Vicor Corp (VICR) 2004 Q4 法說會逐字稿

Good day, ladies and gentlemen, and welcome to the Vicor Corporation fourth quarter and year-end results conference call.

My name is John and I will be your coordinator for today.

At this time all participants are in listen-only mode.

We will be facilitating a question and answer session towards the end of this conference.

If at any time during the call you require assistance, please press star followed by 0 and a coordinator will be happy to assist you.

I would now like to turn the presentation to your host for today's call, Mr. Mark Glazer, Chief Financial Officer.

Please proceed, sir.

Thank you.

Good afternoon and welcome to Vicor's quarterly conference call.

I'm Mark Glazer, Chief Financial Officer, and with me is our CEO, Patrizio Vinciarelli.

Before we begin, we'd like to remind all of you that today's conference call is being recorded and is the copyrighted property of Vicor Corporation.

Any rebroadcast, reproduction or other transmission of this conference call in whole or in part without the prior written consent of Vicor is prohibited.

We'd also like to remind you that various remarks that we may make during this call about future expectations, trends, plans and prospects for the Company and its business constitute forward-looking statements for purposes of the Safe Harbor Provisions under the Private Securities Litigation Reform Act of 1995.

These forward-looking statements merely reflect our current beliefs, expectations and estimates, which we share with you during our quarter conference call.

And we can not assure the future results or outcome of the matters described in any of those statements.

Actual results may differ materially as a result of risks and uncertainties, including those discussed in the MD&A part one in legal proceedings sections included in our quarterly and annual reports filed with the SEC in forms 10(Q) and 10(K).

A replay of this conference call will be available beginning shortly upon its conclusion through February 22, 2005, by calling 888-286-8010 and using the pass code 25466105.

In addition, a webcast replay of the conference call will be available on the investor relations section of the company's website at www.vicorpower.com/irwebcast, beginning shortly upon its conclusion.

However, the information we provide during this call is accurate only as of the date of this call, and investors should not assume that the information remains accurate at any later time.

We undertake no obligation to revise or update any of the statements made during this call in order to reflect events or circumstances that may arise after this call.

You should not rely on the math or the conclusion of this call.

We're now ready to begin the Q-And-A portion of our conference.

I would ask that you limit yourselves to up to 2 questions at a time so that everyone gets a chance to ask his or her question.

You may of course get back in the queue to ask additional questions.

John, we'll now take the first question.

Ladies and gentlemen, if you wish to ask a question, press star followed by 1 on your touchtone phone.

If your question has been answered or you wish to withdraw your question, you may press star followed by 2.

And questions will be taken in the order received.

And your first question comes from the line of Steve Smigie with Raymond James.

Please proceed.

Great.

Thank you very much.

I'm just wondering, you mentioned in your press release about at -- at least some optimism about '05 in terms of some growth in revenues and improvement in gross margin leading to a profitable '05.

I was wondering if you might able to comment, specifically, what -- what gives you confidence in that, and if you could comment, perhaps, any sort of sequential gross margin and revenue performance for -- for Q1?

Thanks.

What gives us confidence is the order pattern in the forecast for the year, both internationally and in North America.

The modest growth that we are forecasting should proceed sequentially, beginning with the first quarter and following on to that.

Margin improvement is expected to be appreciable.

Not as significant as it was last year, but nevertheless, in [INAUDIBLE - strong accent] combination with the top-line growth to lead to solid profitability for the year.

Okay.

And the -- the gross margin improvement, is that going to be related largely to as you mentioned perhaps volume or is it going to be also you have some mix of some of your new new VI products coming on at -- at a higher gross margin level?

It's a combination of various factors, including, in particular, continuing efficiency improvements, yield improvements, particularly relating to several international products.

Top-line growth, leading to better overall efficiencies in the factory.

Those are the primary factors.

Okay.

Let me ask one more and then I'll let somebody else ask questions.

In -- in the quarter in terms of sequential decline in revenue, was it pretty much equal in terms of decline for a first generation versus second generation?

Our second generation overall last year grew faster than -- than first gen.

We had about a 20 percent growth for the year on second gen.

