Chris Caso

Chris Caso asked for an estimate of how much Microchip is currently under-shipping end demand, particularly for its direct customers, and whether the inventory correction is larger for direct or distribution channels.

Answer

CEO Steve Sanghi explained that quantifying the under-shipment to direct customers is difficult due to operational complexity but believes the inventory correction will continue for some time. He stated that, directionally, direct customers likely built up more inventory during the supply crunch as they were prioritized, suggesting their current inventory correction is more significant than at distributors.

Chris Caso asked for an estimate of how much Microchip is currently under-shipping actual end demand, particularly for its direct customers. He followed up by asking whether the under-shipment is greater for direct customers compared to distribution customers.

Answer

CEO Steve Sanghi stated that while they have a sense of the under-shipment level, the data is anecdotal and not 'audit proof' enough to share publicly, especially for the diverse direct customer base. However, he directionally confirmed that during the supply crunch, direct customers were prioritized and likely built higher inventory levels than distributors. Therefore, he believes the inventory correction and under-shipping are probably more significant at direct customers.

Chris Caso of Wolfe Research asked about the extent of SiTime's current market penetration in the AI data center segment and its plans to expand reach into unaddressed areas. He also inquired about the impact of the 1.6 TB transition on SiTime's timing content per board and identified other potential content drivers within the Communications, Enterprise, and Data Center (CED) segment.

Answer

Rajesh Vashist, Chief Executive Officer, described SiTime as being in the "early innings" of the AI data center market, selling to a broad ecosystem, and outlined plans for rapid expansion by adding resources in R&D, marketing, and sales, and increasing geographic footprint. He highlighted that the 1.6 TB transition would lead to higher volumes and significant increases in average selling prices (ASPs), also pointing to content growth in switches, accelerator cards, connectivity cards, and future potential with chiplet roadmaps.

Chris Caso inquired about the extent to which Snapdragon ASPs have driven handset growth, the impact of rising wafer prices on ASPs, and how the industry absorbs these higher costs.

Answer

CEO Cristiano Amon highlighted a long-term trend of strong demand for more capable chips, driven by OEM competition and consumer activity, which supports higher ASPs. He expressed confidence in this trend continuing for several years and reiterated the significant multi-year mix shift towards more premium devices as a key factor.

Chris Caso inquired about the extent to which Snapdragon ASPs have driven handset growth, considering rising wafer prices, and how the industry absorbs these higher ASPs.

Answer

CEO Cristiano Amon highlighted a long-term trend of strong demand for more capable chips and processing in premium-tier devices, driven by OEM competition and consumer demand. He expressed confidence in the continued growth of content and ASPs for future chips, noting the significant mix shift towards more premium devices as a multi-year trend.

Chris Caso of Wolfe Research LLC followed up on the December quarter outlook, asking about the potential for Chinese OEMs to pull forward launches and the impact of an extra week in the prior year's quarter. He also questioned the spending impact of entering the data center business and the financial effects of the AlphaWave acquisition.

Answer

CFO & COO Akash Palkhiwala reiterated that the business remains strong and that December will be the seasonally strongest quarter, despite the Apple share dynamic. Regarding spending, he explained that OpEx is managed by reallocating existing spend towards growth areas like the data center, and the company will remain disciplined.

Chris Caso asked about the outlook for the enterprise data segment in 2026, including expectations for market share dynamics and projected growth. He followed up by asking for more color on the drivers of the anticipated 30-40% growth, specifically if it would be broad-based or skewed towards ASIC solutions and vertical power.

Answer

Michael Hsing (CEO and Founder) stated that the market is 'cleaner' and MPS's technology shines in higher power density products, positioning the company as a major player. Bernie Blegen (EVP and CFO) projected enterprise data growth in the range of 30-40% in 2026, with much of that weighted to the second half. Michael Hsing declined to specify the exact drivers or commit to the percentage, preferring to let the numbers speak for themselves.

Chris Caso of Wolfe Research asked about the puts and takes for the enterprise data segment looking into next year, specifically if market share changes are expected to be cleaner and if the business is projected to grow. He followed up by asking for more color on the drivers of the anticipated 30-40% growth in enterprise data, inquiring if it would be broad-based or skewed towards ASIC solutions or vertical power.

Answer

Michael Hsing, CEO and Founder, confirmed that the market is cleaner this year and the module business is growing, emphasizing that MPS technology excels in higher power density products, positioning them as a major player in this market segment in the next couple of years. Bernie Blegen, EVP and CFO, projected enterprise data growth in the range of 30-40% in 2026, primarily weighted to the second half due to material ramps from new players. Michael Hsing declined to elaborate further on the specific drivers of the 30-40% growth, preferring to let the numbers speak for themselves.

Chris Caso inquired about the full-year guidance for the Enterprise Data segment, which was previously guided as flat plus or minus 20%, and asked for commentary on macro uncertainty and potential customer pull-ins that competitors have noted.

