Peter Peng

Peter Peng inquired about the overall unit assumptions for the year, specifically whether low single-digit unit growth is still the base case or if memory constraints could lead to a flat market, and how to think about seasonality given potential different launch timings.

Answer

CEO Philip Brace stated that Skyworks is only guiding one quarter out but is seeing very strong unit demand, which is reflected in their numbers and is above seasonality. He noted that for outer quarters, seasonality appears fairly normal, and they are not seeing anything unusual with respect to launch timings.

Peter Peng inquired about Skyworks' overall unit assumptions, particularly regarding a strong upgrade cycle versus concerns about memory constraints potentially leading to a flat market. He also asked how to think about seasonality for the year, considering potential different launch timings.

Answer

CEO and President Philip Brace stated that Skyworks is currently seeing very strong unit demand, which is reflected in their numbers and is above seasonality. He indicated that they expect stronger unit demand than publicly discussed but would not project future demand beyond the current quarter. Regarding seasonality, he noted that outer quarters appear 'fairly normal' and they are not observing anything unusual, just strong demand.

Peter Peng questioned the apparent discrepancy between Skyworks reporting seasonal trends and its largest customer reportedly building inventory for tariff mitigation. He also asked for a breakdown of which broad markets are seeing growth.

Answer

CFO Kris Sennesael attributed the difference to the complex supply chain, noting that distributors and contract manufacturers act as buffers, and that Skyworks' results and guidance do not show evidence of pull-ins. CEO Philip Brace identified WiFi 7 and automotive as the strongest growth drivers in broad markets, while the infrastructure segment has 'more work to do'.

Peter Peng asked a broader question about the long-term relationship with the largest customer after two years of content losses and whether this accelerates the company's diversification strategy. He also requested the Android revenue number for the quarter.

Answer

CFO Kris Sennesael affirmed the relationship with the largest customer remains strong despite challenges from intensified competition and the modem transition. He reiterated that diversification into Broad Markets has always been a core strategy and will continue. He also confirmed that Android revenue was flat sequentially in the December quarter.

Peter Peng inquired about the performance and trends within Skyworks' Android business, particularly given peer commentary on weakness, and asked about the sustainability of the recovery in the broad markets segment heading into 2025.

Answer

CEO Liam K. Griffin described a robust Android pipeline with key partners like Google and Samsung, who are investing in technology that leverages Skyworks' capabilities. CFO Kris Sennesael quantified the Android business as less than $75 million for the quarter, primarily with Google and Samsung, noting that the shift to AI-enabled phones drives complexity. For broad markets, Sennesael confirmed a bottom in December 2023 and expects continued modest sequential growth that will eventually accelerate as excess inventory clears, driven by secular trends like WiFi 7, automotive, and AI data centers.

Peter Peng asked about the accelerated pace of Qorvo's Android business exit, specifically the increase from $200 million to $300 million, and the long-term revenue run rate after completing this strategic exit. He also inquired about the gross margin profile for fiscal 2027.

Answer

CFO Grant Brown explained that the increased exit amount for fiscal 2027 is due to both strategic exit and memory pricing/availability impacts on mass-tier Android build plans. He stated that the primary driver for fiscal 2027 gross margin improvement is business mix, with HPA becoming a larger contributor and the exit from lower-tier Android. CEO Bob Bruggeworth added comments on operational efficiency.

Peter Peng inquired about the accelerated pace of Qorvo's Android business exit, noting the increase from a prior $200 million expectation to $300 million, and asked if this was due to expedited strategic exit or memory pricing impacts. He also sought insight into the long-term revenue run rate for the Android business post-exit and requested a breakdown of the gross margin profile for fiscal year 2027, particularly regarding the target of above 50%.

Answer

Grant Brown (CFO) and Bob Bruggeworth (CEO) clarified that the increased Android exit estimate to $300 million for fiscal 2027 is fully due to their strategic exit from the business, accelerated by memory pricing and availability constraints impacting customer build plans. For gross margin, Grant Brown (CFO) explained that the biggest driver for FY27 is business mix, with HPA becoming a larger, margin-accretive percentage, and improved product mix within ACG from exiting lower-tier Android. He also highlighted the operations team's cost management efforts.

Peter Peng requested a breakdown of the ~$400 million shortfall in the ACG segment versus consensus, asking how much was due to the shift to lower-tier Android versus other content factors. He also asked if Qorvo's content varies across different SKUs at its largest customer.