And significantly less than that on -- on first gen.

And we see that as a continuing pattern.

Okay.

And we -- has the -- has the mix ch -- did the mix change all that much in the quarter first gen versus second gen I guess is my question?

Or excuse me in the

Not in a major way.

I think these trends are -- are not subject to -- to, you know, wild swings.

Okay.

Great.

Thank you.

Thank you.

And your next question comes from the line of Ron Opel of Moors Cabot.

Please proceed.

Yes, Patrizio, on the last conference call you indicated that -- that you thought there might be some revenue contribution from the Ichips in the second half of the year, both from base business applications and possibly also -- also from larger volume applications.

Any change in that expectation at this point?

No major change.

We see some significant programs beginning to wrap in the second half, leading into volume production, very significant volume production actually.

In 2006?

Yes.

Okay.

And -- and you indicated in the press release that demand in key end markets has recently increased.

I'm wondering if that's semiconductor capital equipment and if how you feel about whether the extent to which it's sustainable.

We've seen in -- in some of our [INAUDIBLE] equipment, you know, some spotty activity, but we're not betting on that as being the driver for a pickup in reserves in the short term.

I think our comments with respect to that market are unchanged relative to the last quarter.

And at least that we don't see it picking up in a meaningful way for awhile, at least into the second quarter.

So the other key end markets would be telecom and NIT?

Well, we've seen some productivity in -- in some telecom broadcast network communications.

You know, the -- the --the general industrial market, things like bar-code readers and -- and -- and other industrial applications.

You know, as we – commented in, I believe the last quarterly report, obviously with all prices is high, we've seen quite a bit of activity from the all patch equipment side.

You know, process control, industrial automation, Defense, to some extent that's a very selective picture, not -- not everything is getting funded, but some things, particularly big ticket hard --hardware that -- that does contain our products.

We're -- we're very pervasive, in -- in all defense applications, so but, in some we're seeing some -- some good activity.

Thank you.

Thank you.

And your next question comes from the line of Peter Simon of Ardour.

Please proceed.

Yes, thanks guys.

I have a question regarding -- in the press release you mention you have 36.3 million in backlog.

How much of that is -- are you going to recognize as revenue in the first quarter of '05?

I don't have a precise figure, but as suggested earlier, we expect the first quarter to be up.

To be up?

Yeah, up, in terms of top line.

Okay, and also, looking at your SG&A costs across the board, they've remained fairly steady.

You have this new line, this V-Ichip line, that you're pushing are you going to up your SG&A costs at all to get that more aggressively into the marketplace?

Do you anticipate any increase in SG&A going forward?

We anticipate some increases in, you know, padding (ph) expenses relating to V-Ichips.

You know, already at very, very high levels of -- of investment relating to V-Ichip, we've been there for awhile.

Throughout the enterprise and not just in front end but back end of the business.

And -- and that's going to continue to be a factor with -- with respect to the overall financial picture.

The -- the -- the business as crucial (ph) V-Ichips would be significantly profitable at this point.

We are making major investments in V-Ichips for good reason and we expect to see big payoffs before too long.

Okay.

And just one last question.

In the press release you mentioned leading companies in consumer electronics, information technology and automative mark -- automotive market segments are -- have -- are some of your customers.

Can you name specific companies as that are your customers?

Our policy is not to -- to comment about, you know, specific catherine (ph) engagements.

I guess I can point you to some recent articles that have been written, were, you know, this one of the customers has shared their reviews with respect to -- to V-Ichips with reporters within the industry, but otherwise we -- we really can't make any comment with respect to specific customer engagements.

Okay.

All right.

Thanks a lot.

Thank you.

And your next question comes from the line of Jeff Bencik from Jefferies and Company.

Please proceed.

Okay, thank you.

In terms of the modest growth you're expecting, in terms of magnitude, what should I expect that to be?

Is that 3 percent to 5 percent top line growth , 5 to 8?

Somethi -- can you give a little more color on that?

Somewhat larger than that.

But -- I don't want to get pinned down with respect to that.

We -- we expect it to be a little larger than either of the two brackets you referenced.

I would say that that will very much depend on how the key end markets evolve over the year.

