Semtech Q3 FY 2024 Earnings

Semtech Q3 FY 2024 Earnings

The News: Semtech Corporation, the high-performance semiconductor, IoT systems, and cloud connectivity service provider, reported unaudited financial results for its third quarter (Q3) of fiscal year 2024 (FY 2024), which ended October 29. Semtech reported net sales of $200.9 million for the quarter, above the midpoint of guidance, a generally accepted accounting principles (GAAP) gross margin of 46.3% and non-GAAP gross margin of 51.3%, above the high end of guidance. GAAP diluted loss per share was $0.60 and non-GAAP diluted earnings per share (EPS), above the high end of guidance, were $0.02. Additionally, effective October 2, Mark Lin became Semtech’s executive vice president and chief financial officer. Read more on the Semtech website.

Semtech Q3 FY 2024 Earnings

Analyst Take: All in all, no surprises from Semtech in Q3 FY 2024. Net sales were pretty much in line with guidance and expectations and persistent inventory headwinds continued to act as a drag on the company’s recovery, partially offsetting emerging growth vectors and causing asymmetries in overall solutions demand. Generative AI in the data center continued to be, predictably, a growth opportunity for Semtech, while its LoRa and PerSe solutions continue to find scalable new use case sockets and deliver design wins for the company.


  • Net sales of $200.9 million, slightly above the guidance midpoint
  • Infrastructure up 2% quarter-over-quarter (QoQ)
  • High-end consumer up 10% QoQ
  • Industrial down 26% QoQ


Infrastructure net sales were $43.2 million, a QoQ increase of just 2%. AI remained a primary growth driver for hyperscale data center applications, which saw QoQ and YoY growth in Q3.

General compute data center applications grew as well. Semtech also saw record shipments in 200-gig, 400-gig, and 800-gig applications, uplifted in great part by the popularity of the company’s Tri-Edge and FiberEdge data center products.

Elevated channel inventories continued to act as a drag on Semtech’s other infrastructure products, however. These included passive optical network applications and infrastructure-focused transient voltage suppression. But sequential POS growth for these products suggests the start, albeit slow, of a trend toward normalization.

On the earnings call, CEO Paul Pickle highlighted the company’s strength and momentum in the PON space, with the announcement of the world’s first 50-gig PON chipset last March, which delivers multi-gigabit broadband services for multi-tenant locations and is expected to drive new use cases for the PON market both in enterprise and small and midsize business (SMB) markets. The chipset is reportedly already sampling with module vendors and system integrators, and the feedback appears to be positive so far.

Semtech has also begun sampling 1.6-terabit and linear pluggable optics applications with module vendors and systems integrators, and the hope is that these solutions will help Semtech capitalize on the need for low cost, low power, low latency solutions. Commercialization for these solutions is not expected until second half (H2) of next year, however. Semtech’s automotive solutions are still in the very early stages of commercialization, but Semtech’s Ethernet protection solutions could position the company for future growth in the segment.

High-End Consumer

High-end consumer sales jumped to $37.6 million in Q3, a sequential increase of 10% that Semtech can attribute to the seasonality in TVS products and a strong quarter for mobile handset sales. Note that the quarter’s numbers also reflect YoY growth, not just sequential growth. Design wins grew 10% QoQ for handheld devices and wearables. Proximity sensing product sales declined slightly QoQ but grew YoY.

An important slice of Semtech’s business that I have been keeping an eye on: Semtech’s PerSe sensing solution. Although a still relatively young product for the company, PerSe provides capacitive touch and user sensing capabilities, primarily in handsets. When used in wearables, however, PerSe sensors deliver automated functionality and rapid response interactions such as smart assistant activation, noise cancellation control, and media player management while minimizing end user exposure to RF energy. The market advantage of this combination is that it allows equipment manufacturers to achieve compliance with absorption rate (SAR) regulations while maintaining optimal signal connectivity. The growth opportunity for Semtech therefore lies in its ability to expand PerSe’s footprint from mobile handsets to other growing product segments such as wearables, tablets, PCs, and other IoT products.


