Atif Malik

Atif Malik of Citigroup asked for an estimate of the Total Addressable Market (TAM) for scale-up Ethernet in the next three years.

Answer

Chairperson & CEO Jayshree Ullal responded that it is too early to quantify the TAM. She noted that while port density could be high, the dollar value might be lower due to simpler functionality requirements. She deferred a more detailed answer to the upcoming Analyst Day in September.

Atif Malik asked for more color on the stronger-than-usual Q2 seasonality and whether it is being driven by customers pulling forward orders due to tariff concerns.

Answer

CFO Chantelle Breithaupt confirmed that there is some customer pull-forward activity related to tariff uncertainty contributing to the strong Q2 guide, but she characterized the effect as not being significant or material.

Atif Malik questioned how Arista could reiterate its $750 million AI back-end sales goal despite a stalled customer and asked for a breakdown of the $70 billion TAM forecast for 2028.

Answer

CEO Jayshree Ullal broke down the $70 billion 2028 TAM as roughly one-third AI, one-third data center/cloud, and one-third campus/enterprise. She expressed confidence in the $750 million AI goal for 2025, citing strong progress with three customers deploying a cumulative 100,000 GPUs. The overall revenue guidance increase to $8.2 billion reflects broad momentum across AI, cloud, and enterprise.

Atif Malik asked for clarification on the '2x front-end spend for every dollar of back-end spend' concept, seeking to understand the signs Arista is looking for to see this AI-driven lift in front-end network demand.

Answer

CEO Jayshree Ullal explained that the ratio varies based on the AI use case. While some customers build isolated back-end training clusters, Arista is increasingly seeing a multiplier effect. She cited scenarios where front-end spend could be 30%, 100%, or even 200% of the back-end investment. This is why the $750M back-end AI target is expected to drive a similar amount of front-end network demand, though tracking the 'pure AI' portion becomes difficult as workloads merge.

Atif Malik asked if the consumer reception of the iPhone Air offers insights into the potential foldable phone market and inquired about Apple's strategy for personalized Siri, specifically if it will continue a three-pronged approach (Apple foundation models, partner LLMs, M&A) or emphasize one strategy.

Answer

CEO Tim Cook stated that the iPhone Air's reception is not necessarily a proxy for the foldable phone market but expressed excitement about the overall iPhone reception, which drives double-digit growth expectations. He confirmed that Apple is creating its own foundation models for on-device and Private Cloud Compute use, has several in development, and continually surveils the market for M&A opportunities to advance its roadmap.

Atif Malik asked if the consumer reception of iPhone Air provides insights into the foldable phone market. He also inquired about the progress of personalized Siri and whether Apple will continue a three-pronged AI strategy (own foundation models, partner LLMs, M&A) or emphasize one approach.

Answer

CEO Tim Cook stated that iPhone Air reception is not a proxy for the foldable market but expressed satisfaction with overall iPhone reception and expected double-digit growth. He confirmed Apple is creating its own foundation models (on-device and in Private Cloud Compute) and continually surveils the market for M&A opportunities to advance its roadmap.

Atif Malik asked about the strategy for Vision Pro, questioning if the focus remains on enterprise or if Apple is broadening its use cases, especially given competitor momentum. He also inquired if Apple feels the need to accelerate its AI roadmap through large-scale M&A rather than its traditional organic focus.

Answer

CEO Tim Cook expressed excitement for VisionOS 26 updates like spatial widgets and more lifelike personas, highlighting enterprise resonance with customers like CAE and reaffirming Apple's belief in the product category. On M&A, he noted Apple has acquired about seven smaller companies this year and remains open to acquisitions of any size that can accelerate its roadmap, though it has nothing specific to share.

Atif Malik asked about the potential impact of tariffs under a new administration and whether the upgraded Siri would be the 'killer application' for Apple Intelligence.

Answer

CEO Tim Cook declined to comment on potential tariffs, stating they are 'monitoring the situation.' He suggested the 'killer feature' of Apple Intelligence will vary by user, but that many, including the upgraded Siri, will be used daily.

Atif Malik began a question noting that the specification difference between the iPhone 16 Pro and base models appears smaller than in prior years, with all models getting new A18-family chips and no price increase, asking if this represented a strategic shift.

Answer

The analyst's line dropped before the question could be completed or answered. The company stated they would connect with the analyst offline.

