Craig Ellis

Craig Ellis sought to understand the trajectory of the memory market recovery, questioning if it's a steeper slope or a typical seasonal move. He also asked about the drivers behind the improvement in the general semiconductor market and the outlook for an upturn in the automotive and industrial market in the first half of calendar 2026.

Answer

Lester Wong, Interim CEO and CFO, stated that memory utilization is very high and sales are increasing, indicating a ramp that will continue into fiscal year 2026. He attributed the general semiconductor improvement to smartphone and high-performance computing, characterizing it as a cyclical recovery after a prolonged downturn and inventory digestion. For automotive and industrial, Mr. Wong reported customer optimism, expecting sequential revenue increases in Q1 from Q4, and foreseeing a better fiscal 2026 driven by power semiconductor technology transitions for clean tech and EV.

Craig Ellis sought to understand the dynamics of the memory market recovery, specifically if it's a steeper slope or different timing for a seasonal move-up. He also asked about the drivers for general semi improvement and any indications of an upturn in the auto and industrial markets for the first half of calendar 2026.

Answer

Lester Wong, Interim CEO and CFO, indicated that memory utilization is very high and sales are increasing, suggesting a ramp that will continue into FY2026. He attributed general semi improvement to smartphone and high-performance computing, viewing it as a normal cyclical recovery after a prolonged downturn and inventory digestion. For auto and industrial, Lester Wong reported customer optimism and expected sequential revenue growth in Q1 from Q4, anticipating a better FY2026 driven by power semi technology transitions for clean tech and EV.

Craig Ellis questioned whether the increased utilization in China and Taiwan could be a pull-in of demand ahead of tariffs, potentially leading to below-seasonal demand later in the year. He also asked about the long-term potential of the company's move into the DRAM HBM market, inquiring about its future materiality and customer breadth.

Answer

CFO Lester Wong responded that the high utilization is not expected to cause a future drop-off; rather, customers are running equipment at higher-than-normal rates due to caution around tariffs, delaying new capacity buys. President and CEO Fusen Chen addressed the memory opportunity, stating that while the company has high share in NAND, the focus is now on DRAM. He highlighted the VerticalWire solution for DDR, which can reduce form factor by over 30%, with the first production ramp expected in the first half of 2026 with a leading customer.

Craig Ellis asked about customer sentiment regarding the need for incremental capacity given anemic end-market demand, the quantifiable value of AI-related opportunities, and the timeline for high-bandwidth memory (HBM) volume shipments.

Answer

CEO Fusen Chen expressed bullishness for the second half of fiscal 2025, citing a prolonged downturn and upcoming capacity needs, particularly in China. He projected Advanced Packaging revenue to grow to $275-$300 million in 2025. For HBM, Chen and CFO Lester Wong clarified that while a system may ship by year-end, commercial revenue is expected in 18-24 months, likely in calendar 2026.

Craig Ellis of B. Riley Securities asked about Rigetti's potential interest in M&A or other inorganic activities to accelerate its roadmap, given its substantial cash balance.

Answer

President and CEO Subodh Kulkarni stated that Rigetti has significantly accelerated its roadmap organically, primarily due to the success of its chiplet technology. While open to M&A that could further accelerate the roadmap, Rigetti believes it currently has the necessary internal technology to execute its detailed 2027 roadmap.

Craig Ellis asked about the implications of Rigetti's historic strengths with national labs for integrating with NVIDIA's NVLink and accelerating hybrid compute workloads, including AI. He also sought clarification on the revenue recognition for the $5.8 million AFRL contract and inquired about the company's strategy regarding M&A or inorganic activities given its $600 million cash balance.

Answer

President and CEO Subodh Kulkarni highlighted the logical synergy between Rigetti's and NVIDIA's presence in national labs for developing hybrid systems, especially with renewed NQI funding. He expects more work demonstrating how CPUs, GPUs, and QPUs can complement each other for future computation needs. CFO Jeff Bertelsen confirmed the AFRL contract revenue would be recognized fairly ratably over three years, starting in Q3 2025. Dr. Kulkarni stated Rigetti believes it has the internal technology to execute its roadmap organically but would consider M&A to accelerate it further.

Craig Ellis of B. Riley Securities questioned how Rigetti ensures its partner, Quanta, maintains development pace as systems scale, and how the company is positioning itself for government funding while awaiting NQI reauthorization.

Answer

CEO Subodh Kulkarni expressed confidence in Quanta's capabilities, citing their technical expertise and leadership in the server market. He noted Quanta's high-volume manufacturing strength will become crucial in a few years. While awaiting funding resolutions, Kulkarni stated Rigetti maintains very active engagement with the DOE and DOD, with its technology already deployed in national labs like Fermilab. The relationships remain strong, with both sides ready to expand work once funding is appropriated.

Craig Ellis asked for specifics on what criteria Rigetti must meet in Stage A of the DARPA program to advance to the next phase. He also inquired about the next steps and reasonable milestones for the strategic relationship with Quanta Computer through the end of 2025 and into 2026.

Answer

CEO Subodh Kulkarni stated that to pass DARPA's Stage A, Rigetti must execute its publicly disclosed roadmap, which includes demonstrating its chiplet approach with over 100 qubits at high fidelity. Regarding the Quanta partnership, Kulkarni explained that following the $35 million investment, Quanta will invest $250 million over five years in non-QPU hardware. He expects Quanta to be handling the bulk of control systems R&D by this time next year, allowing Rigetti to focus its R&D on core QPU technology.

