Financial Data and Key Metrics Changes - The company reported third-quarter revenue of $1.688 billion, flat compared to the prior quarter and a 3% decrease year-over-year [30] - Gross profit for the third quarter was $439 million, translating to a gross margin of approximately 26%, which expanded sequentially and year-over-year by about 80 and 130 basis points respectively [33][34] - Operating profit was $260 million with an operating margin of 15.4%, at the high end of the guidance range and 180 basis points above the prior year period [34] - Net income for the third quarter was $232 million, an increase of approximately 1% from the prior year period, resulting in diluted earnings of $0.41 per share [35] Business Line Data and Key Metrics Changes - Automotive revenue decreased approximately 17% sequentially but increased 20% year-over-year, driven by share and content expansion [31][32] - Smart mobile devices revenue increased approximately 10% sequentially but decreased approximately 13% year-over-year, primarily due to one-time pricing adjustments [30][31] - Home and industrial IoT revenue decreased approximately 14% sequentially and 16% year-over-year, driven by a reduction in wafer revenue associated with aerospace and defense applications [31] - Communications infrastructure and data center revenue increased approximately 2% sequentially and 32% year-over-year, with expectations for low 20s percentage growth in 2025 [32] Market Data and Key Metrics Changes - The automotive segment represented approximately 18% of total revenue in the third quarter [23] - The communications infrastructure and data center segment accounted for approximately 10% of total revenue [27] - The company secured nearly 150 new design wins across end markets, representing more than 50% growth from the same quarter a year ago [19] Company Strategy and Development Direction - The company is focusing on scaling AI in data centers and expanding its optical networking capabilities, with an estimated serviceable addressable market for optical networking expected to grow at a CAGR of approximately 40% through 2030 [8][9] - The company plans to invest $16 billion to expand U.S. manufacturing and advanced packaging capabilities, supported by leading customers [14] - The strategy includes diversifying the business and accelerating growth in high-margin product platforms, with automotive expected to approach $1.5 billion in annual revenue by 2025 [21][22] Management's Comments on Operating Environment and Future Outlook - Management expressed confidence in the company's ability to capture long-term trends driving the industry, particularly in AI and semiconductor supply chain resilience [17][18] - The ongoing geopolitical conflicts and supply chain challenges are prompting customers to seek non-China, non-Taiwan supply chains, which the company is well-positioned to support [13][15] - Management anticipates strong growth in the Silicon Photonics business, projecting it to become a billion-dollar-plus run-rate business by the end of the decade [9] Other Important Information - The company plans to qualify licensed GaN technology at its Vermont fab, with full production expected to begin in the second half of 2026 [20] - The company announced plans to invest an additional EUR 1.1 billion in its Dresden fab, aiming to increase production capacity significantly [16] Q&A Session Summary Question: Long-term differentiation of Silicon Photonics business - Management highlighted that the company has been early in developing Silicon Photonics, focusing on best-in-class device performance and building an ecosystem for customer support [42][43] Question: Capital and CapEx needs for Silicon Photonics growth - Management indicated that while specific CapEx guidance for 2026 is not available, an increase in CapEx is expected to support the ramp in demand for Silicon Photonics [45][46] Question: Revenue guidance for smart mobile devices - Management noted that smart mobile devices are expected to see a low double-digit percentage decline year-over-year due to previous pricing adjustments, but they anticipate future growth in differentiated areas [50][54] Question: Onshoring and customer demand - Management reported strong engagement from customers regarding U.S. onshoring, with a significant pipeline of opportunities expected to ramp in 2027 and beyond [60][61] Question: GaN strategy and competition - Management expressed excitement about GaN technology, emphasizing its critical role in data centers and infrastructure, and noted a focus on high-quality, reliable devices [66][68]