Q1 2026 Monolithic Power Systems Inc Earnings Call

April 30, 2026

Speaker #1: Good day, and thank you for standing by. Welcome to the MONOLITHIC POWER SYSTEMS, Inc., first quarter 2026 earnings conference call. At this time, all participants are in a listen-only mode.

Operator: Good day, and thank you for standing by. Welcome to the Monolithic Power Systems, Inc. Q1 2026 earnings conference call. We are joined by speakers Michael Hsing, CEO and founder of MPS, Rob Dean, interim CFO, and Tony Balow, Vice President of Finance. Now I would like to turn the conference over to Arthur Lee to read a safe harbor statement. Please go ahead.

Speaker #1: After the speaker's presentation, there will be a question-and-answer session. To ask a question during the session, you will need to press star 11 on your telephone.

Speaker #1: You will then hear an automated message advising your hand is raised. To withdraw your question, please press star 11 again. Please be advised that today's conference is being recorded.

Speaker #1: We are joined by speakers Michael Singh, CEO and founder of MPS, Rob Dean, interim CFO, Tony Balo, Vice President of Finance, and now I would like to turn the conference over to Arthur Lee to read a safe-harbor statement.

Speaker #1: Please go ahead.

Speaker #2: Earlier today, MPS released a written commentary on our results of operations for the first quarter ended March 31, 2026. This document can be found on our website.

Arthur Lee: Earlier today, MPS released a written commentary on our results of operations for Q1 ended 31 March 2026. This document can be found on our website. Before we begin, I would like to remind everyone that in the course of today's presentation, we may make forward-looking statements and projections within the meaning of the Private Securities Litigation Reform Act of 1995 that involve risk and uncertainties. The risk, uncertainties, and other factors that could cause actual results to differ from these forward-looking statements are identified in the safe harbor statements contained in the Q1 2026 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. We assume no obligation to update this information. Now, I would like to turn the call over to Tony.

Speaker #2: Before we begin, I would like to remind everyone that in the course of today's presentation, we may make forward-looking statements and projections within the meaning of the private securities litigation reform act of 1995 that involve risk and uncertainties.

Speaker #2: 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 Q1 2026 earnings commentary and in our SEC filings, including our Form 10-K and Forms 10-Q, which can be found on our website.

Speaker #2: Our statements are made as of today, and we assume no obligation to update this information. Now, I would like to turn the call over to Tony.

Speaker #3: Thanks, Arthur. Good afternoon and welcome to our Q1 2026 earnings call. In Q1, MPS achieved record quarterly revenue of $804 million. 7% higher than the fourth quarter of 2025 and 26% higher than the first quarter of 2025.

Tony Balow: Thanks, Arthur. Good afternoon, and welcome to our Q1 2026 earnings call. In Q1, MPS achieved record quarterly revenue of $804 million, 7% higher than Q4 2025 and 26% higher than Q1 2025. Our quarterly performance was a result of our continued innovation, our consistent execution, and the resilience of our diversified market strategy. Let me call out a few highlights from the quarter. Our communications end market grew 33% sequentially on the strength of our power solutions for optical modules and switches. The pipeline for our automotive and Enterprise Data end markets, including server, continued to accelerate as we won multiple new projects across customers and regions.

Speaker #3: Our quarterly performance was a result of our continued innovation, our consistent execution, and the resilience of our diversified market strategy. Let me call out a few highlights from the quarter.

Speaker #3: Our communications and market grew strength of our power solutions for optical modules and switches. The pipeline for our automotive and enterprise data and markets, including server, continued to accelerate as we won multiple new projects across customers and regions.

Speaker #3: We sampled our first high-speed interface products for DDR5 at major customers and MPS continued to grow our capacity past our original $4 billion plan with a new goal of reaching $6 billion in the near future.

Tony Balow: We sampled our first high-speed interface products for DDR5 at major customers, MPS continued to grow our capacity past our original $4 billion plan with a new goal of reaching $6 billion in the near future. We continue to adjust to the fluid geopolitical and macroeconomic environment, our diversified market strategy remains unchanged. MPS focuses on innovation and solving our customers' most challenging problems. We consistently invest in new technologies that open new end markets and applications and accelerate our transition from chips only to a full-service silicon-based solution provider. Finally, we continue to expand and diversify our global supply chain, allowing us to capture future growth opportunities, maintain supply stability, and rapidly adapt to market changes as they occur. Operator, you may now open the webinar for questions.

Speaker #3: We continue to adjust to the fluid geopolitical and macroeconomic environment, but our diversified market strategy remains unchanged. MPS focuses on innovation and solving our customers' most challenging problems.

Speaker #3: We consistently invest in new technologies that open new end markets and applications and accelerate our transition from chips only to a full-service silicon-based solution provider.

Speaker #3: And finally, we continue to expand and diversify our global supply chain allowing us to capture future growth opportunities maintain supply stability and rapidly adapt to market changes as they occur.

Speaker #3: Operator, you may now open the webinar for questions.

Speaker #1: As a reminder, to ask a question, please press *11 on your telephone and wait for your name to be announced. To withdraw your question, please press *11 again.

Operator: Our first question comes from Ross Seymore with Deutsche Bank. Your line is open.

Speaker #1: Please stand by while we compile the Q&A roster. Our first question comes from Ross Seymour with Deutsche Bank. Your line is open.

Operator: Our first question comes from Ross Seymore with Deutsche Bank. Your line is open.

Speaker #4: Hi guys. Thanks for letting me ask a question. I just wanted to dig a little bit into the enterprise data side of things. Can you just talk about the different trends you're seeing between kind of the XPU side versus the CPU server CPU side?

Ross Seymore: Hi, guys. Thanks for letting me ask a question. I just wanted to dig a little bit into the Enterprise Data side of things. Can you just talk about the different trends you're seeing between kind of the XPU side versus the CPU, server CPU side? I know you mentioned in your preamble that the backlog and visibility was improving in both. Given the strength of demand we're hearing elsewhere in the server CPU side of things, I wondered how you guys are doing there.

Speaker #4: I know you mentioned in your preamble that the backlog and visibility was improving in both, but given the strength of demand we're hearing elsewhere in the server CPU side of things, I wondered how you guys are doing there.

Speaker #3: Both are good. You have maybe Tony, you can talk to that.

Tony Balow: Both are good. Yeah, maybe, Tony, you can talk to that.

Michael Hsing: Both are good. Yeah, maybe, Tony, you can talk to that.

Tony Balow: Yeah, I'll give a little more color. Ross, if you recall, even last year in 2025, we had talked about CPU being a tailwind, and we continue to see that here in 2026. If you look across Enterprise Data for us, right, as we've said, it's increasingly hard to differentiate between sort of AI solutions and CPU. In general, all the growth drivers are intact. We're ramping new customers, we've been ramping existing customers. We continue to see the transition to modules, and like I said, plain server has been a tailwind, and we think it will continue to be so.

Speaker #5: Yeah, I'll give a little more color. And Ross, if you recall, even last year in 2025, we had talked about CPU being a tailwind.

Speaker #5: And we continue to see that here in 2026. But if you look across enterprise data, for us, right, as we've said, it's increasingly hard to differentiate between sort of AI solutions and CPU.

Speaker #5: But in general, all the growth drivers are intact. We're ramping new customers. We've been ramping existing customers. We continue to see the transition to modules.

Speaker #5: And like I said, plain server has been a tailwind, and we think it will continue to be so.

Speaker #4: Thanks for that. And I guess the second question would be on the storage and computing side of things. That seemed to be a little bit better than feared in the first quarter.

