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    Monolithic Power Systems Inc (MPWR)

    Q4 2023 Earnings Summary

    Reported on Jan 10, 2025 (After Market Close)
    Pre-Earnings Price$645.41Last close (Feb 7, 2024)
    Post-Earnings Price$680.00Open (Feb 8, 2024)
    Price Change
    $34.59(+5.36%)

    What went well

    • MPWR is expanding its revenue capacity to $4 billion, reflecting confidence in future growth and continued execution of their long-term strategy.
    • The acquisition of Axiom BV is expected to significantly enhance MPWR's technological capabilities in programmable multicore digital signal processors, opening new markets and potentially revolutionizing audio systems across automotive and consumer applications.
    • Strong growth in the enterprise data segment driven by AI applications, with MPWR expanding production lines to meet increasing demand and expecting further growth in 2024.

    Q&A Summary

    1. Enterprise Data Outlook
      Q: What are your expectations for the enterprise data segment and expanding customer base with GPU and AI accelerators?
      A: We have benefited from accelerated demand over the last four quarters and foresee a broadening customer base in GPU and AI accelerators. While we've enjoyed a high market share, we expect it may decrease as second and third suppliers enter the market. However, the market segment is growing rapidly, and we're expanding production to meet demand in the second half.

    2. Dollar Content per Server
      Q: Do you expect your average dollar content per server to increase despite competition and lower-cost cards?
      A: As power requirements for AI products increase, we believe our dollar content per server will go up. While competition is increasing, especially as new AI players enter the market, we're focused on resolving technical challenges and meeting customer demand. Cost is not the main issue now; it's about throughput and fulfilling requirements.

    3. Q1 Guidance by Segment
      Q: Can you provide guidance for March by segment?
      A: The growth driver remains the enterprise data segment, with additional positive demand for traditional CPU data center solutions alongside AI. We expect communications to flatten, while other groups may see sequential declines ranging from high single digits to low double digits between Q4 and Q1.

    4. Acquisition of Axiom
      Q: Can you elaborate on the Axiom acquisition and its prospects?
      A: We've acquired Axiom, a company we've worked with for three years. Their technology, combined with our power stage, offers significant benefits in audio signal processing and amplification. We've proven this with high-end customers, achieving unique products with zero distortion at low cost. This advances audio quality for consumers and could revolutionize how we listen.

    5. Automotive Segment Outlook
      Q: Can you comment on the softness in the automotive market and expectations for EV ramp?
      A: The auto segment slowed towards the end of last year, but we still grew approximately 20% to 30%. Growth was primarily driven by infotainment and digital cockpit solutions. Looking ahead, we see increased activity as customers consume inventories and anticipate higher volume ramps, especially in EVs, in the first part of this year. The EV ramp is lumpy due to varying automaker schedules, but overall, more EVs with our products are expected.

    6. 48-Volt Stage 1 and Stage 2 Products
      Q: What's the outlook for Stage 1 power products and competition in 48-volt solutions?
      A: We are dominant in second stage 48-volt solutions and have introduced Stage 1 products, resolving earlier issues. Stage 1 represents about 20%–25% of the dollar content of Stage 2, and we expect incremental ramp in these products in Q1 and Q2. While competition is increasing, we focus on being the best performer, and customers are receptive to our solutions.

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