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Silicon Laboratories Inc (NASDAQ:SLAB)
Q3 2020 Earnings Call
Oct 28, 2020, 8:30 a.m. ET

Contents:

  • Prepared Remarks
  • Questions and Answers
  • Call Participants

Prepared Remarks:

Operator

Good morning. My name is Cole, and I will be your conference operator today. At this time, I would like to welcome everyone to the Silicon Labs Third Quarter Fiscal 2020 Earnings Conference Call. [Operator Instructions] [Operator Instructions].

I would now like to turn the conference over to George Lane, Director of Investor Relations and International Finance. George, please go ahead.

George Lane -- Director of Investor Relations and International Finance

Thank you, Cole, and good morning, everyone. Tyson Tuttle, Chief Executive Officer; and John Hollister, Chief Financial Officer, on today's call. We will discuss our financial performance and review our business activities for the third quarter. After our prepared comments, we'll take questions. Our earnings press release and the accompanying financial tables are available in the Investor Relations section of our website at www.silabs.com. This call is also being webcast, and a replay will be available for four weeks. Our comments today will include forward-looking statements subject to risks and uncertainties.

We base these forward-looking statements on information available to us as of the date of this conference call and assume no obligation to update these statements in the future. We encourage you to review our SEC filings, which identify important risk factors that could cause actual results to differ materially from those contained in any forward-looking statements. Additionally, during our call today, we will refer to certain non-GAAP financial information. A reconciliation of our GAAP to non-GAAP results is included in the company's earnings press release and in the Investor Relations section of the Silicon Labs website.

I would now like to turn the call over to Silicon Labs' Chief Financial Officer, John Hollister.

John Hollister -- Senior Vice President and Chief Financial Officer

Thanks, George. We are pleased to announce a strong finish to the third quarter with revenue ending at $221 million, exceeding the top end of our guidance range. Third quarter revenue was up approximately 7% sequentially. Revenue from our IoT products set a new all-time record in Q3 at $133 million, up more than $18 million from Q2 or about 16%. During the quarter, we saw particular strength from ramps in smart home and lighting products with product sales from our wireless connectivity technologies growing 29% sequentially. As expected, revenue from our Infrastructure and Automotive products declined in the third quarter, ending at $88 million. Timing revenue was down significantly due to lower demand from our customers coming off of a strong first half. We also had a late quarter impact to our timing products due to the stoppage of shipments to Huawei.

Revenue from Broadcast products increased in Q3 with seasonal strength from sales of TV tuners as well as a slight recovery in automotive radio. Turning to end markets, revenue from industrial and consumer was up in the third quarter due to strong growth in IoT. Automotive revenue was roughly flat. Revenue in communications was down significantly due to weakness in timing. Geographically, revenue in the Americas was strong in the third quarter on IoT growth. Sales into Europe also increased, whereas APAC revenue was about flat to second quarter. Four IoT wireless customers moved into our top 10 customer list during the quarter, and a U.S.-based IoT customer became our top customer. Our top 10 customers now include five IoT customers, all based in the Americas and Europe.

Revenue from the top 10 customers increased to 22% of revenue, up from 20% in Q2. Distribution sales were 78% of total revenue in the third quarter, and we ended Q3 with DSI at around 48 days, down from 53 days at the end of Q2. Non-GAAP gross margin was 59.5% in Q3. This was lower than we expected due to product mix in the quarter as we experienced a large rebound from top-tier IoT wireless customers and Broadcast consumer products, combined with a larger-than-expected decline in higher-margin Infrastructure and Automotive products, driven by the decline in timing. I would like to note that our IoT wireless products earned some of the highest gross margins in the industry, owing to our feature-rich and highly differentiated technology offering as well as high levels of CMOS integration. Given the strong recovery in the semiconductor industry and strong design win momentum, we are seeing sharp ramps in customer demand for our IoT wireless products, and we are aggressively working with our supply chain to expand production capacity and build inventory.

Non-GAAP operating expenses ended the quarter at $94 million, up about $4 million, primarily due to increases in variable compensation with an improving business outlook in the second half of this year. Non-GAAP R&D expenses were $56 million, and non-GAAP SG&A expenses were $39 million. Non-GAAP operating margin ended at 16.9%, and non-GAAP earnings per share was $0.73. Our non-GAAP effective tax rate for the quarter was 12.8%. On a GAAP basis, gross margin for Q3 was 58.8%. Total GAAP operating expenses were $120 million with GAAP R&D at $72 million and GAAP SG&A expenses of $48 million. Stock compensation expense was $15 million for the quarter, and amortization of intangible assets was $12 million. GAAP operating margin was 4% for the quarter with GAAP earnings at $0.07 per share. Turning now to the balance sheet, we ended the quarter with cash and investments of $727 million.

