Thanks, everyone, for joining. I want to welcome everyone to RBC's TIMT conference. I am Srini Pajjuri, a Covered Semis. Today, we're pleased to have Astera Labs. We have Nick Aberle, who heads the IR team there. Nick, thanks for joining us. We have roughly 30 minutes. We're going to leave a few minutes for Q&A in the end as well. Nick, what? It's been a little more than a year since you guys went public, a very successful IPO. Maybe, you know, we can start with when you went public. I think you were targeting a high-growth market, roughly, I don't know, $10 billion-ish TAM. Things have changed quite a bit since the market has broadened and you've expanded into new markets as well. How are you thinking about, in terms of the addressable market?
What's a, how do you think about your SAM and TAM and growth potential going forward?
Yep, got it. Yeah. Thanks for inviting us as well. Srini, appreciate it. Thanks for all the investor support. Yeah, it's almost been almost two years. It'll be two years in March. Time has flown by, for sure. A lot has changed. Yeah. The initial market opportunity that we outlined around the IPO was around $7 billion, and that's grown substantially just over the course of the last, call it, 18 months or so. The market opportunity for us is really a function of two big pieces. I mean, there's clearly a secular trend and tailwind that's at our back associated with just the build-out of cloud and AI infrastructure and new accelerators coming on the market. Obviously, the goal of Astera is to staple as many dollars as we can to each one of those accelerators shipping into the market.
We have been able to kind of further enhance the market opportunity on a company-specific basis by bringing out new products, developing new technologies, expanding the roadmap, and just broadening the overall portfolio. If you look at where we stand today, there are the initial pieces of the business that we outlined during the IPO, the signal conditioning pieces of the business, which entail the retimer opportunities both for PCIe and for Ethernet. We have outlined that as about a $3 billion TAM or served addressable market because we serve that today. Both of those are poised to grow quite nicely over the next couple of years. Both pieces of the business are going to be kind of graduating to the next level, going to PCIe Gen 6 for the PCIe side, ultimately Gen 7 as well, where the speeds will double again.
The same thing on the Ethernet side of the house as well. We're primarily shipping 50 gig per lane solutions today that will expand to 100 gig per lane starting next year for us, and then obviously 200 gig per lane beyond that. Some pretty big drivers in that business where you see adoption, especially on the Ethernet side, fairly limited today in corner cases, but much more adoption and attach expected as we move to these faster speeds. Leo, obviously a big market opportunity as well. That business is still small for us today from a revenue standpoint. I think we put out a press release last night talking about a new engagement with Microsoft there. Hopefully those will start to drop some proof points that something is starting to brew on that front.
When you start to think about the market opportunity there in the entire CPU landscape of ultimately every CPU is CXL capable, how many of those we can enable, that market opportunity starts to be quite large as well. It was at OCP last year where we launched the Scorpio product line, which boosted the TAM even further, made up of a couple of different pieces. We will talk about each of those pieces individually in a little bit. The P series, we are calling it on or about $2.5 billion of incremental opportunity for head node connectivity. The X series, which is for scale-up clustering of accelerators, we called that at the time at being around a $2.5 milllion-$3 billion market opportunity.
Most recently, talking about UA Link being incremental on top of those kind of PCIe or PCIe-like protocols that X Series addresses, adding another couple of billion dollars on top. Yeah, all folded in, kind of looking at a $14 billion-$15 billion served addressable market today. Clearly, we're not sitting still either. We're developing and pushing forward, seeing some of the announcements on the optical side. We would expect to continue to grow that TAM going forward.
That's great. Your largest business, the retimers, the chip that sits between CPU and GPU and sometimes between CPU and storage, et cetera, there were some concerns, I guess, a lot of concerns as the market moved from Hopper generation to Blackwell. That still continues to grow to this day. I think last quarter it was up. For this year, it looks like it's going to be up 60%-70%. Your expectation is for that business to continue to grow into next year.
That's correct. Yeah. Aries is still a very big piece of our business. Yeah. If you look back four, six quarters ago, it was over 90% of total revenue. Today, it's closer to two-thirds. All the while it's grown, yeah, we'll grow close to 70% this year on the Aries business. Quite healthy growth, but also diversified kind of the business across the other product lines just because they're growing very fast as well. Yeah, I mean, there was a little bit of skepticism coming into the year about the transition to Blackwell at NVIDIA. Obviously, we had a big presence there with Hopper. You started to see some of the reference platforms that NVIDIA goes to market with on the rack scale side use less retimer content. We've also picked up a meaningful amount of retimer content in other areas.
