Vijay Rakesh

Vijay Rakesh of Mizuho asked for an attribution of the expected gross margin improvement in September across pricing, utilization, and HAMR mix, and requested an update on the qualification progress for the next two HAMR customers.

Answer

CFO Gianluca Romano confirmed that all three factors—higher HAMR volume, favorable pricing, and strong cost absorption—are contributing to the margin expansion. CEO Dave Mosley added that qualifications with other major customers are progressing very well and are on the path outlined at their Analyst Day.

Vijay Rakesh asked for the expected mix of HAMR products by the end of fiscal 2026 and whether the company remains on track to achieve its mid-40% gross margin target.

Answer

CEO Dave Mosley did not provide a specific HAMR mix forecast but stated that the ramp will accelerate as customer qualifications are completed. CFO Gianluca Romano affirmed that the objective is to continue improving margins every quarter, highlighting the company's strong operating margin performance as evidence of their strategy's success.

Vijay Rakesh of Mizuho asked if HAMR could constitute 10-20% of the exabyte mix by the first half of calendar 2026 and if additional capacity would be needed for the ramp.

Answer

CEO Dave Mosley confirmed no new head and media unit capacity is needed, as existing tools are convertible to HAMR and exabyte growth comes from aerial density. CFO Gianluca Romano noted that while they expect to ramp HAMR hard, the majority of the ramp will occur in the second half of calendar 2025, following customer qualifications.

Vijay Rakesh of Mizuho asked for an outlook on unit shipments for calendar 2025 and inquired about the roadmap for bringing previously idled capacity and headcount back online.

Answer

CEO Dave Mosley did not provide specific unit shipment guidance but noted that factories are relatively full, so the transition to HAMR will be a careful pivot rather than an aggressive ramp into empty capacity. He highlighted that many non-critical components are shared between the latest PMR and HAMR products, allowing for flexibility. CFO Gianluca Romano stated that there is not much idle capacity left to bring back online, and future exabyte growth will be supported by technology transitions.

Vijay Rakesh asked whether the expected strength in 2026 WFE for Lam Research would be primarily driven by memory or foundry segments, given the strong DRAM pricing environment. He also inquired if the U.S. Investment Tax Credit (ITC) and CHIPS Act funding would serve as a tailwind for 2026 WFE.

Answer

EVP and CFO Doug Bettinger stated that the 2026 WFE strength is likely to come from both memory and foundry segments, with more detailed color to be provided on the December call. He viewed the U.S. ITC and CHIPS Act funding as only marginal influences, emphasizing that end demand remains the primary driver for WFE, with these incentives potentially affecting geographic distribution.

Vijay Rakesh asked about the primary drivers of the anticipated strength in 2026, specifically whether it would be led more by memory or foundry. He also inquired about the potential tailwind from the U.S. ITC (Investment Tax Credit) and CHIPS Act money for 2026 WFE.

Answer

Doug Bettinger, Executive Vice President and CFO, stated that the strength in 2026 is expected to come from both memory and foundry, with more detailed color to be provided on the December call. He viewed the U.S. ITC and CHIPS Act as having only a marginal influence, with end demand being the primary driver, though they might slightly influence geographic distribution.

Vijay Rakesh of Mizuho Financial Group asked if the Investment Tax Credit (ITC) could be a tailwind for WFE next year and questioned if the China revenue mix is expected to normalize.

Answer

EVP and CFO Doug Bittinger stated he had not specifically correlated the ITC to a WFE tailwind but acknowledged it was possible. Regarding China, he noted that after being up in September, the mix would likely lighten in December, and for the full year, the China mix would be flat to slightly down compared to the prior year, an improvement from previous expectations.

Vijay Rakesh asked if the Investment Tax Credit (ITC) could provide a tailwind to WFE next year and whether Lam's China revenue mix is expected to normalize over time.

Answer

EVP and CFO Douglas Bittinger stated he had not specifically analyzed a correlation between the ITC and WFE. Regarding China, he confirmed the region's revenue is expected to be up in September but soften in December, leading to a revised full-year outlook for China's mix to be flat to slightly down, which is an improvement from the prior view.