Ross Seymore: Thanks for that. I guess, the second question would be on the storage and computing side of things that seem to be a little bit better than feared in Q1. Talk about the tailwinds or headwinds given what's happening from a macro perspective, and then potentially the difference between what you guys do on the storage side versus the computing side.

Speaker #4: Talk about the tailwinds or headwinds given what's happening from a macro perspective and then potentially the difference between what you guys do on the storage side versus the computing side.

Speaker #3: Yeah, I'll start on that one, and then I'll let Mike and Rob jump in. But as you know, right, that segment really has sort of two separate businesses in it.

Tony Balow: Yeah, I'll start on that one, then I'll let Michael and Rob jump in. As you know, right? That segment really has sort of 2 separate businesses in it. The storage side obviously has remained strong as it's really been indexed to a lot of the data center business. We've seen strength in DDR5, we've seen strength in HDD, SSD, continue out of last year and into Q1. On the notebook side, we're still more cautious on that side. As you know, there's really 2 dynamics there. I'm sure you've heard other companies talk about potential TAM headwinds associated with memory shortages or elasticity from memory prices. Remember, we also selectively play in that part of the market that has lower margins around consumer.

Speaker #3: The storage side, obviously, has remained strong as it's really been indexed to a lot of the data center business. And we've seen strength in DDR5.

Speaker #3: We've seen strength in HDD and SDD continue out of last year and into Q1. On the notebook side, we're still more cautious on that side.

Speaker #3: As you know, there's really two dynamics there. I'm sure you've heard other companies talk about potential TAM headwinds associated with memory shortages or elasticity from memory prices.

Speaker #3: But remember, we also selectively play in that part of the market that has lower margins around consumer. And so I think, and we look forward on those two, on that business going through the year, I think we're still very optimistic about storage staying strong.

Tony Balow: I think, and if we look forward on those two, on that business going through the year, I think we're still very optimistic about storage staying strong, probably much more cautious on the notebook side.

Speaker #3: Probably much more cautious on the notebook side.

Speaker #4: Thank you.

Ross Seymore: Thank you.

Speaker #1: Bye. But the notebooks, and we don't really care this quarter or next quarter. As long as we develop the best solutions, our power densities and our customers' ease of use, and these design that we have, the revenue will run.

Michael Hsing: The notebooks. We don't really care this quarter or next quarter, because as long as we develop the best solutions, our power densities and can, and our customers ease of use and these design win that we have, the revenue will rise.

Speaker #3: All right. Operator, next question.

Tony Balow: All right, operator, next question.

Speaker #1: Thank you. Our next question comes from William Stein with Truist Securities. Your line is open.

Operator: Thank you. Our next question comes from William Stein with Truist Securities. Your line is open.

Speaker #5: Great. First, I'd like to ask about manufacturing. You noted in the press release that you passed the $4 billion target. You're now working to $6 billion capacity.

William Stein: Great. First I'd like to ask about manufacturing. You noted in the press release that you passed the $4 billion target, you're now working to $6 billion capacity. Maybe you can update us as to the strategy around geographic placement of your capacity, and maybe remind us what's going on from a technology perspective. This used to be a big focus, you know, of the various BCD iterations that you that you produce. Can you bring us up to speed as to what is the latest BCD generation? Thank you.

Speaker #5: Maybe you can update us as to the strategy around geographic placement of your capacity and maybe remind us what's going on from a technology perspective?

Speaker #5: This used to be a big focus of the various BCD iterations that you produce. But can you bring us up to speed as to what is the latest BCD generation?

Speaker #5: Thank you.

Michael Hsing: I answer your last question, sir, first. We are still around the 60 nanometers, and okay, maybe we'll go down to 40, 45 nanometers. These ones, like, as a power density keep, as a market trend, the power increase it, and we increase the power densities. It's just old stories. You know, we keep doing the same things in the last 20 years. We just do better than our competitors. For the $6 billion goal for manufacturing pipelines, Clearly, we see our near futures. We see a lot more activities of a lot more potentials.

Speaker #3: I’ll answer your last portion. First, we are still around the 16 nanometers, and maybe we’ll go down to 40, 45 nanometers. And these ones, as a power density, as a market trend, the power increases and then we increase the power densities.

Speaker #3: And it's just an old story. We keep doing the same things in the last 20 years. And we just do better than our competitors.

Speaker #3: For the $6 billion gold for manufacturing pipelines, clearly, we have our near futures; we see a lot more activity of a lot more potentials and all these design wings is imminent.

Michael Hsing: Like, and all these design win is imminent, come, they're turning into our revenues.

Speaker #3: They were turning into a revenue.

Speaker #5: And maybe just to add, well, I think I'm telling you what you know, but on the $4 billion of capacity, we talked about that being very geographically diverse, both inside and outside of China.

Tony Balow: Maybe just to add, Will, I think I'm telling you what you know, but on the $4 billion of capacity, we talked about that being very geographically diverse, both inside and outside of China. Remember, our strategy really is to maintain that supply chain diversity. We'll continue to try to have that balance going forward.

Speaker #5: And remember, our strategy really is to maintain that supply chain diversity. So we'll continue to try to have that balance going forward.

Speaker #1: Thank you. Our next question comes from Joshua Buckwalter with TD Callen. Your line is open.

Operator: Thank you. Our next question comes from Joshua Buchalter with TD Cowen. Your line is open.

Speaker #6: Hey guys, thank you for taking my question and congrats on the results. Maybe to start, can you just help us a little bit with the models?

Joshua Buchalter: Hey, guys. Thank you for taking my question, and congrats on the results. Maybe to start, can you just help us a little bit with the models? Any help you can give us on the guidance by segment as we think about, you know, sort of a 12% sequential growth for the Q2, which segments should be above and below? Thank you.

Speaker #6: Any help you can give us on the guidance by segment as we think about sort of a 12% sequential growth for the June quarter? Which segments should be above and below?

Speaker #6: Thank you.

Speaker #3: Well, I think let me start at you guys are more interested the most, okay? Bernie last time talked to you guys will have a 50% of flaws.

Michael Hsing: Well, I think as I was. Let me start with you guys are more interested the most, okay? Bernie last time, okay, talked to you guys, we have a 50% of flaws. 50% flaws, and okay, I'll let Tony talk about, but give you a better news today, okay? I'm more excited about the other projects that I deeply involved, okay? I mean, the building automations, audio project side, as well as the robotics. These ones will pave the way for our next 2 to 3 years out, and again, the remaining on the same growth trajectory.

Speaker #3: Okay, 50% flaws. I'll let Tony talk about it, but give you a better news today, okay? And I'm more excited about other projects that I deeply involved, okay?

Speaker #3: Me and the building automations and audio project site and as well as the robotics. And these ones, I will pave the way for our next two to three years out, okay?

Speaker #3: The remainder on the same growth trajectory.

Speaker #5: Yeah, and I'll follow up a little bit. It's kind of marching through. And Josh, I know the first thing people are interested in is enterprise data.

Tony Balow: Yeah, I'll follow up a little bit as kind of marching through. Josh, I know one of the first thing people are interested in is Enterprise Data, so I'll start there. As you recall, we tend to be fairly conservative how we look at these things, waiting for the backlog to be in place. Late last year, we talked about 30% to 40% growth year over year. In the last call, we kind of rose that to a 50% floor. The strong ordering patterns that we saw start last year have kind of continued through Q1. At this point in time, I think we're comfortable raising that floor up to around 85% year over year growth.

Speaker #5: So I'll start there. And as you recall, we tend to be fairly conservative in how we look at these things, waiting for the backlog to be in place.

Speaker #5: So late last year, we talked about 30 to 40 percent growth year over year. In the last call, we kind of rose that to a 50% floor.

