Financial Data and Key Metrics Changes - For Q2, the company reported record net sales of $257.6 million, up 20% year over year and marking the sixth consecutive quarter of growth [25][27] - Adjusted gross margin was 53.2%, down 30 basis points sequentially but up 280 basis points year over year [25][26] - Adjusted operating income was $48.6 million, resulting in an adjusted operating margin of 18.8%, up 460 basis points year over year [27] - Adjusted diluted earnings per share increased to $0.41, up from $0.11 a year ago [28] Business Line Data and Key Metrics Changes - Infrastructure net sales reached $73.4 million, up 1% sequentially and up 39% year over year, driven by record revenues in the data center business [9][10] - Data center net sales were $52.2 million, up 1% sequentially and up 92% year over year [10] - High-end consumer net sales were $41.2 million, up 16% sequentially and up 11% year over year [17] - Industrial net sales were $143 million, slightly up sequentially and up 14% year over year [19] Market Data and Key Metrics Changes - The company noted strong demand in the data center market, with expectations for continued growth driven by increased CapEx spending from cloud service providers [41][42] - The industrial end market showed growth in applications including home security systems and smart appliances, with LoRa-enabled solutions net sales at $36.9 million, down 5% sequentially but up 29% year over year [19][20] Company Strategy and Development Direction - The company is focused on strengthening its balance sheet, having reduced debt significantly, resulting in an adjusted debt leverage ratio of 1.6, down from 8.8 a year ago [7][30] - The strategy includes rationalizing the portfolio and increasing investment in core assets such as data center, LoRa, and Persei, which have contributed to net sales momentum [7][9] - The company aims to transform into a higher growth and more profitable entity, with a focus on portfolio optimization and strategic investments in R&D [8][24] Management's Comments on Operating Environment and Future Outlook - Management expressed optimism regarding the data center market, citing strong forecasts for 2026 and beyond, despite some caution in the Chinese market due to GPU availability [41][42] - The company anticipates continued strong demand for its fiber edge products and is preparing for significant volume ramps in 2026 [11][12] - Management highlighted the importance of low power and low latency solutions in meeting the increasing bandwidth requirements [12][16] Other Important Information - The company recorded a non-cash goodwill impairment charge of $41.9 million from its Connected Services business, reflecting a reassessment of this business's goodwill balance [28][29] - Operating cash flow for Q2 was $44.4 million, up 60% from the previous quarter and up from negative $5 million a year ago [29] Q&A Session Summary Question: What is the outlook for LPO opportunities and timing? - Management indicated that LPO deployment is expected to start in Q4, with various customers at different stages of testing and qualification [36][38] Question: How is the general state of data center spending? - Management noted strong conviction among cloud service providers to increase CapEx spending for data center capacity and AI capabilities, with optimistic forecasts for 2026 [40][41] Question: What is the outlook for CopperEdge and broader adoption? - Management reported strong traction with over 20 customers engaged, with expectations for high volume ramps in Q4 or 2026 [46][48] Question: What is the expected performance of LoRa in the coming quarters? - Management expressed confidence in LoRa's demand, expecting quarterly revenue between $30 million to $40 million, driven by new product capabilities [56][58] Question: What are the expectations for the ACC revenue ramp? - Management clarified that the volume ramp for ACC is expected to start in Q4, with specific applications driving demand [94] Question: How does the company view the general business environment and bookings? - Management reported strong booking activities across various segments, indicating positive momentum for future quarters [101][102]

Financial Data and Key Metrics Changes - For Q2, the company reported record net sales of $257.6 million, up 20% year over year and marking the sixth consecutive quarter of growth [25][24] - Adjusted gross margin was 53.2%, down 30 basis points sequentially but up 280 basis points year over year [25] - Adjusted operating income was $48.6 million, resulting in an adjusted operating margin of 18.8%, up 460 basis points year over year [26] - Adjusted diluted earnings per share increased to $0.41, up from $0.11 a year ago [28] - The adjusted debt leverage ratio improved to 1.6, down from 8.8 a year ago [27] Business Line Data and Key Metrics Changes - Infrastructure net sales reached $73.4 million, up 1% sequentially and up 39% year over year, driven by record revenues in the data center business [9] - Data center net sales were $52.2 million, up 1% sequentially and up 92% year over year [10] - High-end consumer net sales were $41.2 million, up 16% sequentially and up 11% year over year [17] - Industrial net sales were $143 million, up slightly sequentially and up 14% year over year [19] - IoT systems hardware business recorded net sales of $64.8 million, up 2% sequentially and up 24% year over year [21] Market Data and Key Metrics Changes - The company noted strong demand in the data center market, with expectations for continued growth driven by increased CapEx spending from cloud service providers [39] - In China, CSPs showed cautious booking activity due to GPU availability but have recently seen improved bookings [40] - The company is experiencing strong momentum in the 5G market, particularly with IoT transitions from 4G to 5G [22] Company Strategy and Development Direction - The company is focused on strengthening its balance sheet, having reduced debt significantly and improved its net leverage ratio [6] - There is an emphasis on portfolio optimization and increased investment in core assets such as data center, LoRa, and Persei [6][8] - The company aims to transform into a higher growth and more profitable entity, with a strong focus on R&D to support long-term growth [5][25] Management's Comments on Operating Environment and Future Outlook - Management expressed optimism about the data center market's growth cycle, driven by higher data rates and increased demand for fiber edge products [11] - The company anticipates continued strong opportunities in the data center market, despite some caution from CSPs in China [40] - Management highlighted the importance of low power and low latency solutions in meeting the evolving demands of data centers [12] Other Important Information - The company recorded a non-cash goodwill impairment charge of $41.9 million from its Connected Services business [28] - The company expects net sales for Q3 to be approximately $266 million, reflecting a 12% year-over-year increase [30] Q&A Session Summary Question: What is the timing for LPO opportunities? - Management indicated that LPO deployments are expected to start in Q4, with some customers at different stages of testing and qualification [36][37] Question: What is the outlook for data center spending? - Management expressed strong confidence in continued data center spending, with CSPs forecasting increased CapEx for 2026 and beyond [38][39] Question: What is the outlook for CopperEdge adoption? - Management reported strong traction with CopperEdge, with several key customers engaged in testing and qualification [46] Question: What is the expected performance of LoRa? - Management expects LoRa revenue to be between $30 million to $40 million quarterly, driven by new applications and enhanced capabilities [56] Question: What are the expectations for ACC revenue? - Management expects ACC revenue to ramp up in Q4, with 100 gig per lane cables leading the initial demand [95] Question: What are the expectations for the Tri Edge business? - Management plans to continue developing the Tri Edge product line, focusing on low power consumption and signal integrity [86][88]

Core Insights - SkyWater Technology (SKYT) and Semtech Corporation (SMTC) are positioned to benefit from the growing semiconductor market, particularly as the U.S. increases domestic chip production [1][2] - Semiconductor sales are projected to grow 11.2% year over year, reaching $700.9 billion in 2025 and $760.7 billion in 2026, driven by demand for AI hardware, electric vehicles, and industrial automation [2] SkyWater Technology (SKYT) - SkyWater is enhancing its market position through product innovation and expanded manufacturing capabilities, with a focus on its ThermaView platform for thermal imaging [4] - The company reported Q1 2025 revenues of $61.3 million and a gross margin of 24.2%, with advanced computing now accounting for 10% of total revenues [5] - The acquisition of Infineon's Fab 25 is expected to significantly increase SkyWater's capacity, adding approximately 400,000 wafer starts per year and making it the largest U.S.-based pure-play foundry service provider [6] Semtech Corporation (SMTC) - Semtech is experiencing growth in next-gen data center infrastructure, reporting record data center revenue of $51.6 million in Q1 fiscal 2026, a 143% increase year over year [7] - The CopperEdge product line offers over 90% power savings and is designed for high-density AI/ML data centers, with new ICs launched to support advanced connectivity [8] - Semtech's collaboration with major cloud platforms positions its technologies at the core of next-generation compute infrastructure, enhancing its growth potential in AI-centric markets [9][10] Market Performance and Valuation - Both SKYT and SMTC shares have declined year-to-date, with drops of 25.8% and 21.3% respectively, attributed to a challenging macroeconomic environment [11] - SMTC shares are currently overvalued with a Value Score of D, while SKYT holds a Value Score of B; SMTC's Price/Sales ratio is 3.87X compared to SKYT's 1.43X [13] - Earnings estimates indicate a projected loss of one cent per share for SKYT in 2025, while SMTC's earnings for fiscal 2026 are estimated at $1.66 per share, reflecting an 88.64% year-over-year increase [16] Conclusion - Both companies are well-positioned to capitalize on long-term growth trends in the semiconductor market, with SkyWater benefiting from its unique foundry status and Semtech showing stronger near-term visibility due to record data center performance [17][18]

