SWKS - Earnings call transcript Q3 2019 | Skyworks Solutions, Inc.

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Operator

Good afternoon and welcome to Skyworks Solutions Third Quarter and Fiscal Year 2019 Earnings Call. This call is being recorded.

At this time, I will turn the call over to Mitch Haws, Investor Relations for Skyworks. Mr. Haws, please go ahead.

Mitch Haws

operator. you, Thank and conference everyone Skyworks' fiscal third Good welcome XXXX call. quarter afternoon to today our Officer. With Executive Liam are me Griffin, Kris our Officer; President Sennesael, Chief Financial and Chief and

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

Additionally, of to GAAP. measures release for our the include reconciliation press discuss our our a guidance the complete refer non-GAAP will Investor Relations to company consistent within results website section financial past and we with practice. Please

With the that, I'll turn to Liam. call

Liam Griffin

financial resiliency us Thanks strong delivered Skyworks QX, flow. solid Mitch, allowed model in business the welcome and to and our cash results as profitability everyone. maintain of

share cash in the be flow of guidance, our $X.XX. with of revenue million, $XXX of at we $XXX earnings reported of our to year-to-date. operating more above Looking gross delivering per while million and And operating slightly margin XX%, generation XX.X%, margin continues drove detail, cash of strong, quarter

XG ramp Looking infrastructure, forward, our design smartphones, win as we in wireless of across pipeline on the is capitalize expanding and IoT.

supporting is number deployments. Skyworks example, global now a in infrastructure, wireless For of XG

and are infrastructure Our stations small leading ramping solutions and we radios, today cell both with Japanese address and European base XG OEMs. macro

gaining in recent leading Korean bars, leveraging massive MIMO space, new XG emerging sound SOCs Facebook cognitive stations with analog their customer. we their wins for is VR for at a and IoT with Skyworks Oculus headset, Vizio for addition, enabling our In radios. categories Across wireless the share and are base

we are cellular combine LTE market are module Gemalto, the in and expanding leading technology. And wearables low providers, devices Wi-Fi CAT wins our design where secured our U-Blox, that also Sierra and including Telit, power reach Wireless. We M we with the populating

leadership as also We've Cisco extended devices, solutions, their top Netgear. signature with the Amazon, with industry as streaming X and such wins in over several design as DirecTV the with quarter, well our for design including their Wi-Fi leaders last WiFi Nest, wins

in mobile, Finally, customers, coming key XG suite our leveraging of Vivo, with others. of for solutions Oppo, our unique the launches support we've phones, wave to Samsung, engagements LG, and at deepened

demonstrate advanced XXXX real continents, economics expansive seeing and XG the these are now With As bring, and continue to for creating launched Skyworks. building time into opportunities connectivity momentum on for we can XG demand and services the the opportunities of four that expect compelling XG beyond. nature are operators

performance we the To becomes gains universal XG product. and speed, technology capacity is and broader be connector. clear, spawn And to not expect network a where a the XG much in latency, a ecosystem

the and With transport, XG in like digital the cases far usage autonomous already health. new driving scope IoT, industrial going application areas smart is beyond emerging cities, smartphone,

technology multiple tremendous to this our becomes reality. position generations scale lead a across Skyworks, and is a XG as experience as For opportunity us

investments of have demands capital the complex world's integrated innovative Our meeting of specialized and the build customers. supply chain to vertically capable enabled most us highly

customers, capabilities, devices Incorporating markets, expands creating in volume production will applications. TAM BAW-enabled quarter. advance this array BAW be of TC-SAW, we in to continue positions and to and These support commenced and QX, a filter in We and our mobile our leadership of positions wider shipping us SAW devices.

from nearly along automation like Honeywell, $X.X customers, XX% Continental, as Today, to we and revenues And set Ford, Siemens, market in of rate broad our in XG, portfolio. leaders LG, growth expanded factory with GE. capabilities since Bosch, That's annual a XXXX. addition serve global broad compound including markets have grown as generate our an now we companies billion of in such

leveraging experience, ubiquitous Skyworks the of forefront decades our So of at world-class in relationships. scale, is summary, connectivity, and customer

We of and everyone continue all are time. the on well connecting executing everything our positioned vision to

I a performance discussion for the will turn last outlook over call to QX. our that, and With Kris quarter’s for of

