Cisco & Wells Fargo to Host Silicon One Tech Talk Transcript

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

Question: Aaron Rakers - Wells Fargo - Analyst : So Martin, I think just to level set, the first thing I want to bring up is, can you just give an overview of Cisco's Silicon One strategy? What's the current strategy? How long have you been pursuing this strategy, and how prevalent is Silicon One currently across the product portfolio for the company. And certainly, we'll dive deeper, but just to level set the audience here, I'd like to maybe start there.

Question: Aaron Rakers - Wells Fargo - Analyst : Yeah, and I think that segways into my second question. I think from a device perspective, when we as investors think about that that proliferation -- correct me if I'm wrong, I think Silicon One has been deployed across 17 devices for the company. And you recently launched, Silicon One into the campus market. What are the -- you mentioned next three to five years across the portfolio, what's kind of -- how do we think about the what's next, like you launch into campus, you've done obviously some of the core data center and routing functions, but walk us through maybe that proliferation from 17 devices, so what does that look like?

Question: Aaron Rakers - Wells Fargo - Analyst : Yeah. That's perfect. And part of the Silicon One strategy has also been being agnostic, right, not just offering Silicon One on internal platforms but supporting S1 deployments in third-party devices. Where are you seeing traction from that perspective? Can can you help us appreciate that side of selling Silicon One silicon only, if you will?

Question: Aaron Rakers - Wells Fargo - Analyst : Yeah, and I'm going to definitely get to the hyperscale discussion because I don't know that I've been on any call where that doesn't come up or AI comes up obviously in this context. But before we go there, just kind of sticking with the portfolio and the proliferation. I think when we think about this, you look at the market, you've got Broadcom which obviously you well know. You've got Marvell. You've got merchants silicon, if you will. But internalizing that silicon strategy, how do we think about that from a margin perspective? Like, I would assume that Silicon One has not just portfolio advantages but model advantages from a margin accretion perspective?

Question: Aaron Rakers - Wells Fargo - Analyst : Yeah, and so that just naturally accretes to the model. So just to paraphrase what you said, we're a quarter of the way through that full extent of the proliferation, which should be over the next three to five years, that rest of the 75% we should see across campus, data center switching, routing across the portfolio effectively. REFINITIV STREETEVENTS | www.refinitiv.com | Contact Us consent of Refinitiv. 'Refinitiv' and the Refinitiv logo are registered trademarks of Refinitiv and its affiliated companies. JULY 11, 2025 / 3:00PM, WFC.N - Cisco & Wells Fargo to Host Silicon One Tech Talk

Question: Aaron Rakers - Wells Fargo - Analyst : Yeah, perfect. When we think about describing Silicon One. I think in the past we talked about like a unifying architecture or unified architecture approach. That implies that the prior landscape was fairly fragmented. Can you elaborate a little bit on that in terms of the context of historical divisions or trade-offs that customers faced in networking and how silicon has fundamentally changed that perception or interaction with customers?

Question: Aaron Rakers - Wells Fargo - Analyst : Yeah, and I think we're going to -- maybe I'll touch on that a little bit later around the programmability and some of the different underlying architectural considerations of Silicon One. But before we go there, again, I want to make sure I get this out in front of people. We have to talk on any conversation about hyperscale, and obviously, Cisco has performed well this year. You've outpaced, the initial expectations as far as hyperscale orders. Can that 1.3 billion of web scale orders, and again emphasis on back end, by the company -- Last quarter, you talked about 60/40 split between switching and optics. But maybe, first, can you talk a little bit about how we should think about the order to deployment or revenue conversion cycle of those opportunities, and how maybe that's changing or could change as we look forward?

Question: Aaron Rakers - Wells Fargo - Analyst : So Sami, just to put a finer point on it, six to nine months, and maybe it compresses a little bit from there. Is that fair?

Question: Aaron Rakers - Wells Fargo - Analyst : Yeah, okay, and I think, Sami or Martin, whichever, there has been some clear confusion around those AI orders and what they may be encompassed. Can you clear that up for us, back end, front end, optics, transceivers, maybe I'll throw in their top rack versus spine? Just help us level set us or the audience on unpacking those numbers a little bit more to the extent you can.

Question: Aaron Rakers - Wells Fargo - Analyst : Yeah. And just to be very succinctly clear, like the HUMAIN deal, some of the things that we've seen on the sovereign side, not inclusive of those numbers. And you'll still break out like web scale, but those would be additive obviously to those dynamics as we move forward.

