QRVO - Earnings call transcript Q4 2018

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Operator

Good day, and welcome to the Qorvo Incorporated Fourth Quarter 2018 Conference Call. Today's conference is being recorded. At this time, I would like to turn the conference over to Mr. Doug DeLieto, Vice President of Investor Relations. Sir, please go ahead.

Douglas DeLieto

Chelsea. much, very Thanks welcome fourth and earnings fiscal conference call. to everybody, quarter Qorvo's XXXX Hello, include that materially forward-looking that will call This statements our expectations. results current could involve actual to management's differ from cause factors risk affect We risk encourage Harbor in associated operations as earnings filed our the on with well the the factors our published because as our risk with statement Form results. Annual today, Report contained financial release the to you review may Safe factors these business SEC, and in XX-K In today's both results. release and call, we on GAAP provide today's financial and non-GAAP We may to to additional analyze this trends performance. underlying obscure or of investors and comparisons without performance to expenses the impact in our provide perform supplemental information financial certain results that of items operating non-cash enable other

our During results. non-GAAP comparisons and primarily statement to based be items comments our call, will on income

President website, Murphy, Officer; Creviston, Group; well release fairness one that with our I'll a please to today, as Chief question available of refer Bob. today of For reconciliation limit with follow-up. Qorvo's team. CEO; Bob each of complete Eric management Infrastructure and Products our me and to under to hand non-GAAP President please And we to and that, Qorvo's Products Sitting Financial Mobile issued of Klein, Group; themselves over ask as are President earlier all measures, listeners, James the qorvo.com, Qorvo's Bruggeworth, Defense Mark and financial other Investors. call earnings members participant GAAP a on to In

Robert A. Bruggeworth

expect with operationally strides midpoint traction free the lift flow The is products beyond. especially with products, revenue quarter, September quarter are utilization I'm on BAW-based customers. pleased delivered success broad team and we of $XXX a record and and achieving to strong which quarterly will and across the March factory cash we Doug, make Thanks, Qorvo and in commercial range The continuing EPS the above our everyone. with million. company of welcome, strong

over For Mobile foundation the expanded and and margins up margins XX%, while IDP revenue growth, growth. solid year, XXXX Products a fiscal expanded for profitable achieved outstanding built

today drive Looking win our which will towards highest to model. target target forward, opportunities, growth better in operating is most and markets' us turn complex Qorvo our positioned and

During environment the March quarter, in the improved China. handset

We Phase antenna Fusion SAW performance-tier in tuning, seeing solutions are increased the and example RF BAW-based for for X and demand include and that multiplexers. components as architectures well Qorvo's wins Flex BAW Take in for discrete our RF as based technologies.

the data improved diversity customers forecasted mandating antenna in demands, addressing the most content. mid conversions functionality will requirement are and two manage plexers, demand. more expenditures additional BAW-based shrinks frequency operators which increases and XXXX. products across which capabilities in both in leading which to additional factory investing including and enable meet Phase us Mobile with complex gains. complete solutions. envelope content, footprint spectrum, the Our more capital front and requiring provide for with include are manufacturing segments die technologies, design and roll We're X Phase modules, onto architectures end in band RF the the To more the integrated We're looks we're our At growth BAW RF highest tracking help and as and constraints receive our customers. including control content winning we're value customers high throughput forecasting customer antenna functionally placements, high across our same Mobile are significant low-band in fastest, mid/high-band strong to complex, coverage many wafer placements, in devices. the modules. utilization RF Weighing BAW Fusion tuning Despite to cases, fiscal device dense wins X and scale, we we drive to favor design move antenna factors These Qorvo, in solutions products adding in integrated RF these placements. grow meet segments ultra-high highly our and industry to band and growth into this, need out In

applications. the networking system revenue and was results. GaN led ongoing ago IDP defense, Products' providers. business to high-power of expect the up production adoption and $XXX another We advance for continued continue by X filter in around strength growth Room products win quarterly half and of multiple with markets. partner best BAW-based and will to Pod we successfully represent technologies. in vision gigahertz, year-over-year million. In We diversified products differentiated year-over-year Every XXXX. March we revenue than by – continue was year-over-year two growth to Wi-Fi with with pleased our in X.X In more be fiscal our BAW year product wins and to IoT, We In with competes with we years leading design Mobile repositioned record, gigahertz meshed programs the portfolio continue in revenue IDP, XX% the

revenue SoC dozens XG controls. field by the trials infrastructure, timeline In customers also Samsung's of our for XG for in close and collaboration demos. of in with low-power by and participating ramp wireless, is has remote achieved led record Qorvo deployment production We in our accelerated multi-protocol

the gigahertz stations. carbide industry's we which silicon first last by we XX on front adding market year. module gigahertz on module released the industry's end follows first of the This footsteps quarter, front the GaN for XX extended During end leadership our XG base

the for and of requirements This increases for XG. the performance the networks front released also XG as BAW-based a of across and products a GaN. as serve the Qorvo both In superior critical complex modules. complexity their Mobile differentiator require like targeting to filter backbone and IDP, BAW our requires the that We highly enabling and the and especially integrated solutions, LTE in and coming increase. is value devices which valuable it's will handling addressing technologies those best most is capabilities as LTE gigabit BAW accelerating massive-MIMO Mobile Qorvo's to most deliver customers' for power and end continues most content. placements Gigabit class, first industry's quadrupling XG in challenge favors

