As a reminder, this conference is being recorded. It is now my pleasure to introduce your host, Leslie Green of Investor Relations. Thank you. You may begin.
Thank you, Shamali. Good afternoon, everyone, and thank you for joining us on today's conference call to discuss MaxLinear's third quarter 2026 financial results. Today's call is being hosted by Dr. Kishore Seendripu, CEO, and Steve Litchfield, Chief Financial Officer and Chief Corporate Strategy Officer. After our prepared comments, we will take your questions. Our comments today include forward-looking statements within the meaning of applicable securities laws, including statements regarding our guidance for the fourth quarter of 2026, including revenue, GAAP and non-GAAP gross margin, GAAP and non-GAAP operating expenses, GAAP and non-GAAP interest and other expense, GAAP and non-GAAP income taxes, and GAAP and non-GAAP diluted share count.
In addition, we will make forward-looking statements relating to trends, opportunities, execution of our business plan, and potential growth and uncertainties in various product and geographic markets, including, without limitation, statements concerning the future financial and operating results, opportunities for revenue and market share gains across our target markets, new products, including the timing of production and launches of such products, demand for the adoption of certain technologies, and our total addressable market. These forward-looking statements involve substantial risks and uncertainties, including risks outlined in the Risk Factors section of our recent SEC filings, including our most recent annual report on Form 10-K and our Form 10-Q for the quarter ended September 30, 2026, which we filed today. Any forward-looking statements are made as of today, and MaxLinear has no obligation to update or revise any forward-looking statements.
The third quarter 2026 earnings release is available in the investor relations section of our website at maxlinear.com. In addition, we report certain historical financial metrics, including, but not limited to, gross margin, income or loss from operations, operating expenses, interest and other expense, and income tax on both a GAAP and non-GAAP basis. We encourage investors to review the detailed reconciliation of our GAAP and non-GAAP presentations and the press release available on our website. We do not provide a reconciliation of non-GAAP guidance for future periods because of the inherent uncertainty associated with our ability to project certain future changes, including stock-based compensation and its related tax effects, as well as potential impairments. Non-GAAP financial measures discussed today are not meant to be considered in isolation or as a substitute for comparable GAAP financial measures.
We are providing this information because management believes it is useful to investors as it reflects how management measures our business. Lastly, this call is also being webcast, and the replay will be available on our website for two weeks. Now let me turn the call over to Kishore Seendripu, CEO of MaxLinear. Kishore.
Thank you, Leslie, and good afternoon, everyone. As the ongoing AI infrastructure build-out momentum continues and as AI data center clusters continue to scale to unprecedented size and bandwidth requirements, we believe MaxLinear is emerging as a key enabler of next-generation connectivity technologies. Demand for our optical data center connectivity and infrastructure solutions continues to strengthen, and we believe MaxLinear is in the early innings of a multiyear AI-driven growth cycle. Against this backdrop, our AI data center business continues to outperform our expectations. In Q3, overall revenue grew 72% year-on-year, driven by accelerating adoption of our optical PAM4 products, expanding customer engagements, and strong execution across our infrastructure portfolio. Infrastructure as a category grew 210% year-on-year, and which is now larger than the rest of our revenue categories combined.
Reflecting this momentum, we are raising our 2026 optical data center revenue outlook to $250 million-$270 million. With strong visibility in bookings extending beyond 2027, we expect another significant step-up in revenue next year. Keystone, our 5 nm CMOS 100 Gb per lane PAM4 SerDes family, continues to ramp rapidly in high-volume production across multiple hyperscalers. Its industry-leading power efficiency and performance position MaxLinear at the center of today's 800G optical infrastructure deployments. Looking ahead, we are seeing accelerating customer activity around Rushmore-based 200 Gb per lane PAM4 1.6 Tb architectures, where qualification programs are advancing toward expected production deployments in 2027. Rushmore is building on Keystone's foundational success and is also expected to become a major multiyear growth driver.
