Good afternoon. My name is Tania and I will be your conference operator today. At this time I would like to welcome everyone to Semtech Corporation’s Q1 FY ’15 earnings release conference call. (Operator Instructions). Thank you. Sandy Harrison, Director of Business Finance and Investor Relations, you may begin your conference

Thank you, Tania. Welcome to Semtech’s first quarter fiscal year 2015 conference call. I’m Sandy Harrison, Director of Business Finance and Investor Relations. Speakers for today’s call will be Mohan Maheswaran, Semtech’s President and Chief Executive Officer; and Emeka Chukwu, our Chief Financial Officer. A press release announcing our unaudited results for the quarter ended April 27, 2014 was issued after the market closed today and is available on our website at www.semtech.com. Today’s call will include forward-looking statements that include risks and uncertainties that could cause actual results to differ materially from the results anticipated in these statements. For a more detailed discussion of these risks and uncertainties, please review the Safe Harbor Statement included in today’s press release, as well as the Other Risk Factor section of our most recent periodic reports on Forms 10-K filed with the Securities and Exchange Commission. As a reminder, comments made on today’s call are current as of today only. Semtech undertakes no obligation to update the information in this call should facts or circumstances change. During the call we may refer to pro forma or other financial measures that are not prepared in accordance with Generally Accepted Accounting Principles. A discussion of why the management team considers non-GAAP information useful, along with detailed reconciliations between GAAP and non-GAAP results, are included in today’s press release. With that, I’ll now turn the call over to Semtech’s Chief Financial Officer, Emeka Chukwu. Emeka?

Thank you Sandy. Good afternoon everyone. Q1 of fiscal 2015 was a solid quarter for Semtech with net revenue of $132.9 million coming in at a upper end of our guidance range. This represented growth of 5% from the prior quarter and decline of 18% from the first quarter of fiscal 2014. A broad number of new platform ramps in high-end consumer and strength in enterprise computing from the wireless infrastructure and datacenter build outs contributed to the favorable results. In Q1, sales into Asia represented 24% of revenue, North America represented 14% and Europe was 12% of total revenue. Due to the reduced OEM shipments as we exit the long haul for this business. Distribution sales now represents a greater portion of our revenue at 53% of total revenue, while direct sales represented approximately 47% of total revenue. Bookings were strong in Q1 of fiscal 2015 resulting in a book-to-bill of greater than one. Sales booking accounted for approximately 52% of shipments during the quarter. Gross margin on a GAAP basis for Q1 of fiscal 2015 was 58.8% of which approximately 12 basis points came from the some of previously written-off inventory. This is an increase from 42.5% in Q4 of fiscal 2014, the improvement was driven largely by the absence of the special charges we took in Q4 of fiscal 2014 as a result of realignment of our businesses in Q4. This benefit was somewhat offset by the additional $1 million inventory reserve taken in Q1 as part of the realignment activity. In Q2 of fiscal 2015 we expect GAAP gross margins to expand as a result of higher manufacturing volume due to stronger demand under normal occurrence of the special charges associated with the realignment efforts. Operating expenses on a GAAP basis was $66.9 million compared to…

Thank you Emeka. Good afternoon everyone. I will discuss our Q1 fiscal year 2015 performance by end market and by product group and then provide our outlook for Q2 of fiscal year 2015. In Q1 of fiscal year 2015 we achieved net revenues of 132.9 million, an increase of 5% from Q4 of fiscal year 2014 and a decrease of 18% from Q1 of fiscal year 2014. For the quarter our non-GAAP gross margin was 59.8% and our non-GAAP diluted earnings per share was $0.32 per share. In Q1 of fiscal year 2015 revenue from the high end consumer market increased from the prior quarter and represented 32% of total revenues. Approximately 24% of this revenue was attributable to hand-held devices and approximately 8% was attributable to other consumer systems. Revenue from the enterprise computing end-market increased from the prior quarter and represented 19% of total revenues. Revenue from the industrial end-market was flat and represented 25% of total company revenues. Revenue from the communications end market decreased and represented approximately 24% of Semtech’s total revenue. I will now discuss the performance of each of our product groups. As a reminder we’re now reporting our results on the three product groups. Q1 of fiscal year 2015 was a solid quarter for our protection, power and high reliability product group which grew 11% sequentially and represented 47% of total revenues. We experienced strength from all end markets except for computing with particular strength from the high end consumer market driven by smartphones and from the communications end market where we benefited from increased demand from the wireless infrastructure build-out in China. Our protection business continues to perform very well and grew approximately 19% sequentially. There are early indications that the demand from Samsung’s new S5 smartphone release will exceed original expectations…

