Monolithic Power Systems, Inc.

Good day, and thank you for standing by. Welcome to the Monolithic Power Systems, Inc. First Quarter 2026 Earnings Conference Call. At this time, all participants are in a listen-only mode. After the speaker's presentation, there will be a question and answer session. To ask a question during the session, you will need to press star 1-1 on your telephone. You will then hear an automated message advising your hand is raised. To withdraw your question, please press star 11 again. Please be advised that today's conference is being recorded. We are joined by speakers Michael Singh, CEO and founder of MPS, Rob Dean, Interim CFO, Tony Bailo, Vice President of Finance, and now I would like to turn the conference over to Arthur Lee to read a Safe Harbor Statement. Please go ahead.

Earlier today, NPS released a written commentary on our results of operations for the first quarter ended March 31, 2026. This document can be found on our website. Before we begin, I would like to remind everyone that in the course of today's presentation, we may make forward-looking statements and projections within the meaning of the Private Securities Litigation Reform Act of 1995 that involve risk and uncertainties. The risk, uncertainties, and other factors that could cause actual results to differ from these four looking statements are identified in the Safe Harbor Statements contained in the Q1 2026 Earnings Commentary and in our SEC filings, including our Form 10-K and Forms 10-Q, which can be found on our website. Our statements are made as of today, and we assume no obligation to update this information. Now, I would like to turn the call over to Tony.

Thanks, Arthur. Good afternoon and welcome to our Q1 2026 earnings call. In Q1, MPS achieved record quarterly revenue of $804 million, 7% higher than the fourth quarter of 2025 and 26% higher than the first quarter of 2025. Our quarterly performance was a result of our continued innovation, our consistent execution, and the resilience of our diversified market strategy. Let me call out a few highlights from the quarter. Our communications end market grew 33% sequentially on the strength of our power solutions for optical modules and switches. The pipeline for our automotive and enterprise data end markets, including server, continued to accelerate as we won multiple new projects across customers and regions. We sampled our first high-speed interface products for DDR5 at major customers, and MPS continued to grow our capacity past our original $4 billion plan with a new goal of reaching $6 billion in the near future. We continue to adjust to the fluid geopolitical and macroeconomic environment, but our diversified market strategy remains unchanged. MPS focuses on innovation and solving our customers' most challenging problems. We consistently invest in new technologies that open new end markets and applications and accelerate our transition from chips only to a full-service silicon-based solution provider. And finally, we continue to expand and diversify our global supply chain, allowing us to capture future growth opportunities, maintain supply stability, and rapidly adapt to market changes as they occur.

Operator, you may now open the webinar for questions.

As a reminder, to ask a question, please press star 11 on your telephone and wait for your name to be announced. To withdraw your question, please press star 11 again. Please stand by while we compile the Q&A roster. Our first question comes from Ross Seymour with Deutsche Bank. Your line is open.

Hi, guys. Thanks for letting me ask a question. I just wanted to dig a little bit into the enterprise data side of things. Can you just talk about the different trends you're seeing between kind of the XPU side versus the CPU, server CPU side? I know you mentioned in your preamble that the backlog and visibility was improving in both, but given the strength of demand we're hearing elsewhere in the server CPU side of things, I wondered how you guys are doing there.

Both are good.

yeah i'll give a little more color and ross if you recall even last year in 2025 we had talked about cpu being a tailwind and we continue to see that here in 2026 but if you look across enterprise data for us right as we've said it's increasingly hard to differentiate between sort of ai solutions and cpu but in general all the growth drives are intact we're ramping new customers We've been ramping existing customers. We continue to see the transition to modules. And like I said, plain server has been a tailwind, and we think it will continue to be so.

Thanks for that. And I guess the second question would be on the storage and computing side of things that seem to be a little bit better than feared in the first quarter. Talk about the tailwinds or headwinds, given what's happening from a macro perspective, and then potentially the difference between what you guys do on the storage side versus the computing side.