Question: Aaron Rakers - Wells Fargo - Analyst : And some of those opportunities could be as sizable, right? Quicker maybe deployments and even as sizable as some of these hyperscalers, fair?

Question: Aaron Rakers - Wells Fargo - Analyst : Yeah. Sami, I really appreciate that.

Question: Aaron Rakers - Wells Fargo - Analyst : Yeah, go ahead, go ahead.

Question: Aaron Rakers - Wells Fargo - Analyst : Yeah. That's perfect. And I think some of that should kind of segue ways, Martin, to the competitive landscape a little bit. Oftentimes, in my discussions, you talk about Silicon One, talk about with Chuck. And one of the comments that comes up is, hey, we're winning because we're not Broadcom, right? Broadcom dominates the merchant silicon side of market. But is there other -- what other attributes of Silicon One would you say have been competitive insertions for the company when you look at it, either be it relative to Broadcom or obviously NVIDIA comes up a bit in the discussion with their Spectrum-X product. How would you frame that, the differentiators at the architectural level?

Question: Aaron Rakers - Wells Fargo - Analyst : So I'm going to jump over. I got Sami, definitely jump in if you had any e-mailed questions with you. One I've gotten e-mailed in said, Martin, specific to you, how is your approach in leading Silicon One different that the person asked relative to you all? And I think what he's referring to is basically NVIDIA, right, and you guys obviously have a relationship with NVIDIA. But how does that -- I guess, paraphrasing the question is, how does that relationship work? REFINITIV STREETEVENTS | www.refinitiv.com | Contact Us consent of Refinitiv. 'Refinitiv' and the Refinitiv logo are registered trademarks of Refinitiv and its affiliated companies. JULY 11, 2025 / 3:00PM, WFC.N - Cisco & Wells Fargo to Host Silicon One Tech Talk What's your approach in leading Silicon One relative to having the relationship with NVIDIA that the company established here?

Question: Aaron Rakers - Wells Fargo - Analyst : Yeah. Sami, I don't know if you have any e-mail questions in or else I'll just keep going down my list.

Question: Aaron Rakers - Wells Fargo - Analyst : Yeah. That makes a lot of sense. I think maybe going a little bit deeper there. Again, I think I mentioned earlier, I think you said 60-40 split between systems and optics this last quarter as far as the order momentum. If I were to double click on the switch side, can you talk about like where you're at? Meaning, I get a lot of discussions around top of rack. I think a couple of quarters ago, Cisco announced that they had won a super spine design win at a hyperscaler. So where are we at in terms of seeing like inside that back-end network fabric, opportunities for Cisco, top of rack, and increased opportunities maybe at the spine and maybe leaf layers of the network. Any thoughts there?

Question: Aaron Rakers - Wells Fargo - Analyst : Yes. How much does back end pull front end? Have you seen that? I know that we talk a lot about, obviously, Sami, you just went through it, it's back-end centric. They have to define where the deployments are taking place. But have you seen evidence where winning the back end actually is pulling front-end opportunities for Cisco?

Question: Aaron Rakers - Wells Fargo - Analyst : Yeah. Sami, I have one other question e-mailed in here, and it speaks to the competitive dynamics. We -- maybe I'll paraphrase it, like the pace of innovation is remarkable, right? We've dramatically changed over the last couple of years since -- arguably since mid-part of '23 with this whole AI insertion. How do we think -- I think you recently launched the G200, you're shipping 51T silicon, 51.2. We've seen the biggest competitor announced or introduced their Tomahawk 6 platform moving to 102. How do we think about the competitiveness of Cisco and keeping pace with that dynamic in the market? And I have a follow-on to that, but why don't we start there and interested in your thoughts.

Question: Aaron Rakers - Wells Fargo - Analyst : That's perfect.

Question: Aaron Rakers - Wells Fargo - Analyst : Right, right. Makes a lot of sense. One of the other interesting things, and this is the second part of the question was, with that introduction, we're starting to see, we talk a ton about Ethernet on the scale-out side, but there's this idea of scale-up Ethernet or UA Link, and when you look at NVIDIA's rack-scale architecture, you've got nine switches of NVLink sitting inside that architecture connecting those compute nodes. REFINITIV STREETEVENTS | www.refinitiv.com | Contact Us consent of Refinitiv. 'Refinitiv' and the Refinitiv logo are registered trademarks of Refinitiv and its affiliated companies. JULY 11, 2025 / 3:00PM, WFC.N - Cisco & Wells Fargo to Host Silicon One Tech Talk How do you envision Ethernet as far as playing in the scale upside? Is that an opportunity that we or myself and investors should be thinking about for the traditional switch vendors or the switch ecosystem on Ethernet?

