Good day, ladies and gentlemen, and welcome to the First Quarter 2016 Marvell Technology Group Earnings Conference Call. My name is Derek, and I'll be your operator for today. [Operator Instructions] As a reminder, this conference is being recorded for replay purposes. I would now like to turn the conference over to Mr. John Ahn, Director of Investor Relations. You may proceed.

Great. Thank you, Derek, and good afternoon, everyone. Welcome to Marvell Technology Group's First Quarter of Fiscal Year 2016 Earnings Call. With me on the call today are Sehat Sutardja, Marvell's Chairman and CEO; Weili Dai, Marvell's President; and Sukhi Nagesh, Marvell's Interim CFO. We will all be available during the Q&A portion of the call today. If you have not obtained a copy of our current press release, it can be found at our company website under the Investor Relations section at marvell.com. We have also posted a slide deck summarizing our first quarter fiscal year 2016 results in the IR section of our website for investors. Additionally, this call is being recorded and will be available for replay from our website. Please be reminded that today's discussion will include forward-looking statements that involve risks and uncertainties that could cause our results to differ materially from management's current expectations. The risks and uncertainties include our expectations about our overall business; our R&D investment; product and market strategy; statements about design wins and market acceptance of our products; statements about general trends in end markets we serve, including future growth opportunities; statements about market share; and statements regarding our financial outlook for the second quarter of fiscal 2016. To fully understand the risks and uncertainties that may cause the results to differ from our expectations and outlook, please refer to today's earnings release, our latest annual report on Form 10-K and subsequent SEC filings for a detailed description of our business and associated risks. Please be reminded that all of our statements are made as of today, and Marvell undertakes no obligation to revise or update publicly any forward-looking statements. During our call today, we will make reference to certain non-GAAP financial measures, which exclude the effects of stock-based compensation, amortization of acquired intangible assets, acquisition-related costs, restructuring costs, litigation settlements and certain onetime expenses and benefits that are driven primarily by discrete events that management does not consider to be directly related to our core operating performance. Pursuant to Regulation G, we have provided reconciliations of the non-GAAP financial measures to the most directly comparable GAAP measures in our first quarter earnings press release, which has been furnished to the SEC on Form 8-K and is available on our website in the Investor Relations section. With that, I would now like to turn the call over to Sehat.

Thanks, John, and good afternoon, everyone. I'd like to start today's call by thanking Mike Rashkin who is retiring as our CFO. Through his leadership, Mike has been extremely instrumental in improving financial discipline in the company. All of us at Marvell would like to thank Mike for his many years of service and dedication for the company and wish him a wonderful retirement. The board has also appointed our VP of Finance and Investor Relations, Sukhi Nagesh, as interim CFO. Now many of you already know Sukhi quite well, and we expect this to be a smooth transition. Now moving on to the financial results for the first quarter of fiscal 2016. We reported first quarter revenue of $724 million, a sequential decline of 16%, which is -- which was in line with our revised guidance. The sequential decline was mainly due to softer-than-expected demand from the storage end market as well as from the emerging markets. Our non-GAAP gross margin of approximately 52% was better than our original guidance and was -- and we continued to effectively control our operating expenses, which also came in better than our original guidance. As a result, our non-GAAP EPS came in at $0.13 per share. We believe the weaker demand in Q1 was due to near-term macroeconomic conditions as many of our customers and semiconductor peers experienced similar trends. We expect this slower demand environment to persist in Q2 but expect growth to resume in the second half of the year. Despite the near-term headwinds, we will continue to invest in the new -- in new and innovative technologies as we believe this will allow Marvell to emerge stronger when economic situation improves. Now I'd like to provide a brief update on each of our end markets. First, on storage. Revenue…

