Marvell Technology, Inc. ($MRVL)

Yes. Okay. Great. Thanks. All right. Well, very excited to have Marvell join us. My name is Mark Lipacis. I'm the senior semiconductor analyst at Evercore ISI. And so today, we have Willem Meintjes -- hopefully, I'm getting that name right and who is the CFO; and then Ashish Saran, who is the SVP of Investor Relations. So there's a lot going on in your sector. So I think let's just get right to it.

But maybe just to start out with, you guys just reported last week and maybe if you take a moment and kind of summarize for everybody, like what do you think are the main takeaways?

Yes. Thanks. It's really great to be here, Mark. Yes, so we reported last week. And I think if you go back over the last several quarters, we've really established a different cadence here, and it's really driven by the market. What we've seen is the end markets that we're addressing continue to be extremely strong, and it's really driven by CapEx, right? And so if you go back to September last year, we, for the first time, sort of indicated some longer-term numbers, right? And for the current year, we sort of took that number to $10 billion. And then outer year to $13 billion, right? And so in a subsequent quarter, we upped that from $10 billion to $11 billion, and then for the outer year from $13 billion to $15 billion. And then just last week, we've now taken it to $11.5 billion and to $16.5 billion for the outer year. And so we've been sort of very constantly been able to drive the supply chain with the upsides that we've been seeing on the demand side.

Yes. I think our interconnect business, in particular, is absolutely on fire. I mean that thing is growing at 70% plus for this year. I think within that, if you think about there's really 2 big underlying drivers. There's a scale-out business that's growing even faster, quite frankly. That's really our PAM DSP, TIA driver business. And then you've got scale across, which is just starting. It's going to get a lot bigger in the outer years, right? So that's -- the short to medium term from a revenue perspective looks very, very strong. And then I think what's even more exciting is all the engagements we are seeing a little bit further out in time, which I'm sure we'll get into today's call. But I would say that's equally exciting as well.

Great. All right. Thanks for the setup. So I think there was -- in Taiwan, there were some news, Jensen Huang said that you guys are the next $1 trillion market cap company. And I'm hoping that you can talk about that a little bit. And before you do, though, I'd like to ask or just reflect on the checks that we have done, which indicated over the last 6 months, we talked to about a couple of dozen sources amongst the hyperscalers. And very consistently across the group, what we heard is that Marvell is being viewed more as a more strategic partner supplier. And that's because you have the broad portfolio of IP. And this was coming through not just on the XPU side, but also on the networking side. And so can you -- if you want to -- if you care to make any comments about this idea about where your market cap is going to go or the context that, that was put in? But if you could also just remind investors of the relationship you have with NVIDIA and NVLink fusion and to the extent that the checks that we have picked up on, which I believe Matt played back in your call, how that is working into that relationship also?

Yes. Maybe I'll start and Ashish can talk a little bit more about the NVIDIA relationship. But really, if you look at it over a longer arc, I think it's a real validation of the investments we've made and the relevance of connectivity, right? I think beyond that sort of narrow commentary from last night, I think the broader discussion was really how connectivity is driving compute and accelerated compute and the investments that we've made both organically and inorganically have really positioned us to be the leader in that space. And so as you've seen sort of these bottlenecks on compute and then memory, we're really seeing the next major bottleneck being on connectivity, and the technology to drive past that is really the investments that we've been making. And so we can get into more detail, but maybe you can talk a little bit on NVIDIA, Ashish.

