MACOM Technology Solutions Holdings, Inc. (NASDAQ:MTSI) Q1 2023 Earnings Call Transcript

Jack Kober: And just to add to that, Harsh, in terms of our gross margins as we work before, we’ve been pleased with some of the progress we’ve made over the past number of quarters. I think if you look back over, I think, it’s seven or eight quarters, we’ve been above that 60% number and have made sequential improvements. And with our flexible manufacturing model that we have with certain of our products being fab internally and certain of them also going out to third parties, that provides us with some protection over the varying different business cycles that allows us to ramp as well. So that kind of protects our overall gross margins. From a gross margin point of view, from as we look at our operations and all the contributions that the teams have been making over the past couple of years, we feel like we’re in a much stronger place and those improvements that we’ve made will continue as we go forward.

Harsh Kumar: Thanks, guys. And for my follow-up, I wanted to go back to a question that Tom O’Malley asked earlier. So maybe phrase the question a little bit differently. In the core industrial space, the hard core industrial space where you play, there are not too many companies that are calling out any weakness in that. They’re all €“ most of the other sort of industrial players are calling out weakness in consumer. So I wanted to understand if maybe it’s a function of the growth you had last year or you’re actually starting to see some issues with one or two customers or if it’s broader based than that, where maybe we should put our blinders on and start focusing on that area as something of interest, but just curious if you could provide some more color around that.

Steve Daly: Yes. And I think it really comes down to MACOM specific industrial business, which may be different than some of the bellwethers that service that industry with microcontrollers or large ASICs. So we have €“ so that would be the first point. I think you’re seeing MACOM specific performance. We sell, for example, into door openers, sensors, medical equipment and test and measurement. So I would say that those markets have been performing well for MACOM, and we expect that to continue. But we don’t consider ourselves really a bellwether. So I wouldn’t read a lot into our trend the fact that we’re maybe deviating from industry trends.

Operator: Thank you. And our next question coming from the line of David Williams with Benchmark. Your line is open.

David Williams: Hey, good morning. Thanks for the question and congrats on the execution here. I wanted to ask, maybe first just kind of about China and some of the demand, and there was a question on this earlier, but thinking more about the demand environment as we head into the second quarter, maybe into the back half of the year, it feels like the freedom of movement there. And once we kind of get through some of this COVID impact, that feels like a market that could rebound fairly quickly. And just kind of curious how you’re seeing that if that’s a possibility and if that could potentially be an upside that we can look forward to?