We're obviously focused on that, but we're more focused on the - the bigger picture in terms of, you know, the opportunities going forward.

That -- that are on a different scale altogether.

Okay.

And in terms of, you know, how should I look at this in terms of gen1 and gen2, and V-Ichips by, in terms of percentage of revenues from each of those, you know, sort of at the end of '05?

Well, as suggested earlier, we expect to see some of the initial programs involved with V-Ichips ramping up in the second half of the year.

They're still going to be in terms of the overall revenue picture this year not very significant.

As suggested earlier in terms of the mix between first gen and second gen, second gen last year grew at about 20 percent, it was first gen was a little less than 10 percent and we don't expect that that picture to -- to change, or that trend to change significantly this year.

Okay.

And then finally, in terms of the revenue growth, how much of that is -- is anticipated to be your internal growth versus market, end market growth?

We expect it to grow faster than the -- the general market for, you know, power supplies and power components.

Okay.

Thank you.

Thank you.

And your next question comes from the line of Fred Ramberg of M.S. Howells.

Please proceed.

Yes, good afternoon.

I was wondering if you could comment on -- further comment on your publicly announced license agreement with Sony, and about your --

Hello?

Hello?

Your next question will come from the line of Steve Smigie of Raymond James.

Please proceed.

I'm sorry, but that question was cut off.

I guess I'll go ahead and if he gets back on.

Okay.

Let me know and I'll get back off again.

Yep.

Just in terms of the magnitude of the ramps in 2006 time frame on -- on some of the V-Ichip products, is that, you know, given the contracts or the programs that will start ramping in '05, is that possible that could be, or -- or magnitude around say $50 million in -- in '06?

Is that sort of where you are getting too, or be something larger or smaller than that?

We really at this point cannot comment with respect to that.

This is going to be not the kind of statistical business that lends itself to precise forecasting, they're a large programs, they're -- they're precise.

Start time is somewhat uncertain.

And the ramp rate is also somewhat uncertaint.

So there is enough variabilities that giving you any kind of accurate range would be very difficult.

Okay.

You -- you mentioned three areas that -- that you focused on the consumer, telecom, automotive.

Could you give us perhaps an example of how you might have a parts in a particular application, so for example on a consumer board you might have, you know, 2 V-Ichips for a flat panel display whereas a telecom system you might have 8 chips and what the combination of chips would be, so we might be able to get some sense of, you know, a generic system that you're entering and how many parts you might have on each in dollar content there?

For say consumer, telecom, automotive?

Well, I guess I'll start at the top end in terms of high power systems and -- and offline systems in particular.

There was a -- a recent article published that made references to an application that -- that involved as many as 100 V-Ichips, you know, per system.

That -- that would be at the very top end of the scale in terms of being a large power system.

It also happens to be an offline power system, where the power conversion takes place from an AC source, in effect, to deliver a power for downstream converters.

At the other end of the spectrum, which would be at the point of load, you know, VTMs, early VTMs, that have been announced that within the last year-and -a-half find some very attractive opportunities powering advanced processors for a variety of applications.

And in that case, the distinguishing attributes have to do with the point of load efficiency, the high bandwidth or speed of the VTM, the ability of VTMs to virtually eliminate the need to foreground (ph), more capacity and so the point of load, which is otherwise, you know, significant in terms of its consumption of real estate of the point of load, which is transmitting pressure through real estate (ph).

So, your examples of -- of the two ends of the spectrum, you can envision in terms of some of the other examples that you -- you referenced that to the extent that V-Ichips are very thin, they lend themselves to applications that value thinness.

And as we all know, there's a general trend towards products that's more lighter, thinner, and you -- you can guess from that what some of these applications might be.

Okay.

Could you give us, you know, a generic example of how many might be in a flat panel display application?

The -- the -- the -- the number of V-Ichips varies from application to application.

At one end of the spectrum, as I mentioned earlier, could be as many as 100 or more.

At the other end of the -- the range it could -- could be just one.

It very much relates to the power consumption of the system, and what fashion the system is effectively addressed at this point in time by available V-Ichip types.

