SWKS - Skyworks Solutions, Inc.

Operator: Thank you for standing by. My name is Kathleen, and I will be your conference operator today. At this time, I would like to welcome everyone to the Skyworks Fourth Quarter for year 2025 Earnings Call. [Operator Instructions] Thank you. I would now like to turn the call over to Raji Gill, Vice President of Investor Relations of Skyworks. Please go ahead. Rajvindra Gill: Thank you, operator. Good afternoon, everyone, and welcome to Skyworks' Fourth Fiscal Quarter 2025 Conference Call. With me today for our prepared remarks is Phil Brace, our Chief Executive Officer and President; and Philip Carter, Senior Vice President and Chief Financial Officer for Skyworks. This call is being broadcast over the web and can be accessed from the Investor Relations section of the company's website at skyworksinc.com. In addition, the company's prepared remarks will be made available on our website complete after the conclusion during the call. Before we begin, I would like to remind everyone that our discussion will include statements relating to future results and expectations that are or may be considered forward-looking statements. Please refer to our earnings press release and recent SEC filings, including our annual report on Form 10-K for information on certain risks that could cause actual outcomes to differ materially and adversely from any forward-looking statements made today. Additionally, today's discussion will include non-GAAP financial measures consistent with our past practice. Please refer to our press release within the Investor Relations section of our company website for a complete reconciliation to GAAP. Lastly, for detailed information regarding the Skyworks and Qorvo combination announced on October 28, I encourage you to review the press release investor presentation and related materials available on our Investor Relations website. Today's call, however, will focus on our fiscal fourth quarter and full year 2025 results as well as our outlook for the December quarter. With that, I'll turn the call over to Phil Brace. Philip Brace: Thanks, Raji, and welcome, everyone. Before getting into the quarterly results, I want to take a moment to reflect on what we've accomplished over the past few quarters. One, we've had three straight quarters of solid execution with both revenue and non-GAAP EPS exceeding expectations. We're seeing strong momentum across mobile and broad markets as our teams continue to execute. Two, we streamlined our sales and marketing teams to be more customer-focused and enhanced collaboration with the engineering teams, appointed a new executive to lead global sales and welcomed a new Chief Financial Officer, further strengthening our leadership team as we position the company for its next phase of growth. Three, last quarter, we announced the consolidation of our Woburn facility to improve our long-term cost structure and support healthier gross margins. And finally, for last week, we announced an agreement to combine with Qorvo, a transformative deal that upon closing will add meaningful scale, diversification and a broader highly complementary technology and product portfolio. Moving to the quarter. Skyworks delivered strong results, fueled by a significant upside in mobile and sustained strength across broad markets. We posted revenue of $1.1 billion, delivered earnings per share of $1.76, and for the full fiscal year, we generated $1.1 billion of free cash, representing 27% free cash flow margin. In mobile, results again were strong, with revenue up 21% sequentially and 7% year-over-year. Our outperformance reflects healthy sell-through and a richer product mix at our top customer, along with continued growth in Android. Looking ahead, we see multiple drivers of long-term RF content growth. Internal modem adoption, added AI functionality and higher RF complexity are expanding our opportunity inside the smartphone. We're also delivering more performance in smaller form factors supporting new features within existing sockets. With our deep RF expertise, strong customer relationships and manufacturing scale, we are well positioned as the next phase of wireless innovation take shape. Broad Markets has delivered another solid quarter. Demand was broad-based across edge IoT, automotive and data center. In edge IoT, WiFi 7 adoption continues to accelerate across home, enterprise and industrial applications. Customers are moving quickly to upgrade platforms that require faster connectivity, lower latency and better power efficiency. Backlog and order trends remain solid and we anticipate continued strong adoption entering fiscal '26. We're also making good progress on next-generation WiFi 8 programs to extend that leadership. In automotive, design activity remains robust as vehicles become more connected and intelligent. The run rate exiting fiscal '25 represents a new record for our automotive business, surpassing our previous high in fiscal '23. We're entering next year with a robust pipeline of design wins across 5G telematics, infotainment and power management systems across a broad set of global OEMs. In data center infrastructure, activity continues to rebound as customer inventories have normalized. The recovery that began in mid fiscal '25 has continued to gain traction and we see a favorable setup for further growth into fiscal '26. This quarter's momentum was supported by broad-based demand, including increasing timing design win activity for next-generation 800-gig platforms for data center and cloud infrastructure. Taken together, Broad Markets has evolved into a more balanced and durable growth engine for Skyworks. Now an approximately $1.5 billion business with positive momentum over the past 7 quarters, expanding customer reach and margins above the overall corporate average. Before we move into the financial details, I'd like to take a moment and welcome Philip Carter as our new CFO. Philip brings extensive financial and accounting experience in the semiconductor space, having previously served as Skyworks' Principal Accounting Officer before becoming the Chief Accounting Officer at AMD. We're happy to have him back and look