Answer

CFO Grant Brown stated he could not bucket against consensus but said a large portion of the shortfall is related to Qorvo's pricing discipline amid the Android market's shift to the entry tier, which represents a ~$1 billion TAM reduction. CEO Robert Bruggeworth confirmed that Qorvo's content does vary across different models and SKUs for its largest customer, and this variation contributes to the 'mix and models' impact on revenue.

Peter Peng asked President and CEO Joel Smejkal for an assessment of the potential material impact of the Nexperia situation on Vishay's business, acknowledging that Vishay is not currently generating revenue from it but is in discussions with customers.

Answer

President and CEO Joel Smejkal explained that Vishay and competitors are helping automotive OEMs avoid line downs by crossing part numbers. He noted that while Vishay is getting a great opportunity to engage with OEMs and Tier 1s, it's too early to quantify the impact due to the dynamic and geopolitical nature of the situation, which can change rapidly.

Peter Peng inquired about Vishay's expectations for Q1 seasonal trends, the projected gross margin dynamics for Q1 considering the Newport headwind and metal cost pass-through, an update on qualifying with a large compute customer after a board configuration change, and the potential material impact of the Nexperia situation on Vishay's business.

Answer

Joel Smejkal, President and CEO, explained that traditional seasonality is less clear due to factors like Q4 being a shorter quarter and ongoing strength in industrial, aerospace defense, automotive, and medical segments. He noted that October's 1.15 book-to-bill could lead to a better Q1. He stated that Vishay does not guide that far ahead for Q1 gross margins, but internal cost improvement projects and annual contract negotiations are underway. He confirmed Vishay's continued engagement with AI design centers, expanding product offerings (MOSFETs, ICs, passives), and gaining traction. Regarding Nexperia, Joel Smejkal mentioned Vishay is helping automotive customers avoid line downs by crossing part numbers, but it's too dynamic and geopolitically influenced to quantify the material impact at this time.

Peter Peng of JPMorgan Chase & Co. asked about the outlook for the second half of the year, whether current demand is driven by channel refilling or pull-forwards, details on the growing AI business, and clarification on a slipping customer program in the semiconductor segment.

Answer

President and CEO Joel Smejkal provided a positive outlook, stating that the backlog is building at a faster rate and that Q4 revenue could be better than Q3. He attributed demand to fundamental drivers like AI, smart grid, and automotive rather than simple pull-ins. Regarding AI, Smejkal highlighted a growing customer count and an expanding bill of materials per design due to Vishay's broad portfolio. He clarified that the 'slipping program' referred to a design change in a major AI platform, for which Vishay is now working to secure its position on the new design.

Peter Peng from JPMorgan Chase & Co. asked for management's view on whether the current order strength represents a true cyclical recovery or a temporary pull-in ahead of tariffs. He also inquired about the scale of the AI business, the outlook for the second half of 2025, and the reasons for a flat gross margin outlook in Q2 despite higher revenue.

Answer

President and CEO Joel Smejkal asserted that the recovery is genuine, citing multi-year smart grid projects, defense spending, and AI investments as drivers independent of tariffs. He noted that AI revenue more than doubled in Q1 vs Q4 but declined to size the business due to its dynamic nature. For H2 2025, he expressed optimism based on backlog building three quarters out, a trend not seen last year. CFO David McConnell's prior comments indicated the flat Q2 gross margin is due to tariff impacts and higher input costs offsetting volume growth.

Peter Peng inquired about the revenue potential from AI server power, Vishay's content per system, and its positioning in the non-NVIDIA custom ASIC market. He also asked about the likelihood of seasonal strength in the second quarter and the expected gross margin trajectory for 2025, considering the impact of the Newport facility and depreciation.

Answer

President and CEO Joel Smejkal stated that AI-related revenue was minimal in Q4 but that Vishay has a strong design position with content estimated at $30-$40 per tray. He noted visibility remains low pending chipset deliveries. For Q2, he pointed to positive book-to-bill trends but is cautious pending post-Chinese New Year data. CFO David McConnell addressed gross margins, explaining that volume is the key driver and that the drag from the Newport facility is expected to diminish through 2025, aiming for margin neutrality by year-end.

Peter Peng asked for an update on Amkor's S-Connect progress, an equivalent to Co-SL, given the increasing transition by hyperscaler customers to Co-SL in their roadmaps, and Amkor's position in this area. He also inquired about the impact of new high-density fan-out ramps on seasonality, particularly in the first half of next year.

Answer

CEO Giel Rutten focused on high-density fan-out (equivalent to Co-SR) as a significant opportunity, with ongoing evaluation of on-substrate technology in Asia and complementary supply chain in the U.S. He explained that Amkor's seasonality is largely driven by the communication market, but new product launches in the compute domain are expected to show significantly less seasonality, which could ultimately level out overall seasonality.