Thank you, Sehat, and good afternoon, everyone. I'd also like to add my thanks to Mike and congratulate him on his retirement. Mike has been a great mentor to me, and I hope to [indiscernible] it with the same level of integrity and principles in my new role going forward. Moving to our financials. As Sehat mentioned, our first quarter financial results reflected a muted demand environment, which is consistent with many of our customers and semiconductor peers. While revenues were in line with our revised guidance, gross margin was slightly better than our original expectation, mainly due to mix. We reported revenues of $724 million for the first quarter, which was a decline of 16% driven by softer demand trends across most end markets. As Sehat said earlier, we believe that demand weakness is temporary, and we expect to return to growth in the second half of this year. Moving to the details on our various end markets. Our storage revenue in the first quarter declined 20% sequentially and represented 48% of total revenue. HDD sales were lower due to the well-documented weakness in the PC value chain, while SSDs declined in line with seasonality. Our mobile and wireless revenues declined 13% from Q4 and represented 25% of total revenue. Weaker LTE smartphone demand in China was partially offset by initial shipments into Korean OEMs global smartphone platform. Connectivity sales were also weaker due to the lower mobile and gaming seasonality. In networking, our Q1 revenue was softer, declining 7% sequentially and making up 21% of total revenue. This was mainly due to muted demand from enterprise customers. Moving next to margins and expenses. Our non-GAAP gross margin for the first quarter was approximately 52% or roughly flat from Q4 but better than anticipated due to favorable mix. Non-GAAP…

[Operator Instructions] And our first question will come from the line of Harlan Sur, JPMorgan.

HDD industry shipment TAM was down about 10%, 11% sequentially in Q1. I think your HDD controller business was probably down more like 25% sequentially in the first quarter. Here in Q2, I think HDD industry TAM is looking to be down about kind of 3% to 5%. And now, you're guiding your HDD segment probably down in about that range as well. So the Marvell team is essentially undershipping consumption by 20% to 25% for 2 quarters in a row. It seems like your customers are planning for some positive seasonality in Q3. If that plays out, should we anticipate a return to growth in your HDD business that is greater than the TAM growth and just given how much your undershipping consumption here these past 2 quarters?

Harlan, this is Sukhi. You bring up a good point, but I think in our storage business overall if it's broken down, it's the mix between hard drives and SSDs. And all we can say is our SSD business was down more than HDD business in the quarter for a number of different reasons, I think which is pretty well aware and -- people know about that in the market. But in terms of the hard drive business for us, which is the TAM, we have some customers who are actually seeing a pullback in their business, and we're just -- we just leave that our TAM over multiple quarter period -- track that of the overall TAM -- our business tracks that of the overall TAM. It's very hard for us to synchronize exactly every quarter, but I think over a couple of quarter periods, we are pretty similar to what the TAM is.

Okay, but you do -- you did -- brought up a good point that the hard drive -- the PC industry is -- people in the PC industry's value chains, okay, expecting to see the deployments of Windows 10 over the second half of this year. So as a result, that is widely known that -- by this time, it's widely known that, okay, there's a slowdown in the PC space to do that anticipation. So we'll see -- I think we do expect when we took TAMs at this launch, it would have good reception. We all know the benefits from that uptick.

If there is an uptick in the drive industry for Q2 or Q3, maybe we will see that benefit, but at this point, it's probably too early for us to comment on that.

Okay. That's a fair point. And then question for Sehat. So last call when I asked, you said you'd clearly be doing what's right for shareholders in terms of strategic options for mobile. It seems like the pricing environment hasn't been getting any better. The competitive environment continues to be fierce. If you exit -- and so -- and if you exit mobile, I think you're left with the business that can grow kind of low-, mid-single digits top line and sort of being throwing off sort of low mid-20% operating margins and free cash flow margins. So given that your mobile business was down in Q1, and that's the fourth consecutive quarter, are you any closer? Or is the team any closer to making any sort of strategic decision with mobile?

That's a good question. But as you know, especially with the deployments of FLCs and MoChi technology into all our product lines, we'll be even more competitive in the mobile space. So the -- we as a company, we have to focus on developing the best technology to differentiate ourselves. So mobile is no different. However, as we said earlier, we have to be responsible also for the shareholders' interest. So we will continue to be open to any strategy or opportunities that comes in front of us. In the meantime, we will continue to build even better, even more advanced technology, okay, to make it even more attractive, okay, for our customers to use all products.

