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    Monolithic Power Systems Inc (MPWR)

    Business Description

    Monolithic Power Systems, Inc. (MPS) is a fabless global company that designs, develops, and markets high-performance, semiconductor-based power electronics solutions. The company focuses on providing innovative power solutions across various markets, including storage and computing, enterprise data, automotive, industrial, communications, and consumer markets . MPS's product offerings are primarily divided into two main families: DC to DC products and Lighting Control products . The company's revenue is predominantly derived from sales to customers outside North America, with a significant portion coming from Asia .

    1. DC to DC Products - Develops integrated circuits used for voltage conversion and control in a wide range of electronic systems, serving as the most significant contributor to the company's revenue.
    2. Lighting Control Products - Provides solutions for backlighting and general illumination, contributing to the company's offerings in lighting applications.

    Q3 2024 Summary

    Initial Price$807.88July 1, 2024
    Final Price$891.81October 1, 2024
    Price Change$83.93
    % Change+10.39%

    What went well

    • Strong growth in Enterprise Data segment due to vertical power products, with growth expected in the next few quarters. MPS is now shipping these products in good volumes.
    • MPS is gaining significant share in new server platforms (Sapphire Rapids/VR14), becoming a significant supplier in this growth. This will pull through other solutions like DDR5 memory and contribute to future growth.
    • Strong growth in Communications segment, driven by new Wi-Fi formats and optical networking. MPS's reference designs are turning into revenue, and they see sustainable growth through the first half of 2025.

    Q&A Summary

    1. Enterprise Data Outlook
      Q: Why was Enterprise Data down, and what's the outlook?
      A: Enterprise Data was down about 1.5% from Q2 due to different customer ordering patterns compared to the past six quarters. Looking ahead to Q4, MPS expects Enterprise Data to be up low single digits sequentially. They are not anticipating any share position changes and believe that the introduction of second or third competitors for supply chain security is a factor. New AI opportunities, including tensor processors, are expected to ramp in the next few quarters, contributing to growth.

    2. Non-Enterprise Data Growth
      Q: Is the strong growth in non-Enterprise segments cyclical or company-specific?
      A: It's a bit of both. MPS experienced improvements in ordering patterns and new revenue opportunities from prior design wins coming to market, particularly in Automotive and Communications. The momentum is seen across all segments except AI power, indicating both cyclical improvement and MPS-specific factors.

    3. Pricing Pressure and Competition
      Q: Are you seeing pricing pressure due to increased competition?
      A: Competitors, including some Chinese suppliers, are attempting to lower prices to enter the market. However, MPS doesn't compete on price; instead, it focuses on providing the highest performance solutions. Customers are unlikely to switch quickly, and MPS emphasizes diversity and value.

    4. Customer Concentration
      Q: Do you have any 10% customers in the September quarter?
      A: Yes, MPS had one direct customer accounting for over 10% of revenue in the quarter. They also acknowledged multiple distributors exceeding 10%, but only one end customer surpassed that threshold.

    5. Traditional Server Business Outlook
      Q: What's your view on traditional server business into 2025?
      A: Volumes in the traditional server market are starting to pick up. MPS expects to be a significant supplier in the Sapphire Rapids platform, specifically in VR14 solutions, contributing to growth in this segment.

    6. Vertical Power Transition
      Q: Will the shift to vertical power accelerate market growth?
      A: Absolutely. MPS has been involved in the power module market since 2017, and its technology and manufacturing capabilities position it well for the vertical power transition. They are already shipping products in good volumes, which is expected to accelerate growth over the next few quarters.

    7. 2025 Enterprise Data Revenue Expectations
      Q: Is $1.1 billion in Enterprise Data revenue in 2025 reasonable?
      A: While not providing specific guidance, MPS is confident it will be a significant player when the AI market reaches equilibrium. With many customers and designs starting to ramp into revenues, they anticipate substantial growth.