Speaker #5: And the strong ordering patterns that we saw start last year have kind of continued through Q1. So at this point in time, I think we're comfortable raising that floor up to around 85% year over year growth.

Speaker #5: And that will certainly be one of the drivers of growth for the year for MPS. If you look through—oh, sorry, Michael.

Tony Balow: That will certainly be one of the drivers of growth for the year for MPS. If you look to. Oh, sorry, Michael.

Speaker #3: I'll let Tony deliver a better answer. Better than our last CFO. Okay.

Michael Hsing: I'll let Tony deliver better than our last CFO. Okay.

Speaker #5: You know, if you look at the others, Josh, I think we've been signaling on communication as we've become increasingly excited about that end market with not only the optical module growth, but due to switches as well.

Tony Balow: You know, if you look at the others, Josh, it's, I think we've been signaling on communication as we become increasingly excited about that end market with not only the optical module growth, but due to switches as well. We certainly would expect those to be drivers. Auto, I think is a very consistent story. We said that would be, you know, roughly flat through the H1 of the year and ramping in later in the year. Then storage and compute, we talked about a bit already with Ross, right? There's really two different dynamics going in there, where we're still very optimistic on storage pull through by data center, more cautious on notebook.

Speaker #5: So we certainly would expect those to be drivers. Auto, I think, is a very consistent store. We've said that would be roughly flat through the first half of the year and ramping in later in the year.

Speaker #5: And then storage and compute, we talked about a bit already with Ross, right? There's really two different dynamics going in there where we're still very optimistic on storage, pull through by data center, more cautious on notebook.

Speaker #3: But here again, overall, we cannot predict which quarter goes what volumes. And that's not our business to do that. And we're winning strategy is the same as the last 20 years.

Michael Hsing: Here again, overall, we cannot predict which quarter goes ramp, what volumes. That's not our business to do that. Our winning strategy is the same as the last 20 years. As long as we deliver the best product and service our solving our problem for our customers. I don't see we lose any socket, okay. The major socket at least, okay. We keep winning. Those business, those design wins will turn into revenues.

Speaker #3: As long as we deliver the best product and the service our solving our problem, problem for our customers, and I don't see we lose any socket, okay?

Speaker #3: And the major socket at least, okay? And we keep winning. And those business, those design ways will take into revenues.

Speaker #2: Thank you both for all the color there. Unfortunately, when you deliver good news, you still get annoying follow-up questions. But yeah, I guess if we think about the incremental upside since last quarter, any help you can give us on how much of that's coming from CPUs as Ross mentioned earlier versus more confidence into either content or visibility into share on the AI accelerator side?

Joshua Buchalter: Thank you both for all the color there. You know, unfortunately, when you deliver good news, you still get annoying follow-up questions. Yeah, I guess if we think about the incremental upside since last quarter, any help you can give us on how much of that's coming from CPUs, as Ross mentioned earlier, versus more confidence into either content or visibility into share on the AI accelerator side? Thank you both and congratulations again.

Speaker #2: Thank you both and congratulations again.

Speaker #3: That's a good try. Okay. Now I'm not going to give it to you. Okay.

Michael Hsing: That's a good try. Okay, now I'm not going to give it to you. Okay.

Speaker #5: Yeah, Josh, I think we just fall back and we've talked about all the growth drivers and stay there intact. I don't think we want to try to parse out between volume and content because it can be very specific.

Tony Balow: Yeah, Josh, I think we just fall back, and when we've talked about all the growth drivers and say they're intact. I don't think we wanna try to parse out between volume and content, 'cause it'd be very specific.

Speaker #3: And in reality, it's a very difficult, okay, to separate it. Okay. What is color AI? What is servers? Okay. There's a lot of there's a lot of agent, okay, and small segment, okay, and these are very small utility box, okay?

Michael Hsing: In reality, it's very difficult to separate it. What is called AI? What is called servers? There's a lot of, there's a lot of agent in a small segment. These are very much a small utility box. We see a lot happening. I mean, maybe I don't use the right word, and you guys use it. Just based on GPUs. These are happening. That's clearly overlapped with the CPU and the, and GPU powered.

Speaker #3: We see a lot happening, okay? And maybe I don't use the right words and you guys use them, okay? And these are portable AI devices, okay?

Speaker #3: And just based on GPUs, these are happening. And that's clearly overlapped with the CPU and GPU powered.

Joshua Buchalter: Okay. Can't hurt to try. Thank you, guys.

Speaker #2: Canter to try. Thank you guys.

Speaker #3: Okay.

Michael Hsing: Okay.

Speaker #1: Thank you. Our next question comes from Rick Schaefer with Oppenheimer & Co. Your line is open.

Operator: Thank you. Our next question comes from Rick Schafer with Oppenheimer & Co. Your line is open.

Speaker #5: Oh, thanks, guys. And I'll add my congratulations and just a wow. I guess on the outlook. Maybe if I could just for a second talk about enterprise data.

Rick Schafer: Thanks, guys, and I'll add my congratulations, and just a wow, I guess, on the outlook. Maybe if I could just for a second talk about Enterprise Data. I've got a follow-up for Michael that you'll like better, but I think. You know, the top four CSPs, I think just last night, I mean, now we're over $700 billion in CapEx just from them. I mean, seems like you guys are clearly seeing that increased order velocity. My real question is, are you able to capture all of that upside? I mean, is there anything, you know, curbing your supply, your ability to capitalize, Michael?

Speaker #5: I've got a follow-up, Michael, that you'll like better, but I think. But the top four CSPs, I think just last night, I mean, now we're over 700 billion in CapEx just from them.

Speaker #5: I mean, it seems like you guys are clearly seeing that increased order velocity. My real question is, are you able to capture all of that upside?

Speaker #5: I mean, is there anything curbing your supplier, your ability to capitalize, Michael? Because in years past, you guys—MPS has kind of each kind of made your bones on always being ready for that upside.

Rick Schafer: 'Cause in years past, you guys have, you know, as yes has kind of, each kind of made your bones on always being ready for that upside and kind of never being caught short. I'm just kind of curious if that's still the case or kind of what you're seeing.

Speaker #5: And kind of never being caught short. So just kind of curious if that's still the case, or kind of what you're seeing.

Speaker #3: I think at least exactly right. Okay. And although we have a few more players, okay, and well, let me go back to a few quarters ago in these AIs and GPU powers.

Michael Hsing: I think it's exactly right. Okay, and, although we have a few more players, okay. Well, let me go back to a few quarters ago, so, okay. These AIs and, okay, I mean, GPU powers, given times will be the performance and also the manufacturing capabilities and the reliability will remain as only a few players. After a year, couple of years, it's being very clear that MPS is one of my players. As I promised over a year ago or so, we continue to do well, and, okay, in many aspects, okay, especially for the power density side. We are the best in the market segment because we provide a total monolithic power solutions.

Speaker #3: And given times, we'll be the performance and also the manufacturing capabilities and reliability will remain only a few players. And after a year, a couple of years, it's being very clear that MPS is one of our players.

Speaker #3: And as I promised, over a year ago or so. And we continue to do well. And in many aspects, okay, especially for the power density side, we are the best in the market segment because we provide a total monolithic power solutions.

Speaker #3: And we can use the single piece of a silicon versus our competitor using multiple pieces of silicons. And that clearly shows our advantage. And yet we don't want to be the dominant supplier.

Michael Hsing: We can use a single piece of a silicons versus our competitor use a multiple piece of a silicons. That clearly shows our advantage. Yet we don't wanna be the dominant suppliers, and okay, we just don't wanna be a part of it. Our goal is diversified growth.

Speaker #3: Okay. Well, we just don't want to be a part of it. And our goal is to diversify growth.