Kris Sennesael

Thanks, Liam. XXXX updated the quarter our for Skyworks' that million, third was of is of June above the X fiscal $X million revenue guidance. $XXX midpoint

of was of Department of revenue Bureau of added of quarter Huawei U.S. the Commerce, third to and Our on reflects list. placing entity the the entity all Technologies shipments list. the to as and the Skyworks date the certain Securities Huawei U.S. its Industry affiliates Huawei ceased impact of

administration of we we restrictions, which did shipping After an July. early export the of review in the scope list we determine resume that could products, start certain ultimately regulations and in-depth the entity lawfully

However, the below business to historical levels the current with into we expect well quarter. remain Huawei

Third quarter in million XX.X%. of margin profit fiscal non-GAAP gross non-GAAP was $XXX gross resulting a

of write-downs the related inventory of in primarily noted only the entity $XX As charge our release, of financial we to due the GAAP consisting statements nonrecurring earnings incurred Huawei addition to million, a BIS attached list. to

and Operating We we of sequentially, our $XXX expenses better generated million effectively our continue slightly million than operating translating XX%. income, to margin were an manage down $XXX operating guidance into as of expenses. operating

$XXX share. or earnings Third diluted tax was quarter drove per rate of $X.XX net X.X%. This effective million income of

and and cash fiscal $XXX year of million, months sheet balance for flow cash first the was third cash quarter nine flow, from fiscal million. $XXX operations the operating was to Turning flow

we repurchased common $XX our in fiscal X.X quarter were total shares million distributed expenditures dividends $XX of of $XX million million. for million, a and stock Third capital

cash share We ended cash and to returned approximately XXX% During generated the million nine of shareholders the the of of this billion year. with under balance debt. months first flow the quarter this just we the dividends, year, we’ve free represents with fiscal via no investment $X and repurchases and have $XXX

and to Now in growth product QX, the revenue ahead we quarter execute sequential to track on we deliver strategic looking as fiscal on September are earnings ramps.

assumes million $XXX the range Huawei the uncertainty to remains of given related the $XXX with associated revenue issues. $XXX levels in at nominal outlook revenue million The anticipate million ongoing trade at revenue or we Specifically, midpoint.

despite the compared is range, lower At X% to the to increase significantly quarter. revenue sequentially the to June of Huawei midpoint revenue expected

in the quarters, strong to reach we Huawei June ramps our ability expanding reflecting deliver seasonal customers complex expect Excluding demonstrate September at our to we increase highly as solutions. and our sequentially, XX% large revenue integrated and and

Huawei. margin with gross XX% expect to associated factory in range reduced the approximately lower to of demand compared We the June despite utilization flat the quarter, the from XX.X%,

million expect approximately an We Below the effective tax expenses million, income other our continue we roughly adjust $XXX levels. as approximately we anticipate to of opening in and $X.X of X.X%. rate spending line,

diluted be XXX.X At diluted revenue earnings share in shares. count plan to million $XXX of the per we midpoint our $X.XX. We share expect million deliver to of

our quarterly to reflecting also today in share, business Finally, $X.XX per cash increase XX% announced we Skyworks our dividend capabilities. in and model confidence a generation sustainable

let call And back to Liam. me turn the with that,

Liam Griffin

Chris. Thanks,

SkyX cloud, an technology leveraging are and providing to connected our foundation the in leader, the proven underlying expertise a we enable entirely world. connections new As ecosystem for and of today's platforms billions systems devices the between

customer Looking global forward, the of tomorrow. leadership established economy XG facilitating Skyworks expansive innovative the is uniquely and and positioned solutions, markets mobile of that deep are relationships and and scale with set growing

remarks, prepared our That the for operator let's line questions. concludes open

Operator

Arya. of question from have line ahead. Instructions] You a go Please Vivek [Operator

Vivek Arya

my taking actually for I of I had you Thank could. question. if two them,

basis? some both you on offset you can do content but that in your in help the realized year-on-year conservative your perhaps hoping is on a on units, insights was to do largest of how curious, I'm expect I give growth and us sequential a Liam September, unit everyone conservatism. I industry First, could on that customer

us color So to largest year-on-year can you could growth on customer? some help sequential and give extent whatever if at us your you

Liam Griffin

Sure. consummated been exciting offer. all mean, the and continues the we Skyworks I but we've customers, most of units, work we to And with a of scope design that I really to and say it to and We're that of customers, this count, reach significant down flagship Well, we're proud the number to of the and continue done. what very device certainly comes year. do the complexity with leading team will phones what wins expand continuing the have

