Monolithic Power Systems - Earnings Call - Q3 2025

Executive Summary

• Q3 2025 was a record quarter: revenue $737.18M (+10.9% q/q, +18.9% y/y), non-GAAP EPS $4.73; GAAP EPS $3.71. Non-GAAP gross margin held at 55.5% and GAAP operating margin was 26.5%.
• Results beat S&P Global consensus: revenue $737.18M vs. $722.14M*, and non-GAAP EPS $4.73 vs. $4.64*; both better than expected, driven by stronger Enterprise Data (AI power) and broad-based y/y growth across all end markets. Values retrieved from S&P Global.
• Q4 2025 guidance is roughly in line with Street: revenue $730–$750M vs. $741.69M* consensus midpoint; gross margin guide steady at ~55% (GAAP 54.9–55.5%; non-GAAP 55.2–55.8%). Values retrieved from S&P Global.
• Key drivers: sequential strength in Enterprise Data (+33% q/q on AI applications), Consumer (+21% q/q), Industrial (+18% q/q); Storage & Computing declined 4.5% q/q on weaker notebooks; inventories well managed with days of inventory down to 139 (current-quarter basis).

What Went Well and What Went Wrong

What Went Well

• Enterprise Data accelerated on AI: $191.5M, +33% q/q and +3.8% y/y; management cited “layering of additional customers” and AI power solutions as the catalyst.
• Broad-based y/y growth: all six end markets grew y/y; Automotive +36.1% y/y with an additional Tier 1 ADAS design win; first full BMS design win on a robotics platform underscores shift to solutions.
• Strong cash generation and balance sheet: operating cash flow $239.3M; cash, cash equivalents and short-term investments $1,269.5M; DIO fell to 139 days (current-quarter basis) vs. 150 in Q2.

What Went Wrong

• Storage & Computing down sequentially (-4.5% q/q) driven by lower notebook power solutions despite strong y/y growth; mix tempered overall q/q momentum.
• Gross margin expansion elusive near term; management reiterated margins likely remain mid-55% +/- 20–30 bps given short-dated orders and limited backlog visibility.
• Visibility remains limited (3–4 months) with short lead times and constrained ability to steer mix; channel inventory lean but bookings predictability remains a watch item.

Transcript

Speaker 2

Welcome, everyone, to the MPS Q3 2025 earnings webinar. My name is Arthur Lee, and I'll be the moderator for this webinar. Joining me today are Michael Hsing, CEO and founder of MPS, Bernie Blegen, EVP and CFO, and Tony Balow, Vice President of Finance. Earlier today, along with our earnings announcement, MPS released a written commentary on the results of our operations. Both documents can be found on our website. Before we begin, I'd like to remind everyone that in the course of today's presentation, we may make forward-looking statements and projections within the meaning of the Private Securities Litigation Reform Act of 1995 that involve risk and uncertainties.

The risks, uncertainties, and other factors that could cause actual results to differ from these forward-looking statements are identified in the Safe Harbor Statements contained in the Q3 2025 earnings release, our Q3 2025 earnings commentary, and in our SEC filings, including our Form 10-K, which can be found on our website. Our statements are made as of today, and we assume no obligation to update this information. Now, I would like to turn the call over to Bernie Blegen.

Speaker 5

Thanks, Arthur. Good afternoon, and welcome to our Q3 2025 earnings call. In Q3, MPS achieved record quarterly revenue of $737.2 million, 10.9% higher than the second quarter of 2025 and 18.9% higher than Q3 of 2024. This performance reflected the ongoing strength of our diversified market strategy, consistent execution, continued innovation, and relentless customer focus. Let me call out a few highlights from the third quarter. Our diversified market strategy drove year-over-year revenue growth in all of our end markets. We continued to expand our automotive customer base with another major Tier 1 supplier adopting MPS for its next-generation ADAS solution. Additionally, we secured our first design win for a full battery management system solution on a robotics platform, which further supports our transformation from being a chip-only semiconductor supplier to a full-service silicon-based solutions provider.