We've ramped aggressively on the custom ASIC accelerator market side. We've also started to penetrate the scale-up opportunity as well for PCIe retimers. As these racks grow and clusters grow in size, distances become more challenging for these PCIe signals to traverse with high fidelity. You start to need PCIe retimers either chipped down on a board or at the end of AEC cables. That's been another big driver of our business. Yeah, I mean, to your point, expect that business to continue growing into next year. PCIe Gen 6 transition is just underway. Blackwell is really the only endpoint today that supports Gen 6. We'll see a whole slew of incremental accelerators start to adopt PCIe Gen 6 starting next year, going into 2027.
That will drive higher attach for retimers, but also a higher ASP for us as well. I think on or about 20%+- ASP lift on a generation-over-generation basis. Overall, very excited about the Aries business and the opportunity there.
That's great. I think this market took off with Gen AI, with the Hopper generation. Obviously that attracted some big competitors, right? I think Broadcom announced some products and Marvell announced some products. It looks like you have that visibility into next year in terms of your design and momentum. Also, you're talking about ASP premium going forward.
Yes. Yeah, that's exactly right. Yeah. I mean, just like any other big and growing market, you would expect competition. Not super surprising from that standpoint. We respect all the guys that are coming into the space. They're very well-known, established names in the networking arena. Yeah, I mean, we have a substantial foothold in this business today. We're in the incumbent position. We're the only guy shipping PCIe Gen 6 solutions into the market today. We talked about PCIe Gen 6 making up a little over 20% of our business in total in Q3. To our knowledge, nobody else is shipping anything in volume today. Yeah, I mean, the head start is there.
The learnings and kind of the gauntlet that we've gone through on Gen 5 has built a lot of muscle for the organization in terms of understanding the nuances and the iterations that need to be made to kind of handle all these different workloads and interop between a wide variety of endpoints. We feel very good about our position there.
Got it. Should we kind of think of retimer growth going forward kind of primarily associated with the ASIC side of things, or do you think there is actually more growth left in the GPU market as well for you?
I think it's going to be both. Yeah. The Gen 6 business that we're shipping today is shipping into NVL72-based platforms. That is a growing business. We would expect that to continue to expand next year. To your point, I mean, I would say that the XPU side or the custom ASIC accelerator side is probably a little bit more fertile market opportunity for us because we can play on that scale-out side and the peripheral connectivity side in addition to the scale-up clustering side as well. It's just a bigger dollar content per accelerator opportunity for us.
Got it. In terms of your visibility, I think these systems are designed well in advance, right, like I don't know, 18- 24 months. Is that the sort of visibility that you have in terms of design and movement?
Yeah. I mean, it's on or about 12- 18 months, I think, is a good mark for sure. Yeah. I mean, the stuff that we'll ship for revenue and that will drive growth next year for us has been largely baked for quite a while. The things that we're focused on developing and working with our customers on to launch is really at next 2027, 2028 at this point. Yeah, good visibility on that front in terms of the design wins, the engagements, expectations for what forecasting and demand and units could look like. Obviously, not a perfect crystal ball, but feeling pretty good about the trajectory.
Okay, great. Just switching gears to the PCIe switch side. You have been shipping the Scorpio P for a scale-out. I think that seems to be ramping quite well. Let's talk about that. How do you see the opportunity there? How big is the SAM and how many designers do you have? How should we think about growth as we go into next year?
Yeah. I mean, it's clearly a large market opportunity. It's a multi-billion dollar SAM from our perspective. When you think about how to build that market opportunity out, you're really looking at all the accelerators that are shipping into the market. PCI Express is the native language within an AI rack or an AI server. CPUs, GPUs, networking elements, storage, memory all need to interface with each other over PCI Express. There is a huge opportunity there. We talked about some of the retiming opportunities for signal conditioning, but also for switching as well. PCI Express Gen 6 is our kind of first foray into that market. Broadcom had a big play there for Gen 5 and drove substantial revenue there. We were the first to market with the Gen 6 switch, and we're the first ones to ship into volume on Gen 6 today.
We do feel like we have a decent lead with a very optimized solution for that market opportunity. When you think about it, there will be opportunities on the GPU side like we're seeing today on the NVL72. There will be opportunities on custom ASIC businesses as well. We talked about on the call that we've picked up new design wins with incremental customers outside of our lead customer that we're shipping to today that will start to layer into our growth profile in 2026. Yeah, I think the P Series business is very healthy. It's grown very rapidly this year and is poised to continue to grow even further next year.
