Sukhi Nagesh - VP, Finance and Investor Relations Sehat Sutardja - Chairman and CEO Michael Rashkin - CFO

Craig Ellis - B. Riley Harlan Sur - JPMorgan Quinn Bolton - Needham & Company Doug Freedman - RBC Capital Markets Hans Mosesmann - Raymond James Sanjay Chaurasia - Nomura Ian Ing - MKM Partners Joe Moore - Morgan Stanley Kevin Cassidy - Stifel Steven Chen - UBS Ross Seymore - Deutsche Bank Mark Delaney - Goldman Sachs John Pitzer - Credit Suisse

Good day, ladies and gentlemen, and welcome to the Q2 2015 Marvell Technology Group, Ltd. Earnings Conference Call. My name is Whitley, and I will be your operator for today. (Operator Instructions) As a reminder, this call is being recorded for replay purposes. I would now like to turn the conference over to your host for today, Mr. Sukhi Nagesh, VP of Finance. Please proceed, sir.

Thank you, Whitley, and good afternoon, everyone. Welcome to Marvell Technology Group's second quarter fiscal 2015 earnings call. With me on the call today are Sehat Sutardja, Marvell's Chairman and CEO; and Mike Rashkin, Marvell's CFO. We will all be available during the Q&A portion of the call today. If you have not obtained a copy of our current press release, it can be found at our company website under the Investor Relations section at marvell.com. We have also posted a slide deck summarizing our quarterly results in the IR section of our website for investors. Additionally, this call is being recorded and will be available for replay from our website. Please be reminded that today's discussion will include forward-looking statements that involve risks and uncertainties that could cause our results to differ materially from management's current expectations. The risks and uncertainties include our expectations about our overall business, our R&D investments, our product and market strategy, statements about design wins and market acceptance of our products, statements about general trends in the end markets we serve including future growth opportunities, statements about market share, and statements regarding our financial outlook for the third quarter of fiscal 2015. To fully understand the risks and uncertainties that may cause results to differ from our expectations and outlook, please refer to today's earning press release, our latest quarterly report on Form 10-Q and subsequent SEC filings for a detailed description of our business and associated risks. Please be reminded that all of our statements are made as of today, and Marvell undertakes no obligation to revise or update publicly any forward-looking statements. During our call today, we will make reference to certain non-GAAP financial measures, which exclude the effect of stock-based compensation, amortization of intangible assets, acquisition-related costs, restructuring costs, litigation settlement, and certain one time expenses and benefits that are driven primarily by the discrete events that management does not consider to be directly related to our core operating performance. Pursuant to Regulation G, we have provided reconciliations of the non-GAAP financial measures to the most directly comparable GAAP measures in our second quarter earnings press release, which has been furnished to the SEC on Form 8-K, and is available on our website in the Investor Relations section. With that, I would now like to turn the call over to Sehat.

