Ambarella at Bank of America Conference: AI Strategy and Market Challenges

On Tuesday, 03 June 2025, Ambarella Inc. (NASDAQ:AMBA) presented at the Bank of America Global Technology Conference 2025, shedding light on its strategic shift towards AI for video and its financial trajectory. While the company reported strong financial results and an optimistic outlook, it also addressed concerns about market cyclicality and competition in the automotive sector.

Key Takeaways

• Ambarella has successfully transitioned to AI for video, with 80% of revenue from AI processors.
• Q1 financial results exceeded guidance by 33%, with raised projections for Q2 and fiscal year 2026.
• The company aims for $13 billion in revenue by fiscal 2031, potentially requiring acquisitions.
• Concerns remain about automotive market cyclicality and competition from Qualcomm and MediaTek.
• Ambarella’s current domestic consumption in China stands at 15% of revenue.

Financial Results

• Q1 results surpassed expectations by 33%.
• Guidance for Q2 increased by 5-6%, with a 5% raise for fiscal year 2026.
• AI processors contribute 80% of total revenue, with a 60% CAGR over five years.
• Revenue distribution: 70% from IoT and 30% from the automotive sector.
• Gross margin target range is 59-62%, with average selling prices (ASP) projected to rise.

Operational Updates

• Over 32 million AI processors shipped since 2018.
• New applications include video conferencing, wearable cameras, and edge infrastructure.
• Continued investment in CV3 for autonomous driving, with expected revenue from design wins by 2027.
• Focus on high-margin opportunities and mainstream high-end products.

Future Outlook

• Ambarella targets $13 billion in revenue by fiscal 2031, with potential acquisitions.
• Growth drivers include CV3 penetration in automotive and expansion of edge AI.
• Challenges include macroeconomic factors, tariff implications, and competitive pressures.

Q&A Highlights

• Emphasis on providing compiler tools for customer model optimization.
• Focus on high-end processors due to limited R&D resources.
• Automotive customers are slowing investments, focusing on low-end products.

In conclusion, Ambarella’s participation in the Bank of America Global Technology Conference 2025 highlighted its strategic focus on AI and market challenges. For a detailed understanding, refer to the full transcript below.

Full transcript - Bank of America Global Technology Conference 2025:

Vivek Arya, Analyst, Bank of America: Okay. Okay. Alright. Excellent. Good afternoon, everyone.

Welcome to this, session. I’m Vivek Arya from Bank of America’s semiconductor and semi comp equipment research team. I’m really delighted to have the team from Ambarella join us this afternoon. Fermi Wang, CEO with me and John Young, CFO and Louis Garardi from the IR team with us as well. And I’ll go the usual kind of fireside Q and A format, but if you would like to bring anything up, please feel free to raise your hands.

So for me, warm welcome. Really glad that you could join us. And you just reported earnings, and I’m sure we’ll get into kind of the nitty gritty of the quarter. But for me, I think it will really help the audience for you to kind of set the stage on what Ambarella used to be, what it has come to, and how is your kind of strategic vision evolved in this process?

Fermi Wang, CEO, Ambarella: Right. Thank thank you, Vivek. And first of all, thank you for coming to meet with us today. You know, Ambarella is 21 years old, and we start when we started, we purely focused on one ideas, how to enable personal video content. And that was in 02/2004.

There was no iPhone. There was no no YouTube. So to enable personal video content is a difficult task. And we build this really proprietary video processing technology so that people people can record high quality video content in a very cheap video device. That was the foundation of the company, and we we basically went to a profitability just with that technology.

But very soon after iPhone come out, it become very clear that capture video is become a a commodity, and we need to start adding value by go to different market. And that is the time we realized that we in in addition to consumer market, need to go to, you know, security camera, drone camera, or other camera like automotive camera to differentiate the product portfolio, and which we did. That’s the reason we went public in 02/2012. And after 02/2012, the most important thing happening that day, in addition to collect the the money, but is to identify for us, we need to add a a brand new technology to our video processing, which is really we at that time, we call video analytics or computer vision. Basically, you can analyze the video content in real time when you capture the video.

And that that based on the idea, we start producing our computer vision technology or AI for the video technology. And it took us a few years to get to the first production. And we start ramping up our second generation computer vision technology in 2018. And in the last six years, our revenue go from zero to last quarter 75%. If you look at this, it’s a 60 CAGR in five years in terms of AI revenue growth.