forward to working together as we continue building Skyworks for the long term. With that, I'll turn the call over to Philip for a discussion of last quarter's performance and outlook for Q1 of fiscal '26. Philip Carter: Thanks, Phil. I'm excited to be back at Skyworks and to work again with such a talented team, having spent many years here in my career, it's great to see the company's continued momentum and strong execution. I look forward to partnering with Phil and the rest of the leadership team to drive long-term value for shareholders. Now turning to our fourth fiscal quarter results. Skyworks delivered revenue of $1.1 billion, exceeding the high end of our guidance range. During the quarter, our largest customer accounted for approximately 67% of revenue. Mobile represented 65% of total revenue, up 21% sequentially and 7% year-over-year, supported by stronger sell-through at our top customer and continued growth in Android. Broad Markets grew 3% sequentially and 7% year-over-year, driven by growth across edge IoT, automotive and data center. Gross profit was $511 million with gross margin of 46.5%. Operating expenses were $247 million, slightly above the high end of our guidance range, primarily due to higher employee incentive accruals tied to stronger quarterly revenue. We're keeping a disciplined approach to spending, investing where it matters most for future growth. Operating income reached $264 million, translating to an operating margin of 24%. Other income was $11 million, and our effective tax rate was 4.1%, resulting in net income of $264 million and diluted earnings per share of $1.76. For the full fiscal year, we generated $1.3 billion of operating cash flow and capital expenditures of $195 million, resulting in annual free cash flow of $1.1 billion or 27% free cash flow margin. We do expect free cash flow to remain solid in fiscal '26 but below fiscal '25, given the lower expected revenue base and more normalized working capital trends, particularly as we no longer expect a tailwind from inventory reductions. We ended the quarter with $1.4 billion in cash and investments and $1 billion in debt, maintaining a strong balance sheet and ample flexibility to support our strategic and financial priorities. Looking ahead to the first quarter of fiscal '26, we expect revenue to be between $975 million to $1.025 billion. We anticipate mobile to decline low to mid-teens sequentially. We expect broad markets to be up slightly sequentially, representing 39% of sales and up mid- to high single digits year-over-year. Gross margin is projected to be approximately 46% to 47%. We expect operating expenses between $230 million and $240 million as we continue to fund key R&D initiatives while maintaining tight control over discretionary spending. Below the line, we anticipate approximately $4 million in other income, an effective tax rate of 10% and a diluted share count of 150.5 million shares. At the midpoint of our revenue outlook of $1 billion, this equates to expected diluted earnings per share of $1.40. With that, I'll turn it back to Phil for closing remarks. Philip Brace: Thank you, Phil. A heartful thank you to our employees, customers and partners. Your hard work and support fuels our success and sets the stage for continued leadership and growth. Operator, let's open the line for questions. Operator: [Operator Instructions] And your first question comes from the line of Harsh Kumar of Piper Sandler. Harsh Kumar: I guess, Phil and Phil, congratulations on solid results, what I think is a very good guidance as well. Phil Brace, I had a question for you. It was not that long ago that your company was telegraphing a loss of content at your largest customers, but all things considered, when I look at what you guys have done, your revenues are holding really well. I mean, extremely well. And I was curious what has changed or what didn't happen or maybe what went right for you, was it units? Or was it share or just traction in other areas that is causing you to outperform relative to that prognosis maybe 6 to 9 months ago? Philip Brace: Yes. Thanks, Harsh. It's a good question. Look, obviously, we've been pleased with our results. The mobile results were stronger than expected and our guide reflects that. I think there's a number of factors for that. First, obviously, units are better than expected. Our customers -- our collective customers, both our large ones as well as Android ones are seeing very positive uptake from the latest phone models, which I think has been successful. We've seen some of that. Frankly, we've also seen some mix in the underlying phones that have been geared towards our content as well. So we've had a little bit about the unit benefit and a mix benefit, it's -- obviously, as you can imagine, it's a little difficult to predict that three or four quarters out, right? So there's a lot of things you can't predict out. The guidance going forward does comprehend the content comments that we made previously. So I would say it's a combination of both. And I think we've executed well in spite of all that. Harsh Kumar: Very well. And for my follow-up, if I can ask you, you mentioned in your comments that you've streamlined sales, which I think was part of the problem. I was curious what just at a very high level, what you've done and how you went about it and how is it benefiting the business from here? Philip Brace: Yes, it's a great question. I mean, obviously, recruited in a new executive, which I've been really happy with sometimes just having some fresh air is helpful. It's like listening to music, it brings a fresh air. It's a different perspective on the way to do things. From a structural perspective, what we've done is we've kind of put what I'll call the traditional product marketing functions, which were previously integrated into one group. We actually put that back into business units to really drive tighter alignment between the engineering and the product line road maps and frankly, have our sales team focused on what they should be focused on, which is revenue generation and customer acquisition. Operator: Your next question comes from the line of Christopher Rolland of