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Operator
Greetings and welcome to the Semtech Corporation's second quarter fiscal year 2025 earnings call. At this time, all participants are in a listen-only mode. If anyone should require operator assistance during the conference, please press star zero on your telephone keypad.
Paul
A brief question. I'm moving towards us. Driving up demand for Semtech's world-class portfolio of product, technology, and services. Through discipline, the investment, innovation, and efficiency will develop even more differentiated solutions that underpin the critical business needs of our customers. In so doing, we expect to achieve solid organic growth, SAM expansion, market share gain, and margin expansion. Third, energize our people and elevate our winning culture. I have been hugely impressed with our talented and committed workforce and leadership, but we can do more. We will invest in our people, align around a clear vision and focused strategic imperative to accelerate results with a winning mindset and high performance culture. Moving to our second quarter results, I believe Semtech has executed well to the established strategy as demonstrated by solid second quarter financial performance with a sequential revenue growth across each of our business units and a favorable outlook for our third quarter that forecasts the acceleration of our growth. For the second quarter, infrastructure net sales were 52.9 million with net sales for data center of 27.2 million, up 28% sequentially and up 37% year over year. In hyperscale data center applications, net sales more than doubled over last year and were well supported by strong demand for a fiber edge transimpedance amplifier or TIA and laser drivers for 400 gig and 800 gig optical modules and a tri-edge 50 gig PEMFOR product in 200 gig and 400 gig active optical cables. We have noted increasing CAPEX targets reported by hyperscalers and incrementally, AI data center markets are moving towards us. Our analog solutions provide substantially lower power and lower latency as well as significantly greater value compared to the retimed DSP solutions. My meetings with the chief system architect in data center ecosystems since joining as CEO confirmed that my belief that the transportation of bits within data center has by far the greatest power optimization opportunities. Lower power consumption and latency reduction for transport are key considerations for AI computing. Delivering on these transport opportunities will allow a greater allocation of power to compute and memory and the Semtec team has every intention on delivering our low power, low latency solutions through embedded customer engagement and our depth of analog expertise. Semtec's copper edge continuous time linear equalizers have a well documented application where we partnered with Nvidia to implement low power, low latency active copper cables or ACCs for black weld racks and pods. For our 200g copper edge linear redrivers, we have received the purchase orders from ACC cable manufacturers and expect the shipments to start in our fiscal third quarter in limited quantities, a nominal ramp in the fourth quarter and acceleration in the next fiscal year. Qualifications are on schedule and we currently estimate our annual opportunities specific to the single platform exceeds the floor case we provided last quarter. That said, Semtec's ACC opportunities extend beyond a single platform and a single customer. We estimate data centers currently deploy tens of millions of direct attached copper cables or DAC cables per year. These DAC cables are passive and as data rates and cable length increase, we expect there will be natural progression from DAC cable to ACC to meet signal integrity requirements. The market is moving towards us and replacement of only a small fraction of DAC cables to ACC will represent a substantial increase to Semtec's SEM. Indeed, Semtec is currently engaged with a number of companies in the AI ecosystem on this set of opportunities. On this front, while we believe standards bodies and MSAs have their place in this market to promote interoperability and backwards compatibility, the time to develop and approve those standards inevitably extends the time to deploy. We believe the pace of data center innovation is optimized with Semtec's direct engagement with our end customers and allows us to create a purpose-built solution for hyperscalers to address their specific challenges. We are absolutely at the right moment to adopt this approach. I expect direct engagement will accelerate Semtec's time to revenue and enhance top-line organic growth. It is this top-line organic growth that allows for prudent investment and I believe my prior experience growing a business while operating in a leveraged situation as well as in a highly cost-conscious EMS environment well informs my decision-making process in prioritizing disciplined investments. My expectation in this investment must deliver meaningful returns to shareholders. In linear pluggable optics, based on our engagement with a number of key partners, we believe we have a path to LPO shipment by the latter portion of