Despite announcing its long-awaited high-volume manufacturing partner for GaN on Si, investors focused on the negative news from MACOM's earnings release, with the stock price ending last week down 38 percent from the closing price just prior to the earnings release.

For the first quarter of fiscal 2018, MACOM reported revenue of $130.9 million, which was down 21 percent sequentially and down 14 percent from the prior year’s quarter. MACOM’s CEO John Croteau attributed the decline in revenue to “the geopolitical downturn in China,” the second quarter softness in China has dampened revenue.

Beginning this fiscal year, MACOM is reporting revenue by three new segments:

• Telecom,
• Data center
• Industrial and defense.

In Q1, telecom revenue was $55.5 million, down 49 percent from the prior year’s quarter, clearly hurt by the softness in China and decreased demand for fiber to the home products. The only bright spot, data center contributed $34.8 million, 27 percent greater than the prior year’s quarter. The industrial and defense segment generated $40.7 million, down 6 percent year-over-year, which reflected lower demand for what the company described as “legacy component products.”

MACOM’s guidance for the March quarter is for revenue to be between $142 million and $150 million, which represents 12 percent sequential growth at the mid-point. Croteau said, “In the December quarter, we believe we saw the bottom in terms of market demand and revenue.”

Despite the recent downturn, Croteau remains bullish about MACOM’s future. The demand for data will drive network expansion in the data center, metro and long-haul telecom networks and 5G wireless infrastructure, and he sees MACOM well-positioned to play in these growth markets, having invested in the underlying technologies that will enable these markets.

“We believe these technologies are now poised to enable major industry transitions that are now clearly underway. Simply put, MACOM will be an active participant, not a casualty in these targeted areas of secular industry growth.” — John Croteau, MACOM CEO