Advanced Micro Devices Inc (AMD) — Q4 2020 Earnings Call Transcript

Thank you, Christina. And good afternoon everyone. With me are Victor Peng, CEO; Brice Hill, our new CFO; and Sumeet Gagneja, our Chief Accounting Officer. Since Brice only recently joined Xilinx and wasn’t here during the last quarter, for this call, Victor will provide the financial and business review of the March quarter and the business outlook for the June quarter. Let me remind everyone that during our conference call today, we may make projections or other forward-looking statements regarding future events or the future financial performance of the company. We wish to caution you that such statements are predictions based on information currently available and actual results may differ materially. We refer you to the documents the company files with the SEC including our 10-Ks, 10-Qs and 8-Ks. These documents contain and identify important risk factors that could cause the actual results to differ materially from those contained in our projections or forward-looking statements. In addition to GAAP financial measures, we will be disclosing certain supplemental non-GAAP financial measures used by management to evaluate the company’s financial results. We provide these measures to facilitate period to period comparability for purposes of evaluating continuing business operations by excluding the effects of non-recurring and unusual items such as amortization of intangibles and certain one-time items related to acquisitions. We believe that sharing these non-GAAP measures will be helpful for analysts and investors in analyzing the company’s ongoing core business. A reconciliation of non-GAAP financial information to the closest GAAP measure is included in our earnings release and has been posted on our Investor Relations website. This conference call is open to all and is being webcast live. It can be accessed from our Xilinx Investor Relations website. Let me now turn the call over to Victor.

Thanks Matt and thanks everyone for joining today’s call. I am excited to have Brice Hill, our new CFO joining us today. Brice welcome to your first Xilinx earnings call.

Thank you Victor. It’s nice to meet all of you online virtually and I am thrilled to join Xilinx. I am impressed with the products, strategy, the vision of the company and especially the leadership team and just excited to contribute to the future. So thanks Victor.

