Steve Daly: So a couple of things. You’re right, the book-to-bill if we just go back a quarter or two. So in Q3 of our fiscal 2023, it was 0.9 and then we ended fiscal 2023 with a book-to-bill of 1.1. And then this past quarter, it was a 0.9, okay? So the weakness looking at the bookings was really Telecom and to a certain degree, Data Center related. And the strength was sort of the segment that was the strongest was I&D, primarily driven by the D, and it was — we had some very good bookings there. So as Jack said, our industrial business still remains weak. I’m not sure we’re able to call a bottom per se, but we feel that we can move the base business during Q3 and Q4. I mean we’ve been at $151 million now for a few quarters, right? So…
Jack Kober: Yeah.
Steve Daly: Whether we’re at the bottom or not, it’s just so hard to tell. So I really can’t say anything more than that.
Harsh Kumar: Fair enough. Thanks, Stephen. And then I did have a follow-up, another question that was asked earlier on your Data Center strength, wherever we look, we see this generative AI driving compute memory and it would imply that connectivity is rising, which is really good for you guys. It seems like you’ve got the products you talked about strong demand, but you are talking about slippage, I think is that this quarter in March. And I think you said maybe potentially slipping into the June quarter as well. A, is that correct about March and June quarters? And then, B, is that simply you aligning your shipments to customer needs, which would imply that the customers are weak? Or is there something else going on?
Steve Daly: So there’s a lot of moving parts in the Data Center first, in terms of the back half of 2024 or fiscal 2024. When we look at the Data Center business, we think that there’s opportunities for growth. Exactly what that will be, we’re not able to say today. Second, there’s an overhang right now in the Data Center business of the lower data rates, 25 gig, a lot of the traditional NRZ products that we sold into being certainly very, very weak. That we’re not expecting to really come back in any earnest in the back half. We think the growth in the back half will be at the higher data rates. Third, what you’re seeing here really is movement around the major customers and their ordering patterns as they start to ramp up and hit steady states.
And so as we’ve seen many times in the data center, there’s prime the pump and drive ramps and then pump the brakes. And that’s — we’re in that little bit of a moat, I think, in Q2, where now a lot of our lead customers are digesting a lot of the inventory before they do another step up. The other thing I’ll highlight is these parts do have long lead times, and so the customers know that. So as we start to move into this quarter and beginning of Q3, we’ll have very good visibility into the back half of the year. But I will say, and to your point, the trends are very supportive of our core strategy, which is focusing on the higher data rates. And we have a compelling product line. We think we have some of the best drivers in TIAs in the industry.
We have been seeing pulled, not only from let’s say, the major customers, but we’re also seeing pull from the cloud folks themselves, where they’re beginning to become believers that linear drive can have a place in their networks. And the last point I’ll make about the Data Center, as everybody knows, with the new architectures of these systems, there is an incredible amount of short-reach optical or electrical connectivity or cables. So the SAM in this area is growing rapidly. And there’s been lots of publications from various folks talking about port counts and whatnot. But there’s just tremendous growth that folks are predicting. And so we’ll see if that comes to fruition, but we feel like we are in a good spot.
Operator: Thank you. And our next question coming from the line of Harlan Sur with JPMorgan. Your line is now open.
Harlan Sur: Hi, Good morning, thanks for taking my question and congrats on getting the RF business acquisition closed. Steve, the newly acquired RF business in Telecom, you guys had expected a slight decline in the December quarter, marking sort of five quarters of consecutive declines. It looks like Telco was actually down more than that in the December quarter, obviously, we know wired and wireless infrastructure trends continue to be weak. But from March, you’re actually thinking 8% to 9% sequential growth. So do you guys believe that the business has bottomed and maybe Telco sort of bounces along the bottom beyond the March quarter?
Steve Daly: So possibly. So the telecom market for us has — well, three areas that are positive right now. Number one is metro long haul where we see ramp-ups of 130 gigabaud systems very early, but there’s a lot of spending and pull for our products in this market. Second is SATCOM, satellite communications. We are seeing growth and many opportunities to expand our business in this area. So that is absolutely supporting our near-term revenues. We are starting to see some amount of growth in China for small cell deployments and front haul demand, let’s say, it’s modest, but it’s an improvement over where we were a quarter or two ago. But to your point, you’re right, we’re — we’ve come down significantly from over $60 million to now this past quarter, $27 million.
A lot of the growth we had in 2022 and 2023 was cable infrastructure, that’s essentially gone away. We had a lot of revenue with PON, passive optical networks. We are today shipping products into PON at a very muted level, it’s not 0, but it’s quite low. So the last point I’ll highlight is 5G is still a very important market for MACOM and while a lot of people are quite negative about telecom, we actually are reinvigorated and quite excited about being able to bring the RF power business from Wolfspeed into a whole range of customers that either they were not engaged in or where we want to grow the positions where they were engaged. And so we believe that together, we can gain more market share in the 5G market space together. And so that’s part of our core strategy.
Harlan Sur: I appreciate that. And then maybe just a quick update on the linear driver, right? Because it seems like there would be more demand for these types of solutions as the industry moves to 1.60 speeds later this year because the DSP-based 1.60 modules consume so much power. So maybe give us an update on the traction of Linear Drive on the current 100 gig per lane, upcoming 200 gig per lane. And is the team actually shipping solutions in high-volume production today?
Steve Daly: Right. So a few things. There is a lot of work going on in the industry for interoperability at 100G per lane for linear drive. So that is really the state of the industry. And so, you’re starting to see various publications. In fact, there was, I think, an industry get together, I think it was in October, where you had some of the major cloud companies presenting data showing bit arrow rate in functionality of linear drive systems, actually showing system-level data, and the data is compelling. So now what needs to happen, of course, to support this is more switches being available, not just the Tomahawk 5, but other platforms, whether it’s Cisco Silicon One or others. So there needs to be more switches that can handle the linear drive because the ASIC needs to support the linear drive because the ASIC needs to support the linear drive chip that we make.
So that is the state of that business. We feel like we’re right on the edge of that discussion and our high-performance connectivity team is doing a phenomenal job there. When you talk about 200 gig per lane — we will — as I mentioned in my script, we’ll be demonstrating some products there in that regard. And so we are, of course, also very active. I think there’s less activity right now in that area. There are certain constraints. A lot of the first-generation 200 gig per lane will be single-mode fiber using silicon photonics and EMLs and that — we think before the volumes kick in, it has to switch over to a VCSEL laser. And we don’t make VCSEL lasers at 200 gig. I’m not sure that it’s very early days for that, but there’s things that need to come together in the ecosystem to support super high-volume 200 gig, and it’s still very early.
