So with Wolfspeed and MACOM, we believe we can do higher levels of integration, we can capture more market share and just better service to customers in this segment together. So we’re in all sorts of different types of platforms with the core MACOM business with the RF power coming online, our SAM just increases further. Our — from a GaN point of view, just to remind everybody, Wolfspeed’s technology is ideal up through about 14 or 15 gigahertz up through expand, let’s say, they’re very high-voltage, high-power processes. So if you’re building a radar that wants to knock or a transmitter that wants to knock drones out of the sky, you would want to buy one of Wolfspeed or one of MACOM’s products as an example of a new application that is very relevant today.
And then, of course, the necessity to upgrade electronic warfare and jamming systems. They all require high-power transmitters and this is right in our wheelhouse. So great technology. We’re very active, we’ll conservatively say high single-digit growth, but we’ve been beating that and if things go well, then we hope to stay on that CAGR run rate.
Operator: Thank you. And our next question coming from the line of Tore Svanberg with Stifel. Your line is open.
Tore Svanberg: Yes, thank you. And let me first offer my sincere condolences of the passing of Chairman Ocampo. First question, Stephen, it’s really related to what you just talked about. So if we think about the Wolf RF business, it sounds like it’s going to sort of contribute 50-50 between I&D and Telecom. But as you think about the growth of that business, will that also be very similar? Do you expect sort of the contribution to be similar to both of those segments?
Steve Daly: So I think they’re going to be different. And I think when we look at the Wolfspeed portfolio as it exists today, they have a very strong telecom business, which is down right now because of weak 5G, and we have great potential there to capture more market share together and turn that around. They have a great foundry business, which is a combination of commercial and defense, and we believe we can continue to grow that business. And then they have a product line of FET discrete devices and mimics. We believe their mimic product line is way too small. We want to throw the full force of our mimic designers at their processes and take higher-value products to the customers. So we would expect, and our strategy will be to grow the mimic portion of their portfolio in terms of assigning resources to develop products to go after customers aggressively.
That will be a corporate priority for us. And we think that is one of the best ways to: A, capture market share; B, improve profitability, and C, grow the revenue of what is a product line that today is just too small. So when we roll all that up, we’ll just have to sort of wait and see. There’s a lot of factors here beyond our control regarding some of the run rates of their big programs. And of course, we’re still getting to know the programs and understand them. And as the Wolfspeed management team works with our team and we go together to customers and learn about the programs, we’ll be able to sort of refine our thinking. But yes, this business has tremendous potential to grow. If you look at the $2 billion SAM for GaN, about half of that, we believe, is defense-related.
And so we want a big piece of that.
Tore Svanberg: That’s very helpful. And as my follow-up, and I know people are asking a lot of questions about the sort of step down in Data Center. But could you give us a little more color on maybe the — so let’s say it’s a $200 million business now, how much of that is lower data rate versus higher data rate? And are you starting to see any seasonality in that business? Or is that still way too early?
Steve Daly: Yeah, I would just say one thing about people’s concern about our data center business. So our Data Center business back in 2019 was about $115 million. And on the trajectory that we’re on right now, that business is probably going to be above $175 million to $200 million. I mean that’s kind of the range this is going. So we’re very happy that every year, we’ve been able to grow the business. Now, we also like to say all the time that this is the most volatile part of our business. We see ramps go up and ramps go down, and that is definitely just what you’re signing up for. And you’re seeing a little bit of that over the last three or four quarters where we’ve had a tremendous ramp-up and now we’re having a pause.
We don’t read too much into it. We have — at the higher data rates, we’re gaining exposure across the industry as the LPO technology is adopted, it plays to our favor, and we know that the sheer volume of short-reach connections is increasing. And so these are the — I think these are the themes that we believe are most important. I would not call this business seasonal, I think it’s very much related to deployments and the folks that are making the data center infrastructure, winning business and rolling out large clusters or infrastructure. It’s more program-related than seasonal.
Operator: Thank you. And our next question coming from the line of Karl Ackerman with BNP Paribas. Your line is open.
Karl Ackerman: Yes, thank you gentlemen for squeezing me in. Two, if I may. First, I suppose, Jack — well, or Steve, could you address whether you have enough capacity today to support 50-gig per lane or 100-gig per lane and could be 200 gig per lane for short-reach applications? And whether you are actually seeing end customers begin to co-invest in the supply chain to support continuity of supply?
Steve Daly: So we — just to remind everybody, the high-performance analog products that we produce are using third-party foundries, not internal MACOM foundries. So in this case, we’re dealing with the global giants that produce high-performance CMOS or by CMOS or silicon germanium. And so we typically don’t view our requirements as moving the needle inside of these fabs. We’re sort of a small player in what is typically very large fabs, and our volumes are really not material to their overall business. So I would say that we’re not too concerned about capacity. What we have to be concerned about is lead time and planning so that — as I mentioned, this is a volatile business. So when the music stops, we don’t want to be holding a lot of parts.
So we have to plan very carefully ramp up steady state programs, diversifying those parts across a lot of customers, and then ramping down. And then the way we manage that with customers is we provide them long lead time so that we can buffer and reduce some of that inventory risk. But I would say, generally speaking, we do not have a capacity problem here. And on the back end regarding OSAT or testing, a lot of these products are bare die, flip chip or bumped in some cases, packaged. So no issues there from a capacity point of view. And then the third thing I’ll mention is we have great relationships with our third-party foundries. And when we see high demand, we’re on the phone, we’re talking to them and making sure that they can clear the road for us if that’s necessary.
So it’s really priority and planning.
Karl Ackerman: Yeah, thanks for that, Steve. For my follow-up, thank you for providing the core growth of telecom in March. But how do you see that market this fiscal year? And within telecom, the Wolf acquisition gives you both GaN as well as LDMOS product and it gives you the full suite of antenna components where telco operators can implement really 5G NR and 4G LTE for carrier infrastructure. And so the Telco to that is, will you also prioritize LDMOS? And if so, how are you thinking about that particular end market, the carrier infrastructure of the market this year as well? Thanks you.
