Darin G. Billerbeck – President and Chief Executive Officer
Mike Chu – Deutsche Bank Securities, Inc.
Lattice Semiconductor Corporation (LSCC) Deutsche Bank 2013 Technology Conference Call September 11, 2013 2:40 PM ET
Mike Chu – Deutsche Bank Securities, Inc.
I’ll go ahead and kick things off. My name is Mike Chu. I’m on the semiconductor team here at Deutsche Bank and we’re very pleased to have Lattice Semiconductor and Darin Billerbeck. Kick it off with presentation and we’ll move into Q&A after that.
Darin G. Billerbeck
All right, thanks and welcome, everybody. I know that it’s been a crazy elevator deal for a lot of people that have been going from place to place to place today, but glad you could make it with us today. I’m going to spend about 15 minutes going through the presentation, and then we’ll open it up for Q&A. We have some prepared questions to help us get started and then after that, if you want to ask a question, please feel free.
So you’re here at the Lattice, really an overview of what we’re doing. There’s a Safe Harbor, I’m not going to try to say any forward-looking statements obviously, but if I do ignore them as usual legal counsel.
We’re the FPGA supplier that offers something a little bit different than our competitors. So a lot of people traditionally think there’s three different suppliers in the FPGA industry and there are. We focus primarily on the low-end [indiscernible] primarily focused on the high-end. We do some unique things. We’ll talk a little bit about our focus and what we think our advantages are and where we win, because for us, it’s all about finding places that we can grow, win and defend more than anything and not really being measured up against filings in Altera, but measured up against the growth that we want to do in the potential market where we believe that we can win. So we are one of the few or we are the only FPGA supplier left that really focuses on low power, low cost and small form factor. And people can talk about small form factor, but when we’re talking about them, it’s like 1.5 millimeters by 1.5 millimeter squared.
Most people think 6 by 6 or 8 by 8 or 9 by 9 or small. The devices we are making today you can barely see it. If I held up a business card with that on there, you couldn’t see it from where you are so very, very small devices, very capable to do things. We still do a lot of bridging and control logic, but again, our focus is in areas where people value low cost, they value low power and more importantly, the small form factors. So we look at it really as big value and affordable innovation versus trying to be in an arms race, trying to develop the next process technology for 16-nanometer, which is not our focus at all.
Okay, today the markets are pretty big that we serve. Traditionally, people see our market as really the FPGA market, which is about $4.5 billion to-date give or take, hundreds of millions of dollars. But where we want to actually expand into is not only develop the products for the FPGA, but expand it to the broader market and that market if you look at it is huge, and that market consists of a lot A6 microcontrollers, all sorts of specific application processing devices depending on where the market are that they serve. And then we also do a small portion of our business in power management, very lucrative, very high margin and a scenario that we’re focused on because it does give you some capabilities that help you in other areas in the marketplace.
If you look at 2017, you can see that it’s just huge up in all area. So plenty of potential growth for us, plenty of potential growth for our competitors, but more than anywhere, we are looking at the consumer logic and ASSP market. So that’s one of our growth, that’s how we’ve grown in the last couple of quarters and that’s where we really differentiate from all the other FPGA suppliers.
Okay, we help our folks win or we help our customers win. we enable them. The markets that we serve are really kind of a design win market for the customers and then now parleying into a design services market. So it’s changing from the older days where people had – wrote their own RTL and they developed their own solutions and consumer mobile, you developed solutions for them off of a menu, they picked those solutions, they integrate those into their platform and off to the race as they go, and those platforms are turning about once a year.
Like Samsung turns their platforms differentially than maybe an apple or maybe somebody else, but they are all turning platforms very quickly, innovations that they’d point. We want to dominate the low lead market. Again, low lead doesn’t need 22 or 16 nanometer to be successful. The form factors that we deal with that 1.5 by 1.5 square millimeter, they’re now 40 nanometers.
So you don’t have to be on leading edge technology to provide some pretty, pretty innovative solutions. And we’re going to focus where we fit and we’re going to grow in the key markets that we serve. So if you look at the low density traditional markets, you’ll see people talk about milliwatts, cost – low-cost about $2 and 24, 25, 20 or 30 square millimeters.