Accounts receivable ended up approximately $10 million at $80 million or 33 days sales outstanding. Our inventory balance declined in the quarter to $66 million, representing inventory turns of 5.5 times. Cash flow from operations on a year-to-date basis was approximately $127 million, down about 6% from the same period of fiscal 2019. In Q3, we also executed approximately $18 million in open market repurchases of our 2022 convertible notes and ended the quarter with a total debt balance of $681 million. Our revolving credit facility remains in effect with no drawn balance. We have ample liquidity available to us to execute our long-term capital deployment strategies. I will now cover guidance for the fourth quarter. We expect revenue in the fourth quarter to be in the range of $221 million to $231 million with both IoT and Infrastructure and Automotive increasing. We expect non-GAAP gross margin to be approximately 59%.

Our gross margin outlook continues to be influenced by trends we experienced in the third quarter. We expect our IoT mix to grow, particularly from continued ramps of wireless products and tight supply chain capacity. Due to these factors, we expect to be operating toward the bottom end of our non-GAAP gross margin range. We expect non-GAAP operating expenses to be $95 million and our non-GAAP effective tax rate to 13% for the fourth quarter. We expect non-GAAP earnings per share to be in the range of $0.68 to $0.78. On a GAAP basis, we expect gross margin to be 59%, operating expenses to be $123 million and GAAP earnings per share to be in the range of $0.02 to $0.12.

I will now turn the call over to Tyson.

Tyson Tuttle -- President and Chief Executive Officer

Thank you, John. Third quarter revenue was considerably stronger than expected with our IoT products leading the way with a record quarter. We see sustained acceleration toward a more connected world, which our products are well suited to address. Both third quarter design win lifetime revenue and bookings set records, highlighting the strength of our strategy and product portfolio. In particular, we are delighted that Bluetooth design wins continue to set new records. Design wins were up 49% sequentially in Q3 and up 100% year-over-year. We continue to see upside in demand for our IoT products, now making up 68% of our design wins and 65% of our total opportunity funnel. Our IoT opportunity funnel grew 8% sequentially to over $9 billion of lifetime revenue. Moving on to product category updates. In IoT, we are seeing increasing demand for connectivity. Smart home, consumer and industrial solutions are driving design wins.

And we continue to strengthen our wireless portfolio, adding new differentiated capabilities while advancing security and growing ecosystem partnerships. In Q3, we announced our collaboration with Amazon to support Sidewalk, a secure network created by neighbors who share a small portion of their broadband connection, enabling their devices to work better at home and beyond the front door. Sidewalk is a free software application layer that works on top of our Wireless Gecko Series two products to support Sidewalk's sub-gigahertz and low -- Bluetooth Low Energy protocols and permit IoT devices to securely connect to each other through the cloud. Sidewalk is simple to set up, free to use and is expected to have a tangibly positive quality-of-life impact. We were glad to have Ring Founder and Chief Inventor, Jamie Siminoff, join us during our Works With smart home developer conference last month to share more details about how Sidewalk extends the working range of low-bandwidth IoT devices and helps them stay online even when those devices are outside their home's Wi-Fi range.

Millions of consumers will enjoy the many new IoT experiences Sidewalk will enable, such as tools and home appliances that can self-diagnose problems and order replacement parts, smart locks with improved wireless range and reduced energy consumption, and the ability to quickly locate lost pets or missing valuables throughout the neighborhood. Silicon Labs' wireless solutions for Amazon Sidewalk easily enable developers to create IoT products with encrypted cloud communication across wireless protocols. This is an exciting development further in convergence of IoT wireless protocols that we are well positioned to service. We have built our business to be the ultimate connector with the broadest portfolio of IoT wireless products. As a result, we are uniquely positioned to bring players across the smart home industry together, as we did last month in our first virtual Works With smart home developer conference. Over 6,000 people from the Americas, Europe and Asia registered, making it one of the most attended smart home industry events held to date.

The conference provided an on-ramp for smart home developers to engage directly the biggest, most popular smart home ecosystems in the world, including Amazon, Comcast and Google, through co-authored curriculum featuring 40 technical sessions, 12 hands-on workshops and six keynotes, spanning 40 hours of high-quality, engaging content. We are thrilled with the turnout and feedback received from participants, and we'll continue to play a leading role in shaping the future of the smart home industry. In combination with Works With, we've launched Simplicity Studio 5, which is the latest of our free-to-use, class-leading IoT developer environment. Simplicity Studio five now offers universal access and an enhanced developer experience across a wide range of wireless protocols, all within a new, intuitive and responsive web-style user interface. Simplifying and accelerating the development of wireless silicon, Simplicity Studio five also gives IoT developers support for open thread and paves the way for future development of project Connected Home over IP-based devices. We continue to be excited about the Bluetooth opportunity in front of us.

