Peter Andrew - VP, Treasury and Investor Relations Matt Murphy - President and Chief Executive Officer Jean Hu - Chief Financial Officer

Charles Kazarian - Credit Suisse Blayne Curtis - Barclays Karl Ackerman - Cowen & Company Vivek Arya - Bank of America Merrill Lynch Quinn Bolton - Needham & Company Craig Ellis - B. Riley Gary Mobley - Benchmark Kevin Cassidy - Stifel Joe Moore - Morgan Stanley Ross Seymore - Deutsche Bank Harlan Sur - JPMorgan Mark Delaney - Goldman Sachs Srini Pajjuri - Macquarie Capital Christopher Rolland - Susquehanna International Group Atif Malik - Citi

Good day, ladies and gentlemen, and welcome to the Q3 2018 Marvell Technology Group Ltd Earnings Conference Call. At this time, all participants are in a listen-only mode. Later, we will conduct a question-and-answer session and instructions will follow at that time. [Operator Instructions] As a reminder, this conference call is being recorded. I would now like to introduce your host for today’s conference Mr. Peter Andrew. Sir, you may begin.

Thank you and good afternoon everyone. Welcome to Marvell third quarter of fiscal year 2018 earnings call. Joining me on the call today is Marvell's President and CEO Matt Murphy, and CFO Jean Hu. Before I turn the call over to Matt, I wanted to remind everyone that certain comments today may include forward-looking statements which are subject to significant risk and uncertainties and which could cause our actual results to differ materially from management’s current expectations. Please review the cautionary statements and risk factors contained in our earnings press release, which we filed with the SEC today and posted on our website as well as our most recent 10-K and 10-Q filings. We do not intend to update our forward-looking statements. During our call today, we will make reference to certain non-GAAP financial measures or reconciliation between our GAAP and non-GAAP financial measures as available on our website in the Investor Relations section. With that, let me now turn the call over to Marvell’s President and CEO, Matt Murphy.

Good afternoon everyone and thank you for joining us today. It has been a very busy past eight days for Marvell. Last Monday, we signed a definitive agreement to combine with Cavium uniting two great companies that together will deliver unmatched innovation and end-to-end communications infrastructure solutions. I am very excited about our combined future. But today, we are here to review Marvell’s strong third quarter performance which was the result of improved execution across the company and growth in our core businesses of storage, networking and connectivity. From a financial perspective, revenue in the quarter was $616 million, above the midpoint of our guidance. Our core businesses grew on a sequential basis and that together grown 7% year-to-date. This exceeds the target we set in March during our investor day. Our non-GAAP gross margin grew 400 basis points from a year ago to 61.6% today, as our world class engineering and improved execution continue to deliver tremendous value. Operating expenses on a non-GAAP basis came in better than expected below the low end of our target range we set last November. As a result, non-GAAP operating margin grew nearly 900 basis points from a year ago to 28.4%. This demonstrates the power of our business model and we are making solid progress towards our target of 30%. Finally, free cash flow grew nearly 90% from last year to $194 million. Over the past five quarters, we have returned $860 million to shareholders, more than 140% of free cash flow. On the operational front last quarter, Tom Lagatta, EVP of Sales and Marketing brought together more than 400 sales professionals, field application engineers and partners from around the world for Marvell’s first ever sales conference. This featured a week of intense product and sales training and laid the groundwork for the year ahead. Since joining the company less than a year ago, Tom has transformed our sales management, go-to-market strategy, compensation programs and customer support. Customers, partners and employees alike say they are experiencing new and renewed Marvell, one that is beginning to live up to its true potential. Now turning to our business performance, I am pleased to report that in Q3, our storage business performed slightly above expectations, growing roughly 1% sequentially. Year-to-date our storage business has grown 10% driven primarily by the strong performance of our SSD portfolio. We continue to ramp our new MVME base solutions and we are well positioned as the SSD market transitions to this high performance interface. Overall, we see continued traction of our SSD products, particularly in the enterprise and cloud data center as our customers adopt our industry leading solutions. Our HDD revenue came in higher than originally expected, fuelled by the ramp of our 1 terabyte per platter HDD controller solutions. These platforms enabled many more of our customers to offer higher capacity and lower power solutions to their customers. The transition to 1 terabyte solutions per platter is progressing well and highlights the value that Marvell Solutions offer customers. The bottom line is there is overall demand for storage growth and as capacity migrates towards the enterprise and data center we remain well positioned in the storage market across both HDD and SSD. Moving onto networking, our networking business was up 2% sequentially and 3% year-over-year. Our success in Q3 was driven by our refreshed portfolio of switches, PHYs, and embedded processors for the enterprise market. This growth more than offsets declines in our legacy portfolio. We are very pleased by the performance of our new products which target the enterprise campus and data center. Marvell is well-positioned to capitalize as end customers upgrade their switching platforms to deliver multi-gigabit, enhanced security, traffic analytics and greater support for mobility. We also continue to see strong customer interest in our secure automotive Ethernet products. While it’s still early, we have established active engagement with the leading automotive OEM and tier 1 suppliers. This technology is the foundational building block for the next generation high-speed in-car networks that are vital for driver assist and autonomous driving. This is a trend we not only enable but have the potential to accelerate. Overall, we remain excited about the position of our networking business and it’s traction in the enterprise campus and automotive markets. As we look towards our next fiscal year, we expect continued growth in our networking business on a year-over-year basis. Moving to connectivity, this business enjoyed a strong quarter, driven by strength in automotive, enterprise access and smart voice connected devices. We continue to shift our strategy towards this market’s high performance segments focussing on applications that value the innovation that Marvell delivers. In the coming weeks, we will announce our next-generation 11ax portfolio which will deliver best-in-class features and performance for enterprise access point, carrier gateways, set top box and automotive applications. Today, Wi-Fi networks are supporting more users and more devices than ever before. Marvell’s implementation of new 11ax standard will bring our customers four times greater capacity, support for the greatest number of users, symmetrical uplink and downlink performance and greater coverage in all deployments. We started sampling these products more than six months ago and are now starting to see strong customer attraction. In summary, our strong performance in the third quarter highlights our momentum in transforming Marvell into a leader in providing higher end infrastructure solutions in storage, networking and connectivity. Looking forward, we anticipate that storage and networking will represent a growing percentage of our business and expect to see continued expansion of our gross margins in Q4 and continuing on into FY 2019. Let me close by saving Marvell has made outstanding improvements as a company and I am very proud of our team’s performance. I want to thank Marvell’s employees around the world for their part in making our success possible, and look forward to even greater success in the future. Now let me turn the call over to Jean.

