Thomas O’Malley

Thomas O'Malley asked for clarification on the mix of Micron's CapEx for the current year, specifically seeking details on the proportion of construction CapEx or trends on a normalized basis.

Answer

Manish Bhatia (EVP of Global Operations) reiterated that construction CapEx is projected to double from fiscal year 2025 to 2026, but did not provide specific percentages or a base number for the current year's CapEx mix.

Thomas O'Malley asked for a reminder of the mix of Micron's CapEx for the current year, specifically the proportion of construction CapEx, or the trends on a normalized basis.

Answer

Manish Bhatia (EVP of Global Operations) referred to Mark Murphy's earlier comment that construction CapEx is doubling from fiscal year 2025 to 2026, indicating a significant increase in that component of CapEx.

Thomas O'Malley inquired about the current state of the NAND industry, including reports of hyperscaler demand, pricing increases, and Micron's bit shipments. He also asked for clarification on the fiscal 2026 CAPEX guidance, specifically the net amount and the allocation between DRAM and NAND spend.

Answer

Sumit Sadana, EVP and Chief Business Officer, explained that FQ4 NAND bit decline was mix-driven noise and that NAND industry conditions are expected to improve in calendar 2026, driven by hyperscaler AI server deployments and increased data center SSD usage. He noted Micron's strong position in data center SSDs. Mark Murphy, EVP & CFO, added that Micron continues to reduce NAND wafer outs, slow node transitions, and work down inventories. Manish Bhatia, EVP - Global Operations, mentioned that exiting managed NAND would free up supply for the data center market. Mark Murphy clarified that the fiscal 2026 CAPEX guidance of approximately $18 billion net is primarily for DRAM construction and equipment.

Asked about Micron's view on its normalized HBM market share going forward and its ability to increase capacity, as well as the current NAND utilization rate and the plan for utilization next year.

Answer

On HBM, now that it's at scale, it will be managed as part of the overall portfolio with a focus on ROI and profitability, without committing to a specific future share target. The capacity is fungible, providing flexibility. On NAND, overall wafer capacity will be structurally down 10% by the end of fiscal 2025, which has reduced underutilization, though some remains. The leading-edge NAND nodes are fully utilized.

Thomas O'Malley of Barclays asked about Micron's view on its normalized HBM share for next year, given its accelerated progress, and its ability to increase capacity. He also inquired about current NAND utilization levels and the strategy for bringing capacity online in the future.

Answer

Chairman, President & CEO Sanjay Mehrotra explained that HBM is now a scaled business and will be managed within the portfolio with a focus on ROI, noting its capacity is fungible with other products, providing flexibility. On NAND, he reiterated that overall wafer capacity will be structurally down about 10% by the end of fiscal 2025 versus fiscal 2024. This has reduced underutilization, although some legacy NAND remains underutilized while leading-edge nodes are fully utilized.

Thomas O'Malley inquired about the rapid expansion of the Active Electrical Cable (AEC) market, specifically how the Active LED Cable (ALC) market could be double the AEC Total Addressable Market (TAM), and whether this is driven by units or Average Selling Prices (ASPs). He also asked for details on the percentages of the top four customers in Q2 and the expected ramp of new hyperscale customers.

Answer

President and CEO Bill Brennan explained that the ALC TAM expansion is a combination of both quantity and ASPs, highlighting ALCs' ability to deliver AEC-class reliability, power efficiency, and system cost with thinner wire and longer reach, ideal for row-scale networks with a tremendous increase in connections. For customer mix, Bill Brennan detailed Q2 revenue percentages for the top four customers (42%, 24%, 16%, 11%), noting the non-linear ramp of individual hyperscalers and the company's 12-month visibility.

Thomas O'Malley inquired about Credo's strategy for scale-up architectures like UALink and NVLink Fusion, and sought evidence of the company's growing traction in the high-speed optical market.

Answer

CEO Bill Brennan explained that while PCIe Gen5/6 is the near-term opportunity, Credo's future 224G SerDes-based AECs will support emerging standards like UALink and NVLink Fusion. On the optical front, Brennan highlighted strong momentum, with plans to more than double optical revenue in fiscal 2026. He pointed to a significant 800G LRO DSP demonstration at OFC that achieved sub-10-watt power consumption as a key proof point of their innovation and traction.

Thomas O'Malley asked about Credo's potential plans to enter the PCIe switching market as a natural progression from its retimer and cable products. He also inquired about the relative opportunity size between AI scale-up and scale-out networks and Credo's positioning for each.

Answer

CEO William Brennan stated that moving into PCIe switching is a "natural progression" and a "possible spot for us to grow into over time," but the current focus is on perfecting PCIe retimers and AECs. He explained that the scale-up network opportunity is likely larger than scale-out in a 2-3 year timeframe, especially as the market moves from 32-gig NRZ to 64-gig PAM-4 with PCIe Gen6, playing to Credo's strengths.

Thomas O'Malley inquired about the specific growth drivers for the anticipated 50% growth in fiscal '26, particularly the mix between AECs and the new 200-gig per lane DSPs. He also asked for Credo's view on the long-term architectural battle between Ethernet and PCIe in back-end networks.

Answer

CEO William Brennan clarified that AECs will be the main revenue driver in fiscal '26 due to their larger market size, although optical DSPs may see a higher percentage growth rate. On the network architecture question, Brennan stated Credo is agnostic, as the overarching trend toward faster speeds benefits the company in both Ethernet and PCIe markets, positioning them well regardless of which standard prevails.