Thanks, Sukhi, and good afternoon, everyone. Today, we reported second quarter revenue of approximately $962 million, slightly higher from the prior quarter and in line with our guidance range. Revenues in the quarter were driven by better than expected demand from our storage and networking customers offset by softer 3G mobile business. We delivered the following non-GAAP results for Q2: Gross margin of approximately 50.6%, operating margin of 17%, and earnings per share of $0.34. We also paid approximately $31 million in dividends during the quarter. Now I would like to provide a brief update on each of our end markets. In Storage, revenues came in higher than expected driven by strength in both HDDs and SSDs. For Q2, revenues from our storage end market increased 6% sequentially. Starting with HDD, our business grew sequentially as we continued to gain share. This growth was despite a flat industry TAM and as we continued to improve our 60% -- plus 60% plus share of our total HDD market. Our 500 gigabyte per platter solutions continues to gain momentum, and we believe this technology could continue to strong growth for the foreseeable future. In the enterprise drive space, we continue to see steady share gains with units doubling in Q2 compared to the same time last year. For reference, our share of the largest HDD manufacturer’s enterprise business is just over 50% and growing. In addition, we are continuing to accelerate our investment in next-generation HDD technologies. We believe this will allow us to further increase our share and solidify our leadership position in the market over the next few years. Next in SSDs; we had another record quarter driven by double digit sequential growth in both volumes and sales. We continue to be the top SSD controller supplier in the market. During the quarter, we announced several new products that expanded our industry leading SSD offerings. These included our fifth generation SATA product with a new LDPC technology that supports 3D NAND as well as 15-nanometer 2D NAND. We also introduced a low cost, but higher performance PCIe-based SSD solution with a similar price point to our previous generation SATA solution. In addition, we introduced a very high end enterprise PCI product for the data center in high-end client markets, with which we already have multiple customer engagements. We expect mass production of these products starting in calendar 2015. In the mean time our business remains on track to grow strongly in fiscal 2015 on the strength of our existing product lines. For Q3, we expect our storage end market to be flat to up modestly, driven by stable HDD fundamentals and continued strength in SSD. Turning next to networking, Q2 results grew 6% compared to the prior quarter. We saw strong double digit sequential growth from our Ethernet product lines across enterprise, data center, and service providers with the latter also providing growth in our PON product line. We saw solid growth in our North American customer base, especially in IT networking for enterprise and data center solutions. We also saw continued growth in our ARM-based embedded networking SoC products. These end wins momentum continued this quarter with new programs that cover low end, fix solutions to high end modular platforms in enterprise and service provider markets. In summary, our networking business remains steady and we believe we are well positioned for growth going forward. For Q3, we are expecting flat to modest growth in our networking end market. Now next move will be mobile and wireless. Our revenue in this end market came in softer than expected and declined approximately 9% sequentially. Although our 4G LTE and wireless connectivity businesses continued to perform well, we saw weaker than expected 3G demand from one of our major Asian smartphone OEMs, which led to most of the downside, however, on a year-over-year basis, our mobile and wireless business still increased over 65%. Specifically in mobile, we continued to see growth across our customer base in 4G LTE and saw double digit sequential unit growth in Q2. During the quarter, we expanded our customer list from tier 1 OEMs to now include tier 2 OEMs. We expect new smartphone launches with our LTE solution in the coming quarters and are confident about holding a strong market position in China. We are also seeing good expansion of our 4G LTE products outside of China with a leading OEM already launching our LTE solution in the European market. In addition, Samsung recently launched the new Galaxy Mini 4G LTE smartphone in a multi-mode mobile hotspot, both powered by our LTE solutions. Samsung has also selected our quad-core SoC to power their new 7-inch Galaxy tablet. In summary, for mobile, we are well positioned for 4G in 4G LTE to meet any competitive challenges. Next in wireless connectivity, Q2 performance was slightly better than expectations with double digit growth both on a year-over-year and quarter-on-quarter. For our 1x1 MIMO solutions, we saw strength in gaming market for both console and portable devices as well as continued growth in our 4G smartphone platform. For our 2x2 solutions, customers continued to adopt our combo solutions in set-top boxes, tablets, and chrome books, and we expect to see more product launching later this year. Finally, in the 4x4 devices, we are seeing strong attraction as the access points and gateway markets move towards the higher end. Moving next to the IoT market, which is a part of our wireless connectivity business. We have already introduced as you know a ZigBEE solution in the past. Now, we recently enhanced our family of wireless microcontroller SoC with Wi-Fi and Bluetooth. These SoC target a broad spectrum of IoT for wearable and smartphone products for which we are currently seeing strong customer interest. We are seeing strong design attraction in the lighting appliances and home automation markets. We expect volume ramps of these devices later this year. We are also thrilled to be supporting Apple’s new HomeKit accessory protocol. HomeKit-enabled home electronics manufacturers easily add the ability for the customers to securely pair and control devices throughout the home including integration with SIRI. We expect HomeKit-enabled products to be launched later this year. For Q3, we expect our mobile and wireless and market to grow modestly on a sequential basis. Similar to Q2 we expect continued strength in 4G LTE and connectivity to be partially offset by ongoing challenges in 3G at the major Asian customers. Now, moving to audio business. Although revenue in Q2 declined seasonally, on a year-over-year basis sales increased over 50% mainly due to shipments of Google Chromecast which has now launched in 18 countries. Additionally, we continue to gain traction at new service providers with our ARMADA 1500 family of set top box SoCs. In summary, excluding 3G weakness most of our end markets in Q2 came in better than expected with storage networking and connectivity delivering higher revenues. Looking ahead, we expect to see growth in Q3, our 4G mobile interactions remain solid with many new customers just starting to ramp into production. We also have new products coming up that will further enhance our competitiveness. Our connectivity business remains strong due to demand from enterprise, gaming and high attach rates to our mobile business. Our storage business is also healthy, driven by market share gains in HDDs and strong growth in SSDs. Finally, our networking business remains stable. With that, I would like now to turn the call over to Mike to go over our second quarter financial results and the third quarter outlook.

