MACOM Technology Solutions Holdings, Inc. (MTSI) 2020 Q1 法說會逐字稿

Good afternoon, and welcome to MACOM's First Fiscal Quarter 2020 Conference Call. This conference call is being recorded today, Tuesday, January 28, 2020. (Operator Instructions) I will now turn the call over to Mr. Steve Ferranti, MACOM's Vice President of Investor Relations. Mr. Ferranti, please go ahead.

下午好，歡迎參加 MACOM 2020 會計年度第一季財報電話會議。本次電話會議於今天（2020 年 1 月 28 日，星期二）錄音。(接線員指示) 現在我將把電話交給 MACOM 投資人關係副總裁 Steve Ferranti 先生。Ferranti 先生，請開始。

Thank you, Catherine. Good afternoon, and welcome to MACOM's First Fiscal Quarter 2020 Earnings Conference Call. I would like to remind everyone that our discussion today will contain forward-looking statements, which are subject to certain risks and uncertainties as defined in the safe harbor for forward-looking statements contained in the Private Securities Litigation Reform Act of 1995.

謝謝你，Catherine。下午好，歡迎參加 MACOM 2020 會計年度第一季財報電話會議。我想提醒各位，我們今天的討論將包含前瞻性陳述；此類陳述受若干風險與不確定性影響，其定義載於 1995 年《私人證券訴訟改革法》所包含之前瞻性陳述安全港條款。

Actual results may differ materially from those discussed today.

實際結果可能與今天討論的內容有重大差異。

For more detailed discussions of the risks and uncertainties that could result in those differences, we refer you to MACOM's filings with the SEC. Management's statements during this call will include discussions of certain adjusted non-GAAP financial information. A reconciliation of GAAP to adjusted non-GAAP results are provided in the company's press release and related Form 8-K, which was filed with the SEC today.

關於可能導致上述差異之風險與不確定性的更詳細討論，請參閱 MACOM 向美國證券交易委員會（SEC）提交的文件。管理層在本次電話會議中的發言將包含對若干經調整之非 GAAP 財務資訊的討論。GAAP 與經調整非 GAAP 結果之調節表已載於公司新聞稿及相關的 Form 8-K（已於今日向 SEC 提交）中。

With that, I'll turn over the call to Steve Daly, President and CEO of MACOM.

接下來，我將把電話交給 MACOM 總裁兼執行長 Steve Daly。

Thank you, and good afternoon. I will begin today's call with a general company update. After that, Jack Kober, our Chief Financial Officer, will provide a more in depth review of our fiscal 2020 Q1 financial results. When Jack is finished, I will provide revenue and earnings guidance for our Q2 and then we would be happy to take some questions.

謝謝，下午好。我將先就公司整體狀況做一般性更新。之後，我們的財務長 Jack Kober 將更深入地回顧 2020 會計年度第一季的財務結果。Jack 結束後，我將提供第二季的營收與獲利指引，接著我們很樂意回答一些問題。

Revenue for Q1 was $119.1 million and adjusted EPS was $0.07 per diluted share. It was a good start to our fiscal 2020, and the MACOM team did an outstanding job during the quarter to achieve these results. MACOM's management and employees continue to drive improvements across all aspects of the business. The management team is doing a great job establishing a culture of engineering excellence and fiscal discipline. Our Q1 revenue by end markets was as follows: Telecom was $45.6 million, Industrial & Defense was $50.5 million and Data Center was $23 million.

第一季營收為 1.191 億美元，經調整後每股盈餘（EPS）為每股稀釋後 0.07 美元。這是我們 2020 會計年度的良好開端，MACOM 團隊在本季表現出色，達成了這些成果。MACOM 管理層與員工持續推動業務各方面的改善。管理團隊在建立工程卓越與財務紀律的文化方面做得非常好。第一季按終端市場的營收如下：電信 4,560 萬美元、工業與國防 5,050 萬美元、資料中心 2,300 萬美元。

All markets performed well with sequential growth of 15%, 1% and 2%, respectively. On a geographic basis, 45% of our first quarter revenue was from domestic customers and 55% from international customers, similar to prior quarters. Our book-to-bill ratio was 1.1:1. In our turns business, or business booked and shipped within the quarter was approximately 25% of our total revenue. We experienced solid bookings across all 3 end markets. And generally speaking, demand for our products was strong in the first fiscal quarter.

各市場表現良好，分別較前一季成長 15%、1% 與 2%。以地區來看，第一季營收中 45% 來自國內客戶、55% 來自國際客戶，與前幾季相近。我們的接單出貨比（book-to-bill）為 1.1:1。在我們的「turns」業務（即於當季接單並於當季出貨的業務）中，約占總營收的 25%。我們在三大終端市場皆有穩健的接單表現。整體而言，第一會計季對我們產品的需求強勁。

The sequential growth in our Telecom end market was primarily driven by demand for our 5G products and, to a lesser degree, by an increase in 2.5 GPON, following multiple quarters of decline.

我們電信終端市場的季增主要由 5G 產品需求帶動，此外 2.5 GPON 在連續多季下滑後也有所回升，但影響程度較小。

As a reminder, our 5G portfolio today consists of receive side RF front-end modules, control products for base stations, high-performance analog ICs for 5G front haul and high-performance coherent driver and TIA products for mid-haul.

提醒各位，我們目前的 5G 產品組合包括：接收端 RF 前端模組、基地台控制產品、用於 5G 前傳（front haul）的高效能類比 IC，以及用於中傳（mid-haul）的高效能相干驅動器與 TIA 產品。

We view 5G a key driver for MACOM revenue in the years ahead. And in the coming quarters, we anticipate expanding our current 5G portfolio by launching complementary new products, including more optical components, more discrete RF components and more high-performance analog and mixed signal ICs. Our Industrial & Defense end market revenue was driven by various U.S. defense programs, SATCOM applications and increased sales to our test and measurement customers.

我們認為 5G 將是未來數年推動 MACOM 營收的關鍵動能。在接下來幾季，我們預期將透過推出互補的新產品來擴充現有 5G 產品組合，包括更多光學元件、更多分立式 RF 元件，以及更多高效能類比與混合訊號 IC。我們工業與國防終端市場的營收，主要由多項美國國防計畫、衛星通訊（SATCOM）應用，以及對測試與量測客戶的銷售增加所帶動。

Going forward, we plan to expand our efforts to win market share with our existing products, and we will target satellite and defense OEMs with our high reliability components. Our Data Center end market revenue continues to show improving trends, driven largely by our 100G product portfolio. Today, we service this market with high-speed analog products.

展望未來，我們計畫擴大以既有產品爭取市占的努力，並以高可靠度元件鎖定衛星與國防 OEM 客戶。我們資料中心終端市場的營收持續呈現改善趨勢，主要由 100G 產品組合所帶動。目前我們以高速類比產品服務此市場。

The inventory in our sales distribution channel is relatively low compared to historical levels, and we believe our largest high-volume customers are carrying relatively low levels of inventory. This has and we expect that it will continue to support near-term incremental revenue growth. The revenue growth in our 3 core markets will also be driven by our ability to design and bring new products to market quickly and win market share. We are confident the changes made in our engineering management and broader organization in September as well as the updates to our product development process will allow us to improve MACOM's competitiveness and time to market.

