Craig Ellis

Craig Ellis asked a high-level question about whether D-Wave's strong execution, including the applicability of annealing cryo control to gate model and robust bookings, is a direct result of increased R&D and go-to-market spend. He also sought color on the system sales pipeline and the new 'all-you-can-eat' offering.

Answer

CEO Alan Baratz confirmed that the investments are playing out as planned, accelerating work on the Advantage3 system and the gate model system, particularly with on-chip cryogenic control. He noted robust go-to-market progress, significant pipeline growth, and a positive outlook for the year, indicating that investments are yielding expected results.

Craig Ellis of B. Riley Securities asked if the recent strong execution, including the applicability of annealing cryogenic control to gate model technology and the robust $45 million in trailing four-to-five-month bookings, is a direct result of D-Wave's increased R&D and go-to-market investments. He also requested further insight into the current pipeline for system sales and the new 'all-you-can-eat' offering.

Answer

CEO Alan Baratz confirmed that the investments are indeed playing out as planned. On the R&D side, this includes accelerating work on the Advantage3 system (analog-digital capability, multi-chip for 100,000 qubits) and the gate model system (on-chip cryogenic control). On the go-to-market side, the pipeline has grown significantly, with robust progress in system sales (exceeding the previous expectation of one per year) and faster progression in larger QCaaS and professional services deals, indicating that investments are yielding expected results.

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 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 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 sought details on the drivers for IonQ's calendar 2026 revenue guidance of $235 million, including international/domestic mix and specific program contributions, and asked about engineering milestones for the 256-qubit system.

Answer

CFO and COO Inder Singh highlighted globalization, strong organic growth in the compute platform, increasing demand for Post-Quantum Security and sensing solutions, and a growing commercial customer base. He also detailed that the 256-qubit system roadmap is semiconductor-based, with initial tape-outs completed and development progressing as planned.

Craig Ellis asked for more details on the drivers behind the $235 million midpoint revenue guidance for calendar year 2026, including international versus domestic mix and specific program contributions, along with the linearity of revenue throughout the year. He also asked about engineering milestones for the 256-qubit system.

Answer

Inder M. Singh, IonQ's CFO and COO, highlighted continued globalization, strong demand for the 5th-generation Tempo and future machines, and the resonating technology roadmap. He noted significant organic growth in the compute platform, increasing urgency for Post-Quantum Security solutions, and early excitement in quantum sensing. He also mentioned the growing commercial customer base. Regarding the 256-qubit system, Inder M. Singh confirmed the semiconductor-based roadmap, with tape-outs A, B, and C completed and D in progress, leveraging existing foundries for scaling.

Craig Ellis congratulated indie on its 20% core business growth in Q1 and asked for the top two or three drivers behind this growth, specifically inquiring if radar was a significant contributor at this early stage. He also followed up on the long-term trajectory of the radar business, seeking visibility on when it might achieve $100 million in annualized revenue, whether by 2028, sooner, or later.

Answer

Don McClymont, CEO, confirmed that radar volumes were relatively small in Q4 and Q1 but emphasized the critical importance of initial shipments for pipeline clearance and design validation. He identified ADAS-side drivers, particularly the IND880 processor and its AI edge processor integrated version, as key contributors to core business growth. Regarding the $100 million annualized radar business, Mr. McClymont expressed increasing confidence and positive outlook, noting the significant support and supply chain expansion efforts underway, though he did not provide an exact timeline.

Craig Ellis asked about the primary drivers behind indie Semiconductor's projected 20% core business growth in Q1, specifically whether radar is a significant contributor, and sought visibility on when the radar business could achieve $100 million in annualized revenue, considering its scaling through 2029.

Answer

CEO Don McClymont clarified that while Q1 radar volumes are still small, they are critical for design validation. The core business growth is largely driven by ADAS, particularly the successful IND880 processor and its new AI edge-integrated version. He expressed increasing confidence in the radar business reaching $100 million annually, though without a specific timeline, citing extensive support and supply chain expansion efforts as indicators of strong momentum.

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 inquired about the expected contour of Onto Innovation's 30% year-on-year advanced packaging growth throughout the year and potential notable programmatic wins.

