Greetings. Welcome to the Semtech Corporation Q3 FY 2022 earnings call. At this time, all participants are in a listen only mode. A question and answer session will follow the formal presentation. If anyone should require operator assistance during the conference, please press star zero on your telephone keypad. Please note this conference is being recorded. I will now turn the conference over to your host, VP of Investor Relations, Sandy Harrison. You may begin. Great. Thank you, Kyle, and welcome to Semtech's conference call to discuss our third quarter fiscal year 2022 financial results. Speakers for today's call will be Mohan Maheswaran, Semtech's President and Chief Executive Officer, and Emeka Chukwu, our Chief Financial Officer. A press release announcing our unaudited results was issued after the market closed today and is available on our website at semtech.com. Today's call will include forward-looking statements that include risks and uncertainties that could cause actual results to differ materially from the results anticipated in these statements. For a more detailed discussion of these risks and uncertainties, please review the safe harbor statement included in today's Press Release and in the Other Risk Factors section of our most recent periodic reports filed with the Securities and Exchange Commission. As a reminder, comments made on today's call are current as of today only, and Semtech undertakes no obligation to update the information from this call should facts or circumstances change. All the references made to financial results in Mohan's and Emeka's prepared remarks during this call will refer to non-GAAP financial measures unless otherwise noted. A discussion of why the Management team considers such non-GAAP financial measures useful, along with a detailed reconciliation of the non-GAAP measures to the most comparable GAAP financial measures, are included in today's Press Release. With that, I will turn the call over to Semtech's Chief Financial Officer, Emeka Chukwu. Emeka? Thank you, Sandy. Good afternoon, everyone. As is our practice, I will focus my comments on our non-GAAP financial results, unless otherwise noted. In Q3 fiscal year 2022, the company delivered a very strong financial performance that included achieving a number of new financial records, including net sales of $194.9 million that increased 5% sequentially and 27% year-over-year and was above the midpoint of our guidance. Continued momentum and record results by several of our key growth platforms contributed to the strong net sales performance. In Q3, shipments into Asia, North America and Europe represented 78%, 12% and 10% respectively. While this represented the ship to addresses for our distributors and customers, we estimate that approximately 45% of our shipments are consumed in China, 27% in the Americas, and the balance over the rest of the world. Total direct sales represented approximately 12% of net sales, and distribution net sales represented approximately 88%. Our distributor POS represented another quarterly record, and the business remains balanced with approximately 41%, 32%, and 27% of the total POS coming from the infrastructure, industrial, and high-end consumer end markets respectively. In Q3, bookings increased 16% year- over- year, and turns bookings accounted for approximately 3% of our Q3 shipments. Q3 gross margin increased 110 basis points sequentially to 63.8%, which represented the upper end of our guidance range and a new quarterly record led by a more favorable product mix. Going forward, we expect our gross margin to continue to benefit from the richer mix of sales from our key growth platforms that include LoRa- enabled, our 10G PON, our Tri-Edge PAM4 CDRs, and our broad-based industrial protection products. For Q4, we expect gross margin to continue to expand as we anticipate a more favorable mix due to a seasonally lower high-end consumer net sales. For planning and modeling purposes, we expect our gross margin to remain at current levels with an upward bias over the next several quarters, reflecting the benefit from the growth of our secular growth platforms. In Q3, operating expense increased 2% to $67.5 million, driven by higher new product development expenses. For Q4, we expect our operating expense to be in line to slightly above current levels. Looking ahead to fiscal year 2023, we expect our operating expense to begin to trend back toward our target model of half the rate of net sales growth. In Q3, operating profit increased 14% sequentially, or nearly 3 x that of net sales, and increased 51% on a year-over-year basis, led by the higher gross margin and represented a record operating profit. Operating margin expanded by 210 basis points sequentially to 29.2% and represented solid progress towards our 32%-36% long-term target model. As expected, we are seeing the stronger operating leverage expected from the success of our growth platforms. In Q3, cash flow from operations was a record $66.5 million, up 26% sequentially, and represented 34% of net sales as a result of the record operating profit and good management of working capital, while free cash flow increased 33% sequentially to 31% of net sales. Free cash flow generation in fiscal year 2022 has been strong, despite the strategic actions to maintain higher levels of inventory, and we expect to end the year around the low end of our long-term free cash flow target of 25%-30% of net sales, which will be a significant expansion from the prior year. In Q3, we repurchased approximately $30 million or 0.6% of our outstanding stock, resulting in $292 million remaining in our outstanding authorization, and we expect to continue to use our cash to opportunistically repurchase our shares, make strategic investments, and pay down the debt. In Q3, accounts receivable increased 2% sequentially to $74 million, while days of sales was flat with the prior quarter at 34 days and remains below our target range of 40-45 days. In Q3, net