Karl Ackerman

Karl Ackerman asked about the demand prospects for Arista's front-end high-speed switching products that address agentic AI, considering the expected uptake in conventional server CPUs and Arista's upwardly revised 2026 outlook.

Answer

Jayshree Ullal, Arista's Chairperson and CEO, confirmed that the AI networking revenue, projected to be over $3 billion in 2026, includes front-end components tied to back-end GPU clusters for all-Ethernet, all-AI systems. She anticipates that the rise of agentic AI applications will increase demand for various XPUs in both front and back ends, extending beyond large cloud providers to enterprises for applications like genomic sequencing and software automation.

Karl Ackerman asked about the demand prospects for front-end high-speed switching products addressing agentic AI, given the revised outlook and the role of agentic AI in supporting conventional server CPUs.

Answer

CEO Jayshree Ullal stated that Arista's AI revenue, projected to be over $3 billion in 2026, now definitely includes the front-end as it's tied to back-end GPU clusters in all-Ethernet, all-AI systems for agentic AI applications. She noted that while these applications are currently with large cloud/AI/specialty providers, they are expected to feed into the enterprise, increasing demand for various XPUs in both front and back ends.

Karl Ackerman asked about Arista Networks' market opportunity between disaggregated scheduled fabrics (DSF) and non-scheduled fabrics, and whether other data center operators are seeking to adopt the DSF architecture due to its congestion-free advantages.

Answer

Jayshree Ullal, Arista Networks' CEO and Chairperson, stated that Arista is not 'religious' about either architecture, having co-developed DSF with a leading cloud titan and selling non-scheduled fabrics for a long time, with both performing well. Ken Duda, Arista Networks' CTO and SVP of Software Engineering, emphasized Arista's 15 years of experience with both architectures, offering customers choice and a consistent operating model.

Karl Ackerman inquired about Arista's market opportunity across disaggregated scheduled fabrics (DSF) and non-scheduled fabrics, asking if other data center operators are adopting the DSF architecture due to its congestion-free advantages.

Answer

Jayshree Ullal, CEO and Chairperson, clarified that Arista supports both DSF (co-developed with Meta) and non-scheduled fabrics, with both performing well. Ken Duda, CTO and SVP of Software Engineering, emphasized that Arista offers customers a choice between these architectures, providing options for highest value (congestion-free) or lower cost, all running on the same software.

Karl Ackerman of BNP Paribas asked if Arista expects all four of its top cloud providers to adopt its switches for back-end AI deployments by 2026 and inquired about the biggest opportunities with neo-cloud providers.

Answer

Chairperson & CEO Jayshree Ullal gave a direct "yes," confirming the expectation that all four top cloud titans will have deployed Arista for back-end networking by 2026. She added that for neo-clouds, the opportunity is almost always a combination of both back-end and front-end networking.

Karl Ackerman inquired about the deployment cadence of 800-gig switches by hyperscalers and whether this trend is related to the recent growth in Arista's deferred revenue.

Answer

CEO Jayshree Ullal affirmed that 2025 is 'the year of 800 gig,' following the 400-gig cycle in 2024. She confirmed that increased activity around the 800-gig Etherlink portfolio, introduced in late 2024, is a key driver for both current shipments and the growth in the deferred revenue balance.

Karl Ackerman asked for the outlook on Arista's services business for the upcoming quarter and full year, noting its strong growth and the significant increase in deferred revenue.

Answer

CFO Chantelle Breithaupt stated that Arista does not provide guidance for individual business components like services. She advised that the historical trend over the last few years is the best indicator for future performance, keeping in mind that services revenue timing can lag product sales, especially in the post-COVID environment.

Karl Ackerman asked about the adoption of 800-gig technology, specifically whether hyperscaler AI deployments are using 400-gig for trials and planning 800-gig for production, and what the 800-gig hardware mix might look like in 2025.

Answer

CEO Jayshree Ullal stated that the majority of current AI trials and pilots are being conducted on 400-gig platforms. This is because the broader 800-gig ecosystem, including NICs and standards like UEC, is still maturing. She expects to see a more balanced split between 400-gig and 800-gig deployments as 2025 progresses.

Karl Ackerman asked about the order rates and new product demand traction within Cisco's security portfolio, particularly for Secure Access, XDR, Hypershield, AI Defense, and refreshed firewalls, to gauge recovery prospects for the balance of fiscal year 2026. He also inquired about the order rates for Cisco's 51.2 terabit and 100 terabit data center switch portfolio, given that the $5 billion AI orders do not include G300 or the 100-terabit switch portfolio.

Answer

Chuck Robbins (Chairman and CEO, Cisco Systems) outlined three key points for security: the short-term revenue headwind from the Splunk cloud transition, strong adoption of new products (1,000 new customers in Q2, up 100% sequentially, totaling 4,000 since launch), and the third consecutive quarter of double-digit unit growth for refreshed firewalls. He expects the organic Cisco security portfolio to grow close to double digits exiting Q4 FY26. Regarding data center switches, he stated that Cisco is selling as much as it can build for 51.2 terabit products, with huge acceleration in 800-gig optics and Acacia portfolio, indicating strong demand. Mark Patterson (CFO, Cisco Systems) added that Cisco is making inroads and securing additional design wins with hyperscalers.

Karl Ackerman asked for an update on the order rates and new product demand traction within Cisco's security portfolio, and the outlook for recovery in the second half of fiscal year 2026. He also inquired about the order rates for Cisco's 51.2-terabit and 100-terabit data center switch portfolio, noting that the G300 is not included in the $5 billion AI orders.

Answer

Chairman and CEO Chuck Robbins outlined three key points for security: the Splunk transition's short-term revenue headwind, strong adoption of new products (Secure Access, XDR, AI Defense, Hypershield) with 1,000 new customers in Q2 (up 100% sequentially) and 4,000 total since launch, and the third consecutive quarter of double-digit unit growth for refresh firewalls. He expects the organic Cisco security portfolio to grow close to double digits exiting Q4 FY26. For the 51.2-terabit products, Chuck Robbins stated that demand is high, with Cisco selling as much as it can build, seeing huge acceleration in 800G optics and the Acacia portfolio, and winning additional design wins with hyperscalers in Q2.

Karl Ackerman asked how much of the incremental $1 billion in fiscal 2026 revenue is from an earlier-than-expected enterprise campus refresh versus AI growth. He also inquired if Cisco has secured enough capacity to fulfill a doubling of AI orders from Hyperscale customers this year.

Answer

Chuck Robbins, Chairman and CEO, stated that the incremental $1 billion in the FY26 guide increase is a combination of Hyperscale growth and the broader business (which saw 9% order growth in Q1), without an exact breakdown. Mark Patterson, CFO, confirmed that inventory plus advanced purchase commitments are up almost $1 billion in the last 90 days and 38% year-over-year, indicating they are actively securing supply to meet accelerating Hyperscale demand.

Karl Ackerman asked how much of the incremental $1 billion in fiscal year 2026 revenue guidance is attributable to an earlier-than-expected enterprise campus refresh versus AI growth. He also asked if Cisco has secured enough capacity to fulfill a doubling of AI orders from Hyperscale customers this year.

Answer

Chairman and CEO Chuck Robbins stated that the incremental $1 billion in revenue guidance is a combination of Hyperscale AI order growth and the broader business, including campus refresh, without providing an exact split. CFO Mark Patterson confirmed that Cisco is making advanced purchase commitments, with inventory plus advanced purchase commitments up almost $1 billion in Q1 and 38% year-over-year, to secure supply and meet accelerating Hyperscale demand.

Karl Ackerman of BNP Paribas S.A. asked for a ranking of business segments by conviction for hitting the FY2026 outlook and questioned if Silicon One could comprise half of Cisco's Switch ASICs within three years.