So, if a particular system, as an example, happens to require 3 or 400 watts and the main channel is addressed by a V-Ichip or combination of a PRM or a VTM, there might be 1 or 2 V-Ichips involved.

Okay.

Great, thank you very much.

Thank you.

Your next question comes from the line of Fred Ramberg of M.S. Howells.

Please go ahead, sir.

Yes, good afternoon.

Can you hear me?

Yes.

Okay, thank you.

Yes, I was just wondering if you could comment further on your progress with your license agreement with Sony and your position on their next generation products.

I -- I really cannot comment, you know, beyond saying that we have a good and developing relationship with -- with Sony.

But -- but I cannot make any specific comment with respect to applications.

Okay, so when you're talking about in -- a high volume consumer applications, we can make some assumptions, I guess?

You're always free to make assumptions, but I cannot comment.

Okay, sir.

Thank you.

And your next question comes from the line of Ron Opel of Moors Cabot.

Please go ahead, sir.

Yes, Patrizio, I wonder if you'd comment on the -- the status of either the Celestica license or any other prospective license or licenses that would result in a -- in -- in a second source of supply.

Celestica sold its power business to C and D.

Mm hmm.

So Celestica itself is no longer a licensee.

We are involved in discussions with respect to additional licensing arrangements and -- and partnering arrangements.

As I've commented in the past, we don't feel compelled to hurry to develop a relationships.

We -- we value the -- the long-term nature of these relationships, and want to make the up front investment in terms of, you know, picking right partners and developing complimentary strategies in -- in the many markets that V-Ichips -- can can serve.

And -- and obviously when we have additional synthesis, we'll -- we'll make a prompt announcements of -- of those licenses.

Okay.

And the prospective possible -- possibly prospective competition between VRMs voltage regulation models and V-Ichips.

I'm just -- I'm assuming that V-Ichips have the same competitive -- competitive pra -- performance, superiority advantages there as elsewhere.

Is that -- is that correct?

Well, one of the key attributes of the VTM is one of the key V-Ichip component types is that as I suggested earlier, it has high band width.

It is much faster than any competitive converter.

It -- It's a single stage device.

Some of the VRMs, you know, particularly VRMs that address,you know, higher current applications, evolve a multiplicity of, you know, sections that are interweaved to achieve a higher effective operating frequency.

You know, dispense of significant complexity.

A single VTM is very fast, faster in terms of supporting [INAUDIBLE] as many processors are.

To the point, as I suggested earlier, of making it unnecessary to us to deploy other point of load, both capacity and to support the load to while, you know, VRM as competitive product would you know, take its time to -- to -- to respond to those changing loads.

So, the advantages of high-priced power solution as compared with the traditional VRM solution to, you know, powering microcessors have to do with diminished use of the S8 (ph) or the point of load avoidance of, you know, need for connectors, avoidance of the need for more capacitance, cleaner performance in terms of use noise, which is becoming more and more significantly in some applications.

So, there are many attributes of the factorized part Vicor solution, we care in particular that are very relevant to -- to processor applications.

Okay.

And thank you.

And any comment on the availability of the 48 volt input PRM, the timing?

You -- you can see, at least one of the debit sheets on -- on our website.

We've sampled some select customers.

We are still holding the product for general availability until we completed a round of customer -- key customer sampling which is taking place and -- and expect it to make the 48 volt AL product, which is the adapted loop version of the PRM, generally available in about 4 weeks.

We've also sampled either stand-alone V-Ichips or as part of big rigs, other kinds of PRMs, including 12 volt input devices.

Great.

Thank you.

Thank you.

And your next question comes from the line of Jim Bartlett of Bartlett Investors.

Please proceed.

Just a follow-on so I understand that.

That -- that you're -- you're sampling these PRM devices before general availability, and is that -- that because of any technical problems?

Or customization problems?

Or within the -- your development of the PRM or is this a marketing strategy?

Well, we're going through a a series of steps that are involved having our field application engineers force go through multivisual tasks on these devices in dependency of various applications and sites throughout the world.

Having completed that, we're now going through a round of customer sampling, and as suggested earlier, having completed that, we'll make the product generally available.