Got it. Nick, one of the questions that we always get is that PCIe is not a new market, right? There are a lot of players in this market. What is it that you bring to the table that gives you guys this competitive advantage, especially on the retimer side? How do you sustain that? You are making progress on the switch side. What is that? What are the...
Yeah. I mean, you're totally right. Not a new market, not a new standard. I think some of this was identifying early on the trend within AI servers and this heterogeneous compute environment where you're starting to use CPUs and GPUs within the same system. By default, PCI Express became very important within AI servers. I think the right approach that was taken by the team, if you look back three, four years ago, was clearly the hardware is important. The capability of being able to condition the signal is important. Having good SerDes is important. Focusing on how to add value specifically for fleet managers and hyperscalers trying to optimize productivity within the data center was really the key that set it off.
There was a very intense focus on building a software team and a software stack that could be provided to customers in order to proactively analyze what is happening within the data center. If you think about them, hyperscalers spending tens of billions of dollars on CapEx and having hundreds and hundreds of thousands of AI servers within a data center that are having millions and millions of PCIe links running through them, having knowledge of exactly what's happening on those links and what's happening on each of those endpoints could be a very valuable thing. We put sensors into the product. We developed APIs that we provided to our customers. Those customers then take those APIs, build it into their operating stacks, and can more effectively manage their fleets.
They can identify if there is a problem in any specific area within a link or between endpoints within the infrastructure that they can go in and fix something proactively. At the end of the day, again, where they're spending tens of billions of dollars in CapEx, they want to utilize that and make it as productive as possible. If we can help them make it just a little bit more productive, then our solutions end up being free for them.
Got it. Got it. Switching gears to Scorpio X, the switch product for scale-up, obviously you've been pretty bullish about the opportunity. It's a large market, but also there is healthy skepticism about the longer-term sustainability, but it hasn't even started to ramp yet. Let's talk about the ramp and how do you see into 2026 in terms of design wins and the momentum.
Yeah. I mean, we're super excited about the prospects and the opportunities around X Series. And if you think about it, I mean, rack scale infrastructure is just really in the early stages of deployment. NVIDIA has been the first guy to kind of bring rack scale infrastructure, AI infrastructure to market at scale. You've had a couple of others just starting to do similar things over the course of the last couple of quarters. Just the market opportunity and that secular trend is very early in the game right now. X Series was built in order to enable clustering of accelerators or clustering of GPUs in a kind of back-end scale-up topology that allows each of those accelerators to speak with each other and create one cohesive compute unit. We've seen initial traction with customers wanting to leverage PCIe to make that happen.
PCI Express is a very low-latency standard that allows you to do kind of memory semantics and optimize those back-end scale-up connections. We are in pre-production today. We shipped a little bit of it in Q3, a little bit more in Q4. We hope to go into volume production early half of next year. We have multiple customers, again, multiple platforms that are poised to start kind of pulling and demanding X series solutions starting next year. Very excited about the market opportunity there. It is still in its very early stages of expanding. We are going to see just on PCI Express alone, at least the next three to four years, we have programs and designs that will ramp into volume production. There are new ones that are still getting converted.
We talked about a pipeline of over 10 unique customers looking to adopt and leverage PCIe for scale-up, of which only a handful of those are actual design wins today. There could be incremental conversions that even push that out even further. Very excited about that. I'm sure you'll ask about UA Link next, but that would be the next evolution of what we are trying to provide on the scale-up side.
Yeah, we'll get to UA Link in a bit. Just want to understand as you go from retimers to Scorpio P and then Scorpio X, just going to talk to us about your content per XPU because I think that's a pretty significant increase that you're seeing.
Yeah. So yeah, I mean, we're fortunate, like I mentioned earlier, to be kind of pointed in the right direction from a secular standpoint. And we've kind of cut our teeth with the retimer business and engaged very tightly with some of the kind of biggest hyperscalers in the world, the biggest merchant GPU vendors in the world. There's not too many boxes or AI servers that have been shipped into the market over the last couple of years that don't have some type of Astera content in them. So that's afforded us some very tight relationships and a sneak peek at exactly what things are coming down the pipe. I think that when we think about the growth that's available to us by just expanding the content.
