Ambarella Inc at Bank of America Global Automotive Virtual Summit Transcript

The following is excerpted from the question-and-answer section of the transcript.

Question: Aileen Elizabeth Smith - BofA Securities, Research Division - Analyst : Absolutely. It's a ton of good content to start with and brings up a lot of questions that we can certainly get into. I think a question to kick off with, just given the audience that we have today, for those of us in the automotive universe that cover the automakers, the Tier 1 supply and the Tier 1 suppliers. The Tier 2-plus supply base, frankly, can be pretty confusing in terms of where the technology is coming from, that is ultimately going into Tier 1-plus component systems and service integrators. Obviously, though, semis and chips are gaining in relevance from a content and from a value-add perspective. Most of us are pretty familiar with Mobileye on the vision front. But could you remind us who you identify as your key competitors and you touched upon this a little bit in your prepared remarks, but I want to drill down a little bit more. Really what differentiates Ambarella's approach versus some of the other key players in the market?

Question: Aileen Elizabeth Smith - BofA Securities, Research Division - Analyst : Well, I think let's follow-on to that. When we think about the hardware versus software, where you guys are focusing more specifically on the hardware side, Mobileye as a key competitor is really on the software side. Can you talk about how much software support you are receiving for your systems on chip versus perhaps some of the other competition outside of Mobileye? REFINITIV STREETEVENTS | www.refinitiv.com | Contact Us consent of Refinitiv. 'Refinitiv' and the Refinitiv logo are registered trademarks of Refinitiv and its affiliated companies. MARCH 30, 2021 / 3:40PM, AMBA.OQ - Ambarella Inc at Bank of America Global Automotive Virtual Summit

Question: Aileen Elizabeth Smith - BofA Securities, Research Division - Analyst : Okay. So you guys describe ourselves as, I think, an artificial intelligence vision silicon company. So when you're using that description and thinking about the value-add that you're providing to your customers on the AI front. It's really these software tools that are providing to the customers this algorithm-first approach that allows it to be essentially modularized at the customer level for the various software applications that they're working on, correct?

Question: Aileen Elizabeth Smith - BofA Securities, Research Division - Analyst : Okay. When we think about -- one of the questions that we get a decent amount of people is, why is computer vision an ideal solution for autonomous driving systems, whether it's Level 2+ active safety or Level 4+ fully autonomous capabilities. What specifically can computer vision offer that cannot be solved for by the existing sensor hardware or even software suite?

Question: Aileen Elizabeth Smith - BofA Securities, Research Division - Analyst : Great. That brings up, I think, a really important question from our side of things. Obviously, we've seen this in terms of the emergence of some of the newer specs onto the market. But (inaudible) is frequently cited as a gating technology for autonomous capability, while camera and radar are perceived as perhaps more mature systems. However, obviously, you're clearly advancing computer vision technology and companies like Magna and others are pursuing more advanced radar as well. So when you think about the incremental progress that can be made in terms of the value-add for cameras, do you think that traditional component systems like vision have much more room to go via your technology or perhaps others?

Question: Aileen Elizabeth Smith - BofA Securities, Research Division - Analyst : And as a follow-up to that question, maybe a good segue into the competitive landscape here. Mobileye recently unveiled its LiDAR SoC. So do you guys perceive this as an effort that may be indicative at all of a broader change in the competitive landscape and where your peers are directing investment?

Question: Aileen Elizabeth Smith - BofA Securities, Research Division - Analyst : And you mentioned that sensor fusion and the domain controller system, what is the customer receptivity to outsource those systems As we think about autonomous systems in general, whether it's Level 2 or Level 4-plus, they're highly mission-critical systems in getting the car from point A to point B safely. REFINITIV STREETEVENTS | www.refinitiv.com | Contact Us consent of Refinitiv. 'Refinitiv' and the Refinitiv logo are registered trademarks of Refinitiv and its affiliated companies. MARCH 30, 2021 / 3:40PM, AMBA.OQ - Ambarella Inc at Bank of America Global Automotive Virtual Summit So when you think about customers and their likelihood of outsourcing that system itself or the software to the Tier 2-plus supply base and getting a solution that may be more or less a black box. Is there -- like I said, is there receptivity for them to do that?

