Marvell sees fewer supply chain issues, predicts wireless growth

“Growth in 5G adoption” drove $600M in annual wireless revenue – CEO

Semiconductor maker Marvell Technology posted results for its second fiscal quarter on Thursday, with revenues of $1.52 billion for the June quarter, offering adjusted earnings of 57 cents per share. Those numbers were in line with analyst expectations as well as Marvell’s previous guidance. The company acknowledged the pressure of short-term supply chain issues, souring investors, who punished Marvell’s stock in after-hours trading.

“Our overall demand is outpacing supply,” said Marvell CEO Matt Murphy, calling demand healthy “with the exception of consumer [hard disk drive].” Overall, said Murphy, Marvell saw a 20% year over year (YoY) growth in data center revenue. Data center was the largest end-market, according to Marvell CFO Jean Hu. She said that data center sales accounted for 42% of consolidated revenue.

“Enterprise networking was next largest with 22% of total revenue, followed by carrier infrastructure at 19%,” said Hu, adding that the company’s non-GAAP gross profit had increased 41% YoY to $986 million.

Carrier infrastructure revenue for the quarter “was well above our forecast at $285 million and growing 45% year over year and 13% sequentially,” said Murphy.

Hu said Marvell is projecting Q3 revenue in the range of $1.51 to $1.61 billion for the current quarter, with adjusted earnings expected of 56 to 62 cents per share.

“Our wireless business continued to advance in the second quarter, benefiting from the growth in 5G adoption,” said Murphy. “With an annualized revenue run rate crossing $600 million, we are thrilled to have achieved an important milestone.”

Murphy predicts “an extended period of growth for our 5G business” with regions in Europe and all of India still waiting for 5G. He said Marvell also expects more growth in established markets like the U.S., which are still early in their 5G deployments.

“In addition, we have significant content growth in the next generation of base stations still in front of us. In wired, we saw stronger-than-expected shipments of our coherent [digital signal processors] and accompanying [transimpediance amplifers] and drivers to wired customers,” he said.

Murphy predicted 5G wireless revenue to grow sequentially, with YoY growth predicted “in the mid-20% range, primarily by our wireless end market.” He predicted that growth will be offset by lower wired end market revenue, resulting in a decline in overall carrier end market revenue “in the mid-single digits.”

Data center revenue grew 48%, said Murphy. 

“We believe the overall demand picture in cloud data centers remains healthy, and that this market represents the single biggest long-term growth driver for Marvell,” he said.

“Due to the complex nature of products for this end market, we expect supply challenges in the third quarter to impact our ability to fully meet the demand on a sequential basis,” he said.

Murphy painted a rosier forecast for Q4 and beyond.

“We expect our data center revenue in the fourth quarter to increase on a sequential basis, anticipating an improvement in supply and new product ramps in cloud,” he said.

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