Thomas O’Malley • Barclays Capital

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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.

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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.

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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.

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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.

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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.

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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.

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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.

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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.

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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.

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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.

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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.

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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.

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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.

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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.

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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.

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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.

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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.

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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.

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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.

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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.

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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.

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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.

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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.

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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.

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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.

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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.'

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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.

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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.

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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.

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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.

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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.

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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.

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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.

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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.

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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.

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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.

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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.

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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.

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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.

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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.

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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."

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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.

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Mark Adams, President & CEO, responded that the company is not seeing any significant inventory builds or pull-forwards in the memory business, stating that inventory levels appear balanced. For the Advanced Computing segment's Q4 outlook, Adams clarified that the expected growth is not from one single major deployment, but rather from a more diversified set of customers, reinforcing the inherently 'lumpy' nature of project timing in that business.

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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.

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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.

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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.

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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.

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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.

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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.

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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.

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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.

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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.

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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.

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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.

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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.

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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.

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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.

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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.

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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.

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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.

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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.

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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.

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