Craig Ellis of B. Riley inquired about the genesis and exclusivity of the strategic partnership with Quanta Computer. He also asked for an update on U.S. government quantum funding initiatives and how Rigetti's significant cash position impacts its near-term spending intensity and long-term path to becoming self-funding. In a follow-up, he sought clarification on the revenue recognition for the two Novera QPU sales in the quarter.

Answer

CEO Subodh Kulkarni explained the Quanta partnership originated from a mutual search, with Quanta seeking a leading superconducting quantum partner and Rigetti needing a high-volume manufacturing partner for non-QPU hardware. He confirmed the technology developed is not exclusive. Kulkarni noted a bipartisan $2.5 billion funding bill is expected to pass, benefiting DOE labs Rigetti works with, alongside significant DoD initiatives like the DARPA QBI. He stated that with existing cash and new commitments totaling nearly $500 million, the company is funded for at least three years, allowing a primary focus on R&D. CFO Jeffrey Bertelsen later clarified that both Novera QPU sales were fully recognized in Q4 2024, while revenue from a larger U.K. system sale will be largely complete in Q1 2025.

Craig Ellis inquired about the outlook for international engagements over the next year following recent successes in Israel and the U.K., and asked for more detail on the company's view of the $7.5 billion total addressable market (TAM) over the next few years.

Answer

CEO Subodh Kulkarni stated that technology progress is increasing opportunities with international governments, as nearly 20 countries now have national quantum initiatives. On the TAM, he reiterated the $7.5 billion 5-year figure from IDC, clarifying that Rigetti expects this market to be dominated by on-premise systems and superconducting technology due to speed advantages. He positioned Rigetti to capture a sizable share of this market against key competitors.

Craig Ellis from B. Riley Securities asked about the previously stated expectation of a moderate 15% half-on-half increase in R&D and sales/marketing investment, seeking an update on its progress and expectations for Q4 and H1 2026.

Answer

CFO John Markovich confirmed the operating expenses for the balance of the year would increase approximately 15% sequentially, with the majority allocated to R&D, but declined to provide guidance for H1 2026. CEO Alan Baratz added that increased cash flow allows for modest R&D investments, particularly accelerating the gate model program. He also mentioned facilitating system sales and QCAS go-to-market motions, and early inquiries about enterprise licenses bundling multiple proofs of concept and production applications.

Craig Ellis from B. Riley Securities inquired about the progress of D-Wave's planned moderate increase in R&D and sales and marketing investments (15% half-on-half), asking for expectations for Q4 and H1 2026 expenses.

Answer

CFO John Markovich reiterated the guidance for a 15% sequential increase in operating expenses for the balance of the year, primarily in R&D, but declined to provide guidance for H1 2026. CEO Dr. Alan Baratz added that increased R&D investment would accelerate the Gate model program, and go-to-market investments would facilitate system sales and professional services/QCAS, noting early inquiries about enterprise licenses for multiple applications.

Craig Ellis of B. Riley Financial inquired about D-Wave's M&A strategy, asking about the types of targets, potential deal sizes, and expected timing for acquisitions.

Answer

CEO Alan Baratz explained that while a detailed strategy is not public, the company's strong cash position has made M&A a strategic priority. He indicated D-Wave is exploring acquisitions to accelerate R&D and product development in areas like gate model and quantum AI, with a goal to announce deals in 2025, contingent on finding suitable partners.

Craig Ellis asked for details on inbound blockchain partnership opportunities and whether Q1's high gross margin is a proxy for future system sales. He also inquired about the uptick in the sales pipeline and later asked about customer reaction to the long-term technology roadmap presented at Qubits '25.

Answer

CEO Alan Baratz stated that D-Wave is exploring blockchain partnerships, which he believes will drive system sales, but noted it's early. CFO John Markovich confirmed the high gross margin is a reasonable proxy for system sales, though variable, and noted the pipeline includes larger firms, leading to longer sales cycles. Baratz added that customers reacted with excitement to the long-term roadmap, anticipating it will unlock new use cases and enhance ROI.

Craig Ellis asked how the progress and favorable commentary around the Advantage 2 system are affecting inbound customer interest and when the system is expected to be commercialized on the LEAP platform. He also inquired about the productivity of the recently expanded go-to-market team.

Answer

CEO Alan Baratz explained that excitement for Advantage 2 is high, particularly in materials science, driven by its superior performance which enabled the company's quantum supremacy research. He stated the system would be added to the LEAP cloud service 'sooner rather than later' but did not provide a specific date. Regarding the go-to-market team, Baratz noted it is 'early days' for the new hires and that the company expects to see productivity benefits beginning in Q1 of the next fiscal year.

Craig Ellis asked Phil Brace, CEO, about the broader leadership team, specifically if he felt he had the right team in place across all functions (product, manufacturing, operations, etc.) following recent executive changes, or if further changes were anticipated. He also asked about fiscal second quarter seasonality and working capital management.

Answer

Phil Brace, CEO and President of Skyworks, affirmed that he feels 'great about the leadership team' currently in place and is 'not anticipating any changes.' Philip Carter, SVP and CFO, stated that while they do not guide beyond one quarter, they generally expect 'normal seasonality' for Q2. Regarding working capital, he noted that the free cash flow benefit from inventory reduction in fiscal 2025 is not expected to repeat, anticipating some inventory build near year-end, but highlighted low inventory levels in the channel providing good visibility.

Craig Ellis asked Phil Brace about the broader organizational structure, specifically if he feels the right leadership team is in place across all functions following recent executive changes (CFO, head of sales), or if additional changes are anticipated in areas like product, manufacturing, or operations. He also asked Philip Carter about the fiscal second quarter's seasonality and how the company plans to manage working capital, particularly inventory, heading into a seasonally softer period.

