Qualcomm at Citi Conference Notes

Steve Mollenkopf

5G is the next big thing

Sure, so, 5G is – it’s the next big step in cellular. I think it’s interesting for two reasons. One is it’s another generation of cellular technology. You essentially get higher speeds. You get advanced robustness, and so you’re setting up the business for the massive Internet of. You also get a number of features that make services that are very difficult to big mission-critical services essentially.

The network will begin to be absorbed by other industries

“the more interesting part I think is that this is the case, this is the time, and this is when cellular road map really starts to be absorbed by other industries beside cellular. So automotive, things like self-driving cars, the network that will be used for self-driving cars has a different set of circumstances and requirements than what you would have in just the case of just pure cellular, and that is replicated across a number of different verticals, healthcare, the industrial space.”

Commercial 5G in 2019

“You’ll start to see the first commercial devices in 2019. You can go to the store, buy a device with 5G in it in 2019. You’re already seeing people doing trials and early developments in the marketplace now. But the real standard compliance, new radio 5G will happen in 2019 time frame and we’ve been accelerating our plans for that.”

This is the first time that China is pushing not just waiting

“If I were to answer that same question a year ago, I would have said 2020, and it’s being pulled in part in The United States also in Asia. Interestingly, it’s not – this is the first time I’ve seen this happen with the G transitions, but I’ve been in a number of G transitions. This is the first time that China is not waiting, and they’re really wanting to go pretty aggressively as well.”

Not going to be a strong 5G player unless you were strong in 4G and 3G

“just like in the 4G transition, I don’t think you’re going to be a strong 5G player unless you were already a strong 4G and 3G player. And that has to do with the way in which the network will be deployed. It will be deployed with regional hotspots of 5G where maybe they have spectrum allocations, very favorable. They have millimeter-wave frequencies depending on the geography or the location, and it will be on top of a sea of 4G.”

Data center is being architected by big cloud providers for themselves

“So the data center is an interesting space for us because it’s going through a transition. And the transition, I think, there are at least three aspects of it that I would highlight. One, is the growth is happening in data centers that people are architecting and building themselves, meaning that these are the big cloud providers. They are building their own cloud areas, or they are offering cloud services broadly. And they want to have control over the architecture of the data center, and they want a willing partner that has scale and someone instead of just their normal option.”

Chinese cloud another big change in datacenter

“The second one is that you’re seeing the advent or the growth of the Chinese cloud. So China wants to have its own cloud, and we’re leveraging a joint venture in China that’s Guizhou to participate in the growth of that cloud. So as a new participant in the data center space, we want to figure out how do we build scale and get some of these big trends, get on the front-end of these big transitions, so we’re doing that”

First time in a long time that transistor leadership is not happening in the PC space first

“And then the second – the third one, the final one is that this is probably the first time in the history of semiconductors where transistor leadership is not occurring in the PC space first. So we’re seeing through Samsung and TSMC particularly extremely competitive just raw transistor capability, which we think enables us to compete not only in the handset space, but we can leverage that investment to see it – a real disruption, we think, competitive disruption, in the data center space.”

NVIDIA 2Q17 Earnings Call Notes

Jen-Hsun Huang – NVIDIA Corp.

GPU acceleration of servers delivers extraordinary value proposition

“Data center is a very large market, as you know, and the reason for that is because the vast majority of the world’s future computing will be largely done in data centers. And there’s a very well accepted notion now that GPU acceleration of servers delivers extraordinary value proposition. If you have a data-intensive application, and the vast majority of the future applications in data centers will be data intensive, a GPU could reduce the number of servers you require or increase the amount of throughput pretty substantially. Just adding one GPU to a server could reduce several hundred thousand dollars of reduction in number of servers. And so the value proposition and the cost savings of using GPUs is quite extraordinary.”

Cryptocurrency is here to stay

“Cryptocurrency and blockchain is here to stay. The market need for it is going to grow, and over time it will become quite large. It is very clear that new currencies will come to market, and it’s very clear that the GPU is just fantastic at cryptography. And as these new algorithms are being developed, the GPU is really quite ideal for it. And so this is a market that is not likely to go away anytime soon, and the only thing that we can probably expect is that there will be more currencies to come.”

