Steven Litchfield: Yes, Tim. So you’re right. I mean we kind of highlighted where we thought the end market growth would be from it’s certainly some of these newer products that we’ve been talking about, they will definitely have an impact on Q2. But I’d say, overall, it’s probably the recovery itself, that’s probably helping a little bit more in Q2 and some of the newer products kind of have a layering impact throughout the year.
Operator: Our next question is from Ananda Baruah with Loop Capital Markets.
Ananda Baruah: I guess, 2 for me, if I could. The new products that you have ramping through the year that you have? And maybe just — you can even keep it to sort of Ethernet, optical and storage if you want those are the most important one’s. But I guess the question is, when during the year, like first half, second half, should we expect each of those to begin to make an impact? And I know — Kishore, I know you talked about collectively they each making an impact and giving [indiscernible] the sequential growth. But do you think for the year, there’s kind of 1 — so do you think there’s just sort of 1 or 2 in particular that will make more — the most meaningful impact? Or is it collectively through the year also? And I have a quick follow-up.
Steven Litchfield: Yes, Ananda, maybe I’ll take a stab at it. I mean look, the storage accelerator business — we’ve been in this business for a while. We have some — a new product that’s ramping this year. It will start kind of mid-year and then definitely grow throughout this year and into next year. I mean, a lot of these customers take a little bit longer to ramp because there’s multiple product families. But really encouraging signs as we get more design wins and see more traction there. I mean the optical front, I think we’ve been talking about, I mean, one of the big drivers around optical, is 800 gig. And so 800 gig is certainly going to start this year but you’re going to see more of those volumes happen in 2025 which is exciting, right?
I mean that — but the work itself, that work is going to be done this year. These are really long qualifying cycles. And so that work is being done right now. A lot of that — a lot of those opportunities are being awarded right now. And so we’ve got to close on those opportunities and you’ll certainly see that revenue contribute in the back half of this year but it’s also going to be a big driver in 2025. And on the Ethernet side, even that, I would say there’s some existing 2.5-gig business that’s recovering kind of on the gateway front as the inventory improves but then some of the newer products like in the industrial market, specifically in the enterprise Ethernet market, that’s where we’re seeing a lot more adoption. We’ve got a couple of really large customers that will be ramping probably more in 2025 than in 2024.
So again, each of them kind of have their own time frame that they’re coming in but we have a lot of confidence around each one of them.
Ananda Baruah: That’s super helpful context, Steve. And I guess the follow-up is just sort of your guys’ long-term 35% op margin target. Like what needs to happen over the next kind of couple of years for you to achieve that? And I think the last time you were sort of kissing that, Steve, so the quarterly revenue run rate was high 200 — 280 plus. And so with the new products, do you still need to get back to that revenue level to sort of approach the mid-30s operating margins? So any kind context there would be helpful.
Kishore Seendripu: So Ananda, there is first and foremost, right, there’s a lot of spend even when we were kissing the, as you call, the 35% operating margin, right? There was a lot of investment that was being spent in the new areas that we have entered 5 years ago from a development perspective. Secondly, we had acquired our connected home business and there was a lot of what I call old-stale products. that really needed to be upgraded which usually in silicon world means that we do, right which is — so the OpEx that you saw was had the burden of all of these big undertakings on our own organic side and the ones we had to undertake organically from the acquisition front. So first and foremost, now the OpEx is being brought into control or what I want to call not control is now being rightsized for a normal cadence of investment.
So that’s the first and foremost, benefit of this downturn, if you will. And then when the revenue is growing, so you started getting leverage out of that because we’ve already got a much of this product portfolio behind us. So I think that’s going to accelerate the march towards the 30%, 35% operating margin. So Steve, if you want to add any color on that beyond?
Steven Litchfield: No, I think that’s right. I mean maybe I’d refresh some history here but we — we also had a pretty clear path getting to that number to that over 30% number. Long before we saw $1 billion worth of revenue. So I’m confident that we can get back at a much lower revenue run rate than the $1 billion you referenced.
Operator: Our next question is from Karl Ackerman with BNP Paribas.
Karl Ackerman: Steve, I think you said broadband will be down on revenue in F Q2 but you’re starting to see an improvement in bookings. Are those bookings on the cable side or more on fiber. I ask because you’ve been more weighted toward cable or [indiscernible] fiber and some of the investors have worried that the declines in broadband are more secular than cyclical in nature. And so I guess as you address that question, could you discuss your design engagements with customers on PON that can help drive a much larger recovery in broadband as we think of not just the second half of this year but also going into ’25?
Steven Litchfield: Yes, Karl. Great question. And you’re exactly right. We’ve been more exposed on the cable side but we’re certainly seeing a recovery on both PON and cable. I mentioned earlier the excitement around the PON side. But we’re seeing plenty of activity on the cable side and there’s lots of hype around some of the upgrades that are happening in that market. I mean I don’t think we really carry one way or the other where that growth comes from in broadband. And there are certainly tons of investments happening out there that we’ll be able to benefit from.
Karl Ackerman: Okay. For my follow-up, you introduced several new optical products leveraging your existing 5-nanometer 800-gig DSP technology, including half retimed and full retimed DSPs really for, well, AEC and AOC products. I guess given the confidence that you have on this ramp this year and next year, is most of that coming from half retime DSPs and AEC products, will that be the strongest growth that you see this year?
Kishore Seendripu: I don’t think anybody would volunteer that half retimer [ph] would be any meaningful revenue in this category of products. I would say it’s fully driven by full rate retimer products, if you will, the 800-gig PAM4 or 400-gig PAM4 single lane 100 gigabits, right? So that would be it. It’s pretty simple other than the customer designings with the various optics they use becomes a pretty challenging problem, right? So the DSPs need to be versatile to manage all the various optics every customer uses and then the yield management of that. So I don’t see a half retimer being a big revenue generated at least through 2025.
