Good evening, everyone. Welcome to day one of Citi Global Technology Conference. My name is Atif Malik. I cover U.S. semiconductors, semiconductor equipment, and communication equipment stocks here at Citi. It's my pleasure to welcome Matt Johnson, President and CEO, and John Hollister, CFO of Silicon Labs. Silicon Labs is a pure-play leader in IoT devices, and they have software, hardware, wireless, and security integrated platform across multiple end markets, Industrial and Commercial , Home and Life . Silicon Labs recently late August hosted their development conference, and I'm going to start off asking Matt, you know, what he previewed on their next generation Series 3 platform, and also what he heard from some of the major customers like Amazon and Google Nest at the development forum. Matt?
Sure. Good morning, everyone, and, yeah, I mean, maybe to give some context for anyone who's not familiar, our Works With is a developer conference that we host every year over the last four years. And it's usually has a high virtual component, but sometimes there's also an in-person component as well. And we just had our Works With Conference over the last few days, and we're really excited about it for a couple of reasons. One is record attendance, over 10,000 attendees, which is meaningful in our space and industry, because it's really only place that our industry has to come together for, you know, the IoT space. And it's not only Silicon Labs.
Obviously, all of our partners are there as well across the industry, whether it's Amazon, Google, and Samsung, and many others. So the big deal at that conference was, you know, we had multiple announcements, but the biggest one was we gave the industry a sneak peek or preview of our next generation platform. And, you know, a few reasons why that's so relevant, this next generation platform, called Series three, is actually our fifth generation of wireless platform, really purpose-built for the IoT. And, you know, we're currently on our Series 2 platform, which has honestly, you know, six, seven, eight years of growth ahead of it. We're still right in the, you know, power cycle of that platform, but we also don't ever wanna get complacent or too comfortable.
We wanna keep pushing the boundary for ourselves in the industry and give people that visibility and runway into what's going to be available down the road. So that was what the announcement with Series 3 was. And, you know, some of the highlights of Series 3, why it's such a big deal for our industry, you know, one is we're really pushing the boundaries on all the things we've always excelled at as a company. We've always led the industry in terms of power consumption, security, wireless performance across tons of wireless protocols and ecosystems, and Series 3 is gonna take that to the next level. So longer battery life than anything that's been announced or existing in the industry, next level of security, which we already have the leading security platform in the industry.
We're gonna take that to the next click, and even more wireless integration across multiple radios, multiple protocols, multiple bands. So that's the first piece of the announcement, is really taking our historical strengths to the next level. The second is compute. We're taking compute from. You know, take two, two elements, general compute, think of Arm, compute for our customers' applications. We're doing a 20+ x increase in performance, which is very relevant because that allows a lot of our customers to integrate the standalone microcontrollers in their applications. And we're taking the machine learning or AI performance up significantly to over 100x our previous generation.
So we already had the only integrated AI in a wireless SoC in the industry for what we do, and we just gave our customers a roadmap to 100x more performance and compute down the road. So that was a big announcement for our customer base. And then the third piece is scalability. We've really built this thing to scale at a much higher level for the industry. One of the biggest challenges in the IoT is interoperability, scalability for all these different protocols, ecosystems, products. And, you know, some of our customers have over 200 different IoT developments in-house. So what we've done with Series 3 is a few things.
We've given them the ability to scale much faster in software, scale much faster, in terms of their development cycle time, and we've given them a roadmap where if they're developing on Series 2, which is the industry's leading platform, it's also gonna be portable to Series 3. So if you're a developer, this is the best possible thing that could happen, that the platform you're already relying on also gives you a roadmap to the next-gen platform. You can stay there, you have portability, you have scalability, and obviously, we addressed a lot of the industry's supply concerns by giving them a roadmap to multiple foundries, multiple geos, which is also important.
So big picture, if you step back, we have the platform that's already leading the industry, and we just gave them a roadmap to something that will allow even faster scaling and deployment of IoT devices. So it, it was a big moment for us and the industry over the last few days, and pretty excited.
Great. Matt, just staying on the part, and Series 3, where are we in terms of adoption of Series 2?
Sure.
I mean, how penetrated you are on, on that?
Yeah, that's a great point. I'd say we're still relatively early. Just to frame it for everybody, we started ramping Series 2, let's call it production shipments, over the last few years. So an easy way to think about it, our company doubled its revenue over the last couple of years. That was primarily driven by Series 2. Our design win funnel, I'm sorry, opportunity funnel is around $18 billion, over $18 billion now. That growth is all driven by Series 2. Our design wins, which are growing at a faster pace than our revenue over the last few years, that's being driven by Series 2. So it's really driving our you know, current growth, and it will drive our growth for the next few years to come.