我們銷售通路中的庫存相較於歷史水準偏低，我們也認為最大的高出貨量客戶目前持有的庫存水位相對較低。這一點已經、且我們預期將持續支撐短期的增量營收成長。我們三大核心市場的營收成長，也將由我們快速設計並將新產品推向市場、以及贏得市占的能力所驅動。我們有信心，9 月在工程管理與更廣泛組織所做的調整，以及對產品開發流程的更新，將使我們提升 MACOM 的競爭力與上市時程（time to market）。

Along these lines, during the quarter, we launched 13 new products. This exceeded the pace of the last several quarters, and we expect this rate to continue to increase throughout 2020. Simply put, we are increasing the efficiency of our R&D spending by streamlining the product launch process.

在這方面，本季我們推出了 13 項新產品。這超過了過去幾季的推出速度，我們預期此速度將在 2020 年持續提升。簡而言之，我們正透過精簡產品上市流程，提高研發支出的效率。

I would like to highlight 3 notable product releases from the first quarter, which illustrate the diversity of our technology. First, we expanded our microwave mimic portfolio with 2 new gallium arsenide mixer products, covering 6 to 26 gigahertz and 15 to 45 gigahertz. In addition to having broad bandwidth, these up and down converters feature high linearity, a key differentiator and a requirement for high-performance microwave systems. We offer these products as bare die or in low-cost surface mount packages, and they will target point-to-point microwave radios, test and measurement and other high-frequency applications.

我想強調第一季三項值得注意的產品發表，以展現我們技術的多樣性。第一，我們以兩款新的砷化鎵混頻器產品擴充了微波 mimic 產品組合，涵蓋 6 至 26 GHz 以及 15 至 45 GHz。除了具備寬頻寬外，這些上／下變頻器也具備高線性度，這是高效能微波系統的關鍵差異化要素與必要條件。我們提供裸晶（bare die）或低成本表面黏著封裝版本，目標應用包括點對點微波無線電、測試與量測及其他高頻應用。

Second, during the quarter, we released to production a silicon germanium, 28 gigabaud linear EML laser driver, targeting 5G backhaul applications. This device supports 100G, 200G and 400G data rates using PAM4 modulation.

第二，本季我們將一款矽鍺（silicon germanium）、28 gigabaud 線性 EML 雷射驅動器導入量產，鎖定 5G 回傳（backhaul）應用。該元件支援使用 PAM4 調變的 100G、200G 與 400G 資料速率。

And third, we launched a 12.5 watt, 50 Volt GaN on Silicon surface mount wideband power amplifier. This product is notable for its wideband performance and 56% drain efficiency at 2.5 gigahertz. Applications for this product include secure communications, avionics and ISM infrastructure. These 3 products highlight the breadth of technology we have as well as the diverse end markets which we serve. Today, we sell hundreds of differentiated products to thousands of customers. We have relatively low direct customer concentration and low product revenue concentration.

第三，我們推出一款 12.5 瓦、50 伏特的矽基氮化鎵（GaN on Silicon）表面黏著寬頻功率放大器。此產品以其寬頻效能以及在 2.5 GHz 時 56% 的汲極效率（drain efficiency）而著稱。其應用包括安全通訊、航電與 ISM 基礎設施。這三項產品突顯了我們技術的廣度，以及我們所服務的多元終端市場。目前我們向數千家客戶銷售數百種具差異化的產品。我們的直接客戶集中度與產品營收集中度皆相對較低。

Our existing product portfolio and our recently released products established the foundation of MACOM and should provide us the opportunity for revenue and profit growth in the near term. At the same time, we are focused on completing R&D on technology, which will help drive MACOM's growth over the longer term. These include new technologies like next-generation GaN on Silicon, DSPs, lasers, L-PIC assemblies in silicon photonics. We recognize that these technologies have the potential to generate significant revenues and profits in the years ahead.

我們現有的產品組合以及近期推出的產品已奠定 MACOM 的基礎，並應可在短期內為我們帶來營收與獲利成長的機會。同時，我們也專注於完成相關技術的研發，這將有助於推動 MACOM 在更長期的成長。這些包括新一代矽基氮化鎵（GaN on Silicon）、DSP、雷射、以及矽光子中的 L-PIC 組件等新技術。我們認為，這些技術在未來數年具備創造可觀營收與獲利的潛力。

During the quarter, we made progress on various key technology developments. As an example, our laser diode development team implemented a variety of wafer processing changes to improve our products' performance as well as improve our test and burn in yields. In the coming weeks and months, we will verify that these changes meet our reliability requirements as well as the long-term reliability requirements of the Telcordia standards for optical components. These results will provide us the opportunity to enter the 5G front-haul market with a 25G laser solution that services up to 10-kilometer applications, enabling new design wins and new revenue. This is just one of many laser reengineering efforts underway. Our laser technology supports over 15 unique laser configurations, most of which use our patented etch-faceted technology. Our laser technology will target data rates from 100G to 400G and applications in the Data Center, 5G front-haul and mid-haul and various other high volume markets. I can provide a few general updates related to our RF power product and development activities.

本季期間，我們在多項關鍵技術開發上取得進展。例如，我們的雷射二極體開發團隊實施了多項晶圓製程變更，以提升產品效能，並提高測試與燒機（burn-in）良率。在接下來數週與數月內，我們將驗證這些變更是否符合我們的可靠度要求，以及 Telcordia 光學元件標準的長期可靠度要求。這些結果將使我們有機會以可支援最長 10 公里應用的 25G 雷射解決方案切入 5G 前傳（front-haul）市場，帶動新的設計導入（design wins）與新營收。這只是我們正在進行的眾多雷射再工程（reengineering）工作之一。我們的雷射技術支援超過 15 種獨特的雷射配置，其中多數採用我們具專利的蝕刻端面（etch-faceted）技術。我們的雷射技術將鎖定 100G 至 400G 的資料速率，以及資料中心、5G 前傳與中傳（mid-haul）等各類其他高出貨量市場的應用。我也可以就我們的 RF 功率產品與開發活動提供幾點概括性更新。

First, our design team is doing a great job executing their new product plan, which now includes adding GaN on Silicon Carbide products to our portfolio. Second, our efforts to transition our GaN on Silicon technology to ST's 6-inch fab continue. Capital equipment planning, procurement and installation, which is necessary to complete the process development, all continue to progress. I would like to highlight that ST and MACOM still have a significant amount of work in front of us to complete the GaN on Silicon development. And for this reason, we will announce the associated schedules and product introductions when we are further along in the project.

第一，我們的設計團隊在執行新產品計畫方面表現出色；該計畫目前也包括將碳化矽基氮化鎵（GaN on Silicon Carbide）產品納入我們的產品組合。第二，我們將矽基氮化鎵（GaN on Silicon）技術轉移至 ST 的 6 吋晶圓廠的工作仍在持續推進。完成製程開發所需的資本設備規劃、採購與安裝皆持續進展。我想強調，ST 與 MACOM 在完成矽基氮化鎵（GaN on Silicon）開發方面仍有大量工作要做。因此，我們將在專案進展更為成熟時，再公布相關時程與產品導入計畫。

And third, using our existing 4-inch GaN supplier, we have made incremental progress on our 5G GaN on Silicon massive MIMO amplifier design and product performance. Our current 6 watt, 8 watt and 10 watt product performance is achieving improved results and is becoming increasingly competitive to LDMOS and GaN on Silicon Carbide.

