Financial Data and Key Metrics Changes - For Q3 FY2026, net sales were $267 million, representing a 4% sequential increase and a 13% year-over-year increase, driven by data center and LoRa portfolio momentum [5][22] - Adjusted operating margins grew by 180 basis points sequentially and 230 basis points year-over-year [5][23] - Adjusted diluted earnings per share were $0.48, up 17% sequentially and 85% year-over-year [5][26] - Adjusted EBITDA was $62.7 million, up 11% sequentially and 23% year-over-year, with an adjusted EBITDA margin of 23.5% [23][26] Business Line Data and Key Metrics Changes - Infrastructure net sales were $77.9 million, up 6% sequentially and 18% year-over-year, supported by data center business [7] - Data center net sales reached a record $56.2 million, up 8% sequentially and 30% year-over-year [8] - High-end consumer net sales for Q3 were $41.9 million, up 2% sequentially and 5% year-over-year [13] - Industrial net sales were $147.2 million, up 3% sequentially and 12% year-over-year, driven by strong LoRa performance [14] Market Data and Key Metrics Changes - The data center business is expected to see continued growth, with projections for a 10% sequential increase in Q4 [27] - The high-end consumer market is anticipated to decrease by about 3% sequentially in Q4, partially offset by market share gains [27] - The industrial end market is expected to remain flat, with growth in IoT systems and connectivity offsetting declines [27] Company Strategy and Development Direction - The company is focused on capturing growth opportunities in core assets and optimizing its portfolio, including the recent acquisition of the Force Sensing business [6][20] - The strategy includes leveraging R&D resources to expand the portfolio, particularly in LoRa and data center technologies [6][19] - The company aims to strengthen its market position in next-generation data center solutions and LoRa-based IoT applications [18][21] Management's Comments on Operating Environment and Future Outlook - Management expressed confidence in the growth trajectory of the data center business, supported by strong demand and customer engagement [8][62] - The company anticipates a meaningful contribution from LPO in Q4, with expectations for continued design wins [46][60] - Management highlighted the importance of power efficiency in their solutions, positioning the company to lead in ultra-power-efficient technologies [18][19] Other Important Information - The company completed a $402.5 million convertible note offering, significantly reducing interest expenses and improving cash flow [24][25] - The adjusted net leverage ratio improved to 1.5, down from 7.2 year-over-year, reflecting strong business performance and debt reduction [27][26] Q&A Session Summary Question: Insights on CopperEdge ramping with lead CSP - Management indicated that CopperEdge is designed into three programs with a significant ramp expected starting mid-2026, which is seen as a catalyst for broader adoption [34][36] Question: Size of the ACC opportunity - Management noted that ACC is positioned between DAC and AEC, with a substantial total addressable market (TAM) and expected to capture a significant portion as deployment ramps up [38][39] Question: Growth expectations for LPO - Management expects LPO to contribute meaningfully in Q4, with a strong growth opportunity anticipated [44][46] Question: Gross margin outlook for Q4 - Management clarified that semiconductor gross margins are expected to remain healthy, driven by data center and LoRa growth, despite lower margins in IoT systems [50][51] Question: Force-sensing acquisition details - The force-sensing technology is expected to enhance the company's sensing portfolio, with integration already underway and first products shipped [65][68] Question: Divestiture of non-core assets - Management confirmed that interest from potential acquirers has increased, and the divestiture remains a top priority [82][84]

