Greetings, and welcome to the Semtech Corporation fiscal year 20 4th Quarter Conference As a reminder, this conference is being recorded. I would now like to turn the conference over to your host, Sandy Harrison, Investor Relations. Please go ahead.
Thank you, Hector. And welcome to Semtech's conference call to discuss our financial results for the fourth quarter fiscal year 2020. Speakers for today's call will be Mohan Lauren, Semtech's President, Chief Executive Officer and Emeka Chukwu, our Chief Financial Officer. A press release announcing our unaudited results issued after the market close today and is available on our website at semtech.com. Today's call will include forward looking statements that include risks and uncertainties, that could cause actual results to differ materially from results anticipated in these statements.
For a more detailed discussion of these risks and uncertainties, please review the Safe Harbor statement included in today's press release and in the other risk factors section of our most recent periodic reports filed with the Securities And Exchange Commission. To update the information from this call should facts or circumstances change. During the call, we will refer to non GAAP financial measures that are not prepared in accordance the Generally Accepted Accounting Principles. Discussion of why the management team considers such non GAAP financial measures useful along with the detailed reconciliations of such non GAAP measures to the most comparable GAAP measures are included in today's press release. All references to financial results in Mohan's and Emeka's formal presentation on this call refer to non GAAP measures unless otherwise noted.
With that, I will turn the call over to Semtech's Chief Financial Officer, Emeka Chuka. Emeka?
Thank you, Sandy. Good afternoon, everyone. For Q4 fiscal year 'twenty, net sales decreased 2% sequentially to $138,000,000. Which was above the midpoint of our guidance. Fiscal year 20 net sales decreased 13% over the prior year.
Driven by the challenging macro environment the overall industry faced for much of the year, fueled by the China tariffs and Huawei ban. In Q4, shipments into Asia represented 78% of net sales. North America represented 13% and Europe represented 9%. Total direct sales represented approximately 24% and sales to distribution was approximately 76%. Our distribution business remains balanced with 55% of the total POS coming from the high end consumer and enterprise computing end markets and 45% of total POS coming from the industrial and communications end markets.
While bookings declined slightly over the prior quarter, Book to bill was above 1. Total bookings accounted for approximately 37% of shipments during the quarter. Q4 GAAP gross margin came in as expected at 61.1%. And we expect our Q1 gross margin to be relatively flat sequentially. Q44 GAAP operating expense increased 8% sequentially due to higher pension expense, share based compensation expense and new product expense.
In Q1, we expect GAAP operating expense to decrease between 8% to 12% sequentially, primarily due to lower amortization of intangibles, lower share based compensation expense, lower pension expense and lower new product expenses. Q4 GAAP interest and other expenses increased to $3,100,000 from $1,500,000 in Q3 driven by the impairment of some of our minority investments and the write off of previously capitalized debt issuance costs. From our refinance debt. Q4 GAAP tax rate was approximately 59% up from 16% in Q3 primarily due to the impact of an internal asset transfer between tax jurisdictions. Note that there was no significant cash tax impact from this action.
We expect our GAAP tax rate for Q1 and fiscal year 'twenty one to be in the range of 23% to 27%. Our GAAP tax rate forecast excludes consideration of any impact from discrete items including excess tax benefit or deficiency from the exercise of stock options. Moving on to the non GAAP results, which exclude the impact of share based compensation. Amortization of acquired intangibles acquisition related and other nonrecurring charges. As expected, Q4 non GAAP gross margin declined slightly over the prior quarter to 61.5%.
And we expect our Q1 non GAAP gross margin to be generally flat with Q4 levels. In fiscal year 2021, we expect our non GAAP gross margin to strengthen through the year as demand from our higher margin growth engines recover. And overall demand improves. Q4 non GAAP operating expense increased 2% sequentially to $53,900,000 due to higher new product expenses. In Q1, we expect non GAAP operating expense to be flat to down 4% sequentially.
Mostly due to the timing of new product expenses. For fiscal year 2021, we expect our non GAAP operating expenses to increase at roughly half the rate of revenue growth, which is consistent with our target operating model. In Q4, our non GAAP tax rate decreased to approximately 9% reflecting a favorable mix of regional income. We expect our Q1 and fiscal year 2021 non GAAP tax rates to remain in the 14% to 16% range. In Q4, cash flow from operations increased to 33% sales up from 546,000 shares or $27,600,000 of stock in Q4 and approximately 1,500,000 shares or $70,200,000 of stock in fiscal year 2020.
And our stock repurchase authorization now stands at approximately 110 $1,000,000. We expect to continue to use our cash to opportunistically repurchase our shares make strategic investments and pay down debt. In Q4, our cash and investments balance was $293,000,000. And our debt balance was approximately $197,000,000, resulting in a net cash position of $96,000,000. In Q4 accounts receivable represented 41 days of sales, which is at the lower end of our target range of 40 to 45 days.
Net inventory was sequentially flat at 121 days and remains above our target range of 90 to 100 days. In Q1, we expect net inventory to increase slightly because of the macro driven uncertainties and demand. In summary, We were pleased to deliver strong Q4 results despite all the macro uncertainties. Looking ahead, We believe that our secular growth drivers of Hyperscale Data Center, 5g Infrastructure And Internet of Things Our stable gross margin, our well controlled operating expenses, our strong cash flow generation and our efficient capital allocation, provides us the platform for a strong financial performance in fiscal year 2021. I will now hand the call over to Mohan.