Overall, we continue to demonstrate our ability to grow and swiftly adapt to all aspects of our business to the fluid geopolitical and macroeconomic environment. Our proven long-term growth strategy remains intact as MPS focuses on innovation and solving our customers' most challenging problems. We continue to invest in new technology, expand into new markets, and to diversify both our end market applications and global supply chain. This will allow us to capture future growth opportunities, maintain supply chain stability, and quickly adapt to market changes as they occur. I will now open the webinar up for questions.

Speaker 2

Thank you, Bernie. Panelists, I would now like to begin our Q&A session. As a reminder, if you would like to ask a question, please click on the participant's icon on the menu bar and then click the raise hand button. Our first question is from Joshua Buchalter of Cowen. Josh, your line is now open.

Speaker 1

Hey, guys. Thank you for taking my question and congrats on another beat and raise. I guess to start, maybe you guiding up about 1%. Can you give us the puts and takes of which end markets you expect to grow more or less? Of note, I think earlier you mentioned enterprise data was expected to be flat to down 20%. Any updates to the guidance for that segment in particular? Thank you.

Speaker 5

Sure, Josh. When you look at Q3, I think that we saw a little bit better than anticipated performance in both our enterprise data and industrial markets. Pretty much every other group was as we anticipated. Looking ahead, I know that you're interested in enterprise data. We're seeing a layering of additional customers that began in this layering effect in Q4 and is providing this good momentum as we look ahead into the early part of next year.

Speaker 3

I should add all these. In a script readout, Bernie Blegen mentioned a list of market segments, and they started growing. We look back in the last few quarters, all these growths come from greenfield products that were released two, three years ago. Now we see the result. In the near future, in the next few quarters, we will see these will continue to enhance our revenues.

Speaker 1

Thank you for the color there. Maybe to follow up on that, Michael, I think you've been pretty clear. Philosophically, you have some reservations and even frustrations with the AI market because of the concentration and visibility. Given all the massive announcements over the last quarter, even in that space, maybe you could spend a couple of minutes talking to us about just big picture philosophically, how you're approaching these huge forecasts and I'm sure competitive sockets with massive scale. How do you guys figure out which opportunities to go after and service and your thoughts on the market, just given I think you've had frustrations about it, distracting from your diversified growth? Thank you both.

Speaker 3

Yeah, as you said, it is a kind of a distraction, okay? Business is a business. The good money is a good money, okay? We don't want to take a bad money, okay? Overall, the bottom line is MPS wants to demonstrate in any segment of a market we are the best. We have possessed the best technology and the best customer service. We're solving problems. We demonstrated that we can have qualities and shipments. In all these categories, we are the best company. In terms of which AI company, we don't really care. We engage with the large companies and the small companies. We want to demonstrate that this is the best technology. When the revenue comes, it comes. Given times, as we said it, given time, all the true color will show.

Speaker 1

Thank you, Michael.

Speaker 2

Our next question is from Ross Seymore of Deutsche Bank. Ross, your line is now open.

Speaker 4

Hi, guys. Can you hear me?

Speaker 5

Just fine, Ross.

Speaker 4

Perfect. Thank you. I guess for my first question, the automotive side of things, you talked about getting an incremental design win on the ADAS side of things. There's a lot of choppiness in that end market across different GOs and at different points in time, cyclically, geopolitically, all those sorts of things. From a secular growth perspective, can you just talk about ADAS as a percentage of your revenues now versus user interface or USB and those sorts of things, and how ADAS penetrating more of that market changes the growth rate, the content, the diversity of it? I just kind of want to capture that ADAS theme and what it really means to you.

Speaker 5

Sure. I think that we've demonstrated a history of establishing a strong presence in various markets with differentiated technology. You might recall going back a ways, it was USB ports for automotive, and now it's ADAS. What this does is it has a cascading effect where we're able to get adoptions and the design wins. We call out when these begin to ramp, and that's actually been more important to us than necessarily what the SAR is for a particular end market. In this one in particular, we have started with a lot of ADAS opportunities, particularly in the EVs because they're faster to come to market. What that's given us the opportunity has been is to showcase all of our other technologies, and now we're starting to see those ramp, whether it's in body electronics or different applications.

