Silicon Labs at JPMorgan Conference: IoT Wireless Growth Strategy

On Wednesday, 14 May 2025, Silicon Labs (NASDAQ:SLAB) took the stage at the 53rd Annual JPMorgan Global Technology, Media and Communications Conference. Company executives discussed their strategic direction, highlighting robust growth in the IoT wireless sector while addressing concerns about inventory levels. Silicon Labs’ focus on delivering comprehensive solutions has bolstered its market position amidst ongoing supply chain challenges.

Key Takeaways

• Silicon Labs reported a 7% revenue increase in March and anticipates an 8% rise in June.
• The company achieved $10 billion in design wins over the past three years.
• Bluetooth segment growth reached 80% year-on-year, with WiFi expanding by 40%.
• Silicon Labs is launching 20-30 new products on the Series Three platform.
• Inventory levels remain stable, with a focus on replenishing to target levels.

Financial Results

• March Revenue:

- Increased by 7% sequentially

- Surpassed 60% growth year-on-year

• June Guidance:

- Anticipating 8% sequential growth

• Design Wins:

- $10 billion in lifetime value over three years

- Annualized potential between $2 billion and $2.5 billion

• Inventory:

- Channel and customer distribution inventories at 48 days, below the 70-75 day target

• Bluetooth and WiFi Growth:

- Bluetooth grew 80% year-on-year

- WiFi expanded 40% year-on-year

Operational Updates

• Series Two Platform:

- Shipped 1 billion units, with an additional 6 billion units planned

• Series Three Platform:

- Currently sampling and ramping to production

• Market Segments:

- Smart metering: Engaged in major global deployments

- Electronic shelf labels: Shipped over 300 million units

- Portable medical devices: Rapid growth expected in 2025

• Customer Retention:

- Maintained 95% retention of top 100 customers over five years

Future Outlook

• Revenue Growth:

- Positive sequential growth expected throughout 2025

- Aim to restore channel inventory to 70-75 days

• Series Three Platform:

- Launching 20-30 new products in the coming years

Q&A Highlights

• Inventory Concerns:

- Stable customer inventory levels; internal inventory remains low

• 4G to 5G Transition:

- Monitoring IoT cellular adoption; collaboration with Amazon on Sidewalk technology

• $10 Billion Design Win Pipeline:

- Represents committed design activities over three years

- Industrial sales account for 55% to 60% of design wins

For a detailed view of the conference call, please refer to the full transcript below.

Full transcript - 53rd Annual JPMorgan Global Technology, Media and Communications Conference:

Peter Peng, Small and Midcap Semiconductor Analyst: Okay. Let’s get started. Hello, everybody. Thanks for attending our fifty third Annual TMT Conference. My name is Peter Peng, the small and midcap semiconductor analyst for the firm.

I’m pleased to have Silicon Labs with us here today. We have Matt Johnson, President and CEO and Dean Butler, CFO. You guys just reported a good set of numbers yesterday. So, gentlemen, if you can just start off off with the recap of your earnings and an overview of your company.

Matt Johnson, President and CEO, Silicon Labs: Sure. Maybe let’s cover the company first, and then we’ll talk about the earnings a little bit as well. So for anyone not familiar with Silicon Labs, we’re the largest company in the world that’s dedicated to the IoT wireless or embedded wireless space. And what that means and what we do there is provide complete solutions in silicon, in software, in support and development tools for our customers who have products or devices on the edge of the network. And that market has become increasingly large and increasing in its growth potential moving forward.

We’re talking billions and billions of devices across a wide range of applications, whether it’s in consumer or home, healthcare, industrial, commercial, retail environments. They’re all adopting wireless or embedded solutions at an increasing rate. So as a company, what we do is we focus on three areas to differentiate ourselves. We focus on the breadth, the depth, and having the most focus on the space of any other company out there. And so when we say breadth, we’re a broad market supplier.

