Speakers for today's call will be Mohan Maheswaran, Semtech's President and Chief Executive Officer; and Emeka Chukwu, Semtech's Executive Vice President and Chief Financial Officer. Please note this conference is being recorded. At this time, all participants are in a listen-only mode. A question-and-answer session will follow the formal presentation.

I will now turn the conference over to Semtech's Executive Vice President and Chief Financial Officer, Emeka Chukwu.

Emeka Chukwu - Executive Vice President & Chief Financial Officer

Thank you, Alex.

A press release announcing our unaudited results was issued after the market closed today and is available on our website at semtech.com. Today's call will include forward-looking statements that include risks and uncertainties that could cause actual results to differ materially from the results anticipated in these statements. For a more detailed discussion of these risks and uncertainties, please review the safe harbor statement included in today's press release and in other - in the other risk factors section of our most recent periodic reports filed with the Securities and Exchange Commission. As a reminder, comments made on today's call are current as of today only, and Semtech undertakes no obligation to update the information from this call, should facts or circumstances change.

All references made to financials results in my prepared remarks and Mohan's prepared remarks during this call will refer to non-GAAP financial measures, unless otherwise noted. A discussion of why the management team considers such non-GAAP financial measures useful, along with detailed reconciliations of such non -GAAP measures to the most comparable GAAP financial measures are included in today's press release.

In Q4 fiscal '22, the company delivered net sales of $190.6 million, a decrease of 2% sequentially and an increase of 16% year-over-year, and was once again above the midpoint of our guidance. Fiscal '22 revenues grew 24% to a record $740.9 million, while EPS grew 49% to a record $2.61 or more than 2 times the rate of net revenues growth. The strength of this secular drivers behind our growth engines contributed to the strong sales performance despite the challenges presented by COVID and supply constraints.

In Q4, shipments into Asia, North America and Europe represented 78%, 13% and 9%, respectively. While this represented the shift to address this for our distributors and customers, we estimate that approximately 33% of our shipments are consumed in China, 29% in the Americas, 19% in Europe and the balance over the rest of the world.

Total direct sales represented approximately 11% of net sales and distribution net sales represented approximately 89%. Our distributor POS presented another quarterly record, and the business remains balanced with approximately 42%, 32%, and 26% of the total POS coming from the infrastructure, industrial, and high-end consumer end markets, respectively.

In Q4 of fiscal '22, net revenues from the high-end consumer market decreased 22% sequentially and 6% over the prior year and represented 25% of total revenues. Approximately 13% of high-end consumer net revenues was attributable to mobile devices and approximately 12% was attributable to other consumer systems. Net revenue from the industrial end market increased 10% sequentially and 38% over the prior year and represented 39% of total net revenues. Finally, the infrastructure end market increased 3% sequentially and 14% over the prior year and represented 36% of total revenues. Q4 bookings increased 35% sequentially and total bookings accounted for approximately 3% of our Q4 shipments.

Q4 gross margin increased 70 basis points sequentially to 64.5%, which represented the upper end of our guidance range and the new quarterly record, driven by a higher mix of our growth drivers that include LoRa-enabled to a 10G PON, a Tri-Edge PAM4 CDRs, 5G wireless, and broad-based industrial protection products. For Q1, we expect gross margin to continue to expand, reflecting the benefits of continued strength of our growth engines. In fiscal '23, we expect our gross margins to trend higher by 100 to 200 basis points from a favorable mix of our growth platforms.

Q4 operating expense increased slightly to $68.7 million, driven by higher new product development expenses. For Q1, we expect our operating expense to increase by 4% due to higher compensation expenses, which is typical at the start of a new calendar year. Looking ahead to fiscal '23, we expect our operating expense to trend back towards our target model of half the rate of revenue growth.

In fiscal '22, operating profit grew 45%, approximately 2 times the rate of revenue growth, led by the higher gross margin and represented a record operating profit. Operating margin expanded approximately 400 basis points to 27.4% and represented a solid progress towards 32% to 36% long term target model. As expected, we are seeing the strong operating leverage expected from the success of our growth platform.

Our fiscal '23 non-GAAP normalized tax rate is 12%, slightly lower than the 13% in fiscal '22 due to a more favorable mix of regional income. In fiscal '22, cash flow from operations was a record $203 million, up 71% for fiscal '21, and it was 27.4% of net sales, which represented a 740 basis points expansion from fiscal '21. This is the record of record operating profit and good management of working capital. Correspondingly, the free cash flow increased 105% to 24% of net sales, around the low end of our long-term free cash flow target of 25% to 30% of net sales. Cash flow generation in fiscal '22 was very strong, despite the strategic actions to maintain higher levels of inventory because of strong demand and supply constraints.