Answer

CEO Chuck Robbins ranked his conviction as: 1) Service Provider/Cloud, 2) Enterprise, and 3) Public Sector, while noting a forecasted return to growth in Federal. On Silicon One, he stated the goal is to drive adoption as fast as possible and agreed the three-year assumption for it to reach half of switch ASICs is 'not too far off'.

Karl Ackerman from BNP Paribas asked for a quantification of AI orders from enterprise customers and inquired about the timeline for Silicon One to offer co-packaged optics (CPO) solutions.

Answer

CEO Chuck Robbins estimated enterprise AI orders are accelerating and are in the 'hundreds of millions' of dollars, noting many joint NVIDIA solutions are still pending rollout. Regarding CPO, he stated Cisco has already demonstrated the technology and will be ready to deliver it as soon as customer demand for its power and speed benefits materializes.

Karl Ackerman of BNP Paribas asked for a quantification of enterprise AI orders incremental to the cloud target and inquired about the timeline for Silicon One to offer co-packaged optics (CPO) solutions.

Answer

CEO Chuck Robbins estimated enterprise AI orders are accelerating and are in the 'hundreds of millions' of dollars, noting that solutions from the NVIDIA partnership are still rolling out. Regarding CPO, he stated that Cisco demonstrated the technology in 2023 and will be ready to deliver it as soon as customer demand, driven by power and speed requirements, makes it viable.

Karl Ackerman of BNP Paribas questioned the implied OpEx decline in the Q2 outlook, asking where Cisco plans to accelerate investment for future growth versus letting savings flow to profitability. He also asked if the triple-digit hyperscaler order growth was concentrated in top-of-rack switches or driven by a single customer.

Answer

CFO Scott Herren clarified that the year-over-year OpEx growth is primarily driven by the addition of Splunk, and that savings from the recent restructuring are being reinvested into high-growth areas like AI and security. CEO Chuck Robbins confirmed the strong hyperscaler growth was not from a single customer but was balanced across four of the six largest players, and the AI infrastructure business was also balanced across them.

Karl Ackerman asked if the customer opportunity for integrating Astera Labs' optical technology is larger for its switch portfolio than for signal conditioning and SCM products, given the OpEx increase and aiXscale acquisition. He also inquired about the nature of Scorpio P design wins (custom compute vs. GPU racks) with the two new hyperscalers and the overall opportunity for Scorpio P extending into 2026.

Answer

Jitendra Mohan, CEO and Co-founder, stated that the optical opportunity for scale-up is very large, potentially larger than signal conditioning, with initial deployments likely in 2028. He added that OpEx increases also service fabric-side opportunities from existing engagements, with the Israel team focusing on AI fabrics for near-term, mid-term, and long-term growth. For Scorpio P, he confirmed it's primarily for scale-out use cases, with two new hyperscalers adopting it for both merchant GPU-based and custom accelerator platforms, expected to add meaningful revenue in 2027, and continues to attract broad customer interest as the only high-volume PCIe Gen 6 switch.

Karl Ackerman asked if the customer opportunity for integrating optical technology is larger for Astera Labs' switch portfolio than for its signal conditioning and SCM products, given the investments in optical. He also asked about the nature of Scorpio P design wins with new hyperscalers (custom compute vs. GPU racks) and the opportunity for Scorpio P extending into 2026.

Answer

Jitendra Mohan, CEO and Co-founder, stated that the optical opportunity for scale-up is very large, potentially larger than signal conditioning, with initial deployments expected around 2028. He clarified that the OpEx increase supports fabric-side opportunities driven by customer requests for additional lane counts and features. For Scorpio P, he confirmed two new US hyperscalers adopted it for both merchant GPU and custom accelerator platforms, expecting meaningful revenue in 2027, with continued strong customer interest and design wins.

Karl Ackerman asked if the added functionality to the $55 million satellite contract implies the program's size is the same or larger than previously viewed. He also inquired about the breadth of MACOM's engagement across various satellite programs.

Answer

Stephen G. Daly, President and CEO, believes the customer is adding functionality to the large contract, which will attract new customers to the constellation, positively impacting the platform's long-term prospects. He confirmed MACOM's engagement at various levels with all major LEO constellations, covering microwave (backhaul, ground-to-satellite), satellite-to-satellite communications, optics, direct-to-device/cell circuitry, and ground stations. He reiterated the $55 million contract has potential for an additional $25 million add-on, with steady-state production expected to lead to further orders.

Karl Ackerman asked if the size of the $55 million satellite program (with a potential $25 million add-on) is expected to be the same or larger due to added functionality, and he also inquired about the breadth of MACOM's engagement across various satellite programs.

Answer

Stephen G. Daly, President and CEO, confirmed that the added functionality to the large satellite contract is viewed as positive, potentially attracting new customers to the constellation and thus benefiting long-term prospects. He stated that MACOM is engaged at various levels with all major LEO constellations, covering microwave, optics, direct-to-device, and ground station aspects. He also clarified that the $55 million contract is expected to lead to additional orders once it reaches steady-state production.

Karl Ackerman inquired whether MACOM's record backlog includes data comm products like TIAs, drivers, and PDs, asking for quantification of order visibility and capacity plans. He also asked for an update on yield enhancements and operational performance in the RF business, and if it could become margin-neutral before planned capacity additions.

Answer

President and CEO Steve Daly stated that while backlog isn't broken out by product line, data center backlog is growing nicely, and defense customers typically have longer lead times. CFO Jack Kober addressed gross margin improvements, expecting sequential quarterly increases of 25-50 basis points, attributing it to a global effort across all MACOM fabs, including the RTP fab, rather than focusing on a single business area.

Karl Ackerman asked if MACOM's record backlog includes data comm products like TIAs, drivers, and PDs, and sought to understand the level of order visibility with customers. He also inquired about the timing of yield enhancements and operational performance in the RF business, and its potential impact on margin neutrality.

Answer

Steve Daly, President and CEO, MACOM, stated that backlog is not broken out by product line, but data center backlog is growing well. Jack Kober, CFO, MACOM, indicated expected sequential gross margin improvements of 25-50 basis points quarterly, driven by global enhancements, cost reductions, and yield improvements across all fabs, including RTP. Mr. Daly added that specific fab gross margins are not disclosed due to complexity and competitive reasons.

Karl Ackerman from BNP Paribas questioned why the Telecom segment is guided flat to slightly down despite ongoing strength in Data Center Interconnect (DCI). He also asked for an updated timeline on when the previously announced SATCOM design wins are expected to ramp into production revenue.

Answer

President and CEO Stephen Daly explained that the strong DCI business is performing well, and the slight quarter-over-quarter change in the overall Telecom segment is related to backlog management and timing, emphasizing the strong year-over-year growth. For SATCOM, Daly reiterated that the company is in the engineering model phase and expects production could start as early as the end of the calendar year, depending on customer reviews.

Karl Ackerman questioned the timing and status of a major $55 million SATCOM program and its potential expansion, and also asked about MACOM's exposure to the growing European defense market.

Answer

President and CEO Stephen Daly stated the large SATCOM program is on track, with the R&D phase nearly complete and a production ramp expected near the end of the calendar year. Regarding European defense, Daly confirmed that direct exposure is growing, catalyzed by the acquisition of their MESC facility in France, which provides a platform to engage with European defense contractors and recently secured a significant pilot order for a large radar program.

Karl Ackerman asked about MACOM's in-house capabilities for silicon photonics and customer demand for its CW laser portfolio. He also inquired about potential government funding shifts toward satellite and any pickup in the PON business from BEAD funding.

Answer

President and CEO Stephen Daly clarified that MACOM has exited the commercial silicon photonics space and now acts as a merchant supplier of CW lasers and other components to customers developing their own solutions. On the second topic, he stated an expectation for continued government funding for satellite programs due to national security needs. He noted that while the PON business is slowly improving, he could not directly correlate it to BEAD funding initiatives.