Thanks, Brice. So let me start by spending a few minutes on actions we’re taking to address COVID-19 challenges and our assessment of potential impact to our business before moving on to Q4 FY 20 results and our outlook for Q1. Because of the uncertain business environment due to coronavirus, we will not be providing full year guidance for FY 21. I hope that each one of you and your families are staying safe and healthy. Our hearts go out to those who have been personally impacted by COVID-19. I also want to take this opportunity to express our sincere gratitude to all healthcare workers around the globe who are on the frontlines of fighting this once in a century pandemic. As we’re all adapting to new ways of living and working, the physical and mental well-being of our employees remains our highest priority. We have implemented work-from-home globally, except in China where employees have been allowed to return to work. We’ve also enforced social distancing practices and adopted strict travel restrictions as part of many other measures we’ve taken for the health and safety of our employees. We’ve worked hard to improve our employees' work-from-home experiences and their productivity. In addition to the connectivity enhancements, we’ve increased internal communications to keep our employees both informed and engaged. To alleviate anxiety and enable better focus, I’ve communicated some items that there will be no workforce reductions during the rest of this calendar year. We’ll control expenses as appropriate by means other than job elimination. As a company, we’re doing our part to fight COVID-19. For our healthcare industry customers, we’ve formed a task force to provide special assistance, prioritize product fulfillment and expedite shipments. I am proud that our technology which powers millions of medical devices like ventilators, patient monitors, respirators, and patient ICU beds plays a role in combating the coronavirus. In late January, we supported China’s largest medical equipment maker Mindray with thousands of Spartan-7 FPGAs to power patient monitoring systems. We’re currently working to support some of the largest medical suppliers in the U.S., such as GE Healthcare as well as companies in Europe and Asia to supply products for testing and treating COVID-19. In addition, Xilinx donated a total of $1.1 million to several organizations including the WHO, as well as regional and local non-profit institutions. Turning now to our update on our supply chain and demand impact from COVID-19. Our supply chain remains intact without significant disruption. However, we started seeing COVID-19 demand related impact midway through the quarter with weakness in our Automotive, Broadcast and Consumer business. The weakness was more pronounced in the automotive business as car sales in China and around the globe declined significantly. We also saw weakness in broadcast in the China channel businesses. Nonetheless, our team has executed extremely well and the overall business impact in the quarter was relatively modest keeping us within our guidance range. Now I’ll talk about our fiscal year 2020. Fiscal 2020 was much more challenging than we anticipated. Our business is materially impacted by the U.S. export restrictions to Huawei early in the fiscal year and the overall challenging global trade environment, coupled with general weakness in the semiconductor market in calendar 2019. Despite these challenges, we had another record year with $3.2 billion of revenues growing 3% year-on-year. This is a testament to the resilience of our business which we attribute to the diversity of the markets we serve and the strength of our product leadership. In FY 20, we also generated $1.2 billion in cash flow from operations and returned significant value back to shareholders with $372 million in dividends paid and spending over $1.2 billion to buy back 12.9 million shares. Now moving on to the fourth quarter highlights. The Advanced Products category constituted approximately 70% of total revenues. Zynq-based revenues grew 2% year-over-year despite the impact of weakness in Wired and Wireless, and the Automotive businesses and represented 20% of our total revenues. Zynq revenue and design win momentum continues to be strong across our target markets. In the communications market, we recently announced a strategic engagement with Samsung for their second-generation 5G radio design that includes beamforming based on our 7-nanometer Versal ACAP. This engagement is driven by the compelling Versal value proposition, particularly our AI engine architecture as well as our commitment to deliver optimized and differentiated platform solutions for our customers. Telefonica, a multinational telecom carrier, announced its plan to build next-generation wireless radio networks using O-RAN collaborating with Xilinx and other leading companies. Our RFSoC products will be used in their 4G and 5G radios. In the Data Center, we announced Xilinx’s first comprehensive SmartNIC platform, the Alveo U25. It combines a highly optimized SmartNIC platform with a powerful and flexible FPGA-based engine. In addition, we’re working with Nimbix and Samsung’s SmartSSD storage group to deliver intelligent storage using FPGA-based computational accelerators. Across our core markets, we announced a range of new advanced machine learning capabilities in our products for the professional, audio, video, and broadcast markets. On the software front, we have had over 20,000 Vitis downloads since we announced Vitis this past November. We have trained over 10,000 developers to date, an increase of over 250% since last year. We have around 1,000 software partners working with us and a growing library of applications. Lastly, we doubled the number of production applications running on our platform since the previous year. Moving to a review of our business groups and core markets for the fourth quarter. Our core markets performed largely as expected. We saw strong sequential revenue growth as programs ramped at multiple emulation and prototyping customers. Aerospace and Defense and Industrial, Scientific and Medical were both up as expected with A&D revenues growing double-digits. We had expected auto revenue to recover but auto revenues are flat due to COVID-19 impacts. As expected, AVB and Consumer were weaker, but the weakness was more pronounced due to COVID-19. The Data Center Group performed as expected with strong sequential growth primarily due to contributions from compute acceleration driven by a mix of both cloud and high-performance compute customers. We saw notable strengths from a hyperscaler deployment of an FPGA-based SmartNIC and our DCG opportunity