What we're more excited about is as we look ahead and the transformation of the end market for automotive as it moves into 48V and zonal electronics.

Speaker 3

We don't know the breakdown to answer your question exactly. Maybe Bernie has some ideas. I think it's less than half. I think it's well less than half.

Speaker 4

It's considerably less than half.

Speaker 3

Okay. I'm just looking at the number of cars and also our revenues. That cannot be more than half. In the ADAS side, more and more cars, including combustion engine cars, they're adopting ADAS. We will see a significant growth in the next few years. That's where we anticipate it.

Speaker 4

Great. Thanks for that, Collar. I guess as my follow-up, pivoting to another thing you talked about in your press release of moving from a silicon or chip-based supplier to more of a solution provider, how do you think about the gross margin implications of that over time? You guys were a few points higher than you are now a couple of years ago. We've talked about what does it take to get you back to kind of the upper 50% from the mid-50%-ish where you are today. Does that system approach help, or is that actually a headwind in the gross margin as you go forward, as much as it might even be operating margin accretive?

Speaker 3

I don't think so. I don't think that there would be a headwind. A lot of large systems that we're building, we're kind of learning how to do it. It creates a lot of issues. Once the volume goes up, we're learning it. I think things get a lot better. Since last year, I guess, it will improve quite a bit. We're actually making our own test equipment, as a lot of people know about it. We eat our own dog food. Creating all fully automated test systems, those types of products never existed before. I think ultimately we'll improve the yield and improve the gross margins.

Speaker 4

Thank you.

Speaker 2

Our next question is from Joe Cortici of Wells Fargo. Joe, your line is now open.

Speaker 9

Yeah, thanks for taking the questions. Maybe first, I just wanted to ask, you know, with Bedded within the 4Q guide, is there any help you can kind of provide in just thinking about the end markets? I think there's some seasonality to maybe like a consumer in the fourth quarter. I think enterprise data, you guys were previously thinking that would be up somewhere like high single digits sequentially in the December quarter. Is that still the case?

Speaker 3

Anticipating a market, that's a very difficult call. As you guys are betting on which stocks, it's difficult. We have our way of operating our business. We do the best, develop a technology, engage our customers closely. Probably the same way that you pick how you pick stocks, okay? You engage customers closely. Whatever happens, happens. You can't predict what the market is, and we don't do that, actually.

Speaker 5

Since we last talked about the second half of this year, nothing's fundamentally changed in our positioning.

Speaker 9

Okay. Thanks for that. That's helpful. Maybe just also following up, like, you know, I think in the press release or prepared remarks, you had a comment around the first design win for a full battery management system solution for robotics platform. Can you talk about what drove that and how you think about the revenue opportunity ramping there and more wins in the future?

Speaker 3

Yeah. We probably get too excited to talk about those. The fact is that we got excited because we see robotics happening. We kind of predicted that that's the BMS going to happen. We got in and we designed it in. Our customers engage with us. There's a ground-up system that we developed, and we see more and more these type of a system will happen. These kind of systems will become a reality. That's the reason we put out there.

Speaker 4

I'll just add on very specifically on that one. Clearly, we called it out because of the fact it was the first opportunity that we had the design win on. In terms of a revenue ramp, that's really starting in 2026. It's not in and of itself necessarily a needle mover on the model, but I do think it sort of starts the wave of these full solution design wins that we might have going forward.

Speaker 3

Yeah. That's kind of the same kind of way in making a point that is, okay. We do start to do robotics stuff for the actuators and the IC for actuators and the battery management system charging, wireless chargings. These are back a few years ago. We didn't even know that the robotics world was taking off. I've been talking about robotics since 2017 or 2018. The AI-assist robot are more and more beliefs, okay, that we're really starting taking off. That's kind of a project that we think is, oh, we picked the winners. We're glad to see it. That's why we're probably too excited to talk about this.

Speaker 9

Thank you.

Speaker 2

Our next question is from Quinn Bolton of Needham. Quinn, your line is now open.

