Xilinx Reports Q4 2017 Earnings and Wow!

[Daniel Nenni]

As you all know I'm a big fan of Xilinx. I was a big fan of Altera until they defected from TSMC to Intel then was acquired. My prediction at the time was that Xilinx would run away with the FPGA business as Intel assimilated Altera. Clearly that prediction is coming true and for those brave soles that bought XLNX I congratulate you. In the last twelve months XLNX has jumped from $43 per share to more than $60. The question today is: Will that rise continue?

Based on what I hear from the trenches the answer is yes, absolutely!

Xilinx (XLNX) Q4 2017 Results - Earnings Call Transcript | Seeking Alpha

Moshe N. Gavrielov
28-nanometer product family very significantly surpassed $200 million in the quarter, setting by far a very significant PLD industry record. 20-nanometer generated $60 million in sales, driven by a very broad base of markets. 16-nanometer sales grew significantly in the March quarter to a new record, significantly exceeding our forecast with sales from all of our end markets...

One of our key 16-nanometer customers is Amazon Web Services. Just last week, AWS announced the general availability of our FPGAs for cloud-based acceleration. Our world-class silicon technology, coupled with our optimized software tools, allow AWS to offer optimizable and programmable hardware acceleration to their users.

More broadly, our investment and exceptional execution at the 16-nanometer node has extended our competitive lead to approximately 18 months. We are now shipping 14 unique products to more than 450 discrete customers. This represents a substantial increase from last quarter, where we shipped 12 unique products to 300 customers.

Remember, Xilinx and Alter both released 28nm products at the same time. Xilinx went on to beat Altera to 20nm and 16nm and next year will be sampling 7nm chips. Altera is just now ramping up 14nm and 10nm is nowhere to be seen. Remember, after an FPGA design win it takes 2-3 years before revenue starts ramping so the best is yet to come.

Xilinx just posted their sixth growth quarter and I don't see anything stopping them, certainly not Intel/Altera. Just my opinion of course but congratulations to Xilinx and their partners, especially TSMC.

Comments? Agree or disagree? You can read the history of FPGAs here from our book "Fabless: The Transformation of the Semiconductor Industry:

A Brief History of Field Programmable Devices (FPGAs)

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[Bernard Murphy]

Cloud is going to be huge for FPGA guys.

 

[Daniel Nenni]

Here is the FPGA mention on the Intel investor call:

"and executing flawlessly in memory and FPGAs" Hahahahaha........ What happened to 14nm? And what about 10nm?

"In our Programmable Solutions Group, revenue declined 7% over the last year after adjusting for acquisition-related accounting charges in the first quarter of 2016. The year-over-year decline was due to weakness in the data center and comm segment, partially offset by growth in industrial and auto and consumer. We also announced an important pilot program with Alibaba Cloud, the cloud computing arm of Alibaba Group, for our cloud-based FPGA acceleration service."

 

[count]

Big fan of XLNX right now but the company is starting to look overvalued. I purchased the shares last year based on the premise that it was a likely acquisition target (with Broadcom the most likely suitor), but even if they didn't get purchased it's a great company with little downside. I don't think it's an acquisition target at these levels.

Right now I'm looking at TSM. Stock looks really, really undervalued to me. You look at the fabless ecosystem right now, and it's just so strong. You have NVDA, XLNX, AAPL, all doing so well. Then you have the push from the big cloud providers looking at ARM and fabless. So there is a ton of growth on the high end. On the low and mid end, IoT is extending the life of 28nm. Then you look at TSM, which is dead center of fabless ecosystem and it's cheaper on a valuation basis than Intel. This is a fat pitch if I've ever seen one.

 

[hist78]

I remember this Q3 2015 earning conference call, Xilinx's CEO Moshe Gavrielov answered a question regarding their 16nm FinFET delay:

Xilinx's (XLNX) CEO Moshe Gavrielov on Q3 2015 Results - Earnings Call Transcript | Seeking Alpha

Operator:

Your next question comes from the line of Ambrish Srivastava from BMO Capital. Your line is open.


Ambrish Srivastava:

Moshe, I just had a clarification on the FinFET comments you made. Is this an issue emanating from the difficulty, in your opinion, TSMC is having or is it coming from the Xilinx side? And just as a quick follow-up, what’s the timing from tape out to when we should expect production volume? Thank you.

Moshe Gavrielov:

Okay. So there are no issues with TSMC, they have had numerous tape outs already, they are giving us full support. The design whenever you encounter a new generation of product tends to unearth problems that you did not anticipate and as a result the closing of all of these issues is taking a little longer plus the challenges related to design for FinFET transistors are more significant. So it's not a TSMC challenge or issue at all, it's just our ability to finish the design with their support. ...

When a CEO is sincerely and honestly addressing the issue instead of blaming someone else, his/her company will thrive!

 

[Daniel Nenni]

I agree completely. Ethics win! I really do see double digit gains coming for Xilinx. The once boring FPGA market now has some sex appeal. Moshe also said the Zynq product family will dominate their revenue in the coming years. Zynq is 28nm and 16nm with ARM IP baked in and I'm pretty sure Zynq will continue at 7nm.

Back in the day Altera and ARM were also close but not anymore so this is another market that Xilinx will dominate, the FPGA SoC.

I'm wondering if Achronix will step up and replace Altera? Let me do some digging, I know people....

I remember this Q3 2015 earning conference call, Xilinx's CEO Moshe Gavrielov answered a question regarding their 16nm FinFET delay:

Xilinx's (XLNX) CEO Moshe Gavrielov on Q3 2015 Results - Earnings Call Transcript | Seeking Alpha



When a CEO is sincerely and honestly addressing the issue instead of blaming someone else, his/her company will thrive!

 

[Daniel Nenni]

Big fan of XLNX right now but the company is starting to look overvalued. I purchased the shares last year based on the premise that it was a likely acquisition target (with Broadcom the most likely suitor), but even if they didn't get purchased it's a great company with little downside. I don't think it's an acquisition target at these levels.

Right now I'm looking at TSM. Stock looks really, really undervalued to me. You look at the fabless ecosystem right now, and it's just so strong. You have NVDA, XLNX, AAPL, all doing so well. Then you have the push from the big cloud providers looking at ARM and fabless. So there is a ton of growth on the high end. On the low and mid end, IoT is extending the life of 28nm. Then you look at TSM, which is dead center of fabless ecosystem and it's cheaper on a valuation basis than Intel. This is a fat pitch if I've ever seen one.

I agree completely. My hope is that GF steps up to the plate at 7nm so the pure-play business model can thrive and the IDM foundries can get back to what they are really good at, making their own chips.

 

[SteveSchiets]

I have a reason to believe that Lightwave Logic (LWLG) will choose Xilinx for their polymer based devices. We will see.

"We have continued to attract, recruit and hire specialized world class device engineers to capitalize on our existing momentum, which has attained results ahead of schedule. Importantly, this will accelerate our continued progress in 2017 and beyond. In that effort, we have already begun exploring packaging designs to prepare for customer evaluations.

Press Releases: Lightwave Logic Achieves High-Speed Modulation Enabling 25Gbps in an All-Organic Polymer Ridge Waveguide Modulator Prototype

 

[kingmouf]

If Zynq's success is an indication, I wonder what will happen if Intel/Altera actually make a meaningful Xeon/FPGA single chip solution.