When you look at the ultra low density, if you get down to the places that I talked about, which is really about 2.25 square millimeters. This is fixed, because there’s a traditional market and consumer that is in that space. But it services tablets, it services smartphones, it services the PC industry, car navigation, and considered it for a lot of different areas. The most important part is that you’re now talking about microwatts. And many times when you talk to people about its microamps of current, which – and you will see that longer battery life obviously from mobile devices.
Lots of units in this market, a lot of people look at billion and they say still a lot of people a billion unit. The difference is we ship in a month more than our competitor ship in a year. So that shows you where we’re headed, very high volumes, very low-cost solutions, they have to be highly reliable. When we talk about DPMs, we’re talking about defects per million on these devices that are well under 50 DPM. I mean, this is really, really hi-tech, innovative, high-quality results, so this isn’t some throw it in to somebody’s smartphone and get it done. So we really consider ourselves in the FPGA market, the high volume guys.
This is what we’re talking about. so you can see a circle and a little two dots right there, that’s the latest product that we have on 14 nanometer, very tiny, real estates everything in a smartphone, if I make the real estate for logic smaller, I can put a bigger battery in, that battery life then can extend the usage of an LCD screen or basically the standby current of the entire device.
If you look at the areas that we plan again, we have really four product families; we have iCE40, which a lot of people have heard a lot about, because that’s our consumer mobile play and we have MachXO2, which is really our bridging, glue logic control functionality. XO2 actually has consumer mobile device on it. it can be done – it can actually be developed in two packet size with two different power sequences. So we do sell an XO2 ZE and there is a consumer mobile market and we have been doing so for the last two to three years. That was our first extantiation in the consumer market, iCE actually give us a lower price point and a lower power than our XO2 device, both play in consumer.
XO2 is really kind of the twist in our main iCE40 world that plays in just about everything from comps to surveillance to industrial to medical and then other areas. ECP3, pure play for a lot of the data in control logic for the communications, both in wireless, wireline and the backhaul, it does the high speed service, which is of real data path oriented device, but we also do a lot of control logic with it. That was the one that you’ll see grow as you get the – the China mobile and some of the China telecom growth that you’ll see next year. but we see some growth from ECP3 family in that.
And then last but not least, obviously, is Power Manager II, which is part of our power management device family and that focus primarily on voltage sequences hot swapping and [indiscernible] for the server network are also communications and some of the different applications within the Internet.
If you look at software suite, I won’t get into a lot of this, but the big challenge with FPGA is really the software that helps our customers develop their solutions. It has to be easy to use and have to be simplistic and it also has to do what they want to do. So we invested a lot of money through the years to really up level. We did on our old lever software, some of the classic parts that we had and now we have latest diamond ice cube and then multiple other design support services that we give to our customers. It makes it easier for them to develop solutions on their own or help us develop solutions we can.
If you look at the market trends that we had today and end market shipments, we really want our balance to be about 30% comps, about 30% consumer and then the rest of it’s made up by broad market. And that affords us to play aggressively in the comps area that we play in with a balanced margin portfolio. Consumer margins will be a little bit lower, but we expect them to be close to our corporate model, which is above the 50% margin, 50% to 55%. And then you are going to see the industrial, medical and automotive, to be quite a bit higher. So we want to have a good balanced portfolio, so that when we have growth rates in all three that we’re going to end up with a balanced margin, corporate margin growth that we are looking for.
If you look at the consumer market and the applications, again, we are developing a lot of unique solutions not only for standard chipsets for platforms, with the specific Samsung design win, we’re not only rating the S4 and the S4 Mini, the S4 Mayo and the S4 waterproof device and then we are also into some of the Galaxy tablets and different things. So once you get on the platform, that both features that they may change a lot and the beauty of a program of the logic device and consumers that can pick and choose what they want depending on device.