We do broad market wireless, which is pretty unique. And what I mean by that is tens of thousands of customers across thousands of applications in our markets. Also, breadth in terms of the wireless technologies we support. We support technologies that you know, like Bluetooth and WiFi, but also a lot of different technologies and ecosystems that people aren’t familiar with or as familiar with. Zigbee, Z Wave, WiSun, a bunch of proprietary technologies, Thread.

And where we shine is our ability to make these wireless technologies work together and work together well, as well as make all the different wireless ecosystems work together and work together well. And then from a depth perspective, we’ve always shined as a company that we can bring the leading differentiation or performance to that space. And what I mean by that in the wireless domain, we’ll have the industry’s leading wireless performance as well as industry leading power consumption, industry leading security, you name it. In each of these markets, we’ve been able to differentiate even if it’s a standardized wireless technology to bring things to the table that our customers want and need for that class of applications. And because we focus on this and only this, we have really unique domain knowledge and expertise not only for embedded wireless, but for these applications that we serve.

And then the last real thing that sticks out is our focus. As I said in the beginning, this is all that we do as a company, is focus on IoT wireless or embedded wireless. And because of that, all of our R and D, all of our development goes towards custom or purpose built products and platforms for this space. And there’s hardly any other company in the world that can make that claim. Most companies we compete against are trying to repurpose IP and technology from their core markets and core focus areas into other markets.

And that doesn’t work well in the IoT. In the IoT, you need things that run seven, eight, nine, ten years on a coin cell battery. You need things that can operate at price points or power consumption levels or unique security requirements for this space. So that has served us well and what’s allowed us to outgrow the market for many years and we’ll talk about the forward looking expectation in a few minutes. The last thing is that focus also helps in terms of our customers’ confidence in betting on us because the supply chain crisis really brought to the surface that when things get rough, companies retrench to their core.

And our customers know this is our core. This is the one thing that we do versus we’re trying to experiment on this, but we’ll retrench when things get rough. So through the supply chain crisis, not only were we able to do well in supply, but we’re able to secure more customers and increase our market share because of that focus and because of customers willing to bet on us for this space. We recently held our Analyst Day in New York, I was going say a few weeks ago, maybe a couple of months ago now.

Dean Butler, CFO, Silicon Labs: March now. Thank you. And

Matt Johnson, President and CEO, Silicon Labs: maybe just a couple of things that really popped out is one, our current generation that we call Series two, that’s our platform with multiple SoCs, couldn’t be doing better in the marketplace. We have shipped right now around 1,000,000,000 units so far and we’ve shared that we’ve secured another 6,000,000,000 units to ship in the coming years. We’ve won over $10,000,000,000 of designs that will ship in production over the next few years. So we’re seeing really good progress on this current platform and it has become the de facto standard in the market. At the same time, we have already started sampling and ramping to production our next gen platform called Series three, which will bring even more new to industry capabilities to this IoT space, including memory architectures that are really well suited for new standards like Matter, for what AI and ML will need at the edge, as well as new to world performance in the wireless domain.

So the key point is our end market, the embedded edge, is growing and only accelerating in terms of the number of devices, And there’s no company in the world that is larger or better positioned to go capture that growth. And so that’s what we’ve dedicated our company to. That’s all that we do. And we’re really excited about the progress we’re making. At the Analyst Day, we shared this is the highest confidence we’ve ever had in future growth in our history as a company, and that’s really exciting for us.

So I’ll stop there and give Dean an opportunity to talk about what we just shared at our earnings that was yesterday, I guess.

Dean Butler, CFO, Silicon Labs: Yes, just yesterday, super recent. Let me just connect back our Analyst Day that Matt touched on, which is my favorite data point actually is in the Analyst Day is this $10,000,000,000 number. It’s $10,000,000,000 of design wins over the last three years. So that’s a lifetime value. So in general, lifetime is sort of four to five years.

