SWKS - Earnings call transcript Q4 2017 | Skyworks Solutions, Inc.

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Operator

Good afternoon, and welcome to Skyworks Solutions Fourth Quarter and Fiscal Year 2017 Earnings Call. This call is being recorded. At this time, I will turn the call over to Mitch Haws, Vice President of Investor Relations for Skyworks. Mr. Haws, please go ahead.

Mitchell J. Haws

Ryan. you, Thank and Year-End everyone, Skyworks Fiscal Fourth Good Conference welcome Call. and XXXX Quarter afternoon, to With the Sennesael, and Chief Officer. me our Executive Griffin, on Officer, call today and Kris our Financial Liam Chief are President

risks we statements. discussion include expectations Please our our that refer Before everyone or may results statements filings, to SEC for will release our could I to report to statements would on remind outcomes begin, recent XX-K, be differ from that certain press Form future and information on to are annual relating and including like considered that actual made earnings forward-looking cause adversely and materially any today. forward-looking

refer Relations complete reconciliation Additionally, company we financial turn discuss the our consistent non-GAAP section website and over release for With GAAP. include will the guidance Liam. within the our call of to to press practice. our Investor with I'll that, results Please to measures our past

Liam K. Griffin

Thanks, fiscal produced Mitch, vibrant Mobile and welcome, in and the IoT demonstrating and traction XXXX, QX increasingly profitable ecosystems. team within results record our everyone. The Skyworks in

with basis begin margin XXX revenue guidance. ahead XX% per earnings basis up year-over-year, expanded consensus. highlights. sequentially. $X.XX, our XX% We by and me $XXX operating $X.XX million, of Let few up fourth of year-over-year, margin gross achieved We We points, above a and XX quarter delivered points by share of

with earnings up produced of For the share exceptional XX%, billion, flow, full year, of per cash last XX% $X.X up we generated up year. billion, And operating XX% revenues $X.XX, from year-over-year. we $X.X

across premier design win expanded significantly performance, customers. broadened our our pipeline. our of to we addition In financial aperture we've strong Last all quarter, reach the

smartphones across Vivo, DRx home receivers. and and solutions, solutions. our proprietary Galaxy volume broad carrier low, networking Genie and and Oppo, DirecTV's power Bosch and SkyOne platforms, we integrated with lighting Xiaomi, leveraged at aggregation, delivered Wi-Fi, And with adding and and telematics of premium and mid production enabled Motorola. systems. We we Hyundai, powered commenced across GPS and Huawei's high and at security we SkyOne, smart Note markets, new newest SkyLiTE Specifically, XK band within SkyOne Samsung's DC/DC converters. SkyBlue while platforms engines proprietary for Zigbee launched wireless fully Cisco's modules in-vehicle And ISM management We

Sonos' and for next-generation power simultaneous leading We enabling MIMO reality XX XXX.XXax customers introduced speaker drone supplied smart newest a and virtual watches, unveiled also for Fitbit's Alexa. increase speed we antenna supported connectivity secured DJI and we in solutions latest applications, Amazon Wi-Fi high We tuning And solutions, for hi-fi up fourfold wins supporting at GPS with deployments. featuring XG precision and station to users. base

So wins segments, all with infrastructure. economy is driving we strengthening provided At enhancing X and XXXX mobile XX volumes five educate. momentum work, the not opportunity usage the intelligence, over balance to And way billion market represents grow solutions connectivity reality, data year higher sheet. a play, fast, people secure, be opportunity applications In And billion and which augmented well delivered significant is now of without by artificial wearables, Skyworks. include unconnected, our possible design vehicles, there to key as would strategic to definition, autonomous homes, network devices today connected projected times gaining summarize, parallel, we across are to these by as connect capturing power-efficient exploding, record expanding is enormous. Global The and yet applications still the business the results, by worldwide. the between another IoT expected is XXXX. growth level, live, while ubiquitous connected are XXXX. our

and profitable equity previously As macro-tend this the accelerating. market as highly recognizing powerful, discussed, is we've

S&P XXX five In all today's fact, mobile if successful market growing of companies we cap, rapidly economy. they demonstrating the are by top monetization at look

a these range XXXX, created increasingly of a are newly and value expanding platforms X usage have slowing radio cases strength clear capacity crowded incremental broad since trillion testament industry. shareholder stressing scope of five of companies this of the network and group, creating Meanwhile, data connected throughput. As to an spectrum, the

to mission that robotics. Our represent networks. XG new such inflection XG standards, This and driverless we this is enable greatly will the see enabler and of and XG machine-to-machine, platforms. key that as while network will will that's previously to speed, a enhancing global latency, in data-driven extremely require world be traffic expanding a communication alleviate boost rollout a and digital in cars, a will and an XG in XG. to spawn jam. XXX massive IoT, up applications, capacity times looming offer performance low XG unimagined significant And utility the improving requirement applications greatly will also mobile existing mission-critical reliability. and for point of