Yeah, I'll start on that one, and then I'll let Mike and Rob jump in. But as you know, right, that segment really has sort of two separate businesses in it. The storage side obviously has remained strong, as it's really been indexed to a lot of the data center business. And we've seen strength in DDR5. We've seen strength in HDFSDD continue out of last year and into Q1. On the notebook side, we're still more cautious on that side. As you know, there's really two dynamics there. I've sure you've heard other companies talk about potential TAM headwinds associated with memory shortages or elasticity from memory prices. But remember, we also selectively play in that part of the market that has lower margins around consumer. And so I think if we look forward on that business going through the year, I think we're still very optimistic about storage staying strong, probably much more cautious on the notebook side.

Thank you. But the notebooks are And we don't really care this quarter or next quarter. As long as we develop the best solutions, our power densities, and our customers' ease of use, and these design that we have, the revenue will rise.

All right, operator, next question.

Thank you. Our next question comes from William Stein with Truist Securities. Your line is open.

Great. First, I'd like to ask about manufacturing. You noted in the press release that you passed the $4 billion target. You're now working to $6 billion capacity. Maybe you can update us as to the strategy around geographic placement of your capacity, and maybe remind us what's going on from a technology perspective? This used to be a big focus, you know, the various BCD iterations that you produce. But can you bring us up to speed as to what is the latest BCD generation? Thank you.

I'll answer your last question first. We are still around the 60 nanometers, and maybe we'll go down to 40 nanometers. 40, 45 nanometers. These ones, as a power density, as a market trend, the power increases and we increase the power densities. It's just old stories. We keep doing the same things in the last 20 years. We just do better than our competitors. For the sixth Billion dollar gold for manufacturing pipelines. We clearly, and we have, we see our near futures. We see a lot more activities, a lot more potentials. And all these design wings is imminent. They will turn into our revenues.

And maybe just to add, well, I think I'm telling you what you know, but on the $4 billion of capacity, we talked about that being very geographically diverse, both inside and outside of China. And remember, our strategy really is to maintain that supply chain diversity.

So we'll continue to try to have that balance going forward. Thank you.

Our next question comes from Joshua Buchalter with TD Callen. Your line is open.

Hey, guys, thank you for taking my question and congrats on the results. Maybe to start, can you just help us a little bit with the models? Any help you can give us on the guidance by segment as we think about, you know, sort of a 12% sequential growth for the June quarter, which segments should be above and below? Thank you.

Well, I think if I would, let me start out that you guys are more interested than most. Okay, man. Bernie, last time, when I talked to you guys, we had about 50% of, Flaws. Okay, 50% flaws. Okay, I'll let Tony talk about it, but give you a better news today, okay? And I'm more excited about the other projects that I'm deeply involved. Okay, me and the building automations and audio project site as well as the robotics. And these ones will pave the way for our next two to three years out and remain on the same growth trajectory.

Yeah, and I'll follow up a little bit as kind of marching through. And Josh, I know the first thing people are interested in is enterprise data, so I'll start there. And as you recall, We tend to be fairly conservative in how we look at these things, waiting for the backlog to be in place. So late last year, we talked about 30 to 40% growth year over year. In the last call, we kind of rose that to a 50% floor. And the strong ordering patterns that we saw start last year have kind of continued through Q1. So at this point in time, I think we're comfortable raising that floor up to around 85% year over year growth. And that will certainly be one of the drivers of growth for the year for NPS.

If you look through, oh, sorry, Michael. Better than our last CFO, okay.

If you look at the others, Josh, I think we've been signaling on communication as we've become increasingly excited about that end market with not only the optical module growth, but due to switches as well. So we certainly would expect those to be drivers. Auto, I think it's a very consistent store. We said that would be roughly flat through the first half of the year and ramping in later in the year. And then storage and compute, we talked about a bit already with Ross, right? There's really two different dynamics going in there where we're still very optimistic on storage pulled through by data center, more cautious on notebook.

