Earnings Call Transcript - MXL Q1 2022

Operator, Operator

Hello and welcome to the MaxLinear Inc., First Quarter 2022 Earnings Conference Call and Webcast. At this time all participants are in a listen-only mode. A question-and-answer session will follow the formal presentation. As a reminder, this conference is being recorded. It is now my pleasure to turn the call over to Nick Aberle. Please go ahead.

Nicholas Aberle, Host

Thank you, operator. Good afternoon, everyone, and thank you for joining us on today’s conference call to discuss MaxLinear’s first quarter 2022 financial results. Today’s call is being hosted by Dr. Kishore Seendripu, CEO; and Steve Litchfield, Chief Financial Officer and Chief Corporate Strategy Officer. After our prepared comments, we will take questions. Our comments today include forward-looking statements within the meaning of applicable securities laws, including statements relating to our guidance for second quarter 2022 revenue, revenue growth expectations and our principal target markets, and GAAP and non-GAAP gross margin, operating expenses, effective tax rate and interest and other expense. In addition, we will make forward-looking statements relating to trends, opportunities and uncertainties in various product and geographic markets, including, without limitation, statements concerning opportunities arising from our broadband, wireless, infrastructure and connectivity markets and opportunities for improved revenues across our target markets. These forward-looking statements involve substantial risks and uncertainties, including risks arising from competition, supply constraints facing the semiconductor industry, global trade and export restrictions, the impact of the COVID-19 pandemic, our dependence on a limited number of customers, average selling price trends and risks that our target markets and growth opportunities may not develop as we currently expect and then our assumptions concerning these opportunities may prove incorrect. More information on these and other risks is outlined in our Risk Factors section of our recent SEC filings, including our Form 10-Q for the quarter ended March 31, 2022, which we filed today. Any forward-looking statements are made as of today and MaxLinear has no obligation to update or revise any forward-looking statements. The first quarter 2022 earnings release is available in the Investor Relations section of our website at maxlinear.com. In addition, we report certain historical financial metrics, including net revenues, gross margins, operating expenses, income from operations, interest and other expense, income taxes, net income and net income per share on both a GAAP and non-GAAP basis. We encourage investors to review the detailed reconciliation of our GAAP and non-GAAP presentations in the press release available on our website. We do not provide a reconciliation of non-GAAP guidance for future periods because of the inherent uncertainty associated with our ability to project certain future charges, including stock-based compensation and its associated tax effects. Non-GAAP financial measures discussed today do not replace the presentation of MaxLinear’s GAAP financial results. We are providing this information to enable investors to perform more meaningful comparisons of our operating results in a manner similar to management’s analysis of our business. Lastly, this call is also being webcast and a replay will be available on our website for two weeks. Now let me turn the call over to Kishore Seendripu, CEO of MaxLinear.