FY26. Similar to active copper cables, LPO represents an opportunity to deploy a low latency, low power solution in the optical space. With annual optical transceiver consumption at approximately 30 million units, a fraction of this market converting to LPO represents a substantial expansion to Semtec. A world-class TIA is the key to successful LPO deployment and I'm certain Semtec's TIA fits the requirement. I have first-hand knowledge, having selected Semtec as my first choice TIA supplier to deploy silicon photonics product at a prior company. Our class-leading TIA performance on the receiving end well positions us for LRO opportunities as well and we recognize there are potential applications where LRO is suited to meet customers' interoperability requirements. Moving to Pong, net sales were 20.4 million within expectation following a robust first quarter and up 49% year over year. Pong demand, especially the 10 gig, remains strong with the total consumption increase of 41% year over year. 50 gig is on the horizon and we're looking to expand this business on a global level. Regarding other products in the infrastructure and market, wireless net sales declined but remain within expectations. In wireless, we're continuing the qualification process with our tri-edge and fiber-edge wireless platforms for 5G advanced and are actively engaging with key partners like Ericsson and Nokia. We stand ready when this market rebounds. There were a few other small sequential net sales declines resulting in a 5% sequential decline but a data center and signal integrity segment each grow subsequentially. Moving to our high-end consumer end market, net sales were 37.1 million, a sequential increase of 7% or up 9% year over year. POS ticked up sequentially and increased 34% year over year ahead of what we expect to be seasonally strong Q3. Net sales in high-end consumer TVS grew to 26 million, up 4% sequentially and up 42% year over year. Our market share in consumer TVS grew at a double-digit rate compared to last year and we believe we are winning on technological and operational performance. I'm very pleased this growth is broad-based as we expand on platforms and applications. The overall ESD threat environment has been increasing. Higher performance silicon reduces the amount of expensive on-chip real estate available to dissipate surge energy. This trend increases the importance of high-performance off-chip protection SEMTECH offers. This is yet another example of how markets are moving towards us. We continue to grow our market shares at not only the world's largest consumer electronics company but in other North American and Korean companies as well. Indeed, our consumer TVS engagement in Korea recently resulted in design wins in the industrial and automotive space where this key customer is winning shares. This is a great example of how our direct customer engagement approach is solving customer problems across a number of their markets and resulting in increased SEM for SEMTECH. Our class-leading, per se, proximity sensing products continue to perform well with design wins at a key Korean smartphone manufacturer. While allowing our customers to meet specific absorption rate standards is a great use case for per se, gesture controls are a substantial source of demand for this product. Per se's class-leading 3D sensing and auto-fiber sensitivity is meeting all exceeding end customer requirements for gesture control features in variables, mobile audio, and smart glasses. For the second quarter, industrial net sales were $125.3 million, up 8% sequentially. LoRa-enabled solutions had net sales of $28.7 million, a healthy 34% sequentially increase, and a 72% increase over the prior year. LoRa consumption in industrial applications continues to grow, and I am pleased that the development of the LoRa-enabled solution has been able to bring the same momentum over a broad range of applications from healthcare, smart utilities, and smart cities to factory automation with recent deployment in automotive facilities. A LoRa-1 expert from Mercedes-Benz presented his company's success story at a LoRa-1 live event in June. Their implementation resulted in what they characterized as enormous cost savings. It gave me great pleasure when an end customer becomes a LoRa advocate and demonstrates use cases at Mercedes for just one reason as to why I am excited in LoRa's future and why Semtech is fully committed to LoRa and its continued innovation in ecosystem expansion. I plan to attend the things conference in Amsterdam in late September to meet with ecosystem leaders and strategize our path to democratize the LoRa standard and accelerate a proliferation. Our IoT systems business recorded second quarter net sales of 52.3 million, up 8% sequentially, and consistent with our analysis that the business has reached a bad rock last quarter. Bookings in the first quarter had healthy sequential growth, and second quarter bookings grew from there. Also, channels and customer inventory levels have overall reached the normalized levels. In our module business, we had a number of red cap design wins demonstrating continued trust in Semtech's product across