Thank you, Sehat, and good afternoon, everyone. Moving to our financials, as Sehat mentioned we reported record revenues of $962 million for the second quarter, which was slightly higher than the prior quarter and an increase of 19% year-over-year. The inline revenues were driven by better than expected growth in storage and network and offset by a larger than anticipated decline in 3G mobile. In storage, our overall revenue grew 6% sequentially and represented approximately 46% of total sales. Q2 sales in this area were better than expected and we saw growth in both our HDD and SSD businesses. In networking, our revenue grew 6% sequentially and represented approximately 19% of total sales. Networking sales in Q2 were better than expected and driven by strong growth in our Ethernet product lines and continued adoption of our embedded SoC solutions. Our mobile and wireless end market came in softer than anticipated declining 9% sequentially and represented 30% of overall sales. Although sales of 4G LTE and wireless connectivity products increased during the quarter, 3G shipments declined more than expected mainly due to weakness at one of our major Asian based OEMs. Moving next to margins and expenses, our non-GAAP gross margin for the second quarter was approximately 50.6%, which was above the mid point of our guidance range and improved 180 basis points sequentially. The main reason for this was a more favorable product mix during the quarter. Non-GAAP operating expenses came in at $323 million at the low end of our guidance range due to excellent expense controls by our business units. This resulted in a non-GAAP operating margin of 17% for the quarter improving 260 basis points sequentially which was better than our expectations. Net interest and other income was about $12 million, mostly to an investment gain that occurred in Q2. We recognize the tax benefit of approximately $6 million in the quarter due in part to the expiration of the statute of limitations in certain foreign jurisdictions. This resulted in non-GAAP net income for the second quarter of $181 million or $0.34 per diluted share. This was approximately $0.06 higher than the midpoint of our guidance. The shares used to compute diluted non-GAAP EPS during the second quarter were $533 million. Cash flow from operations for the second quarter was $157 million and free cash flow for the second quarter was $137 million or approximately 14% of revenue. Now, summarizing Q2 results on a GAAP basis, we generated GAAP net income of $139 million or $0.27 per diluted share. The difference between our GAAP and non-GAAP results during the second quarter were mainly due to stock based compensation of $35 million, $4 million related to amortization and write off of intangible assets, $2 million of indemnity guarantee cost associated with ongoing litigation and $1 million due to restructuring and legal settlement costs. Now, turning to the balance sheet, cash, cash equivalents and short-term investments as of the end of the second quarter was approximately $2.3 billion, an increase of 7% from the previous quarter. We also paid dividends of $31 million in the quarter or equivalent to $0.06 per share. Net inventory at the end of the second quarter was approximately $394 million, an increase of about $43 million from the previous quarter in order to meet demand for our products in the coming quarters. Days of inventory increased approximately seven days to 71. Moving next to our outlook for the third quarter of fiscal 2015, we currently project revenues to be in the range of $960 million to $1 billion. At the midpoint this would equate to roughly 2% sequential growth. We expect our storage and networking businesses to be flat to up modestly, while our mobile and wireless business is expected to grow slightly. Within our mobile and wireless business we expect continued growth in 4G and connectivity to be partially offset by a decline in 3G. We currently project non-GAAP gross margin of 50% plus or minus 100 basis points and currently anticipate non-GAAP operating expenses to be approximately $330 million plus or minus $10 million. We anticipate R&D expenses of approximately $270 million and SG&A expenses of approximately $60 million. At the midpoint of our projected guidance this should translate to a non-GAAP operating margin of approximately 16% plus or minus 100 basis points. The combination of interest and other income should net out to approximately $1 million and we expect tax expense to be approximately $6 million. We currently expect the diluted share count to be approximately 535 million shares. In total, we currently project non-GAAP EPS to be $0.29 per diluted share plus or minus a couple of pennies. On the balance sheet, we currently expect to generate $150 million in free cash flow during the quarter. We anticipate our cash balance to be about $2.4 billion and excluding any M&A activity, share buyback or other onetime items. We currently expect our GAAP EPS to be lower than our non-GAAP EPS by about $0.08 per share. With that I'd like to turn the call over to the operator to begin the Q&A portion of our call. Operator?

(Operator Instructions) Our first question comes from the line of Craig Ellis with B. Riley. Please proceed.

Wanted to follow-up on some of the points made about the mobile business on the 3G and the 4G. Mike, can you -- or Sehat, can you give us the mix of 3G versus 4G, and how should we expect the mix of that business to change as we look out over the back half of calendar 2014 and through calendar 2015? B. Riley: Wanted to follow-up on some of the points made about the mobile business on the 3G and the 4G. Mike, can you -- or Sehat, can you give us the mix of 3G versus 4G, and how should we expect the mix of that business to change as we look out over the back half of calendar 2014 and through calendar 2015?

Well, we don’t provide the mix of those products, but as time goes on, we expect the 4G to exceed the 3G, with the 3G really on a downward ramp.

Yeah, Craig, this is Sukhi. 3G was still if you remember in Q1, we said 3G was a predominant part of our business in Q1 and 4G was a small part. That was still the case in Q2 as well. And as you know, I think it’s pretty clear out there that there is one Asian OEM that had some issues, and we were not – we didn’t escape that in Q2. Craig Ellis – B. Riley: Thanks for the help there. And then the follow-up question is on gross margin. It looks like the mix of business is unchanged quarter-to-quarter, but the gross margin midpoint is down sequentially, so what accounts for the decrease in gross margin when mix is flattish?

Well you know there’s always plusses and minus every quarter, Craig and you know, we are going to see growth in our mobile business in Q3 and I think we have mentioned this in the past that from a mix standpoint, mobile wireless generally commands lower than corporate average margins and that would be a contributor to the lower margin really. Craig Ellis – B. Riley: Thanks guys.

Your next question comes from the line of Harlan Sur with JPMorgan. Please proceed. Harlan Sur – JPMorgan: Hey, thanks for taking my question. Good to see the continued 4G growth in your Q3 guide, but MediaTek is ramping its 32 bit and 64 bit multi-core 4G solutions into China mobile this quarter, and there has been a lot of concern that your market share is going to drop significantly. Sehat, any way to help give us confidence that you are still capturing a high level of 4G design wins that will ramp beyond just the third quarter, and that you will continue to build scale in 4G smartphones? Maybe I don't know -- quantify the number of 4G handset design wins you have in the pipeline that you have yet to ramp or some sort of confidence that you can continue to grow your 4G business in Q4 and into the first half of next year? Anything you can provide would be appreciated.

Yeah sure. We -- talking about 64 bit, so we also introduced 64 bit 4G solutions last quarter, so those will be ramping up sometime this year as well, so there’s nothing unique about MediaTek building 64 bit. We have 32 bit solutions, we have 64 bit solutions. The area that we haven’t played in the past were on the ultra low cost side that in the future we will be addressing as well. So those are the designs in the pipeline, and they will go into production sometimes next year. So if you’re talking about the way the volumes continue to grow, I do believe that as 4G LTE price goes down – as the market, as we and the market, like as in our competition are starting to address the ultra-low cost side to replace the 3G. We believe the market for 4G LTE is going to explode. So, this market is going to be so big that it is clear that the competition is going to be fierce, but we are not concerned about that. Every time we enter like a big market opportunity, there is bound to be a lot of companies willing to get into this business. Now the good thing is a lot of companies are also going out of this business, so only just three of us are going to be left in the LTE space. And being -- not being late this time around in the LTE, creates – sets us up in a much much better position in in the customer base. All we have to do is make sure that we deliver the lower cost of solutions to address the 3G replacement sometimes -- that’s going to happen sometimes next year. Harlan Sur – JPMorgan: Okay thanks for that.