Thank you, Emeka. Good afternoon everyone. I will discuss our Q3 fiscal year 2020 performance by end market and by product group, discuss that fiscal year 2020 performance and then provide our outlook for Q1 of fiscal year 2021. In Q4 of fiscal year 2020, Net revenues decreased 2% over the prior quarter to $138,000,000, softer demand from the industrial and consumer end market was offset by stronger demand from the enterprise computing and communications end markets, which contributed to better than seasonal results for Q4. We posted non GAAP gross margin of 61.5 percent and non GAAP earnings per diluted share of $0.40.
In Q4 of fiscal year 2020, net revenues from the enterprise computing end market increased sequentially and represented 32% of total net revenues. Net revenues from the communications end market increased sequentially and represented 10% of total net revenues. Net revenues from the industrial end market decreased sequentially and also represented 32 percent of total net revenues. Net revenues from the high end consumer market decreased slightly over high end consumer net revenues was attributable to mobile devices and approximately 8% was attributable to other consumer systems. I will now discuss the performance of each of net revenues from our Signal Integrity Product Group increased 1% sequentially and represented 43% of total revenues.
Stronger demand from the data center and base station segments contributed to the sequential growth. In Q4, demand from the data center market increased nicely over the prior quarter, led by record revenues from our CDR platforms. Strong demand for our Clear Edge CDRs used in 100 gig NRZ modules was driven by our hyperscale and cloud customers. We expect this strength to continue throughout fiscal year 2021. Interest in our new Tri Edge PAM4 CDRs remains very high.
This week, we received our 1st production order for our Tri Edge products, and we already have numerous customers going through system tests with our latest Tri Edge PAM4 Silicon. The advantages of analog PAM4 implementations are very clear as the lower power, lower cost and lower latency provides our data center customers with a compelling advantage over existing solutions. We expect to see our Tri Edge revenues ramp throughout the year at hyperscale data center customers deploying 100 gig, 200 gig and 4 100 gig optical modules that require lower latency and lower power. The Open Eye MSA consortium that was formed to support and promote interoperability of analog CDR platforms, have seen its membership more than double to 40 plus companies since its founding and includes key chip companies as well as software and systems vendors of next generation PAM4 optical systems. Our FiberEdge PMD devices also continue winning designs in PAM4 modules, where we have collaborated with DSP providers, to deliver optical module vendors, a highly optimized solution.
We recently announced the production of our newest quad linear 100 gig per channel TIA platform for 400 gig optical modules, targeted at hyperscale data centers. Our FiberEdge products complement our ClearEdge and Tri Edge CDR platforms, which we expect to continue to ramp this year. Following a relatively weak fiscal year 2020 performance, we expect to see much stronger declined sequentially. Semtech remains a leading supplier to the PON market, providing comprehensive offerings for 1 gig, 2.5 gig and 10 gig PON, OLT and OA new systems. Recent macro events in China have limited our near term visibility.
But we build outs and to drive growth in our PON business in fiscal year 2021. We anticipate a 100% increase in 10 gig PON deployments in fiscal year 2021, driven by China, Europe and the U. S. In Q4 of fiscal year 2020, demand from our wireless base station market increased sequentially as 5g Infrastructure deployments start to accelerate. Our ClearEdge CDR platforms are gaining solid momentum in the 5G market, and we have begun early shipments of our ClearEdge CDRs into 5G base station front haul and mid haul optical modules.
We expect both our ClearEdge and Tri Edge platforms to gain momentum in 5G base stations as 5G infrastructure deployments increase globally. In fiscal year 2021, we expect our base station revenues to increase as we expect to see continued 4G spending and a meaningful increase in spending for 5G where our market opportunity could triple versus 4G. The ever increasing demand for higher data rates by data centers, passive optical networks and wireless broadband networks is driving greater demand for Semtech signal integrity product platforms, which is a secular trend we expect to continue for some time and we remain very confident in our strategy and position in our target markets. In Q1 of fiscal year 2021, we expect net revenues from our Signal Integrity Product Group to decline, driven by softer demand across all segments driven primarily by the impact of the coronavirus. We do anticipate that this temporary demand softness will turn into stronger demand in the second half of fiscal year twenty twenty one.
Moving on to our protection product group. In Q4 of fiscal year 'twenty, net revenues from our protection products group declined 6% sequentially and represented 27 percent of total revenues. In Q4 of fiscal year 'twenty, our high end consumer protection business experienced the typical seasonal inventory reductions. While near term smartphone demand has been impacted by macro events, The prospects for our protection platforms in mobile devices, displays and accessories remains positive as 5G smartphones integrate higher performance interfaces and more advanced lithography devices. Our protection business continues to benefit from its successful diversification into key industrial markets, including automotive, IoT, and broad based industrial applications.
