew by over 40% year-over-year, showcasing the strength of our diversified business model. We achieved our milestone of securing more than $4 billion of geographically balanced capacity and continued to add additional supply chain partners to support future growth. We had record module revenue and positioned ourselves for a further shift to solutions by sampling our 800-volt power solution for data center.
Tony Balow: Thanks, Rob. I'll now move to our prepared remarks before going to Q&A. In 2025, NPS posted its 14th consecutive year of growth with a full-year revenue of $2.8 billion, up 26.4% from 2024. For Q4 2025, we had a record quarterly revenue of $751.2 million, 1.9% above Q3 2025, and 20.8% higher than the fourth quarter of 2024. This performance reflected our consistent execution, continued innovation, and relentless customer focus. Let me call out a few highlights from 2025. Our non-enterprise data and markets grew by over 40% year-over-year, showcasing the strength of our diversified business model. We achieved our milestone of securing more than $4 billion of geographically balanced capacity and continued to add additional supply chain partners to support future growth. We had record module revenue and positioned ourselves for a further shift to solutions by sampling our 800-volt power solution for data center.
Speaker #2: before going to Rob. I will now move to our prepared remarks Q&A. In 2025, MPS posted its 14th consecutive year of growth with a full year revenue of $2.8 billion, up 26.4% from 2024.
Speaker #2: 2025, we had a record quarterly revenue For Q4 of $751.2 million, 1.9% above Q3 2025, and $20.8% higher than the fourth quarter of 2024.
Speaker #2: reflected our consistent This performance execution, continued innovation, and relentless customer focus. Let me call out a few highlights from 2025. Our non-enterprise data and markets grew by over 40% year over year, showcasing the strength of our diversified business model.
Speaker #2: We achieved our milestone of securing more than $4 billion of geographically balanced capacity and continue to add additional supply chain partners to support future growth.
Speaker #2: We had record module revenue and positioned ourselves for a further shift to solutions by sampling our 800-volt power solution for data center. In automotive, we launched solutions for 48-volt and zonal architectures including the first fully integrated 48-volt EFUs and a kilowatt-level zonal controller that will support growth in 2026 and beyond.
Tony Balow: In automotive, we launched solutions for 48-volt and zonal architectures, including the first fully integrated 48-volt eFuses and a kilowatt-level zonal controller that will support growth in 2026 and beyond. We expanded our customer base and data center for power solutions across AI, server, memory, optical modules, and switch applications with leading-edge current density, power efficiency, and packaging. I am also pleased to announce that our quarterly dividend will increase 28% to $2 per share. For the three years ending with December 2025, NPS has returned over 72% of free cash flow to stockholders through share repurchases and dividends. Our proven long-term growth strategy remains intact as NPS focuses on innovation and solving our customers' most challenging problems. We continue to invest in new technology, expand into new markets, and to diversify both our end-market applications and global supply chain.
Tony Balow: In automotive, we launched solutions for 48-volt and zonal architectures, including the first fully integrated 48-volt eFuses and a kilowatt-level zonal controller that will support growth in 2026 and beyond. We expanded our customer base and data center for power solutions across AI, server, memory, optical modules, and switch applications with leading-edge current density, power efficiency, and packaging. I am also pleased to announce that our quarterly dividend will increase 28% to $2 per share. For the three years ending with December 2025, NPS has returned over 72% of free cash flow to stockholders through share repurchases and dividends. Our proven long-term growth strategy remains intact as NPS focuses on innovation and solving our customers' most challenging problems. We continue to invest in new technology, expand into new markets, and to diversify both our end-market applications and global supply chain.
Speaker #2: customer base in data center for power solutions across AI, server, memory, optical modules, and We expanded our switch applications with leading-edge current density, power efficiency, and packaging.
Speaker #2: I am also pleased to announce that our quarterly dividend will increase 28% to $2.00 per share. For the three years ending with December 2025, MPS has returned over 72% of free cash flow to stockholders through share repurchases and dividends.
Speaker #2: Our proven long-term growth strategy remains intact as MPS focuses on innovation and solving our customers' most challenging problems. We continue to invest in new technology, expand into new markets, and to diversify both our end market applications and global supply chain.
Speaker #2: This will allow us to capture future growth opportunities, maintain supply chain stability, and quickly adapt to market changes as they
Tony Balow: This will allow us to capture future growth opportunities, maintain supply chain stability, and quickly adapt to market changes as they occur. I will now open the webinar for questions.
Tony Balow: This will allow us to capture future growth opportunities, maintain supply chain stability, and quickly adapt to market changes as they occur. I will now open the webinar for questions.
Speaker #2: occur. I will now open the webinar for questions.
Arthur Lee: Thank you, Tony. 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. Our first question is from Chris Caso of Wolfe Research. Chris, your line is now open.
Arthur Lee: Thank you, Tony. 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. Our first question is from Chris Caso of Wolfe Research. Chris, your line is now open.
Speaker #1: I would now like to begin our Q&A Thank you, Tony. And Liz, 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 #1: Our first question is from Chris Casso of Whoof Research. Chris, your line is now
Speaker #1: open. Yes, thank
Chris Caso: Yes, thank you. And Bernie, I'm lucky to be the first to congratulate you on your retirement and wish you all the best. It's been a pleasure all these years.
Chris Caso: Yes, thank you. And Bernie, I'm lucky to be the first to congratulate you on your retirement and wish you all the best. It's been a pleasure all these years.
Speaker #5: you. And I'm Bernie, I'm lucky to be the first to congratulate you on your retirement and wish you all the best. It's been a pleasure all these years.
Speaker #3: Thank you very much, Chris.
Bernie Blegen: Thank you very much, Chris.
Bernie Blegen: Thank you very much, Chris.
Speaker #5: So for my first question, I guess as we look into the March quarter, could you give some color on what you're seeing with respect to the different segments?
Chris Caso: So for my first question, I guess as we look into the March quarter, could you give some color on what you're seeing with respect to the different segments? What do you see within the various market segments?
Chris Caso: So for my first question, I guess as we look into the March quarter, could you give some color on what you're seeing with respect to the different segments? What do you see within the various market segments?
Speaker #5: What do you see within the various market segments?
Speaker #4: Sure. Let me start to color this by talking a little bit about Q4 '25. We saw a good step up in the ordering patterns in the quarter.
Bernie Blegen: Sure. Let me start to color this by talking a little bit about Q4 2025. We saw a good step up in the ordering patterns in the quarter. Our Book-to-Bill Ratio was well in excess of one. That's really reflected in our backlog, which is starting to extend out into Q2 and Q3 of 2026. We also finished with, rather, our channel inventory stayed at the low end of our range. So we feel that we're servicing real demand and that we're seeing a lot of a strong ordering trend. So as we look at the fourth quarter, you can see that we saw some pretty good strength, particularly as it relates to enterprise data, and also to the communications. We expect that those trends, along with automotive, should continue to extend into Q1 and into the remainder of the year.
Bernie Blegen: Sure. Let me start to color this by talking a little bit about Q4 2025. We saw a good step up in the ordering patterns in the quarter. Our Book-to-Bill Ratio was well in excess of one. That's really reflected in our backlog, which is starting to extend out into Q2 and Q3 of 2026. We also finished with, rather, our channel inventory stayed at the low end of our range. So we feel that we're servicing real demand and that we're seeing a lot of a strong ordering trend. So as we look at the fourth quarter, you can see that we saw some pretty good strength, particularly as it relates to enterprise data, and also to the communications. We expect that those trends, along with automotive, should continue to extend into Q1 and into the remainder of the year.
Speaker #4: Our book-to-bill ratio was well in excess of one. And that's really reflected in our backlog, which is starting to extend out into Q2 and Q3 of '26.
Speaker #4: We also finished with fairly routine or rather our channel inventory stayed at the low end of our range. So we feel that we're servicing real demand and that we're seeing a lot of strong ordering trend.
Speaker #4: So as we look at the fourth quarter, you can see that we saw some pretty good strength, particularly as it relates to enterprise data, and also to the communications.
Speaker #4: that those trends along We expect with automotive should continue to extend into Q1 and into the remainder of the year.
Chris Caso: Thank you. As a follow-up, and you mentioned enterprise data, and obviously, that's been a focus of attention, not just for you, but the whole market. You had made some comments on enterprise data for 2026 on the last earnings call. And if I just annualize the Q4 numbers, you pretty much get to where that guidance was. So what are your thoughts on that in the year? And perhaps is there a seasonal element to enterprise data as we go through the year?
Chris Caso: Thank you. As a follow-up, and you mentioned enterprise data, and obviously, that's been a focus of attention, not just for you, but the whole market. You had made some comments on enterprise data for 2026 on the last earnings call. And if I just annualize the Q4 numbers, you pretty much get to where that guidance was. So what are your thoughts on that in the year? And perhaps is there a seasonal element to enterprise data as we go through the year?
Speaker #5: You—As a follow-up, and you thank—mentioned enterprise data, and obviously that's been a focus of attention not just for you, but the whole market.
Speaker #5: You had made some comments in enterprise data for 26 on the last earnings call. And if I just annualize the Q4 numbers, you pretty much get to where that guidance was.
Speaker #5: So what are your thoughts on that in the year? And perhaps, is there a seasonal element to enterprise data as we go through the—
Speaker #5: year? Sure.
Bernie Blegen: Sure. I'll start off on this one. As I said, in Q4, we saw some fairly pronounced changes in ordering patterns, which has given us a fair amount more of confidence as far as what the outlook for enterprise data could be in 2026. Now, I think for those that you've worked with me for the last 10 years, you know that I like to stay pretty conservatively profiled when I make an estimate. So I'd probably say that whereas last quarter I talked about a range of between 30% and 40%, maybe I can increase that to a floor of 50% growth for 2025.
Bernie Blegen: Sure. I'll start off on this one. As I said, in Q4, we saw some fairly pronounced changes in ordering patterns, which has given us a fair amount more of confidence as far as what the outlook for enterprise data could be in 2026. Now, I think for those that you've worked with me for the last 10 years, you know that I like to stay pretty conservatively profiled when I make an estimate. So I'd probably say that whereas last quarter I talked about a range of between 30% and 40%, maybe I can increase that to a floor of 50% growth for 2025.
Speaker #4: I'll start off on this one. As I said, in Q4, we saw some fairly pronounced changes in ordering patterns. Which has given us a fair amount more of confidence as far as what the outlook for enterprise data could be in '26.
Speaker #4: Now, I think for those of you who have worked with me for the last 10 years, you know that I like to stay pretty conservatively profiled when I make an estimate.
Speaker #4: I'd probably say So that whereas last quarter, I talked about a range of between 30 and 40%, maybe I can increase that to a floor of 50% growth for
Speaker #4: 2025. Well,
Michael Hsing: Well, 50%. I thought we can do a lot more than that.
Michael Hsing: Well, 50%. I thought we can do a lot more than that.
Speaker #5: 50%. I thought I was going to do a lot more than see this is what I see Conservatively. here. We won the many design wins.
Speaker #5: that. Well, I
Bernie Blegen: Conservatively.
Bernie Blegen: Conservatively.
