Tom O'Malley

Tom O'Malley asked for clarification on whether the two new hyperscalers adopting PCIe are US or Chinese. He also sought to understand if AMD's MI500 series would support native UALink or UALink over Ethernet, given previous generations supported UALink over Ethernet.

Answer

Jitendra Mohan, CEO and Co-founder, confirmed the two new hyperscalers for PCIe are US-based. Regarding AMD's MI500 series, he referred to publicly released information, noting AMD supports both, but considers UALink native as the highest-performance scale-up protocol, without speaking for AMD directly.

Tom O'Malley asked for clarification on whether the two new hyperscalers adopting PCIe, with revenue expected in 2027, are U.S. or Chinese hyperscalers. He also inquired about the MI500 series supporting UALink, specifically whether it would be native UALink or UALink over Ethernet, noting the significant difference for switch usage.

Answer

Jitendra Mohan, CEO and Co-founder, confirmed the two new hyperscalers are U.S. hyperscalers. Regarding the MI500 series, he deferred to the AI customer but noted publicly released information indicates support for both native UALink and UALink over Ethernet, with native UALink considered the highest-performance scale-up protocol.

Tom O'Malley inquired about the guidance for gross margins in the March quarter, particularly with mobile revenue declining, and sought an update on the sampling process for new chips and upcoming announcements.

Answer

Ken Rizvi, CFO, stated that non-GAAP gross margins are expected to remain in the mid-53% range for Q3, consistent with the current product mix. Rahul Patel, President and CEO, detailed that Astra microprocessors are sampling and nearing production, while two new products (an Astra MCU with Wi-Fi 7/Bluetooth 6/Thread and a standalone Wi-Fi 7/Bluetooth/BLE/Thread Connectivity SoC) are in early sampling. A semi-custom MCU is on track for tape-out in Q2.

Tom O'Malley inquired about the gross margin guidance for the March quarter, specifically the impact of mobile revenue trends, and requested an update on the sampling process for new chips and upcoming announcements.

Answer

Ken Rizvi, CFO, stated that non-GAAP gross margins are expected to remain in the mid-53% range for Q3. Rahul Patel, President and CEO, provided updates on Astra microprocessor production (end of current quarter/early next), sampling of new Astra MCU with Wi-Fi 7 and standalone Wi-Fi 7 connectivity SoC, and the semi-custom MCU tape-out in April, hinting at more Astra-class processors in H2.

Tom O'Malley asked for an update on the integration of the RTP fab, specifically how bringing more products in-house is progressing and if it could contribute more significantly to gross margin upside beyond the guided 25-50 basis points. He also inquired about the relative sizing of SATCOM and Active Copper Cables (ACCs) as growth drivers and the expected contribution of ACCs to data center growth.

Answer

Stephen G. Daly, President and CEO, explained that the RTP fab has shown incremental profitability improvements since acquisition, with future gross margin gains primarily from Massachusetts and French fab utilization. RTP's focus is on increasing output by 30% and reducing cycle times, with insourcing benefits expected in 2027 and beyond. The French fab's 3-inch to 6-inch wafer transition is nearing completion by June 2026. Jack Kober, CFO, reiterated that gross margin improvement is a combination of many factors. Regarding growth drivers, Mr. Daly stated there was no ACC revenue in Q1, but SATCOM is a strong growth market (commercial and military) expected to grow nicely into 2027, with LEO business contributing to last year's telecom growth. MACOM does not typically disclose revenue by specific product lines or market segments.

Tom O'Malley asked for an update on the integration of the RTP fab, including progress on bringing outsourced products in-house, and whether this could contribute more significantly to gross margin improvement beyond the guided 25-50 basis points. He also sought clarification on the relative sizing of SATCOM and Active Copper Cables (ACCs) as growth drivers and how ACCs specifically contribute to data center growth.

Answer

Stephen G. Daly, President and CEO, reported continuous profitability improvements at the RTP fab since its acquisition, driven by yield enhancements and cost reductions. He noted that current gross margin improvements are primarily from increased utilization at MACOM's Massachusetts and French fabs due to rising demand. Benefits from insourcing components at RTP are expected in 2027 and beyond, following design cycles. He also mentioned the French fab's transition to 6-inch wafers, expected to be fully qualified by June 2026, will provide future benefits. Mr. Daly stated there was no ACC revenue in Q1 but expects the SATCOM business to grow significantly into 2027, driven by commercial and military LEO programs. He declined to provide specific sizing for product lines or market segments.