If you are on the platform, they can then modify and they can modify and apply in high volume manufacturing. That gives them a lot of benefit of innovation. And I think we are starting to see that work out, as you see some more innovative companies co-acted different features to be adjusting the three different things versus other people that are sitting there, kind of doing an evolutionary approach to each phone model. So we’re seeing a lot of innovation in the customers that we serve and embracing the fact that that flexibility and reliability is important to them along with the low power.
We also gave a multisource approaches through this program, which means for instance, the cellphone that sells in Europe may not be the same cellphone or smartphone that sells in China. In China, we have a dual-SIM approach. In Europe, we may have a complete different feature set. We have only one device that fits both of the solutions where again, the hardware platforms stay the same.
Huge advantage when they’re getting in high volume manufacturing, this is huge advantage for us when we’re servicing that. So both – they get a better cost and price to the platform and they get more flexibility for the markets they serve. And then first or last, but again, not least, we do see over the logic gates on a lot of other devices that they have. And these devices are more and more complex each generation, which enables them to be able to provide more services, but also creates issues between different interfaces. And so even though we’re doing some specific outlook functions on smartphones, we also do some bridging functions are there in addition to that.
So we’ve got some really good opportunities, not only in the traditional markets that we serve with the consumer market, but also with some of the feature edge and some of the more flexible solutions that we offer, and finally the form factor. These guys pay for real estate hasn’t changed since I’ve been doing this back in the days where we supported that. So form factor is still very, very important.
Industrial medical again, there’s just a ton of interfaces here. This is our XO2 platform more than anything. You see a little bit of ECP3, which is our steady device that plays in video, and surveillance and things like that. But for the most part, this is a big market opportunity for us, because people are starting to embrace FPGAs in multiple areas, because again, they’re looking at flexible solutions that serve multiple markets.
And then when we target future products include some of the applications that we think are going to be big, and some of those are simplistic and they’re huge, motor control can be done with FPGAs and a lot of areas that traditionally today they aren’t done. So there’s things that we’re focusing on an industrial and medical and those opportunities. They’ve been traditionally done by microcontrollers and we can do at a lower cost and more simplistic fashion within FPGA.
And finally, this market serves our tax base bump up our margin structure for us. So these are our highest margin products, typically sell through justice, typically sold in Europe. And so we do have some America industrials, but that’s a primary focus for us. So consumer mobile seems to be more U.S. and Asia driven, industrial seems more U.S. and Europe driven.
So if you look at the communications market, a lot of people think, we don’t play in LTE, we don’t play in those, we don’t have high net-in products and that’s not true. We do have a whole cluster of products varying from our MachXO2 device, going all the way to ECP3 that play in the backhaul and wireline, we talk a little bit about that. Most of this is bridging function, some of it’s control plane, a lot of that is still highest speed data that we do where we do interfaces that enable things to come in and out, but we don’t do a pure data play. Our data play is hard, it takes a ton of resources and our competitors are always going to do that better than what we do.
And finally, we give people cost reductions on some stuff that they need to have more flexibility, and they want to drive the cost of their systems down. You’ve heard about that HetNet that hasn’t really come to any type of fruition today. But you can anticipate in the future, when they’re doing small HetNet devices, you’re going to see smaller FPGAs around bigger ASICs. That’s always starting to happen and we’re very uniquely positioned to take advantage of that.
So in the comps, we sell that about every device we have through communications, through power management, through our XO2 device, through our ECP3 devices, and we’ll stop directly into the HetNet’s when they move to bigger ASPs and smaller FPGAs and then finally we are architected that did a lot different areas, then we spent enormous amount of time in the comps focusing on the areas where we do fit, and the low power smartphone factor innovation and important.
From a business execution, we have a very simple mantra which is expand, pursue, defend and broaden. We want to expand the market share specifically in areas where we are uniquely qualified, consumer mobile is one. We are starting to see some of the video inclusion of voice and automotive be another. For pursuing acquisitions and strategic partners, we are aligned with different partners, all of them could be microcontrollers, some of them could be ASIC vendors, some of them are big name people that we outlined with the reference of buying, to be able to get into the market, and help them solve problems they need, but we want to look at acquisitions.