But as also mentioned earlier, any customer with interest can get a first sense of the performance through the data sheet that's been being published on our website.

And -- and if there is a live opportunity, we can also jump start through the process and -- and sample the PRM to -- to that particular application.

Have a full complement available?

Well, I don't know what you mean by full complement.

As I mentioned earlier, there are three types at this point that have been developed.

There's a 48 volt AL, which is the one featured on the website, which is the adaptive loop version for general factorized power, system applications.

There's an IF, for ancillary feedback version, which is used within big rigs to provide backwards compatibility in rig applications.

And there's a 12-volt input version for VRM type applications.

Would there -- that you mentioned 3.

I mean, could there be as many as 4 or 5 or 6 as well?

Well, at the level of a full Vic, which is a -- a product with the capability of 2 to 300 watts, or up to 300 watts, depending on input voltage, only a -- a few are needed to cover the entire breadth of -- of applications of that power level.

Obviously over time we're going to have, you know, more ground offerings at a fraction of the big power levels.

And would you say that the new licensees are -- are somewhat dependent on getting out of this full complement?

Not necessarily.

It depends on the -- the nature of the application.

So the answer is not necessarily.

In fact, I think I -- I made an analogy in the past, which went along the lines of having offered the VTM was a little bit like offering a bigger shoe business and just having the right shoe for sale.

Well, guess what, that's led to a significant number of important seeds for -- for major programs.

Now that we have, the wherewithal to also deploy the left shoe.

Or, have a -- a chip set capability with both the PRM and the VTM playing together.

The market opportunities and -- and -- and the opportunities to seed a variety of applications in -- in many end markets we'll be getting that.

All right.

Thank you.

And your next question comes from the line of Don McKenna of D.P.

McKenna and Company.

Please proceed.

Patrizio, you may have answered this when you responded to Ron a few minutes ago.

But, I've been reading an awful lot, you get an awful lot of press these days on this dual core technology, that the, you know, the -- the industry seems to be going towards.

And also, of course, I've read the -- the article with your work going on with IBM.

Knowing that you've got the relationship with Sony and then you get, you know, things like the current Forbes magazine doing a -- a writeup on the super cell (ph) that Sony and IBM are working on.

Is the technology that's involved with your factorized power lend itself to these 2 different types of applications?

I cannot make any comment with respect to -- to our customers’ applications of -- of the products.

How about the concepts that are involved with these?

I think as suggested in press release, we believe that V-Ichip technology and V-Ichips are uniquely capable of addressing the-- the breadth of our system requirements in the marketplace.

From -- from very high power levels to low power levels, from very high voltage to very low voltage.

And, I guess in that regard, you made reference to the coverage that we've received in -- in the trade press, which I would submit is rather dispassionate about this, just aiming to do a -- a fair coverage of what is going on in the industry and what is relevant to the future of the industry.

And in that regard, that will point to a recent article, it think it was in the January issue of Electronic Design, covering with one section covering FPA, as well as covering other developments in the industry and just by looking at the relative coverage of FPA as compared with other developments in the industry, you can get a sense for what some of the -- the people that are experts in the industry believe is truly relevant.

Those -- those tend to be fairly technical in nature and I'm not smart enough to -- to really understand that.

But when I see all these different things I get kind of excited about potential there.

Would I be wrong to, you know, without asking you to comment specifically on your relationship with these other folks, would I be wrong to have my interest piqued by some of these things that I'm reading?

I really cannot comment with respect to -- to specific applications one way or the other.

Okay.

Thanks.

Thank you.

Your next question comes from the line of Dick Feldman of Monarch Capital.

Please proceed.

Patrizio, in the press release, you made some references to industry trends, and I wondered if you could perhaps on this call elaborate on them?

I'm talking about recent competitive developments, relating to intermediate bus architecture, et cetera.

Well, I -- I think that the -- the comment made in the press release is -- is on point with respect to this general issue.

Is there anything in particular with you -?

Well, I mean, you made reference to the fact that the semiconductor companies, perhaps in the short run, could gain at the expense of the more traditional power supply manufacturers and then where do you stand in this picture?