Earlier, talking about stapling as many dollars as we can to each accelerator going out the door, it really started with Aries, which probably allowed us $50- $100 worth of content per accelerator. Roughly introduced Taurus, so if you had both of those solutions within a certain platform, it kind of gets you up into $100-$150 worth of content per accelerator. Scorpio is really the game changer where you started to see multiple hundreds of dollars of incremental opportunity per accelerator. X Series kind of kicks it up to the next notch where it is going to be a very high-value, high-protein anchor socket that is within the platform. If you have the grand slam of Astera content across the entire platform, you probably get pretty close to $1,000 of content per accelerator. Like I mentioned earlier, we are not stopping there.
Link will very likely take it above that number overall.
Okay, got it. Obviously, you guys made a comment that Scorpio could be bigger, biggest product sometime next year. Retimer is obviously much bigger now. That kind of, I guess, tells us how confident you are about the Scorpio ramp.
Yeah. I mean, with all the caveats and disclaimers that we always post, I mean, this is very, very driven by our customers and their deployments, the timing of their deployments, and the pace of their deployments. Certainly a possibility that we could see crossover late next year. If not, then certainly in early part of 2027. Yeah, I mean, it is a function of that dollar content opportunity. When you're able to kind of attach those kind of higher-value solutions to these accelerators, then you can grow revenue pretty meaningfully and expand your opportunity very meaningfully as well.
Got it. Got it. UA Link, that is where there is a lot of debate about. As we go from Scorpio X, which is PCIe-based, to UA Link, I would imagine that there is additional content opportunity, right? Where are we in that in terms of the standards? Actually, maybe you can talk about what does UA Link bring to the table that PCIe does not have today? How do you see the timeline of that ramp?
Yeah. If you look at the landscape today of what customers or GPU guys or accelerator manufacturers, AI platform providers are looking to leverage to scale up within a rack, multiple accelerators, you have a couple of options. You have PCI Express. You have standard Ethernet. You have some proprietary protocols out there as well. Most recently, NVLink Fusion has been entered into the mix. You have really that set of opportunities. PCI Express and standard Ethernet, as you know, have been around for some time, decades. They are by no means optimized for AI workloads and AI applications, but it is what we have today. Customers will use that and will help them to make those efficient as possible.
Looking out over the long term and seeing the opportunity in that secular trend moving to kind of a rack scale architecture, there is a big need for something that's going to be more purpose-built for AI. The consortium, the UA Link consortium, was put together late last year to solve that exact problem, to kind of bring a standardized open ecosystem approach to scale-up networking and to provide solutions that are purpose-built for that application. The standard was ratified. The 1.0 standard was ratified back in March of this year. Ever since that standard was ratified, you've started to see development happen. We're clearly hustling quite quickly to develop and build out a portfolio of solutions. It won't just be a switch. It will be a switch. It will be signal conditioning capabilities. It will be cabling. It could be chiplets.
There could be a whole variety of opportunities there from a portfolio standpoint to pick up business on that side of the house. All that is tracking well. Our expectation is that we'll be able to put products, UA Link products in customers' hands at the end of next year, back half of next year for system qualifications, initial bring-ups, and deployments in 2027. That is the expectation today. I mean, we continue to grind along and build these things up. We're hoping for others to do the same to really kind of promote this openness of the ecosystem to provide customers and hyperscalers with an opportunity to have a broad and diverse set of suppliers as well.
I guess the debate is about UA Link versus UA Link is somewhat new, whereas Ethernet has been around forever. Broadcom is pushing Ethernet and looks like they got pretty good industry-wide support, just like UA Link does. I guess how can investors get conviction that UA Link opportunity is going to be as big as you think longer term, given the complication from Ethernet?
Yeah. I mean, I think just to provide some context at a high level to start out, I mean, clearly this is a huge market opportunity. We size it out to be tens of billions of dollars when you think about the entire universe of accelerators and the connectivity content that's going to be needed on the back end to scale and cluster all of these accelerators together. That is across NVLink, Ethernet, PCIe, UA Link, ESON, whatever else comes to the market. That is the pie that everybody's trying to grab. We've always said that there will be a role for PCIe, UA Link, Ethernet, NVLink, NVLink Fusions. All these things will play into that mix.
Customers will choose based upon which standard on a multi-generational basis fits best with their topology, their architecture, their accelerators, what they're trying to accomplish within their data centers and within their infrastructure. We see a place for all of these standards. Like I mentioned, UA Link kind of set out on the path with taking a blank sheet of paper and figuring out, hey, what are the top 10 things we need within an AI scale-up topology? Everything else is kind of thrown in the recycle bin. You want a highly optimized solution that has no overhead and is just focused on that application specifically. That is the incremental evolution from PCIe to UA Link. Standard Ethernet today is serviceable, but it does have a lot of that overhead.