Your next question will come from the line of Tim Arcuri, Cowen and Company.

I guess my first question is, Sukhi, maybe you can talk about the CFO transition. Why did this happen now? And maybe from a top level, Sehat, maybe you can sort of address whether or not the CFO transition might change how you think about any of the possible strategic decisions you might make with the mobile and wireless business?

So I'll answer the second part. It's none at all, not even a bit.

There was no -- there's no linkage to that at all, Tim. And as far as the transition now, Mike's been with the company for 16 years. He's been a fantastic leader for all of us and a great colleague for many people here who've been here, and it was a personal decision for him to retire. And so there's nothing more to it than that.

Okay, then I guess [indiscernible] I'm just wondering, how you might handicap -- if I look at your SSD business, it looks like it's down more than I would expect unless there was a decision by one of the large notebook manufacturers to maybe begin to use their own controller. They recently did buy a controller company several years ago, and it looks like they might be doing that in their flagship notebook now using their own part. So my question is, how does that impact your business? And how do you handicap the likelihood that, that customer or any other customer might use their own controller over yours?

Do you want to answer it?

Sure, yes. So Tim, I think, you're probably on the right track in some of your assessment there. But we also have a very strong portfolio of products in SSDs. Sehat mentioned about NVMe, DRAM-less NVMe SSD products and the PCI-based products, especially, is going to be very critical for this market moving forward. And we are engaged with multiple other customers for this [indiscernible] product as well. So we do believe that the SSD market is growing, and even if there are certain near-term product transitions at a certain customer, we should be able to move beyond that fairly quickly.

Yes, I want to add to that. There's always going to be a customer that they might want to use their own solution, especially [indiscernible] critical mass. However, the vast majority of the customers do not have such critical mass, and they will still use, okay, third-party suppliers, like from us. And as far as from, okay, from, okay, the SSD discussion, okay, it's also in terms of our differentiation, how do we differentiate ourselves in the long run compared against the competition? The answer will be similar to the HDD space. I said earlier, okay, we are now deploying hybrid technology into our HDD portfolios. So to make our HDD solution to be very, very powerful just like as powerful as an SSD solution, they will help increase the adoptions of HDDs into the market to refresh the trend of the converting the HDD to SSDs. Now at the same time, using the same technology, Okay, we can also build an enterprise, I said, SSD that has, okay, they have the cost of more like an HDD. So this technology is applicable for HDD as well as for SSDs. So we believe that -- we believe, okay, when the dust settles, we will -- okay, we will have the majority of the market share in this area.

Your next question will be from the line of Quinn Bolton, Needham & Company.

I just wanted to follow up on Harlan's question. Obviously you guys undershipping the TAM here in the near term. Can you make any comments as to whether you're seeing your HDD customers holding lower inventory levels? And if so, do you think that's a permanent reflection of just greater supply chain efficiencies? Or to the extent that demand conditions come back as Harlan suggested maybe allows for a snap back in the second half of the year?

Good question, Quinn, and entirely possible. We do know that some customers do very tightly manage their inventory and did manage their inventory in Q1 and their supply and their production towards the end of Q1. How long that continues or they're going to switch it back on. We don't have entire visibilities into that at this point of time. But if they do start to switch that back on, we may see positive benefits.

Okay, and then just a follow-on question on the FLC technology. Obviously, it sounds like it probably add some kind of price premium over standard HDD controller. But can you give us any sense as FLC starts to ship next year what you think the penetration might be and how -- to the extent that, that technology is accepted? How much faster on a revenue basis could you grow rather than the overall HDD TAM?