And from there, we identify more opportunity. So in addition to just doing a new network CNN have new network AI application, we identify using a a driving to basically using a a a video perception and radar perception to do a time driving. In addition to that, in the last two years, when GNI pop up, we start looking at how to apply our CV CV flow architecture for those more more advanced AI portfolio. And so today, 70% of our our revenue from IoT side, 30% from the auto side, but majority of our revenue come from our AI processors, close to 80%. So you can see that we transition from a video processing only company to AI for video.

In the future, I think all of the tech the only technology we’ll focus on going to be is how to continue to improve our AI performance for video data only at beginning, maybe moving to other data type. But just just purely focus on video data type, you will give us a lot of growth on the edge AI for the endpoints like cameras or in edge infrastructure like the the the the boxes that integrate multiple edge endpoints and put the multiple video stream into a box that we can use a more powerful chip to analyze video. So AI technology going to be most important technology driver for us and also revenue driver.

Vivek Arya, Analyst, Bank of America: Got it. Now edge AI, you know, you have a very interesting presentation on on your website, right, where you lay out kind of the core and then the network edge and the application edge. What does edge AI mean for you for me? And and the reason I ask that question is that, you know, yes, there is an understanding that, obviously, you can’t just take products that have been designed for the core and, you know, put it on the edge. Right?

But then you also have a number of companies on the smartphone industry, right, in the typical conventional IoT industry who can actually participate in that edge also. So what does edge AI, you know, mean to you, and how is the competitive landscape? Like, who is your true competitor

Fermi Wang, CEO, Ambarella: Right.

Vivek Arya, Analyst, Bank of America: In in edge AI?

Fermi Wang, CEO, Ambarella: It’s a great question because I think there’s a lot of different definition of edge AI. For me, the definition HAI means that for each application, if you call the HAI, majority of the AI performs AI functions happens at age. But there’s other device like, you know, with your cell phone, you collect data, but you pass majority data to a cloud, and the majority AI happens at a cloud state. Although your data is collecting on edge, I won’t call the edge device because really that’s just a data collection. The AI happens in the call side.

So the way I define the HDI means majority of the AI performance happen at edge device. That’s why I call it HDI.

Vivek Arya, Analyst, Bank of America: Okay. And then competition, who do you think as competitors edge AI?

Fermi Wang, CEO, Ambarella: Today, I think that edge AI, of course, that NVIDIA has some edge AI device like Tegra. Qualcomm has a lot. Then you talk about another 50 startup company that have been founded by the VC. So it’s it’s a busy crowd space, but, you know, we made it clear that in the last since 02/2018, we shipped more than 32,000,000 units of AI processors to edge AI devices. And also, I think that’s just that one data point put us in a unique position competing with NVIDIA and Qualcomm.

I see.

Vivek Arya, Analyst, Bank of America: You know, a few months ago, I think everyone in the investment community heard of DeepSeek, right, in a really loud way, right? I’m sure we’ll debate what the pros and cons. But what has that announcement meant for Ambarella? You know, what has that done positive or negative for you guys? Right.

Fermi Wang, CEO, Ambarella: It’s I think there’s a major impact to us positively. You know, before that, DeepSeek, when you talk about reasoning model, everybody just assured, in fact, including myself, it has to happen on cloud. There’s no chance it will happen on the edge because of performance requirement. But what DeepSeek really show to me is they have multiple different models starting from 1,500,000,000 parameters, the smallest to a to then to the 400 something billion parameters. And we at the ICY as a few weeks ago, we show that with our CV75, which is a two watt chip, that is capable running DeepSeg 1,500,000,000 parameters model without any problem, at a really good performance.

And the CV 72 or five watt chip, four to five watt chip can run the 8,000,000,000 parameter. So just this two thing show you that at a very cost effective and power efficient solution can run reasonably model. That was not possible just three months ago. So I think that create opportunity. I still don’t know what’s the best application that can use the deep sig model running at edge.

We’ll figure that out taking time. But just that we can start showing people that such a powerful model that can only be run on the cloud, now can be available at Edge. I think that create an opportunity for us in the future.

Vivek Arya, Analyst, Bank of America: Got it. Is the optimization of the who does the optimization of the product, you know, for these large number of, you know, large and small and medium sized models? Is that work that Ambarella has to do? Is that the work the customer does after getting your silicon? Like, whose job is it to do all all that work?

Fermi Wang, CEO, Ambarella: Right. So for example, that’s using a puppy model that is generated by some big companies. Right? And but people want to retrain it. So that retraining usually happen with our customer.