Industry Overview - The semiconductor industry is projected to grow from $631.01 billion in 2025 to $958.93 billion by 2030, with a CAGR of 8.73% during this period, driven by demand for AI and data center technologies [2] - Shipment volume in the semiconductor market is expected to increase from 1.40 trillion units in 2025 to 2.29 trillion units by 2030, at a CAGR of 10.32% [3] AMD Insights - AMD's data center revenues surged 57.2% year over year to $3.674 billion in Q1 2025, accounting for 49.4% of total revenues, driven by the adoption of EPYC processors [4] - The launch of the AMD EPYC 4005 Series processors in May 2025 is aimed at enhancing performance and efficiency for small and medium businesses [6] - AMD's partnerships with major hyperscalers like Oracle and Google Cloud have expanded the use of its EPYC CPUs, contributing to its growth [5] Semtech Insights - Semtech's data center revenues reached a record $51.6 million in Q1 fiscal 2026, up 143% year over year, driven by demand for CopperEdge and FiberEdge products [7] - The launch of the CopperEdge portfolio in April 2025 includes solutions that enable 800G and 1.6T connectivity for AI/ML data centers, focusing on power savings and performance [8] - Semtech has strengthened collaborations with cloud service providers, enhancing its position in next-generation data center infrastructure [9] Performance and Valuation - Year-to-date, AMD shares have decreased by 2.8%, while SMTC shares have fallen by 38.5%, attributed to a challenging macroeconomic environment [11] - Both AMD and SMTC shares are currently considered overvalued, with AMD trading at a forward Price/Sales ratio of 5.65X and SMTC at 3.09X [14] - The Zacks Consensus Estimate for AMD's 2025 earnings is $4.02 per share, reflecting a 21.45% year-over-year increase, while SMTC's fiscal 2026 earnings estimate is $1.66 per share, indicating an 88.64% year-over-year increase [16] Earnings Performance - AMD has consistently beaten earnings estimates over the past four quarters, with an average surprise of 2.30%, while SMTC has a higher average surprise of 10.83% [17] - Semtech's stronger earnings surprise history and innovative solutions position it as a more attractive investment compared to AMD [18]

Semtech Corporation (SMTC) is scheduled to report first-quarter fiscal 2026 results after market close on May 27.For first-quarter fiscal 2026, Semtech expects net sales of $250 million (+/- $5 million), indicating 21% year-over-year growth. The Zacks Consensus Estimate for revenues is pegged at $249.79 million, indicating a rise of 21.20% from the year-ago quarter.SMTC anticipates non-GAAP earnings per share to be 37 cents (+/- 3 cents). The consensus mark for the same is pegged at 38 cents, unchanged over ...

Core Viewpoint - Semtech Corporation (SMTC) reported strong fourth-quarter fiscal 2025 earnings, leading to a 21.06% increase in share price to $39.60, driven by operational efficiency and effective expense management [1][2]. Financial Performance - SMTC's non-GAAP earnings for Q4 fiscal 2025 were 40 cents per share, exceeding Zacks Consensus Estimate by 25% and management's guidance of 32 cents, significantly up from 6 cents in the same quarter last year [2]. - The company's revenues for Q4 fiscal 2025 reached $251 million, beating the Zacks Consensus Estimate by 1.25% and aligning with management's guidance of $250 million, reflecting a 30.1% year-over-year growth [3]. Revenue Breakdown - Revenue from the infrastructure market was $69.1 million (27.5% of net sales), showing a 75% year-over-year increase, primarily due to demand for data centers and expansion in the FiberEdge portfolio [5]. - Sales from the industrial market totaled $146.6 million (58.4% of net sales), marking a 21% year-over-year growth [5]. - High-end consumer market sales were $35.4 million (14.1% of net sales), up 10% year over year, driven by strong market demand and contributions from design wins [6]. Product Line Performance - Signal Integrity sales were $72.5 million (28.9% of net sales), up 69.4% year over year [7]. - Analog Mixed Signal & Wireless sales reached $85.4 million (35% of net sales), reflecting a 34% year-over-year increase [7]. - IoT System and Connectivity sales were $93.1 million (37.09% of net sales), up 3.8% year over year [7]. Margin Analysis - The non-GAAP gross margin improved to 53.2%, expanding 430 basis points year over year and 80 basis points sequentially [8]. - The non-GAAP operating margin was reported at 19.9%, compared to 9.2% in the same quarter last year [8]. Balance Sheet and Cash Flow - As of January 26, 2025, cash and cash equivalents increased to $151.7 million from $136.5 million as of October 27, 2024 [9]. - Long-term debt decreased to $505.9 million from $1.19 billion in the previous quarter [10]. - Operating cash flow for the quarter was $33.5 million, while free cash flow was $30.9 million [10]. Future Guidance - For Q1 fiscal 2026, Semtech expects net sales of $250 million (+/- $5 million), indicating a 21% year-over-year growth, with the Zacks Consensus Estimate at $248.80 million [11]. - The company anticipates a non-GAAP gross margin of 53% (+/- 50 bps) and a non-GAAP operating margin of 18.2%, suggesting a 600 basis points year-over-year improvement [12]. - Non-GAAP earnings are projected at 37 cents (+/- 3 cents) per share, compared to the consensus mark of 32 cents, indicating an improvement from 6 cents in the year-ago quarter [13].