Industrial sales slipped 26% QoQ to $120.2 million, as expected, with the lion’s share concentrated in the company’s ISP modules business. Conversely, IoT Connectivity Services were up 1.4% QoQ to $24.2 million, with AirVantage Smart Connectivity, Advanced service line (global access via a multi-MC, multi-profile solution on a single SIM), Carrier+ (simplified regional deployments with multiple carriers) performing well. Per Pickle, these growth vectors were partially offset by the phasing out of legacy technologies. Connected gateways also grew 3% QoQ.

LoRa-enabled industrial products, however, saw a QoQ decline in Q3, but POS and bookings increased, signaling some measure of market recovery. Case in point: Several European-based utilities announcing RFPs with a requirement for a LoRa solution, also signaling an increase in traction for LoRa solutions specifically in the utility segment. Pickle also highlighted that LoRa solutions are being integrated into custom hearing aid SoCs for a customer.

As the largest North American module supplier, Semtech continues to see what Pickle calls “a meaningful share shift in pipeline from our competitors to us.” (Pipeline meaning design wins). Consensus is that sensitive or high-priority infrastructures such as industrialized laptops (used by first responders and cellular routers/utilities) and applications involving sensitive personal identifiers and banking information are likely driving this shift toward Semtech’s trusted solutions.

This echoed a discussion during the previous quarter’s earnings call in which Pickle discussed how Semtech’s broadband module business could stand to benefit from ongoing US legislative attention to the company’s low-cost APAC-based (Asia-Pacific region) competitors. There was a strong sense at the time that this scrutiny might present Semtech with an opportunity to expand its market share. Pipeline engagements had reportedly been quick to pick up following questions about possible updates to the entity exclusion list, which could happen with little to no warning. As the market was beginning to consider its options and the potential risk of sudden supply chain disruptions, the advantages of working with a vendor with little risk of ending up on the entity exclusion list steered many toward Semtech. Semtech’s ability to put TIA-compliant modules in place, should that ever become a requirement, certainly did not hurt.


Also hailing back to the previous quarter’s earnings call, I recall Pickle’s guarded optimism regarding the then barely nascent recovery: “While we remain cautious given the current challenges of broader economic uncertainties and high channel inventory, I am confident that our ongoing operational refinements and strong presence in key markets keep us poised to recover as economic conditions evolve.” We see in Q3’s numbers and guidance for Q4 that these comments were pretty much on target.

The sector’s recovery increasingly looks like a game of two steps forward, one step back. On the one hand, improving economic and demand pipeline conditions are slowly driving QoQ improvements toward an eventual return to YoY growth, possibly late into H2 2024. On the other hand, inventory bloat is proving more persistent than some may have hoped, and the drag placed on demand for modules, routers, and other hardware remains not only sticky but asymmetrical. Q4 sales for Semtech’s overall industrial solutions are expected to remain somewhat flat, if not slightly down, while sales of high-end consumer solutions could soften due to seasonality trending and, yes, channel inventory bloat (still).

Fortunately, Semtech’s positioning in the high-performance analog and IoT sectors continues to put the company on solid footing, and while Q4 could feel like a bit of a step back from Q2 and Q3 gains, I feel that Q1 of the upcoming fiscal year should see Semtech making up for that potential (although probably subtle) temporary loss in momentum.

Disclosure: The Futurum Group is a research and advisory firm that engages or has engaged in research, analysis, and advisory services with many technology companies, including those mentioned in this article. The author does not hold any equity positions with any company mentioned in this article.

Analysis and opinions expressed herein are specific to the analyst individually and data and other information that might have been provided for validation, not those of The Futurum Group as a whole.

Other Insights from The Futurum Group:

Semtech Q2 FY 2024: Recovery Incoming but Inventory Bloat Still a Drag

Amazon Sidewalk Using Semtech’s LoRa® as a Foundational Technology to Connect Devices

Amazon Fire TV: Battling for Center of Gravity in the Home

Author Information

Olivier Blanchard has extensive experience managing product innovation, technology adoption, digital integration, and change management for industry leaders in the B2B, B2C, B2G sectors, and the IT channel. His passion is helping decision-makers and their organizations understand the many risks and opportunities of technology-driven disruption, and leverage innovation to build stronger, better, more competitive companies.  Read Full Bio.


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