But here again, overall, we cannot predict which quarter goes ramp volumes. And that's not our business to do that. And we're winning strategy is same as the last 20 years. As long as we deliver the best product and a service solving our problem for our customers. And I don't see, we lose any socket, okay, the major socket at least, okay. And we keep winning. And those business, those design wins will turn into revenues.

Thank you both for all the color there. Unfortunately, when you deliver good news, you still get annoying follow-up questions. But I guess if we think about the incremental upside since last quarter, Any help you can give us on how much of that's coming from CPUs, as Ross mentioned earlier, versus more confidence into either content or visibility into share on the AI accelerator side? Thank you both, and congratulations again.

That's a good try. Okay, now I'm not going to give it to you.

Okay. Yeah, Josh, I think we just fall back and we've talked about all the growth drivers and say they're intact. I don't think we want to try to parse out between volume and content because it can be very specific.

In reality, it's very difficult to separate it. What is called AI? What is called servers? There's a lot of... aging okay and a small segment okay and these are very much um a small um you small utility box okay we see a lot happening okay i mean uh um maybe i don't use the right words and you guys use it okay i mean uh these are portable ai devices okay and just based on gpus these are happening and That's clearly overlapped with the CPU and GPU powered.

Kenner to try. Thank you, guys. Okay.

Thank you. Our next question comes from Rick Schaefer with Oppenheimer & Co. Your line is open.

Thanks, guys, and my congratulations and just a wow, I guess, on the outlook. Maybe if I could just for a second talk about enterprise data. I've got a follow-up, Michael, that you'll like better, I think. But, you know, the top four CFPs, I think, just last night, I mean, now we're over 700 billion in CapEx just from them. I mean, it seems like you guys are clearly seeing that increased order velocity. My real question is, are you able to capture all of that upside? I mean, is there anything, you know, curbing your supply or your ability to capitalize, Michael? Because in years past, you guys have... You know, he's kind of he's kind of made your bones on always being ready for that upside and kind of never being caught short. So I'm just kind of curious if that's still the case or kind of what you're seeing.

I think it's exactly right. And that gave in that. Although we have a few more players and I came in and well, let's let me go back to a few quarters ago. And these are AIs and they gave me the GPU powers. And given times will be the performance and also the manufacturing capabilities and the reliability will remain as only a few players. And after a couple of years, it's been very clear that NPS is one of our players. and as I promised over a year ago or so. And we continue to do well in many aspects, especially for the power density side. We are the best in the market segment because we provide a total monolithic power solutions. And we can use a single piece of silicon versus our competitor using multiple Roozbeh Gharakhloo, piece of a silicon and that clearly shows our our advantage and and yet we don't want to be the the dominant suppliers and okay well just don't want to be a part of it and our goal is diversified goals.

Got it. And so for my follow-up, Michael, I'm just curious on physical AI.

Obviously, you know, it's getting a lot more, you know, a lot more people talking about it and getting a lot more focused. And I'm just curious if you could flesh out maybe a little more of your plans for that segment. You know, what kind of TAM do you, have you guys identified there? I mean, you called out robotics, you know, a minute ago on the call. I mean, can that be a meaningful revenue contributor next year, or when would we start to see, you know, robotics start to drive top line?

We see this year, but the volume is still low, but it can kind of move the needle slightly. If we go up the trains, this is still at the very beginning, and it's very difficult to predict. And many companies that launched the first high-volume robotics, though we clearly benefited from it. And after that, we cannot call the market segment growth. But the future is there, clearly. When more AI adopted in robotics, the application will be widened.

And I think what you see is us try to run the typical MPS playbook, which right now we're trying to engage broadly and win all the designs we can. We can't control when the customers ramp, but we can't control winning the sockets. And that's the broad engagement you really see happening in 2026.

That's a very good point. Yep. Great. Well, thanks, guys.

Thank you. Our next question comes from Quinn Bolton with Needham and Company. Your line is open.

