Harlan Sur

Harlan Sur questioned the accelerating growth of NVIDIA's networking business, particularly the Spectrum-X Ethernet switching platform, and sought insights into its current runway and projected trends through the calendar year.

Answer

Jensen Huang, President and CEO of NVIDIA, highlighted the networking business as an extension of NVIDIA's AI infrastructure, driven by NVLink and Spectrum-X Ethernet. He noted NVIDIA's rapid ascent to becoming a leading Ethernet networking company due to the effectiveness of its AI infrastructure solutions.

Harlan Sur noted the accelerating growth of NVIDIA's networking revenue, particularly the Spectrum-X Ethernet switching platform, and asked about the current and projected runway for Spectrum-X, including upcoming platforms like Spectrum-XGS and Spectrum-6.

Answer

CEO Jensen Huang explained that networking is an extension of NVIDIA's AI infrastructure, encompassing NVLink for scale-up and Spectrum-X/InfiniBand for scale-out. He emphasized that NVLink has turbocharged the networking business, making NVIDIA a leading Ethernet networking company, with Spectrum-X being a 'home run' due to its effectiveness in AI infrastructure.

Harlan Sur from JPMorgan Chase & Co. questioned the demand dynamics for the next-generation Blackwell Ultra, set to launch in H2 2025, and how customers and the supply chain will manage simultaneous product ramps.

Answer

President and CEO Jensen Huang confirmed Blackwell Ultra is on track for the second half of the year. He explained that the transition will be much smoother than the Hopper-to-Blackwell shift because the system architecture remains the same. The previous transition was more challenging due to the move from an NVLink 8 to an NVLink 72 system. Huang also noted that planning for the subsequent architecture, Vera Rubin, is already underway with partners.

Harlan Sur inquired how Analog Devices is leveraging its software, DSP, and systems capabilities to gain further traction in the fast-growing AI business, beyond its strong portfolio of RF, mixed-signal, and power products.

Answer

Vincent Roche, CEO and Chairman, explained that ADI's innovation activities are centered around application system knowledge, enabling them to capture more customer complexity and increase ASPs. He highlighted the increasing role of digital control and DSP heritage in multi-phase, high-speed power conversion systems for AI, as well as in the optical sector's 'nervous system' around modems. He noted that everything ADI does now has a strong mix of analog, digital, and increasingly software, including product platforms with embedded machine learning.

Harlan Sur asked how Analog Devices leverages its software, DSP, and systems capabilities to gain further traction in the fast-growing AI business, specifically across connectivity, power, and ATE.

Answer

Vincent Roche, CEO and Chairman, highlighted ADI's innovation activities centered around application system knowledge, which increases ASPs. He noted that future power systems will be more digitally controlled, leveraging ADI's digital signal processing heritage for high-speed conversion and precision. In the optical sector, digital functionality partners with mixed signal conversion and power. He emphasized a strong mix of analog, digital, and software, including embedded machine learning.

Harlan Sur asked why Q3 gross margin was 69.2%, below the anticipated 70%, and questioned if it was due to a higher mix of lower-margin Communications revenue. He also asked for the Q4 gross margin outlook.

Answer

EVP & CFO Richard Puccio explained the margin miss was primarily due to an unexpected, temporary lower factory utilization, not mix. He confirmed utilization is back on track and that ADI expects to reach a 70% gross margin in Q4 at the midpoint of its guidance.

An analyst from JPMorgan Chase & Co. asked for an update on the Industrial Automation subsegment, questioning if it saw continued sequential growth and whether recent tariff uncertainty has impacted order trends from China.

Answer

Executive Richard Puccio confirmed that the automation subsegment continued to grow and ended the quarter with a book-to-bill ratio greater than one, a trend expected to continue into Q3. CEO Vincent Roche added that while tariff uncertainty is causing some customers to pause build-outs, the long-term trend of automation remains strong, supported by factors like reshoring and localization.

Harlan Sur asked if Applied Global Services (AGS) is expected to grow faster than its historical 11% CAGR this calendar year, given the strong systems business outlook, increasing customer utilizations, and value-added services. He followed up on the Process Diagnostics and Control (PDC) business, asking about its strongest pull and if it's approaching or exceeding a $2 billion annualized run rate this year.

Answer

CFO Brice Hill acknowledged AGS's 15% year-over-year growth in Q1 and the positive dynamics, expecting low double-digit growth or better, despite past trade restriction headwinds. CEO Gary Dickerson expressed excitement about the AGS innovation pipeline, including AIX, and the strong growth opportunity. He also highlighted PDC as one of the fastest-growing businesses, driven by E-beam technology and its importance for material characterization and faster learning rates, expecting continued high growth.

Harlan Sur asked if Applied Global Services (AGS) is expected to grow faster than its historical 10-12% CAGR this calendar year, given strong current trends and market dynamics. He also inquired about the strongest pull for Applied Materials' Process Diagnostics and Control (PDC) solutions and if the PDC franchise is approaching or exceeding a $2 billion annualized run rate.

Answer

CFO Brice Hill indicated that AGS is confident in low double-digit growth, with potential for higher rates during periods of high utilization, driven by an expanding installed base and new products like AIx. CEO Gary Dickerson highlighted PDC as one of the fastest-growing businesses this year, driven by leadership in e-beam technology and its importance for accelerating learning rates in advanced logic, DRAM, and packaging, expressing high confidence in continued strong growth.

Harlan Sur asked for an update on the Advanced Packaging business, including its expected growth for the fiscal year and whether it is being affected by the weaker advanced logic spending dynamics.

Answer

CFO Brice Hill stated that the advanced packaging business is pacing similarly to last year and is not impacted by the leading-edge logic schedule shifts. CEO Gary Dickerson added that packaging is Applied's highest market share area and is on track to more than double to over $3 billion in revenue over the next few years, driven by AI and energy-efficient computing needs.

Harlan Sur asked for confirmation on whether the company still expects an acceleration in leading-edge foundry-logic and memory spending in the second half of the calendar year, and also inquired about the current mix of integrated system solutions.

Answer

CFO Brice Hill confirmed that leading-edge investment is accelerating, driven by strong AI data center demand for logic, DRAM, and HBM. He also stated that integrated equipment solutions continue to represent approximately 30% of the company's systems business.

Harlan Sur asked for confirmation on whether the company still expects an acceleration in leading-edge foundry-logic and memory spending in the second half of the calendar year. He also inquired about the current mix of integrated system solutions as a percentage of the systems business.

Answer

CFO Brice Hill confirmed that leading-edge spending is accelerating, supported by rising cloud service provider CapEx and new factory announcements. He also stated that integrated equipment solutions continue to represent approximately 30% of the company's systems business.

Harlan Sur asked about the potential size of the upcoming 2-nanometer node transition relative to 3-nanometer, noting that design starts appear to be accelerating.

Answer

CFO Brice Hill responded that based on its performance benefits, the company expects 2-nanometer to be a large node, similar to how 7-nanometer was a popular landing spot for designs. CEO Gary Dickerson added that customers are very bullish on the size of the 2-nanometer node, driven by the need for energy-efficient computing for AI.

Harlan Sur questioned why the services (AGS) business operating margins remain below historical peaks despite strong revenue growth and asked about the path to returning to the low-30% range. He also asked if integrated systems offer customers operational benefits like higher throughput and smaller footprints.

Answer

CFO Brice Hill explained that a structural change in how corporate expenses are allocated to the segments has impacted reported operating margins, but he expects continued profit improvement. CEO Gary Dickerson added that service innovations are driving value and will help margins. On the follow-up, Dickerson confirmed that integrated systems provide significant cost and operational benefits, such as simplifying processes, reducing EUV steps, and lowering overall operating costs for customers.

Harlan Sur asked if Microchip's turns business came in well above historical trends in the December quarter, contributing to the upside, and if the same or higher level of turns mix and expedite requests are continuing in the current quarter. He also inquired if Microchip is benefiting from strong data center SSD demand, driven by AI compute, and if R&D investments are still committed to the data center SSD franchise.

Answer

Steve Sanghi (Executive Chair) confirmed that January was extremely strong with a high turns component and bookings, continuing the trend of pull-in requests. He noted that the December quarter saw unusual strength with continuous bookings and expedites through holidays, leading to an 'upcycle kind of behavior.' Eric Bjornholt (CFO) confirmed that Microchip absolutely supports and continues investing in the storage segment of data centers, including both flash and HDD, as well as the switching segment, with three solid product lines.