Karl Ackerman asked about the breadth of customer adoption for Active Copper Cables (ACCs) and the opportunity for Active Electrical Cables (AECs). He also inquired about the key drivers for the Telecom segment on the path to $1 billion in annual revenue, specifically the roles of SATCOM, wireline, and wireless.

Answer

CEO Stephen Daly confirmed broad market interest in ACCs at lower data rates and clarified that MACOM categorizes AECs within its ACC bucket. For long-term Telecom growth, Daly highlighted SATCOM as having tremendous potential. He noted near-term strength is from SATCOM and US 5G deployments, while wireline (CATV, PON) is slowly recovering. He stressed that gaining market share as competitors exit and increasing engineering capacity through acquisitions like ENGIN-IC are key to overall growth.

Karl Ackerman asked about the investments Coherent is making to drive growth, whether OpEx growth could be half of sales growth, and the impact of the sales material and processing business divestiture on OpEx. He followed up on whether a broad-based industrial recovery is evident beyond Semicap.

Answer

CEO Jim Anderson stated that R&D scales to maximize opportunities, while CFO Sherri Luther emphasized SG&A efficiency towards an 8% of revenue target, with R&D investments heavily in data center and communications. Jim Anderson noted a strong pickup in Semicap orders translating to sequential revenue growth in the June quarter and H2, but it's too early to call a broad-based industrial recovery.

Karl Ackerman asked about Coherent's investments driving growth, whether OpEx growth could be half of sales growth, and how the divestiture of the sales material and processing business impacts OpEx stability. He also inquired about a broader industrial business recovery beyond the strong Semicap orders.

Answer

CEO Jim Anderson stated that R&D is scaled to maximize growth opportunities, while SG&A presents the biggest opportunity for operational leverage. CFO Sherry Luther elaborated that R&D increased 16% year-over-year, focused on data center and communications, targeting 10% of revenue. SG&A, currently 9.6% of revenue, is targeted at 8%, with ongoing efficiency drives. Mr. Anderson noted it's too early to call a broad-based industrial recovery, but confirmed a very strong pickup in Semicap orders in Q2, expected to translate into sequential revenue growth in the June quarter and the second half of the calendar year.

Karl Ackerman asked if Coherent could internally service all its EML laser needs by year-end with the new 6-inch line and whether the company can meet or exceed the datacom growth rates outlined at its Analyst Day.

Answer

CEO Jim Anderson clarified that the 6-inch indium phosphide line supports multiple products beyond EMLs, including CW lasers. He stated that for supply chain resiliency, Coherent will continue to use a mix of internal and external EML sources. He affirmed that the company's target is to grow in line with or faster than the range provided at the Investor Day and that they are actively adding capacity to achieve this goal.

Karl Ackerman asked for a quantification of the gross margin impact from the recent portfolio optimization actions. He also inquired about the demand outlook for 800G datacom transceivers through the calendar year, given investor concerns about inventory and competition.

Answer

CFO Sherri Luther explained that the benefits from portfolio optimization are more long-term and that the actions taken in Q3 did not have a significant direct impact on the quarter's P&L, though R&D spend has already been shifting towards core growth engines. CEO James Anderson stated that Coherent continues to see strong short- and long-term demand signals for datacom transceivers from customers and is focused on gaining market share, not just matching market growth.

Karl Ackerman of BNP Paribas asked if Coherent's AI transceiver opportunity is constrained by its current indium phosphide wafer capacity and also inquired about the expected trajectory of operating expenses through fiscal 2025.

Answer

CEO James Anderson stated that the company is not capacity-gated, praising the supply chain team for tripling indium phosphide output year-over-year to support strong datacom growth. CFO Sherri Luther explained that OpEx is expected to increase due to strategic R&D investments for long-term growth, while the company maintains discipline on SG&A to drive operating leverage. She directed investors to the upcoming Investor Day for a longer-term model.

Karl Ackerman asked if data center customers are reallocating procurement towards U.S.-domiciled suppliers and requested a quantification of the total addressable market (TAM) expansion from disaggregated AI clusters.

Answer

CEO James Anderson responded that supply chain resiliency, including geographic diversity and vertical integration, is an increasingly important factor for data center customers and a key differentiator for Coherent. He acknowledged the expanding TAM opportunity from new data center architectures but stated that a quantification would be provided at the company's Investor Day in May.

Karl Ackerman inquired about the specific areas driving strength in broad markets for the March quarter, the long-term growth drivers over the next 2-3 years, and whether fiscal 2025 should be considered the trough in content at Skyworks' largest customer, including the potential impact of AI on RF content gains.

Answer

CEO Philip Brace identified Wi-Fi 7 adoption, automotive connectivity (telematics, infotainment, power isolation), and data center infrastructure (jitter attenuating clocks for 800 gig/1.6 terabit and power isolation products) as the three major growth areas in broad markets. Regarding the largest customer, he stated that Skyworks defended key mobile sockets and gained content where architecture changes created opportunities, expecting blended mobile content to be roughly flat year-over-year, with strong tailwinds from upgrade cycles and AI demand.

Karl Ackerman asked about the drivers behind the consistent sequential and year-over-year growth in broad markets, specifically highlighting strength in the March quarter and identifying key areas for long-term growth over the next two to three years. He also questioned the company's 5G positioning in premium Android handsets, the outlook for content at its largest customer, and whether AI could drive higher RF content gains.

Answer

CEO and President Philip Brace attributed broad markets growth to strong Wi-Fi 7 adoption driven by bandwidth-intensive applications and edge AI, solid automotive demand for connectivity and power isolation, and improving data center infrastructure demand for timing and power management products (jitter attenuating clocks, power isolation). Regarding the largest customer, he noted defending key sockets and strong tailwinds from upgrade cycles and AI demand, expecting blended mobile content to be roughly flat year-over-year.

Carl Ackerman (question asked by Sam Feldman) asked for an update on the Android business, which was just under $100 million last quarter, driven by the Google product ramp. He sought insight into the magnitude and direction of the Android business this quarter and the factors influencing a potential $400 million run rate.

Answer

Rajvindra Gill, Vice President of Investor Relations, confirmed that Android revenue was up sequentially, primarily driven by Google, and is expected to increase again in the December quarter, also led by Google.

On behalf of Karl Ackerman, an analyst asked about the potential impact of tariffs on the business, the ability to pass on costs, and whether the company's CapEx outlook or manufacturing locations would change as a result.

Answer

CEO Philip Brace and CFO Kris Sennesael explained that the current guidance reflects their assessment of the dynamic tariff environment and they do not see a major direct impact due to their diversified global supply chain. They added that CapEx plans remain unchanged, as spending is focused on new technology development rather than production capacity.

Karl Ackerman asked if RF designs for the largest customer could be repurposed for Android wins, such as with Samsung, and also inquired about the dollar content opportunities in other consumer electronics like watches, tablets, and PCs.

Answer

CFO Kris Sennesael explained that while core technology can be leveraged across mobile and broad markets, specific products for the largest customer are proprietary. He confirmed they are selectively pursuing the high-end Android market. He also stated that approximately 15% of the largest customer's revenue comes from non-phone products, and this segment is expected to continue growing.

Karl Ackerman followed up on gross margins, asking about inventory days targets and their impact on the margin outlook. He also asked about the favorability of the M&A environment and whether Skyworks might pursue more aggressive share buybacks.

Answer

CFO Kris Sennesael stated that internal inventory has been reduced for seven consecutive quarters and can be reduced further, which, while the right long-term action, currently weighs on factory utilization and gross margins. CEO Liam K. Griffin addressed capital strategy, emphasizing that the company's strong cash flow provides excellent optionality. He affirmed that Skyworks remains disciplined and continuously evaluates the optimal mix of M&A and shareholder returns.