We can of course, we can do retraining. We are capable of doing that. But, however, that we try to bundle a retrained model, sell them to customer. We are basically taking away the differentiation our customer wants. So our job the the way we position this is our customers should do all the retraining.

Vivek Arya, Analyst, Bank of America: Right.

Fermi Wang, CEO, Ambarella: Our job is to help them to port that retrained model onto our chip and running very efficiently. So we need to provide them a compiler tools that can compile the model, doesn’t matter who is CNN or any kind of the generic type of models, and efficiently convert that to a binary that runs on chip. That’s what we should do. And after that porting, it’s our job to work with the customer to optimize the model. So that I think is our job.

Vivek Arya, Analyst, Bank of America: I see. One other industry question for me I had is some of the edge AI companies that we speak to, they say, well, you know, we can do the processor, but by the way, you know, we also have a way to bundle the sensor, right, that is getting the information. Some will say, well, you know, I have a great connectivity portfolio, right, because, you know, ultimately, this thing has to go back and forth, right, to to some other place. How do you address that bundling, you know, argument? And and how do Is that something Ambarella will need to do, develop a connectivity portfolio or develop a sensor portfolio?

Or do you think that staying best of breed is is the right approach for you?

Fermi Wang, CEO, Ambarella: My gut feeling is that people want to bundle everything together, in fact, in the past because they want to integrate those function into a single chip. But I don’t think that’s possible. You cannot integrate sensor or connectivity into a five nanometer chip anymore efficient price efficiently. So they are really talking about they have a sensor and they have processing chip and they have a connectivity chip and they bundle as a package selling at a discount price to a customer. So it’s basically a business deal that so people I do agree there.

People trying to bundle and selling using business deal to sell the whole package. But but from my point of view, you won’t get the best technology. Right? Or if the people already have the best technology on all three of them, good for them. They will win the business no matter what.

But the the way we run into is we always provide the best technology on the process, particularly on the video processing, power efficiency for AI, and also performance for DRAM bandwidth. All of that is our strength. So for us, we are really just trying to compete with people trying to bundle together. But for most of customer, today at least, is they are trying to get the best technology. Cost always an issue, but technology had to be the first priority for them.

So from that point of view, although we are running to all kind of people trying to bundle solution, but I think we still have no problem to sell our AI processors to our customers. Okay.

Vivek Arya, Analyst, Bank of America: A few kind of near term and then we’ll come to the longer term dynamics. So you reported earnings last week, right? Q1, very good results. Q2 was good guidance, and I think you raised the guidance for fiscal ’twenty six. The stock had a little bit of a mixed reaction, let’s call it that.

But what was your kind of impression of your earnings? How you think about the second half of the year? And if you want to make a comment on how this kind of mix?

Fermi Wang, CEO, Ambarella: I won’t call them down 10% was a mixed responses. So first of all, our Q1 was 33% better than guidance. Our q we guide up q two for 5% or 6%. Then we increase our annual guidance by another 5% in the middle. Right?

So from the financial performance point of view, I don’t see anything wrong with it. So then if I look at our script, we talk about new market or new chip. We continue to deliver on time. So overall from the script point of view, I didn’t I don’t think we show any weakness. So now what’s the theory about behind this 10% drop?

I heard few of them, but one of them I want to give you, you know, really making sure people understand. There’s a thesis says, well, because I didn’t talk enough about CV3 or autonomous driving updates in my script, people think that I am, you know, defocus our autonomous driving investment and focus more on the edge infrastructure. I just want to make clear that it’s not the case. In fact, that in the last three months, we continue to invest heavily on the, you know, the on the development in customer engagement design in RFQ. We didn’t give any update because we there’s in that three, three months, there’s no major development from the customer point of view for us to give update.

So, but however, at the same time, that the new announcement on the edge infrastructure side is not, should not be a surprise because since edge AI come out, we talk about using N1, N1 six fifty five to address this edge infrastructure opportunity. So that I don’t think is a brand new thing that people should say this is defocusing on. So I just want to make clear that CV3 for autonomous driving continue to be a very important direction for the company. While we should try to leverage the only investment we put into our third generation CVflow architecture and try to identify new application can take advantage of that technology so that we don’t need to add too much more OpEx and still can enable brand new application. I think that’s really the best word that we can have.

Vivek Arya, Analyst, Bank of America: And then on the second half of the year, right, I think you’re using kind of your typical conservatism. Is that typical conservatism or is there something in the macro environment that causes you to be more conservative than usual?