Hey, guys. I'll offer my congratulations as well on the results and outlook. Michael, Tony, I guess I wanted to ask on the comms segment, it was up 33% sequentially in March. It sounds like it's going to be one of the faster growing segments in the June quarter. When I look at optical modules, I think 800 gig modules are more than doubling in 26. So My question is, do you think the comms segment could actually grow as fast, if not faster, than enterprise data this year, given those trends?

Yeah. Again, I'll follow Tony's answer for the last one. We're not in the business to predicting what the market trend is. We provide these happens in this particular segment. we saw a lot of activities and a lot of demand for high power density product, and especially modules. And I think as I mentioned about maybe a few quarters ago, and so this quarter, and it's just jumped out. And from what we learned, the power density of the module with a very confined area. And the data rate keeps increasing. And with the opticals or with other type of a format, the power will keep increasing. And in what rate, I cannot predict. But in the small, confined areas, and the power density is critical. That's our basic technology so that we can apply it in that segment and that we execute it fast and that we capture the market.

Yeah, and I think as ordering patterns have continued to be strong and extend, we still don't have them all the way through the year. So I think it's pretty tough for us to call, you know, all the way through the back half right now. But certainly we put that end market, you know, above the corporate average.

got it okay and then um same way i'll go back to uh servers and okay and uh go back to the server side and okay we um in the last years we don't know and okay me and uh the server market will pick it up or not picking up okay as far as we listen to our customers so we get our inventory ready and again and uh when they need it would they they have they have those products and uh um So we just focus on delivering a better product, winning more sockets.

Yeah, I mean, I'm a broken record, but I think it's a great example of, again, the Versight approach. You land and you sort of look at the other sockets available to the applications and continue to grow your SAM.

My follow-up question, Michael, you guys have been sampling your products for 800 or plus minus 400 volts for a few quarters now. Wondering if you could provide any feedback on how that activity is going and um can you give us any thoughts on there's a lot of debate between whether those higher power conversion steps will be more gan based or silicon carbide based if it goes gan will you guys have gan based solutions ready for that for that opportunity no we based on a silicon carbide and our that's our solutions we do

In the past, I openly said I don't believe in gain. Okay, now start to... I didn't know what I was talking about, I guess. Okay, we, in the last... Started last year, we developed our gain, but not for 800 volts. It's for low voltage and lower power segments. We start to... develop these fundamental technologies in-game. To answer the first part of our questions, yes, we're sampling. And again, we call it sampling to co-develop that system with our customers. And also, our customers' customers. And we don't talk about those until I guess you guys asked for it. And 800 volts became household numbers, household names on the Wall Street. And so we start to talk about it. And our product is working. And I think overall the environment in the new 800 volts power bus data centers, They a lot of things has to be resolved and. We just have our for that application is already OK and also have a. 800 volts OK go go to a 10,000 volts. OK that that's another thing and has to be developed a lot more lot more efficient. Efficient power conversions and These are all part of the pictures. NPS will play in those segments.

Thank you, Michael.

Thank you. As a reminder, to ask a question, please press star 1-1 on your telephone. Again, that is star 1-1 to ask a question. Our next question comes from Tori Sponberg. With Stifel, your line is open.

Yes, thanks, Michael, Tony, and congrats on another record quarter. I had a question maybe as a follow-up to a previous question on power. So I do realize there's a lot of focus on 8-ondervolt, but before we get there, you know, there's the move to 2,000-watt GPUs. And I know there's a lot of sort of wannabe power management companies out there, Michael. So, you know, just hoping you could touch on, you know, two of the three things that really make NPS so unique and differentiated to handle those types of power levels. Because that is not like a 2028 timeframe, right? I mean, that's already next year. So, yeah, if you could give some color there, that'd be great.