In Q4, we repurchased approximately $33 million of our outstanding stock. And for the full year, we repurchased approximately $130 million or 2.7% of our outstanding stock and resulted in approximately $259 million remaining in our outstanding authorization. We expect to continue to use our cash to opportunistically repurchase our shares, make strategic investments and pay down our debt.

Q4 accounts receivable decreased 4% sequentially to $72 million, while days of sales were in line with the prior quarter at 35 days. In Q4, net inventory in absolute dollar terms increased 8% sequentially, and days of inventory increased 13 days sequentially to 146 days. We expect net inventory to remain above our target range of 90 to 100 days to support the higher demand and a better supply chain environment.

In summary, we are very pleased to deliver a record financial performance in fiscal '22, despite the supply chain constraints and continued pandemic headwinds. We are pleased to see our years of investment in technology platforms that are nevertheless matter sustainable planet drive record revenues, record gross margin, record earnings per share and record cash flow from operations. The financial model is delivering a strong leverage. In fiscal year '23, we believe the long term secular nature of our growth engines of LoRa-enabled, Tri-Edge PAM4, 10G PON, 5G wireless and broad-based industrial protection platforms positions us nicely for another record financial performance in fiscal '23.

I will now hand the call over to Mohan.

Mohan Maheswaran - Director, President & Chief Executive Officer

Thank you, Emeka. Good afternoon, everyone.

I will discuss our Q4 fiscal year '22 performance by product group, discuss our fiscal year '22 performance and then provide our outlook for Q1 of fiscal year '23. In Q4 of fiscal year '22, net revenues of $190.6 million represented a 2.2% sequential decline, which was much better than our typical seasonality of 5% to 10% down. We posted record non-GAAP gross margins of 64.5% and non-GAAP earnings per diluted share of $0.70.

In Q4 of fiscal year '22, our Signal Integrity product group grew 21% over the prior year and achieved another quarterly record and represented 39% of total revenues. Record demand from that PON business contributed to the growth. Our data center demand remained soft, as customers managed year-end inventory. However, Q4 data center bookings increased significantly in the quarter, and we are expecting data center revenues to rebound nicely in Q1, led by growth from our Tri-Edge short-reach PAM4 platform. We have continued to attain new Tri-Edge design wins across multiple geographies in a 100G, 200G and 400G PAM4 optical modules. In FY '22, revenue from our Tri-Edge platform increased over 700% to approximately $14 million, and we now expect our data center Tri-Edge revenues to triple in FY '23, as more customers move to full production. And we increase our market share over DSP solutions in the 200G and 400G PAM4 segments.

In addition, we are now sampling our long-reach Tri-Edge platform targeted at 200G FR4 optical modules. These new POPs approximately double our PAM in the hyperscale data center market. We are confident that Tri-Edge's ultra-low power, low cost and low latency, together with FiberEdge's high performance will enable us to continue to grow our hyperscale data center business over the next few years.

In Q4 of FY '22, revenue from our PON business represented another quarterly record, driven by continued strength from our GPON platforms as global demand for higher access bandwidth remain strong. While the China market continues to lead PON demand, US, Indian, and European service providers have all announced PON deployments, which we believe bodes very well for future PON demand growth globally. Semtech is the leading PMD supplier to the global PON market, providing the most comprehensive PON PMD portfolio. We recently announced our first 25G PON PMD device for 25G OLT applications, which has been designed to interface to Semtech's ClearEdge family of CDRs. As PON systems increase in bandwidth, we anticipate that the integration of CDR functions into PON modules will be necessary. We are also in development of advanced PMD technologies for 50G PON systems that will partner with our leading edge Tri-Edge PAM4 platform. As a result, we expect our PON business to continue to grow over the next few years.

In Q4 of FY '22, revenue from our wireless base station business was approximately flat from Q3. We continue to win new designs for both ClearEdge and Tri-Edge in 5G base station front or optical modules. We recently announced the industry's first 50G PAM4 CDR with Integrated driver targeted at 5G wireless infrastructure, which is currently in field trials at several Tier 1 system vendors. We expect the wireless base station market to strengthen in FY '23, and we believe our 5G momentum based on both our ClearEdge and Tri-Edge wins should enable our wireless base station business to deliver solid growth in FY '23. The underlying secular demand strength we witnessed in FY '22, driven by the quest for higher bandwidth at the lowest power across all infrastructure segments is expected to continue into FY '23. In Q1, we expect our Signal Integrity product revenues to increase and deliver another quarterly record.