Michael Hsing: Well, I see this is what I see here. Okay. We own many design wins. And across the board, not from one company, one large company, we have multiple customers. They are very big. They call it, what, Magnificent Seven or Eight or whatever. Okay. We own all the designs. Okay. And we are proven, well, one of the valuable AI power supplies. And also I see the other end. Okay. We have all the capacities. We can deliver this year to our customers' needs. And I don't see why not. It's not only 50%. Okay. We can be a lot more than that. Okay.
Michael Hsing: Well, I see this is what I see here. Okay. We own many design wins. And across the board, not from one company, one large company, we have multiple customers. They are very big. They call it, what, Magnificent Seven or Eight or whatever. Okay. We own all the designs. Okay. And we are proven, well, one of the valuable AI power supplies. And also I see the other end. Okay. We have all the capacities. We can deliver this year to our customers' needs. And I don't see why not. It's not only 50%. Okay. We can be a lot more than that. Okay.
Speaker #5: And across the board, not from a one company, one large company, we have a multiple customers. They are very big. They call it magnificent seven or eight or whatever.
Speaker #5: designs. And we—we won all. The results are proven; we are one of the valuable AI power providers. And also, I see supply, the other end.
Speaker #5: We have all the capacities. We can deliver this year to our customers' needs. And I don't see why not. So not only 50%, we can be a lot more than that.
Speaker #5: We have all the capacities. We can deliver this year to our customers' needs. And I don't see why not. So not only 50%, we can be a lot more than
Speaker #3: Maybe just one last thing to add is, Chris, you heard us talk about the drivers for growth, which were really around growing existing customers and adding new customers.
Tony Balow: Maybe just one last thing to add is, Chris, you heard us talk about the drivers for growth, which was really around growing existing customers, adding new customers, seeing new platforms coming to market, and then, of course, just server tailwinds. I think we always knew those were in place, and now we're just seeing some of the backlog to go along with it. The only other thing I'd add, right, is we focus a lot on enterprise data, but I think we've seen strong data center demand, which has really also pulled through storage growth, optical modules, switches, and other areas we've talked about. So I think overall, we've seen strong data center demand through the end of the year.
Tony Balow: Maybe just one last thing to add is, Chris, you heard us talk about the drivers for growth, which was really around growing existing customers, adding new customers, seeing new platforms coming to market, and then, of course, just server tailwinds. I think we always knew those were in place, and now we're just seeing some of the backlog to go along with it. The only other thing I'd add, right, is we focus a lot on enterprise data, but I think we've seen strong data center demand, which has really also pulled through storage growth, optical modules, switches, and other areas we've talked about. So I think overall, we've seen strong data center demand through the end of the year.
Speaker #3: Seeing new platforms come to market, and then, of course, just server tailwinds. I think we always knew those were in place, and now we're just seeing some of the backlog to go along with it.
Speaker #3: The only other thing I'd add, right, is we focus a lot on enterprise data. But I think we've seen a strong data center demand, which has really also pulled through storage growth, optical modules, switches, and other areas we've talked about.
Speaker #3: So I think overall, we've seen strong data center demand through the end of the year.
Speaker #5: Got it. Okay. Thank you. All the best, Bernie.
Chris Caso: Got it. Okay. Thank you. All the best, Bernie.
Chris Caso: Got it. Okay. Thank you. All the best, Bernie.
Speaker #1: Our next question is from Joe Quatorchi, a Wells Fargo. Joe, your line is now
Arthur Lee: Our next question is from Joe Quatrochi of Wells Fargo. Joe, your line is now open.
Arthur Lee: Our next question is from Joe Quatrochi of Wells Fargo. Joe, your line is now open.
Speaker #1: open. Yeah, thanks for taking the questions.
Joe Quatrochi: Yeah. Thanks for taking the questions, and my congrats to Bernie as well. Thanks for all the help. Maybe just to follow up on that, in the enterprise data and the increase in Outlook, how much of that is related to traditional server CPU demand that it seems like is accelerating as well?
Joe Quatrochi: Yeah. Thanks for taking the questions, and my congrats to Bernie as well. Thanks for all the help. Maybe just to follow up on that, in the enterprise data and the increase in Outlook, how much of that is related to traditional server CPU demand that it seems like is accelerating as well?
Speaker #6: And my congrats to Bernie as well. Thanks for all the help. Maybe just to follow up on that, in the enterprise data and the increase in outlook, how much of that is related to like it is accelerating as traditional server CPU demand?
Speaker #6: well. And it seems
Speaker #4: Well, as I said, we have a lot of And again, particularly last year and a half. And we see continuously changing adapter our modules.
Michael Hsing: Well, as I said, we have a lot of new design wins, and again, particularly last year and a half. And we see continuously changing, adopting our modules and even changing power modules. And we see the trend. And we see with our power densities, okay, we're winning the market.
Michael Hsing: Well, as I said, we have a lot of new design wins, and again, particularly last year and a half. And we see continuously changing, adopting our modules and even changing power modules. And we see the trend. And we see with our power densities, okay, we're winning the market.
Speaker #4: even from a changing And from a silicon to modules. And we see the trend. And with our power densities, I mean, we're winning the market.
Speaker #6: Yeah. I think to go back to part of your question, which had to do with the traditional maybe CPU data center, the lines between AI, GPUs, and CPU are getting pretty blurry because they're so integral to one another, these days.
Bernie Blegen: Yeah. I think to go back to part of your question, which had to do with the traditional maybe CPU data center, the lines between AI, GPUs, and CPU are getting pretty blurry because they're so integral to one another these days.
Bernie Blegen: Yeah. I think to go back to part of your question, which had to do with the traditional maybe CPU data center, the lines between AI, GPUs, and CPU are getting pretty blurry because they're so integral to one another these days.
Speaker #4: They're using the same kind of power supply
Michael Hsing: They're using the same kind of power supply now.
Michael Hsing: They're using the same kind of power supply now.
Speaker #4: now. Exactly.
Bernie Blegen: Exactly. But I would say that we've been trending very well in both categories. So I can talk to a trend line, but I can't really give you an absolute figure.
Bernie Blegen: Exactly. But I would say that we've been trending very well in both categories. So I can talk to a trend line, but I can't really give you an absolute figure.
Speaker #6: But I would say that we've been trending very well in both categories so I can talk to a trend line, but I can't really give you an absolute figure.
Speaker #1: Okay, that's helpful. And then as a follow-up, as I think about just kind of storage and compute and maybe the exposure to PCs, are you seeing anything related to just kind of memory prices increasing, and just kind of maybe some pressure on some demand destruction around that part of the market?
Joe Quatrochi: Okay. That's helpful. Then as a follow-up, as I think about just kind of storage and compute and maybe the exposure to PCs, are you seeing anything related to just kind of memory prices increasing and just kind of maybe some pressure on some demand destruction around that part of the market?
Joe Quatrochi: Okay. That's helpful. Then as a follow-up, as I think about just kind of storage and compute and maybe the exposure to PCs, are you seeing anything related to just kind of memory prices increasing and just kind of maybe some pressure on some demand destruction around that part of the market?
Speaker #4: Oh, you're talking about PCs. The PC is a different animal than the data centers. I mean, new question he's asking about memory and the constraints there, whether we're seeing that affect us.
Michael Hsing: Oh, you're talking about PCs. A PC is a different animal than the data centers. Okay.
Michael Hsing: Oh, you're talking about PCs. A PC is a different animal than the data centers. Okay.
Bernie Blegen: New question. He's asking about memory and the constraints there, whether we're seeing that effective.
Bernie Blegen: New question. He's asking about memory and the constraints there, whether we're seeing that effective.
Speaker #6: Oh, memory constraints?
Michael Hsing: Oh, memory constraints?
Michael Hsing: Oh, memory constraints?
Bernie Blegen: Yes.
Bernie Blegen: Yes.
Speaker #4: Okay. As I said earlier, we don't have a constraint on the capacity
Michael Hsing: Okay. As I said earlier, we don't have constraints on the capacity side.
Michael Hsing: Okay. As I said earlier, we don't have constraints on the capacity side.
Speaker #4: side. Yeah.
Tony Balow: Yeah. And I think where you're going, Joe, as well as also is there's any demand destruction in PCs. I think as you looked at Q4 into Q1, remember, we're coming off a very strong first half of 2025. So we expected that to be down a bit as well as we are participating more selectively in the more emerging parts of that business. I don't think we know how it's going to play out through the rest of this year at this point. So I don't think it's possible to say how that market might trend. We hear a lot of the same, but I think it's too early for us to tell.
Tony Balow: Yeah. And I think where you're going, Joe, as well as also is there's any demand destruction in PCs. I think as you looked at Q4 into Q1, remember, we're coming off a very strong first half of 2025. So we expected that to be down a bit as well as we are participating more selectively in the more emerging parts of that business. I don't think we know how it's going to play out through the rest of this year at this point. So I don't think it's possible to say how that market might trend. We hear a lot of the same, but I think it's too early for us to tell.
Speaker #3: And I think where you're going, Joe, as well as also is there's going to be demand destruction in PCs. I think if you looked at Q4 to Q1, remember, we're coming off a very strong first half of 2025.
Speaker #3: So we expected that to be down a bit as well, as we are participating more selectively in the emerging parts of that business. I don't think we know how it's going to play out through the rest of this year at this point.
Speaker #3: So, I don't think it's possible to say how that market might trend. We hear a lot of the same, but I think it's too early for us to tell.
Speaker #4: Thank
Joe Quatrochi: Thank you.
Joe Quatrochi: Thank you.
Speaker #4: you.
Chris Caso: Oh, the.
Chris Caso: Oh, the.
Speaker #6: the memory constraint on the PCs. Oh,
Arthur Lee: Our next.
Arthur Lee: Our next.
Michael Hsing: Memory constraint on the PC.
Michael Hsing: Memory constraint on the PC.
Tony Balow: On the.
Tony Balow: On the.
Bernie Blegen: Yes.
Bernie Blegen: Yes.
Speaker #4: Yes.
Michael Hsing: Oh, okay. I don't know. Okay. We don't know. Those are market. Okay. We don't know what our customer do. We deliver what our customers ask. I care less.
Michael Hsing: Oh, okay. I don't know. Okay. We don't know. Those are market. Okay. We don't know what our customer do. We deliver what our customers ask. I care less.
Speaker #4: I don't know. We don't know. Does the market? Okay, we don't know what our customers do. We deliver what our customers ask. I care less.
Speaker #6: Yeah. Okay.
Tony Balow: Yeah. Okay.
Tony Balow: Yeah. Okay.
Speaker #1: Our next question is from Josh Paculter of Cohen. Josh, your line is now open.
Arthur Lee: Our next question is from Josh Buchalter of TD Cowen. Josh, your line is now open.
Arthur Lee: Our next question is from Josh Buchalter of TD Cowen. Josh, your line is now open.
Speaker #7: Hey, guys. Thank you for taking my question, and definitely want to echo the congrats and best wishes to Bernie after an incredible run and a long, sometimes strange trip.