In Q4, our Protection Product Group announced the latest member of its RClamp platform, a multi line protection array that delivers outstanding protection for a broad range of high speed interfaces and ports. In industrial, IoT and telecommunications applications. In Q1 of fiscal year 'twenty one, we are expecting our protection revenues to be approximately flat. Turning to our wireless and sensing product group. In Q4 of fiscal year 2020, net revenues from our wireless and sensing product decreased 2% sequentially, and represented 30% of total revenues.
Q4 was another quarter of strong achievements by our LoRa business. We recently announced several new use cases and partnerships that demonstrate the benefits and efficiencies of LoRa. A few of these announcements in Q4 included Will Hellson, the largest marine network networking operator on the planet, announced the use of 2.4 gigahertz LoRa to deliver IoT solutions to the maritime shipping industry on both land and at sea. Nora will be deploying ships for predictive maintenance, temperature monitoring, asset management and asset tracking. Smart soul network or SNET announced a LoRaWAN network to provide smart parking, smart street lighting solutions and geolocation use cases in Seoul Korea.
Helium announced a new nationwide LoRaWAN network in the U. S. Their current network supports over 745 Cities in the U. S. And Soft and Indian solutions provide up is using LoRa to convert order metering solutions to new advanced metering infrastructure, reducing waste and cost, while increasing efficiency.
And Elm Measure, a utility metering developer and Claude Pi, a maker of long range sensor networks, developed a new line of prepaid smart meters based on LoRa Technology that tracks and reports usage data in real time for precise billing and reduced energy wastage. These are just a few examples of the many new smarter and more sustainable planet. In Q4 of fiscal year 2020, demand for our proximity sensing platforms increased as global RF regulations and awareness of the dangers of school year 2021 as we see solid design win progress in new 5G smartphones, where there is an increase in the number of high performance radios used. For Q1 of fiscal year 2021, we expect net revenues from our wireless and sensing product group to decrease due to the impact of the coronavirus. Moving on to new products and design wins.
In Q4 of fiscal year 2020, we released 26 new products and achieved 2 184 new design wins. Now let me comment briefly on our fiscal year 2020 performance. In fiscal year 2020, net revenues declined 13% over the prior year's record performance, driven primarily by geopolitical headwinds, which negatively impacted all of our product groups. In fiscal year 2020, we had 74 new product releases, and achieved another design win record of 90900 and 909 new design wins. In FY20, our Signal Integrity Product Group introduced several new disruptive platforms that should contribute to our long term growth.
These include our Tri Edge PAM4 CDRs and FiberEdge PMD platforms, for the data center and 5G wireless markets, our 10 gig PON platforms, and our new software defined video or refinet platform, targeted at the ProAV market. In FY20, our protection product group continued its diversification into new broad based industrial verticals, including the automotive and IoT markets, where the increasing use of advanced lithography devices are making systems more susceptible to damage from transient events such as voltage spikes. In addition, our protection business from U. S.-based smartphone manufacturers achieved a new annual revenue record, further diversifying our mobile revenues geographically. In FY 2020, our wireless and sensing product group made significant progress in advancing Semtech's LoRa technology to be the global standard for the LP WAN market.
Our LoRa enabled revenue declined approximately 5% to $74,000,000, from $78,000,000 in fiscal year 2019 due to lower revenues from China. However, our LoRa enabled POS grew by 7% from fiscal year 2019 and represented a new POS record. In FY 2020, our LoRa business met or exceeded all the metrics we targeted at the beginning of the year. These metrics included: 1, the number of countries with more networks grew to more than 91 countries from 70, the end of fiscal year 2019. By the end of fiscal year 2021, we expect over 100 countries to have lower networks.
2, the number of public or private LoRa network operators grew to 133 at the end of fiscal year 20 from 101 in FY 2019. We expect 150 LoRa network operators by the end of fiscal year 2021. The number of LoRa gateways deployed grew 164 percent from 243,000 gateways in fiscal year 2019, to 642,000 gateways at the end of fiscal year 2020. These gateways are capable of supporting 2.5000000000 connected end nodes. We expect the number of LoRa gateways deployed to increase over $1,000,000 by the end of fiscal year 2021.
The cumulative number of lower end nodes increased 55% to $135,000,000 at the end of fiscal year 2020 from $87,000,000 at the end of fiscal year 2019. We expect this number 5, the LoRa Opportunity pipeline exceeded $500,000,000 at the end of fiscal year 2020 with an additional $200,000,000 of leads feeding the opportunity pipeline. We anticipate that on average, 40% to 50% of this pipeline will convert to full deployment over a 24 month timeline. Our pipeline remains geographically well balanced with approximately 65% of the opportunities coming from the Americas and Europe and includes a growing number of use cases in the smart home and consumer markets. Where the volumes could be significantly higher and could drive deployments more rapidly than from industrial markets.
At the end of fiscal year 2021, we are anticipating our opportunity pipeline will exceed $700,000,000 with an additional $300,000,000 of leads feeding these opportunities. We expect the strong momentum in our LoRa metrics continue in fiscal year 'twenty one as the LP WAN market starts to grow rapidly and as our new LoRa technology platforms are adopted. These new LoRa platforms include our LoRa smart home platform designed for LP WAN based smart home, community and consumer patients providing low power, broad coverage for indoor neighborhood and campus area IoT devices used for safety, environmental and convenience use cases. Our LoRa global platform that uses a 2.4 gigahertz version of LoRa to enable global use cases requiring higher bandwidth. And our LoRa Edge platform, which is a highly versatile and extremely low power software defined LoRa platform that enables a broad range of asset management applications targeted at industrial Building home, transportation and logistics segments.