You know we’ve also mentioned, Sehat mentioned in his prepared commentary, right, we are expanding our customer base from tier 1 OEMs to now include tier 2 OEMs as well. And you can’t do that without – you know obviously you need to have design wins to do that. Right? Harlan Sur – JPMorgan: Yes.

We already have. Harlan Sur – JPMorgan: Okay. Great. And then my follow-up question is, when the stock was last at these levels, the team was aggressive in its buyback program. I think the last time around you were probably using 100% of your quarterly free cash flow to buy the stock, kind of here in the $12, $13 range. Can you guys just give us an update on when you think you will finalize some of the remaining issues with the CMU appeals process, and be in a position to start to aggressively buy back your stock again?

Good question, Harlan. I think we’ve talked about this in the past as well. Yeah we mentioned right about capital allocation strategy has not changed, it continues to be the same. We will be opportunistic in our share repurchases. And you know just to put that question in perspective, we spend a significant portion and as you said we spend a significant portion of our free cash in the last three years in share repurchases, right close to $3 billion and in share repurchases. So this is a significantly better than pretty much most of our competitors out there and we are also paying a heavy a pretty healthy dividend to our shareholders. And management of the company board continues to evaluate the business needs every quarter about the capital structure and capital returns. We are using our cash, you know I think we have mentioned this to you as well for appropriate investments to drive future growth as well as return capital to our shareholders in the form of buybacks and dividends. In the near term however, I think as we’ve have mentioned in the past, we are waiting for further clarity in the ongoing litigation before we can proceed forward. Harlan Sur – JPMorgan: Any visibility in terms of timing on when you are going to be able to resolve some of these remaining issues?

We’re just waiting. Harlan Sur – JPMorgan: Okay. All right. Thank you.

The other thing, we’ve just recently updated our website and FAQ, I urge everybody to take a look at that that just happened today, so we’ve had you know obviously we filed our appeal in the CMU case so there’s a bunch of new information that’s probably good for you to take a look at. Harlan Sur – JPMorgan: Okay. Thank you.

Your next question comes from the line of Quinn Bolton with Needham & Company. Please proceed. Quinn Bolton – Needham & Company: Hi, guys. Just wanted to come back to the mobile and wireless business. Obviously you talked about one OEM in the 3G business that's gone through some market share issues. But can you talk about whether there's any real active 3G design going on right now or is most of the design work you're seeing on the LTE side of the business?

Most of the activities are 4G LTE. Pretty much if you talk to the OEMs in Asia, they all are working -- they're all seeing that the demand is in the 4G space. So this is the -- I think this could be a transition year from 3G to 4G and next year will be when the LTEs -- when the ultra low cost Lees finally is available in the market. Nobody will talk about 3G any longer next year. So as a result, we don't spend too much time on trying to get new design wins on the 3G side. Quinn Bolton – Needham & Company: Great. Thanks for that clarification, Sehat. Just a follow-up question. You talked about the ultra low cost LTE. Do you have any sense on how the margin profiles of those solutions will compare to your current 3G business?

Obviously, the LTE's going to be better than the 3G, especially when you're talking about the 3G is almost at the end of life. I don't see any concern on that side.

But Quinn, are you referring to the low cost LTE? Quinn Bolton – Needham & Company: Just wondering if you go one for one replacement of a 3G design today for ultra low cost next year, is that margin accretive?

Yes. Obviously the ultra low cost is going to be slightly lower margin than the higher end. That's always going to be the case. But the volumes are going to be so much bigger. But you also need to put it into perspective that in the 3G we have a lot more competition today than in the 4G. 4G's we're talking about three suppliers. So three suppliers versus more than like six, seven suppliers in the 3G. The market profile's is going to be significantly better in the LTE space. Quinn Bolton – Needham & Company: Great. Thank you.

Your next question comes from the line of Doug Freedman with RBC Capital Markets. Please proceed. Doug Freedman - RBC Capital Markets: Great. Thanks guys for taking my questions. Congratulations on the strong results. If I could dig into a little bit maybe if you could highlight for us what is causing revenue growth to be maybe a little bit less than you would normally see in this quarter. Is it literally all related to the 3G softness that you’re seeing or is there other things occurring in these storage or networking businesses?

For Q3 Doug, its predominantly I would say the 3G business that’s offsetting growth elsewhere. Plus, remember, if you talk about Q2, Q2 obviously we had initially expected our storage business, the network business to be flat. They came in better than expected, 6% growth for each of those end markets for us. And our Q2 has the month of July as well. So clearly, for us to -- I know where you're going with it. You're going with the storage guys have been guiding the end market to be up a lot more. Should that be up for us as well? We expect on a two quarter basis probably even out for us. So the main difference really for us is the 3G going down. Doug Freedman - RBC Capital Markets: Okay. If I could focus in a little bit on the base band efforts the Company's pursuing. Your competitors have offered up a number of units they expect to ship this year. Would you like to counter that with a number of units? Do you think you can ship either this year or next? And if you could maybe give us a better understanding of the amount of your R&D or OpEx that is going towards your base band efforts?