smartphone unmatched growth underpinned technology the the with global of And the connectivity catalyst is base. as in over in to unwiring the and smartphone the planet, a by the order and operate and system well-positioned to the intense aggressive our challenges applications all depth, levels unit XG, XG, differentiated entire leading and Skyworks are all performance, growth performance solutions leap expand extensive will investments to our with system capitalize, require billion ecosystem. strategic new an today realized. leader breadth IP enormous integration portfolio, This product engines two for smartphone and architectures create in in to also partnerships reflected this mind, see enabling significantly wave decades IoT ensure scale. to all past IoT customers, make XG, will networks. installed subscribers X and upgrade XG In will on Keep We across more powerful

the we to sheet result, a our leadership extend As position. cash balance have and flow, profitability,

CapEx and pivotal requirements will R&D the as and technology intensify. around strategic be scale Our investments XG

growth, with most call while importantly, continuing last turn quarter's to profitability to for of to and performance and over discussion QX. committed I Kris delivering for the value. above-market shareholder of Finally, create our outlook premium we sustainable will now are levels

Kris Sennesael

million $XXX Liam. up our quarter fourth Gross of estimates. and up Thanks, a sequentially the revenue, in XX% guidance consensus XX.X% following exceeding sequential was XX% up million, QX basis June X% basis revenue. quarter. $XXX record Operating of the or sequentially compared XXXX year, last points to of for was of and were profit million Revenue fiscal or XX XX improvement points expense of $XXX

operating we million margin generated operating into As basis $XXX XX.X%, a sequentially. of income, result, points translating XXX up an of

up income XX% of compared exceeding $X.XX. $X.XX by last our was sequentially to net Our per tax share, of diluted Fourth rate XX% year. earnings and $XXX QX or guidance EPS XX.X%, of was of driving $X.XX million quarter

were the million. for fiscal and and million, million. Dividends million, flow from common of repurchased were $XX total quarter to million operations paid cash sheet Turning stock a balance $XXX $XXX capital X shares our flow, expenditures was and we fourth of $XX cash

and XX% fourth into quarter revenue, share, the income XXXX, let's is a and also results. this per earnings was $X.X annual $X.XX year-over-year. As $X.X last billion $X.X last up up fiscal billion, Operating of review versus year. of our delivered XX% net of translating billion, diluted was record We income

balance from and cash free flow cash bottom operations billion cash year XXXX. $XXX the line XX% resulting year-over-year We or free addition generated million, was to top growth, flow a CapEx with fiscal over the In of to cash flow margin. from up of for XX% in We strong free dividend $X.X billion, we $X.X in XXXX of returned a as million just fiscal with the we billion no cash XX% and flow share year. of million million shares $XXX the and shareholders, ended of debt. throughout $XXX buybacks, payments repurchased X.X fiscal $X.X

Now and to expense moving outlook for $XXX expected roughly XX.X% fiscal with range. Operating to to billion, are Below line, be tax a to revenue $X.XX of year-over-year be other XX% QX. We to XX% plan rate $X.X to expansion million million. the the up in we margin gross anticipate XX.X%. income, our for

diluted count demonstrating back our leverage. intend be of year-over-year, sustained to $X.XX, approximately an share XXX.X Accordingly, to expect that, increase to earnings over share XX% we with I'll our million diluted call turn And the shares. of Liam. per deliver operating We

Liam K. Griffin

Thanks, enters momentum. XXXX with Kris. fiscal Skyworks strong

Operator, companies up value time EPS is years, more integrated tripled, outperformance driven cash a being apparent the Mobile of connected remarks. five let's is revenues economy closing, In doubled, that the relevant complexity concludes vibrant, In prepared Our for can have open our more never That with line exciting. is The the has connecting and the results. our rewards ambitious who one five vision past in ecosystem, architectural times. more all our and operating simplified solutions. has than inherent in and by dynamic our everything resolve questions. been than everyone

Operator

Okay.

with Citi. Our the line first of question ahead. from come go Please Atif Malik will

Atif Malik

execution. the good thanks taking my and for questions, job on Hi,

December if expansion gross I the the can gross driving the question, First margins, about quarter, and Kris, talk a have you margin then what's follow-up. into

Kris Sennesael

I'm expansion. ongoing pleased the Yeah, gross so with first of margin all,

As prepared September basis we margin added December, between X up said in points remarks, and in we added XX guide in to points. the June, here, we point gross basis XX we for basis XX

that three elements. And so, is the way we do

size more course, helps cost with Of volume absorption, revenue, scale more and one. that's and fixed

third-party all suppliers. across progress with not on make and to last to least, Secondly, our we filter continue operational we drive And operations insourcing. our then continue efficiencies good but

purchased the produced As filters are is XX% a of we parties. XX% reminder, use being and roughly in-house, third from

allocation XX%/XX% there are and making We good a in that. moving progress towards

to continue of progress we make all, target this our gross combine you and good XX% when so, towards margin. And moving

