Conference Transcript - MRVL 2026-06-02

Mark Lopatsis, Analyst — Evercore ISI

Very excited to have Marvell join us. My name is Mark Lopatsis. I'm the senior semiconductor analyst at Evercore ISI. And so today we have Willem Maintis, hopefully I'm getting that name right, who is the CFO, and then Ashish Saran, who is the SVP of investor relations. So there's a lot going on in your sector, so I think let's just get right to it. But maybe just to start out with, you guys just reported last week, and maybe if you take a moment and kind of summarize for everybody, like, what do you think of the main takeaways?

Willem Meintjes, CFO

Yeah, thanks. It's really great to be here, Mark. Yeah, so we reported last week, and, you know, I think if you go back over the last several quarters, we've really established a different cadence here, and it's really driven by the market. what we've seen is the end markets that we're addressing continue to be extremely strong, and it's really driven by CapEx, right? And so if you go back to September last year, we, for the first time, sort of indicated, you know, some longer-term numbers, right? And for the current year, we sort of took that number to 10 billion, and then the outer year to 13 billion, right? And so in a subsequent quarter, we upped that from 10 to 11. And then for the outer year, from 13 to 15. And then just last week, we've now taken it to 11.5 and to 16.5 for the outer year. And so we've been sort of very consistently being able to drive the supply chain with the upsides that we've been seeing on the demand side.

Ashish Saran, Head of Investor Relations

Yeah, I think our interconnect business in particular is absolutely on fire. I mean, that thing is growing at 70% plus for this year. I think within that, if you think about there's really two big underlying drivers, there's a scale-out business that's growing even faster, quite frankly. That's really our PAM DSP TIA driver business. And then you've got scale across, which is just starting. It's going to get a lot bigger in the outer years, right? So this is a short to medium term from a revenue perspective. It looks very, very strong. And then I think what's even more exciting is all the engagements we are seeing a little bit further out in time, which I'm sure we'll get into today's call. But I would say that's equally exciting as well.

Mark Lopatsis, Analyst — Evercore ISI

Thanks for the setup. So I think, you know, there was in Taiwan there was some news. Jensen Huang said that you guys are the next trillion-dollar market cap company. And I'm hoping that you can talk about that a little bit. And before you do, though, I'd like to ask or just reflect on the checks that we have done, which indicated over the last six months we talked to about a couple dozen sources amongst the hyperscalers and very consistently across the group what we heard is that Marvell is being viewed as a more strategic partner supplier and that's because you have the broad portfolio of IP. And this was coming through not just on the XP side, but also on the networking side. And so can you, if you care to make any comments about this idea about where your market cap is going to go or the context that that was put in, but if you could also just remind investors of the relationship you have with NVIDIA and NVLink Fusion and to the extent that, you know, the checks that we have picked up on, which I believe Matt played back in your call, how that is working into that relationship also.

Willem Meintjes, CFO

Yeah, maybe I'll start, and Ashish can talk a little bit more about the NVIDIA relationship. But really, if you look at it over a longer arc, I think it's a real validation of the investments we've made and the relevance of connectivity, right? I think beyond that sort of narrow commentary from last night, I think that the broader discussion was really how connectivity is driving compute and accelerated compute. And the investments that we've made both organically and inorganically have really positioned us to be the leader in that space. And so as you've seen sort of these bottlenecks on compute and then memory, we're really seeing the next major bottleneck being on connectivity. And the technology to drive past that is really the investments that we've been making. And so we can get into more detail, but maybe you can talk a little bit on the NVIDIA.

