Analog Devices, Inc. (ADI) Earnings Call Transcript & Summary

Thanks. Good morning and good afternoon, everybody. I'm Rick Schafer, Oppenheimer's semiconductor analyst. I'm joined today by ADI, VP, Comms and Cloud, Andy McLean; and VP IR, Mike Lucarelli. So good to see you, Andy, and good to see you, Mike. So thanks for joining us. Appreciate it. I thought maybe we just go and kick things off with a conversation and then maybe save 5 or so minutes at the -- 10 minutes at the end for any Q&A from the audience. So those in the audience, just please feel free to queue up for questions as we go. So again, thanks for joining us. Great to see you guys.

Thank you. Pleasure to be here.

Thank you.

Andy, before we get started, I thought -- I was hoping maybe you could give a brief history of your background and the kinds of things you're responsible for and focused on at ADI?

Yes, sure. I'd be happy to do so. So once again, thank you to all of you for joining us. It's nice to virtually meet you. So as Rick said, my name is Andy McLean. I'm the Corporate Vice President for our Communications and Cloud business units, been at ADI now for 4 years. Prior to this role, I was responsible for fortune of our automotive business. And then prior to joining Analog Devices, I was at a combination of Texas Instruments and National Semiconductor for more decades than I care to share on this call. I got a little bit of a development background. At TI, I was responsible for a lot of the development activity, also on the automotive products there. But I am delighted to be here today and talk a little bit about my business and the -- what's going on in the industry.

Thanks. So speaking of your business, it might help people because we've got a pretty diverse crew signed up listening in. Just maybe spend a couple of minutes in terms of giving some background on the comms business and where you guys focus, obviously, signal chain, et cetera, and maybe even give a sense of maybe how the business splits now wireless and wired and just kind of get a little bit better feel for the business.

Yes, sure. So as I mentioned, the name of the business unit is communications and cloud which is a little bit of a euphemism for -- on the cloud side more for data center. But the topic today is primarily on the communications side. And there, there's really three parts to that business. It splits about 50% wireless, 50% wired. Within the wireless business, there's really also two halves to the business. One is what I would call this sort of well-known base station transceiver part of the business. And then the other half is actually more of a broad-based business where instead of focusing on the heavy integration levels that are required for the scale and base stations now, it's more a better collection of very high performance components, LNAs, switchers, some timing products that go together to make different types of solutions for more broad market applications outside of the sort of traditional base station market. And then overall, what we've communicated is that business, my business is about 15% of ADI's overall revenue.

And maybe quickly [indiscernible] on the call, maybe a little towards ADI. If you -- even before Maxim, we were more tilted towards wireless. We're about 2/3 wireless, maybe 1/3 wired, Maxim balances out. Now we're -- as Andy pointed out, we're about 50-50. I think we have good growth in both the wireless side and the wire. I think that [ we're comfortable ] with the wireless side, but the wire side also an area for us of an opportunity for growth. We had quite an undergrown market over the past 5 years, but we can say that on a different call.

And maybe just to add one thing I didn't touch on. Mike mentioned the inclusion of Maxim into the business. What that also brings is a more extensive power portfolio that previously we didn't have a stronger play on the power side in the wireless business. That's sort of rebalancing and growth that we might refer to. Some of that is going to come with a more extensive power play into the wireless business. And maybe we can get into that in a little bit more detail.

For sure. Absolutely. My next question is actually on 5G. So it's -- in terms of the upgrade cycle, I know it's a key driver of that business. I mean we kind of -- I think you guys have said that's a double-digit growth business. I know we certainly have written out enough times. I think -- in 2022, so this year, we're kind of finishing up year 3 of that upgrade cycle. Historically, if you study 1 to 4G, it's -- these are decade-long cycles, right, on average. And so with the tenders happening in India, and we see what Europe seems to finally be getting ready to roll I'm just sort of curious what you're seeing out there. As we look to 2023, not looking for any guidance for the segment or anything. I'm just -- so curious what you're seeing in terms of trends, potential growth. Are you seeing anything wonky like -- the whole group is kind of seeing some of this macro headwinds. I mean do you think 5G is going to be relatively resilient?