Answer

Michael Plisinski (CEO) indicated that advanced packaging revenue is expected to be relatively stable between the first and second halves of the year. He noted that stronger adoption of the G5 platform could provide additional upside, as it is currently conservatively factored into the 30%+ growth estimate. Craig Ellis also asked about visibility for advanced nodes in the back half of the year, expectations for growth, and the performance of Gate-All-Around and memory segments. Michael Plisinski (CEO) mentioned expanding advanced nodes with customer discussions focused on ramp support, acknowledging some timing uncertainty. He projected advanced nodes to perform in the 10%-20% range (mid-teens), with potential for refinement as additional VPAs are solidified.

Craig Ellis inquired about the expected contour of Onto Innovation's 30% year-on-year advanced packaging growth throughout the year, potential programmatic wins, and the visibility and growth expectations for advanced nodes in the second half of the year.

Answer

CEO Michael Plisinski indicated that advanced packaging revenue is expected to be relatively stable between the first and second halves of the year, with potential upside from stronger adoption of the G5 platform. For advanced nodes, Mr. Plisinski noted positive customer sentiment and discussions around supporting ramps, but acknowledged some timing uncertainty. He expects advanced nodes to perform in the 10%-20% growth range, with potential for refinement as additional VPAs are solidified.

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, Senior Managing Director at B. Riley, sought confirmation on his characterization of Camtek's growth drivers for the year, expecting strong growth from IDMs (due to HBM exposure), OSATs, and foundries (with 2.5D), driven by the uptake of Hawk and Eagle systems. He also questioned Camtek's operational readiness to meet higher-than-expected demand (WFE-like growth), the potential impact on gross margins, and the expected gross margin for Q1, along with the OpEx trajectory for the year.

Answer

COO Ramy Langer affirmed Ellis's view on growth drivers, confirming expectations for strong growth from HBM, foundries, and OSATs, with OSATs adopting CoWoS and AI technologies. Langer stated Camtek's operational readiness to meet any level of demand, including high teens growth. CFO Moshe Eisenberg added that Camtek has the necessary capacity, inventory, and supply chain. Eisenberg projected Q1 gross margins to remain between 50.5%-51.5%, with improvement expected in the second half. He also indicated an increase in OpEx during the first half due to R&D investments aimed at capturing future opportunities.

Craig Ellis (B. Riley) sought confirmation on the expected growth across different customer classes (IDM, OSAT, foundry) for the year, and Camtek's capacity and gross margin implications if demand were to exceed current double-digit forecasts.

Answer

Ramy Langer (COO, Camtek) confirmed strong growth expectations for IDMs (HBM exposure), OSATs (advanced packaging and AI technologies), and foundries (2.5D). He stated Camtek is operationally ready for any demand level, with current capacity well over $700 million and additional capacity in Europe expected late 2026. Moshe Eisenberg (CFO, Camtek) reiterated expected gross margin improvement in the second half, with Q1 margins around 50.5%-51.5%, and an increase in OpEx in H1 due to R&D investments.

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 sought a better understanding of the mature foundry business, including geographical insights on utilization rates in China, Southeast Asia, U.S., and Europe, and where customers are nearing capacity addition levels. He also asked about the demand intensity from China for 2026 and the factors impacting the Q1 gross margin guide of 41%.

Answer

Russell Low, President and CEO, noted that utilization rates vary, with China continuing to add capacity for self-sufficiency goals, while non-Chinese customers need to fill existing capacity before new tool purchases. Jamie Coogan, EVP and CFO, expects China revenue to be relatively flat to slightly down in 2026, remaining a durable market. He attributed the Q1 gross margin decline to a higher mix of lower-margin memory systems, moderation of CS&I volume (due to seasonality and Q4 pull-ins), and a modest tariff impact, which is higher in Q1.

Craig Ellis sought a better understanding of the mature foundry business, specifically asking about utilization rates geographically (China, Southeast Asia, U.S., Europe) and where customers are closer to needing to add more capacity. He also asked about the demand intensity from China in 2026, comparing it to 2025's 42% of total revenue, given some companies suggest flattish trends. Finally, he inquired if any one-offs were impacting the Q1 gross margin guide of 41%.

