Silicon Laboratories Inc. (SLAB) Earnings Call Transcript & Summary

All right. Thank you, everyone. And welcome to the 2020 Analyst Day for Silicon Labs. My name is Tyson Tuttle. I am CEO here. And I do want to apologize. We are actually holding this as a virtual event today. We ended up canceling out all the travel and out of an abundance of caution, I think, just to protect our employees and also doing the right thing in terms of all the analysts and investors that were planning to attend decided to do this as a virtual meeting. So we are holding this over Zoom, and I hope everyone was able to connect in successfully. You'll be able to type in questions into Zoom, and those will be read out here as part of the Q&A sessions that we hold through the day. I also have to just note that we couldn't have picked a better day for holding an Analyst Day. This has been in preparation for quite some time. And certainly, with all the events going out into the market, our announcement of the Redpine acquisition this morning and updating guidance, this is actually a very important time for us to all get together and talk about the real exciting stuff that we have going on at Silicon Labs and the future and long-term potential as well as really talk about what's going on today and how that is impacting the business. So we have a number of legal notices here. Those are in the slides. I welcome everyone to review these at your leisure. I have the agenda for today. We're going to be talking -- it's morning here in Austin, and so I will do a brief introduction. We'll talk about some of the product categories, talk about some of the history of the company, talk about Silicon Labs 4.0, what we're calling SLAB 4.0, taking the company into the future to simplify and scale our business to the next level. Next, Matt Johnson will get up. He's our GM and SVP of the Internet of Things business, and he will give an overview of the opportunities there as well as talk in more detail about the Redpine acquisition. Then Mark Thompson, our SVP and GM of Infrastructure and Automotive, will get up and talk about our infrastructure and automotive products and opportunities. John Hollister, our CFO, will get up and talk about the update to the financial guidance but also a broader picture of where Silicon Labs, both our past performance and some of the future opportunities sitting in front of us. And then we will conclude that at the end of the morning with a summary but then also a general Q&A. So in both Matt's section and Mark's section, I'd like to request that people -- those questions should really pertain to those businesses specifically, and then we will address the more broad corporate-level questions as we get into the summary at the end presentation. And we should be able to close up by about 12:30 here, Austin time. All right. We have members of our management team here today. You see the 4 presenters up in the top left. So myself; Matt; Mark; and John; Daniel Cooley, our Chief Strategy Officer; Brandon Tolany, our SVP of Worldwide Sales and Marketing; Sharon Hagi is our Chief Security Officer; Lori Knowlton, Chief People Officer; Nestor Ho, our Chief Legal Officer; Sandeep, running Worldwide Operations; Megan Lueders, Chief Marketing Officer; and Alessandro Piovaccari, our Chief Technical Officer. The management team has about 80 years of experience here at Silicon Labs, many long-term employees, and it's great to have them here with me for the Analyst Day. All right. Silicon Labs was founded in 1996. We went public in 2000, a very successful IPO on the NASDAQ. We're actually celebrating our 20th anniversary as a public company on the 24th of this month, which is a wonderful milestone. And we have really been, from the beginning of the company, about being a leading provider of silicon and now software and solutions for a smarter, more connected world. We have been developing mixed signal and RF technologies that have really changed markets and a lot of industry firsts and coming in to disrupt markets and to take share, and that's driven growth. And we've got some graphical depictions of this as we go through the presentation. We have a fabless model. So if you look -- from a near-term perspective, the fabless model is very scalable in terms of our ability to adjust to both upsides in demand but also in downsides of demand. We do not have our own factories with a utilization and so that fabless model has been foundational to the company since the very, very beginning. If you look at the markets that we've been targeting, especially now with the Internet of Things and the Infrastructure and Automotive businesses, these are high quality. They're large markets that are diverse. There's a diversity in our business, which really plays to the -- our strength. And those markets provide a long runway for growth in the future. So no matter what's going on in the macro economy, the trends that we're targeting in terms of Internet of Things, in terms of 5G, in terms of electric vehicles and a lot of the different technologies that we're bringing to bear there are going to continue to fuel growth and improvements in profitability of the company as we scale going forward. Silicon Labs is a global company. We're headquartered here in Austin with our global HQ. The majority of our headcount, about half of our employees are here in Austin with centers in Boston and also in Silicon Valley. We have a substantial design and sales capability in Europe with 5 design centers and sales offices around Europe. And our international HQ where we run our operations and supply chain as well as do a lot of design and a lot of support functions are over in Singapore. We do have a substantial team in China, and we have been monitoring and going through a lot of the COVID-19 situation there and also preparing worldwide for the -- what is now a pandemic coming along. But that international HQ, we set that up in 2004. And so that has been really important, both to our fabless model but also our ability to scale globally. If you look -- really, since the beginning of the company, we talked about our vision of being a leading provider of silicon, software and solutions for a smarter, more connected world. We believe that these technologies that we're developing are helping to make the world a better place to be able to connect people and also to drive efficiencies in supply chains, to drive energy efficiency and really have impacts on the world in a very substantial way. And I think that these are -- by focusing in on this concept, it allows us to have this long runway for growth. And it's really important to have the culture of the company be centered, not only that everyone is excited about doing this but that we're aligned on the ways that we're going to achieve those goals. And that's really underpinned by the values that we have as a company, the way we work together, the way we treat customers, the way we treat our suppliers and the way we really hold ourselves accountable for the results in the end. The company has always been about top-level talent, hiring the best people but also as people come into the company, to be able to foster those -- their career paths to be able to empower them to do their jobs and to really be able to perform at their best. So fundamentally, the success of a company and the success of Silicon Labs is really, first and foremost, about the people that we have within the company. We are also very, very focused on creating customer value and driving commercial success, and that means developing the right products and being focused on the right markets and also looking at ways how are we going to differentiate, how are we going to win. And that is really about really truly driving innovation into the product development and the way we operate and as we're going into more complicated and diverse markets, really understanding those problems and innovating, not just at the technical level but at the way we take those products to market, the way we develop platforms, the way we develop software, the way we bring in new technologies and capabilities into the company to be able to drive the required items that we need to be successful. And fundamentally, and we'll talk more about this today. It's about simplicity. It's about simplicity in the way we develop products. When we do a platform, how do we drive efficiency in R&D? How do we drive simplicity in the way our products -- the out-of-the-box experience, the way we support the customers, the way we work with partners? And how do we scale our SG&A and our sales efforts in a way that really can drive additional growth? And fundamentally, both of those things are about driving incremental profitability over time. So profitable growth is fundamentally what we're trying to achieve with what we're doing. And that gets down, not just into a goal but into the culture of the company and the way we all work together. We also look very, very hard at and have a lot of processes and a lot of ways that, when you empower people, you also have to hold people accountable for the results, looking at the KPIs, looking at the results, really sitting down and saying what went well and what could have gone better and how do we continuously improve the way we work. And so holding accountable but not -- at the same time, not holding back from being willing to take risks if we're going after a new market or we need to take a technical risk but really understand what those risks are all about upfront as much as possible and then really sitting down and holding ourselves truly accountable. And then the last value that we have -- and these have been really continuous through the company. It's not something that just we came up with. This is -- was written on a napkin in 1996 by our founder, Nav Sooch, about really how we work together. And fundamentally, it's really about doing the right thing. We're talking about a situation right now where we have a challenge with the health crisis, and we have some stuff going on with the economy or the way we're -- we look at whether to do an acquisition in a challenging time. And you really have to sit down and say, "Are we doing the right thing? Are we treating each other the right way? Are we taking the right level of precautions? Are we prepared? Are we maintaining a conservative balance sheet in order to weather the storm?" And so that fundamental value of doing the right thing extends to a lot of different aspects but is really fundamental to how we operate as a company. So our vision, our values have remained constant over time, and they really help guide us and have been responsible for a lot of our success. All right. I wanted to spend a little bit of time looking at some of the history of the company, what got us to where we are today and what that means about our path forward in the future. And we've broken this down. We've got SLAB 1.0, 2.0, 3.0. And now we're going to talk about the new era that we're really moving into, which is SLAB 4.0. So we'll go through each one of these individually. So we -- the company started in 1996. SLAB 1.0, that was the foundation. That was a start-up and then the IPO. We talked about SLAB 2.0 was where we diversified. And then really SLAB 3.0 was where -- I've been with the company now 23 years and I think about 8 years as CEO. So when I started, we really started on this path towards Silicon Labs 3.0, the focus. And so we'll go through each one of these individually. If we take SLAB 1.0, this was really when we were -- we started in 1996. It was a highly successful start-up. It was really founded on the concept of mixed-signal innovation and standard CMOS with a fabless model. We targeted the PC and mobile phone markets as we need to get products out, and we need to get to market quickly, and those were the hot products in the day. It was about connectivity. It was about developing this fundamental RF and mixed-signal technology that really is the underpinning of what the company is today. And IPO in 2000 -- March 24, 2000, and then we entered the downturn. But actually, we had a product cycle with our mobile phone products and saw a nice ramp on the mobile side. During that time, we also established our Singapore international headquarters and started moving to outsourcing a lot of the product test. But in 2007, we actually decided to divest our mobile business. So we had realized that, while we had great technology, we didn't control the system. There were too few customers, too many competitors and that it was something that -- where we were not going to be able to win. So we divested that business in 2007. And you can see from the revenue chart, that was actually a very substantial move. It was a $300 million divestiture. And 1/3 of our employees, a lot of our most talented employees actually ended up going to NXP and then ST-Ericsson. Luckily, a lot of those folks are back with us today. But it really required some reflection of -- both on the strategy that it's not just about developing great technology, but it's also about making sure that you're in a market that you could win long term and also something where you can control the integration path or that there's barriers to integration and also that you can have all of the capabilities that are going to be required to win. There was also, I think, some lessons around that it was fairly concentrated, and that also puts the company at risk. And that was -- that really required a lot of reflection and took us into what we call the Silicon Labs 2.0 phase, where we said, "All right. Let's make sure that we work on things, that we can sustain but also diversify, diversify into multiple markets with multiple products." A lot of the roots for what we're doing today started during this time. We took the proceeds from that sale, and we invested into our product lines. We also retired a lot of our shares. We did a lot of share buyback. John will talk about the statistics and the numbers around all of that. But fundamentally, this was about going after high-quality products with -- in high-quality markets with very, very differentiated technology. So that was our sensor products, our Power over Ethernet. Actually, our microcontroller business, we acquired that in 2003 and during this time frame started to build some momentum with our 8-bit microcontrollers and even started our 32-bit microcontroller product lines. And we have a lot of success in broadcast as well. We did some very differentiated products in the radio side, the TV Tuner side which retained -- that is now a very profitable business that is sustained over time. So the SLAB 2.0, the diversification was really very successful. We also grew our sales channel, our distribution channel to be able to get our products out into the market successfully, and so there was a lot of foundational work that was done during this time. But as we entered into the new decade, we went through the slowdown in 2008 and 2009 and kind of powered through that with some of these product cycles. We saw that you really have to look at the sustainability of each of these markets and to -- and really look at it from a customer perspective and to be able to have continuity that when you have a product in a market and a customer you want to have a follow-on, you want to make sure that, that integration path is clear where we can continue to sustain that over time. And then fundamentally, we wanted to be more strategic about the markets that we're going after and look at these on a really long term -- a multi-decade basis and make sure that our developments were aligned to the fundamental trends in the economy. So that really took us into the SLAB 3.0 era. And when we really sat -- we sat down. It was about 2010 that we really sat down and said, "Okay. How are we going to refocus into these long-term trends that are going to make the company sustainable and really drive our growth for the next decade or more?" And we were -- we also had a very good technology in connectivity. We had very good RF capability and integration capability. We had a successful microcontroller business. We had divested our cellular business, the mobile business in 2007, but we saw the opportunity to be able to go after the market where all of these other devices are going to get connected. And really, this was the early days of the Internet of Things. When I started talking about the Internet of things locally here within the company -- some folks in the audience are nodding. Everyone's like what. Why -- what is this Internet of Things? And why is that going to be a big deal? And how's -- and really, you sat down and you thought this is a market where we can actually control the integration path. The integration level is going to be different. It's broad and diverse, the set of applications. And this is going to be a trend that is multi-decades long. It's not just going to be one handset, and all of a sudden, you get a big win. It's going to take a really multidimensional effort to go succeed at that. But if we actually can pull that off, we will be able to win in the long term and to be able to dominate that. And this is something that was not going to happen overnight, but we saw a massive opportunity for IoT sitting in front of us. And we made a decision as a team and as a Board and we communicated this out to the investors in that 2012 time frame that this was going to be a big focus for us as a company. And we shifted a lot of resources internally that we're working on other products into this area, brought in a lot of our wireless and RF expertise and also went -- we realized that there were capabilities that we did not have internally and that we needed to actually bring into the company. So we went out and said what are those capabilities in terms of software expertise and networking expertise and went on a series -- we did a series of acquisitions, strategic acquisitions to bring those capabilities into the company in a way that helped us build those capabilities with the Ember acquisition starting in 2012. And we have slides that talk about all of those acquisitions. That was a comprehensive effort to put those capabilities and bring those capabilities into the company. And I would also say that the transition of resources into this area, the -- bringing a lot of teams into the company and integrating those together not just in terms of a road map or a product portfolio but also in terms of the culture. The culture of the company and embracing the culture of a lot of the folks that were coming in and changing the way we work, getting people aligned as to what it's going to take to win and why we're going to do that was really, really important. And it took a lot of work. It was not a straight line from just, okay, we're going to do this, and it happens. It takes time. It takes time for people to digest really what it's going to take to win. And I think that process continues today. But if you look at the opportunity that we have sitting in front of us, the diversity of the markets, the challenge of building the platform, the challenge of making that accessible and easy for customers to use and the -- really, that concept of simplicity and scaling as fundamental to being able to drive leadership as well as profitable growth, the roots of that were set in 2012, and we've been on a mission to be able to really accomplish that and leverage that and take that to the next level over this time frame. And we've seen substantial growth from that, and we'll get into exactly how that looks. I think that you can argue that we've actually accomplished a lot of that and achieved this leadership position. But at the same time, the opportunity that we have from the -- particularly that IoT wireless market is massive. And we're still in the early stages of that, and we need to stay focused on what that opportunity is. I also -- the I&A business, we focused our I&A business, our Infrastructure and Automotive business into the electrification of the world. So -- and also on the communications infrastructure side and then also in the infotainment market within automotive, and Mark will talk about more of that later as well. But you look at the opportunity that we have in the electrification of cars, in alternative energy, in motors and industrial applications. And we had a fundamental technology in electrical isolation and high-voltage isolation that we saw we could integrate around that. And this was a technology, again, that was -- that we can control the integration path and drive the integration into that platform and that, that would be fundamentally transformational to the global economy. And one of those key technologies that -- to the extent that we can develop great products and have differentiated technology and get that out to the market, that was a big opportunity. And that's starting to play out in a big way. So Mark will be talking about that. And then also the explosion of data. We saw the cloud coming. We saw the fact that data centers and the backbone of the Internet and wireless were going to be a really important trend that's going to continue to go. There's more and more data every year. And we had a fundamental technology in our -- what's really a high-performance RF technology applied to data communications in our timing business and some fundamental patented technology there in how that was implemented and could actually drive a lot of benefit into these systems, and that was in our timing business. And we were able to focus in on that and drive growth and success in that communications business, and that is now the foundation of our I&A business. And if you look at the strategic growth vectors that we targeted in 2012 and have been focusing on since, that's now about 80% of our revenue today. So when we -- if you go back to 2012, that was actually maybe only 20% of our revenue. And now we've been able to really transform the company, both from a strategic standpoint, from a cultural standpoint and also from a revenue complexion, into a place where we think that we are extremely well positioned for the future. All right. I did want to -- today is an Analyst Day, one of those days where you talk about changes, and one of the things that we're changing are our product categories. And this reflects really what I was just talking about, the transformation of our business. IoT is now 58% -- this is 2019 revenue, 58% of our business with about 2/3 of that in wireless. And Matt will talk more about the details of that and all of the dynamics that we're seeing. That revenue category is going to remain. But if you take Access, which is our legacy modem business from SLAB 1.0; our Broadcast business, which is our -- really essentially a mature business from the SLAB 2.0, but now our Infrastructure business with our timing and isolation, we are putting that together into a single category called Infrastructure and Automotive. And so Mark will talk in detail about how that breaks down in the market and the opportunities within that. That's about 42% of our revenue last year. So going forward, we will be talking about IoT with the big driver going on in wireless, infrastructure and automotive, with big opportunities in the automotive markets, in communications infrastructure and in the industrial space with our timing and our isolation products. So this is a natural, I think, simplification and focusing of our product categories on really what are the big opportunities and the big growth opportunities sitting in front of us. We look at that market opportunity, we are currently looking at about a $14 billion SAM, and this is inclusive of all of the IoT and all of the infrastructure and automotive products. Mark and Matt will go through this in more detail. But if you look at the CAGR from today through 2023, it's about a 9% CAGR. So the important thing to keep in mind is that just the markets that we're going into now, these high-quality growth markets over the next 4 years or 5 years are going to be growing at about a 9% CAGR. One of the other changes that we're going to make today, and John will talk about this, is in our growth targets. And we are going to look at our growth against this metric and outperforming the market and outgrowing the market, taking share within our SAM and measuring ourselves against this CAGR and being able to grow at 1.5x this market CAGR rate. And so that's really an increase in our view. We think that we've done a lot of foundational work. We're extremely well positioned, but we also think that our growth versus the market should be accelerating going forward. If you look at some of the drivers behind this, we talked about IoT, we talked about the bandwidth expansion, we talked about electric vehicles, those are some of the things that we see driving this growth going forward and really are the focus, both of our R&D teams as well as our customer activity. And today, within this market, we're at about 8% share. There's a long way to go in terms of achieving market leadership and driving growth and SAM expansion within this. And I would say that this is not just a couple-of-year opportunity. This is a very, very long-term opportunity that we remain focused on. This morning, we announced the acquisition of Redpine Signal's Bluetooth and Wi-Fi assets. We are very excited about this acquisition for a number of reasons. First and foremost, it really fits in well with our IoT strategy, with driving very, very low power, always-on Wi-Fi. It's -- they have a class-leading solution and a number of very important design wins in this area. It accelerates our pathway into Wi-Fi 6, 802.11ax, and the integration of these technologies into our platform provides a really substantial acceleration of our road map into that area. More importantly, I think the team and the culture, so the team that has developed these -- Redpine has been developing Wi-Fi with MIMO and OFDM technologies and integrating that into silicon and doing the software stacks for about 20 years. It's a very high-quality set of technologies and capabilities. But also, it's really important that it's also a very compatible culture, I think, to Silicon Labs in terms of engineering excellence. They have an at-scale team in Hyderabad, India, which we view as extremely important to us. It's about 200 employees. And if you think about the concept of being able to scale efficiently in terms of our R&D, having this site at scale in India is kind of the next step for us as a company not just in the specific area of Wi-Fi but across the board, to be able to leverage that site where we can efficiently scale our R&D efforts, in particular here in the software area but also full stack, all the way from silicon all the way to the cloud in that location. So it's very, very exciting from a technology standpoint, from a culture standpoint. And really, this team that we're getting in Hyderabad, Venkat and the leadership at Redpine, I want to thank them, and I also want to really compliment them for doing a good job at both the technology and building that team. And I think that all of this in the hands of Silicon Labs, in combination with our platform and our culture and pulling everyone together as well as our channel, our ability to take these products out more broadly into the market is really, really an exciting opportunity. We view this as a $100 million revenue opportunity by 2023. They're at, today, about a $20 million run rate as revenue. And we see that, as time goes on, as we go into 2021, a number of new design wins we'll begin ramping, this adds about $15 million of OpEx to us on a run rate basis. So that -- with the additional investments required to integrate this, we expect that to be accretive in the second half of 2021. The gross margins that are coming in, their gross margins are consistent with our corporate gross margin. So that's a very, very good result, especially in the Wi-Fi market and is really a demonstration of the differentiation that they have. And also, we expect this acquisition to be -- to increase our growth rate in IoT. So this will accelerate the growth rate of the IoT business overall as that revenue and those design wins ramp over time. So very excited to announce this today. We have a lot of plans in terms of how we're going to integrate. We have contingency plans in terms of how to integrate this in the presence of a lot of the travel restrictions and a lot of the coronavirus activity, leveraging our location in Singapore, our relationship with suppliers. We actually have a lot of common suppliers, and so a lot of those systems are already set up. So we believe that this will close in Q2 with all the customary approvals and all that sort of stuff. And really pleased to announce this and believe that we're well set up to execute both on a near-term basis as we integrate customer and sales and operations activities but also longer term in terms of culture and integrating this into the design team and integrating it into our platform and into our channel. All right. So this is my last slide, and I wanted to introduce the concept of SLAB 4.0. So this is 2020 and beyond with really the goal to simplify the way we work, both in terms of R&D and driving our platform approach to developing products and then also getting those out into the market. The markets, we believe, our strategy is sound, that we are working on the right things. And we've established leadership positions in those markets and that those markets are set to grow for decades. We believe that our model, our fabless model is scalable that -- in terms of being able to grow that. But to be able to simplify our R&D with the platform approach and continue to drive that forward and to be able to get those products out in the market -- into the market and convert what is a very large pipeline that we have into opportunities is going to drive faster growth, is going to drive increased profitability, and we're very, very excited to share this with you and more details about each of these individual businesses and how we're going to go about that. So with that, I would like to turn it over to Matt Johnson. So Matt, come on up. And he is running our IoT business. And I'll let you do -- I guess we're not supposed to shake hands. We'll do this, and I'll hand you this.

