David Williams

David Williams with Benchmark inquired about the current trajectory of Alpha and Omega Semiconductor's AI opportunities, specifically regarding GPU design wins and how they align with initial expectations, considering shifts in segment prioritization. He also asked about the normalization timeline for operating expenses and the potential for capacity expansion within the existing footprint to improve gross margins or utilize cash.

Answer

CEO Stephen Chang clarified that while direct VRM solutions for GPUs were less than original expectations, the overall AI opportunity is expanding to include medium-voltage MOSFETs for power conversions, already showing positive results. CFO Yifan Liang detailed a planned 25% increase in R&D spending for calendar 2026, funded by the Chongqing JV equity sale, with OpEx increasing by $4 million in the March quarter, primarily for R&D. Liang also noted increased CapEx in December and March quarters to support 2026 growth and new product capacity.

David Williams asked about the tracking of AI opportunities and GPU design wins against expectations, the normalization of operating expenses, and potential capacity expansion or other uses of cash to improve gross margins.

Answer

CEO Stephen Chang explained that while VRM solutions for GPUs were less than original expectations, the AI opportunity is expanding to include high-performance Medium-Voltage MOSFETs for power conversions, already impacting current results. CFO Yifan Liang detailed that March quarter OpEx increased due to a 25% R&D investment increase for calendar 2026 in critical areas, funded partly by CQJV equity sale proceeds, with gradual increases expected. He also noted CapEx increases to prepare for 2026 growth and new product capacity.

David Williams of The Benchmark Company, LLC asked about the company's manufacturing strategy regarding internal versus third-party capacity following the JV sale, the impact of tariffs on its Asian manufacturing footprint, and the general demand sentiment from customers for the second half of the year.

Answer

CFO Yifan Liang stated the $150M from the JV sale provides capital and flexibility to evaluate both internal and external production based on needs, emphasizing the deal's value creation. She also noted that the direct impact from tariffs is not significant, but the company is prepared to adjust its supply chain to support customers. CEO Stephen Chang added that customer sentiment varies by market, with tariff-related pull-ins in PCs, continued strength in AI and graphics, and seasonal demand for smartphones.

David Williams of The Benchmark Company inquired about the magnitude of PC-related demand pull-ins, the success in graphics cards, the direct impact of tariffs, and the drivers behind the stronger-than-expected gross margin guidance for the upcoming quarter.

Answer

Executive Stephen Chang quantified that about half of the $6 million revenue beat could be attributed to notebook pull-ins due to tariffs, a trend expected to continue. He also highlighted growing shipments for new graphics and AI accelerator cards. CFO Yifan Liang explained that direct tariff exposure is minimal as U.S. shipments are low, and the improved margin guidance is due to a better product mix and higher factory utilization.

David Williams inquired about the AI opportunity, asking for more detail on the timing of revenue contribution and the potential magnitude of the revenue step-up from this new area. He also questioned the gross margin outlook for the next 12-18 months and the extent of any demand pull-in related to tariff uncertainty.

Answer

Executive Stephen Chang stated that the AI data center opportunity has the potential to be 'multiples bigger' than the graphics card business due to significantly higher power requirements, though market share is still to be determined, with a target for a mid-year launch. He also noted that tariff uncertainty was causing some demand pull-in for the Computing segment, but not a huge amount. Executive Yifan Liang projected that non-GAAP gross margin, after dipping in the March quarter, could recover to December quarter levels by the June quarter, driven by an improved product mix.

David Williams asked about the current competitive landscape, particularly regarding the graphics card business, and whether the market has returned to typical seasonal trends.

Answer

Executive Stephen Chang acknowledged that overall competition has increased during the market correction period. However, he stated that for the upcoming graphics card platform transition, AOSL expects less competition due to its total solution offering. Chang confirmed that seasonality has returned to the computing and consumer markets, but a full PC market recovery is still pending. The company aims to offset this by increasing its Bill of Materials (BOM) content and expanding into AI accelerator cards.

David Williams inquired about the current demand environment across all segments, seeking clarity on where the company stands in the market cycle (bottom, turning, or still distant) given ongoing inventory digestion. He also asked for more details on the company's reorganization, particularly how reprioritizing R&D efforts and accelerating time to market are expected to unfold and contribute to performance over the next few quarters and the coming year.

Answer

CEO Jen Lloyd indicated conservatism in the consumer/appliance business due to headwinds, with potential upside from housing market and interest rate changes. CFO Nancy Erba highlighted the return to growth in 2025 and plans for similar growth in 2026, while maintaining cautious investments until bookings solidify. Regarding reorganization, Ms. Lloyd explained that restructuring provides flexibility to strengthen the team, driving focus, urgency, and agility in R&D. She cited the data center work with NVIDIA as an example of pivoting focus to customer needs and adopting a customer-centric view in product development.

David Williams inquired about the current stage of the demand cycle across segments, considering inventory digestion, and how the recent reorganization, R&D reprioritization, and accelerated time to market will unfold and benefit the company over the next year.

Answer

CEO Jen Lloyd indicated conservatism regarding the consumer/appliance business due to headwinds, with potential upside from housing and interest rates. CFO Nancy Erba mentioned planning for similar growth in 2026 but with cautious investments. Jen Lloyd added that the restructuring provides flexibility, and the R&D focus, urgency, and agility are key to accelerating growth, citing data center engagements as an example of customer-centric product development.

David Williams asked about the risk level embedded in the Q3 guidance given tariff uncertainties, inquired about booking trends at the end of the quarter, and asked new CEO Jen Lloyd for her high-level strategic vision for Power Integrations.

Answer

CFO Sandeep Nayyar explained that the guidance reflects a significant slowdown in bookings in July, which were down nearly 20% from the normal run rate. He attributed this to caution around tariffs, which led to front-running in the appliance business during the first half of the year. President and CEO Jen Lloyd stated her strategic focus is on improving R&D efficiency to invigorate growth and achieve the company's double-digit growth model, with a particular emphasis on high-value markets like data centers and automotive.

David Williams inquired about the automotive segment, asking about the nature of recent design wins, their ramp-up process, and performance relative to initial expectations. He also sought clarity on the drivers behind the confident outlook for the industrial segment, given broader market weakness.

Answer

CEO Balu Balakrishnan stated that automotive design wins are exceeding expectations, although long-term customer forecasts have moderated with revised EV projections. He confirmed the company is on track for high single-digit million-dollar revenue in automotive this year, targeting a $100 million run-rate by 2029. He attributed the strong industrial outlook to specific design wins in high-voltage DC transmission, locomotives in India, and renewables, noting that these specific programs are driving growth.

David Williams inquired about the increased confidence in high-power GaN for applications like EV drivetrains and asked for an update on automotive design wins and the expected revenue trajectory from GaN in the automotive sector.