What was the first question? Doug Freedman - RBC Capital Markets: Just the total number MediaTek has offered up they expect to ship a certain number of units this year. And I was wondering how you still feel about how many units you think you can ship and what that is in terms of the market size, maybe?

We've never -- we haven't divided the units. We never talk about units in this business. We are still obviously a new -- relatively a new Company so we also have to be careful about talking about our units. But in terms of our investment in the base band, we are actually quite leading in the LTE space. So we already sample really devices, really sample early -- late last year, so we have prototypes in the next generation devices in the pipeline. So, in terms of the amount of effort to do this, actually it's not in the base band side. Most of the efforts, they require a lot of investment in supporting the application side. So those things are the ones that we've been working even starting from the 3G time frame. Now our solutions are being more mature. Actually, this is helping us, our customers to be able to ramp up production on our 4G solutions sooner, I mean at a faster rate than used to be when we presented a 3G space. So as I said earlier, volumes -- if you look in the 3G space, we are tiny, tiny player in the past. So if we look at the positive side, next year when the volume moves from 3G to 4G, we're talking about getting market share away from our competition on the 3G volumes. So, if anything, it's going to be -- for the industry to move to 4G, it's going to be better for us than if the industry stays with 3G. So my expectation is volumes, unit wise without putting the numbers is going to be bigger than this year on the 4G. Doug Freedman - RBC Capital Markets: And then my last question is one that I think I’ve asked in the past and the question really is in your storage, has SSD revenue gotten to be size that it’s large enough that you can separate it for us or highlight for us what percentage of your storage business it is?

It is getting bigger for sure; Doug, but we have not disclosed that. We don’t intend to disclose that at this point.

I also mentioned in the past that we will disclose that especially in this business, it’s not just HDDs or SDDs, and down the road there will be SSD for smartphone as we had nothing to do with SDDs for PCs or enterprise. And not to mentioned about hybrid HDDs and its too complication and some of these devices is actually are going to be the same device just retargeted from one market versus the other market. So we would rather not split the number.

For competitive reasons, Doug. Doug Freedman - RBC Capital Markets: Alright, thank you guys.

Thanks Doug.

Your next comes from the line of Hans Mosesmann with Raymond James. Please proceed. Hans Mosesmann - Raymond James: Thank you. A couple of questions on the storage side, specific to PC side of that business. It seems that you’re guiding to flattish TAM in current quarter. What is going on there and can you provide some clarity in terms of PC refresh on the enterprise side of things that was ongoing earlier this year? Thank.

Yeah. Hans, I think we mentioned, if you look at it on a two quarter basis Q2 plus Q3, it probably evens out for us, right. I mean, Q2 HDD TAM was flat. We grew our business. Our storage business overall grew 6% in the quarter. And we've guided to our storage business to be flat to up modestly, come in better than flat. So I think on a two quarters basis, just because we are off a calendar month, you should be looking at it that way. It probably evens out and it's relatively in line to the market. Hans Mosesmann - Raymond James: Can you provide any kind of qualitative data on the enterprise or commercial PC refresh that we saw earlier in the year?

On the enterprise side, as Sehat mentioned, we continue to do very good trend and see very trend at our one North American customer. Our share continues to creep up steadily. It’s grown over 50% on a year-over-year. So we feel about that, that business continues to grow though this year.

Well, maybe I'll give a little bit qualitative feedback. So if you look at the PC space and the enterprise in the business users, even consumer side, the market tends to be -- maybe a little bit somewhat conservative at this point. Because of what they seen in the last couple years of PCs, PC markets not growing or even going down slightly. But I believe the market may change, may be improving in the next few quarters. This is just my gut feeling. And maybe the reason is, one reason is the Intel shipping new -- this 40-nanometer processors which depending on how they're priced -- if they're priced, the new 40-nanometer FinFET processors correctly the market may grow. The PC market may see a cycle -- replacement cycle in the next few quarters. But again, I cannot -- I don't know how to predict that. I'm just making a statement here, the suppliers, the key suppliers in the market eager to drive the market for replacement cycle; I think this market will move. But in the meantime, we have to be just as conservative as our customers in terms of projecting the units in HDD and if the number goes up, ready to supply the parts to our customers. Hans Mosesmann - Raymond James: Great. Thank you very much.

Your next question comes from the line Sanjay Chaurasia with Nomura. Please proceed. Sanjay Chaurasia - Nomura: Sehat, question on LTE market. Could you give us some more color on demand for LTE chipsets in the second half of this year? Your chipset competitor in China, they’re indicating a very strong demand. I was just wondering if you could provide any color you are seeing from your customers. And if not, the unit shipment color, I was just wondering if you used to do that with TD-SCDMA, if you could provide your market share for this year in TD LTE?