Big Sky, our family of next-generation 400 Gb per lane 3.2 Tb optical and electrical PAM4 interconnect technologies, will further catalyze growth as data center network speeds continue to accelerate beyond 200 Gb per lane. Beyond PAM4 SerDes optics, we continue to broaden our AI infrastructure footprint across optical and electrical interconnects, retimers, control plane connectivity, telemetry, and power management. This strong expansion of content inside the AI data center stack positions MaxLinear to participate across multiple layers of future AI data center architectures. Already, Annapurna, our 1.6 Tb electrical interconnect product family, addresses 1.6 Tb active electrical cable and onboard retimer applications for AI scale-up. Washington, our 200 Gb per lane TIA platform, not only supports PAM4 DSP-based optics, but also non-DSP-based linear pluggable optics consisting of LRO/ LPO, NPO, and CPO solutions.
We expect initial Washington and Annapurna revenues in 2027, followed by a stronger volume ramp in 2028. We are also excited about our AI RackCommander portfolio, consisting of USB, PCIe, UART connectivity bridges used for telemetry, power management and protection solutions for rack scale AI infrastructure. RackCommander expands our role beyond data movement and into the control plane of the AI data center. Customers require advanced telemetry monitoring, connectivity, and power control capabilities to maximize performance and efficiency, which is critical for infrastructure management. We believe this represents a significant long-term growth opportunity while expanding our strategic footprint. Additionally, our XGS-PON hyperscale data center design win, which serves as the control plane connectivity network across multiple data centers, has completed qualification. Supported by secured backlog, we expect first deployments of this inter data center control plane solution to start in 2027.
Separately, Panther, our storage accelerator platform, continues to gain momentum as customers seek more efficient AI infrastructure. By significantly increasing effective storage utilization and unlocking KV cache capacity for agentic AI applications, Panther enables customers to support larger AI inference workloads without increasing storage infrastructure spending. We expect Panther revenue to roughly double this year, with potential for another meaningful increase in 2027. While AI data center remains our primary growth driver, we expect edge AI-driven upgrades to also drive growth in 2027 and 2028 for our wireless infrastructure and broadband access and connectivity solutions. These include Sierra single chip 5G RAN remote radio unit solution, our millimeter wave, microwave backhaul RF and modem SoCs, and XGS-PON fiber broadband home gateways.
Both broadband and connectivity categories delivered sequential revenue growth in Q3, driven by large-scale deployments of fiber PON and Wi-Fi 7 gateways at major tier one service providers in North America and Europe. In closing, accelerating hyperscale deployments, increasing optical connectivity content, new product ramps, and broader participation across the AI infrastructure stack give us confidence that MaxLinear is still in the early stages of a significant growth cycle. Our strategy is focused on strengthening our leadership in high-speed data center connectivity, expanding into adjacent infrastructure markets, and increasing our content share and strategic relevance with hyperscale customers. With strong customer momentum, great backlog visibility, and a differentiated technology portfolio, we believe MaxLinear is well positioned to deliver sustained growth and long-term shareholder value. With that, let me turn the call over to Steve Litchfield, our Chief Financial Officer and Chief Corporate Strategy Officer. Steve?
Thanks, Kishore. Total revenue for the third quarter was $218.1 million, up 29% from $168.8 million in the previous quarter and up 72% from $126.5 million in the third quarter of 2025. Infrastructure revenue for the third quarter of 2026 grew to approximately $125 million. Broadband revenue grew to approximately $53 million. Connectivity revenue was approximately $25 million. Our industrial multi-market revenue was approximately $15 million. GAAP and non-GAAP gross margin for the third quarter were 58.7% and 60% of revenue. The delta between GAAP and non-GAAP gross margin in the third quarter was primarily driven by $2.5 million of acquisition-related intangible asset amortization. Third quarter GAAP operating expenses were $97.8 million and non-GAAP operating expenses were $66.5 million. The delta between GAAP and non-GAAP operating expenses were primarily due to stock-based compensation and performance-based equity accruals of $28.8 million combined and acquisition-related cost and other costs of $2.3 million.