Operator: Our next question is from Suji Desilva with ROTH MKM.
Suji Desilva: Just maybe a little bit of follow-up on some of the recent questions here. But broadband declining but connectivity increasing. I would — I thought kind of mentally, those were kind of coupled in terms of in the same boxes in broadband but maybe that’s the wrong way to think about it. Can you just talk about that potential disconnect in the guide?
Steven Litchfield: Yes. So you’re right. They’re fairly connected. A lot of the gateways of course, incorporate our Ethernet or WiFi products. And so they normally trade together but I mean they vary a little bit too. I mean we can certainly go out. I mean there’s a lot of opportunities to win more connectivity business. In WiFi, I mentioned a little earlier in the session around Ethernet and some of the opportunities that were growing in the Ethernet market with 2 gig — 2.5 gig adoption within the enterprise market within the industrial market. So from time to time, yes, I mean they don’t necessarily always trade together.
Suji Desilva: Okay. That’s helpful, Steve. And then my other question is on the optical side. I’m just trying to draw path from the prior effort, 400 gig and now 800 gig. Is that lead customer continuing and kind of building on the traction you had with that customer? Do you have additional customers or different customers just to understand how the customer base and traction is developing here?
Kishore Seendripu: I just want to clarify here that the customers — the end customers who are driving 400 gigabit versus 800 gigabit is a completely different sequence now. So they are not the leaders anymore in terms of trying to move aggressively ahead with the higher speeds right now. So I would say that it’s a different set of customers driving 800-gigabit PAM4 revenues, 100 gigabit per lane or 400-gigabit PAM4 revenues with 100 gigabit per lane. So it’s a totally different set of customers but there’s only a few set of customers in the marketplace. So it’s a very small group.
Suji Desilva: Kishore, can you just remind us the competitive landscape and your advantage quickly? I know we talked about OFC but a refresh would be helpful.
Kishore Seendripu: Yes. So from our perspective, we are the only solution that has got a 5-nanometer CMOS, PAM4 DSP with integrated laser drivers, that’s fully in production and is increasingly qualified by others. Now we were not the first ones with 800-gig PAM4. Our competitive solutions are in 7-nanometer. They have — therefore, the incumbency advantages for the company to continue from being ahead on the timing on the sampling of the product. But the good news here is that outside of the NVIDIA customer — market-based supplier base. And the rest of the data centers are moving at a normal cadence of an option of 800-gigabit PAM4. So we are not late to the market. We are in the beta phases of trials and qualifications. So we feel that we have not lost any timing advantage — timing-related positioning with our 5-nanometer solution, even though we are later by several months compared to our competition about 2 years ago, right?
So — so the big disadvantage is a lack of incumbency. The advantage is the product superiority, where the power is significantly lower than our competition by almost 30%. And so whether it’s a module or the chip level positioning, it can vary between 20% and 30% in power reduction. So the low power matters a lot and that is a big advantage. I think everybody needs to meet the performance requirements and go through the drop cycle [ph]. And frankly, even today, that is the biggest mountain we are climbing now even as we are recording revenue with victories, in increments as we ship these products.
Operator: Our final question will be from Richard Shannon with Craig-Hallum.
Richard Shannon: Maybe I’ll throw one out here in the storage space. You reiterated your comments about kind of revenues doubling this year getting to $50 million to $75 million and I think you’ve said in the past and today that this is largely based on single customer. I guess a couple of interlocking questions here first of all, as the announcement with Dell last week, is that the single customer? And then maybe you can talk about building new customers to help maybe provide upside to those numbers over time, how that’s going?
Kishore Seendripu: So I think that we do not — the current shipments of Panther III are based off a single customer would be a fair conclusion based on the press release, I suppose. However, we have always talked about expanding our accelerated products beyond the enterprise market and over time with data — into the data partnerships [ph] with other players, right? So when we talk about a $50 million to $75 million revenue, the question that it is true that revenue forecast is based substantially almost wholly on enterprise storage appliance market and not data center-based market revenue.
Richard Shannon: Okay. Fair enough. Second question is in wireless infrastructure. You talked about, I think, for at least a couple of quarters now talking about calendar ’25 being a strong year. Obviously, you’ve had some inventory burn here on both sides of that business. I guess my question, just from a modeling perspective is, can calendar ’25 be a record year for wireless infrastructure? It seems like you’re down fairly strongly in revenue run rates would seem like a big bar to jump but just curious whether you think that’s possible?
Kishore Seendripu: I would say that ’25 will not be the record year. It will be a growing year. And I think we’ll continue to grow our wireless revenues from our current levels to doubling of those revenues based on the road map and the products we are launching. So I believe from an infrastructure, if it’s a $500 million revenue, you should see your wireless infrastructure, optical being 80% to 90% of the revenue. And the remaining 20%, if you will, of being Ethernet that we’ve already talked about but if you’re an Ethernet storage but really — but each of those individuals have a bigger potential than that [indiscernible]. So $500 million is of revenue by infrastructure is there sort of an imbalance of things based on timing and how the TAM develops, so to speak.
No, absolutely not. ’25 is not going to be a record year because that will be a good thing and will grow beyond that. Thank you very much. With that last question there, I just want to wrap up this session here. And I would like to thank you all and we hope that this quarter, we’re going to see you again. We will be present at the Stifel Cross Sector Insight Conference in Boston and with Northland Securities Virtual Growth Conference, as well. With that, thank you all for joining us today once again and look forward to speaking with you soon. Bye.
Operator: This concludes today’s conference. You may disconnect your lines at this time. Thank you for your participation.