Karl Ackerman asked if Fabrinet remains supply-constrained on Datacom transceivers, particularly regarding leading-edge products, and inquired about the growth opportunities within the Datacom segment across hyperscale and merchant transceiver OEMs. He also questioned the split of the $80 million sequential increase in telecom revenue between satcom and core telecom/optical line system businesses and whether the satcom business opportunity could eventually mirror the high-performance computing opportunity.

Answer

Seamus Grady, Chairman and CEO, confirmed that Fabrinet has been supply-constrained in Datacom, especially for 200 Gb per lane products (800 Gb and 1.6 Tb), but noted approval for a second source for the EML laser, which should alleviate constraints. He mentioned several ongoing projects for Datacom growth with both hyperscale direct and merchant transceiver manufacturers. For telecom, Mr. Grady highlighted strong DCI module growth (400ZR and 800ZR) and growth in complete network systems, indicating solid performance across all fronts, including satellite communications.

Karl Ackerman asked if Fabrinet remains supply-constrained on Datacom transceivers, particularly regarding laser capacity, and discussed growth opportunities within the segment across hyperscale and merchant transceiver OEMs. He also inquired about the split of the $80 million sequential increase in telecom between satcom and core telecom/optical line system business, and if the satcom business opportunity could be similar to HPC over time.

Answer

Seamus Grady, Chairman and CEO, confirmed Datacom was supply-constrained on leading-edge 200G per lane products, but a second source for the EML laser was approved, which should benefit future quarters. He noted demand continues to outstrip supply and Fabrinet is working on projects with hyperscale and merchant vendors. For telecom, Mr. Grady highlighted strong DCI growth (400ZR and 800ZR modules) and growth in network systems, with satellite communications also contributing steadily.

Karl Ackerman inquired about Fabrinet's December quarter outlook for DataCom, specifically asking about embedded assumptions for 200 Gbps per lane EML laser capacity. He also asked for clarification on the 'first HPC program' and whether its considerable scaling includes other customer engagements or discussions for new HPC programs.

Answer

Seamus Grady, Chairman and CEO, stated that Fabrinet does not comment on individual components or customers but emphasized the company's strong position in the generational transition to photonics. He highlighted Fabrinet's historical growth, including a 10-year compounded annual revenue growth of 16% and earnings growth of 21%, with recent revenue growth accelerating to 22% last quarter and a projected 29% for the current quarter. Regarding HPC, Mr. Grady explained it's a new category due to its unique nature and high optimism for expansion. He noted the initial program is progressing well, with qualification builds completed and product shipping, and expressed optimism about pursuing other opportunities and potentially having multiple HPC customers in the future.

Karl Ackerman inquired about Fabrinet's December quarter outlook for DataCom, specifically asking about assumptions regarding access to 200 gig per lane EML laser capacity to support growth. He also asked if the 'first HPC program' mentioned in prepared remarks accounts for other potential customer engagements or discussions for additional HPC programs.

Answer

Chairman and CEO Seamus Grady stated that Fabrinet does not comment on individual components but highlighted the company's strong historical performance with a 16% compounded annual revenue growth and 21% compounded earnings growth over 10 years, projecting 29% growth for the current quarter. Regarding HPC, Mr. Grady explained it's a new category due to its unique nature and expressed optimism for its growth, confirming that while it's the first customer, they are pursuing other opportunities in this area.

Karl Ackerman asked for clarification on whether the guided Q1 dip in Datacom revenue includes the new High-Performance Computing (HPC) segment and inquired about the growth runway for 800G versus 1.6T transceivers with hyperscalers.

Answer

CEO Seamus Grady clarified that the HPC program is a new, separate reporting category and is not included in the Datacom figures. He explained that while their main customer is focused on 1.6T, broader Datacom opportunities exist for both 800G and 1.6T across other customers, merchant suppliers, and direct hyperscaler engagements.

Karl Ackerman inquired about the reasons for lower gross margins in the quarter, specifically asking about the impact from the Amazon warrant and the Thai baht, and sought clarification on the outlook for gross margin improvement in the next quarter.

Answer

CEO Seamus Grady explained that the Amazon warrant had a one-time impact of about $4 million, or 40 basis points, on Q3 gross margin. He noted that without this, margins would have been consistent with the prior quarter. For Q4, he anticipates some short-term margin headwinds from significant new product ramps and start-up costs, which are positioning the company for strong growth in fiscal 2026. He added that foreign exchange headwinds were already factored into guidance and are expected to be flat in Q4.

Karl Ackerman asked about the expected timing for telecom revenue to reach record levels and whether the growth in silicon photonics is driven more by internal data center transceivers or by coherent ZR for DCI applications.

Answer

CEO Seamus Grady explained that while telecom revenue is strengthening due to DCI products and new program wins, it's difficult to predict the exact timing of a new record. He confirmed the largest new system wins are not yet major contributors. Grady also clarified that the significant growth in silicon photonics is primarily driven by coherent ZR transceivers for data center interconnect (DCI) applications.

Karl Ackerman of BNP Paribas Exane inquired about the sequential growth outlook for 800-gigabit transceiver revenue and the drivers behind the strength in 400-gigabit products, questioning if it was due to coherent ZR pluggables or a new business win.

Answer

CEO Seamus Grady explained that while long-term datacom trends are positive, there has been a mix shift between 400G and 800G with their largest customer as they transition to 1.6T. He confirmed that the 400G strength is driven by both this mix shift and a new business win with an existing customer.

Karl Ackerman questioned whether the demand driven by agentic AI could enable Western Digital to surpass its long-term exabyte growth target of low 20s, considering the correlation between hard drive units and conventional server demand, alongside content uplift from new drives. He also inquired about the broader interest in HAMR technology beyond the initial customer.

Answer

CEO Irving Tan noted that exabyte growth has been in the low 20s and anticipates that the shift in AI value from model training to inference will generate significantly more data, requiring increased storage. He emphasized that HDDs are well-suited for this due to their superior economics for mass-scale inference data. Regarding HAMR, he confirmed that qualification has started with one hyperscale customer this month and will be initiated with another hyperscale customer 'relatively soon.'

Karl Ackerman questioned whether the demand driven by agentic AI could enable Western Digital to exceed its long-term exabyte growth target of low 20s, considering the correlation with conventional servers and content uplift from new drives. He also asked about interest in HAMR beyond the initial customer.

Answer

Irving Tan, CEO, acknowledged current exabyte growth in the low 20s and projected that the shift in AI value from training to inference will generate significantly more data, necessitating increased storage on HDDs due to their superior economics. He emphasized that inference will be a major driver for HDD storage. Regarding HAMR, he confirmed qualification started with one hyperscale customer this month and another will commence soon.

Karl Ackerman inquired about the adoption curve of Ultra SMR among hyperscalers and whether certain workloads limit its use. He also asked how the company balances strong customer demand visibility with its own capacity planning.

Answer

CEO Irving Tan reported that a third hyperscaler has now qualified Ultra SMR, with a fourth in process. He noted new workloads are typically deployed on the highest capacity drives. Regarding capacity, Tan explained that long-term agreements (LTAs) provide crucial visibility, and the company's focus is on increasing areal density through technology rather than adding significant physical capacity.

Karl Ackerman from BNP Paribas inquired about the primary hurdles to adding manufacturing capacity and whether it's tied to LTA visibility. He also asked for color on the growth trajectory for private cloud and SMB customers and any signs of demand pull-forward.

Answer

CEO Irving Tan responded that exabyte growth is primarily driven by technology and aerial density improvements, such as their UltraSMR technology, which allows for capacity increases without significant CapEx for new production units. He also noted growth opportunities in sovereign and private clouds and confirmed the company has not seen any demand pull-forward from customers ahead of potential tariffs.

