Welcome, everyone, to the MPS First Quarter 2022 Earnings Webinar. Please note that this webinar is being recorded and will be archived for one year on our Investor Relations page at www.monolithicpower.com. My name is Genevieve Cunningham, and I will be the moderator for this webinar. Joining me today are Michael Hsing, CEO and Founder of MPS; and Bernie Blegen, VP and CFO. In the course of today's conference call, we will make forward-looking statements and projections that involve risks and uncertainty, which could cause results to differ materially from management's current views and expectations. Please refer to the safe harbor statement contained in the earnings release published today. Risks, uncertainties and other factors that could cause actual results to differ are identified in the safe harbor statements contained in the Q1 earnings release and in our SEC filings, including our Form 10-K filed on February 25, 2022, which is accessible through our website. MPS assumes no obligation to update the information provided on today's call. We will be discussing gross margin, operating expense, R&D and SG&A expense, operating income, other income, income before income taxes, net income and earnings on both a GAAP and a non-GAAP basis. These non-GAAP financial measures are not prepared in accordance with GAAP and should not be considered as a substitute for or superior to measures of financial performance prepared in accordance with GAAP. A table that outlines the reconciliation between the non-GAAP financial measures to GAAP financial measures is included in our Q1 2022 earnings release, which we have furnished to the SEC and is currently available on our website. I'd also like to remind you that today's conference call is being webcast live over the Internet and will be available for replay on our website for 1 year, along with the earnings release filed with the SEC earlier today. Now I'd like to turn the call over to Bernie.