Our LoRa Edge platform includes Wi Fi sniffing and GPS location features. Enabling the most versatile LP Y And Geolocation platform in the industry. This platform will also drive our future cloud services business, with the first service being a geolocation service for asset tracking applications. Armed with the new platforms along with the increasing influence and momentum of the LoRa Alliance, we expect to continue to drive LoRa to become the defector standard for the global LP WAN market, in what we expect to be a multibillion unit industry in the next 5 years. For FY 2021, we are expecting our LoRa enabled revenues to be between $90,000,000 $120,000,000.
Despite the ongoing headwinds in China and the uncertainties associated with the coronavirus, with the positive momentum from our LoRa metrics and growth in our opportunity funnel. We continue to anticipate a 40% CAGR for our LoRa enabled business over the next 5 years. Now let me discuss our outlook for the first quarter of fiscal year 2021. While the near term visibility remains challenging, and despite the ongoing headwinds associated with China demand, the Huawei ban, and the uncertainty associated with the coronavirus. We believe the underlying demand for our products remains very strong.
Based on our backlog entering the quarter, we are currently estimating Q1 net revenues to be between $125,000,000 $135,000,000. This guidance assumes a $10,000,000 negative impact due to the coronavirus and assumes no more direct shipments to Huawei this quarter. To attain the midpoint of our guidance, range or approximately $130,000,000, we needed net turns orders of approximately 27% at the beginning of Q1. We expect our Q1 non GAAP earnings to be between $0.1336 per diluted share. I will now
Thank you.
A confirmation Your first question comes from the line of Christopher Rolland with Susquehanna Financial Group. Please proceed with your question.
Hey guys, thanks for the question. Yeah, just any more details on LoRa. You know, what percentage of LoRa today is China and and and where did it peak out? I'm just trying to get, a sense of how this is diversifying outside of China and what gives you confidence in your outlook looking forward? Thanks.
Laura, used to be about 60% of the revenue was from China. I think, it's still close to that. It's being, it's definitely diversifying now and the opportunity pipeline has, as I mentioned, about 60, 65% of the opportunity pipeline is outside China. So, diversification across the different regions is happening. I would say that though that, China from being a a headwind for us last year continues to actually be quite strong as we look at it now.
Bookings are stronger and I think China and general may be the 1st region to kind of overcome all the coronavirus main issues. And as we see capacity coming back online, that's seems to be strengthening the demand in China. So, it's difficult to call out the next year will play out, but I think, going forward, definitely with the opportunities being more geographically balanced, I think, we'll expect to get a little bit more more of a balanced revenue geographically over the next few years here.
Great. And then your guidance, it kind of looks like it's in line with others in terms of the effects from the virus. You also called out that this was probably mostly supply chain and less about demand destruction maybe you can talk about the supply chain. What you're seeing there? Is it upstream?
Is it downstream? And also what gives you confidence that that demand comes back, and that there's no actual demand destruction in the end? Thanks.
Yes, I would say, 1st of all, I don't think yet we have really seen any major supply chain issues. I think what's clear is that, China as a region were struggling with the coronavirus. And with the move out shift of Chinese New Year, that impacted the overall demand for sure. And it's slowly coming back online, maybe not somewhere around between 70% 80% capacity, I think. So the demand fully isn't there yet.
But all indications prior to the coronavirus was that demand for Q1 was going to be strong. It's still remaining relatively strong. I would say bookings have been pretty healthy. You know, our turns required is fairly low compared to what we've done historically. So, that all gives us a fairly good feeling.
And then also when we see the different segments we play in. We see data center strength and we see, you know, 5g Infrastructure rent that we see generally, infrastructural areas doing quite well, plus one would anticipate some type of stimulus both in Asia and maybe in other countries that will again impact infrastructure. So, we're anticipating once the demands environment settles around after the coronavirus kind of stabilizes, we're expecting the demand to pick up again.
Thanks for the color.
Your next question comes from the line of Quinn Bolton with Needham And Company. Please proceed with your question.
Hey guys, I guess just wanted to follow-up on that. It sounds like you haven't seen any major supply chain constraints bookings are are starting to recover, especially in China, as coronavirus there seems to be getting a little bit more under control. So I guess when we look at your April quarter guidance and the $10,000,000 that you adjusted for coronavirus, Where did that come from? Is that just sort of lost demand as factories were offline or just the near term demand destruction within the China market? In the month of February, or are you anticipating potential cancellations or push outs or something in the March April order book that you may not have seen yet, but you're just being conservative and you know, allowing for some potential push outs or cancellations over the next couple of months.
And then I got a couple of follow ups.
Yes, Quinn, it's a little bit of everything you said actually. It's some data points to suggest that some of that pond tenders and proof of concepts on Laura being slightly pushed out. So we see a little bit of push outs of those. We haven't seen any cancellations or revenue, demand push outs. So revenue push outs, we've seen more indications that things just kind of, being delayed.
