Semtech (NASDAQ:SMTC) outlined strong fiscal 2026 results and detailed its growth priorities in data center connectivity and LoRa during a fireside chat at Roth’s 30th annual conference in Orange County. Mark Lin, presenting on behalf of the company, said the past year marked a “transformational” period both for operating performance and cash generation, while management is increasing R&D investment to capture what it views as high-return opportunities—particularly in data center.
Fiscal 2026 results highlight revenue growth and cash generation
Lin said Semtech reported fiscal 2026 revenue of $1.05 billion, up 15.5%, and earnings per share of $1.71, up 94%. He added that the company recorded its eighth consecutive quarter of revenue growth in the fourth quarter, with EPS, operating margins, and gross margins above the midpoint of guidance.
Management forecasts 50%+ organic growth in data center
Looking ahead, Lin said Semtech is forecasting data center revenue growth of more than 50% year over year on an organic basis in fiscal 2027, with 12% sequential growth expected into fiscal first quarter. He attributed the outlook to multiple “growth vectors,” including ramps in 800G optical, 1.6T copper, and 1.6T optical, as well as the expected first-quarter shipment of CopperEdge linear equalizers.
Lin said customer engagement and bookings coming out of the Optical Fiber Communications Conference (OFC) in Los Angeles were “quite encouraging.” He described a high level of customer meetings and said Semtech expanded booth space and conference rooms at the show to accommodate demand.
ACC, LPO, and higher-speed roadmaps discussed
During the discussion, Lin highlighted active copper cable (ACC) as an emerging opportunity built on Semtech’s CopperEdge linear equalizer. He positioned ACC as a middle ground between passive direct attach copper (DAC) and active electrical cables (AECs) that use DSPs. Lin said AECs consume significantly more power, while power and thermal limits have become increasingly important constraints inside data centers.
Key points Lin shared about ACC included:
- Semtech demonstrated ACC at 1.6T and 3 meters, which Lin said is sufficient for “scale up within the rack.”
- ACC can use up to 90% less power than AECs, with Lin citing roughly 2 watts, and it offers “significantly less latency.”
- Semtech expects initial ACC revenues to begin in fiscal Q1 with a hyperscaler, with additional design wins expected later in the year.
- Lin referenced the creation of an ACC MSA (acc-msa.org) and said its membership supported the company’s earlier comment that it was engaged with “20+” potential customers and a broad ecosystem.
Lin also said linear pluggable optics (LPO) is “tracking expectations.” He reiterated the company’s prior expectation of mid-single-digit starting revenue for LPO in fiscal Q4, which he said was achieved. Looking forward, Lin said Semtech expects CopperEdge linear equalizers—across cable, PCB, and on-board implementations—to generate higher revenue than LPO.
On longer-term speed transitions, Lin said Semtech demonstrated 3.2T (400G per lane) technology at OFC and described it as part of a multi-year growth cycle. He indicated fiscal 2028 as a reasonable time frame for commercial contribution from 3.2T.
HieFo acquisition expands photonics capabilities and content opportunity
Lin said Semtech recently closed the tuck-in acquisition of HieFo Corporation, which he described as adding an entrance into photonics and supporting greater integration as data rates rise. He said HieFo provides capabilities on the photonics side, including laser-related development and modulators, and noted the company is currently selling gain chips for data center interconnect (DCI).
Lin framed the acquisition as part of expanding Semtech’s addressable content. He said Semtech’s content in an 800G module is currently “high single digits” dollars, largely from transimpedance amplifiers (TIAs), but that the company sees an opportunity for content around $80 at 3.2T.
Divestiture process for cellular modules and investment priorities
Lin said Semtech continues to pursue a divestiture of its cellular module business, describing it as a business with about 20% gross margins that is “not a great fit” for Semtech’s portfolio. He said excluding cellular modules, Semtech’s fiscal 2026 gross margin would have been “very close to pushing 60%,” and that growth in data center and LoRa is margin accretive, supporting the potential to move “well into the 60s%” on a consolidated basis in the near term.
On the status of the divestiture, Lin said the company has a “preferred acquirer” and that he views the spending of external dollars by potential buyers—such as diligence and legal costs—as an encouraging sign toward closing a deal.
Lin also addressed operating expense trends, noting that guidance implies higher OpEx from fiscal Q4 to Q1, driven by R&D. He said time-to-market and customer engagement are critical, and that management intends to continue investing in R&D across data center, LoRa, and sensing, while noting operating leverage could emerge if ramps outpace expectations. He also said the company has executed small tuck-in acquisitions, including one in fiscal Q4 to expand sensing, and described recent deals as cost-effective, stating the combined consideration of two acquisitions was less than a quarter’s free cash flow.
In closing, Lin summarized Semtech’s outlook as having “broad-based paths for growth,” citing data center, LoRa, and high-end consumer markets.
About Semtech (NASDAQ:SMTC)
Semtech Corporation is a leading supplier of high-performance analog and mixed-signal semiconductors and advanced algorithms. The company’s products address a broad range of applications in the Internet of Things (IoT), data center and telecom, industrial, home automation, automotive, and aerospace markets. Semtech’s portfolio includes power management, signal integrity, protection devices, wireless and sensing technologies that enable smarter, more connected systems worldwide.
A core offering from Semtech is its LoRa® technology, a low-power, long-range wireless communication platform that has become a de facto standard for global IoT deployments.