You know, we still have many more products coming out on Series 2. We'll be developing software on top of Series 2 for the next decade, easily. These things don't go away, they last a long time. The best way to think of it is Series 2 or Series 3 won't replace Series 2, it will complement it and build on top of it. It's not an instead of, it's in addition to.
What is the availability for Series 3? Timeline.
Series 3, so we're already engaged with multiple customers as 'cause we've been working on Series 3 for a while. But in terms of, you know, early access, as general samples, that type of thing, that's early next year.
Okay. And then the next one on the top line growth and, you know, John, if you do jump in. You guys have seen your revenue double from 2020 to 2022 last year, 25% year-over-year growth and outperforming the industry. This year, if we look at consensus numbers, somewhere down 11%-12%. Obviously, macro is a big piece of that, you're dragging some of your end markets. So how should we think about your outperformance? How much what it- what was it the market driven? How much of it is was the share gains because of the Series 2 products that you've talked about? How much of it is was maybe the ASPs going up?
Yeah. So, you know, particularly looking at 2021 and 2022, we had significant share gain activity, you know, and it's really on the back of the Series 2 early, early progress and success that we had. Also the supply chain situation, where Silicon Labs really shone in that whole last couple of years of having more available supply, being able to address the middle part of the market, frankly, better than some of our competitors, and that's very durable business. Those were trends that will stick with us for a long time. But it's really on the back of the strength of the Series 2 products themselves. If you just think about the BG22, our new Bluetooth device, that has done really well in the market, and we have definitely gained significant share from that.
Yeah, in 2022, there was some ASP lift because of, you know, supply chain cost inflation, but really, share gain has been a, a very material component of our growth success the last couple of years.
Got it. And John, looking into next year, I know, I'm not asking for guidance.
Sure.
But again, Street is modeling you guys up 78% year-over-year. And are we just looking at things like PMI indicators and stuff like that to see a rebound in the overall market, and then layer your outperformance based on your product cycle?
Yeah, simply put, yes. You know, we are in a down cycle right now, you know, no question about it. It will recover. It's just a question of when and how strongly, but we feel very good about the company's longer term growth horizon. We maintain our 20% CAGR goal, and we think that's very achievable for the company over a mid and long-term basis. And the additional thing I want to point out is, while the revenue is behind this year, the design wins are on track. We, year to date, are on our annual plan for design win momentum. That's a really good sign for longer term growth on the company, and it also bodes well that the IoT customer base is not pulling back in terms of investing in their own new product development.
Yeah, I think that that's really important, John, 'cause, you know, none of the fundamentals have changed, right? That, the need for, you know, wireless connectivity, you know, and, you know, connecting devices at the edge, that's only accelerated over the last few years, and that outlook, you know, over the next decade couldn't be better. And our position and, you know, ability to capture that has only improved over the last few years with Series 2, the strength of that platform, and now Series 3. So, you know, we're excited, you know, obviously not excited about the current market environment, but very excited about the next few years on the other side of that, given that positioning and that market outlook.
Great. And John, just staying on the cycle, if you can remind us what your lead times were pre-COVID, where the lead times are now, and also the backlog, kind of coming down, and-
Sure
... if you're seeing any signs of stability.
You bet. So, you know, pre-pandemic, we were operating with fairly tight lead times. You can think of it as seven to eight weeks. So, you know, we would enter a quarter, roughly half booked for the quarter, with turns to go to account for the other half. In the height of the pandemic and the supply crunch, those extended way out, and we had a lot of backlog accumulate. We're now getting more back to normal, but with also some high variability in the lead time experience. You know, some customers are continuing to put fairly long lead times on their orders. Other customers are really short, you know, well within a month of lead time. So it's kind of a mixed bag.
That does affect our visibility to a certain extent, but, you know, over time, I think we're looking at more like 12-14 weeks as a more normalized level. I don't think we're going back to the pre-pandemic lead time experience as this thing settles out.
And then, Matt, you talked about your long-term goals, 15%+ compound annual growth rate for industrial and commercial... 12% for home and life. Can you talk about, you know, which end markets within these segments, whether it's smart lighting, are you guys most excited about?
In the overall-
In the overall IoT-
Yeah, sure.
Because IoT is such a broad-
It sure is.