a number of core network equipment customers that demand near perfect uptime and performance. Geopolitical considerations remain a tailwind for this business on a number of fronts, and we are experiencing renewed engagement with some customers we believe due to these matters. Our business in asset tracking applications has benefited especially as government and security related users constitute a meaningful portion of this market. Government end users are becoming more educated on risks, especially after realizing their vehicle fleets are being tracked with geopolitically sensitive components. We are pleased to have launched a Canadian instance of Air Link Management Service with SME's local data residency requirement, which is particularly important for government and public safety users. The government related business is a natural adjacent market with Semtech's cellular system solutions. Lastly, we started production of our own TAA qualified facility to serve increased demand for TAA compliant products. This facility allows us to better support continuity in supply and to elevate our support as we aggressively pursue US federal opportunities. Second quarter net sales for a connected services business were $24.3 million with noteworthy design wins in remote monitoring, sleep tracking, and healthcare. Also of note, we collaborated with Console Connect, a leading network at service platform to expand Semtech's connectivity coverage across the APAC region for our air vantage service. We believe this collaboration underscores the commitment to offer best in class network quality. In the industrial TVS, solutions are required to address increasingly harsh ESD environments as factories increasingly automate. This is where markets are most likely moving towards us. We continue to expand our product portfolio with innovative solutions to address critical customer needs. Now let me turn the call back to Mark.
Mark
Thank you, Hong. For the second quarter, we recorded net sales of $215.4 million, up 4% sequentially. Net sales trend by end market, reportable segment, and geographic region is included on slide 16 of the earnings presentation. Gross margin was 50.4%, up 60 basis points sequentially and up 80 basis points year over year, reflecting favorable mix and cost controlled overhead spending. Operating expense were $78 million, a 9% year over year reduction. This resulted in operating income of $30.5 million and an operating margin of 14.2%, up 200 basis points sequentially and up 60 basis points year over year. Net interest expense was $20.5 million in line with guidance. We recorded net earnings per share of 11 cents based on the diluted account of 71.8 million shares. Adjusted EBITDA was $40.5 million and adjusted EBITDA margin was 18.8%, up 270 basis points sequentially and up 240 basis points year over year. Moving to the balance sheet, we did the second quarter with a cash balance of $115.9 million, with working capital changes largely corresponding to revenue and cost of goods sold. Inventories increased $7.5 million or 5% sequentially, in part to support higher expected third quarter shipments and to carry a nominal amount of wafer bank, supporting active copper cable orders, but are down 13% year over year. Principle outstanding on our debt was $1.2 billion, reflecting the convert equalization completed at the end of the second quarter. Free cash flow for the second quarter was an $8.4 million use of cash, primarily reflective of working capital changes, and we did not draw on our revolver. Now turning to third quarter guidance, we currently expect net sales of $233 million, plus or minus $5 million. We expect net sales from the infrastructure and market to increase sequentially, with data center applications leading the growth. Infrastructure is expected to provide the strongest near term tailwind. We expect net sales from the high consumer market to be up, with typical seasonality benefiting the SEND market. We expect industrial net sales to be slightly up as recovering booking activity from the first quarter carried into the second quarter. Based on expected product mix and net sales levels, gross margin expected to be 52%, plus or minus 50 basis points. At the midpoint of guidance, this would be a 160 basis point sequential improvement. Operating expenses are expected to be $81 million, plus or minus $1 million, resulting in operating margin at the midpoint of 17.2%, which would result in a 300 basis point sequential improvement. We expect net interest expense to be $18.8 million, reflective of debt reduction and a tax rate of 15%. These amounts are expected to result in a net earnings per share at $0.23, plus or minus $0.03, based on a weighted average share account of 70.6 million shares. Adjacent EBITDA is expected to be $48.7 million, plus or minus $2.8 million, resulting in EBITDA margin at the midpoint of 20.9%, which would equate to a sequential increase of 210 basis points. Guidance at the midpoint contemplates growth in net sales, improving gross, operating and adjusted EBITDA margins, and higher diluted earnings per share. With that, I now would like to turn the call back over to the operator for Q&A.