(Operator Instructions). Your first question comes from the line of Ian Ing from MKM Partners. Your line is open.

You got a nice wins here in the pipeline, tablets and smartphones, I mean how should we think of mix? Is there any mix should be causing this up [ph] in the next few quarters or is it largely top on revenue that drives gross margins?

Gross margin is mostly a mix question for us, obviously some is driven by volume if we get the high revenue that drives high volumes for us but more industrial, also enterprise computing is a higher gross margin generated for us. So it's mostly mix Ian, but obviously the higher revenue drives higher volumes as well. Those are the most, the two biggest current contributors.

And then the low power wireless win, I think you refer to it as LoRa, I mean can you give us a sense of what product life cycles here are they very short? Like consumer or are they very multiyear?

Yes the LoRa technology which is long range wireless technology has two components to it, one is really -- its really more industrial in nature so a little bit longer time to revenue but much longer lifecycle. But it's a both end so you’ve a kind of a gateway transceiver and then you also have the other side -- the device side and that can have a slightly shorter lifecycles but much higher volumes. So we’re seeing obviously a lot of opportunity in both sides and also in private and public network. So it really depends on the network itself. I would suggest in private networks the lifecycle would be much longer than the public networks.

And then my last question, it looks like, I just want to confirm ultra-long haul has stabilized here. It's down to 5 million a quarter. I think that’s even lower than some of your year’s [ph] target of $30 million a year or so. You’re still able to put up these results in guidance?

It's within that range, I think $5 million to $7 million. We think that 5 million is kind of the low point and probably $7 million - $8 million is the high point and it's certainly in that range so that’s probably about right.

Our next question comes from the line of Andrew Huang from Sterne Agee. Your line is open.

This is John Shen for Andrew. Thanks for taking the question and congrats on the good results. On improvement in bookings can you talk about which products you’re seeing the most strength?

Well it's pretty broad, obviously our Gennum products bookings are very strongly, at a record bookings quarter as I mentioned there and that’s across the datacenter side also on the wireless base station side, the video side is also strong. So bookings in general in our Gennum business is very good. And then our protection business was driven by smartphones but also other areas within protection doing quite well, it was strong. And then on the wireless sensing side the sensing business is doing very well, the proximity sensing we mentioned our first orders and shipments of our touch sensing platform also. So, I would say in general across all of our businesses, the bookings were quite strong.

And can you talk about the impacts of the ramp in China LTE on the businesses in Q1 and the rest of the year?

Well certainly Q1 I mentioned it did impact us positively in both protection and power and our Gennum products as well. So very positive, we will continue to see good demand for Q2 fairly it's part of the reason why our Q2 guidance is strong and our indications are that actually the strength will be there for at least part of the second half -- we are not sure whether it's Q3 or Q4 certainly we’re anticipating some strength in second half also.

Your next question comes from the line of Harsh Kumar from Stephens, Inc. Your line is open.

Mohan, I had a quick question for you, you sound extremely optimistic about the prospects of the company in the second half. Can you tell us maybe just looking at everything which is the one area that you’re most optimistic about? Will that be wireless sensing or data center? Connectivity or any of the other areas you’re involved in?