So, highly unit demonstrate high areas look, proud very to you be is predict I tell we ability and we’ll and that to something how but grow curve the complex, show. we that our will margin gain in especially really can't will can content,

Vivek Arya

Liam, XXXX? but benefits the give industry looking And you for as the tough from XXXX, fiscal prospects look for ban. weakness definitely with follow-up, XG, And at of be? material Thank an onset could growth, just if can are think But fiscal growth how fiscal you we at start you realized as overall a it how was premium all just you. year conceptually overall us a Skyworks’ I about units there's as start the XXXX, in the that should year Huawei last how you then and

Liam Griffin

volatility a as year I you year and And in number reasons. difficult for was of been Yes, a XXXX some kind our of we've then that level. early issue. was tremendous there's a macro excitement which But think momentum ban, fiscal has mentioned There mobile and this but had think at Huawei manage. the XG has higher pretty do been of a around I effects significant around we’ll today

see XG talked incredible with expect smartphone working that and on matter an to we the side, capabilities infrastructure in all helping their be them about the prepared to for in we the rollouts industry. the develop certainly So remarks. in we're We're starting catalyst customers devices, that this

XG remarks, prepared really universal technology, is for it's is multi-market product, us. connector. the a opportunities it in a said I populate not will As It a

happen. great to solutions have We great, make that

So, we're XXXX excited beyond. and really about

We we really effects the today. near-term out just if also good sequential We net a which now. feel the of XX% right can't quarter control Huawei, in guided we

see again. the we QX, December our coming into As sequential growth we quarter, look

So bullish XG the that ahead. prospects of we and about feel

Operator

of line FBR. comes Craig question go with ahead. Next Ellis Riley from Please

Craig Ellis

let Thanks B. follow-up comment. last question Riley FBR. Liam, guys. for on that's just me the taking the Yes,

out that cross that quarter, how about at seasonality below think and seasonality? we December now, right seasonality trending that see probably should mean be As profile you [ph] we business quarter would macro you is versus that look that the or one the currents expect normal for to favorable normal to

Liam Griffin

to we able time customers seasonal just here coming number be is the a frame. of back And deliver QX it good that again, a Craig, one, outlook not here, Well, we half of solid the involved the will calendar feel into but I about our in during ramp, think year.

respect devices that have also in with way, forth the phones. that by good consummated we've to visibility, perspective good in timing. we very what a very design we And visibility leading from smart have on put We the

we So good feel coming about through.

the the then how go. of balance And year, things see we'll

of strategic I demand we'll that. time and continues for is we think And advantage that to some of think and redistributed with be we're of to now, the going enduring us. broad that able challenges Huawei, vector right a lot markets despite to a be take get

Craig Ellis

for then X% up follow-up, on And get segment hand cleanups can you then Kris. up was materially on about just for really pretty me despite just us Okay. clarification days Kris and the give write-down. the let the the to moved splits inventory,

So, the how guys. work back down about and into should a company's ability normal it level? Thanks we get to think inventory

Kris Sennesael

first you me the let give splits. Yes,

wireless by in provide impacted in some that in that well of broad the we Huawei markets which for non-mobile broad you well to, revenue some revenue, Huawei. So digits also XX% sequentially of to keep low-single the have was markets, is connectivity infrastructure up Huawei markets, year-over-year. business part, And QX broad mind was of as the course, as accounted was as total in ban, as solutions

products, annualized at running IoT WiFi X, prepared in revenue. in in that the launch in of more a markets, the with billion segment Again, And some lot strength it’s of I automotive, about talked of the that think, than see we market broad remarks and wearable Liam general. the $X.X

side segment down that And of XX%, by on slowest the And was shipment even so, was approximately the broad XX% was market XX%, quarter which more and impacted sequentially seasonal flip the of Huawei our mobile year. was ban. course,

So that's the split.