Thank you very much.

And we'll talk to everyone at the end. We have a Q&A session after Matt's session, a Q&A session after Mark's session and then a more general Q&A. And please type in all of the questions so that we can handle this on a virtual basis. Thank you very much.

Thank you, Tyson, and good morning, everyone. My name is Matt Johnson. I'm responsible for the Internet of Things here at Silicon Labs, and I'm really excited to have the opportunity to share with you what we're doing. Before I do that, there's something that's critically important for everyone to take away from this discussion this morning, and that is that Silicon Labs is the leader in IoT wireless. We're the leader in market share. We're the leader in market growth. We lead, first of all, from having amazing breadth and depth of wireless technology. That depth and breadth has come from years of investment that Tyson was talking about in this space, and that's allowed us to build this tremendous position. On top of that, we have amazing diversity of customers and applications, tens of thousands of customers, thousands of applications. And what we can do is we can connect that technology, with that diversity of customers through an IoT platform. That platform allows us to connect that breadth of technology very efficiently and in a way that we can scale. So as the market grows and evolves, we can continue to adapt with it. Last but not least is an amazingly strong culture and unique set of talent. This allows us to lead. This is the most important differentiator that we have. It gives us the ability to adapt, to evolve and to be in the strongest position possible in this market. So this combination of things is what allows us to lead the way we've been leading and what best positions us to continue leading and even accelerate our growth moving forward in the future. So before we talk more about that, I thought it would be helpful to just remind people what we make and what we do here at Silicon Labs in the IoT space. So think about the Internet of Things. So we have the Internet. We have things, and they need to be connected. That connection in the middle is where we come in with our solution. We have this amazing diversity of customers and applications, and they need to be connected. What we provide is a complete solution, an SoC in the middle that provides everything a customer needs to get there. So to give you an idea of what that looks like, we're talking the complete tools and development environment that a customer needs, the requisite software and protocol stacks for the wireless connectivity and then this complete solution that provides the sense and control to interface with our customers' applications; the compute and memory to provide the processing for our customers' applications; critically, the connectivity across multiple wireless protocols; and more and more increasingly important, moving forward in the future, the security that our customers need to rely on these solutions and that's going to be necessary for the IoT to grow at the rate that it has the potential to grow. In the power management, that's critical for especially battery-powered applications, all integrated on one system on chip. So just to help give you some perspective on what this can look like, these solutions can be as small as 4x4 millimeters. They can have integrated -- leading integrated suite of security capabilities, wireless range up to 10 kilometers and a solution that can operate up to 10 years on a coin cell battery. Just to help make that real, what I have here is a solution that we just announced at CES in December -- I'm sorry, in January. This solution is called the BG22, and it's one of these SoCs. And what it can do, just to give you some context or perspective, this solution provides Bluetooth or BLE, Bluetooth Low Energy. It can operate for device tracking down to less than a meter, and it provides a complete solution, as we have it here, as an asset-tracking device. And this total solution can go 10 years on a coin cell. And with all the integration we provide, it can have a price point of $1, which is really remarkable. That just gives you an idea of what's coming in this space. So we have great products, but it takes a lot more than great products to be successful in this market. Tyson mentioned the multidimensionality of this space that's required to be successful. So just start at the top and think about the tens and tens of thousands of customers and the thousands of applications. I think with the IoT, there's a tendency to think of applications that we're more familiar with and are more visible to us as consumers, if you think of alarms and smart bulbs and locks and smart speakers because we see those every day. But there's an amazing range of applications that are rapidly growing and emerging in this space. Whether it's fleet tracking or metering or agriculture or water management, all these applications are coming, and they are absolutely fantastic. But with that diversity comes complexity. And what we have is an infrastructure set up with important tools that makes this possible. So one way to envision this is think of it from a customer's perspective. We have some customers that are -- obviously, they're experts in their application space, but some of our customers are also experts in wireless. And they're looking for a certain type of support and enablement from us, and so we're set up to do that. But if you go to the other end of the spectrum, we also have a different type of customer who is an expert in their application, but they want it to connect wirelessly, and they don't know how to do that. And we have the ability to provide turnkey solutions for them as well. When you look at ecosystems and partners, this is critical. This is the way the IoT is with a broad range of ecosystems and partners that are required and part of making the IoT successful. Silicon Labs is in every one of these ecosystems, and we are trusted by these companies to provide solutions that will get them where they want to go. When you look at the wireless technologies, this is something that it's really critical that people understand. We show the technologies here like Bluetooth and Thread and Zigbee and Z-Wave and Wi-Fi. These are wireless technologies that are standards. They're alliances and people use and most know, but there's actually an incredible range of other wireless technologies that we also support that we don't list here that we'll talk more about later. But the key for this is to put yourself in the customer's shoes. If you're a customer, you don't buy one wireless technology. You need multiple wireless technologies to make the IoT work. That's what is necessary for the IOT. That's what's necessary for our customers. And one of our values is we have this breadth and depth that we're not supporting one. We're supporting what our customers need. So we don't come in and say, "Hey, this is what we have, so this must be the answer." We have what they need, and we have the ability to integrate them in unique ways for the specific applications and customer needs. So we talked about the product. How do we connect this all? We have tens of thousands of customers and applications, and we have all these technologies. We do this with a platform approach. This platform is what allows us to connect these in an efficient and scalable way, so we can service this diversity and continue evolving our wireless technology as the market evolves. So to help demonstrate that, what this represents is our 2019 IoT revenue. And it shows how much diversity we've achieved from this approach. So if you look at it from a technology standpoint, a strong majority of our revenue is coming from wireless across all these wireless technologies that I mentioned. From a market perspective, we focus on home and consumer, and industrial and commercial. And the reason we have it split by those 2 markets is they have different requirements. They have different cycles, different needs, different care-abouts, and both are critically important to us. So we focus on both of these with dedicated resources, and we have amazing diversity between these 2 markets. And I'm going to talk a lot more about these in a few minutes. In terms of geography, I don't think we could be more diversified between Americas, Europe and Asia. And customers, it's really important that people understand what this represents. We have over 100 customers that are over $1 million a year in revenue, and then there's another 30,000 customers in our 2019 revenue. We have achieved that diversity I was talking about on the previous slide and supporting these customers and applications with all these wireless technologies in a very effective, efficient and scalable way. So we're really excited about this. So let's talk about -- a little bit about what the potential is moving forward. If you take a step back and think about some of the biggest technology trends that have really shaped our market and the way we live, starting with PCs and handsets, both of these introduced complete changes to the way we live and work that we couldn't even have anticipated when they initially were conceived and came out. If you step back and look at it, though, it's amazing. To put it in perspective, today, there's 0.3 personal computers on the planet per person or per human being. When you look at handsets, there's already 1.2 per person on the planet. And think of the way that changed business models, lifestyles, everything. Today, there is already over 6 IoT-connected devices per human being on the planet. And over the next decade and beyond, we believe that's going to go to over 50. And just imagine what that's going to create and make possible and the potential that comes from that. And the thing that's most exciting for us is we're right in the middle of this. We get to live, experience and see this every day when a customer is asking, "Can I do this? Can I connect this?" Applications that you never would have thought would have this need, where they see a way to make their business more productive or efficient, where they see a way to create a new business model, where they see a way to do something that's never been done before. So it's incredibly exciting to be part of this and in the middle of this journey. So let's talk about some of those things that are happening in this market and in this space. So the first thing is the acceleration that's happening in IoT growth. It's coming from some very fundamental realizations in this market. So the first is it's improving lives, right, at a very fundamental level. What -- you can think of this in terms of health care. You can think of this in terms of time saved in your life. You can think of this in terms of peace of mind or security. All of these can improve lives. When you think about the environmental impact, it's, I think, remarkable when you look at global energy consumption and the estimates of how much the IoT can help reduce that consumption by monitoring and tracking and using that energy more efficiently or when it comes to water and monitoring losses of water and using water more efficiently, it's incredible. And then the ROI portion. As I said before, there's so many places, especially in industrial and commercial, where we see just very strong ROI-driving decisions to improve the productivity and efficiency of an automation environment, improving smart city infrastructure. These are really incredible. But there's something else on top of that, which is also cloud and artificial intelligence. In order to maximize the potential of cloud computing and artificial intelligence as well, they need more connected things. They need more data. And so because of that, you see this tremendous push by the industry to connect more things and work together to increase the proliferation of IoT end devices. So that's helping the industry align, which is exciting. So the best example of this is increased collaboration that we're seeing, and you can use a CHIP as an example, the Connected Home over IP. So this is where, through the Zigbee Alliance, which we are a founding member, we see companies coming together as part of that alliance just announced most recently in December, like Google and Apple and Amazon and many others, coming together to say, how might we accelerate the adoption of these devices, which is the best example of showing that the industry is starting to gain that momentum. Another key piece is security and privacy. We all see the news. We all see the concerns increasing around privacy. We see the increasing regulation. And it's important to understand this isn't about a nice-to-have feature. This is a must-have foundational, elemental component of the IoT in order for it to reach its growth potential. If devices are not secure and compromised, it can't be trusted and the IoT cannot scale. So this is critically important. Next is the technology and the way it's evolving. So one thing that's important for people to understand is, there's often, I think, with wireless technologies, a desire, maybe because it makes better news or because of history, to look for a VHS versus Betamax type fight between the different wireless technologies. And that's actually not where it's at and what's playing out. Because of the diversity of customers and applications, all of these wireless technologies are needed. They're all growing. They're all being used for unique reasons. And that's important for people to understand and where they're, if you think of it, converging or consolidating is above the wireless protocols at the application and data model level. That's how this is being brought together. That's what CHIP, or Connected Home over IP, is. So it's important that people understand that. It's also important to recognize how this is also pulling wireless technologies into the mainstream that weren't as much before. A perfect example is Thread. So Thread's a technology that we pioneered over 5 years ago, but it really hasn't started to take off as a market yet. The CHIP standard, or Connected Home over IP, has decided that in addition to Wi-Fi, in addition to Bluetooth, Thread needs to be added of 1 of the 3 wireless technologies under that umbrella because of the unique properties and values that it brings, which is going to drive significant adoption and proliferation of this wireless technology that we're at the foundation of. So that's incredibly exciting. And last but not least, all of this only underscores the importance of software and simplicity to help enable our customers and drive differentiation for them as they try to go to market. So there's a lot going on in this space. To convert all of this to numbers, what we have here is our served available market for our business in the IoT, and the first cut is breaking it out by those 2 markets that I mentioned before, so the home and consumer space, and industrial and commercial. And what you see over the next 5 years is strong growth in both of those markets, which is exciting for us, given what you'll see in a few minutes is incredible success in both of them. If you looked at it from a technology perspective, you can see microcontrollers, modest growth at 4% and incredibly strong growth at almost 20% in wireless, which we're excited about because of our strength in the wireless space. It's also important, though, that people understand that all of these wireless solutions also have a microcontroller inside them. They also have the wireless component, which puts it in the wireless bucket. So let's talk about those market segments. So the first is smart home and consumer. And what I want to do is outline a little bit more about why they're growing so fast and why they're being adopted. I don't have it here, but health care is a huge component of this as you look at all the ways that the IoT can help accelerate a consumer and health care experiences. It's significant. But also, like I said, improving the amount of time and availability in people's lives, giving peace of mind in terms of security, safety, and also just saving and conserving energy, these are all fundamental improvements that the IoT can bring. And we're incredibly excited about this because we've been investing in this market from the beginning. Sitting here today, we have over $4.7 billion, almost $5 billion of open opportunities in this market. And let me explain what that means and what that represents. When we say opportunity funnel, we look at the total amount of opportunities that we're working with our customers on in terms of the lifetime revenue their decision to use us represent. So simply put, if they decide to use us, it's not just for 1 year. It's for multiple years. And that's the lifetime revenue that would be secured by that decision. So today, in this market space, we have almost $5 billion that we're actively working on and supporting, which is remarkable. And to underscore our success, almost 50% of our revenue in IoT is coming from this space. So we've had amazing success in this space already, and we see it positioned to grow, which is really exciting. To give you an idea about that next level down of that SAM, you can see consumer with a 3% growth and then the home space with 23% compound annual growth from 19% to 23%, so tremendous growth over the next few years. And like I said, we've been investing in this space from the beginning. So we have incredible partnerships and relationships in this space. We're in all these ecosystems that I mentioned earlier. We're the driver of a lot of the fundamental or underlying technologies that go into this marketplace. And like I said, across the board, we also have a unique distinction of having all these wireless technologies. Not just this one, not just that one, we have them all, and we can integrate them broadly. This is critical. So we're excited about what's going on in this space. And to that point, because of the opportunity, because of the momentum, Silicon Labs is sponsoring an event this summer in September in Austin, Texas. And this is called the Works With event, and this is an industry first where we bring together, basically, our market, the leadership of our market, and we're talking over 600 customers for a developer event, where we work on accelerating connecting those opportunities our customers have to the Internet, those things to the Internet. It's an easy way to conceptualize this. And just to give you an idea of the event, we have keynotes and participation from companies like Google, Amazon, Comcast, Samsung. It's going to be a really exciting event. Like I said, it's something that the industry hasn't had, which we believe is a critical time and moment to help facilitate and accelerate this adoption of the smart home space. So with that being said, I'm going to pause for a minute and show you a quick video to help put this all in perspective for you. There you go. [Presentation]