Yeah, so, talking about the units, as we said earlier in Q2 unit shipments going up, we always say in Q3 unit shipments also get to go up. So the shipments on LTE we expect to continue to go up as we said earlier, but the reason we have softness in our mobile business because of the softness in the 3G side, that’s nothing to do with the 4G. Despite the MediaTek going into the business in the 4G, it's just only making this business even more attractive for us. The supply chain sees the MediaTek came to the market. They know this market is going to be right for high volume production. So as long as we continue to deliver our new products on time to take -- to serve the price points of this market, we believe we will continue to grow our business next year. As I said earlier, when our ultra low cost is ready, our volumes can only go up significantly. Sanjay Chaurasia - Nomura: And other question is, is FinFET next year a necessary element in your roadmap to be successful your other competitor in this space they have indicated some FinFET base roadmap for next year. I was just wondering what is your strategy to deal with that.

Yeah. Talking about FinFET, yeah, we’ve been working on FinFET for, I don’t know like year, year and a half now. The challenge right now in FinFET is the cost structure and it does not make sense for ultra low cost segment or even for the medium cost segment. In FinFET will be important for the very, very high end market where you get performance, where cost is not an issue. So we’re working on that, but we don’t – we’re not going to use FinFET for the lowest cost product to the market first. It would be bad for gross margin if we do that. Sanjay Chaurasia - Nomura: Thanks.

Thank you, Sanjay.

Your next question comes from the line Ian Ing of MKM Partners. Please proceed. Ian Ing - MKM Partners: Yes. Thanks for taking my question. So for 4G what sort of milestones should we look for at this point outside of China? You talked about an OEM launching in Europe? Your modems are certified at some U.S. carriers. Should we look for some other milestones to see some progress there?

Significant milestone obviously would be when our ultra low cost go into production, because those are the ones that are going to replace the 3G. And as I say, because our 3G business is tiny compared to the rest of the world, the ultra low cost 4G is going to be an important milestone for us as those are the ones that are going to allow us to get a much bigger percentage of the cell phone market Ian Ing - MKM Partners: So largely be China OEMs selling into the rest of the world. That’s the overseas model do you think?

They’re all going to be -- I think by this time we all get to agree that most of the phones are may going to be manufactured in China and Korea. I think nobody’s going to argue against that. So, yeah, it’s -- whatever the market is for U.S or for Europe is going to be built in China or Korea. Ian Ing - MKM Partners: Okay, great. And then, as my follow-up, R&D expenditures 28% of sales. That’s a bit high versus peers but understandably a lot of things are in investment mode. Do you have a sense of like which businesses are likely the move out of investment mode into harvest shortly, I think some part of storage already in harvest mode at this points?

Let me address the storage. Even storage, we are not -- we're not playing the harvest mode. There’s still a lot of things that need to be invented to allow our customers to move to terabyte per drive and low cost. We can build terabyte drives now, talking about two and-a-half inch. But the price doesn't make sense for the end users. So building investment in hybrid, there's a lot of investment to do, how to build the proper hybrid for the hard drive, and then continued investment of the building more advanced SSDs to allow TLCs to be just as reliable and MLC in the past, so a lot of investments still yet to be done in the next several years. I think the harvest mode for that probably will be five years at the earliest. A lot of time people made a mistake thinking there's nothing left to be invented. That's when they made a mistake and we'll be happy when they make that mistake.

Having said that, Sehat, I think we do agree that it's important to control our R&D expenses and you'll notice that our overall OpEx for this past quarter has gone down $7 million. So we are very active in controlling our operating expenses and part of that is to direct our operating -- direct our R&D expenses into those areas where it's most productive and to reduce it in those areas where it's not so productive. We're going to continue to invest but we're going to continue invest into those areas where it's going to be most fruitful.

Okay. Yes, I agree with that. I agree with that. But also, I want to add another thing. Part of it’s -- even when we continue to invest, we can also do better investment, do better allocations of R&D investment, meaning like for example doing less duplication. It's a big Company. So in the past we have some duplication efforts in certain areas. We can have those areas -- we are working on this. As we're able to improve the synergy in the different businesses, we could continue to invest in R&D, but without increasing the R&D dollars.

Right. So, we intend to increase our investment for reduced our expenditure. Ian Ing - MKM Partners: Okay. Thanks Sehat, thanks Mike.

Your next question comes from the line of Joe Moore with Morgan Stanley. Please proceed. Joe Moore - Morgan Stanley: Great. Thank you. I wonder if you could talk about the SSD market competitively now that the LSI San forth business has gone to -- Seagate is probably not going to pursue aggressive merchant market wins. How do you see competitive landscape in the merchant market there? We hear about [Fisons] and other kind of coming into the market. How competitive do you think that's likely to be in a year or so?

SSD is an area -- out of all the companies in this business investing in SSD, we are the oldest one. We have the one they've been working on the longest, more than seven years by this time. That's on top of the things that we leverage from the HDD. So a lot of technology we develop HDD for more than decade ago are being ported even when we started this business seven years ago. So a lot of new inventions continue. We continue to invest heavily in this area so we have a lot of new inventions coming. The reason we won this business is because we have better performance, better business which translates -- also better yield, better quality, which translate into lower cost to the end products. So the cost of our -- so a lot of our competitors try to get into this business a few years back did not treat this business properly. They didn't invest the right amount of investment to compete properly to win this business. I'm confident. I feel good about that. We have extremely strong IP portfolio. We have tons of patents in this area. So we are very confident that we will be able to protect this business for the long run. Joe Moore - Morgan Stanley: Thank you very much. And then, a quarter ago you’d mentioned that the $100 million on the PDLP side from China mobile was part of the upper end of the range that you would look at for the year. Do you have any update on that how big the PDLP market will be in 2014.

