MACOM's Q3 2025 Earnings Call: Key Contradictions in Growth Expectations and Margin Outlooks

RTP fab transition and gross margin impact, data center growth momentum and market outlook, telecom segment growth opportunities, satellite communications revenue potential, and data center growth drivers are the key contradictions discussed in MACOM's latest 2025Q3 earnings call.



Strong Financial Performance and Revenue Milestones:
- MACOM Technology Solutions Holdings, Inc. reported revenue of $252.1 million for Q3, up 6.9% sequentially and its backlog remains at a record level.
- The financial performance was driven by the strong growth in its Industrial & Defense and Data Center segments, with a notable book-to-bill ratio of just over 1.1:1.

Segment-Specific Growth:
- The Industrial & Defense segment achieved $108.2 million in revenue, representing a 10% sequential increase, and the Data Center segment reported $75.8 million, up 5% sequentially.
- Growth in these segments was due to strong demand in applications such as military and space electronics, as well as the expansion of data centers globally.

Product and Market Diversification:
- The Data Center segment is expected to achieve significant year-over-year growth, driven by new product lines like 200G per lane photodetectors and 100G per lane linear pluggable optics, enhancing MACOM's market position.
- Diversification into higher data rate applications and new customer deployments are contributing to this growth.

RTP Fab and Margin Impact:
- MACOM assumed operational control of the RTP fab ahead of schedule, anticipating a near-term gross margin dilution of approximately 60 basis points.
- While acknowledging a short-term impact, the company expects improvements through yield enhancement and capacity expansion, aiming to convert the RTP fab into a tailwind for long-term profitability.