Moving on to our Protection product group. In Q4 of fiscal year '22, net revenue from our Protection product group decreased 7% sequentially, as expected due to seasonality and increased 11% over the same period last year, and represented 28% of total revenues. Demand from our consumer customers softened in Q4. However, as expected, bookings from the consumer market strengthened nicely, and we expect our consumer protection business to increase in Q1. In Q4, demand from our broad-based Protection products grew 33% from a year ago. Our Protection business continues to diversify into a broader range of segments, including industrial, communications, automotive and IoT.

As more systems designers use chips with advanced process geometries, we expect demand for Semtech's high-performance protection to increase across all market segments. Our broad-based protection business continues to grow nicely and is a major contributor to our increasing gross margins. In Q1 of fiscal year '23, we expect our Protection revenues to increase.

Turning to our Wireless and Sensing product group. In Q4 of fiscal year '22, revenues from our Wireless and Sensing product group increased 13% over the prior year and represented 33% of total revenues. In Q4, our LoRa-enabled revenues achieved another quarterly record as the adoption of LoRa in low power IoT applications continued to accelerate.

During the quarter, we announced several exciting use cases, which included a joint initiative with the Lacuna Space to further increase LoRaWAN coverage in areas of the world without cellular or WiFi. Tencent Cloud, a leading technology company in China, announced it has integrated our LoRa Cloud geolocation services into the Tencent Cloud platform. The City of Cary in North Carolina is leveraging new LoRaWAN sensor connectivity and predictive data analytics from system integrator SAS, together with Microsoft Azure to better monitor flood levels and provide additional community services to its citizens. ICT International's precision environmental sensors are leveraging LoRaWAN to enable smarter monitoring of the urban forest based on a data centric approach. And Elvexys, a designer of innovative energy transport and distribution networks in Europe, together with Oiken, a switch distributor of electricity, are leveraging LoRaWAN connectivity and integration into their existing SCADA system to monitor and fix power grid failures.

Also in Q4, the LoRaWAN protocol was officially recognized as a global standard by the International Telecommunications Union, ITU. We expect this recognition to enable global interoperability and enable massive scaling of LoRaWAN. LoRa's low power, long range and network flexibility is enabling the connection of billions of sensors to enable a smarter, more connected and sustainable planet.

In Q4 of fiscal year '22, revenue from our proximity sensing platforms softened as expected due to lower seasonal demand, following the strong first half. Global RF regulations targeted at protecting users from increasingly more powerful radios are expected to drive more stringent radio power requirements on smartphones and wearable manufacturers. We expect an expansion of these regulations in Asia towards the end of this fiscal year, which will benefit our proximity sensing business as 5G mobile devices proliferate over the next few years. For Q1 of fiscal year '23, we expect net revenues from our Wireless and Sensing product to increase and deliver another record quarter led by our LoRa business.

Moving on to new products and design wins. In Q4 fiscal year '22, we released 10 new products and achieved 3,237 new design wins.

Now, let me comment briefly on our fiscal year '22 performance. In fiscal year '22 net revenues increased 24% to a record $741 million, driven by strength from all of our product groups. In FY '22, we had 55 new product releases and also achieved a record number of design wins of 13,083, representing a 16% increase from the prior year.

In FY '22, our Signal Integrity Product business grew 14% over the prior year to achieve record revenues. Global infrastructure demand remains strong, leading to record PON revenues. Our SIP product group achieved record bookings in FY '22, and we expect our Signal Integrity Product group to deliver another record in FY '23, driven by strong growth from our Tri-Edge PAM4 products for the hyperscale data center market and 5G wireless base station market and continued strength from the PON market.

In FY '22, our Protection business grew 26% over the prior year, driven by our broad-based protection business, which grew 34% to achieve a new revenue record. We expect both our consumer protection and our broad-based protection businesses to continue to grow as the needs of the circular economy drive strong demand for Semtech protection products in the automotive, infrastructure, IoT and consumer segments. We expect our Protection business to achieve double-digit growth again in FY '23, and deliver record revenues in FY '23.