Well it's not just one area, I will and that’s the wireless and sensing area and that is because that’s new and fairly small for us today. So yes there as you know that’s obviously protection if we grow, we gain sockets, we grow in that business, the Gennum business it's now again a price computing driven and some video driven. There is some new stuff there as well in the video side but the biggest area the new emerging growth for us is clearly the wireless and sensing side and both the proximity sensing and the touch sensing side. So all three of those areas within that wireless and sensing business are pretty exciting for us and we’re just starting.

I just want to follow-up more on, can I ask you touch sensing? This is a product that I think was supposed to come out a few months ago, how optimistic are you that this will ramp in the second half at some point in time. What kind of visibility do you have and then also maybe talk about scope of how big this can be for you?

Well first of all on the timing, the timing -- it was originally supposed to be kind of ramping in Q4, that pushed out and Q2 is now the initial prototype ramping and production Q3 of this year, that’s still the timing and we still anticipate that to be quite good. We do have pretty good visibility of the schedule and the revenue numbers. Obviously I’m not going to give you too much information there but we have said I think publically that this could be a $20 million - $30 million revenue business for us this year.

Your next question comes from the line of Rick Schafer from Oppenheimer. Your line is open.

This is Joe on for Rick. Let me add my congrats here. I was wondering if you could just give a little bit of a clarity on the 2K prospects timing of the ramp, how you see it from the linearity prospective and then where it could potentially be as far as size in the business? Thanks.

Are you talking about the video business?

Correct, the broadcast yes.

Broadcast video business, the nice thing about this for us is we already are obviously a leader in the video broadcast business and Gennum has historically got a very good brand recognition in this space. Have got a lot of product, very good relationship with the customers and it was just a question of whether the market was going to move from 3G to 6G and the timing of that and so what we’re starting to see is that most of the infrastructure customers are starting to now deploy and build and deploy 6G’s related equipment and that’s really positive sign for us. So we’re seeing good, lots of activity and lots of kind of promises of increased demand. It's still early days, and I think it's still going to take some time and obviously the TVs and other equipment’s that have to lead the charge in terms of driving the -- putting the demand on the infrastructure. So we see that as potentially taking over basically replacing the old video equipment and it should drive good growth for us which would probably be in the high single digits.

And then on the (indiscernible) business, it seems like the headwinds are behind you, you’re down below that 30 million run-rate you have spoken about earlier. You think there is any growth in the business from here just where do you see it trending longer term now? Thanks.

Well we just essentially exited, I mean we’re not planning on growing. If it is it will be opportunistic, as I said in the previous two calls it's a bit of surprise how quickly it came down but it is what it is. We think in the actions and moved out of it, we’re not putting a lot of R&D investment in the long-haul side of it. So if it comes back as I said it will be driven by CapEx infrastructure in the long haul side. We don’t see much at the moment, there is still promise that it maybe come out in the second half but we’re not counting on it.

Your next question comes from the line of Steven Smigie from Raymond James. Your line is open.

So can you talk a little bit more about the proximity sensor business especially the touch sensor business? So it's discussed, it had originally been pushed out and now it seems you’re getting the production orders. Have they told you at this point that the issues that they were facing in terms of the processor and software have been fixed and now it's just a matter of timing and not much they are [ph] actually selling their units.

All that -- everything you have said is correct Steve, the only issue with smartphones as you know and it's the same with any smartphone manufacturer when they release the phone they have anticipation of a certain level of demand and then what transpires is are we all going to go out and buy the phone and so I would say that the forecast is quite conservative that we have been given. I don’t think that there is a huge expectation and so I think it's very doable but one has to wait and see. From an execution standpoint I think everything is on track.

And then on the proximity sensors, I think you touched on this a little bit already and I think I just missed part of the discussion but I think you guys had gotten some nice wins on some tablets, and I think it was maybe you were getting maybe three units per tablet. Can you talk about how that proliferates in other tablets or beyond tablets and is that right to think you’re sort of getting three per device and why would it be three just to give a dynamics around the potential there?