Operator
Thank you. We'll now be conducting a question and answer session. If you would like to ask a question, please press star one on your telephone keypad. The confirmation tone will indicate your line is in the question queue. You may press star two to remove your question from the queue. The participants using speaker equipment may be necessary to pick up your handset before pressing the star keys. In the interest of time, we ask the participants limit themselves to one question. One moment please while we follow up for questions. Thank you. Our first question is from Cody Acree with the Benchmark Company. Please proceed with your question.
Cody Acree
Thanks guys for taking my question. And Hong, congrats on the good first quarter out of the gate and welcome. Maybe Hong, if you can talk about your active copper cable expectations. You mentioned a TAM that was larger than the TAM that was given by Paul before his departure. If you can maybe go through the elements of that TAM calculation, whether that's a unit volume, an ASP basis, or just a total available addressable market would be great.
Paul
Cody, thank you very much. So thank you for recognizing our position and role in this very exciting market opportunity. And as I mentioned in the prepared remark that in the last quarter, we gave a floor case based on the number of racks and expected ASP share allocation for a specific use case from a specific customer. Since then, we have expanded our engagement with the customers. And right now we have several customers discussing with us the ACC opportunities. And we're very excited about the total availability and total opportunity is above and beyond the floor case we guided. And we will see this ACC opportunities continue to expand. As you know that there are a lot of DAC cables, which is a passive copper cable in the data center. And installation base might be tens of millions. And as the data rate goes higher, as the connection length goes extended, the signal integrity is going to be a challenge. So the progression from the DAC cable to ACC is going to be inevitable. So very excited about the opportunities. And let's see, you know, we will start seeing some revenue contribution from Q3 as we guide it. And then we'll be ramping from there. Thank you.
Operator
Thank you. Our next question is from Quinn Bolton with Needham and Company. Please proceed with your question.
spk06
Hey, guys. Let me offer my congratulations on a great quarter and a very strong outlook. I guess, Hong, just wanted to follow up on Cody's question just to really try to clarify that opportunity for the ACC, Tim. It sounds like you said your floor case at a single platform, single customer, you think now exceeds 100 million. I just want to clarify that. Or were you saying that you're seeing engagements beyond that first customer and you're talking about a TAM of north of 100 million as you start to factor in some of these other ACC opportunities? So if I could clarify that and then I had a second question if I could sneak that in.
Paul
Sure. Quinn, thank you very much. Yeah. Now, let me first clarify the TAM I mentioned in the prepared remark is with respect to the single platform, single customer situation. I feel that our actual opportunities is going to be higher than the floor case. In addition to that, we're engaging with multiple customers in the similar AI connectivity ecosystems for the similar purpose of low latency, low power, extended reach applications. Those opportunities is not counted in what I was saying increased opportunities compared to the floor case.
spk06
Perfect. Thank you for that clarification. The question I had was about LPO's. You mentioned in the script that you see an opportunity for LPO's to perhaps begin shipments before the end of fiscal 26. Wondering if you could go into sort of the use case you see for LPO's. Is that in back end networks for the GPU's or AI accelerators? Do you see that in general switch infrastructure or are there other applications where you see LPO's potentially being adopted? Thank you, Hong.