-scheme.
Yeah.
Yeah.
Everyone defines IoT differently, I think.
Right
... depending on. Yeah, sure. So, if you step back, you know, maybe an easy way to do it is break it out by, you know, the way we are structured and look at it internally. So we have our home and life business, which home typically covers a lot of the, you know, spaces and applications I think people are more familiar with, whether it's lighting, or panels, or smart speakers, or security systems, or any of the devices that you might see in your day-to-day. Life is more indexed to something you might wear, healthcare, your quality, your lifestyle, medical. So that space, you know, we've seen really kind of accelerate over the last few years, and everything indicates that has, you know, really strong secular growth capability over the next decade.
You know, easy ways to think about it are, you know, during the pandemic, telehealth took off, and that seems to be durable, and the need to connect devices is part of that, whether it's a... You know, think about it, a blood pressure cuff, a pulse oximeter, a thermometer, or just, you know, wearables for health, type of tracking your day-to-day, preventive. You know, all these, you know, monitoring, blood glucose, all of these are taking off as long-term trends. You know, we've been focused on that space for a long time. So that's an area where, you know, we see long-term durable growth in addition to the traditional spaces in home and life.
And then if you go over to the other side of the house with Industrial Commercial , you know, I think that space has really kind of hit its stride over the last few years. And what I mean by that is the financials are just strong. You know, our customers are seeing returns, you know, under 12 months for a lot of different applications and deployments, which is a real key or trigger for them to deploy and accelerate adoption. And the software maturity, technology maturity has also hit its stride. So, you know, easy examples would be, you know, metering. We see that across the globe, whether it's, you know, gas, water, electric, and with very fast returns for those applications. We talk about, you know, shelf labels or digital labels.
Again, very fast returns for the commercial and retail environment, so deployment's accelerating. And it just goes on and on across each of those spaces where, you know, in a factory, just wire replacement, just awesome opportunity to simplify the cost structure, improve the upgradeability. You know, you could put that under the Industry 4.0 bucket. But those are a few examples that, you know, really have strong long-term growth and deployment outside of the traditional understanding of what the IoT is. Maybe as a quick answer.
Great. And I still get asked about your secret sauce versus some of your bigger competitors, whether it's TI or ADI, or, STMicro. You know, I would say, you know, maybe some of it is software, but can you just talk about what drives your kind of penetration in the IoT market, and what keeps the gross margin so high, you know-
Sure
... and the barriers to entry?
Yeah, sure. I mean, quick answer is, is depth, breadth, and focus, right? There's no other company in the world that has, you know, the, the breadth of what we do across multiple generations, the, you know, depth in terms of what we can do in terms of- you know, we can take a watch battery and make it run for 10 years, you know, over a mile for our customers, right? With, you know, high security, interoperability, and the focus that this is all that we do. And, you know, if you take that to the next level, most companies, you know, are trying to do what they do and push that into our space. What we do is custom purpose-built for this space, which is really important.
We're not trying to, you know, just say, "Oh, it's an adjacent," you know, SAM expander. It doesn't work that way, and, and that's, you know, one of the reasons we're successful. Multiple generations of focus, really important. We have domain expertise, understanding, relationships, trust. And, you know, just look at the supply chain crisis over the last couple of years. As a company, we were able to double our business during that crisis, and we saw a lot of our competitors, you know, stumble, where they either focused on other areas, they weren't able to prioritize it, they weren't able to, to execute. And the last piece that is worth mentioning, wireless and RF is hard. It's not something that you just say, "Hey, I've decided strategically, that's cool.
I'm gonna go do that. Trust me, you look at any company that says they want to get into it, they have to acquire their way in. You don't home grow your way in. And once you acquire, it takes years to integrate that. I mean, simply said, it's a lot easier to integrate digital into RF than integrate RF into digital. And we see a lot of our competition struggle with that on a day-to-day basis. So, you know, simply said, that's why we've been able to grow faster than our competition. And if anything, you know, given our design win momentum, we see the ability to grow even faster in the coming years because of the execution, the platform, and the confluence of all those things.
You know, definitely a lot of competition out there, but because of that, we feel extremely good about how we're positioned.
Yeah, Atif, I just wanna quickly add, you know, on the depth concept, we have been doing this for a long time. We have been 15 years, really, in this market.
Five generations now.
Yeah.
Mm-hmm. Great.
Yeah.