Josh Buchalter: Hey, guys. Thank you for taking my question and definitely want to echo the congrats and best wishes to Bernie after an incredible run and a long, sometimes strange trip. Very much appreciate the support over the year, and congrats and best of luck to Rob. Maybe just to start, the incremental confidence in enterprise data is great to see, and it seems like you guys are suggesting you feel better about visibility there than you have in the past. Is that a fair read? And if so, is part of this just the market is maturing and scaling, and also just the capacity needs are so great? I'm just hoping you could maybe speak to how visibility compared to maybe a year ago or something. Thank you.
Josh Buchalter: Hey, guys. Thank you for taking my question and definitely want to echo the congrats and best wishes to Bernie after an incredible run and a long, sometimes strange trip. Very much appreciate the support over the year, and congrats and best of luck to Rob. Maybe just to start, the incremental confidence in enterprise data is great to see, and it seems like you guys are suggesting you feel better about visibility there than you have in the past. Is that a fair read? And if so, is part of this just the market is maturing and scaling, and also just the capacity needs are so great? I'm just hoping you could maybe speak to how visibility compared to maybe a year ago or something. Thank you.
Speaker #7: Very much appreciate the support over the year, and congrats and best of luck to Rob. Maybe just to start, the incremental confidence in enterprise data is great to see, and it seems like you guys are suggesting you feel better about visibility there than you have in the past.
Speaker #7: Is that a fair read? And if so, is part of this just the market is maturing and scaling and also just the capacity needs are so great?
Speaker #7: I'm just hoping you could maybe speak to how visibility compared to maybe a year ago or something. Thank
Speaker #7: you.
Speaker #3: Yeah, I
Bernie Blegen: Yeah. I think in prior quarters, I've said that we've been experiencing a turnaround, much of which has been around the enterprise data or more broadly AI markets, but that the anomaly had been that we'd been seeing very short lead times and that they were not putting a lot of backlog in our books. I'd say that the fundamental change that also making us more confident right now is that we are seeing longer ordering patterns because some of our customers are concerned about capacity constraints, not necessarily with us, but just in general.
Bernie Blegen: Yeah. I think in prior quarters, I've said that we've been experiencing a turnaround, much of which has been around the enterprise data or more broadly AI markets, but that the anomaly had been that we'd been seeing very short lead times and that they were not putting a lot of backlog in our books. I'd say that the fundamental change that also making us more confident right now is that we are seeing longer ordering patterns because some of our customers are concerned about capacity constraints, not necessarily with us, but just in general.
Speaker #3: think in prior quarters, I've said that we've been experiencing a turnaround, much of which has been around the enterprise data or more broadly AI markets.
Speaker #3: that we'd been seeing very short But that the anomaly had been lead times and that they were not putting a lot of backlog in our books.
Speaker #3: And I'd say that the fundamental change that also making us more confident right now is that we are seeing longer ordering patterns because some of our customers are concerned about capacity constraints, not necessarily with us, but just in
Speaker #7: Okay, that's helpful, Colin. Thank you, Bernie. And then the 40% non-enterprise data growth number for 2025 is obviously a huge and above your historical algorithm of, I think it was 10 to 15% above the analog industry.
Josh Buchalter: Okay. That's helpful, Caller. Thank you, Bernie. And then the 40% non-enterprise data growth number for 2025 is obviously huge and above your historical algorithm of, I think it was 10% to 15% above the analog industry. Is that still the right way we should be thinking about the non-compute exposed verticals into 2026 as well? Thank you and congrats again.
Josh Buchalter: Okay. That's helpful, Caller. Thank you, Bernie. And then the 40% non-enterprise data growth number for 2025 is obviously huge and above your historical algorithm of, I think it was 10% to 15% above the analog industry. Is that still the right way we should be thinking about the non-compute exposed verticals into 2026 as well? Thank you and congrats again.
Speaker #7: way we should be thinking about Is that still the right the non-compute exposed verticals into 2026 as well? Thank you and congrats again.
Michael Hsing: Well, I try to manage your expectation. We're not going to say 2026, we have a 40% growth. Okay. These growths, okay, we are still small players in the overall market compared to other market sizes. Okay. Some growths in some years, okay, we see the opportunities that we can grow better than the other years. Okay. But the long-term trend or even short-term trend in 2026, where we'll grow it.
Michael Hsing: Well, I try to manage your expectation. We're not going to say 2026, we have a 40% growth. Okay. These growths, okay, we are still small players in the overall market compared to other market sizes. Okay. Some growths in some years, okay, we see the opportunities that we can grow better than the other years. Okay. But the long-term trend or even short-term trend in 2026, where we'll grow it.
Speaker #4: your expectation Well, I will try to manage that we're not going to we're not saying '26, we have a 40% growth. Okay. And this growth, okay, we are still a small players in the overall market compared to other market sizes.
Speaker #4: Okay. And some growth, some years, we see the opportunities of we can grow better than the other years. Okay. But the long-term trend, or even short-term it.
Speaker #7: Okay. Thank you.
Josh Buchalter: Okay. Thank you.
Josh Buchalter: Okay. Thank you.
Speaker #1: Our next question is from Quinn Bolton of Needham. Quinn, your line is now open.
Arthur Lee: Our next question is from Quinn Bolton of Needham. Quinn, your line is now open.
Arthur Lee: Our next question is from Quinn Bolton of Needham. Quinn, your line is now open.
Speaker #8: Hey, thanks for taking my question and decade. So thank you for all your help along the way. Welcome Rob. Wanted to ask some of your competitors in the AI power space or talking about their businesses doubling in 2026.
Quinn Bolton: Hey, thanks for taking my question. And Bernie, it's been a great run, a great decade. So thank you for all your help along the way. Welcome, Rob. Wanted to ask, some of your competitors in the AI power space are talking about their businesses doubling in 2026. And I know your business and their businesses don't overlap 100%. There's different compositions. My question is, do you guys think that you're gaining shares as you look into 2026 broadly in the AI power segment?
Quinn Bolton: Hey, thanks for taking my question. And Bernie, it's been a great run, a great decade. So thank you for all your help along the way. Welcome, Rob. Wanted to ask, some of your competitors in the AI power space are talking about their businesses doubling in 2026. And I know your business and their businesses don't overlap 100%. There's different compositions. My question is, do you guys think that you're gaining shares as you look into 2026 broadly in the AI power segment?
Speaker #8: And I know your business and their businesses don't overlap 100%. There's different compositions. My question is, do you guys think that you're gaining share as you look into 2026 broadly in the AI power
Speaker #8: segment? Yeah.
Michael Hsing: Yeah. I refuse to get into a pissing contest. Okay. We're less on the stage. Okay. We let the numbers speak self. As always, as our since IPOs or what, 21 years history, we never do that. Okay.
Michael Hsing: Yeah. I refuse to get into a pissing contest. Okay. We're less on the stage. Okay. We let the numbers speak self. As always, as our since IPOs or what, 21 years history, we never do that. Okay.
Speaker #4: I refuse to get into a pissing, okay? And the contest, whole way or less, on the stage, okay? We let the numbers speak for themselves.
Speaker #4: As always, as our CSIPOs were 21 years history, we never do that. Okay.
Tony Balow: I do think that we clearly have great products, broad engagement across the customers. We have design wins in a broad swath. So how the market then plays out remains to be seen, I think. But I think we're very confident in our product portfolio and the engagements we have right now.
Tony Balow: I do think that we clearly have great products, broad engagement across the customers. We have design wins in a broad swath. So how the market then plays out remains to be seen, I think. But I think we're very confident in our product portfolio and the engagements we have right now.
Speaker #3: I do think that we clearly have great products, broad engagement across the customers. We have design wins in a broad swath. So how the market then plays out remains to be seen, I think.
Speaker #3: I think we're very confident in our product But portfolio and engagements we have right
Speaker #3: now. Got it.
Josh Buchalter: Got it. And then, Michael, some of the.
Josh Buchalter: Got it. And then, Michael, some of the.
Speaker #8: And then, Michael, some of the much better small...
Michael Hsing: That's a much better small talk. That's a much better.
Michael Hsing: That's a much better small talk. That's a much better.
Speaker #8: Talk. Well, as you said, we'll see.
Quinn Bolton: Well, as you said, we'll see where the numbers shake out at the end of the year. Michael, I wanted to ask too, you talked about sampling your 800-volt.
Quinn Bolton: Well, as you said, we'll see where the numbers shake out at the end of the year. Michael, I wanted to ask too, you talked about sampling your 800-volt.
Speaker #6: where the numbers shake out at the end of the year. Michael, I wanted to ask you, you talked about sampling your 800.
Speaker #4: You probably saw much earlier. Okay.
Michael Hsing: You probably will see much earlier. Okay.
Michael Hsing: You probably will see much earlier. Okay.
Speaker #6: Oh, good. We'll stay tuned. I wanted to ask you about the 800-volt solutions for 800-volt racks. Some of the participants in the market are suggesting NVIDIA and others are looking for GaN-based solutions.
Quinn Bolton: Oh, good. We'll stay tuned. I wanted to ask you about the 800-volt solutions for 800-volt racks. Some of the participants in the market are suggesting NVIDIA and others are looking for GaN-based solutions. I think you guys are offering a silicon carbide-based solution. And so just wondering if you could talk about what you're seeing in the market. Is there a preference for GaN or silicon carbide? Do you think there'll be a mix of compound semiconductor solutions for that 800-volt to 12- or 6-volt stage in those 800-volt racks?
Quinn Bolton: Oh, good. We'll stay tuned. I wanted to ask you about the 800-volt solutions for 800-volt racks. Some of the participants in the market are suggesting NVIDIA and others are looking for GaN-based solutions. I think you guys are offering a silicon carbide-based solution. And so just wondering if you could talk about what you're seeing in the market. Is there a preference for GaN or silicon carbide? Do you think there'll be a mix of compound semiconductor solutions for that 800-volt to 12- or 6-volt stage in those 800-volt racks?
Speaker #6: I think you guys are offering a silicon carbide-based solution. And so just wondering if you could talk about what you're seeing in the market.
Speaker #6: Is there a preference for GaN or silicon carbide? Do you think there'll be a mix of compound semiconductor solutions for that 800-volt to 12 or 6-volt stage in those 800-volt racks?
Speaker #3: Yeah, yeah, yeah. Okay. Again, okay, this is not a good venue to talk about technical terms. Okay. Actually, I'm happy to be a person who really knows the semiconductor device.
Michael Hsing: Yeah, yeah, yeah. Okay. Again, okay, and this is not a good venue to talk about technical terms. Okay. Actually, I'm happy to be a person who really knows a semiconductor device. And we are developing silicon carbide. Okay. And 10 years ago, I was wrong about the GaN. Okay. But in the last few years, we develop our own GaN devices. Okay. And 800 volts, since Tony is mentioning about it, and we're entering a pissing contest. Okay. That revenue is not for this year, not even for next year. Okay. Maybe end of the next year. However, we're the first company to sample it. Now that's a part of a pissing contest. Okay.