With the strong growth in our business, coupled with continued spending discipline, we have delivered significant improvement in our GAAP and non-GAAP operating margin over the past 12 months. GAAP operating margin for Q3 2026 was 13.9%, and non-GAAP operating margin in Q3 was 29.5% of net revenue. GAAP and non-GAAP interest and other expense during the quarter was $2.1 million and $2 million. GAAP diluted EPS for Q3 2026 was $0.30 per share. Non-GAAP diluted EPS was $0.62 per share. In Q3, net cash flow used in operating activities was approximately $13.6 million. We exited Q3 of 2026 with approximately $109.9 million in cash equivalents, and restricted cash. This included a substantial prepayment for wafers supporting rising demand for our data center products, for which we have committed order backlog throughout 2027.
Our day sales outstanding in Q3 was approximately 31 days versus 28 days in the previous quarter. Our days of inventory was down in the quarter from 123 days to 111 days. Finally, today, we announced that we have amended our existing credit agreement to increase the amounts available under the revolving credit facility by $70 million to $200 million. With this facility, our total available liquidity is much improved, giving us additional flexibility to address further customer demand and other growth opportunities. This concludes the discussion for our Q3 financial results. With that, let's turn to our guidance for Q4 of 2026. We currently expect revenue in the fourth quarter of 2026 to be between $240 million and $260 million. Looking at Q4 by end market, we expect strong growth in infrastructure driven by data center optical interconnects.
We expect broadband and connectivity end markets to be down seasonally, while industrial multi-market end market is expected to be up. We expect fourth quarter GAAP gross margin to be approximately 58%-61%, and non-GAAP gross margin to be in the range of 59% and 62% of revenue. We expect Q4 2026 GAAP operating expenses to be in the range of $96 million- $101 million. We expect Q4 2026 non-GAAP operating expenses to be in the range of $65 million - $70 million. We expect both our Q4 GAAP and non-GAAP interest and other expense to be in the range of approximately $3.5 million- $4.3 million. We expect a $1.5 million tax benefit on a GAAP basis and non-GAAP tax provision of approximately $1.5 million. We expect our Q4 GAAP and non-GAAP diluted share count to be approximately 99.7 million each.
In summary, our quarterly performance highlights the continued strength of our optical product portfolio and the accelerating momentum across several growth drivers within our infrastructure business. The progress and innovation we have achieved in this area have been transformative, and we believe we remain in the early innings of a multi-year growth cycle marked by expanding revenue and increasing operating leverage. We are excited about the opportunities ahead and remain confident in our ability to deliver sustainable long-term value for shareholders. With that, I would like to open up the call for questions. Operator?
Thank you. We will now be conducting a question and answer session. If you would 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 to remove yourself from the queue. For participants using speaker equipment, it may be necessary to pick up the handset before pressing the star keys. One moment, please, while we pull for questions. Our first question comes from the line of Tore Svanberg with Stifel. Please proceed with your question.
Yes. Thank you. Kishore, Steve, congrats on the strong results. My first question is on the PAM4 DSP side. You upped the number there for calendar 2026. Based on my rough math, I think that's now, it'd be running at about $100 million a quarter run rate. As we think about 2027, is $400 million-plus a good number? How should we think about the mix next year between 800G and 1.6T? Thank you.
Yeah. Hey, Tore. This is Steve. I don't think we're planning to give guidance in the out year today, but certainly I do believe you've seen us with some very strong growth coming from our optical DSP business. I think we're actually doing a really great job on the market share standpoint. I think as you look into 2027, you're starting to see the momentum pick up, and I would expect to see us outgrow the market in 2027.
Very good. Thank you for that. As far as customer diversification, I noticed you didn't have any 10% customers this quarter. I had a question specifically on your optical DSP business. How should we think about the composition there by amount of customers, module makers, geography? Any color you could share with us on how diversified that business is becoming real time. Thank you.