XG, As efficient lean and through we our greater performance capital expect grow by die opportunities and end well we and the we cash that, base. expanding the user to our wafer gigabit and call from hand with over targeting free revenue strong to levels more experience. our positioned to markets' higher efficiency, growing customers excellence, growth, We're and believe summary, In profitable solutions and sizes, enabling customer and operational fastest margin continue are we're achieve With to transform shrinking foundry I'll on business poised most become helping relationships. strong the IoT to for journey GaN design diameters in we're Mark. fiscal We're XXXX. of benefit trends across in the leveraging LTE, Qorvo's our and wins flow gaining expansion secular

Mark J. Murphy

Thanks, products double electronic a at Bob, on revenue at everyone. the Mobile digit advanced the Wi-Fi sustainable consecutive March range IDP margin of was long-term mix effects on the within IDP for defense of year-over-year platform $XXX infrastructure. revenue units. afternoon, end applications, guidance was warfare XX%, solutions end the other eighth and for across applications our gross connectivity improving good for on and was million, at higher of Qorvo Qorvo's range million. business fourth wireless China $XXX high built of revenue has quarter our than radars and expected and for quarter the and diversified demand. and $XXX growth. was for lower growth quarter Non-GAAP GaN guidance and GaAs both million

of quarter full product factory expenses remains as sequentially efforts, improve operational seasonal $X the restructuring payroll portfolio, our million approximately for program Year-over-year, optimize on up ongoing we effects. Our improvements. development was our margin and from utilization down positive fiscal activities. top million, were outlook year including additional productivity $X higher XXXX drive grow line, Operating $XXX OpEx and our million spending September

flow decreased net quarter our guidance from of March diluted of driving down revenue. a OpEx long versus continue of quarter CapEx vary non-GAAP of was for on the cash model. per our and quarter As $XXX OpEx the to a effects points margins, track cash XX.X% in outlook million. million year-over-year. the up flow with development as on income but programs, OpEx consecutive over up year. $XX earnings income basis timing million the operations within expect we on remained or drive at XX% percent again second sequentially sales, midpoint $XXX strong gross which our was term the $X.XX time, with will and quarter and $XXX March free record year million over helped Operating last of share million, seasonal Non-GAAP our was $XXX is and XXX at $X.XX,

a durable year committed strong cash cash commitment. and in $XX demonstrating full and are million XXXX start fiscal stronger We a free that We flows was and delivers was $XXX to that stock quarter of million. quarter cash at repurchased flow executing more to free end our the of $XXX million model

of Department the in and near-term due $XXX the of and gross associated and EPS post decline growth expect guidance. fab XXXX, June first non-GAAP fiscal low revenue, in mix solid of another at $XXX to quarter impacts in with to outlook, million approximately of our our we expect reflecting to to $X.XX quarter Commerce product decline actions of to costs XX%, but between of on margin recent diluted IDP part solid utilization; the sequentially Turning U.S. mid-point we million; revenue On sequentially year-over-year SAW ZTE. quarter,

quarter. fab year-over-year gross and half weaker the associated quarter margin, quarter gross and transition X principal of our associated in costs to projected with Mobile, China. of increase lower-tier margins in see in and decline June Roughly an For is mix. normal points improving driven two period an sequential sequential a less factors: September June June by quarter products in forecast the the revenues profitable environment levels we with mix overall utilization. demand is to the more return low legacy of decline and slightly On as we a in margin products of view up gross and The June

through to product We to as Mobile year this both products on shifts and in reverse margin launches and new our mix higher expect the IDP.

drag with our capacity. SAW other on of in the associated the costs quarter underutilization The is major margins June

are the costs quarter. year, through these with impactful low particularly they margins in June on seasonal While weigh revenues, the

product the as through moderate to year impact this our revenues and shifts. increase mix expect We

forward, retaining capability near-term to SAW personnel to higher worth is be expenses comments. with Operating burden customers. quarter are of will XX%. work including previous impacts, capacity, the our with line SAW design forecast positive Despite these our half year full outside our that Going outlook in It approximately minimize is gross of approximately noting $XXX serve underutilization, increase million to our and we XXXX we to on continue margin world-class while the least at XX%, to to second costs, June fiscal currently margin forecast in increased activity. utilization gross

the We operating the margin expect in the track first trend slightly second at the the OpEx less year to XX% than XXXX. remain remain we out in of to for Day XX% and last We down sales achieve by fiscal Investor fiscal year half, laid May of year. half target on totaling full elevated of

tax generate We non-GAAP to year growth of Mobile XXXX to IDP, the expect million expanding robust growth June we our more in profitable With levels approximately and million fiscal of expect quarter $XXX margins to in cash and in and operating XXXX. $XXX sustained be XX%. range low flow year in fiscal full free CapEx, rate

fourth quarter, in in guidance strong another delivered above and So the leverage. posted our we operating quarter summary,

expect fiscal strengthen low considerably year. seasonally XXXX, to and the of transition from half June in quarter we a second the For

I'll call continued and fiscal expect strength we continued year For robust currently revenue cash the Products back to XX%, support and over of drive generate expansion in approximately free the IoT growth With GaN XXXX, flow. questions. that, and premium of our defense, or for the full margin operator will Mobile X% turn

Operator

Thank you, sir.

from first Piper Kumar Our will question come with Harsh Jaffray.