Answer

Phil Brace, CEO and President, expressed confidence in the current leadership team and stated he is not anticipating any further changes. Philip Carter, Senior Vice President and Chief Financial Officer, noted that while they don't guide beyond one quarter, normal seasonality is generally expected for Q2. He added that while fiscal 2025 benefited from inventory reduction, this is not expected to repeat, and some inventory build is anticipated near year-end, though channel inventory levels remain low.

Craig Ellis inquired about the potential for ADAS and other programs to continue benefiting the automotive and industrial segment beyond Q4 into 2026, given the broad strength observed. He also sought clarification on the baseline for the 100 basis point gross margin improvement expected from the Japan facility rationalization.

Answer

CEO Giel Rutten stated that advanced packaging in automotive, including ADAS proliferation and electrification, is expected to drive continued growth. He also noted the recovery of the mainstream portfolio, with Q2 2025 being a trough and improvements expected to continue. CFO Megan Faust clarified that Q3 2025 should be used as the baseline for the 100 basis point gross margin benefit, with the full impact expected by the end of 2027.

Craig Ellis asked about the potential for ADAS and other programs to continue benefiting the automotive and industrial segment beyond Q4 into 2026, given broad strength and improving ADAS. He then sought clarification on the baseline for the 100 basis point gross margin improvement expected from the Japan facility rationalization.

Answer

President and CEO Giel Rutten expects advanced packaging in automotive, including ADAS, to continue driving growth due to proliferation and electrification, moving towards self-driving and connectivity. He also noted the recovery of the mainstream portfolio, with Q2 as a trough and continued improvement expected. CFO Megan Faust clarified that Q3 should be used as the baseline for the Japan facility rationalization benefits, with the full 100 basis point impact expected by the end of 2027.

Craig Ellis sought clarification on the linearity of the Communications segment's strength in Q1 and asked if the RDL-based opportunity would generate revenue this year. He also asked if the company's prior full-year outlook of 'flat to modestly up' revenue with a 40-60 first-half/second-half split was still valid.

Answer

CEO Giel Rutten described Q1 communications revenue as fairly linear and solid throughout the quarter. He confirmed that investments in RDL technology will generate revenue this year, highlighting that the equipment is fungible across HPC applications. CFO Megan Faust addressed the full-year view, explaining that because the first half has been stronger than expected, the H1/H2 revenue split will be more moderate. She refrained from giving a new full-year guide due to market dynamics.

Craig Ellis asked for a breakdown of the 2024 computing growth between AI PCs and GPU systems and their expected 2025 contributions, and also requested a ranked list of company-specific growth drivers for 2025.

Answer

CEO Giel Rutten identified GPU-based systems for AI data centers as the primary driver of 2024 computing growth. For 2025, he outlined key drivers as: regaining the SiP socket in communications, upside in advanced automotive products, opportunities in compute (tempered by China restrictions), and a full year of a new consumer wearable program. He emphasized a solid pipeline across segments rather than a single breakout opportunity.

Craig Ellis asked about the gross margin outlook for the first half of 2025, potential new growth programs for 2025 similar to the major wins in 2024, and key milestones for the Vietnam and Arizona factory ramps next year.

Answer

CFO Megan Faust projected margin expansion in 2025, driven by the gradual recovery of underutilized markets like Automotive, Industrial, and traditional servers, as well as growth in the high-margin 2.5D business. CEO Giel Rutten identified potential 2025 growth drivers including an AI-driven communications up-cycle, the power module partnership with Infineon for EVs, and continued strength in computing. For milestones, Rutten noted Vietnam is ramping SiP and memory in Q4, while Arizona's progress is linked to the TSMC partnership and CHIPS funding.

Craig Ellis of B. Riley Securities asked CEO Hong Ho about his key objectives for his second year, particularly for the infrastructure business. He also inquired about the significant evolutions to expect across product groups like CopperEdge and FiberEdge.

Answer

CEO Hong Ho stated that with a stronger financial foundation, his goal for the second year is to be more aggressive with R&D to establish market leadership, moving beyond playing catch-up. He emphasized that the overarching strategy for all product lines is to focus on the market's fundamental needs: higher bandwidth, lower power, lower latency, and lower cost.

Craig Ellis from B. Riley Financial asked for help dimensioning the data center growth drivers in the second half, particularly the relative contribution of AI connectivity and LPO. He also asked about the SurgeSwitch product's applications and content opportunity.

Answer

President & CEO Hong Hou highlighted a broad-based data center growth outlook, with a strong base from core FiberEdge products, supplemented by incremental revenue from new CopperEdge customers, LPO deployments, and new 1.6T drivers. Regarding SurgeSwitch, management described it as an integrated, higher-ASP system-level protection solution for ubiquitous Type-C ports, expanding its addressable market.

Craig Ellis asked for a long-term view on the data center business, questioning how to size the opportunity in 2-3 years now that it has expanded beyond a single customer. He also asked about the expense outlook and whether OpEx would continue to grow at a fraction of revenue.

Answer

CEO Hong Hou explained that the company is moving to quantify the data center opportunity by counting the number of 200-gigabit ports rather than specific rack deployments, which provides a more relevant long-term measure. Executive Mark Lin confirmed no one-time expenses are expected and reiterated the model of OpEx growing at about half the rate of revenue, with some investment shifting toward data center opportunities.

