Srini Pajjuri

Srini Pajjuri asked about the drivers of continued growth for Aries retimers (units, PCIe 6 transition, new customers) and the potential implications for Aries as the market transitions from copper to optical in 2027-2028. He also inquired about Astera Labs' capability to pivot to ESUN if the market shifts in that direction, and its anticipated role in that market.

Answer

Jitendra Mohan, CEO and Co-founder, explained that Aries benefits from its early lead in PCIe (Gen 4, 5, 6), continued growth in chip-down applications, and increased use in cabled applications (smart cable modules) for scale-up, leading to ASP uplift. He noted copper will coexist with optical for a long time, with optical transition likely starting with pluggable optics, then near-package, and co-packaged optics for scale-up around 2028. Regarding ESUN, he stated Astera has the capability to design an ESUN-based solution but is currently focused on UALink based on customer requests, with an aspiration to address the full connectivity TAM over time.

Srini Pajjuri asked about the impact of memory constraints on the next quarter's royalty outlook and whether bill of materials pressure affects CSS and v9 adoption.

Answer

Rene Haas, Arm's Chief Executive Officer, stated that no impact on CSS adoption from bill of materials pressure is observed, as the value of accelerating time to market outweighs BOM considerations. Jason Child, Arm's Chief Financial Officer, clarified that the memory impact on Q4 royalty guidance is minimal; the low teens growth is primarily due to seasonality and a tough comparison from an unusual MediaTek chip release a year ago. Full-year royalties are still expected to be north of 20%.

Srini Pajjuri asked if memory impact was already affecting Q4 royalty guidance and if bill of materials pressure was impacting CSS and v9 adoption.

Answer

CFO Jason Child clarified that memory impact on Q4 royalty guidance is minimal; the low-teens growth is primarily due to seasonality and lapping an unusual MediaTek chip release from a year ago. CEO Rene Haas stated that no impact from bill of materials pressure is observed on CSS adoption, as the value of accelerated time to market significantly outweighs any cost considerations for customers.

An analyst from Raymond James asked about the networking and data center business, seeking to understand its potential as a growth driver from both a royalty and licensing perspective over the next year.

Answer

CEO Rene Haas expressed strong optimism for NeoVerse adoption, citing the general availability of power-efficient chips from Microsoft (Cobalt) and Google (Axion), and the software leverage from NVIDIA's Grace Blackwell platform. CFO Jason Child added that while networking remains slow, the cloud compute market is strong and expected to accelerate in the second half of the year as these new deployments ramp.

Srini Pajjuri of Raymond James Financial sought two clarifications: whether the 2026 AI forecast includes contributions from new prospects, and if the current 40% AI networking mix is the new normal.

Answer

CEO Hock Tan declined to comment on prospects, stating, "We only talk on customers." Regarding the mix, he clarified that the 40% share for networking is higher than the long-term expectation. He reiterated his previous view that the networking-to-XPU ratio should normalize to less than 30% as the business grows into 2026.

Srini Pajjuri from Raymond James Financial sought two clarifications: whether the 2026 AI forecast includes contributions from the four previously mentioned prospects, and if the current 40% revenue mix for networking within AI is the expected long-term rate.

Answer

CEO Hock Tan declined to comment on prospects, stating, 'We only talk on customers.' On the second point, he clarified that the current 40% mix for networking is higher than the expected long-term run-rate, which he anticipates will be closer to 30% or less of total AI revenue.

Srini Pajjuri of Raymond James Financial asked about Marvell's optical market share in the transition from 800G to 1.6T, the potential impact from LPO technology, and the current state of inventory at optical customers.

Answer

Chairman and CEO Matt Murphy stated Marvell has a "commanding position" in 800G and expects no fundamental share shift at 1.6T due to its time-to-market lead. He views Linear Pluggable Optics (LPO) as an incremental opportunity where Marvell will participate. He also noted that customer inventory levels look good, with low distribution inventory, and expects continued strong growth in the optics business.