We’ve done one. Obviously, the SiliconBlue acquisition was very successful for us. There is not a lot out there today, but we are still looking at it and then we want to defend the markets, what do we own and we own glue logic. We own bridging, we own the low density market and we own consumer. And we got to make sure that we broaden that part portfolio to be able to service all the markets that we want to go after, and then the new markets that we are going to help build.
From a quarterly revenue perspective, revenue this last quarter looks really good in Q2. It was actually a record for us. The $85 million was one of the highest that we’ve had in a long time. If we can hold onto that for the year we are going to have a really solid year and outgrow the market, and outgrow our competitors, which is really good.
If you look at the new product growth, that’s pretty impressive. We are growing at a pretty good rate, a lot of that is driven by XO2. It’s driven by ECP3 and it has been driven by iCE. So lots of good growth from some of the new products that we have initiated in last two to three years and we expect that to continue.
From a quarterly P&L perspective, obviously revenue was very high, but we did find we turned in a operating income than we did a year ago.
Let’s look at this year versus last year, this year this time we were redeploying people worried about Q1 and Q2, this particular time momentum going from Q3, Q4 looks a lot better than we’ve seen in the past. So we are encouraged by the signs we are seeing in the market. We’re encouraged the comp that’s coming back, encouraged that consumer mobile has actually continued to grow faster than what people think.
The biggest thing is with a lot of the revenue which was the highest in a decade from a healthy balance sheet, obviously we have a lot of cash and no debt, and people ask the full time what are we going to do with it. We’ll continue some of the buybacks that we’ve been doing. We probably are not going to do any dividends for the people that are looking at that, but we are looking at strategic acquisitions and strategic plans.
Again, strong cash position, no debt, and I think that’s pretty much nice so low cost, low power, low loads, we are living in a lot areas strategically focused where we went, strong business model. And we are focused on shareholder value more than anything. We spend a lot of our time and energy today trying to understand what our shareholders are looking for, what the investment community is looking for, and what we can do to grow faster than the market.
So our challenge even as the smallest guy in one of the biggest market, is growing faster than everybody. I’m not going to do that by developing solutions in market that don’t exist today, and they continue to grow those markets. And we’ll defend the positions we have yesterday, and will continue to grow those position faster.
Okay with I’m going to open it up to some questions and answers, and we can go from there.
Okay, maybe just kick it off with questions that we’ve been asking all of our presenters on the credit environment, this time last year we were entering kind of a soft – I guess if you would say, maybe you just talk about what you are seeing in the current environment maybe on a demand side for the products that you guys sell. And also let me talk about a little bit about the inventory situation that you guys see as well.
Darin G. Billerbeck
Yeah, it’s interesting, we’ve heard a lot about inventory positions and different things and we heard a lot about the market being analyzed by different people and different market segments. We see it maybe a little different than everyone else. I think when you’re small you can get some build ahead before other people.
In comps we’re already seeing some of the build-out for the China Mobile and some of these other and maybe because we are smaller and inventory carrying costs are lower than what some of our competitors are. We’ve seen that through Q3. My expectation would be that we would see some of that through Q4 also. So again the momentum going in the complex, much better today than it did in the past. That’s a good thing I think for everybody.
I think that the Vodafone deal that’s going on, I think that will help. That will probably take a lot of time to come to any kind of a material change in the comps, but at least it’s good news that people are going to reinvest in the Europe, which hasn’t had investment in a long time. But if you look at the other market segments, Europe still looks not so good. The U.S. is growing slowly. China seems to be kind of a highlight.
There is some concern there, but for us it’s really all about consumer and mobile growth. So when we look at the smartphone market, we can grow within that market even if that market doesn’t grow because people traditionally haven’t used FPGA. So when we enter that market and we grow, that’s a great potential for us and we expect that to continue through 2014. So we feel comfortable about the momentum that we are seeing in the industry. We feel comfortable about our products aligning to the right platforms and our biggest challenge is really just getting out of one type of a platform and getting to multiple wins and multiple big OEMs, specifically in the smartphone and also the tablet market.