John, just going back to the cycle question that keeps on coming up is, you know, China, your sales. I think your comments for China was maybe 10% of first half sales. Can you just talk about, you know, are you seeing the weakness, at least in the near term, across all regions, or China the main driver?
Yeah. China has been a key driver of market weakness, and unfortunately, we just haven't seen signs of China taking off or really recovering in a robust way. We, you know, we have seen this cycle really globally at this point, you know, across business units, across the various end markets that we serve. We're navigating it, you know, we're looking at our own internal spending, et cetera. But unfortunately, China's situation has been quite weak for about a year now.
All right. Another one on the competition. Are you seeing any kind of domestic, the Chinese, fabless companies coming up in this market?
I mean, certainly there are some others, and they have had some degree of success there. But back to the design win comment, what is interesting is, while our China revenue is really at an all-time low, at 10% of our global revenue, the China design win mix is stronger than that.
Yeah.
It's around 20%.
Yeah.
And that is what one would typically think of as a normal level for design win in China. And that really tells us that, number one, China customers are still designing new products, and they are continuing to opt for best-of-breed technologies. But for sure, you know, over time, in the mid- and long term, the domestic threat will persist and likely accelerate over time.
You know, we don't want to sugarcoat it, right? I mean, there's literally hundreds of companies locally in China trying to do what we do. You know, we've always only been selected if we have something that there's no other viable alternative, right? I mean, almost everything we do is sole sourced by a long shot. That dynamic hasn't changed. We expect it to continue to, you know, get even more challenging over time. But very few of those companies have, you know, achieved whatever you want to call it, escape velocity. The one thing that has changed is their headwinds outside of China have increased.
Yeah.
That's new. There was always a headwind in China, but outside of China now, we see so many companies who don't want Chinese silicon, especially big brand companies. So we're seeing, you know, and it's not even, "Hey, in our next design cycle, we want to remove it," it's they want to remove it ahead of the natural design cycle. So that's new. We haven't had that, as much, in the last decade, so it'll be interesting to see how that plays out moving forward.
Great. And let me pause here and see if there are any questions in the audience. If you have a question, you can raise your hand, and we'll pass the microphone to you. Yes?
It's a follow-up question for John. If lead times pre-COVID were seven, eight, but they're only going to recede back to 12-14, arithmetically, that would suggest that every quarter is basically based on the backlog you had entering. I'm sure you have turns or book and ship business in the quarter, but how does that change the management if you look at how you run the company post-COVID versus how you were doing it before? How does it change your visibility, and what are the implications for variability in your business post-recovery? Thanks.
Yeah. Thanks, Chip. It's not... I wouldn't say it would meaningfully change how we operate. You know, in theory, this should give us better visibility into customer order patterns. But, you know, even within these average-type comments, there's a lot of mix, and customers do not uniformly conform to quoted lead times. So even with our 12-14, if that's where we land, you'll continue to see, you know, aberrations longer or shorter over time. But, you know, in theory, it should improve visibility.
Yeah, 100%. And honestly, there's just not much incentive to have the shorter lead times. I mean, it's, it's an easy way to summarize it, right? You have less visibility. The natural cycle to develop the parts is much longer, or manufacturing them much longer. So, you know, it, it will help net net, but it, it won't be transformational.
Yeah. So this, this will put us more in line with market-
Yeah
... is the other way to think about that, with competitors.
Do you think your book and ship business over time in recovery still stays well, well below the 50% that it might have been pre-COVID?
Yeah, we'll have to see how that shakes out. One would logically expect that to be the case. The magnitude of it-
Yeah
... we'll have to see. Whether it's, you know, 10 or 20 points less, we'll have to see how that shakes out. The question was whether the turns will be less than were the case pre-COVID.
It also depends on the end markets in terms of demand, how strong the demand cycle is for, you know, overall macro. And I also think, you know, where people's heads are at on supply. You know, that was a massive topic for the industry that's kind of gone quiet. It hasn't gone away. So I think, you know, we'll see, as you know, the environment right now is not awesome, it's going to change, demand's going to be strong, and supply will be back in people's minds. So I think, you know, there'll be more... People will lean in on their ordering patterns more than they had historically as a result.
Questions? Okay. John, in terms of your gross margins, you have best-in-class premium gross margins versus some of your peers, and you have the same expectations continuing for longer term, but you have mentioned a modest gross margin erosion.
Mm
... on the last earnings call. Could you elaborate on that, and when will it normalize?