Clearly, there's some softness, as I said, because the Chinese New York, New Year was delayed. And so some delay in just bringing up capacity in China. So that impacted it. And clearly, there is some nervousness in certainty around, you know, the coronavirus around the world. And so I think all of those, you know, kind of gave us food for thought as we were planning our Q1 number and we anticipate a kind of approximately a $10,000,000 impact which is reflected in our numbers.
Great. And I just wanted to switch over to the, the data center market. It sounds like you're expecting stronger year in fiscal 2021. Just wanted to confirm that, that, I heard that correctly. And a follow-up on the triad Sounds like you've got your 1st production order.
So congratulations on that. Just wondering as you look through fiscal 21 for Tri Edge. Does that ramp to any kind of meaningful level? I mean, could it be a few million bucks a quarter by the end of the year? Could it be larger or is it a kind of a slower ramp?
Any sort of magnitude of how quickly you think that business takes off could be would be helpful. Thank you.
Yeah, Quinn, the actually the NRZ CDRs, as I mentioned, we're still, that's doing extremely well. Which suggests to us that the probably the PAM4 stuff will, be a little bit slower. But I think one of the compelling value propositions of Tri Edge is the lower power and lower costs. So a lot will depend on how fast the customers want to transition. I think.
So, but we had planned on a stronger kind of second half. So maybe 3,000,000 $4,000,000 in the second half year of the year and then are really ramping up next year.
Great. Thank you. Your next question comes from the line of Karl Ackerman with Cowen and Company. Please proceed with your question. Good
afternoon, gentlemen. Two questions, if I may. I know you guys don't want to go out in the limb and talk about a preliminary guide for fiscal 2021, but I'm curious to the extent you could comment or willing to comment, it was too early to suggest that you can grow top line this year, just given the, strong growth opportunity across LoRa and your data center business. And despite your view that OpEx will grow Hathaway to sales, I guess, how can OpEx be, in the event growth turns out to be a little bit less than your current expectations.
And I
have a follow-up.
So, let me take the revenue 1 and then Mecca can talk about OpEx. I mean, if we look at across our portfolio, data center, I expect to still grow this year. It comes off a relatively, like fiscal year 2020, we're expecting 10 gig PON to grow this year, mostly driven by China, but other regions as well. So that's our anticipation. It may, it may not be as fast because of the coronavirus in the first half.
So, but I'd expect second half for sure. 5G infrastructure, we know is being pushed out there once in every region of the world. And so we're expecting base station infrastructure to grow versus last year. Again, the timing is the key question. And then, of course, if we look at our IoT business and Laura, that's, We're still expecting that to grow.
We have the pipeline. And Laura, remember, many of the use cases are really energy efficiency, productivity enhancements, cost reduction kind of approaches and even smart health kind of, segment. So Laura should, in many ways, still be able to grow, I think, regardless of what, transpires, at least from an annual standpoint. And then our protection business, as I mentioned, we are slightly diversifying that business, diversifying both in the mobile area geographically and industrial area. And so we're expecting that to also do reasonably well if the general macro does well and distributors replenish on their inventory, at least again in the second half.
And so pretty much across the board, we are seeing all of our product groups. We're expecting growth. Of course, a lot depends on what transpires over the next quarter here with the coronavirus. Indications are that in China, things are improving and certainly we're seeing that from a demand standpoint, how sustainable that is and how over what period of time, we'll just have to wait and see. But at the moment, I think we're more positive than negative on it.
And, so, Carl, with regards to the operating expenses, you know, one of the things that we've actually been able to do very well in the history of the company is, it's, manage our operating expenses in, in line with what the top line is going. You know, one of the key things that I've always tried to investors attention students that about 20 percent of operating expenses is variable. And so we do have a few opportunities that we can, modulate depending on what's going on with the top line. Having said that though, you know, we are really very excited about some of the growth opportunities that we have within the company, the investments we're making in those areas. And so, you know, we still believe on the said is that those growth drivers would start to come to fruition right here and that, there wouldn't be any need to take any drastic action with regards to outputting asbestos.
I appreciate that, Mohan and Emeka. Thank you. For my follow-up, if I may, double clicking on surge protection for a moment. Are there new opportunities you see growing surge protection and proximity sensing beyond your key South Korean OEM. You had mentioned on prior calls, design wins around wearables.
So I was curious if any updated thoughts there. Thank you.
Yes, Kyle. We actually, that's been a strategy of ours for a while. We've obviously been strong in Korea for some time But a few years ago, we made the conscious decision that we're going to really go aggressively try to diversify, and get smartphone business in China, smartphone business in North America, proximity sensing business as well as protection business in these areas. And then look at smartphones and wearables and accessories. And I would say we've been successful with all of those strategies.
I mean, if I look at the business today, we have a fairly balanced, geographical spread of protection in mobile devices in Korea, in China, in Asia, and also in North America, U. S. Specifically. And then also proximity sensing where it used to be just Korea is also starting to now spread its wings into into Asia and into other U. S.
Manufacturers and not only in smartphones, but also in wearables as well. So that is a strategy. It continues to be a strategy and we are being quite successful with that strategy.
Your next question comes from the line of Tore Svanberg with Stifel. Please proceed with your question.