Susquehanna. Christopher Rolland: So I guess, first of all, for Phil, maybe on mergers and/or divestitures, obviously, besides big pending one. I think the story here at one point was to diversify outside of handset and a single large customer seems like you're actually doubling down the other way instead of diversifying. But are there still opportunities even when this is pending to do either mergers and divestitures. And is there a theme that could be involved here on the merger side, whether it be analog or IoT, obviously, without giving anything away, just -- I think we're waiting for a big strategic kind of update from you and maybe we were sidetracked or side-swiped by the Qorvo news. Thoughts on this diversification outside. Philip Brace: Well, to be frank, I kind of disagree with your characterization on a couple of comments, but I'll say, look, when we go back to the Qorvo deal, I think you should just go back to the data that we talked about last week, but I think this gives us both scale and diversification. The customer concentration should actually go down. And I view this as a concentration in wireless, not just handsets. And so I think that solves a lot of both strategic and financial challenges for the company, and I'm excited about the combination. With respect to what occurs in dependency, both of our companies need to operate independently. We'll continue to do that. Obviously, right, they're subject to certain operating covenants that we both need to live through. And so we're going to continue to be focused on running our businesses and do that. I would not expect any major transformational activities and the like. And from my point of view, this represents the biggest deal the company has done in its history and one of the biggest transformation deals in the RF industry in general. So I characterize -- disagree with your characterization being sideswiped but nevertheless, thank you for the question. Christopher Rolland: It won't be the first time that someone's disagreed with me and vocalized it. Perhaps, secondly, it does sound kind of your prepared remarks, actually, from your answer to Harsh's question. It sounds like you guys may be a little bit more optimistic on Android. You're seeing better things there. Does the kind of forward outlook, has it changed at all? Are you perhaps a little bit more optimistic on addressing Android in the future? Or do you still worry about kind of the commoditized offerings or treatment of RF in that space? Philip Brace: Yes. I think, honestly, our biggest customer in that space is a mountain view of base customer, and that's -- we've got a very strong footprint there, and they tend to value the performance and integration and features that we can provide. I think that, that's -- I guess, I would say the theme is us focusing on the premium part of the segment that value the integration performance that we can provide, and that's where it is. And so you've seen us kind of I'll say, defocus away from the more lower-end commodity space, it doesn't value that. And so I think that no change from our view on that area and our Android strength is really on one major customer in sentimental view. Operator: Your next question comes from the line of Krish Sankar of TD Cowen. Hadi Orabi: This is Hadi for Krish. Congrats on the results. I have a question on -- if we exclude the biggest customer, it looks like your revenues were up like 50% year-over-year. How most of that is driven by the units versus content? And how we should think about revenues outside the main customer going forward? And I have a follow-up. Philip Brace: So the first part of your question was about the business within the main -- I missed the first part of your question, if you wouldn't mind please repeating that. Hadi Orabi: Yes, if we exclude the biggest customer, your revenues were up like 50% year-over-year. So I wonder what's driving that? Is it units? Is it content? What's the biggest bucket? And how we should think about that going forward, that segment? Philip Brace: I think you're just referring to our Broad Markets business on that side, right? I'm just kind of looking -- or maybe Phil will help with that. Philip Carter: Yes. So as we look at our broad markets business, it's really strength across the board as we look at automotive, IoT, edge I mean we're seeing strength in kind of a lot of different markets within the broad market space, and that's really driving the growth outside of our largest customer. Hadi Orabi: All right. And a question about China. Your exposure there is below 10%. Your peer is trying to exit the market. So I think -- I wonder like how you guys think about the China market? And if you're comfortable with the level of exposure there today? Or do you have any plans to reduce that going forward? Philip Brace: I don't think we're changing our focus there. Look, our focus is really on the premium space in that segment. And I would like to point out, beyond handsets, we have other business there as well, including the automotive space and other areas where we have presence. We mentioned BYD and the like. So we do have other business there. We're really focused on the customers and the opportunities that will value the technology and the performance that we bring. And so to that extent, particularly for some of the higher volume, lower SP handsets, we're choosing not to participate there because they're just economically not attractive businesses. And that hasn't changed, and our focus won't change there. Operator: And your next question comes from the line of Jim Schneider of Goldman Sachs. James Schneider: I was wondering if you could maybe talk about some of the dynamics you're seeing in the broad markets business. I mean clearly, you're seeing a recovery across the space and across the peer group. But I'm kind of curious given some of the data center or other dynamics you called out, Phil, how you would encourage us to think about the long-term structural growth rate of that business? Is this something that could easily be mid-teens long term? Or is that maybe a little bit too aggressive and just how we should think about that from a long-term perspective. Philip