Thanks, Gen. MPS achieved record revenue for the first quarter at $377.7 million, an increase of 48.4% compared to the same quarter in 2021. This rise in revenue showcases the strength of the overall market and notable market share gains, driven by customer acceptance of our new product launches. Before discussing revenue by market segment, I want to highlight a change in our reporting approach. To enhance visibility on data center and cloud computing revenue, we will report computer and storage figures separately. This change is reflected in a table included in this webinar, outlining our quarterly revenue on this basis since 2017. The first line item, storage and computing, deals primarily with total storage and client computing revenue. The second line item, enterprise data, captures revenue from data center products. In the storage and computing market, our first quarter 2022 revenue reached $96.6 million, showing an increase of $18.6 million or 23.9% from the fourth quarter of 2021, mainly due to increased sales of storage and commercial notebooks. Revenue in storage and computing accounted for 25.6% of MPS' total revenue in the first quarter of 2022, compared to 20.2% in the same quarter last year. In the enterprise data market, first quarter 2022 revenue was $42.5 million, reflecting a 5.0% increase from the fourth quarter of 2021, largely due to ongoing strength in data center and workstation computing sales. Enterprise data revenue constituted 11.3% of MPS' first quarter 2022 revenue, compared to 6.4% in the first quarter of 2021. First quarter 2022 communications revenue rose to $55.6 million, an increase of $9.7 million or 21.1% compared to the fourth quarter of 2021, primarily driven by higher revenue associated with 5G build-outs and satellite communications. Communications revenue made up 14.7% of MPS' first quarter 2022 revenue, slightly up from 14.2% in the first quarter of 2021. Revenue from consumer markets in the first quarter of 2022 was $80.0 million, which is an increase of $13.6 million or 20.6% from the fourth quarter of 2021. This growth in revenue reflects a broad-based increase, particularly within our IoT sector. Consumer revenue accounted for 21.2% of our first quarter revenue, down from a 26.0% contribution in the prior year's first quarter. For the first quarter of 2022, unearned revenue was $54.5 million, a decrease of 3.2% from the fourth quarter of 2021, representing 14.4% of MPS' total revenue compared to 17.6% in the previous year. In the industrial market, revenue of $48.5 million was nearly unchanged from the fourth quarter of 2021, making up 12.8% of our total revenue compared to 15.6% last year. Regarding gross margin, GAAP gross margin was reported at 57.9%, which is 30 basis points higher than the previous quarter and 250 basis points higher than the same quarter in 2021. Our GAAP operating income for the first quarter was $96.1 million, an increase from $78.6 million in the fourth quarter of 2021. For non-GAAP measures, the first quarter gross margin was 58.3%, improving by 40 basis points from the previous quarter and 250 basis points from the first quarter of 2021. Non-GAAP operating income was $133.6 million, compared to $112.0 million in the previous quarter. Both GAAP and non-GAAP results show an improvement in sequential quarterly gross margin, primarily due to a better product mix as higher-value, new products gained traction. Looking at our operating expenses, GAAP operating expenses were $122.7 million in the first quarter of 2022, rising from $115.3 million in the fourth quarter of 2021. Non-GAAP operating expenses for the first quarter were $86.6 million, up from $83.0 million in the previous quarter. The differences between non-GAAP and GAAP operating expenses stem from stock compensation, amortization of purchased intangibles, and income or losses from an unfunded deferred compensation plan. For the first quarter of 2022, compensation expenses amounted to $39.8 million, including around $1.3 million charged to cost of goods sold, compared to $31.2 million in the prior quarter. Moving to the bottom line, our first quarter GAAP net income stood at $79.6 million or $1.65 per fully diluted share, versus $72.7 million or $1.51 per share in the fourth quarter of 2021. Non-GAAP net income for the first quarter was $118.3 million or $2.45 per fully diluted share compared to $102.1 million or $2.12 in the fourth quarter. At the end of Q1 2022, fully diluted shares outstanding totaled 48.2 million. Now let's examine our balance sheet. As of the end of the first quarter of 2022, cash, cash equivalents, and investments reached $775.1 million, compared to $727.5 million at the end of the fourth quarter of 2021. MPS generated approximately $107.4 million in operating cash flow compared to $28.2 million in the previous quarter. Capital spending for the first quarter of 2022 totaled $26.5 million. Accounts receivable at the end of the first quarter were $120.3 million, which equates to 29 days of sales outstanding, a one-day increase from the fourth quarter's 28 days. Our internal inventory was $311.0 million at the end of the first quarter, up from $259.4 million at the end of the previous quarter. Days of inventory increased to 178 days at the end of Q1, compared to 166 days at the end of Q4. Traditionally, we’ve calculated days inventory based on current quarter revenue, but we believe comparing inventory levels with the projected revenue for the following quarter offers a clearer economic perspective. By this measure, days of inventory increased to 159 days at the end of Q1, compared to 149 days at the end of Q4. Now, let’s move on to our outlook for the second quarter of 2022. We forecast Q2 revenue to fall between $420 million and $440 million. We also anticipate gross margin to be in the range of 58.4% to 59.4%, with non-GAAP gross margin expected to range from 58.7% to 59.3%. GAAP R&D and SG&A expenses are projected to be between $132.7 million and $136.7 million, while non-GAAP R&D and SG&A expenses are expected to be in the range of $90.0 million to $92.0 million. This does not account for stock compensation and litigation expenses. Total stock-based compensation expenses are forecasted to be between $44.2 million and $46.2 million, including about $1.5 million that will be charged to cost of goods sold, with litigation expenses ranging from $2.3 million to $2.7 million. Interest and other income is expected to be between $1.3 million and $1.7 million before considering foreign exchange gains or losses, and fully diluted shares are projected to be between 47.8 million and 48.8 million. In conclusion, we will continue with our long-term strategy for sustainable growth, and I will now open the floor to questions.

Thank you, Bernie. Analysts, I would now like to begin our Q&A session. Our first question is from Ross Seymore of Deutsche Bank.

Ross is not there. Perhaps we can move on.

Our next question is from Alex Vecchi of William Blair.

Congratulations on a great quarter in a tough environment. Maybe you can address a little bit the supply constraints in some of the China COVID impact. It seems like you guys came out from that completely unscathed, be interested in some of the dynamics that allowed you to do that.