Paul
Thank you, Quinn. The LPO IC is more versatile and it can be used to scale out and it can be used to scale up as well. Because LPO's share the same characteristic as the ACC cables, low latency, low power consumption and when you need extended reach, you go through electrical to optical conversion, transmit over fiber and then the other end optical to electrical conversion. That conversion only consumes incremental amount of power. But the power consumption and latency are really similar to ACC. So the LPO can be used to scale out the cluster. But in the meantime when you need the ethernet scale out, scale up, so the LPO can be used to replace the DSP based retimed transceivers as well. Right now as you know that every year the industry consumes about 25 to 30 million units of optical transceivers largely based on DSP retimed solutions. The LPO can chip away even a fraction of that market, the opportunity is going to be tremendous. So that's why we're very excited about the LPO opportunities as well. And as I mentioned, we're being engaging very closely with the ecosystem partners and our TIA is commonly considered the best in the industry. And we hope our next refinement spin in the near term of the 200 gigabit re-driver will provide the extended performance and the functionality that the industry needs. And I'm still very confident that in the latter part of FY26 we'll be entering into the production with the limited quantities for LPO.
Operator
Thank you. Our next question is from Tori Zvonberg with Stiefel. Please proceed with your question.
LoRa
Yes, thank you. Welcome on board Hong and congrats on the strong results here. I do recognize there's a lot of interest in the signal integrity business, but I was actually more surprised by your recovery in the LoRa revenue. It was very strong in the quarter. It sounds like the momentum is there, it's going to continue going forward. So could you just elaborate a little bit more on what's going on there? Is this basically inventory replenishment from the last few years or are you seeing some big new programs actually adopting LoRa?
Paul
Tori, thank you very much. Yeah, that's a good question. I would say both. And first of all, the industry demand is resuming after the depletion of the inventory in the channels and so we are, as we reported, the POS increases and the inventory in the channel decreases from the last quarter and it's very natural that this market demand is bouncing back. The second part of the reason, the second reason of the growth as I talked about the Mercedes Benz use case and our development partners are finding new uses in the market use cases and because the unique capability of the LoRa one and it can translate into tremendous savings and the functionality enhancement in the system design and I believe this is really our key for grow the revenues even beyond the current level, current pace and that's why I'm very excited to attending the SINCE conference in Amsterdam and I got my days all lined up to meet with the executives of the ecosystem and to mobilize the entire system, creating more use cases like the Mercedes Benz and utilizing the capability that LoRa one can offer. So that is a great opportunity for us and it has been a good engine for our
LoRa
team. Thank you for the call in.
Paul
Thank you Tori.
Operator
Thank you. Our next question is from Christopher Rollin with Susquehanna. Please proceed with your question.
Christopher Rollin
Hey, thanks for the question and welcome Hong. My question was also actually on LPO and you also mentioned LRO as well. So I just wanted to know what the opportunity in LRO was. I assume it's also a high grade TIA but putting these opportunities together, do you think this could be a larger opportunity for you than ACCs or copper and if so, how much bigger? Thank you.
Paul
Yeah, Chris, thank you very much and that's a great question. So the LPO certainly is analog on the transmitting side and on the receiving side and there's some concerns in the industry, especially from the cloud service providers of CSPs on LPO. Their primary concern is that if the solution will be providing enough link budget for them to choose the different silicons on the switch side and then choose the different optical transceivers on the optical transport side and they have been benefiting from that optionality and multi-source agreement over the last decades because they need a lot of transceivers when they deploy a new data center. They need a lot of switches. They don't want it to be just locked by one's suppliers. So that has been the primary concern. They have all recognized that the LPO's provide low latency, low power consumption and even lower cost, higher value. They have no denial on that, but it's just not sure the link budget will allow them to exercise this option for multi-source agreement. And when I talk to many key architects and some of them, they say, you know what, we are pretty sure the receiving side, we can do that, but the transmitting side, you know, in the worst case, we do DSP-based retime solution on the transmitting side. That's still translating into tremendous power savings. That's an LRO. For us, either way, it's a winning for us because when they do LRO, all LPO, they tend to choose the best in class TIA product. I would say at this point, that's some type of product. We'll benefit from both. As for your second part of the question, you know, is LPO going to be representing an even bigger opportunity than ACC? I believe it's a good opportunity out there to replace, as I said, DSP-based retimer is an opportunity. But ACC, it can replace the DAC cable when the line rate increases to 100 gigabit per second and connection distance exceeding 2 meters for 100 gig. The DAC cable really cannot maintain the signal integrity needed. So both products are great opportunities in this AI-based connectivity era and has many years of runway. Thank you. Thanks,
Operator
Hong. Thank you. Our next question is from Harsh Kumar with Piper Sandler. Please proceed with your question.