Question: Aaron Rakers - Wells Fargo - Analyst : So we're not wrong in thinking that Ethernet, there is an opportunity on the scale up. We'll see how that evolves, but UA Link or whatever that version might be that it's fair to assume that that could present an incremental opportunity for the Ethernet?

Question: Aaron Rakers - Wells Fargo - Analyst : So I'm going to move past the hyperscale dynamic a little bit, but I'd be remiss if I didn't ask this question. So when you think about Cisco and the success that the company has reported here over these last couple of quarters, how do you size the market? Or Sami jump in here. How do you think -- how does Cisco think about sizing the AI networking market? And I have to ask, we'll see where it goes. But do you have any kind of thoughts on share aspirations in that market opportunity?

Question: Aaron Rakers - Wells Fargo - Analyst : Yeah. Sami, any thoughts on sizing?

Question: Aaron Rakers - Wells Fargo - Analyst : Yeah, yeah. And just to be fair, Sami, I mean, a lot of the things that we've seen develop for the company on this front was not going back to that Analyst Day. When you look at that networking business growth profile, a lot of the things that we've seen have been additive from -- since back then to what you were contemplating it.

Question: Aaron Rakers - Wells Fargo - Analyst : Yes. That's a great point. And that co-optimization, I think, to your point, gets more and more increasingly complex, which plays into the Cisco strategy. You mentioned there, Martin, the supply chain side, right? Like as you see these opportunities present, Sami, earlier we talked about the order to revenue rec progression. How much of that has been a challenge for the company? Are you able to keep up with the demand in terms of getting your allocation of if it's wafer starts from your manufacturing partners? How do you manage that. How has that been progressing?

Question: Aaron Rakers - Wells Fargo - Analyst : So I'm going to maybe rapid fire here last couple of questions unless Sami, you have any -- that you -- that came into you that you want to make sure we get to.

Question: Aaron Rakers - Wells Fargo - Analyst : So the quick last couple of questions, and I want to be appreciative of your time, Martin. And again, I really do appreciate you letting us host this discussion. One of the things on the technology side that I read a little bit about, but I'm honestly a little bit confused of where, and who's what is the Radix scaling, right? I think Cisco has talked about G200 having, I think it's 512 Radic scaling as -- in some things I've read is a competitive advantage. Can you help level set that? Is that a competitive advantage? And how would we think about that as far as important when you're in dialogue with these hyperscalers?

Question: Aaron Rakers - Wells Fargo - Analyst : Yes. Final two questions for Martin, I'll let you get on with your day and weekend, hopefully. The one question I want to ask is just we talked about NVIDIA a little bit earlier. Where do you -- how would you characterize the progression that we've seen of enterprise -- traditional enterprise AI adoption at this point? When do you think maybe that starts to inflect more materially as you look at the relationship with NVIDIA just more broadly for Cisco. And then I'll throw out the second question, and we'll end the discussion is, I'd be interested in how the team around Silicon One has expanded, developed anything you want to share on that front of just Cisco's investment here, right? And this being core to the focus or the strategy of the company, I'd be curious if any metrics you might be able to offer us there.

Question: Aaron Rakers - Wells Fargo - Analyst : Yeah. And then on the enterprise side, I guess at a high level, how do you envision that becoming more pervasive? I'm starting to hear a little bit about the $20 million, $50 million kind of projects within traditional enterprise starting to show up on AI deployments, but be curious on what you're saying.

Question: Aaron Rakers - Wells Fargo - Analyst : I think Cisco and that NVIDIA relationship is well positioned for that. I want to appreciate your time. Sami, I don't know if there's anything you want to throw out there that maybe we didn't discuss that you'd leave investors or the audience to kind of think about here? Or if not, I'm happy to end it at that.

Question: Aaron Rakers - Wells Fargo - Analyst : Yeah. Perfect. So again, I appreciate your time and allowing us to host the discussion. I don't know, Martin, you had anything left to say. But if so --

Question: Aaron Rakers - Wells Fargo - Analyst : Perfect. Well, that's a good way to leave us to think about things. So I appreciate the time and again, letting us host this call. And hopefully, you guys have a great weekend. Thanks so much.