Speaker #5: Got it. And from a follow-up, Michael, I'm just curious on physical AI. Obviously, it's getting a lot more a lot more people talking about it and seeing a lot more focused.

Rick Schafer: Got it. For my follow-up, Michael, I'm just curious on physical AI. Obviously, you know, it's getting a lot more, you know, a lot more people talking about it and seeing a lot more focus. I'm just curious if you could flesh out maybe a little more your plans for that segment. You know, what kind of TAM have you guys identified there? I mean, you called out robotics, you know, a minute ago on the call. I mean, can that be a meaningful revenue contributor next year, or when would we start to see, you know, robotics start to drive top line?

Speaker #5: And I'm just curious if you could flesh out maybe a little more your plans for that segment. What kind of TAM do you have you guys identified there?

Speaker #5: I mean, you called out robotics a minute ago on the call. I mean, can that be a meaningful revenue contributor next year? Or when would we start to see robotics start to drive top line?

Speaker #3: We see this year. And but the volume still low, but it can kind of move the needle slightly. And if we go up the trains, okay, this is still at the very beginning.

Michael Hsing: We see this year, but the volume is still low, but it can kind of move the needle slightly. If we go up the trends, this is still at the very beginning, and it's very difficult to predict. Many companies have launched the first high volume robotics that we clearly benefited from it. After that, we cannot call the market segment growth, but the future is there. Clearly, when more AI adopted it in the robotics, the application will be widened.

Speaker #3: And it's very difficult to predict, okay? And many companies that launched the first high volume robotics, okay, that will clearly benefit from it. And after that, we can call the we cannot call the market segment growth.

Speaker #3: But the future is there. Clearly, when more AI adopted in the robotics, the application will be widened.

Speaker #5: And I think what you see is us try to run the typical MPS playbook, which right now we're trying to engage broadly and win all the designs we can.

Tony Balow: I think what you see is us try to run the typical MPS playbook, which right now we're trying to engage broadly and win all the designs we can. We can't control when the customers ramp, but we can control winning the sockets. That's the broad engagement we really see happening in 2026.

Speaker #5: We can't control when the customers ramp, but we can control winning the sockets. And that's the broad engagement you really see happening in 2026.

Speaker #3: That's very good point. Yeah.

Michael Hsing: That's very good point. Yep.

Speaker #5: Great. Well, thanks, guys.

Tony Balow: Great. Well, thanks, guys.

Rick Schafer: Great. Well, thanks, guys.

Operator: Thank you. Our next question comes from Quinn Bolton with Needham & Company.

Speaker #1: Thank you. Our next question comes from Quinn Bolton with Needham & Company. Your line is open.

Speaker #6: Hey, guys. I'll offer my congratulations as well on the results and outlook. Michael, Tony, I guess I wanted to ask on the comms segment.

Quinn Bolton: Hey, guys. I'll offer my congratulations as well on the results and outlook. Michael, Tony, I guess I wanted to ask on the comms segment, it was up 33% sequentially in March. It sounds like it's gonna be one of the faster-growing segments in the Q2. When I look at optical modules, I think 800 gig modules are more than doubling in 2026. My question is: Do you think the comms segment could actually grow as fast, if not faster, than Enterprise Data this year, given those trends?

Speaker #6: It was up 33% sequentially and March, it segments. And the June quarter, when I look at optical modules, I think 800 gig modules or more than doubling in '26.

Speaker #6: So my question is, do you think the comms segment could actually grow as fast, if not faster than enterprise data this year, given those trends?

Speaker #3: Yeah. Again, I'll follow Tony's answer for the last one. So we're in the business to predicting what the market trend is. Okay. And we provide this happens.

Michael Hsing: Yeah. Again, I'll follow Tony's answer the last one. Like, we're in the business to predicting what the market trend is. Okay? This happens, okay, in this particular segment. We saw a lot of activities and a lot of demand for high power density product and especially modules. I think as I mentioned about maybe a few quarters ago, this quarter's it's just jumps out. From what we learned, the power density of the module in a, with a very confined area, the data rate keep increasing. With the opticals or with the other type of a format, okay, the power will keep increasing, okay? In what rate, I cannot predict.

Speaker #3: Okay. And in this particular segment, and we saw a lot of activities and a lot of demand for high power density product. And especially modules.

Speaker #3: And I think as I mentioned about maybe a few quarters ago, and so this quarter and it's just jumps out. And I from what we learned, the power density of the module with a very confined area and the data rate keep increasing it.

Speaker #3: And with the opticals or with the other type of a format, okay, the power will keep increasing. Okay. And in what rate? I cannot predict.

Speaker #3: But in the small confined areas, and the power density is critical. And that's our basic technologies that we can apply in that segment. And then we execute fast.

Michael Hsing: In a small confined areas and the power density, power density is critical. That's our basic technology so that we can apply in that segments, then we execute it fast, then we capture the market.

Speaker #3: And then we capture the market.

Speaker #5: Yeah, and I think as ordering patterns have continued to be strong and extend, we still don't have them all the way through the year.

Tony Balow: Yeah, I think as ordering patterns have continued to be strong and extend, we still don't have them all the way through the year. I think it's pretty tough for us to call, you know, all the way through H2 right now. Certainly we'd put that end market, you know, above the corporate average.

Speaker #5: So I think it's pretty tough for us to call all the way through the back half right now. But certainly, we put that end market above the corporate average.

Speaker #6: Got it. Okay. And then I guess.

Quinn Bolton: Got it. Okay.

Michael Hsing: Yeah, the same way. I'll go back to servers, okay? Go back to the server side, okay? We in the last years, we don't know, okay, the server market will pick it up or not picking up, okay? As far as we listen to our customers, we get our inventory ready, okay? When they need it, they have those product. We just focus on deliver better product, winning more socket.

Speaker #3: Yeah. Same way. I'll go back to a server. Okay. And go back to a server side. Okay. We in the last years, we don't know.

Speaker #3: Okay. And the server market will pick it up. Not picking up. Okay. As far as we listen to our customers, we get our inventory ready.

Speaker #3: Okay. And when they need it, they have those products. And so we just focus on deliver better product, winning more socket.

Speaker #5: Yeah. I mean, and I'm a broken record, but I think it's a great example of, again, diversified approach. You land and you sort of look at the other sockets available to an application and continue to grow your SAM.

Tony Balow: Yeah. I mean, I'm a broken record, I think it's a great example of, again, diversified approach. You land and you sort of look at the other sockets available to the applications and continue to grow your SAM.

Speaker #6: Okay. Great. My follow-up question, Michael, you guys have been sampling your products for 800 or plus minus 400 volts for a few quarters now.

Quinn Bolton: Great. My follow-up question, Michael, you guys have been sampling your products for 800 or plus minus 400 volts for a few quarters now. Wondering if you could provide any feedback on how that activity is going. Can you give us any thoughts on there's a lot of debate between whether those higher power conversion steps will be more GaN-based or silicon carbide-based. If it goes GaN, will you guys have GaN-based solutions ready for that for that opportunity?

Speaker #6: Wondering if you could provide any feedback on how that activity is going and can you give us any thoughts on there's a lot of debate between whether those higher power conversion steps will be more GAN-based or silicon carbide-based if it goes GAN.

Speaker #6: Will you guys have GAN-based solutions ready for that opportunity?

Speaker #3: No. We based on the silicon carbide. And that's our solutions. We do in the past, I openly said I don't believe GAN. Okay. Now start to I didn't know what I was talking about, I guess.

Michael Hsing: No. We based on silicon carbide and that's our solutions. We do in the past, I openly said I don't believe GaN. Start to, I didn't know what I was talking about. We in the last, started last year, we developed our GaN, but it's not for 800 volts. It's for low voltage and lower power and lower power segments. We start to develop these fundamental technologies in GaN. To answer the first part of our questions, yes, we're sampling, and rather sample or call a sampling, the co-development that systems with our customers. Also our customers.