Thank you, Tore. I think when you go to the first order of diversification for us, it's really exciting that now we are transitioning from 800G, fully established as a growth vehicle and market share gains. We are in strong qual cycles on 1.6 Tb Rushmore products, along with not just only in optical products, but we are in a strong qual cycle on electrical products as well at the 1.6 Tb speeds. So that's the first layer of diversification, if you will. We expect in the near term, Rushmore to start picking up revenue in 2027. If you look to 2028 and 2029, it's going to be a massive growth driver for us, in addition to Keystone at 800G, still growing for us as well. So that's the first order of diversification. The second part is that our revenues are quite broad-based.
It's across all the major module makers. We have a growing set of module makers who are also engaged in 1.6 Tb beyond our 800G product lines. The same applies on the data centers as well. Our penetration of geographically in Asia and the U.S. is increasingly now bigger. The momentum on the design-in cycles is starting to shift towards 1.6 Tb. I think the U.S. is in a more advanced phase of 1.6 Tb deployments. We naturally expect the U.S. to become an increasingly strong driver or value proposition in the optical module space as well.
Right. I'll go back in line. Thank you.
Thank you. Our next question comes from the line of Ananda Baruah with Loop Capital Markets. Please proceed with your question.
Hey, thanks. Thanks, guys, for taking the question, and congrats on the continued good progress. It's cool to see. I guess two, if I could, Kishore, just sort of sticking there on the hyperscaler diversification, and maybe just partly clarification as well. You said in the past 1.6T production ships is really a mid 2027 dynamic. How much of the business between now and then in 800G, if any, is from U.S.-based hyperscalers? If just even anecdotal, and I have a quick follow-up. Thanks.
Ananda, we have never broken down that revenue in that sort of. We never do that. However, it's pretty broad-based. Suffice it to say, as 1.6 Tb revenues start ramping, with initial revenues actually in early 2027 and a stronger ramp in the second half, the U.S. data centers will start becoming very important both on a static snapshot basis, and also from a trajectory basis. Because the U.S. is the one that's going to adopt 1.6 Tb a much earlier cycle than their Chinese counterparts, right? I think that what we take extreme satisfaction and joy in is that 1.6 Tb traction is quite across the board substantially, and the U.S. data centers are just beginning to start ramping 1.6 Tb outside of an NVIDIA and a Google in that order, right?
Our supply diversity across the various speed nodes, across 800G and 1.6 Tb on the supply lines, including the fabrication process, really puts us in a unique position where within our company, we're not competing across product lines for the same technology node. In a sense, we should be able to win this race in terms of becoming a major provider in 1.6T.
That's good context. I appreciate it. That's helpful. The quick follow-up is, you mentioned NPO, CPO. Is there a useful way for us to think about your SerDes participation in NPO, CPO? If even just from a paradigm approach, how involved do you expect to be? In what ways do you expect to be involved? The question's been coming up, and it'll be relevant 12 months from now. Thanks.
Okay. If you look forward, you see a future where all the alphabet POs will be in coexistence with the PAM4 SerDes-based optical pluggables, right? We have seen that the shoreline density and power consumption scenarios will drive a certain volume of the speed connections into the optical-based, what I call incarnations, right? Be it an NPO or an LRO, right? If you look at the LRO, our DSP naturally lends itself into a full-blown participation. We believe that in the U.S., LRO is a real option at the 200G per lane, and I believe it will be a major option in the 400G per lane as well. That is my particular view. If you look at CPO has gotten delayed because the challenge of the optics in a hybridized co-package configuration is a very huge problem.
Therefore, I think NPO supplants what we were thinking about as CPO. NPO, the advantages of maintenance, modularity, diversity of suppliers for the product, as against being locked to the ASIC players on the switch side or the GPU side. I think it is a natural place where the ecosystem goes. I think NPO will be big. How big? I cannot speak, but I would say on a snapshot basis in 2030, you should expect 60%-70% pluggable, 20% NPO, and 10% all various forms of it. That is my personal view, not a market view. But I think we will be a major player in NPO and LROs, which will be the natural ideally suited for low power applications versus an LPO in the future as the speeds increase. Okay.