So we're really excited about this event, and that's coming up here in Austin in September. So let's switch gears a little bit and talk about the other market that we focus on, and it's probably a market that gets less attention and is less familiar for people. And like I said earlier, I think part of the reason for that is, as consumers, we get less direct exposure to this space. But the ability of this market space and the IoT to impact us globally, I think, is just phenomenal. And that's incredibly exciting. Just to help put in perspective, over 60% of global energy consumption is coming out of these markets. And think of the challenge we have globally managing the energy consumption, the energy needs moving forward. And then if you look at what IoT can bring to this space in terms of more efficient use of that energy or more efficient use of precious resources like water to detect and recover up to 40% of water that is lost, so what we see here, in addition to strong return on investment for industrial and commercial applications, is the ability to make a huge impact on global energy consumption and environmental impact, which we think is really exciting. And as I said before, we have been focused on this space for over a decade, and that has put us in an incredible position for over half our revenues coming from this market space and $4 billion of open opportunities for these products. So again, really exciting and amazing momentum and potential. Just to give you an idea of the growth potential here. This goes down to the next level with the, for lack of a better term, the submarkets we cover here: industrial, smart cities and retail. And within these, look over the next 5 years at the growth that's coming out of these spaces: 9%, 17% and 23% compound annual growth. That's really exciting. And this spans such a breadth of applications. But we've been here. We've been doing this. We have the relationships. We have the application insights to continue supporting and leading in this space. I think this is probably a good point to pause and explain a concept behind our wireless technologies that isn't well understood. I mentioned earlier that there's a lot of different wireless technologies that we support, and most people equate that to technologies like Bluetooth and Zigbee and Z-Wave and Thread. But there is a tremendous amount of other wireless technologies that may be standards that you've never heard of or, in other cases, they're actually proprietary wireless technologies that our customers use for their environment. And we support all of those. In fact, we support over 100 different wireless technology. That just gives you a sense of the flexibility and ability to scale of our IoT platform. And this space, industrial and commercial is one of the largest consumers of this variation of wireless technology. So our position here is really quite remarkable. Not only do we have that experience in these verticals, but we have high-performance solutions that have the ability to integrate standard technologies as well as proprietary technologies in unique ways for our customers. So we see great potential here moving forward. So switching gears a little bit. We talked about those 2 markets. I'd like to spend a few minutes talking about Wi-Fi. We just had a big announcement this morning, and a very logical question is why Wi-Fi, why now. And the answer is here. So the first thing is, if you go back to our strategy, our strategy has been to support the mainstream technologies that are making the IoT happen, that are making the IoT real. And if you looked at Wi-Fi, Wi-Fi has been around for a long time and it's ubiquitous and critical technology from a wireless perspective. But it hasn't been an IoT technology to the same extent as it's seen success in PCs or handsets or your home access. However, with the introduction of Wi-Fi 6 or 802.11ax, that's changing. This is a wireless technology that is really tailored for IoT end applications and that makes it really exciting for us. And we see an opportunity to take this capability and integrate it with our other wireless technologies just like we have been using our IoT platform. So what does that look like? So why did we do this? There's 3 categories that I want to spend some time talking about: technology, market and people. So from a technology perspective, Tyson mentioned earlier, right, Redpine brings just an amazing history, 20-year history, a tremendous amount of patents and really talented engineering team and culture in the Wi-Fi space. And this allows us to not only take advantage of these products but also accelerate those product areas that they're investing. So what we have is take the leader in IoT wireless technology, add some more capability and resources, and we can take that and integrate it to our IoT platform, allowing us to offer even more breadth and depth of wireless technology to our customer base. From a market perspective, it's incredibly exciting because think about the tens of thousands of customers I mentioned earlier. And this team at Redpine Signals is doing a great job, but they need access to market and scale. We can connect those 2 things, which creates tremendous growth opportunity and potential right out of the gate. And then people. We mentioned how important people are. We have R&D centers globally, but this adds a significant at-scale footprint in Hyderabad, India, which gives us the ability to faster, more efficient scaling that we didn't have access to before. This is a really attractive people and talent market. So this is exciting as well. So you take these reasons. This is what's driving this. And it's worth mentioning that we have done this before. This isn't our first time to this show. We have a consistent track record of acquiring companies and technology and teams to accelerate our position in IoT, whether it's through our organic investments or through acquisition, we know how to do this, and we're really excited about the Redpine Signals team joining us. So now let's talk a little bit about those technologies. I've mentioned multiple times that unmatched breadth and depth of technology, and I think it's important to spend a little bit of time talking about that just to help underscore. So first of all, Zigbee. Zigbee is a mesh technology that we at Silicon Labs have been involved in for almost 2 decades. Think of us as the foundation of this technology. And because of that, we are the undisputed leader in Zigbee technology in the marketplace, which is exciting because Zigbee just keeps on accelerating and getting more momentum and adoption out there. And then there's Thread, so Thread, you can think of this as, in some ways, evolving out of Zigbee. And based on same 802.15.4, and what is critical here is Thread, it adds in addition the ability for IP addressability of those end nodes. And this is a market that really hasn't taken off. I mentioned earlier, we've been investing in this technology for well over 5 years, and the market is just starting to get ready to accelerate. And that's exciting for us because we are the foundation of technologies like Thread and Zigbee, and to see those being pulled into standards like CHIP and going mainstream is incredibly exciting. And we see that creating opportunity. Also, the proprietary space. I mentioned this before, proprietary is kind of a catch-all for us for all the 100-plus wireless technologies that are lesser known or truly proprietary for our customers, and they don't want anyone else using these technologies because they want a closed system. We have figured out a way, especially -- which most of this, I should mention, is in sub-gigahertz. We figured out a way to support these customers across these technologies and ensure that they work and ensure that they work reliably and in an efficient way so we can support and mix and match these technologies given our customers' needs and trends. So this space is incredibly exciting because we're recognized in the industry as able to put these together for our customer base, which leads us to Z-Wave. So Z-Wave, we acquired back in early 2018, and there was a couple of things that attracted us here. So first of all, it was a sub-gigahertz home wireless mesh technology. And what that offers is the advantage of essentially a longer range in what can be a difficult environment. It also brings a unique ease of use model, which is a critical thing our industry needs right now. And on top of that, it's an alliance with over 700 members and over 3,000 devices certified. So that's incredible momentum as well. And just to give you an idea of our ability to use and work with these technologies, once Z-Wave came into Silicon Labs, in less than a year, we had the Z-Wave protocol stack up and running on all our silicon and hardware solutions and out there in the market in customers' hands and in doing so, gave the ability to have higher performance, lower power and better price point. So this is remarkable but I think a good demonstration of the way we can move these technologies around with our platform approach. Then you get to Bluetooth and Wi-Fi. So these are standards that are more ubiquitous out there in the marketplace. And what we are doing is increasing our focus on these areas. I explained Wi-Fi, as this comes into the IoT, we want to have the ability to include this and integrate this on our platform. For Bluetooth, it's a little bit different. Bluetooth is there, and we've been focused on Bluetooth. But what we've seen is just this shift, one, in customer interest from Silicon Labs solutions; and two, a shift in the market in terms of where the technology is going that plays right to our strengths. So as the market goes to BLE or low energy solution, as the market goes to Bluetooth mesh, as the market goes to direction finding, all of these create a disruption and the need for the capability that we thrive in. And on top of that, not only do we have that strength, but we also have the ability to combine with these other technologies in a very effective way. So the takeaway here is we have not only this depth of all of these but the breadth of all of these combined and the ability to use them efficiently and integrate them to, again, put yourself in the customer's shoes. They need multiple technologies. We can provide all of those technologies that our customers need, not just the ones that we want to push. So let's talk a little bit about that platform because I think it's really important to understand this concept that you've talked about that radical diversity out there for applications and customers. How do we connect all of those to all those wireless technologies? We do that with a platform approach, and that platform approach is a fully integrated and vertical concept, starting with hardware at the silicon layer going to platform software, which you think of this as middleware, real-time operating systems, drivers, and then you get to connectivity software. And we have what's called RAL, or Radio Abstraction Layer, that allows us to more easily move these wireless technologies in and out of our platform. And what you see here is just a small sample of all the wireless technologies we support. As I mentioned before, we're supporting over 100. And then last but certainly not least are developer tools. It's so important to put yourself in the developer's shoes and understand the complexity that's out there of them trying to get from point A to point B with all these technologies that can have challenges working together and we know how to do that. So if they're at point A and saying, "I have my application and I want it to talk to this," we know how to get them there. And that platform gives us the flexibility to adapt to this diversity over here. So it would be irresponsible not to talk about security, and I think it's really important. As I mentioned earlier, this shift is happening real-time, I think, for all of us in the IoT space, where we've seen security go from something that was, in a lot of cases, a nice to have to a critical must-have feature. And I think what is most important to understand is we saw this a long time ago. We saw this trend coming. We knew that this pattern or direction was going to play out, so we've been investing in this space. And just a few days ago, Silicon Labs announced what is called Secure Vault, which is really the most comprehensive suite of security capability on IoT end devices. This is not only exciting for us, but it's really important for this market space. Just to give you perspective, these new devices offer unique identity for every device, which is really important. They offer the acceleration for the cryptography that's on the device as well as secured key storage and certificate management. All of these are fundamental capabilities not just for today, but as we go forward in the future and regulations continue to come out, it gives our customers the ability to keep updating, even if it's updating over the air and evolving with these evolving needs in the marketplace. So you watch over the next 5, 10 years how foundational or fundamental this becomes to the IoT. So we've talked about all these things and why we're leading and how we're positioned, but I think it's important just to show the numbers and help put this in perspective. What you see in green is the actual market performance for short-range wireless over the last few years. So specifically, this is WSTS short range year-on-year growth, and you can see that the market had an anomalous year last year for all of the industry, but you can get a sense of what the growth has been over the last few years. What we have in blue is Silicon Labs' wireless performance during that same time frame. And you can see how we're influenced by the overall market. As the market goes up or down, we are influenced by that. But way more importantly, we have consistently outperformed the market in this space by a significant margin. Another way to look at this is, what we have here is Silicon Labs' total IoT performance versus the IoT that's reported for other public companies compared to market performance. So how did each of us compare versus the performance of market and market, in this case, being short-range wireless? Not only did Silicon Labs significantly outgrow competition in the space, but it demonstrates the power of our exposure and position in wireless. It's such a large percentage of our revenue, and it's such a large percentage of our opportunity in growth, it puts us in an incredible position. So this is incredibly exciting to see what all of the stuff I talked about before is driving in terms of results, strong outperformance of the market. But this is done. This happened. And the next question is what does the future look like. So the best indication we have of future growth is what do we have for opportunities and what does our design win trend and momentum look like. And what you see on the left over here is the opportunity funnel by technology. And you can see today, our opportunity funnel is between $8 billion and $9 billion, and almost all of that is in the wireless space because that is where we have something that is just incredibly unique in the marketplace. But those are opportunities that we're working with our customers to support them on, and they'll convert to design wins for success. What about our design wins? So what you see here is our actual design win trend for IoT over the last few years. We don't report this granularity in terms of design wins publicly, but what you can see is the actual trend. And what you can see is the growth rate, particularly in design wins in wireless, of 43% compound annual growth rate. Think of what you saw in the previous slide. Think of the performance versus market that we've accomplished with what we've been doing historically for design wins. And then look at what we've been achieving for design wins over the last couple of years. We have incredible design win momentum, which is the best indicator of what's to come moving forward. On top of that, we also have remarkable diversity. I showed you the opportunity we have in both of these markets, but also look at the design win momentum in both of these markets. We see tremendous growth in both of these focused markets. Again, not only speaks to the opportunity moving forward but the continued diversity of opportunity that we're seeing in wireless and by market. So this is incredibly exciting for us. So with all of that being said, again, the most important takeaway here is Silicon Labs is the leader in IoT wireless. We've done this by, before people even knew what it was called, focusing and investing on this space and being consistent in that intent and hyper-focused on making sure it was successful. We've consistently outperformed the market, and we've positioned ourselves to continue doing that through decades of market growth and decades of outperforming the market. So the punch line of all of this is there's no one that's better positioned in IoT wireless to maximize this opportunity than Silicon Labs. So that's all I had for my formal presentation. What I'm going to do now is pause and take a moment to ask if there's any questions before I hand things over to Mark Thompson.