Financial Data and Key Metrics Changes - For Q4, the company recorded net sales of $251 million, up 6% sequentially and up 33% year over year [39][41] - Adjusted gross margin was 53.2%, up 80 basis points sequentially and up 430 basis points year over year [40] - Adjusted operating income was $49.8 million, resulting in an adjusted operating margin of 19.9%, up 160 basis points sequentially and up 1070 basis points year over year [40] - Adjusted diluted earnings per share increased to 40 cents, up from 26 cents in Q3 and up from a loss of 6 cents in Q4 of the previous year [41][42] - Net debt was reduced to $411 million, a decrease of 68% from $1.3 billion at the end of FY 2024 [42][43] Business Line Data and Key Metrics Changes - Infrastructure net sales for Q4 were $69.1 million, up 5% sequentially and up 75% year over year [16] - Data center net sales reached a record $50 million, up 16% sequentially and up 183% year over year [16] - High-end consumer net sales for Q4 were $35.4 million, up 10% year over year, with FY 2025 net sales at $147 million, up 17% year over year [22][25] - Industrial net sales for Q4 were $146.6 million, up 12% sequentially and up 21% year over year, with LoRa-enabled solutions recording Q4 net sales of $37.1 million, up 28% sequentially and up 205% year over year [27][28] Market Data and Key Metrics Changes - The company expects net sales from the infrastructure end market to increase sequentially, with data center applications leading growth [44] - The high-end consumer end market is expected to see slight increases reflective of seasonality, while the industrial end market is anticipated to decline due to seasonality in the IoT portfolio [45] Company Strategy and Development Direction - The company is focused on three core priorities: portfolio optimization and simplification, strategic investment in R&D, and driving margin expansion through operational leverage and AI [11][15] - The company aims to enhance profitability through portfolio optimization and leveraging AI for efficiency [15] - The company is prioritizing divestitures of non-core assets to improve balance sheet strength and operational focus [10] Management's Comments on Operating Environment and Future Outlook - Management expressed optimism about the trajectory of the business, citing strong fundamentals and a favorable market environment [65] - The company anticipates continued growth in the data center segment despite temporary headwinds from the Copper Edge portfolio [70] - Management highlighted the importance of customer engagement and innovation in driving future growth [102] Other Important Information - The company achieved a significant milestone with the 5G Redcap certification in collaboration with AT&T and Qualcomm, positioning it for scalable solutions across industries [36] - The company is actively engaged with over 20 potential customers for its CopperEdge portfolio, indicating a strong interest in new applications [58] Q&A Session Summary Question: Can you expand on the Copper Edge portfolio and its future? - Management indicated that revenue for Copper Edge is expected to be below $50 million in FY 2026, with ongoing engagement with over 20 customers for various applications [56][58] Question: What is the outlook for the core business and growth visibility? - Management expressed confidence in the core business's growth trajectory, with expectations for continued sequential growth across various segments [62][65] Question: Can you provide timing on the upcoming revenue step change in the data center? - Management noted that while there may be temporary bumps in the Copper Edge segment, overall data center growth is expected to continue [70] Question: How is the company approaching portfolio rationalization? - Management stated that they are patient in their approach to rationalization, focusing on strategic synergies rather than distressed sales [76] Question: What is the outlook for LoRa and its recent growth? - Management attributed the strong growth in LoRa to customer focus and new product development, with expectations for continued year-over-year growth [102][156]