the was on which days. inventory then inventory. up in $XX of our year, is of quarter, million, days up And days quarter XXX XX again Inventory the maybe June to were seasonal slowest

our the have efficient order of of been quarter to all so, we it with level here, it, our have where we excluding growth the growth talked September quarter. and we sequential see into loading in course drive during And of of in quarter, into slowest XX% capital a about Huawei then that equipment. our factories ramps definitely product and even of year further seasonal new December support customers key And the we our usage the

between I and quarter, XXX where to the -- days the we so, do inventory. And do expect to we seasonal consume depending inventory fluctuate expect come of are going some cycle. days, we forward, in days the December And on down inventory to of September that will in we as XXX

that higher keep house. than were them By a that filters now, in the is were But five to and the parties maybe four two making to all got house. none house. we you years have we was filters so mind or getting of of years historical ago, levels. to filters purchase ago, close slightly And in in XX% in XX% of We roughly third from we the are what

down that's driving of And of so and expected inventory inventory. December line September is the inventory obviously levels fully and in higher with is we will But in some come again days quarter. what

Operator

Please from Morgan Next with of comes question go ahead. Stanley. line Craig Hettenbach

Craig Hettenbach

side? of any just color And estimate of dollar the about as in Liam, traction terms how in out rough seeing smartphone you. also that's content then and on you're thank Yes, we think initial the from the design playing a a XG wave? perspective,

Liam Griffin

absolutely. see that deal the a of Craig, in just be in a number to opportunity complexity Well, expanding of areas, an in we resolved there's XG system. needs Sure, great

Our customers of integration kind are looking cohesive solution. for and

So can deal a resolve with platforms are lot XG solutions the of these also we perfect SkyX for developed have And complexity. backward configurable, challenge customers like we into of are XG. to they and compatibility we that that

within if So to technology, and but bands and coexistence a of well. device, -- lot for design at with on critical challenge a the we're lining a the phone, XG today you're there We're battle and There's physical XG customers. physical going a going phones, XG. there's providers consumption device to look also our complexity XG need you're a interoperable enabled with be is that to up the in band working XG with current the of base as have you

can agnostic So the solutions around ecosystem. somewhat baseband our be

got developed technologies in now just And technology shipping spoke technologies got we've about. vital be that we in that even band we're we've XG. BAW DRX will adding We've devices that some that we ultra-high the the house, more of shipping, commenced

So to we're our it's partners here. trust And challenging that be you will help we is tell partners that's have and partners customers in the that I what difficult, be those very one good that out But successful. position. want XG that are reaching our they customers been and of

Craig Hettenbach

you terms bought bigger the a the Avnera? context much know design And them, think How the it. update in you work terms just of Got that then I pay follow-up mean, in designs momentum for on having platform, customers. I Avnera. of able doing? when through Skyworks terms that that they're to Are of you in in at leverage of of some new larger

Liam Griffin

Sure, us. And very that is portfolio well doing that's great a question. for Craig,

opening certainly we're with So designs seen some But we that was acquisition. got we've fully they've what very one powered integrated Avnera, in remarks It's performance mentioned the great in leveraging, from pleased SOC Skyworks. we're with the of that some technology now, right that slick by overall, audio. very

little looking sales and good. a of advantage take very operational the it's marketing to more that. so larger side, organization on but able far, we're strength So Appreciate and a

Operator

The next with of Caso Raymond from Please go comes Chris ahead. question James. line

Chris Caso

Good Yes, you. thank evening.

quarter, more which quarter to the maybe trying are XX% Just Huawei of to as kind that of that's that a question I facing. what get sequential would $XX into said remaining earlier in million quarter, $XX you're and had therefore, in were took September shipments from work about customer quarter. the on it those understand of the you minimal guess, of on sort out to to June go that shipments a seems headwind Huawei the the color you in out a that just million said out and you was the what you little pre-announcement

some what that, to seems Huawei. then it And in terms has like to follow every ship can others, had company maybe difference can't on of they and

additional also folks Some for shipments. are applying licenses for some

Just for can ship you the some more? potential ship color more able and and what on being can't to

Kris Sennesael

Yes, Chris.

So on maybe Huawei. color some I'll more provide

the was guidance, of our being adjust shipped was above out updated to we ban ship slightly was know, ban we you when million the as revenue took Huawei's effective. guidance. didn't of and QX, in And after roughly effective. the We revenue did So revenue and that $XX XX% we prior total all the

So quarter, Huawei. typically definitely in for QX, it's the seasonal stronger

expect did half the of the first what we fiscal seen actually revenue so in year. And more than we've

with forward very we And revenue to so looking QX, minimal them. expect do

we are We the get certain -- can legally products, ship but from actually demand that Huawei we is signal low. very

And revenue I to mean you want We probably expect something? in add QX. $XX to below million be Liam