    8. Communications Segment Performance
      Q: What's driving growth in the Communications segment?
      A: Growth is driven by optical networking and new Wi-Fi formats ramping up. MPS has numerous reference designs in these areas, and the outlook remains solid with sustainable growth expected through the first half of 2025.

    9. Automotive Segment Growth
      Q: Have the Automotive and other lagging segments turned around?
      A: Yes, the step-up from Q2 to Q3 in Automotive is believed to be sustainable. A number of design wins are now ramping up, and revenue is expected to grow over the next 2-3 quarters. Strength is seen across all segments, including infotainment and body controls.

    10. Home Automation Opportunities
      Q: What are your growth drivers in home automation?
      A: MPS offers products in lighting, thermostats, shade controls, fan motors, security systems, and window actuators. They are also developing MCUs that can serve as the brain for various devices, aiming to simplify building automation with all-in-one solutions.

    Key Metrics

    View all financials →
    Revenue by Segment - in Millions of USDFY 2013Q1 2014Q2 2014Q3 2014Q4 2014FY 2014Q1 2015Q2 2015Q3 2015Q4 2015FY 2015Q1 2016Q2 2016Q3 2016Q4 2016FY 2016Q1 2017Q2 2017Q3 2017Q4 2017FY 2017Q1 2018Q2 2018Q3 2018Q4 2018FY 2018Q1 2019Q2 2019Q3 2019Q4 2019FY 2019Q1 2020Q2 2020Q3 2020Q4 2020FY 2020Q1 2021Q2 2021Q3 2021Q4 2021FY 2021Q1 2022Q2 2022Q3 2022Q4 2022FY 2022Q1 2023Q2 2023Q3 2023Q4 2023FY 2023Q1 2024Q2 2024Q3 2024
    Storage and Computing119.8124.5129.5117.3491.1106.1114.955144.0
    Enterprise Data47.248.098.9128.9323.0149.7187.211184.5
    Automotive105.3104.495.289.8394.787.187.193111.3
    Industrial47.549.742.133.4172.730.232.27744.0
    Communications67.949.346.840.9204.946.643.56671.9
    Consumer63.465.262.443.7234.738.142.22964.4
    DC to DC Products425.2418.2447.4427.81,718.6416.0501.302616.1
    Lighting Control Products25.923.027.526102.441.96.1294.0
    Total Revenue451.1441.1474.94541,821.1457.9507.431620.1
    Revenue by Geography - in Millions of USDFY 2013Q1 2014Q2 2014Q3 2014Q4 2014FY 2014Q1 2015Q2 2015Q3 2015Q4 2015FY 2015Q1 2016Q2 2016Q3 2016Q4 2016FY 2016Q1 2017Q2 2017Q3 2017Q4 2017FY 2017Q1 2018Q2 2018Q3 2018Q4 2018FY 2018Q1 2019Q2 2019Q3 2019Q4 2019FY 2019Q1 2020Q2 2020Q3 2020Q4 2020FY 2020Q1 2021Q2 2021Q3 2021Q4 2021FY 2021Q1 2022Q2 2022Q3 2022Q4 2022FY 2022Q1 2023Q2 2023Q3 2023Q4 2023FY 2023Q1 2024Q2 2024Q3 2024
    China225.052216.172234.9258.68934.8263.04282.514310.472
    Taiwan48.83370.212103.584.95307.5100.45127.396179.747
    South Korea45.68040.66941.741.85169.935.5439.51351.815
    Europe43.10336.34829.823.35132.617.7419.10525.145
    United States31.01727.57123.615.1197.314.8213.92713.797
    Japan30.81528.28818.615.693.312.9513.55216.286
    Southeast Asia26.43221.70822.514.5685.213.2411.35222.772
    Other0.1330.1600.20.010.50.110.0720.085
    Total Revenue451.065441.128474.9454.011,821.1457.89507.431620.119

