1. Semtech is like the Qualcomm for low-power, long-range IoT connectivity, providing the fundamental wireless technology that powers many smart devices.

2. Think of them as a more specialized Texas Instruments or Analog Devices for high-speed data infrastructure and industrial applications.

3. They are an 'Intel Inside' for high-performance connectivity and sensing in advanced systems like data centers and IoT devices.

• LoRa Devices & Wireless RF Technology: Provides long-range, low-power wireless platforms for Internet of Things (IoT) applications, enabling connectivity for smart cities, agriculture, and logistics.
• Signal Integrity Products: Offer high-performance integrated circuits (ICs) for transmitting high-speed data over optical or copper interconnects in data centers, enterprise networks, and broadcast video systems.
• Power Management Products: Deliver a range of ICs designed for efficient power conversion, regulation, and management across various electronic systems and applications.
• Protection Products (TVS): Include transient voltage suppressor (TVS) devices that safeguard electronic systems from electrostatic discharge (ESD), lightning, and other destructive voltage transients.

Semtech (SMTC) - Major Customers

Semtech operates primarily on a business-to-business (B2B) model, selling its analog and mixed-signal semiconductor products and advanced algorithms to other companies that integrate them into their own devices and systems. They do not sell directly to individual consumers.

Based on its most recent 10-K filing (for the fiscal year ended January 28, 2024), Semtech did not have any single customer that accounted for 10% or more of its net sales during that fiscal year.

However, in previous fiscal years, major distributors have accounted for a significant portion of Semtech's revenue. These distributors typically purchase products from Semtech and then resell them to a wide array of original equipment manufacturers (OEMs) and other end customers. Historically significant distribution partners have included:

• Arrow Electronics, Inc. (Symbol: ARW) - Accounted for 11% of net sales in fiscal year 2023 and 11% in fiscal year 2022.
• TD SYNNEX Corporation (Symbol: SNX) - Accounted for 10% of net sales in fiscal year 2022.

While no single customer met the 10% threshold in the latest fiscal year, these large distributors remain crucial partners in Semtech's sales channel, facilitating broad market access for its products.

• Taiwan Semiconductor Manufacturing Company Limited (TSM)
• United Microelectronics Corporation (UMC)
• Advanced Semiconductor Engineering, Inc. (ASX)
• Amkor Technology, Inc. (AMKR)
• Siliconware Precision Industries Co., Ltd.

Dr. Hong Hou, President and Chief Executive Officer

Dr. Hou has served as President and Chief Executive Officer of Semtech since June 2024 and as a member of its Board of Directors since July 2023. He is recognized as a multinational technology executive with a strong record of technical innovation and business transformation. Prior to Semtech, Dr. Hou held executive positions at Brooks Automation, Intel Corporation, Fabrinet (as CTO and General Manager), AXT, Inc. (as Chief Operating Officer), and EMCORE Corporation (as President and Chief Executive Officer). While at Brooks Automation, he drove improvements in a leveraged buyout environment. Dr. Hou holds a Ph.D. in Electrical Engineering and completed executive courses at Stanford Business School. He also serves on the board of directors of Wolfspeed, Inc.

Mark Lin, Executive Vice President and Chief Financial Officer

Mr. Lin joined Semtech in October 2023 as Executive Vice President and Chief Financial Officer. Before joining Semtech, he served as Vice President and Corporate Controller of MKS Instruments, Inc. from November 2019 to October 2023. Mr. Lin was previously with Microsemi Corporation from June 2005 until July 2019, where he held various accounting and finance roles, including Vice President, Finance and Corporate Controller since 2014. He received a Bachelor of Arts in business-economics from the University of California, Los Angeles, and is a certified public accountant.

Asaf Silberstein, Executive Vice President and Chief Operating Officer

Mr. Silberstein has been part of Semtech's senior management since 2019, serving as Executive Vice President and Chief Operating Officer.

Ross Gray, Senior Vice President and General Manager, IoT Systems and Connectivity

Mr. Gray serves as the Senior Vice President and General Manager for IoT Systems and Connectivity at Semtech.