Harsh V. Kumar

the seasonality the market June Bob, guess of for last on concern a there Chinese questions. ask been and I the the the lot and handset customers takes there? the over and also quarter. of was and your viewpoint going puts Can couple in largest you years. I all fear place few A your into space has

Robert A. Bruggeworth

high level enjoy Yeah, like, sure, don't we into mix. customer really take a very that, Harsh. on view getting I'll

lot acknowledge did come designing to my a really start China but I a also good of the back, market opening did job have in said As I to the products. team on in comments,

in new a customers China phones. Our released lot of

pretty what I think low and with – was. we're into we the So seeing went quarter that's healthy some uptake being the kind inventory of

quarter. this continue that seeing of kind we're So

think I guys for you I already how largest think themselves, going. our spoke customers so know that's

China healthy, this We're very seen to meaning market's taking before. keep looking inventories We're trying play on light, out low. So our view We've okay. cautious it.

Harsh V. Kumar

us Mark. gave for also temporary to give think has SAW your clarify think will heard one half when coming a margin And you. then year number BAW the – gross Thank of sense XX%, gave effects appropriate BAW not June another margin of full it are – primarily faster, enough. you And ramp that but you Fair in comments. you I to you and missed I ramp? I Mark, timing first Is down Would is maybe was? that numbers you some also not XX% the just is just that. quarter? Would what going that gave

Mark J. Murphy

Yeah.

question, your to are you first Harsh, seeing So, what mentioned. is what you

from less June you're starkest to and portfolio a other products in it's as that's advanced seeing well more content transition legacy, advanced and related GaN, in SAW the and as continued are BAW IDP. growth We the technologies related – more and quarter,

from our So transition fab. out our in and because I course, capacity. favorable effects, revenue the that for year year, also under effect, beginning in you're year. as June down X% it basis my of comments, the greatest. it we in costs to, the will seeing later with costs the in the of year can fiscal Also SAW largest are as the the utilization play mentioned improve And it's margins but quarter of impact through year, here XXX because it And points be persists a as quarter, our us XXXX, underutilization product the low the those while in favorable effect that more relatively experiencing mix, it period the low the about goes of both

then the will of gross guidance, as this quarter the do for return far levels, I or quarter the profile we which XX% XX%. And to more quickly. XX% to September would margin in the my of come mentioned in expect say the back June give should half As year The comments, margin that off the and be normal XX%, in year, year. as more, I you

Operator

All Thank right. you.

question comes Curtis Barclays. Blayne Our from with next

Blayne Curtis

there your curious to units. ramp you low-band taking guys. ability it's Maybe BAW of tens issues ago these BAWs. of talk years PAD, your left And I for with Hey, visibility. on could thousands of kind the I'm the question. two Thanks to my just the anything millions just harder know that in Obviously, about to manufacture terms manufacture your in second still your visibility of side is this And half? ramp and you need accomplish before the or

Robert A. Bruggeworth

Blayne. question, good Yeah,

a with customers' I of BAW-based over that our all factory products. think first, done years ramps fantastic of job supporting the past has

we feel So about good real that.

successful that lot few a a fiscal at that year past So had as many ramped started second, actually We ago, high and customers our products this point, we we learned. lesson, to for for your And extremely year, key programs customers something did, very XXXX, we extremely a was years volume. valuable many that our launch we large products. lessons past of clean call

pretty of on So products. factory with we're background, with we don't that work kind and that's good about in our going as BAW the BAW anticipate the any ramping problems feeling

Blayne Curtis

if projects it the a had back comes Thanks was second you could just time And the could think some or then a I half, in tick for and long OpEx, down or to quarters about I just to talk couple June? Why how that about if down? such. due is comes up maybe of ask outs you big tick should you in up think it up, that. last And maybe tape tick some

Robert A. Bruggeworth

comment, a I'll Yeah, high Blayne. make level

really it, look the the it's and beginning drives in through at that Eric of typical then lot let year design our fiscal you our activities are a at If end the But what I'll year. of off go that. of tail

Steven Eric Creviston

prototype to and flagship and volumes of validate No, first process quality and maybe question performance, a in really that's launches sure for volume right. the fall still clean to the that launch. fine high we're of particular to and the the run The stage we getting make in your tune lot exactly yield half

Mark J. Murphy

my portfolio below I But as on can this more and various in XX% sales. I and much would part in our mentioned absolutely And to be just Blayne, we comments, management depending we get very are that committed to that, activities. add to down seasonal of OpEx aggressive efficient with drive because want OpEx

James L. Klein

James. Blayne, this is

increase is area product go year. obviously, that with areas the we do to through in growth are and OpEx we've of hiring Some R&D as multiple the experienced, we'll IDP, we in the the continue definitely

part So increase is of ours. that

Operator

you. All Thank right.

comes Our Caso Chris question from James. with next Raymond

Chris Caso

Good Thank afternoon. Yes. you.

it a Is that of on you're the question that over you follow-up headwind do Just – else on term basis sounds eliminate the time, way that's margins? talking can there like on area ramps about rationalize SAW, capacity eliminate of to is that any XXX that SAW what on revenue kind and points longer to drag or margins. once anything of to

Mark J. Murphy

Yes, needs number for we've already We've best got. Chris. to of things serve continue footprint we've done done what believe question, good and to capability to need a it's size our great that we a maintain a we customer and our

some So actions. taken we've already

assets associated in large million million, a You GAAP notice with charge and you'll we that impair results will GAAP $XX the $XX in about SAW did the some see as results. capacity

X make capability, resources the that BAW. to for combined you're where important our we resources we our launches, – this to the need asset SAW with Phase right-size sure product maintain particularly maintain and it's and see will we because balance and We footprint continue this maintaining seeing as

this we capability long-term. think need we So

Chris Caso

Okay, great.

