Irrational Analysis
Semiconductor Engineer, Engineering-Driven Investment Analysis
Semtech's linear equalizer attach rate per Google TPU should be far higher than the 1-3 chips others cite. Each TPU has about six octal links and each linear equalizer covers four lanes, and all or nearly all links should need one. That answers @BozRiverGuides, who asked how many linear equalizer chips go into each TPU and had heard estimates of 1 to 3. x.comÂ
Google's MediaTek-built TPU v9 should lift Semtech's content per chip. Per @StockSavvyShay, the Triggerfish variant adds SRAM, HBM4E memory and a simulation die, so data must travel farther and faster in the rack, pushing electrical links to their limit. MediaTek's SerDes is leaner than Broadcom's, so links need extra help, which Semtech's signal conditioners and redrivers supply; Google reportedly already relies on them. More Semtech parts attach with every accelerator Google ships. x.comÂ
Semtech benefits as larger AI clusters need faster, more efficient links between GPUs and switches, which its CopperEdge and FiberEdge chips supply. Data center revenue rose 91% year over year. The stock keeps setting all-time highs despite a broad semiconductor sell-off and tops US semiconductors by Momentum Score at 99, ahead of AMD and NVIDIA. x.comÂ
Semtech does not deserve its status as a hot optical stock, since it is mostly a low-quality analog business with only a couple of data center parts. The move has been striking, though being wrong is possible. x.comÂ
Semtech remains a Buy with a $162 target at 22x FY28 EPS, as AI demand runs about three times its supply capacity. F2Q revenue rose 33% YoY to $341.9M, EPS of $0.71 beat $0.61, gross margin hit a record 54.5%, and F3Q guidance of $410M revenue and $1.02-1.08 EPS tops estimates. 1.6T CopperEdge ACC is now in mass shipment to major hyperscalers, and FiberEdge targets over 50% of its 1.6T market by end-FY27. SiGe/InP wafer and packaging limits are the bottleneck; FY28 EPS is forecast at $7.40. … Show more
Semtech benefits from Nvidia's strategy of scaling up with copper for as long as possible. At Computex 2026, Jensen Huang said to use copper wherever you can and optics only where you must. Nvidia's Blackwell NVL72 racks use thousands of copper cables rather than fiber to link GPUs within a rack, and keeping data intact over that copper relies heavily on signal-integrity chips from Semtech's active copper cable alliance. x.comÂ
Semtech is not an attractive holding because of its historic cyclicality, unless the business has materially changed. x.comÂ
Broadcom's integrated optics, electronics and packaging could lower custom-chip system costs because separate suppliers defend their margins. At similar valuations, it is preferred to Nvidia and has more room to beat expectations. Google TPU v8 shipments are estimated at 4.0M in 2026 and 9.1M in 2027, assuming Broadcom supplies the remainder after MediaTek's allocation. Anthropic financing adds value only if chip profit exceeds likely support payments and capacity costs. x.com x.comÂ
Semtech is put forward as a stock to own. x.comÂ
Semtech's low-power chips connect AI clusters and are hard to replace once designed in. The stock is breaking out, with quarterly relative performance back at highs and about 20% to go to the 1.618 Fibonacci extension. x.comÂ
Semtech's AI interconnect story has turned from multiple emerging bets into an explicit FY27 product stack. 800G remains durable, LPO has started shipping, ACC/CopperEdge enters production shipment this quarter, and HieFo offers a path to much higher content at 3.2T while being accretive in year one. Q1 guidance beat the Street on revenue, gross margin and EPS. The case weakens if, by summer, Semtech still cites design activity rather than measurable revenue from ACC, 1.6T FiberEdge or HieFo. … Show more