Harlan Sur from JPMorgan Chase & Co. asked if Microchip's turns business (short lead time orders) came in well above historical trends in the December quarter, contributing to the upside, and if this trend of high turns mix and increasing expedite requests is continuing into the current quarter. He also inquired about Microchip's benefit from strong data center SSD demand, particularly in AI compute, and ongoing R&D investments in the data center SSD franchise.

Answer

Executive Chair Steve Sanghi confirmed that the turns component and bookings were very strong in December and January, with significant pull-in requests from customers, indicating an "upcycle kind of behavior" that was not initially modeled. He noted that this momentum is continuing into the current quarter, leading to a strong 6.2% sequential growth guidance. CFO Eric Bjornholt affirmed that Microchip is absolutely benefiting from strong data center SSD demand and continues to invest in the storage segment (flash and HDD) and switching segment of data centers.

Harlan Sur requested an update on the Fab 2 closure and the right-sizing of Fab 4 and Fab 5, specifically asking if the targeted $115 million in annual cost savings (250 basis points of gross margin improvement) was already reflected in the current gross margin profile or still to come. He also asked for the rough mix of data center versus client/PC compute within the data center and compute segment.

Answer

CFO Eric Bjornholt clarified that the $90 million annual cash savings from Fab 2 are on track, but these costs do not currently impact non-GAAP gross margins, which are primarily affected by underutilization and inventory write-offs. COO Rich Simoncic stated that the majority of the 19% data center and compute revenue is data center focused, but the exact mix is not disclosed.

Harlan Sur requested an update on the Fab 2 closure and right-sizing of Fab 4 and Fab 5, specifically asking if the targeted $115 million in annual cost savings (250 basis points of gross margin improvement) is already reflected in current gross margins or if more is yet to come, and then inquired about the rough mix of data center versus client/PC compute within the 19% data center and compute revenue segment.

Answer

CFO Eric Bjornholt clarified that the Fab 2 closure targeted $90 million in annual cash savings, which are not directly impacting non-GAAP gross margins today, but the sale agreement (expected to close in December) will further remove the factory from the cost structure. COO Rich Simoncic stated that Microchip does not break out the mix between data center and client/PC compute to that level of detail, but confirmed the majority of the 19% segment is data center-focused.

Harlan Sur asked about the drivers behind the relative strength in Asia, which grew 14% sequentially, outpacing other regions. He also inquired if the percentage of 'turns' business grew in the June quarter and what the expectation is for September.

Answer

CEO Steve Sanghi explained that the strength in Asia is largely a proxy for demand from U.S. and European customers who manufacture their products there, as sales are reported based on ship-to location. CFO Eric Bjornholt added that the March quarter comparison is impacted by the Chinese New Year. Regarding turns, Bjornholt confirmed that turns were strong in June and are expected to remain high in September due to short lead times.

Harlan Sur asked about the drivers behind Asia's relative revenue strength and inquired about the trend in turns business as a percentage of sales for the June and September quarters.

Answer

CEO Steve Sanghi explained that Asia's strength is often a proxy for demand from U.S. and European customers who manufacture there. CFO Eric Bjornholt added that the June quarter benefited from a comparison to the March quarter, which included the Chinese New Year. Mr. Bjornholt also confirmed that turns business was strong in June and is expected to remain high given short lead times.

Harlan Sur asked if Microchip is seeing any pullback in orders from its small and medium-sized China industrial base due to current tariff dynamics, similar to the 2018-2019 period. He also inquired about the performance of megatrend revenues in fiscal 2025.

Answer

CEO Steve Sanghi responded that he is not seeing a pullback, noting that customers are actively moving production out of China to other locations like Vietnam, mitigating the direct impact. COO Richard Simoncic added that the megatrends revenue mix remained consistent but growth slowed, as these areas were equally affected by the broad inventory correction.

Harlan Sur asked for a way to quantify the success of Microchip's Total System Solutions (TSS) strategy, such as the increase in dollar content per customer opportunity over the past several years.

Answer

CEO Ganesh Moorthy explained that it's difficult to quantify across their 120,000 customers but that they track the multiplier effect in subsets of large customers and megatrends. Executive J. Bjornholt suggested that a good way to see the strategy in action is to review the extensive reference design section on the company's website, which shows the targeted applications and the number of Microchip devices included.

Harlan Sur inquired about the current percentage of royalty mix from Compute Subsystems (CSS) and its potential proportion of royalty revenue over the next two to three years.

Answer

Jason Child, Arm's Chief Financial Officer, stated that CSS was approaching double digits last year, is well into the teens this year, and could reach upwards of 50% of royalty revenue in the next couple of years. He attributed this acceleration to customers' need to shorten cycle times (CSS cuts it in half) and noted that all CSS customers have renewed for the next generation, indicating strong value perception.

Harlan Sur asked about the current percentage of royalty mix from Compute Subsystems (CSS) and its potential proportion of royalty revenue over the next two to three years.

Answer

CFO Jason Child stated that CSS, which was approaching double digits last year, is now well into the teens and could reach upwards of 50% of the royalty mix in the next couple of years. This acceleration is primarily driven by customers' need to shorten cycle times, with all existing CSS customers renewing for next-generation versions.

Harlan Sur inquired about the doubling of NeoVerse royalties, Arm's extensive penetration across data center components (GPUs, SmartNICs, networking, switching, routing), and the increasing mix of cloud and networking in total royalty revenues, projecting it from 10% last fiscal year to 15-20% this year.

Answer

CEO Rene Haas confirmed Arm's widespread penetration across the networking stack, including BlueField, Tomahawk, and Arista technologies, emphasizing power efficiency as a key accelerant. CFO Jason Child affirmed that the cloud and networking royalty mix is expected to continue increasing, with the 15-20% trajectory being a reasonable and faster-than-expected trend for the year.

Harlan Sur highlighted the doubling of Neoverse royalties year-over-year and Arm's extensive compute penetration across various data center components (GPUs, SmartNICs, networking, switching, routing, service provider networking), asking if the cloud and networking royalty mix is now approaching 15-20% from 10% last fiscal year.

Answer

Rene Haas, Arm's Chief Executive Officer, confirmed Arm's widespread penetration across the networking stack, including technologies like BlueField, Mellanox, Tomahawk, and Arista, and emphasized power efficiency as a key accelerant. Jason Child, Arm's Chief Financial Officer, confirmed that the cloud and networking royalty mix is indeed increasing from approximately 10% last year, and that 15-20% is a reasonable expectation for the current year, growing faster than initially anticipated.

Harlan Sur asked about the progress and monetization strategy for Arm's Chiplet System Architecture (CSA), viewing it as a strategic scaling of its system-level approach.

Answer

CEO Rene Haas confirmed accelerated demand for CSS and strong interest in the Arm Total Design partner program for chiplets. He explained that this is driven by extreme design complexity and the urgent need to bring AI-capable products to market faster, as compute demand is currently outpacing silicon supply.

Harlan Sur highlighted the strength in first-half licensing revenue and asked if, given strong design activity and CSS engagements, the company could grow its backlog for the full fiscal year.

Answer

CEO Rene Haas attributed the robust licensing demand to the broad-based need for more compute power for AI applications, noting that CSS licenses have doubled, exceeding expectations. CFO Jason Child added that while licensing revenue is tracking well ahead of initial plans, he does not anticipate a significant increase in the backlog (RPO) due to offsetting revenue recognition. He emphasized that the key focus should be on the strong 23% year-over-year royalty growth.

Harlan Sur asked if the industry's chip supply tightness and customers' focus on maximizing supply from existing capacity through yield improvements are driving incremental demand for KLA's process control solutions.

Answer

Rick Wallace (CEO) confirmed this trend, noting 'back penetration' of technologies to optimize yield. He explained that customers are striving to optimize existing capacity due to current constraints in building new fabs, and the favorable pricing environment makes additional yield more valuable, driving demand for KLA's solutions.

Harlan Sur asked about the expected growth of KLA's inspection and patterning businesses relative to the overall WFE view of low-teens growth for 2026, given their historical outperformance and the industry's focus on yield and manufacturability. He also inquired if the industry's chip supply tightness and focus on yield improvements in existing capacity are driving incremental demand for KLA's process control solutions.