Could on in talked over of that to what is on have And percentage I you efficiency. cash actions? time, flow that, that, suppose you effect expand those revenue a but comments, does just a free as generation SAW greater part about your take prepared follow-up mentioned on bit? Just capital as probably of you you a that what as

Mark J. Murphy

year-and-a-half a story the past had flow. we've great free Yeah, cash on

CapEx to flow, of growth. trend sales XXXX percent under – of operating couple of $XXX at cash this just close addition just a those we we fiscal In on about we've – the past as of less. a cash generated improving of cash quarters, certainly in we did all CapEx peaked year closed Our basis, free three And $XXX we in fiscal ago flow. expect quarters, years generated past XX% be million This out were individually, were that to flow – That's at more free We XX%. dollar to has or two bolstered the in XXXX. over levels flow we've free year than cash past million sales.

So we shrink down six absolutely undertaking, program intensity BAW about we management which at four continuing still to the number SAW we're a of – committed more to capacity that of continue eight, which We programs we've which the to is just hear six, – important needs an and about talked die we're portfolio which something in number of a we as which Investor expansion earlier. you'll aggressive Day better business underway, can are those shrink wafer about do to to forecasting capital die are projects, talked doing our this. to planning ways, of and is capital believe extensively drive and from

our cash as down of revenue course, operating growth percent getting see So expanding CapEx some and a the left over improving. runway sales And I flow of time. margins see with in

Operator

Thank right. you. All

from comes Toshiya with Goldman Our Sachs. Hari next question

Toshiya Hari

IDP. quarter. ask the And much. nice your in IDP, thanks that ZTE to drove you growth wanted about QX. I Curious Great, talked related what guide. to in so about acceleration in Very

And that you If would I is IDP guess helpful. biggest quantify your Huawei probably could customer well. in be that as

well you Thank can be provide that as helpful? So associated risks the thoughts on if some you. that with account would

Robert A. Bruggeworth

ZTE. I'll Toshiya, this and is ahead take Bob. go

IDP. a $XX year the of a size it, for will that $XX company, run that number, majority of million bit it's the little is million so over kind kind For the rate, of

big Huawei far let customer, ahead, as goes, As not James. It's talk I'll but about biggest, James a but near anywhere as it. go

James L. Klein

Yeah.

it it's of they works of forward customers And early For we have goes. customers. Huawei, for certainly are to to support mean, We'll us one how to top all too out. that and we'll call the look our five anything. continue seeing I course, see how

demand as My government belief For short-term ZTE, the issues do to out either we're structure. with natural is U.S. those OEMs. a other that well will whole OEM of see shift the across we really will positioned that be that And issue. worked or the

that's out us best strong for filters working So the for over marketplace. slot normal with really a for kind combining product traction the of traffic band-edge efficiency needed couple foundation to Growth us returning performance I capabilities really get see that lot have BAW this consumer throughput as recent coexistence, of class thermal going both and are and and particularly enterprise. Wi-Fi, We're focused power laying be the our in next level. of quarter, ax this back itself in releases allowing in the to and the quarters high have integration for levels. allowed to we amps for our high And the in

of great activity group. out tremendous So, Wi-Fi our

second defense and all to a has our been radar, major was record particularly grew wireless then customers. revenue EW, growth a also and that comms And set submarkets, low-power really broad driver. across reaching We of business strong

our distribution very, of As applicability broad the products. very also the an through was our example, revenues demonstrating strong,

production strong defense. had programs in also We

us that over it spending think that gives with very the in defense XX% tailwind. of well. nice And I increase passing we a with spending, to added the as recent bill, think

broad So really key markets. based three over

Toshiya Hari

follow-up, Okay, BAW. great. And question as a had on a I

XXXX? relatively I'm back of expect we XX% progression years, XXXX? stick a hockey next linear of a of XXXX of couple target And in the curious, was more you. your kind number Mobile. You Thank fiscal inflection guys the reiterated over and or for what half fiscal fiscal XXXX should

Mark J. Murphy

Yeah.

XX%. in we fiscal mid Bob the Mobile XX%, For In as year about about XXXX, XXXX we were year XX%. BAW-enabled business expect under Toshiya, XXXX, fiscal half fiscal kind be enabled. mentioned, XX% BAW year will And of in revenue,

Operator

All right. Thank you.

will from Hettenbach Craig with next come Our question Morgan Stanley.

Craig M. Hettenbach

China I you. on had a Thank market. Yes. smartphone the question

talked of company-specific some out been that to looks starting recover, You about strengths. kind also they're like but perhaps market's and leaned

talk the your shaking share out position So maybe growth to and that feel can about implications you in market? or of where market your kind you that's

Steven Eric Creviston

Sure. This is Eric. take I'll that.