Thank you, Matt. Our first question comes from Tore Svanberg with Stifel. Will Silicon Labs only leverage Redpine's Wi-Fi technology in IoT devices? Or will there be a play in consumer, retail and/or enterprise as well?

So the way we're going to approach -- quick answer is we're going to leverage it more broadly. But we're going to start, as we always do, with a focused approach, starting with the market opportunities for the markets we're in, and then we'll look for SAM expansion opportunities. But it will be a very structured approach to keep expanding the SAM as we see our ability to integrate it into our platform and service our customers effectively. But we truly see Wi-Fi opportunity across all of the market segments I just talked about. And that's why we are acquiring Redpine Signals.

Thank you. Our next question comes from Gary Mobley with Wells Fargo. You addressed a good majority of his question in terms of in which way -- how would we use the Wi-Fi connectivity we are acquiring from Redpine, but he's also curious to know how we plan to retarget Redpine's Bluetooth, if at all.

Good question. So Redpine has a Bluetooth Classic capability as well as well as BLE. Silicon Labs has already a strong position in BLE. So what we are going to do is we believe there will be a continued need for IoT combo devices. A combo device is, think of this as a multiprotocol device, and we see that need increasing, not decreasing. Our commitment to Bluetooth couldn't be bigger, and our commitment to Wi-Fi couldn't be bigger. So we see this as a foundational capability that we're going to continue to scale and try to take advantage of post-acquisition.

Great. Thank you. Another question. What is Silicon Labs' role in other IoT connectivity technologies like LoRa and urban IoT? Are customers asking for true multimode radios that include PAN, LAN and WAN?

So 2 questions there. First was what is our role in those and then what are customers asking for. The way to think of our role is we participate in an incredible array of alliances and standards out there. And we believe that that's an integral part of what we do, and we'll continue to do that. We do not participate in LoRa which is a closed standard. So that's what the case is for LoRa. In terms of longer term and what we see for customer need and what customers are asking for, given our exposure to the market, I think we have a pretty good pulse on what the need is and what customers are asking for. And what I'd say is we focus our investment on where we see the biggest opportunities and where we see the biggest need from our customers. And as that evolves over time, we adapt. Perfect example is what we just did today with Wi-Fi. We see Wi-Fi becoming a more meaningful piece of the IOT. We're accelerating our capability there. But for the other technologies you mentioned, we'll continue to monitor. But if and when we see it makes sense, we'll accelerate our focus there.

Thank you. And that was -- last questions were from Tore Svanberg with Stifel. He has another question. What is Silicon Labs' position in AI processing at the edge?

Silicon Labs believes that AI processing at the edge is real. It's early days, but it will happen over time. And we do have solutions that we are investing in and creating for that space.

And the final question from Tore Svanberg with Stifel, looking at our SAM that we presented for consumer at home, how is it that they were relatively flat between '16 and '19?

How is it that they were...

They were relatively flat, the SAM.

This is a function of the markets. I think one of the things that makes that a little bit deceptive is how much 2019 was a down year for the industry. So if you look at those, I believe that was 2016 to 2019 if I'm not mistaken.

Correct.

So that drop in '19 hit all these markets pretty hard. So it makes that growth look deceptively low.

Thank you. And the final IoT question for now -- actually, I take that back. Next question is from Alex Vecchi with William Blair. How do you see the importance and your portfolio of multi-protocol solutions and devices going forward?

How do we see the importance of it?

Yes.

Yes, we see it as pretty elemental for our capability moving forward. Easiest way to answer that is the IoT requires multiple technologies to make it -- to be realized. We're supporting all those technologies. And like I said before, if you put yourself in the customers' shoes, we can provide what they need, just -- not just what we want to supply.

The next question comes from Suji Desilva with Roth Capital. Can you elaborate on how Wi-Fi 6 better enables IoT applications?

So Wi-Fi 6 is really tailored for these applications in a couple of different ways. One is it's ubiquitous already in the home and in devices. So if you bring a device home and have the ability to start up with Wi-Fi, it's an existing technology that helps a lot. It's also been tailored really to work from an energy consumption or power perspective much better for end devices than previous Wi-Fi standards where -- which really didn't lend themselves to any battery-powered application. Also, I should mention the IP addressability is also attractive.

Great. Thank you. We are limiting Q&A for now to IoT. So that's it for now. Thank you so much, Matt.

Thank you, everyone. Appreciate it.