Michael Hsing: Yeah, yeah, yeah. Okay. Again, okay, and this is not a good venue to talk about technical terms. Okay. Actually, I'm happy to be a person who really knows a semiconductor device. And we are developing silicon carbide. Okay. And 10 years ago, I was wrong about the GaN. Okay. But in the last few years, we develop our own GaN devices. Okay. And 800 volts, since Tony is mentioning about it, and we're entering a pissing contest. Okay. That revenue is not for this year, not even for next year. Okay. Maybe end of the next year. However, we're the first company to sample it. Now that's a part of a pissing contest. Okay.
Speaker #3: And we are developed silicon carbide. Okay. And 10 years ago, I was wrong for about a GaN. Okay. But in the last few years, we developed our own GaN devices.
Speaker #3: Okay. And 800-volt since Tony's mentioned about it. And we're entering a pissing contest. Okay. That revenue is not for this year, not for even for next year.
Speaker #3: Okay. Maybe end of the next year. However, we're the first company to sample it. Now that's a part of a pissing contest. Okay. And again, we've done a good job and shown ourselves to be very adaptive changes to the market.
Bernie Blegen: Again, we've done a good job and shown ourselves to be very adaptable to changes to the market. So whether it turns out to be GaN or silicon carbide that is what's demanded, I'm sure that we'll be well positioned to take advantage of it.
Bernie Blegen: Again, we've done a good job and shown ourselves to be very adaptable to changes to the market. So whether it turns out to be GaN or silicon carbide that is what's demanded, I'm sure that we'll be well positioned to take advantage of it.
Speaker #3: So whether it turns out to be GaN or silicon carbide, that is what's demanded. I'm sure that we'll be well positioned to take advantage of
Speaker #6: Got it.
Quinn Bolton: Got it. Thank you.
Quinn Bolton: Got it. Thank you.
Speaker #6: you.
Speaker #1: Our next
Arthur Lee: Our next question is from Rick Schafer of Oppenheimer. Rick, your line is now open.
Arthur Lee: Our next question is from Rick Schafer of Oppenheimer. Rick, your line is now open.
Speaker #1: question is from Rick Schaefer of Oppenheimer. Rick, your line is now open.
Speaker #2: Oh, thanks. And I'll just say, Bernie, it's been a genuine pleasure. You're going to be missed. And Michael, I just want to confirm for everybody that you're never retiring, right?
Rick Schafer: Oh, thanks. And I'll just say, Bernie, it's been a genuine pleasure. You're going to be missed. And Michael, I just want to confirm for everybody that you're never retiring, right?
Rick Schafer: Oh, thanks. And I'll just say, Bernie, it's been a genuine pleasure. You're going to be missed. And Michael, I just want to confirm for everybody that you're never retiring, right?
Speaker #4: Well, it happened to be today is my 86th earnings call. I'm looking forward. I'm looking to double it. Okay. Well, be serious. Okay. And I enjoyed this MPS.
Michael Hsing: Well, it happened to me today. It's my 86th earnings call. I'm looking for double it. Okay. Well, be serious. Okay. I enjoy this MPS immensely. Okay. We actually created this platform. Everybody can maximize their capability. The more interesting things to me is we company evolve. We found a we sell semiconductor power management. Now in the semiconductor, we're getting into an MCU. We're getting into a data converter. We get into even high speeds. Okay. These are a few gigahertz of stuff. You will see the revenue soon. On the overall marketing segment address, we migrate from silicon to systems to a module to systems. You will see a lot more. I enjoy this process a lot. Every year, I'm a part of it. Okay. I have own product lines.
Michael Hsing: Well, it happened to me today. It's my 86th earnings call. I'm looking for double it. Okay. Well, be serious. Okay. I enjoy this MPS immensely. Okay. We actually created this platform. Everybody can maximize their capability. The more interesting things to me is we company evolve. We found a we sell semiconductor power management. Now in the semiconductor, we're getting into an MCU. We're getting into a data converter. We get into even high speeds. Okay. These are a few gigahertz of stuff. You will see the revenue soon. On the overall marketing segment address, we migrate from silicon to systems to a module to systems. You will see a lot more. I enjoy this process a lot. Every year, I'm a part of it. Okay. I have own product lines.
Speaker #4: Okay. And immensely. Okay. We actually created this platform. Everybody can maximize their capability. And the more interesting thing to me is we company evolve.
Speaker #4: And we found the semiconductor, we sell in the semiconductor, we get into MCU, we get into a data converter, we get into a even high-speed.
Speaker #4: Okay. These are a few gigahertz of stuff. And you will see the revenue soon. And on the overall marketing market segment address, we migrate from silicon to systems to a module to systems.
Speaker #4: And you will see a lot more. And I'm a part of it, okay. And I have my own product lines.
Rick Schafer: Thanks, Michael. It's reassuring. Hey, I also just had a quick clarification, and then I've got a couple of follow-ups. But the clarification, Michael, you said earlier that the CPU, GPU, and server are using the same power supplies now. So does that mean that server CPU is already migrating to 48-volt?
Rick Schafer: Thanks, Michael. It's reassuring. Hey, I also just had a quick clarification, and then I've got a couple of follow-ups. But the clarification, Michael, you said earlier that the CPU, GPU, and server are using the same power supplies now. So does that mean that server CPU is already migrating to 48-volt?
Speaker #2: Thanks, Michael. It's reassuring. Hey, I also just had a quick clarification, and then I've got a couple of follow-ups. But the clarification, Michael, you said that the CPU and GPU and server are using the same power supplies now.
Speaker #2: So does that mean that server CPU is already migrating to 48-volt?
Speaker #4: It's due they use mostly, okay, if they have some advance, okay, and high-priced server, or special servers, okay, special need. They still use 12-volt.
Michael Hsing: It's still. They use mostly, if they have some advanced, and high-priced server or special servers, special need. They still use 12 volts. But I'm aware of some models use 48 volts. My guess is still small. I'm not very clear on that. But the majority is still 12 volts. And now it's clear the modules are the way to go if you don't want to improve efficiency.
Michael Hsing: It's still. They use mostly, if they have some advanced, and high-priced server or special servers, special need. They still use 12 volts. But I'm aware of some models use 48 volts. My guess is still small. I'm not very clear on that. But the majority is still 12 volts. And now it's clear the modules are the way to go if you don't want to improve efficiency.
Speaker #4: But I'm aware of some models that use a 48-volt; my guess is still small. I'm not very clear on that. But the majority still 12-volt.
Speaker #4: And now it's clear the modules are the way to go. And if you don't want to improve efficiency...
Speaker #2: Thanks for clearing that up. So my first question really is on optical transceiver because that's basically a brand new product line, a little over a year old, I believe.
Rick Schafer: Thanks for clearing that up. So my first question really is on optical transceiver because that's basically a brand new product line, a little over a year old, I believe. And by our count and our model, it's close to roughly 5% of sales exiting last year, I think now, which is a pretty remarkable ramp. So I guess I'm out and thinking. We're asking, what are your expectations for that business this year? And what does that imply for comm segment? What are sort of the puts and takes within the comm segment?
Rick Schafer: Thanks for clearing that up. So my first question really is on optical transceiver because that's basically a brand new product line, a little over a year old, I believe. And by our count and our model, it's close to roughly 5% of sales exiting last year, I think now, which is a pretty remarkable ramp. So I guess I'm out and thinking. We're asking, what are your expectations for that business this year? And what does that imply for comm segment? What are sort of the puts and takes within the comm segment?
Speaker #2: close to roughly 5% of sales, And by our count and our model, it's exiting last year, I think now. Which is a pretty remarkable ramp.
Speaker #2: So I guess I'm thinking, we're asking, what are your expectations for that business this year? And what does that imply for comms segment? What are sort of the puts and takes within the comms segment?
Speaker #4: I can comment on that. Give me this because we enter the module journey since 2016 or '17. And these happen to be the highest power density product on the market.
Michael Hsing: I can comment on that. Give me a day because we entered the module journey since 2016 or 2017. These happen to be the highest power density product on the market. Then optical modules, they wanted that because they have limited rooms. Okay. In terms of our business, I don't know the details. Maybe Bernie or Tony can answer it. Okay.
Michael Hsing: I can comment on that. Give me a day because we entered the module journey since 2016 or 2017. These happen to be the highest power density product on the market. Then optical modules, they wanted that because they have limited rooms. Okay. In terms of our business, I don't know the details. Maybe Bernie or Tony can answer it. Okay.
Speaker #4: Then optical modules, they wanted that because they have a limited rooms. Okay. In terms of a business, I don't know the details and maybe Bernie has a Tony can answer it.
Speaker #4: Okay.
Speaker #3: Yeah, I'll just follow up. I
Tony Balow: Yeah, I'll just follow up. I think, Rick, we have obviously seen great growth in optical modules over the past year and a half. I think the way we look at the market, very typical for MPS, is sort of interconnect. So it's not just optical modules, but engagements for CPO, active copper, other things as well because the market will then figure out what interconnect technology is actually going to succeed over the long term. We obviously don't guide by sub-end market, let alone sub-end market. But we would expect optical module to continue to grow as you start to see the 1.6 ramp as we go through. And for communications, it should be an area of growth first in 2026, both on optical modules and in switches because that's where our data center switches are as well.
Tony Balow: Yeah, I'll just follow up. I think, Rick, we have obviously seen great growth in optical modules over the past year and a half. I think the way we look at the market, very typical for MPS, is sort of interconnect. So it's not just optical modules, but engagements for CPO, active copper, other things as well because the market will then figure out what interconnect technology is actually going to succeed over the long term. We obviously don't guide by sub-end market, let alone sub-end market. But we would expect optical module to continue to grow as you start to see the 1.6 ramp as we go through. And for communications, it should be an area of growth first in 2026, both on optical modules and in switches because that's where our data center switches are as well.
Speaker #3: think, Rick, we have obviously seen great growth in optical modules over the past year and a half. I think the way we look at the market, very typical for MPS, is sort of interconnect.
Speaker #3: So it's not just optical modules, but engagements for CPO, active copper, other things as well. Because the market will then figure out what interconnect technology is actually going to succeed over the long term.
Speaker #3: We obviously don't guide by sub and market, let alone sub and market, but we would expect optical module to continue to grow as you start to see the 1.6 ramp.
Speaker #3: As we go through, and for communications, it should be an area of growth for us in '26, both on optical modules and as switches, because that's where our data center switches are as well.
Speaker #2: Yep. Thanks for that. I mean, if I can sneak in one on automotive, I mean, obviously great year in '25. And I'm just curious what are the what you see is the top drivers, excuse me, of a segment growth this year.
Rick Schafer: Thanks for that. Then if I could sneak in one on automotive. I mean, obviously, great year in 2025. And I'm just curious, what you see is the top drivers, excuse me, of segment growth this year. I know you highlighted 48-volt zonal. And I didn't hear you say much about ADAS, but I assume ADAS. I don't know if you can update us on how big ADAS is within that segment now or and if there's any way to quantify sort of a shift this year that you expect in potential content per vehicle.
Rick Schafer: Thanks for that. Then if I could sneak in one on automotive. I mean, obviously, great year in 2025. And I'm just curious, what you see is the top drivers, excuse me, of segment growth this year. I know you highlighted 48-volt zonal. And I didn't hear you say much about ADAS, but I assume ADAS. I don't know if you can update us on how big ADAS is within that segment now or and if there's any way to quantify sort of a shift this year that you expect in potential content per vehicle.