Answer

CEO Rick Wallace expressed confidence in continued strong growth for inspection, especially BBP products, driven by AI build-out, increased designs, larger die, and HBM. He noted metrology would see relative recovery and reticle would be very strong due to design starts. CFO Bren Higgins added that KLA expects to sustain multi-year outperformance due to changing intensity profiles, particularly in HBM. Rick Wallace confirmed that customers are indeed driving incremental demand for process control to optimize yield from existing capacity, especially given current constraints and higher pricing for additional yield.

Harlan Sur asked about the strengthening outlook for calendar year 2026 WFE growth, inquiring if the magnitude of growth has improved or if it's primarily increased confidence, and requested elaboration on the broader spending profile in WFE and advanced packaging. He also followed up on whether new fab geographies and a major logic player's focus on foundry business are driving incremental process control spend.

Answer

CFO Bren Higgins stated that it's more about increased confidence and constructive timing discussions with customers, noting positive trends in leading-edge foundry logic, HBM, and flash, while expecting normalization in China. CEO Rick Wallace added that customers are actively trying to secure slots, indicating strong demand. Bren Higgins further confirmed that more players doing leading-edge work in more locations would be accretive to overall process control intensity.

Harlan Sur inquired about the updated outlook for calendar year 2026 WFE growth, specifically whether the magnitude or confidence level has improved, and requested elaboration on the 'broader spending profile' in WFE and advanced packaging. He also asked if additional dynamics like new fab geographies and a major logic player's focus on foundry business are driving incremental process control spend.

Answer

CFO Bren Higgins stated that the outlook reflects increased confidence and closer alignment with customer lead time expectations, rather than a significant strengthening of the growth rate. He highlighted constructive views on leading-edge foundry logic, HBM investments, and advanced packaging momentum. CEO Rick Wallace added that customers are actively seeking to secure equipment slots. Bren Higgins further explained that more players doing leading-edge work in more locations would be accretive to overall process control intensity.

Harlan Sur from J.P. Morgan asked about the drivers behind the significant outperformance in inspection versus patterning systems, and questioned where the incremental upside for the revised advanced packaging revenue forecast is coming from.

Answer

EVP & CFO Bren Higgins attributed the inspection strength to an inflection in optical pattern inspection, which was previously supply-constrained, and high sampling rates for Gate-All-Around and advanced packaging. He noted patterning was flatter due to a slowdown in advanced litho affecting overlay tools, but expects it to strengthen. President & CEO Rick Wallace added that the advanced packaging upside comes from a combination of new product adoption, share gains, and the overall AI infrastructure build-out, noting KLA is closer to the beginning of this trend than the end.

Harlan Sur of JPMorgan Chase & Co. asked for the drivers behind the significant year-to-date strength in inspection versus flattish growth in patterning, and also inquired about the source of the incremental upside in the raised Advanced Packaging revenue forecast.

Answer

EVP & CFO Bren Higgins attributed the inspection strength to an inflection in optical pattern inspection as supply constraints eased, strong demand for gate-all-around technology, and advanced packaging. He noted patterning was mixed, with overlay weaker but reticle inspection poised for a record year. President & CEO Rick Wallace added that rising process control intensity initially favors inspection. On packaging, Wallace cited momentum from product adoption and the AI infrastructure build-out, while Higgins highlighted that process control intensity in packaging has grown to 5-6% of spend.

Harlan Sur questioned the decision to postpone KLA's Analyst Day amid strong results, asking about the risks from trade uncertainty, mitigation strategies for tariff impacts, and the drivers behind market share gains in e-beam inspection.

Answer

CFO Bren Higgins stated the postponement was a prudent response to unprecedented global trade uncertainty. He identified the service business as most exposed to tariffs due to parts importation for contracts. CEO Richard Wallace attributed e-beam inspection success to long-term platform investment, creating powerful synergies with optical tools that are driving strong customer adoption at the leading edge.

Harlan Sur from JPMorgan Chase & Co. asked if KLA's process control business could achieve low to mid-teens percentage growth in 2025, given its history of outperforming WFE. He also requested a breakdown of the 60% growth outlook for the advanced packaging business.

Answer

CEO Rick Wallace expressed strong confidence in KLA's position, citing resumed scaling, larger die sizes, HBM dynamics, and packaging as key drivers. He detailed that packaging growth comes from inspection, metrology, and plasma dicing systems. CFO Bren Higgins added that the advanced packaging business mix is approximately 65-70% semiconductor process control.

Harlan Sur inquired if the anticipated 2025 decline in China revenue would be offset by stronger advanced node spending. He also asked if the patterning and metrology business would accelerate in 2025, given its relative underperformance to inspection in 2024.

Answer

CFO Bren Higgins confirmed that stronger leading-edge demand is expected to offset the moderation in China, keeping the overall 2025 outlook stable. He also affirmed their view that metrology and reticle inspection will see growth in 2025, driven by new technologies and design starts. CEO Rick Wallace added that easing supply constraints for inspection system optics will also enable growth.

Harlan Sur from JPMorgan Chase & Co. asked about the sustainability of the strong double-digit year-over-year growth in the industrial segment, specifically inquiring if customer hesitation, previously noted in areas like factory automation, has subsided and if order activity, particularly from China-based industrial customers, is now accelerating. He also followed up on the progress of the Sherman Fab build-outs and sought quantification of potential offsets, such as the increased Investment Tax Credit (ITC) and direct CHIPS Act funding, against the projected $2 billion to $3 billion gross capital expenditure for 2026.

Answer

CEO Haviv Ilan acknowledged a pickup in industrial orders but expressed caution regarding its sustainability, noting that Q3 2025 industrial revenue was still significantly below 2022 peaks, with expectations for continued secular growth. He confirmed Sherman Fab is ahead of schedule with strong performance, and Lehi is on track. CFO Rafael Lizardi reiterated 2026 CapEx guidance, provided new depreciation expectations, and clarified that the 35% ITC applies to all 2026 CapEx, with direct funding remaining at up to $1.6 billion.

Harlan Sur asked about customer hesitancy in the industrial business, particularly in factory automation and among China-based customers, and whether order activity is now picking up. He then followed up on the progress of Sherman Fab build-outs, the potential $2 billion-$3 billion gross CapEx for the year, and the quantification of potential offsets from ITC and direct funding.

Answer

CEO Haviv Ilan noted that industrial revenue in Q3 2025 was still 25% below 2022 peaks, with secular growth continuing. He observed a recent pickup in orders, including industrial, but emphasized the need to assess its sustainability. Regarding Fabs, Haviv Ilan reported Sherman Fab execution is ahead of schedule with high yields, and Lehi's 65nm and 45nm transitions are progressing well. CFO Rafael Lizardi confirmed 2026 CapEx guidance of $2 billion-$3 billion, projected 2026 depreciation at $2.2 billion-$2.4 billion, and stated the Investment Tax Credit (ITC) is now 35% for 2026 CapEx, with up to $1.6 billion in direct CHIPS Act funding expected.

Harlan Sur asked if the company's 'turns business' grew sequentially in Q2, viewing it as a key indicator of cyclical recovery. His follow-up inquired whether the industrial automation sub-segment was showing relative weakness due to tariff concerns, particularly with China-based customers.

Answer

CEO Haviv Ilan and VP & Head of IR Mike Beckman confirmed that the turns business accelerated in Q2, continuing a positive trend. Beckman added that the recovery in the industrial market was broad-based across all sectors and did not show specific weakness in industrial automation.

Harlan Sur asked about cycle health indicators like customer cancellations and turns orders, and followed up on how the $1.6 billion CHIPS Act grant would impact the free cash flow per share profile.

Answer

Executive Haviv Ilan confirmed that turns business was strong in Q4, while Executive Dave Pahl noted cancellations remain at low levels. Regarding the CHIPS Act, executives explained the timing of the cash is uncertain and tied to construction milestones. However, Executive Rafael Lizardi provided an updated, lower depreciation forecast for 2025 ($1.8B-$2.0B) and 2026 (lower half of $2.3B-$2.7B range) as a direct result of the grant.