Costs close to $1000 to manufacture top of the line GPU

“And so the price of Volta is driven by the fact that, of course, the manufacturing cost is quite extraordinary. These are expensive things to go and design. The manufacturing cost itself, you guys can estimate it, is probably in the several hundred dollars to close to $1,000. However, the software intensity of developing Volta, the architectural intensity of developing Volta, all of the software intensity associated with all the algorithms and optimizing all the algorithms of Volta is really where the value-add ultimately ends up. And so I guess the pricing – your question relates is pricing. We expect pricing to be quite favorable for Volta.”

Going to see lvl 4 self driving cars in 2021

“And then the fully autonomous drivered cars, driven cars, branded cars will start hitting the road around 2020 and 2021. So the way to think about it is this year and next is really about development. Starting next year and the following year is robot taxis. And then 2021 to forward you’re going to see a lot of Level 4s.”

Volta is a giant leap

” Volta was a giant leap. It’s got 120 teraflops. Another way to think about that is eight of them in one node is essentially one petaflops, which puts it among the top 20 fastest supercomputers on the planet. And the entire world’s top 500 supercomputers are only 700 petaflops. And with eight Voltas in one box, we’re doing artificial intelligence that represents one of them. So Volta is just a gigantic leap for deep learning and it’s such a gigantic leap for processing that – and we announced it at GTC, if you recall, which is practically right at the beginning of the quarter.”

Neural net hardware and software is improving at an exponential rate

“A neural net in terms of complexity is approximately – not quite, but approximately doubling every year. And this is one of the exciting things about artificial intelligence. In no time in my history of looking at computers in the last 35 years have we ever seen a double exponential where the GPU computing model, our GPUs are essentially increasing in performance by approximately three times each year. In order to be 100 times in just four years, we have to increase overall system performance by a factor of three, by over a factor of three every year.

And yet on the other hand, on top of it, the neural network architecture and the algorithms that are being developed are improving in accuracy by about twice each year. And so object recognition accuracy is improving by twice each year, or the error rate is decreasing by half each year. And speech recognition is improving by a factor of two each year. And so you’ve got these two exponentials that are happening, and it’s pretty exciting. That’s one of the reasons why AI is moving so fast.”

The whole car is going to become an AI

“The second major component is our self-driving car platforms, and a lot of it still is infotainment systems. Our infotainment system is going to evolve into an AI cockpit product line. We initially started with autonomous driving. But you probably heard me say at GTC that our future infotainment systems will basically turn your cockpit or turn your car into an AI. So your whole car will become an AI. It will talk to you. It will know where you are. It knows who’s in the cabin. And if there are potential things to be concerned about around the car, it might even just tell you in natural language. And so the entire car will become an AI.”

The next revolution of AI will be at the edge and the most visible impact will be in the autonomous vehicle

“The next revolution of AI will be at the edge, and the most visible impactful evidence will be the autonomous vehicle. Our strategy is to build a ground-up deep learning platform for self-driving cars, and that has put us in pole position to lead the charge”

Microchip FY 1Q18 Earnings Call Notes

Steve Sanghi – Microchip Technology, Inc.

Strong business environment, inventories at the low end of normal

“we are continuing to see a very strong business environment for our products worldwide and have a number of company-specific demand drivers. Our bookings rate in the June quarter was extremely strong. Our inventories at Microchip as well as at the distributors are towards the low end of the normal range. Both inventories at Microchip as well as distributors declined further sequentially in the June quarter. While our manufacturing operations produced a lot more units in the June quarter, we shipped them all for growth and did not progress towards improving our inventory position.”

Lead times are not getting any longer

“While lead times are still longer than what we would like them to be, they’re not getting any longer and we appear to have created a soft landing so far without triggering any double ordering or panic from our customer base.”

Pricing discipline is improving

“The pricing discipline is improving and to a different extent with various manufacturers. I can’t mention it, the names of the competitors and specifically what they are doing, but we have seen some discipline on others also, some more than the others. Microchip has kind of led this charge in the last five years, and especially after the acquisition of Atmel, whose pricing was really below acceptable pricing, we have quite substantially corrected those pricing and we have seen others who were relatively undisciplined also make some correct moves in that direction.”