Vijay Rakesh asked for an estimate of NAND growth in calendar 2025 and for an update on the company's opportunity related to QLC NAND.

Answer

EVP & CFO Douglas Bettinger declined to provide a specific growth number for NAND but confirmed it will be up. CEO Timothy Archer addressed the QLC opportunity by highlighting the new Cryo 3.0 technology, a breakthrough for high-aspect-ratio etch that is applicable to both new tools and upgrades for the installed base, making it financially attractive for customers.

Vijay Rakesh of Mizuho asked about the growth drivers in the cloud segment, inquiring about the number of hyperscale customers and key milestones. He also questioned the market's transition from TLC to QLC SSDs and Sandisk's progress in ramping up its QLC products.

Answer

CEO David V. Goeckeler stated that Sandisk has multiple hyperscale customers and is expanding its channel business, noting that AI is pulling demand. He highlighted the roadmap for both TLC-based compute SSDs and larger QLC-based storage SSDs, mentioning that qualifications for the latter are progressing well ahead of a new architecture launch with BiCS 8 QLC.

Vijay Rakesh of Mizuho Financial Group inquired about the data center SSD roadmap, targets for hyperscaler qualifications, and the potential data center revenue mix. He also sought clarification on the timeline for underutilization cost reduction.

Answer

CEO David Goeckeler confirmed a second hyperscaler qualification is underway and the new 256TB SSD is now with customers for a 6-12 month qualification process. CFO Luis Visoso clarified that underutilization charges are expected to be near zero after Q1, while the more significant startup costs will decline over Q2 and Q3.

Vijay Rakesh requested details on the cloud business, including the number of hyperscale customers and key milestones. He also asked about the ramp of QLC-based SSDs and Sandisk's position in terms of qualification and shipments.

Answer

Executive David V. Goeckeler confirmed Sandisk serves multiple hyperscale customers and is expanding its channel business, leveraging key qualifications to reach a broader ecosystem. On QLC SSDs, he described a two-pronged strategy with high-performance TLC for compute and high-capacity QLC for storage. He noted that qualifications are progressing well and highlighted the upcoming 'Stargate' architecture, which combines a new ASIC with BiCS 8 QLC, as a key future product.

Vijay Rakesh inquired about the expected extension of China's NEV and scrapping subsidies into 2026, and sought Autoliv's outlook for the European auto market in 2026, considering price competition and tariffs.

Answer

Mikael Bratt, President and CEO, declined to speculate on China's subsidies but expressed a positive outlook on the region due to growing share with Chinese OEMs, R&D investments, and partnerships. He deferred comments on the 2026 European market to the next earnings call, noting current caution for 2025 due to demand rather than OEM reshuffling.

Vijay Rakesh of Mizuho Financial Group questioned if Autoliv expects its typical seasonality in the second half, given the risks to global LVP. He also asked about the content difference between EV and ICE vehicles and the company's current sales mix.

Answer

CFO Fredrik Westin confirmed expectations for a return to traditional seasonality, with a weaker H2 overall, Q3 being the weakest quarter and Q4 the strongest, driven by LVP and engineering income. On the EV/ICE mix, he noted that Autoliv's market share is similar for both and saw no significant change in Q2.

Vijay Rakesh of Mizuho questioned what assumptions regarding potential tariffs or changes in EV mandates were embedded in the 2% organic growth guidance for 2025. He also asked about the average content per vehicle (CPV) in China for 2024 and the expected increase for 2025.

Answer

CEO Mikael Bratt stated that the 2025 guidance includes no assumptions for new tariffs due to their unpredictability. CFO Fredrik Westin explained that China's CPV slightly decreased from 2023 to 2024 because government scrappage programs favored lower-end vehicles. However, both executives expect this trend to reverse in 2025, with CPV beginning to increase again in line with the long-term trend.