Fermi Wang, CEO, Ambarella: I think it’s a conservatism that really reflect the reality. You know, there’s a huge tariff discussion on July 2. People are going to receiving later to find out what’s the tariff rate. If everything goes smoothly, that will be great, but if not, it’s going to be a ugly situation immediately. So what I try to say is because we don’t know, we try to bake in some conservatives into our second half guidance.

That what that means is there will be more upside than downside for us. And if things turn out to be, you know, that tariff is non non issue after July 2, I think we can get a better number than our second than our guidance right now. So that’s that’s the thing we we try to say.

Vivek Arya, Analyst, Bank of America: Got it. Did you observe any pull ins in in the first half at all?

Fermi Wang, CEO, Ambarella: Or Well, you know, to tell the truth, when you see a strong financial performance that we have, you have to suspect there are some of the pull in. But we engage with our customer aggressively to understand their position, not only they say they are doing pulling because they are most of them say, hey, you know what, sitting here, wait to see what’s going to happen with the tariff. So from that point of view, I I suspect there are some, but that’s not a major scale that what we’ve seen three years ago. I see. You know, one thing,

Vivek Arya, Analyst, Bank of America: for me, you brought up that there have not been as many updates on the automotive side. You know, we spoke with Continental recently, and they are still very engaged, right, with the So to your point, things are happening, right? It’s just that end customer progress has been, right, a little bit slow. But where do you see it? Right?

When do you think you will start to, you know, the automotive pipeline will start to get reenergized?

Fermi Wang, CEO, Ambarella: Well, first of all, the our investment continues. Our engagement with county on the current design win, for example, Aurora, Ketiag, and other design win we announced already, they are all in progress. And and we we I expect that we’re going to deliver revenue in 2027 as we announced in the past. So the key is, right now, we have to continue to focus on the design win and the RFQ that we have. The only thing we’re trying to say is look at, know, the in a while we we lost a major design in the last quarter, and we were hoping have very high hope before that, that after we lose it, then that becomes such a negative response for us.

So we are start thinking about how to communicate to the investors about our designing activities. Setting our expectation and fail to deliver, it’s just, I don’t think that’s the right way to do it anymore, right? So we need to figure out what’s the right way to communicate to investor in the future. Got it.

Vivek Arya, Analyst, Bank of America: Okay. And then if let’s say for the next one to two years sort of edge AI and IoT stays, what are the top three or four applications that are driving it? Then within that, if you could also give us a sense for how many of them are accretive to your average selling price right now?

Fermi Wang, CEO, Ambarella: So first of all, we are starting a lot of new applications that will come into our pipe revenue pipeline. You know, security used to be our biggest one. Right now, you know, we are starting we talk about, you know, video conferencing, you know, portable video, wearable cameras, you know, now each infrastructure. All of them can be meaningful revenue for us. And all of them are taking advantage of third generation AI infrastructure.

And the the ASP, all of them going up. For example, just give you an idea. For the video conferencing, the first chip was selling to there was a video only human viewing process chip at $9. Today, CV five that people use for video conferencing is selling between 25 to $45, depends on volume. And the ASP growth is significant because the AI performance you’re adding there.

That’s but CV5 is still second generation CVflow. When you go to third generation CVflow, CV72 and CV75, we talk about which are going to add advanced model that we just talked about, vision language model and the reasoning model, maybe move more in the future into that platform, I expect to see more applications jump up. So the ASP is really about how much AI performance we continue to offer our customer, and I expect that our ASP continue to grow up. Today, our average ASP in the co company is 13 to $14. Our CV five selling price is anywhere between 25 to 45 for our second generation CV four.

CV 72 is also in that similar range by its third generation architecture. CV three, we talk about hundred dollars to a $400. Right. And NYC55 that for the infrastructure we talk about low three digit price. So you can see that our ASP going to continue to grow based on it because it’s really AI performance the demand going to continue to drive up our performance requirement, therefore our ASPs.

Vivek Arya, Analyst, Bank of America: Got it. You still have some legacy video processor business, right? How should we model kind of the decline of that business over the next few years?

Fermi Wang, CEO, Ambarella: In last quarter, we have only like 25% of human viewing or video process business. And we expect that you’re going to have a very long tail and gradually going down in that. So you should maybe assuming another three, four years of down. But at certain point, majority, 99% of our revenue come from AI based products.

Vivek Arya, Analyst, Bank of America: Okay. And then can you give us a sense for what your exposure is to China, both on kind of a build to and a ship to basis, so we get kind of a true measure of what that exposure is?