Okay. Sticking with that smartphone theme, I think you mentioned you had two design wins in the Samsung phones on the platform and there’s been some inventory corrections, things like that that have been in the market. Just wondering and it doesn’t look like from your results that you experienced an impact from that, have you navigated those kind of the inventory issues related to that large smartphone customer?
Darin G. Billerbeck
No, I think first of all, you have to look at the markets that you serve and you have to judge them, and you have to understand how big they’re going to be and how the opportunities for the growth rate for everybody within the market. And you have to look at the totality of it and then make your judgment on what you think you can do. I think we were fortunate because we are in a whole platform and there is not a one or two suppliers buying against each other as we’re providing a service for multiple products in the platforms.
And I think the difference is maybe our judgment, maybe some of the things that we did is very much through the process, but we try to be not conservative, but realistic about what we thought everybody could achieve in the marketplace and align our manufacturing processes and our unit volumes to that. So I don’t think that we saw the overhang that a lot of people thought and I think the shipments that we’re seeing today are very close to what we believe that they would have shipped. So maybe, and we maybe in front of things versus other people, but we didn’t see the drop of that most people saw.
You mentioned that you are designing to a platform that covers a lot of products, is that platform win something that you think you can leverage into maybe the next generation platform or even beyond that platforms with other smartphone vendors?
Darin G. Billerbeck
I think that’s the focus today. The focus for us today is we’ve got to go in the next platform for sure of what we are serving today, and then that gives you some added benefit that now you’ve got multiple platforms within a given supplier. And then additionally, you have to expand out to that to the top three to five. We’ve taken goals to win the top three to five OEMs in the smartphone market.
We made a lot of progress. We’ve got some wins today, albeit when we started with the first win it was smaller and then it ramped at a pretty high rate once we got into the overall platforms, so it’s typically you get a peripheral device that you ramp kind of prove yourself, and then you grow. So I expect us to have a little bit more success in bigger OEMs probably in the second half of next year. We’ll see some shipments in Q4 on some smaller OEM platforms, which is good for us, because it’s extantiation that we’ve moved beyond, but I think the best news for us is people are calling us now versus us having to call on them. That’s a big deal because they are doing teardowns and they are starting to figure out the innovations in the time your market advantage that we bring to our customers.
In that smartphone space, it seems like you guys are pretty uniquely positioned as a PLB supplier into that end market. Who are you competing with to win those next-generation platforms, is it application specific products, is that maybe nascent PLB suppliers or is it internal development or who are your competitors that you see for those platform wins?
Darin G. Billerbeck
It’s the small ASIC guys, those people with the specific functions with specific solutions and what we’ll do is we’ll take multiple solutions and add them into one smaller form factor. So let’s say an ASIC that’s two different they could do antenna tuning or maybe a barcode label or something else right, we’ll combine all three of those into a form factor that’s smaller at a price that’s actually competitive or lower than that. So that’s how we win. We do multiple functions and then give them the flexibility to go off of a menu and pick other opportunities that they want to put on their forfeiture set that they want to add or not.
So the nice thing is they can get a whole list of items that they can do and as we get better and better at that, we can harden some of that IP and then provide even more flexibility for new IP. So the stickiness becomes the evolution of what we do and almost doing what the ASIC guys do in spite of the FPGA and then adding more programmable logic to do more.
So that’s really the secret to being successful. They are no other PLB suppliers in this market. It’s a difficult market to get in. It’s a difficult market to have the right technology. This technology that’s used is not – has not – hasn’t been developed by either of our competitors nor do I think that’s the focus of them, because I think you are still on an arms race on 16 and 22 nanometer versus trying to look back and say what do I want to do on 40.
And just kind of on that competitive dynamic, you mentioned that you want to get the gross margin for that business to be in company average range, which I think are in the 50s. Given that the smartphone market is so competitive and it’s difficult for any semi-supplier to get those kind of risk margins, how are you – think you can get there? What are some of the levers that you have to get there?