Yeah. I did say that, I did say that $100 million was on the high end, but I still believe we’re still on the high end, but nobody knows what’s going to happen in December of this year. But base on the rate they’re running, I think maybe a little bit higher than our early projection. But okay.

Jury's still out

Yeah, jury’s still out here. But the beauty is it doesn’t matter. I think it doesn’t matter whether its $800 million this year or not. For sure next year’s going to more $100 million.

Thank you, Joe.

Your next question comes from the line of Kevin Cassidy from Stifel. Please proceed. Kevin Cassidy - Stifel: Thanks for taking my question. Your networking business was up 6% quarter-over-quarter. Can you break it down a little more, how much was that Ethernet and what split within Ethernet? Are you seeing more demand at 10 gigabit and do you see it moving toward 40?

Yeah. So, our networking business is comprised mostly of enterprise customers, Kevin. So I think we’ve mentioned that in the past. We saw very nice, very broad-based growth in Q2. We saw some double-digit growth in our Ethernet PHY businesses. We saw some pretty good double-digit growth in our switch business as well. And this was both for the data center as well as the service provider market. Some of the things that you know before, you may have an idea, the Prestera switching line, the Alaska PHY lines all did pretty well. ARMADA SoC devices did really well. The one thing, our own NPU business was a little softer in the quarter mainly because we saw a significantly stronger Q1, but we expect that to rebound nicely this quarter. Kevin Cassidy - Stifel: Okay, great, and maybe just housekeeping question. Tax rate going forward seems to be fluctuating quite a bit the last couple quarters. What should we expect?

Well, the tax rate is affected by releases of accruals based on reserves that were set up because of liabilities in foreign countries and when those statutes of limitations and those liabilities expire, it provides a reversal of the reserve. Going forward, we believe the rate is going to be less than 5% for the year and subject of to these kinds of fluctuations that occur because of accounting reasons. Kevin Cassidy - Stifel: Okay. Great. Thank you.

Your next question comes from the line of Steven Chen with UBS. Please proceed. Steven Chen - UBS: Hi. Thanks for taking my questions. The first one, I want to drill down little bit more on the ARMADA SoC business. Sehat, you mentioned earlier some of the activity on I guess engagements with maybe carriers or Telcos. Could you talk a little bit more about the growth opportunity there, whether you see further growth from Chromecast or if it's ARMADA in TDs or some of these set-top boxes? And if you could talk a little bit about whether they're an IPTV type of design or if its more of an OTT over-the-top video type of delivery paradigm there?

So, there will be a lot of -- obviously one, we at the first -- first we entered the only still entered in the Chromecast market. We believe there will be significant opportunities to continue to invest in building more advanced Chromecast devices to address better new generation codec, H.265, VP9, so those – you can think about the Chromecast as a device like a set-top box or like a micro set-top box, set-top box inside a dongle. So, the difference between that versus the real set-top box, the real set-top box will have more memory, little bit more features, and as a results also it’s also natural for us to address. That’s why when we say, we have a several design wins on the ARMADA 1500 set-top box SoCs. So this is just the same family of products just one more optimized for the dongle, there one more optimized for a set-top box. So set-top box is, it’s a new business for us, but as we are proven to – as we prove ourselves to serve this market, we believe in a long run we would grow this business as well. Steven Chen - UBS: Okay. That’s helpful. And my follow-up is on the SSD business. Just wanted to drill down a little bit on the latest fifth generation SATA SSDs that you mentioned that support 50-nanometer and also 3D NAND. I was wondering what kind of timeframe you’re looking at we’re expecting for the ramp up of SSDs that use these fifth generation SSDs and also what the I guess also the ASP would be or directionally is that a big boost up in the ASP for that future generation?

Yeah. The production target, we said introduce the 3D product last quarter. Those are the productions targeted for some times early next year. So -- and then we’re not stopping still, like we also building newer devices. Some of them could simply be like a stripped down device let’s say for the lower end market. Some of them will be new generation, even more advance solutions. So as we build more advanced solutions, the price obviously will go up. But as we also build lower price market for let’s say for new generations for either ultra book that require much lower cost solution. Those price will be design to be obviously to be lower cost. But the volume will be much higher. So and those are not cannibalizing the existing market. Those will be just addressing new markets opportunity. So we feel good. This is a business that we invested probably many, many years earlier before anybody thought it was important to invest in this area. Steven Chen – UBS: Okay. Great. Thank you.

Your next question comes from the line of Ross Seymore with Deutsche Bank. Please proceed. Ross Seymore - Deutsche Bank: Hi, guys. Thanks for letting me asking questions. Just wondered when you think that 3G headwind is going to be done and what influence if any it might have on the typical seasonality that customer puts into place that affects our January quarter?

That’s a good question, Ross. We will continue to see some headwinds this quarter on the 3G side. And that’s a reason for what we guided to. As far as Q4, it’s little too early for us to comment on that. We recognize there is seasonality with that customer in Q4, but as we mentioned in the past, right, we are also looking at pretty solid design traction elsewhere at other customers for 4G, so it’s a little tough for us to make that call at this point. Ross Seymore - Deutsche Bank: Got you. Then the 4G side is my second question. I think Sehat in your prepared comments you said the 4G units were up double-digit sequentially. Was there anything we’re supposed to imply on the ASPs from that statement and that you didn’t mentioned revenues also being up sequentially or I kind of over complicating things?