Vijay Rakesh asked about the expected mix of one-gamma versus one-beta DRAM production for fiscal 2026 and its impact on bit growth. He also inquired if HBM4 margins are expected to be better than HBM3E, considering its higher cost and price.

Answer

Manish Bhatia, EVP - Global Operations, expressed satisfaction with the one-gamma ramp, achieving mature yields and first revenue shipments. He expects one-gamma to be the primary driver of bit growth for fiscal 2026, with one-gamma and one-beta already forming the significant majority of bit output. Sumit Sadana, EVP and Chief Business Officer, confirmed that HBM4 cost and price would be meaningfully higher than HBM3E. He reiterated that HBM overall is expected to provide strong ROI for the company, driven by its complexity and value creation for customers, without discussing specific product line margins.

Vijay Rakesh asked about the expected mix of one-gamma versus one-beta DRAM production for fiscal 2026, given the successful ramp of one-gamma. He also inquired if HBM4 margins are expected to be better than HBM3E, considering its higher speeds, lower power, and potentially larger die size.

Answer

Manish Bhatia, EVP of Global Operations, expressed satisfaction with the one-gamma ramp, confirming mature yields and first revenue shipments. He expects one-gamma to be the primary driver for bit growth in fiscal 2026, with its mix continuing to grow. Mark Murphy, CFO, added that one-gamma is a crucial part of the 2026 supply solution. Sumit Sadana, EVP and Chief Business Officer, stated that HBM4 cost and price will be meaningfully higher than HBM3E, and the company expects strong overall ROI for HBM due to its complexity and value creation for customers.

Vijay Rakesh inquired about the expected mix of one-gamma versus one-beta DRAM production for fiscal 2026, given the one-gamma ramp. He also asked if HBM4 margins are expected to be better than HBM3E, considering its higher speeds, lower power, and potentially larger die.

Answer

Manish Bhatia, EVP of Global Operations, expressed satisfaction with the one-gamma ramp, confirming mature yields and first revenue shipments, and stated that one-gamma will be the primary driver of bit growth for fiscal 2026, with its mix continuing to grow. Mark Murphy, CFO, added that one-gamma is a very important part of Micron's supply solution. Sumit Sadana, Chief Business Officer, affirmed confidence in HBM4's capabilities, noting its higher cost and meaningfully higher price compared to HBM3E, and reiterated expectations for strong HBM ROI over many years.

Vijay Rakesh asked how Micron's HBM4, with its CMOS logic die, compares to competitors' approaches and how it could drive higher ASPs. He also sought clarification on any potential demand pull-in from Q1 into the April quarter.

Answer

EVP and Chief Business Officer Sumit Sadana confirmed HBM4 pricing is expected to be higher per bit than HBM3E, reflecting its robust value. EVP of Global Operations Manish Bhatia added that the JEDEC standard die size for HBM4 is larger, increasing cost, but Micron feels good about its roadmap using its proven 1-beta technology and internal logic die. Sumit Sadana reiterated that any pull-in activity is modest and the overall demand environment remains healthy.

Vijay Rakesh from Mizuho asked about Micron's HBM4 technology, specifically its CMOS logic die compared to competitors' approaches and the potential impact on average selling prices (ASPs). He also requested more context on any demand pull-in activity.

Answer

EVP and Chief Business Officer Sumit Sadana confirmed HBM4 pricing per bit is expected to be higher than HBM3E. EVP of Global Operations Manish Bhatia added that Micron benefits from using its proven 1-beta node and an internally built logic die, leveraging learnings from HBM3E. Sumit Sadana reiterated that any pull-in impact is modest and the overall demand environment is healthy.

Asked about the progress of HBM4 qualification and the outlook for maintaining power-performance leadership, as well as whether there is an accelerated pull-through for SSDs in AI servers.

Answer

Micron has sampled HBM4 to multiple customers and is pleased with its performance, planning to maintain its leadership in power efficiency. The volume ramp is on track for 2026 to meet customer timelines. For SSDs, after some inventory digestion, the second half of calendar 2025 is expected to be better. Micron's SSDs are well-positioned for new AI accelerator platforms, and the company is now the #2 brand in data center SSDs, which will help shift its product mix to higher-value solutions.