Atif Malik

like solution. what Liam, This historically, Great. major much China in terms you're or OEMs I or tender RF XXs. peers of year, basis, this is be outgrowing share Can If Huawei China share year? your gains of very look And your next strong. execution in been percent into up year? at share picking your particularly been – then, this talk a your And your could sales in has with about on mid permanent how market you the has of your

Liam K. Griffin

us you give much to And I not of a seen know, can country, strategic lot goes global Tier lately, also great as that a time. X It's a that market as China mix. a consumer as also it growing that there's they've Well, only product a some market. color in It's exports. been phones, you've for I'll I has produces mean, Sure, market try you for here. been so as into

this content, Huawei the band, move capitalizing within DRx Vivo band, as to theme really higher-end is we're rich the and towards high power a performance mid us, that where we Oppo SkyOne, China. well. have technology, For that and great that Xiaomi band, is on seeing technology, example, moving now right theme low we're and

us up products. the performance and asking that consumer those for level in is theme for for up. moving up, see is that we're to And really real content the happy moving So, that that China

Operator

Our with Drexel of Acree Please next question Cody ahead. comes from go the line Hamilton.

Cody Acree

the progress. on Congrats Thanks, guys, question. for taking the

Liam K. Griffin

Thanks.

Cody Acree

phones could Liam, in just middle-market you that their phones, we seeing statements content. that they back maybe their toward that talking were to what go stated, Can have, question. RF China I definitely dollar what square up on It's made bit that if If consumer you're to different obviously, call, you maybe Qorvo you a about cheaper just follow lower maybe on last movement us conference help guess. versus comment? a from

Liam K. Griffin

in think, real mid That I there's a there's $X that right. can seeing could sell rich have theme now look the product mid-tier, participate premium We the even where in driving phones well, both that XG Yeah, are be higher $X There's end. the low again, then end, $X be China. global getting end. we're moving much $X. mid-tier, so to content content is is end, the playing but you low not China, in end that a well. XG in in at still is We out right the or when theme both premium about up participation can sell very and and acceleration But of outside can a to

well that's we're class Huawei engaged I seeing has the been that early. where us. mean, case We've benefit. done study for a with So extremely We've customer.

set able through of and wonderful changing. their portfolio. not We been products And have have drive to a relationships that's incredible

Cody Acree

customer, has Street a so inarguable pretty good December out Thank little guys, considered you and might used guidance. what see December doing little largest a of December the launch a with beat-and-raise And relatively in to line the pretty stronger might quarter what of March your of March? transition? you gotten but And that. maybe be to And for to then that lighter September mean be the does might lastly, quarters we delay a

Liam K. Griffin

you, Sure, here's Cody. well, tell can what I

We have for There's our through backlog not a We process look lot a of position. our guidance. speculation.

with our our right And the they're putting we visibility they're side to markets, mobile, great team as on the companies. designs in or to actually great have to infrastructure. a it's of And quarter the the great the up cement We job deliver try right are. their with the in IoT product then customers has job done to to whether And customers in whether in mix end. current is on where right the

So, for but that than balanced control, but wouldn't some expect you out we of of March, guidance that have kind from our don't I the quarter changed. anything is QX. and has go really view normal there. signature of with any really we for different have We nothing yet our through every But process a

Operator

go J.P. question Peterson next Bill from comes the Morgan. Please with Our line of ahead.

Bill Peterson

on a past mobile? feel congrats the the as of for I you've well I quarter Yeah, broad as can on in in us you markets size done guess, first thanks well, letting question, the guess, is give as the ask quarter. a me and

Kris Sennesael

Yes, Bill, of broad was approximately XX% markets revenue. total so

XX% Our and was integrated Power Amplifiers approximately of the mobile revenue, total XX%. was

definitely broad I'm at XX% of with So, revenue. pleased markets very total

So more we actually markets. than $XXX revenue in of broad quarter million exceeded

market. So billion over revenue we've now in in annualized that $X

that prepared that business. to segment. could overall momentum us design in remarks, We experience a definitely a segment that's helping from the As of lot hear have of you lot so our grow in and we win growth

Bill Peterson

pipeline that design markets in And of guess, pipeline, and look color. of Okay. two guess, Thanks the for out year if guess, of broad based I the you I content mobile we kind which a that's at market faster between broad the have but for well would next win your side. to just I go mobile question just as stage? for And you. you this Thank the also expect

Kris Sennesael

has in teens market XXXX growing full broad been year-over-year. high so Yes, year, fiscal

We see bullish we well in of we and continue to mid-teens, grow course, lot expect are area. that the that our definitely see very same so of high growth a there, to teens, to mobile but at continue mid time, about as growth markets to double-digit

Bill Peterson

you. Thank

Operator

from Please question line with Sachs. Next the comes Toshiya of Goldman Hari ahead. go

