Crudo Semiconductor at Mizuho Tech Conference: AEC Growth Strategy Unveiled

On Tuesday, 10 June 2025, Crudo Semiconductor (NASDAQ:CRDO) presented at the Mizuho Technology Conference 2025, outlining its strategic growth and technological advancements. The company emphasized its competitive edge in Active Electrical Cable (AEC) technology, while also addressing future challenges in the high-speed connectivity market. Despite significant AEC revenue growth, Crudo faces pressure to diversify its customer base.

Key Takeaways

• Crudo’s AEC technology is 100 times more reliable than laser-based optics.
• AEC revenue has grown tenfold since the company’s IPO.
• The company is expanding into rack-to-rack connectivity with NVIDIA GPUs.
• Crudo is developing both copper and optical solutions for the 400G market.
• Manufacturing capacity can nearly double within six months.

Financial Results

• AEC revenue has increased 10x since Crudo’s IPO.
• Three customers accounted for over 10% of revenue in the last quarter.
• Two more customers are expected to ramp up, one in late Q2/early Q3 and another later.
• All six hyperscalers have the potential to become 10% customers long-term.
• Crudo remains a sub-billion dollar company.

Operational Updates

• Crudo’s AECs are significantly more reliable than laser-based optics.
• The company provides predictive maintenance capabilities through telemetry data.
• Expansion to rack-to-rack connections with seven-meter cables, specifically for liquid-cooled environments.
• Exclusive connections with NVIDIA GPUs through xAI.

Future Outlook

• The scale-up market, including PCIe and NVLink, is estimated to be 100 times the front-end network opportunity.
• Core scale-up opportunities for Crudo will focus on PCIe retimers and AECs over the next 18 months to 3 years.
• The company aims to reach 43 dB loss handling and low latency with PCIe SerDes.
• Crudo anticipates co-packaged optics (CPO) to rise in higher-level switching, favoring copper for reliability.

Q&A Highlights

• Crudo is developing solutions for the 400G market, seen as the next big challenge.
• CEO Bill Brennan foresees the 100 gig per lane or 800 gig port market to remain substantial for years.
• Crudo aims to build a universal solution for Scale-Up Ethernet (SUE).

Readers interested in more details are encouraged to refer to the full transcript below.

Full transcript - Mizuho Technology Conference 2025:

Vijay Rakesh, Senior Semis Analyst, Mizuho: Joining us at the Mizuho Tech Conference. I’m Vijay Rakesh, senior semis analyst for Mizuho. And joining me today is Bill Brennan, CEO of Crudo Semiconductor. Bill, welcome. Thank you for joining us, and I appreciate the So for more than twenty five years, Bill has been leading and scaling organizations to deliver steady revenue growth and profit.

Bill joined Crudo in 2013, leading the company to his IPO in January 2022. He has overseen Credo’s growth from a small start up and organization of more than 500 employees. Under stewardship, the company has pioneered revolutionary networking technologies based on Credo’s high performance, low power SerDes technology, including active electrical cables, AECs. You guys will hear a lot of it today. And LROs, linear resistive optics, some of that too.

Under this leadership, Credo has emerged as a gold standard for high speed connectivity solutions, delivering revolutionary retimers, gearboxes, and MaxEck cables. With that, Bill, thank you for joining. Let’s join in welcoming Bill Benignan. With that, let’s get started. So okay, Bill.

Here we go. Let’s go. AAC cables. It’s been the big chunk of your revenues. I mean, it’s been a big driver for you.

I think, since your IPO, your AAC cable revenue has grown almost 10x, I believe. Just amazing. I don’t think anybody saw it growing that fast. But can you maybe you can talk to us about the competitive moat, what is driving that business, and how you see that going forward, sir.

Bill Brennan, CEO, Crudo Semiconductor: Sure. So we are we are a company that delivers connectivity solutions. I’ve recently talked about the three different tiers of innovation. And this is, you know, will ultimately get to to the competitive moat that we’re building. Everything for us starts with SerDes.

It’s a super difficult circuit that’s, that’s critical for any kind of high speed connectivity. I believe that we go deeper and broader in in our SerDes IP portfolio than any of our competitors. We’re very very much application specific in our mindset. And so I think, you know, there’s a moat that’s created at a SerDes IP level. The tier of innovation is really ICs, you know, integrated circuit design.

So we do a lot of different and special things with our IC design. So adding to the competitive moat there. We do things with more efficient power, lower cost and performance in addition to adding circuits that can go higher level from a feature standpoint. So the tier is really the system level solution. And that’s delivering products that are integrated within our customers’ network at level that surpasses what the IEEE standard is.