Well, Alex, we planned this kind of ramp not from last year but from many years ago. And as you remember, in 2017, even '16, we said that we are going to grow on greenfield products, and exactly we don't know at plus or minus a year or so. And so we planned every aspect, including logistics, staff, assembly house, and our internal testing. And this is not a one-year thing. We planned a long time ago. And now when the revenue ramped a little better than we anticipated. And so that's where you see the result.

And if I can add to that, we've also built inventories so that in 178 days, we're just at the lower end of our goal of being between 180 and 200 days, which provides us a good insurance policy as we look ahead to achieving our numbers for the second half of the year.

Yes, even at the end of the second half of 2019, the business was not as great, but we built according to our plan, and we know the business will come. I remember that our inventory was over 200 days. That part of it has made our customers feel much more reliable, viewing MPS as a major player.

Okay. That's really helpful. And then maybe one for you, Bernie, just on gross margin. Margins have been very strong, as I believe. You've alluded to product mix. Just on that front, how much more runway do you think you have on the gross margin front from the uplift on sort of your new products going forward?

Sure. As you've seen both in the results that we had for Q1, along with our guidance for Q2, which positions us around 59% gross margin, I think we've done a fair job of acknowledging the uplift in our margins as a result of our product mix. So again, I'll give the same answer I did last time: we believe that we've created a new floor for gross margins, and we can expand 10 to 20 basis points sequentially. If opportunistically, we see a back set that allows us to take it up another, we will be happy to take that. I want to emphasize that while most of our peer companies have benefited both in terms of revenue growth and margin expansion from price increases, ours has been driven primarily by the change in revenue mix, favoring these higher-value products. It was only in February of this year that we did a broad-based increase in our prices, but that was still far below what the market has seen.

We have passed the cost onto our customers. Regarding margin expansion, we mentioned earlier that from 2017 to 2018, we faced no significant challenges. By 2019, the market experienced a slight slowdown, and we accumulated some amortizations in our production pipeline. Consequently, our margins decreased slightly, but it was not a significant drop. Now, we are seeing our margins continue to grow.

Our next question is from Matt Ramsay of Cowen.

Can you guys hear me all right?

Yes.

Michael, I guess, for either one of you, it was interesting that you're breaking out sort of the data center piece from the PC and storage business. I wonder a couple of things about that, like what may be you guys are trying to signal by breaking those out separately, in particular the new enterprise data segment is up, I don't know, 160% year-over-year, but that's really before the two primary server processor vendors launched with new sockets this year. So Michael, could you maybe talk a little bit about the reason for breaking that out and the relative growth rates you guys expect of these two new segments as we go forward?

If you put everything together, we will address those questions as we always have. However, when we reported specific numbers, which are clearer to you, we noticed there are fewer significant questions and other concerns.

I think, Matt, you did a good job of saying that this is clearly an inflection point for us, an inflection year, which will gain momentum as we see both Intel and AMD position for product releases coming up here. So that, in addition to the expanding footprint we have in both 48-volt and artificial intelligence, we believe that this will be one of our areas for sustainable growth for certainly the next 3 to 5 years. As Michael said, we believe that providing better transparency is definitely better information for our investors.

Thanks to both for that. That's helpful. I guess if you look at the second quarter guidance that you provided, $430 million at the midpoint was quite a bit above where consensus was and certainly where my model was. Bernie, if you might take a second to walk us through, by segment, how you're thinking about the growth being concentrated, that would be really helpful.

I believe we will see a significant increase in enterprise growth in both dollar and percent terms, particularly in the latter half of the year. We anticipate ongoing growth in our storage and computing sectors, although likely at a slower pace. This slowdown is partly because storage typically signals an upcoming growth phase in data centers based on our experiences. In the last two quarters, we have witnessed strong increases in storage, and we expect similar results in data centers over the next two to three quarters. In other segments, we have expanded our communications efforts beyond just 5G to include satellite communications, which will continue to be a key growth driver in the near future. Additionally, the consumer segment is progressing well; while we have highlighted the Internet of Things, growth in this area is quite diverse.