Karl Ackerman inquired about the order rates and demand visibility for the newly launched 32-terabyte SMR and 26-terabyte CMR drives, and how these products support the sustainability of HDD business growth throughout 2025.

Answer

Incoming Western Digital CEO Tiang Yew Tan confirmed that the outlook for nearline HDDs remains healthy. He stated that qualifications for the new high-capacity drives are expected to be completed in the first calendar quarter, noting that customers are 'very excited' about the new products and that more visibility would be provided as the ramp progresses.

Karl Ackerman asked about the available capacity for expanding HDD head and media production and inquired if the recently qualified third hyperscaler for SMR would be ramping on the new 32TB offering.

Answer

CEO David Goeckeler stated that customers generally want to deploy the densest drive possible, suggesting the new 32TB drive will be adopted quickly post-qualification. Regarding capacity, he explained that the company sized its infrastructure to satisfy expected market unit demand and is focused on increasing exabytes through density innovation rather than expanding its physical footprint, emphasizing the importance of customer demand visibility for future planning.

Karl Ackerman inquired about SanDisk's product roadmap to address new performance requirements driven by AI compute, specifically asking about high IOPS SSDs and engagements related to High Bandwidth Flash (HBF), given the increasing attachment of NAND to AI compute and the data center mix reaching 15%.

Answer

CEO David Goeckeler highlighted that the compute-focused TLC high-performance drive is currently driving significant growth, with a 64% sequential increase, and SanDisk is well-positioned to migrate these to BiCS8. He emphasized the ongoing innovation to meet AI storage demands, including high IOPS Enterprise SSDs. David also discussed SanDisk's High Bandwidth Flash (HBF) initiative, which aims to re-architect NAND for AI, noting deep customer conversations, NAND die design, and controller development, underscoring the tremendous opportunity for innovation in the early stages of AI scaling.

Karl Ackerman requested an update on SanDisk's product roadmap to address new performance requirements for NAND flash in AI compute, specifically mentioning high IOPS SSDs and engagements on High Bandwidth Flash (HBF).

Answer

David Goeckeler (Chairman and CEO) stated that compute-focused TLC high-performance drives are currently driving growth, with strong customer demand and ongoing migration to BiCS8. He highlighted significant innovation for AI storage, including high IOPS Enterprise SSDs and High Bandwidth Flash (HBF), which SanDisk has been developing. He noted deep customer conversations on use cases and progress in designing NAND die and controllers for HBF, emphasizing the early-stage, tremendous opportunity in AI architecture innovation.

Karl Ackerman asked whether Sandisk's increased hyperscaler qualifications for enterprise SSDs would be supported by transitioning existing client and edge wafer capacity or by new capacity from the K2 Fab. He also inquired about expected cost declines for the December quarter and whether they could reach high teens with the aggressive transition to BiCS8.

Answer

Chairman and CEO David Goeckeler clarified that Sandisk does not plan to add capacity for specific markets but will manage mix for optimal financial return, leveraging optionality. He emphasized that the goal is to grow bits constantly with the market. Regarding cost declines, Goeckeler noted a transition from cost headwinds to tailwinds with the BiCS8 ramp, underutilization costs behind them, and fab startup costs decreasing. EVP and CFO Luis Visoso added that while specific cost decline percentages are not provided, the focus is on driving gross margin expansion, which has seen significant improvement.

Karl Ackerman asked whether SanDisk anticipates transitioning client and edge wafer capacity to enterprise SSDs for hyperscaler qualifications, or if new capacity from the K2 fab would primarily support this. He also inquired about expected cost declines going into the December quarter and with the aggressive transition to BICS8.

Answer

Chairman and CEO David Goeckeler clarified that SanDisk does not plan to add capacity for specific markets but will manage mix for optimal financial return, aiming for as much optionality as possible. He noted that the company is moving from a period of cost headwinds to tailwinds in the December quarter, driven by the BICS8 ramp, the end of underutilization costs, and fab startup costs. EVP and CFO Luis Visoso emphasized the focus on driving gross margin expansion, noting significant improvements and the ongoing benefit from lower cost per gigabyte as BICS8 ramps.

Karl Ackerman of BNP Paribas questioned the outlook for NAND bit shipments for the upcoming quarter and the full calendar year, asking if the company still expects low double-digit growth. He also sought commentary on the level of order visibility across Sandisk's end markets.

Answer

CFO Luis Visoso reiterated the guidance for flattish bit shipments in the June quarter. For the second half of 2025, he stated there's no change to the previous view of high single-digit growth, expressing optimism about long-term demand drivers. He added that visibility is good, with transactional markets showing price increases and progress being made across client and cloud.

Karl Ackerman of BNP Paribas asked about average storage capacity trends in mobile and PCs for the second half of the year and whether the data center SSD business could outpace overall company growth in fiscal 2026.

Answer

Chairman & CEO David Goeckeler provided specific content growth forecasts, with PC capacity growth accelerating from mid-single digits in 2025 to mid-to-high single digits in 2026. While not providing a specific forecast for data center growth, he noted that higher-than-expected demand for qualification samples is a positive leading indicator for the business.

Karl Ackerman asked for the outlook on NAND bit shipments for the June quarter and the full calendar year, and also requested commentary on the level of order visibility Sandisk has across its different end markets.

Answer

Executive Luis Visoso reiterated guidance for flattish bit shipments in the June quarter and maintained the previous forecast for high single-digit growth in the second half of 2025. He noted continued optimism for long-term growth drivers in client, PC, mobile, and cloud. Regarding visibility, Visoso stated that customer conversations are positive, transactional markets are strengthening, and progress across client and cloud provides confidence in the current guidance.

Karl Ackerman inquired about Celestica's opportunity to address multi-rack scale-up XPU networks, such as optical circuit switches and co-packaged optics-based switches, asking about the breadth of customer engagements in this area.

Answer

CEO Rob Mionis noted increasing R&D activity for integrated AI/ML and networking systems supporting scale-up and scale-out, viewing this as a major growth driver. CFO Mandeep Chawla added that 1.6T wins are used for both scale-up and scale-in, and while co-packaged optics conversations are increasing, mass adoption is expected more towards 3.2T programs, which are currently in R&D.

Karl Ackerman asked about Celestica's opportunity to address multi-rack scale-up XPU networks, such as optical circuit switches and co-packaged optics-based switches, in terms of customer engagement breadth.

Answer

Rob Mionis (President and CEO) noted increasing activity and R&D expenditures in more integrated AI/ML and networking systems, supporting both scale-up and scale-out fabrics, viewing this as a major growth driver. Mandeep Chawla (CFO) added that 1.6T wins are used for both scale-up and scale-in, and while co-packaged optics conversations are increasing, mass adoption is expected more towards 3.2T programs, which are in R&D.

Karl Ackerman inquired about the assurances Celestica's largest customers provide to support capacity growth, such as multi-year bond commitments or combined CapEx investments, given the projected doubling of capacity in Thailand and Texas from 2024-2027 with CapEx at 2%-2.5% of sales. He also asked about the relative mix of 800G switch ports, the trajectory of 1.6T, and the opportunity in liquid-cooled base switches for 2026 and 2027.

Answer

Mandeep Chawla (CFO) stated that CapEx is disciplined and tied to customer programs with good multi-year demand visibility, noting that 1.6% of next year's 2% CapEx is for growth. Steve Dorwart (SVP and GM of Hyperscalers) added that they have 12-15 months of solid forecast inputs and sometimes visibility beyond that for specific programs. Mandeep Chawla further explained that 800G and 400G will be roughly 50/50 by end of 2025, with 800G accelerating in 2026 and 1.6T ramping in late 2026 and into 2027. Jason Phillips (President of Connectivity and Cloud Solutions) emphasized translating 800G engagements into 1.6T, with liquid cooling playing a key role.