Craig Ellis of B. Riley Securities asked for help sizing the potential revenue from new Active Copper Cable (ACC) customer engagements for the next fiscal year and sought a 2-3 year outlook on the business's growth potential.

Answer

President and CEO Hong Hou explained that engagements with new ACC customers are still in the early stages, making it premature to quantify the opportunity for next year or provide a multi-year forecast. However, he expressed strong optimism about the directional growth and noted he is actively leveraging his industry network to expand these opportunities, promising a more detailed update on future calls.

Craig Ellis from B. Riley Financial inquired about the eMotion3d acquisition, asking if its software could accelerate revenue by intercepting customer ramps or being downloaded to existing products. He also asked for the estimated size of the quantum photonics market by 2030 and Indy's potential share.

Answer

Co-Founder, CEO & Director Donald McClymont confirmed eMotion3d's software can ramp faster than hardware and could potentially be switched over in production quickly. EVP - Photonics BU Mathieu Drolet estimated the quantum photonics market could reach $3 billion to $5 billion by 2030, with Donald McClymont adding that Indy aims to capture a large share.

Craig Ellis inquired about the upcoming vision and radar product ramps, seeking both qualitative details on program breadth and quantitative estimates for the second-half 2025 ramp. He also asked for clarification on the Q4 operating expense target after restructuring.

Answer

Executive Donald McClymont confirmed that vision and radar product lines each have the potential to exceed $100 million in annual revenue, supported by strategic relationships with Valeo and Bosch. He noted caution regarding the ramp's steepness due to market turbulence but expressed confidence in the peak. Executive Mark Tyndall specified that Q4 OpEx is targeted to be approximately $33 million and is expected to remain flat through the second half of 2026.

Craig Ellis asked about the key product blocks that will drive revenue growth from 2025 towards the 2028 target of over $700 million, and also inquired about design win momentum in China.

Answer

Executive Donald McClymont identified ADAS products, specifically vision and radar, as the key long-term growth drivers, supported by continued linear growth in the user experience business. Regarding China, he highlighted a strong presence and design wins with major OEMs like BYD, Li Auto, and Xiaomi, noting the market is dynamic and a critical component of indie's strategy.

Craig Ellis of B. Riley Financial inquired about the specific milestones and next steps for the next-generation Dragonfly platform, new customer opportunities, and the key variables driving the forecasted Q4 revenue rebound.

Answer

CEO Michael Plisinski confirmed the next-gen Dragonfly passed stringent customer tests for resolution and throughput, with next steps focused on system reliability for shipment. He noted strong pull from additional memory customers, leading to increased production plans for the second half of the year. Plisinski clarified the Q4 rebound is driven by broad customer demand timing and a strong backlog for current products, rather than being dependent on new platform releases.

Craig Ellis asked for an update on the high-bandwidth memory (HBM) market, including potential digestion, and inquired about the second-half outlook for advanced packaging and specialty devices.

Answer

CEO Michael Plisinski stated that the outlook for HBM investments remains unchanged. He clarified that a product capability gap, which the company is addressing with a next-generation platform, is primarily related to 2.5D packaging sensitivity requirements, not HBM. For the second half, he noted that difficult year-over-year comparisons and tool slot allocation decisions in 2.5D AI packaging are creating a short-term negative impact.

Craig Ellis questioned how Onto Innovation's 2025 growth will compare to the broader WFE industry's projected 5% growth and asked about the potential for gross margin expansion throughout the year.

Answer

CEO Michael Plisinski asserted that Onto expects to 'continue to outperform the WFE numbers... well above 5%.' CFO Mark Slicer added that the company aims to use 55% gross margin as a baseline and improve quarterly, targeting 50 basis points or more of improvement, driven by a favorable product mix from advanced nodes and operational efficiencies.

Craig Ellis of B. Riley Financial focused on the longer-term impact of M&A, asking for a reasonable annualized revenue contribution from all recent acquisitions for next year. He also sought to confirm the pro-forma cash balance after the Mixel acquisition payment.

Answer

CEO Babak Taheri acknowledged that extrapolating the partial-year revenue contributions to a full year is a reasonable approach but stated the company would provide a more fine-tuned model by the end of the quarter. He also confirmed that the post-Mixel cash balance would be in the $30 million to $35 million range, agreeing with the analyst's calculation.

Craig Ellis of B. Riley Securities asked for clarification on the revenue contribution from the PPC and TechX acquisitions in Q2 and full-year 2025 guidance, the extent to which delayed Q1 orders are included in the updated forecast, and the company's appetite for future M&A.

Answer

CEO Babak Taheri clarified that the acquisitions are expected to contribute a combined $4 million to $6 million in 2025 revenue, with a portion factored into Q2 guidance. He confirmed the impact from delayed orders is accounted for in the new conservative forecast. Taheri also noted that SAM expansion via M&A remains a core strategy and that integration and cross-selling from the recent deals are progressing well, potentially faster than the linear revenue recognition model implies.

Craig Ellis sought details on the project milestones for the second $5 million FTCO deal and asked if further extensions are possible. He also requested an update on the M&A funnel and progress toward selecting targets.

Answer

CEO Babak Taheri explained the FTCO deal extension involves advanced wafer-level physics modeling and parasitic extraction, and he expects the project to continue growing for years. Regarding M&A, he confirmed the funnel has been narrowed significantly and discussions with potential targets that meet Silvaco's high standards have commenced.

Craig Ellis followed up on HBM4, asking which features of the Eagle G5 or Hawk are most advantageous and the potential impact on gross margins. He also asked about the next significant growth drivers for Camtek over the next 18 months beyond HBM4.