Kishore Seendripu, CEO

Thank you, Nick, and good afternoon, everyone. Our Q1 revenue was $263.9 million, up 6% sequentially and 26% year-on-year, while gross margin was 62.8% and non-GAAP operating margins expanded to 33.5%. During Q1, we saw accelerating growth in our Wi-Fi connectivity, fiber broadband access and 5G wireless infrastructure end markets. These end markets continue to be the most significant growth drivers for the company. Our new products have solid traction and are gaining multi-year business opportunities. We are seeing strong growth driven by the increasing infrastructure capital expenditure spend. Specifically, telco carriers are upgrading to support multi-gigabit fiber PAM broadband home access and expanding 5G network buildouts. Our gathering business strength is born of product development success, content increases in customer platforms, as well as the strategic expansion of our portfolio into adjacent technologies and markets. Turning to the business highlights. In broadband and connectivity, Wi-Fi 6 and fiber gateways are the two most significant drivers of growth for the company, and we expect continued revenue expansion over the next several years. Most notably, in Q1 Wi-Fi had another breakout performance growing 37% quarter-on-quarter, and nearly tripling year-on-year. We are benefiting from the transition to Wi-Fi 6 and Wi-Fi 6E, increased market share, higher attach rates and higher ASPs. Furthermore, the Wi-Fi market itself continues to demonstrate strong growth as consumers demand speed and reliability within the connected home to support voice, video, gaming and internet in parallel. Looking into Q2, we expect to diversify and expand our Wi-Fi revenues beyond operator-driven broadband gateway markets as we begin ramping into third-party standalone routers. The standalone Wi-Fi router addressable market opportunity exceeds 100 million units per year. Based on these trends and our strong product traction, we confidently expect to more than double our Wi-Fi product revenues in 2022 and are firmly on a trajectory to deliver at least $200 million in Wi-Fi revenue in 2023. Lastly, our soon-to-launch innovative next-generation Wi-Fi 7 standard-based product will be strong positive catalysts for increased selling prices, future share gains and market expansion opportunities in Wi-Fi connectivity. In broadband gateway, we are ramping into several new fiber access applications with new product technology and renewed focus driving meaningful design win traction. One example is our industry-leading URX family of Gateway SOC and network processors for 10 gigabit wireless access networks that are driving customers to build around our fiber gateway platform offering. Additionally, new fiber gateway wins will pull through over $20 of peripheral bill of material content including Wi-Fi, Ethernet and power management solutions. As a reminder, fiber as a category within the broadband end market is seeing strong unit growth driven by the move to 10-gigabit increase capital deployment by carriers to add subscribers and to benefit from government funds to deliver services to underserved homes. We are very bullish about our fiber PAM growth. Moving to infrastructure, our 5G wireless access and backhaul products grew in aggregate by over 50% year-on-year in Q1 driven by the early stage build-out of 5G infrastructure in North America. Even as we benefit from the long-term 5G secular trends, new products are driving higher content opportunities per platform and incremental growth. For example, our Bill of Material per platform has doubled as we ramp our 5G millimeter-wave products into multiband radios for wireless backhaul applications.

Operator, Operator

Ladies and gentlemen, please stand by. We are experiencing some technical difficulties. We'll get speakers back on the line shortly. Thank you. Ladies and gentlemen, please stay connected. We are reconnecting the speakers as we speak. So you're going to be rejoining the MaxLinear speakers into the conference. Please proceed.

Steve Litchfield, CFO

All right. I apologize, everyone. I'm not sure exactly what happened there. But I'm going to start again on our guidance. So we currently expect revenue in the second quarter of 2022 to be approximately $275 million to $285 million, up approximately 6% at the midpoint of the range versus the previous quarter and up approximately 36% versus the prior year. While we continue to expect supply chain tightness to continue throughout FY 2022, we're expecting to see incremental improvements to better support the success of our customers. Looking at Q2 by end market, we expect broadband revenue to be up quarter-over-quarter driven by growth in Gateway SOC for both cable and fiber applications. Connectivity is expected to be up versus Q1 driven by continued strength in Wi-Fi. In infrastructure, we are expecting revenue to be flat as compared with Q1. Demand for our infrastructure solutions continue to be strong, but growth is being constrained in the near term by tightness in substrate availability. Lastly, we expect our industrial multi-markets revenue to be slightly up quarter-over-quarter. We expect second quarter GAAP gross profit margin to be approximately 57% to 59%. And non-GAAP gross profit margin to be between 61% to 63% of revenue. As a reminder, our gross profit margin percentage forecasts can vary within a given quarter depending on product mix and other factors. We expect Q2 2022 GAAP operating expenses to be up quarter-on-quarter to a range of $112 million to $118 million. We expect Q2 non-GAAP operating expenses to be above Q1 levels within a range of $80 million to $86 million. We expect our GAAP tax rate to be approximately 25% and non-GAAP tax rate to be roughly 6%. We expect GAAP and non-GAAP interest in other expenses to be roughly $3 million. In closing, we are continuing to execute with innovative product offerings that are enabling us to drive growth through market share gains and silicon content increases. We have significantly increased our total addressable market by delivering innovative new products for adjacent markets. We have prioritized customers and are continuing to build increasingly strategic relationships that we believe will enable us to grow our presence in markets where we are today under-penetrated. We believe we are well positioned for continued revenue expansion and operating leverage throughout FY 2022, which will create significant value for our shareholders. With that, I'd like to turn the call over for questions.

Operator, Operator

Thank you. We now will be conducting a question-and-answer session. Our first question today is coming from Tore Svanberg from Stifel Nicolaus.

Jeremy Loiacono, Analyst

Yes, good afternoon, and congratulations on the strong results. First of all, this is Jeremy on for Tore. Unless this was part of the portion that got cut off. But on the infrastructure side, did you provide us an update on the PAM4 DSP?