Yes, sure. I think on NVIDIA, I think -- I mean there's really 3 big pillars to that agreement we just announced. The first one of them, of course, is a very long-standing relationship we've had on the optics market, primarily historically on the scale-out market, which is on the pluggable side. But now since scale-up optics, which we'll touch upon more later in today's discussion is becoming a much, much -- that's where most of the new differentiation is going to come from, they themselves have their own path they're pursuing. We, of course, are investing in that technology as well. And I think it just makes sense for the kind of the 2 leaders in this space to have collaboration in where does NPO, CPO go in the future, right? So think about optics as basically becoming a much broader relationship, building upon what we've been doing for them, but now really collaborating much more so on the new scale-up optics market. So that's kind of one pillar. The second pillar, of course, is the one which I think got most interest and it makes sense is today, if you think about hyperscalers, they've really got 2 different infrastructures. They've got a completely merchant infrastructure, NVIDIA primarily, and then they obviously got custom. And they, too, don't talk to each other, right? So think of that in the long run, that's not how you want to build a data center. You want complete fungibility. That's where Marvell comes in, right, with our networking IP, our custom IP, where we have the bridge between both those worlds, right? So that's really a big part of the relationship, where now you can have hyperscalers being completely fungible in terms of how they design their network. They don't have to choose one or the other. They can choose both. So we see that as really opening a much bigger TAM for the 2 companies combined. And the last one, of course, is innovation on the AI RAN infrastructure. We've been in that market for a very long time with our OCTEON processors, which help on the baseband side. And as you go from the world of 5G to 6G, you need a lot more capability, you want software-defined architectures, and that's where NVIDIA comes in. So we're building in hooks into our baseband processors where you can basically add NVIDIA solutions and very quickly, you can upgrade your RAN without reinvesting in building the base station from scratch. So it's a very important thing for our customers. So again, a very broad set of relationships, but we certainly see all 3 of them being very important for Marvell going forward.

I have to say in hearing you talk about that, it just reminds me when Matt Murphy first came to Marvell, and he said, I identified the top companies to acquire Inphi and Cavium. And if I think about the comments we heard from the -- we heard from our sources, the hyperscalers, this idea, this broad portfolio of products, it really seems that like that vision is playing out, right? And can you take that to one -- maybe one layer deeper and just talk about like how is this idea, like, the broad portfolio? And I appreciate that the other thing that comes through when we talk to the hyperscalers is everybody has a completely different view on how the architecture plays out. So if you -- maybe you could just take it one layer deeper to help investors kind of sink their teeth into what is this idea of a broad portfolio mean? Why does that make you strategic?

Yes. I think maybe let's start in connectivity, and then we can talk about custom. But if you take connectivity, right, on the longest reach, we have a coherent portfolio, right, which -- this is sort of the DCI original sort of colors portfolio that was part of Inphi, and that Inphi really pioneered and developed. And so what we're seeing today is that technology starting to transform into a scale across opportunity, which if you look at the scale across opportunity over time, that's going to be a lot larger than the DCI opportunity. And we're investing to be the absolute leader there. And so when you take that coherent technology and then you start sort of moving down inside the data center, there's reaches there where it's sort of too far for PAM technology, and we're able to do something that we're again pioneering on coherent-lite. Obviously, Inphi was famous for the PAM technology that when we acquired them. And we've continued to invest to be the leader on each generation going from 400 to 800 gig to 1.6T going to 3.2T next. And so I think one part there that we didn't necessarily talk about previously, but on the last call, we mentioned that if you look at the broadband analog, TIAs and drivers that's part of that portfolio, it's actually very significant. It's a $1 billion business for us. And then you can kind of keep going down the stack on connectivity once you get inside the chip on die-to-die SerDes. And so this whole -- the entire stack from connectivity all the way from hundreds of kilometers down to millimeters, it's Marvell IP that's enabling that. And so when we look at the custom opportunity, maybe you can kind of tie that in.

Yes, maybe one other example where all the pieces come together is scale up, right? So if you think about when you want to build a scale-up network, there's 3 key components. There's a compute engine, the XPU. There's the interconnect, right, which is copper today going optical over time, and it's the switch. We have all 3 pieces, right? We build XPUs. We're investing in switches, and we have the leading photonics technology in the market. On top of that, to your point earlier, that each hyperscaler is looking at multiple different alternatives, this is where our breadth of technology and investment lets us do multiple flavors. So we're not making a bet on any one single thing. In optics, we basically have 3 different modulator technologies for doing essentially scale-up optics. It's MRM, Micro-Ring; MZM, Mach-Zehnder as well as EAM. We're also investing in even more exotic technologies, whether it's microVCSEL, it's microLED. So pretty much all options on the optical side are available. Even on copper, we can do co-packaged copper if that's what customers want initially as they go towards NPO, CPO. Similarly, on the protocol side, on the switch side, we're not restricted to offering one type of technology. We have a UALink switch coming out now. It's 115T product. We have an ESUN product, which is based on a 100T platform. And of course, with the whole discussion we had earlier with NVIDIA, we have full access through us through NVLink platform. So I think that's the idea when you really think about having end-to-end, really having all the pieces. Scale-up is almost a perfect example where a customer can work with us on the entire rack-scale infrastructure upfront. We can design all the chips for them, the entire signal path and give them different optimization paths, which is a fairly unique ability. There's not that many other people which you can do it in the world today.