Not going to comment on the industry but we’ve engineered a soft landing

“I don’t have any comments on the industry. I resigned from that job two years ago. We’re just simply – I will comment on Microchip. And what I’m seeing is that by lead times really not going longer and taking almost a year to bring these lead times down, that we’re guiding to really by the middle of next year, we believe we already have engineered a soft landing and not creating any panic, not having runaway book-to-bill ratio, strong backlog, fair amount of unsupported product. But still largely good behavior on the part of customers and distributors. Inventory is still very low all over the board. Our distributor inventories are low. Our Microchip inventories are lowest in seven years. This is essentially engineering a soft landing.”

Competitors haven’t treated distributors as well

“But what we’re experiencing is currently, as a number of our competitors have defranchised either distributor completely or they have narrowed their margins and not giving them demand creation margin, we have seen these distributors put a tremendous attention and focus on Microchip and especially with a broadened product line sort of under the Microchip 2.0 initiative that we have, we are finding that distributors are finding the new Microchip 2.0 product portfolio to be so much more desirable and essentially being able to replace the number of other competitive companies where they have lost a franchise on, including microcontroller, analog, wireless, USB, Ethernet, wired products, USB, Ethernet and wireless, just really timing is just perfect for the distribution to grab onto our broad portfolio, and do a great job for us. So I think we are taking advantage of it right now.”

Taiwan Semiconductor 2Q17 Earnings Call Notes

Mark Liu – Co-CEO, President and Additional Director

AI is getting everywhere

“AI is indeed getting to smartphone. That’s for sure. And that is — actually, AI is going to every segments in our growth sectors. AI is getting to mobile. AI is getting to high-performance computing like deep learning. AI will go into automotive, which is ADAS and so forth. And AI will go to simple IoT, MCU also. So this AI is a general application driver of momentum — put this way, one of the driver — driving momentum, and it is ubiquitous.”

C. C. Wei – Co-CEO, President and Additional Director

Lora Ho

Increasing customer concentration but that’s not all a bad thing

Our top 10 customers account for 64% in 2015. And that number went up to 69%, as you can see from our annual report. This is mainly because there are consolidations among customer base. For this year, we expect the concentration will come down a little bit. But I want to say that people may feel customer concentration is not a good thing. But we feel the other way. It’s not really a bad thing, because when you have a bigger customer, that means the dependency for them to TSMC as the customer and for us to then as the supplier needs to be stronger, the relationship collaboration needs to be stronger, which is in favor of a foundry business model. So we view that as a positive thing.

Analyst Comment:

Increasing semiconductor content in phones

“Google has talked about their next oval leaves, there’s going to be accelerators coming out later this year. I think we hear about Apple Neural Engine. There’s a significant shift happening which would suggest smartphone content is going to rise for — semiconductor content is going to rise in smartphones because of AI. And I don’t know whether you see this accelerating the smartphone growth rates that you see over the next couple of years.”

Qualcomm at Bank of America Conference Notes

Cristiano Amon – EVP of QUALCOMM Technologies

The smartphone took away the entire portable consumer electronics industry

” mobile is so big of an industry, the smartphone is so big of an industry that the point it became the new consumer electronics industry, it took away the entire portable consumer electronics industry that use to exists in the ’80s and the ’90s from cameras, to music, to video, to gaming, to everything. And that technology platform is so competitive that it is going to go into how car infotainment is going to look like, how machines become smart running OSs and connecting with modems and the Internet of Things.”

Specifics of 5G makes it harder to get in if you’re not a leader in 4G

“On top of that you have two variations of 5G, in the sub 6 gigahertz spectrum, you’re going to provide multiple units of gigabit, let’s say five gigabit for example. And then above that in the millimeter wave you’ve going to have multiple tens of gigabit. And 4G will continue to become very relevant as it gets upgraded to Gigabit LTE lower latency and it will have lower latency as we migrate up and down. So I’ll argue, if you don’t have leadership in 4G, because 4G is not static, it’s not like what happened with GSM as 3G arrived. If you don’t have leadership in 4G, our ability to continue in 4G, if you don’t have a system capabilities to do multimode devices and if you don’t have the scale to deal with alphabet soup of frequency bands, I think 5G is actually much harder for you to enter the market. ”

Microchip FY 4Q17 Earnings Call Notes

Steve Sanghi – Microchip Technology, Inc.

