MACOM Technology Solutions Holdings Inc(NASDAQ: MTSI) stock lost over 7.8% on November 14th, 2017 after-hours session hurt by their weak top-line performance during the fourth quarter of 2017.
The group delivered their revenue in the low end of their guidance, which reached $166 million. The group witnessed a hard pause in network infrastructure demand in China, hurting the entire range of Networks businesses. Overall, their Networks lost 25% on a sequential basis despite rising 3% on a year-on-year basis.
On the other hand, the groups A&D and multi-market businesses, surged 32% and 16% on a year-over-year basis, respectively. But they fell short of expectations as they faced supply constraints during the course of the quarter, hurting their ability to meet strong demands for their 100-gig Data Center products. Moreover, despite a strong for 100-gig solutions in data centers, the overall performance was hurt by the supply chain challenges.
Going forward, MACOM Technology Solutions does not see any signs of a pickup in network equipment demand in the December quarter. They expect to continue to face their supply constraints which would hamper their ability to meet strong Data Center demands. Meanwhile, the group’s A&D and Multi-market businesses returned to a more normalized pattern post a strong quarter, leading to a sequential decline and overall revenue.
On the other hand, the group is competing for capacity allocation at both front-end wafer and back-end packaging and assembly suppliers to sustain their production ramps. The group’s SiGe-based analog products are competing for the same capacity as others RF products servicing iPhone production, was rising than usual.
The group’s Data Centers revenue surged 259% yoy to $47 million, during fourth quarter of 2017 but their Telecom revenue lost 32% yoy to $66 million. The group’s industrial and defense enhanced 24% yoy to $53 million, during the quarter.
The group sees a lucrative opportunity for their business in the long run with the change, starting with 4G LTE power amplifiers, which represents over $1 billion TAM. Their initial GaN design wins are ramping into production, while the group is competing on a program-by-program basis for further wins as compared to traditional LDMOS competitors.