Yes. Thank you. Let me start with the housekeeping. I think you mentioned 27% turns where where is that number today? You know, kind of 1 or the more than a month into the quarter.
Tore, we can't give you that number. But what I can tell you is that the bookings have been pretty strong and, you know, we feel very good about what we are.
Okay. So it's not like you've seen strong bookings at the beginning of the quarter and those are now tailing off. You're kind of just seeing steady linear bookings. Okay. Perfect.
Thank you.
2nd question on Laura. So you gave us all the metrics for the fiscal year. You for that, by the way. A lot of great information. It just seems like all in all the categories, there's growth Obviously, your revenues did not grow.
So, can you just talk a little bit about that? I mean, is this because of, you know, certain China customers going to MB IoT or, you know, help us understand a little bit why why your business went down while, you know, all the other metrics were were for the year?
Yes, I think part of the thing you have to remember, which is why I mentioned it, Tori, our POS did grow 7%. So, and that's, that's, really the measure of deployments of end nodes, right? So our revenues, when we ship them, we make calendar revenue when we ship in distribution, but if there's excess channel, inventory or something like that, then we may not, you may not get the full picture. So that's one thing to remember. The second thing to remember is that the reason I give out all these metrics is to indicate momentum.
And momentum is really the indicator of future revenue. When you look at, how many gateways deployed use cases, how many end nodes are being deployed or how many countries are being deployed. The assumption is that, customers are going to deploy once they've completed their proof of concepts and they go to full implementation, they're going to deploy more end nodes and more devices and that will drive revenue. So the timing of the revenues is quite challenging for us, especially when, we had like we did last year, one region of the world like China initially, really in the first half, just really struggled and kind of it was difficult to catch it up in the second half of the year. We don't think that will happen this year.
We think that's just going to be a little bit more stable. And we're projecting reasonable growth this year and beyond.
Very good. Just one last question. Pipeline revenue increased $200,000,000 year over year. I was just hoping you could talk a little bit about the mix of that $100,000,000, again, from a geographic perspective, I do appreciate that, there's a much higher percentage outside of China, but if you could add a little bit more color on North America versus U. S.
Versus all the countries, that'd be great.
Yes. Let's see. So I would say about 30% is Americas. That includes North America, South America, about 36% is Europe. And then the rest, is 11%, about 11%, 11%, 12% is rest of Asia and Japan and Korea.
And then about 23% is 25% is China, something something like that. Those are approximate figures, sorry, but that will give you an idea of the opportunity pipeline.
That's really helpful. Thank you.
Your next question comes from the line of Gary Mobley with Wells Fargo. Please proceed with your question.
Hey, guys. I guess it's probably worth saying congratulations to a strong finish to the year and and, perhaps a better than feared start to current fiscal year 'twenty one. My question relates to your turns business requirements, embedded in your first quarter guidance. My calculation is correct. You're assuming roughly $10,000,000 to $12,000,000 in lower turns requirement for the embedded in the midpoint of the revenue guide.
And I'm assuming much of that's related to Huawei. And so my question is, Did you generate any turns business from Huawei in the just reported fourth quarter? And what's sort of a best case scenario in terms of what you can actually to Huawei based on the current restrictions?
So, remember, Gary, so our guidance assumes no more shipments to Huawei. So we don't need any more tons into Huawei to get, to achieve our number. Having said that, Having said that, I think, we plan on shipping every quarter about $10,000,000 to Huawei. I think that's what we did last quarter, about $10,000,000 last quarter and it's a mix of of all the different products. And obviously it takes into consideration what we can and cannot ship.
And if the restriction is in, further squeezed then we have to relook at it. But that's the reason why, you know, as we give out our guidance, I've made the decision not to to communicate that, you know, we don't need any more turns from Huawei to make our number. So, because we just don't know exactly what's going to happen with the restriction. As far as we're concerned, we're just assuming that the restriction will continue as it is.
Got you. Okay. And did I see a roughly $2,000,000 restructuring in the non GAAP reconciliation and what does that relate to? Is that an actual headcount reduction or are you refocusing your investment in perhaps a different area?
No. No. It's, I think it has mostly to do with, an actuarial valuation of our find benefit obligations and a few other things, but, there was no restructuring in terms of letting people go and stuff like that during the come, during the quarter.
Got you. Okay. Thank you guys.
Your next question comes from the line of Tristan Gerra with Baird And Company Please proceed with your question.
Hi, good afternoon. From the $10,000,000 impact in the current quarter guidance, from China. Is that pretty much allocated across all the businesses you have in China? Or would you say a majority of that is actually related to lower. And in general, how much of a step back you think the situation in China is impacting your revenue growth assumptions for lower revenue this fiscal year?
So, Tristan, the $10,000,000 is really a coronavirus impact. And I think it actually majority of is impacting our signal integrity product group, at least 40% 60%. And then maybe the rest of it is split between our protection and our wireless and sensing business. So it's a broad, impact that we've estimated there. And then the second part of your question is, we believe that our LoRa enabled business is going to do very well this year and China is going to come back and already we're seeing indications of that.