inventory in absolute dollar terms increased 2% sequentially, and days of inventory increased four days sequentially to 133 days. We expect net inventory to remain above our target range of 90-100 days to support the stronger demand and the tighter supply chain environment. In summary, the success of our growth engines of LoRa, Tri-Edge PAM4, 10G PON, 5G wireless, and broad-based protection platforms enabled us to deliver a record net sales, record gross margin, record operating profit, record earnings per share, and record cash flow in Q3. We expect the sustainable long-term growth from these key growth engines and the underlying secular drivers to continue to drive record financial performance for fiscal year 2022 and provide a strong momentum as we move into fiscal year 2023. I will now hand the call over to Mohan. Thank you, Emeka. Good afternoon, everyone. I will discuss our Q3 fiscal year 2022 performance by end market and by product group, and then provide our outlook for Q4 of fiscal year 2022. In Q3, net revenue of $194.9 million grew 5% sequentially and 27% annually and represented a new quarterly record. Higher demand from the industrial and high-end consumer markets contributed to Q3 growth. We posted record non-GAAP gross margin of 63.8% and record non-GAAP earnings per diluted share of $0.74. In Q3, net revenue from the industrial end market increased 17% sequentially, led by record results from both our LoRa business and our broad-based protection business, and represented 35% of total net revenues. The infrastructure market decreased 1% sequentially as record PON revenues and stronger base station revenues were offset by lower Data Center revenues and represented 34% of total net revenues. The high-end consumer market increased 2% sequentially and represented 31% of total revenues, with approximately 20% attributable to mobile devices and approximately 11% attributable to other consumer systems. I will now discuss the performance of each of our product groups. In Q3 of fiscal year 2022, our Signal Integrity product group increased 3% sequentially and achieved a new revenue record led by growth from the PON and base station infrastructure markets, and represented 39% of total revenues. In Q3, revenue from our Data Center customers softened over the prior strong quarter. Our Tri-Edge PAM4 short reach platforms continued to gain solid design win traction with key hyperscale customers. We expect this momentum to accelerate into FY 2023 as the power and cost benefits of Tri-Edge become realized across shorter reach links in the Data Center market. The excellent performance of our short reach Tri-Edge platforms has also led to increasing interest in our longer reach Tri-Edge PAM4 platforms planned for release over the next several quarters. In FY 2022, we expect our Data Center PAM4 revenues to end in the high- teens and increase over 100% in FY 2023. As new Tri-Edge products are released to production, we believe our complete portfolio of Tri-Edge PAM4 devices will enable very strong revenue growth over the next few years in 100G, 200G, and 400G PAM4 optical modules in the hyperscale Data Center market. In Q3 of FY 2022, revenue from the PON market achieved another record performance led by record 10G PON revenues as we continue to benefit from the most comprehensive PON PMD portfolio available in the market today. We expect our PON business, led by our 10G PON solutions to continue to grow as global service providers accelerate their deployments of higher bandwidth access networks. In Q3 of FY 2022, demand from our wireless base station customers increased over the prior quarter. Several 5G China tenders have been announced, and carriers in North America and Europe are expected to begin 5G infrastructure build-outs over the next 12 to 18 months. We are expecting demand for our 5G platforms, 5G platforms to accelerate in FY 2023 due to a significant design in momentum for our 25G ClearEdge family. In addition, our industry-leading 50 Gb per second PAM4 Tri-Edge platform, targeted at 50 Gb per second front haul modules, is now being sampled for next generation 5G wireless networks and receiving very positive feedback. The secular themes driving the global demand for greater bandwidth are expected to remain strong, and we believe our strong position in our key infrastructure markets will provide the sustainable tailwinds needed to drive double-digit growth for our Signal Integrity product group over the next several years. In Q4 of fiscal year 2022, we expect revenue from our Signal Integrity product group to increase and achieve another record driven by growth from the Data Center market. Moving on to our protection product group. In Q3 of fiscal year 2022, net revenues from our Protection product group increased 14% sequentially and 36% year-over-year and represented 29% of total revenues. In Q3, revenue from our consumer protection platforms increased sequentially as expected, driven by North American and Asian consumer demand. While consumer demand remains strong, many of our customers are supply chain limited, which is impacting their ability to build complete systems. We anticipate that this constraint will remain for at least two more quarters. In Q3, demand for our Protection devices used by the broad-based industrial markets grew 31% sequentially and 71% annually and achieved a new quarterly revenue record led by growth from our automotive, communications, and broad-based industrial customers. Our Protection platforms deliver superior Protection for systems using leading process geometry devices. We expect this secular trend to continue and contribute to the increased adoption of Semtech's Protection platforms across all technology sectors and help deliver double-digit growth with increasing gross margins over the next several years. In Q4 of FY 2022, we expect our Protection revenues to decrease sequentially due to typical seasonality. Turning to our wireless and sensing product group, in Q3, revenues