Peter Peng asked for an update on Amkor's S-Connect, an equivalent to Co-op L, given the industry trend of hyperscaler and merchant transitions to Co-op L, and Amkor's positioning in this area. He then inquired about the impact of new high-density fan-out ramps on seasonality, particularly in the first half of next year.

Answer

President and CEO Giel Rutten stated that Amkor is working closely with its foundry partner for a complementary supply chain, with a current focus on high-density fan-out (Co-op R equivalent) where significant opportunities exist. He explained that Amkor's seasonality is largely driven by the communication market, but new product launches, especially in the compute domain, are expected to show significantly less seasonality, which would ultimately help level out overall seasonality.

Peter Peng from JPMorgan Chase & Co. asked if the strong Q2 results and above-seasonal Q3 guidance were driven by customer demand pull-ins, and followed up on the computing segment's growth outlook for 2025.

Answer

CEO Giel Rutten responded that the company did not see signs of active pull-ins, though he noted some last-minute spot orders in markets like automotive due to low inventory levels. For the computing segment, Mr. Rutten highlighted accelerated growth and innovation. CFO Megan Faust provided quantitative context, stating that computing revenue hit a record in 2024 and is on track to do so again in 2025, having grown 18% year-over-year in the first half, making it Amkor's fastest-growing end market.

Peter Peng asked for the full-year outlook for the Computing segment's 2.5D business, considering the puts and takes of export controls on a key customer versus a new networking customer ramp. He also inquired about the 2026 outlook, specifically seeking updates on CoWoS-L (ConnectS) technology and the broader 2.5D design win pipeline.

Answer

CEO Giel Rutten acknowledged that volumes with their prime 2.5D customer are lower due to export controls but noted this is offset by a ramp with a second 2.5D customer and multiple other GPU and CPU devices. He expressed optimism for the Computing segment for the full year, despite macro risks. Looking to 2026, Rutten confirmed two customers are in qualification for bridge technology set to ramp that year, and the overall compute portfolio is broadening beyond a single GPU device.

Peter Peng questioned the dynamics with Amkor's marquee AI customer as they transition to new products and how Amkor plans to backfill that capacity, and also asked about OpEx spending plans for 2025.

Answer

CEO Giel Rutten stated that near-term 2.5D business is below expectations due to an accelerated GPU transition and China trade restrictions. He noted confidence in the overall pipeline, citing a ramping second 2.5D customer and new RDL-based programs. For next-generation GPUs, Amkor is positioned as a 'technology follower' targeting 2026. CFO Megan Faust added that full-year 2025 OpEx is expected to be similar to 2024, balancing technology investments with strict cost controls.

Peter Peng from JPMorgan Chase & Co. asked about the prioritization of business segments and the current stage of the company's transformation into an IoT-focused entity. He also inquired about any signs of demand pull-forward and what constitutes typical seasonality for the business.

Answer

President & CEO Rahul Patel stated he is evaluating all assets, emphasizing the high value of the company's analog mixed-signal capability for the core IoT strategy, and deferred specifics on portfolio changes to the Analyst Day. SVP & CFO Ken Rizvi addressed the pull-in question, noting it's difficult to gauge but that some mobile strength in Q4 might be due to global incentives. Patel added that despite potential mobile softness, total revenue is guided to grow in Q1, fueled by the core IoT segment.

Peter Peng of JPMorgan Chase & Co. asked when the company might see more synchronized growth across its end markets, given that Core IoT is currently the primary growth driver. He also inquired about the progress of the company's go-to-market strategy for the broad market, including sales, marketing, and distribution efforts.

Answer

Interim CEO Ken Rizvi projected that Core IoT would continue to lead growth, marking its sixth consecutive quarter of sequential growth. He noted Enterprise is performing well outside of the sluggish Automotive segment, and Mobile has a good foundation for long-term growth. Regarding the broad market, Ken Rizvi and Vikram Gupta, SVP of IoT Processors, stated they are in the 'early innings' of their strategy, actively investing in go-to-market teams, sales collateral, and partner/ODM networks, which are beginning to show positive results.

Peter Peng from JPMorgan asked for the key factors underpinning the company's confidence in its outlook for $10 million of incremental revenue per quarter, and inquired about the margin implications of the recent Broadcom transaction.