How would you characterize yourself?

Okay.

Well, the comment with respect to the semiconductor companies likely to have the upper hand in -- in whatever the IBL -- IBL opportunity ends up being, is simply a reflection of the -- the -- the content of a -- a - an isolated point of load device in -- in terms of value.

You know, most of the value is in -- in the silicon.

So it goes without saying that silicon makers as opposed to power supply companies, because of the -- the -- the cost and -- and the fashion of the cost, that relates to silicon are likely to have the more cost effective solutions and are likely to be enjoying a larger share of whatever the market opportunity ends up being.

Insofar as the manner of the opportunity, it is one of those trends within the industry that, in my opinion, gets overstated, you know, par -- particularly in terms of, you know, coverage within the financial community.

I think if you look in the trade press, what you see in terms of coverage is a good deal more balanced.

I -- I think in the financial community there's been quite a bit of hype with respect to the concept, you know, digital control.

You know, one way to -- to relate to -- to that would be to draw an analogy, and the analogy that comes to mind, is the falling that if -- if you add, let's say, a, you know, propeller airplane, you know, putting some fancy controls in it, might make it better in some respects, but it wouldn't change its essence.

It wouldn't make it compete with a jet engine.

And -- and that's the nature of -- of the issue here.

Within the [INAUDIBLE] architecture, the engine, the -- the power converter, which is the art of the product, it's still essentially a -- a relatively old device.

It has been improved, as I suggested earlier, it has been stretched by creating a multiplicity of channels that operate in parallel, but they either itself is a reflection of the essential handicap that is orchestrated with the general approach.

So, the -- the digital control, which has value, I'm not suggesting it is not part of the future of products in this field in general.

It will be.

But it is not what is often characterized as being, it is really relatively second rate development.

Certainly secondary to the core issues associated with power processing itself.

So that you -- what -- these are ways of sort of trying to extend the life of an old technology by hanging onto it, better control circuits and things of this nature, whereas you address the core issue with regard to power conversion?

Well , I wouldn't say that -- that I attempt to extend the life.

I think that I attempted to, you know, provide new kinds of features within a -- a -- a power system architecture.

And a -- a -- a power conversion engine, that is called back converter, that has, you know, very notable limitations.

First of all, it is only truly applicable as an unisolated device at the point of load.

It can't be applied in -- in the breadth of power system requirements that, you know, major markets depend upon.

And also within its relatively limited federal (ph) applications, which are primarily in IT and communications, it suffers from some very fundamental limitations that are not at all addressed by the deployment of digital control.

Digital control can -- can do certain good things.

But guess what?

They can do those good things for -- for engines much more adept at solving, you know, the more fundamental problems that, you know, challenge, you know, power systems in general.

The early successes that you've had, that you hope will ramp up, start slowly in '05 and be more significant in '06 with the V-Ichip architecture, are these mostly higher voltage applications or are some of them -- or would they be across the board?

From 0.8-volts outputs to 400 volt inputs.

So it's across -- so it's a wide range?

Yes.

Thank you.

And your next question comes from the line of Robert Katz of Sindvest.

Please proceed.

Hi, Patrizio.

I have a question about the Vic bricks and are you seeing early success with them?

I -- I was under the impression that that would have earlier adoption and sort of be more -- would -- would be easier for people to sort of switch that out with some of the current products in the market.

Well -- well I think you're referring to the fact that we commented in the past that there’s an established, substantial market, there for those products and -- and Vic brick aim to be, you know, backwards compatible -- retrofit for that.

But, we're still in the early stages of the Vic brick development, which is factored to, you know, early wins and initial contributions top line for -- for V-Ichip based products in general.

I will look at, as I suggested earlier, those, you know the right shoe, so to speak, which is, you know, the VTM engine, both as applied the point of load at one end of the spectrum and as applied in, you know, front end power systems from -- from offline high input voltage applications.

So, that's where we're going to see the -- the first volume applications of the V-Ichip based products.

And then in terms of getting designs in the communications market, when do you -- when would you anticipate that happening?

And -- and I imagine that will be taking market share for the most part, or would it be displacing some of your second generation products?