Answer

Russell Low (President and CEO, Axcelis Technologies) noted that utilization rates vary by customer, with China still showing high utilization and demand for additional growth due to self-sufficiency goals, while non-Chinese customers need to fill existing capacity before investing in new tools. Jamie Coogan (EVP and CFO, Axcelis Technologies) stated that China revenue is expected to be relatively flat to slightly down in 2026, remaining a durable part of the market as they continue fab expansion. Regarding Q1 gross margin, he attributed the sequential decline primarily to a higher mix of lower-margin memory systems, moderation in CS&I volume (due to seasonality and Q4 pull-ins), a lower mix of high-margin upgrades within CS&I, and a modest incremental impact from tariffs.

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 inquired about Rogers Corporation's multi-year growth ambitions beyond data centers, asking about specific initiatives from the past few quarters expected to convert into new design wins or opportunities this year, and the anticipated revenue timing. He also asked if new profitability improvement initiatives are planned for 2026, beyond the previously announced $30 million and $13 million Curamik-related savings, or if the focus is on executing existing objectives. Finally, he asked about the expected loading of the new Curamik facility in China in the back half of 2026.

Answer

Interim President and CEO Ali El-Haj stated that growth targets are across all business segments, with identified opportunities in EMS and AES, expanded market share with existing customers, and growth in ADAS. He mentioned developing newer, differentiated technologies for EV battery and renewables, and direct engagement with OEMs. Senior Vice President and CFO Laura Russell clarified that the $25 million run rate initiative has a full-year benefit of $32 million ($7 million incremental in 2026), and the $13 million Curamik Germany restructuring savings will materialize in the second half of 2026. She emphasized that top-line expansion and innovation will drive substantial shifts, complemented by continued business management. Mr. El-Haj noted that the Curamik China facility's ramp-up is slower than expected, but growth is still anticipated in Q2, Q3, and Q4, with a focus on avoiding price erosion.

Craig Ellis asked about Rogers Corporation's multi-year growth initiatives beyond data centers, seeking details on specific design wins, new opportunities, and expected revenue timing across all business segments. He also inquired about the company's profitability improvement plans for 2026, specifically if there are new initiatives beyond the previously announced cost savings and ceramic restructuring.

Answer

Interim President and CEO Ali El-Haj explained that growth targets are across all business segments (EMS and AES), including market share expansion with existing customers, ADAS growth, and new 'not me-too' technologies for EV battery and renewables with double-digit growth potential. He also mentioned direct OEM engagement in automotive. Senior Vice President and CFO Laura Russell clarified that the $25 million run rate for previous initiatives has a full-year benefit of $32 million (with an incremental $7 million in 2026), and the $13 million from Germany ceramic restructuring will materialize in H2 2026. No new *announced* initiatives were detailed, but the focus remains on top-line expansion, innovation, and ongoing business management, noting operating expenses decreased from $210 million (2024) to $193-$194 million (2025). Ali El-Haj also addressed the China ceramic facility, noting its ramp-up is slower than expected but customers are interested, with growth anticipated in Q2-Q4 while balancing aggressive market pursuit with avoiding price erosion.

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 inquired about Cohu's fourth quarter order activity, specifically how much of the strong systems and recurring orders would convert to revenue in the first quarter versus being pipelined for later in 2026. He also asked for the Neon High Bandwidth Memory (HBM) business's revenue exit for 2025, expectations for 2026, and clarification on the Q4 gross margin variance.

Answer

Luis Müller, Cohu's President and CEO, noted systems orders were up 47% quarter-over-quarter, and recurring orders were up 34%, including large annual service contracts. Jeff Jones, Cohu's CFO, added that approximately 70% of Q1 guided revenue was in backlog, with the majority of the balance shipping in Q2. Regarding HBM, Jeff Jones stated the business exited 2025 at $11 million, with a 2026 forecast of $15 million to $20 million. He clarified that the Q4 gross margin variance was primarily due to a 350 basis point one-time inventory charge, with product mix accounting for the remainder.