Kishore Seendripu, CEO

So in the prepared remarks, we did talk through PAM4 DSP. I mean, we continue to be on track and very pleased, if you recall, last quarter, we kind of pushed some of those revenues out to the back half of the year. But we just completed a really successful OFC show where we talked a lot about the 5-nanometer solution where we're seeing significant traction. And that I guess, I would also add that the market opportunity there I think continues to be very robust. And so we're excited to see those products kind of proliferate and start to penetrate with additional customers.

Jeremy Loiacono, Analyst

Great. And then, in terms of the Wi-Fi 6 product and your penetration with third-party standalone solutions. Can you talk about any differences in terms of design cycles, potential ramps, and also maybe the ASP or gross margin, if any impact?

Kishore Seendripu, CEO

I believe that our traction with Wi-Fi 6 and 6E is significant. Being one of the first certified by the Wi-Fi 6 Alliance, we are among the top three access point solutions available. We're experiencing strong demand for standalone Wi-Fi routers, driven by the overall performance of our solutions. Our differentiation mainly lies in offering the highest data throughput compared to our competitors, which sets us apart. Additionally, our competitive pricing relative to performance is crucial for success in the standalone Wi-Fi market. To thrive, it's essential to provide the best, most reliable, and cost-effective standalone Wi-Fi solutions, which also includes our Ethernet products. As we move into the latter half of the year, we anticipate a substantial increase in demand for third-party standalone Wi-Fi routers.

Operator, Operator

Thanks. Our question today is coming from Alex Leszcz from William Blair.

Alex Leszcz, Analyst

Hey, guys, congratulations on excellent execution. Just to follow up on the Wi-Fi question, Steve, maybe can you help us understand the potential impact going forward as Wi-Fi becomes a larger portion of the business? And you guys get to that $200 million in revenue next year in terms of gross margin. And then, historically, that's been a lower gross margin product. But I know since you overtook Intel, you've made some improvements. So maybe a little clarification there.

Steve Litchfield, CFO

Yes, sure. Absolutely. So very excited about Wi-Fi. I mean, when you say what the impact is, it's a great impact. We're very excited about seeing this growth. I mean, seeing this business get north of $200 million, I think it still feels very much like early days here. We're seeing nice upsides in supply. So we're starting to see more supply that we've been able to kind of move some things around and get more supply out for our customers. We do see third-party routers coming in. I mean, this is kind of I suggested earlier, there's an incremental 100 million units out there that we can now go out and address. Gross margins in this business are good. It does get lumped into the category of kind of a lot of those Intel products came in at lower gross margins. And so we are making improvements there and some of that on the supply chain side with cost. But it's also our next generation products will come out at higher gross margins as well. So yes, I mean, there's some lower margin business that comes into play in the second half of the year. But I think long-term we don't see a problem as far as competing and being able to go after our mid-60s gross margin percentage.

Kishore Seendripu, CEO

Just one qualifier there, Steve, the Wi-Fi 6E we are talking about, the product developed after the acquisition and closed are based on that, so it's not a legacy product. So it's got some, what if you will MaxLinear flavors to it in terms of competitiveness on the cost structure.

Alex Leszcz, Analyst

That's helpful. And thanks for that clarification. And then just a question on the constraints. When you talked a little bit about substrates and infrastructure, is that more on the wireless backhaul side? Is it on the optical side? Or is it also impacting the 5G trajectory as we move throughout the year?

Kishore Seendripu, CEO

We don't specify the areas where we are experiencing shortages. However, the significant shortages in high-performance substrates are impacting our infrastructure revenues. That's definitely true. While we typically don't share details about our product line backlog, it's worth noting that our infrastructure backlog is exceptionally strong, exceeding our growth expectations. This is largely driven by 5G rollouts, which are significantly aiding our transition to increased BOM content on the backhaul side, shifting from microwave to millimeter wave and nearly doubling the BOM as access continues to grow. Many positive developments are taking place. I would describe this year as remarkable in terms of our growth, but it's not a fleeting demand, so we will eventually meet it. We are actively taking steps as a company to increase our capacity; we have made investments in specific high-performance substrate companies to secure dedicated capacity for the future. We will manage to overcome this situation. Our infrastructure market is facing more constraints than any other market due to the high-performance substrates, while there are some impacts in other areas, they are not significant enough to affect us much.