Answer

COO Ramy Langer highlighted the Hawk's superior throughput and advanced inspection capabilities (down to 150 nanometers) as key advantages for HBM4 and future technologies like hybrid bonding. He stated the higher-priced Hawk will have a positive contribution to gross margins. Beyond HBM4, Mr. Langer identified broader HPC applications, 3D metrology, new software capabilities, and a potential recovery in the compound semiconductor market as key growth drivers.

Craig Ellis asked about current order dynamics and the mix of turns business, progress toward the company's $500 million revenue target, and the strategy for inorganic growth given the substantial cash balance.

Answer

Executive Ramy Langer noted that while customers are cautious, Camtek has seen no material order delays or cancellations. Both Langer and CEO Rafi Amit expressed confidence in reaching the $500M revenue target, supported by new products and manufacturing infrastructure, with Amit stating it's achievable organically depending on market conditions. Amit also confirmed that while they continue to evaluate acquisitions, the primary focus is on organic growth.

Craig Ellis asked for context on recent pipeline discussions with chiplet and HBM customers, customer engagement for HBM4, and the potential contribution of non-HPC segments like CMOS image sensors and silicon carbide to 2025 growth.

Answer

Executive Ramy Langer described customer discussions about HPC as positive and optimistic, though he noted that engagement on HBM4 is further out. He confirmed that other segments, including CMOS image sensors, fan-out, front-end applications, and silicon carbide (partially in China), are showing recovery and are expected to contribute to growth in 2025.

Craig Ellis from B Riley Financial asked for details on silicon carbide customers using the current slowdown for R&D, and inquired about the structural nature of recent gross margin improvements.

Answer

President & CEO Russell Low confirmed a technology bifurcation, with China focusing on planar SiC while others advance to 200mm trench and superjunction devices, driving high-energy tool demand. EVP & CFO James Coogan noted that while mix is the primary margin driver, structural gains in warranty and operational costs are contributing, though mix will pressure margins in H2 2025.

Craig Ellis inquired about the momentum of the CS&I business for the second half of the year, given the large Purion installed base, and asked about Q2 order intensity and any expected shifts in business mix.

Answer

CFO James Coogan explained that Q1 CS&I strength was driven by high-margin spares and that upgrade opportunities remain. He noted the stickiness of the CS&I business is supported by the growing Purion installed base. CEO Russell Low added that Q1 bookings were encouraging at a 0.8x book-to-bill, but it's premature to call it an inflection point, confirming the booking profile aligns with the current general mature and power business focus.

Craig Ellis of B. Riley Securities asked for indicators on the timing of the market bottom, whether the digestion in China was offset by strength elsewhere, and for color on the full-year 2025 gross margin and operating expense trajectory.

Answer

President and CEO Russell Low noted that business outside of China remains resilient, particularly in the U.S., Europe, and Korea, despite softness in silicon IGBT. EVP and CFO James Coogan explained that Q1 gross margin is expected to be the low point due to volume, mix, and lower CS&I sales, but he anticipates gradual improvement throughout the year. Coogan also stated that OpEx will remain relatively flat year-over-year, with a focus on R&D investment to position the company for future growth, a strategy consistent with past downturns.

Craig Ellis inquired about recent order activity trends by end-use and geography, asking for context on momentum from Q2, how Q3 played out, and the outlook for the first half of 2025.

Answer

CFO James Coogan explained that softness in the general mature and power markets is driving lower order activity, informing the preliminary view that the first half of 2025 will be lower than the second half of 2024. CEO Russell Low identified memory as a potential bright spot, while Coogan noted 2025 could be down year-over-year without a significant market recovery. Low emphasized that visibility into 2025 remains limited.

Craig Ellis asked if the company's internal production and hiring issues have resulted in any market share losses. He also sought to reconcile Ichor's view of a slightly weaker second half with more optimistic WFE growth commentary from another industry player.

Answer

CEO Jeffrey Andreson clarified that there have been no market share shifts in external revenue. He explained that the 'share' issue is internal, as the company is still purchasing some components externally that it plans to insource once operations are fully ramped. Regarding the WFE outlook, Andreson stated that Ichor's view is not materially different and that the company still expects its own revenue growth to outpace the overall WFE market in 2025.

Craig Ellis from B. Riley Securities asked for the precise source of the gross margin execution issue and what new monitoring steps are being implemented. He also inquired about the factors that would drive revenue to the low or high end of the Q2 guidance range.

Answer

Executive Jeffrey Andreson admitted the issue was a failure to align the forecast for inbound supply from internal machining with the demand from integration sites. He stated that management is now digging deeper into the organization to ensure alignment. For Q2 revenue, he said the low end would result from demand shifting out, while the high end would require customer pull-ins from Q3. Executive Greg Swyt noted H2 OpEx would moderate slightly from H1 levels.

Craig Ellis asked for a breakdown of the drivers behind the forecasted 2025 gross margin improvement and for a ranking of the key demand drivers for the year, specifically comparing 3D NAND, DRAM/HBM, and foundry/gate-all-around.

Answer

Executive Greg Swyt and Executive Jeffrey Andreson explained that the 2025 gross margin expansion to over 16% will be driven primarily by the ramp of new proprietary products, followed by volume leverage from higher demand. One-time headwinds from Q4 2024 are expected to dissipate by Q2 2025. Regarding demand, Andreson noted that while foundry logic and DRAM are expected to remain strong and steady, the most significant inflection in growth is coming from the recovery in NAND technology investments.