That is great context. Thank you.
Yep.
Thank you. Our next question comes from the line of Cody Acree with StoneX Financial. You may proceed with your question.
Hey, guys. Congrats on the progress. It has been a great performance. Kishore, maybe can you talk about your visibility into 2027? If you are not going to talk yet about the scale of your optical ramp, can you maybe just talk about your bookings or your lead time visibility for the next few quarters?
Steve, you want to take a shot at it?
Sure. Yeah, Cody. Look, we have great visibility, as I am sure you have heard from others in the industry. We are booking products throughout 2027 into 2028. Lead times for optical product are 26-28 weeks, but customers are certainly coming in and placing orders out much further than that, just given they want a secure supply. You have seen a lot of our upsides that we have delivered. I think you will continue to see more of that growth in 2027.
Steve, maybe just continue with you. Can you just bridge your next gross margin thoughts between mix pricing, manufacturing cost, and product transition over the next couple quarters?
Yeah, sure. So gross margin, as you know, we have been making some nice progress, moved up from 58%. We delivered on 60% this quarter. Our guidance is 60.5%. So I think we are really seeing some nice progress despite some of the cost increases that we are seeing across our entire ecosystem here, I guess. Some of that we have been able to pass along to the customer. And I think our cost structure is actually just very good. So as the mix continues toward more infrastructure products, I think you will see our gross margin continue to trend up.
Excellent. Thank you, guys. Congrats.
Thanks, Cody.
Thank you. Our next question comes from the line of Christopher Rolland with Susquehanna. Please proceed with your question.
Hey, guys. Thank you for the question. Regarding DSP, last cycle, maybe the 400, 800 cycle, DSP was much more widely available. Transceivers had shorter lead times, and people could wait for Land, Power, Shell to be built before making what was a last-minute order on optical. Do you guys view that as different now with longer lead times? Does this perhaps create an effect where people are ordering ahead more significantly, perhaps even over-ordering? They can't get their AI data center up without these transceivers. Does this become perhaps the golden screw that people are willing to purchase more of than they might need just for the initial deployment?
Chris, I don't think so at all. Not at all, actually. You have to keep this in mind that even on the supply chain, nobody's signing real long-term agreements. You have strict discipline on lead time. There's a lot of manufacturing shortage. It is really naturally organizing the entire supply chain into very disciplined on a, "You'll only get what you need now" sort of behavior. I don't think there's any double ordering. Then you get back to our DSP world. We are the only pure play DSP provider in the optical pluggable. Wafer capacities are allocated by companies, by the major foundry. If you are in 5 nm, for example, you're welcome to choose how you distribute your silicon between switch pluggables, GPUs, TPUs, and so on, so forth, right?
Every company gets to prioritize what is in their best value interest. I would say that that is not the case at all, number one. Number two is that even to place over-ordering, the data center guys are very disciplined about creating pure supply chains. What I mean by that is the optics, the DSP for a particular qualification at a data center is very unique so that they don't cross-corrupt the supply chain. I think it's golden. It's not a screw, but it's a bolt. There is a bolt there that is really fastening the cantilever bridge quite well here. That's for those in the San Francisco Bay Area. But yeah, it's looking pretty good.
Excellent. Maybe a follow-up there and a second question. I guess, first of all, obviously you guys have some unique four nanometer DSP capacity that others don't. Can you talk about how you see constraints in the optical market playing out? Is it DSP? Is it other parts, lasers, et cetera? If you could talk about your place there. Then secondly, DSP in the world of CPO. Some believe it's less meaningful. Would like your take, Kishore, as a technologist.