If look at these three tiers of innovation, combined with what we’re doing from a software and firmware perspective, all of this adds to the competitive moat. But I think we’re unique in a sense the way that we’re approaching the you know, this this product category in a sense that we’re vertically integrated. So from that system level, we define the products with our customers. We develop them entirely. We qualify them very intensive qualification, where we qualify the entire link from switch to NIC, running, you know, at speed, over temperature, over voltage.

That’s done in house at Credo. And and then ultimately, we’re responsible for every aspect of production. I’ve got a silicon silicon operations team and I’ve got a system solutions operations team. So it’s really it’s really that way we’re organized adds to the competitive moat. It’s very difficult to compete with us.

Vijay Rakesh, Senior Semis Analyst, Mizuho: Got it. So I think you mentioned the chip side and the software side. On the chip side, obviously, you talked about how you’re at n minus one, at 10 nanometer, 12 nanometer and is able to beat your peers on power consumption or cost. How do you see that as you go forward? You’re already below your peers in many cases, like on SerDes, when you look at Broadcom, Marvel, all these guys.

How do you see that as you go to five nanometer, which I believe will tape out next year?

Bill Brennan, CEO, Crudo Semiconductor: Five, we’re already we’re in flight already. We’ve got products that we’ve introduced. But three nanometer is what’s in fab now.

Vijay Rakesh, Senior Semis Analyst, Mizuho: So how does that compare to what’s out there? What does the competition do when you start coming to market with a three nanometer? Yes. So I

Bill Brennan, CEO, Crudo Semiconductor: think the competitive, arena has changed shape over the last ten years for us. I mean, we’re an existence proof that we do things better at a SerDes and an integrated circuit level. Just the fact that we exist, it doesn’t mean that we’re just as good as Broadcom or just as good as Marvell. Where it might have been a little bit more simple ten years ago that you’ve got to deliver something that’s super high performance with very low power and low cost, it’s kind of shifted today, especially because the bulk of our products are system level products. And so I would say number one today is reliability.

Number two is power. And then cost is always important. So it’s important that you, you know, you approach your business with that mindset. But but more and more in the AI application, when we think about putting 10,000 or a 100,000 or a million GPUs together to form one huge supercomputer, understand there is there is not redundancy in that appliance to switch connection. And so if, you know, if you look at at say optical technology, laser based optics, very, very susceptible to link flaps.

A momentary loss of connection, which will cause the entire cluster to go down. You have to start your training run over. It’s a massive loss of productivity. And so our customers are now putting reliability at the top of the list from the standpoint of what’s important. And we’ve won.

We’ve actually replaced optical connections because our AEC’s are well more than 100 times more reliable than laser based optics.

Vijay Rakesh, Senior Semis Analyst, Mizuho: Got it. I think so that brings us to an interesting point, which is the hardware side, obviously, you have a pretty good lead. But then you also bring in a good software overlay on there where you are able to kind of predict where the next failure point is or predict a link flap, which actually helps you helps the customer get more uptime on the server, might be going to some predictive maintenance, etcetera. Maybe you can talk to that because that’s a big differentiator now on the AEC side versus many of your peers, right?

Unidentified speaker: Right. It’s great point that the way that we work with our customers, try to work with our customers, we try

Bill Brennan, CEO, Crudo Semiconductor: to make their you know, the connections that we’re providing more valuable in a sense, more feature rich. And so one of the things we’ve learned with our AEC business is that if we’re open to innovation, our customers bring a lot of really interesting ideas. Now you’re talking about an area where engineers have not been able to innovate. We’re talking about replacing passive copper cables, basically a jumper cable. Or, you know, looking at the optical space, there’s no real innovation that’s above the IEEE spec.

And so we’ve developed a lot of interesting technology that, you know, allows our customers to do a lot of different things. But telemetry is one of, you know, one of the big value adds that we’ve delivered. So it means like an it means a network engineer can see link health in the entire rack. And instead of having a green light only, and then a red light when when you get a link flap, or when you do have a link that’s degrading. You know, having a check engine light or a yellow light is is super valuable.

So during a maintenance cycle, they can pro go proactively replace those links that are likely to degrade further. And so bringing that across the product family is really our next objective.

Vijay Rakesh, Senior Semis Analyst, Mizuho: So is that something that you can roll out on existing customer deployments already? Or is that only with the new ramp that you can roll in the software?

Bill Brennan, CEO, Crudo Semiconductor: Know it’s there’s different points to engage and it’s really based on the customer’s willingness to take us down that path.