Answer

CEO Balu Balakrishnan explained that significant technological strides, accelerated by the Odyssey Semiconductor acquisition, have boosted confidence in addressing high-power applications up to 50 kilowatts. He noted that while the ~20 current automotive production designs use silicon or silicon carbide, new 900V and 1700V GaN products are securing design wins for 400V and 800V battery systems, with future opportunities in DC-to-DC converters and onboard chargers.

David Williams inquired about the demand drivers and market applications for Power Integrations' new 1,700-volt GaN product and asked about the potential business impact from the U.S. election on renewables and energy efficiency regulations.

Answer

CEO Balu Balakrishnan explained that the 1,700-volt GaN product is ideal for 800-volt and 1,000-volt automotive battery systems and 3-phase industrial applications, offering a superior cost and efficiency alternative to silicon carbide. He expressed confidence that trends toward EVs, renewables, and high-voltage DC transmission are resilient and not dependent on political outcomes, noting that renewables are now more cost-effective than coal and that DC transmission is critical for grid modernization and new power sources like AI data centers.

David Williams asked about regional demand trends within the data center market and the pace of speed transitions across different regions. He also inquired about supply shortages, the pricing environment, specifically concerning Indium Phosphide (InP) supply, and the pricing outlook for the rest of the year.

Answer

Stephen G. Daly, President and CEO, noted a geographic spread in data center demand but emphasized data rate as a key focus, with 400G and above representing a significant portion of revenue and 1.6T applications growing fastest. He mentioned MACOM supports all U.S. and international hyperscalers. On pricing, Mr. Daly described the environment as rational and competitive, balancing pricing with value, and noted that scarcity in some areas generally prevents price reductions. Regarding supply, he acknowledged being in ramp mode for various programs, causing stress on the supply chain, and highlighted Indium Phosphide and other exotic materials as areas of focus for availability and potential constraints.

David Williams asked about the regional demand trends within the data center market and the pace of speed transitions (e.g., 400G, 1.6T) across different regions. He also inquired about shortages and the pricing environment, specifically concerning the supply of Indium Phosphide (InP) and the pricing outlook for the rest of the year.

Answer

Stephen G. Daly, President and CEO, noted a geographic spread in data center demand but emphasized the focus on data rates, with 400G and above (especially 1.6T) being the fastest-growing segments. He mentioned stable performance for older 25G NRZ and 50G PAM4, solid 100G PAM4, and intense focus on 200G PAM4 and next-gen coherent systems, supporting both U.S. and international hyperscalers. On pricing, Mr. Daly stated that MACOM and competitors are rational in a competitive market, with scarcity in some areas generally preventing price reductions. He acknowledged supply chain stress due to ramp mode, with Indium Phosphide and other exotic materials being closely monitored for availability and potential constraints.

David Williams inquired about the demand trends and transition between 100G and 200G solutions, and whether they are meeting or exceeding expectations. He also asked for more details on the HRL IP license agreement, its magnitude, and the capabilities it brings to MACOM.

Answer

Steve Daly, President and CEO, MACOM, stated that 100G business remains stable with continued growth, but the massive growth is driven by higher data rates, specifically 200 gig per lane for 1.6T, which is an early and fast-growing segment. Regarding the HRL IP license, Mr. Daly explained it complements MACOM's existing GaN process, enabling higher power at frequencies above 40 GHz for SATCOM bands and LEO constellations, offering superior power density and efficiency compared to PHEMT GaAs.

David Williams inquired about the demand trends and transition between 100G and 200G solutions, specifically for next-gen 1.6T applications, and asked for additional details on the HRL IP license agreement and the capabilities it brings to MACOM.

Answer

President and CEO Steve Daly stated that while the 100G business was stable and grew nicely, the massive growth is occurring at higher data rates, particularly 200 gig per lane for 1.6T, which is a rapidly growing part of the data center business. On the HRL IP license, Mr. Daly explained it complements MACOM's existing GaN portfolio by enabling higher power levels at frequencies above 40 GHz, crucial for LEO constellations, offering higher power density and efficiency than PHEMT GaAs technology.

David Williams of The Benchmark Company, LLC asked about the factors driving demand for MACOM's lower-speed data center products and the ongoing financial impact from the underutilization of the Lowell fab.

Answer

President and CEO Stephen Daly confirmed that the expansion of AI data centers is driving demand for traditional, lower-data-rate products for the 'front-end' infrastructure connecting to the internet. Regarding the Lowell fab, Daly clarified that the lower-data-rate drivers and TIAs are not processed there, so their growth does not directly impact its utilization. He did not comment on the specific margin impact of the Lowell fab's utilization.

David Williams asked for an outlook on Data Center spending budgets for the current and next fiscal year, key technology growth drivers, and the potential size and development pace of the satellite communications (SATCOM) market.

Answer

President and CEO Stephen Daly noted that cloud service providers continue to invest heavily in data centers, driving innovation in high-speed connectivity like CPO, NPO, and LPO, which expands MACOM's addressable market. On SATCOM, Daly highlighted the growing opportunity driven by new product lines like the Opto-Amp optical amplifier and the industry's shift to higher frequencies (Ka, Q, V, and W-bands), which play to MACOM's strengths.

David Williams asked for more details on the DoD satellite programs and the associated revenue opportunity, and also inquired about any changes in data center customer spending expectations.

Answer

President and CEO Stephen Daly projected continued strength in the satellite market for the next 3-5 years, driven by both commercial and DoD demand in high-frequency bands. He noted MACOM is well-positioned with its RF, microwave, and optical solutions, and mentioned a $55 million contract whose revenue will ramp in late fiscal 2025 and 2026. Regarding data center spending, Daly expressed a bullish outlook, highlighting future growth from optical components for silicon photonics and PAM4 solutions for PCIe 6 and 7.

David Williams asked for more detail on the Linear Pluggable Optics (LPO) opportunity, specifically when MACOM expects the technology to begin taking market share at 800G. He also inquired about any recent changes in customer deployment strategies for active copper cables.

Answer

CEO Stephen Daly explained that LPO is gaining significant industry interest, with the LPO MSA growing to nearly 19 members. He anticipates LPO will start taking a portion of the market over the next one to two years, primarily at the 800G data rate. Regarding copper cables, Daly noted the Data Center market's inherent volatility, acknowledging some customers are discussing using less copper. However, he emphasized that MACOM's diversified portfolio across optical, copper, and pluggable modules mitigates risk from any single architectural shift.

David Williams inquired about any major supply constraints that might have impacted the recent quarter or the current outlook. He also asked for a longer-term perspective on the automotive opportunity, specifically regarding zonal architectures and increased haptics, seeking insight into when revenue contribution might begin and the potential dollar content over the next two to three years.

Answer

CFO Jeff Woolard confirmed no current supply constraints, noting that while the industry is tighter, Cirrus Logic's long product life cycles allow for capacity management. CEO John Forsyth discussed new haptic products for automotive, part of a broader range including timing, audio, and telematics. He estimated a serviceable addressable market (SAM) of over $800 million by 2029 for these products, emphasizing the company's strategy to build new markets into at least a 10% business over time, without providing specific revenue timelines yet.