Vijay Rakesh from Mizuho Financial Group asked about the progress of HBM4 qualification and its potential to maintain power-performance leadership. He also inquired if Micron is seeing accelerated demand for its SSDs from AI servers.

Answer

Chairman, President & CEO Sanjay Mehrotra confirmed that early HBM4 units have been sampled to multiple customers and that Micron is pleased with the product's specifications, intending to maintain its leadership in power efficiency. The volume ramp is scheduled for 2026. Regarding SSDs, he noted that after some inventory digestion, the second half of calendar 2025 is expected to be stronger. He highlighted that Micron's SSDs are well-positioned for new AI platforms and that the company achieved a record #2 market share in data center SSDs in calendar Q1.

Vijay Rakesh asked if Micron's HBM revenue could double in 2026 given its market share trajectory and capacity ramp. He also inquired about the adoption rate of QLC SSDs in AI servers and the broader trend of SSDs replacing HDDs in data centers.

Answer

Chief Business Officer Sumit Sadana confirmed that with a robust quarterly revenue ramp through calendar 2025, HBM revenue in 2026 should be 'significantly higher' than in 2025. Regarding NAND, Sadana explained that AI servers are driving a move to higher-capacity SSDs, often QLC-based. He elaborated on the broader data center trend where hyperscalers are seeking to reduce HDD usage due to reliability and power consumption issues, creating a long-term tailwind for NAND based on Total Cost of Ownership (TCO) benefits.

Vijay Rakesh from Mizuho Financial Group inquired about the mix of sovereign nation orders within the AI pipeline and the anticipated level of margin improvement for AI servers in the second half of the year.

Answer

Jeff Clarke, Vice Chairman and COO, stated that both the sovereign and enterprise segments of the AI pipeline grew at a double-digit rate, faster than the CSP portion. He reiterated that margin improvement in AI servers will come from the absence of one-time Q2 supply chain costs, value engineering, benefits of scale, and the opportunity to attach storage, networking, and services to enterprise deals.

Vijay Rakesh asked for more color on when the Gate-All-Around and backside power ramps would become more material. He also inquired about the outlook for operating expenses given the challenging revenue environment.

Answer

CFO Brice Hill did not provide a specific timeline for the ramp's materiality, citing the need to work with customers on loading plans. Regarding operating expenses, he noted that the company has been running closer to 18% of revenue and will be 'very cautious' on spending in the upcoming quarter due to the lower revenue guide.

Vijay Rakesh asked about the mix of advanced packaging as a percentage of total WFE and how that mix is expected to grow.

Answer

CFO Brice Hill pointed to the company's $1.7 billion in 2024 advanced packaging revenue and its advantaged market share as indicators of the market's size, without providing a specific WFE percentage. CEO Gary Dickerson reiterated the goal to double the packaging business again over the next few years, driven by significant innovation for AI applications.

Vijay Rakesh asked for confirmation on whether Applied Materials expects its China revenues to hold at the current 30% level throughout fiscal year 2025.

Answer

CFO Brice Hill reiterated that the Q1 guide is approximately 30%, which is consistent with historical levels. He emphasized that because the company's China business is now predominantly ICAPS, the revenue level for the rest of the year will depend entirely on the strength and evolution of that specific market.

Vijay Rakesh asked if inventory write-downs would be mostly complete by September and whether a potential tariff exemption would give Microchip an advantage over its international peers.

Answer

CFO Eric Bjornholt clarified that write-downs will continue to decline but will take longer than one quarter to be fully worked through. CEO Steve Sanghi expressed hope that their significant U.S. manufacturing would provide a tariff advantage over peers, but he acknowledged that the rules remain unclear.

Vijay Rakesh asked if the majority of inventory write-downs would be completed by the September quarter. He also questioned whether a potential U.S. tariff exemption would place Microchip in a much better competitive position versus peers like STMicroelectronics, Infineon, and Renesas.