from our wireless and sensing product group grew 1% sequentially and 23% over the prior year and achieved another quarterly record and represented 32% of total revenues. In Q3, our LoRa-enabled platforms delivered another record performance led by growth from the Smart Utility, Smart Building, Industrial IoT, and Smart Agriculture segments. We are also seeing the early ramp of the smart home, smart neighborhood, and smart campus segments, which are driving further growth for our LoRa business, as we had anticipated. As a result of this continued positive momentum, we now expect our LoRa-enabled revenue in FY 2022 to exceed our 40% CAGR target. Our vision for LoRa is to see it deployed everywhere where low-powered sensors are needed, which we believe will result in a positive impact on managing or mitigating the impact of climate change. In Q3, we announced an initiative and goal to connect 1 billion LoRa-enabled sensors by 2026 that have a positive impact on climate change. We continue to see many use cases globally that will contribute to this goal. Some examples of these new use cases include a collaboration with Cloud Energy, a leading IoT solution provider in Asia, to develop and deploy LoRaWAN networks for rooftop wireless solar power systems. RYODEN Corporation, a LoRa solution and network provider, announced a new zero-carbon solution featuring a Renesas microcontroller and our LoRa Edge platform to connect a battery-less sensor directly to the LoRa Cloud, enabling geolocation capabilities for the tracking of personal valuables, logistics assets, animals, and healthcare assets. IQnexus, an end-to-end IoT solutions and integration provider for building automation, incorporated LoRa into its indoor air quality and environmental quality sensors, which reduce carbon dioxide emissions. These are just a few examples of the numerous LoRa use cases emerging to combat climate change. In Q3, Microsoft announced it has joined the LoRa Alliance and has accepted a seat on the LoRa Alliance board. Microsoft Azure is widely considered a tier one enterprise cloud partner for many IoT deployments, and we expect their participation, along with other top-tier cloud providers like AWS, to further strengthen LoRa's presence in the LoRaWAN market. In Q3, our LoRa business metrics continued to make solid progress against our FY 2022 targets. The number of global LoRaWAN network operators grew to 163, and we are expecting 165 LoRaWAN network operators by the end of FY 2022. The cumulative number of LoRa end nodes deployed increased to 225 million, and we expect this number to exceed 236 million cumulative end nodes by the end of FY 2022. The number of LoRa gateways deployed increased to over 2.7 million and has already exceeded the goal we set for the full year. We now expect to have 3 million gateways deployed by the end of FY 2022. The LoRa opportunity pipeline increased to over $900 million and has also exceeded our FY 2022 year-end target. We are increasing our pipeline target for FY 2022 to $950 million. We anticipate that approximately 40% of the opportunities currently in the pipeline will convert to deployments on average over a 24-month timeline. We believe the momentum of our metrics, along with the increasing influence of the LoRa Alliance and its members, will help enable LoRa to become the de facto standard for the fast-growing LPWAN market. In Q3, demand for our proximity sensing platforms softened following last quarter's record revenues. Our sensing platforms provide the industry's most advanced and highly integrated SAR sensing technology for mobile and wearable devices. The increasing adoption of 5G phones and use of high-powered cellular and Wi-Fi radios is expected to result in more stringent RF power regulations globally. This trend is expected to contribute to increased demand for our proximity sensing platforms over the next few years, as we anticipate that several countries in Asia will enforce stricter SAR regulations over the next two years. For Q4 of fiscal year 2022, we expect net revenues from our wireless and sensing product group to decrease, as record results expected from our LoRa business are expected to be offset by seasonally lower consumer revenue. Moving on to new products and design wins. In Q3, we released 23 new products and achieved a record number of new design wins of 3,792. Now let me discuss our outlook for the fourth quarter of FY 2022. We enter Q4 with record backlog and are currently estimating Q4 net revenues to be between $184 million and $194 million. To attain the midpoint of our guidance range, or approximately $189 million, we needed net turned orders of approximately 3% at the beginning of Q4. We expect our Q4 non-GAAP earnings to be between $0.65 and $0.73 per diluted share. I will now hand the call back to the operator, and Sandy, Emeka, and I will be happy to answer any questions. Operator? At this time, we will be conducting a question and answer session. If you'd like to ask a question, please press star one on your telephone keypad. A confirmation tone will indicate your line is in the question queue. You may press star two if you'd like to remove your question from the queue. For participants using speaker equipment, it may be necessary to pick up your handset before pressing the star keys. One moment please while we pull for questions. Our first question is from Tore Svanberg with Stifel. Please proceed with your question. Yes, thank you and congratulations on the record results. First question is on your comment about Data Center and specifically PAM4. I believe you said PAM4 will double next year. Could you maybe talk to some of the specific deployments there, Mohan? It also sounds like sequentially that's gonna drive the Signal Integrity business. Again, I assume that's the beginning of some new deployments that you're benefiting from there. Yeah. That's right, Tore. Yeah, we've got quite a few things going on in the Data Center business, but specifically in the PAM4 