Our next question is from Quinn Bolton of Needham.

Let me offer my congratulations as well. I wanted to come back to Alex's question about China. Obviously, you source most of your assembly and wafer capacity in China. Given the zero COVID policy in China and some of the resulting lockdowns, are you rethinking the need to diversify outside of China, either on the assembly and test or assembly and wafer foundry side? And then I guess, a related question, I think most of your final test takes place in Chengdu. Have you any contingency plans in place in case Chengdu is put under lockdown due to COVID?

Yes. We started a couple of years ago. We already started doing so. As you know, manufacturing in Asia is the center of the world, and we can't debate too much or not if they have serious problems. I think everybody worries about it. Yes, the answer is yes. We already started and established in a different clinical environment.

In Chengdu, Michael, do you have test capacity outside of Chengdu, if Chengdu goes under lockdown?

Yes. As we started about a couple of years ago, but maybe it's a little more than 12 months ago, we're starting.

With the testing capacity in Chengdu, we've concentrated that on some of our higher-value parts, including automotive. Now, as Michael just said, we've started the transition where we can actually have third parties. So we actually have a built-in contingency plan.

Yes, we have test capacity outside Chengdu. In addition to the high-reliability products we are retesting, we also handle a significant volume in a different facility. When I talk about this, I am referring to operations outside of China.

Got it. Okay. And then my follow-up question is around the internal inventory level. You guys have done a fantastic job of increasing that in a very tight supply environment. As you're approaching now the low end of your target range of 180 to 200 days, can you tell us what's going on with lead times? I would think as internal inventories get up to your target level, that may give you the ability to start to reduce lead times to potentially gain even more market share. I'm wondering if you could give us a sense of what's going on with lead times given that increase in internal inventory levels.

Our lead time this quarter remains consistent with the last quarter. I don't have any updates on our bookings. The rate of our bookings has decreased, as you mentioned, Bernie.

And you took my answer on both ones that lead times have remained very consistent each in the last three quarters. Again, what you're seeing as far as the build of inventories has been a very conscious and deliberate decision to build the inventories in advance, particularly on the enterprise side, to meet the demand we expect for the second half of the year. I think that we've done a good job of positioning ourselves under what has now become an uncertain environment.

Our next question is from William Stein of Truist.

Congrats on the very strong results, especially the outlook. We understand, though, that while we see a great number overall, in particular for the guidance, there are always moving parts when we look at it on a more detailed level. I wonder if you're seeing either perhaps owing to customers focusing on getting balanced kits or full sets or however you want to call it, or if you're seeing anything related to Ukraine or the lockdowns in China, whether any of these factors are influencing either the order rates or the backlog. For example, if none of these things were happening, the outlook would have been even stronger. Any qualification you can provide us would be helpful.

Yes, MPS is involved in selling components and does not dominate the application supply market. Our shipments represent just a small part of the overall solutions. We cannot definitively say how various factors, including wartime effectiveness, impact us, though we are quite diversified. We do have an understanding of where our products are shipped, such as to data centers, but we have limited knowledge about the final destinations of products that go to automotive applications. Beyond that, our insight is limited.

Just reinforcing the answer from before, there are no significant KPIs, whether it's in the bookings or any other area of our business that we're seeing a change over the past two to three quarters.

Bernie, you've talked about various levels of revenue that you could achieve at full utilization, in other words, the capacity that you're building for. I know you started this a couple of years ago. I'm sure it's ongoing. But the capacity and the upside that we've seen over the last few quarters, of course, those were not planned very quickly. They were planned a long time ago. Can you remind us or maybe update us on the medium to long-term capacity planning that's in place today? What levels of total capacity can we expect over the next few quarters?

Yes. That's a good question. I think that we answered the questions in the last quarter, okay. We said that we're going to aim for a $4 billion revenue in the next couple of years. And so that's what we do, and we continue to invest.