Answer

EVP & CFO Bernie Blegen stated that while not providing specific Q4 guidance, he expects Q4 to be up sequentially from a strong Q3. Founder, Chairman, President & CEO Michael Hsing added that they remain comfortable with the initial full-year outlook. Regarding macro concerns, Hsing emphasized MPS's focus on internal execution, while Blegen reiterated a 'cautiously optimistic' stance due to strong demand but short lead times.

Chris Caso asked for more detail on the first half versus second half 2026 outlook, assuming advanced logic and DRAM are driving the second half, and if this timing is due to lead times or facility dynamics. He also inquired about gross margin expectations for 2026, particularly with China's percentage of mix coming down.

Answer

CEO Rick Wallace confirmed expectations for flat to slightly up revenue in the first half of 2026, with accelerating growth in the second half, driven by advanced logic, broadening investment, and continued DRAM momentum, influenced by facility dynamics. He stated that gross margins are primarily impacted by product mix, not geography, and that while tariffs are a consistent headwind, KLA is working to mitigate that exposure over time.

Chris Caso asked for more detail on the first half versus second half 2026 outlook, assuming advanced logic and DRAM are driving the second half acceleration, and if this is a function of lead times or facility dynamics. He also inquired about gross margin expectations for 2026, considering mix changes, particularly China's reduced percentage.

Answer

CEO Rick Wallace confirmed expectations for first half 2026 revenue to be flat to slightly up, with accelerating growth in the second half, driven by advanced logic and continued DRAM momentum, influenced by facility dynamics and lead times. CFO Bren Higgins stated that specific guidance for 2026 margins and operating expenses would be provided next quarter. He explained that gross margins are primarily impacted by product mix, not sales region, and that packaging and service growth can have dilutive gross margin but accretive operating margin. He also expressed hope that efforts to mitigate tariff exposure would reduce it as a headwind over time.

Chris Caso asked about the current inventory levels at NXP's direct automotive customers and the potential magnitude of impact if these customers decided to restock. He also sought more details on NXP's intentions regarding share buybacks, following the mention of their resumption in prepared remarks.

Answer

Rafael Sotomayor, President and CEO, stated that direct auto customers are shifting to end demand and are not currently restocking, with inventory levels "way below our manufacturing cycle," which is an unhealthy level. He acknowledged that restocking represents a potential tailwind, though its timing is uncertain. Kurt Sievers, Executive Director and Advisor, added that NXP has been undershipping Tier 1 customers for eight quarters, a headwind that is now subsiding, and Tier 1 inventory is normalized for the current cautious macro environment, but no further restocking is observed. Bill Betz, CFO, confirmed that NXP's capital allocation strategy remains unchanged, with buybacks restarted to balance investments and healthy shareholder returns, noting that 106% of non-GAAP free cash flow was returned to owners over the last 12 months.

Chris Caso asked about the current inventory levels at NXP's direct automotive customers and the potential magnitude of impact if these customers decided to restock. He also requested more details on NXP's intention regarding share buybacks now that they are resuming.

Answer

President and CEO Rafael Sotomayor stated that while NXP is shifting to end demand and normalization is visible in orders, direct customer restocking has not yet occurred. He noted that current inventory levels are significantly below NXP's manufacturing cycle, which is not a healthy level, and that restocking would be a potential tailwind, though its timing is uncertain. Executive Director and Advisor Kurt Sievers added that NXP has been undershipping Tier 1 for about eight quarters, and while this headwind is subsiding, the next lever of restocking has not yet happened. CFO Bill Betz confirmed no change to NXP's capital allocation strategy, stating that buybacks have restarted to balance investments with healthy returns to owners, having returned 106% of non-GAAP free cash flow in the last 12 months.

Chris Caso asked for an update on ASML's thinking regarding the installed base business for calendar 2026, specifically concerning the potential for backing out upgrade revenue. He also sought clarification on whether the recent optimism about AI developments indicates an expectation for stronger bookings in coming quarters, rather than an immediate increase in current total bookings.

Answer

CFO Roger Dassen noted that the installed base expectation for this year has increased, with service business developing nicely, tied to the growing EUV installed base. He will provide a 2026 update in January. Regarding AI, Mr. Dassen confirmed that current bookings are decent, but the positive developments (AI investments, broader customer base, technology progress, more EUV layers) primarily impact beyond 2026, with only a partial effect on 2026, indicating longer-term optimism.

Chris Caso from Wolfe Research asked about the trends in memory revenue and bookings, which appeared down in the quarter, and when to expect benefits from HBM demand to materialize in the order book. He also questioned if the strength in China revenue this year implies a pull-forward that could negatively impact 2026.

Answer

President & CEO Christophe Fouquet noted that while 2025 memory revenue remains strong, logic has seen a more significant increase this year. EVP & CFO Roger Dassen added that the lower Q2 memory bookings followed several quarters of very strong order intake from that segment. Regarding China, Roger Dassen reiterated that ASML sees healthy, sustained demand and not a pattern of pull-ins followed by a collapse.

Chris Caso inquired about the overall business conditions in China, asking about performance beyond the strong auto sector and whether there were any signs of pull-forwards in other Chinese markets.