Toshiya Hari

My exposed many I of many, you. but this many I would high the products, my and broad for up question. the you end you can questions. if where going XXXX, segment the just on realize to thanks first taking and that some be in point helpful. have calendar to drivers areas many, that the expectations to Great, Thank question, perhaps customers quarter, follow wanted markets is into

Liam K. Griffin

set Sure, Toshi. applications of broad It really customers. is and a

I a in point to think ability one is the wireless important Skyworks actual for the create presence broad and topology. growing

XXax. ZigBee, really We're bring, So topologies of we that XXac, offering offering in even There's some offering these we're offering cellular Bluetooth, GPS. range we're and applications. of wide Wi-Fi, we're a

customer that faster demand more continues rattled off opportunities to home prepared video there's longer-range, to it's content few and systems, signal, applications us more tremendous whether amount connected devices, of remarks, business, short-data range for grow. Wi-Fi. security there's drive really a us. stronger allows the devices, that it's manage in So a grow There's and devices that whether we data the rate, The premium set, a

diversified. So creates that customers of then There's the there's the it's we wireless breadth topologies and applications quite bring differentiation. that really with

Toshiya Hari

industry team-up we benefits, your think Thank haven't, you potential two negatives great. my and what at what but you. Okay, case about it you thinking for Qualcomm, spent how the could from you about heard guys the be to the And for some business. when we've to the Broadcom overall have think bid are in guys, their brainstorming have, relates companies? time between Perhaps and follow-up, as implications I'm you as least potential impact should the a you for potential

Liam K. Griffin

but value the things it implications about shows the significant say here, would is Sure, work, way for a of talking this one is we of This very been significance it's play, the early really the I in and economy we've call well, while. clearly to mobile that monetize. live, change a

So I that. it to speaks think

of Wi-Fi. position a we've those have work on with great lot had We we work a both Broadcom lot of Qualcomm, do with For us, with of parties. Avago

those for and think to and about by economy of that we So But on certainly I it, supported value this that see is would takeaway I here. big think that's the mobile the with us, again think coexist the the folks. able be I statement that's

Toshiya Hari

you. Thank

Operator

Ambrish with Next the question Please from ahead. comes line Srivastava BMO. of go

Ambrish Srivastava

conviction to if And could thank pretty And we maybe – like I is theme the you're get view it board, just Liam, Is a your diversification laid you've in Hi, as the I you of interested you're highlighted least sounds since just on you. that way business. just and been level, mobile think the the And diversification. remarks? for with quick your stay on out that have sake business you you in about that much change at then that have the that economy right high follow-up. the out, you and, not laid how your as prepared of

Liam K. Griffin

is, mobile, see this markets that that it question to it. There's semiconductors, unmatched. don't IoT, but connected, anything we cars, definitely it's industry. in Sure, it happy conviction and is I few a will this that And what execution quite about And I'm doing sound, There's I well, to team. really else those want it's can about in we're more years would compare driverless longer and we're call the in we can opportunity no laid doing call even frankly a smartphones. But a and what is do. to there's Skyworks think excited It's and I say big framework my out the XG back what really about it's accomplish. cloud-to-client, I of well. in change quite think we we've

And and conviction. you're So the the excited really dialogue we're where that's hearing about that.

be partnerships And could day opportunities the other generation more do we Are great the and there occur? and there's to that. potential cash really we in made? much But love gives could here, balance deals just and to that are Absolutely. us. Now, sheet more us that or other front options do of there things what day, so

Ambrish Srivastava

Kris, Thank trajectory purposes, for modeling the could how full And you. just Okay. quick my about also you. Thank we year, on OpEx you and CapEx? – follow-up, think should the

Kris Sennesael

past, OpEx, about keeping there. on revenue. no our to change XX% for we the said We've so or OpEx in Sure, there's are

growth capture which in you a digits as and so sales the are and course, make out marketing fluctuations quarter-to-quarter, we fiscal but CapEx XX% value, percent on to Of R&D double-digit On can events have more will you there top-line there some strategic the if to target revenue market. allows basis, running is XXXX. be in in is us same XXXX, seasonal full-year high-single for the to revenue, CapEx, in to a fiscal and expect that

a Here, again, on strategic not to similar our of we operation, scope thing is operation, filter expanding capacity only the but are expansion, technology investments technology. in technology And also making investments making. our are making capacity we the well that the as back-end widen investments in our going as

Ambrish Srivastava

Thank luck. Good you. Okay.

Operator

the Bank question Vivek ahead. from America. of line with comes go of Next Please Arya

Wills Miller

taking is for Miller questions, Vivek. and for Hi. Wills my This the Thanks congrats on results.