End market breakdown

“Based on fiscal year 2017 results, our largest market is industrial, with 35% of our business in this market. The second-largest market is automotive, with 25% of our business. Then comes consumer, with 24% of our business, computing with 9%, communication with 5% and, finally defense and aerospace, with 2% of our business. Over the last several years, our fastest-growing markets have been industrial and automotive, which together account for 60% of our business now. Additionally, our consumer exposure of 24% is not made up of mobile phone; it is made up of home appliances, security systems, thermostats, televisions, remote controls, power tools, drones, joysticks, headphones, furniture, consumer toys, et cetera.”

Seeing a very strong business environment

“We are seeing a very strong business environment for our products worldwide. Our bookings rate is extremely strong. As you know, we have not broken out our book-to-bill ratio in a long time, since it is largely misunderstood. However, to make you aware of the strength of our bookings, we are providing this indicator for one time.”

*Inventories are low and lead times extending

“Other inventories at Microchip as well as at our distributors are towards the low-end of the normal range, therefore we are starting to see some lengthening of our lead times. We’re starting to see challenges in fab, foundry, probe, assembly and test capacity. We have increased wafer starts in our three internal fabs and we’re adding capacity in our three back-end facilities. Despite all this, we are seeing significant business that we’re not able to support by the customer requested dates.”

There are only three uses of capital

“There are three uses of capital. There can be three different uses: using it in our own business in making investments, giving it as a dividend or using it as M&A, and you can call it maybe, fourth, stock buyback.”

We’re also seeing general strength in the economy

“Beyond that, we’re also seeing general strength in the economy, especially happened post-election in U.S. The whole world seems to be positive. You can talk to distributors and they are seeing strong bookings and a strong environment. Lead time for equipment is lengthening, lead time for packages, all sorts of things is lengthening. So those are some of the signs of what’s happening generally in the economy. But I think what we are seeing has really also a significant company-specific element on the top of that.”

NVIDIA 1Q17 Earnings Call Notes

Jen-Hsun Huang – NVIDIA Corp.

Three pillars of the cloud

“There are three major pillars of computing up in the cloud or in large data centers, hyperscale. One pillar is just internal use of computing systems, for developing, for training, for advancing artificial intelligence. That’s a high-performance computing problem.”

“the second pillar is inferencing. And inferencing as it turns out is far, far less complicated than training. It’s a trillion times less complicated, a billion times. It’s a trillion times less complicated. And so once the network is trained, it can be deployed. And there are thousands of networks that are going to be running inside these hyperscale data centers, thousands of different networks, not one, thousands of different types. And they’re detecting all kinds of different things. They’re inferring all kinds of different things, classifying, predicting, all kinds of different things, whether it’s photo or voice or videos or searches or whatnot.”

“And then the last pillar is cloud service providers, and that’s basically the outward public cloud provisioning a computing approach. It’s not about provisioning inferencing. It’s not about provisioning GPUs. It’s really provisioning a computing platform.”

*AI is going to eat software

“AI is going to infuse all of software. AI is going to eat software. Whereas Marc [Andreessen] said that software is going to eat the world, AI is going to eat software, and it’s going to be in every aspect of software. Every single software developer has to learn deep learning. Every single software developer has to apply machine learning. Every software developer will have to learn AI. Every single company will use AI. AI is the automation of automation, and it will likely be the transmission. We’re going to for the first time see the transmission of automation the way we’re seeing the transmission and wireless broadcast of information for the very first time. I’m going to be able to send you automation, send you a little automation by email.”

The impact of AI is huge and we’re just getting started

“And so the ability for AI to transform industry is well understood now. It’s really about automation of everything, and the implication of it is quite large. We’ve been using now deep learning – we’ve been in the area of deep learning for about six years. And the rest of the world has been focused on deep learning for about somewhere between one to two, and some of them are just learning about it.

And almost no companies today use AI in a large way. So on the one hand, we know now that the technology is of extreme value, and we’re getting a better understanding of how to apply it. On the other hand, no industry uses it at the moment. The automotive industry is in the process of being revolutionized because of it. The manufacturing industry will be. Everything in transport will be. Retail, e-tail, everything will be. And so I think the impact is going to be large, and we’re just getting started. We’re just getting started.”