Unidentified speaker: Got

Bill Brennan, CEO, Crudo Semiconductor: it. But yeah, there’s no limitation on when it can be implemented.

Vijay Rakesh, Senior Semis Analyst, Mizuho: Okay. And now on the AEC side, going back, obviously you have grown 10x, but investors, they’re not really satisfied with the 10x growth in

Bill Brennan, CEO, Crudo Semiconductor: revenue. What have you done for me lately? Yeah, exactly. Yes.

Vijay Rakesh, Senior Semis Analyst, Mizuho: So as you look out, how do you see that pipeline growing, either from a customer diversification standpoint or just increasing engagement at your existing customers?

Bill Brennan, CEO, Crudo Semiconductor: Sure. Yeah I think there’s gonna be natural diversity as we expand our footprint with the leading hyperscalers in the world. We’ve mentioned that last quarter we had three customers that were over 10% of the revenue. We mentioned two additional customers that we’ll be ramping this year. One of them will one will happen and that’ll happen probably in the late second quarter, early third quarter and then the other will be following.

So you’ll see customer diversity over time but also there’s we’re really at the very early innings of the product category being adopted across the customer spectrum. There’s different areas within the network where AECs are a good choice. And I mentioned there’s a front end network. So the front end network connection from the NIC to TOR. There’s also scale out back end.

So there’s two pieces to that. There’s the appliance to switch connection. And then there’s also the switch rack that sits within the row dedicated to the AI cluster. And that switch application is also in the front end network. So there’s lots of different areas where AECs should be deployed.

So you’ll see a natural expansion within within those those applications. But most recently, there’s a real expansion as we look at rack to rack connectivity. Previously, we’ve kind of been the the intra rack, you know, connectivity de facto Yeah. As people move from 50 25 gig per lane speeds to 50 to 100. Every almost everybody converted at the 50 gig per lane.

But really across the board for our customer base, 100 gig AEC’s inRAC are a de facto solution. But now that there’s new technologies being deployed as they build new data centers, specifically liquid cooling, and and, you know, incredibly, you know, greater power sourcing. There’s an example, with one customer that that we’ve got. They were were originally building an 18 rack row. Two switch racks and 16 appliance racks.

They were in a facility that was air cooled. The power sourcing was more traditional. Yep. So say less than 15 kilowatts for a rack. So they were they weren’t it wasn’t a very dense deployment.

So as they moved into the building with liquid cooling and the kind of power sourcing that you would need, maybe 10x the power sourcing of traditional, they were able to compress that footprint from 16 racks of appliances, they were able to quadruple the density. So only four racks of appliances and two switch racks. And because link flaps are our top priority to eliminate, they asked us to build seven meter cables and that’s how we ultimately introduced the zero flap AEC family back in in fourth quarter. And so now you’re seeing the expansion of TAM because we’re actually replacing replacing optical connections. Right.

And so, you know, this concept of of going from inter rack only with all these different applications, now we’re looking at expanding the market to rack to rack connections that can cover a densely populated liquid cooled road.

Vijay Rakesh, Senior Semis Analyst, Mizuho: So so to that point, like you already have a massive proof point with Amazon, one of the big customers. They have ramped well. Are you seeing other customers start to look at these proof points and say, hey, we can ramp up to that scale? Are you able to kind of use that example as starting point in your other ramps?

Bill Brennan, CEO, Crudo Semiconductor: Yeah. Think that we can look at the opportunity from a tops down level and we can maybe build a model on CapEx and ultimately what would be the portion of that CapEx that would be spent on connectivity, specifically on connectivity that’s maybe seven meters or less. But I think from my perspective, you know, I view all of the six hyperscalers in The US that that we consider. They all have the ability to drive a very large number from a revenue standpoint, especially as they deploy new technologies and move on to next generation deployments. So I think they all can be 10% customers long term.

Vijay Rakesh, Senior Semis Analyst, Mizuho: So sticking with the theme of cables, guess, I want to go to the scale upside. I think the new trend that’s coming on is your rack and spine are starting to flatten out. There’s more clustering of GPUs. They’re going from 70 to 128 to five twelve and one thousand cluster GPUs. Maybe you can talk to the scale upside.

What’s the opportunity there versus scale out that you do today? What differentiates you from the others?

Bill Brennan, CEO, Crudo Semiconductor: Right. So just to be sure, we’re talking about the back end network in an AI cluster. Scale out being an ethernet protocol. Scale up today being PCIe protocol or with NVIDIA it’s NVLink. And so we look at that scale up architecture is that scale up network really starts within the appliance.