Speaker #3: Okay. At the start of last year, we developed our GAN, but it's not for 800 volts; it's for low voltage and the lower power segments.

Speaker #3: We start to develop these fundamental technologies. And in GAN. To answer the first part of our questions, yes, we sample in. Okay. And rather sample or color sampling is co-developed at that system.

Speaker #3: So with our customers. Okay. And also our customers' customers. And it's we don't talk about those. Until I guess you guys asked for us.

Michael Hsing: We don't talk about those until I guess you guys ask for us, okay. 800 volts became a household names on the Wall Street, okay. We start to talk about it and our product is working. I think the overall environment in the new 800 volts power bus data centers, a lot of things has to be resolved. We just have our for that application is ready, okay. Also have a 800 volts, okay, go to a 10,000 volts, okay. That's another segment has to be developed a lot more efficient power conversions.

Speaker #3: Okay. And 800 volts became a household number. Okay, a household name on Wall Street. Okay. And so we start to talk about it.

Speaker #3: And our product is working. And I think, overall, the environment and in the new 800-volt power bus data centers, a lot of things have to be resolved.

Speaker #3: And we just have our for that application, it's ready. Okay. And also have 800 volts. Okay. Go to a 10,000 volts. Okay. That's another segment.

Speaker #3: And has to be developed a lot more efficient power conversions. And these are all part of the all part of the pictures. NPS will play in those segments.

Michael Hsing: These are all part of the pictures. MPS will play in that, in those segments.

Speaker #6: Thank you, Michael.

Quinn Bolton: Thank you, Michael.

Speaker #2: Thank you. As a reminder, to ask a question, please press star 11 on your telephone. Again, that is star 11 to ask a question.

Operator: Thank you. As a reminder, to ask a question, please press star one one on your telephone. Again, that is star one one to ask a question. Our next question comes from Tore Svanberg with Stifel. Your line is open.

Speaker #2: Our next question comes from Tories Fonberg with Stifel, your line is open.

Speaker #3: Yes. Thanks. Michael, Tony, the congrats on another record quarter. I had a question maybe as a follow-up to a previous question on power. So I do realize there's a lot of focus on 800 volts, but before we get there, there's the move to 2000 or 2000 watt GPUs.

Tore Svanberg: Yes, thanks, Michael, Tony. Congrats on another record quarter. I had a question maybe as a follow-up to a previous question on power. I do realize there's a lot of focus on 800 volt, but before we get there, you know, there's the move to 2,000 or 2,000 watt GPUs. I know there's a lot of sort of wannabe power management companies out there, Michael. Just hoping you could touch on, you know, two of the three things that really make MPS so unique and differentiated to handle those types of power levels. 'Cause that is not like a 2028 timeframe, right? I mean, that's already next year. Yeah, if you could give some color there, that'd be great.

Speaker #3: And I know there's a lot of sort of wannabe power management companies out there, Michael. So just hoping you could touch on two of the three things that really make NPS so unique and differentiate it to handle those types of power levels.

Speaker #3: Because that's not like a 2028 timeframe, right? I mean, that's already next year. So yeah, if you could give us some color there, that'd be great.

Speaker #5: Yeah. Okay. That's a good question. I can touch it. And one of them, I already said earlier. Okay. NPS is focused on the monolithics.

Michael Hsing: Yeah. Okay. That's a good question. I can touch it. One of them I already said earlier. Like, MPS is a focus on the monolithics. We do what is the most cost-effective, how we do the integrations. We have the capabilities, like, to integrate or disintegrate, okay? The integrations we can put it in 1 modules. That's a huge advantage. With the multiple other chips, okay, if you use a particularly discrete power component, okay, discrete power FETs, it's very difficult to do for manufacturing the modules. The second things I should mention that, we invested in a module development unit for other segments, actually.

Speaker #5: And we do what is the most cost-effective and we do and how we do the integrations. And we have the capabilities to integrate or disintegrate.

Speaker #5: Okay. And the integrations and then we can put it in one module. And that's a huge advantage. And with the multiple other chips, okay, and if you use a particularly discrete power component, okay, discrete power fetch and it's very difficult to do for manufacturing the modules.

Speaker #5: The second things I should mention and then we invested in a module development. You know for other segments, actually, and since 2016, we want to move up, okay, from providing silicon-only power conversions and, okay, we do a plug and play solution.

Michael Hsing: Since 2016, we want to move up from providing silicon-only power conversions, we do a plug-and-play solution. That journey we started 2016. Immediately we know how we test these devices and how we qualify these devices. If it's high volumes and high qualities, it can't be touched by humans. Like, we develop our own test systems and, uh, own reliability systems. These are fully automated. Actually, it's all based on MPS motion product. These ones very unique. Before these systems put in productions, we can't find anything like this on the market. That's, I think to me, this is a huge advantage.

Speaker #5: That journey we started 2016. And immediately we know how we test these devices and how we qualify these devices. Again, not and if it's a high volumes and a high qualities, and again, it can be touched by humans.

Speaker #5: We develop our own test systems, and our own reliability systems. These are fully automated, and they’re all—actually, it’s all based on MPS motion product.

Speaker #5: And these ones, okay, very unique. And they before these systems putting in productions we can't find anything like these on the market. And that's I think the two to me, this is a huge advantage.

Speaker #5: And the other one is the last one that go back to semiconductors. And again, we talk about us we use a 16 nanometers. Okay.

Michael Hsing: The other one is the last one that go back to semiconductors, again, we as we talk about this, we use the 60 nanometers, we now move it to a 40 nanometers. Those increase the power density by, last time we talked about a 3 amps per millimeters cube. Now we go past that.

Speaker #5: And we now we move it to a 40 nanometers. And those are increased the power density by last time we talk about a 3 amps per millimeters.

Speaker #5: Cube. And now we go past that.

Speaker #3: Great. Thank you for that, Michael. And as my follow-up, when you mentioned a new product, I always listen to you because I remember you talked about 800 gig optical components being a new market.

Tore Svanberg: Great. Thank you for that, Michael. As my follow-up, you know, when you mention a new product, I always, you know, listen to you because I remember you talked about, you know, 800 gig optical components being a new market, and before you knew it, you had a huge business there. You now mentioned you have your first high-speed interface product sampling for DDR5. Just curious, when should we start to see material revenue from that business? You know, could that also grow into a, you know, several hundred million dollar business over the next few years? Thank you.

Speaker #3: And before you you now mentioned you have your first high-speed interface product sampling for DDR5. So just curious, when should we start to see Material Revenue from that business?

Speaker #3: And could that also grow into a several hundred million dollar business over the next few years? Thank you.

Speaker #5: That's absolutely right. Okay. And frankly, I don't know anything about this high speed. And which is the highest best engineers that cut them loose and then they create these.

Michael Hsing: That's absolutely right. Okay. Frankly, I don't know anything about this high, this high speed. Which of the highest up best engineers that cut them loose, then they created this. But from a business side, it's our natural to like a way of expanding the total service market segment that increase our SAM. We have pretty good positions in PMIC in memory. We introduce timing, timer, timing drivers, on a timing control, whatever it's, and also temperature sensors. Now there's RCD or whatever the things. That is. I know it's very difficult. It is beyond my understanding.

Speaker #5: Okay. And but from a business side, it's our natural to way of expanding the service total service market. So the increase I was seeing.

Speaker #5: And we have a pretty good position and PMIC in memory. Then we introduce timer and timing drivers. Okay. And timing control, whatever. Okay. And also temperature sensors.