Financial Data and Key Metrics Changes - For Q3 FY2026, net sales were $267 million, representing a 4% sequential increase and a 13% year-over-year increase, driven by data center and LoRa portfolio momentum [5][22] - Adjusted operating margins grew by 180 basis points sequentially and 230 basis points year-over-year [5][23] - Adjusted diluted earnings per share were $0.48, up 17% sequentially and 85% year-over-year [5][26] - Adjusted EBITDA was $62.7 million, up 11% sequentially and 23% year-over-year, with an adjusted EBITDA margin of 23.5% [23][26] Business Line Data and Key Metrics Changes - Infrastructure net sales were $77.9 million, up 6% sequentially and 18% year-over-year, supported by data center business [7] - Data center net sales reached a record $56.2 million, up 8% sequentially and 30% year-over-year [8] - High-end consumer net sales for Q3 were $41.9 million, up 2% sequentially and 5% year-over-year [13] - Industrial net sales were $147.2 million, up 3% sequentially and 12% year-over-year, driven by strong LoRa performance [14] Market Data and Key Metrics Changes - The data center market is expected to see continued growth, with projections of approximately 10% sequential growth in Q4 [27] - The high-end consumer market is anticipated to decrease by about 3% sequentially, partially offset by market share gains [27] - The industrial end market is expected to remain flat, with growth in IoT systems and connectivity [27] Company Strategy and Development Direction - The company is focused on capturing growth opportunities in core assets and optimizing its portfolio, including the recent acquisition of the Force Sensing business [6][20] - The strategy includes leveraging R&D resources to expand the portfolio, particularly in LoRa and data center technologies [6][19] - The company aims to strengthen its culture and operational excellence while addressing margin disparities through divestitures of non-core assets [20][21] Management's Comments on Operating Environment and Future Outlook - Management expressed confidence in the strong demand pipeline for data center solutions, particularly in AI CapEx and low-power solutions [8][9] - The company anticipates a meaningful contribution from LPO in Q4, with expectations of continued growth in the data center business [46] - Management highlighted the importance of power efficiency in their solutions, positioning the company to lead in ultra-power-efficient technologies [18] Other Important Information - The company completed a $402.5 million convertible note offering, significantly reducing interest expenses and improving cash flow [24][25] - The acquisition of the Force Sensing business is expected to enhance the company's sensing portfolio and create cross-selling opportunities [14][70] Q&A Session Summary Question: Insights on CopperEdge ramping with lead CSP - Management indicated that CopperEdge is designed into three programs with a ramp expected to start in mid-2026, which will serve as a catalyst for broader adoption among other CSPs [34][36] Question: Size of the ACC opportunity - Management noted that ACC is positioned between DAC and AEC, with significant potential to capture market share due to its power-saving advantages [38][39] Question: Growth expectations for LPO - Management expects LPO to contribute meaningfully in Q4, with a strong ramp anticipated throughout 2026 [46][62] Question: Force Sensing acquisition details - The force sensing technology enhances capabilities for smart wearables and computing, with integration already underway and first products shipped [66][70] Question: Gross margin outlook for ISC business - Management acknowledged that ISC gross margins are expected to be lower due to the mix of cellular modules, but semiconductor gross margins remain healthy [102][103]

Financial Data and Key Metrics Changes - For Q3 2026, net sales were $267 million, up 4% sequentially and up 13% year-over-year, driven by data center and LoRa portfolio momentum [4] - Adjusted operating margins grew 180 basis points sequentially and 230 basis points year-over-year [4] - Adjusted diluted earnings per share were $0.48, up 17% sequentially and 85% year-over-year [25] - Adjusted EBITDA was $62.7 million, up 11% sequentially and 23% year-over-year, with an adjusted EBITDA margin of 23.5% [22] Business Line Data and Key Metrics Changes - Infrastructure net sales were $77.9 million, up 6% sequentially and 18% year-over-year, supported by data center business [7] - Data center net sales reached a record $56.2 million, up 8% sequentially and 30% year-over-year [8] - High-end consumer net sales for Q3 were $41.9 million, up 2% sequentially and 5% year-over-year [12] - Industrial net sales were $147.2 million, up 3% sequentially and 12% year-over-year, driven by strong LoRa performance [13] Market Data and Key Metrics Changes - The data center business is expected to see continued growth, with projections for a 10% sequential increase in Q4 [26] - The high-end consumer market is anticipated to decrease by about 3% sequentially in Q4, partially offset by market share gains [26] - The industrial end market is expected to remain flat, with growth in IoT systems and connectivity [26] Company Strategy and Development Direction - The company is focused on capturing growth opportunities in core assets and optimizing its portfolio [19] - The acquisition of the Force Sensing business is expected to enhance the sensor portfolio and create cross-selling opportunities [5][13] - The company aims to lead in ultra-power-efficient solutions across high-bandwidth data center networking and IoT applications [18] Management's Comments on Operating Environment and Future Outlook - Management expressed confidence in the growth trajectory of the data center business, supported by strong demand for low-power solutions [9][10] - The company is well-positioned to drive LoRa adoption with new capabilities and features [15] - Management highlighted the importance of maintaining a strong balance sheet and reducing interest expenses to support strategic investments [24] Other Important Information - The company completed a $402.5 million convertible note offering, significantly reducing annual interest expenses [23][24] - Operating cash flow for Q3 was $47.5 million, up 60% year-over-year, indicating strong cash generation [25] - The company is actively engaged in divesting non-core assets, with multiple indications of interest from potential acquirers [6][52] Q&A Session Summary Question: What is the outlook for CopperEdge with the lead CSP? - Management indicated that CopperEdge is designed into three programs, with a substantial ramp expected throughout fiscal year 2026 [30][31] Question: How does LPO fit into the market? - Management anticipates a meaningful contribution from LPO in Q4, with strong design wins expected [34] Question: What is the expected gross margin for Q4? - The semiconductor gross margin is projected to be 60.5%, with lower margins anticipated in the IoT systems and connectivity segment [57] Question: What has changed regarding the divestiture of non-core assets? - Management noted increased interest from potential acquirers due to improved geopolitical conditions and business opportunities [52] Question: What is the status of the ACC opportunity? - Management confirmed that there are no reliability issues with ACC, and the ramp is expected to begin in Q4 [60]