Speaker #2: I know you highlighted 48-volt and zonal, and I didn't hear you say much about ADAS, but I assume ADAS— I don't know if you can update us on how big ADAS is within that segment now, or if there's any way to quantify sort of the shift this year that you expect in potential content per vehicle.
Bernie Blegen: Sure. Yeah. Want to take a victory lap on 2025 where automotive grew 43% year-over-year. And.
Bernie Blegen: Sure. Yeah. Want to take a victory lap on 2025 where automotive grew 43% year-over-year. And.
Speaker #3: Sure. I want to take a victory lap on 2025. We're automotive through 43%. Year over year. And.
Michael Hsing: But that's only the beginning.
Michael Hsing: But that's only the beginning.
Speaker #3: That's But that's only the beginning. exactly the point here. Is that what 2025 and is going to continue is that while ADAS certainly was a strong initial ramp, particularly in '23, '24, and '25, I think we saw a lot more diversification into other content opportunities on the automotive platform.
Bernie Blegen: That's exactly the point here, is that what we saw in 2025 and is going to continue is that while ADAS certainly was a strong initial ramp, particularly in 2023, 2024, and 2025, I think we saw a lot more diversification into other content opportunities on the automotive platform. And so as we look ahead here, keep in mind, we're not necessarily driven by the star of the business, but our growth is dependent upon how fast our customers implement these new technologies, particularly as it relates to zonal and 48-volt.
Bernie Blegen: That's exactly the point here, is that what we saw in 2025 and is going to continue is that while ADAS certainly was a strong initial ramp, particularly in 2023, 2024, and 2025, I think we saw a lot more diversification into other content opportunities on the automotive platform. And so as we look ahead here, keep in mind, we're not necessarily driven by the star of the business, but our growth is dependent upon how fast our customers implement these new technologies, particularly as it relates to zonal and 48-volt.
Speaker #3: And so as we look ahead here, keep in mind we're not necessarily driven by the SAR of the business, but our growth is dependent upon how fast our customers implement these new technologies, particularly as it relates to zonal.
Speaker #3: 48-volt. Or Or even ADAS. ADAS.
Michael Hsing: Or even ADAS.
Michael Hsing: Or even ADAS.
Bernie Blegen: Or ADAS.
Bernie Blegen: Or ADAS.
Speaker #4: And the majority cars on the market is nowhere anything close to what Tesla does. Okay. And that's the car I drive. Okay. You have a full I don't drive anymore.
Michael Hsing: The majority of cars on the market is nowhere anything close to what Tesla does. Okay. And that's the car I drive. Okay. You have a full I don't drive anymore. Okay. And I think a majority of people still drive. Okay. And that adoption rate, okay, in a large automotive company, they do things very slowly and much slower than Tesla does. Okay. And for the future, we are up to this point, and actually the next couple of years, I see our products provide the complete power supply chipsets. And also we have all these firmware, software. We're very much engaged with all the carmakers. And I don't see why not. Okay. And that business is going to continue to grow. You actually, guys, okay, you know how many cars shipped with ADAS, okay, which levels. Okay. And you can count MPS in it.
Michael Hsing: The majority of cars on the market is nowhere anything close to what Tesla does. Okay. And that's the car I drive. Okay. You have a full I don't drive anymore. Okay. And I think a majority of people still drive. Okay. And that adoption rate, okay, in a large automotive company, they do things very slowly and much slower than Tesla does. Okay. And for the future, we are up to this point, and actually the next couple of years, I see our products provide the complete power supply chipsets. And also we have all these firmware, software. We're very much engaged with all the carmakers. And I don't see why not. Okay. And that business is going to continue to grow. You actually, guys, okay, you know how many cars shipped with ADAS, okay, which levels. Okay. And you can count MPS in it.
Speaker #4: Okay. And I think a majority of people still drive. Okay. that adoption rate, okay, And in large automotive companies, they do things very slowly and much slower than a Tesla does.
Speaker #4: Okay. And for futures, up to this point and looking ahead to the next couple of years, I see our products provide the complete power supply chipsets, and also we have all this firmware and software very much engaged with all the car makers.
Speaker #4: And I don't see why not. Okay. And that business is going to continue to—
Speaker #4: grow. Yeah. You actually, guys, okay, you know how many cars shipped with ADAS. Okay. Which levels? Okay. And you can count MPS in
Speaker #4: it. And Rick, we're a
Tony Balow: And Rick, we're a little hesitant to probably call any numbers for the full year just because there is a lot of macro uncertainty still. Great design wins, great engagement with tier ones and OEMs. But whether it's tariffs, whether it's the end of EV subsidies, or whether you even talk about what the impact on the auto market is from the memory shortage, I don't think we know. So I think we're a little hesitant to actually put a growth rate on it for the year.
Tony Balow: And Rick, we're a little hesitant to probably call any numbers for the full year just because there is a lot of macro uncertainty still. Great design wins, great engagement with tier ones and OEMs. But whether it's tariffs, whether it's the end of EV subsidies, or whether you even talk about what the impact on the auto market is from the memory shortage, I don't think we know. So I think we're a little hesitant to actually put a growth rate on it for the year.
Speaker #3: little hesitant to probably call any numbers for the full year just because there is a lot of macro uncertainty still. Great design wins, great engagement with tier ones and OEMs.
Speaker #3: But whether it's tariffs, whether it's the end of EV subsidies, or whether you even talk about what the impact on the auto market is from the memory shortage, I don't think we know.
Speaker #3: So I think we're a little hesitant to actually put a growth rate on it for the
Speaker #3: year.
Speaker #2: Appreciate it.
Rick Schafer: Appreciate it. Thanks, guys.
Rick Schafer: Appreciate it. Thanks, guys.
Speaker #2: Thanks,
Speaker #2: guys. Our next question is from Gary
Arthur Lee: Our next question is from Gary Mobley of Loop Capital. Gary, your line is now open.
Arthur Lee: Our next question is from Gary Mobley of Loop Capital. Gary, your line is now open.
Speaker #1: Mobley of Luke Capital. Gary, your line is now
Speaker #1: Mobley of Luke Capital. Gary, your line is now open. Hey, guys.
Tony Balow: Hey, guys. Thanks for taking my question. And Bernie, your retirement's well-deserved and look forward to working with you, Rob. I think everybody on the call would share the same sentiment that I have, that you're definitely one of my favorite CFOs. And for my retirement gift to you, I wanted to throw you a big softball question, but I think it's an important topic. Looking back over the past decade, when you've been CFO, you've outperformed the overall analog chip market, the overall voltage regulator market, consistently every year, seemingly for different reasons each year. But thinking about the outperformance of the market in 2025, maybe if you can give us a sense of what drove that, was that just share gains and voltage regulator die, or was it something more substantial like moving into data converters? Was it tied to the higher content associated with modules and related?
Tony Balow: Hey, guys. Thanks for taking my question. And Bernie, your retirement's well-deserved and look forward to working with you, Rob. I think everybody on the call would share the same sentiment that I have, that you're definitely one of my favorite CFOs. And for my retirement gift to you, I wanted to throw you a big softball question, but I think it's an important topic. Looking back over the past decade, when you've been CFO, you've outperformed the overall analog chip market, the overall voltage regulator market, consistently every year, seemingly for different reasons each year. But thinking about the outperformance of the market in 2025, maybe if you can give us a sense of what drove that, was that just share gains and voltage regulator die, or was it something more substantial like moving into data converters? Was it tied to the higher content associated with modules and related?
Speaker #5: Thanks for taking my question. And Bernie, your retirement's well-deserved and look forward to working with you, Rob. I think everybody on the call would share the same sentiment that I have that you're definitely one of my favorite CFOs.
Speaker #5: And for my retirement gift to you, I wanted to throw you a big softball question. But I think it's an important topic. Looking back over the past decade, when you've been CFO, you've outperformed the overall analog chip market, the overall voltage regulator market, consistently every year.
Speaker #5: Seemingly for different reasons each year. But thinking about the outperformance of the market in 2025, maybe you can give us a sense of what drove that. Was that just share gains and voltage regulator die, or was it something more substantial like moving into data converters?
Speaker #5: Was it tied to the higher content associated with modules and related? Can you give us some KPIs as it relates to sort of your module mix right now?
Tony Balow: Can you give us some KPIs that relate to sort of your module mix right now? Anything you can help us get a better understanding of that consistent market share growth.
Tony Balow: Can you give us some KPIs that relate to sort of your module mix right now? Anything you can help us get a better understanding of that consistent market share growth.
Speaker #5: Anything you can help us get a better understanding of that consistent market share growth? Sure, Gary. And thank you for the kind words there.
Bernie Blegen: Sure, Gary. And thank you for the kind words. They're appreciated. When you look at the overall performance for the company in 2025, we had what had been our largest revenue end market in enterprise data had actually declined 2%. And yet, overall, the company grew 26%. And strategically, how we're differentiated from our competition is that we are represented with the best technology, the best services across all of the end markets that we service. And this is really just a reflection of our execution against that strategy over all of these years. It wasn't that, pardon my saying, we pulled the rabbit out of the hat. We actually are able to adapt very quickly to have changes in the market. So that's what this is really a reflection of in our performance of 2025.
Bernie Blegen: Sure, Gary. And thank you for the kind words. They're appreciated. When you look at the overall performance for the company in 2025, we had what had been our largest revenue end market in enterprise data had actually declined 2%. And yet, overall, the company grew 26%. And strategically, how we're differentiated from our competition is that we are represented with the best technology, the best services across all of the end markets that we service. And this is really just a reflection of our execution against that strategy over all of these years. It wasn't that, pardon my saying, we pulled the rabbit out of the hat. We actually are able to adapt very quickly to have changes in the market. So that's what this is really a reflection of in our performance of 2025.
Speaker #5: They're appreciated. When you look at the overall performance for the company in 2025, we had what had been our largest revenue and market in enterprise data had actually declined 2% and yet overall the company grew 26%.
Speaker #5: And strategically, how we're differentiated from our competition is that we are represented with the best technology, the best services, across all of the end markets that we service.
Speaker #5: And this is really just a reflection of our execution against that strategy over all of these years. It wasn't that—pardon my saying—we pulled the rabbit out of the hat.
Speaker #5: We actually are able to adapt very quickly to changes in the market, so that's what this is really a reflection of in our performance for 2025.
Tony Balow: Thanks. As my follow-up, I wanted to ask about maybe some nuances in your increased visibility and comments regarding that. If I talked to you guys three months ago, I think you were thinking maybe the 2026 year was going to be a little more second-half weighted, just given the stronger bookings that you've seen, the stronger order backlog. As you see here today, would you say the shape of the year is a little more linear, less dependent on the second half?
Tony Balow: Thanks. As my follow-up, I wanted to ask about maybe some nuances in your increased visibility and comments regarding that. If I talked to you guys three months ago, I think you were thinking maybe the 2026 year was going to be a little more second-half weighted, just given the stronger bookings that you've seen, the stronger order backlog. As you see here today, would you say the shape of the year is a little more linear, less dependent on the second half?