All right. Good morning. I'm Mark Thompson. I manage our Infrastructure and Automotive business. And we see this opportunity in Infrastructure and Automotive, by 2023, is going to encompass $6.5 billion of total available market. And of that $6.5 billion, the served available market is going to be $3.3 billion. Out of this $3.3 billion, we will serve 3 primary markets, industrial, communications and automotive. And our mission in these markets is to make the world more connected, safer and, in particular, greener. And I'll be talking a little bit more about this later in the presentation, about how we are working to reduce fossil fuel emissions. We have a rich road map planned, and some of the key growth drivers in these markets are 5G and electric vehicles, and we're investing a lot in these areas for the future. We currently have a little over 10% market share in our markets, and we are growing over a multiyear period above WSTS market growth. John is going to talk a little bit more about that in his wrap up. But as an example of our potential for future growth, from 2018 to 2019, our design win values grew 20% overall. So this is a very good indicator of our future growth. Here we have our 2019 revenue, and this is cut 2 different ways: by market and by the design in location. And normally, you would see a computing market up here. But what we've done is we've combined the computing into our communications market. The computing portion is very small for us. It really just encompasses our timing, data center and our isolation power supplies. And so we've combined that into the communications area and have these 4 segments: automotive, industrial, consumer and communications. And you can see that communications is our largest opportunity. On the design in location, you can see that there's quite a bit of emphasis on APAC. That's actually biased quite a bit by our Broadcast consumer business. The consumer portion on the left is Broadcast consumer, and with almost all of that is designed in, in Asia. And that's why you see the predominance on the right-hand side of the design in location being in Asia. Our timing and isolation businesses are a little bit more balanced when it comes to the design in location. And so here we take this $3.3 billion SAM in 2023 and cut it by markets and by our product lines. So you can see the largest SAM that we have is industrial, followed by communications and automotive. Now you saw on the previous slide, we have a substantial amount of revenue in our Broadcast consumer area. But from a SAM perspective, the opportunity really is not that large. Our opportunity is more in the automotive, communications and industrial spaces. Looking at it by product lines, overlaying that into the product lines, power is actually our largest opportunity, followed quite closely by our timing business. And then thirdly, automotive radio. Our Access and our Broadcast consumer businesses are very profitable businesses for us, but we're not investing a lot as we are in the other 3 businesses. So I'm going to talk a little bit more detail about these 3 main markets that we're serving, starting with communications. And we've divided this into 3 areas: first, being metro/core. This is the classic area that we've had success in, in our timing business. These are operators and telecommunications providers installing products like core routers, coherent optics links and data center interconnection. And it's important to differentiate, this is connecting data centers together. These are very high-speed links between data centers. This is not links inside the data center. Next market would be the wireless space, and this is a little bit newer market for Silicon Labs. We haven't traditionally participated, for instance, in the 4G in previous markets. But as the market moves to 5G, we have a lot of good solutions that we're now shipping in this space. And these are standard things like 5G, remote radio heads, baseband units and small cells. And then finally, in the data center, these are products like Ethernet switches, artificial intelligence or FPGA accelerator cards and optical modules. So it's important to understand why we win in this space. And the first aspect is we have what's called the lowest jitter clocks. And what this really means is we have the highest performance products on the market. And this is a space, particularly the metro/core but increasingly so the other ones, that really cares about performance over anything else. And having the highest performance products has allowed us to attain very good market share in these spaces. In the wireless space, we have very high levels of integration. And this matters a lot because you have customers who are using 2 chips, for instance, for a particular application. And they can combine that down into 1 chip from Silicon Labs. We can provide a very good and obvious value proposition for the customer. In the data center, we have very short lead times for our oscillators, and this actually is very important, particularly when designers are designing PCBs. If they get stuck in the middle of their design and have to order a different frequency crystal, we can provide that in a very short amount of time, and this has actually helped us win business before in the data center market. And then finally, from an isolation perspective, our isolators are used in the larger power supplies and telecommunication systems, and we're helping to make those power supplies much more efficient and waste less energy. Here you see the key trend that Tyson touched on in the beginning in his opening, and this is just the amount of data that's being transmitted around the global Internet. You can see there was around 200 exabytes of data in 2019. An exabyte, by the way, is 1 billion gigabytes. So it's an awful lot of data, and that's going to more than double by 2023. So this is causing all the major network providers to upgrade their equipment. They're going from 4G to 5G. The metro core is going from 400 gig to 800 gig now. And the data center, as you know, has been using 100 gig links now going to 200 gig and 400 gig links. And all of this is driving an upgrade cycle and requiring high-precision components, which plays right through our strength. A couple of key points to note in this communications market. The metro/core space, as I said previously, we have the lowest jitter products, which equals highest performance. And because of that, we've been able to ship over $1 billion in timing chips to date. We're also in all top 10 data center interconnect providers. So this is just an example of the attractiveness of our products in this space. In the wireless space, I talked about integrating multiple technologies. And a good example of this is, for instance, in a small cell or a baseband unit, customers typically need to provide different sets of frequencies. For instance, they'll have to provide Ethernet frequencies to be able to transmit data in and out of the device, and then they'll also have to provide the cellphone frequencies to operate the cellphone network. Those are 2 fundamentally different sets of frequencies and normally provided in 2 different chips from our competition. We've been able to integrate both of those functions into 1 IC and still meet the stringent performance requirements that are demanded by the customers. And this was a -- has been a first in the industry, and it's something that's receiving very high demand from these customers. As a result of this level of integration and performance, we're currently shipping in 4 out of the 5 -- the top 5 5G suppliers. And then finally, in the data center, as I said, these high-speed links are continuing to get higher and higher, and really, this looks a lot like the metro/core market has looked before. The need for performance is increasing, and as I said, this plays right to our strength of high-performance timing products. One other factor is inside the data center, optical modules are used quite extensively and there's a need for very small, high-performance components that fit inside those, and our high-performance oscillators are perfect for this type of application. Moving on to the automotive market. We've divided this into infotainment, electric vehicles and what we call networking or timing networking. And you can see on the SAM side that the -- our portion of the infotainment market is relatively flat from '16 through '23. This is specifically the AM/FM analog and digital radio portion of the infotainment market. And the SAM is relatively flat. But conversely, the SAM for electric vehicles and hybrid vehicles is growing quite rapidly. We see 17% compound annual growth rate from '19 to '23. And the timing networking portion is also growing as well. In the infotainment space, as I said, this is both analog and digital radio as well as this phenomenon called remote tuner modules, and I'll touch a little bit more about that in just a moment. In the electric vehicle and hybrid space, things like traction inverters, battery chargers and communication buses are good application examples. And then networking, Ethernet, advanced driver assistance systems and even infotainment systems that use our high-speed timing devices. So why do we win in this space? Firstly, on our AM/FM radio side, our CMOS tuners are reducing printed circuit board space. We have a very efficient standard CMOS solution that's very small, and it's helping customers provide very cost-effective and small solutions. On the isolation side, we have products that are designed with very robust noise, and this is really important in the automotive space. Cars generate a lot of electrical noise. They have motors and switches and all sorts of things going on inside this automobile, and it's important to have devices that are very robust and operate normally even in the presence of high levels of noise. We also have tuned some of our devices for these new silicon carbide transistors. This is a relatively new phenomenon in the automotive space. Some of you may have heard about this, and these silicon carbide transistors provide faster switching times and can help the customers design more efficient system. And we have designed our isolated gate drivers to work specifically with these silicon carbide transistors. And then finally, in the timing space, our high-precision clocks are often needed for the high levels of data that are starting to be transmitted around the car in these advanced driver assistance systems. All right. Here we see the forecast for battery electric vehicle and plug-in hybrid electric vehicles. This forecast is a synthesis of numerous market reports as well as discussions with our customers. And you can see that what this forecast says, it shows a predominance and out in the future of battery electric vehicles over plug-in hybrid. Regardless of which way this plays out, though, there are similar systems that use our isolators and gate drivers in either one. Whether it's a battery electric or a plug-in hybrid, it uses similar components from Silicon Labs. Well, all of these systems need charging, battery management, operating motors, these types of things. Additionally, what we're seeing in these newer vehicles coming out. I mentioned advanced driver assistance systems. This data point is actually a slightly older data point from 2017. But even a few years ago, these systems were generating between 3 and 40 gigabits of sec of data -- 40 gigabits per second of data, and that's an awful lot of data, and that has just gone up since 2017. And so this is a lot of data to be processed in real time. And so the need for high-performance, high-precision timing devices is just increasing. All right. Looking at some key points in this area. From an electric and hybrid vehicle perspective, we believe Silicon Labs is the leader in digital isolators in the automotive space. Our market share, we estimate right now, is around 25% in the digital isolation portion of electric vehicles. And the served available market -- the opportunity in electric vehicles is quite nice. It varies between $20 to $50 per vehicle. Another aspect of our products is the superior lifetime of them. You have to have long-lasting products and very high-quality, reliable products to participate in the automotive space, and that's a hallmark of our products. They're very long-lasting and customers trust them. In the infotainment space, these are our analog and digital radio solutions, and what we've been able to do, which is different from the competition, is to provide pin-compatible solutions, and this allows the customer to design a system, whether it has 1 tuner, 2 tuners, 4 tuners, they can design 1 PCB and just populate or depopulate chips depending upon how many channels of tuners they want, and they don't have to change designs. They don't have to redesign the printed circuit board. They can just populate or depopulate the chip. So it's a very simple and easy way to scale across our product portfolio with the Silicon Labs devices. We also have a smallest solution. I mentioned on the previous slide the remote tuner module. What this is, is a fairly new trend of taking the AM/FM radio out of the head unit and putting it somewhere else in the vehicle, and there's a couple of advantages of doing that. Number one, the head unit has a number of different technologies in it that didn't used to be there, things like Wi-Fi, Bluetooth, touchscreens, even cellular, and these are fairly rapidly evolving technologies. Every time they change one of these technologies, they switch out the Bluetooth or the Wi-Fi or something like that, it can affect the performance of the analog or digital radio. Clearly, that's not desired. And so instead of having to check and update the AM/FM radio every time they change something in the head unit, they would prefer to evolve those technologies independently of the AM/FM radio, and taking the AM/FM radio out of the head unit allows them to do that. Additionally, if you can put the AM/FM and radio closer to the antenna, that's just going to increase performance. And so what we're seeing is manufacturers take the AM/FM radio and put it, for instance, in various places, sometimes in the pillars between the side windows and the roof, and that gets it closer to the antenna on the roof and out of the head unit. Fortunately, for Silicon Labs, because of our efficient implementation, we have the smallest solution available, which is perfect for remote tuner module. If they want to make that RTM as small as they possibly can to be able to fit it in as many different places as they can, Silicon Lab solution is the perfect solution for that. Finally, in the in-car networking space, we are now offering automotive-qualified clocks and buffers tested up to 105 degrees C. So this is a perfect type of product for an automotive application and perfect for these various types of things like GPUs, LIDAR, radar, 1 gig, 10 gig Ethernet, these types of functions within the car. All right. Moving on to the industrial market. You can see we have a number of different submarkets here. I'll comment that the broad industrial is the first market listed here. This is really just a collection of a huge number of smaller markets in the industrial space. The first individual segment, motor drive and metering, this is a great opportunity for us. This involves things like electric meters, induction motors. And induction motor is -- really, what these are is just larger motors with significant torque. They can be used in things like water pumps, kitchen appliances, air conditioners and fans, automobiles, boiler pumps, compressors, all these types of things. And the important part here is that there are pretty large motors that use a lot of electricity. And if you can make these motors more efficient, you can actually save quite a bit of electricity. And then servo drive, really what this means is a motor system with feedback. And why would you want feedback in a motor system? Well, if you're -- if a motor is spinning and something happens to it that causes the motor to stop spinning or interferes with it, that can actually damage the motor. And if you can detect that and shut the system down before the damage occurs, that's obviously advantageous for both the customers and the end users. And so in order to provide feedback in a high-voltage motor system like that, you have to have isolation. You can isolate the communication bus. The next market would be industrial automation. And these are things like a PLC is a programmable logic controller. This is really just a computer in a factory. We also have things like factory control and robotics. This is direct control of large machines and robotic arms and these types of things as an example of industrial automation. And then the timing industrial portion, these are things like medical imaging, broadcast video and machine vision. And the key theme here is very high resolution, real-time video that has to be processed in real time, and that requires very high-precision components like FPGAs, in many cases, which our timing components are perfect for. So why do we win in this space? Well, this is an example of -- the programmable logic controller, for instance, is an example of a classic Silicon Labs value proposition, where we take a whole bunch of discrete components and integrate it into just 1 IC. And customers, of course, love that because it reduces the size and cost of their system. The fast response time of our isolators is critical in designing highly efficient motor systems and power supplies, and that's a great advantage of using our isolators over the competition. Similar in the automotive space, where I talked about silicon carbide, high-voltage transistors. In the industrial space, we're now seeing customers use gallium nitride or GaN FETs. These are also a different type of high-voltage transistor, which is relatively new. And we have, again, optimized our gate driver, isolated gate driver products to specifically work well with GaN FETS, and we're seeing quite a bit of interest from our customers now in this space to use these products. And finally, in the timing industrial space, as I said, there's a lot of FPGAs used and there's a lot of high-end FPGAs used to be specifically, and they require some very, very precise timing components in order to operate properly. All right. Looking at some of the trends in this space, and this is where I get to talk a little bit more about how we're helping to make this world a better place. One of the key trends that everyone seems to be talking about is how do we conserve energy. And you see governments issuing efficiency standards. The whole point is to eliminate wasted energy in power systems and power supplies. And a good example of this is a data center. A data center may have 100,000 servers in it, and each one of those servers has a power supply in it. And if each one of those power supplies is very inefficient, they're generating a tremendous amount of heat because that's where wasted energy goes. It gets transferred into heat. Well, if you have 100,000 servers all generating a bunch of heat, you're going to have a tremendous cooling bill. You have to have a lot of air conditioners and you have to work very hard to dissipate that heat and cool the room down. Conversely, if you can make those power supplies much more efficient and they don't waste very much heat and your cooling bill goes way down, the amount of energy goes way down, and this is just going to be good for the environment because of the amount of electricity that will have to be used obviously. Smart electric meters are another example where governments and countries are rolling these out, not just to help conserve energy by implementing the meter itself, but it also helps create better consumer habits. If a consumer knows how much electricity they're using and when they're using it. They can better decide when to do certain things and when to use electricity. Maybe it's in a lower peak usage time, which will lower the cost and make it easier on the electric utility to generate that power. And then really, from a motor perspective, electric motors are used all over the world. I mean I think there's -- the statistic is over half the electricity in the entire world is used in electric motors. So if you can run a motor at a variable speed, for instance, instead of just an on/off speed, that will save a tremendous amount of electricity. If you can run it at half speed, it saves almost 75% of the electricity used on that motor. So that's a tremendous opportunity to put the smarts in electric motors and not just run them on/off but to run them at variable speeds and conserve the amount of electricity that's used. Right along with conserving energy is reducing greenhouse emissions, and we're all talking about climate change and how big of a deal this is, particularly if you own property on the coast. This is a huge deal. So it's important to do what we can to positively affect this. You're seeing California mandate, solar power on new homes, tax subsidies for electric vehicles and solar power. Fun fact, Texas leads the nation in generating wind energy. Over 25% of the wind energy in the nation is generated right here in Texas. The point of all this is that Silicon Labs is central to this drive to conserve energy and reduce greenhouse emissions. Our isolators and gate drivers are fundamental products; and solar inverters, solar power and wind energy and electric vehicles in all of these areas that are being driven to help make this world a greener and better place. And it really is fantastic to be able to work in a company and participate in this type of a business where we can feel good about what we're doing because it's -- it feels great to help make the world a better place to live. All right, a couple of key points in these spaces, motor drive and metering. So emissions is a critical aspect, performance aspect of our isolator devices. And really, what this is, is how much electrical noise are these devices generating. And this is critical because, for instance, an electric meter has to be certified by the FCC in the United States in order to be shipped into production. You can't spew out a lot of electrical noise because they could interfere with other things around it. We've actually had cases in the past where our competitors' parts spewed out too much noise and didn't pass the certification. And when replaced with our parts, which were quieter, it did pass the certification and allowed the customer to ship the product into production. So this is a critical performance aspect of our products that we worked very hard on in achieving a high level of performance. Fault monitoring is another area where we've built in the capability to monitor faults and respond to them in our isolation products. And again, this is an example of if a motor's spinning and something happens, if you get it to stop spinning. We can help respond to that and shut down the system before damage occurs. And robust noise immunity, I talked a lot about this in the automotive space. This is also important in the industrial space because we're talking about large motors, factories, these types of things that have a lot of noise in them, and it's important to be able to run in that type of environment reliably. In the industrial automation space, I talked a little bit about how the programmable logic controller device saves PCB space. We literally took a large number of discrete components and integrated them all together into 1 IC, and so this has received very good response from our customers. This is patented, reliable technology. So our customers rely on these parts to run a long time. Just like in the automotive space, the industrial space, our customers install these pieces of equipment on their factory floor and expect them to run for sometimes decades. And because of this reliability and high quality of our products, we've shipped over 1 billion channels of isolators to date, and we're just continuing to move forward and grow that into the future. And then in the timing and industrial (sic) [ timing industrial ] space, we've recently introduced some new clocks with integrated crystal oscillators. So typically, you would take a crystal oscillator and a clock, and that's 2 devices put on a PCB. We've combined them into one, and this allows us not only to reduce the amount of PCB space but also to test these systems more reliably. So we 100% test our oscillators. And that may not sound like a big deal to some, but not all oscillators are 100% tested. And we can actually, in the testing, look for signatures of a future failure and weed those parts out ahead of time before the customers ever see them. And so we've actually been able to increase the overall quality of oscillators at some of our customers because of this capability. And then finally, from an FPGA perspective, we work with all the major FPGA providers and have a number of reference designs, which makes it easy to design in our products in these industrial type of systems. Fun fact, you see a picture of a broadcast camera there on the right. The latest Avengers movie that you may have seen was filmed with cameras using our high-precision timing devices. So we're not only helping to reduce greenhouse emissions. We're helping to make the world a little bit better place with some cool movies. Okay. So before I get into the diagrams, I wanted to do one thing here real quick. I'm sure that for all the folks online, you've seen a lot of these analyst days, and just about everyone, you hear the same thing, which is our products are better, we're better than the competition, and it probably tends to run together and become less believable over time. Well, I wanted to provide 3 concrete examples of why our products really are better than the competition. So the first example is a patented technology that we call MultiSynth. And this actually is very simple to understand. With the competition, if they want to generate an odd clock frequency or a non-even clock frequency, and in this case, I took the example of 233 megahertz, the way they do it is they'll generate 3 clock waveforms, 200, 200 and 300, and then they'll keep repeating that pattern over and over. If you average those 3 numbers together, you get 233 megahertz. So that is one way to generate a 233 megahertz clock signal. Unfortunately, this is the very definition of clock jitter because you're varying the frequency of the clock back and forth over and over and over. And if customers have a high-speed data link, 200 gig, 400 gig and 800 gig link, it is not going to operate properly with this amount of jitter on the clock. It just won't do it. You have to have a very clean, precise clock signal to run these very high-speed data systems. The way that Silicon Labs generates this clock signal, we have 1 part per trillion control over our clock edges. So instead of averaging these clocks together, we actually just generate the precise clock frequency, 233 megahertz, in this case, every time. And this allows us to achieve a much higher level of performance than any of our competitors. We're the only company that has this patented MultiSynth technology and the only company that does it this way. So this really provides an advantage, a performance advantage for Silicon Labs when it comes to generating these different types of clock frequencies. The second example of why we have better products is, again, another patented technology that we call DSPLL. And the analogy I like to use in this case is if any of you have small children or have been around people with small children, you probably know that if there's 2 or more small children together, if one of those small children has something, the other one typically wants it and they oftentimes fight over it. Well, now I'll transfer this to analog PLLs. An analog PLL is a circuit on a chip that generates a fundamental clock frequency. And if you want to generate multiple sets of fundamental clock frequencies, what our competition does is they put multiple analog PLLs on the same chip. So in this example, I have 2 analog PLLs on the same IC. And what happens with the analog PLLs is they act just like small children and they fight. If you put one analog PLL at a particular frequency, the other analog PLL tends to want to go and be at that frequency as well. And typically, that's not what you want the chip to do. You want the 2 analog PLLs to generate fundamental different frequencies. But because they fight and they want to be at the same frequency, this generates a lot of crosstalk and noise on the output clocks. And again, similar to the first example I showed, where you have a lot of jitter, you have a lot of jitter, you have a lot of crosstalk and noise, your high-performance, high-speed systems are not going to operate properly. The way that Silicon Labs has solved this solution is to take one analog PLL and put it on chip and then to do all the other clock generation in the digital domain using a DSP. And because it's in the digital domain and it's used -- being generated through digital processing, they don't interfere with each other. And we just have one analog PLL sitting nice and happy alone, not getting interfered with, not being fought with by any other analog PLLs and everything else is done in the digital domain. And this allows us to, number one, have higher performance; and number two, in many cases, eliminate external components that our competitors use to try and eliminate the fighting between the PLLs. The third example I'll give involves isolation, and Tyson touched on this point a little bit in his opening but the isolation technology is a fundamental technology. It creates a barrier between one side and the other, an electrical and physical barrier so that one side cannot touch the other. And that's important to isolate high voltage to low voltage and quiet to noisy. Well, if you don't own this isolation technology, then it is physically impossible to integrate functions on either sides of those barriers -- of that barrier into one chip. Because Silicon Labs owns this isolation technology and we implement it in a standard CMOS, we have the capability to integrate all sorts of functions and features on either side of this barrier. Similar type of thing can be said for optocoupler manufacturers is they really don't have this capability to integrate in standard CMOS like we do either. So this allows us to offer really a superior value proposition, and we continue to push the envelope with regards to integration in this space. And that's a big part of our road map going forward, is to integrate more and more functions and features into these isolation devices. So I wanted to touch briefly on competition. So from a timing perspective, we listed the various product categories here on the left, and you can see that in clocks, in jitter attenuators and oscillators, we are the leader in this space. We have the most comprehensive portfolio with the highest performance, as I've been saying, out of any of the competition out there. In the clock gen/buffers and wireless clock space, these are a little bit newer categories for us but ones that we've been focusing on and have a very good portfolio. I feel that we're really taking share in this space. And then the final category is SyncE/1588. You can see that we have Microchip over there who acquired Microsemi. They've been the traditional leader in this space, but we recently acquired some -- the embedded business from Qulsar and this is helping us to accelerate our road map and accelerate our product development in this area, and this is a space where we're -- we see some good growth prospects. And in general, I would just comment that there's been a number of M&A events that have occurred in this space, both with Renesas, IDT and Microchip, Microsemi, and we do believe this actually presents an opportunity for Silicon Labs. This presents an opportunity for us to grow share and to approach these customers and really talk about the value proposition that we bring while these other companies integrate themselves and figure all that out. On the isolation competitive front, from a digital isolation perspective, we are the leader in digital isolators. You can see the competitors we list, Infineon and Broadcom, are more of traditional optocoupler manufacturers, although Broadcom does have a little bit of digital isolation products in their portfolio but they're classically optocoupler manufacturers. And what we're seeing is customers migrate from optocouplers to digital isolators. So this is a very clear value proposition in going from one to the other. We provide longer lifetimes with much more stable products that don't age like optocouplers do. Then as you compare us to the digital isolation providers, this is ADI and TI. You can see that digital isolators, we're the leader, isolated drivers as well. We have a much broader portfolio of isolated drivers than ADI or TI. When it comes to the other categories, isolated analog, isolated ADC and onboard power, these are newer areas for us and these are areas of investment for us as well. So as we move forward and grow our product portfolio, you'll start to see more and more products introduced from Silicon labs in these areas. All right. So in conclusion, we feel like in infrastructure and automotive, we are participating. It's very large growing markets, specifically in the industrial, communications and automotive. And specifically, we are focusing our road map and investments in key growth areas, including 5G and electric vehicles. We have patented technology, and I have given you a couple of examples of that patented technology and how it allows us to achieve superior performance, integration and programmability and flexibility. And we have a very healthy product road map, which leads really just to a strong revenue growth opportunity for the Infrastructure and Automotive business going forward. I want to thank you for your time, and I'm happy to entertain questions.