The Bluetooth SIG forecasts annual device shipments will grow from 4.6 billion units in 2020 to 6.2 billion units in 2024. To build on our record Bluetooth design wins, this quarter, we expanded our Bluetooth Low Energy portfolio with the launch of the BGM220S and BGM220P module. At just six times six millimeters, the BGM220S is one of the world's smallest Bluetooth modules. It provides ultra-small size, low-cost and long battery life to add turnkey Bluetooth connectivity to a variety of end products. The BGM220S and its larger PCB variant, the BGM220P, are among the first Bluetooth modules to support Bluetooth direction finding, all while delivering up to 10-year battery life from a single coin cell. Secure Vault, our suite of state-of-the-art IoT security feature, debuted in September in Silicon Labs' multi-protocol Wireless Gecko Series two platform. We identified the need to address growing security threats and regulatory issues for IoT devices early on, and Silicon Labs has taken the lead in delivering the world's best IoT security solutions to the market.

Our Secure Vault products are the world's first radios to earn ARM's PSA Level two security certification. Secure Vault also received SmartCert security certification from the ioXt Alliance, which is recognized as the global standard for IoT security. Finally, Secure Vault was awarded a 2020 LEAP Awards gold medal for best-in-class security. Honoring Secure Vault as a new contemporary solution to an ever-evolving problem, an independent panel of judges recognized just how far Silicon Labs has advanced connected privacy and security for IoT devices with Secure Vault. In September, we announced our collaboration with STRATIS on a new smart home solution built specifically for apartment complexes. The STRATIS 3.0 Gateway uses Silicon Labs' SoCs to deliver multi-protocol wireless capabilities, connecting smart devices throughout apartment communities.

Gateway devices are placed strategically throughout buildings to offer a connected network of smart devices that enable energy efficiency, security, voice controls and remote-control capabilities that were previously unavailable outside of single-family homes. Residents can use their smartphones as a credential to enter residential buildings, common areas, gates, elevators and their own fully equipped smart apartment unit. The system also allows property managers and staff to securely control energy usage and smart technology in vacant units as well as monitor common areas. The STRATIS Gateway is also designed to address adjacent markets such as hospitality, retail and small- to mid-sized commercial applications. As the pandemic continues and we enter the heart of this year's holiday shopping season, I would like to talk about smart retail. Amazon's Prime Day kicked things off with a 60% year-over-year increase in online sales, underscoring just how heavily consumers and retailers alike are depending on connected technology.

We see two trends in smart retail: first, people are shopping online due to more -- due to the pandemic; second, those who do shop in brick-and-mortar stores want to do so safely, meaning time -- minimal time spent shopping indoors and minimal physical contact. These two trends are having a profound impact, requiring retailers to develop and deploy omnichannel strategies which effectively blend online and off-line shopping. Our connected solutions are at the heart of this omnichannel strategy. We facilitate online shopping by bolstering back-end bandwidth infrastructure and helping to manage stock in stores and warehouses. We are also facilitating a safe, convenient in-store experience through electronic shelf labels, which reduced the need for store staff to touch inventory and allow customers to easily locate products and see how much they cost. Our location technology helps guide shoppers and store staff to a product's precise location in the store. And smart tags allow shoppers to see product and pricing information on their smartphone and even purchase products securely without having to go through a checkout lane.

As part of our focus on addressing the needs of health and safety during the ongoing pandemic, we continue to collaborate with our customers to expedite time to market of impactful products. For example, this quarter, we worked with Belgian-based, social-distancing device start-up, Maggy, to begin shipping their new compact social-distancing wearable that warns users when the distance between people becomes too small and poses a risk of COVID-19 infection. Silicon Labs' Bluetooth solution was a critical design element that streamlined Maggy's engineering and wireless development time, allowing the company to focus on design simplicity and accelerate time to market. Turning now to Infrastructure and Automotive. Despite the headwinds related to Huawei and the delay in 5G infrastructure rollout, we continue to see a strong opportunity for our portfolio in the areas of Internet infrastructure, data centers and electric vehicles.

This quarter, we launched a new family of small form-factor, high-performance crystal oscillators. Data center operators and telco networks are deploying lower-cost, smaller form-factor optical modules to line side and client side applications, delivering the need for space-optimized, high-performance timing solutions. Unlike traditional solutions, which may require multiple oscillators to generate all required frequencies, the new oscillators are a single unified solution that delivers any great performance in the industry's smallest footprint. This month, we introduced a new family of isolated gate drivers offering a combination of faster and safer switching, low latency and high noise immunity capabilities. New advancements in these gate drivers help power converter designers meet or exceed increasing energy efficiency standards and size constraints in a variety of applications, including data center and industrial power supplies, micro inverters for solar power and traction inverters for the electric vehicle market. Turning to our leadership team.