Harlan Sur from JPMorgan asked for an update on customer engagement with Intel's 14A process, specifically if test chip designs have commenced or if customers are further along, given the release of PDK 0.5 and the H2 2026 decision timeline. He also inquired about the status of Clearwater Forest (e-core server platform on 18A) amidst server roadmap changes, and the tape-out/ramp timing for Diamond Rapids.

Answer

Lip-Bu Tan, CEO, confirmed that several customers are actively engaging with PDK 0.5, looking at test chips and specific products, with discussions ongoing regarding capacity and pricing. He expects customers to make volume commitments in H2 2026. Lip-Bu Tan also confirmed continued support for Clearwater Forest. He clarified that the focus on the 16-channel Diamond Rapids aims to deliver a differentiating, high-end product, and efforts are underway to accelerate the introduction of Coral Rapids, which will reintroduce multi-threading.

Harlan Sur from JPMorgan Chase & Co. asked for an update on customer engagements for 14A, specifically if customers have commenced test chip designs or are further along, given the release of PDK 0.5 and the need for decisions in the second half of 2026. He also inquired about the support for Clearwater Forest (E-core server platform) and the ramp timing for Diamond Rapids, given the focus on performance-focused products.

Answer

CEO Lip-Bu Tan confirmed that customers are actively engaging with PDK 0.5, looking at test chips and specific products for the foundry. He expects certifications and volume commitments in the second half of 2026, which will then drive capacity expansion and IP readiness. Tan also confirmed continued support for Clearwater Forest, while emphasizing a laser focus on the high-end 16-channel Diamond Rapids and accelerating the introduction of Coral Rapids to reintroduce multi-threading and meet customer excitement.

Harlan Sur from JPMorgan Chase & Co. asked if Micron has observed a near-term positive dynamic in its HBM3E order book due to upper revisions in ASIC AI XPU volume shipments, and how the team manages this upside alongside strong HBM4 demand, given that 2026 supply is fully contracted. He also inquired about the acceleration in the enterprise SSD business, asking if Micron is entering long-term supply agreements with ESSD customers and if storage intensity is higher for inferencing versus training workloads.

Answer

CEO Sanjay Mehrotra confirmed that 2026 HBM supply will be a mix of HBM3E and HBM4, with strong year-over-year growth, and that customers are requiring more HBM across various AI platforms. He noted that multi-year contracts include data center SSDs and span multiple market segments. Sanjay also explained that the rapid evolution of AI, from training to inferencing and with more video content, is driving greater demand for enterprise SSDs, fueled by GenAI.

Harlan Sur asked if Micron has observed a positive dynamic in its HBM3E order book due to significant upward revisions in ASIC AI XPU volume shipments for next year. He also inquired how Micron is managing this HBM3E upside alongside strong HBM4 demand, given that 2026 supply is fully contracted. Additionally, he asked about the strong acceleration in enterprise SSD business, questioning if Micron is entering long-term supply agreements with ESSD customers and if SSD demand is more tied to inferencing workloads (higher storage intensity) versus training.

Answer

CEO Sanjay Mehrotra confirmed that 2026 will feature a mix of HBM3E and HBM4, with both contributing to strong year-over-year revenue growth, and that Micron will manage this mix based on customer requirements. He reiterated that HBM and non-HBM DRAM supply will be tight, and the HBM TAM is now projected to reach $100 billion by 2028, two years earlier than previously expected. For enterprise SSDs, Sanjay Mehrotra highlighted strong momentum and share gains, confirming that data center SSDs are part of the multi-year contracts under discussion across various market segments. He also noted that the rapid evolution of AI, from training to inferencing and video applications, is driving greater demand for enterprise SSDs.

Harlan Sur asked about Micron's inventory levels, specifically DRAM being below target, and whether total and DRAM inventory days would continue to decrease. He also inquired if lead times were extending, customers were placing orders further in advance, and what factors gave confidence in continued supply tightness into calendar 2026. Additionally, he questioned the design and performance of Micron's HBM4, particularly its ability to exceed JEDEC standards and customer requirements, and whether the base logic die was redesigned to achieve these results while maintaining superior power consumption.

Answer

Mark Murphy, CFO, expects inventories to remain at or better than Q4 levels, with DRAM remaining very tight (below target) and NAND inventory days decreasing due to discipline and market improvement. Sanjay Mehrotra, CEO, emphasized that customers understand the strong demand and tight supply. He noted that Micron is leveraging 1-gamma for non-HBM and 1-beta for HBM, focusing on production efficiencies and technology transitions. Regarding HBM4, Sanjay expressed pride in the team's execution, highlighting the innovative design of the DRAM die, advanced CMOS technology in both the DRAM and Micron's in-house base die. This combination enabled industry-leading performance (2.8 TB/s bandwidth, >11 Gbps speeds) and power efficiency, positioning Micron well for the HBM4 production ramp in line with customer demand.

Harlan Sur asked about the expected days of inventory for both total and DRAM exiting the current quarter, the anticipated trend for inventory levels, and whether extended lead times and earlier customer order placements indicate sustained tightness into calendar 2026. He also inquired about the impressive performance of Micron's HBM4, specifically whether achieving 2.8 TB/s bandwidth and 11 Gbps pin speeds required a base logic die redesign, its impact on customer call schedules, and if power consumption remains superior to competitors.

Answer

Mark Murphy, EVP & CFO, stated that inventories are expected to remain at or better than Q4 levels, with DRAM remaining very tight and NAND DIO decreasing. Sanjay Mehrotra, Chairman, President & CEO, attributed HBM4's industry-leading performance to Micron's innovative DRAM die design, advanced CMOS technology in both DRAM and the in-house base die, confirming it positions Micron well for the HBM4 production ramp in line with customer demand.

Harlan Sur asked about the expected days of inventory (DIO) for total and DRAM exiting the current quarter, whether DIO would continue to decrease, and if lead times were extending, indicating better visibility into 2026 tightness. He also questioned the HBM4's superior performance (2.8 TB/s, 11 Gb/s) relative to JEDEC specs, whether it required base logic die redesign, and its power efficiency. Additionally, he inquired about the HBM4E base die strategy (internal vs. TSMC partnership) and the expected mix.

Answer

CFO Mark Murphy expected inventories to remain at or better than Q4, with DRAM remaining very tight (below target) and NAND DIO decreasing. CEO Sanjay Mehrotra emphasized that customers understand the strong demand and tight supply, and Micron is leveraging 1-gamma for non-HBM and 1-beta for HBM. He attributed HBM4's industry-leading performance and power efficiency to innovative DRAM die design, advanced CMOS technology in DRAM and Micron's own base die. He clarified that HBM4 uses Micron's internal base die, while HBM4E (a 2027 product) will partner with TSMC for standard and customized base logic dies, with customization expected to yield higher gross margins.

Asked for an update on supply and pricing negotiations for calendar 2026 HBM, given that 2025 supply is sold out, and whether forecasted customer demand for 2026 exceeds Micron's supply capability.

Answer

Micron confirmed its HBM supply is sold out for 2025. For 2026, they are actively working with customers on their evolving platform requirements for HBM3E, 12-high, and HBM4. While noting that HBM bit demand growth in 2026 will be strong and significantly exceed overall DRAM growth, the company did not directly state whether demand currently exceeds their forecasted supply.

Harlan Sur from JPMorgan Chase & Co. referenced past comments about HBM being sold out for calendar 2025 and asked for an update on supply and pricing negotiations for calendar 2026, and whether forecasted customer demand for 2026 exceeds Micron's supply capability.

Answer

Chairman, President & CEO Sanjay Mehrotra reaffirmed that Micron's HBM supply is sold out for 2025. For 2026, he stated that the company is actively working with customers who are assessing their product mix needs across HBM3E, 12-high, and HBM4. He emphasized that HBM bit demand growth in 2026 is expected to significantly exceed overall DRAM growth and that Micron is focused on qualifying its HBM4 product to meet customer timelines for that year.

Harlan Sur asked for an outlook on gross margins beyond fiscal Q3, questioning if improvements are expected in Q4 and if they would span both DRAM and NAND segments. He also inquired about the drivers behind the upgraded calendar 2025 DRAM bit demand forecast, asking if segments other than HBM were contributing.