Answer

CFO Eric Bjornholt clarified that inventory write-downs will not be finished by September but will continue to decline sequentially over multiple quarters. On tariffs, CEO Steve Sanghi expressed hope for an advantage due to Microchip's higher percentage of U.S. production compared to some peers, but admitted he was unsure of the final rules and could not definitively confirm a competitive advantage.

Vijay Rakesh asked about the company's plans regarding Section 232 and bringing production back to the U.S., and also inquired about visibility into fab utilization for the second half of the year.

Answer

CEO Steve Sanghi explained that current tariff rules actually incentivize moving production out of the U.S. to avoid cross-tariffs with China. Regarding utilization, he projected inventory will drop below 200 days in the September quarter and stated that they will need to begin ramping production well before hitting the 130-150 day target to manage a smooth increase in output.

Vijay Rakesh requested a breakdown of revenue by end market (auto, industrial, consumer) and their performance. He also asked about the risk of inventory obsolescence and write-downs.

Answer

CFO Eric Bjornholt explained that Microchip provides its end-market breakdown annually in May and confirmed that all end markets, particularly industrial and automotive, have been weak. Regarding inventory, Bjornholt stated that the company has been taking 'significant' inventory reserve charges, which are already reflected in the gross margin guidance, and expects these charges to decrease as inventory levels are reduced.

Vijay Rakesh's associate asked what portion of the $33 billion fiscal 2026 guidance is attributable to the recently announced DataVault win and inquired about the potential revenue split for DCBBS between full rack solutions and other components.

Answer

CEO Charles Liang declined to comment on specific customers but confirmed a growing customer base in Europe and the Middle East. He described DCBBS as a comprehensive product line with many components shipping now or very soon, with the goal of providing a one-stop shop for customers building their AI data centers.

Vijay Rakesh asked for specifics on the number of liquid-cooled racks shipped in the September quarter and the outlook for December. He also questioned if management was comfortable they would meet the NASDAQ deadline for filing a compliance plan.

Answer

CFO David Weigand noted that liquid-cooled rack shipments were slightly below the prior quarter but did not provide a specific number. CEO Charles Liang emphasized the company's market leadership and expected growth in this area. Regarding NASDAQ, Weigand confirmed they are working to replace the auditor and will file a plan to request an extension.

Vijay Rakesh inquired about the company's preparations for potential Section 301 tariffs and asked how the bankruptcy of a silicon carbide competitor was affecting Onsemi's business and roadmap.

Answer

President and CEO Hassane El-Khoury stated that regarding tariffs, the company focuses on what it can control, such as its flexible manufacturing footprint, which is a competitive advantage. On the competitor's bankruptcy, he asserted it was not a trigger for new business, as customers had already been making sourcing changes due to the competitor's long-standing struggles. He emphasized that Onsemi wins based on its own product performance and roadmap, not on peer difficulties.

Vijay Rakesh asked if the commentary on pricing pressure was specific to onsemi or an industry-wide trend, and whether the automotive segment's decline was related to recent tariff announcements.

Answer

CEO Hassane El-Khoury stated that the pricing environment is an industry-wide phenomenon and that onsemi is using pricing opportunistically as a tool, which he expects to offset with cost improvements. He also confirmed there is no direct impact from tariffs on the business at this time, and the auto outlook is based on demand. CFO Thad Trent added that no material customer order changes related to tariffs have been observed.

Vijay Rakesh of Mizuho asked about the expected trend for fab utilization beyond Q1 and for more color on the silicon carbide outlook and backlog for 2025.

Answer

CFO Thad Trent stated that fab utilization, guided to mid-50% in Q1, will remain in that range until demand recovers. CEO Hassane El-Khoury reiterated that the 2025 silicon carbide performance is purely dependent on end-market demand, particularly EV sales. He emphasized that onsemi has secured the design wins and gained share, positioning it well for when demand returns.

Vijay Rakesh asked about expected inventory levels at distributors and OEMs by the end of December. He also inquired about the planned mix of internal versus external 200mm silicon carbide substrates by the end of 2025.