第三，透過我們現有的 4 吋 GaN 供應商，我們在 5G 矽基氮化鎵（GaN on Silicon）大規模 MIMO 功率放大器的設計與產品效能方面取得了漸進式進展。我們目前 6 瓦、8 瓦與 10 瓦產品的效能持續改善，並且在與 LDMOS 及碳化矽基氮化鎵（GaN on Silicon Carbide）的競爭中愈發具競爭力。

Over the past 6 months, we have been reengineering the packaging, device matching and optimizing amplifier performance by developing new digital pre distortion or DPD test techniques. Our goal is to finish these product designs and intersect the market with a compelling product at a compelling price. We believe the demand for massive MIMO amplifier products will grow in the years ahead.

在過去 6 個月中，我們透過重新設計封裝、進行元件匹配，並藉由開發新的數位預失真（DPD）測試技術來最佳化放大器效能。我們的目標是完成這些產品設計，並以具吸引力的產品與具競爭力的價格切入市場。我們相信，未來數年對大規模 MIMO 放大器產品的需求將會成長。

MACOM has a diverse business and customer base. We stand in front of a multibillion-dollar SAM or serviceable, addressable market, with a unique and proprietary technology portfolio. We recognize our revenues are small relative to our SAM, and for this reason, we believe we have a tremendous opportunity to increase revenues, profitability and stockholder value in the years ahead.

MACOM 擁有多元化的業務與客戶基礎。我們面對的是一個數十億美元規模的 SAM（可服務、可觸及市場），並擁有獨特且具專有性的技術組合。我們認知到，相較於我們的 SAM，我們目前的營收仍然偏小；因此，我們相信未來數年在提升營收、獲利能力與股東價值方面擁有巨大的機會。

Our operations team continues to execute well on meeting customer commitments. In fiscal 2020, the team will be focused on improving key metrics and performance of our wafer fab as we see opportunities to improve cycle times, lower scrap levels and improved inventory planning.

我們的營運團隊持續在履行客戶承諾方面表現良好。在 2020 會計年度，團隊將著重於改善晶圓廠的關鍵指標與績效；我們看到可改善週期時間、降低報廢率並強化庫存規劃的機會。

During the quarter, operations kicked off a major SIOP or sales, inventory, operations and planning project with a long-term goal of improving the cross-functional planning of our inventory management, and ultimately, lowering our E&O. These process improvements are expected to reduce inventory waste, and we believe that the associated savings will drop right to our bottom line. We expect to see benefits of these efforts in our fiscal 2021.

本季期間，營運部門啟動了一項重大 SIOP（銷售、庫存、營運與規劃）專案，其長期目標是改善我們在庫存管理上的跨部門規劃，並最終降低我們的 E&O（呆滯及過時庫存）。預期這些流程改善將降低庫存浪費，而我們相信相關節省將直接反映在我們的獲利（bottom line）上。我們預期在 2021 會計年度可看到這些努力帶來的效益。

In summary, we continue to improve all aspects of our business, including technology roadmaps, company positioning within the core 3 markets and operational improvements. I am pleased with the results to date, and we expect to continue improved performance as we move ahead.

總結而言，我們持續改善業務的各個面向，包括技術路線圖、公司在三大核心市場中的定位，以及營運改善。我對目前為止的成果感到滿意，並預期在未來推進過程中將持續提升表現。

I'll note that we'll be attending the optical fiber conference, or OFC in San Diego in March during our fiscal Q2. We will have some additional new products to introduce with the conference as well as some great product demonstrations at our booth. Jack will now provide a more detailed review of our Q1 financial results.

我也要提到，我們將在 3 月、也就是我們 2020 會計年度第二季期間，前往聖地牙哥參加光纖通訊大會（OFC）。我們將配合大會推出一些額外的新產品，並在我們的攤位進行精彩的產品展示。接下來 Jack 將更詳細回顧我們第一季的財務結果。

Thanks, Steve, and good afternoon, everyone. Our fiscal Q1 results were another tangible step toward improving MACOM's overall profitability and cash flow. Most notably, we posted sequential improvements in revenue, adjusted earnings per share and free cash flow. This has been a company wide effort, and I would also like to thank all of the MACOM employees who have been working hard to help achieve this. Revenue in the first fiscal quarter of 2020 was $119.1 million, up 6% sequentially. The sequential improvement was driven by positive trends across our end markets, including growth from early 5G deployments in Telecom, healthy demand in Industrial & Defense as well as increases in Data Center. On a year-over-year basis, revenue was down 21% from $150.7 million in fiscal first quarter of 2019.

謝謝你，Steve，各位下午好。我們 2020 會計年度第一季的結果，是朝提升 MACOM 整體獲利能力與現金流邁出的又一個具體步伐。最值得注意的是，我們在營收、調整後每股盈餘（adjusted EPS）以及自由現金流方面皆呈現季對季改善。這是全公司共同努力的成果，我也要感謝所有 MACOM 員工的辛勤付出，協助達成這些目標。2020 會計年度第一季營收為 1.191 億美元，季增 6%。這項季對季改善主要來自各終端市場的正向趨勢，包括電信市場早期 5G 部署帶來的成長、工業與國防的健康需求，以及資料中心需求的增加。以年對年來看，營收較 2019 會計年度第一季的 1.507 億美元下滑 21%。

Adjusted gross profit in fiscal Q1 was $63.7 million or 53.5% of revenue. Adjusted gross margin was up 50 basis points sequentially. Gross margin improvement remains a key focal point for us. As Steve noted, we have a number of ongoing internal initiatives aimed at cycle time improvement, scrap reduction and operational efficiencies that we believe will result in incremental gains in gross margin for the course of fiscal 2020 and beyond.

2020 會計年度第一季調整後毛利為 6,370 萬美元，約占營收的 53.5%。調整後毛利率季對季提升 50 個基點。毛利率改善仍是我們的關鍵重點。如 Steve 所提到，我們正在推動多項內部計畫，聚焦於改善週期時間、降低報廢以及提升營運效率；我們相信這些措施將在 2020 會計年度及之後，帶來毛利率的逐步提升。

Total adjusted operating expense was $50.7 million, consisting of R&D expense of $31.6 million and SG&A expense of $19.1 million. Operating expenses were down more than $300,000 sequentially. We incurred $1.2 million of restructuring charges in the first fiscal quarter associated with the restructuring plan we announced back in June 2019. We anticipate approximately $2 million of additional restructuring expense remaining over the course of fiscal 2020 as we complete these actions. As I have previously noted, there are a few remaining items related to our June 2019 restructuring plan that we expect will provide additional OpEx reductions later in fiscal 2020.