Liam K. Griffin

you. Thank

Wills Miller

at you talk there? I guidance, and guess, seems it if seasonal. I just Can first, about the sales below bit December puts quarter look growth your a takes

Kris Sennesael

and we are X% December, sorry, up X% – for sequentially and So, up XX% up December, year-over-year. guiding for sequentially

of to not or XXXX at been or The a years seasonality look really last has I you hard think strong when normal really normal. It's is XXXX pretty what compare guidance. couple that's XXXX.

again, consider strong that sequential, guidance. a So, XX% X% year-over-year, very I

Wills Miller

in customer And your a September of quick percent largest the quarter? sales you. What as thank a helpful, one. was That's just

Kris Sennesael

three and Foxconn, has obviously. not largest changed, our customers It's Samsung, So Huawei.

the approaching Samsung our XX% full-year is and the high in so Huawei total is on XX%. teens, a in customer low basis, And is largest about of or revenue. XXs, on

Wills Miller

helpful. That's you. Thank

Operator

comes from Charter the Snyder, go of question Edward Equity. Next Please line ahead.

Edward Snyder

few, that. you to on done Thanks. know Wi-Fi not of went Merced a I is which given there, each not modules announced but quarter they scale this before. (XX:XX) interesting a have development, in lot an guys

design like those ASPs And Wi-Fi you $X sampling and SkyOne? of in) to where with what that? modules are they more $X you the pipeline range Are Just designed are in Are the qualified, module? typical or generally, the in production? in for

Liam K. Griffin

Wi-Fi modules, to that respect With Ed, was it?

Edward Snyder

Yes.

Liam K. Griffin

Okay. levels working with basically Wi-Fi fully to I solutions to integration our been single devices and higher integrated mean, just of solutions higher we've multi-mode systems. chip Yeah, from

right that we're curve So along now.

and at level. have We definitely chip the looking would are are module, that some beyond some halfway look which then integration the forward complete have just customers a we to ASP. that that there deeply And enhance are other engaged customers still

So, it's progress. in a work

I at package well Panasonic thing our assembly that our ability tremendous and Wi-Fi. Mexicali create just is deal, as does through Skyworks think our chip integrate now to for bring level strength ability test, to our as our advantage filters in through one in the

about So bringing those bringing place. together, them elements them harmonizing are them market. and in just then to It's

Edward Snyder

and serious seeing up the the to they you always solution, is side? competition now that, is market, tied not that follow any want I RFXXX, which any in if RF/Analog talking Kris, $XX got customer. largest today ET anything of Are last space, had And any from competition us revenue year, base, or but you which serious this you from seeing a from that? to I just for the sell second with tailwind half are be (XX:XX) going any there the was on any could, $XX and RFXXX Broadcom seeing all legacy into mean, then, million? you Can And that. from you, you one them? scale channel in you components give are question their seeing to you Are year, – high Liam, at we on or about the I more a That's real year. million kept product a inventory a at comp Qualcomm, the claim in it right your By the and

Kris Sennesael

supposed high, on I'll So that one inventory, not to very it's is take normal. where It's not it's low, right be. Ed, channel much first the it's

Liam K. Griffin

there's seen the much haven't product I across really Right. anything And globe, for know Ed, but then haven't really change. efforts RFXXX, substantial. of a seen on we that we the

Edward Snyder

you not a serious really to competitor they're So today?

Liam K. Griffin

Right.

Edward Snyder

Thanks. Yeah.

Operator

go we the Next, Please line ahead. Longbow go of Mike to Burton, Research.

Mike Burton

Thanks, had strong You across in lot numbers. of September the September. little us understand help Looks obviously and up And a there China also any to sequentially? for ramps would in a ramp OEMs the and on Samsung how your of would was customer color the the helpful. your base quarter Can quarter, from the you largest be had them customer, a congrats some but September into like you also better? expect trend December Thanks. but pieces you

Liam K. Griffin

adopting Yeah, sure. Yeah, that really set grow of here see some of this December on portfolio variations early a carry suite for what to customers the of type tier antenna was kind product, players. GPS. starting that variations see tuning have and strong on through our higher our was been tier. to SkyOne really – It's kind the diversification other and great of all really products, that of classic products, DRx analog are the our among top the of across We're some would QX mobile launches will now of high kind guidance of today. stages And switching in

a and will propel in bit the the kind leaders really saw here in September December it us of You quarter, that it of the quarter. is

Mike Burton

that some but forward? going should XXXX, at then into if heading or and about consider it, gross modeling puts we we are and what Okay, Thanks. takes as how missed the should we sorry fiscal I margins think of look

Kris Sennesael

so guidance quarter, one with December Yeah, guide XX% only the so you the for a provide quarter time, at we to and we XX.X%.

and progress in our towards the as prepared target so, remarks, we'll, And quarter model. XX%, making said towards that good after we're quarter, so of target model I make further progress

Operator

go Christian the Our Nomura. Please from (XX:XX) line of question comes Sayaka next with ahead.