Speaker 4

Thank you. Congratulations, Michael, Bernie, and Tony. I guess I wanted to start with a big picture question, just, you know, looking through this earnings season, Intel's talked about, you know, sort of shortages of server CPUs. We've seen hyperscalers significantly increasing CapEx. NVIDIA talked about half a trillion dollars of demand in 2025 and 2026. I guess my question is, about a year ago, I think you guys were seeing very, very short lead times in that business and dealing with some level of pricing pressure. I'm wondering, as you're looking at the second half and more importantly into next year, have you started to see any change in customer lead times? Are they giving you better forecasts across the enterprise data segment? Is the pricing on voltage regulators and vertical power, has that changed at all over the last quarter or so?

Speaker 5

Quinn, thanks for the question. Let me start that this remains a very dynamic market. We're responding to a variety of requests when it comes to the orders and the expectations from our customers. In some ways, we're getting improved predictability because we're adding, we're layering, as I said, more customers into the mix. As far as the market itself, particularly with all the blockbuster announcements that have been coming out recently, you can see how quickly things are changing. What our position is, is that we can't control our customers necessarily, but we can position the company to be as responsive as we can.

Speaker 9

Is this sort of dynamic market? I mean, if folks are scrambling to get capacity, has that had any lifting effect on pricing? I'll ask my second question.

Speaker 3

Yeah. Any market segment started from the ramp rapidly at the beginnings always caused these imbalances, okay, supply imbalance. Okay. I mean, on the AI side, clearly it's like that. I mean, once it goes on, things will smooth out.

Speaker 5

Yeah. To be specific to your question, I don't think we've seen any recent or sustainable trends in pricing one way or the other.

Speaker 4

Okay. Perfect. Second question for you, Bernie, gross margins have been sort of ticking down over the last year or two. Can you give us any sense? Do you think they sort of stay in this mid-55, 55.5% range? Is there some point next year that you start to see gross margins starting to move higher, either driven by mix or new products? Should we be thinking about margins being fairly flat over the next year or two?

Speaker 5

Sure. As I've commented on prior calls, we've seen about three or four quarters in a row where I'd say that we have seen a strong uptick in demand, and that continues even today. What makes this cycle different than ones that we've experienced in the past is that the orders are more short-term in nature. We're not seeing a large buildup and backlog in future quarters. Without that visibility, it limits our capacity to be able to manage the mix of business that we want to be able to have expansion in gross margins. For the foreseeable future, until the demand profile changes to elongate the buildup of backlog, I believe that we're going to be in sort of the steady range, plus or minus 20, 30 basis points in the mid-55%.

Speaker 9

Got it. Thanks for that.

Speaker 3

We have a lot of products, a few thousand products, and a few, 40, 50,000 customers. To move, it's very stable margins. With the transitions to more solution-provided companies, as I said earlier, all these, it has to be automated. As time goes on, the margin will improve, but not quickly. That mass is very big. We know it is operated on the low end of our margin profiles. The longer term will improve, and we stick with a gross margin range.

Speaker 9

Got it. Thank you.

Speaker 2

Our next question is from Tore Svanberg of Stifel. Tore, your line is now open.

Speaker 7

Yes. Thank you, Michael. Bernie, Tony, congrats on another record quarter. By the way, some of that dog food you're referring to must be pretty proprietary stuff. My first question is on the enterprise data segment. That's about an $800 million business right now. My understanding is you're on a journey here, right? You're still selling predominantly chips. You're obviously moving into module subsystems, eventually systems. I'm not looking for any numbers per se, but could you sort of let us know where we are in that journey? I mean, building an $800 million business with chips, and where could we eventually go here with obviously more and more subsystem type solutions for enterprise data?

Speaker 3

If I understand your question correctly, I can answer that way. We're anticipating building multiple millions of units per month type of a shipment. All these highly integrated modules never existed before. How do we test this thing? How do we achieve a single low single digit PPM failures? That is, we never encountered that kind of issues before. We started using our own robotic systems to make that happen. Now we achieved very high volumes, 100% automated, including reliability test. That's our future, and the goal is building multiple million units a month for that. $10 million a month for that. That's the near-term goal.