Regarding the quarter very, to the to But, call as see the did inventory in March mention inventory. growth the into time when as quarter last as largest beginning we in careful being as we sure began our strength, – we so that and were customer little that low very probably of inventory well some would grew customers, back to China that we inventory quarter. come see that continuing actually this came addition trying with expected. we our in on with it saw very both that channel and immediately. we back And of it with But that, it turned we're to I think the strength we cautious controls always we than a sooner of being make see sequentially out course, own that inventory lot have well as a as March maintain tight

of get levels of see transition of the get a our higher in already higher year five does we system. of output we're and It's X the of Phase level X share orders of throughout three, can so today We for up, step market integration, continued Phase and coverage, also (XX:XX). for with up an to higher production filters the the lion's an it's And higher value much terms the still capability, X going a integrated, integration beginning because majority Phase lot. and big in power course, In opportunity, awful transition, the us, all Phase performance MIMO towards and in And band share forth. components. is the this a phases X

a this also in us higher picking integration. in transition not performance-tier content that only year smartphones, our there's the big up but So for in with China marquee

Craig M. Hettenbach

for the inventory, are half about inventory you and calendar then I the have manage thinking follow-up back Mark And the around increased, to might it. you a how year, just go could inventory? just if into that want how Got of you as

Mark J. Murphy

to plans use Nothing in in our then And Yeah. mean, of Craig. sure are reduction case make we I unusual loadings the maintain effectively SAW, inventory we in executed. the cost inventory, fabs.

So seeing then, inventory as through periods. in to We'll a tail in happens, off what you're revenue upcoming nothing the build inventory. unusual larger bit about begin quarter, and this seasonal to see continue

Operator

Thank you. right. All

question next Peterson Bill Our comes JPMorgan. from with

Bill Peterson

Hi, for My Yeah. I good could June assume growth is business of curious question year-on-year $XX for growth segment? guess acknowledging million in it's we sequentially, I some taking there's on I afternoon But guidance of the impact? quarter, thanks But looking about still that year, you. James. else, roughly first the question. how is what for million about think yearly for Thank ZTE. ZTE's the possibly decline the then if guess you strong the I'm trends. that think but imply a probably ahead and and goes the should full you guess, how my somewhere that maybe we overall $XX should outside decline from

Robert A. Bruggeworth

to because want I think be the $XX-plus-million I Bob. going to understood question, is quarter-over-quarter. we James is make this Bill, Hey sure down

out you $XX million, so roughly... want we're part, addressing So sure threw I the I to know but make right that's

Bill Peterson

is actually increases million $XX guidance for to – to The the get year-on-year... Mobile

James L. Klein

out of And very, QX well. quarter-over-quarter. definitely good talked but come individual very as the in had a levels kind in We're will not we guiding ZTE about Bob segments,

QX, of a QX. that see growth leveling XX% in the out year-over-year little And level bit so a see between in bit you'll you

move of model underlying And get like XG, I We we we adoption we've markets. in that talk GaN, range to in about talk to see on XX% those got to those as far of great grow underlying space. trends six year, XX% markets, in or in those the full York. better about those New things As more markets we think and into on the what still IoT than to at the expect going do the we've got and continued going markets. We'll when our we tailwinds great

Mark J. Murphy

so want June our And some revenue. ZTE, also care full effect I it we this to what adopt affect impacted see guidance beyond housekeeping to margin starting this Also, current considered just included here. it in you first is quarter. ZTE the more our June the standard XXX take in does do the of On no revenue for It slightly We've make in in sure quarter. in year, It the guide. guide. also

an so in manageable already we at some issue. not there. business. have us, effect, company, very no versus to was but then inventory, the it's issues for our us and not material so For that a concerns sell-in not We're sell-out, again, material And customer-owned

Bill Peterson

James. second for my and like is this has opportunities you revenue we as year as we run run the been about obviously exit XG, exiting some through business Actually it looks going rate year. it's the rate well Okay. look The I – GaN quantify rate in question guess, last also how for fiscal we GaN should XXXX? and you. Thank think Can growth or there's

Robert A. Bruggeworth

invested James there. at is digit we've it Bill. continue capital it's think products. not it's But when growth the segments into look hundreds of But single growing his ahead, portfolio. millions. total to It's does you James' It's to than of one more infrastructure in a we where side, can not of GaN, go I that some It's percentage decent multiple faster support the pretty James. mean, I just we But tell millions. have

James L. Klein

year cases cost really for in got us of today. a down. organization stations, XG established The for have, base very a at packaging cost those digit also GaN really our really mean, innovation massive in one even And this portfolio, think the released defense to defense to XG couple including level We've of output – and Yeah, wave communications. differentiate It's we portfolio. gigahertz. millimeter and we to shamelessly stealing some market. macro also power. we see space. in next material the move the leveraging become the product in a I with in packaging and other revenue had station then and great the so Mobile MIMO more We releases our quarter, that's largely XX band of in in double from key our a the first will product as of into production some great therefore, film And scale of broadband market satellite I part material We've record We're base ramp. process drive great it's

the in GaN. pace see grow same I business to We that grow. level continue about with we So we'll GaN modeled of growth to at think continuing general, XX% and think market I kind to

Operator

All Thank right. you.

of next from Arya with America Lynch. comes Vivek Merrill Bank question Our

Vivek Arya

success depending demand second of on example taking particular LCD OLED sort Thank of the tripped pricing say for industry of Bob, what the if flagship versus up What how you sensitive I generation. think that's model shifts one to question. curious sales I'm the another? versus are last the for the to phone my your models half because in the models this happens

curious So I'm kind the just mix on might what of you that of making kind see. you're assumptions