Well, let me start with the way you started the conversation, right? We're now in 5G, one of many Gs that we've had, right? So I think 5G is a little bit different in the sense there's a number of things. First of all, there's -- it's catching up in terms of data rates, right? So it feels like the wireless business has been constantly sort of chasing the pace of WiFi -- now closed the gap, right? So from just a raw performance perspective, I think 5G is entering a new level where it's catching up with some of the applications that historically the wireless solution has been exploited from. So that's one dimension. Another dimension and again, we're going to get into this, I think, a little bit later is it's not just about connecting cell phones, right? I mean that's the bulk of the application that 5G is targeting. But now we're getting into two other areas. One is private networks that we can unpack a little bit later. And then the other aspect of it is a lot of the new market applications, industrial applications. Connecting things rather than people that I think is a massive growth factor. So in terms of how long this will take to deploy, I think we're still at the early stages, quite frankly. I can also share that the activity on 6G is already very active. So we could have 6G actually coming and being layered in faster than, say, 4G layered over 3G. And I should be not surprised, I mean, the pace of development in many markets is just really expanding. And then the final thing, maybe just to add into a little bit is there's a lot of discussion about 5G being a lot about channel count, right? We've gone from 4T/4R systems to what is being deployed now, which is more sort of 16T/16R massive MIMO is quickly being overtaken by giga MIMO where there's discussion about 128 being the channel count. So I think the increase in channel count is going to also directly be seen to influence that sort of pace of development. So a long story short is we're at the early stage but we might see a more rapid pace of development in 5G rollout for some of the reasons that I mentioned.

I definitely want to come back to channel count because I think that's a big part of ADI's content story in 5G. But just to quickly tie up the regions, the geos. I actually have 2 questions in there. One, are you guys pretty agnostic? I mean is it better for you to see India finally line up and go next year? Or do you benefit disproportionately? Or is it all just sort of a rising tide for ADI, given how broad your share is?

Yes. No, good question. So yes and no. China is a one -- no, it's pretty obvious. We went to Huawei. So that one we're disproportionately beneficial to everyone's had the same ballpark there. The rest of the geographies, we have good share everywhere. We like to say, in 5G, the transceiver is what we always talk about. Remarkably, we utilized 70% share. That's actually -- [ a lot times ], you get because there's always a balance between 1 and 2. They only do [ 100 day 1 ]. If you look at the geos at North America and India are two especially strong deals for us, given our share. Two of those we're shipping into those geos. If you look to '23, you talk about India, I would say our share there is very well -- not very well, very high, and well represented. And we think that will be a good growth driver for our business in '23. Now the question is, India is growing, good thing about that. What happens in rest of the world. Europe, unsure. Most of that [ from the energy ] standpoint. Asia, also unsure. North America seems okay, but '22 is definitely a bigger year in North America than '23. Put it all together, I don't know what will happen in '23, but India is going to be a good role chart for the overall business on the wireless side for comms.

Maybe just to add one point, too. Usually, the rollout is all about CapEx, right? How much is what's it going to take to do this buildout. This year, and I expect it will continue into next year, a lot of it is about OpEx as well. So you see a correlation to the energy crisis and where the impact of those rising energy costs are most extreme to the expected rollout of 5G and the overall wireless infrastructure.

But I mean -- to counter that, I mean, we've got a lot of sunk costs in spectrum, certainly in the U.S. with C-band and everything. So at this point, in my own opinion, I'm curious if you share it, but I would think the carriers would have a need to monetize that at some point.

I completely agree. I mean, when you talk about the cost of spectrum, I mean, the dollar value of that spectrum is astronomical, right? My comment was more related to the geographical mix. I think we may see more exposure to a slowdown is where the energy costs have had the highest impact. And again, Mike's comment about Europe, a little bit less saw here in North America, some other regions have been less impacted by the rising energy costs.

And also on Mike's comment, if I heard you correct, Mike, you pretty much derisked China already. Is that fair to say for Andy's business? Is that...

Yes. It's super small percent of our business. They're probably still -- China comms is still probably 20-or-so percent. That's -- last March, you go back in '18, probably half of our business was in China. And when we did lose, we lost everything behind with geopolitics. One of that -- we had a great share in China. Geopolitics shut us down. Now the good news is the growth now is not about China, it's about North America, India, Europe, rest of the world and the broad market Andy pointed out and [ all the ] private network. So we derisked China, which is very lumpy and uncertain and now we've global deployments and new applications.

Got it. And Andy, my next question is something kind of good way to talk to you about just because I wanted to get your perspective, and there's lots of talk about architectures and what's changing with 5G, but -- and you hinted at 6G already. I mean, so I am just curious what some of the biggest changes are that you're seeing from an architectural standpoint as we move to 5G, and I'm really curious what your take is if you want to put your toe in that water pretty hot? But the millimeter wave argument, like how big a role is the millimeter wave going to play here? What massive line you hinted it to 128, double channel count, small cell, that just a whole kind of -- I know that's a lot, but I'm just curious how you're looking at what you're seeing?

