MPWR
#Sure.
<UNK>, thank you very much for the question.
As we look at 2017 and 2018, certainly going into the Kaby Lake, we benefited significantly by having the reference design, and we've been able to see a lot of very good traction for our power solutions.
Because as we mentioned in the script, the efficient overall efficiency and the small form factor.
So as we look at the current year, we continue to see the similar growth rate as we've experienced in the previous generation of Intel products.
Now as we look out to the product, which I believe you are referring to, of Intel's next generation, Cannonlake, which I believe may come out at the end of this year or in the early part of 2018, we go from not only being a reference design, but also, we have been designed into their core product, which is a significant enhancement over our previous position.
So we remain very optimistic and that relationship for the high-end notebooks.
<UNK>, <UNK>.
Let me add on.
I'm very aware, like any other investors, that notebook is associated with lower margins.
And however, we develop based on the QS Mod technology.
We developed those products and these are very unique ones, and we're only focused on size constraint and requires ---+ mobile longer runtimes, which is a very highly efficient, and also it is a time to market, because our products it is very easy to use.
So we only focused on those high end markets.
As I see the mobile market segment, it's only one of the product lines, and we're not really concentrated on it.
We really focus on the balance to growth in the overall MPS.
You mentioned exactly right.
All these ---+ all the other market segments, MPS couldn't within the industrial, even auto and medical, and for some of the products segments, so we could not address it.
And we think the long haul, the high-voltage SOI is the best way.
So it took us a couple years to develop that technology, and the first products, the first few products will be in the medical market segment.
Both, actually.
This product is implemented in the new foundry.
There are a number of opportunities that we are designed into, in automotive.
I think that our initial footprint, when we started out in the area four years ago, was definitely in the infotainment, and now we have moved into any of the lighting systems, a lot of the systems that are either in the body or designed into sensors.
We are into some of the light ADOS areas.
So I don't think that we are necessarily restricted in any way, and that I think we have a broad set of offerings for automotive.
And as we referenced, we've had design wins and a lot of momentum that we expect to continue out into 2018 and 2019.
I think with server, we feel very positive and optimistic, and that optimism is due to a lot of the reference designs that we have, in addition to the fact that in the next generation, Purley, we are going to be not just increasing in the number of OEMs that we will be working with, but also, we will be increasing the dollar content, going from something in the mid-teens up to the high $40 on a per-server basis.
So, we see as the rollout occurs here in the second half of the year, that we should get some good momentum, and that we really should see some sales gains occurring in the early part of 2018.
I think to begin with, on the servers, this is an area where we had essentially zero market share just as recent as a couple of years ago.
So this is almost a continuing Greenfield opportunity for us.
Obviously, there is a couple of very dominant players in this market, who are very well established as far as their relationships, as well as the technology.
The feedback that we've been receiving, particularly in the area of cloud computing, that we are most interested in being able to take advantage of, has been very positive.
We think that we have unique offering that sufficiently differentiates ourselves in order to be able to get the design win, and also to command very attractive ASPs and margins.
I think in an earlier call, that we allowed for the potential of being between 10% and 20%, and again, I think that's a long-term opportunity, and what we want to do is remember there is well-established competitors here, and that we are starting from a very small space.
Let me add something, and we can divide into what the market share means.
You see, our servers are pretty steady growth, and we will continue to see the acceleration in the end of this year and next year.
So which are these areas.
A few years ago, our [point and below] product and penetrated into server now is widely adopted, and across the board.
Two years ago, we introduced electronic fuse, and now became almost a sole-source for some for the first tier server makers.
And from core power, we penetrated in the last couple years, we are penetrating the second-tier server makers, and now as we are growing the revenue.
And also last year, we penetrated a few first tiers.
However we emphasized not on the bulk of the volumes for a common footprint, we are not participating in that, because those are lower-margin products.
We only concentrate on highly efficient, high frequencies.
So those servers require that, and we believe in the longer term that's the market trend, and we will get a majority, we will get a high percentage of our market share in 2018 and 2019.
The programmable modules, we are launching it already and you will see our ---+ we are still selling through the traditional channel, however the new website will be delayed a little bit, but it will be either in March or in April, we will see the new website.
If I can add to this, there is a continuum here, where what we are beginning to see is good traction with regard to our pre-designed modules, where they are generating a good amount of money, good amount of revenue on a quarterly basis, and than what we expect to do is introduce the new website, and that will be how we will launch the field programmable modules, as well.
I think that everything is tracking exactly as we had hoped it would.
We cannot comment too much, because that's in a courtroom in the legal proceedings and that's only thing we said, MPS will defend vigorously our IP.
We think in the second half of this year in the server side, the revenue will ramp.
Of the design-in activity, even though in the core power, even the core power, we still will gain a significant amount of market shares.
And those are not ---+ may not be in the mainstream, but we have an order ---+ I'm talking about other first tiers, but it is a giant step for MPS.
I think as far as automotive, that's a continuation of the momentum that we've been generating in each of the last three prior year.
Whereas gaming, I think that we have some new opportunities that will be additive, and we should look for those to start to kick in, in Q3 of this year.