Craig Ellis asked about the strong Q4 order activity for both systems and recurring business, inquiring about the conversion timeline to revenue. He also sought clarification on the 2025 HBM revenue exit and 2026 expectations, and the specific impact of the one-time inventory charge on Q4 gross margin.

Answer

President and CEO Luis Müller explained that systems orders were up 47% quarter-over-quarter, driven by handlers, thermal subsystems, and testers, while recurring orders were up 34% due to service contracts, interface products, and handler spares. CFO Jeff Jones added that 70% of Q1 guided revenue was in backlog, with the majority of the balance shipping in Q2. Jeff Jones also stated that 2025 HBM revenue exited at $11 million, with 2026 forecasted between $15 million and $20 million, and confirmed the one-time inventory charge accounted for about 350 basis points of the Q4 gross margin variance.

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 inquired about the 20% year-on-year growth in the computing segment, asking for color on the potential size of the two new data center HDFO programs compared to existing PC-related programs, and if they would reach full volume by the end of 2026. He also asked if Amkor would leverage debt markets, like Japan, to augment its cash balance for the increased investment.

Answer

CEO Kevin Engel stated that the PC market is soft, but data center is strong, with 2.5D and HDFO platforms expected to nearly triple. He anticipates one data center device to be in very high volume with a steep ramp, and the other to contribute meaningfully, though full volume by year-end is uncertain. CFO Megan Faust confirmed that significant government incentives (up to $2.85 billion) and customer commitments (some executed, others in discussion) will contribute to funding. She added that Amkor has access to debt capacity, given its 1.2x debt-to-EBITDA ratio, and is evaluating options to optimize shareholder return.

Craig Ellis asked for more details on Amkor Technology's full-year computing segment growth, specifically how the potential size and ramp of two new data center HDFO programs compare to existing PC-related programs, and if these data center programs are expected to reach full volume by the end of 2026. He also inquired about Amkor's ability to augment its cash balance with debt, leveraging attractive debt markets like Japan, to fund the increased investment.

Answer

CEO Kevin Engel stated that the computing segment includes both PC (soft) and data center, with 2.5D and HDFO platforms expected to nearly triple in 2026. He projected one data center program to ramp steeply to very high volume, and the other to contribute meaningfully, though full volume by year-end is uncertain. CFO Megan Faust highlighted significant government incentives (up to $2.85 billion) and customer commitments as funding sources. She confirmed Amkor's access to various debt capacities, given its 1.2x debt-to-EBITDA ratio, and stated they are evaluating options.

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 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 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 asked about Ichor's half-on-half revenue expectations, given the sequential growth through the year, and whether the mix of higher-margin components would kick in during the year or if it would remain gas panel-oriented. He also sought comfort points regarding the Malaysia business relocation's potential adverse impact on revenue execution, COGS, and expense execution, especially with strong demand.

Answer

CEO Phil Barros stated that the first half would be heavy with gas panel-related business, with growth and gross margin improvement from increased component supply expected in the second half, making the year still second-half weighted for revenue. Regarding Malaysia, Phil Barros clarified that the facility's startup is a first-half headwind baked into Q1 guidance, but it's for additional capacity needed for 2026 and 2027, with tailwinds expected in 2027, and minimal risk due to its proximity to an existing facility.

Craig Ellis inquired about Ichor's half-on-half revenue expectations, given the sequential growth outlook and some industry peers expecting a back-half weighted year. He also asked if a higher mix of components and other higher-margin products would kick in during the year, or if it would remain gas panel-oriented. He followed up on the Malaysia business relocation, asking for assurances that it wouldn't adversely impact revenue or COGS execution amid strong demand.

Answer

CEO Phil Barros stated that the first half would be heavy with gas panel-related business, with growth and gross margin improvement from increased component supply expected in the second half, confirming the year is still second-half weighted but with significant first-half momentum. Regarding Malaysia, Phil Barros explained that the facility is for additional capacity, with headwinds baked into Q1 guidance, and tailwinds expected in 2027.

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 with B. Riley Securities sought clarification on the gating factors for Alpha and Omega Semiconductor's investment in advanced compute products, defining the boundaries of their core competencies. He also asked for projections on the advanced compute segment's revenue contribution as a percentage of the total compute segment, both in the near term and over the next two years, to understand the return on increased R&D investment. Additionally, Ellis inquired about the current pricing environment, given improving foundry utilization rates, and the company's confidence in PC and smartphone growth through calendar year 2026, considering lead times and BOM content gains.