    Executive Team

    NamePositionStart DateShort Bio
    Michael HsingPresident, Chief Executive Officer, and DirectorAug 1997Michael Hsing is the President, Chief Executive Officer, and Director of Monolithic Power Systems (MPS). He founded MPS in August 1997 and has served in these roles since the company's inception. Prior to founding MPS, Mr. Hsing was a Senior Silicon Technology Developer at several analog integrated circuit companies, where he developed and patented key technologies that set new standards in the power electronics industry. He holds a B.S.E.E. from the University of Florida .
    Bernie BlegenExecutive Vice President and Chief Financial OfficerJul 2016Bernie Blegen has served as the Executive Vice President and Chief Financial Officer of Monolithic Power Systems, Inc. since July 2016. He is responsible for finance, accounting, tax, treasury, and investor relations. Prior to this role, from August 2011 to June 2016, Mr. Blegen served as the Corporate Controller at MPS. Before joining MPS, he held several executive finance and accounting positions at other publicly traded technology companies, including Xilinx, Inc. and Credence Systems .
    Deming XiaoExecutive Vice President and President of Asia OperationsJan 2008Deming Xiao has served as the Executive Vice President and President of Asia Operations at Monolithic Power Systems (MPS) since January 2008. He joined MPS in May 2001 and has held several executive positions, including Foundry Manager and Senior Vice President of Operations. Before joining MPS, he was an Engineering Account Manager at Chartered Semiconductor Manufacturing, Inc. from June 2000 to May 2001, and prior to that, he spent six years as Manager of Process Integration Engineering at Fairchild Imaging Sensors .
    Maurice SciammasSenior Vice President of Worldwide Sales and Marketing2007Maurice Sciammas has served as the Senior Vice President of Worldwide Sales and Marketing at Monolithic Power Systems (MPS) since 2007. He joined MPS in July 1999 and initially served as Vice President of Products and Vice President of Sales (excluding greater China) before being appointed to his current position. Prior to joining MPS, he was the Director of IC Products at Supertex from 1990 to 1999 and has also held positions at Micrel, Inc. Maurice Sciammas holds a B.S.E.E. degree from San Jose State University .
    Saria TsengExecutive Vice President, Strategic Corporate Development, General Counsel, and Corporate Secretary2004Saria Tseng has served as the Executive Vice President, Strategic Corporate Development, General Counsel, and Corporate Secretary at Monolithic Power Systems, Inc. (MPS). She joined the company in 2004 as Vice President, General Counsel, and Corporate Secretary and took on the additional role of Vice President, Strategic Corporate Development in 2009. Before joining MPS, Ms. Tseng was Vice President and General Counsel at MaXXan Systems, Inc. from 2001 to 2004. She has also worked as an attorney at Gray Cary Ware & Freidenrich, LLP and Jones, Day, Reavis & Pogue .

    Questions to Ask Management

    1. With your recent disclosure of a customer exceeding 10% of revenue, can you clarify whether this customer concentration is expected to continue, and what risks it might pose to your business strategy?
    2. Given that the Street is projecting your Enterprise Data segment to reach nearly $1.1 billion in revenue next year, do you believe this expectation is reasonable amidst the competitive pressures and potential pricing challenges you've mentioned?
    3. Considering that internal inventory days have decreased significantly while channel inventory remains lean, is there a risk that some of your recent growth is driven by inventory fill, and how are you managing inventory levels to prevent future shortages or overages?
    4. With increasing competition in the AI power market, including aggressive pricing strategies from Chinese suppliers, are you experiencing any pricing pressure, and what measures are you taking to sustain your market position and margins?
    5. Although you've invested in expanding your data converters product line, revenue from this segment remains small; what challenges are you facing in gaining market share, and how do you plan to accelerate growth in this area?

    Share Repurchase Program

    Program DetailsProgram 1
    Approval DateOctober 2023
    End Date/DurationOctober 29, 2026
    Total additional amount$640 million
    Remaining authorization$622.1 million as of September 30, 2024
    DetailsManage capital structure and return value to shareholders. Funded from working capital and cash repatriation. No obligation to purchase specific shares.

