Srinivas Pajjuri

Srinivas Pajjuri asked about the drivers of Aries retimers' continued growth (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 ESON if the market shifts from UALink.

Answer

Jitendra Mohan, CEO and Co-founder, attributed Aries' growth to its leadership in PCIe Gen 4, 5, and 6, increased use in cabled applications (smart cable modules), and scale-up deployments, benefiting from the PCIe Gen 5 to Gen 6 transition. He expects copper and optical to coexist, with optical transition (first pluggable, then near-package, eventually co-packaged) for scale-up around 2028. Regarding UALink vs. ESON, he confirmed Astera Labs has the capability to design ESON solutions but is currently focused on UALink based on customer requests, with an aspiration to address the full connectivity TAM.

Srinivas Pajjuri asked about the specific drivers enabling the shift to custom racks in the second half of the year and also inquired about the long-term market dynamics between Ethernet and UALink for scale-up connectivity.

Answer

CEO Jitendra Mohan explained that customers are building custom racks to integrate their own hardware, like SmartNICs, with platforms such as NVIDIA's Blackwell, a trend expected to ramp in H2 2025. He positioned UALink as a superior long-term solution for scale-up compared to Ethernet, citing better performance, lower latency, and a more diverse, open ecosystem that hyperscalers prefer.

Srini Pajjuri asked about the sustainability of the growth in the NAND business, noting the apparent contradiction between customers cutting utilization and equipment spending improving.

Answer

CFO Brice Hill explained that the current NAND spending is not for capacity but for technology upgrades to the latest nodes. He noted that customers are making these long-term investments to meet future bit demand growth, and these upgrade plans are less sensitive to short-term changes in factory utilization.

Srini Pajjuri asked about the NAND business, highlighting the apparent contradiction between customers cutting utilization while equipment spending improves. He sought clarity on the sustainability and drivers of this growth.

Answer

CFO Brice Hill clarified that the current NAND spending is not for adding capacity but for technology upgrades to the latest nodes. He explained that customers are proceeding with these strategic upgrades to achieve necessary density advancements and meet long-term bit demand growth, independent of near-term factory utilization rates.

Srinivas Pajjuri asked why China's revenue share was described as 'below normal' if export restrictions are permanent, and when it might return to the 30% level. He also inquired about recent demand trends in China.

Answer

CFO Brice Hill explained that 30% remains a good long-term estimate for China's share, as the ICAPS market there is expected to grow over time, even if investment moderates in the short term. CEO Gary Dickerson added that while the investment rate may slow after two strong years, the company remains positive on the long-term market opportunity and its position within it.

Srini Pajjuri asked for the outlook on DRAM growth for the next fiscal year, considering the strong growth from HBM but a potential decline in China-related sales. He also inquired about the outlook for NAND spending and technology transitions.

Answer

CFO Brice Hill did not provide a specific fiscal 2025 forecast but noted that the DRAM market remains strong in the near-term outlook, driven by AI and HBM. For NAND, he mentioned a slight uptick is expected in Q1. He explained the NAND market dynamic is different from DRAM, as impressive bit density gains have met demand, making it primarily an upgrade market rather than one requiring new wafer start capacity.

Srinivas Pajjuri sought to understand the reason for caution regarding the September quarter for Data Center, asking about potential inventory issues, and also inquired about customer interest and applications for LPO/LRO solutions.

Answer

President and CEO Stephen Daly clarified that the caution is standard practice for their most volatile market and not a signal of negative sentiment or an inventory issue; in fact, customers are expediting orders. Regarding LPO, he noted interest is primarily for 800G solutions at 100G per lane, but adoption varies among cloud service providers. The initial production use case is expected to be for short-reach NIC-to-switch links.

Srinivas Pajjuri asked about the potential ASP benefit when transitioning from 800G to 1.6T and from DSP-based to LPO solutions. He also requested details on the revenue contribution and market opportunity for the LEO satellite business.

Answer

President and CEO Stephen Daly declined to comment on specific ASPs but noted that LPO's value comes from eliminating the costly and power-hungry DSP, which could command a premium. He highlighted MACOM's expertise in photodiodes and TIAs as a key differentiator. For the LEO satellite business, Daly explained that revenue contribution varies significantly, from hundreds of dollars for individual chips to tens of thousands for complex subsystems, depending on the customer's needs.