David Williams inquired whether Cirrus Logic experienced any major supply constraints that impacted the recent quarter's performance or the current outlook. He also asked for a longer-term perspective on the automotive opportunity, specifically regarding zonal architectures and increased haptics in-cabin, seeking insights into when significant revenue contributions might begin and the projected dollar content over the next two to three years.

Answer

CFO Jeff Woolard confirmed that there are no current supply constraints, though he acknowledged tighter industry conditions, noting that long product life cycles aid in capacity management. Regarding the automotive market, Jeff Woolard highlighted the recently announced haptic products and other solutions in development (timing, audio, telematics). He estimated a serviceable addressable market (SAM) north of $800 million by 2029 and reiterated the strategic goal for new markets to eventually become at least a 10% business for the company.

David Williams inquired if the lower-than-expected OpEx in Q2, due to push-outs, would largely shift into Q3, and sought an update on the revenue trend and growth trajectory for non-flagship customers, particularly in general markets and the PC space.

Answer

CFO Jeff Woolard confirmed that it's a reasonable assumption that much of the Q2 OpEx, which was lower due to spending delays and some avoided expenses, would shift. He emphasized their disciplined approach to OpEx but noted flexibility for value-creating opportunities. CEO John Forsyth attributed softness in Android to widely reported trends and highlighted the PC market as the biggest growth area. He cited milestones like mainstream consumer laptop wins, SoundWire adoption, expanded support across PC platform vendors, and voice features for AI as key drivers for future growth.

David Williams inquired if the lower operating expenses (OPEX) in the second quarter, attributed to push-outs, were entirely shifted into the third quarter, and also asked about the revenue trends and growth trajectory for non-flagship customers, including general markets and the computing space.

Answer

CFO Jeff Woolard confirmed that a significant portion of the Q2 OPEX reduction was due to timing delays and some avoided expenses, suggesting a reasonable expectation for some of it to shift into Q3, while emphasizing disciplined OPEX management. CEO John Forsyth noted softness in the Android space impacting non-flagship revenue. He highlighted the PC market as a key growth area, citing progress in penetrating mainstream consumer laptops, the propagation of SoundWire, expanded support across PC platform vendors, and the emerging opportunity in voice features for AI-enabled PCs.

David Williams from The Benchmark Company asked for more detail on the shift towards a more first-half weighted seasonality, questioning the relative impact of content versus volume. He also inquired about emerging AI-related opportunities in laptops, Android, and other areas beyond the company's largest customer.

Answer

CEO John Forsyth explained that the seasonality shift is influenced by three main factors: potential tariff-related pull-ins, a more complex global supply chain requiring parts earlier, and a growing mix of camera content, which has a longer manufacturing timeline and thus ships earlier. He emphasized the full-year outlook remains unchanged. On AI, Forsyth stated the company aims to be a key enabler, particularly through voice-centric interfaces and power-efficient solutions, seeing significant potential to transform user experiences in laptops and other future devices.

David Williams inquired about the drivers behind the record-high gross margin and asked for an estimate of the total addressable market and revenue potential for the company's laptop business.

Answer

CEO John Forsyth attributed the strong gross margin to a favorable product mix and significant progress in improving supply chain costs and yields for new products. For the laptop market, he sized the addressable opportunity as approaching half of the 200-220 million annual unit market. He reiterated the revenue ramp from low tens of millions in FY25, with an expectation for that to roughly double in FY26.

David Williams asked about the broader data center opportunity beyond DSPs, including other components like PON for control planes, rack management, and industrial quality transceivers. He also inquired about the significance of the share repurchase authorization and what it signals to the market.

Answer

Kishore Seendripu (CEO) described the data center opportunity as being in early innings, with PAM4 transceivers as the primary entry point. He highlighted new design wins for PON as a control plane layer between data centers and for rack management components like industrial quality transceivers and serial bridges. Steve Litchfield (CFO) stated that the $75 million share repurchase authorization reflects the board's confidence in the company's balance sheet, improving cash flow, and stable revenue outlook.

David Williams inquired about the broader data center opportunity beyond DSPs, asking for the magnitude of opportunity for other components and how MaxLinear expects this to play out through the year.

Answer

CEO Kishore Seendripu explained that it's early innings, with PAM4 transceivers being a big entry (4-6 million units expected). He highlighted PON as a control plane layer for inter-data center communication, industrial quality transceivers/serial bridges for rack management, and smart power management as additional opportunities. For the follow-up, David asked about the share repurchase authorization, its signal of confidence, and potential arbitrage. CFO Steve Litchfield stated the board authorized $75 million in buybacks, reflecting confidence in the balance sheet, improving cash flow, revenue stability, and the business outlook.

David Williams inquired about the trend for MaxLinear's optical business next year, specifically if revenue could double, given current qualifications and ramps. He also asked CFO Steve Litchfield about the gross margin guidance, implying a 64-65% incremental margin, and the moving pieces contributing to this improvement for the next quarter.

Answer

CEO Kishore Seendripu stated that while everything is a possibility, data center ramps can shift. He noted current optical revenue is primarily from 400 Gb solutions, with 800 Gb growing into 2026. He acknowledged competing against entrenched players but felt they had 'cracked open' the market, with MaxLinear now part of all major OEM solution portfolios. CFO Steve Litchfield explained that gross margins are improving as revenue ramps to more material levels, with the faster-growing infrastructure business contributing a higher gross margin mix. Dr. Seendripu added that while progress is good, lead times and fab price increases are consuming some of the potential margin improvements.

David Williams inquired about the gross margin guidance, noting that the implied incremental margin of 64-65% seems fair, and asked about the moving pieces contributing to this margin improvement for the next quarter.

Answer

CFO Steve Litchfield stated that revenue ramp and the higher gross margin mix from the growing infrastructure business are driving improvements. CEO Kishore Seendripu added that while fab lead times and price increases are consuming some gains, the company is making good progress on gross margins.

David Williams asked about the business dynamics in China and MaxLinear's technology roadmap for silicon photonics and co-packaged optics (CPO).

Answer

CEO Kishore Seendripu described China as a mixed market, with weakness in industrial but a significant long-term opportunity in data centers. He confirmed MaxLinear is developing CPO solutions with partners but sees it as a niche application, with pluggable optics remaining dominant.

David Williams asked for an update on the design win progress and revenue ramp for the Keystone PAM4 DSP, and requested details on the potential size and timing of the ramp with a second major North American Tier 1 carrier for its PON solutions.

Answer

CEO Kishore Seendripu highlighted significant progress, with about 20 Keystone-based designs showcased at the Optical Fiber Conference. He reiterated expectations for optical revenue to double this year to the $60-$70 million range, with potential to double again in 2026. Regarding the new Tier 1 PON win, he described it as a major validation with a larger player, expecting a meaningful revenue ramp in 2026 that could help double the company's overall PON business from its current ~$50 million base.

