Q4 2023 Earnings Summary
- Strong Growth Expected in Data Center and Enterprise Segment: SiTime expects its data center and enterprise segment to grow by 50% in 2024, driven by strong engagements with top cloud service providers, AI companies, and being designed into major platforms like optical modules, active optical cables, and GPUs. This positions SiTime well to capture the growing demand in AI and enterprise markets.
- Return to Sequential Growth and 30% Annual Growth Model: The company anticipates sequential growth quarter-to-quarter, with an acceleration in the second half of the year, aiming to return toward its model of 30% annual growth. This confidence is based on the strength of their design wins, unique technology, and customer relationships, suggesting robust future performance.
- Expanding Share in the Automotive Market: Despite a mixed automotive market, SiTime's market share is growing due to its superior products, better supply chain, quality, and reliability. The company believes that the automotive segment could become a $100 million business in the coming years, highlighting a significant growth opportunity.
- SiTime's quarterly revenue has significantly declined from previous highs of $70 million to $42.4 million in Q4 2023 and is expected to further decrease to $31-33 million in Q1 2024, indicating it may take multiple years to return to prior revenue levels due to ongoing inventory issues and a challenging macroeconomic environment.
- The automotive segment is experiencing mixed results, with both U.S. companies and Chinese automakers taking a breather, potentially impacting growth in this market segment despite SiTime's efforts to increase market share.
- SiTime's largest customer in the consumer segment is down more than expected, and the communications segment is not expected to see much growth, suggesting potential weakness in key markets and reliance on data center growth to offset slower performance in other areas.
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2024 Growth Outlook
Q: Will SiTime achieve 30% year-on-year growth in 2024?
A: Management expects sequential growth throughout the year with a stronger second half. While it's early to confirm hitting exactly 30% growth, they are in that general range. -
Inventory Normalization
Q: When will customer inventories return to normal levels?
A: The company continues to see improvement in channel inventory drawdown. They expect most accounts to normalize by Q2, around the June quarter. -
Data Center Growth
Q: How significant is data center growth to SiTime's business?
A: Data center and enterprise are strong growth areas, expected to grow over 50% this year, driving the bulk of growth in the communications and enterprise segment. -
Automotive Market Outlook
Q: What is the outlook for the automotive market?
A: The automotive market is mixed; while U.S. and Chinese automakers are slowing down, SiTime's market share is growing, especially with Tier 1 OEMs. They anticipate automotive becoming a $100 million business in the coming years. -
Consumer Segment Performance
Q: How is the consumer segment expected to perform?
A: The consumer segment is facing normal seasonal declines and impacts from a significant customer being down more than expected. However, growth is anticipated in the second half of the year. -
Return to Previous Revenue Levels
Q: How long will it take to return to previous revenue highs?
A: Management believes it won't take long to reach significant revenue levels exiting Q4, citing strong growth prospects and unique technology. -
Aura Integration
Q: How is the integration of Aura proceeding?
A: The Aura team has integrated seamlessly, contributing new products. SiTime is now engaging upstream with processor companies, enhancing reference platforms with their clock solutions.
Research analysts covering SITIME.