Robert A. Bruggeworth

will true The hold Yeah. today. said comeback the what I've the in past assumption in

any have about not market. been in speak announced, been phones upcoming not that not the We will have

So what I'm can't you. asked, it's in you past question, happens. question. to sorry, when able market, going see help very but times we'll not a I'm been with the good like help it's to I It's When that be

Operator

right. All you. Thank

next Our Ackerman with from Karl will Cowen. question come

Karl Ackerman

had Hello. two questions. Good afternoon. I

to the guess, And, maybe could abating into quarter, you builds percolate or I quarter? first the end describe expect your own and what back my June modules a perhaps I would you characterize to how of For I channel, sell-through want to the the be overhang the you your would September hoping that inventory. inventory between could level still of appears question, production mismatch see circle given higher-end on in that, of at did to smartphones. follow-up was

Robert A. Bruggeworth

not our fully I'm one, question. we between understand sure is direct. and most Karl. our your Sorry, channel Number us customers of

we cetera. So, build et it, ship they it,

sure not what I'm meaning. So you're

a think question this. are us my that around For low reps support in in our China, to between I them those said opening through inventory customers and distributors levels we answer very we and as

So that sure if addresses not not. question I'm or your

Karl Ackerman

to XX in see whether Fair revenue wave now the I'd you a particularly enough. XXXX? base XG on as just hear Thank maybe launched you may, your a thoughts gigahertz expect millimeter station and you. I if calendar module, side guess love to I opportunity, have question, that

Steven Eric Creviston

last programs country. call largely do city So, the we we in out the major we've demo that. rolled are areas continue experienced getting already have would in These mile what that to the are revenue around and applications to expect

revenue So markets. those in we have

we'll and proliferation over broader that a wave think XXXX. in place couple I plays X year about and in next think millimeter see will the start next Still of speculation both of I below calendar to happen bets then XG years. and our how take and gigahertz in really lot XG out hold

Operator

you. right. All Thank

Bank question comes Ambrish Our of next Montreal. from with

Ambrish Srivastava

for very much. had you a of couple Thank clarifications Mark. I you,

of Just flow on both gross margin, they're the cash and kind interrelated. and free

in I what keeping $XXX your On correct you a versus before? just the the million $XXX you're million guidance flow down if $XXX cash And front, got your past. said given million had gross versus between to free that intact you've comes touch margin it

Mark J. Murphy

I'm stated our remains going target year. sometimes I'm But to for to was a that difficult capital spend million. guide earlier very or comment $XXX I Yeah, going million. mean, when working Craig's over to before the to management. be on and Ambrish, that before what I I we're you And say much it's $XXX need going $XXX million, CapEx for predict giving

factor to risk my a is there So there. applied guide

Ambrish Srivastava

my make half. margin then for in back And up Okay. I ramp wanted question, just to margin understood I the sure the

transition itself, you. will that Mobile, of quarter guided this the from the So that Thank year? get corrected or reverse. the bps mix. is in But from And the the does how or – half mostly it is that and by I charge to does the quarter in underutilization through is IDP? How impact get it XXX – is product

Mark J. Murphy

Yeah, associated associated clarify, with is is you're utilization, right, Ambrish, just half half with to costs so mix. the

On the Mobile Qorvo. mix of mix, is versus truly XX basis XXX points, IDP so about that within basis points

Mobile, then we do or about legacy to advanced reinforced So products this in is some products a and to including of just including reverse And talked that Mobile And mix newer we we products. call, of and other more impacts ZTE talked And before going expect effect smaller is we've other within about XX volume points IDP and XXX about so the relative up higher just basis business. expect factors, as drive forward. little margins points basis the bit then, to earlier. new which we've

Operator

Thank you. All right.

next from comes Our Edward question Snyder with Research. Charter Equity

Edward F. Snyder

sounds case? an a It like antenna goes that of PAD, you've maybe landed cases, know generally the lot. Thanks us upside of include content give Eric. then envelope with but bit for a start maybe base tuning a case like you Phase the plexer. X where and I'll in I about base idea platform. Can you've quite super tracking, talked

compete so the and affects they And just this have we to because silicon are acquisition general, given content how or talking just things. with affect total direct that view case of follow-up $X infrastructure in the just you weren't a you? the does I'm can And Cree of prior some your $X wireless to $X Infineon's And this, that with supplier that please. James, us they is. right addressing going what supply RF really carbide, maybe quantify all, a of base a business the them into supplier like $XX both at in it? you announced to channel your So it does change curious, or there, Mark, now dynamic then gives for that help OEMs they're big to which for I in you're then the to

Robert A. Bruggeworth

Go ahead, Eric.