Answer

CFO Thad Trent stated that distributor inventory is expected to be around 10 weeks, while OEM inventory is difficult to track and varies by customer. CEO Hassane El-Khoury said the target for the SiC substrate mix is around 70-80% internal and 20-30% external, as the company intends to always maintain an external supply source for quality and flexibility.

Vijay Rakesh inquired about the xEV customer pipeline in China and APAC, and asked for an update on the 'China for China' strategy and its margin impact.

Answer

CEO Michael Doogue highlighted strong design win momentum with local OEMs in China and a key development agreement in APAC, along with continued success in Japan's hybrid market. Regarding the 'China for China' strategy, he described it as a work in progress that enhances competitiveness and helps sustain margins in the region, rather than being a source of significant margin uplift.

Vijay Rakesh from Mizuho asked for the e-mobility revenue mix for the quarter and inquired about the competitive landscape in China, including pressure from domestic suppliers and customer insourcing trends.

Answer

CFO Derek D'Antilio reported that e-mobility constituted about 50% of automotive revenue. CEO Michael Doogue acknowledged the competitive China market but stressed that Allegro's premium, high-quality products continue to win designs. He cited recent wins in EV inverters and ADAS and noted that a key Chinese customer reaffirmed its commitment to Allegro over local competitors due to superior performance.

Vijay Rakesh from Mizuho Securities inquired about booking trends heading into the March quarter, the split between auto and industrial, and the expected evolution of gross margins over the next several quarters.

Answer

CEO Vineet Nargolwala described booking trends as broad-based but noted that Europe remains an area of concern. CFO Derek D'Antilio reiterated his gross margin outlook, stating that after a Q4-specific 200 bps headwind, margins should see a strong rebound in the June quarter, followed by the company's standard 60-65% incremental drop-through model.

Vijay Rakesh of Mizuho asked about current distributor inventory levels compared to normal and inquired about the competitive landscape, market share, and pricing environment for next year.

Answer

CFO Derek D'Antilio stated that distributor inventory is trending toward the 8-12 week target in Asia, but North America and Europe still have excess to clear. CEO Vineet Nargolwala expressed confidence in maintaining or extending Allegro's magnetic sensing market share, driven by new product introductions. He described the pricing environment as stable, having returned to the typical 2% annual decline in automotive, and noted that aggressive competitive pricing has normalized.

Vijay Rakesh from Mizuho Financial Group asked for more details on the expanded SoftBank license deal related to the Stargate project and whether Arm plans to enter the merchant server CPU market.

Answer

CEO Rene Haas linked the SoftBank deal to their broad AI vision, including the Stargate project, noting Arm is the core CPU for these opportunities. He could not provide product specifics. Regarding a merchant CPU, Haas stated he could not comment on a specific product but expressed confidence in market share gains regardless of that strategy.

Vijay Rakesh of Mizuho Securities asked for a breakdown of the 13 CSS customers by data center and mobile, and inquired about the long-term opportunity from projects like Stargate with OpenAI and NVIDIA.

Answer

CEO Rene Haas clarified the 13 CSS customers are split into roughly 6 for client (mostly mobile), 6 for infrastructure, and 1 for automotive. Regarding Stargate, he confirmed Arm is a key technology partner via the Grace Blackwell superchip, emphasizing the project's need for Arm's energy efficiency, but did not provide further financial or roadmap details.

Vijay Rakesh inquired about the ramp progress of Microsoft's Cobalt 100 CPU and asked for the long-term outlook on related-party revenue, which saw significant sequential growth.

Answer

CEO Rene Haas deferred specific Cobalt shipment comments to Microsoft but noted strong general momentum for Arm in the data center, accelerated by the Grace Blackwell transition. CFO Jason Child stated he expects related-party revenue to remain consistent, with Arm China being the largest component, and reiterated that its share of total revenue will likely decline from ~25% to the mid-teens over time.

Vijay Rakesh inquired about the outlook for Supervision unit volumes in calendar year 2026, especially considering new program ramps, and asked for an update on the level of IQ chip inventory at Mobileye's customers.