The market today is largely connecting GPUs within an appliance. So this is a retimer market. What we’re seeing is that there are rack scale deployments happening. So if you can get higher performance by linking all of the GPUs directly in an appliance, it it definitely makes sense that connecting all of the g GPUs in a rack will give you higher performance. And then there’s an argument to take that network and go row scale, directly connecting all of the GPUs in the row.

And so there’s you know, when I when we think about networks, when we think about front end, know, traditional, what we all all thought, you know, before two or three years ago, we think the scale out opportunity is a 10x opportunity from a volume perspective. We think scale up, if you play it out and and and you go all the way row scale, we think that’s another 10x from a volume standpoint. So 100x of the front end network. So it’s an absolutely massive opportunity. And you know, we have to talk about protocols.

So currently, most of of of the deployments right now are PCIe Gen five. It’s it’s really the language that CPUs the protocol that that comes from the x86. And so it it’s natural that because it’s native on the on the board that PCIe was used to connect the GPUs directly together. In the future, you know, the speed needs to go much much faster than 32 Gbps. Yep.

There’s a natural path to PCIe gen six which doubles the 64. The bandwidth. The 64. But that’s still you know, that’s still a or a quarter of you know what what NVIDIA is achieving with NVLink at 200 gigabits per And so our business over the next, you know, I would say eighteen months to three years, the core of the scale of opportunity for us will be retimer, PCIe retimers and the AEC’s. But after that, there’s a large discussion happening in the industry about where does the protocol land.

And of course people are familiar with the UA Link effort that that’s being led by different companies within the industry. We’ve heard recently from NVIDIA about NVLink Fusion. Yeah. And then we heard recently from Bronco about scale up Ethernet or SUE. So this is you know, for us, we we view the AEC solutions we make are layer one.

So it’s a bit stream. You know, to give you an example, my InfiniBand cables, we were just at the interop effort that took place last week. The only difference between ethernet and InfiniBand at layer one is just the handshake. Yep. And so when you plug it into a port, you’ve got to raise your hand and say, you know, I’m an InfiniBand connection.

And so layer one, it means that that, you know, the the protocol war that’s gonna happen between NVIDIA, you know, Broadcom and the UA Link group, we’ll be able to support all of it with, universal solutions because we’re layer one. But it’s a it’s a very interesting conversation because if we think about NVLink fusion, we’re really talking about the GPU maker. Yep. Right? They’ve gotta make a decision what SerDes to integrate, you know, into their, you know, hundreds of millions of dollars cost in developing that chip.

If you choose to go with the the NVIDIA IP, you’re married to them. Yeah. Right? You’re going to be buying these chiplets that enable you to interface, from the GPU to the outside world. The Broadcom approach, you know, it’s really a hack of the ethernet protocol.

And so what they did was they hacked it. They fixed the packet size and ultimately reducing latency for short connections really targeted at the row.

Vijay Rakesh, Senior Semis Analyst, Mizuho: Got it.

Bill Brennan, CEO, Crudo Semiconductor: It gets you 80% of the way there. And that’s something that you could implement today. So there’s no, there’s a time to market challenge with all of these. But when we think about UA Link, this would be a brand new ecosystem. So there aren’t switch suppliers that exist.

Broadcom

Vijay Rakesh, Senior Semis Analyst, Mizuho: pulled

Bill Brennan, CEO, Crudo Semiconductor: out of UA Link and they’re going SUE. I want

Vijay Rakesh, Senior Semis Analyst, Mizuho: to get to that in a little bit. But I think the key is when you look at the top of the rack, your AC cable, that itself has driven a massive growth for

Bill Brennan, CEO, Crudo Semiconductor: 10x. This

Vijay Rakesh, Senior Semis Analyst, Mizuho: scale up opportunity is something that was not talked about even on the IPO side. And now that is starting to gather steam, get your design wins, and there’s a massive ramp ahead of you. You talked about design win on the scale up side in the half twenty twenty five, which looks like pretty quick. How are you able to differentiate on the scale up versus the existing? What’s what’s different?

Is it power? Is it performance? PCI is an industry standard. But how are you differentiating versus the competition?

Bill Brennan, CEO, Crudo Semiconductor: Yeah. To be clear on on the timing of ramp, we view calendar 2025, the year we’re in, is really a year of design wins. And ’26 is when we’re gonna see the the ramp. And I think we’ll see retimers followed by AEC’s. But if we talk about PCIe specifically, you want to get down to the SerDes level?