Answer

CFO Mark Murphy confirmed expectations for gross margins to be "up somewhat" in fiscal Q4, driven by better market conditions and HBM mix, but cautioned about headwinds from NAND underutilization costs and new fab start-up costs. CEO Sanjay Mehrotra attributed the stronger DRAM demand outlook to a recovery in consumer markets (PC and smartphone) as inventories normalize, AI-driven content growth, and sustained data center strength for HBM, high-density DIMMs, and LPDRAM.

Harlan Sur sought clarification on the $73 billion AI backlog, asking if it's a dynamic figure expected to grow with new orders, and questioned Broadcom's supply chain commitments for 3nm/2nm wafers, CoWoS, substrate, and HBM to meet this demand, specifically regarding the Singapore advanced packaging facility.

Answer

Hock Tan (President and CEO) confirmed the $73 billion backlog is a current snapshot expected to grow with new orders over the next 18 months, given lead times. He stated that the Singapore facility is being built for partially insourcing advanced packaging to enhance supply chain security and delivery. He also mentioned securing capacity from TSMC for 2nm and 3nm silicon, with no current constraints.

Harlan Sur sought clarification on the $73 billion AI backlog for the next six quarters, asking if it's a dynamic number expected to grow, and questioned Broadcom's supply chain commitments for 3nm/2nm wafers, CoWoS, substrate, and HBM, specifically regarding the role of the Singapore facility in advanced packaging.

Answer

Hock Tan (President and CEO, Broadcom) confirmed the $73 billion backlog is a current snapshot and is expected to grow with new orders. He stated that Broadcom is addressing supply chain challenges, particularly in advanced packaging, by partially insourcing these capabilities at its Singapore facility for supply chain security and delivery. He also mentioned reliance on TSMC for silicon capacity in 2nm and 3nm, with no current constraints.

Harlan Sur inquired about the non-AI semiconductor business, noting improving year-over-year trends and asking about the expected magnitude of cyclical upturn and continued order improvements into the next fiscal year, given Broadcom's long lead times.

Answer

Hock Tan, President and CEO, stated that the non-AI segment is expected to be up low single digits year-on-year for Q4, but recovery is slow. He highlighted broadband as the only consistent strong uptrend and anticipates a U-shaped recovery, with meaningful recovery by mid-to-late 2026. Non-AI bookings are up 23% year-on-year.

Harlan Sur of JPMorgan Chase & Co. inquired whether the 60% year-over-year AI business growth rate seen in the first three quarters of fiscal 2025 is a sustainable trajectory for the remainder of the year and into fiscal 2026.

Answer

CEO Hock Tan affirmed that this analysis was insightful and correct. He explained that based on improved visibility into hyperscale partner deployments, Broadcom expects the current growth trajectory to be sustained into fiscal 2026. He agreed that viewing the business through this 60% growth profile for this year and next is a fair assessment.

Harlan Sur from JPMorgan Chase & Co. inquired whether Broadcom's AI business is on track to maintain its strong 60% year-over-year growth rate through the end of fiscal 2025 and into fiscal 2026, aligning with the company's previously stated long-term market growth outlook.

Answer

CEO Hock Tan affirmed this analysis, stating that based on improved visibility from hyperscale partners, the company expects the current AI revenue growth trajectory seen in fiscal 2025 to be sustained into fiscal 2026. He confirmed this was the visibility the company intended to provide.

Inquired about the profile of the AI business ramp in the second half of the fiscal year, particularly regarding new 3-nanometer programs, and whether the outlook has changed in the last 90 days.

Answer

Hock Tan noted that Q1 and Q2 performance was strong, partly due to improved networking shipments and some shipment pull-ins. However, he declined to comment or speculate on the second half of the year, stating that he only provides guidance for the upcoming quarter (Q2).

Harlan Sur asked whether Broadcom's AI business growth in fiscal 2025 would likely track the 35-40% data center CapEx growth projected for its top cloud customers.

Answer

President and CEO Hock Tan advised against using overall hyperscaler CapEx as a proxy for Broadcom's AI growth. He pointed out that such CapEx figures typically don't separate AI from non-AI spending, and the growth rate for AI infrastructure significantly outpaces traditional spending, making a direct correlation misleading.

Harlan Sur asked about Broadcom's ability to meet upside demand for its XPUs and networking products in the second half of the year, questioning if the company is facing any supply constraints.

Answer

President and CEO Hock Tan confirmed that Broadcom is seeing pull-ins and upside orders from hyperscalers and expects this trend to accelerate into 2025. He stated definitively that Broadcom can meet this upside demand and is not supply constrained.

Harlan Sur from JPMorgan Chase & Co. sought clarification on the core EDA plus IP growth embedded in the fiscal year 2026 guidance, asking for a breakdown between EDA and IP, and why EDA's growth remains below the long-term target. He also questioned the expense run rate, asking if cost synergies are being offset by increased spending and where total expenses are expected to be exiting fiscal year 2026.

Answer

Sassine Ghazi, CEO of Synopsys, acknowledged the math was accurate, attributing the EDA growth to the challenging China environment, a 'tale of two markets' (muted for industrial/automotive vs. strong for AI infrastructure), and robust hardware-assisted verification demand. Shelagh Glaser, CFO, added the $110 million divestiture headwind. For expenses, Glaser linked cost synergies to the 40.5% operating margin target, noting continued workforce reductions while maintaining significant R&D investment.

Harlan Sur asked if the Q3 foundry IP weakness was due to Synopsys's largest customer pivoting from 18A to 14A technology, and whether Synopsys would continue supporting this customer's future foundry roadmaps. He also questioned the higher Q4 expense outlook and the timeline for realizing cost synergies.

Answer

President and CEO Sassine Ghazi affirmed Synopsys's commitment as an IP leader to support customers across projects and foundries, regardless of their technology choices, while carefully assessing the timing and market opportunity for developed IP. CFO Shelagh Glaser attributed higher Q4 expenses to initial Ansys integration costs. She deferred specific 2026 guidance to Q4 earnings but highlighted the comprehensive portfolio review, a 10% headcount reduction by FY2026, and accelerated synergy realization.

Harlan Sur asked if the Q3 foundry IP revenue weakness was due to Synopsys's largest customer pivoting from 18A to 14A manufacturing technology, and whether Synopsys would continue to support this customer on future foundry roadmaps despite their challenges. He also inquired about the drivers for the higher Q4 expense outlook and the potential cost synergies for fiscal 2026, specifically the Q4 exit run rate on total expenses.

Answer

Sassine Ghazi, President, CEO & Director, Synopsys, confirmed that as a leader in IP, Synopsys must engage with customers across various projects, foundries, and applications to maintain trust and expand relationships. He noted that the customer's pivot to different technology is their choice, and Synopsys has IP available for the nodes built. The situation involves assessing the timing, size of opportunity, and available market for post-delivery IP. Shelagh Glaser, CFO, attributed the higher Q4 expense outlook to initial integration costs for Ansys, ensuring a successful transition. She stated that the company would provide specific 2026 guidance during the Q4 earnings call but highlighted that the 10% headcount reduction by the end of fiscal year 2026 is expected to accelerate previously committed synergies.

Harlan Sur of JPMorgan Chase & Co. inquired if the Q3 foundry IP revenue weakness was linked to Synopsys's largest customer pivoting from 18A to 14A technology, and whether Synopsys would continue supporting this customer's future foundry roadmaps despite their challenges. He also asked about the higher Q4 expense outlook and the expected fiscal 2026 Q4 exit run rate for total expenses, considering cost synergies.

Answer

President and CEO Sassine Ghazi stated that Synopsys, as an IP leader, must support customer choices across various technologies and applications, and that the IP for the relevant node is already available. He emphasized that the relationship with a foundry involves assessing timing, opportunity size, and post-delivery market. CFO Shelagh Glaser attributed the higher Q4 expense outlook to initial integration costs for Ansys. She deferred specific fiscal 2026 expense guidance to the Q4 earnings call but mentioned that the planned 10% headcount reduction by end of fiscal 2026 will accelerate previously committed synergies.

Harlan Sur asked about the impact of the latest Department of Commerce rules on EDA software on the fiscal '25 outlook. He also requested a qualitative description of the growth profiles for the Design Automation and IP businesses relative to the full-year outlook, given strong design activity.

