Quinn Bolton: I guess, as a follow-up, Kishore. Do you think based on the timing of either third-party routers and Wi-Fi deployments or share gains in fiber that the infrastructure ramps. I mean, can you tell today whether you think second half of the year is better than first half of the year? Or is it just too tough to call at this point?
Steve Litchfield: So, I’ll just jump in real briefly. Look, I think the kind of where we’re seeing the inventory is today, I mean, we’re just beginning this. I mean, it definitely feels like we see some more pain or some additional decline next quarter. And then hopefully, we start to see that inventory flush out and we see some things improve. As you know, they don’t improve quickly. So, I don’t think we’re expecting a dramatic snapback by any stretch of the imagination, but hopefully, in the second half, we’ll see that inventory clear out and start to see improvements in Q3 and Q4.
Kishore Seendripu: See we’re maintaining a conservative stance, right, about how we plan our annual operating plan and our investments in a very disciplined balanced manner. And that’s one thing we’ve always done very well throughout our existence as a public company, and we will continue to do that.
Quinn Bolton: Understood. Thank you for that color.
Operator: Our next question comes from Ross Seymore with Deutsche Bank. Please state your question.
Ross Seymore: Hi, guys. Thanks for asking the question. I think everybody’s kind of beat the dead horse about visibility going forward. So, let me just try to ask something slightly different. Ex inventory, Kishore or Steve, are you seeing any change in the design win frequency in your core areas, whether obviously the new stuff in fiber, Wi-Fi and optical, you’re really excited about? You mentioned that a bunch of times. But any sort of market share shift change in design activity given the uncertainty in the market?
Kishore Seendripu: Thank you, Ross. We’ll go beyond the beating the dead horse, so to speak. Hey, you have to celebrate the first mixed signal $1 billion plus company in this century, right? So, it’s really, really — and it’s almost at the brink of our 20th anniversary as a founding company. So, I’m super excited, right? And coming back to the question of — you’re asking basically, are there any design win cycles here that are presenting themselves, what is the momentum in the market? You asked a very, very good question. Actually, there’s quite a bit of a froth from all these operators, et cetera, where there’s RFPs out there for next-generation platform design-ins. So, what we do over the next 12-month window, we’ll set the stage for the next seven years because it’s a generational technology transformation that’s happening.
And Wi-Fi 7 is going to stay for a long time. From then, the innovation cycles will slowdown. And so, it’s very, very important for us to write now focus on design win momentum and technology win momentum to win these major platforms on the PON side. On the cable side, we feel quite comfortable that we’ll maintain our share and win the next-generation design. So, even those are in the mix, but you know how that world works out, right? So you asked a very good question. And we see in the optical, there’s again some momentum going on in the next-generation high speed interconnect this thing. So, we — I know we talked about this, but I wouldn’t talk about this if I was not feeling good about it. Let me tell you that after two years of talking about it.
So that feels good. On the wireless infrastructure side, lots of conversations on the transport side of next-generation designs, but less conversations on what I call access transceivers, it’s almost like, okay, we’re going to wait for another few years for the next generation of access transceivers sort of technologies. So, I would say if you want to really identify where the froth and momentum is in fiber, in terms of design win, what we call at play and their wireless infrastructure in the transport side, which is all these multi-band backhauls and transports, millimeter wave and microwave and then on the optical side, there is some — quite a bit of conversations and design win battles about next-generation technologies.
Ross Seymore: Thanks for all that color. I guess, as my follow-up, Steve, going over to the OpEx side. You guys have done a great job of controlling that coming in below your guidance and down sequentially in the fourth quarter. The step-up in the first quarter, anything to point out there. And generally, given the uncertain environment on the revenue side of things, what’s your strategy on OpEx as we think relative to kind of the — what I guess, $83 million you guys guided to in the first quarter? How should we think about that trending throughout 2023?