Answer

CCO Dan Galves stated it was too early for specific 2026 guidance but anticipates growth from existing vehicles, including the US launch of the Polestar 4. On inventory, both Galves and EVP Nimrod Nehushtan confirmed they monitor levels closely and believe they remain well-aligned with underlying demand, describing the situation as "pretty flattish" since the end of 2024.

Vijay Rakesh of Mizuho Financial Group asked if AI revenue growth could accelerate beyond 60% in fiscal 2026 due to new customers ramping. He also inquired if the scale-up market would shift to Ethernet, similar to other parts of the data center.

Answer

CEO Hock Tan reiterated his prepared remarks, stating that the current growth rate is expected to "sustain" into 2026, and he declined to speculate on further acceleration. Regarding the second question on NVLink, he stated that since Broadcom does not participate in that ecosystem, he was not qualified to comment on its future.

Vijay Rakesh from Mizuho Financial Group asked if the AI revenue growth rate could accelerate beyond 60% in fiscal 2026 with new customers ramping. He also inquired about the competitive dynamic between NVLink Fusion and Ethernet for scale-up networking.

Answer

CEO Hock Tan reiterated that the current forecast is for the 2025 growth rate to 'sustain' into 2026, declining to speculate on potential acceleration. Regarding NVLink, he stated that since Broadcom does not participate in that ecosystem, he was not qualified to comment on its market trajectory.

Vijay Rakesh extrapolated a potential $50 billion AI revenue figure for fiscal 2027 based on the stated SAM and asked about the line of sight for the ramp in fiscal 2026. He also inquired about the ramp timeline for the two new cloud service provider customers.

Answer

President and CEO Hock Tan declined to provide a forecast for fiscal 2026, reiterating the policy of guiding only one quarter ahead. He explained that while the long-term SAM indicates the trajectory, the path will have quarter-to-quarter variability. Regarding the two new customers, he stated they are in development and expected to ramp 'over the next 3 years' but could not offer a more precise timeline.

Vijay Rakesh asked about the nature of Credo's optical DSP traction, specifically whether customers were adopting full DSP or LRO solutions, and questioned the timeline for scale-up revenues to become material.

Answer

CEO Bill Brennan stated that Credo is agnostic regarding full DSP versus LRO, offering solutions tailored to customer needs for cost or power efficiency. He noted a growing market for sub-10-watt 800G modules where LRO is a strong fit. For scale-up, Brennan reiterated that design wins are expected in calendar 2025, with revenue ramping in calendar 2026 and becoming a significant part of the business in the fiscal 2027 timeframe and beyond.

Vijay Rakesh asked for more detail on the expected ramp timeline and volume for the two new hyperscaler customers. He also inquired about the pipeline for PCIe scale-up solutions and whether qualification is with the server ODM or the GPU/ASIC provider.

Answer

CEO William Brennan stated that the ramp for the two new hyperscalers is expected in fiscal '26, likely in the second half, and that confidence is high. For PCIe, he clarified the timeline is longer, targeting a calendar '25 design cycle and a calendar '26 production ramp for Gen6. He noted that for PCIe solutions, there is independence in customer decision-making and a need for a broader supply chain than currently exists for Gen5.

Vijay Rakesh asked for the percentage of AEC revenue tied to AI, whether to expect new 10% customers in calendar 2025, and for the number of customers in the optical DSP business.

Answer

CEO William Brennan stated that the 'large majority' of AEC revenue, particularly at 100-gig per lane speeds, is driven by AI applications. CFO Dan Fleming said he does not expect new 10% customers in calendar 2025. Regarding optical DSPs, Brennan did not give a specific number but confirmed broad design activity with optical module makers and increasing qualification activity with end customers.

Vijay Rakesh from Mizuho sought to reconfirm the ramp timeline for HAMR technology with its two hyperscale customers and asked for clarification on shipping logistics in the context of potential tariffs.