Imran Sherazi, Senior Vice President and General Manager, Signal Integrity Products Group

Mr. Sherazi holds the position of Senior Vice President and General Manager for the Signal Integrity Products Group at Semtech.

The key risks to Semtech (SMTC) business operations include financial and operational strain from a major acquisition, potential regulatory and legal challenges, and intense market competition coupled with the cyclical nature of the semiconductor industry.

1. Financial and Operational Strain from Sierra Wireless Acquisition: Semtech's acquisition of Sierra Wireless in 2022/2023 for $1.2 billion has led to significant financial challenges. The company recorded a substantial goodwill impairment of $755.6 million for fiscal year 2024, experienced a notable drop in gross profit margins, and faced a weak financial position characterized by negative equity and high debt, reaching approximately $1.2 billion in total debts as of July 2024. Although Semtech has reported a 68% year-over-year reduction in net debt by the close of fiscal year 2025, the acquisition continues to be a major financial and operational burden. The company's interest cover was reported as a very low 0.71 times as of January 2025, indicating high leverage and that interest expenses have significantly impacted the business.
2. Regulatory and Legal Risks over Unregistered Securities Sales: Semtech has disclosed a new and material risk related to its recent sales of unregistered securities. This situation could lead to regulatory scrutiny from authorities and potential legal challenges, which may negatively affect investor confidence, market perception, and the company's overall financial stability and stock price.
3. Intense Market Competition and Cyclicality of the Semiconductor Industry: Semtech operates in a highly competitive market against major semiconductor companies such as Texas Instruments, Analog Devices, NXP Semiconductors, and Infineon Technologies. The semiconductor industry is inherently cyclical, leading to potential fluctuations in demand and revenue. Additionally, the company faces operational risks including high research and development expenses, the potential for supply chain disruptions, technological obsolescence, and evolving consumer preferences. A specific recent setback includes the downgrade of fiscal 2026 revenue projections due to lower-than-expected sales of CopperEdge products, which has impacted Semtech's growth narrative and investor confidence.

• Increased in-house semiconductor design by large technology companies: Major customers, particularly hyperscalers (e.g., Google, Amazon, Microsoft), are increasingly investing in and designing their own custom silicon (ASICs) for various applications, including data center networking, AI accelerators, and specialized IoT functions. This trend can displace demand for off-the-shelf or specialized components that Semtech traditionally supplies, such as optical transceivers, signal integrity products, and power management ICs, thereby reducing Semtech's total addressable market and revenue opportunities from these key customers.
• Intensified competition and pricing pressure in the cellular IoT module market: Following its acquisition of Sierra Wireless, Semtech has significantly expanded its presence in the cellular IoT module segment. This market is characterized by fierce competition, particularly from aggressive Asian manufacturers like Quectel and Fibocom, who often offer highly competitive pricing and rapid product development cycles. This intense pricing pressure and competition for market share can erode Semtech's profitability and make it challenging to achieve anticipated growth and synergies from the Sierra Wireless acquisition.
• Accelerated adoption and operator backing of competing LPWAN technologies (NB-IoT and LTE-M): While LoRaWAN is a core technology for Semtech, competing low-power wide-area network (LPWAN) technologies like NB-IoT and LTE-M continue to gain traction, particularly with strong backing and deployment efforts from major mobile network operators globally. These cellular-based LPWAN solutions offer alternative connectivity options for many IoT use cases and, with increasing economies of scale and operator support, could limit the market penetration and growth potential for LoRaWAN in certain large-scale public network deployments, thereby impacting Semtech's LoRa IP licensing and chip sales.