Answer

CEO Sassine Ghazi and CFO Shelagh Glaser confirmed that the impact of the most recent U.S. semiconductor restrictions, which added some customers to the entity list, is fully incorporated into the FY25 guidance. Ghazi added that growth confidence is driven by accelerating roadmaps from customers in the AI infrastructure space, who are rapidly adopting advanced solutions across the portfolio, including multi-die design tools, hardware-assisted verification, and AI-driven EDA software.

Harlan Sur asked about the potential impact of a major customer's (Intel) efficiency initiatives on Synopsys's business and sought an update on customer support for the Ansys acquisition, given rising chip-package and system-level design challenges.

Answer

CEO Sassine Ghazi explained that the customer's transition to external EDA and IP has been a long-term journey and does not foresee a significant near-term impact due to long-term agreements. He affirmed that customer support for the Ansys deal is strong and growing from both silicon and systems companies, as it directly addresses the integration challenges of electronics and physics from the chip to the system level.

Harlan Sur asked for an update on Marvell's sub-3-nanometer design win pipeline, including XPU and XPU-attach programs, and the timeline for these programs to ramp into production, especially in light of a lead AI customer's 3nm and 2nm XPU announcements.

Answer

Chairman and CEO Matt Murphy stated that the product transition with the lead XPU customer is fully incorporated into the company's numbers, with strong backlog. He highlighted the excitement around 2-nanometer programs, noting an increasing design funnel and compelling power benefits. Strong product ramps for 2-nanometer products are anticipated into fiscal 2028, with the internal engineering team executing exceptionally well across core IP, nodes, and packaging.

Harlan Sur inquired about Marvell's involvement with their lead AI customer's next-generation 3-nanometer and 2-nanometer XPU products, specifically asking for an update on the sub-3-nanometer design win pipeline, including XPU and XPU-attach programs, and their production timelines.

Answer

Matt Murphy (Chairman and CEO) stated that the product transition for their lead XPU customer to the next generation is incorporated into the current numbers, with strong backlog and visibility. He noted that there are multiple 2-nanometer programs in progress, with design funnel increasing due to compelling power benefits. He expects strong product ramps, especially into fiscal 2028, for some 2-nanometer products.

Harlan Sur from JPMorgan Chase & Co. pressed for an update on Marvell's 3-nanometer XPU follow-on program with its lead customer, citing 'deafening' competitive noise from an Asian rival, and also asked about the status of a third 3nm XPU customer win.

Answer

Chairman & CEO Matt Murphy acknowledged the noise but stated that due to the sensitivity of the topic, he would not comment on individual customer sockets. He redirected the focus to Marvell's broader success, including ramping current programs, expanding the design win pipeline to '18 plus' sockets, and executing towards its long-term goal of capturing 20% market share.

Harlan Sur from JP Morgan Chase & Co inquired about the ramp of Marvell's 1.6T optical solutions, asking if shipments have begun ahead of next-gen AI platforms and if its 3-nanometer DSP is being mapped into these new systems.

Answer

Chairman and CEO Matt Murphy confirmed that Marvell has commenced shipments of its 1.6T solution on the 5-nanometer node. He noted that while 800G remains dominant this year, there is strong demand for the 3-nanometer 1.6T product due to its power savings, with a more significant ramp expected next year. He affirmed Marvell is well-positioned for the 1.6T transition.

Harlan Sur of JPMorgan Chase & Co. sought details on the follow-on AI XPU program, asking if it was for training, its ramp timing, and process node. He also asked for an explanation of the 20% sequential increase in inventory versus a more modest 3% revenue growth guide.

Answer

Matthew Murphy, Chairman and CEO, confirmed the follow-on program is a high-volume continuation that will use advanced process nodes but declined to specify timing due to customer confidentiality. Willem Meintjes, CFO, explained that the inventory increase was a strategic build to support strong anticipated growth in custom programs and optics throughout the year, noting that inventory days remained flat quarter-over-quarter.

Harlan Sur asked if it's fair to assume Marvell is the vendor for a key cloud customer's next-generation 3-nanometer custom training ASIC, given Marvell's strong execution and recent multi-year agreement.

Answer

CEO Matt Murphy did not directly confirm the specific program but emphasized the significance of the new five-year, multi-generational agreement with AWS. He reiterated Marvell's goal to capture over 20% of the $40 billion custom silicon TAM. Murphy highlighted that the broad agreement, which covers custom AI products and networking, provides even greater confidence in achieving their long-term revenue targets in this space.

Harlan Sur asked if the recovery in data center storage (nearline HDD, PCIe Gen5 SSDs) is contributing to second-half strength, and whether Marvell is winning custom ASIC opportunities for the complex base logic die in next-generation HBM.

Answer

CEO Matt Murphy confirmed the data center storage business has been recovering steadily for six quarters and is on a path back to its normalized run rate of around $200 million per quarter. Regarding HBM, he affirmed that HBM memory interconnect is a key, complex IP that Marvell is developing and offers as part of its custom AI accelerator platform.

Harlan Sur from JPMorgan Chase & Co. asked about the expected shipment profile for early next year, specifically if GlobalFoundries anticipates a normal seasonal decline of 10-12% sequentially in Q1 2026, considering potential normalization of non-wafer revenues. He also sought an update on GlobalFoundries' China for China strategy, including the partnership with Zen Semiconductor, the timeline for transferring and ramping production, and the business model.

Answer

Interim CFO Sam Franklin noted that GlobalFoundries' diversified portfolio means no single cyclical trend determines revenue. While it's too early to guide Q1 2026, he acknowledged typical seasonal ranges. He explained that non-wafer revenues are a healthy tailwind driven by customer dialogue, new product timing, and engineering services, playing into GlobalFoundries' expanded service offerings. CEO Tim Breen reiterated the China for China strategy focuses on making specific technologies (microcontrollers, automotive imaging, power) available locally in Guangzhou, with strong customer traction from both multinational and local Chinese players seeking diversification. He sees China as a good upside, with automotive technologies undergoing product development and qualification cycles, while GlobalFoundries supplies from its global footprint in the interim.

Harlan Sur asked about the shipment profile for early next year, specifically Q1 2026, considering typical seasonal revenue declines and the potential normalization of non-wafer revenues. He also requested an update on GlobalFoundries' China for China strategy, including the partnership with Zen Semiconductor, the timeline for technology transfer, and the business model.

Answer

Interim CFO Sam Franklin noted the business's increasing diversification, which mitigates reliance on single cyclical trends, and acknowledged typical seasonal ranges for Q1 2026. He highlighted non-wafer revenues as a healthy tailwind. CEO Tim Breen reiterated the China for China strategy involves making specific technologies available locally in Guangzhou, noting strong customer traction from both multinationals and local Chinese players seeking diversification. He sees China as a good upside, with automotive technologies requiring development and qualification cycles.

Harlan Sur of J.P. Morgan asked about fab utilization rates in Q2 and the outlook for the second half of the year. He also followed up on the gross margin trajectory, questioning how the company views its exit rate for the year given ASP adjustments and a previously stated 30% target.

Answer

CFO John Hollister reported that utilization rose to the low 80s in Q2 and is expected to reach the low-to-mid 80s in the second half. He outlined drivers for Q4 gross margin expansion, including richer product mix and improved utilization. CEO Tim Breen clarified that ASP declines are deliberate, strategic moves confined to specific dual-sourced mobile customers and that the overall pricing environment remains stable.

Harlan Sur of JPMorgan Chase & Co. sought to clarify the direct impact of the impairment charge on the Q4 depreciation expense and gross margin, and asked for an update on the qualification and production timeline for the 22nm and 28nm technologies being transferred to the Malta fab.

Answer

CFO John Hollister confirmed the impairment charge had an in-quarter effect on depreciation in Q4 and that the benefit will continue to build through 2025. He also stated that the technology transfers to Malta are progressing well, with the company working through final qualifications and engaging with early customers on the new platforms.

Harlan Sur of JPMorgan Chase & Co. asked about the outlook for the silicon photonics business, questioning if it could become a meaningful contributor to the Communications Infrastructure & Data Center (CID) segment in the next year. He also inquired about the new partnership with NXP, asking if it included an LTA and why some strategic deals include them while others do not.