How is the -- you talked about the optical engine, the Celestial AI. Where are you in the development cycle? How should we think about like the milestones? Are our own checks are indicating excitement around this and the potential for this to be huge for you guys. So like how should investors think about Celestial AI and where it is?

Yes. So I think, first of all, I think if you just step back, there's this category of scale-up optics, right? And so Ashish was talking about, there's a bunch -- a whole range of different technologies enabling scale-up optics that we're investing in. So certainly, Celestial is one of them. But at the same time, we're doing CO-OP technology, MRM with TSMC, where we have MZM, right? That's the photonics engine that's been in our DCI product for a long, long time. And so both NPO, CPO, we're playing in all these different technologies. And so the update that we gave on the last call was that initially, when we said -- when we acquired Celestial, we said $150 million for next year. And we've updated that to incorporate the whole category and actually doubled that number to $300 million, but that includes all the different go-to-market. And so Celestial is on track. We're also very much excited about that opportunity, but the opportunity is a much larger opportunity. And going forward, we're really updating on the overall scale-up optics opportunity versus just the specific.

Yes, the Celestial product is basically -- it's well past development. At this point, it's really entering a manufacturing cycle. We've lined up sources of supply. This is really going towards -- I mean, basically, it's going to be in production essentially next year. So it's well advanced on its path to get into production. So that revenue for next year still stays where we suggested last time. But then, of course, to your point, that ramps very significantly as you go from calendar 2027 to calendar 2028.

So is this the $500 million bogey?

On a quarterly basis, exiting the year next year, it's still $500 million, and it doubles to $1 billion exiting the year following year. So if you kind of work your way through the math, it's basically saying over this roughly 1.25 years time frame from the start of production. It's about $1 billion in revenue, plus or minus. And that's just the very, very beginning of this scale-up ramp. And then on top of that, we would get revenue, as Willem mentioned, from a broader set of scale-up optics solutions, which we have, including our light engine as well as some of our TIAs and drivers.

And Celestial AI, there's -- there haven't been production revenues, as I understand yet, but there's been 4 generations of the product. Can you just talk about the develop because I think there's a set of investors who are concerned about how can you project that kind of revenue when we haven't seen it yet?

Yes. I mean you should think about that this technology was actually demonstrated several years back. So -- and you should imagine that the lead customer went through a very, very extensive bake-off process, right? With very heavy technical detail, getting physical product in their hand because that is basically their scale-up optics, one of the key solutions they need going forward. So in this case, it's not like what we tell you, it's basically where you've got a very large hyperscaler, which has gone through that bake-off process, and this is what they picked. I think that's probably the best validation of that particular technology. And at this point, we are -- like I said, we are well beyond -- this is in a productization phase, where we've lined up basically capacity for volume manufacturing essentially starting fairly soon.

Got you. If we could shift over to the XPU, the ASIC business. The news flow, I think, on this business has been the bane of your existence in a way. And I think there's confusion about what you guys do and what other suppliers in this market -- or claimed to be suppliers. Can you help us understand what is that -- I guess, like we think about you guys as an IP business, how should we think about the competitive landscape? There's companies in Taiwan, like what do they do? What do you guys do differently? I think a lot of people understand what Broadcom does. Like how should we think about -- clear up the confusion for once and for all.

Every time. Once and for all, every time.

This time, it's going to happen.