Yeah, yeah. Sure. Okay. So normally I

Vijay Rakesh, Senior Semis Analyst, Mizuho: think I’m sure investors want to know why. You’re secret sauce.

Bill Brennan, CEO, Crudo Semiconductor: So the discussion about latency with the scale up network really important. And so PCIe, at a SerDes level, in addition to reach, which is how far can a signal travel and still be recovered at the other end of the wire, So the receiver or the clock and data recovery or the DSP. Many many different ways to to talk about that. Reach. We talk about what’s the energy required to get the signal across the wire.

And and cost. In addition to that, you’ve gotta throw latency in. And there’s a tug of war between reach and latency. If you want low latency, you’ve gotta reduce your reach. And I think because we focus so deeply on on building application specific SerDes, we’ve delivered our PCIe SerDes with the ability to have a 43 dB, a greater than 40 dB loss handling.

At the same time, we’re able to get, well below the ten nanoseconds.

Vijay Rakesh, Senior Semis Analyst, Mizuho: And where is the competition when you look at that 43 dB?

Bill Brennan, CEO, Crudo Semiconductor: Well there’s a trade off. The distance versus signal loss, yeah. The distance versus latency. So like we see a lot of our competitors dropping below 40 dB into the 35 dB range, which means for certain links, it’s gonna have enough loss handling performance. And so on a latency, we see competitive as ten nanoseconds.

We’re at six. So we’ve successfully offered reach and low latency.

Vijay Rakesh, Senior Semis Analyst, Mizuho: Got it.

Bill Brennan, CEO, Crudo Semiconductor: And and that’s a huge differentiator. Interesting. Yep. In in addition, I think, you look at our our pilot platform, which is really a software and firmware platform for development and debug, we’re

Vijay Rakesh, Senior Semis Analyst, Mizuho: gonna

Bill Brennan, CEO, Crudo Semiconductor: be faster time to market. So in the ethernet world, going from 25 gig to 50 gig to 100 gig, you know, this this software capability has built has been built over a decade. And and it’s really the way that you get to, you know, you you get to a high yielding board design quickly.

Vijay Rakesh, Senior Semis Analyst, Mizuho: Yeah. So one of the things you mentioned is NVLink obviously has a much higher bandwidth than PCIe Gen five, let’s say. 32 gigabit per that was 200. When do you start to see it competitive to NVLink? And you mentioned UA link and SUV, But obviously, UALINK looks like the sponsors are dropping away, I guess.

It’s only AMD left. But how does SUV stack up on bandwidth versus NVLink versus I guess it’s Ethernet, it might

Unidentified speaker: be PCIe Gen five itself, versus what you will be doing.

Bill Brennan, CEO, Crudo Semiconductor: Yeah. So that’s the key point. From our perspective, what we see is the same SerDes. 200 gigabits per second SerDes. So that is common amongst all three different standards.

So for us, it’s again, we’re in we have the ability to build a universal solution.

Vijay Rakesh, Senior Semis Analyst, Mizuho: Got it. Okay. And so when you look at going to market with the scale up product, would the customers would be the AEC, initial AEC adopters, would that be the route to go?

Bill Brennan, CEO, Crudo Semiconductor: Because Yeah. My feeling is that we’re going to see a natural progression from a retimer market, where we’re selling ICs to AECs as as that network wants to go rack scale.

Vijay Rakesh, Senior Semis Analyst, Mizuho: Got

Bill Brennan, CEO, Crudo Semiconductor: it. And now, you know, an advantage that that you get with going to liquid cooling, you get this compression in your footprint on the row. And now when we talk about going row scale, we can also talk about using AECs for that, which gives you, again, highest reliability, which is the critical factor.

Vijay Rakesh, Senior Semis Analyst, Mizuho: You also mentioned one of the things on your AC cable. So I’d go back to that is a big chunk of your shipments are still 50 gig per lane. But obviously, your 100 gig per lane coming where AC becomes a much bigger use case. Can you talk to how that should logically accelerate the AC adoption as you start to see Tomahawk five or six start to ramp here and that whole bandwidth per lane start to increase, I guess?

Bill Brennan, CEO, Crudo Semiconductor: Yeah. So our couple of customers, we were at lower speeds than 100 gigabits per second. The work that we’re doing with xAI, that’s straight to 800 gig ports, 100 gig per lane. We’re connecting exclusively with NVIDIA GPUs. The next customer to ramp gig bandwidth as well, also connecting exclusively to NVIDIA GPUs.

So I Did have

Vijay Rakesh, Senior Semis Analyst, Mizuho: said the name yet?