Fermi Wang, CEO, Ambarella: So right now, 15% of our revenue is consumed domestically in China. And I also believe majority of our customer, if they don’t want to consume in China, they manufacture outside China already. So our exposure is limited there.

Vivek Arya, Analyst, Bank of America: You know, I saw in your company presentation was this kind of, you know, fiscal thirty one calendar thirty. Right, almost, I think, about $13,000,000,000

Fermi Wang, CEO, Ambarella: That’s right.

Vivek Arya, Analyst, Bank of America: In the sound that you have laid out. Is that something for me that you can do organically? Is that like, what will it take for you to go from a few hundred million, right, to a billion dollar company? What will it take?

Fermi Wang, CEO, Ambarella: Well, the most important thing is that we need to penetrate CV3 because if you look at next two years, the growth will come from the IoT side, right? We talk about that. But if you talk about three, four years, the biggest opportunity is trying to secure a major design win in CV three. And we talk about the last quarter, the design we lost is close to billion dollar opportunity for us. Right?

So a win like that means really solving a big problem for us. And moving forward is really about how to expand AGF on the edge device, edge endpoints to the edge infrastructure. So I think that stay independent and if we want to grow to billion dollars, acquisition probably is unavoidable. But at the same time to your point, that having a much bigger scaled platform, it will definitely help us to get to there even quicker.

Vivek Arya, Analyst, Bank of America: Right. The opportunity that you had to forego that you just referred to, what was that due to? Was it just the company’s scale? Was it resources? Like what what do you think drove it?

And more importantly, is is that, a persistent issue or was that just a one off thing that you had to

Fermi Wang, CEO, Ambarella: Well, you know, one thing I want to point out that our ASP continue to grow. One reason is we only really focus on mainstream high end. But also you can point to that, if we have enough resources, we should be able to even win the low end. There’s no reason to win low But with our scale, with our R and D investment, we believe the best way to invest for us is focusing on the gross margin generation, therefore the operation margin generation. So from that point of view, we do work away from revenue opportunities that we could have because we just don’t focus on lower margin business.

And that’s definitely something can be solved with a bigger scale of the company.

Vivek Arya, Analyst, Bank of America: I see. From a supply chain perspective, what can be the issue that can impact your cost structure if, you know, we get a different situation of where where tariffs are right now? Are you sufficiently diversified?

Fermi Wang, CEO, Ambarella: Well, yes. Well, in fact, you know, we are in five nano and two nano. We cannot diversify in the from the foundry point of view because only the largest company can have a dual source for two nano, five nanometer. We can’t. So we have to pick one.

But from the geopolitical situation, yes, we can protect our our our self and protect our customer by, you know, we are using Samsung. So we do have foundries in Korea and also foundry in Texas. So we do from the diversified point of view, a geopolitical situation point of view. Our supply chain is has been proven by a lot of our customer in terms of the robust. But the true sense of a of a diversification is that you have dual source on any nodes of silicon, which I don’t think we can do without scales.

Vivek Arya, Analyst, Bank of America: I see. You you the gross margin point you brought up is interesting because, you know, your business has been consistently above the 58 to 62 target.

Fermi Wang, CEO, Ambarella: Right.

Vivek Arya, Analyst, Bank of America: So is that because you’re walking away from business, right, or or or is there a or or is it a product gap? Or what what is helping you stay above the target? Or I guess, should the target be revised given how persistently you’ve been

Fermi Wang, CEO, Ambarella: Right. So, however, you know, through our history, we sell them focus on low end because, you know, to try to compete with the price with the those company only pay attention to that, I think it’s a bad deal. However, so throughout the company, we kind of downplay the low gross margin business. But for our customer, for example, that’s a some of a larger security camera customer. They want from the low end to high end.

And we are happy to supply to to to them with cross their platform. And we did definitely take a lower gross margin on the low end side just because we want that business. So that we still have a combination from low end to high end. But if some our customers just say, I don’t care about mainstream, I just want to have buy the price on the low end side, we we we tend to work away from that. Right.

Vivek Arya, Analyst, Bank of America: You know, when I looked at where a lot of our our peers are in terms of modeling, people always model your gross margins to get back into the but from what you’re describing, if ASPs continue to do quite well, is there a reason why gross margins would get back to the trading range or or to your target range or do you think they can consistently stay above that?