Brace: Yes. I think we're looking at it as a long-term kind of double-digit grower. That's kind of where I would have it, where we've kind of got it pegged into and we're modeling and kind of shorter term and even in the medium term, I mean, some of the growth drivers behind that include WiFi, WiFi 7, moving to WiFi 8. You think about some of the strength in automotive in terms of connectivity, in-vehicle entertainment, some of the broadcast radio, things like that. I think that's going to go well. And then the infrastructure and cloud space timing and power opportunities. So we feel like we're attracted -- embedded in segments that have higher growth opportunities and are characterized by longer revenue cycle. So we think a double-digit growth is definitely possible in that business, and that's what we're building for and investing for. James Schneider: And then maybe as a follow-up, if you can maybe kind of speak to the growth rate you expect from OpEx from here on out. Can you sort of hold this December OpEx run rate into say, the first half of the next calendar year. Should we expect some kind of step-ups from here? Or how should we think about the structural run rate in that given the investments you're intending to make? Philip Carter: Yes. So as you look at the fourth quarter, we did have an extra week in there, which added about $7 million to the current quarter. As we look forward for the guide that we provided looking at targeted investments, but we don't anticipate anything above normal inflation as we maintain discipline over our spend. Operator: And your next question comes from the line of Karl Ackerman of BNP Paribas. Samuel Feldman: This is Sam Feldman on for Karl Ackerman. So Android was just under $100 million last quarter, driven by the Google product ramp. And it sounds like you saw strong unit volumes this quarter. So can you give us a sense of the magnitude and direction of the Android business this quarter and generally discuss the puts and takes of achieving $400 million run rate? Rajvindra Gill: Yes. Thanks for that. This is Raji. So as you said, yes, Android was roughly a little bit under $100 million, and it was up sequentially. It's primarily driven by Google. We expect it to increase again in the December quarter, again, driven by Google. Operator: Your next question comes from the line of Edward Snyder of Charter Equity Research. Edward Snyder: So it's well understood that the mix that your largest customer isn't paving the internal solution, which is actually great for Skyworks, given you've got so much more content on the base model. So I'm curious, how much of the strength that you're seeing there is due to, say, mix versus units? And more importantly, earlier this year, the guide was for a pretty steep decline overall in the fourth quarter. You've done better than that. But that was primarily just for the first couple of quarters because the mix of phones doesn't favor the baseball in the first several quarters, but the Pro Max are discontinued over the first year. So your base model runs for a whole year after that. So I'm just trying to get an idea. I don't want you -- I know you haven't got a forecast out too far, but the strength you're seeing in content probably shouldn't fade as the high-end models disappear in the next, whatever, 6 to 9 months, and you should -- this should provide you a pretty good base for increases next year. Is that a fair assessment? Philip Brace: Well, I think as you pointed out, and I think you kind of -- thanks as for the question, you probably -- I think you may have written a note included into this as well. It's actually very difficult to afford. First off, we can't. Second off, we shouldn't. And third off, it's super difficult to do because the actual demand and how it plays out depends not only on the mix of units within the phone, but the balance of phones between generations as well. And so some of the strength you saw in emerging markets could have been from different phone models and then there's mixes that we go in between there as well. I would say that it's fair to characterize that our guidance when we guide going forward, that includes our best understanding of where we're going to be both units and content-wise and I think that we'll just continue to guide that one quarter to the other. It has -- obviously, the net result has been better than we expected at this point, and we'll continue to guide one quarter at a time. Edward Snyder: But you got to benefit from both mix and units? Philip Brace: Yes, I think that's probably fair to say, both mix and units, yes. Edward Snyder: Great. And then I know it's too early to project because we haven't gotten to down select now either, but -- and I'm not looking for guidance here, but you know what you're up to bat against. Everybody knows what they're doing for the full year in the design competition. So you know what you're competing for and I know you've been kind of modest on your guidance for next year. Are we still kind of in that range, too? Or should we be thinking about maybe gains in modules that you had shared previously that maybe you're getting back more than you had on this year? Philip Brace: Yes, it's too early to comment on that, as you might know, I mean, I think that clearly, our content direction has been a downward sloping line. I think I've talked about that. The goal is to change the slope of that line, and I think we'll get more clarity on that in the coming weeks and months, but too early to comment on that. At this point, it's a highly competitive environment, but we feel confident about our technology and the products we're delivering, but it's a highly competitive environment, and we'll see how it plays out. Edward Snyder: Your accounts receivables shot up. It's the second highest going back for, I don't know, at least 5 or 6 years. And I know it's stacked up because of the September quarter and the launch and all that. But I'm just trying to get -- is there something else going on that's a good incidence of both Google and your largest customers? So we're up 51% or ish sequentially. Is there something else in there that we should be thinking about? Philip