In FY '22, our Wireless and Sensing business grew 39% over the prior year and achieved record revenues. Our LoRa-enabled revenues grew 53% annually to a record $134 million. FY '22, our LoRa business continued to make solid progress on the growth metrics we have established. These metrics included the number of LoRa network operators grew to 166 at the end of FY '22 from 150 in FY '21. We expect 180 LoRa network operators by the end of FY '23. And the number of LoRa gateways deployed increased 146% from 1.3 million gateways in FY '21 to 3.2 million at the end of FY '22. We expect the number of LoRa gateways deployed to increase to over 5 million by the end of FY '23. We are delighted with the large increase in gateways deployed globally as this LoRa infrastructure is critical to enable the broad range of industry use cases that are emerging.

PicoCell Gateway deployments increased over 190% versus FY '22. This increase in PicoCell Gateway deployments is being driven by the smart home and smart campus segments, as Amazon Sidewalk gateway deployments increased over 180% versus FY '21. In addition, the Helium People's Network is growing very fast and deployment should accelerate nicely in FY '23. Both Sidewalk and Helium Networks should drive an acceleration in end device deployments over the next few years. In addition to PicoCell deployments, our macro gateway deployments increased 43% over FY '21, driven by smart utility, smart logistics and smart city initiatives globally. And this infrastructure increase should also drive a rapid acceleration in endpoint deployments over the next few years.

The cumulative number of LoRa end nodes deployed increased to 240 million at the end of FY '22 from 178 million at the end of FY '21. We expect this number to exceed 300 million cumulative end nodes by the end of FY '23. With continued network expansion globally, we expect end node deployments to accelerate rapidly over the next 3 to 5 years. The LoRa opportunity pipeline, which includes both opportunities and leads ended FY '22 at approximately $950 million. We anticipate that on average 40% to 50% of the opportunities currently in the pipeline will convert to real deployments over a 24-month time line. Our opportunity pipeline remains well balanced with use cases primarily in smart utilities, smart logistics and asset tracking, industrial IoT, smart homes and smart cities.

At the end of FY '23, we are anticipating our total opportunity pipeline to exceed $1.3 billion. For FY '23, we are expecting another record year from our LoRa business and anticipate a 40% CAGR for our LoRa-enabled business over the next several years. We also expect our Wireless and Sensing product group to achieve another revenue record in FY '23.

Now we discuss our outlook for the first quarter of fiscal year '23. Following the very strong bookings in Q4 and entering Q1 with record backlog, we are currently estimating Q1 net revenues to be between $195 million and $205 million. To attain the midpoint of our guidance range or approximately $200 million, we needed zero tons orders at the beginning of Q1. We expect a Q1 non-GAAP earnings to be between $0.72 and $0.80 per diluted share.

I will now hand the call back to the operator, and Emeka and I will be happy to answer any questions. Operator?

Question & Answers

Operator

Thank you. [Operator Instructions] Our first question comes from the line of Tore Sandberg with Stifel. Please proceed with your question.

Tore Sandberg - Stifel - Analyst

Yes. Thank you, Mohan and Emeka, and congratulations and all the record metrics, quite a few of them. First question, you're expecting gross margin to expand 100 to 200 basis points this year and you attributed that primarily to mix. Should we infer by that that the Signal Integrity group will show the strongest growth this year?

Mohan Maheswaran - Director, President & Chief Executive Officer

Sorry, can you repeat the last section of your question?

Tore Sandberg - Stifel - Analyst

Yeah. Given your comments about mix and gross margin expanding this year, should we infer by that that the Signal Integrity group will show the strongest growth this year?

Mohan Maheswaran - Director, President & Chief Executive Officer

We showed the strongest growth, I think US -

Tore Sandberg - Stifel - Analyst

Amongst the groups, right?

Mohan Maheswaran - Director, President & Chief Executive Officer

I think we do expect all of the groups to grow very nicely. The LoRa-enabled is still going to probably lead the way in terms of absolute dollars of growth. Signal Integrity with our Tri-Edge platform and 10G platform should grow very nicely for us. So I don't know that it's going to be Signal Integrity, but I think both LoRa, the Tri-Edge, the 10G PON that are probably going to lead the way in terms of our year-over-year growth.

Emeka Chukwu - Executive Vice President & Chief Financial Officer

And the ITA business and protection, Tore. So as we get more broad-based protection business, that's something also drives higher gross margins.

Tore Sandberg - Stifel - Analyst

Very good. And Mohan, this time around, you gave us a quarterly revenue for LoRa. And you also gave us a number for the growth in PicoCell deployments. I mean, I'm assuming that sort of an indication that the technology's not really moving into more sort of the consumer world. But, yeah, I was just hoping you could elaborate on why you decided to give us those two metrics this call.

