Genevieve Cunningham is moderating the MPS First Quarter 2024 Earnings Webinar, joined by CEO Michael Hsing, CFO Bernie Blegen, and VP of Finance Tony Balow. The company released written commentary and an earnings announcement earlier in the day. Forward-looking statements may be made during the presentation, and risks and uncertainties are outlined in the Safe Harbor statements and SEC filings. Bernie Blegen briefly discusses the company's Q1 2024 performance and outlook before opening the call to Q&A. Revenue has increased compared to the previous quarter and year, but there is uncertainty for the second half of 2024. Customer engagement and the design win pipeline remain strong.

The company is expanding its product portfolio and diversifying its supply chain globally, positioning itself for further growth. While the first quarter showed consistent improvement, they remain cautious about business conditions in the second half of 2024. The company's long-term growth strategy is intact and they can adapt to market changes. The webinar is now open for questions, with the first question regarding share gains during downturns and the company's success in gaining shares in various vertical markets. The company has seen a 10% increase in market share in the volatile vertical market and is also gaining shares in the server, notebook, and consumer markets due to increased capacity.

The speakers, Bernie Blegen and Tore Svanberg, discuss the positive impact of improved market conditions on share gains in the Communications and Industrial sectors. They also address the potential impact of liquid cooling and other techniques on MPS's enterprise data business, stating that it could lead to growth opportunities rather than threats. Tony Balow adds that the company has demonstrated the ability to increase content in higher value technologies. Quinn Bolton congratulates the company on their steady performance in a difficult market.

The speaker addresses a question about the competitive landscape in enterprise data and discusses their previous projections for power curves and CPU computing capabilities. They mention that power is reaching its limit and competitors are copying their products, but they are focused on bringing the best technology and maintaining a diversified growth. The company has a history of winning opportunities through innovation.

The company is focused on enabling technology for the next generation of high-power GPU, TPU, and ASIC products. They are strategically positioning themselves as the leader in the market, despite potential competition. Vertical power is already in production for multiple customers. It is difficult to predict seasonality, but there are signs of optimism for improved ordering patterns. The company expects continued growth in AI.

Rick Schafer of Oppenheimer asks a question about the potential for x86 platforms to move to 48-volt power and the transition timeline. Michael Hsing mentions that in 2016, they were invited as a guest to the market and gained significant market share. He also mentions that for higher power CPUs (over 700 watts), there may be a transition to 48-volt power, but for lower power CPUs, traditional rack power and 12-volt supply will likely still be used.

The speaker thanks the person and asks about their expectations for the auto business this year. The speaker mentions the market being under pressure and the company's material share gains in China and with their top auto customer. The speaker also asks for an update on the delayed launches from last year and the company's revenue expectations. The speaker emphasizes the importance of preparing inventory and winning market segments in order to see upside in the Chinese EV market. The next question is from Ross Seymore of Deutsche Bank, who also congratulates the company on its stability.

Ross asks about the visibility into the second half, given the caution and uncertainty in the market, but Bernie and Tony explain that while bookings are improving, the ordering patterns have been below normal for the past six quarters, making it difficult to predict future trends. They remain cautiously optimistic and focus on maintaining a strong design win pipeline and supply chain diversification. There are no outliers in the growth expected for the second quarter. Michael adds that they are working on increasing inventory and have more upside potential.

The company has seen a continued demand for enterprise data and some contribution from the automotive industry, but the rest of their end markets are relatively flat. They have made progress in diversifying their manufacturing supply chain globally as per customer demands. They have also been ramping up production of data converters and modules, which are more complex and have multiple chips in each one. The company aims to make it easier for investors by changing the format of their reports.

In response to a question about recent growth in newer categories, Michael Hsing of MPS discusses the company's development of data converters and its plans to release a family of products in this area within a year. He also mentions the success of their e-commerce modules, which have generated over $100 million in revenue. Bernie Blegen adds that this is a strategic differentiator for MPS, as they offer flexible options for customers in terms of silicon or module design. Matt Ramsay of Cowen asks a question.

The speaker is asking about the progression of content per socket for the company in the AI business as their silicon providers make generational transitions. The company's CEO says they don't know exactly how their customers use their products, but they estimate that they use over 700 watts of power per module. The CFO adds that the company is seeing a lot of growth and finding new areas to deploy their products.

The speaker, Matt Ramsay, asks about the company's gross margin trajectory and if they have reached a floor at around 55%. Bernie Blegen responds that the company targets a range of 55-60% and that they have been able to reach the higher end of that range in the past. The main factor that could drive the margin higher is a change in business mix. Another question is asked about pricing trends and the company's position compared to the analog chip market leader, to which Tony Balow and Bernie Blegen respond.

The company is not affected by pricing issues and remains competitive in all markets. They anticipate an increase in gross margin due to the growing demand for their products. The distribution inventory, which was above target last quarter, has been reduced to a more normalized level.

The company's consumer segment has been neglected in recent years, but they are now seeing growth in the notebook market due to not lowering prices. They are also targeting the high-end audio market through their Axign acquisition.

In the paragraph, Michael Hsing and Tore Svanberg discuss the company's plans for innovation and shipping in Q3, as well as the communication market and its potential for growth. They also touch on the impact of AI on the communication sector and the upcoming model year builds for auto.

Bernie Blegen discusses the potential for revenue growth in the automotive industry, particularly with EV companies and Chinese OEMs. He notes that this sector is not as seasonally driven as internal combustion and expects steady improvement rather than a sudden spike in sales. The call concludes with thanks from Bernie and an announcement of the next conference call in late July.

This summary was generated with AI and may contain some inaccuracies.