Liam Griffin

just clear. mean, be I Yes, to

I Chris, immediately mean, not for again, did the the we stopped So, and came when ship ban of out, balance we QX. shipping

legal a QX, get and little and SIA our level. we low certain to reaching commencing been with associations at team entered we shipped guidance doing very other felt a products to it's with comfortable shipments, been homework some we've As but out being

difference So If back, provided QX, that Huawei may it into I differently, very with and feel read of We what net we it. that's says But sequential about competitors QX, our done. lot what a think kind still in Huawei. the we do. but Huawei the I that's of we've a about we between the have know other the out comes business organic that's great. today we guidance can have good played how played netting XX% business

Chris Caso

very right, for Thank that's you that. helpful All color.

words of And for are these Just Huawei if able doesn't what solutions be situation time long-term? alternatives, yourselves XG year, resolved, highly And other necessary there been just Are are as will XG a XG really some the rules. disappear the enable guess the potential manufacturers opportunities here? to for integrated get other some term the to we've under for there this it, current do I phones and follow-up, longer restrictions, ship that if you'll are next for U.S. comes out feel as hearing in to by you one, there implications components still like phones.

Liam Griffin

right, it the We're great a component technologies player. discrete a know you that's way is, you're at not look mean, that question. The I understand we very, and Yes, I it’s and complex. very I provide,

that been haven't We for company years.

things offer the to very, Huawei very kind that we of to So hard companies like and displace. are complex very

think XG the XG, I that power just that, there moving China, issue? perspective, a continue. to opportunities the of be to and is I But China levered global investments the be provide. catalyst technologies. are it's the Could and a around so stop some in the going there here, going that a challenges that's Having specifically to and think all don't of connectivity but from certainly stop for executing I it said and think of XG to benefits access up into don't could the this XG pause, and powerful on think vision this going latency bit with globally, I from industry the Sure, speed and

and -- stay that. we'll So with

can or in redistributed. there demand as the some think And hurt right is, that that here opportunity regions and that But it'll If revenue well. around. the be can thing that get move are we'll yes, other the short-term. for impaired, And I companies overall,

Operator

line Blayne question Curtis from Barclays. comes of with Next a ahead. Please go

Unidentified Analyst

Hey, one outside Blayne guys, business around this of for Huawei. first the My China is is Elion [ph] Tom Curtis. handset

X China, you some market share? period right there view some that are seeing that internally Huawei you could through other about industry you guys Tier this share is in market exceeding players Tier trend talked taking the now? of And players affect play X in guys. out Some how where, that have are earnings and and do How maybe looking

Liam Griffin

a there and great strong a of also very far that's and Huawei, a And, interesting customers it's Vivo on build year. Oppo, and Yes, Xiaomi, had business solutions still good a with those has but partnerships with we've promising the been position position had so We've had track, we for -- those been some new well. we've over developing to as kind able been question. been

ecosystem So looks pretty that at good. the China point part of this

Unidentified Analyst

you one pretty helpful customer largest guys of then been in give the the us Great. guys percentage And have your past. maintenance. about more second Can in my You June? that is

Kris Sennesael

Yes.

Again, revenue. we seasonal ramp So somewhat quarter was will XX% in there. June customer of total as that obviously, the slower that in over large June, quarter the And with largest the is go well QX, customer of up. the

Liam Griffin

pie, get as out and of some Huawei with skewed Tom. revenue Yes, ratios the the a well, of the little bit obviously

Operator

of ahead. line next Our Ackerman Please go comes with question Karl from Cowen.

Karl Ackerman

If the up may, on gentlemen. previous afternoon, to question. Good back I like I'd follow

and is have domestic for growth So very your content? of nationalistic a based ramifications curious, June to where does Then quarter through outlook given proceed seeing that other higher have your support? smartphone OEMs quarter, smartphone contemplate your at I follow-up. China opportunity beyond mobile customer So the nationalism strong I'm you the September

Liam Griffin

and that of that Yes, can, right issues we still the We we're very to gaining demand if the talked back the the resolved, wins. here, stuck. We're feel we've we're right is extent exception And talked about we're kind beyond there and players gaining that developing China success aggressive in only in. across look the it right But other we're and and resolved. now But design get solutions, we globally about that wins active. some The could yes, Huawei board. gets situation network and design we're we steady. of have Huawei where

some custom networks. they're higher very we for not as they're commodities or that interchangeable, not and the custom the XG questions, mentioned XG And commodities, devices make complex we prior end are necessary are in of products even that