Core Insights - Quectel Wireless Solutions has launched five new durable fiberglass antennas that support LoRa, V2X, Wi-Fi, and 5G technologies [1] Product Development - The new antennas expand Quectel's existing product range, providing options tailored to specific use cases [1] - The durable fiberglass design offers discreet and robust solutions across key wireless technologies [1]

Semtech Corp. (NASDAQ:SMTC) is one of the worst-performing data center stocks in 2025. Although the company’s stock is up around 1.8% year-to-date, it has underperformed the broader market and its peers in the data center industry, which have seen an upbeat performance. Baird Reiterates Buy on Semtech (SMTC), Highlights AI Growth and Partnerships That said, on September 28, Robert W. Baird analyst Tristan Gerra reaffirmed a Buy rating on the stock with a $70 price target. His positive view is based on se ...

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]

Summary of Conference Call Notes Industry Overview - **Industry**: US Semiconductors and Semiconductor Equipment - **Key Companies Mentioned**: SMTC (Semtech), MRVL (Marvell Technology) Core Insights and Arguments 1. **Tariff Exclusions**: There is a potential for broad tariff exclusions for US semiconductor companies based on investment commitments across the semiconductor supply chain, including both advanced and lagging edge technologies [2][3] 2. **Impact of US Administration Policies**: The Trump Administration's approach may allow US semiconductor equipment companies to resume shipments to certain customers under specific conditions, contrasting with the Biden Administration's focus on national security [3] 3. **SMTC Performance**: SMTC's stock has underperformed in the sector year-to-date, with expectations of a decline in revenue from LoRa technology following a strong Q1 [4][6] 4. **MRVL Revenue Guidance**: MRVL anticipates revenue in the range of $2.1-2.125 billion for FQ3:26, with strong growth expected in AI revenue and optical business despite the sale of its automotive ethernet business [7] 5. **Gross Margin Trends**: SMTC's gross margin is expected to decline to approximately 53% due to a shift in revenue mix, while MRVL's gross margin is projected to decrease by 20-30 basis points per quarter [6][7] Financial Performance and Guidance 1. **SMTC Financials**: - FQ2 revenue is expected to be around $256 million with EPS of $0.41, aligning with market expectations [8][12] - Guidance for FQ3 indicates revenue of $267 million and EPS of $0.43, slightly below street estimates [9] - Operating margin is projected at 19.0% [10] 2. **MRVL Financials**: - FQ2 results are expected to be in line with estimates, driven by unit trends for Trainium2 at Amazon [7] - Revenue growth in the optics business is anticipated to be around $50 million quarter-over-quarter [7] Other Important Insights 1. **Market Uncertainty**: Broader market uncertainty is affecting deal flow and potential asset sales for SMTC, with management indicating a cautious approach due to tariff implications [6][11] 2. **Portfolio Optimization**: SMTC is focusing on portfolio optimization as a strategic priority, although macroeconomic conditions have delayed progress [6] 3. **Investor Sentiment**: There is muted investor interest in SMTC, and management credibility has yet to recover fully [4] Conclusion The semiconductor industry is navigating complex tariff policies and market dynamics, with specific companies like SMTC and MRVL facing unique challenges and opportunities. The focus on investment commitments for tariff exclusions and the impact of administrative policies will be critical in shaping future performance.