Yes. Maybe just some sort of thoughts on that are routing in what we see, but also a little bit of a projection into the future and where we see more of the growth. So first of all, a lot of the conversation is about channel count. The introduction of massive MIMO and again, I used the phrase earlier soon to be giga MIMO gets you to that [ chart out ], right? That's the direction there. But in terms of coverage, we actually see a continued strong business in microcells that really fill in the gaps that you can cover with these very high channel count base stations. So that for me is quite interesting because, again, most of the conversation is about the transition to these massive MIMO base stations, but I think we're going to see continued growth in the micro stations. Small cell is always a little bit disappointing or underwhelming, right? There was a lot of expectations in how small cell is going to help grow this business. I think we may see a resurgence there as we start talking about private networks, right? When you talk about an enterprise level or even a small campus, maybe covering the floor of this office area that I'm in right now, that's more of a sort of small cell microcell maybe bridging into microcell-type applications than it is massive MIMO, right? So I'm kind of trying to introduce what I think maybe the less discussed portion of this in terms of the architecture change. I think we're actually going to see a resurgence in small cell as we get into private networks. I think we're going to see continued strong growth in microcells, even though a lot of the focus is on the massive MIMO platforms. So you also asked a little bit about millimeter wave and how we see that. Again, that's where if you look at what will be required, say, in these enterprise networks or campus environments. There, it's about the highest level of performance where you don't need the longest range, right? So that presents an opportunity for millimeter wave there. I think that's where we're maybe going to see more growth on the millimeter wave side as well, more and more so, in the -- like into those private networks.

And on small cell, your comment, I'm just to your perspective, small cell, everybody got very excited about it for 4G. It just kind of was a bust. I mean, relative to expectation, right? And so -- and I get exactly what you're saying about private nets kind of maybe driving that market go forward for 5G. What like -- what's the hurdle to adoption to date? Like what was the hurdle in 4G? What's the hurdle to date? I mean, is it...

I think it was just overtaken, right? I mean I'll give you my own personal example here, right? I lived in a rural area in Atlanta where I happen to be in a dead zone, right? So I have no option but to go get that femtocell and to give them the coverage level and the reliability that I need, right? And then we got enabled through WiFi. And that femtocell is now gathering dust on the caller on my office right. It didn't need it anymore. So I think it was a good solution at the time that it was needed. But that need went away pretty quickly when we got used to doing WiFi calls on our cell phones. I mean it just -- it can -- I don't want to say it became redundant because I think there was some placed on it. But the growth kind of met the expectation and then there was no need for more growth because it was replaced by an ultimate application.

No, it makes sense. And back on math in my mind, I don't want to beat that horse too much, but talking about channel counts with the macro base station stuff. I don't know if there's a -- is there a good rule of thumb as you look at your business over the next few years, like in terms of multipliers on ASP for ADI over 5G over 4G? Because I know there's a lot of pieces in that equation, you're going to have to assume so many or 128 count versus 64 count versus 32, right? I mean -- but I mean if you melted all that together, what are you sort of thinking in terms of -- yes, how much 128 are we going to see versus 64 or 32 or down the list? And what's a good, blended bump for you guys for content?

So again, I think there's different ways of looking at that right. It's clear that at least from our customer's perspective, they're looking to drive down cost per channel, right? 100 -- putting a number on that is really hard because it's not just about when they build these larger channel count base stations, it's not just about increasing the channel count. They tend to -- these higher channel count base stations tend to come with added features, added capabilities that kind of obscure that relationship. But in terms of your question about 4G versus 5G, I think the exciting thing for us is, historically, we maybe had hundreds of dollars on a 4G base station. We're now looking at thousands of dollars in that 5G base station now. Some of that is just driven by channel count. It's just more things going into that base station. But it's also the way that we can address more of the share, some of those features, will get more digital content beyond the -- radio, but historically has been our traditional business. So our share -- our ability to access that available market goes up pretty significantly with those high kind of base stations.