Yes. For FLC, the cost -- the silicon cost of deploying FLC into the chip is actually quite seems to be -- quite insignificant, especially if we're talking about the storage market. This technology is, okay, I've been talking about this technology from close to more than 3 years, and okay, over the years, okay, we have improved the -- okay, we have here mastered the implementation of this technology to the point where this is becoming very low cost. So we do believe because of the delta difference between hybrid solution is so small, okay, basically, it's practically just an addition of a single device flash chip to the hard drive. The -- okay, once -- one this thing is proven into the field, the adoption rate will be very rapid. Okay. It's -- there will be nobody in the world that wants to buy a standard hard drive once they see the significant improvement in the IoTs and response times of these FLC-based hybrid drives. Okay. So as I said earlier, it's not a matter of if, it is just when, and the tile is just -- really as just a schedule of the time to port the software into the new device, the certifications, validations, and certification device. And showing to the customers -- to their customers and that typically is in the order of about 9 months or so, 9 months; maybe at most 12 months. So that will be the timing that we anticipate. And after that, I think everybody will want to demand FLC hybrid technology.

Yes. In addition to what Sehat said, FLC technology benefits storage. We're seeing the last few months, it's really across a different market. For example, mobile. There's a huge hurdle -- everybody knows the battery, the power is a big issue. FLC absolutely is going to solving this issue as well as the cost with -- the memory cost for the platform. So we believe our FLC technology is going to help company differentiate in multiple markets. So therefore, we'll gain more business and new design wins.

[indiscernible] to say something?

Do you have a follow?

Just a quick follow-up with FLC versus the first-generation hybrid drives. Does it use the same size flash chip? Or do you need a significantly larger flash chip to implement the FLC?

Very good questions. For the same size of flash chips, the improvement in the heat rate from 50% to 99.9%, actually doing benchmark is actually 100%. We say 99.9% because it's hard to believe that we could achieve 100% heat rate. So just to give you an idea that they'll be once in a while occasion where the algorithm will miss and we'll have to access the HDD. But that event is so rare with our FLC technology versus the traditional caching algorithm, about 50%, sometimes less, sometimes slightly less, sometimes slightly better, okay, if it hits the SSDs, but the other 50% of the time, it hits the HDD. So during -- but during that time, typically the hard drive is sleeping. So then, during that 50% of time, it has to go to the HDD. That drive has to spin up first. That takes about 1 second, and the data will be accessed. Then you have to put it down to sleep again and then the next access. If the next access happened to be in SSD, you're fine, but if next access goes to HDD again, then you'll have to wake the HDD again. In our case, we -- 99.9% of the time it's SSD. So highly unlikely that the HDDs -- if it's on the HDD, takes 1 second and anybody will notice it because that's just a very rare event.

So it's the same sort of footprint.

For the same flash size. So if it's 8 gigabytes, no problem. We can still use 8 gigabytes. If 4 gigabytes, no problem. We can use 4 gigabytes. And of course, nobody's building 4 gigabytes and 8 gigabytes flash chips any longer. So the smallest flash chips that you can buy is 16 gigabytes, but we have run a lot of benchmarks, a lot of simulations that whether it's 8 gigabytes or 16 gigabytes, the performance is exactly the same. Well, 16 gigabytes, slightly better, but for practical purposes, it's the same performance.

Your next question will be from the line of Sanjay Chaurasia, Nomura.

Sehat, another question on FLC. There are multiple reasons SSD is being adopted in computing platforms. A couple of things, better power consumption by 3 to 4x; lower weight by 10x, and SSD is enabling thinner form factors, such as ultra slim notebooks. So even if FLC allows you to bridge the gap in the performance versus SSDs, how much of the competitive dynamics you think you could change that could slow the decline in hard disc drives?