Answer

EVP & CFO Richard Puccio stated that while China auto is strong, ADI is now seeing year-over-year growth across all industrial end markets in the region. He noted that these non-auto markets remain 35-50% below their prior peaks, suggesting significant runway for recovery rather than indicating a pull-forward.

Chris Caso asked about the significance of revenue from multinational customers in China during Q3 and whether the China revenue levels seen in Q2 and guided for Q4 are the correct run-rate for the next few quarters.

Answer

CFO Brice Hill described the revenue from multinationals in China as 'noticeable' in Q3 but 'very small' in the Q4 forecast. He confirmed that the Q2/Q4 level, which represents a 15-20% decline from fiscal 2024, is the right level to assume for the next several quarters.

Chris Caso of Wolfe Research asked about any significant changes in the handset business over the last 90 days regarding content or unit sales, and how the extra week in the September quarter might affect December's seasonality.

Answer

CEO Philip Brace highlighted that strong unit demand and a favorable product mix have benefited the company, reflecting trends also mentioned by their top customer. He refrained from guiding for the December quarter, citing historical volatility. VP of Investor Relations Rajvindra Gill clarified that the extra week in the September quarter impacts operating expenses but not the revenue guidance.

Chris Caso from Wolfe Research asked for more detail on the ASP declines in the mobile segment, the rationale behind them, and their expected impact on future volume and margins. He also inquired about the company's capacity and ability to maintain low CapEx levels.

Answer

CEO Tim Breen clarified that the ASP adjustments were deliberate, long-term strategic decisions made in partnership with a few dual-sourced mobile customers to secure socket longevity and increase market share. He emphasized that GFS has available capacity and future investments will be highly capital-efficient, with over 50% of CapEx expected to be supported by government programs.

Chris Caso asked for details on business trends in China for direct and distribution customers, and for the company's outlook on pricing heading into annual negotiations.

Answer

CEO Michael Doogue described a robust business in China with strong e-mobility design win momentum with local OEMs, driven by a strategy of differentiation at the high-end. On pricing, Mr. Doogue expects to land in a normal, low-single-digit year-over-year price reduction environment, consistent with automotive contracts, and does not see tariffs or supply tightness significantly altering that outlook.

Chris Caso asked for the expected revenue run-rate for the China Android business by the end of the fiscal year. He also inquired about the outlook for the Samsung business, considering the exit from mid-range models versus gains in the high-end, and whether a successful internal Samsung chipset would benefit Qorvo.

Answer

SVP & CFO Grant Brown clarified that the China Android exit run-rate would be higher than the suggested $20-30 million, as Qorvo will still target premium tiers, but confirmed the business will trend down from its current sub-$100 million level. President & CEO Robert Bruggeworth stated a successful internal Samsung baseband would be a positive for Qorvo. SVP of Sales and Marketing Dave Fullwood added that Qorvo's content in Samsung's next spring flagship would likely decline due to increased competition.

Chris Caso inquired about the company's fab loading plans for the second half of the year and their target for internal inventory levels, given the cautious outlook. His follow-up sought a deeper understanding of the automotive market, including customer tone and inventory levels.

Answer

CFO Rafael Lizardi described the ideal strategy of maintaining stable factory loadings through cycles but noted the need for flexibility. CEO Haviv Ilan characterized the automotive market as being in a 'holding pattern,' with customers ordering cautiously and in real-time. He suggested a recovery might lag the industrial market's timeline, as its cycle peaked later.

Chris Caso of Wolfe Research requested clarification on the comment regarding potential 'tariff related pull-ins' by customers, asking about the impact on inventory levels and the outlook for bit demand.

Answer

Chairman, President & CEO Sanjay Mehrotra clarified that while some tariff-related pull-ins may have occurred, the impact is considered 'relatively modest.' He stressed that customer inventory levels are healthy overall and that customers continue to signal a constructive demand environment for the remainder of the calendar year. He asserted that Micron's strong performance and outlook are fundamentally driven by solid execution in the growing AI market, not by inventory pull-ins.

Inquired about the company's exposure to legacy DRAM (DDR4/LP4) and its future margin impact, and asked about their ability to scale HBM capacity to meet a rising TAM and maintain market share in 2026.

Answer

The company confirmed legacy DRAM is about 10% of revenue and will become a smaller part of the business over time. They are confident in their ability to increase HBM capacity and expect their full-year 2026 HBM share to be higher than in 2025, aligning with their technology roadmap and customer relationships, though they did not provide a specific 2026 share projection.

Chris Caso of Wolfe Research LLC asked for an outlook on the second half of the fiscal year, specifically regarding the expected performance of the custom silicon business and the ongoing recovery in the carrier and enterprise segments.

Answer

Chairman and CEO Matt Murphy stated that despite macroeconomic uncertainties, Marvell sees continued strong demand in AI and data center. He also expects the recovery in its enterprise networking and carrier infrastructure businesses to continue and grow throughout the rest of the year, creating a positive setup for fiscal 2027.