Speaker #5: Thanks. As my follow-up, I wanted to ask about maybe some nuances in your increased visibility in comments regarding that. If I talk to you guys, three months ago, I think you were thinking maybe that 2026 year was going to be a little more second-half weighted.
Speaker #5: Just given the stronger bookings that you've seen, the stronger order backlog, as you sit here today, would you say the shape of the year is a little more linear?
Speaker #5: Less dependent on the second half?
Speaker #3: I'd say that the first half for enterprise data in particular, but for the company, is more secure. I think there's still a lot of variables that need to be shaped before we really understand what the second half trajectory is going to look like.
Bernie Blegen: I'd say that the first half for enterprise data in particular, but for the company, is more secure. I think there's still a lot of variables that need to be shaped before we really understand what the second-half trajectory is going to look like. But obviously, the initial signs that we saw from the ordering pattern in Q4 and continuing into this new year have been exceptionally positive. So now we have more of the high-level issue of trying to figure out what's real demand and what may be some double ordering on the part of our customers as they try to secure capacity. They said that's a high-level issue, and we've shown that we can adapt to that as well as anybody by the performance we gave in late 2020 and early 2021. Thank you.
Bernie Blegen: I'd say that the first half for enterprise data in particular, but for the company, is more secure. I think there's still a lot of variables that need to be shaped before we really understand what the second-half trajectory is going to look like. But obviously, the initial signs that we saw from the ordering pattern in Q4 and continuing into this new year have been exceptionally positive. So now we have more of the high-level issue of trying to figure out what's real demand and what may be some double ordering on the part of our customers as they try to secure capacity. They said that's a high-level issue, and we've shown that we can adapt to that as well as anybody by the performance we gave in late 2020 and early 2021. Thank you.
Speaker #3: But obviously, the initial signs that we saw from the ordering pattern in Q4 and continuing into this year have been exceptionally positive. So now we have more of the high-level issue of trying to figure out what's real demand and what may be some double ordering on the part of our customers as they try to secure capacity.
Speaker #3: They said that the high-level issue and we've shown that we can adapt to that as well as anybody by the performance we gave in late 2020 and early
Speaker #3: They said that the high-level issue and we've shown that we can adapt to that as well as anybody by the performance we gave in late 2020 and early 2021.
Speaker #5: Thank you.
Speaker #4: We work with the customers very especially all these large data center customers, very closely. And they will give you—they will give us a very good lead times and forecast.
Michael Hsing: We work with customers, especially all these large data center customers, very closely. And they will give us very good lead times and forecasts. And so we have the capacities ready, and we just meet their demand. Thanks, Michael.
Michael Hsing: We work with customers, especially all these large data center customers, very closely. And they will give us very good lead times and forecasts. And so we have the capacities ready, and we just meet their demand. Thanks, Michael.
Speaker #4: And so we have the capacities ready, and we just meet that demand.
Speaker #5: Thanks, Michael.
Arthur Lee: Our next question is from Tore Svanberg of Stifel. Tore, your line is now open.
Arthur Lee: Our next question is from Tore Svanberg of Stifel. Tore, your line is now open.
Speaker #1: from Tori Swamper of Our next question is Stifel. Tori, your line's now open.
Speaker #6: Yes, thank you. And congratulations, Bernie. You're a class act. And I'm going to miss you tremendously. My first question, Michael, I'm going to zoom in on a market where there's perhaps less contests.
Tony Balow: Yes, thank you, and congratulations, Bernie. You're a class act, and I'm going to miss you tremendously. My first question, Michael, I'm going to zoom in on a market where there's perhaps less contests, which is storage and especially SSD power. It seems to be an area that could see quite a bit of upside and growth in data centers this year. So I was hoping you could talk a little bit about the profile of that business. I mean, I think historically, it's been more tied to client and edge devices. But again, what's the company's position SSD for data center going into 2026?
Tony Balow: Yes, thank you, and congratulations, Bernie. You're a class act, and I'm going to miss you tremendously. My first question, Michael, I'm going to zoom in on a market where there's perhaps less contests, which is storage and especially SSD power. It seems to be an area that could see quite a bit of upside and growth in data centers this year. So I was hoping you could talk a little bit about the profile of that business. I mean, I think historically, it's been more tied to client and edge devices. But again, what's the company's position SSD for data center going into 2026?
Speaker #6: Which is storage and especially SSD power. It seems to be an area that could see quite a bit of upside and growth in data centers this year.
Speaker #6: So, I was hoping you could talk a little bit about the profile of that business. I mean, I think historically it's been more tied to client and edge devices, but again, what's the company's position—SSD for data center—going into 2026?
Speaker #3: Yeah, these are the power management and then also the single process of these are all in the consortium driven by JDAC. And familiar than I maybe Tony, you're a lot more do.
Michael Hsing: Yeah, these are the power management and also the single processes. These are all in the consortium driven by JEDEC. And maybe Tony, you're a lot more familiar than I do. And we are part of it. And DDR4, we don't have much business. Very little. And DDR5, we're in the DDR5, we're on the derating tables. Before, DDR4 wasn't. And so now this business is ramping. I mean, memories all shifted to DDR5. And we clearly see the volumes now, last year and this year. And we're not stopping there. We're migrating down to we expanded our product lines to the single site. And these are all in the memory modules.
Michael Hsing: Yeah, these are the power management and also the single processes. These are all in the consortium driven by JEDEC. And maybe Tony, you're a lot more familiar than I do. And we are part of it. And DDR4, we don't have much business. Very little. And DDR5, we're in the DDR5, we're on the derating tables. Before, DDR4 wasn't. And so now this business is ramping. I mean, memories all shifted to DDR5. And we clearly see the volumes now, last year and this year. And we're not stopping there. We're migrating down to we expanded our product lines to the single site. And these are all in the memory modules.
Speaker #3: And we are part of it. And DDR4, we don't have that much business. Very little. And DDR5, we're in DDR4, we're in on the dining tables.
Speaker #3: Before DDR4 wasn't. And so now this business is ramping. I mean, memories, I mean, all shifted to DDR5. And we clearly see the volumes now.
Speaker #3: And last year and this year. And we're not stopping there. We're migrating down to where expanded our product lines to the single site. And these are all in the memory
Speaker #3: modules. And I think there was
Tony Balow: And I think there was a portion of your question as well about the non-DDR5 part of that business, sort of SSD and HDD. And we have seen an uptick in that part of the business as well. And I think you're right. It's being pulled through much more by the enterprise than consumer these days. And that's why we generally talk about storage being data center-driven inside of the storage and compute segment.
Tony Balow: And I think there was a portion of your question as well about the non-DDR5 part of that business, sort of SSD and HDD. And we have seen an uptick in that part of the business as well. And I think you're right. It's being pulled through much more by the enterprise than consumer these days. And that's why we generally talk about storage being data center-driven inside of the storage and compute segment.
Speaker #5: a portion of your question as well about the non-DDR5 part of that business, sort of SDD and HDD. And we have seen an uptick in that part of the business as well.
Speaker #5: And I think you're right. It's being pulled through much more by the enterprise than consumer these days. And that's why we generally talk about storage being data center driven.
Speaker #5: Inside of the storage and compute segment.
Speaker #6: Yeah, that's what I was trying to get to. And that's my follow-up. Michael, congratulations on getting to 4 billion in capacity, but it looks like you're going to need quite a bit more than that.
Operator: Yeah, that's what I was trying to get to. And as my follow-up, Michael, congratulations on getting to $4 billion in capacity, but it looks like you're going to need quite a bit more than that. So perhaps you could give us a little bit of a sense of what you're doing on the capacity front, especially the next few years, because you're clearly going to need much more than $4 billion.
Operator: Yeah, that's what I was trying to get to. And as my follow-up, Michael, congratulations on getting to $4 billion in capacity, but it looks like you're going to need quite a bit more than that. So perhaps you could give us a little bit of a sense of what you're doing on the capacity front, especially the next few years, because you're clearly going to need much more than $4 billion.
Speaker #6: So perhaps you could give us a little bit of a sense of what you're doing on the capacity front, especially in the next few years, because you're clearly going to need much more than 4 billion.
Speaker #4: Yes. We are very aware of that. And speaking, of course, in our continuously expanding our capacity, and you know MPS history. The worst things are shutting customers down.
Michael Hsing: Yes, we are very aware of that. And speaking, of course, and we're continuously expanding our capacity. And you know MPS histories. The worst things are shutting customers down. And fortunately, it hasn't happened in the MPS. And now it gets a little more complicated. We established from the beginning of the last year, we established our supply management chain. And this is not only for silicon and not for semiconductors, including silicon carbides and gallium nitrides and the materials. And we do a lot of modules or the module components. And so we established the supply chain management. So I think it's and also quality. It's not everybody can play that game. So every supplier can play the game. We go through heavy auditing. And so their standards, they meet our standard. Ultimately, it reflects into our margins.
Michael Hsing: Yes, we are very aware of that. And speaking, of course, and we're continuously expanding our capacity. And you know MPS histories. The worst things are shutting customers down. And fortunately, it hasn't happened in the MPS. And now it gets a little more complicated. We established from the beginning of the last year, we established our supply management chain. And this is not only for silicon and not for semiconductors, including silicon carbides and gallium nitrides and the materials. And we do a lot of modules or the module components. And so we established the supply chain management. So I think it's and also quality. It's not everybody can play that game. So every supplier can play the game. We go through heavy auditing. And so their standards, they meet our standard. Ultimately, it reflects into our margins.
Speaker #4: And fortunately, we haven't had that happen in the MPS. And now it gets a little more complicated. We established, from the beginning of last year, we established our supply management.
Speaker #4: And this is not only for silicon, and not just for semiconductors. This includes silicon carbide and gallium nitride, and the materials. And we do a lot of modules.
Speaker #4: And all the module components. And so we established that the supply chain management—so I think it's also quality. It's not everybody can play that game.
Speaker #4: Every supplier can play the game. These are we go through heavy auditing. And so their standards meet our standard. Ultimately, it's reflected into our margins.
Speaker #4: And so the short answer is yes, we're expanding very
Michael Hsing: The short answer is yes, we're expanding very fast.
Michael Hsing: The short answer is yes, we're expanding very fast.
Speaker #1: Our Thank you. next question is from Kelsey Chia of City Research. Kelsey, your line is now open.
Arthur Lee: Our next question is from Kelsey Chia of Citi. Kelsey, your line is now open.
Arthur Lee: Our next question is from Kelsey Chia of Citi. Kelsey, your line is now open.
Speaker #7: Hi. Hi, Bernie. Congratulations. And retirement. Really appreciate the opportunity to work with you over the past year. So I think on my first question, it's regards to the updated guidance for enterprise data.
Joe Quatrochi: Hi. Hi, Bernie. Congratulations on your retirement. Really appreciate the opportunity to work with you over the past year. So I think on my first question, it's with regards to the updated guidance for enterprise data. Is there any market share gains assumption there, or is it just primarily due to this industry growth? And also, MPS has demonstrated strong execution and historically gained share during periods of supply constraints. So is it fair to assume that MPS could navigate any potential supply constraints and take share in this environment?