Yes. I think just to lend some credibility to that, you recall about a year ago, that we offered by the end of Q2 2022 that we would be at a $2 billion run rate. With the guidance that we provided and the expectations ahead, I think that's a milestone that backs up the amount of visibility in our supply chain. So right now, the goal, as Michael said, is to reach $4 billion.

Yes. If the demand is there this year, we will do it. We will reach $2 billion, as we mentioned a couple of years ago. We continue to see the demand, and we see the demand will be there. This is not a short-term matter. If it does not happen this year, it will happen the year after.

Our next question is from Rick Schafer of Oppenheimer.

I'll echo all the congratulations on another stellar quarter for you guys and outlook. If I could, my first question is just kind of following up on the server breakout and obviously, a big ramp ahead for QSMod and cloud this year. I was curious, kind of below that line a little bit, if there's any updates you could give us, like your 48 volt expectations this year or next? I'm curious when you see 48 volts sort of move into other areas like CPU or some broader markets like auto or industrial because I'm curious if you've looked at what that 48-volt SAM looks like for MPS because it seems like an awful big opportunity.

Yes, 48 volts originally began in the automotive sector but is also applicable in silver and AI for CPUs. While the 48 volts in cars represent a separate application, they utilize similar technologies. We recognize that telecom areas are adopting 48 volts as a standard, and with the compliance of 4G systems to these specifications, we have solutions available. There are numerous opportunities for growth in this area.

I think that the 48-volt, not only are we seeing the ramp, its adoption more broadly, but competitively, I would offer that we're very well positioned with some of the new technologies that we've rolled out and expect to roll out during the course of the next 18 months. So I think here again, we're timing our product releases pretty well with the inflection of this market opportunity.

Yes. As we're talking about the product, the module is ramping. We are providing whatever customers need. We can provide at chip level, module level, or solutions level.

Okay. And then maybe as my follow-up, just on 5G, I haven't asked the 5G question in a while. You guys are engaged with the sort of the big three Tier 1 OEMs. I was curious if you could give us an update on your expectations. I know you flagged 5G here from 1Q results. I'm curious what your expectations are for this year and if there's any update you could give us on how content compares with what you're seeing in the server or data center and how that ramp looks. How do you quantify that opportunity in macro base stations?

The 5G is a relatively new market segment for us. We can't draw from our prior experience and calibrate it up or down. We're living a bit hand to mouth on what demand looks like and how fast we're shipping. We don't have a real good predictive model. What we've talked about in the past has been that, again, we believe, on a broad base, not only with the top three players but with a number of partners related to 5G infrastructure, we're providing content. While it's easy to look at the base station as a means of calculating out what the SAM is available to us, I think that we're also in fiber optic in the data center support for 5G as well as in the transceiver of the base station. A lot of the initial technology that we're putting in is tending to be lower-end and not necessarily specialized or adapted to 5G specifically. We don't have the same level of visibility on how it's being deployed, and we've used this strategy in the past with the data center. We comment with lower dollar value content, build the relationships, and then we can go to a higher value.

Let me say that we do have custom designs for each of the areas that Bernie mentioned, from fiber optics to all the single chains, all the way to transmitters. We do have a customer design, and based on our standard product modules, these are the products. It's not really low-end; it can be, but these products can be used for any other telecom and provide power solutions for each of these blocks. We see a lot of activity now in our revenues ramping now.

Our next question is from Chris Caso of Raymond James.

I guess a question about the profile of revenue growth as we go through the year. Thus far, over the past several quarters, your revenue growth has been pretty broadly based, seeing growth in most segments. I know we've been speaking about and anticipating, for a while, the server ramp as we get to the end of the year. But as we look through revenue in the next kind of two, three, four quarters, do you expect that revenue growth to continue to be broadly based, or do you think this is going to be concentrated in any particular segments?