This isn't an issue in -- in our industry with respect to cannibalization of -- of existing product lines.

Because once a product is designed in, generally speaking, it doesn't get designed out.

So all of these opportunities are -- are incremental.

The only -- the only semblance of cannibalization might be, you know, forward-looking in terms of new designs, or the availability of a much more advanced, more cost effective solution would sway customers who has had good experiences with Vicor into -- into the all systems.

But, it isn't going to be a factor on our legacy products.

Are you starting to see design activity around your new chips for some of these new communications platforms?

Well, we've been seeing activity, you know, for sometime, in spite of the fact that that, up to recently, our opportunity has been limited by only, you know, a few flavors of the VTM engine type of product.

So, as I suggested earlier, we expect to see a significant increase in the rate of seating of -- of potential opportunities in a variety of end markets by the combination of our PRMs and VTMs.

All right.

Are you starting to see any, like, sort of a pull from the design community for this product?

Or is it still sort of a missionary sale, where you have to go out and convince people that they should change the way they handle power on boards?

We are seeing with respect to, again, the -- the VTM engine applications, that there's quite a bit of pull, including from, you know, power supply companies, you know, looking to leverage high voltage input bus converters, to achieve significantly higher densities in offline power systems that have been severely limited in terms of density, which is a very key issue in -- in a lot of applications.

You know, as an example, we're involved with, you know, power supply companies that aim to more than double the density of, you know, front end converters for applications in servers and other kinds of, you know, marketable opportunities.

And -- and there's not a lot of missionary work that needs to be done there, because, you know, the -- the customers have knowledge, they understand what the limitations of old -- old generation technologies are.

And, you know, they're eager to be able to get a competitive advantage and -- and leverage the V-Ichips.

It's not, what would you characterize as a missionary effort.

And a -- and a quick question on financials.

You -- you guided for sequential growth Q1 throughout the year or somewhat like that.

And I -- I think someone was questioning about what the growth rate would be.

And they threw out some numbers.

Did you put out a number for the Q1 growth rate?

I'm not willing to put out the number for the Q1 growth rate, beyond saying that we expect to see Q1 up based on orders we've received and -- and generally speaking based on the forecast for the year, we expect to see sequential growth every quarter.

Great.

Thank you.

And our next question comes from the line of Jeff Bencik of Jefferies and Company.

Please proceed.

Yes, if you could quickly just go over your end markets, which ones were a little bit stronger than expected and which ones were a little bit weaker than expected.

Let me answer that first of all geographically because I already commented earlier, trends by end-markets.

Geographically we've seen particularly since the, you know pickup in -- in Asia, we we've seen Europe have been relatively weak.

North America is holding its own.

Again, by end market, we've seen relative strength in some of the industrial applications, the old patch.

You know, some high end EDP or information technology applications, in some selected [INAUDIBLE] applications.

Okay.

Thank you.

Thank you.

John?

We'll take one more question.

Okay.

Your last question will come from the line of Ron Opel of Moors & Cabot.

Please proceed.

Patrizio, as you go forward over the next several years, with the V-Ichip program and you're initially in full chips and then I -- I -- I believe that -- that you'll be moving then into -- into half chips, form factor chips and than quarter chips and so forth.

Will this process well -- is that a correct perception, and if it is, will this process facilitate cost effectiveness in increasingly low power applications?

Yes.

We already have working how fix the first of that kind.

And -- and generally speaking the scalability is, you know, almost in the actual portion to -- to the size, in the sense that, you know, half-Vic cost just a little bit more than a full Vic.

So to your point, the -- the new scalability of V-Ichip technology expands the market opportunity to lower power levels with, I would say to some extent, increasing cost effectiveness.

Great.

Thanks very much.

Thank you.

Okay.

Thank you for participating and we'll be speaking to you again in April.

Thanks a lot.

Have a good night.

Ladies and gentlemen, we thank you for your participation in today's conference.

This concludes the presentation and you may now disconnect.

Have a great day.

Vicor has not participated in nor authorized the preparation of this transcript nor reviewed it for accuracy or otherwise and disclaims all responsibility for any inaccuracies that may appear herein.