Thank you, Mark. For our remote audience, just a reminder, you may submit questions using the tool provided in the webcast. We are focusing on questions in Infrastructure and Automotive, but we will field broad questions again at the conclusion of the presentation when the full team joins.

So your question, Mark, is from Tore Svanberg with Stifel. What are the other segments of the market that could be complementary to both timing and isolation for Silicon Labs?

What are the other markets that are complementary to timing and isolation?

Segments of the market that could be complementary to both timing and isolation for Silicon Labs.

Well, I'd say that in the presentation I just gave, we highlighted general -- several different markets in each area, there's actually quite a few others. For instance, I'll just give one example. I didn't really talk about the market opportunity in solar power for isolators for instance. That is an area that we -- I talked a lot about reducing greenhouse emissions, but the solar is actually listed on the SAM slide as well. That's a huge growth area for us and one -- and an area that we're doing very well. So I guess my -- the point I want to make is there's a lot of different market areas that we play in. And I just didn't have time to go through each and every one of them. I listed the primary ones. And if you look at the slides, there's other examples of markets that are shown that we just didn't talk about, and I'm happy to follow up on any of those at a future time.

Thank you. And the second part of Tore's question, what new investments is the company making for clocks and power management?

So we're -- we have, what I would call, very rich product road maps. Because we have some fundamental patented technologies, we feel not only an obligation but we are incredibly excited to leverage those in products going forward. And taking the -- for instance, the timing technology that we've classically held an advantage with the core/metro space and transferring that to the wireless and data center markets is a good example of us leveraging that technology into additional spaces. And we have a lot of room to grow just even in the wireless and data center space alone. These are relatively new market areas for us, and we're continuing to invest heavily in these areas. So while the core/metro, as I said, has been a classic focus for us, we're still investing in that area but there's a tremendous amount of growth. And even in the isolation space, now you look at electric vehicles, this is a rapidly evolving market and we're seeing many more customers coming into this market and create new systems. There's a long way to go for this market. You saw the forecast on the Slide 2 that we showed and there's a lot of subsystems in the automobile that we are not even yet playing in that we could be playing in, in the future. So we're -- we have -- I can't get into specifics, obviously, from a competitive standpoint, but we have a lot of products on our road maps, both in the isolation power space and in the timing space and a lot of room to grow in all of these spaces. I hope that answers and addresses the question.

Thank you. The next question comes from Blayne Curtis with Barclays. What is your view on MEMS-based timing?

I didn't understand.

MEMS-based timing, what is your view?

So MEMS-based timing, we a long time ago had a MEMS product that we end of life. We felt like at the time, it was -- we wanted to focus actually more on the higher-end space. The MEMS products that we were offering and many of the MEMS products at the time were targeted more at the low end. And we felt like focusing where our strengths are in the high end was a better value proposition for us and for our customers. And so that's really where we've targeted our efforts, and there really hasn't been any high-performance MEMS devices to date. We have nothing against MEMS technology. Obviously, if MEMS technology progresses to the point where you can achieve very high performance, that's something that we would want to look at. But what we're offering today and our plans for the future are very high-performance products, and we feel comfortable the way we're positioned with our customers.

Thank you, Mark. That's all for questions for Infrastructure and Automotive right now. Please continue to submit questions, and we'll field those at the conclusion of the presentation.

Great. I would love to introduce next, John Hollister, our Chief Financial Officer.

Thank you, Mark. I'm John Hollister, Chief Financial Officer. To wrap up today, as my colleagues have talked about the -- hold on. Check, it's much better. All right. To wrap up today, my colleagues have talked about the journey that we've had as a company as well as the tremendous opportunity we see with the products that we have -- check. Okay. As well as the tremendous growth opportunities in front of us. I want to wrap up focusing on why Silicon Labs represents a great investment and it starts with us addressing high-quality, diverse markets that offer a long runway for growth, and we are addressing those markets with highly differentiated technology, bringing superior gross margins. The differentiated technology position that we have in these markets is supported by a very robust patent portfolio. We have around 1,700 patents and the Redpine Signals acquisition is bringing around 100 additional patents to the portfolio. So that's very good. We have an attractive financial model that we've demonstrated success in operating to and we have an excellent track record of execution through cycles. And last, the company offers a very strong balance sheet and a healthy cash generation capability. So I want to focus on the financial model. What you see here is a scorecard over the last 4 years of performance. Our historical model is shown on the right. And you can see that in 2017 to 2018, we performed just about on every category of our financial model. In 2019, of course, the industry downturn set in for the semiconductor industry, broadly speaking, that impaired our ability to operate on model. But even with that, we ended the year at close to 19% operating margin, which wasn't bad in light of circumstances. We are updating the model this morning. Tyson alluded to this in the opening comments. First of all, we are adjusting our growth target from an absolute goal to be a market multiple goal. We are targeting 1.5 industry growth. I'll talk some more about what that means in a couple of slides. We are increasing our gross margin objective by 100 basis points to a range of 59% to 61%, and we are lowering our long-term objective for SG&A expense on a non-GAAP basis to 16% to 17% with no change in our non-GAAP operating margin objective. Looking at our end markets, you've heard a lot this morning from Tyson and from Matt and from Mark about the end markets that we're serving. I'll just summarize that we are serving very large markets. We estimate our SAM, served available market, for 2019 at about $10 billion and we see a 9% CAGR growth opportunity in that market to $14 billion by 2023. That's quite robust and is supported principally with growth in the industrial market at 13%. And as we've seen, we are highly exposed to the industrial market, both in the IoT area and in the infrastructure and automotive area, so a tremendous growth opportunity in our served available market. We also benefit from customer diversification as you've heard this morning. What you see on the left is the distribution channel on the green line. Our distribution network now accounts for about 70% of our total sales, and that has risen over time. This acts as a force multiplier for our sales force and allows us to penetrate more and more customers, particularly smaller customers around the world. You also see our top 10 customer mix, which is down to around 20%, and that statistic has been coming down over time, yielding less customer concentration which is beneficial for the company overall. What you see on the right is another expression of that where the long tail is shown here from $10 million customers down to $10,000 customers, and you can see the count extend all the way out to 5,000 customers and you can continue to run that all the way out to 30,000 customers, indicating a very diverse set of customers. On the point of diversification and end market exposure, this is a view of our top 20 customers who account for around 30% of our total revenue and the types of applications that those customers are serving. And you can see here that about half of our top 20 customers are serving the industrial end market with good exposure to the communications end market as well with a few in consumer and automotive in the top 20 as well. So this provides a good indication of the end market exposure that we have, particularly in the industrial end market. So this is showing our growth performance over the past several years. And you can see that Silicon Labs has outperformed the industry in most periods under review, and the average amount of outperformance versus the industry has been running about 4 points of growth improvement, better performance versus the industry. And that's true even last year when there was a broad industry downturn, the entire market was down. We were down, but we were down much less than the industry, showing our ability to outperform the industry even under challenging circumstances. So taking the 9% growth opportunity that we see and our objective to outperform the industry at 1.5x or better, we believe that the average level of outperformance running in the 3% to 5% neighborhood can indicate to you that with the SAM growing according to these estimates and us achieving our objectives, we see the opportunity to grow double digits, as Tyson had indicated earlier this morning. On the earnings and profitability front, this is an area where we've continued to perform well. Going back to our very first Analyst Day in 2014, we've steadily improved our earnings performance. You can see our non-GAAP earnings per share steadily increasing from around $2 a share back in the earlier portion of this decade to near $4 a share in 2018. And along with that, our non-GAAP operating margins improved from the mid- to upper teens up to the low 20% neighborhood. So we've demonstrated the ability to operate to our model, and this is what we intend to do in the future going forward. The company is also a healthy cash generator, as we've talked about earlier today. We're averaging in the neighborhood of $150 million to $200 million of operating cash flow per year. Since 2007, we've generated around $1.6 billion in cumulative cash flow. We've deployed around $1.8 billion of that with around $1.1 billion going into our share repurchase program and $700 million going towards strategic M&A. And you can see the list of targets that we've successfully brought into the company. At the bottom of this chart, Redpine Signals is the newest one, and the acquisition of Redpine is not yet accounted for in this data. We currently have over $130 million in our share repurchase program, and we will continue to be opportunistic buyers based on conditions. We also have a track record of executing well through cycles and through the quarterly process. This analysis shows our performance to our guidance. And you can see that for the vast majority of periods under review, we are executing at or above the midpoint of our guidance. This is an important point because it speaks to the visibility in our business model, and that visibility is enhanced by the amount of customer diversification that we have. That's true across customers and across applications. By not having so much dependency on any one customer or any one market, we're able to benefit from that. It actually creates a more predictable business model. We've done a lot in the area of modeling our design win traction, in the opportunity pipeline and in how those statistics are translating into revenue. And this is something that we continue to refine over time. On the point of guidance, of course, as Tyson mentioned at the top, we are in the midst of the coronavirus outbreak situation. This has resulted in us updating our guidance this morning. The good news is that on the supply chain side, all of our suppliers are up. They're all functioning. There are some minor impacts in terms of some bills of material shortages and some lead time extensions, but all the suppliers are up and running and functioning, generally, normally. Where we've seen more of an impact is on customers. We've seen some customers unable to resume full operations, although most of them are resuming operations. So the update to the guidance this morning is that we are lowering the revenue range to $200 million to $205 million for the first quarter. We are not changing the non-GAAP gross margin guidance. Our operating expenses on a non-GAAP basis are coming down a bit due to reduced travel and lower variable compensation. And our non-GAAP earnings per share estimate, we're tightening the range and lowering it to $0.49 to $0.53. So that's the update there. I want to touch on the Redpine Signals transactions. It's a very exciting acquisition opportunity for us. We've signed a definitive agreement to purchase the connectivity assets of Redpine Signals. This includes their ultra-low power Wi-Fi technology as well as their Bluetooth technology. This is expected to increase our overall IoT growth rate, as we mentioned earlier, and we look at the contribution from this to be on a $20 million run rate for this year with very nice gross margins, gross margins that are aligned and consistent with our corporate average. The acquisition will bring us 200 employees, primarily in the Hyderabad, India site. And that's an important point to reflect on as well, where this new site will give us the ability to scale our company in an efficient way and that's not just limited to the IoT BU. Over time, we can look to add other corporate functions and expand what we're doing in the Hyderabad site over time. So that's a great opportunity for us. It will -- the acquisition will bring an incremental non-GAAP OpEx level of $15 million also on an annualized basis, and we are targeting to close the transaction within the second quarter. So that's about it for me. In summary, we're targeting high-quality, diverse end markets that offer a very good runway for growth. We're gaining share in these markets with highly differentiated technology. And we have a good track record of execution at the company and are well supported with a healthy cash flow and strong balance sheet. So with that, I'll invite my colleagues to join me onstage here, and we'll take some final questions.