area. For us, the only products we have out at the moment are the short reach products that go into, you know, optical modules for mostly 200 G, it's 4 by 50, and some 400 G applications. We have, as I mentioned, a new series of products that are planned to come out over the next few quarters for longer reach. I think when we have that broader portfolio, we're gonna see even more momentum there. The momentum on short reach alone is going to drive very, very significant growth for us next year. Now, as I said, 100% growth, and then beyond that for sure. Very excited about the opportunity there. Not only Tri-Edge PAM4 for our Data Center business, but also our 50 Gb per second PAM4 Tri-Edge platform for base station optical modules is also getting extremely good feedback from the marketplace. We're very optimistic about that also. Very good. As a follow-up, your PON business has been on a tear, and I believe it's been one of your stronger businesses on a year-over-year basis. Is there anything that you can share with us to give us conviction that, you know, there's still upward cycles happening there, to sustain this momentum in 10G PON? Yes, for sure. I mean, PON in general, first of all, globally, I think one of the nice things about PON is it's become a lot more of a global technology. You know, for a while, it was very much China that was driving the business and the deployments. But what we've seen, and while we've seen China tenders continue and driving good deployments, we're also starting to see, you know, North America and Europe now starting to drive tenders out there, and that's gonna drive further growth. We're definitely seeing that kind of globalization across many different OEMs now building PON platforms. So, pretty excited by it. I think obviously, you know, access bandwidth is critical. You know, you can have all the bandwidth you want coming to the access point, but if you have a bottleneck there, then that defeats the whole purpose. I think 10G PON is, you know, definitely seeing good growth and will continue to, and I think you know, we're likely to see higher bandwidth PON developments over the next few years. Very encouraged by the growth in PON. Just one last question on LoRa. You know, it sounds like the smart home, smart neighborhood is starting to ramp. Is that primarily in North America, or are you seeing that ramp in other regions as well? We're seeing it ramp across the board, I would say. The majority of the strength is in North America. I would say that it's a number of different players. You know, obviously the Amazon Sidewalk initiative is yet to come, so that's still, I think something that probably second half of next year, we're gonna see that ramp. Definitely we're seeing a whole bunch of other initiatives, including the Helium rollout. You know, we've seen kind of this emergence of this campus networks now. One of the things that's really transpired and really exciting for us is that LoRa, which is predominantly a range driven technology, a low power, long range driven technology. We're seeing in that kinda half a mile to 5 mi range LoRa really starting to get adopted as well, which is pretty exciting because it opens up a whole bunch of use cases that makes the market, essentially, the LPWAN market, become much bigger, and I think will grow faster. Thank you for that, Mohan, and congratulations again. Thank you. Our next question is from Tristan Gerra with Robert W. Baird. Please proceed with your question. Hi, good afternoon. You've talked about both PON and Data Center increasing sequentially, and I know you've mentioned, you just mentioned then that PON is now diversifying away from China. It looks like you're still weathering, you know, the China slowdown better than the way some other companies have characterized it recently. Could you talk about, you know, what you're seeing there in that geography and whether if indeed you're seeing a slowdown, it will have meant, you know, a higher outlook for this quarter at the top line? Yeah. I think, Tristan, it's very segment dependent on which segment you're focused on. We've definitely seen, you know, slowing down in China, smartphones, for example, in the consumer business in general. I would say infrastructure is quite healthy still. I would say IoT is still quite healthy. You know, it really does depend on which segment, and I think that's, you know, we're seeing that across the board. And that's the beauty of being a balanced business like we are and having diversification and having end market and diversification, but also geographical diversification, is that, you know, when one area is doing weak, you know, other areas are strong. You know, just having the diversification helps that. Yeah, but to answer your question, I think it really is segment specific, and we've seen more weakness in the China consumer business than we have in other areas. Great. Could you talk about your expectation about pricing contributing to your top line over the next few quarters? You were mentioning early this year about your expectation for price increases in the second half, which also could benefit gross margin. As those price increases perhaps continuing and with the ones that you've already done, is that going to contribute, you know, next year to the growth in addition to whatever you're going to see in units? Possibly, Tristan, but I think most of our price increases have been really driven by, you know, increases in our supply chain costs. We have focused very much on, you know, when we've had an increase in wafer costs or specifically cost for a specific product, whether it be fab or assembly test related, you know, trying to pass that on to our customer base. That is definitely, you know, helping us offset some of those supply chain cost increases by providing ASP increases. I don't think that we will necessarily continue to do that unless we are seeing more supply chain action, which is possible because, you know, supply chain cycle