David Williams from The Benchmark Company requested an update on the ramp and demand trends for the 2.5Gb Ethernet PHY product, Swan Creek, and asked about regional demand dynamics.

Answer

CEO Kishore Seendripu described Swan Creek as a highly successful product with strong traction. A ramp with a Tier 1 OEM, delayed from late 2024, is now expected to proceed, positioning the product line to potentially reach $100M/year in revenue over 2-3 years. He noted design activity is centered in Taiwan/China for U.S. and China end markets.

David Williams asked about the market traction and 2025 revenue contribution expectations for the 2.5G Ethernet "Swan Creek" product. He also inquired about the go-to-market strategy for the new MaxAI framework and how the company plans to monetize it.

Answer

CEO Kishore Seendripu described the adoption of their 2.5G Ethernet solution as "excellent," with potential to become a $50 million to $100 million business on an annualized run-rate basis within three years. Regarding MaxAI, he explained it will be a hybrid model, with some features offered as a standard competitive differentiator and others developed as customized, monetizable solutions for large customers on a "pay to play" basis.

David Williams inquired about the primary drivers behind Plexus' strong performance and improved fiscal 2026 outlook, specifically asking if it's more market-driven or due to program wins. He also asked about the typical lead time for semi-cap equipment demand to translate into revenue or design win ramps.

Answer

Oliver Mihm, Executive Vice President and Chief Operating Officer, explained that the strong performance is a combination of robust program wins, successful program ramps in healthcare and semi-cap, and improving end-market demand, particularly in semi-cap. He noted that demand increases for semi-cap typically translate into revenue within one to two quarters, while capital or footprint changes take longer, but Plexus currently has ample capacity.

David Williams asked about the primary drivers behind Plexus' significantly improved outlook, specifically whether market demand or program wins are the major contributors to potentially exceeding the 9%-12% revenue growth target for fiscal 2026. He also inquired about the typical timeline for semi-cap equipment demand increases to translate into revenue.

Answer

Todd Kelsey (CEO) explained that the improved outlook is a combination of strong program wins, which are larger and ramping well, and improving end-market demand, particularly in semi-cap, healthcare, and certain aerospace and defense subsectors. He noted that semi-cap demand increases typically translate into revenue within one to two quarters, primarily dependent on material pipeline, with ample existing capacity to support growth.

David Williams asked about Plexus' increasing confidence in future growth trajectory, driven by significant investments across the business, and sought clarification on the opportunities within the AI space, particularly regarding a new AI platform in Romania.

Answer

Todd Kelsey, President and CEO, confirmed growing confidence in future growth, citing substantial new program ramps, significant share gains in the semicap market, and modest end market improvements. He also noted the Penang facility's rapid progress towards profitability. Regarding AI, Oliver Mihm, COO, clarified the Romania win involved a product with AI technology for cell analysis. Todd Kelsey added that Plexus focuses on power generation and thermal management within AI, participates via the semicap business, and sees healthcare as a leader in leveraging AI.

David Williams inquired about Plexus Corp.'s increasing confidence in its future growth trajectory, particularly regarding the impact of current business investments. He also asked for more details on the company's opportunities within the AI space, referencing a new AI-powered platform win in Romania.

Answer

Todd Kelsey, President and CEO, confirmed growing confidence in future growth, attributing it to substantial new program ramps, significant market share gains in semicap, and modest end market improvements. He noted the Penang facility's near-term impact but quick path to profitability. Oliver Mihm, COO, clarified the Romania win involved a product with AI technology for cell analysis. Todd Kelsey further explained Plexus' AI strategy focuses on power generation, thermal management, semicap, and healthcare applications, avoiding the commoditizing compute market.

David Williams of The Benchmark Company LLC inquired about the nature of recent pushouts in the semi-cap business and the demand outlook for the commercial aerospace sector, specifically regarding production rates from major manufacturers. He also followed up on the potential impact of new tax legislation on CapEx and market demand.

Answer

EVP & COO Oliver Mihm clarified that semi-cap pushouts were due to program-specific timing and not a loss of demand. CEO Todd Kelsey stated that while the expected pull-in from Boeing and Airbus has not yet materialized, the defense and space subsectors are showing strong demand, particularly in Europe. EVP & CFO Patrick Jermain noted that new tax legislation does not alter their CapEx plans, though CEO Todd Kelsey acknowledged potential long-term market benefits for engineering, rural health, and clean energy.

David Williams asked about the impact of potential tariffs on Plexus's strategy and customer forecasts, as well as the capital expenditure and timeline required to bring a new facility online.

Answer

CEO Todd Kelsey explained that customers are currently in a 'wait-and-see' mode regarding tariffs, with no impact on demand yet, and noted Plexus is well-positioned with its regional strategy and available capacity. CFO Pat Jermain and COO Oliver Mihm added that while a new facility would take 4-6 quarters to build, the company is currently focused on expanding capacity within existing sites through automation and efficiency improvements.

David Williams inquired about the specific drivers of weakness in the broader Industrial segment outside of semicap and asked about the growth outlook for the Aerospace and Defense sector, questioning if factors beyond commercial aerospace were causing softness.

Answer

President and CEO Todd Kelsey confirmed high-teens growth expectations for the semicap subsector, driven by share gains, not just market trends. EVP and COO Oliver Mihm added that broader industrial softness is impacting communications, measurement, and automation but is expected to improve long-term. Regarding Aerospace and Defense, Todd Kelsey reiterated that the long-term outlook is strong but near-term commercial aerospace production issues are dampening fiscal 2025 growth, while defense and space subsectors remain strong. He also noted the company has adopted a conservative forecasting bias for the sector.

David Williams asked about the full-year fiscal 2025 outlook for the aerospace and defense sector, particularly concerning risks from the unresolved Boeing contract. He also inquired about the SemiCap equipment space, including any concerns and the basis for demand forecasts.

Answer

President and CEO Todd Kelsey explained that the company's aerospace and defense forecast is conservative regarding the Boeing situation, which could provide potential upside. He still anticipates strong, potentially double-digit growth for fiscal 2025, driven by defense program ramps. For SemiCap, Kelsey confirmed a conservative view but expects Plexus to outgrow the market due to share gains, projecting growth well into the double-digits.

David Williams inquired about a reasonable expectation for full-year growth and margins, specifically asking if double-digit growth was a plausible assumption given the current positive dynamics.

Answer

EVP and CFO Abhi Khandelwal stated that while Littelfuse does not provide full-year guidance, the Q1 guidance at the midpoint projects 7% organic growth and 15% total growth year-over-year (with Basler contributing 5%), alongside 28% EPS growth. He reiterated strong momentum from Q4 2025 into 2026, driven by broad-based industrial strength (excluding HVAC) and overall positive market conditions.

David Williams asked about the positive shifts observed over the past 90 days, inquiring whether the improved momentum is primarily due to Littelfuse's self-help strategies or if broader market conditions are also contributing. He also asked for a reasonable expectation for full-year 2026 top-line growth and margins, specifically if double-digit growth is a plausible assumption.