Joe Quatrochi: Hi. Hi, Bernie. Congratulations on your retirement. Really appreciate the opportunity to work with you over the past year. So I think on my first question, it's with regards to the updated guidance for enterprise data. Is there any market share gains assumption there, or is it just primarily due to this industry growth? And also, MPS has demonstrated strong execution and historically gained share during periods of supply constraints. So is it fair to assume that MPS could navigate any potential supply constraints and take share in this environment?
Speaker #7: Is there any market share gains assumption there, or is it just primarily due also, MPS has demonstrated strong execution and historically gleaned share. During periods of supply constraints, so is it fair to assume that MPS could navigate any potential supply constraints and see and to take share in this environment?
Speaker #7: Is there any market share gains assumption there, or is it just primarily due also, MPS has demonstrated strong execution and historically gleaned share. During periods of supply constraints, so is it fair to assume that MPS could navigate any potential supply constraints and see and to take share in this environment?
Speaker #3: Sure. And I think that I'd be doing a disservice to this conversation if I tried to break it down into a formula that says what share gains or what's new business.
Bernie Blegen: Sure. And I think that I'd be doing a disservice to this conversation if I tried to break it down and reformulate it and say, "What's share gains or what's new business?" And I'd rather sort of respond a little differently that this is a large market. We talk about the top six, seven customers, and we're fully engaged with them in a strategic manner where we're developing not just the release of the next generation, but the one beyond that. But this also is an end market with a long tail, and we're participating in the mid-market and the small size as well. So we're still very, very early in how this market's going to roll out and what our positioning is going to be.
Bernie Blegen: Sure. And I think that I'd be doing a disservice to this conversation if I tried to break it down and reformulate it and say, "What's share gains or what's new business?" And I'd rather sort of respond a little differently that this is a large market. We talk about the top six, seven customers, and we're fully engaged with them in a strategic manner where we're developing not just the release of the next generation, but the one beyond that. But this also is an end market with a long tail, and we're participating in the mid-market and the small size as well. So we're still very, very early in how this market's going to roll out and what our positioning is going to be.
Speaker #3: And I'd rather sort of respond a little differently. That this is a large market. We talk about the large top six, seven customers and we're fully engaged with them.
Speaker #3: And strategic manner. Where we're developing not just the release of the next generation, but the one beyond that. But this also is a market with a long tail.
Speaker #3: And we're participating in the mid-market and the small size as well. So we're still very, very early in how this market's going to roll out and what our positioning is going to be.
Speaker #3: And I think that we're as well positioned as anybody to take advantage of the market opportunity but this is a long, long and very big
Bernie Blegen: I think that we're as well positioned as anybody to take advantage of the market opportunity, but this is a long and very big story.
Bernie Blegen: I think that we're as well positioned as anybody to take advantage of the market opportunity, but this is a long and very big story.
Speaker #3: story. Got it.
Joe Quatrochi: Got it.
Joe Quatrochi: Got it.
Speaker #4: Yeah. Well, the company is I'm thinking about beyond AI. Beyond enterprise data centers. And you I'm not retiring. I'm thinking 10, 15 years
Michael Hsing: Yeah. Well, the companies I'm thinking about beyond AI, beyond enterprise data centers. I'm not retiring. I'm thinking 10, 15 years ahead.
Michael Hsing: Yeah. Well, the companies I'm thinking about beyond AI, beyond enterprise data centers. I'm not retiring. I'm thinking 10, 15 years ahead.
Speaker #4: ahead. That's
Joe Quatrochi: That's great. Can continue the outperformance. MPS outlined a gross margin target of 55% to 60%. Could you provide an update with regards to which end markets are currently above or below that corporate average or outline some of the specific gross margin drivers in this year?
Joe Quatrochi: That's great. Can continue the outperformance. MPS outlined a gross margin target of 55% to 60%. Could you provide an update with regards to which end markets are currently above or below that corporate average or outline some of the specific gross margin drivers in this year?
Speaker #7: great. Can continue the outperformance. And MPS, outline a gross margin target of 55 to 60%. Could you provide an update with regards to which end markets are currently above or below that corporate average or outline some of the specific gross margin
Speaker #7: drivers? Yeah, yeah,
Michael Hsing: Yeah, yeah, yeah. We're in the range, but on the low side, I noticed that. Okay.
Michael Hsing: Yeah, yeah, yeah. We're in the range, but on the low side, I noticed that. Okay.
Speaker #4: yeah. Yeah. We're in the range, but on the low side. I noticed that. Okay.
Speaker #3: Let me add a little bit of color there. So Michael said this earlier when we look at all of the opportunities, we keep in mind what is the corporate model for gross margin, which is between 55 and 60 percent.
Bernie Blegen: Let me add a little bit of color there. So Michael said this earlier. When we look at all of the opportunities, we keep in mind what is the corporate model for gross margin, which is between 55% and 60%. And I've been fairly consistent over the course of the last four to six quarters when we've been trending at between 55.5% and 55.8%, which is, Michael said, is the low end of our model that in order for us to show improvement, we really need to have a little longer time horizon as far as backlog to be able to manage in it.
Bernie Blegen: Let me add a little bit of color there. So Michael said this earlier. When we look at all of the opportunities, we keep in mind what is the corporate model for gross margin, which is between 55% and 60%. And I've been fairly consistent over the course of the last four to six quarters when we've been trending at between 55.5% and 55.8%, which is, Michael said, is the low end of our model that in order for us to show improvement, we really need to have a little longer time horizon as far as backlog to be able to manage in it.
Speaker #3: And I've been fairly consistent over the course of the last four to six quarters, when we've been trending at between 55.5 and 55.8, which, as Michael said, is the low end of our model, that in order for us to show improvement, we really need to have a little longer time horizon as far as backlog to be able to manage in it.
Speaker #3: So we are starting to see a backlog developing, which I don't want to make too much out of what one quarter's of experience. But we time during the year the cadence that we've historically shown of incremental sequential improvements of maybe 10 to 20 basis points quarter over
Bernie Blegen: So we are starting to see a backlog developing, which I don't want to make too much out of what just one quarter's of experience, but we should be able to resume at some time during the year the cadence that we've historically shown of incremental, sequential improvements of maybe 10 to 20 basis points quarter over quarter.
Bernie Blegen: So we are starting to see a backlog developing, which I don't want to make too much out of what just one quarter's of experience, but we should be able to resume at some time during the year the cadence that we've historically shown of incremental, sequential improvements of maybe 10 to 20 basis points quarter over quarter.
Speaker #3: quarter.
Speaker #7: Sounds good. Thank
Joe Quatrochi: Sounds good. Thank you. Thanks, Bernie.
Joe Quatrochi: Sounds good. Thank you. Thanks, Bernie.
Speaker #7: you. Thanks, Bernie.
Speaker #1: Our next question is from Jack Egan of Chartered Research. Jack, your line is now open.
Speaker #1: Our next question is from Jack Egan of Chartered Research. Jack, your line is now open. Great.
Arthur Lee: Our next question is from Jack Egan of Charter Equity Research. Jack, your line is now open.
Arthur Lee: Our next question is from Jack Egan of Charter Equity Research. Jack, your line is now open.
Josh Buchalter: Great. Thanks for taking the questions, and I'll echo the congratulations for Bernie and Rob. I had a bit of a technical one. So during last year's Investor Day, you mentioned a packaging innovation that would allow you to basically double the current density of your modules to about 3A/mm². And I was just curious, are there any updates on that? Is that still a work in progress, or is there kind of a timeline for that milestone?
Josh Buchalter: Great. Thanks for taking the questions, and I'll echo the congratulations for Bernie and Rob. I had a bit of a technical one. So during last year's Investor Day, you mentioned a packaging innovation that would allow you to basically double the current density of your modules to about 3A/mm². And I was just curious, are there any updates on that? Is that still a work in progress, or is there kind of a timeline for that milestone?
Speaker #3: Thanks for taking the questions. And I'll echo the congratulations for Bernie and Rob. I had a bit of a technical one. So during last year's investor day, you mentioned a packaging innovation that would allow you to basically double the current density of your modules to about three amps per millimeter squared.
Speaker #3: And I was just curious, are there any updates on that? Is that still a work in progress or is there kind of a timeline for that milestone?
Michael Hsing: We started sampling those products, and again, we expect to have shipping in this quarter and next quarter. This quarter, yeah. Those are already qualified. And our customers were through a qualification on it.
Michael Hsing: We started sampling those products, and again, we expect to have shipping in this quarter and next quarter. This quarter, yeah. Those are already qualified. And our customers were through a qualification on it.
Speaker #4: products. And again, we expect to have a shipping We started sampling those in this quarter and next quarter. This quarter. Yeah. Those already implemented.
Speaker #4: Already qualified. And our customers were sort of qualification on
Speaker #4: it.
Speaker #3: Got it.
Josh Buchalter: Got it. Okay. That's great to hear. And then kind of from a higher level than, last quarter, you talked a bit about the gross margin implications of moving from a silicon supplier to a system provider over the long term. I was a bit curious about the impact on OpEx as well. I mean, is that going to require you to kind of bring on new teams with experience in systems, or is there enough overlap between the chip design and system design processes that you could accomplish it organically, I guess? Any details on the impact to R&D dollars or SGA leverage would be nice.
Josh Buchalter: Got it. Okay. That's great to hear. And then kind of from a higher level than, last quarter, you talked a bit about the gross margin implications of moving from a silicon supplier to a system provider over the long term. I was a bit curious about the impact on OpEx as well. I mean, is that going to require you to kind of bring on new teams with experience in systems, or is there enough overlap between the chip design and system design processes that you could accomplish it organically, I guess? Any details on the impact to R&D dollars or SGA leverage would be nice.
Speaker #3: Okay. Great to hear. And then kind of from a higher level then, last quarter you talked a bit about the gross margin implications of moving from a silicon supplier to a system provider over the long term.
Speaker #3: I was a bit curious about the impact on OPEX as well. I mean, is that going to require you to kind of bring on new teams with experience in systems, or is there enough overlap between the chip design and system design processes that you can accomplish it organically, I guess?
Speaker #3: Any details on the impact to R&D dollars or SGA leverage would be nice.
Speaker #4: Well, we need to get first things. Okay, first. Okay. And we only gained, not lose. Okay? I never believed big dollars. Okay? Investments. Okay?
Michael Hsing: Well, we need to first things first, okay, and we only gain, not lose. Okay? I never believed big dollars and investments translate to the bigger gain. Okay? That's bullshit to me. And so look at MPS. We're creating a few thousand, 4- to 5-thousand products, and I lost track. We addressed the multiple second-world market. With that we can put all these 1 plus 1 is equal 3, okay, not just 2 anymore. We can put all these products in the systems, and we can provide higher values to end users, which doesn't mean we're building a refrigerator. We're building a TV. Okay? We're building some things to alleviate our customers' design effort, manufacturing effort, and give us a higher ASP. And I said earlier that we're sick and tired of selling silicons. Okay?