Ashish Saran, Head of Investor Relations

Yeah, sure. I think on NVIDIA, I think, I mean, there's really three big pillars to that agreement we just announced. The first one of them, of course, is a very long-standing relationship we've had on the optics market, primarily historically on the scale-out market, which is on the pluggable side. But now since scale-up optics, which we'll touch upon more later in today's discussion, is becoming a much, much... That's where most of the new differentiation is going to come from. They themselves have their own path they're pursuing. We, of course, are investing in that technology as well. And I think it just makes sense for the kind of the two leaders in this space to have collaboration in where does NPO, CPO go in the future, right? So think about optics as basically becoming a much broader relationship, building upon what we've been doing for them, but now really collaborating much more so on the new scale-up optics market. So that's kind of one pillar. The second pillar, of course, is the one which I think got most interest, and it makes sense, is today if you think about hyperscalers, they've really got two different infrastructures. They've got a completely merchant infrastructure, NVIDIA primarily, and then obviously got custom, and they two don't talk to each other, right? So think of that in the long run. That's not how you want to build a data center. You want complete fungibility. That's where Marvell comes in, right? With our networking IP, our custom IP, where we have the bridge between both those worlds, right? So that's really a big part of the relationship. Where now you can have hyperscalers being completely fungible in terms of how they design their network. They don't have to choose one or the other. They can choose both. So we see that as really opening a much bigger temp for the two companies combined. And the last one, of course, is innovation on the AI RAN infrastructure. We've been in that market for a very long time with our Oction processors, which help on the baseband side. And as you go from the world of 5G to 6G, you need a lot more capability. You want software-defined architectures. And that's where NVIDIA comes in. So we're building in hooks into our baseband processors where you can basically add NVIDIA solutions and very quickly you can upgrade your RAN without reinvesting and building the base station from scratch. So it's a very important thing for a customer. So, again, a very broad set of relationships, but we certainly see all three of them being very important for Marvell going forward.

Mark Lopatsis, Analyst — Evercore ISI

You know, I have to say, you know, in hearing you talk about that, it just reminds me when, you know, Matt Murphy first came to Marvell and he said, you know, I identified, you know, the top companies to acquire, you know, InFi and Cavium. And, you know, if I think about the comments we heard from the, we heard from our sources, the hyperscalers, this idea, this broad portfolio of products, it really seems that, like, that vision is playing out, right? And can you take that to one, you know, maybe one layer deeper and just talk about, like, how is this idea, like, the broad portfolio? And, you know, I appreciate that, you know, the other thing that comes through when we talk to the hyperscalers is, like, everybody has a completely different view on, like, how the architecture plays out. So maybe you could just take it one layer deeper to help investors kind of sink their teeth into what does this idea of a broad portfolio mean? Why does that make you strategic?

Willem Meintjes, CFO

Yeah, I think maybe let's start in connectivity and then we can talk about custom. But if you take connectivity, right, on the longest reach we have a coherent portfolio, right, which this is sort of the DCI original sort of colors portfolio. that was part of Infy, and that Infy really pioneered and developed, and so what we're seeing today is that technology starting to transform into a scale across opportunity, which, you know, if you look at the scale across opportunity over time, that's gonna be a lot larger than the DCI opportunity, and we're investing to be the absolute leader there, And so, you know, when you take that coherent technology and then you start sort of moving down inside the data center, there's reaches there where it's sort of too far for PAM technology, and we're able to do something that we're, again, pioneering on coherent light. Obviously, EnFi was famous for the PAM technology when we acquired them, and we've continued to invest to be the leader on each generation, going from 400 to 800 to 1.6 T, going to 3.2 T next. And so I think one part there that we didn't necessarily talk about previously, but on the last call we mentioned that if you look at the broadband analog, TIAs and drivers, that's part of that portfolio. it's actually very significant. It's a billion dollar business for us. And then you can kind of keep going down the stack on connectivity once you get inside the chip on die-to-die certes. And so this whole, you know, the entire stack from connectivity all the way, you know, from hundreds of kilometers down to millimeters, It's Marvell IP that's enabling that. And so when we look at the custom opportunity, maybe you can kind of tie that in.

Ashish Saran, Head of Investor Relations

Yeah, maybe one other example where all the pieces come together is scale-up, right? So if you think about when you want to build a scale-up network, there's three key components. There's a compute engine, the XPU. There's the interconnect, right, which is copper today going optical over time, and it's the switch. We have all three pieces, right? We build XPUs. We're investing in switches, and we have the leading photonics technology in the market. On top of that, to your point earlier, that each hyperscaler is looking at multiple different alternatives, this is where our breadth of technology and investment lets us do multiple flavors. So we're not making a bet on any one single thing. In optics, we basically have three different modulator technologies for doing essentially scale-up optics. It's MRM, MicroRing, MZM, Mark Zender, as well as EAM. We're also investing in even more exotic technologies, whether it's micro-vixel, it's micro-LED. So pretty much all options on the optical side are available. Even on copper, we could do co-packaged copper if that's what customers want initially as they go towards NPO, CPO. Similarly, on the protocol side, on the switch side, we're not restricted to offering one type of technology. We have a UA-Link switch coming out now. It's a 115T product. We have an ESUN product, which is based on a 100T platform. and, of course, with the whole discussion we had earlier with NVIDIA, we have full access through us to the NBLink platform. So I think that's the idea when you really think about having end-to-end, really having all the pieces. Scale-up is almost a perfect example where a customer can work with us on an entire rack-scale infrastructure up front. We can design all the chips for them, the entire signal path, and give them different optimization paths, which is a fairly unique ability. There's not that many other people wish you can do it in the world today.