Unknown Speaker

gentlemen. – ask if EPS a you It your a I'm dig and to me to X% guidance. as And rate the I first in and flow to into quarter. happened this lower on for just roughly deeper just question. Can this we a to delve good tax Thanks. Hi, than should letting quarter this expect fiscal where on calculating to through Thanks clearly want came materially that it what benefit for bit in afternoon, rate tax quarter. XXXX? this

Kris Sennesael

tax Right, came tax it $X.XX, a an line The of non-GAAP from $X.XX with that QX, and operational rate. in rate was a full-year $X.XX tax rate expected calculations. bit we had And in that came between slightly foreign some we below and little XXXX. so benefits, favorable fiscal as year-end did That lower higher lower our revenue, a And fiscal of tax slightly on XX.X%. on at income. we what a EPS came That's did basis for rate domestic a rate. more we drove XX.X% and in true-up tax beat the was mix

on fiscal full-year take obviously the we be about do rate we guidance tax slightly reduction XX.X%, as or in provided too For also up of It's for and potential XX.X%. a to that. QX, XXXX, expect on But basis mainly a That XXXX, from does a early not into stock-based compensation deductible is expenses. XXXX tax fiscal from reform. fiscal call tax benefits any to result account

Unknown Speaker

hearing to the other saying content you Can some trend and the and I guess, market that try tiers. content saying? now I'm to describe you're if in you. in there's pricing for some on just seen thank then going guys just, and are maybe been And Thank mid-end de-specing what seeing back helpful, from memory, from so from reconcile display, what at in what That's try maybe investors been increasing I've or this some to so seeing clear I on the you've RF in a and right have second. maybe quick you're the pivot you contrast try is all want This hearing call that the differences China on especially describing market been you the you. actually pressures as forth. and to

Liam K. Griffin

mid in with lot low-tier a Well, in customers. of price, market and Sure, is I on there China way get and that also we – can mid-tier and what frequencies to starting a of de-specing the like in customers. a yeah. to other specifically Xiaomi certain and up emerging seeing push markets lowering high, used And of be demands again, in has China. China from, broad certain Huawei very we same globally sure, build a But that And areas. are exported content. seeing low-end China, A phone lower We're next built for are de-specing and and not companies, performance. Vivo, get is that mid-tier been base global not are It carry set moving to a more up, that that and segment, possibility for some players in lot their move prices. on just there doesn't that also to may is performance. players they content rule are more focus to great of a and There broad, some maybe mean, out can are Oppo, will the markets that see cases, exists a deal on have phones, our that of players get selling will be

focus in, to Skyworks is In could it's we push. interested that the of see happening. the So that possible continue area be performance

Unknown Speaker

Thanks, helpful. guys. That's Excellent.

Liam K. Griffin

Sure.

Operator

B. ahead. question line Riley. go from Please of the comes Next Craig Ellis,

Craig A. Ellis

the in guys. for Thanks nice quarter, execution question, the taking and

point. Just a at couple clarifications this

occur to internal up at to get around XX%. expect time we mentioned that Kris, sourcing filter what First, would you you today where expect period you Over XX%? that to from are

Kris Sennesael

on XX%. a towards we at XX% now ago, quarter So our somewhat are we were halfway

So XXXX. we early be in there should

Craig A. Ellis

sense of is for given around year, win for Liam, Okay, which the a design you this shaking out you so, oftentimes or months where is content thanks. XX coming at pretty good the have which visibility have, And time year. then,

for speak seen potential announced is, the that it gain in what's of have good been markets where Tier to next to in gains in and both two, question a year? year the all can content some you've handsets one, the So out your broad the lower of content that half dynamic favor? playing major the back qualitatively like the Xs tiers there's And just mix-up now you seems

Liam K. Griffin

the to in And so kind going lot engines. is the talked Yeah, sense. some existing now this opening stepping XG XXXX. XG as comments, XG we good have and of makes into that a Sure, XXXX definitely by this visibility There's additive here players. market to with you XG this into we're pretty be early know, We will of elements seeing. what about and be

XG, and implementation many XG, filtering, well. frequencies, you So cases, around have new connectivity new then augmented MIMO with solutions, and new XG, in could as content

implemented, great upgrade. look seeing big there's is on will a there. we're seeing So driver Craig, fully When We're be the you is that we're it's applications opportunity broader it's a through to It couple what an before with mobile for at see side. a more IoT, now embedding set Bluetooth up address, a to and to applications. a on while or things. able starting take device or applications a of also roadmap today. already going with GPS step proliferation we're whether that And much a but It's a the we're Wi-Fi that device broader more getting had location, we've

that a now MIMO example, XxX that now device speed to for watches that streams streaming and Wi-Fi Wi-Fi was of smart For carries enhance rate. nine technology cellular a data media carry or

really IoT twofold. cycle reach, of then it's It's upgrade the and the the applications. there's broadening within continuation of kind the IoT So,

all is for So that opportunities forward. looking us

Craig A. Ellis

Great. Thanks, guys.