Answer

CEO Irving Tan reiterated the previously stated HAMR timeline: qualification in the second half of calendar '26, followed by a high-volume production ramp in the first half of '27. He also clarified that products shipped to the U.S. originate from Southeast Asia, not China, and are not currently subject to tariffs, though the situation remains fluid.

Vijay Rakesh asked about the company's plans for HAMR technology as it increases disk count in current drives. He also followed up on the expected trend for NAND pricing and margins throughout the year.

Answer

CFO Wissam Jabre noted the company is always focused on improving areal density and that its SMR technology is a competitive advantage that will be extensible to the future HAMR portfolio. CEO David Goeckeler added that NAND ASP headwinds are moderating from the prior quarter and that the company is taking supply actions to support pricing and bring the market back into balance.

Vijay Rakesh asked if the new 11-disk, 32TB UltraSMR drive would be accretive to margins and also inquired about the Flash business's CapEx outlook for the next year.

Answer

CEO David Goeckeler affirmed that the 32TB UltraSMR drive is a prime example of a product that lowers customer TCO and, in turn, will drive WDC's profitability up, providing a tailwind once deployed. CFO Wissam Jabre added that while not providing a long-term quantitative view, Flash CapEx would be higher than the very low levels of the last fiscal year, as the focus remains on profitability and cost reduction.

Vijay Rakesh of Mizuho asked for the outlook on the data center business for the remainder of the year and inquired about the CapEx plans for 2025 and 2026.

Answer

Executive Michelle C. Holthaus expressed optimism for the data center segment driven by the upcoming Granite Rapids launch, but noted macro concerns and margin pressure from efforts to stabilize market share. CFO David Zinsner confirmed a reduced 2025 gross CapEx target of $18B, enabled by better utilization of existing assets under construction, and reiterated a long-term capital intensity target of around 25%.

Vijay Rakesh from Mizuho requested quantification of the AI-related mix in the packaging business and an update on the timeline for deleveraging the balance sheet to the company's long-term target.

Answer

CEO John Lee noted that while the AI-driven portion of the IC substrate market is about 10-15%, it is difficult to parse the AI impact in the broader MLB and HDI markets. He emphasized MKS's broad leverage to AI via its foundational role in both semiconductors and packaging. CFO Ramakumar Mayampurath reiterated a strong focus on reaching the 2x net leverage target, noting that top-line growth would accelerate progress, but he did not provide a specific timeline.

Vijay Rakesh asked about seasonality expectations for the March quarter and the big-picture outlook for 2025 WFE, considering potential impacts from China restrictions and the CHIPS Act under a new administration. He also followed up with a question on debt paydown plans through 2025.

Answer

President and CEO John Lee indicated the March quarter typically sees some consumer-driven seasonality in the chemistry business. For 2025, he stated that MKS does not expect significant changes to semiconductor restrictions post-election, viewing the matter as bipartisan. On debt, Lee reiterated that deleveraging is the top priority for excess free cash flow, highlighting the $426 million prepaid in 2024 as proof of the model's strong cash generation.

Vijay Rakesh from Mizuho asked about Qorvo's remaining revenue exposure to the China handset market after exiting the low-end Android business. He also questioned if focusing more on its top two customers would increase competitive intensity.

Answer

CFO Grant Brown quantified the change, stating that China Android revenue is expected to decrease from a run rate of around $100 million per quarter to approximately $50 million per quarter. CEO Bob Bruggeworth asserted that the competitive landscape with its top two customers is already extremely intense and has been for years, so the strategic shift does not alter that dynamic. He emphasized the key market change was the collapse of the mid-tier Android segment.

Vijay Rakesh asked for Skyworks' view on 2025 handset growth and whether they were observing a trend in China toward entry-level phones with more discrete RF components, as mentioned by a peer.

Answer

CFO Kris Sennesael declined to provide a full-year 2025 forecast, adhering to the company's policy of guiding one quarter at a time. CEO Liam K. Griffin addressed the China question, stating that Skyworks has minimal exposure to the low-end China market and is therefore not impacted by that trend. He reiterated that their focus remains on high-performance, strategic Android partners like Google and Samsung.