Answer

Interim CEO and CFO Ken Rizvi attributed his confidence to three main factors: improved visibility from backlog and bookings, very lean channel and customer inventories, and new product ramps, particularly in Core IoT wireless. Regarding margins, Rizvi did not provide a forward-looking forecast beyond the current quarter's guidance of 53.5%, stating that future margins will depend on product mix.

Peter Peng of JPMorgan Chase & Co. asked about the expected recovery profile for the Enterprise segment and its potential impact on margins. He also requested more color on customer engagement for the Astra AI processor platform.

Answer

President and CEO Michael Hurlston stated that a significant Enterprise recovery depends on IT budgets, but noted that if it occurs, the margin impact would vary by product line. Regarding the Astra platform, Hurlston described customer engagement as broad across segments like home security, appliances, and industrial, with a goal to narrow focus to 2-3 key segments in early 2025.

Peter Peng from JPMorgan Chase & Co. requested an update on the lithography and inspection applications business and asked if the significant year-over-year dollar growth in the E&P segment is entirely driven by AI applications.

Answer

President and CEO John Lee stated that the optics business for lithography and inspection has been muted, and while the ~$300M run-rate is intact, growth from that level may be pushed out. He confirmed that the strong year-over-year growth in E&P, despite muted PC and smartphone markets, is indeed driven by the increasing portion of business targeted to AI, including both chemistry and equipment.

Peter Peng referenced an Analyst Day metric about new customer ramps contributing significantly to 2025 growth and asked if current progress suggests they are on track to surpass that. He also inquired if the company could maintain sequential growth through the typically flattish December quarter, given strong current momentum.

Answer

CEO Matt Johnson clarified that the 10 of 12 major ramps mentioned are just the 'tip of the iceberg' and reiterated confidence in continued growth from share gains. CFO Dean Butler declined to provide a Q4 guide but noted that as long as design wins are the primary growth driver, the company should outperform typical seasonality, though limited visibility from shorter-term orders makes forecasting difficult.

Peter Peng asked if the company is still undershiping relative to end consumption. He also inquired about seasonality, noting the Q1 growth guidance is stronger than typical, and whether this implies accelerating growth into the seasonally strong summer quarters.

Answer

Chief Executive Officer Matt Johnson stated that while some customer inventory remains, it is no longer the primary factor influencing their outlook; design wins are. Chief Financial Officer Dean Butler acknowledged that Q1 guidance is bucking seasonal trends due to new product ramps. However, he urged caution on expecting significant acceleration in the summer, citing limited visibility despite positive trends.

Peter Peng of JPMorgan Chase & Co. sought to quantify the materiality of design win ramps on 2025 revenue growth and asked about their potential impact on gross margins.

Answer

CEO Robert Johnson stated that while the company sees a path to 'solid growth' in 2025 driven by these ramps, he could not provide specific revenue contribution figures. He confirmed that these new wins are not expected to meaningfully change the gross margin outlook, and the company remains committed to its long-term margin model.

Peter Peng asked about the expected revenue ramp for new Data Center products and questioned why gross margin remains flat despite strength in other segments, linking it to utilization at the Lowell fab.

Answer

President and CEO Stephen Daly confirmed that 200G photodetectors are ramping for 800G DR4 applications but was hesitant to forecast ramps for other new products like CW lasers. Regarding gross margin, Daly explained that utilization at the Lowell fab, which primarily produces RF products with high exposure to the soft industrial market, has not improved, offsetting gains elsewhere.

Peter Peng asked if there was any reason to doubt sequential growth in the data center business throughout the year, given the record backlog and 1.6T ramp. He also asked for a breakdown of the business between high-speed and lower-speed applications for fiscal '25.

Answer

President and CEO Stephen Daly acknowledged the data center market's volatility but expressed confidence that fiscal 2025 would be a record year for the segment, citing a broadening customer base and new product introductions. He noted that the 'base' data center business, including 100G and 400G products, is also improving, providing a solid foundation for the growth from newer high-speed applications like 800G and 1.6T.

Peter Peng asked if reaching the $1 billion annualized revenue run rate is contingent on a recovery in the Telecom market. He also questioned the historical lumpiness of the Data Center business and whether new products could offset this volatility, given the strong growth guided for Q1.

Answer

CEO Stephen Daly stated that achieving the $1 billion run rate would ideally involve growth from all end markets, including Telecom. Regarding Data Center volatility, Daly affirmed that the historical pattern of growth periods followed by declines is expected to continue. He advised looking at annual growth rates rather than quarterly trends, noting the current move to higher data rates is a multi-year secular tailwind. However, he reiterated that a future down quarter in Data Center is a given, and the company maintains a long-term view.