Mohan Maheswaran - Director, President & Chief Executive Officer

Well, the PicoCell Gateway, I've been giving metrics out on gateway deployments, but I felt now it's gotten to such a large number that will start to break out a little bit the PicoCells and the macro. The macro does tend to be more industrial, smart utilities and smart cities and smart buildings. It's not to say the PicoCell doesn't go into those type of segments, but a large part of the volume is driven by smart home and smart campus. So I wanted to provide that color because we do get that question a lot. And then I think in terms of the quarterly number, we won't give out our quarterly number. We'll continue to talk about 40% CAGR, but obviously we'll try to give an indication of as to how we're doing against that and of course, for the annual number, we said that we were going to grow at least 40%, we grew 53%. And so, we wanted to share that information with you.

Operator

Thank you. Our next question comes from the line of Tristan Gerra with Baird. Please proceed with your question.

Tristan Gerra - R.W Baird - Analyst

Hi, good afternoon. In terms of the revenue pipeline, so I think the numbers you provided show over 30% increase year-over-year, so is that how we should be looking at LoRa revenue for this year as well? And also, if you could remind us the exposure that you have in China for your LoRa business, which I know has been tracking in kind of a 55% range of revenue in prior quarter last year?

Mohan Maheswaran - Director, President & Chief Executive Officer

Yeah. Let me start with that. Tristan, the 50% - China is about 50% of the revenue, but in terms of opportunity pipeline, it's about 30%. It's much more balanced, as we've been saying, the pipeline. Now North America is also in that range, so. But from a revenue standpoint, still 50% is China. And then in terms of the opportunity funnel and revenue and gateway deployments, you really can't correlate these because their timing is different. When we ship products, we ship into distributors, distributors ship into module providers, module guys sometimes ship into the OEMs and then the OEMs build hardware and then deployments of networks. So part of the reason why we give out these metrics is that the timing of these deployments and when we see the actual revenues of us is when the deployments actually occur, it's different and it's difficult for us to exactly determine the exact timing. So we give an indication that each of the areas are growing nicely, which I think is what's important.

Tristan Gerra - R.W Baird - Analyst

Okay. Great. And then for my follow up, I wanted to talk a little bit about what you're seeing in China given that about half of your consumer business is smartphone. And most of that, I believe, is China. Now you've said that you expect the consumer to rebound. How - what are you seeing in terms of inventories in your China smartphone business? And what is the risk that those inventory - this inventory correction continues to happen in the next couple of quarters? And is that also something that could potentially impact your LoRa business? I understand LoRa has come down in China as a percentage of the mix, but it's still 50%. So is that kind of a near-term headwind that you can think of for the next few quarters?

Mohan Maheswaran - Director, President & Chief Executive Officer

Well, so China demand is obviously very important to us still for all areas of the business or product groups. And as we monitor it today, demand is still strong. Consumption is strong. There's nothing to indicate any weakness in our particular segments, I think. With the consumer demand, I mentioned, Q4 typically was - is down and was down. And so - and the second half of FY '22 was not strong for consumer. So - and bookings have increased, have improved. So we are expecting a little bit of a rebound in the first half. I think the second half is the big question, I think not only for China, but really for the rest of the world in terms of demand and all the macro events. But certainly for the first half, we are not anticipating any issues.

Operator

Thank you. Our next question comes from the line of Craig Ellis with B. Riley. Please proceed with your question.

Craig Ellis - B. Riley FBR - Analyst

Yeah. Thanks for taking the questions. I wanted to come back and follow up on LoRa and do it this way, Mohan. So if we were to rewind the clock about a year and think about the momentum that LoRa has gained over the last four quarters, it really did seem to build each quarter. And then you had the very, very strong fiscal fourth quarter. So my question is this, I know the company has had for some time and retains a 40% growth target. But given the level we're exiting fiscal fourth quarter '22, why wouldn't we be seeing the potential for potentially materially above 40% year-on-year growth in fiscal '23, perhaps to the same degree that we did last year?

Mohan Maheswaran - Director, President & Chief Executive Officer

No reason, Craig, other than it's difficult to time exactly, see the revenues, as I mentioned, the momentum sometimes in terms of network deployments and use cases being deployed gets ahead of when end nodes are being deployed and things like that. So we had anticipated 40% growth this last fiscal year for FY '22. Obviously, we did 53%, so we did significantly higher. There's nothing to suggest that, we won't have another similarly year. But I think in terms of the outlook for the next 3 to 5 years, 40% is a very good number that we feel good about, given the different types of metrics and how the opportunity funnel is laying out. And remember, our opportunity funnel we look at is real design opportunities, and we're looking for the conversion of those opportunities into real deployments. And that's really what drives our revenue model.