調整後營業費用總額為 5,070 萬美元，其中研發費用為 3,160 萬美元，銷售、一般及行政（SG&A）費用為 1,910 萬美元。營業費用季對季下降超過 30 萬美元。我們在 2020 會計年度第一季認列了 120 萬美元的重整費用，與我們於 2019 年 6 月宣布的重整計畫相關。隨著我們完成這些行動，我們預期在 2020 會計年度期間仍將有約 200 萬美元的額外重整費用。如我先前所提，與 2019 年 6 月重整計畫相關的少數剩餘事項，預期將在 2020 會計年度稍晚帶來額外的營業費用（OpEx）降低。

I would also like to note that from time to time, our R&D expenses may include large expenditures associated with certain development programs. We will continue to invest in new product opportunities, while also aggressively managing our discretionary spending.

我也想指出，我們的研發費用不時可能會包含與某些開發計畫相關的大額支出。我們將持續投資於新產品機會，同時也會積極管理我們的可控支出。

Adjusted operating income in the first quarter was $13 million, translating into 10.9% adjusted operating margin. We see ample operating leverage in our business model for the remainder of fiscal 2020 as we expect revenue growth to continue and operating expenses to remain relatively stable. Depreciation expense for fiscal Q1 was $7.4 million and adjusted EBITDA was $20.4 million. Fiscal Q1 adjusted net interest expense was approximately $7.6 million, down slightly from the fiscal fourth quarter of 2019. Our non-GAAP adjusted income tax rate in fiscal Q1 continued at 8% and resulted in an expense of approximately $400,000. Fiscal Q1 adjusted net income was $4.9 million, translating into $0.07 of adjusted earnings per fully diluted share, utilizing a share count of 67.5 million fully diluted shares.

第一季調整後營業利益為1,300萬美元，換算為10.9%的調整後營業利益率。我們在2020會計年度剩餘期間的商業模式中看到充足的營運槓桿，因為我們預期營收成長將持續，而營業費用將維持相對穩定。會計年度第一季折舊費用為740萬美元，調整後EBITDA為2,040萬美元。會計年度第一季調整後淨利息費用約為760萬美元，較2019會計年度第四季略有下降。我們在會計年度第一季的非GAAP調整後所得稅率維持在8%，相當於約40萬美元的費用。會計年度第一季調整後淨利為490萬美元，換算為每股完全稀釋後調整後盈餘0.07美元，採用6,750萬股完全稀釋後股數計算。

Now, moving on to cash flow and balance sheet items. Cash flow from operations was a highlight for our fiscal Q1, coming in at $37.7 million. A primary factor behind the improved cash generation with lower working capital levels, led by an $18 million reduction in our accounts receivable balance. This is a direct result of our efforts to improve revenue linearity throughout the quarter, which has allowed us to collect more accounts receivable within the quarter. We feel this continued focus on monthly linearity will have other benefits and operational efficiencies, such as reduced cycle times, lower expedited freight costs, improved production visibility and better inventory management.

接下來談現金流量與資產負債表項目。營運活動現金流量是我們會計年度第一季的一大亮點，達到3,770萬美元。改善現金創造的主要因素之一，是在較低的營運資金水位下運作，其中以應收帳款餘額減少1,800萬美元為主。這是我們努力在整個季度提升營收線性度的直接成果，使我們能在季度內收回更多應收帳款。我們認為持續聚焦於每月線性度也將帶來其他效益與營運效率，例如縮短週期時間、降低加急運費成本、提升生產能見度以及更佳的存貨管理。

Q1 was a transitional quarter for us, and we do expect the trend of improved revenue linearity and working capital management to continue. However, during Q2, we do not believe we will be able to generate operating cash flow at the same level we did here in fiscal Q1. We have taken numerous steps throughout the organization to continue to drive healthier cash flow, including focused capital spending, tight operating expense management and further working capital improvements.

第一季對我們而言是過渡性季度，我們確實預期營收線性度改善與營運資金管理的趨勢將持續。然而，在第二季期間，我們不認為能以與會計年度第一季相同的水準產生營運活動現金流量。我們已在全組織採取多項措施以持續推動更健康的現金流，包括聚焦的資本支出、嚴格的營業費用管理，以及進一步改善營運資金。

During fiscal Q1, capital expenditures totaled $4.2 million or 3.6% of revenue. We anticipate CapEx in fiscal Q2 will be up from Q1 levels as a result of the timing of payments for certain capital investments.

在會計年度第一季，資本支出合計420萬美元，約占營收的3.6%。由於部分資本投資付款時點的影響，我們預期會計年度第二季的資本支出將高於第一季水準。

We expect overall capital expenditures in fiscal 2020 to be below fiscal 2019 levels, and we continue to remain focused on achieving appropriate returns on capital that we deploy.

我們預期2020會計年度整體資本支出將低於2019會計年度水準，並將持續專注於確保我們所投入資本能取得適當的報酬。

Fiscal Q1 free cash flow was a positive $33.4 million as compared to a negative $13.6 million in Q4, driven by the combination of higher Q1 cash flow from operations and lower capital expenditures, as previously discussed.

會計年度第一季自由現金流為正的3,340萬美元，相較之下第四季為負的1,360萬美元；此改善係由前述較高的第一季營運活動現金流量與較低的資本支出共同帶動。

Inventories were $106.9 million at quarter end, down approximately $1 million sequentially. Inventory turns were roughly flat to 2x during the fiscal quarter. Inventory management remains an area of emphasis, and we see opportunities for continued improvement in our inventory metrics going forward. Cash, cash equivalents and short-term investments were $210 million, up $33 million from $177 million at the end of fiscal Q4.

期末存貨為1億690萬美元，較前一季約減少100萬美元。該會計季度的存貨週轉率大致持平，約為2倍。存貨管理仍是我們強調的重點，我們也看到未來存貨指標仍有持續改善的機會。現金、約當現金及短期投資為2.10億美元，較會計年度第四季末的1.77億美元增加3,300萬美元。

As a reminder, our short-term investments are comprised of corporate bonds and commercial paper and are classified as held for sale. Total long-term debt was $693 million, inclusive of finance leases. Our long-term debt of $655 million is covenant light, it has minimal annual principal payments until its maturity in May 2024. We also have an undrawn $160 million credit line available through November 2021.

提醒一下，我們的短期投資由公司債與商業本票組成，並分類為持有待售。長期負債總額為6.93億美元，包含融資租賃。我們6.55億美元的長期負債屬於較少財務契約限制（covenant light），在2024年5月到期前，每年的本金償付金額極少。我們也有一筆1.60億美元的循環信用額度尚未動用，可用至2021年11月。

I want to note that fiscal Q1 was the first quarter in which we implemented FASB's new standard on lease accounting, ASC 842. The adoption of this new accounting standard resulted in an increase in our assets and liabilities of approximately $38 million.

我想指出，會計年度第一季是我們首次採用FASB租賃會計新準則ASC 842的季度。採用此新會計準則使我們的資產與負債各增加約3,800萬美元。

In summary, we are pleased with our financial progress in the first fiscal quarter of 2020. While there's still much more work for us to do in order to achieve our longer term objectives, we believe that we're off to a good start with positive momentum across the business. I will now turn the discussion back over to Steve.