Yes, so the number of units per device is really dependent on the architecture and what the manufacturer is doing. Essentially what the proximity sensing device is doing is determining how close the tablet or phone is to your hand or your ear or an inert material like a table or something like that. So that’s -- the number of devices is just really dependent on what they are trying to do. It isn't going into all tablets and all systems, it's really where you have a wireless connectivity, an LTE wireless connectivity. So there is a limitation there in terms of which tablet it goes in. But that’s what we see and it's most of the mobile devices are starting to have the connectivity. So that’s driving the growth for us. Now today we have pretty good penetration of the tablet market, what’s emerging is that quite a lot of the other applications including smartphones is starting to look at proximity sensing for a number of different functions also just to again determine how close your hand is or your ears are to the phone and things like that.

And just turning to the gross margin as these sensors ramp, you obviously had pretty high gross margin that’s ramping down, some of the sturdy stuff. Is what’s ramping enough to keep us sort of at a 60% gross margin. It seems like more consumer oriented products might have somewhat less. I know you had a chance to sort of look at these products that they are ramping, any sense of what happens to the mix there?

So Steve, based on my prepared remarks I had said that we do expect our gross margins to stay towards the high end of our 55% to 60% range and the key drivers for that is that if you look at the mix of products that we have from Gennum, there is a very good high gross margin business. As we start to see more growth from the video products, those are excellent gross margin products and also Mohan did talk about being excited about business opportunities from our wireless and sensing. The lower products are also very distant gross margin business is significantly at the high end of our range. So definitely we do expect that we’re going to see a lot of growth from our consumer driven products and that has a softer gross margin. We expect that we see from all these other product areas, the Gennum products, the growth in the sensor business, the growth in the video business. I think that is enough mix there to allow us to maintain the current gross margins that we have and also in addition as we continue to see the ramp in revenue the higher manufacturing volumes would allow us to be able to absorb our fixed expenses a whole lot better.

I think Steve also our power business is starting to reach new products and that should be -- all the new products that we’re releasing in power should be accretive to our gross margins as well.

Your next question comes from the line of Earl Hege from RBC Capital Markets. Your line is open.

I’m calling on behalf of Doug Freedman. I guess with respect to the distributor channel, when do you guys expect an inflection there? Are you guys seeing any signs of that in the current quarter?

Well POS for us is very strong, channel inventory is very low. So, to me the demand is quite good and we’re probably at risk of having too much -- too low inventory in the channel. So we’re just really making sure that we have the right mix to support our customers. I didn’t quite understand the question. Do you want to repeat that question?

Sure, yes. I’m just wondering in terms of the distributor channel when do you see them building inventories again? At what point do you believe they are going to become comfortable?

Okay, so yes, I think probably we should start to see that in Q3 and Q4, it depends again the POS, POS is very strong at the moment so replenishing the channel is kind of tough.

And I guess looking through the year, what do you guys see for OpEx and in terms of linearity? How should we think about that?

Right. So during the call last quarter I think I had guided quarterly updates of about $50 million to $53 million. I still expect on an annual basis for it to average out in that range but there could be some quarter-over-quarter fluctuation. So it's possible that in some cases we maybe in the $52 to $54 million range which is what we’re currently guiding to. I think the key takeaway here is at the end of the year when you average it out on a quarter-over-quarter basis I still expect us to be in the $50 million to $53 million range per quarter.

There are no further questions at this time.

In summary, Q1 marked a solid start to fiscal year 2015 for Semtech and set the stage for what we believe will be another solid year. Our strong design win momentum coupled with a strong backlog are positive indicators of continued traction. We remain confident that our position in the key markets where we compete, a balanced portfolio of highly differentiated products and our long standing partnerships with diverse customers will enable us to continue moving towards our goal of the billion dollars in revenue. With that we thank you for your continued support of Semtech and look forward to updating you all next quarter. Thank you.

This concludes today’s conference call. You may now disconnect.