Speaker 7

Yeah, that's very helpful. Thank you for that, Michael. Did you also have a response to my question on the enterprise data? Where are we in this journey towards delivering more system-level solutions, especially with our talking about rack-level power and so on and so forth?

Speaker 3

This is at the very beginning. Maybe I think it's module power skills, less than a third, okay, and less than a third of our revenues. It grew in the last half years. We expected it to grow, some got delayed. It now started happening. In the next years, could be much more.

Speaker 7

Great. Thank you for that, Michael.

Speaker 4

Maybe just to add on to the back of that, Tore, I think as you start talking about some of these solutions for 800 volt, as we discussed, those are like 2027, 2028 revenue ramps. I think it supports what Michael was saying, that we're still at the front end of this opportunity in the data center force.

Speaker 7

Great. Thank you again.

Speaker 3

I think in the investment communities, if you have an 800V technology, data center transformer is like a flip switch. The lights turn on, turn on. It's not like that. The light turned on, it takes a couple of years, more than a couple of years to see the revenues. These take three, four years.

Speaker 7

Great perspective. Thank you again.

Speaker 2

Our next question is from Rick Schafer of Oppenheimer. Rick, your line is now open.

Oh, thanks. I'll add my congratulations, you guys. Maybe if I could start with an auto question, kind of a follow-up. I know we talked about BMS robotics, but I know BMS becomes a bigger contributor for your auto segment next year. You mentioned a couple of things, Michael, in an earlier question, but I'm just curious if you could give some guide rails or provide some guide rails about potential content trends for MPS as you start ramping some of those BMS opportunities. I mean, again, not asking for dollar content per car, but does it double or triple, those kinds of numbers? What does it do to your potential content per vehicle moving into that BMS space in a more meaningful way? As part of your answer, I'm curious where some of the lowest hanging fruit is for you guys. Is it 48V? Is it power isolation?

That kind of thing. Thanks.

Speaker 3

It's actually all of them. BMS revenues for autos and for EVs. It's a bit far away. Our customer, it's a very concentrated market. There's a few players. Well, it's not a few carmakers, and gradually all of them, they want a BMS. Our customers are glad to see MPS is in this to develop that series of that type of a product tools. In terms of other low-hanging fruits, we see 48 volts as a trend. We developed those products back a few years ago, like five, six years ago. We provide all these integrated solutions rather than these discrete ones, and the size can be six, seven times smaller. The other one is 800 volts for EV. Now all goes up, and from 400 volts to 800 volts. In the China market, a lot of cars already have 800 volts.

Our silicon carbide solutions, not for traction inverters and for control systems, these products will be shined. That's, I pulled off my hair at this moment.

Speaker 4

Rick, maybe just to shape you a little bit on timing there to make sure. I think what we said is the layering of opportunities in auto really sort of out of the end of this year and the next year starts with design wins that we have, bringing new content to market per vehicle. You start to see zonal designs hit market next year, then ramping through into 2027. The battery management system and traction inverter solutions are really kind of more like 2027 and beyond, just to make sure you understand sort of how those revenue opportunities are layering in.

Good. Thanks, Tony, for that color. Thanks, Michael. If I could ask for my follow-up, it's on HVDC. I appreciate the timing commentary you provided a second ago, Tony, but I'm also curious. I'm just trying to figure out the right way to think about that emerging market. Can you give a sense of how HVDC compares to how you've described at your analyst day earlier this year, maybe how you describe the 48V accelerator power opportunity? Or in any terms you want, just to try to give a sense of what that market represents to you guys or what you think it could.

Speaker 3

I think it's a 48V system. It's clear. There's a reason why it's 48V. It's going back to those telecom times. Telephone systems are 48V, plus minus 48V, or plus minus 45V. First, it started with the server side. We talk about four years, this thing. It has to be the solutions because once your current goes up, everybody remembers the car using a 6V battery, then it became 12V, and it's ultimately moving up to 48V. These are all for control systems, 48V. The data center is already happening, 48V. I see. That's why I predict all the building systems, all the building automations are going to be on 48V, and the building will be a DC power solutions. The opportunity is great. As we put out, engage our customers with building automation systems, and we prove the point, actually, it's so welcome for that type of a product.