That means $10,000,000,000 divided by four to five gives you a potential run rate of a $2,000,000,000 to $2,500,000,000 So I think that’s the potential that the company has out in front of it. Now how does that connect back to earnings? Those design wins are coming to revenue now. So we started shipping late last year in some of these designs. Many of them clicked on here in the March, more clicking out into the June.

The guide that we had for the June, which we just talked about yesterday on our earnings call is for continued sequential growth. So we come out of a March was 7% up sequentially, up more than 60% year on year. June we expect to be up at midpoint another 8% sequentially. So the growth rate has been really tremendous. And this is not a shocking growth rate.

Like this is the growth rate that we’ve been talking about for months and months and quarters and quarters. This is sort of executing that pipeline of design wins and bringing them to bear into near term revenue. And that’s starting to happen now. When I look forward ahead for the rest of the year, that’s really what the year is going to be driven on. It’s going to be driven on these design win pipelines that are coming.

You saw them in March. You see them here in June, and we expect that to continue for the year. And there’s a bunch of design wins that maybe we can talk about. And Peter, maybe I’ll hand it to you and we can get into details.

Peter Peng, Small and Midcap Semiconductor Analyst: And maybe just on some of the near term dynamics. So kind of following up on the strength, right, you talked about bookings kind of improving linearly throughout the quarter and indicating more of a cyclical recovery and design win ramps rather than any pull forward in demand. I guess and there’s a lot of anxiousness around this. And so maybe if you can just provide us some insight on how your customers are perceiving this inventory situation and how have those discussions changed or evolved since Celebration Day in early April?

Matt Johnson, President and CEO, Silicon Labs: Sure. I mean, customers, I think, broadly speaking, obviously, this is discussed a lot with customers, but it’s difficult for them to act in the sense that there’s still uncertainty, moving targets, and most of our customers have taken the approach of, well, let’s stay the course. And until there’s something you can put your finger on that would drive a meaningful change in strategy or direction. So as we said, we’re not seeing a change in bookings patterns, billings. I mean, they’re going in the right direction.

They’re increasing, but it’s very linear, not lumpy. Forecasts have stayed the same. So that’s encouraging. And at the same time, levels at our customers, their end inventory has stayed stable as well. So we’re not seeing that build that people are worried about, at least at this point in time.

And our own internal inventory we’ve worked down and our DST inventory is actually low. So we feel we need to watch this. Everyone’s watching it closely, but so far everyone’s behaved pretty well.

Peter Peng, Small and Midcap Semiconductor Analyst: That’s good. So as you mentioned, fundamentals is quite strong, positive booking trends, lean customer and channel inventories, and you have significant design win ramps ahead. So when we think about the second half of the year, how should we kind of think about your revenue opportunity? Think previously you talked about sequential growth through the calendar year. So how are you kind of positioning the second half of the year?

Dean Butler, CFO, Silicon Labs: Yes. Directionally, Peter, we think that’s still the case, which is we expect to see positive sequential growth throughout 2025. Look, will things some wrench come in from sideways from GDP? I don’t know, nobody knows. Really what we are focused on and anchored around is our design win traction and the forecast that we get from the customers on those design wins and sort of their pipeline back into us.

I truly believe that based on those forecasts, those customers, we should have no problem in executing a positive quarter on quarter throughout 2025. Just in a broader sense, I think it’s also helpful to know that POS out of the distribution channel has also been positive. So hey, not only is some of these very specific design wins happening and continuing to flow through, For the last three quarters in a row, POS out of distribution channels have continued to increase. We gave actually a data point in the earnings call yesterday publicly that quarter to date for the June, that’s also that trend has also remained true. So it looks like sort of things at the broader level are doing okay.

And then as we layer in these design wins, that gives us incremental confidence that the rest of the year should hold through in a positive direction for us.

Peter Peng, Small and Midcap Semiconductor Analyst: Your channel and customer distribution inventories are now at forty eight days, right? So it’s a new low, it’s below your target level of seventy to seventy five days. So what signs or metrics are you monitoring before you decide to kind of replenish the channel? And if we were to get back to some normalized distribution target days, what would that mean for revenue tailwind?