Atif Malik inquired about the sales trajectory for Gate-All-Around (GAA) technology in the second half of the year and the key drivers behind the strong Q2 gross margins, specifically asking about the contribution from the chemical metrology business and any impact from tariffs.

Answer

President & CEO Gabriel Waisman confirmed Nova is well-positioned with all four leading Gate-All-Around customers and is on track to achieve its cumulative $500 million revenue goal by 2026, seeing stable demand in the second half. CFO Guy Kizner clarified that the high gross margin was due to a favorable product mix of various offerings, not specifically chemical metrology, and that the impact from tariffs was marginal.

Atif Malik of Citigroup asked about the dynamics driving cross-selling of gate-all-around and advanced packaging equipment to the same customers. He also sought clarification on any potential revenue impact from tariffs and the full-year outlook for services growth.

Answer

Executive Gabriel Waisman highlighted Nova's strong position with front-end customers who also have advanced packaging needs, noting double-digit growth in advanced packaging revenue for 2025. Executive Guy Kizner stated that the primary tariff impact is on gross margin (30-50 basis points) with no current top-line impact, and confirmed the services business is on track to meet its 10-15% annual growth target.

Atif Malik inquired about Nova's sales outlook for advanced packaging in the current year and the growth forecast for the services business, noting peer commentary about a potential slowdown.

Answer

President and CEO Gabriel Waisman clarified that advanced packaging growth was driven by both chemical and dimensional metrology and is expected to continue with double-digit growth, aided by the Sentronics acquisition. CFO Guy Kizner added that the services business is projected to grow 10-15% in 2025, following 19% growth in 2024, and that no significant impact from trade restrictions is anticipated.

Atif Malik inquired about Nova's gate-all-around (GAA) outlook, asking for color on the demand difference between 3-nanometer and 2-nanometer nodes and the diversification of the GAA pipeline. He also asked about the demand trends from domestic China for the current quarter and into 2025.

Answer

Gabriel Waisman, executive, confirmed that while GAA is not yet the main revenue driver, it is expected to ramp significantly in 2025. He reiterated the company's estimate of achieving $500 million in aggregated GAA revenue by the end of 2026 has not changed. Waisman noted that Nova's portfolio is strongly positioned and is being evaluated or has been selected by all GAA manufacturers. Regarding China, he stated that Nova sees continued robust demand entering 2025 and that its share of sales from the region is similar to its peers.

Atif Malik of Citigroup asked if the Customer Support Business Group (CSBG) is expected to see a more meaningful snap-back in growth next year after a period of normalization.

Answer

EVP and CFO Doug Bittinger declined to provide a forecast for the following year but noted the consistent tailwind of a growing chamber count. He expressed hope for a recovery in the Reliant systems business but made no commitment. CEO Timothy Archer added that CSBG's advanced services, like Dextro cobots, are synergistic, improving tool performance and driving future systems business share gains, not just generating their own revenue.

Atif Malik asked about the potential for the Customer Support Business Group (CSBG) to experience a more significant growth recovery in the upcoming year.

Answer

EVP and CFO Douglas Bittinger avoided a specific forecast for next year but highlighted the consistent tailwind from a growing installed base and noted the Reliant systems business is currently down. President and CEO Timothy Archer emphasized the synergistic value of CSBG, explaining that advanced services like Dextro cobots improve tool performance and ultimately help drive market share gains for the systems business.

Atif Malik asked if the $100 billion WFE forecast is an 'all-in' number including competitors in China and whether the guided customer concentration for March implies a similar regional concentration.

Answer

EVP & CFO Douglas Bettinger confirmed the WFE forecast is an 'all-in' number that includes restricted customers. He also affirmed that his comment on 'customer concentration' is currently tied to 'geographic concentration,' so the regional mix should be roughly consistent from December to March. However, he reiterated that for the full year, China's revenue percentage will be down versus 2024.

Atif Malik asked why Lam's 2025 China WFE outlook appears less pessimistic than a peer's, questioning if different business dynamics were at play. He also inquired about the seemingly early adoption of Dry Resist technology in DRAM.

Answer

CFO Douglas Bettinger cautioned against direct comparisons with peers, citing differences in historical growth, product lead times, and individual assumptions. CEO Timothy Archer clarified that Dry Resist adoption is not strictly tied to High-NA EUV but occurs when its collective benefits in performance and cost reach a tipping point for a specific customer and node, leading to varied adoption timelines.