Steve Litchfield: Yeah. Ross, it’s a super important question. So, look, as we look at Q1, you have your standard payroll tax increases that you bump up in Q1. We’ve also got a variety of kind of legal costs that are somewhat one-time in nature, but they do tick up in Q1. Look, kind of given the revenue declines, we’re looking very hard, and you’ll see us reduce our OpEx kind of throughout the entire year. So, I would expect it to come down slightly in Q2 and then down the rest of the year, really acknowledging the market environment that we’re in right now.
Ross Seymore: Thank you.
Steve Litchfield: Thanks Ross.
Operator: Our next question comes from Tore Svanberg with Stifel. Please state your question.
Tore Svanberg: Yes. Thank you. If I could just zoom into your broadband business a little bit more. So, based on your guidance, I mean, it looks like that business is going to be down about 30%, 40% from its peak. And that’s even with the fiber side, obviously, growing pretty nicely. So, I do appreciate you don’t know exactly where the channel inventory is. But down 30%, 40%, do you start to get a sense for when that business will start to flatten out?
Steve Litchfield: It’s a great question. We’re wrestling with that. We’ve seen, as I mentioned before, good backlog numbers. And at the same time, there’s just — it’s a very murky environment right now. And I think with some of the supply chain dynamics, a lot of our customers and their customers naturally have ordered up ahead of that. And so, we’re really wrestling with kind of where everything shakes out. It kind of feels tough in the first half of the year. Hopefully, we start to see some modest improvements in the second half. But I wouldn’t say that we’re counting on any major shifts, but it does feel like we’re kind of getting down to the right levels. But I think 2023, you’re going to see — numbers are going to come down quite a bit with some decent recovery in 2024.
Tore Svanberg: Sounds good. That’s fair. And I noticed you made a small acquisition in the quarter. I know it’s pretty small, but was that just a group of engineers or care to comment on that?
Steve Litchfield: Yeah. So — yeah, so the small group of engineers looking to kind of reduce our overall consulting cost, and so that will end up being a modest cost reduction for the company going forward.
Tore Svanberg: Very good. Just one last question because, Kishore, you talked about the broadband business probably not seeing that next leg up until DOCSIS 4. So, what’s your best guess on timing there as when DOCSIS 4.0 will be a more material driver for MaxLinear as a company?
Kishore Seendripu: So, Tore, we are speaking of the cable side here. I think there are two links to the growth, right? When cable launches a recovery, which would be through ASP expansion and some unit growth, right? And the first one would be really 3.1 with Wi-Fi 7. Wi-Fi 7 being a big catalyst for the refresh in the DOCSIS. And then the other one is the next-generation DOCSIS 4.0 with the Wi-Fi 7. So I think that is a sequence of it. So, I would expect that to happen sometime beginning in the second half of 2024 in terms of these new offerings.
Tore Svanberg: Very helpful. Thank you very much.
Operator: Thank you. Our next question comes from David Williams with the Benchmark Company. Please state your question.
David Williams: Hey, good afternoon and congrats on navigating this tough environment. First, maybe I just wanted to ask, do you think that any of the WiFi, just kind of given the strength that you saw in connectivity sequentially, is there any of that you think was maybe pulled forward from the first quarter that is contributing to that 14% sequential decline?
Steve Litchfield: Hey, David. I guess, the way I would describe it, I mean we were really planning to catch up throughout the year. We’re talking about trying to capture more of this third-party router business. We were able to capture some of that. I think as we look into next year between some of the gateway fall off, which is attachment revenue for us. And then also some of the additional third-party router revenues that I think we were anticipating in the first half, really, both of them come down a fair amount, and so moderate a bit, but we are excited about that particular business from a diversified revenue stream. It’s another customer base that we’ve got design wins and are very excited about. So I think it’s something that will continue to fuel growth for us on a go-forward basis. But in the short-term, you’re going to see connectivity and Wi-Fi specifically come down a little bit in the first half.