Okay. Chris, there is a lot of questions out there that you posed here to me. I will take the first one, which is basically related to supply. I think the optic supply is easing. We are really constrained by foundries on the DSP supply. The data center build-out is really accelerating. If you sit here and talk, people talked about TAM units for optical pluggables, no matter what flavors, is in the order of 120 million units. Now they talk about 2027, 2028, maybe 200 million units. I am not keeping count anymore, right? However, the fab capacity is not coming online. These are huge multi-year efforts. There is really a fab capacity shortage, I would say. The DSP supply is a pretty strong supply constraint.
The opportunity on the CPO stuff really is a scale-up side, which is a greenfield opportunity for us. I do believe the NPO is going to be the more bigger success driver than a CPO. In an NPO scenario too, as well, as you go to higher speed longer term, there would be a DSP required, just like an LRO configuration on the, what do you call, a half DSP. We can all agree now that the LPOs are really a very small fraction point technology, and they do not have legs for the future. Right? We have product portfolio that spans TIAs. We have drivers and also we have announced products along those various categories. I feel we are very well positioned whichever way the industry goes, and we will have a full portfolio.
Awesome. Thank you, Kishore.
Yes.
Thank you. Our next question comes from the line of Karl Ackerman with BNP Paribas. Please proceed with your question.
Hi, this is Sam Feldman for Karl Ackerman. First, based on your extended visibility into calendar 2028, can you provide any color on how we should think about the growth rate, the relative growth rate between 800G and the 1.6T? Should we expect 400G to grow through calendar 2027?
I will take that. This year, our optical growth is almost all 800 Gb, in the first half, as we have stated, and Kishore mentioned earlier, 1.6T starts in 2027, but it will have a much bigger growth year in 2028. What is the mix in 2028? I think it is substantially 1.6T. Maybe you will see 800 Gb kind of trailing off, but potentially it can sustain as well up until probably 2029. We see significant growth in 2027 as well as 2028 on both of those.
Got it. Thank you.
Thank you. Our next question comes from the line of Quinn Bolton with Needham & Company. Please proceed with your question.
Hey, guys. Congratulations on the results and strong DSP outlook. I guess, Steve, for you, it looks like the prepaid assets on the balance sheet increased by about $50 million in the September quarter. I assume that that's probably the large majority of that are your prepayments that you talked about. Given that it sounds like you're fairly well booked for calendar 2027 now in the DSP business, do you feel that the prepayments and the wafers you secured support that 2027 backlog? Do you still have more work to do in the fourth quarter in terms of prepayments and securing wafers to meet the demand you're seeing for calendar 2027?
Hey, Quinn. Yeah. We talked about this a little bit before, similar to others, the prepayments, mostly on the wafer side. There's lots of other things going on out there. On the balance sheet isn't just TSMC, there's other things on prepayments as well that we don't break out. I talked earlier about visibility in 2027. Yeah. Backlog, as you would imagine, is very good in 2027 and into 2028. Prepaid, look, I expect prepaids to continue to go up from here as our revenue projections continue to go up as well. I think that's part of the reason why we increased the revolver itself, just to make sure that we can capture all of that upside capacity that's coming from increased market share that we've gained.
Yeah. I think then a follow-up. Steve, I think at some of the investor conferences over the past few months, you've estimated your DSP share currently maybe in the 5%-7% range. Do you think you're at the high end of that or potentially above that by the end of 2026, just based on the strong backlog you're seeing and the increase in the DSP forecast this year?
Hey, Quinn, this is Kishore. I think it's very hard to estimate share. Thank you. I think it's very hard to estimate share given the accelerating demand on units as well. If I'm looking backward, then I think we are well above that number. If I'm looking forward, maybe we have made more progress beyond that share percent, but I don't know at what level we are. Can I say what we will look like two years from now? Sure. It should be in the teens for sure, right? I think that's a very backward-looking number. On a share percentage basis, on a backward-looking TAM basis, it should be larger, but on a forward-looking basis, very hard to estimate because the numbers are moving all around. Suffice to say, we are gaining share every day.