Core Viewpoint - Semtech Corp reported strong first-quarter results, but its shares declined by 5.8% despite positive earnings and revenue growth [1][8]. Financial Performance - Semtech's revenues reached $251.1 million, exceeding consensus estimates of $250.1 million, with earnings per share at 38 cents, above the expected 37 cents [4]. - The company experienced a year-on-year revenue increase of 22%, with Data Center sales soaring by 143% [6]. - Gross margins improved to 53.5%, slightly above the projected 53.0% [4]. Segment Performance - The Infrastructure segment saw a sequential sales growth of 5% and a year-on-year increase of 30%, totaling $72.8 million [2]. - Data Center sales contributed significantly, growing 3% sequentially and 143% year-on-year to $51.6 million [2]. Profitability and Guidance - Non-GAAP operating margins are expected to expand from 16.4% in fiscal 2025 to 20.2% in fiscal 2027 [3]. - Management provided guidance for earnings of 40 cents per share on revenues of $256 million, slightly above market expectations [5]. - The company anticipates sequential growth in its infrastructure and consumer segments, with industrial sales expected to remain flat or slightly decline [5]. Analyst Ratings and Price Targets - Analysts have maintained positive ratings, with Stifel raising its price target from $42 to $45, and Piper Sandler maintaining a target of $55 [9]. - Roth Capital Partners reaffirmed a Buy rating with a price target of $65, while Cantor Fitzgerald set a target of $54 [9].

Financial Data and Key Metrics Changes - For Q1, net sales reached a record $251.1 million, up 22% year over year and above the midpoint of the outlook [21] - Adjusted gross margin was 53.5%, up 30 basis points sequentially and up 370 basis points year over year [21] - Adjusted operating income was $47.6 million, resulting in an adjusted operating margin of 19%, up 680 basis points year over year [22] - Adjusted EBITDA was $55.4 million, up 68% year over year, with an adjusted EBITDA margin of 22.1%, up 600 basis points year over year [22] - Adjusted diluted earnings per share were $0.38, up from $0.06 a year ago [23] Business Line Data and Key Metrics Changes - Infrastructure net sales were $72.8 million, up 5% sequentially and up 30% year over year [8] - Data center net sales were a record $51.6 million, up 3% sequentially and up 143% year over year [8] - High-end consumer net sales were $35.4 million, flat sequentially and up 3% year over year [12] - Industrial net sales were $142.8 million, down 3% sequentially but up 24% year over year [16] - LoRa enabled solutions within the industrial market had net sales of $38.9 million, up 5% sequentially and up 81% year over year [16] Market Data and Key Metrics Changes - The company expects short-term demand gaps in the CopperEdge segment but anticipates sustainable growth in the data center business due to capital expenditure growth by hyperscalers [9] - The IoT cellular portfolio is expected to benefit from growing 5G adoption rates, particularly in North America [18] - Connected services net sales remained stable, showcasing the deployment of AI tools for anomaly detection [19] Company Strategy and Development Direction - The company focuses on portfolio optimization, strategic investment in R&D, and driving margin expansion [7] - Management emphasizes the importance of solidifying a winning culture, accelerating innovation, and leveraging technology leadership to enhance shareholder value [20] - The company is optimistic about the second half of the fiscal year, expecting growth driven by fiber edge products and incremental opportunities from LPO and CopperEdge [90][94] Management's Comments on Operating Environment and Future Outlook - Management acknowledges macroeconomic uncertainties that may impact the timing of portfolio optimization initiatives but remains committed to strategic priorities [68] - The company is confident in its ability to navigate through dynamic tariff policies and maintain stable product flow across the semiconductor supply chain [7] - Management expects net sales for Q2 to be around $256 million, reflecting a 19% year-over-year increase at the midpoint [25] Other Important Information - The company recorded a net debt decrease of $14.8 million to $396.2 million, with a focus on debt reduction [24] - The company successfully amended its revolving credit facility to increase total borrowing capacity by $117.5 million [24] Q&A Session Summary Question: Insights on the cellular module business - Management noted that the cellular module business experienced a seasonal decline but expects revenue to accelerate in future quarters due to competitive dynamics [32][34] Question: Update on AI connectivity and CopperEdge - Management highlighted strong engagement with over 20 customers for CopperEdge, with expectations for revenue ramp-up by Q4 [41][44] Question: Trends in the core data center business - Management expressed optimism for growth in the core data center business, driven by fiber edge products and expected incremental revenue from LPO [55] Question: LoRa market outlook - Management indicated that while LoRa sales may moderate slightly, the business remains strong with a projected quarterly run rate of $30 million to $35 million [60] Question: Expectations for seasonality in the second half - Management noted that seasonality is expected in the high-end consumer segment, while other markets may not show obvious seasonal trends [80] Question: Insights on surge switch product - Management explained that surge switch provides additional protection and is being designed into various applications, enhancing dollar content compared to typical protection products [97][100]