Tom O'Malley questioned SiTime's long-term gross margin model of 60%-65%, noting the acquisition's potential to push towards the higher end and the standalone business's recent incremental gross margins of 68%-70%. He sought clarity on 2026 margin expectations given the AI mix. He also asked for details on the acquired asset's OpEx split (R&D/SG&A) and potential COGS or OpEx synergies.

Answer

Beth Howe, CFO, explained that product mix, particularly the favorable CED growth and the offsetting consumer business mix, would be the primary driver of gross margins in 2026. She anticipates continued favorable operating leverage, with revenue growing faster than operating expenses, while maintaining disciplined investments in R&D and go-to-market capabilities. Regarding the acquisition's OpEx, she stated that as it is a carve-out, they are acquiring specific assets and will integrate manufacturing operations, with more specifics on the model and cost structure to be provided after the close.

Tom O'Malley inquired if SiTime's gross margins for 2026 should be expected to exceed the long-term 60%-65% target, given recent incremental gross margins and the favorable mix shift towards AI. He also asked for the OPEX split (R&D vs. SG&A) of the acquired Renesas asset and potential COGS or OPEX synergies.

Answer

Beth Howe, CFO of SiTime, explained that mix will be the biggest driver of gross margins in 2026, with CED growth being a favorable component and consumer mix acting as an offset. She anticipates continued favorable operating leverage, with revenue growing faster than operating expenses, while maintaining disciplined investments in R&D and go-to-market. Regarding the acquisition, Ms. Howe stated that as a carve-out, specifics on the model and cost structure, including OPEX split and synergies, would be discussed after the closing.

Tom O'Malley asked about AMD's memory procurement strategy, particularly for HBM, and the typical timeline for such procurement (e.g., a year or six months in advance).

Answer

Dr. Lisa Su, Chairman and CEO, AMD, explained that given the lead times for HBM and wafers, AMD works closely with suppliers over a multi-year timeframe. She stated that AMD has been planning for a significant ramp in both CPU and GPU businesses for the past couple of years and is well-positioned, with multi-year agreements extending beyond 2026.

Tom O'Malley asked about AMD's memory procurement strategy, particularly for HBM, inquiring about the typical lead times (e.g., a year or six months in advance). He also asked about the evolution of AMD's system-based architecture, such as KVCache offload or discrete ASIC-style compute, and whether AMD would follow competitors or pursue a different direction.

Answer

Dr. Lisa Su, Chairman and CEO, stated that AMD works closely with suppliers over a multi-year timeframe for HBM and other supply chain components, planning for significant ramps and engaging in multi-year agreements due to supply tightness. She emphasized AMD's flexible chiplet and platform architecture, which allows for diverse system solutions tailored to different requirements, acknowledging that there is no 'one-size-fits-all' approach and investing across the spectrum from rack-scale to other form factors for enterprise AI.

Tom O'Malley asked about NXP's channel restock strategy, current channel inventory levels, and the decision regarding the previously discussed 11-week target. He also inquired about the moving pieces contributing to Q1 strength in the communications infrastructure business, given the exit from RF and prior shift from digital networking.

Answer

Rafael Sotomayor, President and CEO, explained that NXP's account strategy is shifting towards a long-term target of 11 weeks for distribution inventory, having finished Q4 at 10 weeks, reflecting an improving demand environment. For communications infrastructure, he clarified that the Q1 sequential growth of 10% is benefiting from normalization in the digital networking business and growth in secure cards. Jeff Palmer, VP of Investor Relations, added that in 2025, secure cards were just over 50% of the segment, with digital network and RF Power each about 25%.

Tom O'Malley followed up on the Communications Infrastructure business, inquiring about the moving pieces contributing to the Q1 strength given the exit from RF Power and previous shift from Digital Networking.

Answer

Rafael Sotomayor, President and CEO, clarified that the Communications Infrastructure (C&I) business, guided up 10% sequentially in Q1, benefits from normalization in Digital Networking and growth from the Secure Car business, which is expected to strengthen C&I throughout 2026.

Tom O'Malley asked for details on the strong performance of NXP's Industrial & IoT business in Q4, specifically identifying whether the strength was in core industrial or IoT, and the underlying drivers. He also inquired about the performance of the S32 automotive processing platform, its contribution to overall auto growth, and any divergence between the processor business and other auto segments.