Speaker #5: And now there's RCD or whatever the things. Okay. And I know it's a very difficult. This is beyond my understanding. Okay. Our engineers. Okay.

Michael Hsing: Like our engineers and our people, they pull it off. We have a few people that are compare other company, like they have 50 people, or that design groups. We will be able to pull it off in a few years. These are brilliant guys, and they want to make things happen. That's. The revenue, usually we don't talk about it, talk about a product, we sample those products. Our, clearly in the market segment, our customers are very much welcome we have another player.

Speaker #5: And our people's they pull it off. And so we have a few people that are compare other company. I have a 50 people. Okay.

Speaker #5: That design group’s okay. And we will be able to pull it off in a few years. These are brilliant guys, okay, and they want to make things happen.

Speaker #5: And the revenue usually we don't talk about it. Okay. And talk about a product. Okay. And we sample those products clearly in the market segment.

Speaker #5: Our customers are very much welcome to have another player. And tour, I'll just help you with the model a little bit. I wouldn't really have that as being a contributor to 2026 revenue.

Tony Balow: Tore Svanberg, I'll just help you with the model a little bit. I wouldn't really have that as being a contributor to 2026 revenue. I think we're really highlighting it as we continue to expand our footprint, you know, in that market.

Speaker #5: I think we're really highlighting it as we continue to expand our footprint in that market.

Speaker #3: That's fair. Thank you again, and congrats.

Tore Svanberg: That's fair. Thank you again, and congrats.

Speaker #5: Okay. Thank you.

Michael Hsing: Yeah, thank you. Mm-hmm.

Speaker #6: Thank you. Our next question comes from Gary Mobley with Loop Capital, your line is open.

Operator: Thank you. Our next question comes from Gary Mobley with Loop Capital. Your line is open.

Speaker #7: Hi, guys. Let me also extend my congratulations. I'm curious about the comms business. It's definitely to stand out for the quarter in terms of growth, upside, and I presume carrying through the into the second quarter and for the balance of the year as you previewed already.

Gary Mobley: Hi, guys. Let me also extend my congratulations. I'm curious about the comms business. That definitely is a standout for the quarter in terms of growth upside, and I presume carrying through into the second quarter and for the balance of the year as you previewed already. What I'm most curious about is, you know, how much content you have in these 100 gig optical modules, and I assume maybe top-of-rack switches. You know, maybe if you can put it in the context of, you know, by how much you see your content increasing in rack scale solutions for accelerated compute, you know, given this beachhead, you know, in these two new applications.

Speaker #7: So what I'm most curious about is how much content you have in these 800-gig optical modules, and I assume maybe Topper X switches.

Speaker #7: Maybe if you can put it in the context of by how much you see your content increasing in rack-scale solutions for accelerated compute, given this beachhead in these two new applications.

Speaker #5: I think it's more than the beachhead now. We're pretty well in the okay. Well beyond the beach now. Okay. Tony, you want to?

Michael Hsing: I think it's more than a beachhead now. Like, we're pretty, well, okay, well beyond the beach now. Again, Tony, you wanna?

Speaker #4: Yeah. I think we're going to stop short of kind of giving a dollar content. But obviously in the optical modules, right, we have a module in the module doing that.

Tony Balow: I think we're gonna stop short of kind of giving a dollar content. Obviously in the optical modules, right, we have a module in the module doing that. We obviously look at more of that than a discrete device. If you talk about switches and things of that sort, you have a whole different number of trays, for example. You have switches, you have NIC cards, you have other things like that, which all require power. I think the opportunity is, right, is you have a number of different processors sitting in these racks that we can provide power for and that we've been expanding that all sit within our Communication segment. I think we're, as usual, right, we're not gonna talk about specific content layers, especially for specific customers.

Speaker #4: So we device. If you talk about switches and things of that sort, you have a whole different number of trays, for example. You have switches.

Speaker #4: You have NIC cards. You have other things like that, which all require power. And so I think the opportunity is, right, is you have a number of different processors that sit in these racks that we can provide power for and that we've been expanding that all sit within our communication segment.

Speaker #4: But I think we're as usual, right, we're not going to talk about specific content layers, especially for specific customers.

Speaker #3: Okay. This is my follow-up. I wanted to ask about distribution channel inventory. I know it's been running lean as it's still lean relative to where you would normally place your distribution inventory and then as well maybe if you can talk about the sort of inflationary relating pricing trends that you have to pass along.

Gary Mobley: Okay. As my follow-up, I wanted to ask about distribution channel inventory. I know it's been running lean. Is it still, you know, lean relative to, you know, where you would normally, you know, place your distribution inventory? Then as well, maybe if you can talk about the sort of inflationary relating pricing trends that you have to pass along.

Speaker #4: I'll take that one. With regards to our distribution channel, we don't have a great deal of perfect visibility there. But what we have seen at least in 2025 and carrying into 2026 is that the channel has been very lean.

Tony Balow: I'll take that one. With regards to our distribution channel, we don't have a great deal of perfect visibility there. What we have seen, at least in 2025 and carrying into 2026, is that the channel has been very lean. That, you know, implies to us that, you know, we're shipping to what demand is at the market. Beyond that, we're looking good.

Speaker #4: And that implies to us that we're shipping to what demand is at the market. But beyond that, we're looking good.

Speaker #3: Okay. And pricing.

Gary Mobley: Okay. Pricing?

Speaker #5: On the for the pricing. Okay. Cost and pricing. Okay. Yeah. Some of the costs is higher. Okay. And we see the and a lot of activities.

Michael Hsing: On the-

Gary Mobley: Go ahead.

Michael Hsing: For the pricing, okay, cost pricing and, okay, yeah, some of the costs is higher, okay. We see a lot of activities, and okay. We will keep, the goal is that we keeping our margin profiles.

Speaker #5: Okay. So we will keep the goal is that we're keeping our margin profiles.

Speaker #4: Yeah. I think and just to add to Michael, I think we don't we're not looking at it as a broad-based across-the-board. But there are places where input costs have gotten higher.

Tony Balow: Yeah, I think, just to add to Michael, I think we don't, we're not looking at it broad-based across the board, but there are places where, you know, input costs have gotten higher. People are asking for expedited supply chains and things of that sort, and in those cases, yeah, you could see us raise prices to stay within our gross margin model.

Speaker #4: People are asking for expedited supply chains and things of that sort. And in those cases, yeah, you could see us raise prices to stay within our gross margin model.

Speaker #3: Thank you.

Gary Mobley: Thank you.

Speaker #6: Thank you. Our next question comes from Joe Quattroci with Wells Fargo, your line is open.

Operator: Thank you. Our next question comes from Joe Quatrochi with Wells Fargo. Your line is open.

Speaker #7: Yeah. Thanks for taking the question. Maybe just to follow up there on the gross margin. Wondering if you could just share any of the puts and takes on obviously very positive revenue acceleration and kind of not a ton of follow-through on gross margin kind of still stay in that range.

Joe Quatrochi: Yeah, thanks for taking the question. Maybe just to follow up there on the gross margin. Wondering if you could just share any of the puts and takes on the guide? It just feels like, you know, obviously very positive revenue acceleration and kinda not a ton of follow-through on gross margin, kind of still staying in that range.

Speaker #5: Yeah. Okay. Again, I said the margins in the last couple of quarters. Margins on the low end. And although it's in our models. Okay.

Michael Hsing: Yeah. Okay. I again, I said the margins in the last couple of quarters margins on the low end. Although it's in our models, okay, it's on the low end. We still improve the yields on the modules. I think that we don't have a much of a headwind, okay. We're moving up. I don't wanna give you a false hope that we're gonna jump very high, so like it seems okay. That's not MPS. We don't do that kind of things, okay?

