Matt Murphy: Yes. Got you, Ross. Yes, I think maybe I’ll start just super fast at the high level and we’ll just dive in. I’d say that this sort of supply demand inventory cycle we’ve gone through in the industry has taken a lot longer than historical to play out. And its sort of the dynamic I would characterize this time is you had various end markets resetting and correcting at different times in a pretty protracted manner. And if you go all the way back to last year in 2022, it started early with PCs and what the smartphones that went to gaming and then it started with data center and cloud, and it sort of had this kind of couple year series of resets, if you will. In our business, we saw these sort of declines in that manner as you talked about earlier this year in data center as an example.
And a few quarters later, it’s like roaring back as we work through some of those issues. So that’s the cyclicality part you’re talking about. And you’re asking the right question, which is, hey, over time, do these come back or not because maybe we pulled R&D or we sort of have shifted our bets. So I’d say for our business, we are committed to a diversified portfolio. We invest R&D across those various segments, including enterprise carrier. And then within the cloud, there’s a number of opportunities in AI. The only one that we really have deemphasized, and this goes back 5 or 6 years ago is consumer. And we’ve always projected in our models, in our Analyst Days that, that would be a declining business for us over time, both in revenue as a percent of total.
But then our investments in the other areas would more than offset that. And that’s proven to be the case. And so I think when you think about and model us going forward, we have R&D that’s going in and will continue to be invested in kind of the core base of Marvell. And we’ve been able to grow that very nicely over time if you look at it on a trend line. It’s really the consumer piece that is not going to come back. And just to give you an example, this year, one reason it did better is one of the programs we had, which has been in last time buy mode for several quarters. It actually outperformed during the year. Now it looks like it’s not going to continue into next year. But that business is probably in like the $50 million a quarter range type of thing, and that was a design we won years and years ago, and that’s just not going to repeat as an example.
It’s not going to come back. And that’s okay because that’s not something we’re putting R&D into. But for the rest of the segments, we still take a long-term view that we can grow them at or above market and then, of course, take advantage of the cloud AI opportunity, which is really the big growth driver for Marvell. Hope that’s helpful.
Operator: The next question comes from Matt Ramsay of TD Cowen. Please go ahead.
Matt Ramsay : Thank you very much Good afternoon, guys. Matt, I wanted to go back to some of the custom compute and ASIC programs and maybe ask a couple of questions about that. One is, I mean it’s been a heck of a year from a gen AI perspective, when you just go back 12 months, we were just starting to hear ChatGPT then the whole thing has blown up. So the customer base all had to think about that, react to that. And so I wanted to think about the programs that you have in flight and the interactions that you have with the customers and the limited set of customers in that space that are all going to be large. Have you seen them lean more into merchant, more into using ASIC houses or more into doing some of the silicon directly with the foundries themselves?
There has been a change in that mix. That’s the first part of the question. The second part is when you look at AI overall, the leader in that space, which you guys announced a partnership with today, leads not just because of the silicon, but hugely because of software. And I was curious as to whether with the custom programs you’re doing for AI compute, are you seeing the customers invest at the scale and software that can make those programs successful at volume over time?
Matt Murphy: Yes. Thanks, Matt. Yes, I think it’s — you’re right to kind of reflect that how much things have changed in basically a year. I think it’s a pretty simple answer. On the first one, I’d say, every one of those different sort of segments, if you will, that you mentioned, all of them are up in terms of the activity. You can see it from the leaders’ numbers and their guide, you can see it from some of the other companies in the ecosystem talking about ASIC and custom. I mean, look at where we’ve come from even on that, from having very kind of modest expectations to this being a significant revenue driver for us next year. And then there’s various business models, I think that all the large companies are trying to pursue to figure out how to, I think, do all of the above, which is kind of have a nice mix of custom for things that are very, very specific to them as well as take advantage of kind of the market unlock that’s happening because of the work of, say, somebody like NVIDIA, right, that’s actually helping to create a market.
So I think all of that is going to be — it’s not a zero-sum game at all. And I’d say on the sort of customization side and working with those hyperscalers, the design activities through the roof at this point. And so a lot of excitement in that area, both for the custom and then all the stuff we can do around it from an optics and networking perspective. And then I’m not probably the best person to comment on the second one. But clearly, these are very, very well-capitalized smart companies. They understand their customers and they’re going to do what they need to do for their workloads and for their custom silicon to make sure, I’m sure that the software and the service offerings are more than competitive, but you’ve got a great company that’s also out there that’s driving the market.
So I think both are going to exist. And my last point would be to reiterate, this is clearly not like in traditional computing, where it’s more of a zero-sum game. It’s just highly hard to grow the pie. In fact, it may be hard to keep the pie even flat. In this area, there’s going to be a lot of winners and there’s going to be a lot of opportunity created for the companies that have the right positioning, customer relationship and IT portfolios to support these emerging needs. But it’s very dynamic at this juncture. And I think for us, that’s what creates a lot of opportunity.