Karl Ackerman inquired about the assurances Celestica's largest customers provide to support the doubling of capacity in Thailand and Texas from 2024-2027, given the relatively low CapEx, specifically asking about multi-year bond commitments or combined investment into CapEx. He also asked about the relative mix of 800G switch ports today, the trajectory of 1.6T next year, and the opportunity for liquid-cooled base switches in 2026 and 2027.

Answer

Mandeep Chawla (CFO) stated that CapEx is disciplined and tied to customer programs with good multi-year demand visibility, with growth CapEx being a significant portion. Steve Dorwart (SVP and GM of Hyperscalers) added that they have 12-15 months of solid forecast inputs and demand from customers, with some visibility beyond that for specific programs and ASIC commitments. Mandeep Chawla further detailed that 800G and 400G will be roughly 50/50 in 2025, with 800G accelerating in 2026 and 1.6T ramping towards the end of 2026 and into 2027. Jason Phillips (President of Connectivity and Cloud Solutions) emphasized translating 800G engagements into 1.6T, with liquid cooling playing a key role.

Karl Ackerman inquired about the customer and platform breadth for 800-gigabit switches driving the strong CCS outlook and asked about manufacturing capacity in North America to support this growth.

Answer

President and CEO Rob Mionis stated that every 400g customer has transitioned to 800g, with Celestica's market share for 800g being larger. CFO Mandeep Chawla added that 800g volumes reached parity with 400g in Q2 and are accelerating, with wins across their top three hyperscalers. Chawla also confirmed ample capacity to support an additional $3-4 billion in revenue, citing investments in Thailand, Malaysia, Mexico, and Richardson, Texas.

Karl Ackerman asked for clarification on the portion of Seagate's long-term agreements (LTAs) or overall nearline HDD capacity that has fixed or multi-quarter pricing. He also questioned how new agreements would be priced as existing LTAs roll off throughout 2026, considering the widening price per TB gap between HDDs and SSDs.

Answer

CEO Dave Mosley explained that as customers transition from older products (e.g., 2.4 TB per platter) to newer ones (e.g., 3.2 or 4 TB per platter), pricing dynamics change based on demand and available supply. He noted that 2026 is largely booked, with any outperformance being marginal, and the company aims for similar predictability in 2027.

Karl Ackerman sought clarification on the portion of Seagate's long-term agreements (LTAs) or overall nearline HDD capacity with fixed or multi-quarter pricing, and how new agreements would be priced higher as existing LTAs roll off throughout 2026, given the widening price per terabyte gap between HDDs and SSDs.

Answer

CEO Dave Mosley explained that pricing dynamics change based on demand and available supply as customers transition to newer products, such as from 2.4 TB to 3.2 or 4 TB per platter. He noted that 2026 is largely booked, with any out-execution leading to marginal improvements, and that 2027 is expected to start with a similar approach.

Carl Ackerman asked for details on the duration and pricing components of Seagate's long-term HAMR agreements, and what percentage of total revenue is currently based on these agreements compared to the previous year.

Answer

Gianluca Romano, CFO, stated that the duration, volume, and mix of long-term agreements (FTAs or build-to-order) vary by customer. He confirmed that the vast majority of Seagate's nearline exabytes are already committed for the entire calendar 2026 through these long build-to-order agreements.

Karl Ackerman asked about the duration of long-term agreements offering visibility into 2027, and whether exabyte demand is expected to slow down or accelerate into 2027 from current levels.

Answer

Seagate's Chair and CEO, Dave Mosley, stated that supply will increase significantly with the transition to the 4+ product family, driving more exabytes. CFO Gianluca Romano confirmed that the vast majority of nearline exabytes are already committed for the entire calendar 2026.

Karl Ackerman of BNP Paribas asked if hyperscale customers are providing greater visibility due to production constraints and sought clarification on whether the constraints affected HAMR or conventional drives.

Answer

CEO Dave Mosley clarified that the production capacity issue affected the non-HAMR drives, specifically the ramping 24/28TB platform. Regarding visibility, he stated that the build-to-order models already provide good visibility, and for those customers, the temporary supply issue is largely irrelevant to their long-term plans.

Karl Ackerman from BNP Paribas asked for clarification on the nature of the build-to-order visibility, questioning if they are take-or-pay contracts or strong indications of interest. He also inquired about the current and future mix of SMR drives.

Answer

CEO Dave Mosley addressed the SMR question by stating it's a configuration for a few specific cloud and client server customers, and he views it as part of a flexible technology set to meet customer needs. CFO Gianluca Romano clarified the build-to-order agreements, stating that while there are different types, the 'vast majority are orders that are fully committed by customers out in time.'

Karl Ackerman inquired about Broadcom's supply chain resiliency and visibility for key materials like CoWoS, especially with new custom compute processors, and asked to pinpoint bottlenecks and mitigation strategies for 2026.

Answer

Hock Tan (President and CEO, Broadcom) explained that Broadcom's broad portfolio of leading-edge components (DSPs, lasers, etc.) gives it an early view of potential bottlenecks in the AI data center supply chain. He stated that Broadcom is often part of these bottlenecks, which allows them to work on resolutions and expand capacity to match design needs. He expressed confidence in managing these through 2026.

Karl Ackerman questioned Broadcom's supply chain resiliency and visibility for key materials like CoWoS, especially with new custom compute processors, and asked to pinpoint bottlenecks and mitigation strategies for 2026.

Answer

Hock Tan (President and CEO) highlighted Broadcom's fortunate position in having product technology and business lines for multiple leading-edge AI data center components (DSPs, lasers, etc.). He stated that Broadcom identifies and works to resolve bottlenecks, sometimes being part of them, and feels 'pretty good' about supply chain through 2026.

Karl Ackerman asked about the conversion rate of top 10,000 accounts from vSphere to VMware Cloud Foundation (VCF), interest from smaller enterprise customers, and potential cross-selling benefits for Broadcom's merchant semiconductor business.

Answer

Hock Tan, President and CEO, stated that virtually over 90% of the top 10,000 accounts have bought VCF licenses, with full deployment being the next two-year phase. He noted that VCF commoditizes underlying hardware, so there are no direct cross-selling benefits for merchant semiconductors. Interest from the longer tail of customers is still being assessed due to TCO and skill set challenges.

Karl Ackerman of BNP Paribas asked about the role of co-packaged optics (CPO) in achieving the high content opportunity in scale-up networking, questioning if CPO adoption is a critical driver.

Answer

CEO Hock Tan clarified that while many scale-up interconnects currently use copper, a shift to optical is inevitable as clusters grow larger. He positioned CPO as one potential path for this transition but not the only one, with low-cost pluggable optics being another viable option. He stated the key event is the move from copper to optical, which he expects within a year or two, and that Broadcom is prepared for either form factor.

Karl Ackerman from BNP Paribas questioned the role of co-packaged optics (CPO) in achieving the forecasted 5-10x higher content opportunity in scale-up networking, asking if it was a critical technology for adoption.

Answer

CEO Hock Tan clarified that the critical transition for larger AI clusters is the move from copper to optical interconnects, which he expects within a year or two. He noted that while CPO is one path Broadcom is developing, it is not the only solution. The initial move to optical could also be served by low-cost pluggable optics, and the key opportunity lies in the medium's shift from copper to optical fiber.

Karl Ackerman asked for clarification on the relocation of intellectual property back to the U.S., which resulted in a $4.5 billion tax liability, and questioned if this action could be related to any potential asset sales to pay down debt.

Answer

CFO Kirsten Spears clarified that the IP relocation was a matter of timing and is not related to any asset sales. She explained that the charge is non-cash and is offset by a deferred tax liability, resulting in a very small cash impact.

Karl Ackerman asked about Credo's decision to license its Active Electrical Cable (AEC) IP to third parties and how this agreement reflects its perceived competitive moat and go-to-market strategy for AECs. He also inquired about the largest delta in Credo's upwardly revised outlook versus its prior outlook, specifically how much was driven by the ramp of the fifth hyperscale customer versus higher order rates or new AEC applications.