It’s always a very competitive market. I don’t think you should read anything more into it. Our 4G business, we grew our unit. It’s from an ASP it is a very competitive market and it will remain over the rest of this year.

For competitive reasons, I think we prefer not to talk about pricing; our customers are very sophisticated in these areas. They are always going to say so and so is going to have a lower price than yours and they want to see who is blinking first and so it’s not a good idea to for us to talk about pricing, it’s only been the negative, and the result will be negative. So it’s better for us okay to talk about units at this point. Ross Seymore - Deutsche Bank: Okay. Thank you.

Your next question comes from the line of Mark Delaney from Goldman Sachs. Please proceed. Mark Delaney - Goldman Sachs: Thank you very much for taking that question. The Chinese government has been more focused on growing its own domestic semi conductor industry and I’m wondering if you’ve seen any impact on Marvell or you expect to see any impact on your business going forward?

Well if you look at our 4G LTE, our designs there were – like we’re shipping all the products that we – shipping is also done in China. So if anything this should be positive for us and I think we have the mass majority of our resources in this for this business in China. Mark Delaney - Goldman Sachs: Okay. Thank you for that. And then for a follow up question I realize you guys have the CMU [lawsuit] appeal has an overhang and that’s creating some uncertainty the potential cash balance, but if for hypothetical or for argument sake we put that aside for a minute, can you just talk about what sort of minimum cash balance you think you need to keep on the balance sheet?

I think we’ve mentioned this in the past Mark you know roughly we have said roughly three quarters or so of operating expenses and what we would like to keep on our balance sheet, obviously we have access of that and given the circumstances that we have right now we’re just being a little more cautious.

You know also I also mentioned many many years ago with I got this question, I said that when while it is sure that we don’t need much cash flow to run the business under normal circumstances. In the past when we need money to borrow money, we are always had the hostage by the bankers. So it’s better for us to be to have more money in hand so that okay when we need to do something, that we have the money to draw on. So, I would rather be on the safe side to have more money than to have not enough.

No it’s not like we have returned cash to the shareholders.

On top of that. Yes, we’re not holding cash. We are – more cash than we have money in the banks, right.

Thank you, Mark. We’ll take one last question please.

Our final question comes from the line of John Pitzer with Credit Suisse. Please proceed. John Pitzer - Credit Suisse: Yeah guys thanks for letting me take a question. First question just on the inventory build. I know you talked in your prepared comments and that you talked about building ahead of demand, but just given the revenue growth forecast for the current quarter, I’m just kind of curious if you could give a little bit more color on why inventory is growing so much faster than revenues and do you have a target for inventory at the end of the current quarter?

Yeah, good question John. We do have a target for the end of the quarter. Our inventory should drop sequentially at the end of this quarter. One of the reasons we did build inventory was for certain products that we given the tight capacity that we’re seeing at the foundry side for the next few quarters the – we’ve decided to build a little bit of inventory for certain key products, but that being said we are pretty confident that we should see our inventory trend move down. John Pitzer - Credit Suisse: Perfect guys. And then as my follow up just quickly back to the LTE market. Sehat, I’m just kind of curious given the level of investment in the business are you guys now at a revenue level for LTE where that business is making money and then you said in your prepared comments that you saw profitability in TD LTE would be higher than 3G. I’m just kind of question why you believe that and the devil’s advocate question is sort of there was a similar dynamic of you from 2G to 3G that didn’t really hold up as the 3G market matured and so why should we think profitability in LTE will be structurally better than 3G? Thanks.

Sure. If you’re talking about maybe and you’re talking about the 2G to3G. The 2G to 3G transitions for many many years for the first five years of the transition, five or six years of transition, the 3G market was so much more profitable business than the 2G. The only – the 3G being so competitive was only happening in the last year or so. So, in 4G situation it’s different than, it’s better than the 3G for transition from 2G to 3G. From 2G to 3G they were like a dozen players in the market, like give and take. Now we have – now that that is settling we really only have three players in the 4G LTE space. So with three players in the market, I think we [advocate] the markets would still be competitive. That’s true. But I think -- I think it's a different scale of -- people need to be more rationalized in terms of pricing and so they all can – we all can make the right investment for the future. So I’m not concerned about okay that this market being competitive, it’s more important that with this 2 billion units market opportunity down the road when everything moved to the 4G LTE that we have the right new technology, I mean the key word is that we have the new technology that will allow us to deal with the products that will be low cost, yet at the same time will be high performance. And well it’s still too early to talk about it and we are working on developing new technology to enable the kind of price point that people expect to see in the handset. So when we are ready to disclose those the results then you can see what I’m talking about. But it’s too early for us to talk about it, that some of this technology is so – leading edge that okay even we are not so sure whether the result is going to be okay – it’s pretty challenging to build this, but I mean someone to build ultra low cost but high performance of impact. So, you know only times can tell okay when we are finally able to deliver such a product. John Pitzer - Credit Suisse: Thanks, that’s helpful.

That concludes our Q&A. And now I would turn the call back over to Mr. Sukhi for closing remarks.

Thank you. And I would like to thank everyone for the time today and the continued interest in Marvell. We look forward to speaking with you in the coming months. Thank you, and goodbye.

Ladies and gentlemen, that concludes today's conference. Thank you for your participation. You may now disconnect. Have a great day.