Thanks, Matt and good afternoon everyone. I will discuss the highlights of our third quarter of fiscal 2018, and provide our current outlook for the fourth quarter of fiscal 2018. Revenue in the third quarter was $616 million above the midpoint of the guidance we provided in August. Our core business of storage, networking and connectivity grew 1% year-over-year and were up 7% year-to-date. Storage accounted for 51% of revenue, grew 1% sequentially and declined 4% year-over-year. As Matt stated earlier, our storage fiscal 2018 year-to-date revenue grew 10% driven by the ramp of our SSD business and increased presence in the cloud and the enterprise segment with our HDD and SSD solutions. Networking accounted for 24% of revenue and grew 3% year-over-year. Connectivity had a solid quarter and accounted for 17% of revenue and grew 19% year-over-year. Finally, other product accounted for 8% of revenue and it declined 22% year-over-year consistent with our expectations. GAAP gross margin for the third quarter was 61.3% and non-GAAP gross margin was a 61.6%, a record level for Marvell and an increase of 4 percentage points from last year. GAAP operating expenses were $228 million and the non-GAAP operating expenses were $205 million, both below the guidance range that we provided in August. These results mark an important milestone in our restructuring effort as we beat our operating expense reduction target set out a year ago. GAAP operating margin was 24.3%, non-GAAP operating margin was 28.4% versus the 19.5% a year ago highlighting the strength of our financial model and the continued progress toward our target non-GAAP operating margin of approximately 30%. GAAP earnings per diluted share were $0.30 and the non-GAAP earnings per diluted share was $0.34 an increase of 62% year-over-year. I’ll now turn to our balance sheet. At the end of the third quarter, our cash and marketable security were $1.7 billion or roughly $3.40 for non-GAAP diluted share. Our free cash flow generation was $194 million. Moving to retaining capital to shareholders. In the quarter we returned approximately 170 million to shareholders, 140 million in share repurchase and 30 million in dividends. Now turning to our fiscal fourth quarter for 2018 guidance. As a reminder, this is a 14-week quarter. We expect our total revenue to be in the range of $595 million to $625 million. At the midpoint of our guidance, we expect our storage revenue to be approximately flat sequentially in line with seasonal trends. We expect our networking revenue to continue its growth momentum in the fourth quarter and to grow in the high single digit sequentially and the double digit year-over-year as new platform with our refreshed enterprise access solutions ramping to production with our leading OEMs in both China and in North America. We expect our connectivity revenue to decline in the mid-teen sequentially in Q4, largely in line with the seasonal trend. We expect other revenue to be flattish sequentially. We expect our GAAP and the non-GAAP growth margin to be approximately 62%. We expect our GAAP operating expense to be in the range of $240 million and $246 million and the non-GAAP operating expense to be in the range of $250 million and $220 million. We anticipate GAAP income per diluted share in the range of $0.23 to $0.29 and the non-GAAP income per diluted share in the range of $0.29 to $0.33. With that, we will now open the line to Q&A. Operator, we will take the first question please.