    Past Guidance

    Q3 2024 Earnings Call

    • Issued Period: Q3 2024
    • Guided Period: Q4 2024
    • Guidance:
      • Enterprise Data: Expected to be up low single digits sequentially in the December quarter .
      • Overall End Markets: No significant changes expected, with variations in end markets anticipated to be within plus or minus mid-single digits .

    Q2 2024 Earnings Call

    • Issued Period: Q2 2024
    • Guided Period: Q3 2024
    • Guidance:
      • End Market Trends: Improved booking trends carried into Q3, with growth expected in Communications, Storage, and Computing, along with incremental improvements in other groups .
      • Enterprise Data: Expected growth, but at a slowing rate compared to previous quarters .
      • Automotive: Near-term outlook described as "fuzzy," with long-term positioning improving .
      • Vertical Power: Solutions being shipped, with multiple customers launching these products .
      • Seasonality: Signs of optimism from improved ordering patterns, but no specific guidance for Q3 and Q4 .

    Q1 2024 Earnings Call

    • Issued Period: Q1 2024
    • Guided Period: Q2 2024
    • Guidance:
      • Revenue Growth: Improvement in financial performance with revenue up sequentially and year-over-year .
      • End Market Growth: Continuing demand in enterprise data and some contribution from automotive .
      • Gross Margin: Non-GAAP gross margin rate of 55.7%, target range between 55% and 60% .
      • Seasonality and Sequential Growth: Q3 and Q4 expected to be higher than Q2, but flattish between Q3 and Q4 .
      • Automotive Revenue: Strong installed base with Chinese OEMs, expecting sequential improvement .
      • Supply Chain and Inventory: Diversifying supply chain globally, managing channel inventory .
      • Market Share Gains: Gains in automotive, servers, notebooks, communications, and industrial sectors .

    Q4 2023 Earnings Call

    • Issued Period: Q4 2023
    • Guided Period: Q1 2024
    • Guidance:
      • Revenue: Forecasted to be in the range of $437.0 million to $457.0 million .
      • GAAP Gross Margin: Expected to be in the range of 55.1% to 55.7% .
      • Non-GAAP Gross Margin: Expected to be in the range of 55.4% to 56.0% .
      • Total Stock-Based Compensation Expense: Expected to be between $46.2 million to $48.2 million .
      • GAAP Operating Expenses: Expected to be between $147.2 million and $151.2 million .
      • Non-GAAP Operating Expenses: Expected to be in the range of $101.8 million to $103.8 million .
      • Other Income: Expected to range from $5.3 million to $5.7 million .
      • Fully Diluted Shares: Expected to be in the range of 48.8 million to 49.2 million shares .
      • Quarterly Dividend: Announced a 25% increase to $1.25 per share .

    Competitors

    Competitors mentioned in the company's latest 10K filing.

    • Analog Devices
    • Infineon Technologies
    • NXP Semiconductors
    • ON Semiconductor
    • Power Integrations
    • Renesas Electronics
    • ROHM Semiconductor
    • Semtech
    • STMicroelectronics
    • Texas Instruments

    These companies are mentioned as primary competitors in the analog and mixed-signal semiconductor industry, which is highly competitive and characterized by decreasing average selling prices over the life of a product .

    Latest news

    Recent developments and announcements about MPWR.

    Financial Reporting

      Auditor Changes

      ·
      Mar 22, 2019, 12:00 AM

      Monolithic Power Systems, Inc. (MPWR) has changed its auditor. On March 18, 2019, the Audit Committee approved the appointment of Ernst & Young LLP (EY) as the new independent registered public accounting firm for the year ending December 31, 2019. Consequently, Deloitte & Touche LLP (Deloitte) was dismissed from this role. The company notified Deloitte of this change on March 20, 2019. Deloitte's reports on the company's financial statements for the years ended December 31, 2018, and December 31, 2017, were not adverse or qualified .