Let me just frame the size of the business for a second and the puts and the takes, and we can kind of get into the more technical piece. But I think the first piece is that we said that, that business is going to grow over 20% this year. So from $1.5 billion to, let's just use round numbers, $2 billion and then, over double the following year. So rough math, $4 billion plus, right? And we've actually given quite a bit of granularity on the drivers for that growth where we basically said 1/3 is from our current program, 1/3 is from the new XPU program -- XPU attach programs that are ramping, and that's actually 10-plus programs that are going into production or will be in production next year and then 1/3 from the new XPU program. And so the key point there is that this custom business has actually become quite diversified. There's multiple growth drivers, multiple engagements. And what we've seen is if you look at the XPU attach part, that's CXL and NIC. And when we spoke about that originally, we saw those sort of going to $1 billion each in the outer year. And that's very much on track to sort of get there or even more than that. I think we've seen those attach areas just become more and more relevant. And so...

Yes, maybe in terms of what we do, which is a little different than I think, look, there's companies like us, which is the reason why companies are coming or customers are coming to us is because there's a lot of our interconnect technology, the entire discussion we had for the last 15, 20 minutes or so, which is very relevant when you build large complex XPUs. These XPUs are no longer monolithic single-chip devices, right? These are basically multiple compute die, HBM stacks. You need high-speed SerDes, you need die-to-die interfaces, you need custom HBM interfaces, you need much more optimized custom SRAM for much higher packing density, you need advanced packaging. And those are all the things we do for our merchant business. So the reason we're in the custom business is actually because of the expertise we've established from our merchant business. And those capabilities are very important to some of our XPU customers. Now when you build a chip, there's an IP portion, which is what I discussed, which is kind of more considered kind of front-end design. But right at the end of the process, there's also a process where you have to go through a back-end process and do like basically layout, which is physical design, right? So I think some of the companies you're thinking of some of the design service companies have an important role in the ecosystem, but they don't have IP. And the reason they don't have IP is because they don't have a product business, right? So that's the real clear distinction is if we are engaged in a project, it's because our networking IP is what the customer is looking to access and build into the XPU or XPU attach versus when they're partnering up with somebody in the design services side, it's more of a relationship of the design is done somewhere else and essentially, you need someone to do the last part of the process, which is physical design. That's really the clear distinction, I would say, between the 2 business models.

And the traction that we're seeing is really a reflection of that. I think ultimately, when you go through all this [ threads ] and you get out to the other side where we are today, we've seen a massive increase in engagement on the amount of opportunities that we have. And just on the last call, we said we've actually won multiple additional custom design wins, right? And so really, this differentiation in IP is we're seeing that show up in the amount of traction that we're having with the customers.

So may I ask what -- I mean this is -- it seems to me that this is IP that you've had, but it seems like it's like in the last 6 months where our field work is telling us that you're seeing an inflection. And Matt talked about that on the call last night. So what has happened recently?

It's basically -- it's what you're seeing happen in the world of AI, which is that the rate of acceleration is increasing. The complexity is going up. Again, scale-up is a great example of it. Scale-up networking outside of one player didn't really exist at this point in time. But if you look for the next 2 to 3 years, you're looking at much higher densities. You're looking at much more complex inference in an example. You're hearing about agentic AI today. All it's doing is driving a lot more traffic. You need to disaggregate your memory at this point. You need a lot more traffic between XPUs. All of that is, again, back to networking IP. So yes, there's a reason why you're hearing what you're hearing because all the IP we've developed and we ship in our merchant products is absolutely critical. Kind of goes back to your first question, by the way, like why did we get called out? This is the reason why we got called out is because the role of networking is absolutely critical going forward.

Yes, that connectivity thread that goes all the way through, right?

So the market is coming your way, basically.

That's correct.

Yes. I mean we've had this thesis for the last decade, and that's driven all the investments that we've made. And I think the interesting thing is that what we've been saying has been very consistent.