It may take the 1st quarter as I mentioned, because of Chinese New Year and because some companies are not coming back at full capacity in China, And because some of the proof of concepts are definitely going to be delayed because of that and just, you know, travel and people not being able to move around in China as much is going to push out some of the, activity That's why I mentioned that proof of concepts and some of the new tenders and things like that may be shifted. But I don't think it changes the underlying demand, or the need out there. And so that's why we feel that any loss of demand in Q1 probably will pick up assuming things get back to normal will be picked up in the second half.
Okay. That's useful. And then, as my follow-up question in your quarter guidance, what changes in distribution inventories are you assuming, if any, are you assuming that inventories stay flat or on a relative basis at this stage? Or is your assumption for point of sale different from what's embedded in your guidance for this season?
No, I think it's a same assumption. Pios has been doing quite well. As I mentioned, certainly for Laura, it was a, it grew last year. And so that's a positive sign The one thing to remember is if the supply chain is impacted by coronavirus, and we can't get enough material or lead times extend out. I would expect our us to try to actually increase our inventory levels, both internally and in our channel.
But at this point in time, I don't think there's any reason to do that. I think at the moment, we would expect the same type of POS and channel inventory numbers.
Your next question comes from the line of Craig Ellis with B. Riley FBR. Please proceed with your question.
Guys, thanks for all the information on the call regarding Laura and the other businesses. Mohan, I just wanted to start with a question, with, with Laura. First, just asking about the mid the midpoint of this year's, revenues at 105,000,000 as you've talked about the business potentially picking up some high volume design wins, do you, do you forecast that any of that type of revenue conversion would be in the $105,000,000 or how do we think about when some of those higher volume wins might hit?
Yeah, we're anticipating the higher volume, kind of home consumer wins to be more second half Craig, and really they're not yet, I think, heavily in the numbers. So, I would say that there's upside there, but The current numbers, this guidance assumes a continuation of the good progress in most of the smart metering, smart building smart agriculture, kind of more, longer term use cases in industrial IoT and things like that. So it's still pretty good growth, but obviously if smart home and smart consumer starts to play in, then that could impact it. And certainly we believe that in the second half, we'll start to be able to see some of that.
That's helpful. And then the second question is really about the endpoints of the range. So at $90,000,000 sales would be up about 16000000 dollars or 22% at the 120 $46,000,000 or 62 percent year on year. As we look at those endpoints, what are some of the bigger swing factors from low end to high end is it macro? Is it some of the high volume items before macro?
If you can just help us sort that out, that would be quite helpful.
Yes, the macro, I don't think really plays into it other than if there's a really, a really, a big shift in something like we saw at China, first half of last year. I don't think that, is such a huge impact. I think the bigger impact is in conversions, running the POCs, the proof of concepts that the pipeline that we have, which is fairly, fairly substantial. It's converting those into, deployments and real revenue. And we've already seen that that can be pushed out sometimes.
And obviously with the coronavirus and things like that, we are seeing a little bit of a delay in some of the proof of concepts and things like that. So I think that's probably the bigger impact, than over anything else at the moment, We just have to wait and see how it plays out. But certainly in the second half, we're anticipating that most of the kind of macro issues would have gone away. The coronavirus hopefully would be stabilized at least by that point. And I think we should be in good shape to see kind of a return to regular, you know, what we consider normal growth for our IoT business and LoRa business.
Thank you. And then a couple of clarifications for Emeka. Emeka, regarding the new product impact to OpEx in the fiscal fourth quarter, Was that math said or was that was that something else? Can you just clarify what's going on there?
Yes, it's it's mostly has to do with tells the time last year when we sent our last part for, for take power share. Yeah. So it has it had to do mostly with the mask sets.
Great. And then with regards to gross margin, I think you had indicated, from the first quarter, you'd expect gross margin to rise through the year. Can you provide some further color, giving us a sense for the magnitude of increase that's possible? And it seems like signal intake integrity should build quite strongly through the year. Is that really the primary variable or would it be the degree to which Laura is either at the low end or the high end of the range or factors?
Thank you.
Yes. So, when we look at gross margins, I'm actually excited about it because when I look at the growth drivers that we've talked about, We've talked about LoRa. We've talked about data center. Even within protection, we've talked about the industrial applications looking to see a lot of growth out of that for protection. So all of those things that are supposed to expand help drive our gross margin expansion.
The only thing that we have a headwind for gross margin expansion, if you will, is the fact that overall demand is at lower levels, right? So we still have some manufacturing equipment in terms of putting our operations with some, some fixed expenses that we have to absorb. So my expectation would be that a combination of more revenue from our growth drivers and then seeing overall demand coming back, that should be pretty good for our gross margins as to the exact number at this point. I'll probably expect us to help more towards the 62% and hopefully, depending on how things proceed, we might actually exceed go up over 62%.
That's helpful guys. Thank you.
Your next question comes from the line of Mitch Steves with RBC Capital Markets. Please proceed with your question.
Hey, thanks. I had two questions. The first one just clarify just on the guidance for the 10,000,000 wanted to be clear about what's in there. Is that entirely China? Are you guys making an assumption that, that some demand oil road in the other geographies outside of China?
That's the total, that's the global picture. So it's not just China. I would say that because China was the first to be exposed to the coronavirus. The impact is it's more easily measurable because they delayed New Year by a week and it's been taken time for their capacity to come back online, whereas other regions haven't really been impacted yet. And I think that's still potentially to come.