Dean Butler, CFO, Silicon Labs: Yeah, forty eight days is actually lower than we wanted, by the way. We didn’t intend to drive it to forty eight. We’re quite honestly shooting a little bit behind the duck. And that means POS has actually continued to grow in channel. And so as sort of the outbound shipments to the end customers continue to increase over, like I said, the last three quarters and then also sort of quarter to date here in June, we’re sort of playing catch up on, hey, as POS increases, that means we’re shipping back into the channel to replenish and then we have to ship in addition to sort of grow some inventory into that channel to keep it from going down too far.

In fact, 48 we would believe is too low. We said on the public call yesterday that, look, I would expect June to be in low 50s. I would really not like to see the channel go down any further. Our intention is to try to work back toward that target seventy, seventy five days. But that’s not going to happen all at once.

Like that’s going to take several quarters to sort of build in that direction. And like I said, as POS grows, it actually becomes difficult to sort of pipeline that inventory in. I wouldn’t think of it necessarily as a revenue tailwind like, hey, what’s the incremental sort of revenue that the company might generate from that inventory replenishment? Because essentially it’s POS that is likely to occur in the following quarter. So yes, while you’re sort of shipping in now, you have inventory that actually our expectation is goes out in the following quarter.

So as inventory grows, our expectation is POS grows on the back of that.

Peter Peng, Small and Midcap Semiconductor Analyst: Switching now to some of the longer term dynamics, you recently just talked about the $10,000,000,000 in design win pipeline, pretty impressive, right, and set to unfold over the next four to five years. So maybe if you can provide some insights into the diversity of end applications and product technologies within this design win pipeline?

Matt Johnson, President and CEO, Silicon Labs: Sure. It’s worth mentioning that what constitutes that $10,000,000,000 is pretty broad across our geos, technologies, applications. But you can definitely pull out some clear trends in that. The vast majority of that has been driven by Series two platform products. So that platform has just crushed it in terms of market response.

And it’s still going. We’re just this past quarter, we released multiple devices off of the platform. And there’s a lot of momentum there that I’d say the majority of the growth from the platform is yet to be seen is a quick way to say it. And then within it in terms of applications, very broad. We service well over 1,000 different types of applications.

However, there’s three areas that we call out that I think are helpful for people to understand and know that we index to. So you have smart metering, so think of gas, water and electric globally. We participate in every major smart metering deployment in the world with the exception of China Indigenous. So we’re very well covered in that space. We’re the market leader and we continue to see new deployments, new tenders.

We just shared yesterday in earnings that the India smart metering rollout is going a little faster than expected, which is encouraging. And when these start, they run for years. And so we’re just starting to see the start of that. So super encouraging and increasing content there as well as they add more wireless technologies. Another one, electronic shelf labels or digital shelf labels, strong position in that market.

We work with the majority of the market leaders in that space. And we’ve continued to see a rollout in that market as well. Again, these markets are things that we’ve been focused on and covered for many, many years. I think in shelf labels, we’ve already shipped over 300,000,000 units and we expect that just to continue for years to come as that you start to see in real life in retail environments more of these labels being deployed across the globe. And then the third space that we talk about and is more new to us in terms of public exposure is the basically the CGM space or the portable medical space.

And that’s a market where last year we essentially didn’t have any revenue and we see that ramping quickly over the course of this year and the coming years. We’ve been focused on that market for a long time, over six years and those designs take at least two or three years with each customer. We’re engaged with over 60 suppliers globally ramping 12 as we speak now. So we’re seeing good progress in that market and we expect that to continue. So think of that as an area where pretty substantial end market growth potential over the coming decade.

And we’re not only extremely well positioned in that market and increasing that position, but it’s really just starting to ramp. So that’s all incremental revenue for us starting in 2025 this year, but really growing in the coming years. So we like that as a tailwind as well. So those three areas make up a good piece, not a majority, but a good piece of that $10,000,000,000 of wins.