Thank you. [Operator Instructions] And our first question comes from the line of John Pitzer with Credit Suisse. Your line is now open.

Hi, this is Charles Kazarian on behalf of John Pitzer and thank you for letting me ask question today. See, I’m looking at your cash return and you’ve now bought back about I believe about 700 million of share reserve recalled last five quarters or so and reduced your shares by about [12%][ph]. Given the recently announced acquisition, could you perhaps speak to kind of your expectations for capital return, i.e. how should we think about potential slowdowns and buybacks around the timing of M&A? Thank you very much.

All right, yes this is Jean. So we have stopped our share repurchase in conjunction with current acquisition announcement because as many of you know in conjunction with this transaction we are actually going to issue shares. So we are not allowed to buy back until the closing. We are continuing with our dividend payment each quarter. So our plan after we close the transaction certainly is restart the buyback initially maybe in a slower pace but right when we get our debt to EBITDA ratio to our target range we’ll continue to commit to return 15% of free cash flow to shareholders.

And then I guess just possibly as a quick follow up, [Indiscernible] Ethernet I believe was excluded in kind of your long term revenue growth guidance at your analyst day, it seems like your commentary is kind of becoming incrementally more positive on that. I just wondered if you could talk about the trends you’ve seen through this year, what might become comfortable around kind of including that as part of your long term revenue guidance? Thank you.

Great question and you’re right. When we gave our long term model at our first analyst day we did earlier this year, you know we intentionally didn’t include automotive such that we wanted to give kind of a very clear picture of the current business and portfolio of Marvell. Since that time over the last six months, we’ve continued to make great progress in the automotive area. We have hired a general manager, we’ve assigned a dedicated team to this effort and we have made great progress with customers and our traction. So, felt it was appropriate to at least start giving some color around our progress there. We do think that this revenue is going to be very modest in its ramp and I would say you should expect us to start including that as a model update sometime next year when we probably do our next analyst day sort of how I would think about that from a long term modelling point of view, but for the investors out there I think as we sort of make progress towards that date we’ll give color as it’s meaningful to people.

Thank you. And our next question comes from the line of Blayne Curtis with Barclays. Your line is now open.

Hey guys, thanks for taking my question. Nice quarter, maybe if you can just talk about in a storage business SSDs had a huge ramp this year, I think you talked about to may 25% to 30% of that bucket in the second half, just curious if that’s on track. And then, can you just talk about your visibility in next year, you mentioned enterprise maybe if your – just thoughts on the size of that market and your positioning there?

Sure, yes, hey Blayne. So a couple of things, so one is I’d say we’ve been pleased with the ramp and it certainly continued and what I would say is we are still on track to get towards the I’d say the high end of the range that we mentioned earlier in terms of the 25% to 30% contribution from SSD in the fourth quarter. So, again I think we are pleased with that performance in that trajectory. As far as the enterprise side and also the solutions that are going into the cloud, that continues to become a more and more meaningful piece of our business. I don’t have the exact breakout here. I don’t know if Jean you want to comment, but that continues to be more and more important to us and I think from a visibility point of view we only see that continuing in calendar or in fiscal 2019, I’d say that plus increased growth in the enterprise in each and cloud HDD drives as well I think will also be a growth driver. So I think between the two SSD and HDD from an end market poll perspective, we see growth there which is one of the reasons why we are continuing to be excited about our storage business in the near term as well as through the next year in terms of the growth potential that exists.

Thank you. [Operator Instructions] And our next question comes from the line of Karl Ackerman with Cowen & Company. Your line is now open.

Hi, good afternoon everyone, congrats on a great quarter and guide. Matt, in your networking business, based on your results and outlook, it appears you have a much stronger than anticipated traction within your networking business from the 25 new products you recently introduced but how should investors think about the ramp up of that business over the next four quarters, particularly given some of these design wins are now just starting to see traction this quarter, I mean why wouldn’t the year-over-year growth you are seeing today continue for all of calendar 2018? And I have a follow up please.

Okay, yes, no great Karl and I’d say you know we are very pleased with how the networking business evolved throughout the year and I think there was a crossover quarter where this legacy business was declining and our message to investors was hey, just wait till the back half because we did have some visibility into the ramps of these new products that you mentioned and it’s actually happening. So, I think we are very pleased with sort of the outlook we have for the fourth quarter that clearly has contributed to the strength of the guide in terms of it relative to consensus, so that’s all positive and tracking. It’s about 10% year-over-year if you just look at and a little higher like 11% at year-over-year sort of the implied; you just take the midpoint of our guidance. So we do think that that growth will continue because it is driven by new product ramps and new programs by our customers and we do think that that’s going to continue through fiscal 2019. I can’t model it for you on a quarterly basis but we do think that that growth rate that we are on we should be able to continue if you just think about a year-over-year perspective.