Atif Malik of Citigroup asked for clarification on the HBM memory 'snapback,' questioning if the company's view on the TAM had changed or if the outlook was driven by HBM4. He also asked if new packaging technologies were the primary driver for the merchant GPU test opportunity.

Answer

President & CEO Greg Smith clarified that his 'snapback' comment referred to quarterly revenue timing, not a change in the stable full-year memory TAM view. He noted HBM4 capacity adds will be the primary driver, with ramps linked to specific AI accelerators in Q4 '25 and Q1 '26. He stated the GPU opportunity is driven by customers seeking supply chain resilience, not a specific packaging technology change.

Atif Malik asked about the expected number of 10%+ revenue customers in Q3 and requested more detail on the 'strengthening in some optical projects' mentioned in the prepared remarks.

Answer

CFO Mandeep Chawla confirmed they expect to have three customers above 10% of revenue in Q3 and Q4, noting the Q2 drop to two was due to the overall revenue base growing faster than one of the customers. President and CEO Rob Mionis clarified that the optical project strength comes from a ramping data center interconnect program with an enterprise customer.

Atif Malik from Citi asked for a breakdown of the drivers for the sequential gross margin decline in Q2, specifically the cost-side impact from tariffs. He also requested a big-picture view on the CapEx environment for the second half of the year.

Answer

CFO Linda LaGorga acknowledged a modest near-term impact on Q2 gross margin from tariffs on U.S. imports due to a timing lag in mitigation efforts, but stated the full-year 2025 gross margin is still expected to be up modestly from 2024. CEO Bertrand Loy added that he expects the current uncertainty to put additional pressure on CapEx in H2 2025, though this may be offset by improving wafer starts.

Atif Malik asked for an update on the supply constraints discussed in the previous quarter and inquired about the potential impact of new trade tariffs on the company's supply chain.

Answer

CFO Linda LaGorga confirmed that the previously mentioned supplier issues are now essentially resolved, with the HCL issue fixed in Q4 and the valve constraint issue resolving in Q1. She also stated that an assessment of newly announced tariffs shows an immaterial impact to raw material costs, partly mitigated by the company's strategy of localizing supply chains.

Atif Malik requested more detail on the 'discrete supply chain constraints' mentioned and asked for an update on the business environment in China for the September and December quarters.

Answer

CEO Bertrand Loy specified the supply constraints impacted the MC division, involving a specific valve for gas purification and a contaminated batch of HCL for liquid filtration, with resolution expected by early next year. For China, Loy described business as strong, representing about 20% of revenue and expected to grow to a 20-25% share long-term as new local fabs ramp up production.

Atif Malik's representative, Papa Silha, asked about the company's view on PCIe over optics as a future technology path and whether the expected ramp in Scorpio sales in the second half of the year would lead to higher gross margins.

Answer

CEO Jitendra Mohan stated that while copper remains the current focus due to its TCO advantages, Astera Labs has innovative optical solutions ready for when higher data rates and longer reach necessitate them. CFO Mike Tate advised that despite the product mix shift, the company's long-term gross margin target remains around 70%, suggesting margins would trend toward that level over time rather than necessarily increasing in the second half.

Atif Malik asked for the company's view on the timing of co-packaged optics (CPO) and its potential impact, and also requested guidance on how to model operating expenses for the year.

Answer

CEO Jitendra Mohan stated that CPO is not expected to negatively impact the business in the near term, as customers prefer copper and will likely adopt pluggable optics before CPO. He sees CPO's first use case in Ethernet switches, a market Astera doesn't currently serve. CFO Michael Tate guided for a step-up in Q1 OpEx due to hiring, seasonal costs, and a recent acquisition, with the growth rate normalizing afterward. He reiterated a long-term 40% operating margin goal, driven by revenue growth.

Atif Malik asked for the full-year outlook for the services business given headwinds in China and inquired about KLA's competitive position in advanced packaging, particularly regarding logic versus HBM and the outlook for hybrid bonding.

Answer

CFO Bren Higgins projected services growth around 10% for the year, slightly below the long-term trend due to export controls. CEO Richard Wallace explained that KLA's advanced packaging strength comes from adapting front-end tools for high-value AI-driven packages, forecasting growth to $850 million. Higgins added this strategy leverages existing R&D, creating a favorable margin profile.

Atif Malik from Citigroup Inc. asked how KLA is engaging with struggling foundry customers and requested color on the composition of the $500 million revenue impact from China restrictions.