Answer

President and CEO Greg Henderson attributed the positive shift to both Littelfuse's ongoing multi-year strategic progress and broader market momentum, noting a shift from narrower to broader industrial market strength in 2026. EVP and CFO Abhi Khandelwal elaborated on operational execution leading to margin expansion across all segments and the opportunity to optimize power semiconductor profitability. He stated that while full-year guidance isn't provided, the Q1 2026 outlook includes 7% organic growth and 15% total growth year-over-year, with 28% EPS growth at the midpoint, indicating strong momentum.

David Williams with Benchmark Company asked for more color on the sales force realignment, seeking to quantify expectations and gauge its success. He also inquired about the impact of tariffs, specifically if growth was being tempered or if there were any delays.

Answer

President and CEO Greg Henderson explained the sales force realignment shifts from product-aligned to customer-aligned teams, aiming to sell complete portfolios more effectively and better inform R&D strategy. He cited early success in e-mobility and data center as indicators. EVP and CFO Abhi Khandelwal clarified that a Q2 2025 tariff tailwind became a $3 million headwind in the transportation segment in Q3 2025, with Q4 2025 guidance assuming a neutral impact. Greg Henderson added that market dynamics for tariffs have largely stabilized, and Littelfuse's diversified manufacturing footprint helps mitigate major impacts.

David Williams of The Benchmark Company LLC asked about the outlook for the power semiconductor business, specifically when improved orders might translate into meaningful leverage and financial impact. He also questioned whether the broad-based demand improvement represents a true market inflection or could be influenced by factors like tariff-related pull-forwards.

Answer

President & CEO Greg Henderson noted that while the power semiconductor market has been soft, the company is seeing signs of stabilization and improving orders, leading to expectations of positive sequential momentum. He stated that overall end market visibility has improved compared to 3-6 months ago. EVP & CFO Abhi Khandelwal supported this by highlighting the Q3 guidance for 6% year-over-year organic growth, indicating confidence in sustained demand rather than a temporary pull-forward.

David Williams from The Benchmark Company inquired about customer feedback regarding tariffs and demand, the deployment strategy for the company's "complete solutions" initiative, and the current state of the passives business regarding constraints and inventory.

Answer

CEO Greg Henderson reported that while Littelfuse entered Q2 with a strong backlog and a positive Q1 book-to-bill, customers are expressing anxiety about second-half demand, particularly in automotive and personal electronics. He explained that the "complete solutions" strategy, already successful in areas like grid storage and data centers, will be scaled more broadly by fostering more collaboration between business units. Regarding passives, Henderson and CFO Meenal Sethna reiterated the strong Q1 performance and backlog, expressing confidence in the Q2 outlook, which anticipates continued growth in the Electronics segment.

David Williams of The Benchmark Company asked about the potential business impact of new tariffs, particularly concerning China and EVs. He also inquired about the company's 5-year strategy and long-term outlook, inviting comments from the incoming CEO.

Answer

CEO Dave Heinzmann stated that while tariffs get the company's attention, they have experience from 2017 and have since worked to align manufacturing footprints with customer regions. He outlined a process of working with customers to mitigate impacts and ultimately passing on costs if necessary. On strategy, he noted the Investor Day was postponed to allow incoming CEO Greg Henderson time to get situated. Greg Henderson added that he sees Littelfuse as a great franchise with strong market position and technology, and he is excited for the next phase of growth.

David Williams inquired if there has been any change in the average dollar value of design wins. He also asked whether the downturn in the industrial segment is driven more by customer cautiousness or fundamental demand weakness, and requested color on regional performance differences.

Answer

President and CEO Dave Heinzmann described Littelfuse's business as winning 'singles and doubles' rather than 'home runs,' and stated that the size of design wins has remained consistent. The only recent shift is a longer design-to-production cycle in electronics. Regarding the industrial market, he attributed the softness to a mix of factors, including cautiousness on factory investments due to interest rates and a trend toward more last-minute orders as customers manage year-end inventory. He specified that the weakness is most pronounced in Europe and China, while North America remains more stable.

David Williams from Benchmark inquired about the 2026 guidance, specifically assessing the balance between potential upside and downside risks from market dynamics and supply chain constraints. He also sought clarification on the magnitude of Gorilla's total backlog for the upcoming year and the key competitive advantages driving Gorilla's success.

Answer

Chairman and CEO Jay Chandan confirmed more upside potential, citing risks like customer deployment timing, supply chain constraints (e.g., GPU servers, memory price increases), and geopolitical sensitivities, while emphasizing upside from programs going live and driving GPU-as-a-service. CFO Bruce Bower added that the FRAIR contract could see more deployments and that other government bids and MOUs (like One Amazon) represent further upside not yet in guidance. Mr. Bower defined the strict 2026 backlog as $85M, with the data center contract timing still being finalized, and a pipeline exceeding $7 billion. Mr. Chandan highlighted Gorilla's full-stack AI operator capabilities, sovereign control, predictable economics, speed of execution, and focus on selling outcomes as key differentiators. Mr. Bower further noted significant cost savings (5-7% on data centers) due to Gorilla's hardware relationships.

David Williams asked about the potential upside versus downside risks for Gorilla Technology Group's guidance, the overall magnitude of the company's backlog including items without definite amounts or dates, and Gorilla's competitive advantages that lead to contract wins.

Answer

Chairman and CEO Jay Chandan affirmed there is more upside than downside, citing risks such as customer deployment timing, supply chain constraints, and geopolitical sensitivities, but highlighting upside from getting programs live and driving GPU-as-a-service usage. CFO Bruce Bower added that the Freyr contract has potential for more deployments and that active government bids and MOUs (like One Amazon) are not yet in guidance but represent future upside. Mr. Bower clarified that the strict backlog for 2026 is $85 million, with the data center contract having signed implementation but less definite timing, and a pipeline of qualified leads. Mr. Chandan emphasized Gorilla's competitive edge stems from being a proven, full-stack AI operator offering sovereign control, predictable economics, speed of execution, and operational discipline, while Mr. Bower noted significant cost savings on hardware procurement.

David Williams of The Benchmark Company inquired about Rigetti's confidence in its control system development, particularly regarding the transition to a flexible cabling platform, and whether M&A is being considered for this area.

Answer

President and CEO Subodh Kulkarni expressed confidence in the strategic partnership with Quanta Computer for control systems. For flex cables, Rigetti relies on internal technology, subcontractors, and existing IP, but remains open to M&A opportunities that could accelerate its roadmap.

David Williams inquired about Rigetti's status regarding DARPA's Phase B selection, seeking clarification on the constructive feedback received and the timeline for potential advancement. He also asked about the company's comfort level in achieving 99% fidelity for its 1,000-plus qubit system by 2027, aligning with quantum advantage targets.