pipeline continues to grow at double digits, particularly in video, HPC, database, and fintech applications. The Wired and Wireless Group performed better than expected. We had expected Wired revenues to decline but the market grew due to some strength in optical transport networks and access. Wireless revenues performed better than expected due to stronger radio shipments. Lastly, as expected the ASIC transition, which we talked about at length in the past, is largely complete. Now moving on to the financials for the fiscal fourth quarter. Q4 revenues were in line with our guidance range, despite the mid-quarter impact from COVID-19. Total revenues were $756 million, up 5% sequentially and down 9% year-over-year. Data Center Group revenue increased 77% year-over-year and was up 14% sequentially. Wired and Wireless Group revenue declined 46% year-over-year and was down 19% sequentially. AIT revenue increased 15% year-over-year and was up 30% sequentially. ABC revenue increased 2% year-over-year, but was down 13% sequentially. Gross margin was higher than expected primarily due to product mix with GAAP gross margin of 70% and non-GAAP gross margin of 71%. GAAP operating expenses at $350 million and non-GAAP operating expenses at $317 million were both below midpoint of guidance due to reduced hiring and discretionary spending. GAAP operating expenses included a pre-tax charge of $28 million related to severance pay expenses as we completed the restructuring that we announced in late January. GAAP operating income was $178 million or 24% operating margin. Non-GAAP operating income was $218 million or 29% operating margin. Our GAAP tax rate was approximately 15% and non-GAAP tax rate was approximately 16%. The higher tax rates were primarily related to a larger contribution of revenues and profitability from higher tax jurisdictions. GAAP net income was $162 million. Diluted earnings per share were $0.65, a 32% year-over-year decrease and a 2% sequential increase. Non-GAAP net income was $193 million. Non-GAAP diluted EPS was $0.78, a 17% decline from last year and a 15% increase sequentially. Diluted share count decreased to 249.3 million. Gross cash was $2.27 billion with $1.25 billion of long-term debt. Accounts receivables increased to $273 million at 33 days compared to 32 days last quarter. Overall, we generated $345 million in operating cash. During the quarter, we repurchased approximately 5.7 million shares at an average price of $83 per share and paid dividends of $91 million. Turning now to the outlook for the first quarter of fiscal 2021. We anticipate first quarter revenue to fall between $660 million and $720 million, which at the midpoint represents a decline of about 19% year-over-year and around 9% sequentially. Our guidance includes our current evaluation of the impact from COVID-19, with the wider range also reflecting the variability of the situation. Additionally, the timing and dynamics of customer-related programs are contributing to a greater than usual sequential revenue decline. However, we are entering the quarter with a backlog that exceeds our historical average, providing us with some confidence in our revenue projections. The sequential decrease in revenue for the first quarter is expected to result from lower sales in AIT, ADC, and DCG, partially offset by growth in WWG. Within AIT, TME sales are expected to decline, following a record quarter in fiscal Q4, as E&P customer programs are advancing at a more modest pace. A&D sales are also projected to drop mainly due to a significant purchase by a specific customer in fiscal Q4 that will not be repeated in Q1. ISM is expected to remain stable due to strength in the medical sector, despite challenges posed by COVID-19 and other markets. All ABC end markets are being affected by weak demand resulting from COVID-19. Automotive sales are anticipated to decrease significantly, while Broadcast and Consumer sales are expected to decline slightly. DCG sales are forecasted to decrease compared to last quarter. As I have mentioned previously, our DCG business tends to experience more significant revenue fluctuations each quarter compared to our other businesses, as we work to scale this area; however, we remain committed to achieving sustained double-digit growth on an annual basis in the long term. WWG is projected to experience modest growth with improvements in Wireless, and to a lesser extent, in Wired. Fiscal Q1 non-GAAP gross margin is expected to range from 68% to 70%. Non-GAAP operating expenses are anticipated to be between $307 million and $311 million, reflecting our newly adjusted spending profile. Non-GAAP other expenses are projected to be around $13 million primarily due to lower expected interest income and losses from foreign exchange hedging. Lastly, our non-GAAP tax rate is expected to range from 9% to 11%. Turning to FY20 and overall, while we’re not providing full year guidance, we believe the impact of COVID-19 related disruptions will be more evident in some portions of our core markets, including Automotive, Broadcast, Consumer, Industrial, and semiconductor test. We expect the rest of our core markets to be relatively less impacted by COVID-19, but we are continuing to monitor the situation very closely. Despite a modestly slower 5G deployment ramp, we continue to see a strong pipeline of opportunities in WWG. We also expect DCG to continue to build its pipeline as customer engagements go into deployment at hyperscalers. Regarding our shareholder return programs, we plan to be more conservative with our buyback activity as we focus on capital preservation and further improving our strong liquidity position. Our Board has approved a quarterly dividend increase of approximately 3% to $0.38 per share and we remain committed to growing our dividend over the long term. We are focused on being good stewards of Xilinx’s capital and continue to drive free cash flow generation. So in conclusion, I’m extremely grateful and proud of our employees for the dedication they’ve exhibited in keeping our commitments to our customers and running the business while coping with the COVID-19 pandemic. Despite today’s challenges, our belief in, and commitment to our growth opportunities in the Data Center, 5G infrastructure, and Automotive markets remain undiminished. As the leader in adaptable platforms, we’re driving SAM expansion, share gains across our diverse and resilient core markets with innovative products like Zynq, RFSoC, and Versal. We remain 100% focused on executing on our strategy to empower more customers with powerful adaptable platforms and deliver long-term shareholder value. Operator, I’ll now open the call for questions.