I believe at first SUE, then ESON has been the natural evolution for Ethernet to say, hey, we realize that this is not an optimal solution for this market or these applications. We need to provide a purpose-built solution for this market. It is very much going down that same path that UA Link identified a little over a year ago and kind of set course to kind of go solve. I think it is a step in the right direction for sure. We will see how everything plays out. Like I said, I think there will be customers that adopt different standards. Like we have said on our calls previously, we have multiple hyperscalers, multiple kind of customers within that group of 10+ PCIe engagements that are looking to develop UA Link-based solutions that are pushing us in that direction.
We feel very confident that based upon those kind of pushes and those roadmaps that we're headed in the right direction and there's going to be a meaningful market opportunity. When I talk about multi-billion dollar UAL opportunity kind of as a standalone, I mean, it's really a fraction of that total tens of billions of dollars of market opportunity. Hopefully, that's actually conservative and it's much bigger than that.
Yeah, makes sense. We're not going to know for a while, right? I mean, by the time UA Link is shipping and by the time Ethernet is shipping, it's probably 2027, 2028. Let me ask you, I mean, is there anything preventing you from, let's say, hypothetically, Ethernet is the way to go. Is there anything preventing you from entering that Ethernet market? I mean, you have the skill set, right, today?
Yeah. I mean, we have the skill set. And as I mentioned, I mean, it's a step in the right direction, right? We're all about open ecosystems, open standards. I think it's a great step in the right direction for Ethernet to go down this path and open things up and create a level playing field for all the reasons that UA Link has already done for collaboration, for diverse supply chain. Yeah, I mean, it's starting to make a little bit more sense. I mean, it's still very early. Like you mentioned, it's a workstream at OCP right now. They'll set forth on building a spec or a standard that will be released at some point.
If and when it makes sense for us to do that, and we hear customers telling us that that's something that they want us to pursue, that there's an opportunity there, then it's something we would definitely consider.
Yeah, makes sense. I want to see if there are any questions from the audience.
One of the things I kind of think I learned here was the AI at the edge seems to be something that one can discern from vague press releases by some of the large hyperscalers who have consumer end markets as well is coming probably in the next 18 months to two years. All of it is going to be CPU. The thing I think was kind of new to me is that the CPU at the edge probably hands off to a CPU in the data center. There is really little architecturally, it is better to speak CPU to CPU on many of these devices rather than hand off to a GPU or something else. Am I underestimating Leo and CXL opportunity? Could this be a significantly larger opportunity as AI pushes to the edge and it is more of a CPU to CPU type of market?
Yes. So yeah, I mean, Leo has applications within general purpose servers and it's got applications within AI. I think both are very viable and make a lot of sense in terms of return on investment for customers. There are a variety of different customers and designs that we've either already won or that we are chasing that kind of fit into some of the buckets that you described. For us, we expected this market to already develop a little quicker than it has. We've continued to want to be a bit conservative on kind of disseminating exactly how that curve or that growth might layer into the model. We expected initially for it to happen this year and it has not. We're confident that we will see some incremental growth from Leo and CXL next year across kind of both of those applications.
As I referenced earlier, nice press release yesterday after the market closed talking about our relationship with Microsoft to start bringing CXL into the market, leveraging and supporting the SAP HANA kind of type of large database applications. I would say stay tuned. We're optimistic that it will continue to develop and drive some growth, but we want to just be a little bit tempered just given that it's taken a little longer to date. Not necessarily. Yeah. I mean, it could a little bit. I would say that when we built out that TAM, we basically looked at the entire universe of CPUs that ship annually. We assume that close to 100% of those CPUs are CXL capable by, I think it was like 2028. That's what yielded the $4 billion market opportunity.
Again, we're using, I would say, somewhat conservative kind of attach rates and ASPs and those types of assumptions. When you're talking about the immediate market opportunity, it's like, okay, we have all these capable CPUs out there, CXL capable CPUs. How many will actually enable CXL? That's obviously going to start at a much lower level and then hopefully grow as adoption takes place over time. I don't know that it materially changes it. That's already a pretty giant number for us to go prosecute. To the extent that we can even grab 5-10% of that over the next couple of years, that would be a pretty nice win for us, I would say.
Great. That's all the time we have. Thanks, everyone, for joining.
All right. Thanks.