Yeah, okay. That's important. Good questions, I can touch it and one of them I already said earlier. So the NPS is focused on the monolithics. And we do what is the most cost effective and we do and how we do the integrations. And we have the capabilities to integrate or disintegrate. The integrations, we can put it in one module. And that's a huge advantage. And with multiple other chips, OK, and if we use a particularly discrete power component, OK, discrete power . And it's very difficult to do for manufacturing the modules. The second things I should mention mentioned it and then we invested in a module development you note for other assignments actually in the six 2000s 2016s we want to move more up okay from providing silicon only power conversions and okay we do a plug-and-play solution that journey we started 2016 and uh immediately we know how we test these these devices and how we qualify these devices like it not come and if it's a high volumes and the higher qualities and again it can't be touched by humans and like we we develop our own test systems and uh own reliability systems these are fully automated and uh they're all actually it's all based on the mps motion product and uh These ones are very unique. And before these systems putting in productions, we can't find anything like these on the market. And that's, I think, to me, this is a huge advantage. And the other one is the last one that will go back to semiconductors. And again, we talk about this. We used 60 nanometers, and now we move it to 40 nanometers. And those increase the power density by, last time we talked about 3 amps per millimeter cube, and now we go past that.

Great.

Thank you for that, Michael. And as my follow-up, You know, when you mention a new product, I always, you know, listen to you because I remember you talked about, you know, 800 gig optical components being in your market. And before you knew it, you had a huge business there. And you now mentioned you have your first high-speed interface product sampling for DDR5. So, you know, just curious, when should we start to see material revenue from that business? And

know could that also grow into a you know several hundred million dollar business for the next few years thank you that's absolutely right okay and uh frankly i don't know anything about this high this high speed and which is the highest best engineers that cut them loose and then they created this okay and uh um but the former business side is our our natural way of expanding the service, total service market, so the increase I was saying. And we have a pretty good positions in PMIC in memory, then we introduce timing drivers, timing control, whatever, and also temperature sensors. And now there's the RCD or whatever the things, and I know it's very difficult. This is beyond my understanding. Our engineers and our people, they pull it off. So we have a few people that are compared other company, like I have a 50 people. So, okay. Oh, that, that design groups, not game. And, uh, we will be able to, uh, to pull it off in the, in the, in a few years. So these are brilliant guys and okay. And, uh, they want to make things happen. And, uh, the revenue. Usually we don't talk about it, okay, and talk about a product, okay, and we sample those products. Clearly, in that market segment, our customers are very much welcome to have another player.

And, Tor, I'll just help you with the model a little bit. I wouldn't really have that as being a contributor to 2026 revenue. I think we're really highlighting it as we continue to expand our footprint, you know, in that market.

That's fair. Thank you again, and congrats.

thank you thank you our next question comes from gary mobley with loop capital your line is open hi guys let me also extend my congratulations i'm curious about the comms business that definitely to stand out for the quarter in terms of growth upside and i presume carrying through the into the second quarter and for the balance of the years you previewed already so What I'm most curious about is, you know, how much content you have in these 800 gig optical modules, and I assume maybe top rack switches. You know, maybe if you can put it in the context of, you know, by how much you see your content increasing in rack scale solutions for accelerated compute, you know, given this beachhead, you know, in these two new applications.

I think it's more than a beachhead now, Tanaka. We're pretty... pretty well beyond the beach now. Tony, you want to?

Yeah, I think we're going to stop short of kind of giving a dollar content. But obviously, in the optical modules, we have a module in the module doing that. So we obviously look at more of that than a discrete device. If you talk about switches and things of that sort, you have a whole different number of trays for example you have switches you have nick cards you have other things like that which all require power and so i think the opportunity is right is you have a number of different processors that sit in these racks that we can provide power for and that we've been expanding that all sit within our communication segment but i think we're as usual right we're not going to talk about specific content layers especially for specific customers okay my follow-up i wanted to ask about

Distribution channel inventory, I know it's been running lean. Is it still, you know, lean relative to, you know, where you would normally, you know, place your distribution inventory? And then, as well, maybe if you can talk about the sort of inflationary-related pricing trends that you have to pass along.