Christina we will turn to you for questions.

Hi guys, good afternoon. Thank you for taking the question. Victor, I wanted to ask a question on COVID-19 and the demand impact that you’re seeing in your business. You gave great color in your prepared remarks, but I was hoping you could elaborate a little bit in terms of what you saw in the quarter from a revenue standpoint. If you can provide some numbers around the impact, that would be helpful. And then similarly for the current quarter, appreciate the level of uncertainty, but if you can kind of speak to what exactly you’re seeing across your customer base, as it relates to COVID-19, that will be helpful. Are there cancellations, push-outs, downsizing of projects? If you can kind of speak to those, that would be great. And then I’ve got a quick follow-up. Thank you.

Okay. Sure, Toshi. So in the fourth quarter, we did see some impact, but I’d say, all things considered, relatively modest, because it just started happening midway through the quarter and I shared the end markets like Automotive, I think somewhat intuitively pretty as you would expect. In terms of the current quarter, obviously, we’re seeing more meaningful impact. I would say that, as I said in the prepared remarks, it’s not only COVID-19, but if I had to point to one single thing on why both the midpoint and then the range we’re providing is broader is due to COVID-19, and I think I kind of went through some of the end markets that are more exposed to that. We are of course not only increasing communications with our employees but very much so with all our key customers with Avnet, our partner, with our supply chain, with our customers’ customers and a lot of the end markets. So we’re doing everything we can in this uncertain environment to collect a lot of information. And so what I would tell you is that, we are not seeing cancellations. We do not see things like double bookings because of work concerns around material. A few areas where there is people creating buffer stock, but not very expensive and again overall, we have historically higher backlog than we ordinarily have. So I would say that we do have some confidence in that because of that and because of the high level of communication that we have engaged. That said, look, we’re definitely in uncharted territory. Right? So we have factored in some degree of, say, turns degradation over time and just the general uncertainty. So I think we are really trying to do the balance there. I hope that helps.

Yes, that’s great. And then as a quick follow-up, on the Samsung 5G win with Versal, I was hoping you can help us again sort of quantify the potential impact to your business over the next couple of years. I’m sure it’s going to take some time, but both in terms of timing, as well as magnitude, how meaningful this specific win could be for your business? So if you can kind of touch on that, that’ll be helpful. Thanks so much.

Yes, Samsung is a significant win for us and presents an opportunity, especially as it pertains to their second generation of 5G. While we don’t disclose specific customer revenue, this engagement is substantial for us. The larger context is that we are still in the early phases of 5G; what is currently being shipped is the first generation, and we are actively involved in developing the second generation. Most of our customers anticipate at least three generations. We believe this will remain a significant long-term opportunity for us. Additionally, as we've mentioned previously, revenues can be somewhat inconsistent even under normal conditions, and the COVID situation adds extra uncertainty. While pre-COVID we would have expected this to ramp up later in the calendar year and become more substantial in the following year, we now need to reassess in light of the ongoing COVID situation.

Thank you.

Great, thank you. Following up on that last question, the WWG segment, the revenues are down. I think Wireless infrastructure probably down to below 4G levels at this point. So, it seemed like a pretty compelling growth opportunity. At the Analyst Day last year, you talked about what you see the total area under the curve growing by pretty impressive numbers, obviously you expected the ASIC transition, but you didn’t expect Huawei to become more challenged. But how are you seeing that opportunity out in the next two, three years? Do you still see a significantly larger business than 4G even missing Huawei from that forecast?