The thing about tech is that it moves exponentially

“Now that’s kind of a first inning thing. The only trouble with a baseball analogy is that in the world of tech, things don’t – every inning is not the same. In the beginning the first inning feels like – it feels pretty casual and people are enjoying peanuts. The second inning for some reason is shorter and the third inning is shorter than that and the fourth inning is shorter than that. And the reason for that is because of exponential growth. Speed is accelerating.

And so from the bystanders who are on the outside looking in, by the time the third inning comes along, it’s going to feel like people are traveling at the speed of light next to you. If you happen to be on one of the photons, you’re going to be okay. But if you’re not on the deep learning train in a couple of two, three innings, it’s gone. And so that’s the challenge of that analogy because things aren’t moving in linear time. Things are moving exponentially.”

*Computing advances are no longer about transistors alone

“The easy way to think about that is that we can no longer rely – if we want to advance computing performance, we can no longer rely on transistor advances alone. That’s one of the reasons why NVIDIA has never been obsessed about having the latest transistors. We want the best transistors. There’s no question about it, but we don’t need it to advance. And the reason for that is because we advance computing on such a multitude of levels, all the way from architecture, this architecture we call GPU accelerated computing, to the software stacks on top, to the algorithms on top, to the applications that we work with. We tune it across the top, from top to bottom all the way from bottom to top. And so as a result, transistors is just one of the 10 things that we use. And like I said, it’s really, really important to us. And I want the best, and TSMC provides us the absolute best that we can get, and we push along with them as hard as we can. But in the final analysis, it’s one of the tools in the box.”

Colette M. Kress – NVIDIA Corp.

Data center revenue has tripled from a year ago

“Next, data center, record revenue of $409 million was nearly triple that of a year ago. The 38% rise from Q4 marked its seventh consecutive quarter of sequential improvement. Driving growth was demand from cloud service providers and enterprises building training clusters for web services, plus strong gains in high-performance computing, GRID graphics virtualization, and our DGX-1 AI super-computer.”

NVIDIA GPUs are at the center of AI

“AI has quickly emerged as the single most powerful force in technology, and at the center of AI are NVIDIA GPUs. All of the world’s major Internet and cloud service providers now use NVIDIA Tesla-based GPU accelerators, AWS, Facebook, Google, IBM, and Microsoft as well as Alibaba, Baidu, and Tencent. We also announced that Microsoft is bringing NVIDIA Tesla P100 and P40 GPUs to its Azure cloud.”

Qualcomm FY 2Q17 Earnings Call Notes

Derek Aberle

1.7 billion 3G/4G devices shipped in 2016

We estimate that approximately 1.7 billion 3G/4G devices were shipped in 2016, up approximately 10% year-over-year. For calendar 2017, we are reaffirming our estimated global 3G/4G device shipments of 1.75 billion to 1.85 billion devices, up approximately 6% year-over-year at the midpoint.

Taiwan Semiconductor 1Q17 Earnings Call Notes

Mark Liu – President and co-CEO

Fabless inventory high

“We now estimate fabless DOI is still high, high above seasonal exiting first quarter ‘17. Our second quarter revenue guidance that reflects a quite severe inventory adjustment by our customers, particularly in smartphone and PC markets. However, the overall end market smartphone demand appears stable in second quarter ‘17.”

ARM and accelerator use in data centers driven by AI

“Artificial intelligence application and services and five key infrastructures are the major driving force with leading edge technology behind this HPC growth. For example, more than half of our customer product tape-outs with our 7-nanometer today we see our HPC products. Recently we are also very encouraged by the support of a major AI service provider on ARM-based processor or datacenter in Open Compute Project Summit this year. Accelerators used in datacenter are also increasing, adopting the GPUs, FPGAs and ASICS, we expect HPC to become our major growth engine from 2020. The trend of ubiquitous AI also shows up in many IoT and consumer devices such as robot, drones, surveillance devices, smart TV and set-top box. Ubiquitous AI will also be widely used in the fast developing autonomous car market.”

Weakness in smartphone and PC but most because of inventory

“Second quarter weakenings, smartphone is one. We think PC is another one. Mostly because of inventory though and industrial, I don’t see the weakness at all and to come to your question about the, what is your second question.”

Industrial is heating up

“I don’t typically noticed particularly the strengths that are in pocket. Industrial is considered heating up. We have – that’s the number. So showing the overall second quarter. Okay, automotive although a small percentage is heating up.”