Srinivas Pajjuri asked how the transition from 400G to 800G and 1.6T impacts MACOM's serviceable addressable market (SAM) and content per system. He also questioned the relatively flat sequential gross margin guidance and the path to achieving the 60% target, asking about the key drivers for improvement.

Answer

CEO Stephen Daly noted that while component prices increase with data rates, the overall SAM is driven by port counts and deployments. He explained that the SAM impact is situational, with some applications integrating functions (shrinking SAM) while others require more discrete components (growing SAM). CFO John Kober addressed margins, stating the company targets exiting fiscal 2025 at 59% gross margin, with the 60% goal being a bit further out. He cited fab utilization, NPI efficiency, and acquisition optimization as key levers for future margin improvement.

Srinivas Pajjuri from Raymond James asked for a breakdown of royalty growth by end market in the Q1 guidance and inquired about the current and projected contribution from the cloud and networking market.

Answer

CFO Jason Child detailed continued strength in smartphones and client (~30% growth), with infrastructure accelerating to high double-digits, aided by custom silicon and a networking recovery. Automotive remains strong, while IoT has bottomed but grows more slowly. CEO Rene Haas added that NVIDIA's Grace Blackwell is a key accelerant for Arm's data center growth.

Srinivas Pajjuri asked for confirmation that the planned $150M-$200M revenue headwind from exiting low-end Android is on track and requested more detail on the Defense & Aerospace (D&A) business's path to a $1 billion annual run rate.

Answer

CEO Robert Bruggeworth confirmed the Android exit is proceeding as expected. Philip Chesley, President of High Performance Analog, detailed the D&A growth strategy, noting a $5 billion design win funnel. Key drivers include military upgrade cycles, new platforms, DoD budget priorities (hypersonics, UAVs), and a significant opportunity in foreign military sales. Chesley also emphasized Qorvo's unique position with a full suite of onshore RF technologies.

Srinivas Pajjuri inquired about customer conversations regarding second-half tariff impacts and which end markets might be most affected. He also asked if new product growth is driven more by ASP or units.

Answer

CEO Fouad Tamer reported that discussions with cloud customers indicate strong CapEx for 2025 and 2026, and industrial trends are positive with the PMI above 50. He confirmed that new product revenue growth is a mix of both recovering units and ASP improvements as customers adopt newer platforms like Nexus and Avant.

Srinivas Pajjuri inquired about customer conversations regarding the indirect impact of tariffs on the second half of the year and which end markets might be most affected. He also asked if the strong growth in new products was driven more by average selling price (ASP) or unit volume, and if the macro environment was impacting design win momentum.

Answer

CEO Fouad Tamer reported that conversations with cloud customers indicate strong 2025 CapEx and a positive outlook for 2026, with similar strength in wireline communications and an improving industrial PMI. He stated that the fundamentals are positive, with caution only related to tariffs. Tamer also explained that new product growth is driven by a mix of recovering unit volumes and ASP improvements from the Nexus and Avant product families.

Srinivas Pajjuri asked about the post-quantum cryptography (PQC) trend, seeking to understand customer timelines and how Lattice benefits from this opportunity. He also questioned the company's OpEx strategy, balancing recent cost reductions with the need to invest in R&D to capture significant market opportunities.

Answer

CEO Ford Tamer described PQC as one of the most exciting trends, noting Lattice is the only company with a solution available today and is seeing wide adoption as customers prepare for new regulations. Regarding OpEx, both Ford Tamer and CAO Tonya Stevens explained that the company is transforming its cost structure by aggressively hiring in lower-cost geos like India, which allows them to add R&D resources and capabilities while maintaining financial discipline.

Srinivas Pajjuri of Raymond James asked for the drivers of near-term weakness, questioning if it's confined to the auto and industrial correction or if the Comms and Compute segment is also seeing a slowdown. He also asked if the Q4 OpEx guidance fully reflects recent workforce reductions.

Answer

CEO Ford Tamer attributed the trend to a significant mix shift, with the decline in the large Industrial & Auto segment masking strong performance in Compute. Interim CFO Tonya Stevens clarified that the Q4 OpEx guidance includes the impact of the workforce reduction, which will fully benefit results in 2025, leading to an expected low double-digit EPS expansion for the year.