總結來說，我們對2020會計年度第一季的財務進展感到滿意。雖然為了達成我們較長期的目標仍有許多工作要做，但我們相信公司已取得良好開端，且整體業務動能正向。接下來我把討論交回給Steve。

Thank you, Jack. MACOM expects [revenue] (corrected by company after the call) in Q2 fiscal 2020 ending [April 3, 2020], (corrected by company after the call) to be in the range of $122 million to $126 million. Adjusted gross margin is expected to be in the range of 53% to 55%, and adjusted earnings per share is expected to be between $0.09 and $0.13 per share based on 68 million fully diluted shares.

謝謝你，Jack。MACOM預期2020會計年度第二季（截至[2020年4月3日]）（由公司於電話會議後更正）的[營收]（由公司於電話會議後更正）將落在1.22億至1.26億美元之間。調整後毛利率預期介於53%至55%，而以6,800萬股完全稀釋後股數計算，調整後每股盈餘預期介於每股0.09至0.13美元。

Our Q2 revenue projections include expectations that Telecom and Data Center end market revenues will be up, and Industrial & Defense end market revenues will be flat to slightly down.

我們對第二季營收的預測包含以下預期：電信與資料中心終端市場營收將上升，而工業與國防終端市場營收將持平至小幅下滑。

We are excited about the multiple opportunities in front of us, and we are focused on execution and planning.

我們對眼前多項機會感到振奮，並專注於執行與規劃。

I would now like to ask our operator to invite our listeners to ask any questions.

現在我想請接線員邀請各位聽眾提出問題。

(Operator Instructions)

（接線員指示）

And our first question comes from Harsh Kumar with Piper Sandler.

我們的第一個問題來自Piper Sandler的Harsh Kumar。

First of all, congratulations. Solid execution. Good to see that positive free cash flow. A couple of the other companies are talking about Data Center getting better. We didn't see that in the December quarter in a meaningful way, but I think your guidance implies that it will be up in March. I was curious if you can give some color maybe why it didn't move the December quarter? And then perhaps what you're thinking specifically for that end market? And then I have a follow-up.

首先，恭喜。執行得很扎實。很高興看到正向的自由現金流。其他幾家公司都在談資料中心正在好轉。我們在12月季度並沒有明顯看到這點，但我認為你們的指引暗示3月會上升。我想了解你們是否能提供一些背景，為什麼12月季度沒有起來？以及你們對該終端市場具體的看法是什麼？另外我還有一個追問。

Yes, I think that our -- what we're seeing in the Data Center market is in line with industry. We are seeing a positive momentum in terms of booking activity and demand. Most of our exposure in the Data Center is on our 100G analog solutions that are generally for short-reach type applications. As we look into Q2, we see continued strength. We think our sequential growth in the Data Center will be low, well, I'll say, like above 10%, sort of a low teens type of sequential growth. But generally, that end market behaved well to us. We're seeing the demand for our 100G products, and we think there's some significant growth in front of us to come.

是的，我認為我們在資料中心市場看到的情況與產業趨勢一致。就接單活動與需求而言，我們看到正向動能。我們在資料中心的曝險主要來自100G類比解決方案，通常用於短距離應用。展望第二季，我們看到強勢將持續。我們認為資料中心的季增幅度會是低的——嗯，我會說超過10%，大概是低十幾%的季增。整體而言，該終端市場對我們的表現一直不錯。我們看到對100G產品的需求，並且認為未來仍有相當可觀的成長空間。

Our next question comes from Quinn Bolton with Needham & Company.

我們的下一個問題來自 Needham & Company 的 Quinn Bolton。

Let me echo my congratulations on the nice results and especially on the nice cash generation in the quarter. Steve, I wanted to come back. You had mentioned some new products, I think it was GaN on Silicon, the 68 to 10 watt. And I'm just trying to get a sense of the applications for that and how those products may differ from what you're doing with STMicro for GaN on Silicon?

讓我也呼應一下，恭喜你們交出漂亮的成果，尤其是本季良好的現金創造能力。Steve，我想再回到一點。你提到一些新產品，我想是矽基氮化鎵（GaN on Silicon），68 到 10 瓦。我想了解一下它的應用，以及這些產品與你們和意法半導體（STMicro）在矽基氮化鎵（GaN on Silicon）上所做的有何不同？

Right. So just to remind everybody, we have a fairly robust power business. Most of it revolves around legacy bipolar transistor business, where you're talking about 50-watt and above type power levels. And we see that, that's a stable market. It's typically in avionics, defense type end applications, test and measurement, even. And so part of our strategy in terms of product development is to make sure that as the new technologies come forward, such as GaN on Silicon or even GaN on Silicon Carbide that we address those same markets with a more relevant technology or a newer technology. So our strategy over the next year or 2 will be to build out our general power transistor as well as power amplifier business for this multi-market category.

好的。先提醒大家，我們有相當穩健的電源（power）業務。其中大部分圍繞在傳統的雙極性電晶體業務，功率等級通常是 50 瓦以上。我們看到那是一個穩定的市場。終端應用通常在航電、國防類型的應用，甚至也包括測試與量測。因此，就產品開發策略而言，我們要確保當新技術出現時，例如矽基氮化鎵（GaN on Silicon），甚至碳化矽基氮化鎵（GaN on Silicon Carbide），我們能以更貼近需求或更新的技術來服務同樣的市場。所以我們未來一到兩年的策略，是在這個多市場類別中，擴展我們的一般功率電晶體以及功率放大器業務。

What we like about this market is the ASPs are high, the margins are generally very strong, typically above our corporate average. It's a low, medium volume, high mix type of a product area, and it's additive to the strategy that revolves around 5G and ST. But it's very, very different. So as you know, the ST strategy is really taking our existing GaN on Silicon process and transitioning it to a 6-inch low-cost high-volume fab, specifically to address markets like massive MIMO and 5G.

我們喜歡這個市場的原因是 ASP（平均售價）高、毛利通常非常強，通常高於公司平均。這是一個低到中等量、但高組合（high mix）的產品領域，並且可與圍繞 5G 與 ST 的策略相互加成。但它非常、非常不同。如你所知，與 ST 的策略主要是把我們既有的矽基氮化鎵（GaN on Silicon）製程，轉移到一座 6 吋、低成本、高產量的晶圓廠，專門用來因應 massive MIMO 與 5G 等市場。

Got it. So it's a different application. The other question I had is, you guys seem to be reporting strength on the Telecom side of the business, driven by 5G, I think, front mid-haul. Yet when we listen to Texas instruments and Xilinx reported here after the close, both companies have talked about seeing slower activity on 5G. Just wondering if you might be able to help us reconcile the strength you're seeing versus perhaps some of the weakness, some of the larger players in the space are seeing?

了解。所以是不同的應用。我另一個問題是，你們似乎在電信（Telecom）業務端回報強勁，應該是由 5G 驅動，我想是前傳/中傳（front/mid-haul）。但我們在收盤後聽到德州儀器（Texas Instruments）和賽靈思（Xilinx）的說法，兩家公司都提到看到 5G 活動放緩。想請問你們是否能協助我們理解：你們看到的強勁表現，與一些較大型同業看到的疲弱之間，該如何對照？

Well, I think, a few things. Number one, we're very small relative to the size of the market. Remember, we're in front of a multibillion-dollar SAM. So our incremental growth in any period isn't necessarily representative of the market. That's the first point I'd make.