Answer

Rafael Sotomayor, President and CEO, explained that NXP's Industrial & IoT business (60% core industrial, 40% consumer, 80% via distribution) is seeing improving end customer backlog and strong demand signals. Consumer benefits from company-specific drivers like smart glasses, while core industrial sees broad-based improvements driven by energy storage systems and building automation. He emphasized that NXP's strength in I&IoT is company-specific. For Automotive, Mr. Sotomayor noted Q3 was only 3% below its prior peak, driven by core accelerated growth drivers such as the S32 automotive processing platform, radar, and connectivity, reflecting the secular shift to software-defined vehicles. Kurt Sievers, Executive Director and Advisor, added that a full year update on accelerated growth drivers would be provided on the Q4 call, but inter-quarter performance was strong.

Tom O'Malley asked for details on the strong performance of NXP's Industrial and IoT business in Q4, seeking clarification on whether the strength is driven by core industrial or IoT segments. He also inquired about the performance drivers within the S32 automotive processing platform portfolio in Q3 and Q4, and any divergence from the broader auto business.

Answer

President and CEO Rafael Sotomayor explained that Industrial and IoT strength comes from improving end customer backlog through the channel and company-specific drivers in the consumer side (e.g., smart glasses). Core industrial sees broad-based improvements, particularly in energy storage systems and building automation, though NXP doesn't consider itself a bellwether for the segment. For automotive, Mr. Sotomayor noted Q3 was only 3% below its prior peak, driven by core accelerated growth drivers like the S32 platform, radar, and connectivity, reflecting the secular shift to software-defined vehicles. Executive Director and Advisor Kurt Sievers added that a full year update on accelerated growth drivers would be provided on the Q4 call.

Tom O'Malley inquired if KLA agrees with a peer's assessment that Foundry Logic and DRAM show good growth, but NAND is below that, and if this view could change later in the year with an acceleration in NAND technology transition or greenfield capacity.

Answer

Rick Wallace (CEO) noted that any new demand showing up today for NAND (or other segments) would likely be for 2027 deliveries due to industry constraints. He also corrected the analyst, referring to the other company as a 'peer' rather than a 'competitor.'

Tom O'Malley asked where KLA expects to see more share gains, specifically if it's more on the leading-edge Foundry Logic side or the advanced packaging side, and how this would accelerate the overall growth rate. He also inquired if KLA agrees with a peer's assessment that NAND growth is below Foundry Logic and DRAM, and if this view could change with an acceleration in NAND technology transitions or greenfield capacity.

Answer

CFO Bren Higgins confirmed seeing share gains in advanced packaging, positive momentum in logic, and strong momentum in memory. He highlighted strong performance in reticle inspection and electron beam businesses, and noted that the Broadband Plasma and high-end pattern inspection businesses, being in a faster-growing market, will influence overall share numbers. He believes KLA will continue to increment its strong share position due to its portfolio, competitive offerings, and network effect. Regarding NAND, Bren Higgins stated that any new demand showing up today is more about 2027 deliveries due to industry constraints, and he referred to the other company as a 'peer' rather than a 'competitor.'

Tom O'Malley asked for KLA's perspective on Lam Research's statement that $100 billion of AI spend is roughly equivalent to $8 billion in WFE, with most of that related to memory, and if KLA agrees or has any qualifications.

Answer

CEO Rick Wallace generally agreed with the $8 billion WFE figure for $100 billion AI spend, suggesting about half of the AI spend is semiconductor-related. He added that KLA would include packaging, bringing the total closer to $10 billion, and noted KLA's participation is above its average intensity due to the challenging process control elements in larger, more valuable dies, HBM, and packaging.

Tom O'Malley asked for KLA's perspective on the ratio of AI spend to WFE, specifically if they agree with the statement that $100 billion of AI spend is roughly equivalent to $8 billion in WFE, with most of that related to memory, and if KLA has any qualifications for this ratio.

Answer

CEO Rick Wallace generally agreed with the ratio, suggesting that about half of $100 billion AI spend would be semiconductor-related. He added that KLA's view would bring the WFE equivalent closer to $10 billion due to the inclusion of advanced packaging, where KLA's participation is above its average intensity for the rest of the industry, especially in challenging process control elements like HBM.

Tom O'Malley asked about the assumed growth split between the e-mobility business and the broader trucking SAM business within the guidance. He also sought broader insights into the health of the automotive market, including customer behavior and any signs of inventory build, given recent industry commentary.