That's my view at this time.

Speaker 4

Rick, I think part of your question was also on the 800V high voltage DC for data center as well, right?

Yes.

I think on that one, we've been pretty careful about trying to go size the opportunity because, one, it's very far out. Two, we don't know how it will ramp into market. I think what we have said is since we don't play in that part of the market today, the business we get is sort of all accretive to our overall SAM going forward. I think we want to be careful about sizing the market yet, given how far out it is and not knowing how it will layer into the data centers going forward.

I appreciate that. Thanks, you guys.

Speaker 2

Our next question is from Gary Mobley of Loop Capital. Gary, your line is now open.

Speaker 0

Hey, guys. Let me extend my congratulations on the continued strong growth and continued execution. I appreciate the fact that you still only have about three to four months of visibility, given the capacity that you can support and the quick turns business you can support. Can you confirm whether bookings continue to improve sequentially, and what are the seasonal considerations as we look out into the first quarter?

Speaker 3

It's very difficult for us to predict that, okay, what's the booking? Where's the bookings? We build our inventory. We try to build. Look at the inventory now. We try to build up as a case way below our models. Whatever comes, we anticipate it. We can swiftly adapt.

Speaker 4

Yeah, just to add to that, we really don't have a lot of visibility into the first half of next year. We can definitely point to the normal drivers as far as both enterprise data and automotive are very well positioned for new revenue ramps, but getting both the timing as well as getting that to balance out, we don't have a strong view on Q1 yet.

Speaker 0

Okay. Appreciate that. If I'm not mistaken, your distribution inventory as of mid-year was at the low end of your five to eight-week target range, and it decreased in the June quarter. What was the trend sequentially for the September quarter? When might you take that distribution inventory back up to maybe the mid to upper part of that normal range?

Speaker 4

Yeah. Currently, the Q3 channel inventory was unchanged in terms of days from where it was in the prior quarter. We take from that that we're satisfying real demand at this point, which again is a reflection of the quick turns business that we're working with.

Speaker 0

Thank you.

Speaker 2

Our next question is from Chris Caso of Wolfe Research. Chris, your line is now open.

Speaker 7

Yes, thank you. Good evening. The first question is on enterprise data. What are sort of the puts and takes as you look into next year? This year there was some changes in market share in that, which affected that business. I guess I'm going to assume that things are cleaner as you go from this year into next year. I mean, one, do you expect to grow that business as you go into next year?

Speaker 3

It’s cleaner. You see that this year is the next year’s. This year’s, okay. We are doing pretty good this year. As I said earlier, the module business is growing. All these, this area, Monolithic Power Systems technology shines. The higher power, the better it is, because we provide the highest density power density products that fit this market perfectly. In the next couple of years, you will see it. Monolithic Power Systems is a major player in this market segment. Also, the market is big. It’s not okay. We don’t want to play. We don’t want to be a Monolithic Power Systems only. You want to have multiple competitors. It’s good for the industry.

Speaker 4

Yeah, I could see enterprise data growing in the range of 30% to 40% in 2026 for us. Much of that, though, would be back in the second half of the year. While we've seen a number of new players that have been layered in, I think the material ramps are more weighted to the second half of 2026.

Speaker 7

That's very helpful. If I could follow on to that. Since you provided a little bit of color on that, Bernie. When you look at that 30% to 40% growth, is that because I know that some of the vertical power designs, for example, you have more content. What's the driver of that? Is it fairly broad-based? Is it skewed towards some of the ASIC solutions, more towards vertical power? Whatever kind of color you can give behind that 30% to 40% expectation.

Speaker 3

As a CEO, I don't know how to make a 30 to 40% cost. I don't know. The opportunity is there. If we didn't deliver a 30 to 40%, the stocks I see from $900 to $400, what kind of fuck-up is that? I don't want to make them very hot, just waiting for the numbers. Let the numbers show it.