Yes. And by the way, it's not just the market is coming our way. I think what's also happening is as you go to these longer reaches, higher speeds, higher densities, the market is coming our way on the optics side. And that's an area where we started a long time back. I think one of the key things when you look at do you not just have all the pieces, when did you start assembling those pieces? It's not something you wake up today and go license IP and go build a product. These are things you have to invest in 5 years or 10 years. When you engage with these large customers, they're looking at where will you take them not just today and tomorrow, it's what's your road map look like? And do you have data? Do you have field data, which says you've done it and it works? I think that's the other thing to keep in mind. So I think the shift toward optics in particular, is going to be very beneficial. I mean this is -- we started down this path with Inphi, but we've added more capabilities, right? Very recently, Celestial is one example. We're looking even further out. We acquired a company called Polariton, clearly a pre-revenue company. But they've got some very unique technology, which can take modulators to speeds which are roughly up to 10x higher than current technology. So we're looking out where does this market go in the next 5 to 10 years, and optics is a massive differentiator for us.

Got you. Now Will, you mentioned the XPU attached design wins. And I think Matt mentioned on the call that the forecast continue to come in higher than expected, if I didn't capture that.

No, you got it right.

Spirit correctly -- please do correct me. So we have a -- the other checks that we've done over the last 6 months indicated led us to this called CPU renaissance, where you have more CPUs because of first, inferencing and now agentic AI, you have a change in the CPU to GPU ratio. And I think you guys mentioned this on the call as well. To what extent are these XPU attached business or sockets that you have? Is it NICs and CXL controllers? Is it all that? And is it correct to say that these all get attached to CPUs that go into AI servers? Like how could we qualify this business?

Yes. I think, first of all, clearly, there's an inflection, right, in terms of like the CPU attached to GPU, right, that rate. It's very dynamic, right? I think the technologies that we have are clearly attaching to some of that. But exactly how that plays out, I think it's not necessarily built into what we've communicated, right? I think as you look at CXL and you look at the memory wall, that's very relevant as you scale these CPUs. And so certainly, I think that is a significant opportunity, both not just CXL, but on PCIe, on PCIe switch and retimers. If you look at just the amount of data that's getting moved, there's sort of the MOE and then this is agentic and quantifying the impact of agentic, I think that's still very much ahead of us here.

Yes. But the products are very, very similar to your point. I mean if you look at our revenue stack we outlined, call it, in '28, where we said in that $10 billion, at that point, we said $3 billion-ish plus or minus is going to be coming from XPU attach. The 2 biggest pillars of that essentially, each $1 billion plus was CXL and custom NICs essentially. And if you think about the simple -- if you're going to have more CPUs, just very direct, you're going to need more NICs, just flat out. And if you're using this primarily for inferencing, you're going to have these longer context windows in inferencing, you need a lot more KV cache data. You're going to need more CXL essentially, especially today where DRAM prices are high and capacity is very tight. So I would absolutely expect -- the numbers we've outlined so far don't really include the agentic impact, just to be clear, because that's all happening now. So the revenue we had outlined was things we had already seen based on attaching to XPUs. Now with agentic, more CPUs, you should expect to see more upside on those. And by the way, it's very similar products. In fact, if you think about it, CPUs in the last few years were designed with CXL already in mind. They just never used them because all the oxygen went to GPUs in this whole AI cycle, but now the tides kind of reversing a little bit, right? So yes, I think there's certainly a lot of excitement around this, and the attach rates can be actually very, very meaningful for us.

And is the XPU attach -- is it all NICs and CXL? Or is it...

There are some other products there.

How can you qualify this?

So think about XPU attach at a very high level as an offload device. You're trying to basically maximize your central compute device for its core function. This is no different than if you go back years back, right, where you started creating NICs to minimize I/O of the server CPU, same idea essentially. CXL and NICs are the 2 large examples, but there's a couple more we can identify where we have design wins going into production. One certainly would be storage accelerators because while we are discussing memory as CXL, there is storage, right? So you're basically -- whether it's SSDs or HDDs, right, instead of having the core CPU, XPU address them, you'd rather do it for a dedicated device. So that's a storage accelerator. And the last one is the security offload device, right? This is a unique product for Marvell. This comes from the Cavium acquisition. We're one of the only companies building dedicated security accelerators, and this is a perfect use case, again, optimized for different hyperscalers, right? And again, the idea is as more and more companies and enterprises -- take Marvell, we don't go buy our own AI infrastructure. We're using AI as a service, but I want to make sure my data when I put it into a cloud network is encrypted. You can certainly do encryption/decryption on a standard XPU or a standard CPU, but why would you? You'd much rather do it on a dedicated device. So that's another example, which is again going to be a fairly large opportunity for us.

