And latencies and access speeds and all of this is going to be incredibly important at the edge and even inside the cloud moving forward even if the AI is going to get even worse. And really this is the play that goes together with all the offerings on the AI processors, as well. So that’s the next step in the evolution of our storage accelerator business. And maybe it is the first time I really connected the dots in that sense for you.
Ananda Baruah: That’s really helpful context. All right, great. Thanks guys.
Kishore Seendripu : Thanks, Ananda.
Operator: Our next question is from Suji Desilva with ROTH MKM. Please proceed.
Suji Desilva : Hi, Kishore. Hi, Steve. A question about the carrier PON program. I’m curious if that is the rollouts happening as you’d expected or whether that carriers pushing out at laying that roll out because of the macro content?
Kishore Seendripu : So, the roll is already happening. We’ve been shipping for this whole year actually. The only difference is that the earlier part of the year, the rollout was slower than we expected. So they were sitting on a bunch of inventory and then they started shipping. Now, they’re shipping on a actual cadence, and we are already working on the next generation platform. But my expectation is the next generation is going to be delayed and the existing generation platform with 10 gigabit PON, – PON and Wi-Fi 6 or 2, which is enhanced throughput one is going to have a long life. Having said that, we got the next generation offering as well. So, I don’t think there’s any change in plans yet. There’ll be natural slowdowns and seasonalities and that’s sort of the thing, but nothing out of the ordinary. Because to start with, it is not as much inventory on our side as was in the beginning of the year.
Suji Desilva : That’s helpful Kishore. And then, lastly on the AEC market within optical that’s kind of coming online here. Can you help us just think about the relative size? Do you think that that market will be a year two out versus the AOCs and the passive cables just to understand how big you think that market grows as a share of the cabling?
Kishore Seendripu : That’s a very, very interesting question. I know there’s a lot of excitement in AEC. But AEC has been a very, very tiny market looking backwards. Right now rational for AEC comes in as the speeds have increased dramatically where passive copper cannot meet the performance. And you need active electrical cables. It’s a place for AOCs as well, I mean our AI cluster I don’t want to do anything with AECs, right? I want to go optical. So it’s really is a mix and match. So this market can be huge, gigantic and I think any forecast will underestimate the volume it can be over the long-term. It’s just like USB 3.0, right? It can just keep growing. How are the prices are going to be a lot more optimistic than they really will play out to be, right?
All in all I expect the markets, I don’t know anywhere between $200 million size for a chip guy to as big as $1 billion for transceivers, active optical cable, and active electrical cable combined. But there is this cards in the last 20 years of existing is MaxLinear for me. I’ve never seen a single chip supply in the communication segment more than $300 million of product. So the billion dollar TAM, a $300 million TAM is my point. So put it differently is going to take generations of products to really access the $1 dollar TAM and that’s going to take a few years to get there. But I think we’re very well positioned with our technology evolution.
Suji Desilva : Okay. Thanks Kishore.
Operator: Our final question is a follow-up from Tore Svanberg with Stifel. Please proceed.
Tore Svanberg: Yes, thank you. I just had a two-part question on the recent Commscope Vantiva deal. First of all, did that also have an impact on sort of purchasing behavior? Obviously, when you have an event like this, perhaps customers are bit more, careful about buying inventory. And then the second part of the question, does this change anything at all for MaxLinear? The reason I’m asking that question is because, now that it’s going to sort of like two customers in one, I would think that the qual for DOCSIS 4.0 going to be a bit more simpler. So, if you could answer those two questions that would be great. Thanks.
Kishore Seendripu : So Tore, the first part of the question is very, very easy. I don’t think anybody knows which deal happens when. It’s a very non-linear process, M&A activity. Having said that, there’s so much inventory in the channel. I don’t think this – the deal itself had any impact on that. It’s really driven by the end market throughput. And the end-market itself has got a lot of inventory sitting on it, right? So I think our customers are in the same bad place we are in, number one. Number two, regarding the DOCSIS 4.0. cycle. Yes, we got a great chip. The lowest power. The most beautiful thing in the world that sort of a chip we have compared to any competition out there. However, we have seen the way the DOCSIS cable market plays out it really takes three to four years to get to the ramp point where you hit 50% of the volume, at least four years to get a 50% of the market.
And then a seven year life to it, right? Having said that, DOCSIS 4.0 is not the same for everybody. It already has – in the marketplace. There are two flavors of it and it’s a very, very costly network rollout. And I think often it’s going to be very, very selective about DOCSIS 4.0. It’s going to be a very small share of the market. However DOCSIS 3.1 has got many flavors. There is something called the ultra DOCSIS 3.1 which is going to meet all the category of services that the market needs with this 10 gigabit received bandwidth, and upstream multi-gigabit. It’s going to meet all those things. It’s called the higher split ultra DOCSIS 3.1. And that can roll out today based on all the network out there. And that’s what the operators are going to lean towards, and that’s going to be 80% of the market.
And so DOCSIS 4.0 is great, but 3.1 is even more beautiful. Ultra DOCSIS 3.1 is what I put my bet on.
Tore Svanberg: Great perspective. Thank you.
Kishore Seendripu : Thank you.
Operator: We have reached the end of…
Kishore Seendripu : Sorry. Go ahead, please.
Operator: I was just going to hand it back over to Dr. Kishore Seendripu for closing comments.
Kishore Seendripu : Well, thank you. Thank you, operator. So, I just want to thank you all for attending this call. I would like to tell you that we’ll be participating in a number of conferences in November through January. The Stifel Midwest Growth Conference in Chicago on November 9th, the Roth Capital Technology event in New York on November 15th, the UBS Technology Conference in Scottsdale on November 28th, the Wells Fargo TMT Summit in Rancho Palos Verdes, California on November 29, and the Needham Growth Conference in New York on January 18. With that I want to thank you all once again for joining us and we look forward to speaking with you again soon. Thank you.
Operator: Thank you. This will conclude today’s conference. You may disconnect your lines at this time and thank you for your participation.