Operator, Operator

Thank you. Next question is coming from David Williams from The Benchmark Company. Your line is now live. David perhaps your phone is on mute David. Please pick up your handset.

David Williams, Analyst

Oh, my apologies there. I thought I'd put that off. Thanks for that. Letting me jump on and congrats on the solid quarter.

Kishore Seendripu, CEO

Thanks, David.

David Williams, Analyst

I guess on the first side, just kind of thinking about China and you've got a pretty good portion of your business kind of shipped into Asia overall. Just kind of curious if you're seeing anything in terms of either demand or supply side from the Chinese lockdowns that we've seen intensify over the last several weeks.

Steve Litchfield, CFO

Yes. I guess I wouldn't say that we have huge exposure. I mean, we definitely got a lot of business there. And it's growing nicely. But I mean, as far as the COVID dynamics and shutdown, I don't think the demand side we've seen too much on the supply side. We definitely saw some of that late last quarter. And we're seeing it right now. But overall, I think we feel very comfortable and that was reflected in our guidance.

David Williams, Analyst

Okay, fantastic. And then maybe just on a higher level, but from a backlog or maybe the order book. Have you seen anything in terms of cancellations or changes there? Are your customers? Have they changed the behavior? Just kind of thinking about the demand outlook? Or do you still feel pretty comfortable that that it's business as usual here?

Steve Litchfield, CFO

So yes. It's business as usual in a very positive way. Right? For us, it's not business as usual because we are seeing a lot of growth, accelerating growth in the various markets. So for us if there's a lot of demand with the big infrastructure spend that's going on, whether it's in our wireless infrastructure markets, optical data in the markets, or in the broadband fiber deployments, right? So we're benefiting from that. So we are not seeing cancellations pushed out. But we do know that our customers are struggling still to secure products from other players in the platforms. Having said that, our guidance reflects our expectation of what I call an end throughput sales which is what we track when we give guidance, not what we sell into our customers, per se. So we feel very good where we are in terms of our guidance and the demand out there.

David Williams, Analyst

Fantastic. Thanks so much for the color. I appreciate it.

Operator, Operator

Thanks. Our next questions today is coming from Suji DeSilva from ROTH Capital.

Suji DeSilva, Analyst

Thank you. Sure. Congratulations on the progress here. You've talked about in the Wi-Fi market, expanding to the router opportunity I pictured as being different from the setup box opportunity you've already done very well. And can you talk about what competitive landscape or just differences that are penetrating that market and what the timing might be to announcing some wins there?

Kishore Seendripu, CEO

I think we already spoke about it. I said the latter half of this year is going to be heavily driven by these gains in standalone router business. And the dynamics of any of these markets are quite similar. They're very different from operator markets. However, typically, even the standalone router market somewhere along the way, the end customer to those standalone router designs are operatively class of businesses. So how are the differences here? Here, we don't get to compete with our full platform offering, with our Gateway SOC, the fiber or the cable front end, and the full menu of products we bring to bear on the Gateway platform. So we compete, it's a hand-to-hand combat on the Wi-Fi side, and you win based on performance. And that's where we are winning. I mean, you want to keep in mind that we are a purely access point focused Wi-Fi product company. And so we have really focused on building the best-in-class in that landscape, whereas the other competitors really come from the consumer side. And it's sort of reverse migration to the access point. So I think we come with some inherent advantages driving straight from the access point side.

Suji DeSilva, Analyst

Great. That's very helpful, Kishore. And then maybe, Steve or perhaps Kishore, you've done very well, this Intel acquisition, tracking your history of acquisitions? How should we be thinking about further in organic activity? Now we've had a couple of quarters of kind of moving forward from this and what sorts of framework we should be thinking about? You have a lot of organic opportunities already going. So I'm curious.

Kishore Seendripu, CEO

So I just want to correct this misperception right. Our growth, or the Intel acquisition business and ours were coupled, because we had a strong broadband presence. So our organic growth in the previous two years without exactly picking the timeframe was in excess of 40%. So we don't break that out, because we sell it as a full category right now. So I just want to correct the perception, maybe investing organically for a while in infrastructure will last three to five years. And now the wireless infrastructure has really caught a lot of acceleration and momentum. And the reason I say this is very, very important for our employee validation as well, that we are a technology company. We take investments and we measure ourselves on how we execute, enduring excellence is what we bring to bear on our product and with levels of customer support excellence as well. So I just want to correct that misperception. This growth was coming. It was in the works. And we got a lot of momentum from our ability to execute acquisitions. Right. So I just want to and so this is going to be a story that continues. Steve, do you want to add anything else on that?