Mark Lopatsis, Analyst — Evercore ISI

How is the, you talk about the optical engine, the celestial AI, where are you in the development cycle? How should we think about the milestones? Our own checks are indicating excitement around this and the potential for this to be huge for you guys. So how should investors think about celestial AI, where it is?

Willem Meintjes, CFO

Yeah, so I think, first of all, I think, you know, if you just step back, there's this category of scale-up optics, right, and so Ashish was talking about there's a whole range of different technologies enabling scale-up optics that we're investing in. So, SUNY Celestial is one of them, but at the same time, we're doing COOP technology, MRM with TSMC, where we have MZM, right? That's the photonics engine that's been in our DCI product for a long, long time. And so, you know, both NPO, CPO, we're playing in all these different technologies. And so, you know, the update that we gave on the last call was that, you know, initially when we acquired Celestial, we said $150 million for next year. And we've updated that to incorporate the whole category and actually double that number to $300 million. But that includes all the different go-to-market. And so Celestial is on track. We're also very much excited about that opportunity. But the opportunity is a much larger opportunity. And going forward, we're really updating on the overall scale-up optics opportunity versus just the specific.

Ashish Saran, Head of Investor Relations

Yeah, the Celestial product is basically, it's well past development. At this point, it's really entering a manufacturing cycle. We've lined up, you know, sources of supply. This is really going towards, I mean, basically, it's going to be in production, essentially, next year. So it's well advanced on its path into getting into production. So that revenue for next year still stays where we suggested last time. But then, of course, to your point, that ramps very significantly as you go from calendar 2027 to calendar 2028.

Mark Lopatsis, Analyst — Evercore ISI

So is this the $500 million bogey?

Ashish Saran, Head of Investor Relations

On a quarterly basis, exiting the year next year, it's still $500 million, and it doubles to a billion dollars exiting the year following year. So if you kind of work your way through the map, it's basically saying over this roughly a year and a quarter time frame from the start of production, it's about a billion dollars in revenue, plus or minus. And that's just the very, very beginning of this scale-up ramp. And then on top of that, we would get revenue as Vila mentioned from a broader set of scale up optics solutions which we have including a light engine as well as some of our TIAs and

Mark Lopatsis, Analyst — Evercore ISI

drivers. And Celestial AI, there haven't been production revenues as I understand yet but there's been four generations of the product. Can you just talk about the development? Because I think there's a set of investors who are concerned about how can you project that kind of

Ashish Saran, Head of Investor Relations

revenue when we haven't seen it yet. Yeah, I mean you should think about that this technology was actually demonstrated several years back. And you should imagine that the lead customer went through a very, very extensive bake-off process with very heavy technical detail, getting physical product in their hand because that is basically their scale-up optics, one of the key solutions they need going forward. So in this case, it's not like what we tell you. It's basically where you've got a very large hyperscaler which has gone through that bake-off process and this is what they picked. I think that's probably the best validation of that particular technology. And at this point, we're, like I said, we're well beyond, this is in a productization phase, where we've lined up basically capacity, you know, for volume manufacturing, essentially starting fairly soon.

Mark Lopatsis, Analyst — Evercore ISI

Gotcha. If we could shift over to the XPU, the ASIC business, you know, the news flow, I think, on this business has been the bane of your existence in a way. And I think there's confusion about what you guys do and, you know, what other suppliers in this market are, you know, claim to be suppliers. Can you help us understand what is that, you know, I guess we think about you guys as an IP business. Are, you know, how should we think about the competitive landscape? There's companies in Taiwan. Like, what do they do? What do you guys do differently? You know, I think a lot of people understand what Broadcom does. Like, how should we think about, you know, clear up the confusion for once and for all?