Well, the strategy is we're firing as many cylinders as we can. Whenever one grows, we grow. That’s the strength of our diversification. In the next few quarters, we see the demand, even for 2023 and '24, being pretty much similar. We don’t see that much of a difference. One thing we see it is that our customers demand more high-value products, which means they can easily adopt ease of use and a much higher efficiency product regarding energy use. So we see this as a significant opportunity. Instead of our customer doing a lot of development work, we do a lot of development work for our customers, resulting in a higher dollar amount and higher dollar content. That’s the difference we see.

Got it. My follow-up question is about the impact of some of the China lockdowns, not from your production side but rather from your customer side. What we heard from some others or at least one other is that part of the challenges in China right now are customers having facilities that are closed or that freight forwarders simply unwilling to accept product because of the logistics challenges. Is that something you're facing as well? Is there any impact on your revenue right now, which might mean some of those issues get solved and that some of that goes into the second half of the year?

Absolutely; it hit us. Don't get me wrong. Even though we grow this much, if it were not a problem, we could have shipped a whole lot more. We just anticipated that a little better. For the portion above our model, even a year or two ago, we can’t speculate too much about the factors involved. On the other hand, our logistics and production limitations mean our customers have a mix, too. We clearly see the auto business; we have less problem shipping product than other suppliers. So you can't speculate too much because of limited supply.

I think that we continue to be very resilient under a number of environmental circumstances. Part of that is the planning that we set three to four years ago; some of it is how diversified we are, and some of it is how adaptive we can be in the moment. We acknowledge the impact our customer supply chain is affecting us, but I wouldn’t say that it is a pronounced element, and we're monitoring it.

Our next question is from Tore Svanberg of Stifel Nicolaus.

Congratulations on another record quarter, quite stunning. My first question is on long-term growth. You grew more than 40% last year. It looks like you're on track to growth another 40% this year at least. Michael, in the past, you've said there's no reason why you can't accelerate growth even though you have higher revenues. So I'm trying to understand what you think about long-term growth at this point. Is 40% the right number? I know you're probably not going to commit to a number, but anything you can add on that would be great.

Yes. As always said, about a few minutes ago, I said that our customers demand higher value products, which can be solutions related to products; they want to lower their engineering effort to MPS. I see that opportunity as a chance for accelerated growth. If you think about MPS, we don't make many things; we're just only testing the final control and quality. That's applicable to anything else. So I apply the models, apply tools, and apply all related solutions. So from now on, you will see MPS providing plug-and-play solutions for all kinds of robotics, industrial automation, and building controls. Those types of products will have much higher ASPs, and we’ll incorporate those components into our solutions. Therefore, the unit price will be much higher. Now it's about how fast we can put all these solutions together and turn into meaningful revenue. As I can't predict and now with a lot of knowledge over time, I see MPS is a semiconductor chip business that keeps growing. In the near term over the next year, I don't see any slowdown, and it’s actually accelerating.

That's great perspective, Michael. As my follow-up, I wasn't aware you had a lot of traction in the sat comm market. Could you provide a little more color there? What types of applications, what are some of the strengths the company has today in that market? Are you continuing to introduce new products? This market is, of course, a very high-margin business but also very difficult to crack into.

Yes. We're committed to selling our communications and not only in segments like self the grand station, there’s a huge amount. There’s new standards, and there’s a lot of new activities in that area. We designed this a few years ago. Mostly, it’s power modules related to the antennas, panels, and also a lot of power box components. I think the value is everywhere; these components power the antenna, as well as the receivers, and they benefit us all.

Thanks.

Our next question is from Ross Seymore of Deutsche Bank.

Can you guys hear me this time?

Yes, Ross, you're there.

I've been here the whole time. Glad that we got it to work. I guess the first question is a longer-term one, then I'll follow up with a shorter-term one. Michael, you mentioned many times throughout tonight's call about moving up the value chain, adding more value. Customers want to use Monolithic for more and more. In the past, that's been going from kind of the second or third tier folks in various markets up to the first tier. So really what I want to get at is: Are you seeing evidence of moving up to higher-value customers? Does the fact that you didn't raise prices as much as your peers, and that you had availability, is that giving you longer-term design wins, higher-value design wins? Anything you could do to quantify that dynamic?