I want to kind of shift gears to the DSP business, which has been a great business for you guys. How do you anticipate your share position to evolve as the market kind of shifts from 800 gig to 1.6T to 3.2T over the next several years. Is the competitive landscape changing?

Yes. I think when we acquired Inphi, there was always this expectation that we're going to lose market share. And frankly, Mark, it just really hasn't happened, right? I mean the teams executed really, really well on investing and being first with each technology. And we continue to see that. Now the market has become so much bigger that clearly, there's a lot of investment and there's a lot of competition. And so at our scale, is there a potential for somebody to take some small amount? Certainly, that's the case. But we're continuing to drive absolutely very, very strong majority market share across each one of these generations. And the team is ensuring that, that continues. I mean if you look at 1.6T that actually went into production last year, it's become very significant this year. And 800 gig is still growing. But if you look across into next year, we're going to continue to have very, very, very strong share.

I think the basis of competition in these markets is always were you first to market? Did you have the first solution? And that's been the case in every single generation of PAM4, no different at 1.6T. The second, of course, you can see it in the numbers. I mean we outlined for this year. We're going to grow at 70% plus interconnect. Within that, scale-out is growing faster, right? And then again, we said next year, we will again substantially outgrow cloud CapEx from an interconnect business. And again, the largest part of our interconnect business is our PAM DSPs. And next year, in particular, 1.6T is a huge part of it. So -- and the reality is I don't think we see anything significantly different. I think we've had a leading position. I don't really see that changing going forward.

I think from our standpoint, it seems like you're planning for billions in annual revenues from hundreds of millions last year for 1.6T. How should investors think about the mix of DSPs versus TIAs versus drivers? You have good products in all these buckets. How do we think about those different elements?

Yes, I mean...

How -- where they work together, if that's fair to ask?

Sure. So DSPs would still be the largest portion of our entire interconnect revenue, but it is getting a lot more diversified, right? So if I go back -- and this is all the information we provided a couple of quarters back. If I go back to like last year, our total business in interconnect was about half of data centers, call it, roughly $3 billion. And within that, we said about $0.5 billion was scale across and the remaining essentially was scale-out, which was dominated by DSPs. Now that business is going to go from $3 billion to 70% plus this year, right, and then outpacing cloud CapEx, you guys can run through your model, you'll end up with a very large multibillion-dollar DSP business. But at that point in time, to answer your question, we also said scale across will also be a $1 billion business. And then TIAs and drivers will also become a $1 billion business. So the business gets very diversified, but obviously, DSPs, given the volume, given our market share position, one would expect will remain kind of the majority.

Specifically, I think it was underappreciated like the size of our TIA and driver business. So we wanted to sort of at a point in time, just break that out for investors so that you can kind of see the scale of that. We'll probably not break that out too regularly. But I don't think most people understood just the scale of that business today.

That was from Inphi. That's a...

That's -- in fact, that is the original Inphi business, right? When they started down, this was before PAM DSPs, right? So the original business from Inphi was actually building these analog components, right? And that's been a critical differentiator. Obviously, with the takeoff in PAM DSPs and that business became kind of the face and it still is. But the reality is it's a lot more diversified. And it's also a key component of technology required for scale-up optics going forward. It's not just scale out.

Got you. How is -- so everything is growing very nicely, right? How do we think about supply constraints here? And maybe starting here, how do you characterize the supply -- laser supply for you guys?

