Joe Quattrocchi

Joe Quattrocchi asked about Arm's role and the CPU's importance in AI and cloud data centers, particularly with the proliferation of AI agents.

Answer

Rene Haas, Arm's Chief Executive Officer, explained that the shift from training to inference and the rise of agentic AI workloads are well-suited for power-efficient, always-on CPUs with fast latency. He noted an increased deployment of CPUs and higher core counts in the latest chips from hyperscalers and NVIDIA. Jason Child, Arm's Chief Financial Officer, also addressed a follow-up on royalty revenue growth and potential demand destruction in consumer electronics due to memory constraints, stating that the impact on Arm's royalties would be minimal (1-2% of total) as high-end v9 and CSS royalties are protected, and Cloud AI growth is compensating for these risks.

Joe Quattrocchi asked about Arm's and the CPU's evolving role in AI and cloud data centers, particularly with the rise of AI agents.

Answer

CEO Rene Haas explained that the shift from training to inference and the emergence of agentic AI workloads favor power-efficient, always-on CPUs with fast latency, leading to increased CPU deployment and core counts in hyperscaler chips. CFO Jason Child addressed concerns about royalty revenue growth and potential demand destruction in consumer electronics due to memory constraints, noting that Arm's focus on high-end (CSS, v9) and strong cloud AI growth would largely offset any negative impact on total royalties.

Joe Quattrocchi asked for more details on how recent acquisitions are accelerating interest in NXP's software-defined vehicle (SDV) portfolio and what specific aspects customers find exciting. He also inquired about the geographical demand trends observed in the automotive segment for Q4 and what is embedded in the Q1 outlook.

Answer

Rafael Sotomayor, President and CEO, explained that TTTech Auto has significantly accelerated NXP's SDV story, particularly in delivering an S32 architecture and systems with MotionWise middleware by year-end. He also highlighted strong customer interest in physical AI, driven by the combination of the Kinara NPU and i.MX family, which is expected to result in strong design wins in 2026. For automotive, he reiterated that the inventory correction is largely behind, with Q4 returning to year-on-year growth and Q1 guided for YoY growth (despite only one month of sensor business). He noted no significant regional differences, with the thesis of SDVs and advanced ADAS driving multi-year content growth remaining unchanged.

Joe Quattrocchi asked for details on the pricing environment, specifically which end markets or products are experiencing price inflation, and sought clarification on the expected regional seasonality for Americas, EMEA, and Asia in the March quarter guidance.

Answer

CEO Phil Gallagher stated that overall ASPs have held up, but lead times trending higher suggest anticipated price increases in memory, storage, controllers, and certain IP&E components, largely driven by data center and industrial demand. CFO Ken Jacobson added that these increases are announced but had minimal impact on Q2 results. Regarding seasonality, Gallagher noted that the West (Americas and EMEA) is expected to show typical sequential growth in March, unlike the prior year, which is positive for higher-margin regions. Asia's decline due to Lunar New Year is projected to be less significant than in the past, leading to a favorable regional mix shift for operating margin expansion.

Joe Quattrocchi inquired about the pricing environment, asking which end markets or products are experiencing price inflation, and sought clarification on the revenue guidance for the March quarter, particularly for Americas and EMEA relative to seasonality.

Answer

Phil Gallagher, CEO of Avnet, noted that overall ASPs have held up, but increasing lead times are leading to anticipated price inflation in memory, storage, controllers, and certain IPD components, driven by data center/AI and industrial demand. Ken Jacobson, CFO of Avnet, clarified that announced increases had minimal impact on Q2 results. For guidance, Gallagher explained that the West (Americas and EMEA) is expected to see a typical seasonal bounce back in March, unlike last year, while Asia's decline due to Lunar New Year will be less significant than in the past. Jacobson added that the West's high single-digit growth is expected to drive operating margin expansion.

Joe Quattrocchi asked for ON Semiconductor's expectations regarding silicon carbide revenue growth for the current year. He also inquired about the current rate of short lead time orders, how it compares to the prior quarter, and if there's any increased visibility in demand.

Answer

Hassane El-Khoury, President, CEO, and Director, ON Semiconductor, stated that silicon carbide performance is exactly as expected, with the company continuing to gain share and maintain its position in China through new product ramps, including with NIO and a leading Tier 1 supplier. Thad Trent, CFO, ON Semiconductor, noted that lead times have slightly extended to around 20 weeks, with no significant change in short lead time orders, but improved order patterns are contributing to confidence in market stabilization.

Joe Quattrocchi asked for expectations on silicon carbide revenue growth for the current year and inquired about the rate of short lead time orders, comparing it to the prior quarter and assessing any increased visibility.

Answer

Hassane El-Khoury, President and CEO, stated that silicon carbide is performing exactly as expected, with continued market share gains and unchanged position in China due to new product ramps. Thad Trent, CFO, noted that lead times pushed out slightly to around 20 weeks from mid-teen weeks, with no significant change in short lead time orders, but improving order patterns are contributing to confidence in market stabilization.