Steve Litchfield, CFO

Well, the only other thing, I'll just address the second part of your question. I mean, look, generating, I think you saw in the quarter, we're generating a lot of cash here. And so I think the message on that front is consistent. We'll continue to pay down the debt, continue to buy back stock. We had a big stock buyback this quarter, about $26 million of stock. And we'll continue to look at acquisitions. So all those are still relevant today.

Operator, Operator

Thanks. The next question is coming from Gary Mobley from Wells Fargo Securities.

Gary Mobley, Analyst

Hey, guys. Thanks for taking my question. Want to start by asking about Wi-Fi 7. I know one of your competitors put out some press splash a week or two ago. And I'm just curious, from your perspective, what you're anticipating on the Wi-Fi 7 in terms of product generation, product revenue, content gain opportunity, those sorts of things.

Kishore Seendripu, CEO

Yes, Gary. I'll take this question. Obviously, it is going to be a highly differentiated solution. We are not big on press releases too early to the market. However, it's around the corner. And we will be one of the first certified Wi-Fi 7 access point solutions out there. The offering is going to reflect what MaxLinear is about high levels of integration cost competitiveness, lowest power and a very innovative BOM savings for the customer in performance. So we believe that with that will drive a lot of market share gain growth and also expand our stickiness in existing markets and market share. In addition, it is going to allow us to differentiate in other ways where we can expand the end markets itself going into more adjacent markets. So that's the way we visualize the strategic rollout of our Wi-Fi 7 and I'm absolutely confident we will do a great job on it.

Gary Mobley, Analyst

Thanks, Kishore. And perhaps a question for Steve. If I do my calculation correctly, it looks like your own internal inventory days was roughly flat sequentially and the increase is supportive of your 6% sequential revenue growth guidance. But maybe if you can just speak about inventory in the channel where you see that currently? And given the current profile of your backlog in the improving supply situation? How many consecutive quarters of sequential revenue growth do you think you can string together?

Steve Litchfield, CFO

Yes, Gary. Absolutely. So the inventory, we did see a modest increase in dollars, but days were about the same. You're correct on that. And we're not keeping up with demand, I guess, at this point. Visibility continues to be very strong. I mean, Kishore kind of shared a few times on the call, but we have a lot of new opportunities in Wi-Fi, in fiber, in some of our infrastructure opportunities. So we continue to see a tremendous amount of growth over a multi-year period, right? And so I'm not going to guide more than the quarter that we just gave you. But I think you can see with the product portfolio and the traction that we're getting, I think we feel very good. With regard to more of the tactical aspect of the question. Like everyone else, we're always looking, watching channel inventory levels and they're still very, very low. And we've seen that across all of our end markets. I mean, it is a cyclical industry. So we're absolutely watching closely to see if that changes and when that changes and how do we respond. But at this point, as far as our products go and the traction that we're getting with some of our new market share gains, we feel very good about strong visibility.

Operator, Operator

Thank you. Our next question today is coming from Trevor Janesvski from Needham.

Unidentified Analyst, Analyst

This is Trevor Janesvski on for Quinn Bolton. And congrats on the solid quarter and guidance. So following up on the China lockdown question, even though we know most of the end product ends up in North America and Europe, how much of the company's products are shipped from manufacturing locations in China? Thanks.

Kishore Seendripu, CEO

So Trevor, we are a chip supplier, right? We supply chips or most of them are manufactured pretty much in the location where the wafers are. So to that extent we are very, very heavily Taiwan dependent wafer consumers. So I think that answers your question where our products get manufactured. And because so much of our revenues are outside of China, most of the business goes through ODMs, who are placed in Taiwan. And so to the extent that the ODMs are present in Taiwan, they have diversified their supply chains in the last few years to be both geo-located or even outside of China. So we feel that our end markets outside of China are very well serviced by being immune to this lockdown, to the extent that they have to supply to their customers. Now, I cannot really project on what pieces they bring out of China and Beijing into their boxes. I cannot say that, but we feel for now that they've got sufficient diversification geographically on manufacturing capabilities for their product.