Craig Ellis - B. Riley FBR - Analyst

Got it, very helpful. And then, I don't know if it's you or Emeka that I should congratulate for having a quarter's revenue guidance require zero turns, but nice to see that kind of backlog coverage, guys. But Emeka, I wanted to flip it to you and actually talk about another line item. So very helpful to get the calendar - or, excuse me, the fiscal '23 gross margin color that Tore asked about. But my question is, so if we look at the last 4 or 5 quarters, we've had very material sequential gross margin improvement and the color for fiscal '23 would imply, I think, just 20 to 30 basis points from here through the year. So what's happening within mix that caused gross margins to expand so materially over the trailing 4 or 5 quarters? And why would it not stay on that pace and instead moderate to something that's more implied in the guidance? Thank you.

Emeka Chukwu - Executive Vice President & Chief Financial Officer

Yeah. So Craig, I think we've been saying this for a while, but a lot of our investments have been going into markets that we expect to grow very fast. And we also expect to have very high gross margins, and it is very pleasing to actually see that beginning to play out, the LoRa-enabled, 10G PON, Protection ITA industrial businesses, that is really very pleasing to see. As we go forward in FY '22, we saw about 180 basis points of gross margin expansion year-over-year. There is nothing that says that we cannot duplicate that in getting FY '23 and that's why the guidance for 100 to 200 basis points, but we'll have to see. We'll have to see - the expectation is that we will continue to see gross margin expansion, but we just have to see how things play out, especially there are still things out there, I mean, with the war in Ukraine, we don't know what the impact is going to be on the supply chain that is already feeling a lot of heat and things like that. So - but we'll see, but we're very hopeful and we're very excited with our gross margin story.

Operator

Thank you. Our next question comes from the line of Quinn Bolton with Needham & Company. Please proceed with your question.

Quinn Bolton - Needham & Company - Analyst

Hey guys, I'll offer my congratulations as well. And I guess really sort of a follow up to Craig's question on LoRa. If I just do the math you gave us the full year, you gave us the fourth quarter, it looks like LoRa in the fourth quarter was $41.7 million and for the average of the first three quarters of the year, it was closer at $31 million, so it looks like there was a pretty dramatic acceleration in the LoRa business in the fourth quarter. And I'm just wondering, Mohan, if you can give us some sense, is that driven by just continued gateway deployments? Are you seeing a particular use case? Is it end node? What really drove that acceleration in the fourth quarter?

Mohan Maheswaran - Director, President & Chief Executive Officer

Yeah. I would say, at this moment, Quinn, it's more the infrastructure. So more gateways at the moment driving it. But I think that's the good news, which is for us, that infrastructure is being deployed. And then we'd expect end nodes to follow the timing of which is tough to call. But yeah, this is not unexpected. I mean, if you go back a couple of years ago, we were running at $10 million a quarter and now, we're running closer to $40 million a quarter. And so it's been trending upwards and it's been trending upwards, not by mistake. I mean, it's infrastructure going in gateways, macro gateways deployments, a real IoT use cases. We're seeing a LoRa ecosystem really expand. We're seeing LoRa alliance has increased the number of companies in the alliance, but also the types of companies. We now have Microsoft Azure, Amazon, really big players in the ecosystem that are now starting to drive use cases as well for us. So the whole machine is moving in the right direction. We said it. It was going to happen. It's just a question of time. And now as we're starting to see it, it's just really translating into deployments.

And remember for us, when we generate revenue, when we ship products into our customers, right, but the deployments take a little bit longer and so we're monitoring that and then the use cases get deployed. And the good thing is that really, if you look across the globe now, LoRa is very well, I mentioned the ITU, LoRaWAN being standard now and the ITU - recognized by ITU. That's really significant because now the whole globe can use LoRaWAN and knowing that there's interoperability there, we're starting to see roaming agreements across these networks. The PicoCell, I pointed that out because it drives different types of use cases, some of which we've been talking about for a while like tags and things like that. But there hasn't been the infrastructure in place and I think that's starting to change now. So very exciting to see that, yeah.