Craig Ellis asked for clarification on the calendar 2025 outlook, questioning the dynamics between NAND and DRAM demand and the expected linearity of spending. He also inquired about the potential contribution of proprietary content to gross margin or revenue in 2025.

Answer

Executive Jeffrey Andreson confirmed that while DRAM remains strong, the NAND recovery is now anticipated to begin earlier in 2025 than previously expected. He projected that demand levels from Q4 2024 would extend into Q1 2025 before progressing through the year. Regarding proprietary products, Andreson noted they will primarily improve profitability, advising analysts to model a 25 basis point quarter-over-quarter gross margin improvement.

Craig Ellis of B. Riley Financial requested specific examples of how accelerating the 'speed of execution' would benefit Rogers and sought clarification on the total and timing of cost savings, combining the new $13 million initiative with the prior $32 million run-rate program.

Answer

Interim President & CEO Ali El-Haj provided examples of improving execution by significantly reducing product lead times and accelerating new product development cycles to win programs faster. SVP, CFO & Treasurer Laura Russell confirmed the cumulative cost savings target is approximately $45 million, clarifying that the incremental $13 million in annual savings is expected to begin materializing in 2026.

Craig Ellis from B. Riley Securities asked about the tone of customer conversations regarding tariffs, the development of the curamik opportunity pipeline in China amidst a soft global market, the drivers of Q2 gross margin expansion, and the relative capital intensity of the company's two main business segments.

Answer

President and CEO Randall Gouveia described customer conversations as resilient and cooperative, focused on mutual mitigation of tariff impacts. He noted the curamik pipeline in China is expanding with wins from both Western and Chinese OEMs, supported by the new local facility, despite current macro sluggishness. SVP and CFO Laura Russell explained that the Q2 gross margin expansion is driven by favorable product mix and improved volume utilization, and stated that capital intensity for maintenance and past expansion has been relatively balanced between the AES and EMS segments.

Craig Ellis of B. Riley Securities asked about the Aerospace & Defense (A&D) business, questioning if its recent growth represents a sustainable lift to the baseline. He also sought more color on the impact of geopolitical uncertainty and potential tariffs on end markets and customer behavior.

Answer

President and CEO Randall Gouveia affirmed that Aerospace & Defense is a core business with a solid base, projecting sustainable mid-single-digit long-term growth driven by EMS gasketing technologies and RFS solutions for radars and antennas. Regarding geopolitical risk, Gouveia stated that the company's primary mitigation is its 'local-for-local' manufacturing strategy, which provides flexibility to produce and supply within Asia, North America, and Europe. He noted that current customer hesitance is largely due to broad macroeconomic uncertainty, causing them to be cautious with inventory until there is more clarity.

Craig Ellis of B. Riley Securities sought details on the industrial market strategy, asking if recent commentary signaled a strategic refocus and what the revenue potential is for new segments like BESS and data centers. He also inquired about the expected revenue impact from the new China facility's ramp-up in 2025, the reason for the significant Q3 operating expense decrease, the performance of specific portable electronics programs, and the company's current M&A pipeline and appetite.

Answer

CEO Colin Gouveia clarified that the company is strategically focusing on growing specific sub-segments like data centers, BESS, and medical with the goal of elevating them out of the 'general industrial' category. While not quantifying the revenue impact of the new China facility, he noted it will enable better service to the local market. Interim CFO Laura Russell explained the Q3 OpEx decrease was due to lower variable compensation and reduced professional services, but noted costs would rise slightly in Q4 for new facility qualifications. Colin Gouveia added that the portable electronics ramp was slower than anticipated due to delays in high-end phone adoption and related software rollouts. On M&A, he confirmed it remains a key strategy, but the market has been slow, though Rogers has identified several potential targets.

Craig Ellis of B. Riley Securities asked about the evolution of customer sentiment regarding 2026 prospects since the last quarter. He also requested details on the new Eclipse Gen 2.5 handler, its specific capabilities, and its potential market impact, particularly for GPUs and APUs.

Answer

CEO Luis Müller stated that auto and industrial customers see a steady, progressive recovery into 2026. For the Eclipse 2.5, he highlighted two key features: its high configurability allowing one system to cover multiple applications, and its high power dissipation capability of up to 3,000 watts, which is critical for testing the latest generation of high-end compute and GPU devices. This flexibility is particularly attractive to OSATs.

Craig Ellis asked about the business outlook for the second half of 2025, inquiring what customers are signaling regarding their future needs for systems and recurring products. He also asked for clarification on the planned changes to the test cell utilization metric and sought an update on the integration and future prospects of the Tignis acquisition.

Answer

CEO Luis Müller expressed cautious optimism, noting positive momentum in system interest but choosing not to provide specific H2 guidance, stating that current consensus estimates feel appropriate. Regarding utilization, he explained the goal is to refine the metric's breakdown by end market (auto, mobile, etc.) without changing the total IDM/OSAT figures. On Tignis, Müller reported strong customer interest and a high level of activity, but indicated it would be about six more months before they could provide concrete financial projections for 2026.

In a follow-up, Craig Ellis asked for a more detailed explanation of the go-to-market strategy for Cohu's software business, specifically how DI-Core and Tignis products will be sold to customers.

Answer

President and CEO Luis Müller detailed a multi-pronged strategy. The DI-Core vision software will remain a distinct offering. The DI-Core predictive maintenance software will be enhanced with Tignis' AI technology to expand its reach beyond Cohu's equipment to the broader back-end manufacturing space. Separately, Cohu will support the continued growth of Tignis' own software business, which currently serves the front-end manufacturing market.