Answer

CBO Niels Anderskouv stated that GF is engaged with three major optical transceiver players and believes silicon photonics and SiGe will be meaningful future revenue generators as data speed and power requirements evolve. CEO Thomas Caulfield added that GF is also focused on power delivery solutions for the data center. Regarding the NXP deal, executives explained that LTAs are typically used for end markets with long product life cycles, like automotive, where customers need certainty on volume and price. Other deals use more dynamic terms. Caulfield noted GF still has $17 billion in revenue under LTAs.

Harlan Sur inquired about the impact of UALink 1.0 and new Ethernet-based scale-up architectures on Astera Labs' design pipeline and engagements for Scorpio X and UALink, considering long GPU/XPU design cycles.

Answer

Sanjay Gajendra, President, Co-Founder, and COO, confirmed growing market opportunity for Scorpio X, estimating the scale-up market in tens of billions. He noted that design wins often span multiple generations, with PCIe-based scale-up solutions ramping and engagements with over 10 AI platform providers. Mr. Gajendra highlighted UALink as a meaningfully additive opportunity, expecting revenue in 2027, and expressed confidence in a multi-billion dollar scale-up business. Regarding Scorpio X as an anchor product, Mr. Gajendra stated that early engagement with system designers for scale-up solutions naturally leads to discussions about other Astera Labs products like retimers and AEC optical cable modules, potentially increasing dollar content per XPU to thousands.

Harlan Sur followed up on Scorpio X as an anchor product, inquiring if the strategy of content pull-in for signal conditioning, AEC, or optical cable modules is playing out, and asked about the average content uplift per XPU.

Answer

Sanjay Gajendra, President, Co-Founder, and COO, confirmed that being in the socket for scale-up solutions naturally opens conversations for other products like retimers, gearbox devices, and controllers. He indicated that future design wins could scale to multiple thousands of dollars per accelerator and rack level, affirming that a strong presence in the scale-up network allows for pulling in several other products and technologies.

Harlan Sur asked about the key differentiators for Astera Labs' Scorpio X series switches, the role of the Cosmos software suite as an anchor, and the market reception and development timeline for the UALink standard.

Answer

CEO Jitendra Mohan highlighted that customer proximity, execution track record, and the customizable Cosmos software suite are key differentiators, confirming Scorpio acts as an anchor product. President & COO Sanjay Gajendra noted tremendous interest in UALink due to its technical advantages and open ecosystem, with a broader deployment expected in 2027 and beyond.

Harlan Sur inquired about the overall AI and data center spending environment, including concerns about CapEx momentum, potential AI compute digestion, and the impact of tariffs and China restrictions on the business outlook.

Answer

CFO Mike Tate stated that tariffs have not had a material impact but are being monitored, while restrictions on GPU sales to China created a headwind that was factored into guidance. COO Sanjay Gajendra emphasized that Astera Labs' revenue diversification across custom ASICs and merchant GPUs, as well as scale-up and scale-out applications, provides multiple avenues for growth and stability through 2025 and beyond.

Harlan Sur inquired about the revenue mix between merchant GPU and internal ASIC-based AI systems for 2024 and 2025, and also asked for the rationale behind the significant sequential increase in inventory levels in Q4.

Answer

Chief Financial Officer Michael Tate explained that internal AI accelerator programs drove significant growth starting in Q3 2024. He projects this trend will dominate H1 2025, with merchant GPU-based systems, featuring higher content with Scorpio switches, accelerating in H2 2025. Regarding inventory, Tate stated that Q3 saw a significant drawdown due to strong demand, and the Q4 increase represents a build-back to normalized levels to support future growth and customer upside, given Astera's sole-source position on most programs.

Harlan Sur of JPMorgan Chase & Co. asked about Astera Labs' visibility for continued sequential growth, given the strength in its core PCIe Gen 5 business and the ramp of new products like PCIe Gen 6 retimers and Scorpio switches. He also questioned how much the COSMOS software stack differentiates the new Scorpio portfolio.

Answer

President and COO Sanjay Gajendra confirmed strong visibility due to a robust backlog and broad design wins, highlighting diversifying revenue from Taurus, Aries, and upcoming LEO production. Executive Jitendra Mohan added that the COSMOS software is a significant differentiator for Scorpio, as it was purpose-built for AI workloads and provides a holistic, customizable monitoring solution that leverages data from across Astera's product families.

Harlan Sur asked about ON Semiconductor's mass market strategy, specifically inquiring about the size of this segment as a percentage of total distribution revenues and its performance in the September quarter relative to the overall DISCI business. He also sought clarification on the vertical GaN (VGAN) technology, asking if the Syracuse Fab Facility was part of the NextGen acquisition and what ON Semiconductor has done to commercialize this differentiated technology.

Answer

Hassane El-Khoury, President, CEO, and Director, ON Semiconductor, explained that approximately 58% of their business goes through distribution, with about half being demand creation. He estimated the mass market, comprising small, emerging customers, to be roughly 25% of total distribution revenue. Mr. El-Khoury confirmed that the Syracuse fab came with the NextGen technology acquisition, and ON Semiconductor's manufacturing expertise and ability to scale new technologies quickly, similar to their success with GTET silicon carbide, have been crucial in commercializing VGAN.

Harlan Sur asked about the size of ON's mass market strategy (small to medium-sized customers) as a percentage of total distribution revenues and its performance in the September quarter. He also questioned the specifics of the vertical GaN (vGaN) technology, including the acquisition of NextGen/Hewitt Syracuse Fab, and ON's role in its commercialization.

Answer

Hassane El-Khoury, President and CEO, explained that approximately 58% of ON's business goes through distribution, with about half being demand creation, and the mass market representing a subset of that, roughly 25% of total distribution revenue. He confirmed that the Syracuse fab came with the vGaN technology, and ON's manufacturing capability and scaling expertise, proven with the GTET acquisition, are key to commercializing this differentiated technology.

Harlan Sur noted the divergence between stronger direct shipments and weaker distribution sales, asking if this implies lower inventory at direct customers. He also inquired about the level of 'turns business' assumed in the Q2 guidance.

Answer

CEO Hassane El-Khoury downplayed the direct vs. distribution divergence, noting that much of the distribution business serves direct customers and the trend reflects subsiding inventory drains in some markets. CFO Thad Trent added that while order patterns are more stable, the company still requires a similar level of turns business in Q2 as it did in Q1, as customers continue to book orders closer to lead times.

Harlan Sur inquired about the third-generation upgrade cycle for Cadence's emulation and prototyping platforms, noting record Q3 revenues and comparing it to the previous generation's three years of record growth, asking about the demand curve and anticipated momentum for hardware in 2026.

Answer

President and CEO Anirudh Devgan confirmed phenomenal hardware performance, expecting the trend to continue with 2026 potentially stronger than 2025, driven by increasing design complexity and Cadence's unique ability to build its own systems. SVP and CFO John Wall added that demand remains very strong across AI, HPC, and auto markets, with scaling manufacturing capacity and healthy gross margins, and inventory is being built to meet pipeline demand.

Harlan Sur inquired about the demand curve and anticipated momentum for Cadence's third-generation emulation and prototyping platforms (Palladium, Protium) into 2026, given their record Q3 revenues and the ongoing drivers of design complexity and new customer adoption.

Answer

President and CEO Anirudh Devgan confirmed that hardware is performing exceptionally well, with 2026 expected to be stronger than 2025, though guidance remains prudent due to shorter visibility. He highlighted Cadence's unique position as the only company designing its own chips for these systems, supporting 1 trillion transistor designs. SVP and CFO John Wall added that demand remains very strong across AI, HPC, and automotive markets, with scaling manufacturing capacity and healthy growth margins.

Harlan Sur from J.P. Morgan questioned how the industry's shift to 3D-IC and advanced packaging is contributing to Cadence's bookings and revenue strength.

Answer

President & CEO Anirudh Devgan confirmed this is a major growth driver, positioning Cadence's Integrity 3D-IC and Allegro platforms as critical for these complex designs. He highlighted deep collaborations with TSMC and other foundries. While not broken out, he described advanced packaging as a significant part of the System Design & Analysis business that also pulls through revenue for core digital and analysis tools.

Harlan Sur asked about the strong year-over-year growth in Cadence's China business and whether the focus on domestic chip design programs could be a tailwind, potentially leading to a more optimistic outlook than the company's prior 'flattish' view for the year.