I'm happy to congratulate Serena Townsend for her promotion to Senior Vice President and Chief People Officer. As CPO, Serena is responsible for the company's global talent strategy, people programs and values-driven, inclusive culture. Since joining Silicon Labs in early 2017, Serena has had a positive impact on many fronts, including global talent acquisition, deepening our diversity, equity and inclusion efforts and ensuring continuity during the ongoing global pandemic. Under Serena's leadership, I'm confident that our global culture and employee initiatives are in excellent hands. I want to extend our best wishes and deepest thanks to Lori Knowlton, our previous Chief People Officer, for the outstanding contribution she made to our business and culture.

Lori played a key role fostering our winning culture with a focus on diversity, equity and inclusion. And she also helped build a world-class recruiting team, which has attracted the best and brightest talent to Silicon Labs. Looking ahead, we expect robust growth in IoT. Despite a turbulent macro environment, we delivered record IoT design wins and revenue with an acceleration of demand through the quarter. We continue to innovate silicon, software and tools to shape the future of IoT and are well positioned with our broad connectivity portfolio to continue this momentum. Thank you for your time and attention.

Before we take your questions, I'd like to turn the call back to George. George?

George Lane -- Director of Investor Relations and International Finance

Thank you, Tyson. Before we open the call for a question-and-answer session, I'd like to announce our participation in the Barclays Global TMT Conference on December 10, using a virtual platform.

We'd now like to open the call up for your questions. [Operator Instructions].

Questions and Answers:

Operator

[Operator Instructions] And our first question today will come from Blayne Curtis with Barclays. Please go ahead.

Blayne Curtis -- Barclays -- Analyst

Hey, guys. Thanks for taking my questions. I had two. Just kind of curious, as you think about the strength you're seeing in IoT, you mentioned smart home and consumer, I'm assuming there's some benefit from all these home improvement people are doing while they're sitting around. So just kind of curious if you think about what you saw in upside and any kind of perspective into next year?

And then second question, just on gross margin, obviously, bottom end of the range. You said mix, and I think you mentioned wireless being 68% of the design wins. I'm assuming wireless will continue to increase as a percent of mix. Any perspective where wireless is as a percent of mix in September? And then just thoughts on gross margin as that becomes a bigger part.

Tyson Tuttle -- President and Chief Executive Officer

Thanks for the question, Blayne. I'll cover the first part, and then I'll let John cover the gross margin. We are seeing really robust growth ahead in IoT, and there are large ramps in wireless with top-tier customers. And we mentioned smart home consumer retail, it's really very, very broad. There's a lot of industrial applications that are coming online. We've got things like smart lighting, home security systems, building automation, retail, asset tracking. There's just a lot of design win activity and some very, very strong ramps. And we see really a path to double-digit revenue growth next year as the SAM expands and we take share in wireless, and that double-digit revenue growth is really for the whole company.

We see the design win funnel, everything, very, very strong. The wireless growth, I think we did 29% here in Q3, and we see an opportunity to continue that growth, 30% up next year, kind of same as what we've seen. We're seeing -- a lot of the work that we've been doing for the last couple of years is now starting to ramp into production. And some of the trends that we've seen in the pandemic having accelerated some of those programs and just the general trend toward IoT and connected devices in general. So yes, the trends in IoT are very, very, very positive, and it's both at the Tier one customers as well as the broader base of customers that we're seeing that.

John Hollister -- Senior Vice President and Chief Financial Officer

Yes, Blayne, this is John. So on the gross margin topic, you're right, it really is a function of mix with both a combination of factors, strength in IoT, and as a reminder, our IoT gross margins are a bit below the corporate average gross margin, combined with weakness in timing. We saw the restrictions placed on Huawei and also a general pullback in timing in the third quarter, coming off of what was a very strong first half in that part of our business. So it's really a combination of those two factors. And yes, we do see that continuing.

Tyson Tuttle -- President and Chief Executive Officer

Yes. And Blayne, I would like to just mention that our IoT gross margins are -- they're in the high 50s, but they are a little bit below the overall corporate gross margin levels and certainly less than timing. So when you swap timing revenue for IoT gross margin, you'll see that mix shift occur. And that's what we're seeing here in the second half.

Blayne Curtis -- Barclays -- Analyst

I guess a quick follow-up. If the IoT margin is in the high 50s, should we think about the wireless within that being lower? Or is that not the case?

John Hollister -- Senior Vice President and Chief Financial Officer

Yes. It really gets into customer-specific and application-specific, the technology itself, without going into too much detail there, but it's -- there's a blend and various mix factors within IoT.