I think, in a 12 to 24 window, we could be neck and neck with one of our two competitors, right? That's the hope, that's the goal, and that's the momentum.
Excellent. Thank you, Kishore.
Thank you. Our next question comes from the line of Tim Savageaux with Northland Capital Markets. Please, you may proceed with your question.
Hey, good afternoon. I'll add my congrats on the results and the outlook. I wanted to go back to—
You 're welcome.
—to market growth, market share type discussion. Steve, you made a comment earlier in the call about outgrowing the market. I think we may have a baseline there. Marvell talked about the AI interconnect unit for them growing, call it, 65% on a CAGR through 2030. It is coincidentally what MaxLinear is growing overall in 2026. But as we look at the optical DSP business, is it fair to use something like that as a baseline? When you say you want to outgrow the market, just based on your run rate, it seems like we should be thinking closer to a double here than anything else for 2027. I just wanted to bounce that reasoning off you.
No, Tim, I feel very confident we are outgrowing the market, which I think is supportive of what you are asking. Yes.
We cannot speak for Marvell's numbers.
Okay. Well, I'll go on and ask this one anyway then, which is, yeah, I think your market share is 6% here. If you take those forecasts out to their conclusion, they're talking about, I don't know, a $15 billion optical DSP market in 2030. If you get into double digits here before that, you should have a billion-dollar business on your hand pretty quickly. I want to bounce that one off you too, and then that'll be it for me.
Tim, we can't comment on that, right?
Yeah. But the numbers you're talking about, look, there's a lot of growth here. Kishore commented earlier about the transceiver growth. People are talking 200 million units next year. These numbers make a lot of sense, as Kishore stated, it being up in the teens over the next couple of years, very achievable. I think we are doing a great job. I think you've seen that from us in 2026, but I would say it's just getting going. You're going to continue to see through that in 2027 and 2028.
Thanks very much.
Thank you. Our next question comes from the line of Joe Quatrochi with Wells Fargo. You may proceed with your question.
Hi, guys. This is Travis Poulin on for Joe. Thanks for taking my question. Steve, I just wanted to switch gears to broadband. You spoke of seeing some seasonal softness in Q4 2026. Just curious how we should think about this moving forward into the first half of 2027, into the second half of 2027, and just the overall broadband recovery in general. Thanks.
Yeah. Thanks, Travis. Yeah, we actually feel pretty good. We do see some seasonality in Q4, certainly, but as far as 2027 goes, just as we had talked about previously with the telco spending, but then also our market share gains on the PON side, we do expect to see growth in 2027, so feel very good about that.
Got it. Thank you. That's it for me.
Thank you. Our next question in queue is from the line of Tore Svanberg with Stifel. Please proceed with your question.
Yeah, thank you. Now that the basic questions are out of the way, I just had a few more specific follow-ups. Kishore, I think you said you expect 1.6T revenue already first half of next year. I think in the last quarter, I think you talked about maybe middle of the year. So what changed there? Is it the market that's accelerating earlier? Is it based on some new design wins? Any clarification there? By the way, does that include DSP and TIA, or is it just DSP?
Tore, obviously, it's been three months, and we did not know where we would be, but I think there's an initial design win that will start shipping in the first half. The exact amount of quantity is not clear, but it's meaningful in the sense that it sets up the second half very nicely. Also, second part also is correct what you asked. They are accelerating design qual momentum going on. Somewhat we are bottlenecked by our own ability to support multiple quals simultaneously, and we are all going through resource bottlenecks from that angle. So that narrative is also about also accelerating on the qual windows across the module space into the data center cycles. Right? I think that's what gives me a little more. Then we also have commitments both for DSP and TIA in these design wins.
So it's not just our DSP alone. Obviously, we live in a world where we want to attach our own TIA to our own DSP for selfish reasons beyond just a great performance advantage and cost saving for our own customers in terms of power efficiency and the total BOM efficiency, right? I think all the three questions you asked are a strong affirmative response.