Answer

CEO Anirudh Devgan acknowledged the strong Q1 performance in China, driven by AI and physical AI systems like autos and robotics. However, both he and CFO John Wall confirmed that despite the strong start, the company is maintaining its prudent guidance assumption that China revenue will be flat for the full year 2025.

Harlan Sur from JPMorgan Chase & Co. asked why the company's three-year revenue CAGR was guided to drop below 15% despite a strong macro environment, and which areas besides China were subject to a cautious outlook.

Answer

CFO John Wall noted that while the guide implies low-teen growth ex-China, the company typically starts the year with a prudent forecast. CEO Anirudh Devgan shifted the focus to overall financial strength, highlighting that the 2025 outlook implies a "Rule of 40" score over 55% for the first time, reflecting a commitment to both strong revenue growth and significant profitability improvement.

Harlan Sur asked if record-high inventory levels indicated that demand for new hardware systems was outpacing supply, potentially constraining Q4 shipments. He also requested a qualitative view on the China business for 2025 based on design activity.

Answer

CFO John Wall clarified that the inventory increase was due to a strategic multi-year component purchase, not a current supply constraint. CEO Anirudh Devgan noted that design activity in China is strong, especially in automotive. Wall added that historically, Cadence has never had two consecutive down years in China revenue and that the region has been recovering sequentially in 2024.

Harlan Sur asked if overall 2026 WFE growth might be constrained by the availability of clean room space across DRAM, advanced foundry, and advanced packaging, similar to the situation in NAND. He also inquired about the growth rate of core spares, services, and upgrades within CSPG (Customer Support Business Group), excluding Reliant, and the relative operating margins of CSPG compared to the corporate average.

Answer

President and CEO Tim Archer suggested that physical infrastructure (clean room space) could be a limiting factor for acceleration, as equipment lead times are generally within facility build times. EVP and CFO Doug Bettinger clarified that within CSPG, spares, services, and upgrades are growing, while Reliant (mature node spending) is not. He confirmed that CSPG is accretive to operating margin but did not provide specific quantification.

Harlan Sur asked if overall WFE growth in calendar year 2026 might be limited by the availability of clean room space across NAND, DRAM, advanced foundry, and advanced packaging. He also requested an update on CSPG dynamics, including the growth rate of core spares, services, and upgrades, and how CSPG operating margins compare to the corporate average.

Answer

Tim Archer, President and CEO, suggested that customers would be better positioned to discuss physical infrastructure plans, noting that equipment supply chain lead times are generally within facility build times, making Lam unlikely to be the bottleneck. Doug Bettinger, Executive Vice President and CFO, confirmed that CSPG is on track for growth, driven by spares, services, and upgrades (excluding Reliant), and that CSPG remains accretive to operating margin, though he did not quantify it.

Harlan Sur of JPMorgan Chase & Co. asked about the drivers of the strong China business, potential equipment pull-ins, and whether the advanced packaging and HBM business is performing better than initial expectations for the year.

Answer

EVP and CFO Doug Bittinger confirmed that the stronger China spending is from a handful of customers but stated it's nearly impossible to determine if it's a pull-in. He also noted that the advanced packaging business is performing slightly stronger than expected, with HBM being a key driver. CEO Timothy Archer added that the transition from HBM3E to HBM4E requires approximately 30% more wafers for the same bit output, benefiting Lam.

Harlan Sur inquired about the drivers of the strong China business, whether it represented a pull-in ahead of tariffs, and if the advanced packaging business was outperforming expectations, particularly with the migration to HBM4.

Answer

EVP and CFO Douglas Bittinger noted the stronger China spending came from a handful of customers and that advanced packaging is performing slightly better than expected. President and CEO Timothy Archer added that the HBM3e to HBM4e transition is a key driver, requiring approximately 30% more wafers for equivalent bit output, which benefits Lam's front-end and packaging businesses.

Harlan Sur asked for a final number on 2024 advanced packaging revenue and its growth outlook, and questioned the sustainability of gross margin strength driven by the new Malaysia facility.

Answer

EVP & CFO Douglas Bettinger confirmed advanced packaging revenue exceeded $1 billion in 2024 and will grow again in 2025. On gross margins, he acknowledged the 100+ basis point benefit from the Asia strategy but warned of persistent headwinds from customer mix. CEO Timothy Archer positioned the Malaysia investment as a successful long-term strategy for a sustainable step-up in performance.

Harlan Sur asked for an update on NAND market trends, seeking to confirm if higher utilization was still driving spares growth and to gauge confidence in the 2025 NAND WFE outlook. He also inquired about the growth trajectory for HBM-related revenues.

Answer

CEO Timothy Archer explained that the NAND recovery is being driven by technology upgrades to produce higher-performance bits for AI-related applications, a trend that strongly favors Lam's product portfolio. He also confirmed that the HBM and advanced packaging business has strengthened significantly, driven by AI demand, with the SABRE 3D platform showing strong momentum.

Harlan Sur from J.P. Morgan questioned why the RTP fab transfer resulted in a margin headwind instead of an expected step-up from eliminating the previous owner's markup. He also requested an update on the traction and size of MACOM's foundry services business.

Answer

President and CEO Stephen Daly acknowledged the goal was a neutral or positive transfer but stated the company is about 60 basis points short, without commenting on prior cost structures. He emphasized that MACOM's overall business is complex with multiple fabs and a fabless component. Regarding foundry services, Daly confirmed it's part of the business model across all fabs to support customers, but the company does not break out foundry revenue for competitive reasons.

Harlan Sur asked about AMD's strategy for its upcoming MI400 rack-scale AI solutions, focusing on how the company plans to simplify deployment and the nature of early customer feedback. He also inquired about the key drivers of AMD's sustained momentum in the enterprise on-prem EPYC server market.

Answer

CEO Lisa Su stated that the acquisition of ZT Systems was a key move to address rack-scale architecture challenges and that AMD is actively co-designing MI400 solutions with customers, receiving high enthusiasm. For EPYC's enterprise success, Su credited the strength and breadth of the 5th Gen Turin product portfolio and, most importantly, significant investments in go-to-market capabilities, including direct engagement with end-users to replicate successful deployments across industries.

Harlan Sur asked if the server CPU business grew double digits sequentially in Q4, including enterprise, and about share prospects in 2025. He also inquired about customer feedback on AMD's AI networking architecture and any upcoming innovations.

Answer

CEO Lisa Su confirmed the server business grew double digits sequentially in Q4 across both cloud and enterprise, and she sees a strong 2025 for server CPUs due to a competitive portfolio and go-to-market investments. On networking, Su emphasized its importance, noting increasing proof points with each product generation, close work with Ethernet partners, and the development of an in-house AI NIC via the Pensando team.

Harlan Sur asked if the recovery momentum in the enterprise server CPU business continued in Q3 and if growth is expected in Q4. He also inquired about enterprise and cloud demand trends in China.

Answer

CEO Dr. Lisa Su confirmed that positive growth momentum in enterprise EPYC adoption continued in Q3 and that another quarter of sequential growth is expected for the overall server business in Q4. She noted that enterprise remains a key growth opportunity where AMD has been underrepresented. CFO Jean Hu added that AMD is also underrepresented in the China server market, which presents another opportunity for share gains.

Harlan Sur from JPMorgan asked if the company's outlook aligns with a low-20% nearline exabyte growth profile for the year. He also inquired about the expected mix of UltraSMR drives and their gross margin profile compared to CMR drives.

Answer

CEO Irving Tan confirmed that a low-20% exabyte growth forecast is 'in the ballpark.' He stated that the UltraSMR mix can fluctuate between 40-45% in any given quarter and that while both platforms have pricing leverage, UltraSMR drives provide better ASPs and CapEx efficiency due to their higher capacity.

Harlan Sur asked for the enterprise SSD revenue mix as a percentage of total Flash revenue for the past two quarters and inquired about the key technology drivers behind the competitiveness of their new high-capacity SSDs.

Answer

CFO Wissam Jabre clarified that the enterprise SSD mix exceeded 15% in Q1 and is expected to be between 15% and 20% for the full fiscal year. CEO David Goeckeler attributed the product competitiveness to a combination of getting the controller technology right, leveraging their strong BiCS NAND roadmap, and maintaining focus on building a stronger portfolio throughout the downturn.