Carter: Yes. There's nothing unusual in AR. It really has to do the linearity of revenue and the timing of collections, but nothing out of the ordinary. Operator: Your next question comes from the line of Peter Peng of JPMorgan. Peter Peng: Congratulations on the results. I just want to follow up on the last question. So at your largest customer, is it the mix within the current generation? Or is it a better mix of the prior generation model that's driving better-than-expected content? Maybe you can clarify that. Philip Brace: It's all of the above. I mean it's better units. You've seen all the press, it's all of the above. We really can't get -- I mean, we really can't get into too much more on that. It's all of the above. It's better mix, it's better content. It's better -- it's lots of better results that are all included in the guidance. We can't really get into more than that. Peter Peng: Okay. That's fair. And then I think your fair -- your Broad Market has been growing for the -- it's almost 7 quarters in a row. And you guys are kind of in this high single digits. I think you guys have like three big buckets, your auto, your infrastructure and then your consumer IoT. Maybe if you can kind of give us a characterization of what is kind of back to normal growth? And what buckets are still kind of the more trend line growth? Philip Brace: Yes, sure. Rajvindra Gill: Yes, that's a great question, Peter. So if you look at the guidance for broad markets, we're guiding it to be up slightly on a sequential basis. On a year-over-year basis, it's up kind of mid- to high single digits. The growth really is across the board, but it's being led primarily by WiFi 7. The WiFi 7 adoption is quite strong. The backlog is very strong entering into fiscal '26. So there's a lot of momentum there. Second, we mentioned that the automotive business exiting fiscal '25 is at a record. So that's almost $65 million a quarter in automotive run rating exiting fiscal '25, and we feel good about the pipeline going forward. And then lastly, the data center and infrastructure business, after kind of several quarters of inventory digestion by a lot of our customers, we're starting to see those customers start to rebuild inventory again. And we're also seeing some nice design wins, timing design wins on some 800 gig platforms that we mentioned on the prepared remarks. So all three are growing. We do expect some seasonality as we enter into fiscal '26, which you would expect after you burn off some inventory. So I would kind of factor that in. But overall, we're moving in the right direction in Broad Markets. Operator: Your next question comes from the line of Craig Ellis of B. Riley Securities. Craig Ellis: Thanks for taking the question. I'll echo the congratulations on the execution. Phil Brace, I wanted to start with one for you. So in your prepared remarks, you mentioned some key executive changes, bringing in a new CFO, a new head of sales. The question is, as you look across the broader organization, do you feel like you have the right team in place across all the other functions or do you expect there to be additional changes and to what effect, whether it be in product, manufacturing, operations, et cetera? Philip Brace: That's a great question. I feel great about the leadership team that I have in place now, and I'm not anticipating any changes. Craig Ellis: All right. And then the second question is for Philip Carter. So it's a 2-parter one. As we look at the business, we're clearly tracking well in the fiscal first quarter. But can you remind us what fiscal second quarter seasonality is in the eyes of Skyworks. And related to that, as we think about some of the working capital dynamics of the business, how should we think the company is planning to manage things like inventory going into what is a seasonally softer period for its biggest segment for a couple of quarters. Philip Carter: Yes. So I guess on the first question, we don't guide beyond one quarter out. I think, generally speaking, it does look like normal seasonality. In terms of working capital, so we did benefit greatly in terms of free cash flow in fiscal '25 as a result of burning down some inventory. I do not anticipate that to repeat next year. So there is going to be some inventory build as we get near the end of the year. But yes, otherwise, the business in terms of inventory is running well. There's low inventory levels in the channel. And so we have pretty good visibility there. So yes, that's what we're seeing. Operator: And there are no further questions. I will now turn the conference back over to Phil Brace, the CEO and President of Skyworks for closing remarks. Philip Brace: Great. Thanks for participating in today's call. I look forward to speaking with you at upcoming investor conferences throughout the quarter. Thank you. Operator: Ladies and gentlemen, that concludes today's call. Thank you all for joining. You may now disconnect.

Operator: Good day, and welcome to the Skyworks Third Quarter Fiscal Year 2025 Earnings Call. [Operator Instructions] As a reminder, this call may be recorded. I would now like to turn the call over to Raji Gill, Vice President, Investor Relations and Corporate Development. Please go ahead. Rajvindra S. Gill: Thank you, operator. Good afternoon, everyone, and welcome to Skyworks' Third Fiscal Quarter 2025 Conference Call. With me today for our prepared remarks is Phil Brace, our Chief Executive Officer and President; and Rob Schriesheim, Interim Chief Financial Officer for Skyworks. This call is being broadcast over the web and can be accessed from the Investor Relations section of the company's website at skyworksinc.com. In addition, the company's prepared remarks will be made available on our website promptly after the conclusion during the call. Before we begin, I would like to remind everyone that our discussion will include statements relating to future results and expectations that are or may be considered forward-looking statements. Please refer to our earnings press release and recent SEC filings, including our annual report on Form 10-K for information on certain risks that could cause actual outcomes to differ materially and adversely from any forward-looking statements made today. Additionally, today's discussion will include non-GAAP financial measures consistent with our past practice. Please refer to our press release within the Investor Relations section of our company website for a complete reconciliation to GAAP. With that, I'll turn the call over to Phil. Philip Gordon Brace: Thanks, Raji, and welcome, everyone. Skyworks delivered strong results this quarter, fueled by an upside in Mobile and sustained strength across Broad Markets. We posted revenue of $965 million, delivered earnings per share of $1.33 and generated free cash flow of $253 million. Revenue, gross margin and EPS exceeded the high end of our guidance. We returned $430 million to shareholders this quarter through share repurchases and dividends and more than $1 billion across the past 2 quarters, supported by strong free cash flow and disciplined working capital management. In Mobile, revenue came in above seasonal trends with strength continuing into the September quarter, supported by healthy sell- through at our top customer and new product launches in Android. While end demand signals remain solid, we're actively monitoring the channel and are maintaining a disciplined approach to inventory. Looking ahead, we see multiple drivers of long-term RF content growth, including opportunities from internal modem adoption, higher RF complexity with AI features and a larger addressable footprint within the smartphone. At the same time, we'll continue to deliver more performance in smaller form factors, enabling richer features within current sockets. Smartphone replacement cycles remain historically long, now averaging over 4 years, even as our top customer maintains a record installed base. The first wave of AI-capable phones is reaching scale and early demand signals are encouraging. As AI capabilities become more intuitive and integrated, we believe this could drive an inflection in upgrade cycles, leading to a potential tailwind to volumes and content over time. Our deep RF expertise, strong customer relationships and advanced manufacturing put us in a strong position to lead through this next phase. Broad Markets continue to gain momentum, driven by new customer engagements across edge IoT and automotive. We are seeing stronger order flow, healthy book-to-bill levels and lean channel inventory. In edge IoT, WiFi 7 adoption is accelerating across consumer, enterprise and industrial applications. These systems demand faster speeds at ultra-low latency, translating to greater RF complexity. Looking ahead, we're already investing in WiFi 8 to support the next wave of performance. Automotive remains a key growth driver for Skyworks, supported by long design cycles that offer greater visibility and more durable revenue streams. We broadened our reach across a growing roster of global OEMs, securing programs with BYD, Ford, Geely, Nissan and others. As vehicles become more software-defined and connected, the need for secure wireless links continues to grow, from 5G telematics to over-the-air updates and infotainment, all of which increase our content opportunity. In traditional data center and infrastructure, business activity is rebounding as inventory normalizes. Meanwhile, accelerating AI workloads are driving upgrades to 800 gig and 1.6 terabit switches, increasing demand for our precision timing solutions. Altogether, Broad Markets is becoming a stronger, more resilient growth engine for Skyworks, and we expect this momentum to continue with both sequential and year-over-year growth in the September quarter. In aggregate, this is a $1.5 billion business with a double- digit long-term growth profile and gross margins above the corporate average, a core part of our portfolio that we believe remains underappreciated relative to its scale and contribution. Today, we're taking action to optimize our manufacturing footprint with the planned closure of our Woburn manufacturing facility and the consolidation of operations into our Newbury Park site. This move is designed to drive higher fab utilization, lower fixed costs and improve overall efficiency in the future. As our product mix shifts towards more advanced, higher-value content, this consolidation positions us to expand gross margins over time, while reinvesting in next-generation technologies and maintaining the scale and technical capability required to serve our premium customers at the highest levels. Before we dive into the numbers, I want to welcome Rob Schriesheim to the team in his role as interim CFO. Rob has served on the Skyworks Board for nearly 20 years and knows our business, strategy and leadership team exceptionally well. His appointment ensures continuity as we move through this transition. On the CFO search, we've been taking a deliberate approach and have a number of strong candidates in the pipeline. I expect the process to conclude shortly. With that, I'll turn the call over to Rob for a discussion of last quarter's performance and outlook for Q4 of fiscal '25. Robert A. Schriesheim: Thanks, Phil. It's a privilege to step in as interim CFO and support the Skyworks team during this transition. Having served on the Board for nearly 2 decades and being a shareholder, I know the company well and have confidence in our strategy, our financial discipline and our long-term growth opportunities. Turning to our third fiscal quarter results. Skyworks delivered revenue of $965 million, exceeding the high end of our guidance range. During the quarter, our largest customer accounted for about 63% of revenue. Mobile represented 62% of total revenue, up 1% sequentially and 8% year-over-year, driven by stronger sell-through at our top customer and new product launches in Android. Broad Markets, which includes edge IoT, automotive, industrial, infrastructure and cloud grew 2% sequentially and 5% year-over- year. This marks the sixth consecutive quarter of growth and reflects stronger end demand and further inventory normalization across key verticals. Gross profit was $454 million, with gross margins of 47.1%, above expectations, driven by product mix and ongoing cost discipline. We see