Answer

CEO Stephen Chang explained that investments in AI leverage existing PC total solutions, expanding into graphics and AI platforms, and now into medium-voltage power conversion (48V-12V) for a broader ecosystem. He noted that AI/graphics previously represented 20-25% of computing in calendar 2025, with potential to reach 50% or higher due to new VRM and medium-voltage opportunities. CFO Yifan Liang stated that December quarter pricing was in line with historical trends, with March quarter factoring in normal price erosion, while closely monitoring the market. Chang expressed confidence in PC and smartphone growth through increased BOM content and penetration of total solutions, despite memory supply headwinds, and leveraging higher charging currents in smartphones.

Craig Ellis asked about the strategic gating factors for investing in new advanced compute opportunities, the current and projected contribution of advanced compute to the overall computing segment, and the potential for improved pricing due to higher foundry utilization to boost gross margins. He also questioned the confidence in PC and smartphone growth through calendar 2026 despite memory shortages, given content gains.

Answer

CEO Stephen Chang explained investments are focused on areas of strength like PC total solutions, AI applications (VRM and medium-voltage power conversion), and smartphone battery protection, expanding product breadth and customer base. He estimated AI/graphics-related computing could grow from 20-25% to potentially 50% or higher. He expressed confidence in PC growth through increased BOM content and total solution penetration, and smartphone growth due to higher charging currents and leading technology. CFO Yifan Liang noted December quarter pricing was in line with historical trends, with March quarter factoring in normal price erosion, and they are monitoring the market.

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 with B. Riley Securities questioned the commercialization timeline for High Bandwidth Flash (HBF) in volume, considering customer engagements and industry acceleration. He also asked for the timeline from the initial High Bandwidth Memory (HBM) system shipment to volume production and the expected adoption timeline and community for Vertical Wire technology in low-power DRAM and mobile applications.

Answer

Lester Wong, Interim Chief Executive Officer and Chief Financial Officer, indicated that HBF is in early stages and likely a CY 2027 play for volume commercialization due to qualification and standards. For HBM, he expects volume production in fiscal 2027, with potential POs in FY 2026 following the initial evaluation system shipment. Regarding Vertical Wire, he anticipates some traction in the latter half of FY 2026, with significant expansion in FY 2027, noting ongoing work with 8 customers across Korea, China, and the US.

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 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 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 asked CEO Mike Slessor for details on FormFactor's market share gains at the top three DRAM OEMs, including the potential magnitude of gains, timing, and financial impact. He also questioned the company's confidence in meeting customer demand above $225 million per quarter with current facilities before Farmers Branch ramps, and how quickly Farmers Branch can be brought online and its material impact over the next 12-24 months.

Answer

CEO Mike Slessor explained that FormFactor has strong share with its largest customer and is using SmartMatrix technology to increase share with the other two HBM manufacturers, seeing it as a significant opportunity due to HBM market growth. Senior VP, FormFactor, Inc. Aric McKinnis stated that output from the current footprint continues to increase with ongoing improvements, and Farmers Branch remains on schedule for year-end, providing additional capacity beyond this year. He also clarified that about two-thirds of recent gross margin improvement was from cost initiatives, with the remainder from volume.

Craig Ellis asked for details on FormFactor's reported market share gains at each of the top three DRAM OEMs, specifically inquiring about the magnitude of possible gains across customers, the timing of these gains, and their potential financial impact over the coming quarters. He also inquired about FormFactor's confidence in meeting customer demand if it grows above $225 million per quarter in the near term, before the Farmers Branch facility is fully operational, and asked about the speed and material impact of the Farmers Branch ramp on production and revenue in the next 12-24 months. Finally, he followed up on the strong gross margin execution in Q4, asking if any factors were one-off or if the levers being pulled are sustainable for continued strong demand.