Darin G. Billerbeck
Well, today, the margins and consumers are probably high 40. So people think they are lower than that. They are high 40s. As we move through, I expect and they get closer to our model, somewhere between 50% and 55%, and there is people – that may say there is no way you are going to do that and again, it’s about creating value propositions that drop the ASP of the overall solution and dropping the building material down by providing a solution that’s more of what’s in that and integrating more ASIC functionalities within program logic.
You can do it and the proof points are you have to get your cost structure down so low that if you are selling a sub 1 dollar device, you can still make 55, 60 points. That’s really where we would like to head, but we’re going to walk before we run so high 40s. You’d like to get above 50 and then after that you want to get to our corporate margin and it’s doable in this market.
Just open it up for questions anybody from the audience if anybody has any? Maybe switching gears a little bit to the common infrastructure side, you mentioned that you are beginning to see some of that China Mobile ramp, can you just talk about what exposure you have to that particular ramp where you got a position and let me also comment on the fact that a number of the companies that have been asked this question, have said that they are expecting a more gradual ramp is that what you are also expecting or do you expect to see some kind of a hockey stick?
Darin G. Billerbeck
I think it’s going to [indiscernible], so I would agree with that. I think you’re going to see gradual ramp. It’s difficult to deploy that many. It’s difficult to point that many base stations or upgrade that backhaul that quickly. I think there has been a lot of work already been done on the backhaul upgrade. I think now you are talking about really getting into the base stations and other things other than deployment factors. Some of it is driven by capacity issues, some of it are driven by more of a speed and a performance basis.
For us, we play in the whole thing. A lot of people have discounted it, so lot of that can’t play in LTE, base stations, so they can’t play in the LTE build up not true. We play with XO. We play with XO2. We play with ECP3. We don’t play enough high end – as we talked about, we don’t play in a 12 or 20 gig 3 base spend oriented solution, we don’t do that. But that’s not our marketplace. So where we get built out is in just the basis bridging functions which we do in multiple of our products.
So for us we’ll see the build up, we‘ll just see it differently, where they may have one or two devices in these platforms. We may have four, five, six different devices doing different functions within those particular platform. So we feel very comfortable with our position there. It’s not the same as our competitors for sure.
And these are design in that you already have and you’re just waiting for them to ramp, or is there still some selection process ongoing?
Darin G. Billerbeck
Most of the designs wins for the LTE marketplace were down about two years ago. So they are probably a year and a half to two years ago. They go through a full validation, verification, certification process to get some to the point where they can actually sell that. So for us this is really old design wins on products like MachXO, MachXO2 and then also ECP3. So those design wins happened a long time ago.
And let me just switching gears again a little bit to cash priorities, you mentioned that you have an interest in doing your dividend, but you are looking at maybe M&A also how do buyback fit into that as well?
Darin G. Billerbeck
Yes, we’ve had a buyback since I’ve been the CEO of the company. It’s been instituted since day one. We’ll continue that for dilution reasons. We do look at that opportunistically at times that, there is, some opportunities that we have depending on market, depending on stock and what we believe. So for the most part, we’ve had a steady stream, we have one deployed today. So, we were out there today with a buyback option. I think when you look at what the company needs to do to grow, we have to both be successful in the organic growth that we have today. But then we are going to have to look at opportunities to do different things beyond what we’ve done.
SiliconBlue was a great acquisition for us. There is not that many out there today because I really got it 10 years ago, a lot of the investment community kind of walked away from some of this, but there are things that we look at that are potential, but it has to align with our NDA, it has to align with the profit technology and the focus on the markets that we serve. We are not just going to do something to buy revenue and I think that’s one of the mistakes a lot of companies make. So we are going to be very disciplined about it and very targeted about what we do as an acquisition and we want to make sure that we can repeat the success that we’ve already had and once that we’ve done.
And I guess maybe flipping that around, it seems like a lot of semi-companies would like to have the consumer business that you have now is that lived up since long and even the [indiscernible] business is very – it’s becoming an attractive area given that the things are putting the turn up. How do you respond to questions around why wouldn’t you be acquired by like an Altera who has had aspirations of getting into some of the consumer side and then have a fairly significant comp, and this as well, how do you respond to that question?