Bill Brennan, CEO, Crudo Semiconductor: No. Tricky. Yeah, we’re in a competitive world.

Vijay Rakesh, Senior Semis Analyst, Mizuho: Got it. Okay.

Bill Brennan, CEO, Crudo Semiconductor: But the I guess the point being is that we’re going to see a natural trend as speeds increase and as reliability becomes more in focus, these trends are going to lead to AEC adoption more broadly.

Vijay Rakesh, Senior Semis Analyst, Mizuho: Got it. I want to go to the optical DSP side. I think it’s a small market for you. It’s a small revenue for you now. But like your AEC side, it’s grown like 10x in the last two years, three years,

Bill Brennan, CEO, Crudo Semiconductor: three years. From a smaller base. From

Vijay Rakesh, Senior Semis Analyst, Mizuho: a smaller base, definitely. But obviously, you are expanding significantly in that space. You said you

Unidentified speaker: have three customers. You add two more by the end

Vijay Rakesh, Senior Semis Analyst, Mizuho: of the year. Can you talk to what’s differentiating you from the competition and how you’re able to break into that market? And when you look at that customer set there, does it obviously, it will be CSPs, but does it kind of line up with how the AC customer ramps look like?

Bill Brennan, CEO, Crudo Semiconductor: I haven’t seen a correlation in ramps yet.

Vijay Rakesh, Senior Semis Analyst, Mizuho: Got it.

Bill Brennan, CEO, Crudo Semiconductor: Okay. But if if I look at the offerings that we’re bringing to market right now, we offer absolute the the lowest cost solution with our 12 nanometer solution. The it’s got very competitive power. You can build 15 watt optical modules and and it’s got very competitive performance. We just announced our five nanometer product, 800 gig DSP, and that is by far the lowest power solution in the market.

In fact, with our LRO variant on that, you can achieve module power compared to 15 watts, which is standard, you can achieve nine watts. And so as power and energy efficiency become more important, we see a huge amount of interest coming out of OFC in that product. But ultimately, what what we’re trying to do is also, deliver system level features to, to our customers to to allow some of those interesting things that we’ve done with AECs to allow that in the optical space as well.

Vijay Rakesh, Senior Semis Analyst, Mizuho: And so when you look at since you’re talking about optical, I want to go to the CPO side of this.

Bill Brennan, CEO, Crudo Semiconductor: Fun conversation. So

Vijay Rakesh, Senior Semis Analyst, Mizuho: there’s all the talk about CPO at top of the rack at the switch, odds CPU at the GPU level. And now as the cluster sizes increase from 70 to 128 to five twelve, do you see CPO more starting off at the GPU than top of the rack? Or how do you see that playing out?

Bill Brennan, CEO, Crudo Semiconductor: Yeah. I see CPO taking off in the higher level switching.

Vijay Rakesh, Senior Semis Analyst, Mizuho: Switching it,

Bill Brennan, CEO, Crudo Semiconductor: I don’t see it happening anytime soon from a GPU to top of rack switch. There’s a cost to That will be an electrical connection for reliability. CPO has one big pitfall that has not been answered yet. And this acronym RAS, Reliability Availability Serviceability. This is core.

And then we can talk about if you can’t address that at a fundamental level, especially where it’s needed, which is from the appliance to the switch, the top of rack switch, you don’t even get past the starting line. But even after that, you’ve got to consider that it’s not the ultimate low power. There’s there’s ways to do it with better power efficiency. In fact, with with copper, I mean it’s fundamentally lower lower power. That that How

Vijay Rakesh, Senior Semis Analyst, Mizuho: does it compare versus optical when you look at copper?

Bill Brennan, CEO, Crudo Semiconductor: We look at half the power. Right? So it’s And then, you know, at the end of the day, it does I mean cost does matter. And when you’re talking about a supply chain, you know, the optical transceiver and AOC manufacturers, they live in a neighborhood of 20 to 30% gross margins. The neighborhood of 70% or higher, it means that it’s it’s gonna be seriously unaffordable.

But for us, we don’t see CPO happening before the 200t generation of switches. And and when it does happen, it should happen in the, you know, the the higher levels within the the hierarchy of switching.

Vijay Rakesh, Senior Semis Analyst, Mizuho: Got it. And when you look at the scale up versus the scale out opportunity, obviously, scale out, you guys have a pretty good you have been playing this game and you have been able to knock down a couple of design wins there. Scale up is a new opportunity for us. But how do you compare the technical complexity of scale up versus scale out? Like, where do you see the competitive moat as much more challenging?

Is it on scale out, scale up?