That’s very helpful. And if I may, during your Cavium call about a week ago, there were several questions on your appetite for M&A beyond Cavium. But I think what was missed is your inclination toward further pruning of your overall portfolio. Specifically is your connectivity business or any of your other businesses sacrosanct in a sense of we are acknowledging that competition in connectivity is fierce but we have this 802.11ax wave that should be significant in a semi autonomous vehicle and connected home world. Your thoughts there will be appreciative? Thank you.

Sure. Yes, no I’m glad we’ll pivot to the portfolio question not the M&A question because as everybody knows we just announced days ago we are entering into a transaction, so to talk about the next one is way too premature. From a portfolio point of view, what we said on the call with respect to Cavium that there was no planned divestitures of that business. On our own business, we continue to look at that very pragmatically and we’ll do the same by the way, you should expect this from this management team that will always take a very full view of the entire portfolio of all of our businesses on a regular basis to make sure that we are tracking. With respect to connectivity, you are correct. There is actually a pretty exciting new wave of capability that you're going to get with ax. We, by design have been a little bit reserved in sort of our promotion of this. We sort of prefer that Marvell here to make progress with customers, get the product to where they are much further along before we start talking about them. So as I indicated you will see some announcements probably before the end of the year here what our portfolio will look like. But we do think that certainly that wave for ax does play into the end market focus we have, whether it's upgrading of enterprise access points and corporate campuses or whether its -- as you mentioned in semiautonomous vehicles, connected home clearly has got tremendous bandwidth requirement that are going to be enabled by ax. So, I think there’s number of applications there. But as you mentioned conductivity is more challenging business because it is standards driven, but we’re hopeful that with our portfolio, repositioning of our current connectivity business to higher performance end, we think that’s the right way to go and ax certainly plays into it.

Thank you. And our next question comes from the line of Vivek Arya with Bank of America Merrill Lynch. Your line is now open.

Thanks for taking my question and congratulations on good execution. Just a quick clarification and the question, maybe for Jean, Jean, how should we think about April in terms of seasonality on revenue and cost given the extra week in January? And then maybe, Matt, just to push you little bit more on the connectivity side. Is it -- how do we gauge your consumer versus enterprise mix within connectivity, because I can understand the rationale for our being engaged with enterprise because that’s what Cavium also strengthens. But what is the rational for staying engaged on the consumer side than conductivity? Thank you.

Yes. So, the question, we guide at one quarter at a time. So April quarter and maybe I can give you some color on operating expense side. The Q4 is the quarter we have 14 weeks better than Q3. We do go back to the normal 13 weeks. However as you know that’s the quarter the payroll tax start to come back, so I would say on balance [ph] because it’s a 13-week of quarter but you add $3 million to $5 million of payroll tax, so its probably from OpEx modeling perspective its largely flattish with the Q4 OpEx. That’s the color I can give it to you.

Okay. And then, Vivek let me drill down little bit into connectivity to try to answer your question more fully. So just as the backdrop maybe to sort of take you from where we were to where we are. When I came into the company and we all got involved, you know the connectivity business was very challenged in the company and the mix even if you go back like 18 months ago was a lot more consumer-oriented, gross margins were dramatically lower and you know was not a business that I think look like the model that we were developing. Now, if you fast forward to now I think we've made tremendous progress with that product line. We have first of all improve the overall cost structure of the company across every business we have and so that’s contributed to improvement in margins. As we said, maybe three or four calls ago we exited some low margin module business that we had and some lower end segments, I mean, things like you know we’re in toys as an example which really was not where the profitability was. And so this journey we’ve been on to focus not just by the way in enterprise access points, but automotive has done well for us and also high-end consumer which is you could say that’s high-end connected home or value added high-end consumer devices where we can add value. And so that is part of the portfolio and that is part of the portfolio that we’re going to support going forward, but we’ve clearly elected to not go as broad as we were and shake some of the real low-end applications that I just didn't think added value. So, from a go forward standpoint we’re more focused on delivering value and managing around profitability in that business and not necessarily driving topline as hard, but making sure that we add value there. So you should expect getting into next year we’ll still have mix that got some consumer in it, I would say, its high-end consumer. But ideally it’s going to see a continued growing portion of more enterprise, automotive and high-end connected home applications. And I think that mix will be more favorable to us, but we’re not going to chase growth at the expense of margin. Hope that’s helpful.

Thank you. And our next question comes from the line of Quinn Bolton with Needham & Company. Your line is now open.

Hi. Let me add my congratulations on the nice results and gain. So -- but I just wanted to come back, last quarter you talked about seeing some headwinds in terms of inventory in the HDD market as some of your customers are going through factory transitions. Is that mostly wound up or do you still see some inventory in the channel that’s impacting the HDD segment?