Two things. One, it's hard to say the channel average counts would be with 5G versus 4G. It's easy to say it will be higher. We know that for sure. It was a mix, it 16, 32, 64, 128 , also [ 4 and 8 ] channels also as well. Put all together, the channel counts could be 2x higher, maybe 3x, depends. That kind of -- the figures go out and like [indiscernible] going to be usually the early days that's a MIMO, that as you get coverage, you densify the network in more lower channel count, [ 4 to 8 ] macro base station or small cells. For as laid out, our business scales to channel. The transceiver part that stuff, more channels, more content is good. For example, our transceivers got 8 channels. So for 8 channel radio, 1 transceiver. And if it's a 64-channel, you need 8 transceivers. Now the content is not 8x because you get some value to the customer as well. But the dollar scale with it when you get some cost benefit to the customer saying not 8x, maybe did 4x in that system. So we win, they win.

Maybe just also to go back to your mix question because I give you just a few example. One of our major customers that I met with recently was looking at a network deployment that they were betting on. And they required 42 different base stations, different accounts, different features, different capabilities to service that deployment, 42. And that was a mix of very low channel count base stations where they just needed to add some coverage all the way up to the 64, 128-type base stations. So I think you're going to see some of these larger deployments a real mix across that spectrum from 4 channels up to even 128.

And I guess I'll just -- myself jump to that just real quick and talk about it. But you -- leveraging this content story with you guys in 5G, the way I look at it is what Mike said earlier, you know your share is growing in the market. And so is it -- I guess, is that the number? Are we going to be at 70%? Is ADI kind of confident it will just hold 70%, there's probably not a lot more to go there now in terms of share versus TI? Is there any room for any further upside there because it's obviously been a driver for that business for you guys?

Yes. So I mean, we're certainly targeting higher share, right? I'd love to target 80%. I think you're being a little bit generous in terms of what our share is. As this market grows, it's -- we expect and we're planning to remain the majority shareholder in that market. But as the share -- as the overall business grows and maybe becomes a little bit more fragmented in terms of the application space, it will be hard to maintain that sort of level of share. But I would say I mean in terms of what I would build my business plan on, we're talking more in the sort of 60%, 65% region, targeting higher.

Okay. No, it's interesting. I'm curious what like the value -- sorry, Mike.

I think when he says maybe a little bit more fragmented market, more applications, there's a chance to add new areas. So we could -- our hope is to hold the same share, but even if we maintain call it 50% to 70% share in net new applications, it's a net positive, but will [ targeting ] higher.

It's a much bigger [ pie ].

We also have new entrants in the market, too. And [indiscernible] to serve, I think we'll share in my opinion. I'm obviously a -- I'm a cautious guy. But I know our RF business, I know what we do on the comms side. It will be really good. And as ORAN does take off, everyone will be very excited. We'll care about share because we had longevity of the 5G cycle, margins and growth.

Sorry, just to add one more data point to, right, because I want to create some balance here. I talked earlier on about the fact that our overall wireless business is split about 50-50 between -- the top -- we've had all the conversation to date on, which is on the base station market and broader market. If anything, I'm actually equally excited, if not more excited about the growth in those broader market opportunities for other products that we have.

No, fair enough. And I just -- I should probably ask while we're talking about it, but I mean how big of a drag is -- or if it is at all is 4G now for you guys? Is that sort of -- is that business, I would assume sort of kind of rolls off and is obviously replaced by 5G, but does that create -- I don't know how much exposure you have left within your wireless business to some of the older stuff.

It's still sailing. I mean again -- I mean, just to throw out a data point, we were talking about it earlier. We've still got about 40% of the world's population with no high-speed access, no broadband access, right? Not to say that some of those deployments or some of those areas might be covered by 4G, right? So I'm not sure I would anticipate strong growth. And I don't want to say it as a drag. I'd just say it is continuing to be additive as we focus more on this next generation.

It's not -- as I said, it doesn't go as fast as 5G, but also not falling off of cliff. I think we've seen some fall in the past couple of years, but kind of flat line here. New areas adopted, grows other areas to move more faster 5G as a trade-off, we'd like to make 4G to 5G higher content for us.

Okay. And speaking of content, I mean, is it worth exploring that any more like what you said earlier, Andy, about some of the -- I think, Mike, you said something, too, about having Maxim in the fold and whether it's on the transceiver side of the RF side or whether it's on the power side? But I mean, in terms of like -- and I know we can go to -- and I certainly want to talk more about ORAN, VRAN in a second, but just areas of obvious content expansion for you guys above and beyond.