Craig Ellis asked about the apparent turning point in the mobile business, the potential revenue and ramp timeline for the new Neon HBM and silicon carbide die-level burn-in products, and the confidence in Q1 sequential revenue growth.

Answer

President and CEO Luis Müller confirmed the mobile segment's year-over-year growth and noted that bookings were up sequentially across all segments, indicating a broader improvement. For the new HBM and silicon carbide products, Müller discussed the significant market opportunities, including a ~$100M market for HBM inspection, but stated it is too early to project a specific revenue ramp. CFO Jeffrey Jones affirmed the Q1 revenue forecast for 10% sequential growth, attributing it to a book-to-bill ratio over 1 in Q4 and stating that typical seasonality is not currently a factor.

Craig Ellis asked for clarification on operating expenses, specifically quantifying the impact of the New Taiwan Dollar exchange rate versus R&D growth, and inquired about the enterprise business momentum for MonTitan, NVIDIA BlueField, and PCIe Gen 5 controllers.

Answer

CFO Jason Tsai quantified that a stable exchange rate would have improved operating margin by about one percentage point. President & CEO Wallace Kou detailed that MonTitan has strong design momentum with initial ramps in Q4 2025, and the NVIDIA BlueField qualification is in its final stage with production expected in Q4.

Craig Ellis from B. Riley Financial asked for a quantification of the New Taiwan Dollar's impact on operating expenses and sought an update on the enterprise business, focusing on MonTitan customer ramps, the NVIDIA BlueField program status, and PCIe Gen 5 controller engagement.

Answer

CFO Jason Tsai explained that the stronger Taiwan dollar negatively impacted operating margin by over one percentage point in Q2 and for the Q3 outlook. President and CEO Wallace Kou added that MonTitan has strong design momentum with Tier 1 customers, with an initial ramp expected in Q4 2025 and significant growth in 2026. He also confirmed the NVIDIA BlueField qualification is in its final stage for a Q4 production start, which is opening doors for further collaboration with NVIDIA.

Craig Ellis asked for more details on the MonTitan enterprise SSD customer ramp expected in the second half of 2025, including the timing and volume potential across the six secured customers. He also requested a ranking of the growth drivers that will contribute to achieving the projected $1 billion annual revenue run rate by Q4 2025.

Answer

CEO Wallace Kou detailed that the six MonTitan customers include two Tier 1s, with initial production starting late in 2025 and reaching more meaningful volume by mid-2026. He identified the high-end PCIe5 8-channel controller, with an ASP over $10, as the primary growth driver for the second half of the year, followed by strong momentum in mobile controllers (eMMC and UFS), which gives the company confidence in reaching the $1 billion run rate.

Craig Ellis requested a high-level summary of how new products like PCIe Gen5, UFS 4.0, and MonTitan will collectively drive growth in 2025, asking for a potential quantification. He also inquired about the outlook for gross margins and operating expenses for 2025, including tape-out costs and R&D intensity.

Answer

CEO Chia-Chang Kou detailed significant market share opportunities for each new product, including targeting 50-60% of the high-end PC market with PCIe Gen5 by 2026 and MonTitan reaching 10% of total revenue by 2026-27. CFO Jason Tsai added that the company is on track to return to its historical 48-50% gross margin range by early 2025. He also noted that OpEx would remain steady, with plans for two more advanced controller tape-outs next year, similar to 2024.

Craig Ellis from B. Riley Securities sought clarification on the components of the Q3 gross margin guide, specifically asking about HBM startup costs, tariff headwinds, and competitive pricing. He also asked for a high-level breakdown of how FormFactor plans to bridge the 700 basis point gap to its target model gross margin.

Answer

CFO Shai Shahar reiterated that no HBM ramp-up costs are in the Q3 guide but confirmed a 1 to 1.5 percentage point headwind from tariffs, with no significant changes in competitive pricing. CEO Michael Slessor explained that bridging the gap to the 47% target gross margin relies on three roughly equal components: volume leverage, ongoing operational cost reductions, and growing market share in higher-value Foundry and Logic applications like GPUs and hyperscaler custom AI.

Craig Ellis from B. Riley Securities inquired about the dynamics with a key customer that returned to the 10% list and asked for the HBM vs. non-HBM revenue mix in Q2 guidance and its implications for achieving target gross margins.

Answer

CEO Mike Slessor noted the customer's rebound is tied to their investment in regaining process leadership but emphasized FormFactor's strategic diversification towards HBM and CPO. He stated that Q2 DRAM growth is almost entirely from HBM, with non-HBM remaining flat. CFO Shai Shahar reiterated commitment to the 47% gross margin target, outlining that it requires market recovery, share gains in foundry & logic, and internal cost improvements.

Craig Ellis questioned why end-market volume is currently having such a significant impact on the business, which is historically more dependent on product cycles, and asked about the reasons for a large U.S. microprocessor customer falling off the 10% customer list in Q4.

Answer

CEO Mike Slessor clarified that while new designs drive the refresh cycle for probe cards, the quantity sold is directly tied to wafer volumes, which are currently low in key markets like PCs and mobile. He confirmed broad-based weakness in Foundry & Logic, particularly in the microprocessor business, led to no F&L customer reaching the 10% threshold, underscoring the strategic need to qualify at all major customers.

Craig Ellis of B. Riley Securities questioned whether HBM yield improvements could decrease probe card intensity or if technology transitions are too rapid. He also asked about potential digestion from a key U.S. customer and progress on new GPU customer penetration.