Answer

President and CEO Subodh Kulkarni explained that Rigetti received constructive feedback from DARPA focusing on error correction and long-range coupling for the 2033 fault-tolerant quantum computing milestone, not current performance. He clarified that the feedback was about future work plans. Regarding the 2027 roadmap, Dr. Kulkarni stated that while the 1,000-plus qubit system at 99.8% fidelity is a significant step, 99.9% fidelity and some error correction are still needed to achieve quantum advantage, which is anticipated between 2027 and 2029.

David Williams from The Benchmark Company LLC asked about the company's confidence in scaling its 99.5% fidelity to the upcoming 100+ qubit system and whether the overall technology roadmap could be accelerated.

Answer

CEO Subodh Kulkarni expressed high confidence in achieving the 100+ qubit system with 99.5% fidelity by year-end, attributing this to the scalability of their proprietary chiplet architecture. However, he cautioned that accelerating the 3-4 year timeline to quantum advantage is complex, as it requires hitting four key metrics simultaneously: 1,000+ qubits, 99.9%+ fidelity, error correction, and gate speeds under 50 nanoseconds. He noted that challenges in areas like system cabling and error correction remain.

David Williams asked for more details about the recently won DARPA contract, including how it is expected to proceed, key milestones for Phase 1, and if there is revenue associated with each phase. He also inquired about the current level of customer interest in acquiring Rigetti's quantum processors directly.

Answer

CEO Subodh Kulkarni explained that the DARPA project aims to build a utility-scale quantum computer within seven years and that Phase A is a six-month vetting process. To advance, Rigetti must execute its public roadmap of demonstrating chiplets with over 100 qubits and high fidelity. He noted Phase A includes a $1 million award, viewed as strategic rather than monetary. On customer interest, Kulkarni stated the market is still in an R&D phase, with sales being lumpy and government-driven, and that the lack of NQI reauthorization is currently constraining academic orders.

David Williams from The Benchmark Company asked about Rigetti's key intellectual property differentiators compared to competitors like IBM and Google. He also questioned whether the company's IP is compelling enough to potentially force others into licensing agreements in the future and inquired about the current state of customer demand for QPUs.

Answer

CEO Subodh Kulkarni highlighted three main differentiators: the company's open modular architecture, its leading chiplet/tiling approach to scaling, and proprietary fabrication processes like its unique annealing technique. He noted that while the IP portfolio of nearly 230 patents is strong, it is too early for licensing discussions, which often result in cross-licensing among R&D leaders. Kulkarni reiterated that current customer demand is from the academic and research community for fundamental studies, with broad commercial applications still projected to be 4-5 years away.

David Williams asked about the increased confidence in Rigetti's technology roadmap, whether progress in areas like chip tiling is outpacing expectations, and for an update on government funding opportunities.

Answer

CEO Subodh Kulkarni confirmed that confidence is high due to successfully producing high-fidelity 9-qubit chips and demonstrating the ability to tile them without performance degradation. He emphasized that this multi-chip strategy leverages proven CMOS industry techniques and is crucial for scaling. Kulkarni also noted that while the expiration of the NQI Act has impacted near-term financials, the company is actively lobbying for its reauthorization and pursuing other opportunities, such as a significant DARPA project.

David Williams of Benchmark inquired about the Davidson Technologies relationship, specifically how D-Wave plans to leverage its heritage and ongoing work to play into national security and defense initiatives like the Golden Dome project.

Answer

CEO Dr. Alan Baratz stated D-Wave's interest in Golden Dome and participation in government forums, emphasizing solving hard problems that deliver value to the U.S. government. He highlighted that the next step with Davidson, now that the Advantage II system is operational, is to secure it for classified applications, potentially making it the first quantum computer certified for such use.

David Williams of Benchmark inquired about the Davidson Technologies relationship, D-Wave's role in national security and defense initiatives like Golden Dome, and the potential for D-Wave's heritage to contribute.

Answer

CEO Alan Baratz confirmed D-Wave's interest in Golden Dome and participation in government forums, focusing on solving hard, real-world problems for the U.S. government rather than research experimentation. He noted that the next step with Davidson, now that the Advantage2 system is operational, is to secure it for classified government applications, potentially making it the first quantum computer certified for such use.

David Williams from The Benchmark Company LLC asked about the significance of the new cryogenic packaging initiative and its impact on D-Wave's technology roadmap.

Answer

CEO Alan Baratz described the initiative as critically important for scaling both annealing and gate model systems. He stated that this technology, developed with NASA's JPL, enables multi-chip solutions with superconducting interconnects, which is essential for achieving their 100,000-qubit goal and advancing their gate model program.

David Williams of The Benchmark Company asked how the strengthened balance sheet might alter the company's go-to-market strategy or accelerate R&D. He also inquired about the changing customer perception following the quantum supremacy results, particularly in contrast to skepticism from other industry leaders.

Answer

CEO Alan Baratz stated that the capital could accelerate the gate-model program and the new multi-chip scaling approach, and will support a significant expansion of the go-to-market team. Regarding customer perception, he acknowledged the supremacy result is technical but has broad applicability, hinting at further announcements related to AI at the upcoming NVIDIA GTC conference. CFO John Markovich added they are evaluating where to increase investment rates.

David Williams asked about the implications of recent Chinese research that used D-Wave's system for encryption-breaking, questioning if it was a 'double-edged sword'. He also sought further clarification on the National Quantum Initiative Act (NQIA) and its specific opportunities for annealing technology.

Answer

CEO Alan Baratz clarified that the research, while interesting, only advanced factoring capabilities from 17 to 22 bits, which is nowhere near the 2,000 bits required to break current RSA encryption. He affirmed that D-Wave does not sell to China and is tightening access controls. Baratz also distinguished between the National Defense Authorization Act, which already includes favorable language for annealing, and the NQIA, a broader R&D funding bill awaiting reauthorization.

David Williams inquired about the drivers of strong demand in Asia, questioning if it was organic or tariff-related. He also asked for an update on the remaining inventory digestion in the automotive market, the margin profile of new products, and current factory utilization rates.

Answer

SVP of Worldwide Sales and Marketing, Emily Yang, stated that tariff-related pull-ins were immaterial and growth was driven by strong demand and market share gains. She noted that while some inventory digestion remains in automotive, the market is improving, evidenced by 23.5% YoY revenue growth in the segment. Yang also explained that new products command higher margins due to added features and cost improvements. President & CEO, Gary Yu, added that factory utilization varies, but the company is focused on migrating production to internal fabs to support high-end demand and improve loading over time.

David Williams of The Benchmark Company asked about the sustainability of current demand momentum, questioning if recent tariff announcements are causing a pull-in of orders. He also inquired how the tariff situation might alter Diodes' manufacturing strategy and sought details on regional trends for AI-related capital expenditures.