Fermi Wang, CEO, Ambarella: Well, in fact, we are in the target range of 59 to 62, but we are kind of guiding gross margin a little lower as a trend. The reason for that is, you know, our competition, particularly on auto side, is Qualcomm and media. I I don’t expect that they will be nice to us in terms of price competition. So I think that we kind of bake in that potential competition from that. But from the IoT endpoint device point of view, I think we have a track record and also the product portfolio that can protect us.

Vivek Arya, Analyst, Bank of America: I see. And then on the R and D intensity, know, Ambarella has always been a company with a very strong focus, right, on R and D. But that also means that, you know, that it is very, you know, out of bounds, right, with the kind of sales growth that you’re seeing. You think it’s just a matter of time? Is it like at what point do you think Ambarella can be a company that is going earnings on a consistent basis?

Fermi Wang, CEO, Ambarella: So first of all, we you know, if you look at last ten years, we invest on the CV flow for c new CN type new network, and then we invest on the autonomous driving with CV three. Now that we’re talking about so that two generation of CV flow definitely take a huge amount of investment. Moving forward, I think in the near future, our job is leveraging that investment to focus on the the applications can take advantage of those investment. So we are not looking for another market that will require a huge amount of R and D expense. Instead, I do believe our AI architecture will allow us using a current architecture and current software to tap into the new market.

So from that point of view, I hope and we’ll continue to show more of operating leverages on our bottom line.

Vivek Arya, Analyst, Bank of America: Okay. And outside of the CV3, what are you seeing in the automotive market right now? There’s a lot of concern about cyclical issues. So what are you hearing from your automotive customers?

Fermi Wang, CEO, Ambarella: We saw the same thing. You know, in fact that the market has, you know, different problems and the financial problem and inventory problems. So I I because of that, we do see people slow down the investment. Although everybody’s still committed to do level two plus, but the investment cycle and their decision cycle definitely push out. That’s one thing we see.

The other thing is, instead of doing really high end events to level two plus, level three car, They focus on more on a highway level, level two plus. So basically changing their business model to focus on the value, more value based engineering and try to get to market faster so they can get to profit. So I do see that the change of the particular Western side.

Vivek Arya, Analyst, Bank of America: I see. Does your opportunity in a car change depending on the modality, like if people are using just cameras versus using cameras plus LiDAR plus other things?

Fermi Wang, CEO, Ambarella: Well, I don’t think that changed. I think it’s hard for me to believe that when you go to a higher level of autonomy, you can use camera only. So I think that domain controller that can integrate multiple sensor modality continue to be our thesis, and we believe that we can continue to benefit from there.

Vivek Arya, Analyst, Bank of America: Okay. And then finally, me, as you look over the next year, what do you think are possible kind of upside drivers to the guidance you have given? I understand macro is what it is. Know, is there a certain market? Is there a certain, you know, customer or application that that you think can drive upside to how you think about your fiscal twenty six right now?

Fermi Wang, CEO, Ambarella: A couple of things. Right? First of all, we talk about a lot of green shoots of opportunity in h h endpoint opportunities. Mhmm. Those opportunity, if the volume goes up for example, the wearable camera, a lot of people, you know, we start seeing a lot of opportunity on wearable because it’s not just a policeman wearing the wearable.

A lot of security guards, service people, seven Eleven clerk, put on wearables so that they can document all of the events happens when they provide service. And you can imagine that that kind of if the volume goes up, and that can be a driver, right? For us, it’s all about volume. The other thing is now we’re talking about edge infrastructure. We believe the revenue is going to be start second half of next year.

And with right if we, you know, hit the the market with the right customers, it can be a That’s a server

Vivek Arya, Analyst, Bank of America: like product.

Fermi Wang, CEO, Ambarella: That’s a server type. It was infrastructure type. Yes. It’s a server type.

Vivek Arya, Analyst, Bank of America: So you plan to sell whole box or you plan to sell the just the CPU on the lot?

Fermi Wang, CEO, Ambarella: Right. So just like a camera, we provide a complete reference design. Show a camera to customer with our chip in there, but our customer will look at the camera and say, great, that’s a good example. They will build their own box, build their own camera. So for the edge infrastructure setting, we are going to build a complete box, including application running on top of that, and give this rough design to our customer.

They can find the manufacturer themselves to manufacture the box itself. But on top of our software, they’ll remove the layers of software that we provide, replace that with their own models for their own applications, so that they control the all of the value added. So that is business model we are looking at.

Vivek Arya, Analyst, Bank of America: Makes sense. With that, Vermeer, thank you so much for your time and your patience. Thank you for that. You Thank you. Thank you.

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