Answer

CEO Mike Slessor responded that while HBM yields will improve, the fast pace of innovation and capacity expansion, particularly with more die per stack, will likely maintain high test intensity. He characterized customer-specific fluctuations as normal. On GPUs, Slessor reported good progress with a large fabless CPU/GPU maker, expecting qualification in Q4, and is focused on penetrating the advanced packaging business of another major GPU customer.

Craig Ellis asked for specific examples of changes made to improve product development for customers and when investors might see the benefits of these enhancements.

Answer

COO Richard Simoncic highlighted the release of Microchip's internal MPLAB AI coding assistant to customers free of charge, which can improve their productivity by over 40%. The company is also developing AI product recommenders and board-level support for Total System Solutions (TSS). The goal is to make designing with Microchip products easier, thereby increasing adoption and design wins.

Craig Ellis asked about the progress in assessing the right level of production capacity and the steps for realignment. He also sought to confirm the timing of the next debt maturity after September 2025.

Answer

CEO Steve Sanghi stated the team is 'very far along' in its capacity assessment beyond the closure of Fab 2 and will disclose the full plan on March 3. CFO Eric Bjornholt confirmed that after the September 2025 maturity, the next bond maturity is a $1 billion tranche due in March 2028.

Craig Ellis asked about the performance of AI-accelerator products versus expectations, seeking clarity on whether underperformance was due to product issues, market share, or platform ramp timing. He also inquired about reports of thermal issues, the potential growth contribution from server system boards versus cards, and the primary drivers for calendar 2025 growth beyond unit expansion, such as content and share gains. Finally, he asked about strategies to improve gross margins amid competitive pricing pressure.

Answer

Executive Stephen Chang clarified that the softness in AI-accelerators was due to a customer's transition to a new platform, not an AOSL product issue, and confirmed AOSL is a contender for the new design expected to ramp mid-year. He declined to comment on specific thermal issue reports but reiterated excitement for the data center opportunity. Chang identified AI, with its increasing power requirements and total solution sales (controller plus power stage), and smartphones, with higher charging currents driving BOM content, as the top growth drivers for 2025. Executive Yifan Liang added that gross margin improvement will come from new, higher-margin products, increased utilization, and internal cost reduction efforts.

Craig Ellis sought clarification on segment guidance and then asked for details on AI-related socket wins, the potential dollar content per unit, the impact of desktop market share gains, and the current competitive pricing environment.

Answer

Executive Stephen Chang clarified that a projected 30% decline was for the Consumer segment, not Communications. He detailed that near-term AI opportunities are in next-gen graphics and AI accelerator cards, where AOSL's BOM content could increase from about $5-$6 to a range of $7 to over $20 per unit by providing a total solution. He also confirmed desktop share gains are helping the Computing segment grow against seasonal trends. Executive Yifan Liang added that pricing pressure has intensified, leading to high single-digit annual ASP erosion, which the company is countering with new product introductions.

Craig Ellis of B. Riley Securities, with questions asked by an associate, inquired about Identiv's confidence in achieving its mid-2025 non-GAAP gross margin target, the expected cash burn trajectory, the potential timing for strategic M&A, and the company's penetration efforts with large pharmaceutical companies.

Answer

CEO Kirsten Newquist expressed confidence in reaching the 26-28% non-GAAP gross margin target post-transition of production to Thailand, which is progressing on schedule. CFO Justin Scarpulla affirmed the near-term operating cash use forecast of $14-$16 million over the next 12 months. Regarding M&A, Newquist confirmed the company is actively evaluating targets as a strategic priority but has no definitive timeline. She also highlighted that the pharmaceutical sector is a key focus, with several new product development projects currently underway.

Inquired about the mix between enterprise and consumer Wi-Fi momentum, the drivers of Q3 revenue growth by segment, the CapEx outlook for calendar 2024, and the expected normalization of accounts receivable.

Answer

Executives highlighted that while enterprise Wi-Fi is strong, the carrier segment is also a major contributor with volumes competitive to consumer. They are also gaining traction in the consumer market as performance becomes more critical. Q3 revenue growth is driven by a pickup in legacy Wi-Fi 6E programs and new Wi-Fi 7 preproduction orders, while the 5G network side has slowed. CapEx is expected to be minimal (hundreds of thousands per quarter) for the rest of 2024. The accounts receivable buildup from Q2 will be collected in Q3 and is expected to normalize.

The analyst inquired about the breakdown of WiFi revenue growth in the March quarter, the key drivers for revenue doubling to reach breakeven in the second half of calendar 2024, including mobile's contribution, and the timing for receiving the ITC tax refund.

Answer

Executives explained that March quarter WiFi growth is evenly split between consumer and enterprise, driven by recovering WiFi 6E programs and new Wi-Fi 7 ramps. The ramp to breakeven in the second half of 2024 will be driven by continued growth in WiFi (with higher content per device), a recovery in network infrastructure, and strength in defense. Mobile's contribution will primarily come from Tier-2 customers. The ITC refund of $3.5-$4 million will be realized over 18 months, with the first tranche of $1.5-$2 million expected in the March 2024 quarter.

Inquired about the drivers for the projected Q1 revenue decline, the outlook for a revenue bottom, the potential timing of a mobile production ramp in China, and any interim updates on CHIPS Act and DoD funding.

Answer

The Q1 revenue decline is attributed to slowdowns in mobile and WiFi, a seasonal dip in foundry services, and supply chain constraints. The company expects softness to last 1-2 quarters, with the December quarter likely similar to September before a pickup in March. The mobile ramp timing is uncertain due to the weak China market. An update on government funding is expected on the next earnings call in early November, as contracts must be finalized before any announcements.