Thomas O'Malley asked for the specific drivers behind the better-than-expected product revenue and strong product gross margin in Q1. He also inquired about the underlying assumption for IP revenue within the Q2 guidance.

Answer

CFO Dan Fleming attributed the strong product revenue to higher turns bookings, led by their largest AEC hyperscaler customer. He explained that the significant product gross margin expansion was primarily driven by increased scale. For Q2, Fleming expects IP to be a 'modestly' larger contributor than in Q1 but emphasized that a large IP contribution is not required to meet the company's gross margin goals.

Thomas O'Malley asked about the customer reception for Helios at OCP, AMD's outlook on the crossover point between discrete GPU sales and full system (rack-scale) sales, and initial customer feedback on the Helios rack. He also questioned the primary industry constraint for large AI deployments into next year, specifically whether it would be component availability or data center infrastructure (power/CapEx).

Answer

Dr. Lisa Su, Chair and CEO, reported phenomenal OCP reception for MI450 and Helios, noting expanded customer interest and the expectation that early MI450 customers will primarily adopt rack-scale solutions. On constraints, Dr. Su emphasized the need for ecosystem-wide planning across power, supply chain, and components, expressing confidence in AMD's supply chain readiness to support significant growth.

Thomas O'Malley inquired about customer responses to the 'Helios' rack-scale solution following the OCP announcement, AMD's view on discrete versus system sales for MI450 into next year, and when a crossover might occur. He also asked about potential industry constraints, specifically whether component availability, data center infrastructure, or power would be the primary gating factor for large-scale deployments in the coming year.

Answer

Lisa Su, Chair and CEO of AMD, reported phenomenal OCP reception for 'Helios' and MI450, noting expanded customer interest. She expects early MI450 customers to primarily adopt rack-scale solutions. Addressing constraints, Lisa Su stated that the entire ecosystem must plan together, with AMD working closely with customers on power plans and supply chain partners for capacity. She expressed confidence in the supply chain to support significant growth, acknowledging that all aspects will be tight but the ecosystem is actively working to address them.

Thomas O’Malley of Barclays Capital inquired about AMD's Client business performance, asking if strong Q2 results indicated a pull-forward of demand and how the second half might look. He also asked for an update on the potential resumption of MI308 shipments to China, including supply chain readiness and inventory status.

Answer

CEO Lisa Su responded that the company does not see significant pull-forward in the Client segment, noting strong end-user consumption and ASP growth. She guided for modest, less-than-seasonal growth in Q3. Regarding China, Dr. Su stated that while licenses for MI308 are still under review, the inventory is mostly work-in-process, meaning a ramp-up to fulfill demand would take a couple of quarters after any approvals are granted.

Thomas O’Malley asked about the Client business outlook for the second half of 2025, questioning potential demand pull-forward into Q2, and also inquired about the status of MI308 shipments to China.

Answer

Chair and CEO Lisa Su stated that strong Q2 Client performance was driven by robust end-user consumption, not a pull-forward, and expects moderate growth in Q3. Regarding China, she noted that export license applications for the MI308 are under review and that it would take a couple of quarters to work through the related inventory once licenses are approved.

Thomas O'Malley questioned AMD's position on system-level AI architectures, asking if the company has all the necessary components, especially for interconnects. He also requested an outlook for the Client business for the full year, separating market growth from expected share gains.

Answer

CEO Lisa Su affirmed that AMD has all the required pieces for system-level solutions, including deep ecosystem partnerships. She emphasized that customers want reference architectures that work but also the flexibility to interchange components like networking, and AMD is focused on ensuring interoperability. On the Client business, Su highlighted that performance is driven by revenue share gains in high-end notebook, commercial, and desktop segments. She noted that while they are monitoring the macro environment, they believe their inventory position is healthy and not inflated by pull-ins.

Thomas O'Malley asked about the expected product mix between the MI300 and the new MI325 in Q4. He also requested an update on the recovery status of the various end markets within the Embedded segment heading into 2025.

Answer

CEO Dr. Lisa Su clarified that the majority of the Data Center GPU mix in Q4 will be the MI300, as the MI325 is launching late in the quarter and will ramp more significantly in Q1 2025. For the Embedded business, she reiterated that the recovery is gradual and mixed, with continued strength in Test & Emulation and Aerospace & Defense, some recovery in Automotive, but persistent softness in Communications and Industrial.

Thomas O'Malley inquired about the timing of the exabyte crossover between the Mosaic 3 and Mosaic 4 platforms, asking if a 15-20% contribution from Mosaic 4 could be expected in the first half of fiscal 2027, and the potential supply addition from this transition.

Answer

Dave Mosley, Chair and CEO, indicated that the Mosaic 4 ramp is expected to be faster than Mosaic 3 due to commonality in piece parts, but execution on yields and scrap remains critical. He confirmed that the transition to Mosaic 4 will significantly increase exabyte output, and the team is focused on accelerating this process.

Thomas O'Malley asked about the timing of the crossover between the Mosaic 3 and Mosaic 4 platforms, the potential for a faster ramp for Mosaic 4, and how much supply that transition could add to the industry.

Answer

Seagate's Chair and CEO, Dave Mosley, expects a faster ramp for Mosaic 4 due to commonality with Mosaic 3, but it will be dictated by yield ramp. CFO Gianluca Romano noted the long cycle time for HAMR ramp, emphasizing the time needed to increase capacity.