Willem Meintjes, CFO

Yeah, what's the fun of that? Every time. This time it's going to happen. Let me just frame the size of the business for a second and the puts and the takes, and we can kind of get into the more technical piece. But I think the first piece is that, you know, we said that that business is going to grow over 20% this year, so from one and a half billion to, let's just use round numbers, two billion. And then over double the following here, so rough math, four billion plus, right? And we've actually given quite a bit of granularity on the drivers for that growth, where we basically said a third is from our current program, a third is from the new XPU attached programs that are ramping, and that's actually 10 plus programs that are going into production, or will be in production next year. And then a third from the new XPU program. And so the key point there is that this custom business has actually become quite diversified. There's multiple growth drivers, multiple engagements, and what we've seen is if you look at the XPU attached part, part, that's CXL and NIC and when we spoke about that originally, we saw those going to a billion each in the outer year and that's very much on track to get there or even more than that. I think we've seen those attached areas just become more and more relevant.

Ashish Saran, Head of Investor Relations

And so... Yeah, maybe in terms of what we do, which is a little different than... I think, yeah, look, there's there's companies like us which is the reason why companies are coming or customers are coming to us is because there's a lot of our interconnect technology, the entire discussion we had for the last 15-20 minutes or so which is very relevant when you build large complex XPUs. These XPUs are no longer monolithic single chip devices, right? These are basically multiple compute die, HBM stacks. You need high speed 30s. You need die-to-die interfaces. You need custom HBM interfaces. You need much more optimized custom SRAM for much higher packing density. You need advanced packaging. and those are all the things we do for our merchant business. So the reason we're in the custom business is actually because of the expertise we've established from our merchant business, and those capabilities are very important to some of our XPU customers. Now, when you build a chip, there's an IP portion, which is what I discussed, which is kind of more considered kind of front-end design, but right at the end of the process, there's also a process where you have to go through a back-end process and do, like, basically layout, which is physical design, right? So I think some of the companies you're thinking of, some of the design service companies, have an important role in the ecosystem, but they don't have IP. And the reason they don't have IP is because they don't have a product business, right? So that's the real clear distinction, is if we're engaged in a project, it's because our networking IP is what the customer is looking to access and build into the XPU or XPU attached, versus when they're partnering up with somebody in the design services side, it's more of a relationship of the design is done somewhere else and essentially you need someone to do the last part of the process, which is physical design. That's really the clear distinction, I would say, between the two business models.

Willem Meintjes, CFO

And the traction that we're seeing is really a reflection of that. I think, you know, ultimately when you go through all this thrash and you get out to the other side we are today, we've seen a massive increase in engagement on the amount of opportunities that we have And just on the last call, you know, we said we've actually won, you know, multiple additional custom design wins, right? And so, you know, really this differentiation in IP is we're seeing that show up in the amount of traction that we're having with the customers.

Mark Lopatsis, Analyst — Evercore ISI

So may I ask what, I mean, this is, it seems to me that this is IP that you've had, but it seems like it's like in the last six months where our field work is telling us that we're seeing an inflection, and Matt talked about that on the call last night. So what has happened recently?

Ashish Saran, Head of Investor Relations

It's basically, it's what you're seeing happen in the world of AI, which is that the rate of acceleration is increasing. The complexity is going up. Again, scale-up's a great example of it. Scale-up networking outside of one player didn't really exist at this point in time. But if you look for the next two to three years, you're looking at much higher densities. You're looking at much more complex inference in the example. You're hearing about agentic AI today. All it's doing is driving a lot more traffic. You need to disaggregate your memory at this point. You need a lot more traffic between XPUs. All of that is, again, back to networking IP. So yes, there's a reason why you're hearing what you're hearing, because all the IP we've developed, and we ship in our merchant products is absolutely critical. Kind of goes back to your first question, by the way, like why did we get called out? This is the reason why we got called out is because the role of networking is absolutely critical going forward.

Willem Meintjes, CFO

Yeah, that connectivity thread that goes all the way through, right.

Mark Lopatsis, Analyst — Evercore ISI

So the market is coming your way, basically.

Willem Meintjes, CFO

That's correct. Yeah, I mean, we've had this thesis for the last decade and that's driven all the investments that we've made. And, you know, I think the interesting thing is that what we've been saying has been very consistent.