I think you are familiar with what our long-term model is, and we want to grow operating expenses at a rate that is 50% to 60% out of our revenue growth rate.
Certainly in 2016, we have mentioned that we had some excellent opportunities as far as generating new product investment, as well as sales and marketing resources, as well as the investment in our fourth fab.
And we expect to continue to invest in all three of those initiatives, albeit at a lower rate of growth in 2017, and we do not plan to add headcount at the same level as we did in 2016.
Sure.
I think just the way you position that comment is actually very helpful to understanding the dynamics here.
We actually have three, four, or five unique opportunities that are coming on stream in 2017.
And when we look at the timing and the order of magnitude for them, I think it is good to be a little bit cautious, only because there's certain events that are not 100% in our control, and those that are, we have some level of execution risk.
So as we look ahead to 2018 we believe that those elements will all have sorted itself out, and that we will be able to fully capitalize on the ---+ take advantage of these opportunities.
Let me add on.
To me, the 2017 is done.
All the designing, products, I don't think our customers can change it.
And it would take extraordinary effort to change that.
And so, when the revenue happens, and again, many particularly in the cloud computing, some of the notebooks, some of the servers and some of the data centers and these are depending on our customers.
And also the third-party really the product like Intel, the processors.
To me, within the plus or minus of a few months.
So related to other market segments like auto, this is a very steady state of growth.
We see a lot more designing activities in the last couple of years.
That will all translate into revenues.
Second half of 2017 and 2018.
And at the same time, don't forget we still have a high-end consumer business I've seen IoT will grow this year tremendously.
Frankly, I see the very similar growth rate, and the Company designed it that way, very balanced the growth, and growth at a high rate.
Right.
I would have to agree with <UNK> there, that I think that you would be limiting the message to focus solely on servers.
We again are very excited about that opportunity, but not at the expense of what we are seeing with the high-end notebooks, what we are seeing with the gaming opportunity.
And <UNK> brought to light what we are seeing with appliances through the Internet of Things in high-end consumer.
I think if you look at how we progressed gross margin in 2016, we went up 10 to 20 basis points quarter over quarter.
So we ended up with the gross margin in Q4 that was 40 basis points higher than the year before.
And I would expect a similar trend line to occur.
You are right, that a lot of the new revenue growth is at higher margins, and we're also seeing some of the investments we made, particularly with the new fab, that those should also generate improvements to gross margin.
But the thing we want to manage first and foremost is very predictable, modest as I said, 10 to 20 basis points increases in gross margin, and to the extent that we can afford to add in lower margin business to accelerate revenue growth, that's really what our business model is based around.
Exactly.
And including other components down the road.
We think this is a really, a game change.
We can take a look at other opportunities and the technology that we targeted.
So we will be able to deliver single much more cleaner, and also we integrated a lot more than the silicon technology is capable.
It is in production now and sales volumes are very little, and very ---+ at the initial stage.
And these are mostly for industrial applications, smaller, and also smaller customers.
A variety of them, including some of the small customers in the consumer space.
We will really emphasize the website, which will launch in March or April.
I think that there's also a longer-term opportunity in the communications market for the field programmability, so it is an interesting product family, where we are trying to encourage more these low end, small volume, industrial and consumer opportunities, but at the same time, we see a longer-term opportunity in the wireless infrastructure for the comms market.
I forgot about the programmable product for telecom, for the infrastructure.
We launched the product and again you can see on YouTube, you can see on our website, you can parallel all of them from 20 amps to all the way to 1,000 amps and in the APAC show in March, we will demonstrate something like a 1,000 amp or 2,000 amp solutions and those are one-of-a-kind.
Well received among the telecom companies.
I think at this point, and again let's talk about the nature of the market.
You've got the gateway wireless, which tends to be a little bit low end and has some characteristics that are similar to consumer.
And then you have the higher end network, which as we were just talking, we believe has great promise for us.
We are very committed to that part of the market.
As we are just introducing the products now, and while the feedback has been very positive from the telco companies, it is like any product release.
It takes time, and this tends to be a lumpy marketplace where you can, if you win a large customer, you can have a significant order.
But the time it takes to win the trust and win the relationship, and demonstrate the value of your technology, it makes it a little hard to predict.
So I think the way we intended to look the comms market physically any quarter plus or minus $1 million, and there will be a point of inflection, but it is probably later in 2018.
Very much, I agree.
Yes.
We made the investments in order to be able to manage the growth for 2018 and 2019 and even beyond that, and it is not just on pure capacity, but as we are referencing, as far as a partner to help us with the new technology, we feel very, very well-positioned.
That's a very good question.
We are also puzzled.
As you have seen MPS started about four or five years ago, have a transitional to more diverse market segments.
And last year, I hoped that we had every quarter as consecutive growth, with the lack of Q4.
But Q1 Q2, Q3 and Q4 is shy of it just a little.
And so obviously the pattern is changing, and what we will see probably this year is a very similar or even, I can hope, I still hope we could have a consecutive quarter to quarter growth for four or five quarters in a row.
Great.
I would like to thank you all for joining us for this conference call, and look forward to talking to you again during our first-quarter conference call, which will be most likely at the end of April.
Thank you, and have a nice day.