Unidentified Analyst, Analyst

Thank you. And as my follow-up, are there any particular cost headwinds in the second quarter that caused gross margins to decline 80 basis points at the midpoint in June, or is it mostly just mix?

Steve Litchfield, CFO

Trevor, so we saw a nice improvement in the last quarter of 120 basis points. And so this is really consistent with what the guidance that we had kind of talked about, as far as that 62% at the midpoint here is pretty consistent with what we talked about and it is a product mix. We continue to feel very confident in the gross margin kind of getting up to the mid-60s over the next couple of years as supply chain constraints start to ease. There's nothing that stands out that is super concerning to us in Q2 whatsoever.

Kishore Seendripu, CEO

I also would add one more element to the supply chain constraints, right? I think there are constraints. People are talking about easing of supply chain but it's very, very choppy to put it least, right? So there are constraints based on technology nodes. There are constraints based on packages. And so I think the constraints will continue in the kind of quality of high-value end markets we are in. But we are navigating those constraints as best as we can and we've done a decent job of it. And there are some suppliers who are communicating cost increases moving forward as well. So we have taken that entire expectation also into our guidance for you guys.

Operator, Operator

Our next question today is coming from Sam Peterman from Craig-Hallum.

Sam Peterman, Analyst

Hi, guys. Thanks for taking my question. I wanted to ask a little bit on the broadband segment, you talked about it growing quarter-over-quarter into the second quarter here. And mentioned cable and fiber, both in growth drivers there, obviously, on a percentage basis fibers probably is going to grow faster. But I wonder if you could talk about in dollar terms, is fiber kind of taking the lead now from cable in terms of driving the majority of your dollar growth in that segment? And then on fiber as well, are you still on track to ramp with that large North American Tier-1 you've mentioned before in the second half?

Kishore Seendripu, CEO

Yes, so absolutely, Sam. So yes, broadband continues to do very well. We do expect it to be up again this quarter? You're absolutely right. I mean, it has contributed or contributing from the fiber side, as well as the cable side. What we've been talking a lot about the fiber opportunity. And yes, on the large North American supplier, we do expect that to ramp in the second half of the year that's on track going well, and that'll continue. We'll see continued growth into 2023. Because it'll end up being somewhat supply constrained throughout this year. So and it's not just that one. I mean, we've got multiple suppliers that are ramping in 2022. And we'll continue to see that growth in 2023. It's still a small number, right? I mean, we've talked about that business last year being less than $10 million, growing into kind of 10s of millions of dollars this year. I think as we look out into 2023, I mean, there's a good shot of seeing that kind of double again next year in 2023, because it's still pretty early days on the fiber side.

Sam Peterman, Analyst

Okay, thanks for that. Second question, I just want to go back to Wi-Fi, and this third-party access, or third-party router market that you're talking about? That sounds like a good opportunity for unit growth for you guys. And I wonder if you could talk about kind of unit growth opportunities you see, for Wi-Fi and kind of the core markets, I guess, the core operator markets that you've been in cable and fiber at this point? Is there a lot of unit growth runway there still? Or do you see much of the growth coming from kind of more content as you move up to new generations at this point?

Kishore Seendripu, CEO

Yes. Look, I mean, it's still very much early days on the Wi-Fi side for us. I mean, we're still barely keeping up. I mean, we've talked about our attach rates, still not one-to-one and even our main gateway customers, right? So we've got, we still got continued growth coming with that attach rate. We've got more significant growth coming from the fiber attached. That's all new business for us. So that's going to contribute. And then of course, the standalone routers is yet another market. So we're by no means keeping up yet there. The market opportunity itself continues to expand. And so I think there's a really nice runway as we roll out 6E and Wi-Fi 7 coming beyond that, which will expand the market even further. But we're hitting price points and good profitability levels. We're getting traction with customers, and we have significant more supply coming on late this year and into 2023 to satisfy that demand.

Operator, Operator

Thanks. The next question today is coming from Ananda Baruah from Loop Capital.

Ananda Baruah, Analyst

Hey, thanks, guys. Good afternoon. Thanks for taking the questions and congrats on the strong results and execution.

Steve Litchfield, CFO

Thanks.