Tyson Tuttle -- President and Chief Executive Officer

Yes. I think if you look at the IoT wireless mix and -- or the IoT mix, and wireless is more than two three of the revenue, and it is in the high 50s on the wireless side. There's a mix depending on the various technologies, and then that gets blended in with the microcontroller margins, which are in the same range. So I would say that across the wireless and everything, wireless is in the high 50s as well, but it's not quite the 60% that we have in our target.

Blayne Curtis -- Barclays -- Analyst

Helpful. Thanks, guys.

Operator

And our next question will come from Gary Mobley with Wells Fargo Securities. Please go ahead.

Gary Mobley -- Wells Fargo Securities -- Analyst

Hey, guys. Thanks for taking my question. I want to double-click on the topic of gross margin. Speaking about the mix within the mix of IoT, would you characterize the gross margins in the wireless radio mix as being lower for standards-based wireless like Wi-Fi and Bluetooth versus something that's a little more proprietary like Z-Wave and you see a significant difference in the growth rates of each? And you mentioned some tight supply in your supply chain. Are you seeing some maybe outsized wafer inflation?

Tyson Tuttle -- President and Chief Executive Officer

Gary, yes, I can cover kind of the mix of standards. And there's also the mix between modules and chips, and then you've also got the difference between large-volume customers and smaller customers. If you look -- we're seeing very strong uptick in 15.4, which includes Zigbee and Thread. And those margins, as well as Z-Wave in the smart home, tend to be in line. Bluetooth is a lot of more consumer, higher-volume applications. And we're seeing very strong growth there and very respectable margins. Wi-Fi is still a smaller portion of the business, and those are in line as well. So we don't see too much variation.

I would say that on the proprietary side, which I would maybe include Z-Wave in there, but we have a lot of stuff in sub-gigahertz proprietary that goes into industrial networks. That's a very broad range of things, and that's maybe a little bit above. But overall, the variation between these is not that -- there's not that huge of a range between the top and the bottom end of the -- on the wireless customers. And then you blend in the eight-bit and 32-bit MCUs and sensors into that mix, I would say that the variation probably is more based on volume than it is based on standard. And John, I will let you cover the other part of that question.

John Hollister -- Senior Vice President and Chief Financial Officer

Yes, that's right, Tyson. And on the tight supply chain, Gary, I mean, you're seeing this across the sector with the strong -- reports of strong order rebound here in the second half. And yes, there is some added pressure on the manufacturing cost profile. We're working carefully with our suppliers to ensure capacity and service customers, but there is a bit of pressure there, yes.

Gary Mobley -- Wells Fargo Securities -- Analyst

Got you. As my follow-up, I wanted to get a sense of what's missing from the export restrictions targeting Huawei. What was Huawei as a customer in the third quarter?

John Hollister -- Senior Vice President and Chief Financial Officer

Yes. The steady-state run rate for Huawei has been in the 2% range, and that includes both direct as well as some indirect business addressing the Huawei supply chain. So it's about 2%.

Gary Mobley -- Wells Fargo Securities -- Analyst

Thanks Tyson.

Tyson Tuttle -- President and Chief Executive Officer

Yeah.

Operator

And our next question will come from Srini Pajjuri with SMBC. Please go ahead.

Srini Pajjuri -- SMBC -- Analyst

Thank you. Good morning, guys. John, just curious what you're seeing in terms of your Disty Channel trends in terms of inventory, etc. Given the strong demand, I'm just curious, as you look into Q4, if you're seeing your channel inventories go up or down.

John Hollister -- Senior Vice President and Chief Financial Officer

Yes, Srini, POS has been very strong. We expect strong POS in the fourth quarter. Ideally, we would like to add some Disty inventory. We're going to try to do that. We'll see how we can process everything through the balance of our order flow this quarter. But as we just reported, days actually declined five days from 53 to 48 days in the third quarter. Our goal would be to hold that stable, if not grow it slightly, but I do not expect a large increase in days as we round out the year.

Srini Pajjuri -- SMBC -- Analyst

Got it. And then just a follow-up on the auto business. I know you said it grew sequentially. Some of your peers are reporting very strong auto numbers. I guess the demand is coming back. The production has recovered very strongly. I'm just curious as to how big that business is for you and why we are not seeing a stronger recovery there?

John Hollister -- Senior Vice President and Chief Financial Officer

Yes. Auto is not tremendously large for us. It's on the order of about 7%, 8% of our total revenue, and it's more targeted. We have a particular focus with the infotainment sockets as well as an emerging footprint in electric vehicles. I think what you're seeing across some peers is the more broad-based nature of their auto exposure more than anything.

Srini Pajjuri -- SMBC -- Analyst

Got it. Thank you.

Operator

And our next question will come from Tore Svanberg with Stifel. Please go ahead.