Answer

President and CEO Bill Brennan explained that Credo pioneered the AEC market and filed with the ITC to protect its IP after not receiving sufficient acknowledgment from others. He stated that licensing does not change Credo's competitive focus on speed, qualification, and flawless delivery, as customers desire multiple suppliers. CFO Dan Fleming attributed the upwardly revised outlook to a general strengthening of forecasts observed over the past three to four quarters, rather than a specific customer or application, indicating a broader industry trend.

Karl Ackerman inquired if the doubling of CapEx was tied to any take-or-pay customer agreements and asked for clarification on the use of Credo's AECs in GPU versus custom ASIC server racks.

Answer

CFO Dan Fleming clarified that the increased CapEx is driven by internal technology development, specifically production mask set tape-outs for advanced nodes like 3nm, rather than specific customer contracts. CEO Bill Brennan addressed the application question by stating that Credo's AECs are used broadly to connect any type of GPU to any switch and should not be viewed as a proxy for any single compute architecture.

Karl Ackerman asked for the primary drivers behind the guided uptick in gross margin for the fourth quarter. He also sought clarification on whether the projected future 10%+ customers are all AEC-related or if they indicate a broadening into other product lines.

Answer

CFO Dan Fleming attributed the gross margin improvement primarily to the benefits of scale, noting that product gross margin (excluding engineering services) rose over 900 basis points year-over-year. He also mentioned the roll-off of contra revenue from a warrant with Amazon as a lesser, but accretive, factor. Fleming confirmed that the referenced future 10%+ customers are AEC-related, as it is the largest driver of absolute revenue growth.

Karl Ackerman asked about the expected revenue from the IP licensing business in Q3 and its overall visibility. He also questioned if the four customers comprising 5-10% of revenue were concentrated in AECs or more broadly distributed.

Answer

CEO William Brennan stated that the IP business will remain a small, lumpy part of revenue and is not expected to cross the 10% threshold in Q3. CFO Dan Fleming confirmed that the customer base in the 5-10% revenue bracket is broad-based, with contributions from AEC, Optical DSP, and line card retimer products, demonstrating successful revenue diversification.

Karl Ackerman asked about the competitive dynamic between active copper cables (ACC), which use redrivers, and Credo's active electrical cables (AEC), which use retimers. He also followed up on the potential for seasonality in licensing revenue and the long-term outlook for that business.

Answer

CEO William Brennan positioned ACCs as a niche, non-standard solution with limited broad market appeal, asserting that fully retimed AECs are the preferred choice for interoperability and performance. CFO Dan Fleming stated there is no seasonality in IP revenue and reaffirmed the 10-15% of revenue target for FY25 and FY26, suggesting it might be reset lower in the future as product revenue scales significantly.

Karl Ackerman asked for clarification on whether the projected acceleration of transceiver growth over the next four to five quarters is sequential or year-over-year. He also asked for a framework of the quarterly transceiver opportunity among Lumentum's three hyperscalers versus the initial $250 million/quarter expectation, and how the Thailand fab capacity build-out supports this.

Answer

President and CEO Michael Hurlston stated that Lumentum has line of sight to $250 million/quarter for transceivers, balancing customer opportunities for the highest margin. He emphasized growing profitably and not unbridled, given other increasing growth drivers like CPO and OCS. He explained that the Thailand capacity supports this 'bounded number' for transceivers, but they could add more if desired, choosing to limit for now to let other growth drivers play out.

Karl Ackerman asked for clarification on whether the projected transceiver growth acceleration over the next four to five quarters is sequential or year-over-year. He also sought to frame the quarterly transceiver opportunity among hyperscalers against the initial $250 million expectation and understand how Lumentum's Thailand fab capacity supports this.

Answer

President and CEO Michael Hurlston stated that Lumentum has line of sight to the $250 million per quarter opportunity, balancing customer opportunities to achieve the highest margin profile. He emphasized that the leading customer will remain primary, but Lumentum will continue to engage other customers selectively to grow profitably. Michael Hurlston noted that the Thailand fab capacity supports this 'bounded' growth, but they could add more if they pursued the business in an 'unbridled fashion,' preferring to let other growth drivers like CPO and OCS play out.

Karl Ackerman of BNP Paribas questioned if the 50% sequential growth in cloud transceivers was due to demand pull-forward ahead of tariffs. He also asked for clarification on whether the move to in-house manufacturing was for industrial or networking products and if it required significant new capacity.

Answer

CEO Michael Hurlston and President of Cloud and Networking Wupen Yuen denied any demand pull-forward, stating the growth is tied to new GPU and accelerator ramps and catching up on supply after resolving earlier production issues. CFO Wajid Ali clarified that the manufacturing shift from contract manufacturers to in-house is for data center interconnect (DCI) products, supported by CapEx committed 6-9 months ago to increase capacity by 50% by year-end.

Karl Ackerman asked if the new datacom transceiver wins are for 800G or 1.6T speeds and whether EML bottlenecks are constraining the datacom business. He also questioned the capital expenditure trajectory for the rest of the fiscal year.

Answer

President and CEO Alan Lowe clarified the new customer wins are for speeds below 1.6T, as 1.6T is more of a late 2025 or 2026 ramp. He confirmed that the lack of indium phosphide for both EMLs and CW lasers is a gating factor for the broader module market. EVP and CFO Wajid Ali added that CapEx in the second half of the fiscal year will be similar to the first half, with investments focused on expanding EML chip capacity to address these ongoing supply constraints.

Karl Ackerman from BNP Paribas questioned whether new hyperscale wins are for custom AI processors or standard GPU platforms, and if these wins are driven by a shift to U.S.-domiciled suppliers.

Answer

SVP and CSO Chris Coldren clarified that these are new opportunities, not reallocations, though customers value Lumentum's U.S. headquarters and non-China manufacturing. He noted the initial transceivers for these wins do not integrate Lumentum's EMLs, as those designs were already in progress, but future opportunities for vertical integration exist.

Karl Ackerman inquired about the breadth of MaxLinear's design engagements in optical DSPs for 800 gig and when 800 gig revenue is expected to surpass 400 gig revenue.

Answer

CEO Kishore Seendripu stated engagement with all major module makers in Asia and America for various configurations. He noted that each data center has its own roadmap and cadence; MaxLinear is not participating with Google or NVIDIA. Current shipping is a subset of hyperscalers in the U.S. and Asia, and the crossover timing depends on these varied deployment cadences.

Karl Ackerman asked about MaxLinear's gateway opportunity within the broadband segment, specifically how it is broadening beyond a single carrier and its potential to help the segment return to $100 million per quarter. He also inquired about the breadth of design engagements for optical DSPs for 800 gig and when MaxLinear expects revenue from 800 gig to surpass revenue from 400 gig.

Answer

CFO Steve Litchfield explained that the PON business is new and growing, with traction from two major North American carriers and several other customers. He highlighted that content opportunities within a gateway (PON or cable) can be $40-$50, driven by Wi-Fi, Ethernet, and the SoC itself, with content increases being a significant revenue driver alongside unit growth and share gains. CEO Kishore Seendripu stated that MaxLinear is engaged with all major OEM/module makers globally for optical DSPs. He noted that data centers have varying roadmaps, with some like Google already beyond 800 gig (where MaxLinear is not engaged) and NVIDIA being a different magnitude. MaxLinear is currently shipping to a subset of hyperscalers in the U.S. and Asia.

Karl Ackerman inquired about which business areas have the strongest order visibility and asked for an update on the customer traction and outlook for the Panther storage accelerator SoCs.

Answer

CEO Kishore Seendripu stated that order visibility is strong across all segments, with the main variable being the timing of optical qualifications. He noted significant traction for Panther SoCs with enterprise players and hyperscalers, projecting revenues could triple next year.