Thomas O'Malley of Barclays inquired about the breadth of HAMR adoption beyond the initial lead customer and asked for an update on the previously mentioned mass capacity production ceiling of around 160 exabytes.

Answer

CEO Dave Mosley confirmed that multiple customers are now ramping HAMR and showing strong demand. He clarified that the 160 exabyte level is no longer a 'wall,' as Seagate can now grow exabyte capacity through technology transitions to its Mozaic 3+ and 4+ platforms rather than by increasing the gross number of drives produced.

Thomas O'Malley asked if the 14-week September quarter creates a revenue headwind. He also inquired if Seagate is approaching an exabyte shipment 'wall' that requires a technology transition and if customers are becoming more aggressive on pricing due to tariff concerns.

Answer

CFO Gianluca Romano clarified that the extra week in the September quarter affects operating expenses but not revenue, which is negotiated on a quarterly basis. CEO Dave Mosley added that there is no hard exabyte 'wall' because aerial density gains from technology transitions allow the company to deliver more exabytes efficiently. He also stated they have not seen any change in customer pricing behavior.

Thomas O'Malley of Barclays requested more detail on the business mix, specifically asking for the current percentage of business from HAMR and the expected mix by the end of calendar year 2025.

Answer

CEO Dave Mosley did not provide specific percentages but noted the fast ramp of the 24/28TB PMR platform, which shares common parts with HAMR, enabling a quick transition. He emphasized that the HAMR ramp will be managed cautiously in line with customer qualification timelines, but the customer pull for higher capacities is very strong.

Thomas O'Malley from Barclays asked what actions Seagate would take if the HAMR ramp were further delayed, given that factories are already at capacity. He also asked for a potential timeframe for when AI could become a meaningful demand contributor.

Answer

CEO Dave Mosley expressed confidence in the HAMR timeline but stated that if a delay occurred, the company could easily pivot back to its last-generation PMR product, which is also not fully ramped and has very good margins. On AI, he noted that while it's a complex topic, the most significant current trend is the growth in video, which he considers a form of AI application. He sees this demand flowing through now and believes it will be a driver in the near future.

Thomas O'Malley inquired about the Jericho 4 Ethernet fabric router, the developing 'scale across' market, the timeline for material revenue uplift, and the importance of these switches for inferencing workloads.

Answer

Hock Tan, President and CEO, explained that 'scale across' involves networking clusters beyond 100,000 XPUs/GPUs across multiple data centers, requiring deep buffering and intelligent congestion control. He noted Jericho 3 has been deployed for two years, and Jericho 4 (51.2 Tbps) addresses increased bandwidth needs for AI training, leveraging proven Ethernet technology.

Thomas O'Malley from Barclays sought more clarity on the Q3 'digestion' in the custom ASIC business and asked if Marvell was seeing any supply chain constraints, particularly with lasers, that could impact its strong optical business ramp.

Answer

Chairman & CEO Matt Murphy clarified the Q3 custom issue is purely a timing matter related to customer build schedules, not a product transition. Regarding the supply chain, both Murphy and President & COO Chris Koopmans noted that while the environment is tight, Marvell's deep partnerships and strong execution have enabled them to manage through any 'noise' and successfully meet customer demand for their optics products.

Thomas O'Malley of Barclays asked if the optical business was flattening given the mid-single-digit data center growth guidance while custom silicon grows strongly, and also requested sizing the opportunity for other products like AECs and retimers.

Answer

Chairman and CEO Matt Murphy clarified that the optical business is performing well and is expected to grow throughout the year, alongside custom silicon. He also noted that Active Electrical Cables (AECs) are ramping this year. CFO Willem Meintjes added that a strong seasonal snapback in the lower-margin consumer business also contributes to the overall Q2 gross margin guidance.

Thomas O'Malley from Barclays asked about the adoption of co-packaged optics (CPO), where it might appear first, and its implications for the DSP business. He also asked about the health of the 800G optical market regarding inventory and pricing ahead of the 1.6T transition.

Answer

Matthew Murphy, Chairman and CEO, explained that the primary opportunity for CPO has shifted from long-term scale-out applications to more immediate scale-up connectivity within AI racks, which he views as an expansion of Marvell's addressable market. On the optical market, he described demand for 800G products as very healthy and strong, positioning it as the current workhorse. He also noted significant customer traction for Marvell's new 3-nanometer 1.6T product due to its power efficiency.

Thomas O'Malley asked about the non-optical DSP components of the Amazon agreement, such as AECs, PCIe retimers, and switching, seeking to understand their significance and growth potential.

Answer

CEO Matt Murphy described the networking side of the agreement as "extremely important" and not heavily outweighed by the custom silicon portion. He highlighted switching as a key growth area with the Teralynx 10 product gaining strong interest. He also identified Active Electrical Cables (AECs) as a "bright spot" that is currently ramping, emphasizing the five-year deal provides a broad platform for innovation across these product lines.

Thomas O'Malley asked for a breakdown of the key drivers for the accelerated $600 million quarterly revenue target and questioned the significance of a competitor's recent 3D sensing press release involving Apple.

Answer

President and CEO Michael Hurlston identified sustained strength in components, significant growth in cloud modules, and new revenue from OCS as the primary contributors to reaching the $600 million target. He characterized the 3D sensing business as a minimal part of Lumentum's future but noted the company is gaining share and has an innovation lead.