Srinivas Pajjuri asked about the second-half Foundry/Logic demand outlook, specifically N2 cycle timing, and the long-term implications of high-NA EUV for process control intensity.

Answer

CFO Bren Higgins noted the N2 investment cycle is strong and expected to at least double next year. CEO Richard Wallace explained that high-NA's smaller features will inherently drive demand for more sensitive inspection, including increased reticle verification. He stated that customer adoption will depend on total cost and the availability of adequate metrology, which is a positive long-term driver for KLA.

Srinivas Pajjuri of Raymond James Financial, Inc. questioned the implied sequential decline in Foundry/Logic revenue given strong N2 commentary. He also asked about N3's contribution and the change in process control intensity from N3 to N2.

Answer

CFO Bren Higgins clarified that Foundry/Logic is relatively consistent, with memory becoming a higher mix percentage. CEO Rick Wallace added that some non-N2/N3 spending in December was not repeating. Higgins stated that new investment is primarily N2-focused and updated that KLA's share of WFE at N2 is now expected to be 90-100 basis points higher than at N3, an increase from the prior 75 bps estimate.

Srinivas Pajjuri sought to clarify whether near-term strength was driven more by 3-nanometer or 2-nanometer demand. He also asked about the impact of a potential China slowdown on KLA's bookings and visibility via its Remaining Performance Obligation (RPO).

Answer

CFO Bren Higgins clarified that recent upside was from 3-nanometer, but 2-nanometer is expected to be the big driver for 2025. Regarding visibility, he noted that the RPO had flattened and might dip slightly before turning around, as shorter lead times are balanced by new customers placing orders further in advance to secure capacity.

Srinivas Pajjuri of Raymond James asked for the reason behind the weaker Q2 server guidance and inquired about the internal versus external manufacturing mix for Panther Lake and the future Nova Lake products.

Answer

Executive Michelle C. Holthaus cited Q1 pull-ins by hyperscalers and supply constraints on older parts for the softer Q2 server outlook. She confirmed the goal to bring ~70% of the Panther Lake die in-house to 18A remains. For Nova Lake, she stated that while it will use both TSMC and Intel processes, the aggregate number of wafers built internally at Intel will increase compared to Panther Lake.

Srinivas Pajjuri of Raymond James inquired about the assumptions for achieving foundry breakeven by 2027, particularly the required mix of internal versus external customers. He also asked for an update on the plan to manufacture Panther Lake on the 18A process.

Answer

CFO and Interim Co-CEO David Zinsner stated the 2027 foundry breakeven target is primarily based on internal wafers moving to higher-margin EUV nodes, with potential upside from external customers. Michelle C. Holthaus, Interim Co-CEO, confirmed Panther Lake is set for the internal 18A process, while the subsequent Nova Lake product will utilize a hybrid model with both internal and external die.

Srinivas Pajjuri questioned why Intel's advanced packaging services are not seeing more public traction given industry tightness. He also asked about the gross margin impact of integrating memory on the Lunar Lake package and the architectural rationale.

Answer

CEO Pat Gelsinger responded that there is significant interest in Intel's packaging, but moving supply chains is a complex process. He noted the external foundry pipeline is strong, driven by packaging, and the business is now profitable. CFO David Zinsner confirmed the on-package memory for Lunar Lake has a 'meaningful impact' on margins. Gelsinger explained this was a 'one-off' design choice made when Lunar Lake was a niche product, which will not be repeated in future volume products like Panther Lake.

Srinivas Pajjuri asked for clarification on the HBM price premium for 12-high stacks and the manufacturing complexity of the HBM4 transition. He also questioned how Micron can maintain its market share goals amid a rising TAM and its flexibility to ramp supply to capture potential market opportunities.

Answer

Chief Business Officer Sumit Sadana confirmed the 12-high HBM price per bit is higher due to complexity, not just capacity. EVP of Global Ops Manish Bhatia described the HBM4 transition as integrating new front-end and assembly technologies, building on the learnings from the successful HBM3E ramp. Bhatia also noted that better-than-planned production is helping achieve share targets, while Sadana added that Micron is making substantial, yet disciplined, investments to capture long-term growth.