Yes, Joe, that's a great question. Looking ahead two to three years, we anticipate that, assuming everything goes well, the challenges we face in visibility due to the pandemic will be manageable. We believe that the market will still be significantly larger than 4G, despite the absence of the Huawei business. Even though we've lost one of our major customers, the fact that our revenue remains above $1 billion shows that we are performing strong in the early stages of 5G. Once we navigate some of the near-term challenges and uncertainties, we see a substantial opportunity ahead. This is largely because 5G represents a much larger deployment, and we are providing considerably more value with our RFSoC lines, Versal lines, and our collaboration with key suppliers. We are closely working with them to enhance their architectures. Additionally, regarding the COVID situation, in some markets, there may be demand disruptions, but in this case, it's more about delays rather than a true disruption in demand. Understanding the timing of these delays and how they will recover is challenging.

Great. And then just to clarify I mean you’re still selling some trailing edge product to Huawei I believe. Can you quantify that and is there much Huawei to think about your forecast?

Yes. Joe, it’s really pretty de minimis. I mean, we don’t really count on it and because it is pretty much more modest and it’s just not something we count on but from time to time we have some amount of Huawei revenue.

Maybe on mute.

Hi guys can you hear me?

Yes Ross.

Perfect. Glad my mute button doesn’t work. Just had a question on Victor, you mentioned no double ordering and no buffer to discuss. I noticed your turns have increased to the higher-end or the highest end of what you offer in the last couple of years. How do you determine if you are experiencing those pull-ins, and why would the turns have increased so much if it wasn’t due to pull-in behavior?

I think our performance varies across different markets. However, China is recovering after the shutdown and is focused on advancing their 5G deployments, which presents some opportunities for growth. In other regions, there may be some concerns, but our lead times and our ability to deliver products remain unaffected. While there have been discussions with customers about potential changes, we have not experienced any cancellations so far. We acknowledge that circumstances can evolve, which is why we've included a broad range in our projections that reflects our assessments.

Got it. And then one longer-term question. You mentioned about the wide array of engagements that you have in software development, etc., that can benefit your Data Center Group. I just wondered if you’ve seen the activity on your customer side change at all during the COVID side, on one hand, those are the customers that can keep their longer-term development going because they’re so well financed and see growth, etc. But people are fearing that even that market, if the recession gets nasty, would clamp down on some of the new launches that were otherwise planned and your company would benefit a lot from those new launches. So any sort of update on the activity you’re seeing from an engagement level from a longer-term perspective as well as kind of the near term?

That's a good question, and it's something I discuss with my team and the sales group quite specifically. Our customers, especially those we've engaged with through meaningful proof-of-concepts and trials, are not showing any signs of disengagement. Everyone seems committed to maintaining their operations. If this situation persists for an extended period, we might encounter challenges in acquiring entirely new customers. We are currently gaining market share and expanding our serviceable addressable market, and we've already made substantial progress in that regard. However, at this point, we do not see any adverse effects on our opportunity pipelines. It's worth noting that if this situation drags on, customers will likely focus primarily on their existing suppliers. Nevertheless, we do not perceive any significant impact at this time.

Yes, thanks for taking the question. I wanted to talk a little bit about the Data Center business. It sounds like you’re a bit more confident in the visibility that you’re seeing on proof-of-concepts moving into kind of production deployment. Can you just talk a little bit more about what you’re seeing there and how much traction have you been seeing from the SmartNIC category, obviously, the Solarflare Alveo U25 products? And then I have a follow-up.

Yes, I think the key points relate to the quality and intensity of our engagements and the positive results we are observing. New users typically transition to a new platform only when they notice significant enhancements, and we are very optimistic about the trends we are witnessing. Additionally, there is strong interest in expanding our Alveo line, although the revenue is still forthcoming. Even during the pandemic, our customers are utilizing our accelerators to enhance their genomic analyses and simulations, which highlights the effectiveness of our acceleration technology for these applications. Overall, these developments are promising. However, the timing of this growth can be somewhat erratic, and we do face some uncertainty with the potential recession on the horizon.

