Keysight cements an ‘exceptional’ quarter, aims for net-zero emissions by 2040

Keysight Technologies was firing on all cylinders in the most recent quarter: Revenues up 36% to $1.22 billion, profits at $186 million, up from $71 million in the year-ago quarter, and orders up 22%, with growth coming across all of its business segments.

Keysight Chairman, President and CEO Ron Nersesian called the company’s performance “exceptional” and noted that those numbers reflected all-time records for orders and revenue.

During the company’s quarterly call with investors, Nersesian said that Keysight’s strong second quarter was “broad-based, with double-digit order and revenue growth across all markets and regions”. In particular, he called out the strength of Keysight’s portfolio for 5G and beyond, and its position in supporting trends in the automotive and semiconductor markets, as well as aerospace and defense.

To some extent, Keysight is seeing both sides of the global surge in demand for semiconductors. While Nersesian mentioned that Keysight is “managing longer lead times and component availability,” he also said that strong demand for its semiconductor test solutions is one of the drivers for its record orders and revenue, because the company’s customers are investing in advanced technology and “capacity is expanding for mature processes to address surging global semiconductor demands.”

However, he and other company executives were quick to point out that when it comes to Keysight’s “highly differentiated” and custom integrated circuits, it manufactures those in-house — shielding the company from most of the impacts of the chip shortage and making the rest more manageable. “We are encouraged by the strong demand for our differentiated solutions while managing the longer lead times and component availability constraints,” Nersesian said. “Our in-house high-performance semiconductor fab and the strength of our order fulfillment team are helping us manage these near-term supply challenges and give us confidence in our ability to navigate them entering the second half of this year.”

He added that the company anticipated seeing some manufacturing decreases in capacity and supply chain component shortages due to COVID-19 and planned ahead — and that having its custom ICs manufactured in-house “enables us to basically have complete control of that supply chain for the critical custom parts,” Nersesian said. “But there is no doubt that we have built backlog and our order book is strong.”

Other highlights from the quarterly results and call included:

-Keysight’s Communications Solutions Group saw record orders and double-digit order and revenue growth in commercial communications, and its revenues from aerospace, defense and government were up 46%. Drivers included strong demand in space, satellite and signal monitoring, Nersesian said, as well 5G and early 6G research applications.

-The company’s Commercial Communications unit also saw double-digit growth in orders and revenue, driven by 5G investments as well as 400G and 800G Ethernet for data centers.

-Asked about the millimeter wave opportunity for Keysight, Satish Dhanasekaran, Keysight COO, said that the company was “already seeing a pretty steady business for millimeter wave offerings” but that it sees mmWave as still being in early days. “We are on the front-end of something that’s going to play out over the next decade, because of the progression in millimeter wave spectrum from 20 to 40 to 70 to 90 GHz — and then with 6G coming in with terahertz,” Dhanasekaran said. “There is a big, long-term roadmap that’s playing out.” He also pointed out that of roughly 150 5G devices that are being certified now, out of around 700, only about 30% have mmWave support — a percentage that is sure to grow.

-Asked about C Band, NDhanasekaran said that Keysight saw an uptick in demand for C Band-related test capabilities — but warned analysts not to get caught up in the impact of one particular regional band when so many technological advances and spectrum bands are contributing to global test needs. “At the end of the day, our customers are looking to test for creating devices and products that cater to the global marketplace. And right now, we have 9,000 different band combinations that our customers have to test for eventually. And today, they are testing 2,000,” Dhanasekaran said.

In addition, Nersesian highlighted some of Keysight’s corporate social responsibility aims — including a newly announced commitment to achieve net-zero emissions in company operations by 2040 — which is a decade ahead of the timeline set by the Paris climate accords that governments around the world have committed to. Keysight plans to do this through energy conservation and increased efficiency, as well as investing in renewable energy and “selective purchase of certified offsets to neutralize any residual emissions.” Nersesian said the company is working to set science-based targets to ensure that it’s progressing toward that goal.

“We believe our focus on climate and diversity provides us with a competitive advantage,” Nersesian added.

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