You bet. So, you know, we do deliver premium gross margin to the IoT space. If you look at our pure-play competitors or the embedded IoT operations in some of our larger competitors. As we see larger customers ramp, as we see more mix in our revenue of open standards-based technologies like Bluetooth and Wi-Fi, we do expect some modest erosion in the gross margin performance over time. We don't think it'll be aggressive. We think that'll be modest in terms of that trajectory. And if you look at our model, you know, that would call for margins in the mid-50s% to upper 50s%. That's the range. We're at the upper end of that range. We may see that trajectory moderate to more of the midpoint or lower end of that range.
But an important point about that is the trade with that is superior top-line growth and ramping EBIT margins. That's really the model, that's the play. We, we will accept some modest erosion in gross, gross margin for top-line growth and for ramping our EBIT margin over time, and the proof in that has been the last few years. This year is, is a tough time. But if you look at the progression from the company as a pure-play company from 2020 to 2022, we ramped EBIT margins even more than we expected, and that is a trend that we expect over time to continue to, to take place.
100%, and there's nothing in there that changes that. That stands in position that our gross margins will be at a premium relative to our competition. We don't see anything changing that dynamic. Just as we go from, you know, our goal to get from, you know, $1 billion- $2 billion- $3 billion over time, long term, we expect that, you know, gross margin will come closer to our original target. But we'll always be at a premium, and if the industry drives higher gross margins, we'll be at the top of that.
I know you didn't ask this, Atif, but and, and just continue to work down the P&L. As we ramp EBIT margins, we expect even greater leverage on EPS, given the capital deployment progress that we've made. We've returned over $2 billion to our shareholders and lowered our share count to an all-time low. Our, our share count today is roughly where it was right before the company went public in 2000. That's a fairly dramatic change in our share count.
Yeah, that's where I was gonna go next. John, in terms of capital allocation, I feel like you guys were, you know, fairly acquisitive, maybe, before you divested industrial and auto business to Skyworks.
Mm.
I think more recently, you guys are less acquisitive and returning more cash to shareholders in terms of buybacks. So could you just walk us through where we are-
Yeah
... in terms of using that $2 billion buyback, and then, kind of gunpowder is left?
For sure. You know, first point is, we remain very interested in strategic M&A that can further our progress, particularly in the Wi-Fi and Bluetooth space, areas where we are already competing. If there are opportunities to double down, accelerate, gain scale faster, et cetera, we're very, very interested and open to that. You know, capital return has always been part of our capital deployment strategy, and we had returned a fair amount of capital through share repurchases over the last, you know, decade, 15 years or so, before the divestiture transaction. The divestiture allowed us a very large amount of capital to accelerate that and really move that needle in an unusual and really meaningful way. So we took advantage of that opportunity, and, we're able to, return over $2 billion. That's really, largely complete now.
Not to say that we are not going to continue share repurchases, we will, but the unusual amount of capital that was on the balance sheet has been really deployed at this point.
Well, it's worth mentioning, 'cause I'm not sure how well this is understood or how broadly known. I mean, the, you know, as John said, we've been in this space for well over 15 years now. But, you know, the last decade was really about acquiring. You know, we acquired a company almost every year, and that was really about acquiring the requisite technologies to do what we do. And you could think of that, you know, simplistically as, as kind of SAM expansion. Now, we're in a position where we have the requisite technologies and capabilities, where there's not something that we need. You know, there's, you know, incredible opportunity in the markets we're in and the ones we're serving, so we want to go and maximize that gain as much share as we can.
So, you know, from an M&A perspective, we're certainly open to it, but we'd be looking for things to accelerate within our SAM, not expand our SAM. And that's a smaller list, and that's where we're at.
Right.
John, in terms of your distribution, can you remind us how much you direct and how much you use the distribution channels? And if you're thinking of you doing something different, given the supply chain disruption from COVID in the future.
Sure. So we run about 80% of the business through distribution. Within that, there's a mix. You know, you've got some business that's more fulfillment-oriented and some that's true demand generated by the distribution partners. Our distribution partners are very tight with us. That's long-time relationships. We conduct training with their FAE teams. It's really a force multiplier in the market, strong relationships going back decades, and they're a very important part of our business. I also wanna mention that we have clear visibility into what's going on in the distribution channel. We get weekly reports on point of sale as well as inventory levels, so it's very much a partnership in the go-to-market with our distribution partners, and we don't really expect that to change.
Yep.
Hey.