Speaker #5: Maybe it's on the low end. And we still improve the yields and on the modules. And I think that we don't much don't have much of a headwinds.

Speaker #5: Okay. We're moving up. But I don't I'm going to give you a false hope, but we're going to jump very high soon. Okay. That's not NPS.

Speaker #5: We don't do that kind of thing. Okay.

Speaker #4: I'll expand a little bit on what Michael just said. Historically, we've been very consistent with delivering to our gross margin guide. For the last four quarters, we've been flat at 55 and a half.

Tony Balow: I'll expand a little bit on what Michael Hsing just said. Historically, we've been very consistent with delivering to our gross margin guide. For the last 4 quarters, we've been flat at 55.5%, which is at the low end of our gross margin model for growth, which ranges from 55%, mid-fifties to upper fifties. For Q2, as you noticed, we did have the confidence to increase incrementally our gross margins, mainly because we've gotten better visibility to our backlog. We saw this happening in Q4 of last year, and it's continued into Q1 of this year. That has again, given us some confidence. We do, however, see some strong headwinds potentially in H2, and so we're not.

Speaker #4: Which is at the low end of our gross margin model for growth, which ranges 55 mid-50s to upper 50s. For Q2, as you noticed, we did have the confidence to increase incrementally our gross margins.

Speaker #4: Mainly because we've gotten better visibility to our backlog. We saw this happening in the fourth quarter of last year, and it's continued into the first quarter of this year.

Speaker #4: So that has again given us some confidence. We do, however, do see some strong headwinds potentially in the second half. And so we're not we're remaining cautious for the guide in the second half of the year.

Tony Balow: We're remaining cautious, for the guide in H2 of the year.

Speaker #3: All right. That's helpful.

Joe Quatrochi: Got it. That's helpful. Maybe just on the robotics socket opportunities you talked about, you know, up for grabs or to win this year. Are those, do we think about those as being incremental? I think you talked about $150 of content, like per humanoid back at the Analyst Day. Is that the right way to think about it, or are those expanding opportunities?

Speaker #7: Maybe just on the robotics socket opportunities you talked about up for grabs or to win this year. Are those—do we think about those as being incremental?

Speaker #7: So I think you talked about 150 of content for humanoid back at the analyst day. Is that the right way to think about it?

Speaker #7: Or are those expanding opportunities?

Michael Hsing: It really varies. I mean, humanoid is the most visible. You only see some dancing robots and, I mean, those kind of. What we focus on is in the robotics. If it's a remote and without a power cord plugging the robot. Those have the battery operations. Our battery management product plays a role in there. The other one is the AI side, the compute side, for power the GPUs, and these automated control units, and also as well as these sensors. The other segment is the actuators, the motion side. That's overall we sell. We offer for the robotic companies.

Speaker #5: It really varies. Okay. I mean, humanoid is the most visible. You really see some dancing robots. Okay. I mean, those kind of and the what we focus on is being in the robotics.

Speaker #5: If then without a power cord plugging the robot. Okay. And those have battery operations. And so our battery management product plays a role in there.

Speaker #5: And the other one is the AI side, the compute side, okay? For powering up the GPUs, okay? And these are automated control units, okay?

Speaker #5: And also as well as these are sensors. And the other segment is the actuators. The motion side. That's overall we sell. We offer for the robotic companies.

Speaker #5: And many applications, and it's in the actuators. And they can be in medical assist for rehab purposes. Okay. We see those kinds of things happening.

Michael Hsing: Many applications and is in the actuators, and they can be in a medical assist for rehab purposes, okay. We see those kind of things happening. For the dollar content, as I go back to your dollar content, it's very difficult to say. It's like, it's a variety of applications. We sell in chip and to selling modules, okay. So the dollar content is also different, and it's very difficult to judge. The trend is that these robot will happen, and the world will be a lot more automated, and it can assist the human to do a lot of things, okay.

Speaker #5: And for the dollar content, as I go back to your dollar content, it's very difficult to say. Okay. It's a variety of applications. We sell in chip and to selling modules.

Speaker #5: Okay. And so the dollar content is also different. And it's very difficult to judge. But the trend is, these robots will happen. And there will be a lot more—the world will be a lot more automated.

Speaker #5: And you can't assist human to do a lot of things. Okay.

Joe Quatrochi: Thank you.

Speaker #3: Thank you.

Speaker #6: Thank you. As a reminder to ask a question, please press star 11 on your telephone. Again, that is star 11 to ask a question.

Operator: Thank you. As a reminder, to ask a question, please press star one one on your telephone. Again, that is star one one to ask a question. Our next question comes from Chris Caso with Wolfe Research. Your line is open.

Speaker #6: Our next question comes from Chris Caso with Wolf Research, your line is open.

Speaker #5: Yes. Thank you. Good evening. I guess the first question would be about the ED segment, and if you could talk about the growth on Merchant Solutions versus ASIC Solutions this year.

Chris Caso: Yes, thank you. Good evening. I guess the first question would be about the ED segment. If you could talk about the growth on merchant solutions versus ASIC solutions this year, you know, what you're expecting with regard to content. I know you've got a strong position in both, but do you expect outsized growth in one area or the other? Any color you could provide would be helpful. Thank you.

Speaker #5: And what's your expectation with regard to content? I know you've got a strong position in both, but do you expect outsized growth in one area or the other?

Speaker #5: Any color you could provide would be helpful, thank you. We don't divide it into 'these are the learning side' and 'inferencing sides.' Okay. And frankly, we don't know how to separate it.

Michael Hsing: We don't, we don't divide it into, these are the learning side and inferencing sides, okay, and frankly, we don't know how to separate it, and they could use the same similar product. What we do is that while we're winning all these segments is because the power density, as I said earlier, okay? Nobody want to waste power. Power density is directly related to power efficiency. They want a smaller size, and they want to have a high efficiency. It really doesn't matter to us which segment.

Speaker #5: And they could use the same similar product. What we do is while we're winning all these segments, it's because the power density as I said earlier.

Speaker #5: Okay. And nobody wants to waste the power. And efficiency is power density is directly related to power efficiency. And so they want a smaller size.

Speaker #5: And they want to have a higher efficiency. It really doesn't matter to us which segment.

Speaker #3: Chris, the only thing I'd add right is I think we're comfortable raising the floor from 50% to 85%, not because there's been a fundamental change in the growth drivers or how we're approaching the market.

Tony Balow: Chris, the only thing I'd add, right, is I think is we're comfortable raising the floor from 50% to 85%, not because there's been a fundamental change in the growth drivers or how we're approaching the market. It's really, as you know, our more comfort about what's in backlog, and we've seen that extended ordering pattern. I think to Michael's point, you know, I don't think we subdivided the content and volume. I just wanna make sure you know that I don't think anything's changed other than being able to see more orders in the books going forward.

Speaker #3: It's really, as you know, our more comfort about what's in backlog. And we've seen that extended ordering pattern. So I think, to Michael's point, I don't think we subdivided the content and volume.

Speaker #3: But I just want to make sure you know that I don't think anything's changed, other than being able to see more orders in the books going forward.

Speaker #3: Got it.

Chris Caso: Got it. Thanks. As a follow-up, if I could ask about the auto segment. You talked about that being flattish in H1 with some growth in H2. You know, obviously auto's been a little more variable in terms of, you know, its recovery. You know, there was some data out of China, which was a little weaker in the beginning of the year. You know, perhaps you'd give some color on the visibility you have in auto and why you think that starts to grow again in H2?

Speaker #7: Thanks. As a follow-up, if I could ask about the auto segment—you talked about that being flattered in the first half, with some growth in the second half.