我想有幾點。第一，我們相對於市場規模非常小。記得我們面對的是數十億美元規模的 SAM（可服務市場）。所以我們在任何期間的增量成長，不一定能代表整體市場。這是我想先說的第一點。

The second is, our Telecom end market is actually a large catch all for a variety of different submarkets. So 5G is one of them. But we have other submarkets that drive growth. For example, GPON, and I think I mentioned in the script that, that was an area that was showing strength. So -- but with that said, we are seeing new revenue from new products in the 5G front haul market, and we believe we're in a strong position with some of our products, some of our analog products to support that market. So I guess, I'll leave my comments at that, other than we are seeing the strength. We think that, that strength will continue. We have a lot of different products that go into Telecom. We talked about the high-power switches in the past, front-end modules, of course, for 5G radios, and then the access market, which is the GPON market. So Telecom, for MACOM, is a very broad market. As we look into Q2, we think we'll see high single-digit sequential growth coming from all these things I just talked about.

第二，我們的電信終端市場其實是一個涵蓋多種不同子市場的大集合。5G 只是其中之一。但我們還有其他子市場帶動成長。例如 GPON，我想我在講稿中也提到，那是一個展現強勁的領域。不過話說回來，我們確實在 5G 前傳（front haul）市場看到新產品帶來的新營收，而且我們相信憑藉部分產品、尤其是一些類比產品，我們在支援該市場方面處於有利位置。所以我想我的評論就到這裡；除此之外，我們確實看到強勁需求。我們認為這股強勁將會持續。我們有很多不同產品會進入電信領域。過去我們談過高功率開關、5G 無線電的前端模組，當然還有接入市場，也就是 GPON 市場。因此對 MACOM 而言，電信是一個非常廣泛的市場。展望 Q2，我們認為來自我剛提到的所有項目，將帶來高個位數的季增成長。

(Operator Instructions)

(接線員指示)

Our next question comes from to Tore Svanberg with Stifel.

我們的下一個問題來自 Stifel 的 Tore Svanberg。

Congratulations on the strong results. Steve, I apologize for making this comparison, but the previous management team at MACOM seemed to be really aggressive on GaN on Silicon. You just mentioned that perhaps with GaN on Silicon Carbide, at least to me, it appears that you're going to have a -- the more of a balanced approach when it comes to the different flavors of GaN.

恭喜你們有強勁的成果。Steve，我先為這樣的比較致歉，但 MACOM 先前的管理團隊在矽基氮化鎵（GaN on Silicon）上似乎非常積極。你剛提到也許在碳化矽基氮化鎵（GaN on Silicon Carbide）方面，至少在我看來，你們在不同類型的 GaN 上會採取更均衡的做法。

Is that the right way to think of it? Or is there any other reason why you are starting to make more investments in GaN on Silicon Carbide?

這樣理解對嗎？或者，還有其他原因讓你們開始在碳化矽基氮化鎵（GaN on Silicon Carbide）上投入更多資源？

Right. So I look at our business from a portfolio point of view. And we will have products that will run through our internal fab, and we'll have products that we will go to the market and we'll use external fabs. And so when we think about GaN on Silicon or GaN on Silicon Carbide or any other process, whether it's high-power pHEMT or HBT or even bipolar, our strategy is simple. We want to make sure our chip designers have access to the best technology for the applications that they're focused on.

是的。我會從產品組合（portfolio）的角度來看我們的業務。我們會有一些產品在自有晶圓廠（internal fab）生產，也會有一些產品走向市場、使用外部晶圓廠（external fabs）。因此當我們思考矽基氮化鎵（GaN on Silicon）、碳化矽基氮化鎵（GaN on Silicon Carbide）或任何其他製程，不論是高功率 pHEMT、HBT，甚至是雙極性（bipolar），我們的策略很簡單。我們要確保晶片設計師能取得最適合其所聚焦應用的最佳技術。

About $50 million of revenue today is in Industrial & Defense. This is an end market that we sit in or contribute to that wants the best technologies. And so when we compare certain applications to the different GaN process technologies, there are many instances where GaN on Silicon Carbide will provide a superior solution. And so we want to provide our designers access to that process. So I look at the opening up of the aperture of our GaN strategy as additive. We're certainly not backing away from our goals regarding GaN on Silicon and developing a high-volume solution for a variety of markets, including massive MIMO. There are some compelling attributes of GaN on Silicon in terms of ease of use, for example, in certain applications. So we're continuing to develop that. We see it as a long-term activity, as I pointed out, but I don't think you should interpret these actions as a strategy change where we're replacing GaN on Silicon with GaN on Silicon Carbide.

目前大約有 5,000 萬美元的營收來自工業與國防（Industrial & Defense）。這個終端市場是我們所處或所貢獻的領域，而它追求的是最好的技術。因此，當我們把某些應用與不同的 GaN 製程技術相比較時，很多情況下碳化矽基氮化鎵（GaN on Silicon Carbide）會提供更優異的解決方案。所以我們希望讓設計師能使用這個製程。因此我把擴大我們 GaN 策略的範圍視為加成。我們當然沒有退縮，仍會持續推進矽基氮化鎵（GaN on Silicon）的目標，並為包括 massive MIMO 在內的多種市場開發高產量解決方案。矽基氮化鎵（GaN on Silicon）在某些應用上有一些很吸引人的特性，例如易用性。所以我們會持續開發。如我所指出，我們把它視為長期活動，但我不認為你應把這些行動解讀為策略改變，也就是用碳化矽基氮化鎵（GaN on Silicon Carbide）取代矽基氮化鎵（GaN on Silicon）。

That's really helpful. And my follow-up question is, perhaps, for both of you, as it relates to gross margin. So you said you're taking some actions internally, operationally, to try and improve yields, scrap and so on and so forth. Should we think about those initiatives kind of getting the company beyond the immediate goal of 60% gross margin? Or is that kind of part of the march towards that long-term target?

這真的很有幫助。我接下來的問題可能想請教你們兩位，與毛利率相關。所以你提到你們正在內部、在營運面採取一些行動，試圖改善良率、降低報廢等等。我們是否應該把這些措施視為能讓公司超越眼前 60% 毛利率目標的推動力？還是說，這些其實就是朝向那個長期目標前進的一部分？

Tore, it's Jack. Those initiatives are getting us in line with that march towards improving margins. We know we had margins in the high 50s going back the past couple of years or so. So we're taking many of these initiatives to try and get us back in line there. We have posted sequential increases in our gross margins over the past couple of quarters. And the expectation is that will continue. It's going to take some time as we work our way through it. And once again, as revenue recovers, we think we've got more of an opportunity to expand from a gross margin perspective as well.

Tore，我是 Jack。這些措施正是讓我們與提升毛利率的進程保持一致。我們知道在過去幾年左右，我們的毛利率曾經在接近 60% 的高 50% 區間。因此我們正在推動許多這類措施，努力讓我們回到那個水準。過去幾個季度，我們的毛利率已連續呈現季增。而我們的預期是這個趨勢會持續。在我們逐步推進的過程中，這會需要一些時間。另外，一旦營收回升，我們也認為從毛利率角度來看，還有更多擴張的機會。

I think the other area just to note is, in addition to gross margin expansion from an operating margin point of view, we feel we've got sufficient leverage just based on our current OpEx structure and where we're going to have that really contribute to the bottom line.