NVIDIA 4Q16 Earnings Call Notes

Jen-Hsun Huang

Enterprise is waking up to the power of AI

“And so I think the hyperscalers are going to continue to adopt GPU both for internal consumption, and cloud hosting for some time to come. And we’re just in the beginning of that cycle, and that’s one of the reasons why we have quite a fair amount of enthusiasm around the growth here. You mentioned Enterprise, and enterprise, it has all woken to the power of AI, and everybody understands that they have a treasure trove of data that they would like to find a way to discover insight from. In the case of real applications that we’re engaging now, you could just imagine that in the transportation industry, car companies creating self-driving cars, one car company after another needs to take all of their row data and start to train their neural networks for their future self-driving cars. And so they use our DGX or Tesla GPUs to train the networks, which is then used to run their cars running on DRIVE PX.”

We have to make VR headsets easier to use with fewer cables

“The early VR is really targeted at early adopters. And I think the focus of ensuring an excellent experience that surprises people, that delight people, by Oculus and by Valve and by Epic and by Vive, by ourselves, by the industry, has really been a good focus. And I think that we’ve delivered on the promise of a great experience. The thing that we have to do now is that we have to make the headsets easier-to-use, with fewer cables. We have to make it lighter, we have to make it cheaper. And so those are all things that the industry is working on, and as the applications continue to come online, you’re going to see that they’re going to meet themselves and find success. I think the experience is very, very clear that VR is exciting. ”

Deep learning is a breakthrough in the category of machine learning

“deep learning is a breakthrough technique in the category of machine learning, and machine learning is an essential tool to enable AI, to achieve AI. If a computer can’t learn, and if it can’t learn continuously and adapt with the environment, there’s no way to ever achieve artificial intelligence. Learning, as you know, is a foundational part of intelligence, and deep learning is a breakthrough technique where the software can write software by itself by learning from a large quantity of data. Prior to deep learning, other techniques like expert systems and rule-based systems and hand-engineered features, where engineers would write algorithms to figure out how to detect a cat, and then they would figure out how to write another algorithm to detect a car. You could imagine how difficult that is and how imperfect that is. It basically kind of works, but it doesn’t work good enough, well enough to be useful. And then deep learning came along. The reason why deep learning took a long time to come along is because its singular handicap is that it requires an enormous amount of data to train the network, and it requires an enormous amount of computation. And that’s why a lot of people credit the work that we’ve done with our programmable GPUs and our GPU computing platform and the early collaboration with deep learning.”

We haven’t found boundaries of problems that deep learning can solve

“Now, the reason why deep learning has just swept the world, it started with a convolution of neural networks, but reinforcement networks and time sequence networks and all kinds of interesting adversarial networks. And the list of types of networks, I mean, there are 100 networks being created a week, and papers are coming out of everywhere. The reason why is because deep learning has proven to be quite robust. It is incredibly useful, and this tool has at the moment found no boundaries of problems that it’s figured out how to solve. ”

You could achieve level 5 autonomous today with more chips

“DRIVE PX today is a one-chip solution for Level 3. And with two chips, two processors, you can achieve Level 4. And with many processors, you could achieve Level 5 today. And some people are using many processors to develop their Level 5, and some people are using a couple of processors to develop their Level 4. Our next generation, so that’s all based on the Pascal generation. That’s all based on the Pascal generation. Our next generation, the processor is called Xavier. We announced that recently. Xavier basically takes four processors and shrink it into one. And so we’ll be able to achieve Level 4 with one processor. That’s the easiest way to think about it. So we’ll achieve Level 3 with one processor today. Next year, we’ll achieve Level 4 with one processor, and with several processors, you could achieve Level 5.”

Colette Kress

Level 4 autonomy in Audi by 2020

“Jen-Hsun was joined on the CES stage by Audi of America’s President, Scott Keogh. They announced the extension of our decade-long partnership to deliver cars with Level 4 autonomy starting in 2020, powered by DRIVE PX technology. Audi will deliver Level 3 autonomy in its A8 luxury sedan later this year through its zFAS system powered by NVIDIA. We also shared news at CES of our partnership with Mercedes-Benz to collaborate on a car that will be available by year’s end. During the quarter, Tesla began delivering a new autopilot system powered by the NVIDIA DRIVE PX 2 platform in every new Model S and Model X, to be followed by the Model 3.”