But I think across the board, what we've seen is $10,000,000 is about the right number for our Q1 demand.
And then the second one, just on the overall kind of full year, I realize you guys are not going to guide a full year, but how do you, how are you guys thinking about the smartphone shipment environment now for calendar year 20?
Yes. Smart funds is a tough one, Mitch, mostly because we're actually quite optimistic that, you know, the changing work landscape as people become more mobile and maybe do less social interaction will drive a need for more, devices, particularly phones and tablets and PCs and that type of stuff. So, and currently, the demand looks fairly healthy from what we see. So, we're getting more positive, I think, and not only, device, mobile devices, smartphones, but also on kind of other proof wearables and accessories and that type of thing.
Perfect. Thank you.
Your next question comes from the line of harsh Kumar with Piper Sandler. Please proceed with your question.
Yeah. Hey, guys. Thank you for squeezing me in. Two questions. Couple of the companies that have sort of pre announced that talked about demand in China.
Going back to sort of normal levels or pre coronavirus levels. I was curious if you, have also seen that, then I've got another question on Laura.
Yes, I would say Harsh that it's definitely improving. I'm not sure. I would say it's back to pre virus levels, but I think it's improving. Bookings are strong. The indications are strong.
Indications of potential stimulus is also, therefore, infrastructure. And as we know, typically when China invests in infrastructure, it's normally advanced technology kind of stuff. So we'd expect 5G and PON and data center and IoT and those type of things to get the heavy influx of monies. And so that would be helpful. But yeah, I would say that it's improving.
Remember, the coronavirus impact, the China is just coming out of that. I mean, at least get improving. And so they're not back at full capacity yet. And I think that's important to understand. So I don't think the demand levels are quite what they were.
I would say they're at best 70% to 80% at the moment.
Okay. And then, Mohan, thank you for all the color you gave on Laura by funnel type, etcetera. Maybe you could talk about what kind of applications you're seeing a pickup in or expect to see a pickup in this year? Would it be mostly consumer or would it be mostly industrial? And is this the year, you know, calendar year call it 2020 that we see the US inflection?
Yes. So the use cases, I think, are still more in a metering, smart building, smart environment. Smartwater, industrial IoT kind of applications, Harsh, at the moment, but the pipeline of opportunities we have, suggests to that. We're going to add to that very quickly in the, in the smart home area. And I think that's predominantly a U.
S. Driven segment, some in Europe. And then I think supply chain logistics smart logistics, which is predominantly a European driven region. Europe is the major driver for that segment. And then Smart City, which is fairly broadly spread.
So the encouraging thing about LoRa really is it really truly is a year graphical, a true global technology, we see use cases across every single region, including lights of rest of Asia and Australia and Taiwan and Malaysia and Singapore. And so a very, very broad range of applications and a very broad geographical base. So, and that's part of the goodness about the opportunity we have. Of course, there are some really big opportunities that will be the catalyst. And as I mentioned before, when they happen, I think you'll see the impact of it, but at the this point in time, I would just say that they are more U.
S. Based.
Your next question comes from the line of Hamed Khorsand with BWS Financial. Please proceed with your question.
Hi, this is Vicky for Hamed. Thanks for taking my question. First one, you were mentioning the LoRa growth out of China. Was wondering if you could provide some color on what the growth looks like outside of China right now.
Rural growth outside of China is, looking positive. I think it was, I would say that it's, it's relatively small, in depending which region you look at, but trying to steal the biggest revenue driver for LoRa. And so that's why I focused on it. But yeah, across the board, I would say Laura you're still doing quite well from a, gateways deployed standpoint from a number of networks deployed the type of use cases we're seeing, the opportunity pipeline, as I just mentioned, is very broad geographically spread. In fact, if I take out China is about 23% to 25%.
If you take out China, the rest of the 75% is spread across the different regions with Europe being the 2nd largest region and then, Americas and then, rest of Asia.
Okay. Thank you for that.
And then, the next question, you've been saying about how there's your theme of recovery in China. I'm just curious what trends you're seeing outside of China and Italy in America and Europe in general. The last few days and
Well, outside China, as I say, I think it's a little bit difficult to call what demands what's going to happen with demand. We don't see a slowdown in data center market at the moment. We don't see a slowdown in IoT but I think that, in general, the U. S. And Europe are just kind of getting to grips with the coronavirus.
And so, you know, we may see some softness there, I think. And that's kind of why we've guided, taking out $10,000,000 of our Q1 guidance is really to try to ensure we encompass any of that because there will be some. We don't know exactly how much, right?
Okay. Thank you very
and answer session. And I would like to turn the call back to management for closing remarks.
In closing, Our fiscal year 2020 proved a challenging year for Semtech. We believe the strength of the secular drivers behind our key growth engines remain intact We enter fiscal year 'twenty one with a number of exciting new product platforms targeted at the data center, Internet of Things, and mobile segments. Given our diverse product offering, balanced end market approach and strong customer relationships, we expect to see another strong financial performance in FY 2021. With that, we appreciate your continued support of Semtech and look forward to updating you all next quarter. Thank you.
This concludes today's conference. May now disconnect. Thank you for your participation.