Thomas O'Malley inquired about the proprietary interconnect customer opportunity mentioned in the prepared remarks and sought clarification on whether the reiterated $500 million quarterly revenue target for calendar year 2025 implies a specific timeline.

Answer

President and CEO Alan Lowe described the proprietary product as a unique, ultra-high-power laser (chip on carrier) currently shipping in preproduction volumes, with significant volume ramps expected through calendar 2025 and into 2026. Regarding the revenue target, he stated that management is consistently repeating the goal of reaching $500 million in quarterly revenue by the end of calendar 2025 to maintain expectations, affirming they are well on track to achieve it.

Thomas O'Malley of Barclays asked for an update on the qualification status of new transceiver customers and for a breakdown of the key drivers needed to reach the $500 million quarterly revenue target.

Answer

President and CEO Alan Lowe reported that one new customer is already qualified with orders received, while two others are on track for qualification in the first calendar quarter of 2025. He detailed that reaching the $500 million target will be driven by growth in EML chip capacity, ramping transceiver volumes, and strength in data center interconnect, without relying on a major traditional telecom recovery.

Thomas O'Malley of Barclays requested a breakdown of the growth drivers within the Data Center segment, including TIAs, drivers, ACC, and LPO. He also asked for details on the long-term product roadmap and strategic importance of the RTP fab.

Answer

President and CEO Stephen Daly attributed the Data Center strength to broad demand across all data rates, especially 800G and 1.6T, and revenue diversification from new LPO and photodetector (PD) products. For the RTP fab, Daly explained the strategy involves developing high-margin mimic products, insourcing passive components to the Lowell facility to improve utilization, and leveraging the fab's GaN on SiC technology for defense and telecom applications. CFO John Kober added that the RTP fab is a trusted foundry, which is a strategic capability.

Thomas O'Malley inquired about MACOM's Data Center business, seeking an update on the Active Copper Cable (ACC) inflection point and the potential opportunity for Linear Pluggable Optics (LPO) and co-packaged optics.

Answer

President and CEO Stephen Daly confirmed the Data Center segment's strength is driven by its 800G optical portfolio. He noted that while architectural changes at a key customer will alter the ACC demand trajectory, broader interest in ACC for 800G and 1.6T applications is growing. Daly highlighted that LPO solutions are seeing significant interest and are expected to become a revenue contributor in late calendar 2025 and into 2026.

Thomas O’Malley of Barclays Capital questioned the Q2 geographic revenue mix, asking if the increase in Asia Pacific (ex-China) was due to rerouted shipments originally intended for China. He also sought clarity on the second-half outlook for China revenue given the resolution of tariff-related delays.

Answer

CFO John Kiernan clarified that the delayed shipments were accepted by China customers directly after tariffs were reduced and were not rerouted. He stated that the geographic mix played out as expected, with China revenue at about 30% for the first half and projected to be around 20% for the second half, consistent with their initial annual forecast.

Thomas O'Malley of Barclays asked for the specific reasons behind the full-year revenue growth guidance increase from over 30% to over 40%, and sought to clarify the sequential growth drivers between the CED and consumer segments for the second half of the year.

Answer

CEO Rajesh Vashist attributed the upgraded guidance to improved visibility into continued strength across all segments for the second half, highlighting networking, accelerators, and switches within the data center as key drivers, alongside typical seasonal growth in the consumer business. CFO Beth Howe clarified that her comment on CED being the strongest grower was on a full-year, year-over-year basis, while the consumer pickup was a sequential comment reflecting expected H2 seasonality.

Thomas O'Malley asked for a breakdown of the 10+ Scorpio X-switch customer engagements between PCIe and UALink, and inquired about the specific switching attach rate for custom XPU platforms compared to merchant GPU arrays.

Answer

President & COO Sanjay Gajendra clarified that the 10+ current engagements are based on PCIe for near-term opportunities, though many of these customers are also evaluating UALink for the future. He declined to comment on specific attach rates, stating that configurations vary by platform and the focus is on qualifying these designs for production.

Thomas O'Malley requested quantification of the impact from China sales restrictions and asked for commentary on the consistency of the company's full-year revenue ramp outlook, given market noise about potential delays in hyperscaler programs.

Answer

CFO Mike Tate clarified that China end-customer demand is less than 10% of revenue, making the impact from restrictions manageable. CEO Jitendra Mohan and COO Sanjay Gajendra affirmed that their outlook remains largely unchanged, as their guidance models conservatively account for the complexities and potential timing shifts in large-scale system deployments by customers.

Thomas O'Malley sought clarification on the timeline for Scorpio becoming Astera's largest product line and questioned the commentary about the H1 2025 revenue mix for Aries being weighted toward internal AI efforts.

Answer

CEO Jitendra Mohan explained that Scorpio's potential stems from its significantly higher ASP and the larger Total Addressable Market (TAM) for switches compared to retimers. CFO Michael Tate clarified that while merchant GPU platforms drive both Aries and Scorpio, the large, incremental dollar content from Scorpio is tied to new, complex custom designs that are expected to ramp in volume in H2 2025, following pre-production in H1.

Thomas O'Malley of Barclays inquired about Astera Labs' competitive positioning with the Scorpio X Series back-end switch and its long-term market potential versus the P-Series. He also asked about customer diversification for the Taurus product family.