I don't know how to qualify that, because we didn't really increase the price for those strategic customers. The prices were negotiated way before. And we have the audit. We said what we do, and it’s all about MPS branding, benefiting us in the long term. As for high-value customers or high-value products, it’s sporadic. It’s just beginning, and a lot of customers don’t even know, or we offer these solutions. We provide the entire solutions, and they don’t have to design it.

For my follow-up, a near-term question, Bernie, this could either be about revenues and/or gross margin, and it's really about the mix. You've talked about gross margin rising because of mix and new products being the drivers of that. If I look at the industrial and automotive businesses, the last couple of quarters, they're great year-over-year but have been flat to slightly down sequentially for the last six months or so. Is there anything going on in that business? Is it just lumpiness? Are you waiting for some design wins? On the mix side of that equation for gross margin, I think most people believe those could be some of the more accretive areas. So how is the mix such a positive for your gross margin if the two areas that are supposed to be the highest margins are underperforming?

That makes sense. That was a good question.

Let me reference what Michael said earlier. It's the power of our model of diversification of the end markets. If you go back to the performance, the revenue performance that we demonstrated in industrial and automotive last year, they were the leaders in our growth drivers. In the current year, the health of the two end markets really came down to it being the timing of shipments. We believe that as far as the design rules that are coming in, we don't believe that we overshipped them to the extent that it's going to cause us a problem. The orders on the book remain incredibly positive, so again, it's just different from quarter-over-quarter as opposed to anything fundamentally different about the market.

Also, one of the questions is why the margin goes up even if these two segments go sideways. Year-over-year, if you look at it from Q3 last year to now, those segments contribute a lot to margins. In the other segments, like consumers, we phased out a lot, not in the last year but from the beginning of last year. As the capacity gets to issues, we always phase out these lower-margin markets; that's another part of it. But overall, the greenfield products drive the margins.

Just to add to Michael's point, as far as phasing out lower-margin business, we’re trying to rationalize our wafer starts to capture the largest opportunity. As a result, some of the lower-margin business that we used to have in our portfolio is not emphasized in our production planning.

Our next question is from Hans Mosesmann from Rosenblatt.

Congratulations on the good stuff. I have two questions. Michael, if we were to split the 48 volts as an opportunity, I'm thinking about getting 48 volts to the rack in your data center and within the rack, getting that 48 volts to the board. Every board has to deal with the accelerators, and there're power issues there. What is the opportunity for each? Where would you be seeing the first incremental business for 48 volts for MPS?

I think it’s the solution. You’re right. The question depends on applications: 48 volts, down to 12 volts, down directly to 1.2 volts. We don’t do that, but we know the customers’ needs, and so we can provide the solutions. We see the growing opportunity across many applications, within the data centers. These are 48 volts converting to 12, and we know the customers’ needs increasingly to be met.

That was very helpful, Michael. What’s your view on the PC market for MPS? I think Intel mentioned that the low end of the PC market is weak, but the other parts are okay. What’s your view to the degree that you have participation there?

Yes. We do well in PCs, and we manage a commercial aspect, even at the low end of business from OEMs. For us, it’s very opportunistic because we have a product developed for servers. Without much of an engineering effort, we can apply this to other products. We did a product for commercial PCs and for commercial norms. We also do battery management; we provide panel solutions. So pretty much, we can offer mobile solutions other than memories or CPUs. It’s very opportunistic, and demand is strong.

Yes. We have a very good footprint in the commercial side. Because we have so many different client offerings, we're being able to sell additional content into those same platforms.

As there are no further questions, I would now like to turn the webinar back over to Bernie.

Great. Thanks, Gen. I’d like to thank you all for joining us on the Q1 2022 earnings webinar. I look forward to talking to you again during our second quarter conference call, which we would like to be in July. Thank you, and have a nice day.