Bill Brennan, CEO, Crudo Semiconductor: You know, I I think the the technical challenge on both is is high. This is high hurdle stuff that we’re doing. Which means there’s only gonna be a few companies that we can even talk about as potential But I think you’ll see a diversification of our business at at at this protocol level. The scale up opportunity is one that we’re gonna grow into over the next five and even ten years.

Vijay Rakesh, Senior Semis Analyst, Mizuho: Got it. And so when you’re talking scale up, maybe you can talk about the SUV side. Are you part of the SUV group? And when do you see that actually pick up versus NVLink? Are you seeing CSPs actually ask for scale up versus NVLink?

And we are not talking about NVLink fusion too because obviously

Bill Brennan, CEO, Crudo Semiconductor: Right, right. So you could consider credo as not having a dog in this fight. Again, layer one on AECs in particular. And so as that plays out, what we’re looking for is the solution that happens fastest. And my belief is that the Broadcom solution can happen very quickly as opposed to NVLink fusion or UAL.

Vijay Rakesh, Senior Semis Analyst, Mizuho: Just because of the way the how the ethernet side has evolved, I guess.

Bill Brennan, CEO, Crudo Semiconductor: Yeah. It’s an extension of the existing ecosystem. And when you’re looking at a kind of a hacked spec of a protocol that is very, very Familiar people are Like well deployed. You’re talking about these standard ethernet solutions can become very low latency if you follow the SUE protocol. So the hurdle to actual time to market is lowest, I think, with SUE.

But again, again we don’t have a dog in the fight. When the market moves that way, we’re going to have products that are extremely compelling to making those in rack and rack to rack connections.

Vijay Rakesh, Senior Semis Analyst, Mizuho: What does NVLink fusion do to that equation?

Bill Brennan, CEO, Crudo Semiconductor: It offers one more alternative. Right? So it’s So it’s still NVLink, but it

Vijay Rakesh, Senior Semis Analyst, Mizuho: just opens a protocol to

Bill Brennan, CEO, Crudo Semiconductor: Yeah. I mean, so to deploy NVLink fusion, you would have to if you’re a GPU maker, you would go get the IP from NVIDIA, embed it in your GPU, and then you would have to buy a chiplet from NVIDIA for that off GPU communication. So it’s pretty complicated. You know, I don’t, again I don’t have a dog in the fight, but that’s a pretty long time to market. And it’s making decisions that people really have to think through.

So it’s becoming, having some dependence on NVIDIA, I think that’s why UA Link was started, to try to offer a standard that was really independent from the other things. So a combination of you know, the ecosystem being there, time to market Yeah. And ultimately the the cost of doing that, I think that’s gonna determine the winner. But for us, I think, you know, I mean, we’re gonna be supportive of all three. And we’re we’re gonna do whatever we can to help the time to market piece.

Sooner is better.

Vijay Rakesh, Senior Semis Analyst, Mizuho: And so when you look at the top of the rack, obviously, move from InfiniBand to Spectrum X, to Ethernet, to AEC. It took a little bit of time, but it’s happening. On the NVLink side, is the move from NVLink to NVLink Fusion to like an Ethernet PCIe standard, is that a faster transition? Is that an easier transition because an industry standard there? Or is there a what’s the cost benefit for a CSP?

Because we hear CSPs saying we hear basically CSPs saying they want Ethernet done in meeting. But what’s the cost transition from

Bill Brennan, CEO, Crudo Semiconductor: Yes. I think you’ve gotta you’ve gotta consider that that the scale up everything on the scale up that’s outside of NVIDIA right now is all PCIe. And even the 64 gigabits per the Gen six which will happen in calendar twenty six, that has just a you know, it’s or a quarter of the bandwidth that you get with NVLink. Yep. So there’s this massive gap that the rest of the world is looking at.

How do they close the gap and and do 200 gigabits per second? Yeah. From 64 to 200 gig. And, you know, that’s that’s the the real question. I don’t think it’s anything, but how do you get the fastest time to market to scale up protocol that’s got very low latency over short distances?

Vijay Rakesh, Senior Semis Analyst, Mizuho: Got it. And then obviously, you now have a lot of your AC cables being made out of China and you moved it to Malaysia, I guess. Maybe you can talk to how that capacity how you’re lining it up? Because right now, it’s mostly geared to AC cables. Your optical DSPs goes to TSMC.

But what’s the capacity that you will need from a scale up? Can it be built in the same factory? How do you envision that capacity rolling out?