Yes. While we're getting the chairs up here, I wanted to summarize just a little bit about Silicon Labs 4.0 and make a couple of additional comments on the macro situation out there. John talked about our performance to the model and the visibility we have into our business. If you look -- actually, our bookings are actually pretty strong right now. We've kind of returned to a normal booking pattern. As we come through the remainder of the quarter, we had about a $10 million hit on the Q1 revenue. I would say, though, that our visibility into Q2 is still limited. We see the channel replenishing and customers going ahead and continuing to order. But our visibility into the end market demand that's going to be driven by the slowdown that I'm -- we're all anticipating on the consumer demand side, that really -- we have limited visibility into Q2. So when we get to our Q2 -- Q1 earnings call next month, we should have some additional information to be able to share on that. If you look at the presentations from today and as we talked about not just the historical performance of the company but also really the opportunity that we have looking forward, and what we're talking about in terms of what we're calling SLAB 4.0, Silicon Labs 4.0, where we are simplifying our products and the way we work together, really driving that concept of simplicity, in order for us to accelerate our growth into the future, we've got the opportunities. We've got the platforms. We've got the products. We've got an award-winning culture and this new acquisition with Redpine Signals coming in and really excited about our ability to accelerate our growth going forward and also to drive efficiency in SG&A and drive efficiency into our R&D so that we can continue to make that acceleration of growth also an acceleration of profitability over time. I think just also as you reflect in terms of the fabless model and the scalable supply chain that we have, it's very important to realize that when times -- when things come back and that growth happens, we've got a supply chain that can support that. But also as we run into a challenging time, we also can scale on the downside very efficiently. And we've seen that now in Q1, with our revenue that stepped down a little bit, but actually our gross margin's holding in very well. And I think that's an advantage of the model that we use, leveraging world-class suppliers like TSMC and ASC and others who have been great partners with us over time. And managing through that with this model is actually very, very healthy. Very, very excited about the leadership that we've been able to have, but the fact that the markets that we're targeting are high quality. We talked about the diversity that we've been able to achieve in the business, which is really remarkable when you look at the IoT business and the number of customers, I think, Mark's business in Infrastructure and Automotive, the diversity of that and the quality of those markets is really, really important to understand in terms of the durability of our business over time and also the fact that these markets are very, very exciting in terms of the runway of growth, the decades of growth that we have in front of us as these technologies get more deployed into the market and the trends that are really impactful into the world in terms of energy consumption, in terms of connectivity and connecting people and things together and what that means for industry and for society, and I think that, that's really, really important. So the key takeaway, we'll get into Q&A. We're going to invite the team up here but that Silicon Labs is really well positioned to scale and to outperform the market going forward, and we very much appreciate everyone's support and trust that you have in us as shareholders and as employees and as customers and everyone else. And we look forward to taking your questions. So I'll invite the team to go on and come on up. We've got Mark and Matt and John. We've got some more chairs here. And look forward to the questions. I'm sure, Jalene, you're compiling them for us here. So...

Ready to go. John, we've got a couple of financial questions for you. First question from Tore Svanberg, Stifel. At what revenue level would you increase your operating margin target to -- of 20% to 25%?

We think we have a great opportunity to grow the business and manage our OpEx, as we've done in the past. I think if you really just back up and kind of run the math of the opportunity to reach $1 billion in revenue and $4 in non-GAAP EPS, that is a great objective, and that would yield model performance. When we can get there is going to be a function of the market as well as our execution, but that is a good framework for us to think about growth and profitability in the business and we were close to $4 a share a couple of years ago. It is very possible for us to achieve that in the near to midterm.

Thank you. The next question comes from Matt Ramsay with Cowen. John again. As the old Broadcast and Access businesses are folded into the Infrastructure and Auto segment, is there any change in the decline rates for these or investment strategies for those segments?

No, there really is not. We continue to enjoy rich market share in those markets. We continue to have the situation where we're not investing a lot in those markets. And we'll continue to see gentle declines on those. So we don't expect dramatic changes in those dynamics.

I think just one thing to add to that. If you look at the growth targets that we had that were on an absolute basis, I think it was really clear in the last year when we saw double-digit declines in the market and where we actually outperformed 3.5% down last year, which was significantly better in the market, especially when you look in areas like wireless, where we had actually growth and very, very good performance. But to measure ourselves versus the market and really talk about here is the market and we are going to gain share, and we are going to outperform the market and actually going to -- if you look at that 9% CAGR that we anticipated, it's everyone's guess as to what that's going to really be. But at 9.5%, 1.5x the market, that's 4% or 4.5% higher than the market. And so we're actually going from a 10% to 15% absolute range, which depends on the year -- some years, it's higher; some years it's lower -- to really looking at really -- honestly, looking at how that -- what the market is relative to the types of products that we have and saying that we are going to outperform that market. And I think that's a better metric of success and it's also 9% plus 4.5% is 13.5%. So we're actually increasing our view of the overall expectation of growth but also moving it to this market-based metric, which I think is a better way to look at it.

Thank you. Also from Matt. For John, can you expand on the drivers of raising the long-term gross margin target?

It's really been a consistent outperformance of the prior goal. I think we have done an outstanding job, both in the IoT business unit and the operations team, to cost down our products, deliver on the value. And this really speaks to the fundamental advantage we have by having a highly integrated approach where our system-on-chip platforms have both the microcontroller and the radio together. And just as we've done on the TV tuner use case, we can cost down and jump to the next process node quickly, and that process has happened and it continues underway.

I think that Silicon Labs has always achieved premium gross margins compared to our competition, and I really view it as 3 reasons: one, excellence in the supply chain. We've got our own proprietary test system, which we enjoy, and it's very good for broad market applications but also saves a lot of money in the supply chain in driving our cost with the next process node and all of that. We do a really good job. There's always a better job to do. But in terms of driving cost, we've actually been very successful over the last couple of years. I think the second part is -- what you were talking about is really around differentiation and around innovation, and we do a lot of integration of functions. We do a lot of innovation in terms of our patented technology. And that differentiation ultimately creates value for our customers. And then really the most important thing, and it's really cultural, is to sell the value that you have. When you're replacing components on a board, you need to insist on getting paid for it and to really compare that to what the other solutions are. And so the culture that we have, both in our training and the way we go into the channel, is really about selling the value of what we have and making sure that for those innovations and for the products that we're able to deliver, that we actually extract that value. That takes a lot of discipline, to be able to achieve that level of gross margin. And I think that we've made incremental progress, and that's really why we all felt as a team that we were comfortable at moving that gross margin target up.

Next question comes from Suji Desilva with Roth Capital. I'm wondering if there's any upside benefit from Redpine in the gross margin increase.

It's constructive. I'd say, given the revenue level that the company is at, it's not that big of an effect in the mix today, but it is constructive. And as we've indicated, probably more to the point is we view the Redpine acquisition as enhancing our IoT growth rate. That's super excited. As Matt talked about, we see a lot of opportunity to run with those products in our channel and really catalyze what those guys have worked so hard to put together.

Second part of Suji's question is about automotive and our long-term strategy. Wants to know what the opportunity is beyond today's point products and also looking into auto connectivity platforms longer term.

So I can start at least. We have -- we talked quite a bit about some of the point products that we have today. And I think I mentioned earlier, there's a tremendous amount of growth that we have left to go in terms of electric vehicles and the type of systems that go in those. And so we -- if we look at our road map of products and the things that we want to do and can go do, that's going to keep us busy for a while just to, for instance, fill out the electric vehicle market in terms of the served available market that we can go after and the types of products that we don't yet offer that we can offer and, in many cases, want to offer. So there's a -- I'm answering this rather generically, but there's a tremendous opportunity for us to create a raft of new products in this space. I don't know if you want to add anything.

No, I'm just thinking about the new timing portfolio and the high-speed communications in timing.

Yes. So -- and this applies really to the other product portfolios that we're starting to serve automotive. I mean you saw that, for instance, in the timing space, we've relatively recently introduced some new timing products that are automotive qualified and tested to a higher temperature. And so we're expanding where we have good technology. We're expanding that into the automotive space and see a great opportunity.

I think if you look at the automotive market, there are a lot of different opportunities, but it's also -- we have to be careful, and we have been judicious in approaching the automotive market. We see an especially rich opportunity with the electric vehicles. And the traction that we have and leading platforms with Tesla and with BID (sic) [ BYD ] and other Tier 1 suppliers and with our isolation products, in particular, in the battery chargers and within the battery management systems and with the motor drive within those types of circuits, and the dollar opportunity there as well as the proliferation of the electric vehicles across the market, that is our largest future opportunity. And we have really exciting technology there. And in terms of expanding beyond that, that's actually a great place. It's really -- one of the lucky things that we have as a company our size is that we can be selective about the most exciting growth opportunities and focus on those, and those will meaningfully drive our growth and success. We don't have to be the broad-based supplier of every component in a car. We can pick and choose the parts that actually offer the best opportunity for us, and that can actually be very meaningful in the types of growth that we can achieve. And electric vehicles is a very important point. And then I would say on the infotainment side, we have a very substantial market share gain. That market may be flat, but we have now maybe 10% to 15% market share within that market and actually gaining share. There is, again, a very meaningful opportunity. We have a very differentiated technology in that area. And then we can be opportunistic when we have timing parts that are seeing success and we see networks deployed into cars, and we can take those and redeploy those into the market efficiently, that's another place where we can be opportunistic. But having a broad automotive strategy, I believe, is a challenge given our size. And size is really not the right strategic choice given all of the various opportunities that we have in front of us. So that process of prioritizing the most important things that are going to optimize for growth and optimize for efficiency, we believe, is the right strategy to pursue and specifically around the automotive opportunity.

And also just to add around the IoT and connectivity side, we do not invest in automotive-specific products, but we definitely have some really important customer relationships in that space that use our products that we have that are for those other markets, and we continue to support that. And like Tyson was saying, the situation in IoT is -- we have $8 billion or $9 billion of open opportunity in the focus markets right now. So we're not trying to invest in expanding that SAM. We're investing in covering the SAM that we have. And over time, we will see opportunity to expand, and maybe automotive is one of those areas.

Great. Thank you. The next question comes from Ruben Roy with The Benchmark Company. Is the view that Redpine will help to drive a faster long-term growth rate for other IoT segment predicated on Wi-Fi 6 adoption assumptions? And if so, can you walk through some of the assumptions to get to the $100 million in revenue by 2023?

So there's a couple of ways to answer that. So the first piece is we definitely see Wi-Fi adoption increasing in IoT because of Wi-Fi 6, but we also expect growth in Wi-Fi in addition to Wi-Fi 6. So we're going to have to do solutions that integrate Wi-Fi 4 as well as Wi-Fi 6 in our solutions moving forward. The way to think of it is when there's a discontinuity or disruption in the market, like Wi-Fi 6, it creates an opportunity to grow faster. It creates an opportunity for an entrant to get in and get ahead of the game. So we definitely are already seeing that pull from our customers, and that's one of the reasons why we're entering the market at the time that we are.