Harsh Kumar
Yeah, Hong, let me add my welcome to you as well and very strong commentary on the quarter. So congratulations on the guide as well. My question is sort of on ACC. Could you help me sort of understand the scope and the size of this business? Are you the leader, you think, in technology? Are you the sole provider, for example, to this one large customer that you mentioned? And then my other part of the same question is, you know, technology evolves. This is the first generation of ACC. What do you think, or do you think Semtech has the goods to stay competitive in this market as other people look to get into the game? And maybe you could just help us get around what's needed to stay in front of this technological change.
Paul
Great. Thank you, Harsh, and thank you very much for your question. To address your first part of the question, for such a critical application, I think our customers have to use a multi-source, and we are one of the two sources, as I understand at this point. And certainly the guidance we provide is based on -50% allocation, but we have every intention to exercise our technology differentiation, and more importantly, at this point of time, the operations excellence. So to really provide the customers with shorter lead time, better downtime delivery performance, better quality, and that has to be a hallmark of the operations. You know, that's what I made a comment and initial observation of the differentiation of Semtech. So we hope we will be earning more than our fair share allocation in this, and so far it looks very promising. As for the second part of your question, how do we stay competitive? I think this part, the ACC, from the beginning of the engagement, the ecosystem was not sure that we would be able to deliver the performance and signal integrity as needed. Simulation shows good, but when you have the real IC integrated into the real product, it may not deliver the performance as simulated, but that's already behind us. And right now, looking really, really good performance,
Harsh
and
Paul
we are in the process of finishing system validation and product qualification. So we are preparing ourselves to ramp. As we do that, hand that over to the operations, our R&D team already started to get it a next generation product, like 400 gigabit per channel. How do we do that? And I think we can all count on the industry will continue to push forward with a higher data rate, lower latency requirement, low power requirement. And this is a sweet spot, and the market is moving towards us, and we continue to innovate. I do believe that best defense for the position is the aggressive development and engagement with the customers to provide the solutions they need at the time they need. So that's a way to, I do, I have the high confidence that we'll continue to lead in this area for a while.
Harsh Kumar
Excellent, Hong. Thank you so much.
Paul
Thank you, Hans.
Operator
Thank you. Our next question is from Scott Thorle with Roth Capital Partners. Please proceed with your question.
Harsh
Good afternoon. Thanks for taking the questions. Hong and Mark, congrats on the quarter and the outlook. Thank you, Scott. Mark, real quickly, I was wondering if you could repeat the LoRa number. I thought I missed that. And then, Hong, on the HTC opportunity, it sounds like you're ramping in line to maybe a little bit ahead of expectations with NVIDIA and the Blackwell design. But I'm wondering if you could talk a little bit about the timeline for some of these other opportunities, when you would expect them to commercialize given the current path. And a lot of the conversation has been around the opportunity versus DAC. But I'm wondering where AEC fits into the equation as well. Thanks.
Paul
So, Mark, you wanted to go first on the LoRa numbers? Sure. The LoRa
Mark
number, Scott, net sales for the quarter was $28.7 million. That's up 34% sequentially, up 72% over prior year. So very nice healthy rebound, and we believe that is sustainable.
Harsh
Okay. Thank you.