Well, if you look in the laptops -- the laptop market, the difference between the laptops with a hard drive versus a flash, the difference in the weight is quite insignificant. So the biggest challenge of HDD in mobile laptop application, especially at the high end when people are willing to pay $1,000 or more for the laptops. It's really -- it is instant on -- is practically microsecond or millisecond, the latency that people expect, okay, from the SSD. Without FLC, there's no way HDD could be put into sleep mode and be able to wake up in time for people to not to notice it. So the market acceptance -- we expect the market acceptance of the hybrid drives to be very, very good. Now in terms of the weight of the HDDs, today, okay, the thinnest hard drives in the world are 5 millimeters. Well, the vast majority that people are selling right now is actually 7 -- to be actually 7 millimeter hard drives. We are, okay, we have been working, okay, also, okay, on, okay, with our partners to develop 4 millimeter, extremely thin, thinner than a battery like extremely thin hard drive which is going to be a full hybrid drive. And if you look at it, okay, if you see the sample of the prototype that we have on hand, it is, I mean -- it's so beautiful; it's so light. So you would not notice any difference, okay, by the time you get into the laptop.

Okay, this is very helpful. Another question on mobile. Last quarter, you indicated that your turnkey solution will be available by end of Q1. And I believe if I heard correctly you said Q2 this time. Just wondering what was the delay and if you could provide some progress in that area. And then part B in that question is, do you see your mobile and wireless growing year-on-year in fiscal '16?

Yes. So if you look at the -- responding to the first questions, the turnkeys. So the turnkey has been progressing. There's a lot of -- actually a lot of work needs to be done, okay, building the prototypes. When I look at a prototype, I could understand why it takes longer. It's very complicated and then -- and it has to be really nice. So if it doesn't look nice, okay, nobody wants it, right. So you need to get all the software running, validated, certified. So a lot of certification work, okay, has been going on with the carrier, especially with China Mobile. Now we have to buy new equipment, okay, test equipment, a lot more test equipment to [indiscernible] finish the certification process going on with China Mobile. So those things have been progressing quite well. So the delay is just minor compared to the model work that has to be done. Now in terms of the second question, the volumes, we do expect, okay, the volumes to continue to grow. Okay. So towards the second half of this year, we'll be introducing our FLC-based cell phones -- smartphone chip. That will be -- probably it will be the one that will be like a huge hit because for the very first time in the history of mankind, there will be -- anybody will be able to build a phone, okay, with such a small amount of main memory while behaving like a very high-end phone. So we can be able to compete with flagship phones that have 4 gigabytes of main memory with a fractions of the main memory. So that is going to be the defining time of our success into this business.

In addition to what Sehat said, China Mobile, as you guys know that the China Unicom mobile also is the leading providers in driving mass-market LT phone. So there's a lot of effort there, and we have multiple OEMs coming out with their phones in the next few quarters as well.

Right. More specifically there, Sanjay, I think for -- we think Q1 was probably the bottom for our mobile, and we should probably start to see an improvement from the unit and revenue going forward. This particular quarter itself, I think we should see a double-digit growth in unit volume and for LTE business across both in China and in Korea.

Your next question will be from the line of Chris Caso, Susquehanna.

With respect to your revenue, it looks like the first half is running on the order of about down 25% year-on-year. Could you characterize how much of that you consider to be more due to what I'd say are persistent factors, things like pricing and market share as compared to transient factors with just the industry conditions then perhaps what's happening with inventory. And I guess your answer to that probably would give some insight into your level of conviction for growth in the second half.

Well, okay, as we said earlier, the 2 factors that you just mentioned are the ones that really the biggest factors. [indiscernible], okay, the people are waiting for the Windows 10 introduction. So people are not buying replacement for PCs. I mean why not, okay, the reduction is for buying [indiscernible] more people waiting for the Windows 10. And the other part was the slowdowns in the smartphone shipments in China, which was apparently, okay, was already been quite well-known in the last few months, okay. As you see, the pricing of mobile DRAM has dropped quite a bit over the last few months. So only just it will be like in the last few days that people have been talking about that, okay, sometimes next month or so, it's expected that the DRAM pricing will go back up, okay, to be about $3, okay, for 4 gigabits for the mobile DRAMs for the smartphones and because the people expect that the smartphones shipments to pick up again in the second half. So we do believe with okay, with, okay, the market will pick up again as well as our continued tractions in the customer space -- in the customer side on our mobile solutions. We do expect, okay, we will get, okay, bigger shipments. Now our customers also. We're getting on some new customers even with today's solutions while they're waiting for our FLC-based technology because as soon as they see the significant advantage they can have from our future FLC-based smartphones, they actually, okay, immediately can jump in and make decision to, okay, for people that haven't used our solution quite quickly -- quickly actually, they start working on our current solution because they know that once they're familiar with our solution, they could easily make benefits of the next-generation solution, which is then to be significantly lower cost, lower power, much more power and much longer battery standby time. So, okay, so we are very bullish on this.