I also just want to be clear. The Redpine acquisition is bringing in an existing product portfolio of class-leading products that integrate Wi-Fi 4, that integrate Bluetooth Classic, Bluetooth Low Energy and have multiprotocol capability at an energy consumption level that is the best in the industry at a very high level of integration. This is very similar to the IoT SoC that you saw in Matt's presentation. It has the radio. It has the energy management. It has the processor, the Cortex-M processor and the memory, all of that integrated into the solution as well as the software stack that goes along. And so the assumption around the $100 million of revenue by 2023 is really fundamentally about taking that leading set of products and driving that through our channel and simplifying the way that works and then designing that into customers. It's not predicated on the success of Wi-Fi 6 or 11ax. That being said, we are going to take the Redpine team and the Redpine technology, integrate that with our platform and integrate very, very, very differentiated and highly competitive Wi-Fi 6 solutions that will be a part of that, but that is -- we're not -- it's not some future work that we have to do to actually achieve this growth and market traction. It's actually taking the technology that's sitting there right now and helping to simplify it and drive it into the operations chain and drive it into our channel, and that's what's going to be able to drive that growth. And I would also mention that there are a number of design wins that they have achieved already by themselves, which are also counted in that assumption.

Just one thing to add to that. It's important that people understand Wi-Fi 6 does not exist in node yet, right? So all the business and growth out there is coming from existing products in Wi-Fi 4, which has a tremendous growth opportunity. And as Tyson said, it's going to be years before you see the Wi-Fi 6 piece transitioning in. So for that first initial target of growth, Wi-Fi 6 will be a small component. It's just a huge component over the long term.

Great. Thank you. The next question comes from Gary Mobley with Wells Fargo. We'd like to understand a little bit better why we structured the deal as an asset purchase and how -- what's the justification for paying 15x revenue.

So we structured this as an asset purchase primarily due to Redpine having some additional businesses inside the company and their desire to carry forward with some other business activities. So we are taking the vast majority of the talent and the capabilities in the company. There are some residual businesses that they will carry forward with and by structuring it as an asset purchase, it is also more tax-efficient for us in the overall transaction structure.

Thank you. A couple of question about growth targets, both in terms of just high level, how do we compare the old with the new? And how will we view the prior growth targets relative to the new consolidated target?

So the new target is relative to the market. We see the market opportunity as near 10% over the next 4 years in terms of our SAM growth opportunity. We're looking at that and seeing our historical performance versus the market and ascertaining that our opportunity to grow at 1.5x the market is real, and we think we've demonstrated the ability to do that. We're adding the market multiple as well to be reflective of the reality that, certainly, last year, we'll see how this year plays out. There are times where we've gotten large enough that we are not immune from the forces of the market. But even in a situation where the market is depressed, we have continued to outperform the market. A part of our update is to reflect that reality.

I'd agree. If you looked at what we presented in the IoT space, as an example, there's a consistent track record of no matter how the market's moving up and down, we're able to outperform that by a healthy margin. And as we get bigger, as John said, we're anticipating that not only are we going to be able to continue to do that but maybe accelerate that given the momentum we're seeing.

Just one final point. Mark's business has outperformed market. We believe that continues to be the case -- and the opportunity really, the majority of the growth opportunity in the company is with Matt's business. And the majority of that growth opportunity is in wireless. And that's where we had a particular focus on that, tried to call that out a bit more in today's presentation.

Great. And that question was from Raji Gill with Needham. And I think what he was trying to get to is what happened to the old strategic growth targets by business category.

Yes. Exactly. And so like I'm saying, the major portion of our growth is going to come from IoT and it's going to come from wireless.

Great. Thank you. The next question comes from Ruben Roy with The Benchmark Company. Are microcontrollers still an area of focus within IoT? Investments in growth soon to be slated towards connectivity for now. How important are microcontrollers to the longer-term IoT strategy?

Sure. So the question was how important are microcontrollers to IoT moving forward. They're actually incredibly important. It's important to remember that the solutions that we provide, the IoT wireless SoCs, all have microcontrollers in them. So whether we call them out as a separate category or not, our solutions rely on microcontrollers as part of the value proposition of what we're doing. Even if wireless is where we see this tremendous growth opportunity, we still have in support a meaningful amount of business in stand-alone microcontrollers without the wireless. And even in that space, particularly in 8-bit, we see tremendous opportunity and demand from our customer base, and we're still investing in new products there to keep that momentum that we have in that space. So the way to think of it is, it's an integral part of our overall solution, and it won't go away because it's core to our value in providing customers not just the wireless solution but the ability to actually process their application as well and have that complete integration.

Thank you. The next question comes from Matt Ramsay with Cowen. Could you speak about the software investments required for this multiprotocol approach? How was Silicon Labs positioned on the IoT software front versus the competition?

So the question is how do we fit in the software domain versus competitors. It's difficult to answer in terms of quantified because these aren't numbers that are published in the industry in terms of how much people are investing in software. What we do know is, right now, we have this position that we've been able to establish because of how advanced we've been in investing in software ahead of the need. So what I mean by that is we've been able to stay ahead of this demand and address the multiprotocol concerns that are out there, which is a very software-intensive effort. We've also, today, investing more in software than we are in hardware as our total R&D spend. Now what I think we're going to see in the years to come, software will continue to be an area where there's insatiable demand because the nature of the market and the way it's evolving, it'll continue to be a pressure point for us. With that being said, I think we're investing ahead of the curve versus competitive alternatives. And I think the way we're approaching things moving forward, I think we're going to be able to stay well ahead of that curve. Because of the multiprotocol environment that we support, it's required that we invest ahead, and it continues to push us to stay ahead in the market moving forward. The -- oh, go.

Yes. I have a couple of key points. First of all, software is fundamental to our IoT platform and that ability to scale across the various applications. So a lot of the customization or a lot of the personality that the part has to assume across these applications has moved into the software domain. And so we have made a lot of investments in both resources and capabilities and keeping things clean so that we can actually achieve that scalability. That simplification is actually a lot of software development effort that has occurred. And we have been growing our capabilities on software and on the development tools, and we continue to make a lot of progress there. I think the acquisition today is really, really important for us in this aspect and our ability to scale. If we look at our ability to grow our design win traction and continue to grow year after year, we see more and more demands on software. And the ability to scale software with the Hyderabad, India site and bringing that at-scale team in and not just applying the concepts of simplicity in bringing that to the channel but also using that location and that team and our ability to scale there efficiently, I think, plays right into the demand and the need that we have right now on the software. So there's a lot of talent in India and in Hyderabad that can be -- that is very, very relevant to the technologies that we're trying to develop. And we're really, really excited to bring that team into the company that I think is one of the key elements to being able to achieve this scale as we grow the company going forward.

Thank you. The next question comes from Matt Ramsay with Cowen. How does the company think about other high-voltage opportunities for isolation outside of automotive, things like trains, trucking, factory automation, robotics and other markets? Are these just opportunities? Or is the company actively investing in those verticals?

Sure. We are actively investing in these markets. I talked a lot during my presentation about the programmable logic controller device and how we integrated a whole bunch of discrete components under 1 IC. That's a relatively new device, and it's actually a family of devices that we've made specifically for the nonautomotive industrial market, if you will. We're also tuning -- another example is we're tuning our devices to work with gallium nitride high-voltage transistor. This is another new area of interest in the industrial space. So we're absolutely investing for the future in not just automotive but in a variety of different markets. And fortunately, the fundamental technology that we have plays across all these various markets that we've discussed very well.

Thank you. The next question comes from Tore Svanberg with Stifel. Does Silicon Labs have an initiative in compound semiconductors? Or should we assume the silicon heritage will prevail?

We are going to stick with noncompound semiconductors. Love the question, Tore. Our philosophy has been to really drive differentiation into standard process technologies. And also, if you look at a lot of the markets that we're going into in terms of IoT, it's really about following Moore's Law down. We have several more generations to go as we go out in the decades ahead as the flash memory and a lot of those technologies get put into these finer geometries, and we can achieve the types of performance and energy consumption and leakage in those technologies, but that is going to fundamentally remain a CMOS technology. And then, for instance, in our isolation business, we use standard CMOS process flows and technology to implement this high-voltage isolation. And we're optimizing and doing integration around that isolation barrier and supporting a lot of the compound semiconductor technologies like silicon carbide and gallium nitride. But sticking to our knitting in terms of leveraging those standard CMOS factories and like driving innovation within that has been fundamental to the way the company has operated. And for the foreseeable future, I think that's going to remain the case.

Thank you. The next question comes from Raji Gill with Needham. Can you discuss how the design win pipeline and IoT has changed over the last 4 years?

Yes. Absolutely. So if I recall, the data we shared today was the pipeline simply speaking for 2019 or maybe it was current. I can't recall. We don't publish the growth trends in that. But what we've seen, if you go back 4 or 5 years, the trend would look very similar and the opportunity growth as we've seen in design win growth. It just continues to grow. So we don't have numbers to publish. I don't think we have that granularity, but the trend is definitely up and to the right. And I'd also add, just for context, we -- the last thing we have is a lack or shortage of opportunity. What we have is opportunity that just keeps coming in. And our focus is scaling that platform and software resources to maximize and capture that opportunity, and that's what you're seeing reflect in that design win acceleration that you see in the presentation.

I think if you look at the IoT design win pipeline, I mean, the IoT design wins have been increasing. I think that the numbers was on your chart, but it's on the order of 30% a year. And over the last 3 or 4 years, it has become more concentrated in wireless applications. So the percentage of the design wins that are coming from wireless continues to explode. And then the other noticeable thing, I think, especially last year, is the growing momentum of the smart home market and the home and consumer, which is really being driven by the smart home. And we see a lot of momentum with the ecosystems and with the deployment of these technologies in security and smart home and buildings, which actually drove a big chunk of the win last year. It's still -- the numbers are very good across the board, but there was particular strength in the home and consumer. And we see continuing momentum as we go into this year as a lot of the ecosystem providers are now realizing that you need to bring all of these technologies together and make them more accessible. So we believe that, that will drive consumer adoption. And I also just fundamentally believe that if you look at going into -- in terms of the economic times that we're going into, a lot of these technologies are actually ones that will help make us safer. We talked about medical applications. We talked about security. We talked about a lot of these technologies, and then, actually, a lot of the stimulus efforts that are going to be happening out in the market. We saw China announce what was a RMB 1 trillion infrastructure. That actually plays across our portfolio, but IoT and infrastructure both were called out there. So I think that the momentum around IoT deployments and specifically around a lot of these applications that are both in terms of stimulus as well as the ecosystems is really, really exciting.

Great. Thank you. The next question comes from Tore Svanberg with Stifel has to do with CHIP. How should we think about Thread being the third main networking technology for the CHIP platform? What would be the implications for Thread's expansion into the broader IoT industry?

I think the question is what are the implications of Thread being part of CHIP and expanding into the industry. I think it's fantastic to see a technology where we have such a foundational role and having invested in that for the years that we have and to see the industry now recognizing the value of that technology and the need for that wireless technology. So we're still early days in CHIP, right? So Silicon Labs just hosted the annual Zigbee Alliance meeting here in Austin, where we got all the alliance members here together. And one of the topics, obviously, was CHIP and where we're at. And as we work through the definition and how that's going to be implemented, the key will be to start with those 3 technologies and make sure that they're set up for success. And what you're going to see as a result of that is a couple of things. One is we have a tremendous demand from customers asking for Zigbee solutions from us that are CHIP-ready or CHIP-enabled so that when Thread is ready and CHIP is ready, they can upgrade their solution. So that's one of the practical implications we see today. Because CHIP is not ready, we're seeing Zigbee demand increasing in support of that. The next implication you'll see is a much broader and richer amount of home and consumer products supporting Thread. And that will be somewhat unique and new to industry as well, and that's exciting. So those are a few things that you can expect and see in the coming years and months.

I think one of the fundamental things to take away from CHIP is the CHIP is actually not just Thread. It actually will span across all of the standards and bringing a backward compatibility of other standards into this CHIP framework, which will actually make things work together more efficiently and better. And so fundamentally, that's at the IP, the Connected Home over IP, but it will be Thread. And there will also be Bluetooth. There will also be Wi-Fi and also backward compatibility with Zigbee devices, both at the end node device as we develop solutions that are compatible but also at the gateway level and also with Z-Waves. So the goal of CHIP is to bring all of the deployed devices. I mean if you look at the vast majority of shipments today, it's Zigbee and Z-Wave and some on the Wi-Fi side, but to bring all of those devices into this new framework that helps make everything work better together and to drive faster consumer adoption and take away some of the confusion and fragmentation that we see in the market. And I think everyone agrees on those top-level goals, and it's good to see it's starting to happen.

And it's an important construct to make sure we're constantly putting ourselves in the developer's shoes and the consumer's shoes in terms of what we can't have and what we don't want to have are technologies that are not compatible, right? You don't want to go buy something in the store, bring it home and it won't work. Also, as a supplier, you don't want to have multiple SKUs on the shelf of multiple technologies that makes it very confusing for the consumer. So as Tyson said, the overarching goal is to make sure that we provide an experience that is not only great for developers but great for consumers in making all these technologies work and work together and work seamlessly, which is critically important to accelerating IoT goal.

Great. Thank you. The next question comes from Suji Desilva with Roth Capital. Can you provide an update on the smart lighting opportunity? Will it be a steady grower? Or is there some catalyst or inflection opportunity driver in the next 1 to 2 years?

So question is about smart lighting growth. Right now, our experience with smart lighting is it's been consistent growth if you average it, but it's been in fits and starts over time. But we expect it will continue to grow and continue to accelerate, particularly as the price points on smart lighting continue to come down, which will help accelerate consumer adoption of this technology.

Great. Well, we are out of Q&A, so this wraps up the event today. If anyone would like to comment...

I just want to say thank you, Jalene. You are the central character in the preparation of all this, and appreciate your efforts as our moderator, as I'm sure our analysts would -- will thank you later.

Thank you.

Thank you. I want to just appreciate everyone's patience with our online and virtual scheme. It's a little hard to talk to an empty room. But I know that I think we had 200 participants out there. And I think that, overall, the format worked. And I know it's a tough day out there on the market. But from my perspective, I'm very, very excited about the long-term potential that we have. I also think that a lot of the things that we have, just from a near-term tactical perspective, really position the company well. And I appreciate everybody's support and attention. So thank you very much for being with us today.

Thank you.

Thank you.