我想另外一點值得注意的是，除了毛利率擴張之外，從營業利益率的角度來看，我們認為僅基於目前的營運費用（OpEx）結構以及我們未來的走向，就已具備足夠的槓桿，能讓這些因素對最終獲利做出實質貢獻。

And our next question comes from Tom Diffely with D.A. Davidson.

下一個問題來自 D.A. Davidson 的 Tom Diffely。

When you look at the fairly impressive outlook for high single, low double-digit growth, is most of that coming from how you would describe as a market recovery versus the new products? Or are the new products starting to have a meaningful impact on that?

當你們看待相當亮眼的高個位數到低雙位數成長展望時，其中大部分是來自你們所稱的市場復甦，還是來自新產品？或者新產品已開始對成長產生顯著影響？

Yes. I think it's a little bit of both. And just to be clear on our guidance, I think at the midpoint, it's around 4% aggregate sequential growth. Some of the submarkets, so our smaller markets are growing faster right now, such as Data Center and Telecom. But I think it's -- it really is a combination of both. There are pockets where there's market recovery, such as in the Data Center. But there's other areas where we're winning market share. And some of that's due to the great work the company has been doing over the past few years, including developing products for long haul, adding to that product set, for example, linear TIAs, modulator drivers that are running at higher data rates.

是的。我認為兩者都有一些。另外先釐清一下我們的指引：以中位數來看，大約是 4% 的整體季增成長。部分子市場，也就是我們較小的市場，目前成長更快，例如資料中心與電信。但我認為——確實是兩者的組合。有些領域存在市場復甦，例如資料中心。但也有其他領域是我們正在取得市占。其中一部分要歸功於公司過去幾年的出色工作，包括為長距離（long haul）開發產品、擴充產品組合，例如線性 TIA、以及可在更高資料速率下運作的調變器驅動器（modulator drivers）。

So our goal, as a business, is to more rapidly introduce products to capture the market opportunity. And so what Jack and I and the team are doing are really focusing on how do we move products out the door at a faster rate, whether it be a gallium arsenide MIMIC that we run in our foundry, whether it's a laser diode that we want to sell into the Data Center or whether it's a massive MIMO amplifier for 5G. So I think the theme around MACOM's growth will, at least in the next year or 2, will be centered around our ability to launch products for these very large markets that are demanding the products now.

因此，從業務角度來看，我們的目標是更快速地導入產品，以掌握市場機會。所以 Jack、我以及團隊真正聚焦的是：我們要如何以更快的速度把產品推出去——不論是我們在自家晶圓廠（foundry）生產的砷化鎵 MIMIC、我們想賣進資料中心的雷射二極體，或是用於 5G 的大規模 MIMO 放大器。因此我認為，至少在未來 1 到 2 年，MACOM 成長的主軸將圍繞在我們能否為這些目前就需要產品、且規模非常龐大的市場成功推出產品。

Okay, great. And then when you look at the ramping level of new product release, are there certain -- is there a certain end market where you're initially focused, higher margin markets? Or is this truly across the board?

好的，很棒。那麼當你們看新產品釋出的爬坡速度時，是否有某些——是否有某個終端市場是你們一開始更聚焦的，例如毛利較高的市場？還是說這真的是全面性的？

So we -- back in September, we actually reorganized our engineering organization into 6 different groups, which were primarily aligned by technology. Those technologies, in some instances, are very focused on one market. In some instances, they serve many markets. And so each one of these engineering organizations has a product development plan. And I would say, generally speaking, there's a continuum of products that have lower margins and products that have higher margins, depending on the performance of the product and the end application.

我們在去年 9 月其實把工程組織重整為 6 個不同的團隊，主要是依技術別來對齊。這些技術在某些情況下會非常聚焦於單一市場。在另一些情況下，則會服務多個市場。因此每一個工程組織都有其產品開發計畫。而我會說，一般而言，產品存在一個連續光譜：依產品性能與終端應用不同，有些產品毛利較低，有些產品毛利較高。

And so over the long term, as a part of our strategic planning, we do want to increase the gross margins of the company. And while we can work on making improvements with the operation of the business and whether it be yields and production or better designs that have more margin during production, that will get us so far.

因此，從長期來看，作為我們策略規劃的一部分，我們確實希望提高公司的毛利率。雖然我們可以透過改善營運來提升，例如良率與生產，或是透過更好的設計讓量產時具備更高毛利，這些都能讓我們進步到一定程度。

Then the next step is really launching products that command higher gross margins, because the customer's willing to pay a higher price. And so we are going back to our strategy and we are reviewing the end markets that we're in, we're reviewing the markets that we're not in, and we're asking ourselves the question, how do we get our margins above 60%? And the answer will really be coming from what products we choose to design.

接下來的下一步，真正關鍵在於推出能帶來更高毛利率的產品，因為客戶願意支付更高的價格。因此我們正回到既定策略，檢視我們目前所在的終端市場、也檢視我們尚未進入的市場，並問自己：我們要如何把毛利率提高到 60% 以上？答案將主要取決於我們選擇設計哪些產品。

Now with that said, as Jack highlighted here just a moment ago, one thing that's tremendous strength for MACOM is, we have incredible manufacturing, power and leverage. And you saw a glimpse of that, really looking from the fourth quarter to the first quarter, where we just had maybe 6% revenue growth, but we had a 50% increase in EPS, 56%, in that range.

不過話說回來，正如 Jack 剛才提到的，MACOM 一個非常大的優勢是：我們擁有非常強的製造能力、產能與槓桿效益。你們也看到了這一點——從第四季到第一季，我們的營收可能只成長了約 6%，但 EPS 卻增加了 50%，大約 56% 左右，在那個區間。

And so part of what we want to do as a management team is to make sure that we capture the opportunities that drive shareholder value, which ultimately means driving earnings up. And so there's lots of different ways to do that. It can be by launching more high-margin parts, but it can also be a result of launching, say, lower or -- lower than, let's say, corporate average margin parts, but the revenue stream associated with that is tremendous. And so we will certainly look at all of these strategies, and you can be sure that our underlying theme will be to drive shareholder value, which means driving earnings up.

因此，作為管理團隊，我們想做的一部分是確保我們能把握那些能創造股東價值的機會，而這最終意味著推升獲利。而達成這點的方法有很多。可以透過推出更多高毛利的零組件，但也可能是推出例如毛利較低——或低於公司平均毛利的零組件，但其相關的營收規模非常可觀。因此我們一定會評估所有這些策略，你們也可以確信，我們的核心主軸會是提升股東價值，也就是推升獲利。

Our next question comes from Tim Savageaux with Northland Capital.

下一個問題來自 Northland Capital 的 Tim Savageaux。

Congrats on the results. Wanted to focus in on your Telecom growth in the quarter. And to the extent that's somewhat on driven, sounds like mostly 5G driven. And within that, probably mostly front-haul, mid-haul. But if you have a kind of comment on that, I'd like to hear it.