Operator

in Macquarie (USA), before within line content Liam? comes obviously Pajjuri Srini Macquarie. driving ahead. get a that the opportunities and then XG guess, meaningful, question Please function go such Pajjuri Next to then to topic. we And step premium has clarifications, a you Capital your incremental starting that'll continue be A do do with couple segment? little time. you. we a get to bit pause XG been think I you tailwinds just XG, a XG before When of I from Inc. when content - with here Thank for of premium of XG? or for long we increase see we'll take we think go content do are the the to mean, What XG Srini

Liam K. Griffin

that's a question. great no, Sure,

think to to So story. we'll a I see within I opportunity don't their pause. a as each evolve XG we think It continuation step And here a be we're each necessarily see or own they have function, going customer, XG. from and won't

in enhance market where have or are winners adopting two speed. systems that ones We're think greatly applications that with the somewhere on the our been mid, mirroring or along chain. I receive three high are transmit in of we SkyOne, modules customers doing And that what to five customers most continuum we've modules. and from couple DRx adopting the are are could of that That's performance-driven seeing the really this low, a DRx-like downlink modules that band. technology, six

drivers so and deliver big, handle we you then big our to then that dispersion new mobile. by IoT need a devices, XX is network So that be content within and by business the billion just there's and at a these also an such some data. winning devices. we're new deliver a do grow perspective, populating new of with our customers XG or accounts of those can of up with XXXX And work existing to look to that capacity going that XG There's from creating all can technology lot one that to grow when to in network frequencies going of

of through just a be for be IoT really on it So could to Great. quite there's that one massive another then opportunity it But as Inc. Wi-Fi, – be Capital protocols, be it cellular. Pajjuri could M&A that's - clarification in going cycle (USA), clarification. number ZigBee, different the connectivity another Macquarie could for front. And upgrade well. space the Thanks a Srini

work diversification, You That didn't few try talked but a bit you the little to past, a out. years guess, about in did ago. I diversify

balance you cash? M&A strong the flow are is as your out strategy find remind Given the attractive the us you cash usage priorities? what And opportunities with the plans well maybe as don't you're going could And what there, what the forward. cash generating, are strong if sheet

Liam K. Griffin

outlook earlier, great that long in said pursuing. the really franchise. pursuing I we're we a to enhances markets as Yeah, it the and the do are for sure. that portfolio. that just as as up adjacent not diversify different vector in diversification We're same about feel totally Sure, we're on things we're interested as the business the At time, the

So, we fantastic done got have that a a out great management for team, we know how turned us. to we've enhance deals few businesses,

for now XXXX. Panasonic, a in Our joint has in Wi-Fi run. venture entity with a filtering technology. home is deal SiGe with a That's wholly-owned did We tremendous been brought Japan, which

to we potential we that execute our that team deals do in. very going to the want of We'll able are comes that careful and the have look thought So to and we opportunities kind on at entity as through, continue forward. be a mindset

Kris Sennesael

is have strong me is is Half very of just offshore. We sheet. of that cash you, Yeah, with offshore. but a free balance margin remind have $X.X the mind that capability onshore, of percent, cash in we cash being of cash is cash let innovation on that half a do flow billion of generated that XX-plus the XX%, keep generated being half of half onshore,

Capital all the to cash which goal the strategy. that share XXX% And dividend XX% returned along Great. so onshore we flow and free is was that to Thanks, execute (USA), to program. to - Actually, free flow, Inc. guys. buyback through will return the our total last stated program cash Macquarie we shareholder. means back Srini did continue XX% cash generation of back to total And currently, Pajjuri of year, our XX% of shareholders

Operator

with Morgan Craig we Please Hettenbach to Next, ahead. line go Stanley. go the of

Craig M. Hettenbach

Yes, thank you.

and of how kind do up and follow there think on of getting today do a it's XX%? timeline there, the gross wanted your target some or Just to maybe of frame just of of trajectories topic takes just it recent you given the longer the you to you margins, get to matter XX%, of bridge to

Kris Sennesael

– we will never we we we've to make quarter-after-quarter a timeline first no, towards all, continue progress where said that specified of Yeah, target.

I point basis continue XX XX we point anywhere in so, we to said X points XX December. to basis to basis do September, expect June, so. we in do between And did in

a value the solutions same drive we of our combination the XX% hard to in products, and our help that to in gross to work, us but get it's cost. a add And so, at continue continue of lot will margin. that And time more down to

Liam K. Griffin

challenging and not is keep custom our the moving is thing solutions. solutions, but in these the Craig, working engineer-to-engineer as more It's we're other these really highly to really paid value-add, integrated, only for with problems margins integrated competitors, to getting and cement more unique, some within that towards fewer resolving mind the ecosystem customers' – benefit. just our the challenging work, these elegant, Yeah, business

So of that's into that's really complex If theme at look and XG will we of do these strike that more going to what some a zone the we out markets, continue. be Skyworks.

addition that, operator. from more within efficient able looking a be become should company in the internally we So to to margin see benefit to

Craig M. Hettenbach

early are that to And opportunistic an you term, in, there perspective, you're Thanks. phase you Liam, you'd be it. follow-up, even a Got some R&D? in spending from excite R&D areas through think that more intermediate of evaluating you're mentioned just how as particular coming as look where terms XG, you

