Credo Technology Group (CRDO) Barclays 22nd Annual Global Technology Conference 2024 summary

Strategic focus and market evolution

• Maintained consistent product strategy since IPO, focusing on Ethernet, AEC, and optical DSPs, with PCIe Gen 6 targeted for 2025 design-in and 2026 production ramp.

• AEC solutions have evolved to address AI cluster densification, reliability, and new requirements like telemetry and firmware upgrades.

• AI cluster networking now represents a massive new market, with high-speed connectivity gaining recognition as critical for AI infrastructure.

• Market expansion validated by increased competition and multi-billion dollar TAM estimates, with a focus on owning the entire system solution and rapid customer response.

• Customer base has diversified, with three material AEC customers and growing opportunities in both front-end and back-end networks.

Technology and product development

• AECs now feature Zero-Flap reliability, supporting up to seven-meter, 800G cables for dense AI racks.

• Back-end AI cluster networks present a 10x or greater opportunity compared to front-end, with scale-up networks potentially even larger.

• PCIe and Ethernet protocols are both supported, with PCIe Gen 6 and UALink seen as future standards; company remains protocol-agnostic.

• Optical DSP strategy includes both full and cut-down (LRO) 3nm products to balance power and interoperability, with strong interest from hyperscalers.

• Retimer technology is being developed for both onboard and cable applications, with live demos shown for PCIe Gen 6.

Financial and operational highlights

• Amazon warrant agreement nearing completion, expected to positively impact gross margins by up to 400 basis points as the discount is removed.

• Gross margin guidance remains at 63%-65% long-term, with product margins surpassing initial expectations.

• Customer diversification and operational agility enable rapid response to market shifts and customer needs.

• No specific new product area disclosed for the next development phase, but scale-up architecture remains a hotspot.