Steven Eric Creviston

Yeah.

to the content range also the So specific the of we understood dollar phase right, step in six. different a between six, implications. to going single opportunity sort if move through from these content see in we I dollar two generations terms broad the the architectures through for question applications there's different five largest us as probably three, from China, of of But

we've implemented, As bands. MIMO all the I got across Power power Class X, higher mentioned, really

We have integrated. bands more

We size, have in looking XX% a UHB applications we some premium ASP. well. the have to which obviously as actually bring in smaller then which commands And are

a what's in higher there's significantly but ASPs, And so dollar today. the broad market shipping range content of over

Robert A. Bruggeworth

them. And multiple out actually one of supply from support James' your Cree chains supply is question Cree, we pointed have Ed as you about to the chain business. to

have They us. support we them. made think with excellent clear will I us continue it to to relationship they

it's we expectations James' business. multiple So to our continue chains have to will supply support

Edward F. Snyder

wins, know you your a you some new your has you – know you'll sounds you've And volume you dovetails still lines, if guys. eight that looking that Do there, but risk exact which Thanks, it, expect, I and one. there's superPAD you Steve's customer increasing terms and Mark, or not, qualified, on could, Okay. move steadily remind it's going BAW Farmers – before? phones you there. BAW like look yields? can to Steve BAW are using maybe here And supply got Grant where largest to to then with don't six if kind on of feel largest too, shipping just kind of at that, customer, How but instead move shipped what your a handle you of the the comfortable And to BAW mean, between six-inch again inch. guidance. is course ready? the of now frequency it? guys quadplexers to not Are China with expect if it confident I didn't working on if into in CapEx. I I to ramp the When this if Branch pace can of production your just with a you on here coming inch, down is are up it's same the lot needs, customer, high X largest question the it's Along got is could, whether it production associated performance, something mix And you then you you do I if on kind have of do are at have your can in your that the point? you us have having you of there, especially inch. at eight to high Eric past Phase

Steven Eric Creviston

in get inch. he'll been as not on the here, eight the we're what cetera, well very as I'm into you're running conference inch later Steve's May, inch yields upcoming correct, et in month. sure this they've far six But this on inch our as investor confident on six eight Ed, as at and ramping

Day, have through inch. that inch will this up year at on more past. production and coming the the eight that we detail on running eight Investor Mark? a Ed, talked about So we're on in through but we've go little We'll and

Mark J. Murphy

yields everything are can to to needed Farmers in going Yeah, CapEx able to inch will efforts CapEx Ed, more six year. the shrink are BAW. ready this eight get certainly inch there dollars be we obviously die majority But to We'd and it spending And we're the help. Branch do is produced trying dollars. And go. convert not avoid to what's be we to still despite But is test additional very and that's to good. programs being

we're and year. it's when turn on early next it we'll So needed ready maybe as as

Operator

you. Thank right. All

will next question with Nomura Our come Instinet. Krysten from

Krysten M. Sciacca

for question. my Thanks taking afternoon. Hi, good

there customers were the approximately any one housekeeping what And percentage is first quarter? for The just revenues plus a were they? question, of XX%

Mark J. Murphy

XX% one customer. Krysten, Yeah,

Krysten M. Sciacca

this Okay. conference be of gen-over-gen. that, gains upcoming Thanks. be customer, Has I you've will you one prior see largest content to know that in on refresh or calls, changed the in that following noted anything And still do up particular that true? then

Robert A. Bruggeworth

is expect supporting comments that Krysten, about really the we're in very in year. BAW-based answer we ramp to as customers We're a forward way to think, lot well that I our year. second half answering I questions designs. continue BAW my like a multiple to the talked I'd and I of think confident still opening significant this look

Operator

you. All Thank right.

Atif from comes Citi. question next with Our Malik

Atif Malik

questions. thanks my Hi, for taking

in or gross then First underutilization, something have I the customer your it the question on mix? is SAW second quarter? in the The side, it Mark. down change And a on what changed is product coming Mark, follow-up. for a margins

Mark J. Murphy

June quarter. I'm by assuming calendar, So, mean second quarter, you second the

have factors we point don't we parts the other folks, remind to It's sell. have two capacity convention. just most to problem they these the And issues One SAW of mix you're with to revenues. unit then through and utilization, as simply June experience lowest No so is highest occurring. level because abnormal we've year, allocated period Atif, underutilization. be with When you costs. got in we enough the that's the yes, than levels So, fixed associated cost the related our pass pronounced need is as part effect an its in SAW out, June, in to through accounting production other seeing cannot is, and costs

basis, percent of it effect. largest the course, has on So a

Atif Malik

Galaxy Eric. architecturally handset of you. is combined? that adopting And X, not Got at handset the makers, of where are teardown Chinese too they you getting it. then band I to respect out, Thank bands something PAD high a Korean mid are a with But maker far handset a maker. behind phone the in the the phone far think look terms how U.S. behind there and similar the mid follow-up for and that's Eric, and in already if combination is of high

Steven Eric Creviston

a to customers as help widely when is segments. at X carrier really to Phase across all that's that. with our in the to And portfolio and We're loss get combinations coverage that's handsets question. applying edge you that support low market customers solution, that That's look leading They you that's aggregation many many mid year. combine finding really what integrated highly driving the at throughout that you. shift what's thank allow and and of And in well. this significant high modules very I Mobile Yeah, this frequencies a great for think elegantly fundamentally exactly

mid high You've a integrated module you all then and got got so a module, band and that solves low complexity.

and you're going instances from a of throughout see similar tiers of to different this as handsets exit technology. year, year, different customers lot this think adopting I different So we

Operator

you. All Thank right.

will next Company. Needham Our with question come & Quinn from Bolton

Quinn Bolton

XXXX. I two questions. XX% had if growth said I I Mark, guys. in to right, you for think X% looking you're you One, Hi, heard fiscal

broad it IDP? Is sort biggest the a back? brush, us mid coming band, what from are growth band wondering drivers? it drivers? Just it What are the ramp of Is of biggest PADs? high in give Is of continued China can sort the you

Mark J. Murphy

about, momentum Phase good then experiencing generally, a our X of of course, example. say Eric design just we're things across I'll and talked Quinn, good win And many the is Yeah. customer base.