So maybe I'll start with what I'm most excited about, which is the power opportunity. Again, kind of linking things together here. When I talk to our customers, a lot of the conversation now is about the efficiency of those base stations. What can we do from a power domain perspective to improve that degree of performance. Sure, we're talking about higher channel counts, faster rates, but it's increasingly becoming a conversation about that power. And I think that's beyond the current energy crisis, right? I mean, if we -- if I just kind of link in the sustainability aspect, one surprising statistic for me was close to 2% of the CO2 emissions last year were associated with wireless base stations, 2%. So most of the conversations around emissions of the larger chunks, which is transportation and industrialization of industry, but 2% is not an insignificant number, and that's something that our customers are increasingly concerned about. That's anticipated to grow. The CO2 emissions on the energy usage is anticipated to grow 160% over the next decade. That's a huge growth factor. So whilst we will do everything we can to reduce that or to improve the efficiency and reduce that impact on the planet, it's a very significant challenge. So again, we -- I look at it from two aspects. I see a huge business opportunity for ADI to take more share on the power side. But there's also the environmental impact, which I think is equally as important.

I don't know if it's worth it. I don't know if you want to go there with me or not. But if I look at -- if I start to sum all this up between content and share gains and everything that's going on, if I sort of think -- and please -- I know hopefully, you will, Andy, pick apart my logic here. But if I look at sort of roughly rough numbers, 1.5 million macros probably deployed annually for the next, say, I don't know, 5 or 6 years at least. And then if you figure just kind of guess low and say you've got $1,000 of content and then plug in a shared number for you guys, like you said, Mike -- if we split the difference to what Mike said, maybe 70% share. This is, by my math, $1.5 billion business for ADI. Is that -- or can be, is that -- is there anything messed up in there? Like how would you pick on me for throwing that together?

I think you benefited by the law of averages, right? You're probably a little bit high, I think, on the dollar content for base station. You're probably also a little bit high on the share...

Also remember, China is a big market, a lot of big customer in China, right? So 10% share is excluding [indiscernible]. We can't ship to them, right? So we keep wallet of share overall lower. Maybe your logic isn't wrong, but it never works out that easy because there's so many flavors out there and the 1.5 million base stations [ you can call it ]. But the channel count is what matters. You can have more channels per average one year, the next year can be less base agent, but more channels, net-net, it's actually better for us. So it's such a different -- it's hard to do. People love trying to do the math like iPhone. One iPhone, 10 [indiscernible] contacts, using the app. And base station, there's two flavors, basically very tough.

Okay. Okay. It's just -- it's hard for me not to see this -- I mean this is a 10% CAGR-plus business in my eyes. Okay.

We'd agree with that.

Okay. Okay. Well, thanks for indulging me. And then if I could pivot back to ORAN and VRAN for a sec, I mean, especially since you highlighted it. I mean do you agree with the time line that's kind of out there? Folks kind of talk about ORAN, VRAN kind of taken off sort of 2 or 3 years from now. Does that seem realistic? What are the puts and takes on why that would happen sooner? Why that's the right time line or why it would take longer?

So I agree with your time line, but let me comment on that a little bit, right? Whilst ORAN is definitely a target market for the traditional players, Nokia, Ericsson, Samsung, NEC, et cetera, there's going to be a whole bunch of new entrants. I mean that's the whole [indiscernible], right? If we're transparent about it, right? It's about standardizing lines, allowing new entrants into the market. I think the risk factor there and how that gets -- how that impacts time line is the new entrant's ability to absorb this technology and deliver, right? And that's a focus area and actually, I think, the strength of ADI. We're looking at integrating a lot of the complexity that these new entrants will struggle to acquire. So we will do our part to allow them to come into the market sooner, maybe drive down the cost to the point where the market does take off quickly. But certainly in our planning we're not adding any significant contribution from ORAN until '24, '25. We're already getting some revenue from it today. We expect that, that will grow into '23, but not take a big uptick until '24, '25.

And is ORAN -- I think of an ORAN or VRAN operator as maybe being, obviously, smaller. And I don't know if that is going to translate, and you guys already have, I would say, pretty good gross margin and pretty good op margin profile. But I mean, is this -- are these going to be, I would assume, margin accretive within -- even within your business, your specific business, Andy, or I think it's going to need more help, it seems like?