Speaker #7: Obviously, auto has been a little more variable in terms of its recovery. There was some data out of China which was a little weaker in the beginning of the year.

Speaker #7: Perhaps you give some color on the visibility you have at auto and why you think that starts to grow again in the second half.

Speaker #5: I don't pay attention to these which one is strong, which one's which segment is strong, which continent. And it's more strong or weaker. Okay.

Michael Hsing: I don't pay attention to these, which one is strong, which one's, which segment is strong, which continent is more strong or weaker. Again, because these are chasing the market. We're not chasing the market. Whatever happen, happens. Okay, we have the product ready, we can deliver. Tony, you can talk about in near terms and okay, I don't pay any attention to it.

Speaker #5: Because these are chasing the market. We're not chasing the market. Whatever happened, happens, okay? We have the product ready. We can deliver. But Tony, you can talk about the near term.

Speaker #5: Okay. I don't pay any attention to it.

Speaker #3: Yeah, I mean, I can add a little bit more there. I think, Chris, the shape of the year, as you said—right—as our expectation there hasn’t necessarily changed.

Tony Balow: Yeah, I mean, I can add a little bit more there. I think, Chris, the shape of the year, as you said, right, our expectation there hasn't necessarily changed. Why we've talked about seeing that ramp later in the year is really on our belief on one of some of these designs that we previously won come to market. We can't, we can't control when our customers ramp, but the pipeline in auto has been expanding, and based on our current belief, we would expect to see that ramp later in the year. Again, as always, right, we'll monitor as things go through, but that's our belief at the moment.

Speaker #3: And while we've talked about seeing that ramp later in the year, it's really on our belief on one of some of these designs that we've previously won.

Speaker #3: Come to market. We can't control when our customers ramp, but the pipeline in auto has been expanding. Based on our current belief, we would expect to see that ramp later in the year.

Speaker #3: So again, as always, right, we'll monitor as things go through. But that's our belief at the moment.

Speaker #5: Thanks. Well, the bottom line is the bottom line is we're winning socket. And we're expanding our market shares.

Chris Caso: Thanks.

Michael Hsing: Well, the bottom line is we winning socket and we're expanding our market shares.

Speaker #6: Thank you. Our next question comes from Kelsey Xia with Citi. Your line is open.

Operator: Thank you. Our next question comes from Kelsey Chia with Citi. Your line is open.

Speaker #8: Hi. Hi, Mike. I'm Tony. Congrats on the results. Could you talk about the rationale behind focusing on Silicon Carbide for 800-volt step-down while focused on Gallium Nitride just for the lower voltage lower power segments?

Kelsey Chia: Hi. Hi, Mike and Tony. Congrats on the results. Could you talk about the rationale behind focusing on silicon carbide for 800 volt step down while, focused on gallium nitride just for the lower voltage, lower power segments? It seems that some of the peers are also using GaN for, higher voltage step down. How would that influence your competitive positioning?

Speaker #8: It seems that some of the peers are also using GaN for higher voltage step-down. How would that influence your competitive positioning?

Speaker #5: Well, it's a long question. Okay. It's a long answer. At the start, okay, I said I didn't believe again. Okay. And I still don't believe in higher powers.

Michael Hsing: Well, it's obviously a long question. It's a long, it's a long story. Starting, I said I didn't believe in GaN, okay? I still don't believe that I can for higher powers, okay? I mean, we still have to be approved that in the market segment. The reason we use silicon carbide is these devices are proven and they, in the history, like 20 years ago, okay? I mean, they're making diodes, okay? I mean, the material is a lot more reliable, okay? There's some fundamental issues, and we started this, try to improve, it started 2016.

Speaker #5: Okay. I mean, we still have to be approved that in the market segment. The reason we use Silicon Carbide is these devices are proven in the history.

Speaker #5: They got 20 years ago. Okay. I mean, they're making diodes. Okay. I mean, the material is a lot more reliable. Okay. And there's some fundamental issues.

Speaker #5: Okay. We started this, tried to improve it. It started in 2016. And as a result, we have a deep know-how to make and use these silicon carbides.

Michael Hsing: As a result, you know, we have a deep know-how to use these silicon carbide, okay. The MPS is unlike other company, we're selling, we don't sell silicon carbide FETs. These are passive semiconductive pass-through device. We always integrate it into our modules. That's a kind of short story for you. Okay.

Speaker #5: Okay. And the NPS is unlike other companies. We're selling we don't sell Silicon Carbide FETs. And these are passive semiconductors, passive device. And we always integrate it into our modules.

Speaker #5: So that's kind of a short story for you. Okay.

Speaker #8: Thank you. Got it. And I know that the team historically has been able to gain share in tight supply environments. Could you talk more about your supply chain management strategy, and also your confidence in meeting customer demand if other suppliers face capacity constraints?

Kelsey Chia: Thank you. Got it. I know that the team historically has been able to gain share in tight supply environments. Could you talk more about your supply chain management strategy and also your confidence in meeting customer demand if other suppliers face capacity constraints?

Speaker #5: We throughout our history, if you look at it, and especially during 2021, these are after COVID. Okay. It happens. Okay. And NPS always listen to our customers.

Michael Hsing: Throughout the history, if you look at it, especially time, especially during 2021, so these are after COVID, okay, happens. MPS always listen to our customers. We don't play a passive role. When the customers tell you to pull in, it's too late, okay? We have actively, preemptively to build this inventory, get this inventory ready. Our product life cycle is very long. We don't have any materials and like a large amount and scrapping. We know these one sooner or later will sell. Again, like, you ask me where these product ramping, I don't know. Plus minus 1 year, it will sell.

Speaker #5: We don't play a passive role. When a customer tells you to pull in too late, okay, and we have actively, preemptively, to build these inventory, get these inventory ready, and our product lifecycle is very long.

Speaker #5: So we don't have any materials in large amounts and scrapping. And we know these are, sooner or later, we'll sell. And again, you asked me where these products are ramping.

Speaker #5: I don't know. Plus or minus a year, it will sell. And we don't mind having a little higher inventory, although in the most recent quarters, we cannot have enough to build up.

Michael Hsing: We don't mind and have a little higher inventory, although in the last recent quarters, we cannot have enough to build up.

Speaker #3: Yeah. I just think the last thing I'd add, just so it's really clear, is nothing about our outlook or anything we've said about enterprise data floor is because we see any constraints in the supply chain.

Tony Balow: I just think the last thing I'd add, just so it's really clear, is nothing about our outlook or anything we said about Enterprise Data floor is because we see any constraints in the supply chain. It's something we've continuously stayed ahead at. If the root of your question, Kelsey, was whether or not the 85% flow was limited by something, that's not an issue right now.

Speaker #3: It's something we've continuously stayed ahead of. So, if the root of your question, Kelsey, was whether or not the 85% floor was limited by something, that's not an issue right now.

Speaker #8: Got it. Thank you.

Kelsey Chia: Got it. Thank you.

Speaker #5: Yep.

Michael Hsing: Yep. Mm-hmm.

Speaker #6: Thank you. I'm showing no further questions at this time. Oh, now I'd like to turn it back to Tony Balot for closing remarks.

Operator: Thank you. I am showing no further questions at this time. I would now like to turn it back to Tony Balow for closing remarks.

Speaker #3: Thank you, operator. And thank you all for joining us on this conference call today. I look forward to speaking with you on our next call for our second quarter 2026 results.

Tony Balow: Thank you, operator, and thank you all for joining us on this conference call today. I look forward to speaking with you on our next call for our Q2 2026 results. Thanks, and have a great day.

Speaker #3: Thanks, and have a great day.

Operator: This concludes today's conference call. Thank you for participating. You may now disconnect.

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