Answer

CEO Richard Wallace stated that while KLA works with all customers, the bulk of industry investment is clearly with the market leader, and KLA's business reflects that dynamic. CFO Bren Higgins specified that the $500 million impact from export controls was almost entirely related to logic projects, with minimal impact on memory.

Atif Malik asked about the size of KLA's wafer and reticle inspection business in China. He also questioned if a slowdown in China would impact the company's long-term services growth target of 12-14%.

Answer

CFO Bren Higgins estimated that the infrastructure business (wafer and reticle inspection) has accounted for 25% to 35% of KLA's China systems revenue in recent years. He expressed continued confidence in the services growth model, stating they are trending toward the high end of the range, driven by longer tool life and high customer uptime requirements, which should offset potential headwinds.

Atif Malik from Citigroup asked for a follow-up on gross margins, seeking more color on the confidence in reaching the mid-70s range in the second half of the year, given various moving parts like yields and potential tariffs.

Answer

EVP and CFO Colette Kress reiterated that the complexity of the Blackwell system, with its many components and configurations, provides a 'tremendous amount of opportunity' for cost optimization over time. She explained that once the initial, urgent customer ramp is complete, the company can focus more intensely on these cost-down efforts. Regarding tariffs, she stated it remains an unknown until the U.S. government provides clarity on its plans, timing, and scope.

Atif Malik of Citi requested an update on sovereign AI demand and asked for an explanation of the supply constraints affecting the Gaming segment.

Answer

CFO Colette Kress confirmed that the sovereign AI pipeline is 'absolutely intact' and remains a key growth driver, with countries in Europe and Asia Pacific building out national AI infrastructure. Regarding Gaming, she explained that supply is tight for the quarter due to the challenge of ramping products to meet fast sell-through, but she expects to be 'back on track with more supply' in the new calendar year.

Atif Malik questioned the reason for the marked deceleration in material sales growth projected for 2025 compared to 2024. He also asked if Universal Display expects to be the sole source for high-efficiency blue emitters and inquired about the competitive landscape with local suppliers in China.

Answer

CFO Brian Millard explained that 2024's high growth rate was partly due to a lower base in 2023, and the 2025 forecast aligns with industry projections for square area growth. He asserted the company's belief that "all paths to high-efficiency blue go through our materials." Regarding China, Millard acknowledged local competition but expressed confidence in UDC's leadership due to its technology, customer relationships, and patent portfolio.

Atif Malik inquired whether the Semiconductor Systems segment would return to sequential growth in the July quarter (Q3) following the anticipated impact from China in Q2.

Answer

CFO Brice Hill stated that it was too early to say, noting "we'll have to wait and see." He highlighted that while leading-edge is expected to accelerate, this is offset by the ICAPS market, which evolves quarterly. He also confirmed that the services (AGS) business is expected to return to growth in Q3 after a step-down in Q2.

Atif Malik sought clarification on Applied Materials' normalized China sales outlook, referencing a potential prior comment about a 20% level and asking if the 15-30% decline forecasted by peers was a reasonable expectation for the company.

Answer

CFO Brice Hill corrected the premise, stating the company had not projected a 20% normalized rate. He reiterated that China revenue was 30% in Q4 and the Q1 outlook is also approximately 30%, which the company considers a normalized level now that the previously elevated DRAM shipments to China have concluded. This 30% figure includes all business segments.

Speaking for Atif Malik, Adrian Colby asked about opportunities for supply chain optimization to improve margins and the company's potential exposure to tariffs from a new administration.

Answer

Executive Adviser Scott McFeely explained that as supply chain constraints ease, Ciena expects to resume its typical year-over-year cost reduction activities, which will contribute to margin expansion. CFO Jim Moylan characterized tariff risk as speculative, stating that no potential impact has been factored into guidance. He acknowledged exposure related to Mexico and said the company would work to mitigate any effects if tariffs were imposed.

Atif Malik noted that AWS's Trainium chip handles both training and inference and asked if this has changed Marvell's view on the sales contribution mix from its programs with that customer.

Answer

CEO Matt Murphy stated that their thinking on the business mix has not changed. He emphasized that Marvell works very closely with its key custom silicon customers to plan business and supply. While deferring to the customer to discuss their specific product dynamics, he confirmed that Marvell is fully prepared to support their needs as planned.