Peter Peng, Small and Midcap Semiconductor Analyst: Great. You just talked about the significant traction you’re getting with your Series three, and now you’re ramping your Series three, right, with the transition to 22 nanometer process, and it has enhanced compute and AI functionality. And you guys always talked about this as being additive to your SIEM. So maybe just help us understand what is this these incremental applications that you’re targeting and how does that not cannibalize your Series two?

Matt Johnson, President and CEO, Silicon Labs: Yep, absolutely. So the easiest way to think of Series two to Series three, there’s always a set of customers and applications that need one level of capability performance. And there’s always another set of customers and applications that need a different level of capability and performance. So they’re highly complementary from that perspective. Just being very specific, when we move to Series three, we’re adding new industry capabilities features and wireless performance, but also substantially more compute than was available on Series two.

Increasingly, our customers need more compute capability. There’s compute standing outside of our devices, even though every device we sell today has integrated compute microcontroller capability and accelerators, they need more. So we’re integrating a lot more there, which will allow us to increase ASPs, increase our SAM coverage even further. Another one as a good example in addition to general purpose compute is around AI and ML performance and compute. So a lot of our customers on our current generation have access to accelerators for machine learning, but they want even more performance.

So we’re basically doing two orders of magnitude more capability in this next generation to keep up with our customers’ requirements and what they’re trying to do there. And at the same time, what’s unique is this platform supports integrated memory as well as external memory, which really gives our customers a lot of flexibility and scaling as they put more software and more capability on top of these products. So Series three, really think of it as highly complementary to Series two, but new levels of compute performance that complement it. The last thing I’d say is we have this awesome footprint with Series two today, and we’ve made Series three code compatible. So when our customers are using one design in Series two, they have a very easy migration path to higher performance that really complements that position that we’ve established in the marketplace, which I think is a significant competitive advantage.

So sitting here today, we have one platform that is just delivering in spades. And at the same time, the next generation with even more performance is not only sampling now, it’s already ramping to production. And you’ll see at least 20 or 30 products coming off of that platform in the coming years.

Peter Peng, Small and Midcap Semiconductor Analyst: Got it. Sticking with the product and technology front, you guys have been particularly successful in the Bluetooth segment of the market, right, over the last several years, I think last several years it was just kind of 10 to 15% of your total revenue mix, and I think most recently at your Analyst Day, you displayed a chart, it looks like it’s gotten to almost 20%, twenty five % of your revenue mix. And this strong adoption has been driven by some of these successful design wins like your continuous glucose monitoring, your electronic shelf labels. And so maybe just talk about the sustainability of this growth. And then how do you anticipate this segment how big can this segment be over the next couple of years?

Matt Johnson, President and CEO, Silicon Labs: Yes, sure. So Bluetooth is a space that we historically didn’t focus on as much. We were more focused on technologies like 15.4, which would be ZigBee or Thread and a lot of sub gig where we’re the market leader in both of those. I lose track of time now, but a few years ago, we said we’re doubling or tripling down in the BLE space, not just because we saw an opportunity for standalone Bluetooth devices like we’re talking about now, but because we saw BLE integrated on every product that we’re doing. And so we increased our focus there and we found that our skill set was very applicable and we were extremely well positioned in that market to take share.

So our Series two really leaned in with industry leading BLE capabilities. And as a result, we’ve been winning market share on the other side of that. I think at Analyst Day we shared we’re growing in Bluetooth this year 80% year on year. That’s just flat out share gains. There’s no one else growing that fast in the space.

So we’re making good progress there. And what we don’t talk about that is worth mentioning, that is just for standalone Bluetooth devices. We put BLE in everything else that we make too. So the standalone piece has just been it’s relatively easy to get designs in the space and we’re very well positioned. At the same time, we’re adding other focus areas.