Paul
And I can address, Scott, your question about the timing of ACC ramp. And as I mentioned, that right now we're finishing up the system validation and the product qualification. Those are the last two gates before the volume production. So this – well, in Q3, we expected the shipment in the limited quantities, not gated by the demand, but they – there is going to be a cycle time from the FAP. We have already anticipated that, and we got the wafer bank and die bank built beforehand. So – but the real meaningful ramp is going to be in our Q4, fiscal year Q4, and then throughout the 2026 FY, and we expect pretty healthy demand based on the current PO and forecast. And then you mentioned about the AEC. You're right. So the ACC will probably first and that's where the ACC provide the signal integrity requirement, and – but reduced power and reduced latency. And then, you know, the DAC cables and a lot of backplane, when the new switch, you know, 100T switch deployed, they will be having a 224 gigabit service and the ports. So 200 gig becomes the Ethernet port. I will imagine the scale out, they will need a lot of – even the backplane connectivity is using the ACC cable, which will provide the signal integrity they need and low power consumption they need.
Harsh
Great. But, Hong, just for clarification, you've achieved a system-level verification, then, with the current customer?
Paul
Yes. So for the connectivity piece, yes. Yes. And – but of course, their system – you know, you involve in many other things way above and beyond just the connectivity. So that is a validation they're doing. Okay.
Harsh
Great. Thanks so much and congrats on the quarter.
Paul
Thank you. Thank you, Scott.
Operator
Thank you. Our next question is from Craig Ellis with B. Riley Securities. Please proceed with your question.
Craig Ellis
Yeah. Thanks for taking the question and, Hong, I'll echo the congratulations on a tenure well started with the strengths and the print and the guide. I wanted to see if I could get your help on sizing one of the businesses that you identified. So it's great that we're doing well with the lead active copper cable customer and you've framed up how big that business could be. I was hoping that you could give us some scope on how big the engagements with other customers could be next year. And then to your point on strategy number two that you mentioned in your prepared script, if we were to look at what's possible for these businesses as you exercise some of your own expertise in how they're directed, if we look out two to three years, how much bigger can the business be than where it will be as we look at it next year? Thank you.
Paul
Yeah, Craig. Thank you very much. Great talking to you. Thanks for your question. So on the ACC, beyond the specific customer, beyond the specific platform, we're in an early stage of engagement at this point. But we're excited about the engagement with the customers. They present their challenges and high value problems. We think that is right in our alley of the solutions we can provide on the ACC. So we are still in the stage of understanding the requirement and quantify the opportunities. And it might be a little too early for me to give you a number for the next two, three years what the opportunity is going to be. But directionally, I'm very excited about that. And I think this is great. In my alley, I have a really extensive context and connections in the industry. We're going to continue to expand our reach and engagement with the industries. And maybe in the next earnings call, we'll have a better idea on the future opportunities of ACC beyond one platform, one customer. Thank you.
Operator
Thank you. Our next question is from Gus Richard with Northland Capital. Please proceed with your question.
Gus Richard
Yes. Thanks for taking the question. And congratulations on the results. I just want to ask about the competitive environment. Clearly, there's ESP versus analog. And I can think of InFi, Maycom, you guys, as competitors on the analog side in these high speed interfaces. Is there anybody else coming up that you see, anybody with a similar type of capability beyond the companies I mentioned? I'm just trying to get a better handle on the competitive environment.
Paul
Thank you, Gus, for your question. I think for the analog expertise, you got it. Those are the three companies, I will say, on the first tier. I'm sure there's new -and-comers. They're excited about the opportunities as well. It takes a while to establish this capability from the design to testing to many other things in the ecosystem. So in operations, it's at the right time and right place here to capture the enormous opportunities ahead of us. But as for the competitive landscape, you got it right. And I think both of the companies are very formidable. And we can never take it easy. So I told my teams, we need to be constantly paranoid and challenge ourselves, continue to run fast. And the only way to get our unfair share is by the fair performance and superb performance in technology and in operations.
Gus Richard
Got it.
Paul
Thanks so much. Thank you.
Operator
Thank you. There are no further questions at this time. I would like to hand the floor back over to Mark Lynn for any closing comments.
Mark
Thank you, everybody, for joining. And please visit our investor website at .semtech.com for a list of upcoming financial conferences where SemTech will be in attendance.
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