Okay. Well, my follow-up question is regarding the FLC technology as well and a lot's been said on that already. But would you also potentially see licensing opportunities there in either businesses adjacent to what you do or perhaps totally different? Is that something you guys would entertain?

I published the FLC technology, okay, because I know this will benefit mankind. So I -- okay, I'm open to licensing the technology to anybody in the world. It's good for the world. It's good for us as well.

That's something that definitely that we will be considering, Chris.

The next question will be from the line of Hans Mosesmann, Raymond James.

Sehat, just another one on FLC. So you're basically incorporating a DRAM and a low-cost SSD. The DRAM, who provides that? Or are all vendors, suppliers capable of supplying that?

Yes. For the very first generation, we're using standard off-the-shelf DRAM. However, the true benefits of FLC will come whenever DRAM, okay, the future DRAMs are built differently. More specifically, future DRAMs should be built -- again, if you look at my presentation at the ISSCC future DRAMs should be built for performance, latency, lower power in mind than for increased capacity. So those things are in -- okay, those things actually are, okay, are being -- if you look at the [indiscernible] the industry-wide organizations for memory. If you look at [indiscernible] a lot of proposals in the new memory architecture that have been shown in the last, okay, in the last few months. Those exactly follow our proposal for modifying DRAM to be suited -- to be truly, truly optimized for to get the maximum benefits of FLC. But for now, we use standard DRAMs.

Okay and then as a follow-up, what is the incremental dollars to Marvell from a conventional approach or hybrid today to going to the first-generation FLC? Is it 10%, 50% of your existing silicon...

We don't have to talk about that. It's too early to talk about that.

Too early.

Way too early [indiscernible].

It's more important, okay, that our customers at this point -- our customer actually never even asked that question. So because they know the benefits will way outweigh, okay, whatever the cost there to be -- they have to incur to use this technology. The benefits, not just the money they will save from, okay, the less medium they have to buy, the money, okay -- the saving also less battery, smaller battery, lighter phones, lighter mobile devices, or they can use the same battery and have much longer battery life. As I mentioned in my speech at the ISSCC, we can now build -- down the road, using this technology we can build a smartwatch with weeks of standby time. So that's beyond how much money we save, okay, to build this device, it's like even if you spend all the money in the world, you cannot do it anyway today because your battery life is so bad. So the other benefits that is -- that's hard to measure from dollar point of view.

Your next question will be from the line of Craig Ellis, B. Riley.

Congrats, Sukhi. I'll just follow up with the recent line of inquiry on FLC. Sehat, you already have a very strong share position in your core storage market, but you said FLC would be much more broadly applicable. Where do you think that technology would be most meaningful in terms of helping Marvell gain share? Which applications? Is it mobile, and within mobile, would it be equally for smartphone and tablet? What would be in other applications?