WiFi is a new one for us growing 40% year on year there. And I think you’re going to see that growth really accelerating in addition to BLE as we start introducing additional products on the Series three platform in the coming quarters.

Peter Peng, Small and Midcap Semiconductor Analyst: Maybe just on that Wi Fi point, it’s still a pretty small percentage of revenue, but you talked about it being inflecting higher 40% year on year So when concerning the Wi Fi, what are some of the major application drivers and how should we compare the Wi Fi trajectory ramp compared to the Bluetooth?

Matt Johnson, President and CEO, Silicon Labs: Sure. Bluetooth is a bigger total revenue number today and faster growth. But I think over time, WiFi has just as much if not more potential for us in terms of growth. It’s a big market, and we’re seeing a lot of applicability for Wi Fi where you need higher performance, higher bandwidth in a lot of our customers’ applications. And we’re able to do a few things that are unique.

One is we can bring the world’s, whatever you want to call it, lowest battery power or longest battery life to this space, which we’ve already done, which can be without exaggeration 50% or 60% longer battery life than any competing alternative, which is really interesting for battery powered applications where consumers don’t want to change the batteries every three months or four months, you can really make a difference there. Also, because we have such a broad footprint in the market across our other wireless technologies, we see awesome opportunities for pull through in Wi Fi. Where they’re already using us for two or three other technologies, it makes sense to, okay, well, we want to use your platform, want to use a reusable code base. We have that stickiness, which I think is really important. We should talk about that in a few minutes because once someone’s using us, they almost always stay with us and keep increasing what they use, not decreasing what they use.

And I think that’ll serve us well in WiFi.

Dean Butler, CFO, Silicon Labs: Yeah. Would just maybe add one thing on WiFi, like it’s new TAM expansion that’s super for the company. But also the uptick that we’re getting sort of early on is much faster than we’ve witnessed before. You correctly said, hey, Bluetooth is something like 20%, twenty five % of the company’s revenue base today. But of the $10,000,000,000 in design wins, it’s actually opposite.

Bluetooth is the vast majority of actually that $10,000,000,000 in design wins. So sort of getting into a space and then quickly building a pipeline around it is something the company has been good at. WiFi early on now has identified a larger funnel faster than actually Bluetooth when we first sort of engaged into that business. So we’re pretty optimistic that it’s off to a good start. It’s the first couple of devices there on WiFi.

But I think we’re pretty optimistic that actually this TAM is coming soon.

Peter Peng, Small and Midcap Semiconductor Analyst: Another pretty notable data point from your Analyst Day is that you mentioned that 95% of your top 100 customers over the last five you maintained 95% of your top 100 customers over the past five years, and then 60% of your top 500 customers have been with the company for ten years. So maybe just kind of elaborate on why your platform has so much customer stickiness.

Matt Johnson, President and CEO, Silicon Labs: Sure. Yeah, I’ll just comment real quick. It’s worth mentioning of those the ones that have stayed over the last five years, the 95%, two or three of those went out of business. It wasn’t because of us. So we’ve maintained almost everyone.

And I think truly one big difference is this is all that we do, we’re focused on this. That provides an insanely different experience for our customers than suppliers that this is a sideshow. It just does. And that makes a big difference. At the same time, there’s incredible amount of software stickiness.

We do over 1,000 software features every year on top of our platform for our customers. And that’s just an engine that keeps giving them a better experience because we can differentiate, we can update, we can change, we can modify off of the platform so we don’t have to be developing that silicon, but we can be adjusting for whatever they want or need. So case in point, I’m trying to think channel sounding. It’s a BLE feature that provides ranging. It used to be called HADM, now it’s called channel sounding.

It’s standardized in the Bluetooth SIG. When that was the day that that was standardized, we released its support via software, full production. And it’s because we can do that in software, we don’t need to wait in modified hardware, which isn’t cost efficient, cost effective. So that stickiness really tends to grow because once you’re using us in one thing, it’s easier to use us in the next. It’s easier to use us in next because you have code reuse, and we have all those different software features that are really made for those customers.