Answer

Executive Jitendra Mohan positioned the Scorpio P-Series as a ~$1B+ immediate market but agreed the X-Series has a larger long-term TAM, calling it a 'greenfield' opportunity outside the dominant GPU ecosystem. President and COO Sanjay Gajendra stated that the Taurus business is expected to broaden in 2025 as higher data rates drive more diversified adoption of active electrical cables.

Thomas O'Malley requested a breakdown of the advanced packaging segment, specifically the proportion of HBM revenue today versus a year ago. He also posed a strategic question about whether Camtek benefits more from a two-supplier or three-supplier HBM market.

Answer

COO Ramy Langer clarified that of the 70% of revenue from advanced packaging, 50% is from HPC (which includes both HBM and chiplets) and 20% is from conventional advanced packaging. He stated the company does not break out HBM vs. chiplets within the HPC segment. Regarding the number of HBM suppliers, Mr. Langer expressed no preference, noting that all players are customers and a third qualified supplier would represent an additional growth opportunity.

Thomas O'Malley asked about the strong performance in the Industrial and Commercial business, questioning if there were any geographic mix changes or signs of pull-forward demand seen by other chipmakers. He also inquired about the drivers behind the significant incremental gross margin improvement guided for Q3.

Answer

CEO Matt Johnson confirmed there were no significant geographic shifts and that data does not indicate any pull-forward demand; in fact, end-customer inventory is down. CFO Dean Butler explained the strong gross margin outlook is primarily driven by a favorable business mix, with continued strength in higher-margin industrial applications sold through the distribution channel.

Thomas O'Malley inquired about the strategy for channel inventory in the upcoming June quarter and asked for a breakdown of revenue from new products versus broad-based products, including any pricing differences.

Answer

CFO Dean Butler explained that the goal for the June quarter is to increase channel inventory from 48 days to the low 50s, but normalization to the 70-75 day target will be a multi-quarter process. CEO Matt Johnson noted that while they don't break out the specific revenue split, a majority of incremental revenue is from new product ramps, and pricing is not meaningfully different, which allows for continued gross margin progression.

Thomas O'Malley asked about the dynamic between direct and distribution revenue, noting the mix shifted toward direct in Q4. He also requested an update on the company's top customer concentration.

Answer

Chief Financial Officer Dean Butler explained the mix shift was caused by fast-growing direct-shipment CGM ramps outpacing the more channel-heavy industrial business. He expects the distribution mix to increase as the industrial market recovers. He reiterated that while top customers in filings are distributors, the company has never had a single end customer account for 10% of revenue, and that remains true.

Thomas O'Malley of Barclays sought clarification on whether the 'broadening of leading-edge trends' meant new customers or new opportunities, and asked how KLA distinguishes its own outperformance from broader market strength in its forecasts.

Answer

President & CEO Rick Wallace confirmed the trend includes both more customers at the leading edge and a proliferation of designs. He explained that KLA's confidence comes from having a portfolio that can solve more complex problems for customers, driven by architectural changes and demand in HBM, logic, and packaging. EVP & CFO Bren Higgins added that their forecast is informed by their unique position, where challenges like defect density on large, high-value die create specific opportunities for process control.

Thomas O'Malley from Barclays sought clarification on whether the 'broadening of leading-edge trends' meant new customers or expanded opportunities with existing ones, and asked how KLA discerns its own outperformance from broader market growth when forecasting.

Answer

President & CEO Rick Wallace confirmed the 'broadening' refers to both more customers operating at the leading edge and a proliferation of designs from existing customers. Regarding forecasting, Wallace explained that KLA has more tools to solve previously unmet needs, and customers are now dynamically determining their process control needs. EVP & CFO Bren Higgins added that their confidence is informed by direct customer conversations and unique opportunities for process control created by large, high-value die in high-performance computing, which gives them confidence in their own business inflection.

Thomas O'Malley asked about the second-half memory mix between DRAM and NAND and requested details on the methodology used to calculate the 100 basis point tariff impact on gross margin.

Answer

CFO Bren Higgins confirmed DRAM is the main memory driver, fueled by HBM investments, with limited NAND activity. CEO Richard Wallace and CFO Bren Higgins explained the tariff calculation was a detailed, bottom-up analysis by their logistics team, assessing global material flows and service contract structures where KLA is the importer of record to quantify the impact based on current rules.

Thomas O'Malley of Barclays PLC requested details on the uptick in NAND spending for the March quarter and asked if KLA was seeing any rush orders for DRAM capacity driven by AI demand and competitive positioning.

Answer

CFO Bren Higgins described the NAND strength as broad-based but off a very low level, expecting only modest improvement in 2025. CEO Rick Wallace noted that while there were no short-term changes or rush orders in DRAM, momentum for AI infrastructure demand remains strong, leading to active discussions about slot availability for KLA's supply-constrained tools.

Thomas O'Malley asked for KLA's perspective on the NAND market recovery and its drivers for 2025. He also inquired about the timing of hybrid bonding opportunities in advanced packaging and the current growth drivers for that business.

Answer

CFO Bren Higgins noted that while NAND is recovering from a very low base, he doesn't see significant absolute dollar growth in 2025. For advanced packaging, Higgins stated that production hybrid bonding for HBM is not expected until 2026-2027. CEO Rick Wallace added that the key dynamic driving the packaging business is the high cost of failure, which now justifies using KLA's high-end inspection tools.

Thomas O'Malley inquired about the drivers of the strong sequential growth in the Industrial segment and the divergence between the e-mobility and legacy auto businesses.