Very good. Last one is on pricing or content. We are hearing as you go from 800G to 1.6T that maybe prices could be 2x. You are obviously going to be shipping more than the DSP with the TIA. In your case, I guess, you could potentially have more than 2x as the market goes from 800G to 1.6?
You are absolutely right. If you just take this proverbial 2x, historically it never stuck when you change speeds, right? This time it is sticking, right? The ASP on the DSP is more or less doubling, and then we have TIA that we did not add before. All in all, we will be growing more than a 2x on the ASP number. The TIA is not just a TIA, right? It has got smarts that really has what I call a trajectory guide to our NPO strategy and our CPO strategy and our LPO strategy and LRO strategy. So it is an all-in-one deal in the MaxLinear TIA world.
Great color. Thank you.
Yep.
Thank you. Our last question comes from the line of Cody Acree with StoneX Financial. Please proceed with your question.
Hey, guys, just a couple follow-ups as well. Maybe, Kishore, can we go back to that comment you made about constrained ability to support more than one qual? Is this just wafers out of Samsung that you are talking about, or is there What is the ability to address that so that you can get the quals lined up a little faster?
Oh, so, the quals has got nothing to do with wafer supply, right? You have to line up, let us say you have 10 module makers, and that is not unrealistic. All of the 10 want to go simultaneously get their modules ready to go to the data center qual. We will have to pick and choose, right? Because at the end point, multiple module makers are targeting the same data centers as well. That constrains us in terms of how we prioritize our own internal resources to get qual ready. So, that was the context I talked about, right? These are pretty complicated, even though people simplify it and call it a pluggable. It sounds so trivial, but this is one of the most complex technologies that chip people have ever developed over the last 20 - 30 years.
You ought to think about this not just in terms of pluggable alone, you also have to think about interoperability with the switch, the other two vendors of silicon and pre-existing 800G silicon as well. Not just 1.6 Tb. It is pretty complicated. We are constrained in how many we can activate at the same time. You of course, sequence and prioritize them. That is the constraint I was referring to.
Got you. Thank you for that clarification.
Sure.
Lastly.
Yep
with Washington, can you talk about your expected attach rates to Rushmore and the opportunity for standalone as you get into 2027 and maybe looking into 2028? Then maybe the same thing with your AECs. Can you talk about the mix of onboard versus cables for Annapurna?
We expect the attach rate to be 100% at least and more in a year and a half from now. That's the number one answer. The next question you had was related to Could you repeat that for me, please? I just forgot.
We expect the attach rate to be 100% at least and more in a year and a half from now, right? That is the number one answer. The next question you had was related to, could you repeat that for me, please? I just forgot.
Annapurna.
Just Annapurna, yeah.
Annapurna, let's see.
Cables.
Yeah. It's an active electrical cable, right? There's one large leader which everybody knows is Credo. They're 93% or maybe 99% of the entire AEC cable market. But I think the market is diversifying now because the problem is getting a lot more complicated. There are going to be multiple AEC vendors, and our solution will be a pure silicon play to selling it to a cable maker or somebody who makes the, what I call the paddle card for the AEC. Our revenues for the AEC will not be as large as selling a whole cable, but it will correspond to what an AEC market would dictate in terms of silicon price inside it. I would think that it'd be a similar pricing as our PAM4 DSP for optical.
We expect not to get a big share, let's assume, but we are planning around one or two big data centers and then a share of those guys through intermediaries. I think we should be able to get to 20% to 30% in the 1.6 Tb cycle somewhere in the next couple of years. But we won't expand it to multiple data centers, right? It'll be only one or two data centers in the U.S.
Excellent. Thanks for the help, guys.
Thank you.
Thank you. We have reached the end of the question and answer session. Therefore, I would like to turn the call back over to Leslie Green for closing remarks.
Thank you, Shamali, and thank you all for joining. This quarter, we will be presenting at a number of financial conferences and virtual events. Details will be posted on our investor relations page. Thank you all for joining today, and we look forward to speaking with you again soon.
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