Michael Hsing: Well, we need to first things first, okay, and we only gain, not lose. Okay? I never believed big dollars and investments translate to the bigger gain. Okay? That's bullshit to me. And so look at MPS. We're creating a few thousand, 4- to 5-thousand products, and I lost track. We addressed the multiple second-world market. With that we can put all these 1 plus 1 is equal 3, okay, not just 2 anymore. We can put all these products in the systems, and we can provide higher values to end users, which doesn't mean we're building a refrigerator. We're building a TV. Okay? We're building some things to alleviate our customers' design effort, manufacturing effort, and give us a higher ASP. And I said earlier that we're sick and tired of selling silicons. Okay?
Speaker #4: And translate to the bigger gain. Okay? That's a bullshit. And so look at MPS. We creating a few thousand, four to five thousand products, and I lost tracking we addressed the multiple segment of market.
Speaker #4: Why we cannot put all these 'one plus one is equal to three'? Okay? Not just two anymore. We can put all these products, putting the systems.
Speaker #4: And we can provide higher values. To end users. Which doesn't mean we're building a refrigerator. We're building a TV. Okay? We're building some things in a to alleviate our customers' design effort, manufacturer effort.
Speaker #4: And that's in a give us a high ASP. And I said earlier, there were sick and tired of selling silicons. Okay? But why we can't just put all the silicon together and migrate to a system levels like a modules.
Michael Hsing: Why we can just put all the silicon together and migrate to system levels, like modules, okay, and systems. You will see more and more. At least I can say the net margins, net profit has to increase. It's going to be a company that's going to be a lot more efficient.
Michael Hsing: Why we can just put all the silicon together and migrate to system levels, like modules, okay, and systems. You will see more and more. At least I can say the net margins, net profit has to increase. It's going to be a company that's going to be a lot more efficient.
Speaker #4: Okay? And like system. You will see more and more. So at least I can say the net margins net profit had to increase. And then the company is going to be a lot more efficient.
Speaker #3: Okay. I want to touch on something—that this transformation has been occurring now for well over 10 years. If you think about it, we were pretty much completely an analog design house 10, 12 years ago.
Bernie Blegen: Good. I want to touch on something that this transformation has been occurring now for well over 10 years. If you think about, we were pretty much completely an analog design house 10, 12 years ago. And then we've been able to migrate, where we added both digital engineers and software engineers. And now we've had to take on new responsibilities and new skill sets related to packaging, and, as Michael said, testing. And each time we've done this, we've maintained the same level of R&D efficiency of getting the most out of the dollars spent. So just changing to develop new skill sets around the new opportunities we've identified does not necessarily mean that it's going to get more expansive or it's going to compress our operating margins.
Bernie Blegen: Good. I want to touch on something that this transformation has been occurring now for well over 10 years. If you think about, we were pretty much completely an analog design house 10, 12 years ago. And then we've been able to migrate, where we added both digital engineers and software engineers. And now we've had to take on new responsibilities and new skill sets related to packaging, and, as Michael said, testing. And each time we've done this, we've maintained the same level of R&D efficiency of getting the most out of the dollars spent. So just changing to develop new skill sets around the new opportunities we've identified does not necessarily mean that it's going to get more expansive or it's going to compress our operating margins.
Speaker #3: And then we've been able to migrate where we added both digital engineers and software engineers. And now we've had to take on new responsibilities and new skill sets related to packaging.
Speaker #3: And as Michael said in testing. And each time we've done this, we've maintained the same level of R&D efficiency. Of getting the most out of the dollars spent.
Speaker #3: So just changing to develop new skill sets around the new opportunities we've identified does not necessarily mean that it's going to get more expansive or it's going to compress our operating.
Speaker #3: Margins. And I just have one
Tony Balow: I'll just have one last comment. Even we made the model during Investor Day, Jack, that was fully aware of this transition. And so we talked about growing OpEx lower than revenue and giving some leverage to the model. We knew this transition was happening when we put that guidance out there.
Tony Balow: I'll just have one last comment. Even we made the model during Investor Day, Jack, that was fully aware of this transition. And so we talked about growing OpEx lower than revenue and giving some leverage to the model. We knew this transition was happening when we put that guidance out there.
Speaker #2: Even when we made the model during Investor Day, Jack, that was fully aware of this transition. And so we talked about growing OPEX lower than revenue, giving some leverage to the model.
Speaker #2: We knew this transition was happening when we put that guidance out there.
Speaker #3: Got it. Okay. Thank you all for all the color.
Josh Buchalter: Got it. Okay. Thank you all for all the color.
Josh Buchalter: Got it. Okay. Thank you all for all the color.
Speaker #2: Yeah. Our last
Operator: Yeah.
Operator: Yeah.
Arthur Lee: Our last question is from Sebastien Naji of William Blair. Sebastien, your line is now open.
Arthur Lee: Our last question is from Sebastien Naji of William Blair. Sebastien, your line is now open.
Speaker #1: question is from Sebastian Nash of William Blair. Sebastian, your line is now
Speaker #1: open.
Speaker #5: Yeah. Good
Quinn Bolton: Yeah. Good afternoon, and thanks for taking the questions. I'll just echo the best wishes for you, Bernie, in your retirement. My first question is really on the shift to vertical power solutions in the data center. As we move through 2026, what are your expectations for adoption of vertical power? And has that changed at all from your view in previous quarters?
Quinn Bolton: Yeah. Good afternoon, and thanks for taking the questions. I'll just echo the best wishes for you, Bernie, in your retirement. My first question is really on the shift to vertical power solutions in the data center. As we move through 2026, what are your expectations for adoption of vertical power? And has that changed at all from your view in previous quarters?
Speaker #5: afternoon. And thanks for taking the questions. I'll just echo the best wishes for you, Bernie, your retirement. My first question is really on the shift to a vertical power solutions in the data center.
Speaker #5: As we move through 2026, what are your expectations for adoption of vertical power? And has that changed at all from your view in previous quarters?
Speaker #3: Vertical power?
Rick Schafer: Vertical power? Oh, that's a long everybody's going to vertical power, I guess. Okay? And those ones don't. And sooner or later, they will.
Rick Schafer: Vertical power? Oh, that's a long everybody's going to vertical power, I guess. Okay? And those ones don't. And sooner or later, they will.
Speaker #4: Oh, that's a long that's an everybody's going to a vertical power, so I guess. Okay? And those who don't, sooner or later they
Speaker #4: Will. This is just where the direction of the
Bernie Blegen: This is just where the direction of the market. It's the only energy-efficient solution you can put in place if you're going to operate in these high-voltage.
Bernie Blegen: This is just where the direction of the market. It's the only energy-efficient solution you can put in place if you're going to operate in these high-voltage.
Speaker #3: market. It's the only energy efficient solution you can put in place if you're going to operate in these high voltage current. So that's just a natural evolution of the
Rick Schafer: High current.
Rick Schafer: High current.
Bernie Blegen: High current. So that's just a natural evolution of the marketplace.
Bernie Blegen: High current. So that's just a natural evolution of the marketplace.
Speaker #3: marketplace. Got
Quinn Bolton: Got it. So do you think that starts to drive revenue in 2026 then? Is that fair to say?
Quinn Bolton: Got it. So do you think that starts to drive revenue in 2026 then? Is that fair to say?
Speaker #5: So, do you think that starts to drive revenue in 2026?
Speaker #5: Then? Is that fair to say? Oh, yeah, yeah, yeah.
Rick Schafer: Oh, yeah, yeah, yeah. Yeah.
Rick Schafer: Oh, yeah, yeah, yeah. Yeah.
Speaker #5: Okay. Great. Great. Yeah.
Quinn Bolton: Okay.
Quinn Bolton: Okay.
Speaker #4: Oh, yeah.
Rick Schafer: Oh, yeah.
Rick Schafer: Oh, yeah.
Quinn Bolton: Great. Great. That's helpful. And then maybe just as a follow-up on your optical module business, I think you talked about this a little bit in a previous question, but as we think about this shift to Co-Packaged Optics that's getting a lot more attention these days, how does that potentially change your revenue opportunity in optics? Is it more revenue per port? Are the ASPs significantly higher? Any thoughts on that?
Quinn Bolton: Great. Great. That's helpful. And then maybe just as a follow-up on your optical module business, I think you talked about this a little bit in a previous question, but as we think about this shift to Co-Packaged Optics that's getting a lot more attention these days, how does that potentially change your revenue opportunity in optics? Is it more revenue per port? Are the ASPs significantly higher? Any thoughts on that?
Speaker #5: That's helpful. And then maybe, just as a follow-up on your optical module business—I think you talked about this a little bit in a previous question—but as we think about this shift to co-packaged optics that's getting a lot more attention these days, how does that potentially change your revenue opportunity in optics?
Speaker #5: Is it more revenue per port? Are the ASPs significantly higher? Any thoughts on that?
Speaker #4: Higher current, higher density is always good for us. And we're smart in the increased power. And there's a lot more
Michael Hsing: Higher current, higher density is always good for us. We're smiling at the increased power. That's a lot more opportunity for us.
Michael Hsing: Higher current, higher density is always good for us. We're smiling at the increased power. That's a lot more opportunity for us.
Speaker #4: opportunity for us. And a higher Yeah, higher level of
Bernie Blegen: A higher level of integration.
Bernie Blegen: A higher level of integration.
Speaker #3: level of integration.
Michael Hsing: Yeah, higher level of integrations. Widen the competition gap.
Michael Hsing: Yeah, higher level of integrations. Widen the competition gap.
Speaker #4: Integrations, and widen the competition gap.
Speaker #2: Yeah. I think the only thing I'd add there is, again, I think that's, again, for a long term, I don't think that necessarily moves the needle in '26.
Tony Balow: Yeah. I think the only thing I'd add there is, again, I think that's, again, for a long term. I don't think that necessarily moves the needle on 2026, just to be sure, but it's certainly something we're engaged in over the longer term.
Tony Balow: Yeah. I think the only thing I'd add there is, again, I think that's, again, for a long term. I don't think that necessarily moves the needle on 2026, just to be sure, but it's certainly something we're engaged in over the longer term.
Speaker #2: Just to be sure, but it's certainly something we're engaged in over the longer term.
Speaker #5: Okay. Got it. Makes sense. Thank you.
Quinn Bolton: Okay. Got it. Makes sense. Thank you.
Quinn Bolton: Okay. Got it. Makes sense. Thank you.
Speaker #1: This concludes our Q&A session. I would now like to turn the webinar back over to
Arthur Lee: This concludes our Q&A session. I would now like to turn the webinar back over to Tony.
Arthur Lee: This concludes our Q&A session. I would now like to turn the webinar back over to Tony.
Speaker #1: Tony. I'd like to thank all of you for joining us
Josh Buchalter: I'd like to thank all of you for joining us today on this conference call. Our Q1 2026 conference call will likely be held in late April. Thank you, and have a great day.
Josh Buchalter: I'd like to thank all of you for joining us today on this conference call. Our Q1 2026 conference call will likely be held in late April. Thank you, and have a great day.
Speaker #3: today on this conference call. Our first quarter 2026 conference call will likely be held in late April. Thank you, and have a great