Answer

Executive Emily Yang stated that while tariffs create uncertainty, the company is not seeing significant order pull-ins. Instead, she pointed to positive signs of recovery like depleted channel inventory and improved book-to-bill ratios. Executive Gary Yu affirmed that the company's hybrid manufacturing model and global footprint provide flexibility to mitigate tariff impacts and that their strategy of porting products to internal fabs remains unchanged. Emily Yang added that AI-related demand is ramping, especially from hyperscalers, with a large future opportunity in edge computing and a focus on increasing content per server.

In a follow-up, David Williams from The Benchmark Company asked about current pricing trends and the specific drivers behind the significant growth in Diodes' content per AI server.

Answer

Executive Emily Yang confirmed that pricing remains stable, with typical erosion of 1.5-2% per quarter, noting the company is de-emphasizing more competitive commodity areas. She attributed the increased AI server content to an expanding product portfolio and strong demand for products like PCI Express packet switches, which are needed for additional ports in AI systems. Executive Gary Yu added that new product introductions help balance pricing pressures.

David Williams asked for details on the demand improvement seen in Asia, its specific drivers, and the expected trend into Q4 and next year. He also inquired about the pressure on Q4 gross margin guidance and the company's strategic thinking regarding its China exposure given potential administrative changes.

Answer

Executive Emily Yang detailed that the strong Asia demand was broad-based, with China's automotive market being a key growth driver. She provided a Q4 outlook, expecting softness in auto and industrial but flat-to-up performance in computing. Executive Brett Whitmire attributed Q4 gross margin pressure to product mix and underutilization from strategic capacity investments, but expects a recovery in 2025. Regarding China, Emily Yang and Executive Gary Yu emphasized the company's flexibility through its hybrid manufacturing model and its focus on growth opportunities within the local Chinese market, stating they are prepared to adapt to any policy changes.

David Williams asked CEO Niccolo de Masi to rank the most exciting recent developments and inquired about the outlook for operating expenses and the potential timeline to profitability following recent acquisitions.

Answer

CEO & Chairman Niccolo de Masi declined to rank developments, stating the focus is on leading in both quantum computing and networking, as the combination creates a significant competitive moat. CFO Thomas Kramer explained that the primary objective is accelerating the roadmap to delight customers and capture the market, which will save money long-term, rather than focusing on short-term profitability. De Masi added that this investment has created a commanding lead over competitors.

David Williams inquired about the financial impact of recent and proposed acquisitions on revenue and cost structure, and also asked for IonQ's long-term vision for the quantum internet.

Answer

CFO Thomas Kramer stated that the acquisitions are expected to be accretive and strengthen future revenue growth, though interim investment costs will be incurred. He noted that guidance already included inorganic sources. Executive Chairman Peter Chapman detailed the quantum internet vision, explaining that Lightsynq's repeater technology will overcome current distance limitations for ground-based networks, while the Capella acquisition provides the capability to develop and harden hardware for space-based quantum networks.

David Williams of The Benchmark Company, LLC inquired about potential strategic shifts following the CEO transition, the M&A strategy behind the Qubitekk and ID Quantique acquisitions, the strength of the hardware sales pipeline, and the intended use of the new $500 million at-the-market facility.

Answer

Executive Chair Peter Chapman and CEO Niccolo de Masi affirmed strategic continuity, describing the leadership change as a "bandwidth expansion" to allow Chapman to focus on Quantum AI. De Masi highlighted that the acquisitions build a significant patent moat and expand their geographic footprint. Chapman noted a busy international RFP pipeline for computer sales and explained the $500 million ATM is to fund growth in the new quantum networking TAM and in high-potential application areas.

David Williams of The Benchmark Company asked about the strategic synergies of the Qubitekk acquisition, IonQ's plans for the quantum sensing market, and how the new application development partnerships differ from previous projects.

Answer

CEO Peter Chapman explained that the Qubitekk acquisition is synergistic with IonQ's internal photonic networking for scaling computers and also adds a new product line, expanding the company's total addressable market. He positioned quantum sensing as a related field that often relies on quantum networking infrastructure. Chapman clarified that recent partnerships with AstraZeneca and ANSYS are focused on creating production-grade applications timed with hardware readiness, a strategic shift from prior, smaller-scale R&D engagements.

David Williams of The Benchmark Company asked if rising ASPs were due to pricing power or a product mix shift. He also inquired about the revenue contribution split between the new AVANT and Nexus product lines.

Answer

CEO Ford Tamer attributed the ASP increase to a mix shift toward newer products with more features, such as Nexus and Avant, and also within product families (e.g., MachXO3 to XO5). He clarified that near-term growth into 2026 is a 'Nexus story,' with Avant becoming a more significant contributor in the second half of 2026 and into 2027.

David Williams inquired about Lattice's forward penetration and content opportunities in the AI server market and asked for a way to size the magnitude of the company's record design win pipeline.

Answer

CEO Fouad Tamer stated that Lattice continues to find new opportunities in servers around AI, security, and connectivity, viewing it as a durable trend. While declining to provide a specific dollar figure for the design win pipeline, he described it as 'multiple, multiple times the revenue' and a source of confidence for growth into 2026 and 2027.

David Williams asked about Lattice's penetration and content growth opportunities in the server market, especially with AI, and which areas might prove most resilient. He also requested a way to quantify the magnitude of the company's record-paced design win pipeline.

Answer

CEO Fouad Tamer confirmed that Lattice continues to find new and durable opportunities in servers related to AI, security, and connectivity. Regarding the design win pipeline, he described the funnel as 'quite strong' and representing a value of 'multiple, multiple times the revenue,' which gives the company confidence in its growth trajectory for 2026 and 2027, though he declined to provide a specific dollar figure.

David Williams asked for specifics on the demand drivers within the automotive segment, particularly regarding electrification versus ADAS, and where Lattice has greater exposure. He also questioned the strategic purpose of the new R&D center in India, asking if it's for cost optimization or to capture market opportunities in the region.

Answer

CEO Ford Tamer explained that Lattice has design wins across various automotive applications, including infotainment, ADAS, and electrification, and sees automotive as a long-term growth driver, especially in far-edge AI applications near sensors. Regarding the India R&D center, he stated it serves three purposes: accessing a strong local talent pool, serving direct customers in India, and supporting global OEM partners who are expanding manufacturing in the region.

David Williams of The Benchmark Company asked if customer product launch delays are affecting the design win pipeline. He also inquired about the rationale and impact of the 14% headcount reduction, given the company was previously seen as a lean organization.

Answer

CEO Ford Tamer expressed confidence in the broad design win pipeline across top-tier customers and varied applications. Regarding the headcount reduction, he explained it was a necessary action to maintain financial discipline and will drive strong earnings in 2025. He assured that the product roadmap is not impacted, as the changes involved shifting resources to lower-cost geographies.

David Williams of The Benchmark Company LLC asked about the demand outlook for the second half of 2025, including potential risks and upsides, and also inquired about forward-looking margin performance and EBITDA fall-through.