Quinn Bolton - Needham & Company - Analyst

And I guess the follow up to that was I believe you'd mentioned two applications Sidewalk and Helium Network, driving some of those gateway deployments in fiscal '22. Do you have line of sight into sort of the end nodes? Maybe not the exact timing of the ramp, but do you feel confident that that those end nodes are being designed? And it's sort of just a matter of time before we start to see a pretty meaningful pickup in the end nodes on those particular networks?

Mohan Maheswaran - Director, President & Chief Executive Officer

Well, what I know, Quinn, is that there would be no end nodes if we don't have the infrastructure in place. So now the infrastructure is going in, and the gateways are going in and starting to get deployed and sensors are being developed for these networks, I feel pretty confident about it. But I think it's going to take a few years. I don't think it's something that's going to happen overnight. And this is the type of - these are the type of use cases that can drive very, very high volumes very quickly. In other cases, it might take some time. So as I mentioned, a lot of use cases need density of network. And so by having these type of networks and there's no roaming agreements coming to place, it does drive different use cases, so that's the exciting factor that I think we're yet to see, which I think we will see over the next couple of years here.

Operator

Thank you. Our next question comes from the line of Rick Schafer with Oppenheimer. Please proceed with your question.

Rick Schafer - Oppenheimer - Analyst

Yes. Thanks. Excuse me, I'll add my congratulations, guys. Just maybe another follow-up on LoRa, but Mohan, I think you've spoken in the past about your long-term plans for that business, and I think you've talked about moving to more of a licensing and royalty-type model. And I was just curious if there were - sort of what metrics you need to see to consider opening LoRa up as a standard and sort of making that shift away from silicon as your primary source of revenue for LoRa? I think it's - and correct me if I'm wrong, I think it's still over 90% or so of revenue still coming from the tonnage chip side. So is that sort of when we get to your $500 million kind of target in the next sort of 3 or 4 years or just curious kind of how you're thinking about that business?

Mohan Maheswaran - Director, President & Chief Executive Officer

Yeah. So Rick, that's a good question. And first of all, yeah, most of the revenue today is just chip sales. We are starting to see IP royalties come in now a little bit. The key driver is the cloud services revenues, which we just started. It really has - it's just early days, but we - I mentioned on my prepared remarks that we have signed a relationship with Tencent in China. We're starting to look at more relationships to see if we can get our cloud services revenues based on our LoRa edge chip platform, starting to really grow. And the goal is to get that to $100 million of recurring revenues, that's what I've said. We will then trigger a discussion about is that a business that we can start to look at the chip business and the cloud business separately. But I think we're a ways off that yet at least three years, but probably more like five years.

Rick Schafer - Oppenheimer - Analyst

Okay. Thanks for that. And then on Tri-Edge, I mean, thanks a lot for the color on that business. I mean, $40 million, $45 million this year I think you said expected. I mean, that business seems to really be sort of taken off. I know we've talked about it the last couple of years. I mean, were there any like obvious hurdles that just needed to be overcome? I mean, are we sort of at that tipping point now for that business? And how do you look at it in terms of - like, how do you size of the market opportunity there, I guess, for analog PAM4? Thanks.

Mohan Maheswaran - Director, President & Chief Executive Officer

Yeah. Well, the good news here is that we didn't really have any PAM4 products until Tri-Edge. And so we were a little bit behind the DSP solutions out there. And so it's all share gains for us in this space, I think the way I look at it. And so with our first 50G PAM4 short-reach products, we knew we had limitations on reach, but we knew that also the power consumption was going to be an extremely beneficial to data center customers that cared about power and care about cost. And so we're starting to see that momentum now in the short-reach side. And as I mentioned, we're just sampling now the longer reach products for 200G FR4 modules, which is 2 kilometer kind of range, which really opens up the whole data center space for us, and we're excited by that. And obviously, we have quite a few developments in this area as well. So more to come, but yeah, very exciting, and we expect the data center to be quite strong for us over the next few years.

Operator

Thank you. Our next question comes from the line of Gary Mobley with Wells Fargo. Please proceed with your question.

Gary Mobley - Wells Fargo Securities, LLC. - Analyst

Hey, guys. Thanks for taking my question. If I look at the midpoint of your Q1 revenue guide, it's about 4.9% sequential growth. I'm curious to know if that's benefiting at all from point of purchase increase or would you expect a commensurate increase in your point of sale as well?

Mohan Maheswaran - Director, President & Chief Executive Officer

So point of sales also records for us at the moment, and we're expecting another record in Q1. So yeah, I think your question, Gary, was tied to ASP increases. And at the moment, the way we're thinking about it was that any type of cost increases we get we'll pass on to our customers. But, yes, we do expect POS to increase in correlation with that.