Tore Svanberg -- Stifel -- Analyst

Yes, thank you. A question for Tyson or maybe you could just elaborate a little bit more. You said you're starting to see the fruits of a lot of hard work on the IoT side. And obviously, you're expecting some pretty strong growth. Hoping you could just elaborate a little bit more on that. Is that still going to be a broad-based growth? Or are you talking about some really big customers driving that growth?

Tyson Tuttle -- President and Chief Executive Officer

It's really both, Tore. The demand is quite broad-based in IoT, in particular, on the wireless side. We've had a very strong design win numbers and a strong funnel. The IoT funnel now is at $9 billion and continuing to move customers through that. We do have a number of Tier one customers. We mentioned that we now have five customers in our top 10 list that are in IoT, and our top customer is now in IoT. Actually, we had -- our top customer had been the same top customer for about 20 years, and they were just surpassed by the ramp of a large IoT customer. So it's really both and it's really across segments as well. As you know, IoT has just a variety of different applications. And the diversity of applications is both an opportunity because it's stable and it's -- has a lot of different components to it, but it's also a challenge in being able to address that both from a platform concept to make sure that you have the functionality across thousands of applications and that you're efficient in supporting those tens of thousands of customers that are out developing with us.

So the launch of our new Simplicity Studio five tools, we continue to evolve our ease of use to make it easier for customers to design in our products. And we continue to expand our portfolio to add additional wireless capabilities and to keep up with the standards and to continue to push the integration levels and cost to the points where it needs to be. So we're really excited about the opportunity. It's a very broad range, and we continue to try to get better and better in terms of our portfolio and our R&D and the efficiency around that in a lot of the software as well as the customer support side and to be able to take as much of that opportunity and convert it into design wins as possible.

Tore Svanberg -- Stifel -- Analyst

Okay. And as my follow-up, you guided Auto and Infrastructure to be up sequentially in Q4. So are you starting to see a recovery in the timing business? Or is it just more the broader category being up?

John Hollister -- Senior Vice President and Chief Financial Officer

Yes, it's really more of the broader category, Tore. We expect timing to be down slightly in the fourth quarter.

Tore Svanberg -- Stifel -- Analyst

Great. Thank you and Congrats.

Tyson Tuttle -- President and Chief Executive Officer

Thank you.

Operator

And our next question will come from Rajvindra Gill with Needham & Company. Please go ahead.

Rajvindra Gill -- Needham & Company -- Analyst

Yes, thank you and congrats on the IoT momentum. Just digging a little bit deeper in the IoT, I think, Tyson, you had mentioned that the wireless is more than two three of the IoT revenue. Wondering how we should think about that mix going into 2021? How do we also think about Redpine contribution and how we think about kind of Z-Wave in the module business? Just the components of the IoT business as we move into 2021.

Tyson Tuttle -- President and Chief Executive Officer

Yes. So in Q3, wireless was over two three of the total. And we talked about wireless next year growing 30%. And we have a good shot at that, given the design win momentum and the traction that we've got. That includes the Redpine products, it includes Z-Wave, a lot of stuff on the proprietary industrial side, industrial, commercial, a number of consumer and smart home applications as well. We don't break out the revenue by standard, and that varies a bit. Z-Wave continues to see a lot of momentum in the market with, in particular, with like security customers on the smart home side. Certainly, Wi-Fi has an important place there, and we continue to develop the next-generation products and drive design wins with the 9116 and the existing silicon.

And we are ramping a number of Tier one customers into production with our Wi-Fi solution with Redpine. So continue to be happy with that, with the team that we have over in Hyderabad. But you'll see next year, the mix shift going more and more toward wireless. A lot of times, customers are going from separate microcontrollers into either a connected device that adds wireless or the integration of a microcontroller in wireless. And you've got to think about all of our wireless solutions as essentially having an integrated microcontroller. So over time, that wireless mix is going to continue to click up, and we'll have a higher and higher concentration of revenue coming out of the wireless portion of IoT.

Rajvindra Gill -- Needham & Company -- Analyst

Very good. And a question on your thoughts on ultrawideband as a technology, given the nature of it regarding precise localization. We're starting to see ultrawideband kind of move into applications outside of mobile phones, in IoT, in auto. Wondering what your thoughts are on that technology.

Tyson Tuttle -- President and Chief Executive Officer

Yes. I mean UWB is a bit of a narrow technology, and it's not universally deployed. Like if you take Bluetooth or Wi-Fi or a lot of these other ones, they are more universal than UWB. UWB does give you a better ability to get precise location technology, although with Bluetooth now you can get angle of arrival and you can get distance within one to two feet, which is pretty good, and it's a universal kind of technology that people can use. So it's an interesting thing. It's got a narrow range of applications.