Answer

CEO Ashish Chand highlighted steady improvement in the Automation Solutions business, citing growth in key geographies and verticals like discrete manufacturing. He noted more uncertainty in Smart Infrastructure and some broadband project delays. CFO Jeremy Parks reaffirmed the company's model for a roughly 25% incremental EBITDA margin on a year-over-year basis, indicating no fundamental changes to profitability expectations.

David Williams from The Benchmark Company asked for a way to quantify the level of customer discussions and activity related to U.S. reindustrialization. He also questioned if Belden was observing any significant demand pull-forward from customers.

Answer

CEO Ashish Chand explained that while it's difficult to quantify exact bookings, the portion of the sales funnel related to full solutions for U.S. reshoring has grown into the high teens. He added that Belden has not seen any material demand pull-in, as its solutions are engineered and well-planned, but has seen an increase in "interest pull-in" and early discussions.

David Williams from The Benchmark Company asked about the nature of customer conversations regarding future investment plans and how Belden's M&A strategy is balanced between software and hardware acquisitions.

Answer

CEO Ashish Chand responded that customer project funnels are up mid-to-high single digits since the start of the year, with a qualitative shift toward customers seeking integrated IT/OT solutions, which aligns perfectly with Belden's solutions strategy. Regarding M&A, he stated that the company remains focused on three key areas: edge hardware with embedded software, wireless technologies, and security enhancements, as exemplified by the recent Voleatech acquisition.

Asked for quantification of the project delays that impacted Q3 and Q4 guidance, and inquired about the competitive landscape, specifically if competitors are becoming more aggressive on pricing.

Answer

Francois Godfrey explained that several million dollars in projects were delayed into the next fiscal year due to customer caution amid economic uncertainty, not due to competitive pressure. He stated they have not lost any business and are not seeing increased pricing aggression from competitors.

David Williams asked for an update on interest from the military and defense sector, the potential for broader adoption by other countries or agencies, and whether BEAD or RDOF funding is driving customer interest in fixed wireless access.

Answer

CEO Ronald Glibbery stated that military applications are a key focus due to the technology's stealth and anti-jamming capabilities, with initial volume shipments for a tactical communications application starting in the current quarter. He confirmed that global interest is growing, with inquiries from Europe, the Middle East, and Asia. Regarding BEAD funding, Glibbery believes it will have a positive impact but expects the direct benefits to materialize in the second half of the year.

David Williams of The Benchmark Company inquired about the fulfillment schedule for the new $3.6 million order, the health of the broader customer pipeline, the level of engagement across various military applications, and the potential impact from AI at the edge.

Answer

CEO Ronald Glibbery explained that the $3.6 million order will be fulfilled throughout 2025, slightly weighted to the second half due to production capacity. He noted the company's customer base has grown fivefold, reducing concentration risk, and confirmed the first volume military shipments are set for Q2 2025. Glibbery added that Peraso is actively engaged in about a third of the potential military applications shown, including drone and classified projects. He also identified enterprise environments, such as AI-enabled laptops needing high-speed data transfer, as the primary current application for AI at the edge.

David Williams of The Benchmark Company inquired about the expected timing for a revenue inflection from recent mmWave design wins, the status of inventory destocking with major customers, the profile of WISP customers adopting their technology, and the potential for a broader transition from 5GHz to 60GHz in the North American market.

Answer

CEO Ronald Glibbery projected a revenue inflection point starting in Q1 2025, driven by a growing backlog from both new and existing customers. He highlighted strong design win activity, evidenced by a record number of evaluation kit sales in Q3. Glibbery clarified that over 95% of their WISP customers are experienced providers replacing congested 5-gigahertz systems. He also affirmed the North American market's shift to 60GHz, emphasizing Peraso's fiber-like performance and the potential for BEAD funding to become more technology-neutral, benefiting their solutions.

David Williams inquired about the diversity and development of the customer engagement pipeline, the strategy and opportunity for custom IP in Wi-Fi 8, the deployment speed and market size for the DUNE platform, and the potential impact of BEAD funding on the fixed wireless access market.

Answer

CEO Ronald Glibbery explained that the millimeter wave design pipeline is strong, driven by both fixed wireless access and military applications, where low probability of detection is a key feature. For Wi-Fi 8, he stated the company is pursuing a collaboration and partnership model rather than direct capital investment. Regarding the DUNE platform, Glibbery noted that hardware from multiple ODMs is ready for deployment, making the rollout dependent on service provider speed. He estimated the BEAD program could benefit approximately 20 million homes in North America.

Asked about the cadence and financial impact of the record orders in the Air & Liquid segment, and questioned the sustainability of the segment's improved margins.

Answer

Executives stated the record orders were driven by a large nuclear contract whose revenue will be recognized over 2-3 years. The improved margins are considered sustainable due to a favorable product mix shift towards higher-margin nuclear and military products, rather than any one-time items.

David Williams asked for the revenue run rate required to reach full capacity utilization after the recent fab reductions and inquired about the silicon carbide competitive dynamics within China's domestic market.

Answer

CFO Thad Trent explained that a specific revenue number for full utilization is difficult to provide due to product mix, but the ramp-up should be linear. CEO Hassane El-Khoury reiterated that onsemi competes on performance against global peers in China's SiC market, not local suppliers, as Chinese OEMs targeting global markets prioritize technology leadership, which onsemi maintains through its roadmap and flexible supply chain.

Asked about the sustainability of the high gross margin into 2025 and inquired about the new business development team's early impact and future expectations.

Answer

The executive team confirmed a sustainable gross margin target above 60%, attributing the Q4 strength to a favorable mix and pricing, though quarterly fluctuations are possible. They also noted that the new business development team is already performing well, focusing on acquiring new customers globally to drive revenue growth.

The analyst inquired about the sustainability of the impressive growth in the Excess & Surplus (E&S) lines, the current rate environment, the competitive landscape, and the future outlook for the investment portfolio's book yield.

Answer

Executives confirmed the E&S growth is sustainable due to a focus on a less competitive niche of smaller accounts and the addition of new agents. The rate environment remains positive. Regarding the investment portfolio, the book yield of 4.1% is expected to trend upwards towards 5.5%-6% over the next 12-18 months as cash is deployed and maturing investments are reinvested at higher current rates.

The analyst inquired about the drivers behind the strong cost performance, the expected cost trends for the remainder of the year, and the progress of regional exploration efforts.

Answer

The outperformance on costs is attributed to strong collaboration with mining contractors and higher-than-planned productivity. Costs are expected to remain within the revised guidance. Exploration is focused on converting inferred resources and drilling regional targets like El Triunfo, with a resource update anticipated in Q1 of the following year.

The analyst inquired about the sustainability of the high gross margins achieved in the quarter and asked for more details on the growth opportunity and timeline for the service revenue business.

Answer

The executive confirmed that the high gross margins are sustainable due to strategic initiatives like product standardization and improved planning, with potential for further upside. He identified the service business as a significant growth opportunity and announced a new program involving capital investment and hiring to capture this revenue stream.