I'll take that one. With regards to our distribution channel, we don't have a great deal of perfect visibility there. But what we have seen, at least in 2025 and carrying into 2026, is that the channel has been very lean. And that implies to us that we're shipping to what demand is at the end market. But beyond that, we're looking good.

For the pricing, cost of pricing, Yeah, some of the cost is higher, okay, and we see a lot of activities, okay, so we will keep, the goal is that we're keeping our margin profiles.

Yeah, I think, and just to add to Michael, I think we don't, we're not looking at a broad base across the board, but there are places where, you know, input costs have gotten higher people are asking for expedited supply chains and things of that sort. And in those cases, yeah, you could see us raise prices to stay within our gross margin model.

Thank you.

Thank you. Our next question comes from Joe Quattrochi with Wells Fargo. Your line is open.

Yeah, thanks for taking the question. Maybe just to follow up there on the gross margin. I wonder if you could just share any of the puts and takes on the guide. It just feels like, you know, obviously very positive revenue acceleration and kind of not a ton of follow through on gross margin kind of still stay in that range.

Yeah, okay. Again, I said the margins in the last couple of podcasts. Margins on the low end. And although it's in our model, it's on the low end. And we still improve the yields on the modules. And I think that we don't have much of a headwind. We're moving up. But I don't want to give you a false hope that we're going to jump very high. That's not NPS. We don't do that kind of thing.

I'll expand a little bit on what Michael just said. Historically, we've been very consistent with delivering to our gross margin guide. For the last four quarters, we've been flat at 55 and a half, which is at the low end of our gross margin model for growth, which ranges 55, mid 50s to upper 50s. For Q2, as you notice, we did have the confidence to increase incrementally our gross margins, mainly because we've gotten better visibility to our backlog. We saw this happening in the fourth quarter of last year, and it's continued into the first quarter of this year. So that has, again, given us some confidence. We do, however, do see some strong headwinds, potentially in the second half, and so we're remaining cautious for the guide in the second half of the year.

That's helpful. Uh, maybe just on the robotics socket opportunities you talked about, you know, up for grabs or to win this year, or those, do we think about those as being incremental? So I think you talked about $150 a content, like for humanoid back at the analyst day, is that the right way to think about it? Or are those expanding opportunities?

And it, it, it really varies. And I came in, um, humanoid is the most visible. You always see some dancing robots and I came in, uh, those kinds of, and, uh, What we focus on is in the robotics. If it's remote and without a power cord plugging the robot, and those have the battery operations. And so our battery management product plays a role in there. The other one is the AI side, the compute side, for power up the GPUs. And these are automated control units, and also as well as these sensors. And the other segment is the actuators, the motion side. That's the overall we sell. We offer for the robotic companies. And many applications is in actuators. And they can be in medical assist for rehab purposes. We see those kind of things happening. For the dialogue content, go back to your dialogue content. It's very difficult to say. It's a variety of applications. We sell in chip and to selling modules. And so the dialogue content is also different. And it's very difficult to judge. But the trend is these robots will happen. and the world will be a lot more automated, and you can assist the human to do a lot of things, okay?

Thank you.

Thank you. As a reminder, to ask a question, please press star 1-1 on your telephone. Again, that is star 1-1 to ask a question. Our next question comes from Chris Casa with Wolf Research. Your line is open.

Yes, thank you. Good evening. I guess the first question would be about the ED segment. And if you could talk about the growth on merchant solutions versus ASIC solutions this year and, you know, what you're expecting with regard to content. I know you've got a strong position in both, but do you expect outsized growth in one area or the other? Any color you could provide would be helpful. Thank you.

We don't divide it into these learning side and influencing side. And frankly, we don't know how to separate it. And they could use a similar product. What we do is Why are we winning all these assignments is because the power density, as I said earlier, okay? And then nobody wants to waste the power. And efficiency is, power density is directly related to power efficiency. And so they want a smaller size and they want to have a higher efficiency. It really doesn't matter to us which segment.