times are extremely long. When you have long cycle times like that, typically one of the things that drives is higher pricing, generally. At least until all the CapEx and all the investments are in place and, you know, that typically takes several years. It's possible we see it, but I and we're not counting on that. Great. Thank you very much. Our next question is from Harsh Kumar with Piper Sandler. Please proceed with your question. Yeah. Hey, guys. First of all, congratulations. Very solid results. Mohan, I had two for you. You mentioned there was softness in the Data Center business last quarter that you just reported, and that you expect things to improve. I was curious, in your opinion, what might have caused that softness? What are you seeing that gives you the confidence that things are improving in the Data Center? I had a follow-up. I think it's from our standpoint, Harsh, a lot of the shift in what's going on in the market, so 100 G optical modules and maybe there's some excess inventory out there of product. But the newer PAM4 deployments where they have no inventory, I think we're starting to see those ramp up quite fast. You know, we have pretty much those design wins in the bag. It's really design driven. I think we are fairly comfortable about where Q4 is and also next year for our Data Center business. It does tend to be lumpy. All the infrastructure businesses are a little bit lumpy. You know, you'll get a quarter or two of deployments or CapEx spending, and then, you know, there'll be some management of inventory, and then you'll see it come back again. You'll for sure, at least for, you know, 100G PAM4, 200 G, 400 G, and then 5G base stations and for 10 G PON, it's gonna be up and to the right. There's no question that those deployments are gonna continue to grow year-over-year. It's just a question of, you know, timing on it. Okay. Understood, Mohan. Thank you. I had a question on PON. I seem to recall in one of your presentations that the 10G PON, you guys are playing on both sides of the wire, whereas for 1 G PON and 2.5, you were just on one side of the wire. Curious if that is an accurate assessment, which would imply, if that's correct, that your content went up quite a bit. As a side question to that, I was curious if you would be willing to give us how much PON is as a percentage of revenue. Everything you said is accurate, Harsh. 10G PON, we are playing on both, central office end and the ONU end, the OLT end, and the ONU side. Obviously the ASPs are higher on the OLT side, so that's good. It also is if you sell a broad chipset like that, the complete chipset, it gives you a very strong position with your customers. That's also a very good thing, I think. Strategically we're very comfortable with where we are. With regard to percentage, Sandy, I don't know if you have that or if you can provide that. Let me see. Yeah. Harsh, the PON's typically been somewhere in sort of the low to mid-teens. It's probably running at the upper end of that this year to date. That's good enough for me. I'll get back in line. Congrats, guys. Thank you. Thanks. Our next question is from Craig Ellis with B. Riley Securities. Please proceed with your question. Yeah, thanks for taking the questions and congratulations on the very strong quarter and outlook. Mohan, I wanted to start just by getting some further color on what you're seeing with order activity and backlog growth. Backlog is clearly very strong with just 3% turns coverage needed to meet guidance. What are you seeing there? And are there particular areas of the business where you're seeing more significant order intake and backlog expansion? Yeah. Orders continue to be very strong. Backlog is obviously very healthy given the, you know, what we've just mentioned on turns there. Everything's looking quite good there. I would say, you know, there are pockets of extremely very good strength, and PON is clearly one of those. LoRa obviously is another area. You know, our Protection IoT business, which is very broad, very strong. There are some nice pockets. Areas of weakness, I mentioned China, smartphone, consumer. Not totally unexpected coming towards the end of the year and, you know, it's kinda been a funky couple of years here. Some of the typical seasonality, you know, that's what we expect to see, so it's not totally unusual. I would say, Craig, that at the moment everything is still very, very strong. That's really helpful. Then I wanted to go from there and just talk a little bit about the industrial activity inside of protection. Great to see the 31% sequential growth. I was wondering if you could point out some of the things within that very broad end market that are seeing particular strength and how sustainable do you think that strength is as we look out into the first half of calendar 2022? What do you think is driving that strength? I do think it's sustainable. Q4 we'd expect to be a little bit soft, but I think in Q1, in the first half of next year, I'd expect it to be strong again. It's in multiple segments. It's Communications, it's Automotive, it's broad-based, interfaces, USB-C, HDMI. It's a very broad set of interfaces being protected as well as different segments. Automotive particularly I think is strong, and Communications there is quite strong. Now, if you think about what's this kind of sustainability of it, this is really the mass market. It's not 10 customers, it's thousands of customers. What we're really seeing is the broad market now starting to use advanced lithography processors and controllers and DSPs. As they're starting to use those advanced lithography devices, I think it really kind of fits our strategy and the adoption of our protection into those segments very well. That's really what's driving it, Craig, the adoption of these leading-edge geometries and the renewed need for our kind of high-end protection, which is what we've been saying for a while, but you know, we have obviously in the consumer segment, we've