Bill Brennan, CEO, Crudo Semiconductor: So the manufacturing of cables is not on par with the manufacturing of chips. Adding a fab is a massive, massive investment. Adding more lines to produce AECs, it’s a relatively small investment that is relatively quick to implement. We just went through a very vertical ramp driven by our largest customer. And we were able to add significant capacity in less than six months.

So we’re talking about like, from a volume standpoint, nearly doubling the volume that we were producing in less than six months. And so I don’t lose sleep over any kind of forecast.

Vijay Rakesh, Senior Semis Analyst, Mizuho: And you have another opportunity coming there, it’s 10x the size with scale up. Yeah.

Bill Brennan, CEO, Crudo Semiconductor: You know, it’s it’s basic blocking and tackling to add more capacity. And from a geographic diversity standpoint, of course, you know that we started working on diversifying well more than a year ago. And it puts us in a position to be very flexible with where we produce. Got it. And so I think we’re in in, in good shape regardless of where we land on the tariff situation.

Vijay Rakesh, Senior Semis Analyst, Mizuho: Okay. Great. I think we have got about five minutes. Maybe we’ll take some questions. Any questions in the audience?

Just

Unidentified speaker: kind of curious what you think the road map for copper could be. Like I know 400 g per lane copper seems almost impossible. So Are are you a physicist? No. I just like going to the to the conferences.

Yeah. Me People I mean, they they tell you it’s like inches. Right?

Bill Brennan, CEO, Crudo Semiconductor: Right.

Unidentified speaker: So, yeah, what does that mean? Does that mean PAM six? PAM eight? What how do you think you can scale past that?

Bill Brennan, CEO, Crudo Semiconductor: Yeah. So, you know, I’ve I’ve been in this industry for twelve years. I joined Credo twelve years ago and I didn’t know much about networking. I spent a lot of time in the hard disk drive world. And I was told when I joined the company, I take advice from anybody that wants to give it to me.

And I was told that we should only focus on optical because, you know, copper is is, you know, is gonna be, you know, basically obsoleted by optical in the very near future. But I sat down with with who is now our our chief r and d officer, and I just tried to learn about all the connections in the data center. And the vast majority were copper. And then the long ones were were optical. And so I you know, we decided we’re gonna go down the copper path because I wanna grow into a large market.

I don’t wanna wait for, you know, some sort of market to develop. That’s how companies die in Silicon Valley. Market doesn’t happen soon enough. So it’s a pretty good decision. And, you know, we actually conceptualized AEC’s in 2014 of the slide, the slide I did.

And and the concept was, well, if copper is doomed, how do we extend the life of copper? And so, you know, I’ve this shiny object that people talk about, there’s different forms of optical, you know, really obsoleting copper. But I think we we’re we’re finally landing on, like like, reliability matters. And so if you can use copper, even the largest companies in the industry, NVIDIA, says, you will use copper if you can, because it’s just fundamentally more reliable and lower power. And so I think that argument’s over.

So then it becomes a physics argument on, when when does the when do the physics break down. And the argument right now is around 400 gig. The 200 gig per lane, that that horse is out of the barn, so to speak. It’s gonna be the same ecosystems. It could be copper and optical.

And so for 400 gig, the jury’s out. I’m not going to bet only on one. I’m going to have solutions for optical and I’m going have solutions for copper. There’s different ways, like you said. You can change the modulation to PAM8.

You can basically put more bits per symbol to get the throughput. But that’ll play out long term. I don’t lose sleep over it. It’s not something that really occupies my thought. It’s going to take a long time to get to 400 gig.

I’ve got a bunch of questions today about, hey, the 400 gig optical market seems to be like carrying on way beyond what anybody would have thought. And we’re talking about a transition to 800 gig ports. Well, two years ago I was told 1.6 t ports were going wipe out all the 800 like everything takes longer than we expect. And so we are a big believer that the 100 gig per lane or the 800 gig port market is going to be a very large market for several years. And when 1.6T does take off, which will take some time, that’s going to be a very, very long generation prior to getting to 3.2.

So I don’t know if that answers your question, but it’s a raging argument for twelve years in my history. And the bottom line is copper continues to win.

Vijay Rakesh, Senior Semis Analyst, Mizuho: And I think Broadcom on the recent earnings call talked about networking growing 170% year on year. And I think networking in total is probably up to a 15,000,000,000 market. You guys are sub billion. So we’ll see,

Bill Brennan, CEO, Crudo Semiconductor: I

Vijay Rakesh, Senior Semis Analyst, Mizuho: guess. Yes. Any other questions, I guess? Great. I think that brings us to the top of the hour.

So 30 Thank you very much. Thank you, Bill. Appreciate it.

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