Chris, the only thing I'd add, right, is I think we're comfortable raising the floor from 50% to 85%, not because there's been a fundamental change in the growth drivers or how we're approaching the market. It's really, as you know, our more comfort about what's in backlog, and we've seen that extended ordering pattern. So I think, to Michael's point, you know, I don't think we subdivided the content and volume, but I just want to make sure you know that I don't think anything's changed other than being able to see more orders in the books going forward.

Got it. Thanks. As a follow-up, if I could ask about the auto segment. And you talked about that being flourished in the first half with some growth in the second half. You know, obviously, auto has been a little more variable in terms of, you know, its recovery. You know, there was some data to China, which was a little weaker in the beginning of the year. You know, perhaps you give some color on the visibility you have at auto and why you think that starts to grow again in the second half.

I don't pay attention to these, which one is strong, which segment is strong, which continent is more strong or weaker, because these are chasing the market. We're not chasing the market. Whatever happens, we have the product ready, we can deliver. Tony, you can talk about it in year terms. I don't pay any attention to it.

Yeah, I mean, I can add a little bit more there. I think, Chris, the shape of the year, as you said, right, our expectation there hasn't necessarily changed. And why we've talked about seeing that ramp later in the year is really on our belief on one of some of these designs that we previously won come to market. We can't control when our customers ramp. But the pipeline in auto has been expanding, and based on our current belief, we would expect to see that ramp later in the year. So, again, as always, right, we'll monitor as things go through, but that's our belief at the moment.

Thanks. Well, the bottom line is we're winning socket, and we're expanding our market shares.

Thank you.

Our next question comes from Kelsey Chia with Citi. Your line is open.

Hi. Hi, Mike and Tony. Congrats on the results. Could you talk about the rationale behind focusing on silicon carbide for 800 volt step down while focused on gallium nitrate just for the lower voltage, lower power segments? It seems that some of the peers are also using GaN for higher voltage step down. how would that influence their competitive positioning?

It's a long question. Okay, it's a long answer. Starting, okay, I said I didn't believe the game, okay? And I still don't believe for higher powers, okay? I mean, we still have to be approved of that in the market segment. The reason we use the silicon carbide is... These devices are proven in the history, like 20 years ago. They're making dials. The materials are a lot more reliable. And there's some fundamental issues. We started this, tried to improve it at the start of 2016. And as a result, we have deep know-how. And to use these silicon carbides. And the MPSs, unlike other companies, we don't sell silicon carbide first. These are passive semiconductors, passive device. And we always integrate it into our modules. So that's a kind of short story for you.

Thank you. Got it. And I know that the team historically has been able to gain share in tight supply environments. Could you talk more about your supply chain management strategy and also your confidence in meeting customer demand if other suppliers face capacity constraints?

We, throughout our history, if you look at it,

especially during 2021, so these are after COVID, okay, it happens. And NPS always listen to our customers. We don't play a passive role. When the customers tell you to pull in too late, okay, We have actively, preemptively to build these inventory, get these inventory ready. And our product life cycle is very long. So we don't have any materials and like a large amount and scrapping. And we know this one, sooner or later will sell. And again, if you ask me where these products are ramping, I don't know, plus or minus a year, it will stay. And we don't mind having a little higher inventory, although in the last recent quarters, we cannot have enough to build up.

Yeah, I just think the last thing I'd add, just so it's really clear, is nothing about our outlook or anything we said about enterprise data floor is because we see any constraints in the supply chain. It's something we've continuously stayed ahead of. So the root of your question, Kelsey, was whether or not the 85% floor was limited by something. That's not an issue right now.

Got it. Thank you.

Yep. Thank you. I'm showing no further questions at this time. I would now like to turn it back to Tony Bailo for closing remarks.

Thank you, Operator, and thank you all for joining us on this conference call today. I look forward to speaking with you on our next call for our second quarter of 2026 results. Thanks, and have a great day.

This concludes today's conference call. Thank you for participating. You may now disconnect.