proven that capability. You know, we've been waiting in a sense for the broader market to come to us, and now I think it's coming. Yeah, nice to see the market coming to you, especially one that has real nice margin characteristics. Don't wanna ignore Emeka. Emeka, great to see the real strong gross margin. I just wanted to see if there was any further color you could provide on some of the particular pluses in the quarter since we were at the very high end of guidance and at least 50 basis points above what I was expecting. Thank you, Craig, and it's okay, I do not feel ignored at all. Our gross margin story has definitely been a highlight for us, and it's actually very pleasing to see these numbers playing out given the expectations that we've had for a while. If you recall in the past, we've talked about the growth drivers, right, of LoRa- enabled, the 10G PON, the PAM4 CDRs, the broad-based Protection devices. We've talked about all of that coming with much higher gross margins than the corporate average. That's essentially the story, right? Our gross margin expansion story is pretty simple. It is just that of mix. That's great. Thanks, guys. Appreciate it. Our next question is from Christopher Rolland with Susquehanna. Please proceed with your question. Thanks, guys. I guess my questions are mostly around LoRa. I guess for LoRa, in terms of like an innovation treadmill, what kind of improvements do you think we might be able to see with LoRa? You know, with Helium, for example, it's so backlogged right now, it seems like you guys would have a ton of pricing power, particularly for gateway chips. You know, maybe talk about your pricing power for those chips today. Remind me what the average ASP per base station is as well. Thank you. Let me start with that, Chris. I think it varies, but I think for the lower-end base stations, the kind of home base stations, we're talking between $5 and $30, depending on, you know, which version and things like that. You're right, the pricing power is definitely with us. Remember, our strategy is to deploy gateways everywhere in the world and get, you know, we want Helium's distributed wireless network to be very successful and to be essentially, you know, connectivity to be out there in every country in the world and every neighborhood in the world, and LoRa connectivity to be, you know, just not an issue for use cases. That's always been the goal that we've had. That's why I comment on the number of gateways out there and the number of sensors that can be deployed. Because the real goal for us is to get sensors deployed and connected to those gateways. That can't happen if you don't have gateways. Now the beauty about the Helium kind of decentralized network is it kind of allows really viral connectivity, if you like, to the network. We're very excited by it. You know, I think there are. If I look at all the other networks around the world today, they're now starting to get really utilized the way we had envisioned them being utilized. You know, we got roaming agreements. We've got, you know, companies using networks for private enterprise. We've got also public network stuff going on. You know, it just really is starting to play out the way we had anticipated, so very excited by it. Yeah, clearly the Helium network momentum is very, very positive. Yeah. I have been super impressed, Mohan, and I agree with your viral statement around Helium. I have one miner. I love it. I have an order for three more out there. That kind of brings up my second question here. That is, in terms of LoRa gateways, I guess entering the year, if my numbers are right, I think you had maybe 1.3 million gateways in your entire existence, and now you are adding 1.7 this year. Just massive growth on the gateway side. I guess my question is, how confident are you in the visibility in between what is actually Helium and what are in these campus programs or neighborhood programs or industrial programs, how confident are you that these aren't Helium orders, like, for example, the three that I have on back order, for example. You know, are you sure that if the Helium network growth were to slow down, that it really wouldn't affect, you know, the growth for LoRa like we've been seeing? You know, I kind of answered that question, Chris, because our focus is on the sensor connectivity. You know, we just started an initiative, for example, to get 1 billion sensors connected to combat climate change, as an example of that, you know. The sensor connectivity can be, you know, obviously the macro gateways, which are the bigger gateways that sit out on a tower, can connect to many more sensors and have much more range. You know, I think it's more for us use case driven. We do have fairly good visibility into where the gateways are going and what they're doing. Frankly, I think it doesn't matter that much, you know. I think it's more a question of are there use cases and are the use cases really starting to be utilized in the way that you know demonstrates the value of LoRa. Sidewalk is a good example of that. Sidewalk, you know, obviously we're anticipating at some point here next year, you know, Amazon will start to roll it out, and we'll start to get sensors connected to it, and then there'll be you know new use cases emerge. Because the beauty about LoRa and the world of LoRaWAN here and the LPWAN market that's going on is a lot of the use cases are just beginning. I mean, really just beginning. People are starting to see, "Oh, I can use LoRa for this, and I can use it for satellite connectivity, or I can use it for agriculture, or I can use it for smart home deployments, or I can use it for, you know, geolocation, and tracking an asset." You know, this type of, kind of, as I said, viral use case offers the opportunity to really expand the market quickly, and to make it very large, which is obviously our intent, right? Yep. Well, great growth and thank you, Mohan. Thank you. Our next question is from Karl Ackerman