Yes. Thanks Quinn. And as you point out, there were -- for different reasons there were inventory challenges over the last few quarters in the HDD customer base. Its hard to know for precisely on when it's going to burn and normalize, but the readout from the team and from the customers who we have pretty close collaboration with is that we believe by the end of this quarter that inventory levels in aggregate for the HDD customers will normalize to where they want to run them within that mix, so probably it would be somewhere they want to keep a little bit more inventory and some of them where there a little bit leaner, but on the whole the high level readout is based on our current projections we think that inventories exiting the quarter will be in line and rebalanced to where our customers want them and then if that’s the cast then we can sort of go from there.

Great. Then if I could just squeeze a quick question on the networking, you talk about some nice design win traction for the new Ethernet Switches and PHYs, just curious in the enterprise, what you’re seeing in terms of adoption for 2.5 and 5 gig Ethernet. Is that starting to gain traction in terms of the design wins or is pricing still keeping the enterprise market mostly at 1 gigabit? Thanks.

Sure. Yes. I think near-term strength is not from multi-gig, although there's just a little bit of it. We see as more of a fiscal 2019 driver. Actually the wins that we’re seeing and the ramps we’re seeing are either on platforms that our customers have where they’ve adopted Marvell and some of those are happening from – by the way, both in our Chinese customers as well as North America customer. So its multi customer, multi-geo and it’s not multi-gig, its either new high density gigabit Ethernet switches and PHYs or some of our 10-gig products. But we see those continuing through fiscal 2019 as well as multi-gig starting to ramp as well and that’s again kind of going back to the question I believe Karl had, that those are the sort of some of the trends that we see that lead us to feel very good about our networking business and this kind of refreshed effort from the customer base to introduce new campus and enterprise boxes into the market where we’re attached to those. We’ve been thinking this is going to happen for some time and it looks it is.

Thank you. And our next question comes from the line of Craig Ellis with B. Riley. Your line is now open.

Thank you for taking the question and congratulations on a very good execution and some of the nice outlook. Matt, I wanted to just follow-up on the comments in your prepared remarks about the rebuilt sales team under Tom Lagatta. Since so much of what’s happened that the company over the last 12 to 18 months has been significant operational changes that have been unleashed very significant inflections in different parts of the business financially. As we look at that rebuilt sales team, where should be expect to see the greatest impact in the income statement next year, is it with an acceleration in growth in some of the segments or is it something different with gross margins given how they may or may not be comped differently versus the prior sales team?

Sure. Thanks, Craig. And yes, I definitely call that out in my prepared remarks because we do think if we head out of this quarter is that we just announced the results for sort of a quarter which we’ve finish the restructuring actions and now we’re looking at growth and so that pivot, that the sales conference we had which again, I also called out, because interestingly enough for a company of this size to have never had a worldwide sales conference, I think was something that probably looking back could have help, I mean, this was a tremendous effort to get the entire team together. And coming out of that, I think that our mantra on our message to these guys was from Jean and I and the whole management team was really look, it's time to pivot from this mode we’ve been in to growth mode, and that means, driving higher revenue growth. Now, we don't have gross margin bogey on the sales team. That sort of from my point of view that’s the business unit responsibility, so they’re out, they’re chartered with pretty aggressive design win target and goal, and given the dynamics and the customer base and the reception of this sort of renewed Marvell. And I would also incrementally and this is still pretty new, but we have the outpouring of customer support from the announcement of Cavium acquisition, that combination has been viewed extremely positively by our existing customers who just like the fact that we’re going to be bigger, more viable, have a broader product line as well as the Cavium side. So, on the whole, Craig, just to bring it back its really about driving incremental revenue growth in the top line and its really driven through design win, I mean, the products that we have isn't typically its not a catalogue product line. And so typically those are new wins on new platform that we drive. But you know, having a very confidence sales force with great relationships and great management can move the needle. So, we got some stretched goals on them and we’re hopeful they’ll start delivering in the next year and certainly beyond that we can start expecting to see some impact.

Thank you. And our next question comes from the line of Gary Mobley with Benchmark. Your line is now open.

Hi everyone. Thanks for taking my question. Jean, I think you’ve mentioned in the past an expectation that the other revenue, which is like primarily printer engines will decline over time, but based on your guidance for the fourth quarter that business should trend basically flat sequentially throughout the year. How should we think about the long-term expectation or rate of decline for that other category? And then, just one follow-up relating to the debt covenants now that you had eight days to finalize the financing for the Cavium acquisition, can you tell me specifically whether or not there's any covenants precluding Marvell for making additional acquisitions?