Answer

CFO Derek D'Antilio explained that industrial growth was broad-based, led by data center, robotics, and a resurgence in clean energy, with particular strength in the 'Other Asia' region. CEO Michael Doogue clarified that e-mobility growth is balanced between ADAS and EV applications, with ADAS being the larger revenue contributor. CFO D'Antilio added that direct exposure to US EV policy changes is minimal.

Thomas O'Malley of Barclays asked for the expected revenue split between automotive and industrial for the March quarter, the growth trajectory of the e-mobility business, and the significance of China in the industrial segment's revenue.

Answer

CFO Derek D'Antilio provided regional color, expecting a single-digit decline in China but a rebound in North America, while noting China is not outsized in industrial revenue. CEO Vineet Nargolwala clarified that the recent dip in e-mobility (xEV and ADAS) was a temporary artifact of inventory management and that long-term design wins heavily favor this segment, ensuring future growth.

Thomas O'Malley from Barclays asked why Allegro's 2024 revenue correction appears sharper than its peers and whether the company corrected earlier, leading to a leaner supply chain.

Answer

CEO Vineet Nargolwala stated that Allegro "took our medicine early" by proactively managing inventory and avoiding restrictive long-term supply agreements. CFO Derek D'Antilio added that the company began opening its order cancellation window a year prior. He noted that while China's inventory has normalized, North America and Europe still have excess to work through. He confirmed the target for channel inventory is 8-12 weeks.

Thomas O'Malley requested more detail on the tariff environment differences between the September and December quarters and asked if the December outlook for China was conservative given the recent strength.

Answer

EVP and CFO Douglas Bittinger stated only that there are 'more tariff headwinds in December than September' without providing specifics. He asserted that the company's guidance is not intended to be conservative or aggressive but reflects their current view of the business environment, saying, 'We call it like we see it.'

Thomas O'Malley of Barclays asked for more details on the tariff headwinds expected in the December quarter and questioned if the December outlook for China was conservative given the recent short-notice rebound in spending.

Answer

EVP and CFO Doug Bittinger clarified that he was simply communicating that tariff headwinds are greater in December than in September, without providing further specifics. He firmly stated that the company's guidance is not intentionally conservative or aggressive but reflects their view of the business as they see it at that time.

Tom O'Malley asked what is driving the specific urgency for >200-layer NAND upgrades this year and how changing market share dynamics in foundry/logic might impact Lam.

Answer

EVP & CFO Douglas Bettinger cited the need for new capabilities like circuit-under-array to enable QLC for enterprise SSDs, which older nodes cannot provide, as a key driver for NAND upgrades. CEO Timothy Archer stated that spending by leading-edge foundry customers is a share gain opportunity for Lam, given the company's strength in key inflections like gate-all-around and advanced packaging.

Thomas O'Malley sought clarification on the report that ASPs were down in June. He also asked if Western Digital has a specific exabyte shipment level beyond which growth must come from technology transitions alone.

Answer

CFO Kris Sennesael clarified that while ASP per drive increased, ASP per terabyte was slightly down due to mix in a stable pricing environment. CEO Irving Tan addressed the second point, stating that after shipping 190 exabytes, the company's focus on high yields and technology transitions allows for growth without needing incremental capacity investments.

Thomas O'Malley of Barclays questioned the enforceability and practical benefits of the LTAs, drawing a parallel to past issues in the memory industry. He also asked for commentary on the unit versus pricing dynamics embedded in the June quarter guidance.

Answer

CEO Irving Tan differentiated the current HDD environment, stating that LTAs represent a structural shift toward a healthier, more collaborative partnership with customers to ensure supply stability. Interim CFO Don Bennett added that the revenue guide reflects sustained ASP increases as the product mix continues to shift toward higher-capacity, higher-value data center drives.

Thomas O'Malley asked for an update on the CapEx outlook for the NAND business, given the current utilization cuts and mid-cycle pause. He also asked if Western Digital has an internal framework for its maximum HDD exabyte capacity, similar to what competitors have shared.

Answer

CFO Wissam Jabre stated that the company's disciplined approach to CapEx remains unchanged, with the next significant investment tied to future technology node ramps. Incoming Western Digital CEO Tiang Yew Tan declined to provide a specific HDD capacity ceiling, emphasizing the focus on maintaining supply-demand balance and prudent capital management.

Thomas O'Malley asked for a quantification of the margin benefit from the growing mix of enterprise SSDs compared to the traditional NAND portfolio on a like-for-like basis.

Answer

CEO David Goeckeler described the enterprise SSD business as accretive to the overall portfolio. He noted that it is one of the best-priced markets within the Flash business, providing a positive tailwind to financial performance as its mix increases.

Thomas O'Malley inquired about the fiscal year's seasonality, questioning the disconnect between previously flat guidance for the largest customer and the newly reiterated 10%+ content growth. He also asked if the sequential strength in the Android business was a pull-forward ahead of Qorvo's exit from lower-margin segments.

Answer

SVP & CFO Grant Brown explained that while the full-year outlook is not being updated due to macro uncertainty and a CSG program delay, the core content growth story remains intact. He noted that two-thirds of the planned decline in Android revenue is expected in the second half of the fiscal year. SVP of Sales and Marketing Dave Fullwood added that the Android strength was driven by share gains at a major Korean customer and some inventory buffering in China related to trade dynamics.