Answer

CEO Mike Slessor explained that while FormFactor has a strong share with its number one customer, the focus is on increasing market share with the other two HBM manufacturers by leveraging SmartMatrix technology's competitive advantages (high parallelism and high speed), noting a significant opportunity due to the HBM market's growth and relatively low incumbent share at these customers. Senior VP Aric McKinnis stated that the company continues to increase output from its current footprint through ongoing improvements, and Farmers Branch remains on schedule to come online at year-end, providing additional capacity beyond this year, with further details to be shared at the Analyst Day in May. He also clarified that approximately two-thirds of the 540 basis point gross margin improvement from Q2 2025 through year-end was due to structural cost-side initiatives, while the remainder benefited from volume in Q4.

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 a deeper understanding of the product-level contributions to Silicon Motion's anticipated sequential growth throughout the year, specifically regarding eMMC/UFS, MonTitan, and SSD controllers, and whether an annual run rate of $1.3 billion-$1.4 billion is a reasonable expectation.

Answer

CFO Jason Tsai confirmed that strength in the first half of the year is primarily from eMMC and UFS, with client SSD controllers ramping throughout the year (Q1 being seasonally weaker), and MonTitan products scaling in the second half. He reiterated expectations for sequential growth and a record year but did not provide specific full-year guidance. President and CEO Wallace Kou added that while there is strong backlog and momentum, some business might be bypassed if margin targets are not met, indicating a balance between growth and profitability. Mr. Ellis also inquired about the long-term outlook, specifically if the enterprise segment could surpass the consumer business by 2027-2028. Mr. Kou stated that enterprise is a target for growth, highlighting boot drive and automotive storage as strategic areas with new products expected in the next two years, but could not confirm the enterprise segment exceeding consumer. In a follow-up, Mr. Ellis asked about the feasibility and implications of long-term supply agreements (LTAs/LTSAs) for NAND flash and DRAM. Mr. Kou explained that Silicon Motion currently relies on partnerships rather than LTAs, noting the challenges of NAND procurement for automotive (lowest priority) and boot drive (strategic, sometimes lower margin). He emphasized the severe supply shortage driven by CSP demand. Finally, Mr. Ellis asked about the impact of NVIDIA's comments regarding DPU/storage bottlenecks for AI inference on engagement with existing and new enterprise customers and Silicon Motion's R&D strategy. Mr. Kou discussed the rapid growth of AI inferencing, the need for new storage technologies (like KV Cache for latency and increased capacity), and MonTitan's role in addressing these requirements. He acknowledged the limitations in NAND capacity expansion and the preference of NAND makers for HBM/DDR production.

Craig Ellis from B. Riley Securities asked for more details on the product-level contributions to Silicon Motion's anticipated sequential growth throughout the year, specifically regarding eMMC/UFS, MonTitan, and SSD controllers. He also inquired about the potential for the enterprise segment to exceed the consumer business in the 2027-2028 timeframe, and the company's long-term growth arc. In a follow-up, he asked about the company's stance on long-term supply agreements (LTAs/LTSAs) for NAND flash and DRAM, and the impact of Nvidia's comments on DPU/storage bottlenecks on engagement with enterprise customers and R&D.

Answer

Jason Tsai (CFO, Silicon Motion Technology) confirmed strength in eMMC/UFS in H1, client SSD controllers ramping throughout the year (with Q1 being seasonally weaker), and MonTitan scaling in H2. He reiterated expectations for sequential growth and a record revenue year without specific full-year guidance. Wallace Kou (President and CEO, Silicon Motion Technology) added that while they have strong backlog, they might bypass some business if margins don't meet targets, especially for products requiring NAND procurement like automotive Ferri and boot drives. Regarding the enterprise segment, Kou stated it's a target for growth, but couldn't confirm if it would exceed consumer business by 2027-2028, highlighting boot drives and automotive storage as strategic growth areas. On LTAs, Kou stated they currently don't have them, relying on partnerships. He explained that NAND scarcity, driven by CSP demand for HBM/DDR, makes procurement challenging, especially for automotive. He acknowledged Nvidia's comments on inference bottlenecks, noting the strong demand for new storage technologies like MonTitan to address latency and capacity needs in AI, but emphasized the ongoing challenge of securing NAND supply.

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 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 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 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 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 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 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 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 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 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.