It's mostly for communication and with handsets, whether that handset is in automotive or other applications or between handsets so you can see where various people are. So I think it's a little bit more of a niche, and it's still very, very early in the adoption phase. So we're certainly monitoring that technology, but I don't see that as one of the core technologies required for the success in IoT. It also has very slow range -- or a very, very low range. It doesn't travel very far, so that also limits its useful.

Rajvindra Gill -- Needham & Company -- Analyst

And if I could just squeeze in one more question. I think you had mentioned, and just correct me if I'm wrong, a path to double-digit growth for the entire company in calendar 2021? Or was that for IoT?

Tyson Tuttle -- President and Chief Executive Officer

Yes. Given the momentum that we see here in Q3 and continuing into Q4, we believe that we've got a good shot at double-digit growth for the entire company next year. And certainly, within IoT wireless, we talked about a shot at 30% growth in the IoT segment next year. And that depends on the macro and a lot of other factors. And not giving formal guidance here, but those are the -- if we look at where the business is today, we feel very confident in our ability to grow. And we'll see where the market turns out next year as well. But very, very positive momentum right now in bookings and design wins, which point in that direction.

Rajvindra Gill -- Needham & Company -- Analyst

Great. Thank you.

Operator

And our next question will come from Suji Desilva with ROTH Capital. Please go ahead.

Suji Desilva -- ROTH Capital -- Analyst

Good morning, Tyson. Good morning, John. Congratulations on the IoT progress here. On the Bluetooth, I'm going to characterize, I guess, your newer products as single Bluetooth versus past multi-vertical focused, for lack of a term. I'm just wondering if the high-volume wins you're seeing now in Bluetooth, are you capturing share in existing design of the next generation? Or are you seeing new applications where you're coming into the Bluetooth socket? Any color there would be helpful.

Tyson Tuttle -- President and Chief Executive Officer

As we moved into our Series two, which brought our portfolio into 40-nanometer and we were able to take a lot of the feedback and learning, we introduced a new set of products, which were more optimized for many of the Bluetooth applications. They're still capable of some degree of multi-protocol capability depending on the version, but we also have versions that are highly optimized for the very high-volume applications. And so we are taking some existing sockets from competitors. And certainly, you see a lot of new applications for Bluetooth. It's really a mix, but we see this as an opportunity for share gain in Bluetooth 100% year-over-year in terms of design wins with very strong growth. Out of all the wireless protocols, we see probably the strongest growth coming out of the Bluetooth applications. And that includes Bluetooth by itself as well as Bluetooth in combination with something like a Thread or a Zigbee or even Z-Wave for proprietary applications you can use.

A lot of times, you'll connect to a network with a different standard, whether that's Wi-Fi or Z-Wave or Zigbee or Thread, but you will commission device with Bluetooth. So Bluetooth then allows the connectivity to a mobile phone. And really across applications, that's a very common way of onboarding devices onto the network. And so the Bluetooth capability is very important from a multi-protocol standpoint, but we also have an extremely competitive solution in terms of integration, cost, performance, features and adopting all the latest versions of the -- and capabilities of the standard, for instance, direction finding and angle of arrival. So we have a very competitive, on a stand-alone basis, and a very flexible platform depending on how customers want to mix up the different protocols.

Suji Desilva -- ROTH Capital -- Analyst

Okay, helpful color. And then second question, a follow-up for John perhaps. With the increase, it seems, in the profile of IoT connectivity and large customer design wins, which are helping drive success, is there a shift to how we should think about seasonality for the first quarter perhaps in 2021 versus past years? Or is that not enough to kind of move that seasonality concept?

John Hollister -- Senior Vice President and Chief Financial Officer

Yes. It's -- Suji, it's a good question, and it is an unusual time right now. Typically, one would expect first quarter to be down some due to a variety of factors, including what you were referencing. Given the strength and momentum that we see in our bookings, we'll have to see how this plays out as we head into the year-end and onward first quarter outlook. But it's -- it would typically would think it's seasonal down, yes, but bookings are very strong right now.

Suji Desilva -- ROTH Capital -- Analyst

Okay. More secular growth. Thanks, guys.

Tyson Tuttle -- President and Chief Executive Officer

Yeah.

Operator

And our next question will come from Matt Ramsay with Cowen. Please go ahead.

Matt Ramsay -- Cowen -- Analyst

Yes, good morning, everybody. Thanks for taking the questions. Tyson, just one thing to just clarify. The comments you made for next year on IoT, was that 30% growth of the wireless portion, so that two three of your franchise there? Or your goal is potentially 30% growth of the whole IoT segment?

Tyson Tuttle -- President and Chief Executive Officer

That was particular to wireless with that being about two three. So you can -- with the remainder on our microcontroller side, the growth there is much more modest. It's -- there are a lot of applications in microcontrollers that are moving to wireless. So you see some -- the mix shift more over to wireless. But certainly, the wireless is the 30% portion of that.