Thomas O'Malley inquired about the drivers behind the forecasted content growth with Qorvo's largest smartphone customer, potential pricing pressures, and the expected cadence of the strategic exit from the Android market.

Answer

Frank Stewart, President of the Advanced Cellular Group, confirmed content gains in tuning, switches, filters, ultra high-band, and new envelope tracking (ET) solutions. David Fullwood, SVP of Sales and Marketing, noted that pricing pressure is being managed by exiting the mass-tier Android market and focusing on high-performance flagship tiers. CEO Robert Bruggeworth added that while the Android business will see a typical seasonal uptick in the June quarter, it is still on track to decline year-over-year as planned.

Thomas O'Malley of Barclays asked for help reconciling the March quarter guidance, which appeared conservative given positive commentary on key business segments. He also requested color on the total company outlook for the seasonally weak June quarter.

Answer

CFO Grant Brown explained the March guidance incorporates several factors: the divestiture of the silicon carbide business, a sequential increase in Android revenue, a material increase in the D&A business, and the ramp-down from large WiFi deployments. For the June quarter, Brown projected a total company revenue decline of 10-15% sequentially, driven by typical seasonality at its largest customer, the end of a Samsung flagship ramp, and a significant seasonal drop in the D&A business.

Thomas O'Malley asked for clarification on the commentary about 'content and ramp profiles varying by model' for Qorvo's largest customer and inquired about the long-term gross margin profile, questioning if the guided ~44% level is the new normal.

Answer

CFO Grant Brown explained that fiscal 2025 revenue is expected to be down slightly, primarily due to a mix shift in the Android market to entry-tier devices. For its largest customer, Qorvo anticipates a low single-digit revenue decline due to a combination of factors including unit volumes and content per model, but noted engagement on future programs is strong. Regarding margins, Brown reiterated the long-term 50%+ target but acknowledged near-term headwinds from the Android mix shift will pressure margins into early fiscal 2026. He stated the full fiscal year 2025 margin should be in the mid-40s.

Thomas O'Malley inquired if NXP would consider increasing channel inventory beyond its 11-week target and asked for segment-level detail behind the flat-to-slightly-up Q4 revenue outlook.

Answer

CEO Kurt Sievers confirmed that 11 weeks is the firm, long-term target for channel inventory, which was reassessed post-COVID and is embedded in their financial model. He declined to provide a segment-level breakdown for the Q4 outlook, stating that the guidance was based on the company's total historical seasonality and providing more detail would be a "stretch too far."

Thomas O'Malley from Barclays asked if the 11-week channel inventory target is a firm maximum or if there are circumstances to go higher, and also probed for more detail on the segment drivers behind the Q4 flat-to-slightly-up outlook.

Answer

CEO Kurt Sievers confirmed that eleven weeks is the stated long-term target, re-validated post-COVID, and is an element of their long-term financial model. He characterized it as the definition of 'normal' for the company. However, he declined to provide a segment-level breakdown for the Q4 outlook, stating it was a 'stretch too far' and that the guidance was based on the company's multi-year historical average.

Thomas O'Malley of Barclays asked for an update on regional trends, specifically the automotive inventory situation with North American customers, and the decision-making process for adjusting internal factory utilization rates.

Answer

CEO Kurt Sievers confirmed that inventory digestion at U.S. and European Tier 1 customers is ongoing, weighing on revenue, but noted that total inventory dollars are decreasing. CFO Bill Betz added that the company is balancing internal inventory dollars and factory utilization, which is in the low 70% range, and would likely increase utilization once a second-half recovery becomes more certain.

Thomas O’Malley from Barclays Capital asked about the Integrated Memory segment, questioning if the strong quarterly performance indicated any customer pull-forwards, given the full-year guide implies a sequential decline. He also inquired about the drivers for the expected Q4 strength in Advanced Computing, asking if it was due to a single large project or broader customer demand.

Answer

Mark Adams, President & CEO, clarified that the company is not seeing any significant inventory builds or pull-forwards in the memory business, noting that the pipeline for Q4 remains healthy. Regarding Advanced Computing, Adams stated that the anticipated Q4 strength is not dependent on a single major deployment, unlike in Q2, but is expected to be more diversified across a number of customers, though revenue timing remains lumpy.

Thomas O’Malley from Barclays questioned the dynamics in the Integrated Memory segment, noting the raised full-year guidance seemed to imply a sequential Q4 decline and asking about potential pull-forwards. He also asked if the Q4 acceleration in Advanced Computing was due to a single large project or broader customer strength.

Answer

President & CEO Mark Adams clarified that they are not seeing any inventory pull-forwards in the memory business and that the Q4 pipeline remains healthy. Regarding Advanced Computing, Adams stated that the expected Q4 strength is more diversified across multiple customers, unlike the single large deployment that drove Q2 results, reinforcing the lumpy nature of the business.

Thomas O'Malley asked for the revenue impact in the June quarter guidance from the decision to exit the silicon carbide devices and modules business. He also questioned the reasons for the slight sequential gross margin pressure in the guidance.

Answer

CEO James Anderson clarified that the discontinued silicon carbide business was largely pre-revenue, so there is no revenue impact on the forecast; the focus remains on substrates and epi. CFO Sherri Luther explained that the gross margin guidance range reflects potential headwinds from product mix. She highlighted that the company's optimization strategy, focusing on cost reductions and pricing, helped drive a 490 basis point year-over-year margin improvement and will continue to be a focus.