Darin G. Billerbeck
It’s interesting that, I talked to you, and I came a lot of the income here to sell the company or be bought and we wanted to really grow business because we believe we had capabilities to do stuff that no one else could do. And I think some of the proof points are actually shown up now. So I think people are looking at it and then holy crap they actually shown up now. So I think people are looking at it and then holy crap, they actually did what they said they were going to do, and that’s good. We can’t stop somebody obviously from buying the company if they walk in and they say, hey I want to buy it.
Again, if it’s the right value, then that’s good. But I think for us, whether the one thing I learnt in my past, you really want to grow your business and things happen right, and if we are growing it faster than the market that’s the good thing for our shareholders which is what we feel good. If somebody buys it and it’s a premium that’s good for our shareholders. So we would stop that for sure, we couldn’t stop that but that’s not our focus. Our focus is really growing our business both organically and through acquisitions and then making sure that we can open new markets for the technology and the capabilities that we have.
Maybe along those same lines, are you beginning to see some competition from the Altera and Valence it looks like this consumer business can be 50% gross margin it will be something that they would be looking at as well?
Darin G. Billerbeck
It’s definitely an attractive market, but it takes a focus. It also takes a different business model. But we have people today that go in to Samsung, that have focused all their efforts on winning those particular platforms and providing design services for that. It’s a different model that when people in the FPGA market are used to. As we move forward, they would all catch up people would have to do to get in that market and I would challenge people that say, okay the rates are 16 nanometer more important than going backwards and going in to consumer, right. Because ultimately consumers are difficult market unless you have a D&A to do that it’s harder to that people think. And I think some of the D&A that comes in our company that most people don’t recognize. There is a lot of people in this company that came from the cellular phone market.
So a lot of our senior ELT managers have played in this market and they know this market, we should – we’re able to ship 1 million units a day today. So that’s scary compared to where the company was given it’s small two years ago. So you’ve got the right capability. It takes a unique skill set to be able to ramp that fast and have IPEX [ph] familiar and down below 50 and in some cases below five. So different model. Could you do it? Yes. Will they do it? Probably not.
Mike Chu – Deutsche Bank Securities, Inc.
Okay. We’re running out of time here, but if there are any other questions from the audience. Let’s wrap it up. Again, thanks so much to all in the conference and for everybody attending this presentation.
Darin G. Billerbeck
All right, thanks again.
Copyright policy: All transcripts on this site are the copyright of Seeking Alpha. However, we view them as an important resource for bloggers and journalists, and are excited to contribute to the democratization of financial information on the Internet. (Until now investors have had to pay thousands of dollars in subscription fees for transcripts.) So our reproduction policy is as follows: You may quote up to 400 words of any transcript on the condition that you attribute the transcript to Seeking Alpha and either link to the original transcript or to www.SeekingAlpha.com. All other use is prohibited.
THE INFORMATION CONTAINED HERE IS A TEXTUAL REPRESENTATION OF THE APPLICABLE COMPANY'S CONFERENCE CALL, CONFERENCE PRESENTATION OR OTHER AUDIO PRESENTATION, AND WHILE EFFORTS ARE MADE TO PROVIDE AN ACCURATE TRANSCRIPTION, THERE MAY BE MATERIAL ERRORS, OMISSIONS, OR INACCURACIES IN THE REPORTING OF THE SUBSTANCE OF THE AUDIO PRESENTATIONS. IN NO WAY DOES SEEKING ALPHA ASSUME ANY RESPONSIBILITY FOR ANY INVESTMENT OR OTHER DECISIONS MADE BASED UPON THE INFORMATION PROVIDED ON THIS WEB SITE OR IN ANY TRANSCRIPT. USERS ARE ADVISED TO REVIEW THE APPLICABLE COMPANY'S AUDIO PRESENTATION ITSELF AND THE APPLICABLE COMPANY'S SEC FILINGS BEFORE MAKING ANY INVESTMENT OR OTHER DECISIONS.
If you have any additional questions about our online transcripts, please contact us at: email@example.com. Thank you!