Matt Ramsay -- Cowen -- Analyst

Got it. Got it. For a couple of questions on my end. The first one is in the timing business. Obviously, the Huawei headwind has hit yourselves and lots of folks in the industry. I wonder if you might characterize across wired and wireless applications how -- if Huawei's business remains impaired overall, not just that you guys can't sell to them, but that their own business remains impaired for other reasons, maybe how you're positioned with the rest of the competitors that might step in and fill some of those voids. And any appreciable difference in content, margins, any of those things with the rest of the infrastructure providers in those key markets?

Tyson Tuttle -- President and Chief Executive Officer

Yes. So we sold pretty broadly to Huawei. We had some very good designs that we've worked for years on in 5G. We also sold into their optical communications equipment, networking equipment and into the broader ecosystem there. I think if you pull in the -- John mentioned about 2%. We have some other suppliers that go in there. But then we also see other companies, for instance, ZTE, Samsung, Nokia, Ericsson, Cisco, all kind of maybe taking up the slack, depending on the region of the world that you're talking about. What 5G had -- 5G was an emerging opportunity for us. It's not the bulk of the timing revenue, but it's an important piece. We have four out of the top five of 5G infrastructure makers.

We essentially sell to the top 12 networking equipment vendors. We have a very strong position in long haul, in metro markets, an emerging position in data center depending on the area. We're not in the data path, but we're in providing the timing, the high-performance timing within the data center. And then we have an emerging opportunity in automotive. But the bulk of the revenue there in timing is really in core network and long-haul type of applications where high performance is really important. And we have a very broad -- we sell to pretty much everybody in that market.

Matt Ramsay -- Cowen -- Analyst

Got it. And just one last and, I guess, bigger quick picture question on the IoT market. I think the -- and particularly as you talk about maybe some bigger customer programs ramping, I wonder if you might step back and give a little perspective on how you're seeing the usability ecosystem come together. I don't know if that's a real term, but I've been going through, as everybody is sort of trapped at home during the COVID situation, we've been doing lots of home automation upgrades for me personally, and I can automate about everything in my home now. I need 37 iPhone apps to do it. So I just wonder if your company is involved in any industry consortiums, any of these bigger customers that you're dealing with might be doing some work on consolidating the usability of ecosystems like that, that might accelerate adoption?

Tyson Tuttle -- President and Chief Executive Officer

Well, funny you should ask. I actually am upgrading all of the lighting control in my house as we speak. So it's -- I think there's a lot of us that are implementing new smart home stuff and trying to figure out how to not have those 30 apps on our phone. We had our conference. In fact, if you haven't checked it out, it's at workswith.silabs.com, and we did a virtual conference. It was going to be an in-person conference. This is actually a really great lesson on just events in general. We had planned on about 1,200 people in person here in Austin, and we ended up with 6,000 people registering virtually and attending from around the world. And this is with companies like Google, Amazon, Comcast.

And really, the whole purpose of this conference was to talk about how are we going to converge these ecosystems and converge the standards and make it easier for consumers to be able to onboard networks, I mean, everything from Apple HomeKit to Amazon Alexa, the Google Home and all of that. And so that there's less consumer confusion and more convergence of really the user interface and onboarding devices and all that as well as how do you actually make devices and connect them into these ecosystems. So I see tremendous progress in the convergence of these ecosystems and the ease of use and a strong focus by the largest companies in tech that they see this as something that we need to be working together on. And we took a leadership position in this event. It was a groundbreaking event and extremely well attended and lots of media coverage.

So I think we'll see some progress there. As we know, IoT is -- this is a long path. And it's -- the momentum is starting to build, but I think that that's going to continue every year. And it's -- you're going to continue to see new technologies and new capabilities added. But I think the ease of use is also something that must get addressed for it to scale.

Matt Ramsay -- Cowen -- Analyst

Thanks very much guys. Appreciate it.

Operator

And this concludes our question-and-answer session. I would like to turn the conference back over to George Lane.

George Lane -- Director of Investor Relations and International Finance

Thank you, Cole, and thank you all for joining us this morning. This concludes today's call.

Operator

[Operator Closing Remarks].

Duration: 50 minutes

Call participants:

George Lane -- Director of Investor Relations and International Finance

John Hollister -- Senior Vice President and Chief Financial Officer

Tyson Tuttle -- President and Chief Executive Officer

Blayne Curtis -- Barclays -- Analyst

Gary Mobley -- Wells Fargo Securities -- Analyst

Srini Pajjuri -- SMBC -- Analyst

Tore Svanberg -- Stifel -- Analyst

Rajvindra Gill -- Needham & Company -- Analyst

Suji Desilva -- ROTH Capital -- Analyst

Matt Ramsay -- Cowen -- Analyst

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