Okay. So the first question on the other product line. So first, our other product line primarily comprised for customer ASIC and the printer business. So, in the past during our Analyst Day we guided for fiscal 2018 this business will decline about more than 35%, which largely right now if you look at its consistent, its probably between 20% to 25%. And going forward that we actually said, during our Investor Day that our printer business actually quite stable going forward. It’s slightly decline but relatively stable. So we actually see fiscal 2019 and beyond this other categories going to decline more like 10% to 15% year-over-year. So Q4 certainly is a little it unusual, it’s actually flat. But it’s consist with some of the printer business tend to be stable quarter-over-quarter and going forward. So that hopefully that will help you to model other category going forward. And the second question on the fab side, it’s really early. We really need to disclose the transaction in the latest Thanksgiving holiday, so we are not negotiating the fab covenants yet, but we'll update you when we get there. This is too early.

Sandra.

Thank you. And our next question comes from the line of Kevin Cassidy with Stifel. Your line is now open.

Thanks for taking my question and congratulations on the great results. Your SSD business is doing very well. Can you just comment on at all on what you’re seeing as far as availability of the NAND flash devices just for the broad market?

Sure. Hey, Kevin. Yes. That’s an interesting one and we monitor that as closely as we can through our partners. I think it really – there is different point of view, but I’d say in general since the last time we updated everybody, we see that supply loosening up a little bit earlier than I think sort of where people thought and there was a view, these things kind of been sliding every quarter, but there was a view at one point that this wouldn’t be until second half of 2018. People were saying and it seems like now our read-through is probably in the beginning part of 2018 is when supply starts to loosen. So I’ll just say that very qualitatively, that’s a mix of inputs. But it seems like in the limit [ph] you know it's probably moved up from a sort of most bearish outlook of when supply was going to free up and so we obviously think that’s a good think for Marvell. We have had – although our current customer base is generally speaking the folks that control demand we do have a number of our customers where we’re designed in where they’ve been supply limited. So I think it just good for the overall market us in the industry if supply loosens and NAND make progress because of our competitive positioning there. So anyway, I think its probably early 2018, but we’ll certainly keep updating folks as we hear more.

Thank you. And our next question comes from the line of Joe Moore with Morgan Stanley. Your line is now open.

Great. Thank you. I wanted to ask about the 14-week quarter in the context of revenue. I think I heard you talk about the OpEx implications, but is there any revenue ramifications for that extra week as we think about January and April?

From the revenue perspective, right, when you look at the 14 weeks we actually have the holiday during the December and as a company we actually have a holiday shutdown for that week. So when we look at the revenue side this guidance is actually, it’s a balance when we look at the 14 week or look at the holiday week. So overall seasonally it’s quite consistent from what we see. Of course once the quarter progress or see if there’s additional information we can incorporate into our view for the revenue. But right now that’s how we see the quarter.

Okay. Thank you. And then, since you mentioned 11ax I wonder if you could just talk about the timing of actual deployment and what are the gating factors do we need to see 11ax devices before we see infrastructure, is infrastructure lead the way and if there’s still standards definition that has to take place before we can see that rollout more broadly?

Sure. Thanks Joe. And just on the first point I would say, I am interesting on your 14-week quarter question because for sure the OpEx is there, you’re paying people 14-week so that you get into this revenue thing, and as Jean mentioned, it’s a little tricky. But anyway on ax, I think it is quite fluid still, I mean, that a little bit why we've held back in sort of at least proclamations because there is some of the standards that still need to come together which is I think why waiting probably has helped us. And as far as how it’s going to roll out? I don't have a real clear view yet of sort of what’s the chicken and egg of when you see devices versus the access side versus the client side. But that something certainly I can get back to you on. I just don’t have a good feel for intuitively. It maybe, Jean, if you have a view, otherwise, Joe something that I can certainly circle back with you on as when I talk to my guys.

Thank you. And our next question comes from the line of Ross Seymore with Deutsche Bank. Your line is now open.

Thanks for letting me ask a question. Matt, I want to focus on the storage side of things. You started the year with really strong growth year-over-year and then you had some tougher comps now, but it seems like its going to re-accelerate not just in the fourth quarter but next year. Can you just talk about the moving parts and what sort of growth rate do you think is sustainable on that business as the SSD and the enterprise side appear to be rapidly getting bigger than traditional the client side with the HDD business?