with Cowen. Please proceed with your question. Yes, two questions, please. Thank you, gentlemen. The first one is piggybacking on LoRa. You know, it's great to see that LoRa is now integrated into AWS and Azure, but is the go-to-market still predominantly driven by your own sales force? I'm curious, how do you see the go-to-market changing, if at all, now that you do have broader ecosystem support from the larger hyperscalers? Yeah. I think, Karl, you know, the our sales force obviously has a critical role to play in the adoption of LoRa and the marketing of LoRa and the communication of how LoRa is succeeding in the market. We have a LoRa Alliance. The alliance has got, you know, as mentioned before, 400-500 members, including Microsoft and AWS and Cisco and IBM, and, you know, many companies out there at all levels of the value chain. So you've got sensor companies, chip companies, gateway companies, you know, software companies, system integrators. LoRa is just simply a technology, right? It's just a technology platform, yeah. Use cases typically require several members of the ecosystem to participate and get together and figure out an end-to-end solution. I think it's really the power of the Alliance and the kind of pervasive nature of what's happening with LoRa now that's driving the momentum. I don't know that it's you know. If we added a sales guy or ten salespeople, that would necessarily you know have a massive additional benefit. I think it's more about getting the right system integrators in, getting the right use cases so people can look at the use case and say, "Hey, that's interesting. I wanna do that." You know, getting the right sensor technologies out there, software, making sure there's no bottlenecks in the software. You know, I always talk about bottlenecks in the ecosystem, and those bottlenecks have moved. It used to be, you know, sensors and it used to be hardware related. Now it's more software related. The addition of Microsoft Azure and AWS really does add a tremendous value because many companies would have struggled to build a backend software platform for their use case. Having the ability to go to Microsoft or to go to AWS and partner with them to get that access, I think really you know changes the time to market aspect of it. Yeah. Understood. That's helpful. My follow-up is more of a clarification. If PAM4 is high- teens% of sales this year, does that mean NRZ is equally as large this year? And is there a notable margin difference between the CDRs and optical ICs supporting each technology? Thank you. Yeah, NRZ is larger. Obviously, it's been, you know, around for a while, and I think that's the key point to make is that, you know, when you look at PAM4, it's at least for us, it's a fairly new platform. You know, Tri-Edge is just really being released to production, the short reach use cases, and so we've got good design win momentum. And really the point being that, you know, as we get the momentum, the growth in that business is fairly significant. We're expecting PAM4, 200G PAM4, 400G PAM4 deployments next year to accelerate quite nicely. Thank you. Our next question is from Quinn Bolton with Needham & Company. Please proceed with your question. Hey, guys. Congratulations on the nice results. Maybe just a quick follow-up on that last question on the PAM4. One, did you say high-teens in terms of absolute millions of dollars, or is it a high-teens percentage of revenues? Maybe I missed it. Is that only Tri-Edge or does it also include the FiberEdge TIAs? I've got a couple of follow-ups. Yeah, it's high- teens in terms of millions of dollars. That does include FiberEdge, but I would say the majority of the growth is coming from Tri-Edge. Got it. Thank you. You know, looking to just the overall supply chain, I know you mentioned some of your businesses is constrained, especially on the consumer side, by component availability of other manufacturers. Just wondering if you're seeing any supply constraints in your own, you know, perhaps more back-end than front-end, supply chain. I know a number of analog companies through the fall had experienced, you know, shutdowns or COVID-related effects out of Southeast Asia. Wondering if that had any impact on your business this quarter. Not really. I would say that it's kind of been pretty consistent for us over the last couple of quarters. Same type of issues. Obviously, some fabs are full, and their cycle times are, you know, quite long. I would say in general, across the whole supply chain, cycle times have doubled over the last, you know, year or so. We've gone from, you know, an average of 20 weeks to maybe 40 weeks cycle time. That's significant, you know. That's across the board, and that's an average. There are pockets where, you know, it's longer than that, and there are pockets where it's not such a big problem. I would say in general, you know, supply chain is still a major challenge. We're okay. You know, we've obviously built inventory. We planned on building inventory. We are using that inventory to continuously make sure our customers are, you know, the manufacturing lines are running and we're not the bottleneck. We do know, as I mentioned in my prepared remarks, that some of our customers are struggling to get all of the components to build a complete system. That's, you know, has an impact on kind of a short-term demand impact, but I think in the medium term, that will clear up. Got it. My last question, Mohan. Just any update on the LoRa microservices part of the business? Yeah. The cloud services is going well. I think, you know, obviously LoRa Edge is the platform there. Bringing on board Microsoft Azure and now AWS, I think we have partners that we can work with very closely and our customers, and we've started to now look at what elements of the Cloud Service Geolocation performance needs to be changed you know to make sure you know we have an end-to-end solution. I think at the moment you know no real significant breakthroughs