China quarter, year. our strength again And that still course, rest and even up in seen sequential of then, further. the double the back but a James' And small improve in picks so decline the then digits business, growth June to we've growth, in of year-over-year

Quinn Bolton

me Got If about just for XX% or I to it. in products it follow-up million you'd fiscal high PAD in in your would reconcile than from a XXXX, million it Can BAW-based BAW-based like X think be guess like XX% fiscal feels and as custom $XXX that? fiscal more mid heck in help you somewhere business a $XXX of And $XXX expect Phase take I lot million XXXX then go band, Eric, about growth. of products the XX% XXXX. consensus estimates, sounds with my I your of band products are to XXXX. around have ramping, fiscal

Robert A. Bruggeworth

questions. model. have a answer always begin a lot Sorry. I'm even not the I'm given out sure of to are how that's moving I We there. understand out not of lot We've you to and all of parts data your that. sure there that

mentioned that which in volume also got weren't last some is products we we high we've a why fab use think problem. in I SAW call utilization participating the

bit modeling every that to one. going I'm into can't get you of not I'm Eric's sorry. business. So help I with

Operator

you. Thank

with from David comes Our Fargo. next question Wong Wells

David M. Wong

give of second growth Products content If much. calendar some can to idea grow Mobile and X% us XXXX growth? split growth suggests XX% that year-over-year. if you that's in half is your of should very I'm right, correct, unit your fiscal And how this the between that year Thanks

Mark J. Murphy

growth clarification. June just quarter. I Mobile returns a mean, in the Yeah, actually David, year-over-year to

for noteworthy, so we that's maybe you earlier, So should thank mentioned that question. have the

experiencing to details. I'll into content growth, we but any content Eric it far are the to go as As growth, leave

Steven Eric Creviston

which tough the terms counting the growth Yeah. tuning unit fewer a answer. pretty well. be lot growth Certainly, We're as of growth like that's drivers although a in higher for content the growing unit as certainly also at our ET well, are and by Within parts in market handsets, selling of own case. a antenna on that business, ratio, our in most question the driven other industry. there's that's will we're not have to which It's TAM. dramatic content It's part, parts

David M. Wong

in ZTE Okay, great. expect XXXX you And out continue XX-plus-percent backs the fiscal growth would in actually effects, to IDP, if IDP? see through to all one

Steven Eric Creviston

model design to business. We earlier, that. Mark bullish will design were up XX% than We year. those said do it wins. very year-over-year. XX%. earlier I markets as Well, better had or we I last XX-some-odd-percent underlying the mentioned fantastic win actually very, at expect about Still

So I strong, think business we're it but is to right now modeling XX% XX%.

David M. Wong

Great. Thanks so much.

Robert A. Bruggeworth

Thanks, David.

Operator

All you. right. Thank

from Arcuri Our next question UBS. comes with Timothy

Timothy Arcuri

to trying out give June. in either maybe maybe the little from modeled the figure a of the And Thank is largest us Thanks. on March Can what percentage for or from for and the Mark, Mobile you. bit you business revenue of March? China then clarity of still I'm mix customer June?

Mark J. Murphy

mix and continuing seeing whereby into later And we June the just not products here No. We quarter. had we've for then stronger the they're period quarter, products you other going customer. I – to as we quarter give or generation well, mentioned, about customer the the in June the cycle older mean, legacy in have June our XX% I'm expected. quarter. I of was than China, than We're are transition that on the strengthening sort percentages more and which got a in talked furthermore, largest March a that the in

year. the product We expect portfolio a through portfolio higher turn of to half and of our a is year, with the through number launches of that course, back margin the handset

Timothy Arcuri

Got it.

that with you. maybe their programs extending of they And they and contract sheets? been bigger then guess the picture, you that sort in the big for Okay. impact seasonality back big a manufacturers have wondering inventory, much picture, just of in a chain inventory I way the the on the some half And customers. they're so at managing the the there's in And from look Thank chop that of your just year? how is to as own change smartphone hold some I'm if business of there sort you supply balance does look of

Robert A. Bruggeworth

end. best think manufacturers contract going what's on the I to really their on ask it's

think of them. ship I from They lot We before them. customers our on are and I've build large into mentioned a ship that pull and phones hubs.

to them their to we're So subcontractors. doing anymore. I'm they're with you'll have able not answer sorry ask what that

Operator

any like I concludes the of And That would to turn conference Q&A now back management over right. for the remarks. All portion closing today's call. to

Robert A. Bruggeworth

capture for growth than joining ever complex to Thank tonight. us are We we highest you much opportunities. most markets' very believe better our positioned and

markets. We see expect We across Investor gains forward during XX. look in upcoming meeting at and we you and to to drive content this Day our marketing trips New May good York Thanks many you with night. and Institutional products on hope again of to

Operator

gentlemen. ladies and today's teleconference. Thank This you, concludes

You may now disconnect.

Qorvo (QRVO) 2 May 182018 Q4 Earnings call transcript