Gary Mobley - Wells Fargo Securities, LLC. - Analyst

Yeah. I mean, the - I guess it would encapsulate some price increases that is really or more so asking if it was a function of a distributor inventory increasing?

Mohan Maheswaran - Director, President & Chief Executive Officer

Oh, no. So I think, our POS is very strong. As we mentioned on the call, it's a record. And cycle times, supply chain cycle times have not changed. They are very extended at the moment. And so, you'll see our internal inventory has increased. I expect that channel inventory to increase a little bit. But at the end of the day, as long as POS is also increasing, in other words, the consumption is increasing, then I think we're in good shape.

Gary Mobley - Wells Fargo Securities, LLC. - Analyst

Okay. And Emeka, just to clarify, did you say bookings were up 35% quarter-over-quarter? And related to supply, I presume with a 13-day increase quarter-over-quarter in your DOI and where they're running above historical levels that you're really not dealing with any supply constraints. And if that's the situation, how have you guys been able to escape this while others - everybody else in the industry is dealing with it?

Emeka Chukwu - Executive Vice President & Chief Financial Officer

Yeah. So if I go back a couple of years here, probably prior to the pandemic, we had actually - we're anticipating to start seeing the ramp of some of these new product platforms that we're seeing now. So we did pay attention to our supply chain, and in some cases, we made sure we had second forces and all that stuff all lined up. And so we are very fortunate in that way that when the pandemic hit, we're already there, very good position with regard to the supply chain. So we've managed that very well, I think. It doesn't mean that we don't have enough supply constraints at all. I know there are little pockets here and there, but on the average, I think we are in a very good position with where our inventory levels are, and I'm very pleased to see that we are able to support a lot of the strong demand that we're seeing at this point.

Operator

Thank you. Our next question is a follow up from Tore Sandberg with Stifel. Please proceed with your question.

Tore Sandberg - Stifel - Analyst

Yes, thank you. I just had follow up questions on all the products that you introduced at OFC. It was a pretty impressive lineup. And specifically in relation to PON, Mohan, that market has always been a bit volatile, especially because of China. But I think this is going to be your second consecutive year with very strong growth. How should we think about that market and your new products for that market as we go into fiscal '24?

Mohan Maheswaran - Director, President & Chief Executive Officer

Yeah. I would say, Tore, your observation is exactly right. PON has become a totally different space now and it's a totally different market. And I think what's really driven that is the pandemic. When we look at the pandemic and what drove more access bandwidth, there were clearly bottlenecks in the access side. And so PON is a really good way to solve that problem. And I think China has demonstrated that and continues to demonstrate that. But the rest of the world has also now started to accept that. And so we're seeing North America, Europe and India, as I mentioned and other regions starting to really look at PON as the key access bandwidth. And so we've seen an acceleration of GPON, we've seen the acceleration of 10G PON, obviously, that's also helping gross margins, and we are playing obviously in both OLT and ONU side.

And then the other really intriguing thing for us, which is very exciting for us, is the expansion into 25G PON and 25G PON, the modules, as I mentioned on my prepared remarks, will likely need CDR functionality as well. So that opens up a more content for us. We're obviously leaders in PMD side, we're one of the leaders in CDRs, and so the combination of the two in PON gives us a very, very good position there. And we're even - I mentioned we even have development at 50G PON. So very exciting, generally, I would say, good space to be in now and probably for the next 5 to 10 years, this is a space that is going to get a lot of investment in, I suspect.

Tore Sandberg - Stifel - Analyst

Very good, Mohan. Congrats, again. Thank you.

Operator

Ladies and gentlemen, we have reached the end of the question-and-answer session. And I will now turn the call over to Mohan Maheswaran for closing remarks.

Mohan Maheswaran - Director, President & Chief Executive Officer

In closing, we were pleased with our strong Q4 and record fiscal year '22 results. Despite the challenging pandemic and supply chain environment, we believe our multi-sourcing initiatives and our investments in infrastructure and tools has enabled us to maintain best-in-class business operations. Our key growth engines targeted at broadband infrastructure, creating a smarter planet and enabling mobility are all doing very well, and we expect FY '23 to deliver another record year for Semtech. With that, we appreciate your continued support of Semtech and look forward to updating you all next quarter. Thank you.

Operator

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SEMTECH CORP

Q4 2021

Earnings Transcript

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