there, but I would say good momentum. I think you're gonna hear a lot more about that next year. Great. Thank you. Our next question is from Rick Schafer with Oppenheimer. Please proceed with your question. Yeah, thanks. I'll add my congratulations, guys. A lot of good questions already, but just if I could sneak one more in on LoRa. I was hoping you could give a sense maybe of expected LoRa linearity next year. I mean, it doesn't seem like seasonality is really relevant at this point for LoRa. If you kind of look at just the run rate you're on now, it seems like 40% growth sort of makes sense, right, you know, next year. I'm just curious if you could comment on that and give a sense, you know, maybe what type of backlog or just general visibility you have on that business today. Yeah. I think it's pretty good, Rick, I would say for the first half. A lot depends on the funnel and how quickly that funnel moves to deployments. Obviously, it's grown now to a large size, the funnel, and you know, we're anticipating some of those turns to go into full deployments. The momentum is very good. I think everything we had anticipated in terms of, you know, design-ins and design wins from the funnel, and I think in general, the number of use cases that are emerging and starting to get deployed without our help, I think is very encouraging. You know, I think the 40% for next year is looking pretty good as well. Yeah. Thanks for that, Mohan. Then just a quick follow-up on gross margin. I mean, obviously looks fantastic. I mean, it seems like mid-60s% is sort of the new baseline. I was just curious there, you know, as we look forward to not that far out, I mean, looking at the kind of growth you guys are putting up, you know, you're not that far out from your billion-dollar top line, you know, run rate kinda goal. I'm curious sort of where you think or where you see gross margin, you know, once we're at that billion run rate. Then just a quick clarification on next year. I know you talked about ASP, but I'm curious, do you see that as a tailwind for gross margin next year? Rick, this is Emeka. The gross margin, like I said before and in my prepared remarks, is mostly being driven by the mix of revenue. As we're seeing a higher revenue contribution from our growth platforms, that is helping us to drive our gross margin expansion. You know, we are definitely looking at where we have our target range for gross margin at $1 billion of revenue. You know, it is gonna be driven by how that revenue is coming in. In terms of, m id-60s% and stuff like that. That is a possibility, but we just have to wait before we start setting those expectations. We have to wait and see what's going on with the current supply chain environment, right? You know, if we continue to see price increases from the supply chain that you saw, there is so much that our customers will be able to absorb. So that is something that we're keeping an eye on. But you know, I share your sentiment that as we continue to see revenue contributions growing from the new product platforms that we've talked about, that we should continue to see gross margins headed into the mid-60s% and maybe beyond. But we're not going to sign up for those at this point. I understand that. Thank you Emeka. Thanks, Mohan. As a reminder, if you'd like to ask a question, please press star one on your telephone keypad. A confirmation tone will indicate your line is in the question queue. You may press star two if you'd like to remove your question from the queue. Our next question is from Harsh Kumar with Piper Sandler. Please proceed with your question. Yeah, Mohan, I had an interesting one, not specific to your company, but just more so in the industry. A lot of companies that have reported numbers, results, you know, in the last three to six months have basically buck seasonality. There's been just because the demand's been so high, that it's kinda, like, up to the right. I noticed that you guys are guiding seasonal, particularly it seems like from consumer and a couple of other small things. I'm curious if we are back to a demand supply situation where seasonality is coming into play, or is it just do you think something specific to some of your businesses that you have? Well, the seasonality is tied to consumer, as you noticed, Harsh, and I think that it's not a surprise. Some of that, as I mentioned, I think in my prepared remarks, is our customers not being able to get all the parts they need, I think. There's a little bit of that playing into it. I do think there's gonna be some seasonality here. You're right, though. I mean, the demand environment is very strong. You know, people are constrained. To some extent, you know, you can play that game. We typically are shipping to consumption. That's what we're trying to do. We're not trying to do anything more than that. You know, we keep a very close eye on POS. That's kind of our thinking. You know, if the channel is shipping into customers and demand continues to be strong, then Q1 will be very strong. Appreciate it, Mohan. Thank you. We have reached the end of the question and answer session, and I will now turn the call over to CEO and President, Mohan Maheswaran, for closing remarks. In closing, we were pleased to deliver a record performance in Q3 that included record net revenues, record gross margins, record operating income, record earnings per share, and record operating cash flow. The secular demand trends driving our growth engines in the infrastructure, smarter planet, and mobility markets remain strong and are expected to provide sustainable long-term growth. We expect our diverse and growing product offering and balanced end markets to drive a record financial performance in FY 2022 and provide strong momentum going into FY 2023. With that, we appreciate your continued support of Semtech and look forward to updating you all next quarter. Thank you. This concludes today's conference, and you may disconnect your lines at this time.