Speaker 7

Fair enough. Thank you.

Speaker 2

Our next question is from Kelsey Chia of Citi Research. Kelsey, your line is now open.

Speaker 6

Hi, Michael. I'm Bernie. Thanks for taking my question. My question is on the competitive landscape. I was hoping you could share more, especially with regards to the material side of things, like gallium nitride and silicon carbide. I think your biggest enterprise data customer has been signing a lot of partnerships with all these semiconductor companies. I was just wondering about Monolithic Power Systems' positioning in those, and if you actually see those materials as being important in the next generation of the power modules and chips.

Speaker 3

We do our own silicon carbide. We're building modules. Also, we are seeing we are using again. That's a very, very early stage. We're evaluating it. Also, don't forget about silicon. Silicon power MOSFETs have evolved. We engaged a lot of new developments. A lot of the data showed it can be very cost-effective and also can compete with the silicon carbide.

Speaker 6

Got it. Thank you.

Speaker 3

That's a very, very recent development.

Speaker 6

Yeah. Okay. Got it. I would just like to have a sense of how do you guys feel today versus a quarter ago? Especially you guys have come a long way since the start of the year when you're dealing with all these market share changes, visibility on the ASIC customers, and things like that. Given the slew of announcements from all these big mega partnerships, how do you see that relative to your opportunities? Also, given the maturity of the supply chain, I believe things are probably—the supply chain partners are getting to a good cadence. How do you guys feel with regards to those recent announcements relative to your opportunity set?

Speaker 3

I don't measure quarter by quarters. I measure by multiple years. I can't tell you that.

Speaker 4

I guess the simplest way is we're very broadly indexed across not just the merchant vendors or large ASICs, but medium and small-time opportunities. All of these need to find their way into the marketplace. Right now, we're still very, very early in the process. As Michael said, it's very hard to sort out in any particular time period. I think that we're as well indexed amongst all the opportunities as anybody in this market.

Speaker 6

Okay, thank you.

Speaker 2

Our last question is from Jack Egan of Charter Equity Research. Jack, your line is now open.

Great. Thank you for taking the questions. I had one on enterprise data and then one on modules more broadly. The shift to modules and vertical power delivery with the custom ASIC ramp should be a pretty big tailwind for MPS. I'm kind of wondering about what the main drivers have been, at least so far, for those customers that are switching from lateral to modules or vertical power. I'm not really sure if you have this level of granularity, but among the major benefits, like higher power density, higher efficiency, smaller footprint on the top side of the board, etc., is there any one characteristic that's being cited by your customers as the main reason that they are moving to those modules or vertical power delivery?

Speaker 3

From a chip to module, whoever stays with the module stays with the module. Start with the module. Whoever stays with the chip stays with the chip. MPS provides both, both chip solutions and module solutions at this time. I don't know if it answered that question for you.

Got it. Okay. Just kind of on the modules more broadly, I believe, if I understood it correctly, the last quarter you mentioned that modules outside enterprise data could be like 10% to 15% of your total revenues. I was curious how much of your revenue base, or I guess addressable market outside enterprise data, would be eligible for switching to modules, even if you're looking several years into the future. How high could that mix of modules outside enterprise data go?

That's a good question. We build those modules, very similar to enterprise modules, in 2017. Industrial market adoption is kind of slow, actually faster than telecoms. These are two market segments that we focus on. To our surprise, the auto industries also want to use it because it's easy to implement. The other one is semi-equipment, and that's a large segment. We didn't realize that. Now we see all these revenues are happening there. I think in the next couple of years, we'll be growing faster than three or four years ago. We're picking up a business. The rate of increase is picking up.

Got it. Thanks, Michael. That's helpful.

Good. Good.

Speaker 2

This concludes our Q&A session. I would now like to turn the webinar back over to Bernie Blegen.

Speaker 4

I'd like to thank you for all joining us for this conference call. I look forward to talking to you again during our fourth quarter 2025 conference call, which will likely be held in early February. Thank you and have a nice day.