Ashish Saran, Head of Investor Relations

Yeah, and by the way, it's not just the market's coming our way. I think what's also happening is as you go to these longer reaches, higher speeds, higher densities, the market's coming our way on the optics side. And that's an area where we started a long time back. I think one of the key things when you look at do you not just have all the pieces, when did you start assembling those pieces? It's not something you wake up today and go license IP and go build a product. These are things you have to invest in five years or 10 years. When you engage with these large customers, they're looking at where will you take them, not just today and tomorrow. It's what's your roadmap look like. And do you have data? Do you have field data which says you've done it and it works? I think that's the other thing to keep in mind. So I think the shift toward optics in particular is going to be very beneficial. I mean, we started down this path with InFi, but we've added more capabilities, right? Very recently, Celeste is one example. We're looking even further out. We acquired a company called Polariton, clearly a pre-revenue company, but they've got some very unique technology which can take modulators to speeds which are roughly up to 10x higher than current technology. So we're looking at where does this market go in the next 5 to 10 years, and optics is a massive differentiator for us.

Mark Lopatsis, Analyst — Evercore ISI

Now, Willem, you mentioned the XPU-attached design wins, and I think Matt mentioned in the call that the forecasts continue to come in higher than expected. If I, you know, if I didn't capture that spirit correctly, please do correct me. So, you know, we have a, you know, the other checks that we've done over the last six months indicated, you know, led us to this called CPU renaissance, where you have more CPUs because of first inferencing, and now agentic AI, you have a change in the CPU to GPU ratio, and I think you guys mentioned this on the call as well. To what extent are these XPU attached business or sockets that you have? Is it Nix and CXL controllers? Is it all that? And is it correct to say that these all get attached to CPUs that go into AI servers? How could we qualify this business?

Willem Meintjes, CFO

Yeah, I think, first of all, you know, clearly there's an inflection, right, in terms of, like, the CPU, you know, attached to GPU, right, that rate. It's very dynamic, right? I think, you know, the technologies that we have are clearly attaching to some of that, but, you know, exactly how that plays out, you know, I think it's not necessarily built into what we've communicated, right? I think, you know, as you look at CXL and you look at the memory wall, you know, that's very relevant as you scale these CPUs. And so, certainly, I think that is a significant opportunity, both not just CXL, but on PCIe, on PCIe switch and retimers. if you look at just the amount of data that's getting moved there's sort of the MOE and then this is agentic and quantifying the impact of agentic I think that's still very much ahead of us here

Ashish Saran, Head of Investor Relations

yeah but the products are very similar to your point if you look at our revenue stack we outlined call it in 28 where we said in that 10 billion at that point we said 3 billion ish plus or minus is going to be coming from XP or attach The two biggest pillars of that, essentially, each billion-plus was CXL and custom NICs, essentially. And if you think about the simple... If you're going to have more CPUs, just very direct, you're going to need more NICs, just flat out. And if you're using this primarily for inferencing, you're going to have these longer context windows in inferencing, you need a lot more KVCache data. You're going to need more CXL, essentially, especially today where DRAM prices are high and capacity is very tight. So I would absolutely expect... The numbers we've outlined so far don't really include the agenting impact, just to be clear, because that's all happening now. So the revenue we'd outlined was things we had already seen based on attaching to XPUs. Now with agenting, more CPUs, you should expect to see more upside on those. And by the way, it's very similar products. In fact, if you think about it, CPUs in the last few years were designed with CXL already in mind. They just never used them because all the oxygen went to GPUs in this whole AI cycle, but now the tide's kind of reversing a little bit, right? So, yeah, I think there's certainly a lot of excitement around this, and the attach rates can be actually very, very meaningful for us.

Mark Lopatsis, Analyst — Evercore ISI

And is the XPU attached, is it all Nix and CXL, or is it... There are some other products there. How can you qualify this?

Ashish Saran, Head of Investor Relations

So think about XPU attached at a very high level as an offload device. You're trying to basically maximize your central compute device for its core function. It's no different than if you go back years back, right, where you started creating NICs to minimize I.O. of the server CPU. Same idea, essentially. CXL and NICs are the two large examples, but there's a couple more we can identify where we have design wins going into production. One certainly would be storage accelerators because while we're discussing memory as CXL, there is storage, right? So you're basically, whether it's SSDs or HDDs, right, instead of having the core CPU XP address them, you'd rather do it through a dedicated device, so that's a storage accelerator. And the last one is a security offload device. This is a unique product for Marvell. This comes from the Kavium acquisition. We're one of the only companies building dedicated security accelerators, and this is a perfect use case. Again, optimized for different hyperscalers. And again, the idea is as more and more companies and enterprises, take Marvell, we don't go buy our own AI infrastructure. We're using AI as a service, but I want to make sure my data, when I put it into a cloud network, is encrypted. You can certainly do encryption decryption on a standard XP or a standard CP, but why would you? You'd much rather do it on a dedicated device. So that's another example, which is, again, going to be a fairly large opportunity for us.