Let's see. Your design win funnel's about $18 billion. Two or three years ago, it was about $12 billion-$13 billion. Do you think that funnel will continue to grow at that rate? And within that funnel, what's the kind of mix between tier one customers and-
Sure... You bet. The question is on the opportunity pipeline and whether that can continue to have strong growth looking ahead, and what's the mix of that? Short answer is yes, we do see that continuing to grow, and we measure that on the basis of lifetime revenue. So $18 billion is for the full life of the opportunities that we are surfacing. It's roughly split between the two business units. We see a lot of great traction on the industrial and commercial side. Matt was mentioning that, given the ROI that's activated by the adoption of wireless sensor networks. We see a ton of new design activity in the home and life side as well. Looking at life in particular, we have made a major push into the medical space, and we're starting to see the fruits of that now.
We'll see that business is already ramping today, and it will be ramping over time here even more as some of those designs come to full production.
Yeah. I mean, very, very equal across the end segments. Maybe a bias towards, you know, the growth over those years is driven by Series 2, as I said. You know, really strong growth in their Wi-Fi and Bluetooth. We said a few years ago we were gonna go accelerate Bluetooth. It's exactly what we've done. Far from done. And now we've said we're gonna do the same in Wi-Fi. The funnel's there, design win momentum's there, we're gonna do the same thing. So you know, if you wanted to tease out some trends in there, definitely in Series 2, equal across the BUs, you know, increasing BUs, Wi-Fi and Bluetooth, as you'd expect. And we have to start incentivizing that funnel thing, 'cause, you know, that, that's just all natural, organic funnel growth, that's in there.
It will continue to grow, but we're gonna have to start, you know, focusing on it more, I think-
Yeah
... 'cause what we really focus on is design wins.
Right.
Right? The funnel just naturally grows on its own. Then it's convert as much of that as we can to design wins. We might wanna start, you know, increasing the focus on the other side because we talk about it so much, so we'll have to figure that out.
In terms of that $12 billion-$13 billion funnel starting to get a few years ago-
Right
I think in the call, you said it was kind of Q3, Q4. When did that one start to see?
So it's rolling. You know, the question is, how soon-
Right
... does the opportunity pipeline manifest in revenue? You know, things roll in and roll out. It just builds over time. But you know, the reality is, there is ramping business inside our revenue base today, and that will continue to grow over time here.
Questions?
Matt, your comment that Series 3 has 20x more compute-
Mm-hmm
... kind of caught my attention, and I, I feel like you guys have been a bit, further along in terms of, in introducing ML, AI and in-
Yeah
... on the edge through your microcontrollers and devices. And there's a big kind of debate going on at what pace are some of these, maybe not large language models, but maybe the mini models,
Yeah
... proliferate on the edge, away from cloud. Can you just talk about what you're seeing in the market in terms of, AI, ML on the edge?
Sure. So our current generation Series 2 does support, not, you know, large language model or generative AI, it supports machine learning on the edge. So what we mean when we say that, we have a dedicated compute and accelerators built in to process machine learning inference way more efficiently than you could with a general purpose core. That's the intent. Because when you're running on a battery, if you're not running that efficiently, your battery will die very quickly. You won't be able to use it for useful things. And Series 3 will take that to the next level. To answer your question, industry is still pretty early phase. You know, you go through the cycles of, you know, hype and then valley of despair and all that.
I think right now, what we have is the foundation for our industry to start taking advantage of machine learning at the edge. And it's already starting to happen, but it's still relatively early days in that journey. And the easiest way I can give you a comparison is if you went back five or six years ago, we were putting levels of security on our products that people didn't understand why we were doing it. And it's because we wanted that foundation out there and capability, and now we win a ton of business because of the security capabilities that we've put in. We've led almost every standard and measure that the industry has on security; we've been the first. And that served us incredibly well now because it's becoming more mainstream. Machine learning at the edge is gonna be the same thing.
We're way ahead of what the industry needs today, but we're putting that foundation out there, and it will continue to accelerate. And I think some of the biggest challenges are really for our customers, you know, them collecting the data, making sense of the data, training the data, and then easily getting that data onto, you know, the what they've learned in those models, onto our devices. So that's where we're putting a lot of time because, as a company, weser excel at not only the hardware, but, you know, we do more software than hardware and more development tools for our customers than any other. So we're gonna bring that same approach to AI at the edge. Silicon, software, tools, domain expertise, that'll help our customers get there faster. But quick answer, it's early days, but the foundation's out there.
Awesome. We're almost out of time. Matt and John, thank you for coming to the Citi conference.
Thank you, Atif, have a good-