Karl Ackerman

helpful. That's

in in access my on few space? of see and next consumer M&A over view within quarters? prepared products. As adoption points you. XXAX given What's follow-up you And comments, discussed how the early the your XXAX shipments landscape recent Thank competitive XXAX do you your of enterprise the applications the on

Liam Griffin

want to Well, Sure. for right probably that WiFi. the in higher it's stage, early be it's speed XXAX but WiFi is now for you technology an definitely

is of wins is engines SoC we what we doing well, have the do one the Cisco that XXAX had example. we design today with for of some some partnerships the quite are we that players. So named have we And great

of what overall with able solutions similar partnerships together to take those the with and kind calibrate the partnerships. lever of to market providers SoC and advantage with SoC we we're broadly solutions leverage basically do net base our So

good We market also in been WiFi have We've years. over the really able take last WiFi. and the to been a the have beginning solutions several and up technology leader from

continues pretty our at big about higher And The in we levels. market portfolio So been CAGR. customer higher has to mentioned that and performance growing broad catalyst expand the reach WiFi that's XX% portfolio. a and as been we it's at mentioned a

So customers more lot outlook But in that. we're that and portfolio. more still there's a we're of that and strength adopt in for XXAX applications And XXAX. well I seeing positioned early think, very innings for

Operator

Snyder question next from go And Edward Charter the comes Please of ahead. line with Equity.

Edward Snyder

a Thanks get to Thanks. specific, the want today, on than than more three and and band could if throw lot. regard other content about handsets you especially Liam, band millimeter just those are we talk Other maybe like are at wave pad largest ultra-high with with I'd stage, don't XX, expand, But in I maybe this you XG. do band you working to any areas, XG want seeing you going today, that OEMs? XX. it's in phones know your to

Liam Griffin

But We've fall, certain release, platform. bands, more will and the more of portfolio capabilities. some I of are there and the that a I really in be launches phones be positioned harmonized have of and the depending customized depending going at XG there opportunity, to will beyond elements this on we're XG Well, XG OEM. and real mean, upside to of be and SkyX got XXXX think really is unique on our you're a a right, can company the on with needs that is the depending XXXX, for devices some carrier, in market, but the of well that

good there. So think we look I

XG more of is But XXXX play. a the you're right, I opportunity mean,

We support are and will beyond course. wins launch, design that on working the of now that XXXX

Edward Snyder

and the the part just be in town, in participate in yourself set, game to and wise. that So do only wave know Qualcomm atrocious -- you of millimeter clear, performance terms I see then, is

to customers, problems, the product, the want to seeing the do we're if if a feel OEM, than don't largest were? winning We're a working control or where would band base so you problems and phone think want CMOS. your have they that you already to large battery using you going Are from impede you're Qualcomm's something something other now life do to slot of on now. you And heat they suffer the

Liam Griffin

Well, in opportunity mobile another opportunity infrastructure I we wave an certainly on opportunity we XG, here, on to go there's we're side, millimeter handheld at mean, side, looking the see as the both. as so been board to and any years largest we're impeded mean, I I the believe including all one. customers, by with be going here years our across don't base for interoperable we've band,

So we’ll ensure there. that flexible we're able to be

But work those opportunities. those in widespread be going early catalyst could wave I continue time, Again, to over think on a technologies, they're millimeter the infrastructure to don't the industry. be but on, and within we’ll handset and

Operator

with Please Kumar comes go of question Jaffray. from ahead. Harsh Piper Next line

Harsh Kumar

guys. Hey, Yeah.

all, congratulations you. commercial a for on of that I quick shipments, had one Liam, on First BAW

I press like their a how BAW to for mentioned of in you BAW you your speculated follow-up rate that How example, would as the internal SkyX externally versus next sourced? think have And your in release, is your then largest a solution widely year. that, XG to is phone customer the of out readiness much portfolio?