Karl Ackerman sought clarification on a comment about a business doubling next year, asking if it referred to broadband, and inquired whether the strong bookings visibility was consistent across all geographies and end markets.

Answer

CFO Steve Litchfield clarified that the 'doubling' comment from CEO Kishore Seendripu referred to the wireless infrastructure business, not broadband. For broadband, he expects a solid recovery this year followed by growth from new wins. Dr. Seendripu explained that strong bookings are tied to the core business recovery and that the tariff situation is primarily a U.S. broadband concern, as most other business is international.

Karl Ackerman asked for clarification on the impact of China restrictions in the quarter. He also inquired about the PON business, asking if orders from a second Tier 1 U.S. carrier were being pulled in, or if the revenue ramp is more of a back-half 2025 and 2026 event.

Answer

CFO Steve Litchfield confirmed the previously guided $5 to $10 million impact from China restrictions was felt in the back half of the year but that the issue is now behind them. CEO Kishore Seendripu explained that while momentum for PON is building, significant revenue from new gateway solutions is expected to materialize in the latter half of 2025 and grow into 2026 and 2027, rather than being pulled forward.

Karl Ackerman from BNP Paribas Asset Management inquired about order trends for networking and cybersecurity in the SMB space and asked about the rationale for the CloudBlue divestiture and its impact on the xVantage platform.

Answer

CEO Paul Bay confirmed that both the server and cybersecurity businesses were strong during the quarter. He explained that the CloudBlue divestiture was a strategic decision to focus on the unified xVantage platform, noting that Ingram Micro retained all relevant IP from its foundational cloud investments. EVP & CFO Mike Zilis added that from a financial perspective, CloudBlue was an immaterial part of the company's overall cloud business results.

Karl Ackerman sought more detail on the Q2 outlook, specifically asking about the recovery trends in higher-margin server, storage, and networking applications. He also asked about working capital dynamics beyond the June quarter.

Answer

CFO Mike Zilis clarified that while Q2 guidance assumes less robust growth in client endpoint solutions compared to Q1, it still factors in growth in servers, cybersecurity, and cloud. He highlighted that networking returned to modest growth for the first time in five quarters. Regarding working capital, Zilis reiterated that they will continue to invest for growth, which could strain free cash flow in the short term, but this will be balanced by normal seasonality, such as the typical Q3 inventory build for a strong Q4.

Karl Ackerman inquired about the utilization level of the Richardson, Texas facility after recent consolidations and the addition of a new SAW line. He also asked for confirmation that the primary variables affecting the full-year outlook were macro uncertainty and the CSG program push-out.

Answer

SVP & CFO Grant Brown confirmed that the Richardson facility has ample room for the new SAW line, as ongoing die-size reductions have effectively increased manufacturing capacity. Regarding the full-year outlook, he affirmed that the question captured the main considerations and acknowledged that the company's view could prove conservative depending on how unit volumes and product mix play out over the year.

Karl Ackerman questioned if the content growth at the largest customer is tied only to their internal baseband or also to third-party basebands, and asked for an update on working through under-absorbed inventory.

Answer

Frank Stewart, President of the Advanced Cellular Group, confirmed that content growth is broad-based. While the ET PMIC is unique to the internal baseband, wins in other product categories apply across both internal and third-party baseband models. CFO Grant Brown stated that the company has made 'really good progress' in reducing inventory, which is unlocking free cash flow, and they do not see any abnormal inventory issues.

Karl Ackerman from BNP Paribas inquired about the long-term outlook for RF content within the iOS ecosystem, specifically questioning if content gains could continue if the baseband modem supplier remains a competitor rather than an in-house solution.

Answer

CEO Bob Bruggeworth responded that historically, every successive phone model has required more advanced RF, a trend he expects to continue regardless of the baseband modem source. SVP of Sales and Marketing Dave Fullwood added that the primary difference for Qorvo would be the inability to supply its ET PMIC to a competitor's platform, which represents a key opportunity if the customer were to use an internal modem.

Karl Ackerman asked for the mix of mid-tier Android within the current China business and whether the weaker outlook was driven more by competition from local Chinese vendors or by demand shifting to OEMs where Qorvo has less exposure.

Answer

SVP of Sales and Marketing, David Fullwood, explained that the shift to entry-tier Android is the primary headwind, as Qorvo is concentrated in the high and mid-tiers. He noted that in the entry-tier, discrete solutions are more prevalent, pricing is tougher, and customers often outsource these phones to the ODM channel, where Qorvo does not traditionally participate. This outsourcing of 5G entry-tier phones directly reduces Qorvo's available market.

Karl Ackerman of BNP Paribas asked about the drivers for the raised calendar 2025 DRAM bit demand outlook, specifically questioning if it was solely due to HBM or if non-HBM demand had also improved. He also inquired about capital allocation priorities between deleveraging and share buybacks, given the healthy free cash flow.

Answer

EVP and Chief Business Officer Sumit Sadana clarified that the improved 2025 DRAM outlook is driven by both robust AI-related data center growth and a recovery in broad distribution and industrial markets, not tariff pull-ins. EVP & CFO Mark Murphy stated that with record liquidity and reduced net debt, Micron can invest in technology and capacity, grow its dividend, and conduct opportunistic buybacks, noting the balance sheet is in a 'great spot'.

Karl Ackerman asked about the drivers behind the upgraded calendar 2025 DRAM bit demand outlook, questioning if it was solely due to HBM or if non-HBM demand had also improved. He also inquired about capital allocation priorities, specifically balancing net leverage improvements against share buybacks.

Answer

EVP and Chief Business Officer Sumit Sadana clarified that the improved 2025 DRAM outlook is not due to tariff pull-ins but is supported by robust AI-driven data center growth and strengthening demand in industrial and distribution markets. Executive VP & CFO Mark Murphy stated that with record liquidity and reduced net debt, Micron can invest in business priorities like HBM capacity, maintain its dividend, and conduct opportunistic buybacks, noting the balance sheet is in a 'great spot'.

Karl Ackerman questioned the commentary about shipping below demand while not losing share, asking if HBM mix was a key factor. He also asked if CapEx would need to increase to support HBM share goals into fiscal '26 and if that investment would limit margin expansion.

Answer

Chief Business Officer Sumit Sadana clarified that Micron's own supply growth will be less than demand growth, leading to inventory reduction, not that the entire industry will ship below demand. He explained the HBM trade ratio constrains non-HBM DRAM supply. EVP of Global Ops Manish Bhatia added that while they aren't guiding for FY26 CapEx, investments are underway for a new HBM facility for 2027 output, but core DRAM wafer spending will remain disciplined.

Karl Ackerman of BNP Paribas asked if the growing backlog assumes a richer mix of higher-margin transponder blades in the future, and inquired about Ciena's progress toward a fully integrated coherent transceiver using its own IP.

Answer

CFO Jim Moylan gave a direct "yes," confirming that Ciena expects to sell more capacity into its line systems next year, which provides confidence in future margin improvement. Executive Advisor Scott McFeely added that Ciena owns the IP for all key transceiver ingredients and will increasingly use its own components as volume ramps, which is a core part of its cost-reduction plan.

Karl Ackerman asked about the breadth of cloud titan customers ramping 800-gig electro-optics and whether Marvell sees growing evidence of these customers diversifying their optical transceiver procurement away from China, which could be a share gain opportunity.

Answer

CEO Matt Murphy stated that Marvell's market share is high, so they are engaged with nearly every major customer. He confirmed that supply chain diversification due to geopolitical risk is a real concern for hyperscalers. However, he noted this trend has been underway for years, with both international and U.S. suppliers adjusting their supply chains. He believes Marvell is well-positioned to work with all partners and does not foresee a major share shift from this dynamic alone.