Yes. Maybe just talk about the general and we can talk specifically about laser. I think we spoke about it on the call last week a little bit, but we've really instituted a very rigorous process where we do like a 5-year forecast. And what we do is really proactively share that with our supply chain so that they have visibility to our growth trajectory. And I think that's been critical in terms of allocation where when you look at like a year like this year, we've been very consistent in terms of what we've seen in terms of demand and how we've communicated that. And so Chris and team have really -- and you can see the progression here over the last couple of quarters. They've done a great job at securing supply, specifically in relation to those forecasts that we were providing.

Yes. I mean supply has been tight. I mean that's worst-kept secret out there. But having said that, I mean, just look at the upside we're driving this year and next year. So I think we've got -- done a pretty good job. I mean take our data center business. We grew at like mid-40s last year. We're going to grow 50%, so accelerate this year. In a tight supply environment, we're going to accelerate even more next year. So I think that gives you a good sense of -- I think we've got a pretty good handle on it. I think we have a very good understanding. We triangulate demand, make sure we serve it well. And I think we've actually done pretty well on the capacity side. I think in terms of lasers, I mean, I think as far as I can tell, our customers are able to get as much as they need. No one is saying the data center is not going up because they're not on lasers. Would they like more? Of course. But I would just say, I don't think that's a huge constraint in the near term. But given what you're going to expect to see and scale up optics, I think it's important the industry keeps investing in it because the demand for like external laser source is going to absolutely explode. So I think it's a good question, especially in the longer term, where the industry does need to keep investing in it. But look, this is capitalism 101, right? There's an opportunity, people will invest. And I think over time, I think we'll be in pretty good shape.

Does vertical integration make sense on -- for this component for you guys?

I think at this point in time, I think we feel pretty good about the way the industry is set up, right? I think we focus on what we do extremely well, which is build DSPs. Having said that, I think there are places we've built modules. Our DCI business, we actually build the entire module given the complexity of the product. But in general, I think our focus is on silicon. That's where we differentiate. And I think there's other partners out there which are very focused on that particular part of the ecosystem.

Is the -- it looks like we ran out of time. We're going to go a little bit longer, if that's okay with you guys.

Sure.

The -- how should we think about the long-term data center interconnect revenue opportunity? I think Matt previously indicated the TAM is going to expand 5x by 2030. Does that include the more recent commentary as it relates to like the scale across DCI TAM that's got 10x higher bandwidth than the front end? How do we how do we think about that business?

Yes. I think your last comment is really -- I think, the key there where the amount of data on connecting the back end and a scale across network is multiples higher, right? And so that's where the 10x number comes from. And so to be able to address that amount of data, clearly, that market needs to be a lot bigger, right? And so we've, again, pioneered the technology there. And so our expectation is to sort of continue to maintain a really high market share as you see that market develop on scale across.

Yes, I think the TAM numbers are probably going to keep floating up, Mark. I mean, I think, if I compare it to what we said like 2 years back, and that's not just a comment on the fact, yes, clearly, CapEx is higher than we thought it is. So that tide lifts all boats. But I just think that the sheer complexity of the network, right, with agentic, with mixture of experts with all of these different inferencing models is just a lot more than what we all thought even just barely a year or 2 years back, right? And scale across, we're at the very, very beginning stage of it, right? I mean, today, I would say the majority of the market is still DCI front-end connectivity. I think the first scale across meaningful revenue really probably starts next year, maybe a little bit this year. One of the key things you need for scale across is customers really want to go to 1.6T. Today, most of the market is more like 400, 800 gig. But think of scale across as just taking your existing scale-out network and just stretching it across a much longer reach. But it's the same amount of data, which is what drives our PAM DSP business today, just to give you a sense of how large this can be. And you want the same bandwidth, right? So this needs to be 1.6T, which is why we pulled up our road map, came out with our 1.6T DCI module pretty soon. It's going to be sampling second half of this year with a 2-nanometer coherent DSP first to market. So pretty unique position there.

So I think we have the mayor coming in next, and I'm getting the signal from our organizers that it's time for us to wrap up. So that will have to be the last word.

Great. Thanks, Mark.

Willem, Ashish, thank you so much for joining us today and for all the great insights.

Thanks, Mark. Appreciate it.

Appreciate it. Thank you.