They feel like they’re getting a customer bespoke experience, but we’re not doing it in a way that would be overwhelming if we were trying to do it with custom silicon. So that makes a big difference. Dean, anything you want to add?

Dean Butler, CFO, Silicon Labs: No. I mean, think the only thing I would add is people under appreciate the longevity of these products. They people think about, hey, Bluetooth, maybe that’s a couple of years cycle. Many of our devices actually ship for ten years or greater. And I think that’s something people don’t quite realize is many of the customers may ship products for years and years and then sort of move into upgrades or have multiple SKUs that actually run.

So I would just sort of add that piece.

Peter Peng, Small and Midcap Semiconductor Analyst: Okay. Let me just take a pause here to see if there’s any questions.

Robert: Hey, guys. Thanks. Matt, So what’s your view of the four gs to five gs transition that’s going on in wireless? You’ve got AT and T shutting down NB IoT. Also, you’re starting to see a pretty interesting kind of mesh wireless footprint being deployed by Amazon, which as you knew, Sidewalk uses LoRa.

Any opportunity there for you guys in either of those areas and what do you view these the changes? Thanks.

Matt Johnson, President and CEO, Silicon Labs: Yes, sure. So first of all, terms of broad IoT cellular for lack of a term in our space, we’ve heard it discussed for a long time and it still hasn’t yielded massive adoption of proliferation. That being said, position has always been the same. If we see a space that our customers want and need us to provide, we’ll make or buy it because our value proposition to our customers is having complete solutions for their needs, not just how these are the wireless technologies we have and we’re going this is the answer for everything. So haven’t gotten there yet, but we watch that closely.

On the Sidewalk side, we’ve publicly shared that we’ve partnered with Amazon on Sidewalk for years. We have a lot of product we’re the world leader in sub gig technology. A lot of what Sidewalk is based on is sub gig technology. So we’ve helped drive that and won awards in the industry on the ease of use and compatibility with that network. And can’t speak for them at all as a company, but I would expect that that concept is a winning one and it will continue to proliferate moving forward.

And we’re highly indexed to that because of our subject position. Thanks, Robert.

Unidentified speaker: Yeah, thank you for the presentation. So you keep talking about complete solution, talk about code and stuff. And so when I think about IoT and I think about complete solution, think about integrated wireless capability plus compute, so embedded MCU. But then I think just as importantly, you’ve talked about the range of different segments and applications and that sort of tells me that you’ve got a pretty powerful software development platform, right? So question is attach of your embedded compute MCUs to your wireless products as well as the acceptance and adoption of your software and differentiation of your software platform?

Matt Johnson, President and CEO, Silicon Labs: Yeah. So I’d say today, know never say exactly, but almost everything we do is a wireless SoC that has the wireless capability as well as the compute capability, the integrated MCU as well as a bunch of other things, security cores, accelerators for AIML, power management. So for a lot of our customers, not all, but for a lot of our customers, we’re the primary or only silicon in that application. And we keep integrating what comes next for that. There’s other applications where we’re not the primary silicon, we’re providing the wireless for that application.

But broadly speaking, that’s a key part of that. So, one, and when we say complete, it’s not only complete in silicon, but we provide all the software stacks, all the support that they need to get their application up and running. And then we can do what I was mentioning earlier with all the software differentiation and support that they say, hey, I need to work with this. And I mean, hey, I need a proprietary wireless standard. We can do that.

We have a big proprietary business. I need it to support this uniquely. I need this feature. So literally, we do thousands of software features on each platform that are really differentiation for our customers and make us more valuable to them. And it’s one of the reasons we’re able to drive a premium gross margin versus our competition because of that stickiness and differentiation.

And from where customers sit, it’s a win because they get features differentiation performance they couldn’t get otherwise or as quickly in the space.