Yes. Sure Ross, and you’re right. We started the year strong and then I think a couple things went on, the one was the inventory situation which resulted from all kinds of different factors which I think we belabored in multiple calls and so there's been little bit of slowdown on the HDD side year-over-year obviously offset by storage which really had tremendous growth. And it’s interesting because when we look at it from our point of view, calendar 2018, maybe even early 2019, but just sort of think about the next year or so, the HDD and SSD controller SAM basically converges, which is interesting. So at some point, soon, the SSD opportunity will be as big as the HDD opportunity. So market clearly developing, we’ve been growing at a rate that’s faster than that. And so when we look at the moving pieces and certainly I think through a scenario in which inventory is now normalized and we head into 2019, I think that on the HDD side we have several tailwinds going on. The first is we have this transition as I called out from 500 gigabyte per platter to one terabyte per platter that gives us some incremental ASP uplift when that transition happens. Second is that as we continue to make progress and the enterprise and nearline [ph] side, those designs have some incremental growth left in them. We also have pre-amplifiers which we didn’t talk about in the prepared remarks, and again that’s a smaller business, but we do have design wins that are going to be ramping next year. We haven’t size those yet, but I think you should expect in future calls if that revenue start to come in we would be able to size it. And so it sort of paints the picture where ideally we stick to our goal of trying to manage the HDD portion with all of those moving pieces to a flattish level as possible. And then when you layer on top SSD growth we do continue to see SSD is being a kind of mid to high single-digit grower if we’re successful. Now, that’s not been the generally the market viewing consensus that we can do that, but that's been our plan and I would say just final point is incrementally since we had our Analyst Day and we called out that growth rate of that SAM and what our opportunity was if we go sort of now six to eight months beyond that we feel incrementally better that our revenue outlook is probably a bit higher than we thought on the storage side. And so, again we like our prospects for that reason. We’ll have to see how the next year plays out. We’re not doing a fiscal 2019 year plan, but just to give you some qualitative update is we start to bridge from the end of the year here and the outlook. Those are some of the things that you might want to think about in your model and how you sort of measure as going forward.

Yes. To just add it to what Matt said, based on the middle point of our guidance for Q4, our fiscal 2018 storage revenue actually will grow like 8% year-over-year, its better than what we said during our Analyst Day.

Thank you. And our next question comes from the line of Harlan Sur with JPMorgan. Your line is now open.

Good afternoon and congratulations on the solid quarterly execution and margin expansion. If I look at the SSD market, enterprise is the fastest-growing segment that’s roughly about 15% CAGR if I look out over the next three years. Here you guys have been locking up a pretty solid lineup of customers in the segment. And if you guys have captured Western Digital both the WD and SanDisk product lines, also Seagate. So, my sense is that enterprise SSD as a percent of your total SSD business is now a pretty big part of the mix. Is it approaching 30% to 40% of your total SSD revenues? And then if you can help us understand where you're winning here. Is it more enterprise or more cloud-based SSDs? Thank you.

Okay. Thank you. So, I think your question on the enterprise of SSD portion. Yes, you’re in a ballpark. It’s actually growing significantly. So I would say, the change has been really rapid, but you’re in a ballpark. And going forward is certainly we’ll continue to see the revenue ramp overall SSD business and also specifically on the enterprise side. So we do expect – its going to be increasing larger percentage of our SSD revenue going forward.

Great. And then if I could just follow-up. How much is the team benefiting from Intel’s per lease server CPU launch which commenced in September quarter? I know that you guys have a good partnership with Intel on both 10-gig and 25-gig Ethernet? Does this contribute to the growth in the networking business in the third quarter? And will it be contributing to the growth trend in the fourth quarter?

It certainly helps. But to be really frank that’s a very small portion of our business. As we said in the past our networking business is more focused on the access side, the enterprise access side, the overall data center is portraits relatively small, but it does quarter-over-quarter it was a very lower base, it does help a little bit.

Thank you. And our next question comes from the line of Mark Delaney with Goldman Sachs. Your line is now open.

Yes. Good afternoon. Thanks for taking the questions. Just a couple of follow-up questions from me on some of the prior topics. The first one is the follow-up on connectivity. Matt, I understand your increased focus on higher performance areas within connectivity. I was curious if you could talk specifically around game consoles. I may have missed it, but I didn’t hear you talk about that and I’m curious if that factors into any of the areas that Marvell may deemphasize? And if so, may you could help us quantify how exposure that may be to that product area?

Sure. Yes. As I said, I think there is what we called, the higher performance segments and then there are segments that are more challenging. And gaming is some probably somewhere in the middle depending on the application. We’re not going to get into individual kind of subparts of connectivity and their trajectory and momentum because at some it just becomes too small and especially when we look at connectivity and we kind of pro forma of that business with respect when we end up combined with Cavium, it becomes a portion of our business where I think we call out individual pieces on their direction is probably not big enough, but that’s one where in that segment and other consumer segment we just need to stay agile and figure out what makes the more sense for us from a profitability point of view. And again, can we add to value to our customers who want us in there or not. And if we can add value then we won’t participate, because that’s may not be our business. And that applies across a number of connected devices that are out there. Some care and some don’t about technology we bring at the table.

Thank you. And our next question comes from the line of Srini Pajjuri with Macquarie Capital. Your line is now open.

Thank you. Good afternoon guys. Question on the SSD side. Matt, obviously the units are growing nicely there and you said you know you're pretty optimistic about next year as well. I'm just curious as to where we are in the PCIe transition within client as well as in enterprise? And then as we as we go through the transition do you anticipate your ASPs to also benefit? Thank you.

