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 .
- 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.
- Lighting Control Products - Provides solutions for backlighting and general illumination, contributing to the company's offerings in lighting applications.
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Q3 2024 Summary
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
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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. -
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. -
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. -
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. -
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. -
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. -
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. -
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. -
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. -
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
Revenue by Segment - in Millions of USD | FY 2013 | Q1 2014 | Q2 2014 | Q3 2014 | Q4 2014 | FY 2014 | Q1 2015 | Q2 2015 | Q3 2015 | Q4 2015 | FY 2015 | Q1 2016 | Q2 2016 | Q3 2016 | Q4 2016 | FY 2016 | Q1 2017 | Q2 2017 | Q3 2017 | Q4 2017 | FY 2017 | Q1 2018 | Q2 2018 | Q3 2018 | Q4 2018 | FY 2018 | Q1 2019 | Q2 2019 | Q3 2019 | Q4 2019 | FY 2019 | Q1 2020 | Q2 2020 | Q3 2020 | Q4 2020 | FY 2020 | Q1 2021 | Q2 2021 | Q3 2021 | Q4 2021 | FY 2021 | Q1 2022 | Q2 2022 | Q3 2022 | Q4 2022 | FY 2022 | Q1 2023 | Q2 2023 | Q3 2023 | Q4 2023 | FY 2023 | Q1 2024 | Q2 2024 | Q3 2024 |
---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|
Storage and Computing | 119.8 | 124.5 | 129.5 | 117.3 | 491.1 | 106.1 | 114.955 | 144.0 | ||||||||||||||||||||||||||||||||||||||||||||||
Enterprise Data | 47.2 | 48.0 | 98.9 | 128.9 | 323.0 | 149.7 | 187.211 | 184.5 | ||||||||||||||||||||||||||||||||||||||||||||||
Automotive | 105.3 | 104.4 | 95.2 | 89.8 | 394.7 | 87.1 | 87.193 | 111.3 | ||||||||||||||||||||||||||||||||||||||||||||||
Industrial | 47.5 | 49.7 | 42.1 | 33.4 | 172.7 | 30.2 | 32.277 | 44.0 | ||||||||||||||||||||||||||||||||||||||||||||||
Communications | 67.9 | 49.3 | 46.8 | 40.9 | 204.9 | 46.6 | 43.566 | 71.9 | ||||||||||||||||||||||||||||||||||||||||||||||
Consumer | 63.4 | 65.2 | 62.4 | 43.7 | 234.7 | 38.1 | 42.229 | 64.4 | ||||||||||||||||||||||||||||||||||||||||||||||
DC to DC Products | 425.2 | 418.2 | 447.4 | 427.8 | 1,718.6 | 416.0 | 501.302 | 616.1 | ||||||||||||||||||||||||||||||||||||||||||||||
Lighting Control Products | 25.9 | 23.0 | 27.5 | 26 | 102.4 | 41.9 | 6.129 | 4.0 | ||||||||||||||||||||||||||||||||||||||||||||||
Total Revenue | 451.1 | 441.1 | 474.9 | 454 | 1,821.1 | 457.9 | 507.431 | 620.1 | ||||||||||||||||||||||||||||||||||||||||||||||
Revenue by Geography - in Millions of USD | FY 2013 | Q1 2014 | Q2 2014 | Q3 2014 | Q4 2014 | FY 2014 | Q1 2015 | Q2 2015 | Q3 2015 | Q4 2015 | FY 2015 | Q1 2016 | Q2 2016 | Q3 2016 | Q4 2016 | FY 2016 | Q1 2017 | Q2 2017 | Q3 2017 | Q4 2017 | FY 2017 | Q1 2018 | Q2 2018 | Q3 2018 | Q4 2018 | FY 2018 | Q1 2019 | Q2 2019 | Q3 2019 | Q4 2019 | FY 2019 | Q1 2020 | Q2 2020 | Q3 2020 | Q4 2020 | FY 2020 | Q1 2021 | Q2 2021 | Q3 2021 | Q4 2021 | FY 2021 | Q1 2022 | Q2 2022 | Q3 2022 | Q4 2022 | FY 2022 | Q1 2023 | Q2 2023 | Q3 2023 | Q4 2023 | FY 2023 | Q1 2024 | Q2 2024 | Q3 2024 |
China | 225.052 | 216.172 | 234.9 | 258.68 | 934.8 | 263.04 | 282.514 | 310.472 | ||||||||||||||||||||||||||||||||||||||||||||||
Taiwan | 48.833 | 70.212 | 103.5 | 84.95 | 307.5 | 100.45 | 127.396 | 179.747 | ||||||||||||||||||||||||||||||||||||||||||||||
South Korea | 45.680 | 40.669 | 41.7 | 41.85 | 169.9 | 35.54 | 39.513 | 51.815 | ||||||||||||||||||||||||||||||||||||||||||||||
Europe | 43.103 | 36.348 | 29.8 | 23.35 | 132.6 | 17.74 | 19.105 | 25.145 | ||||||||||||||||||||||||||||||||||||||||||||||
United States | 31.017 | 27.571 | 23.6 | 15.11 | 97.3 | 14.82 | 13.927 | 13.797 | ||||||||||||||||||||||||||||||||||||||||||||||
Japan | 30.815 | 28.288 | 18.6 | 15.6 | 93.3 | 12.95 | 13.552 | 16.286 | ||||||||||||||||||||||||||||||||||||||||||||||
Southeast Asia | 26.432 | 21.708 | 22.5 | 14.56 | 85.2 | 13.24 | 11.352 | 22.772 | ||||||||||||||||||||||||||||||||||||||||||||||
Other | 0.133 | 0.160 | 0.2 | 0.01 | 0.5 | 0.11 | 0.072 | 0.085 | ||||||||||||||||||||||||||||||||||||||||||||||
Total Revenue | 451.065 | 441.128 | 474.9 | 454.01 | 1,821.1 | 457.89 | 507.431 | 620.119 |
Executive Team
Questions to Ask Management
- 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?
- 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?
- 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?
- 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?
- 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?
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
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 .