National Instruments Corporation (NASDAQ:NATI) Q3 2020 Earnings Conference Call - Final Transcript

Oct 29, 2020 • 05:00 pm ET


National Instruments Corporation (NASDAQ:NATI) Q3 2020 Earnings Conference Call - Final Transcript


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Q & A

[Operator Instructions] Our first question comes from Richard Eastman with Baird. Your line is now open.

Richard Eastman

Yes, good afternoon. Eric, maybe a little bit more color around the semiconductor, down high single digits. Again, I know we expected that. But we also have seen, maybe a little bit more strength than we thought towards the end of the third quarter than entering the third quarter. And I'm curious, again, with all the activity around the smart -- the mobile market, the smartphone market and the big introduction cycle that we're on here around millimeter wave for one of the biggest U.S. players there.

Where are we involved at all on the test side? I mean, we don't see that in the portfolio of products business, and I think you referenced some of the network stuff around semiconductor. So maybe just some color around the semiconductor piece of the business and then also the mobile handset test business, which I know would normally show up in portfolio products.

Eric Starkloff

Yes. Thanks, Rick. Great question. So as you alluded to, the -- look, we expected based on sort of timing, we expected the semiconductor business to be negative in Q3. So it wasn't outside of our expectations. And as I mentioned, we're still -- it's on pace for a record year. We're still quite optimistic about the short and long-term prospects for that business. There's a couple of things kind of going on there. So 5G, obviously, we've kind of had a lot of success in the sub-6 gigahertz 5G has been a growth driver for that business.

And a you mentioned, now we're starting to see some additional traction in millimeter wave. Our view on millimeter wave. Obviously, we've got product in market now. We primarily sell into the infrastructure of semiconductor devices that are used in infrastructure. Those -- we expect that to be ramping primarily in next year, probably peaking the year after that. But as I mentioned, we are selling products into that space now. Certainly, as you mentioned, the fact that there's -- the most popular cell phone in the world has a millimeter wave and the latest version is a good sign for infrastructure and for the demand for millimeter wave infrastructure.

So I think our optimism is probably ticking up a little bit on that side. Now in semiconductor, we also have some of the things that are more challenging, which is that the China regulations, as we mentioned, that obviously affects some of our semiconductor business in China. And then we also sell a lot into the sort of general industrial mixed-signal semiconductors.

I think that the sort of TIs and ADIs of the world, which have been a little bit more moderate in their business over the last couple of quarters. So on -- then to the last part of your question about portfolio, we have some exposure into the mobile handset test for a variety of different types of measurements. That's not a primary