Question: Aileen Elizabeth Smith - BofA Securities, Research Division - Analyst : Great. I'd love to switch gears a bit and kind of talk around the commercialization aspect. So you have a host of compute vision chips for automotive either in the market today or in the pipeline. So CV5, CV25, CV2, CV22 and a bunch of others. But when we think about what you are currently in the market on, obviously, it's very much more so recorders and data loggers. How do you transition your existing automotive business from -- for your chips from what our recorders and data loggers right now to that Level 1, 2-plus, Forward ADAS and then ultimately, Level 2 to Level 4-plus systems in autonomy.

Question: Aileen Elizabeth Smith - BofA Securities, Research Division - Analyst : You bring up a ton of good points there. I certainly want to get into the revenue funnel and the total addressable market estimation. But I do kind of want to close the loop as we think about your existing product set transitioning over time, your customer set should also transition with it as well. So right now, some of your key customers on the automotive side are at the retail and the Tier 1 level. As you are targeting, advancing more towards Level 2-plus Level 4-plus -- excuse me, Level 4-plus products, specifically, how does that validation process work as you transition from retail to Tier 1 to then automaker customers? And what role do your Tier 1 partners, a lot of which you just mentioned you're partnering with on the software side. What role do they play in kind of helping that go-to-market process or getting your foot in the door at the automated level?

Question: Aileen Elizabeth Smith - BofA Securities, Research Division - Analyst : Absolutely. I do want to touch upon this or maybe expand upon it a little bit because it's been referenced several times today in our conversation, which is, obviously, a very important development on your end which is Motional. And for those a reminder of everyone on the conference call, that's the joint venture between Hyundai and Aptiv. We'll be using your CVflow vision processors. So as we think about what Motional is right now, which is very much a, I would say, R&D-focused investment to advance autonomous technology. Is it fair to assume that, that win on the CVflow vision processors is still a R&D project award, while Motional is still in testing of its autonomous vehicles. And then how do you convert that project award to eventually a production contract to go back to your point of there's still a proof that you need to have a common customer to really get in the door on a production contract.

Question: Aileen Elizabeth Smith - BofA Securities, Research Division - Analyst : That's very helpful. In the 5 minutes or so that we have left, I do want to touch upon, that $600 million funnel for automotive revenue because it is important to get into. So of that $600 million, you disclosed that your key customer set in there is a lot of the Tier 1 suppliers. So when we kind of bracket the percentage of that $600 million. I mean, one, you said 2/3 of it is booked already, another 1/3 is based on probability of booking it. When you think about it from a product perspective, whether it's data loggers, Cabin monitoring, eMirrors and then more so towards Forward ADAS, Level 2-plus, Level 4-plus. As you're increasingly booking those contracts with Tier 1 suppliers is it fair to assume that, that funnel is increasingly

Question: Aileen Elizabeth Smith - BofA Securities, Research Division - Analyst : That's some good color. I think a final question to wrap up with you guys. I'd love to touch upon the SAM or the total addressable market for your products. I think you've outlined that through 2025, perhaps, some numbers that have been put out there, $400 million to $500 million in recorders and data loggers, over $2 billion in Forward ADAS, eMirrors and In-Cabin monitoring combined. Over $2 billion for Level 2-plus and a smaller $200 million level for Level 4-plus. Do you guys internally or could you provide any color on an estimate that you guys have for percentage market share that you think Ambarella could occupy in some of these verticals over time as we think about what that SAM is versus what's really applicable to say, Ambarella?

Question: Aileen Elizabeth Smith - BofA Securities, Research Division - Analyst : Absolutely. It's a good benchmark to think about. I think with that, we are at time. We very much appreciate the commentary and the information today. It's been very informative. From my end, we appreciate your continued support of our summit and I know you guys participated with us in the past. So I'd just like to thank Casey and Louis again for participating. And we thank everybody for tuning in.