Thomas O'Malley from Barclays asked for a segment breakdown to explain the flat sequential revenue guidance for the March quarter and inquired if Coherent is seeing changes in ordering behavior from hyperscalers related to a move toward domestic production.

Answer

CEO James Anderson explained the flat guidance by stating that datacom and telecom revenues are expected to be up sequentially, offset by an expected sequential decline in the industrial-related businesses. On customer behavior, Anderson noted that supply chain resiliency, including geographic diversity and vertical integration, is a key advantage that customers value highly, creating an opportunity for Coherent to gain share.

Thomas O'Malley asked if there were additional non-strategic businesses identified for divestiture beyond the battery platform, and sought details on the 1.6T transceiver ramp, including timing, potential constraints, and the technology mix.

Answer

CEO James Anderson confirmed that other non-strategic product lines and assets are being addressed to improve margins and focus, with updates to be provided at the appropriate time. Regarding 1.6T transceivers, he reiterated the plan for a revenue ramp in calendar 2025, noting the company is technology-agnostic and will deploy the best solution for customers, whether it's EML, VCSEL, or silicon photonics.

Thomas O'Malley asked for specifics on the Android business performance in the March and June quarters and questioned how the company is distinguishing between potential demand pull-forwards and normal seasonal buying patterns.

Answer

CFO Kris Sennesael stated that the Android business was flat sequentially in March but is expected to see a sizable sequential increase in June. CEO Philip Brace added that current order patterns appear to reflect typical seasonality, and the company has seen no clear evidence of abnormal pull-ins.

Thomas O'Malley asked for details on the future camera controller content roadmap, noting its recent proliferation into lower-end devices, and requested color on content expectations for the upcoming fiscal year after a strong content growth year.

Answer

CEO John Forsyth confirmed the expansion of camera controller content into lower-priced phones, which he called a significant development. He outlined future growth vectors, including higher attach rates and increased processing capabilities. For the next fiscal year, he described it as a "waterfall year" building on the recent major audio refresh, with continued opportunities to grow value in camera controllers and, longer-term, in power and battery-related technologies.

Thomas O'Malley asked about the linearity of the strong December quarter, seeking to understand what drove the revenue beat beyond the fiscal calendar shift, and questioned if there was any mix shift towards legacy products.

Answer

CEO John Forsyth explained that the quarter saw more sustained demand than is typical, with customer orders remaining steady and even increasing slightly relative to when guidance was set. He added that the company did not observe any significant or pronounced mix shift towards older generation products during the quarter or heading into March.

Thomas O'Malley from Barclays noted that even with favorable seasonality, Cirrus Logic's implied full-year growth appears modest given significant content upgrades. He also asked for an update on the PC business tracking towards its 'low tens of millions' revenue goal for fiscal 2025 and the outlook for fiscal 2026.

Answer

CEO John Forsyth responded that guidance is based on current backlog and supply chain visibility, and the company must wait to see how the holiday season unfolds before commenting further on March. On the PC business, he confirmed it is tracking to the 'low tens of millions' target for fiscal 2025 and anticipates a 'meaningful step-up' in revenue for fiscal 2026 as more products launch.

Thomas O'Malley of Barclays asked about customer purchasing behavior early in the quarter and requested an update on the data center AI product strategy, particularly concerning Gaudi and Falcon Shores.

Answer

CFO David Zinsner noted a strong start to the quarter but said the guidance prudently assumes a slowdown in June due to tariff impacts. Executive Michelle C. Holthaus stated that CEO Lip-Bu Tan is re-evaluating the AI strategy. She confirmed the company is moving forward with the Jaguar Shores product, not Falcon Shores, and will provide a more detailed AI roadmap in the coming months.

Thomas O'Malley from Barclays inquired about TI's China-for-China strategy, asking if the company's facility in China could meet all in-country demand. He also asked if back-end manufacturing is always co-located with front-end wafer fabs.

Answer

CEO Haviv Ilan clarified that customers seek a dependable global footprint, not necessarily domestic-only manufacturing. He stated TI's global network is well-positioned to serve China's needs. CFO Rafael Lizardi and Haviv Ilan both confirmed that back-end (assembly and test) is not tied to front-end (fab) geography, explaining there are many permutations. A wafer from a U.S. fab could be assembled and tested in different Asian countries, providing significant logistical flexibility.

Thomas O'Malley asked if the lower depreciation guidance was solely due to grants or also reflected lower CapEx. He also asked for a response to reports about China investigating product dumping.

Answer

Executive Rafael Lizardi confirmed the updated depreciation forecast is a function of the grants, not lower CapEx, with the 2025 CapEx plan holding at $5 billion. Regarding China, Executive Haviv Ilan stated it is an important and competitive market where TI is well-positioned. He affirmed that TI has not been notified about any investigation and that it is 'business as usual' with customers in the region.

Thomas O'Malley of Barclays sought clarification on whether the personal electronics, enterprise, and communications markets are now growing sequentially. He also asked for an updated view on whether auto and industrial are still considered long-term double-digit growth markets.

Answer

CEO Haviv Ilan clarified that all three markets (PE, enterprise, comms) are growing sequentially at a fast pace (30%, 20%, and 25% respectively) but are still below their prior peaks. He reaffirmed his belief in the long-term growth profiles, stating the current auto cycle proves the thesis for the next 5-10 years, while industrial growth is a multi-decade trend.