Liam K. Griffin

absolutely, think things. I no, couple Yeah,

In very, is going also will tremendous and new be modules, time going opportunities. these will And frequencies You're which FDD, XG There's division, amount today, frequency-division and X a to a within solutions level from duplexing. to see the these to gigahertz, there. can well, world, zone, play above beyond. up frequencies very and crafty XG, within TDD handsets that topology That's the largely of noise And of requires in some wide gigahertz high shifts create TC about range of Skyworks interference product is a even come filtering going deal from the that it. of frequencies X resolve then to SAW our unbelievable. a be very on companies so to integration great like

like So it's latency, but a benefit in of to the to and great in speed players for lot and create Skyworks. going a tremendous challenge a consumer uptake improvement

to forward looking we're that. So

Craig M. Hettenbach

Got it. Thank you.

Operator

Rakesh Vijay ahead. Please we Mizuho. the go Next, to go of with line

Vijay Raghavan Rakesh

guys. hi, Yeah,

would if TC grew I XG year-on-year SAW, TDD? fiscal of could TC the you how from you on fiscal see Just of XXXX how give your a Thanks. was cadence and wondering perspective, color XXXX some the SAW, SAW given SAW,

Liam K. Griffin

we well, discretely, product you as to TC specific of SAW any don't revenue no don't Yeah, Sure. that sell SAW – so we there's or may directly. tied know,

and potentially the that different intimate standard. certain certainly has looking We're We're moving There's come certain our solutions. DRx There's leveraging a has FDD to we can quarters. TDD X.X are you we implications mentioned I've in the TC implications Again, handle a will our filtering. at standard. and together. for XG. how switching all over that in All for now SkyOne our portfolio nuances higher next However, of couple frequency. gig SAW up and

I for in from with the is portfolio, whether broad occasionally, if Mexicali, in and switching all that or have a And way supplier need a packaging arsenide we silicon, point though flexibility, to think filters strategic tests the own to in-house. partner filter important to we it's vendor a gallium we that very have our that selecting we place. have

see to flexibility various XG so these configurations as all may be we about the customers and build. challenges So our managing going with that it's

Vijay Raghavan Rakesh

if what .XXax carrier Got you at XXXX aggregation XXXX, prioritize the it. TDD for if do from were you to RF or drivers the the between look fiscal you side? at were XG, picking And for look up fiscal or how

Liam K. Griffin

speed done there. in get fast new on It mean, and there's It's performance. well, tremendous Yeah, it's no let to is And grow. very middle We'll kind aggregation be we as sure has hot relatively carrier I of a that. Wi-Fi. continuing the benefits question that's the in as and is thing. I it adoption innings standard mean, in now XXax right and a can. about

those I a portfolio that are that and the the to filters, within think I how grow yields rolls of applications try about access And other our most stretch important. our customers. points factories, the we'll through that the routers filtering through and think to bit, really so then and number add end it's continue we user to discussed, for improve frequencies part, a

Operator

Fargo. Please question comes Wells ahead. the David Wong with next of Our from line go

David M. Wong

to handsets? investing products offer much. offer for increases where think of very products And most products? you do areas mobile the in opportunity Thanks what you are – content your most types build what division, In the

Liam K. Griffin

Huawei that of millions Tier a great again, examples. great the global Oppo seeing that portfolio, yeah. phones high Vivo players mid-tier brands. is Samsung Names Sure, example. of we're What was still are have great up. or seeing, grow We're high-end to like and were global Xs that moving are in into a mid-tier hundreds X want like companies Tier that

it out to and have that a them way we're that DRx really product is output the chain so solutions, customers realized our strategic which by benefit solution. create line, trying transmit more some give adopted hard efficient our We're doing more solutions, in enhancements our with And great been have working power would be SkyOne to which provide have in populated and And certain through and new some great so been not us has improving a wins Wi-Fi to markets has we go technology power and submit downlink been fully performance. there's is growing. rate there. like and for at you bit quite That substantial opportunity technologies not our of then management, look adoption product

more to see in throughout pretty Asia, we're Wi-Fi embedded U.S. And been and smartphones solid. seeing more we're just the portfolio. in power now has starting more So some advancements our

where of like the content. space. the have benchmark coming more That's kind at a on $X across to want phone, we'd We Mate So look or of that entire all name is the mobile see of XX together. Huawei, that we

David M. Wong

very Thanks much. Great.

Operator

gentlemen, back does conclude over question-and-answer now conference Okay. closing and comments. that Mr. Ladies Griffin to I'll turn session. for our the any

Liam K. Griffin

quarter. We the today's you Thank Appreciate participating on events everyone. investor forward other during and you upcoming conferences Thanks, you. seeing call. at to look

Operator

your and does for that Okay. conclude conference. Thank you Ladies gentlemen, today's participation.

You disconnect. may now

Skyworks Solutions (SWKS) 6 Nov 172017 Q4 Earnings call transcript