Semtech (SMTC) operates in several addressable markets with its main products and services. The market sizes for these key areas are as follows:

• LoRa/LoRaWAN IoT: The total addressable market (TAM) for cellular Internet of Things (IoT) alongside non-cellular LoRa-based IoT is expected to expand to $10 billion by 2027. The global LoRa and LoRaWAN IoT market size is projected to grow from USD 8.0 billion in 2024 to USD 32.7 billion by 2029, at a Compound Annual Growth Rate (CAGR) of 32.4%. Another estimate places the global LoRa and LoRaWAN IoT Market at USD 5.6 billion in 2023, projected to reach USD 25.5 billion by 2028, with a CAGR of 35.3%.
• High-Speed Interconnects: The global high-speed interconnects market, which includes solutions for data centers, telecommunications, high-performance computing, and industrial & edge computing, is valued at USD 14.8 billion in 2024 and is projected to reach USD 24.5 billion by 2030, growing at a CAGR of 8.7%. North America is a leading region in this market due to a high concentration of hyperscale data centers.
• Power Management ICs: The global power management IC market size was estimated at USD 38.2 billion in 2023 and is projected to reach USD 59.63 billion by 2030, growing at a CAGR of 6.8%. The Asia Pacific region dominated this market in 2023, accounting for a 43.9% share of global revenue.
• Sensing Products: The global sensor market, which includes Semtech's intelligent sensing solutions, is expected to reach $53 billion in 2030, increasing from $36 billion in 2024, reflecting an annual growth of 7%. Specifically, the proximity sensors market was projected to reach a value of USD 3.3 billion by 2023.

1. AI-driven Demand in Data Centers and High-Speed Connectivity: Semtech anticipates that artificial intelligence (AI)-driven product demand will be a long-term and transformative growth engine within its data center segment. This growth is expected to come from products such as CopperEdge 200-gig linear redrivers used in 1.6T Active Copper Cable (ACC) applications, as well as upcoming ramps in Linear Packet Optical (LPO) and Transimpedance Amplifier (TIA) products. Semtech's FiberEdge business has also emerged as a key contributor to top-line growth in this area.
2. Expansion of LoRa-enabled Solutions within the IoT Ecosystem: The company's LoRa business is a significant driver, with a current worth of $100 million and a prospective pipeline of $400 million. Semtech plans to capture more opportunities in the Internet of Things (IoT) ecosystem, benefiting from the increasing adoption of its recent generation LoRa products (Gen 2 and Gen 3), which offer a smaller footprint, reduced power consumption, and improved radio performance. The company is also gaining business from customers shifting away from competitors in favor of Semtech's designs, particularly in infrastructure applications outside of China.
3. Growth in the Automotive Ethernet Market: Semtech identifies significant opportunities within the automotive Ethernet space.
4. New Product Launches and 5G Advanced Deployment: The introduction of new products, such as the first 50-gig Passive Optical Network (PON) chipset, is expected to contribute to future revenue. Additionally, Semtech anticipates a nominal improvement in carrier capital expenditures (CapEx) for 5G advanced deployment in the coming quarters, which will further drive growth in its infrastructure end market.

Outbound Investments

• In January 2023, Semtech completed its acquisition of Sierra Wireless for approximately $1.2 billion in an all-cash transaction.
• The acquisition was Semtech's largest ever and aimed to expand its Internet of Things (IoT) serviceable available market by approximately 10x to $10 billion by 2027.
• Semtech funded the Sierra Wireless acquisition with cash on hand, $1.15 billion in debt financing, and $319.5 million in convertible senior notes due 2027.

Share Issuance

• In December 2024, Semtech announced the pricing of a public offering of 9,126,985 shares of its common stock at $63.00 per share, with gross proceeds expected to be approximately $575 million.
• The proceeds from this offering were intended for the repayment of certain indebtedness under the company's Third Amended and Restated Credit Agreement, related to the Sierra Wireless acquisition.
• Semtech's shares outstanding increased from approximately 64 million in late 2023 to about 75 million by August 2024 and further to around 86.5 million by March 2025.

Share Repurchases

• Semtech maintains a stock repurchase program that was initially approved in March 2008 and has been expanded by its Board of Directors over the years, with no expiration date.

Capital Expenditures

• Semtech defines free cash flow as cash flows provided by (used in) operating activities less net capital expenditures.
• The company reported positive operating cash flow of $13.9 million and free cash flow of $12.2 million for the full fiscal year 2024.