Ananda Baruah, Analyst

If I could ask about PAM and massive MIMO. Do you still see PAM as a $200 million to $300 million revenue opportunity and massive MIMO as a $300 million to $600 million opportunity over the next three to four years? Are those still the right metrics to consider, and how are you performing compared to your expectations from a year ago?

Steve Litchfield, CFO

Yes. Okay, so I think you're talking about, I’m going to start with 5G massive MIMO. 5G massive MIMO hundreds of millions of dollars. I mean, this goes back a little bit of time, once 5G was rolling out. There was a big $500-ish million TAM opportunity out there. Now a lot of things have kind of pushed to the right, due to the China dynamics and we continue to see that. But absolutely see $100 million plus product line coming out of the wireless infrastructure, wireless access side specifically. Kishore kind of spoke a little bit like Sierra, we're seeing ASP increases. So that's a bigger market opportunity as well. With regard to the PAM side, maybe I'll take a step back. So on the PAM side, what we've said is that look PAM is probably three times kind of depending on how you define it, but to call it three times bigger than the cable market, right, and we're very under-penetrated. But we've said that we've got the potential to see hundreds of millions of dollars of revenue from the PAM business over the next few years. So very exciting opportunity for us. And we get lots of dollar content as those gateways’ rollout. And we see opportunities throughout the world and which is exciting, particularly with the fact that you're seeing a lot of government subsidies kind of help a lot of these operators rollout on the PAM side as well, you're seeing tons of fiber rollout. But even some of the fixed wireless access stuff that people are talking about as well. We support and see and benefit from.

Kishore Seendripu, CEO

We are indeed tracking our internal metrics on the fiber side. We consider this one of the main drivers of growth at the moment. As for the 5G access side, as Steve mentioned, it has been slightly delayed, which has stretched out the opportunity. However, we definitely anticipate that it will contribute over $100 million in revenue, in addition to the wireless backhaul revenue, which will also exceed $100 million. Currently, we are making significant progress in the wireless infrastructure, although we are facing supply constraints.

Ananda Baruah, Analyst

That's super helpful. I appreciate it. That's it for me. Thanks, guys.

Operator, Operator

Thanks. Our next question is coming from Christopher Rolland from Susquehanna.

Christopher Rolland, Analyst

Hey, guys. Thanks for squeezing me in. I guess my question is around competitive dynamics. Are you seeing anything there in terms of their availability of competing products or lead times or supply issues that they may be having? Is this to your benefit? Thanks.

Steve Litchfield, CFO

Yes, Chris. Good question. There are definitely fluctuations in this area. We have made efforts to be proactive and have been quite creative from the beginning. As I’ve mentioned before, we're working on getting other vendors qualified. Kishore pointed out that we are also investing to help these vendors get qualified and expedite our product. We’ve seen a lot of success with that, which helps us outpace the competition. So, I believe that’s beneficial.

Christopher Rolland, Analyst

Great. As a follow-up on infrastructure, considering the outlook for the remainder of the year, I would like you to discuss what you believe will be the primary driver of growth. Will it be PAM in the latter half of the year, wireless backhaul, or transceivers? What are your thoughts?

Steve Litchfield, CFO

Yes. I mean, look, it’s clearly kind of dominated by the wireless infrastructure side, right? So transceivers, but transceivers on the access side as well as on the backhaul side, both have been constrained, but I mean, we're starting to get more product. Our demand has been extremely strong as Kishore had indicated earlier. So I think that's going to be the biggest driver. And frankly, I think I see that continuing through 2023. And I think in '23, you'll start to see a lot more optical contribution.

Operator, Operator

Thank you. We reached the end of our question-and-answer session. I'd like to turn the floor back over to Kishore for any further or closing comments.

Kishore Seendripu, CEO

Well, thank you, operator. Just want to let everybody know that we'll be participating in these following upcoming conferences during Q2. The JPMorgan 50th annual Global Technology Media and Communications Conference on May 24; Craig-Hallum’s 19th Annual Institutional Investor Conference on June 1; Loop Capital Markets Third Annual Investor Conference on June 2; and Stifel Cross Sector Insight Conference on June 7. With that being said, I want to thank you all for joining us today and we look forward to reporting on our progress to you next quarter. Thank you.

Operator, Operator

Thank you. That does conclude today's teleconference and webcast and you may disconnect your line at this time and have a wonderful day. We thank you for your participation today.