Fair enough. And then on the Versal product, obviously coming off the heels of the Samsung announcement, can you just remind us again of where we stand, or how we should think about materializing revenue contributions and are you still on track with some of the product lineup expansion that you’ve previously outlined? Thank you.

Yes, when we announced the reduction in force and some other expense reduction measures in late January, we were very considerate to ensure that we did not harm anything strategic or compromise our long-term goal of achieving sustained double-digit growth. I believe we have successfully managed this and will continue to maintain this approach throughout the downturn. We have other options to consider if the situation worsens, but our focus will be on positioning ourselves to fully capitalize on the recovery when it happens. During this challenging time, we are also committed to being a reliable supplier to all our key customers, so we will manage our actions responsibly without jeopardizing long-term initiatives. This includes not only tape-outs but also the improvements we've made in the ecosystem and software development in Vitis, which has been ready for download for several months and is gaining traction. We will keep pushing forward in developing the ecosystem and advancing key programs.

And, just specifically in 7-nanometer, would you expect that to contribute to revenue toward the end of this year, late in the year?

Yes, I mean we will position for production of the first part, but then through next year and the next several years. As you know, it’s a very broad product family and we’ll be doing lots of tape-outs that will address many different market segments at different price and performance and power points. So we’re still in the early days of that, but as far as 7-nanometer, it will become it will really start to ramp next fiscal year, I would say. But, yes, we are poised to go into production late this year.

Yes, thank you very much. Victor, I just had a question on where we are heading into and I was a little confused, why would backlog be up and what is your perspective on what we are heading into versus ‘08 or ‘09? Yesterday we had this representative from TI tell us that he is opening up the 2008, 2009 playbook to kind of think through revenue. So, having lived through many cycles, what is your perspective on what we’re heading into versus the last one? And then I had a little bit longer term product question.

The first point regarding the backlog is that it varies significantly by market. In the Automotive sector, forecasts have been notably reduced compared to initial predictions, particularly from key suppliers to major OEMs. Additionally, we are experiencing considerable weakness in AVB due to the absence of sporting events and the postponement of the Olympics. This has clearly impacted our backlog in that area. Conversely, Aerospace and Defense remain largely unaffected, and there are long-term opportunities that could enhance our potential upside. While it's challenging to predict the timing and specifics, we're observing increased activity in work-from-home scenarios and home entertainment, particularly video streaming, which has gained traction during the pandemic. Video transcoding and similar video processing applications are benefitting from this trend, and we can integrate AI into these processes as well. In terms of communications infrastructure, while we need to monitor capital expenditure closely, there will likely be increased traffic flow. These factors likely contribute to our current situation. Regarding your question about 2008 and 2009, we are evaluating various scenarios, including that era, but we recognize that we are a different company now. Our revenue has grown significantly, and we have introduced new products that didn't exist back then, such as Zynq, RFSoC, and Versal ACAP. We also weren't targeting the Data Center market, and AI was not a major focus. While we take past experiences into account, we believe that they do not serve as a reliable guide for our current strategies. In fact, we view this as uncharted territory without a clear existing blueprint.

I had a question about the products. That's helpful perspective, Victor, thank you. Regarding the Samsung design win, I recall that the team from Samsung had come and presented on the relationship between your companies. This is for the next generation. Can you help us understand the situation? You have faced challenges with design wins as ASICs and other ASSP solutions have replaced you. This seems like a significant opportunity, so could you help us frame this against what you had in the first generation and compare it with competing solutions? Thank you.

I understand there are many narratives surrounding different players in the market. I believe I've been clear about our initial larger share. We openly acknowledged that we ended up with reduced production, which was not something we anticipated holding onto for long. Historically, we have been strong in radio, and we feel we have enhanced our capabilities with the RFSoC family. Once Versal is released, it will further improve our position compared to ASSPs and ASICs due to its significant increase in compute density, higher integration levels, and because it serves as a powerful platform rather than a fixed solution. I have always believed this would greatly enhance our competitive stance, as evidenced by our engagement with Samsung regarding Versal. However, keep in mind that we are not yet in production with Versal. We expect to begin production by the end of this calendar year, at which point we will see a rollout of additional products. We are confident in our strong position. I have mentioned before that this is a very competitive market, but competing in the ASIC space is familiar territory for us, as we have been active in it since the 4G generation, serving the same customers even as we navigated changes such as the inability to work with Huawei. This has always been a core market for us.