Yes, exactly. I mean, I go back to what I said earlier, right? I think of a lot of the value that we're bringing is wrapped up in that decades of -- I mean five generations now of our radio products. So we've got a lot of value wrapped up in that. We're adding more value through the digitally oriented features that we're building into SoCs and just the thin radios. We expect to get paid for that with these new entrants. So I would say I anticipate that being accretive for ADI. But at the end of the day, I look at things pretty simply. I'm just looking at what dollar margin I can return for ADI, right? And I think the stronger contribution to that is going to be the growth -- the volume growth that comes with it. That at the end of the day -- I've got a phrase that I use, Mike probably doesn't like it, which is percentage is not accounting. I don't look at our margin percentage as strongly as I just look at dollar that -- margin dollar growth for ADI, which again, I think will be driven more by unit volume necessarily than margin percentage.

Just to me, it seems optically like this is not only a greenfield opportunity largely, but you guys are -- this is a core area of focus for you guys much less so for your main competitor there, right? I mean they've openly said this isn't an area of focus. So it just seems like share could be disproportionately higher here for you guys as well versus maybe legacy. But...

Yes. No. I mean all I can see from -- say from a concrete basis is we're investing heavily in this area, right? I mean I'm very fortunate in that our senior leadership team believes in this market, believes in our position, believes in our technology direction that we're taking and how that will benefit our customers. So I can only agree with what you've said in terms of our competitors. And frankly, I care more about my business, and I can say we are investing very heavily in this.

And I'll just ask one more wireless question, I promise this will be last one. But you guys, obviously, have had partnership with Marvell that you knocked a while ago. And I guess at a high level or as deep as you want to go, just sort of what drove that decision to form that partnership? And how do you think it's worked out versus what your expectation for that was?

So I'll start and then maybe Mike can jump in. But I mean, I would start with maybe just a humble statement that I don't think ADI can deliver all the technology that's needed into this marketplace, right? There's a need for an ecosystem. There's both a need and a benefit for partnership in this area. That's what drove us to cement the relationships with Marvell and Intel. I don't see that changing. In fact, if anything, I see that increasing. I think the companies such as ourselves that are going to be successful in the future, that's going to be defined by the strengths in those partnerships and how we relate within the ecosystem. So I think it's even more important going forward, maybe than even [indiscernible].

I think you don't need to work with just [indiscernible] you don't need to work with anyone. But as I said, a market more in the broad market, more new markets, new entrants, having a partnership with someone, you have a full reference design, all the digital, all way to the antenna to the radio, makes it easier to design for the customer. It's a net win for us and our partners. That's what it is all about, it's about seeding the new markets, that's about kind of the base station, those guys know how to do it and having those partnerships makes it more efficient solution and easier design and time to market for the customer.

And just linking that back to ORAN. I mean, again, that's the whole premise is that by having these more standardized interfaces, it opens that up, that will require more partnership, more interoperability. I mean these are things we've seen in other markets, got -- linking it maybe to the wired market. I mean the whole premise and deployment behind ethernet is associated with interoperability standards. I mean I think that's a good example to compare ORAN with and you start to build more of these partnerships and ecosystems, which is a rising tide for the whole industry.

And you just gave me a great segue. I think I've got time for one last one. So I'll ask a wired question. Just if you could kind of walk us through some of what some of the growth drivers are for that business. It's a good-sized business for ADI and for you. And so I mean is it -- so what are the key growth drivers there and sort of some of those cloud versus legacy service provider type growth dynamics and what you're seeing there?

Yes. It's interesting. I mean maybe start by stating the obvious, right? Any time you've got a wireless system, you've got a backhaul, right, which is wired, right? So there's a lot of [indiscernible] between growth on one side and growth on the other. Our focus at this point has been primarily on the optical market, and in particular, from a technology perspective, the optical control portion of that business. I think we doubled the business through the acquisition on the wire line side. We doubled it through the acquisition of Maxim. So we've brought in a new -- a lot of new technology. That's actually something I'm looking at strongly right now. It's a strong business today and something we expect to grow. But I feel as if there's a lot more there that we can maybe apply the talents of an engineer, so.

Yes. Maxim allows power. They have the right power for both attached to other control business, and then two, in the data center itself and servers and hyperscaler guys, lot of power opportunity. [ That portfolio ] did a okay job there. It wasn't really into a high cost, high price. Those guys we need a little lower cost structure, Maxim has that, [indiscernible] relationship with the customers. If anyone has to grow that business, it's really how to grow business to the cloud ambassador side for a dominant optical control side, which is kind of long measurable optical networks you see.

Okay. Well, I look down my watch and we are right on time. So listen, guys, it was great seeing you both today and it was a fun chat and really appreciate you guys taking some time to hang out with us.

Definitely, Rick. Thank you.

Thank you very much. Appreciate it.

Happy holiday, everyone.

Bye.

Bye.