further opportunities to expand margins over time as we execute on our manufacturing efficiency road map. Operating expenses totaled $230 million, aligned with our long-term product road map. We remain disciplined with spend, balancing investment in future growth with prudent cost management. Operating income reached $224 million, translating to an operating margin of 23.3%. Other income was $1 million and our effective tax rate was 11.2%, resulting in net income of $200 million and diluted earnings per share of $1.33, $0.09 above our guidance. Cash flow remained strong, with operating cash flow of $314 million and capital expenditures of $61 million, resulting in free cash flow of $253 million, or 26% of revenue. Over the past 2 years, our free cash flow has benefited from effective working capital management as we've reduced inventory levels. We returned $430 million to shareholders during the quarter, comprised of $104 million in dividends and $330 million in share repurchases. Over the past 2 quarters, we've returned more than $1 billion to shareholders. We ended the quarter with $1.3 billion in cash and investments and $1 billion in debt, maintaining a strong balance sheet and ample flexibility to support our strategic and financial priorities. Looking ahead to the fourth quarter of fiscal 2025, we expect revenue to range between $1 billion to $1.03 billion. In Mobile, we anticipate mid-single-digit sequential growth. We're seeing healthy sell-through, lean channel inventories and solid order visibility heading into the September quarter. Broad Markets is set to grow again this quarter, with year-over-year trends accelerating and continued strength in bookings, backlog and channel sell-through. Gross margin is projected to be approximately 47%, plus or minus 50 basis points, reflecting the stable product mix and ongoing cost discipline. We expect operating expenses between $235 million and $245 million as we continue to fund key R&D initiatives while maintaining tight control over discretionary spend. As a reminder, the September quarter includes a 14th week, which adds about $7 million incremental expenses. Below the line, we anticipate approximately $4 million in other income, an effective tax rate of 13% and a diluted share count of 149.5 million shares. At the midpoint of our revenue outlook, this equates to expected diluted EPS of $1.40. With that, I'll turn it back to Phil for closing remarks. Philip Gordon Brace: Thank you, Rob. Before I close, I want to thank our employees for their incredible dedication and our customers and partners for their continued trust and collaboration. Operator, let's open the line for questions. Operator: [Operator Instructions] Our first question comes from Chris Caso with Wolfe Research. Christopher Caso: I guess the first question is within the handset business, is there anything that you consider that's changed over the last 90 days or with respect to what you expect on content, what you expect on unit sales? Just a little bit of color about what may have been changing within the Mobile landscape. Philip Gordon Brace: Thanks for the question. Look, I think, in general, we've just seen strong demand, I mean, strong demand for some of our products. I think our largest customer had a conference call the other day and kind of reflected that in some very strong demand. And we're seeing the benefit of strong unit demand and frankly, shipments that benefit us from a mix point of view. So that continues to be strong as reflected in our results and our forward-looking guidance. Christopher Caso: Okay. And just with regard to the extra week that you talked about in the September quarter. Well, how should we think about December quarter seasonality, both given some of the content changes at your largest customer, typical seasonal effects and then the impact of the extra -- the absence of the extra week as you go into the December quarter? Philip Gordon Brace: Well, we're not -- obviously, not guiding beyond the current quarter. And I would say that we're seeing solid demand across the board, both in Mobile and in nonmobile. Our book-to-bill remains strong, and we have low inventories at this point. So that's as we are. I think it's been -- December quarter has been a little bit more volatile than others over the past couple of years, I think, just given by other factors. So it's hard for us to say we're just focused on one step at a time, continuing to execute and deliver and our guidance for the quarter kind of stands. Rajvindra S. Gill: And just a quick follow-up, Chris. This is Raji. The extra week did not have an impact on the revenue for the September guide. It just has an impact on the OpEx. Operator: Our next question comes from Edward Snyder with Charter Equity Research. Edward Francis Snyder: So you've talked at length earlier this year about the changes as your largest customer this new product release. I want to touch on a couple of things. Obviously, that has a lot to do with the kind of odd mix of phones that they'll be releasing this year. I know you can't talk about details, but as we move into 2026, if the trends that they've talked about, other companies like Qualcomm have talked about and other folks have hinted at, if they actually play out as expected with the mix starts favoring an internal modem, does that naturally increase your blended content? Not so much on the phones that are being produced now, but if everything -- if we take a snapshot and hold things constant on internal versus external for 2026, would that give you guys a significant boost? Or are things going to change significantly or could change significantly for the next year's model so everything is back up in the air and we got to figure all out from zero again. Philip Gordon Brace: Yes. I mean look, for this particular cycle, we've kind of commented that, generally speaking, we have more content available to us in the internal modem as some parts that were previously unavailable to us now become available to us again. So I think that, that apples- to-apples, that remains to be seen through and constant through the cycle. As we look at things that affect our overall business, right, that's