Srinivas Pajjuri requested more color on which end markets still have excess inventory. He also asked for details on other new products driving growth beyond CGM and the potential size and penetration of these emerging markets.

Answer

Chief Executive Officer Matt Johnson explained that remaining inventory issues are now customer-specific rather than market-wide, and that design win ramps are the primary growth driver for 2025. He identified ESL, smart metering, new WiFi products, and broad Bluetooth adoption as other key growth contributors. He noted that markets like CGM and ESL, while early in adoption, already represent hundreds of millions of units annually.

Srinivas Pajjuri of Raymond James inquired about the uneven booking patterns across end markets and sought details on the potential ASP uplift and market expansion from Edge AI integration.

Answer

CEO Robert Johnson explained that bookings show more strength in Home & Life compared to the Industrial & Commercial segment. Regarding AI, he stated that it drives higher Average Selling Prices (ASPs) due to increased silicon complexity and expands the company's addressable market by enabling new applications. He emphasized that AI integration is a net positive for both product-level revenue and overall market adoption.

Srini Pajjuri sought clarification on the 'flattish' CSBG outlook and questioned the sustainability of the molybdenum (moly) transition in NAND given the weak demand environment.

Answer

EVP & CFO Douglas Bettinger confirmed the 'flattish' CSBG outlook was for calendar year 2025 versus 2024. CEO Timothy Archer explained the moly transition is a multi-year trend as capacity moves to higher layer counts. He reconciled the spending by noting that upgrades are a WFE-efficient way to achieve lower bit costs and higher performance, characterizing the current phase as the 'early signs' of a longer cycle.

Srinivas Pajjuri asked where Lam has the greatest visibility for WFE growth in 2025 and questioned how Lam expects to gain market share in logic and foundry, given that competitors also benefit from the same technology transitions.

Answer

CEO Timothy Archer indicated the best visibility is in NAND upgrades, strong leading-edge logic, and strengthening advanced packaging. He explained that Lam gains share during these inflections because they allow Lam to enter new applications with an expanded product portfolio, such as selective etch for GAA and increased copper plating for backside power, which represent new revenue streams and market expansion for the company.

Srinivas Pajjuri requested an update on "Customer C," a major ASIC opportunity previously slated for a 2026 ramp and described as potentially larger than the first two customers combined.

Answer

CEO Matt Murphy confirmed that this program continues to be the largest of the three major custom silicon opportunities in their pipeline. He stated that the program is "tracking well" with great support from both teams. He added that the overall momentum for custom silicon has only increased since the company's AI Day, reinforcing his optimism for this and other customer programs.

Srinivas Pajjuri asked about the recovery in Marvell's traditional businesses (Enterprise Networking and Carrier), inquiring about their normalized quarterly run rate, the timeline to reach it, and their long-term growth prospects.

Answer

CEO Matt Murphy confirmed these businesses bottomed in the first half and are now growing, with accelerated growth expected from Q3 to Q4. He stated the goal is to drive these businesses back to a combined annualized run rate of around $2 billion to $2.2 billion. Long-term, he characterized them as low-to-mid-single-digit growth markets that are profitable and important to the portfolio, though the primary investment focus remains on the high-growth data center opportunity.

Srinivas Pajjuri requested a revenue breakdown of the broad markets segments and sought clarification on the inventory issues in infrastructure and cloud, given the strength in AI. He also asked why the December guidance was slightly below normal seasonality.

Answer

CFO Kris Sennesael provided the approximate broad markets mix: 40-50% Edge IoT, 35-40% networking/infra/cloud, and 20-25% industrial/auto. He clarified that while AI data centers are a bright spot, the traditional cloud and data center markets remain muted with inventory correction. He attributed the slightly below-seasonal guidance primarily to the more measured pace of recovery in broad markets, not weakness with the largest customer.

Srinivas Pajjuri pointed out the seemingly counterintuitive dynamic where blended Flash ASPs fell 6% while like-for-like ASPs rose 4%, asking for an explanation given the growing mix of higher-priced enterprise SSDs.

Answer

CEO David Goeckeler corrected the premise, stating like-for-like ASPs were up 4% while blended ASPs were down 6%. He attributed this dynamic entirely to product mix, noting that while the enterprise SSD story is emerging, the company had a higher mix of mobile products in the quarter, which influenced the overall blended ASP downward.