Great, thanks for the question. I’ll try to do two quick ones. I guess the first, just in relation to the last question, I think this is the first time you called out SmartSSDs. Maybe if you could just talk about computational storage, how large do you think that is as a percentage of DCG and what kind of growth rate are you expecting versus your double-digit segment growth rate overall?

Yes, we have some promising engagements in that area. We don’t provide detailed breakdowns for each segment. Currently, it doesn’t make up a significant portion of our revenue, but we believe it represents a substantial market opportunity for us over time. If we look ahead about three years, we estimate this could reach around $800 million. Although we are still in the early stages, the potential is considerable. It’s important to note that our current revenue distribution may not fully reflect this opportunity. There is a noticeable disruption in the entire Data Center sector, with a trend toward performing computations closer to data storage to minimize bandwidth usage and reduce power consumption in Data Centers. While it is a good opportunity, I would describe its current scale as relatively modest.

Yes, hi, guys. Just wondering, when you look at your fiscal ‘21, you mentioned ASIC transition mostly complete. Just wondering how you see the growth in the WWG, now that you don’t have that ASIC headwind. And I have one follow-on.

Well, again, we’re not providing full-year guidance because of all the uncertainty in the environment, but I guess I want to go back to my comment that we overall still feel 5G is going to be a very big opportunity for us and even despite not being able to sort of Huawei anymore. So we still feel very good about the growth over time in the long run. RFSoC has continued to get great traction. Most of that volume deployment is in front of us, although we have had volume deployments in different geographies with different OEMs and then Versal is in front of us. Right? That’s all in front of us and we’re just talking about the very first design win we’re getting with Versal. So we feel very good about the opportunities we see in WWG, but I wouldn’t try to predict right now FY21.

Got it. And, I don’t know if you already answered this, but you mentioned two wins at Samsung, I believe one on the radar beamforming side for 5G and one on Versal for, actually, computing with Samsung. Just wondering if you sized both the opportunities as you look at the ramps there. Thanks.

I think we mostly talked about the Versal Samsung 5G engagement. The other referenced Samsung with their SmartSSD and that 16-nanometer UltraScale+ based engagement. But clearly, with all our key customers, we’re talking together about our complete roadmap, but we have nothing specific to say about Versal with respect to Samsung storage at the moment. But, yes, we’ve got really good engagements in 16-nanometers with multiple customers that served in the Data Center as well as good traction in Versal.

And operator I think we have time for a couple more questions.

Great, thanks for the question. I’ll try to do two quick ones. I guess the first, just in relation to the last question, I think this is the first time you called out SmartSSDs. Maybe if you could just talk about computational storage, how large do you think that is as a percentage of DCG and what kind of growth rate are you expecting versus your double-digit segment growth rate overall?

Yes, I believe we have some promising engagements in that area. We don't provide detailed breakdowns for each segment, but currently, it's not a significant part of our revenue. However, we see it as a substantial addressable market over time. Looking ahead, perhaps in about three years, we estimate it could represent an $800 million opportunity. We are still in the early stages, but it's considerable. I want to emphasize that our current revenue distribution may not fully reflect this opportunity. It's apparent that the Data Center is undergoing significant changes, with a trend towards performing computations closer to data storage to optimize bandwidth and reduce power consumption in Data Centers. While this presents a good opportunity, I would characterize the current impact as relatively modest.

So Christina, I think we’ll wrap it up there. I want to thank everyone for joining us today. We’ll have a playback of this call beginning at 5 pm Pacific 8 pm Eastern time. For a copy of our earnings release please visit our investor relations website. Our next earnings release date for the first quarter of fiscal year 2021 will be Thursday July 30, after the market close. This completes our call and thank you very much for your participation.