Quinn Bolton: And then my follow-up question on the data center business, I wanted to ask about the linear pluggable or just linear drive optics. It kind of feels like at recent trade shows, the ECOC show and Open Compute Summit, everybody in the industry seems to be acknowledging that there’s been progress made on linear optics and just kind of wondering if you could give us an update as to what you’re seeing on the linear side and when you may start to see linear drive or linear optics starting to move to production applications. Thanks.
Steve Daly: Thanks, Quinn. So certainly in our fiscal ’24 is when you’re going to really start to see linear drive kick in. And I would just add to that that linear drive is not for all applications. It’s really for applications where you have either 100G or 200G per lane. So an 8×100 or an 8×200 is sort of the optimal case, and then that being a short-reach application. So some of the other applications like 8x50G, those type applications are going to continue to use DSPs and gearboxes, and that’s really not an area of the market we’re focused on. So I would just highlight that linear drive is not for all applications. It’s not going to eliminate the necessity of DSPs within the data center. I think it’s applicable in certain applications, and those are the applications that we’re focused on.
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. Two questions, if I may, as well. I guess sticking to the Datacom theme, could you remind us which portion of your products are at 25 gig per lane and below? I ask because I’m hoping you can juxtapose the demand trends you’re seeing across Hyperscale versus on-prem and enterprise campus applications.
Steve Daly: So 25G or below would be products like clock and data recovery type products. It could be what we call combo chips, which could be a CDR and driver or a CDR and TIA. I would say that’s the bulk of the type of product we sell into that market. Then sort of a second degree to that would be some of our lightweight products, including some of our lasers.
Karl Ackerman: Okay, thanks for that, Steve. I guess pivoting to telecom, then, how should we think about the linearity of your telecom segment outlook in fiscal ’24 or over the next couple quarters? I ask because several of your end customers suggest a mixed recovery but noted an inventory overhang for DWDM transceivers that may extend in mid-2024. So just curious to hear your thoughts on that segment. Thank you.
Steve Daly: Yeah, so in this case, I think as you’re defining telecom, you’re focused on the sort of optical segment or the long haul. So in this case, in our vernacular, we call that a metro long haul business. We do think that there will be pockets of strength in 2024 with our metro long haul business. We see that some of those networks are being upgraded and also, as I mentioned in my script, we’re participating in some of those transitions. I’ll just highlight that these newer platforms are at 130 gigabaud, so they’re extremely high frequency. The equipment is extremely expensive and that’s an area where we want to position ourselves.
Operator: Thank you. And our next question coming from the line of Srini Pajjuri with Raymond James. Your line is open.
Srini Pajjuri: Thank you. Good morning, guys. A couple of questions. Steve, first, a little bit longer term question. You talked about market share gains contributing to fiscal ’23 growth. Could you maybe elaborate on that? I guess subsegments end markets, you are seeing market share opportunities. I guess, where were the market share opportunities last fiscal year and how should we think about going forward what sort of opportunities do you see and what sort of, I guess, top line contribution you expect from share gains?
Steve Daly: Sure. So, the first thing I would just highlight is that we have a very diverse business and we don’t typically see a significant portion of revenue on any one product. So, when we talk about gaining market share, it’s a lot of small and medium-sized wins at a lot of different customers. So, I’ll just highlight that right up front. Certainly, we are gaining market share in industrial and defense, 18% CAGR over the past three years. That is due to the company’s renewed focus on the market primarily. It’s based on doing more custom development work, doing modules and subsystems for certain applications and so we are really very focused on that market. Today, that market is about 50% of our total business, at least it was in fiscal ’23, 49%.
And we think we have leading technology that will be of great interest to the major OEMs across this space. The second thing I’d highlight is we’re definitely gaining market share in satellite communications, both in ground stations as well as on the satellite themselves with our various components. So, that’s an area where we’re definitely focused. We think this subsegment of the market will grow for us in fiscal ’24 and related to that is something I mentioned in the script, which is RF over fiber, which is a very attractive application within not only commercial communication systems, but also defense applications and so, those are just three general areas that we’re focused on, but remember, it’s all about the new products and so to the extent we can launch more and more products every year, that will be the driver for our growth.
And this past year, we did 15% more new products than the prior year and I mentioned in my script, our goal for fiscal ’24 is to do 50% more new products and certainly, that takes into account the closing of the Wolfspeed team in December and then adding their contributions to our metrics. So, we are a product-driven growth company.
Srini Pajjuri: Got it. Thanks for that answer. And, Jack, on the book to bill, it’s good to see it’s, I guess it came in at 1.1 and just trying to get some color on where you’re seeing the most improvement. Is this being driven by any particular subsegment? Or I see that data center you’re guiding for growth, but if you could just give us some color on what’s driving this improvement, because the other two segments seems to be just checking along at the bottom, if anything, maybe some declines in industrial. So, just wondering what’s driving the improvement in book to bill.
Jack Kober: Yes. And with regard to the book to bill, we have challenges, as Steve had mentioned in some of his prepared remarks that we had gone through, but if you look at some of the strength that we had seen here in the current quarter, much of that was around defense as well as data center bookings that had come in and some of these are longer-term type delivery arrangements. So, they have longer lead time. So, you’ll see some of that benefit us as we work our way through fiscal year ’24.