Sure. So I'll give my comments and maybe Jean wants to add too. In general when you look at our revenue today PCIe or NVMe solutions are still pretty, pretty small as a percentage of the total. Now again our total is getting bigger, so don't want to discount the fact that we’re shipping real revenue, but between SATA and SasS and probably some of our SaaS solution also enable NVMe, but the bulk of the revenue today is not in that area. We do see that progressing into next year in that transition. We think we’re well-positioned. Normally, when we through an interface change we can typically get some incremental ASP upgrade. I wouldn't say it's massive, but certainly every time you go through those transitions even within interfaces from different speeds we typically add more value and we can sort of price that into the whole solution. So I think there’s some incremental there and I think we’re again we’re prepared for it and we’re prepared to support the entire range of latest interfaces and SSD to really go after the whole market.

Thank you. And our next question comes from the line of Christopher Rolland with Susquehanna International Group. Your line is now open.

Hey, guys. I’ll echo my congrats on solid results. So, on of your chief competitors here has really strongly ASIC business and perhaps you can talk about some of your capabilities that you’re going to get with Cavium, some technologies that you’re going to be able to add into that business. Can that become a much more meaningful business for Marvell in a few years, call it?

Sure, so yes I think we are still early days and thinking about that clearly there is a competitor out there that’s got very strong capability in ASIC offering from an IT point of view and just having an established business model and a successful one. So, when we – that’s probably a question that needs to be addressed and answered down the road and that’s a longer term strategic question about whether when we combine with Cavium and we got all the IT rationalized and in places is there an opportunity to do more broad custom ASICS. Today, we do actually engage in ASIC opportunities on our own but we don’t run it as a standalone business and so that decision I would defer till sometime later and after we get the two teams combine, but clearly it’s a capability that we will have but whether it makes sense or not is to be determined.

Thank you. And our next question comes from the line of Tom Sepenzis with Northland. Your line is now open.

Hi, thank you for taking my question. I was wondering if you could give us a little color on what you are seeing in the carrier networking business. It’s been a little bit I think weaker than enterprise over the last year, so just what are you expecting or what should we be expecting here over the next couple of quarters from that?

Sure, sure and that’s I think very well known the issues out there with the operators, with the base station providers, with the infrastructure company supporting the carrier network. We are not as exposed to that business which is why I think you are seeing our networking business perform really well to the cycle because of where we are exposed. We do have carrier business is very lumpy, we’ve had a few of our customers this year as an example really not sort of do what they could do and it’s not that they try to overstate their numbers, there really has been weakness, we do see that continuing. I think carrier in general is just always been a very lumpy business and very hard to predict. We and typically those same customers for carrier are same customers for enterprise so we try to leverage the design wins to the extent we can across both of those segments but for us it’s not as meaningful a number so it doesn’t really move the needle for us on a quarterly basis, but I would sort of echo to what you are signalling which is it’s been weak, it’s probably going to be weak through 2018 and it’s probably going to be a little bit lumpy.

Thank you. And our final question comes from the line of Atif Malik with Citi. Your line is now open.

Hi, thank you for taking my question. Matt, I want to go back to the comment that you made about a NAND supplier starting to loosen up earlier than you expected. And assuming that supplier continues to loosen into next year, how would it impact your storage business particularly on the pricing side, I assume you guys benefited from pricing on the controller side as the market was tight this year and can you just talk about how the dynamics reversed if at all next year with the NAND supply loosening?

Sure, I know I understood and I think clearly from a NAND cost per gigabit point of view more supply of this is going to drive the pricing down for the NAND. From a controller point of view, even though the supply has been tight, you know it’s a competitive business, right each of those sockets we compete for you know they are contested and we’ve got to sharpen our pencils and be competitive, so I wouldn’t say that the environment has really even though NAND supply has been tight I wouldn’t say that we’ve sort of gotten the past as a supplier, I think we’ve had to be aggressive and be on top of it to win business, so I anticipate that’s going to continue into the next year. I think to the extent that our customers can really ramp higher volumes, and then they can come back to us and say hey, you know what you quoted us a million pieces and you gave us some price, now we can actually shift five million pieces and we want a discount and we would probably go ahead and do that and then we would also benefit from higher revenues that we are projecting and probably be able to get to supply chain cost to come down commensurate. So I guess the long story short, I don’t see with the kind of business we have today that there is going to be downward ASP pressure that’s going to be more than normal given that supply is loosening but we’ll have to see how the dynamics play out, but we are already preparing for if there is higher volume we want to make sure we are competitive. So, I hope that answers your question and you know typically the businesses that we are in and the kind of solutions that we provide we win them early on and we give some kind of longer term price quote. We get sort of a matrix, the volume versus price and that’s what customer might do, so I don’t it doesn’t quite; we don’t have this far [ph] pricing affect that maybe the NAND companies themselves go through.

Thank you. And with that I have no more questions. With that we will draw the call to a close. Thank you all for listening. You may all disconnect. Everyone have a great day.