Answer

CFO Derek D'Antilio stated that the company does not parse out guidance between e-mobility and ICE business, reiterating that industrial would lead March quarter growth, with auto flat to marginally down due to Chinese New Year. President and CEO Mike Doogue emphasized strong momentum in Allegro's e-mobility SAM ($5 billion of an $8 billion total auto SAM), driven by ADAS and xEV, with EV growth rates around 20%. He noted robust design work, increasing dollar content, and continued lean inventory levels in the automotive sector, indicating no signs of a slowdown.

Tom O'Malley sought clarification on the assumptions for e-mobility versus the broader automotive market in the guidance, and asked for an update on the overall health of the automotive market, including customer behavior and inventory levels.

Answer

Derek D'Antilio, CFO, indicated that specific segment guidance for e-mobility versus ICE is not provided. Mike Doogue, President and CEO, expressed confidence in the automotive market, particularly the e-mobility segment (xEV and ADAS), citing strong design wins and a 16% CAGR for their SAM. He reiterated that inventory levels in automotive remain lean.

Tom O'Malley from Barclays asked for color on HBM's percentage contribution to Micron's total DRAM business from a dollar perspective, and how Micron's competitive positioning for HBM4 compares to competitors, especially regarding a large competitor's HBM3E certification. He also sought specific HBM contribution figures for the November and February quarters.

Answer

CEO Sanjay Mehrotra expressed confidence in Micron's competitive position, product roadmap, and HBM4's industry-leading performance (over 11 gigabits per second) and low power consumption. He reiterated that Micron's HBM share reached parity with its DRAM share in Q3 and that the company will manage the mix between HBM and non-HBM based on strategic customer relationships and profitability goals. Sanjay confirmed HBM revenue was a record in FQ1 and expects strong year-over-year HBM revenue growth in 2026, but declined to provide specific HBM revenue breakouts for the November and February quarters.

Tom O'Malley asked for color on the percentage of Micron's DRAM business that HBM represents from a dollar perspective today. He also questioned Micron's competitive positioning for HBM into next year, particularly concerning a large competitor's increasing competitiveness in HBM3E and the lack of information on their HBM4 plans, and if Micron would make strategic decisions differently based on competitor certifications. Finally, he asked for specific HBM contribution in the November quarter and expectations for the current guide, referencing a historical $8 billion run rate.

Answer

CEO Sanjay Mehrotra expressed confidence in Micron's competitive position, highlighting HBM4's industry-leading performance (over 11 gigabits per second) and low power consumption, and a strong roadmap beyond HBM4. He noted that Micron's HBM share was in line with its DRAM share in Q3 and that in the current tight supply environment, Micron manages the mix of HBM and non-HBM based on strategic customer relationships and profitability goals. He reiterated that HBM revenue was a record in FQ1 and expects strong year-over-year HBM revenue growth in 2026, but did not provide specific HBM revenue breakouts for the November quarter or the current guide.

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

Answer

Sumit Sadana, EVP and Chief Business Officer, clarified that FQ4 NAND bit performance was mix-driven noise, highlighting strong hyperscaler demand for AI servers and expected NAND SSD deployment growth in 2026, which will improve industry conditions. Mark Murphy, CFO, added that Micron is structurally reducing NAND wafer output, slowing node transitions, and lowering CAPEX. Manish Bhatia, EVP of Global Operations, noted the exit from managed NAND to focus on the data center market. Mark Murphy confirmed the net CAPEX guidance of $13.8 billion for 2025 increasing to approximately $18 billion for 2026, with the vast majority allocated to DRAM construction and equipment.

Tom O'Malley inquired about the current state of the NAND industry, including reports of hyperscaler demand, pricing increases, and Micron's bit growth trajectory, asking if a continued decline in bits is expected to drive ASPs. He also asked for clarification on the fiscal 2026 CapEx guidance, specifically if the $18 billion is a net number and if the incremental spend is primarily for DRAM.

Answer

Sumit Sadana, Chief Business Officer, clarified that recent NAND bit fluctuations were mix-driven noise and confirmed strong hyperscaler demand for AI server storage, expecting NAND industry conditions to improve in calendar 2026, particularly benefiting Micron's data center SSD position. Mark Murphy, CFO, added that Micron continues to reduce NAND wafer outs, slow node transitions, and work down inventories. Manish Bhatia, EVP of Global Operations, noted that exiting managed NAND would free up supply for the data center market. Mark Murphy confirmed the $18 billion CapEx for 2026 is net and primarily for DRAM construction and equipment.