The answer is across the board. The benefits in the mobile, okay, laptops application is clear. Okay, it just makes things like really, really low power, so the drive is sleeping 99.9% of the time, it's purely sleeping consuming 0 power. So the benefit is very obvious. But the not-so-obvious one would be the enterprise. Imagine if you have -- if we have a, let's say, a petabyte of hard drive with a terabyte of SSD -- FLC cache. A terabyte of FLC caching, well, maybe, let's not talk about petabyte, like 10 or 20 or 40 terabytes of hard drive. The performance of their solutions will be incredible. You will notice 0 difference between, okay, 10 terabytes of SSD, pure SSD versus a 10-terabyte hard drive that has 1 terabyte of FLC. In fact, you will notice the difference in power because now the power dissipations of the SSD will be 1/10 compared to the -- fewer 10 terabytes of SSD so while costing basically 1/10 of the cost. So the benefit is -- depending on the benefit, the optimization -- the target optimization, the benefits, it's the same. So for the high end, we just have to have high-capacity FLC cache. For the individual users like the consumers, we could afford -- we could actually live with smaller cache and everybody will see the same benefit.

Got it. And then the follow-up is for you, Sukhi, and more towards the middle of the income statement. In the revenue outlook, not much change, pretty flattish, but there's a much more meaningful change in gross margin. Is that just intersegment mix? And with OpEx now at the $305 million level, is that a level that's sustainable? Or as the business grows, is the company signaling later this year -- is that going to move back up?

Good question, Craig. So on the gross margin front, it is a function of mix, obviously. So I think if you look at the end market guidance across the 3 different areas, that should give you a fairly good explanation of why our guidance for gross margin is where it is for Q2. As far as the OpEx, even at $305 million, we are constantly looking at ways of improving ourselves with using our spending, being more efficient and the answer really -- the answer is, no, you shouldn't see our OpEx going back up in the second half of this year.

And we have time for one final question. That question will be from the line of Ian Ing, MKM Partners.

Clarification on mobile and wireless. Looks like guiding flat to up slightly double-digit growth in unit volume. Does that mean the ASP declines are more benign than in recent quarters? And then, how would you say optical or pricing is based on some Deca-Core announcements recently from competitors?

Yes. So Ian, as you know, in the mobile space, pricing is always competitive. And then we want to make sure what pricing is going to do at any given quarter. We do have a connectivity business as well as the mobile business. So we do expect to see growth in our mobile business in this quarter from multiple customers, and maybe on the connectivity side, maybe less growth, if you will, or flattish outlook. So it's probably not appropriate for us to comment on pricing, per se, and we did notice what -- some of our competitors talking about Deca-Core. We're not entirely sure what -- how the market will adopt Deca-core.

Well, okay, okay, the pricing is always an issue if we all, in this industry building similar stuff. So the beauty of our FLC is that once it's deployed, pricing should -- will be a lot less of an issue because it's not going to be about the cost of the chip any longer. It's the cost of the system that matters all of a sudden.

Okay, we'll look for FLC. And then just a quick follow-up. Over to MoChi, this modular development of silicon. Are you going to implement this as build-to-order parts for customers? Or could you incorporate this into your standard SSD [ph] products? You connect up some smaller silicon die, you can get a cheaper solution and a big monolithic die.

Right. So as I said, okay, I mentioned in my brand of speaking as well as today's earnings call statement, we were building basically anything that's reasonably -- anything that we build -- I mean, almost anything that makes sense -- anything almost anything that makes sense will be built using MoChi interfaces. So meaning like practically almost every application processors will have MoChi interfaces. So we're also building MoChi south bridge [ph] devices many different kinds. So we are -- okay our engineers are busy building different types of these functions so that our customers, okay, once we are done with this, our customers do not have to specify what chips need to be built, all they have to buy basically is like à la carte menu. They will pick different application processors, different south bridge [ph] functions, different modems, and they can build whatever they want, and they can decide how much money they want to spend, how much functionality they want to have. It is all under their control. They don't need certain functions. They can save money automatically by not buying those functionalities. So this is going to be -- this is going to be so helpful for us. It will improve our decision-making process. We will improve time-to-market. It will get things done sooner because chips can be a lot simpler from now on.

I think that's it. I'd like to thank everyone for their time today and for continued interest in Marvell. We look forward to speaking with you in the coming months. Thank you and goodbye.

Thank you.

Thank you.

All right. Thank you.

Ladies and gentlemen, that concludes today's conference. We thank you for your participation. You may now disconnect. Have a great day.