恭喜這次的成果。我想聚焦在你們本季的電信成長。就我理解，這在某種程度上是由……聽起來主要是由 5G 所帶動。而在 5G 裡面，可能主要是前傳（front-haul）、中傳（mid-haul）。如果你們能對此做一些評論，我很想聽聽。

To what extent are you able to ascertain kind of what sort of end markets are driving that growth? I assume China is a significant one there. And I wonder if you can give us an update on kind of where you're standing with Huawei these days in that regard? And then I'd like to follow-up.

你們在多大程度上能判斷是哪些終端市場在推動這個成長？我猜中國是其中一個重要市場。我也想請你們更新一下，關於目前你們與華為在這方面的合作/狀態大概如何？然後我還想再追問一個問題。

Yes. Well, your initial comments are accurate and correct regarding what you believe the growth is coming from. It is primarily coming from basically 5G front-haul in the chips associated with that end application. It's primarily a China end market. Although, there is a small contribution coming from other overseas markets that are outside of China. Regarding Huawei. You know, Huawei, as everybody knows, went on the entity list back in May. Prior to that, our revenue at Huawei had been ramping up. They had not, in recent years, achieved a 10% revenue level, but they were climbing up to that point. And then in the middle of May, that changed. And since then, we've seen, well: number one, a vast majority of the products that we we're selling to Huawei, we're no longer selling to Huawei because of the export restrictions. But there is a small subset that we are allowed to sell to them, and we've been doing that. And I would say, over the past 7 months, the revenues to Huawei have effectively been declining or flat.

是的。嗯，您先前的評論就您認為成長來源而言是準確且正確的。主要來自基本上 5G 前傳（front-haul）以及與該終端應用相關的晶片。主要是中國終端市場。不過，也有一小部分貢獻來自中國以外的其他海外市場。關於華為。您知道，眾所周知，華為在 5 月被列入實體清單。在那之前，我們在華為的營收一直在爬升。近年來他們尚未達到 10% 的營收占比水準，但正逐步接近。然後在 5 月中旬，情況改變了。自那之後，我們看到：第一，我們原本賣給華為的絕大多數產品，因出口限制已不再銷售給華為。但仍有一小部分我們被允許賣給他們，我們也一直在這麼做。我會說，在過去 7 個月裡，對華為的營收實際上一直在下滑或持平。

And so when we do our AOP planning, and we look at our future activities, we sort of take the associated revenues out of our modeling and consider that upside. But the general trend has been flat, really, over the last 2 quarters, but declining. And so again, when I look at that and think about our business at large, I would say, clearly, Huawei is a key player in the Telecom space, but our strategy has to be -- to grow beyond Huawei and make sure that if we lose a key customer that we're still strong enough to be profitable and to grow. And that's where the diversity of our business comes into play.

因此，當我們做 AOP 規劃並檢視未來活動時，我們會在模型中把相關營收先拿掉，並將其視為上行空間。但整體趨勢在過去 2 個季度其實是持平，但呈下滑。所以再次，當我看這件事並思考我們整體業務時，我會說，很明顯華為是電信領域的關鍵玩家，但我們的策略必須是——在華為之外成長，並確保即使失去一個關鍵客戶，我們仍足夠強健，能維持獲利並持續成長。這就是我們業務多元化發揮作用的地方。

We have thousands of customers, we have hundreds of product lines, we don't have a lot of customer concentration relative to our peers, and so we think this is a strength.

我們有數千家客戶、數百條產品線，相較同業，我們的客戶集中度不高，因此我們認為這是一項優勢。

But we are certainly keeping an eye on Huawei. We're not really engaged with them at this stage other than selling a very small subset of what we were previously selling them. And all of our forward-looking planning is sort of ex-Huawei, until things change.

但我們當然也會密切關注華為。現階段除了銷售我們先前賣給他們的極少數產品子集合之外，我們並未真正與他們有其他合作。而我們所有前瞻性的規劃基本上都先排除華為（ex-Huawei），直到情況有所改變。

Got it. And a follow-up on the front-haul side. You made some comments around 25-gig lasers into that application, though. I'm not sure I caught the timing. Assuming your kind of front-haul revenues today are more HPA driven, what could the laser part add to that? And when might you expect that to ramp?

了解。另外針對前傳（front-haul）再追問一下。您提到 25G 雷射用於該應用的一些評論。不過我不太確定時間點。假設您目前的前傳營收更多是由 HPA 驅動，那雷射部分能帶來多少增量？您預期何時會開始放量？

So you're right. It could be very additive. We didn't specifically talk about the timing of that other than to say that we've just gone through a process update and now we're going through a qualification phase. So the best thing to do, at this stage, is to wait for updates on this -- on the timeline. I can say that it's going to take at least a quarter or 2 to get to the point where we're comfortable talking about ramps or product introductions or things like that. We still have a fair amount of work to do internally. So no 25G laser revenue for front-haul in the near term.

所以您說得沒錯。它可能會帶來相當大的增量。我們沒有特別談到時間點，只是說我們剛完成一次製程更新，現在正進入認證（qualification）階段。所以在這個階段，最好的做法是等待我們就此——就時程——提供更新。我可以說，至少還需要 1 到 2 個季度，才會到我們覺得可以談放量、產品導入或類似事項的程度。我們內部仍有相當多工作要做。因此短期內前傳不會有 25G 雷射營收。

And our next question comes from Harsh Kumar with Piper Sandler.

下一個問題來自 Piper Sandler 的 Harsh Kumar。

Jack, I was curious if you could talk about how we should think about OpEx. Your OpEx was actually kind of held and then actually went down a little bit, while you grew your revenues. And I think you made some comments that you're going to be reigning it in or sort of holding it pretty tight. Is that in context to absolute dollar terms? Or is that in as a percentage of sales for the rest of the year?

Jack，我想請教我們應該如何看待營業費用（OpEx）。在營收成長的同時，你們的 OpEx 其實大致持平，甚至還小幅下降。我記得你提到你們會把它收緊或維持得相當嚴格。這是指絕對金額（美元）層面嗎？還是指今年剩餘期間占銷售額的百分比？

Yes, we're focused on managing all the operating expenses, Harsh. There can be some ups and downs depending on some R&D expenditures, as I had noted earlier. We're focused on the dollars as we work our way through. And we'll continue to do that and aggressively manage it.

是的，Harsh，我們專注於管理所有營業費用。如我先前提到的，視部分研發支出而定，可能會有一些上下波動。在推進的過程中，我們重點放在金額（美元）本身。我們會持續這麼做，並積極管理。

And I'm showing no further questions at this time. I'd like to turn the call back to Mr. Steve Daly for any closing remarks.

我這邊顯示目前沒有其他問題。我想把電話交回給 Steve Daly 先生，請他做結語。

Thank you. In closing, Jack and I would like to thank our employees for their efforts throughout the past quarter. Have a good evening.

謝謝。最後，Jack 和我想感謝我們的員工在過去一季的努力。祝各位晚安。

Ladies and gentlemen, this concludes today's conference call. Thank you for participating. You may now disconnect. Everyone, have a great day.

各位女士先生，今天的電話會議到此結束。感謝各位參與。您現在可以掛線。祝各位有美好的一天。