Unidentified speaker: Thanks. I just want to make I could be completely wrong on this, but I believe the $10,000,000,000 that you’ve been talking about is a projection. And if I’m incorrect and say, hey, you’re misunderstanding. But if it’s not a project if it is a projection, can you tell us what the committed currently committed revenues are and then also sort of the modeling that gets you from the committed revenues to the projected revenues?

Matt Johnson, President and CEO, Silicon Labs: Yeah, I can take a shot at that.

Dean Butler, CFO, Silicon Labs: Yeah, I’ll take that real quick, Matt. So $110,000,000,000 just to sort of put the quick definition around it. These are the committed awarded design activities cumulative for the last three years. So it’s three years of design awards that we’ve been committed to by customers in lifetime value. So this is a lifetime value.

Lifetime is generally like a four or five years. So you’d have to take that ten, sort of divide it by four or five to get it to sort of an annualized potential. It’s all committed as future business, meaning things that are ramping now, they will continue to ramp into those lifetime values. It doesn’t include things like, hey, does the customer cancel a program? Do their volumes change versus their original projection?

It’s the as in time on when we were awarded it.

Unidentified speaker: First of thank you.

Dean Butler, CFO, Silicon Labs: Yes, absolutely. The

Unidentified speaker: second question is this, is that I believe that you can tell me, are a lot of your projects sort of like this company like Emerson who is selling into projects that have been designed out over years and then take years to build? And by the time their products are being actually deployed into those products, there’s no question about the investment in that initiative at a manufacturing facility or something like that. Are those similar environments that you’re building into where you’re trying to win design awards into large infrastructure projects? Because I think that helps me understand that, in essence, there’s not a question that you’re going to get these revenues in the future as opposed to things like things that are closer to related to consumer demand, tend to be far more cyclical. If I’m not clear to say

Matt Johnson, President and CEO, Silicon Labs: I think let me take a shot and make sure if I’m understanding. I mean, simply said, 55% to 60% of our sales come from industrial as a segment. And it’s worth mentioning of that $10,000,000,000 and it’s actually more than $10,000,000,000 and it’s worth mentioning that represents a significant acceleration in design wins over the prior years.

Unidentified speaker: And

Matt Johnson, President and CEO, Silicon Labs: it’s pretty consistent in terms of the split. So it’s pretty indicative of the business we have today. So point is I would expect strong industrial growth coming out of that. And yes, it is very different environment than the consumer side. You win sometimes hundreds of designs in one customer across so many different spaces and they take a long time to ramp.

So that’s definitely what we’re seeing in industrial. Some are faster. There’s some industrials a little more consumer oriented. Think of power tools in those spaces that move a little faster. But the factory automation, that kind of stuff, it’s pretty long lead time.

Unidentified speaker: Is it okay if I ask one more question?

Matt Johnson, President and CEO, Silicon Labs: Yeah. Okay. I won’t know until you ask it, to

Dean Butler, CFO, Silicon Labs: be honest, but

Unidentified speaker: hog here. The other question is, does it suggest that you’re doing something different in commercialization of the business that you’ve made some choices about how to do things a little bit differently, where to focus or how you’re deploying your people or what you’re even how you’re training them up to be better at being more productive in the marketplace?

Matt Johnson, President and CEO, Silicon Labs: I think we’ve been obsessed as a company in scaling. We’re small and we see an opportunity to be much bigger in our space. So everything is around scaling, ease of use and scalable adoption. RF and wireless technology is inherently difficult and there’s not a lot of broad market wireless out there. There’s not a lot of low to no touch wireless.

We’ve obsessed with that. So we have an increasing portion of our business that’s low to no touch now and we see that accelerating. So that has helped us and that software investment is an integral part of that. I know we’re out of time. I’m seeing you.

Do we have time? We’re out of time. Super.

Dean Butler, CFO, Silicon Labs: Thank you, Peter.

Peter Peng, Small and Midcap Semiconductor Analyst: Dean, thank you for participating.

Matt Johnson, President and CEO, Silicon Labs: Absolutely. Thank you.

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