Liam Griffin

BAW at now, that Yes, We're great in to remarks that you're you that about they’re out. integrated of the is filters, SkyX quarter, organic a we I solutions so solutions, what level now other technology a and prepared quarter this roll shipping discrete start this And to up, the SkyX solution And When mentioned we're going in the see questions. really not They're I blending devices we over of kind level of incorporation move you're what system BAW technology the in are mentioned. as those elements. delivering that solution. going they're we're going of delivering is technologies see BAW, look the see with to is think time. to organic, enabled

temperature Skyworks compensated location, in commercial site, of this to and years. Mexicali for our been we're working got filter we're And also a devices very of doing on do a SAW XX some year, test. driving we've its just millions hundreds we've stuff, business, package a billion Singapore And our sophisticated organic quick on doing filters that's

all there up. expect supply complexity now as chain talking some But of of elements the about beginning it opportunities been real moves So we significant have to conservative and very it to phone be go and along delivering the continues critical we about and work. the to we're make mobile of XG BAW. we're We've

Harsh Kumar

my being follow-up color, the Liam. a Coast RF about XG them tying benefit effectively band and for some talks there it. And for kind of having then Thanks Qualcomm and their West a a to base namely competitor

of do And any you run in in First competition is that XG? design statement? secondly, see then far into do as concerned wins you all, as or them validity

Liam Griffin

Well, with of -- compete we companies. of lots companies, lots we all

-- it's we're best used garner to think share and can of And we areas done the that to design So and healthy. play. the I that, win lion we've in our

and products base to So that we've that I about we're work semiconductor a collaborative providers cases, that got we're concerned will providers and not is doing say in at try ultimately, very all understand that with make the as man best. our thing. customers normal that us that's work But most the

we at look way the it. that's So

of to challenges tremendous that we'll with on lot resolve. we're to want. So, We ecosystems very XG, difficult great Skyworks. side, and with of us phones we our got produce bass really the who be do we interesting shoulder most got to a to And in customers partners, main able to it's partnerships endeavoring made at to people players great things of our customers And deliver technology, products tremendous there. our base the lot that. a continue very, happening There's working we're are band for shoulder and going

Operator

line Longbow Our ahead. Sean of the last from Please question comes go with Harrison Research.

Sean Harrison

Hi, year, for next questions. XG sales a thanks that you the Kris do capital is fourth up? the considering coming XX% then today. and How that launches the tracking about Mainly be intensity of here in my running quarter in taking for see here, will focus all

Kris Sennesael

Yes, you're right.

Huawei take as into range into we to now demand of reduced right look will in XX% CapEx and course, factory from at campuses So utilizations have the revenue account running signal that. and we to

advance necessarily course, in capacity, our to make of BAW technology execute the products our in the operation, in robust TCSAW. as investments especially technology and then integrated our course, end will BAW And about, will necessary not and expanding to our have capacity upgrading and more more well. filter But talked of Now back there, expand we operation. more our as side, and on also, but in part our we making increase Liam BAW to ramp, get on flip filter as just and continue out technology, we the to capabilities

below Going forward, XX% expect CapEx of to that lot trend I revenue. into play of that. maybe a But there's elements

Sean Harrison

there's underutilization you And I a could you weakness. some the least what near-term on the think is mentioned drag under hoping was from I because Huawei maybe then the qualify follow gross as impact second that at margin? up, drag of here the in

Kris Sennesael

quarter to guided now Yes, QX so the as gross XX.X%. and September came in XX% to margin XX.X%, we QX in

down. So slightly maybe flat,

to operational of translates into And of higher into very first a cost we efficiencies added reductions I little driving well complex benefit. do products margin. as have and bit the value that continue to higher well market. we And we And typically gross a on so higher And all, continue on and really mixed well. think execute execute

to addition gross demand for is reduced signal and the entity Having said from a of strongly headwind that Huawei a margins gross expansion. Huawei list somewhat of and margin becoming the

of running And product most about revenue. to Huawei fabs. mean, I on running was was Just of total that XX% our

fabs The end back fabs, fabs as ends of the filter well. our some front and

And And future will plays situation as and what becoming little see of demand course, headwind, out we take can. will near-term out as of actions in not Huawei course, bit cost the the that is a we will take whole necessary underutilization we how much a be. of to hesitate the the so, to

And well I said that we Having mean, of about main XX%. remain definitely produce items. strong margins very that, XX% continue margins one to EBITDA very course, our strong will focus on of above operating or and

Operator

turn Ladies go any the question-and-answer closing back Griffin I'll conclude Mr. session. and gentlemen, that call does to over comments. now ahead. today's for Please

Liam Griffin

investor to thank events for We the you. and upcoming Thank participating today's during other Thank quarter. on call. look you seeing conferences you, and and all you forward

Operator

for participation. and that thank conference Ladies does your you gentlemen, call. We conclude today's

Skyworks Solutions (SWKS) 7 Aug 192019 Q3 Earnings call transcript