Mark Lopatsis, Analyst — Evercore ISI

I want to kind of shift gears to the DSP business, which has been a great business for you guys. How do you anticipate your share position to evolve as the market kind of shifts from 800 to 1.6 to 3.2 over the next several years? Is the competitive landscape changing?

Willem Meintjes, CFO

Yeah, I think when we acquired in FI, there was always this expectation that we're going to lose market share. And frankly, market just really hasn't happened, right? I mean, the team's executed really, really well on investing and being first with each technology. And we continue to see that. Now, the market's become so much bigger that clearly there's a lot of investment and there's a lot of competition. And so, you know, at our scale, you know, is there a potential for somebody to take some small amounts? Certainly that's the case. But we're continuing to drive absolutely very, very strong majority market share across each one of these generations. And the team's ensuring that that continues. I mean, you know, if you look at 1.6 T, that actually went into production last year. It's become very significant this year. And, you know, 800 gig is still growing. But if you look across into next year, we're going to continue to have very, very, very strong share.

Ashish Saran, Head of Investor Relations

I think the basis of competition in these markets is always, you know, were you first to market? Did you have the first solution? And that's been the case in every single generation of PAMP4. or no different at 1.60. The second, of course, you can see it in the numbers. I mean, we outlined for this year we're going to grow at 70% plus interconnect. Within that, scale-out is growing faster, right? And then again, we said next year we will, again, substantially outgrow cloud capex from an interconnect business. And again, the largest part of our interconnect business is up MDSPs. And next year in particular, 1.60 is a huge part of it. And the reality is I don't think we see anything significantly different. I think we've had a leading position. Don't really see that changing going forward.

Mark Lopatsis, Analyst — Evercore ISI

You know, I think, you know, from our standpoint, it seems like you're planning for billions in annual revenues from hundreds of millions last year for 1.6T. How should investors think about the mix of DSPs versus TIAs versus drivers? You have good products in all these buckets. How do we think about those different elements?

Ashish Saran, Head of Investor Relations

Yeah, I mean, the DSPs.

Mark Lopatsis, Analyst — Evercore ISI

And how they work together, if that's fair to ask.

Ashish Saran, Head of Investor Relations

Sure. So DSPs would still be the largest portion of our entire InterConnect revenue, but it is getting a lot more diversified, right? So if I go back, and this is all information we provided a couple of quarters back. If I go back to, like, last year, our total business in InterConnect was about half of data centers. We'll call it roughly $3 billion, and within that, we said about half a billion was scale across, and the remaining, essentially, was scale out, which was dominated by DSPs. Now, that business is going to go from $3 billion to 70% plus this year, right, and then outpacing cloud cap as you guys can run through your model, you'll end up with a very large, multi-billion-dollar DSP business. But at that point in time, to answer your question, we also said scale across will also be a billion-dollar business. And then TIAs and drivers will also become a billion-dollar business. So the business gets very diversified, but obviously DSPs, given the volume, given our market share position, one would expect will remain under the majority.

Willem Meintjes, CFO

Specifically, I think it was underappreciated, like the size of our TIA and driver business. And so we wanted to sort of at a point in time just break that out for investors so that you can kind of see the scale of that. We'll probably not break that out too regularly. But I don't think most people understood just the scale of that business today.

Mark Lopatsis, Analyst — Evercore ISI

That was from InFi.

Ashish Saran, Head of Investor Relations

In fact, that is the original InFi business. When they started down, this was before PAMDSPs, right? So the original business from InFi was actually building these analog components, right? And that's been a critical differentiator. Obviously, with the takeoff in PAM DSPs and that business became kind of the face, and it still is, but the reality is it's a lot more diversified. And it's also a key component of technology required for scale-up optics going forward. It's not just scale-out.

Mark Lopatsis, Analyst — Evercore ISI

How is, you know, so everything is growing very nicely, right? How do we think about supply constraints here? And maybe starting here, how do you characterize this supply, laser supply for you guys?

Willem Meintjes, CFO

Maybe just talk about the general, and we can talk specifically about laser. I think we spoke about it on the call last week a little bit, but we've really instituted a very rigorous process where we do a five-year forecast. and what we do is really proactively share that with our supply chain so that they have visibility to our growth trajectory and I think that's been critical in terms of allocation where when you look at a year like this year we've been very consistent in terms of what we've seen in terms of demand and how we've communicated that and so Chris and team have really, you know, and you can see the progression here over the last couple of quarters. They've done a great job at securing supply specifically in relation to those forecasts that we were providing.

Ashish Saran, Head of Investor Relations

Yeah, I mean, supply has been tight. I mean, it's the worst kept secret out there. But having said that, I mean, just look at the upside we're driving this year and next year. I think we've done a pretty good job. I mean, take our data center business. We grew it like mid-40s last year, We're going to grow 50, so accelerate this year. In a tight supply environment, we're going to accelerate even more next year. So I think that gives you a good sense of, I think we've got a pretty good handle on it. I think we have a very good understanding. We triangulate demand, make sure we serve it well. And I think we've actually done pretty well on the capacity side. I think in terms of lasers, I mean, I think as far as I can tell, right, our customers are able to get as much as they need. No one's saying their data center's not going up because they don't have lasers. Would they like more? Of course. But I would just say I don't think that's a huge constraint in the near term. But given what you're going to expect to see in scale-up optics, I think it's important the industry keeps investing in it because the demand for, like, external laser sources is going to absolutely explode. So I think it's a good question, especially in the longer term, where the industry does need to keep investing in it. But, look, this is capitalism 101, right? There's an opportunity. People will invest. And I think over time, I think we'll be in pretty good shape.

Mark Lopatsis, Analyst — Evercore ISI

Does vertical integration make sense for this component for you guys?

Ashish Saran, Head of Investor Relations

I think at this point in time, I think we feel pretty good about the way the industry is set up, right? I think we focus on what we do extremely well, which is build ESPs. Having said that, I think there are places we build modules. Our DCI business, we actually build an entire module given the complexity of the product. But in general, I think our focus is on silicon. That's where we differentiate. And I think there's other partners out there which are very focused on that particular part of the ecosystem.

Mark Lopatsis, Analyst — Evercore ISI

Is the – it looks like we've run out of time. We're going to go a little bit longer, if that's okay, with you guys. How should we think about the long-term data center interconnect revenue opportunity? I think Matt previously indicated that TAM is going to expand 5x by 2030. Does that include the more recent commentary as it relates to, like, the scale across DCI-TAM that's got 10x higher bandwidth than the front end? Like, how do we think about that business?

Willem Meintjes, CFO

Yeah, I think that your last comment is really, I think, the key there, where the amount of data on connecting the back end in a scale across network is multiples higher, right? And so that's where the 10 times number comes from. And so to be able to address that amount of data, clearly that market needs to be a lot bigger, right? And so, you know, we've, again, pioneered the technology there, and so our expectation is to sort of continue to maintain a really high market share as you see that market develop on scale across.

Ashish Saran, Head of Investor Relations

Yeah, I think the TAM numbers are probably going to keep floating up, Mark. I mean, I think if I compare to what we said, like, and that's not just a comment on the fact, yes, clearly CapEx is higher than we thought it is, so that's, tidal lifts all boats. But I just think that the sheer complexity of the network, right, with the Gentec, with mixture of experts with all of these different influencing models is just a lot more than what we all thought even just barely a year or two years back, right? And scale across, we're at the very, very beginning stage of it, right? I mean, today, I would say the majority of the market is still DCI, front-end connectivity. I think the first scale across meaningful revenue really probably starts next year, maybe a little bit this year. One of the key things you need for scale across is customers really want to go to 1.60. Today, most of the market is more like 400, 800. but think of scale across as just taking an existing scale-out network and just stretching it across a much longer reach but it's the same amount of data which is what drives up ham DSP business today just to give you a sense of how large this can be and you want the same bandwidth so this needs to be 1.60 which is why we pulled up our roadmap came out with our 1.60 DCI module pretty soon it's going to be sampling second half this year with a 2 nanometer coherent DSP first to market so pretty unique position there

Mark Lopatsis, Analyst — Evercore ISI

So I think we have the mayor coming in next, and I'm getting the signal from our organizers that it's time for us to wrap up. So that will have to be the last word. Great, thanks. Willem, Ashish, thank you so much for joining us today and for all the great insights.

Ashish Saran, Head of Investor Relations

Appreciate it. Thank you.