one factor. Mix of what the customer ships between the various different phones is another factor, mix of the various different iPhone, particular models, geography. There's a whole bunch of factors that reflected that. And I think right now, we've got a little bit of tailwind with respect to we're getting solid demand across the phones that have our content in them. So as -- what happens going forward, we'll see. But right now, it's good. Edward Francis Snyder: But part -- if I could follow up, part of the hand you were dealt this year -- this fall was basically because that internal modem is such a small percentage of total phones sold here that dual sourcing on the part is -- it's clear you have talked about it, we've talked about at length, the transmit [ and receive ] module. It's hard to split that when you're only doing maybe 10% or 15% of total volume. I guess my question is, is it a rational expectation that, that might get split on the internal modem when volumes pick up as a natural consequence of, one, you're gaining back share in that exact part in the upcoming phone on the external [ modem phone ]? So clearly, you qualify for that party against Avago or Broadcom. So I'm just trying to get a handle on, is it a rational assumption to assume that if that volume picks up on that phone, the mix starts favoring you and it's large enough to start splitting you to get a bigger chunk of that? Because if your content is already up on that without the transmit diversity receive, and that's what you said, then one would expect to be up significantly with it, right? Philip Gordon Brace: Yes. I mean all things being equal, I think that's probably fair. But I mean all things aren't necessarily equal. It just depends on what phones they ship and all the rest of that stuff. But generally speaking, we do have more content to us available on the internal modem versus the external modem. So as that shifts more to the internal modem, there's a natural tailwind for us there, I would say that. Operator: Our next question comes from Karl Ackerman with BNP Paribas. Samuel Jacob Feldman: This is Sam Feldman on for Karl Ackerman. So you indicated Android revenues were flat on a sequential basis in March quarter at around $70 million. How should we think about your Android business in this quarter relative to last quarter? And going forward, can you grow from these levels? Rajvindra S. Gill: Yes. So this is Raji. So our Android revenue in the June quarter was up significantly. It was up just under $100 million. And this is really primarily related to our ramp with Google, and we expect continued growth into the September quarter when we're thinking about Android. Samuel Jacob Feldman: Great. And I have a follow-up. So is there any way to discern between demand pulling ahead of tariffs versus improved demand? And what inventory levels are you seeing at your end customers compared to last quarter? Philip Gordon Brace: Yes. We're trying to keep a really close eye on it. I think we've talked about in our prepared remarks. So in the past year, we've really been trying to be disciplined to take our inventory down. Our inventories right now are very, very thin lean levels. And so we're trying to maintain focus on that. Obviously, our customers don't always tell us why they're ordering products. We just try and deliver it where we can. And we're just trying to keep our inventories low to manage that. And our current guidance kind of reflects what we believe is the current environment with respect to tariffs and all the rest. Operator: Our next question comes from Christopher Rolland with Susquehanna. Christopher Adam Jackson Rolland: Congrats on the results. Phil, maybe for you now that you've had some more time to look deeply at things at Skyworks, have you kind of solidified your view on the importance of diversification beyond handset? And perhaps, you have any thoughts just broadly without obviously identifying any targets, but thoughts on end markets or products that are desirable for Skyworks? Or alternatively, would you be open to a larger merger within the RF industry? How might you feel on that? Philip Gordon Brace: Yes. I mean look, obviously, that's a very broad question. And I would say, certainly, I mean, you just look strategically at the company, and it's hard not to think that the single customer concentration we have is certainly probably suppressing our multiples compared to what it otherwise would be elsewise. So obviously, kind of diversification and growing the business is important. Having said that, right, I mean, we remain incredibly focused on continuing to keep our eye on the ball where our current bread is butter, right? We've got to maintain major focus on that. And so my message internally with the team is you need to walk and chew gum at the same time, right? We need to continue to be focused on executing cleanly, delivering the best parts we can for our largest customer and then frankly, continue to look ways to grow and diversify our businesses elsewhere. I think if you ask me about priorities and how I look at things in general, I'd probably look for things that are gross margin accretive, a little stickier, have a little, we'll say, a longer time constant of the revenue to help balance some of the potential volatility that comes from being in the handset market. So that's how I'd prioritize that. And in terms of size and scale, I mean, I'm really going to be focused on making sure that we can do things that are accretive. And I think that, that's going to be kind of an important focus for us and the management team. Christopher Adam Jackson Rolland: Awesome. And perhaps as a follow-up, are there any economics attached with closing the Woburn facility or consolidating that? Are there any other opportunities? And more broadly, maybe you can just talk to OpEx growth from here, how you kind of view it on a multiyear basis? Philip Gordon Brace: Yes. On the factory question, you kind of -- I mean, long term on that is we're not really breaking out specific numbers at this time, primarily because, right, it takes a while to get through that. We've got to manage a bunch of parts and do that. And frankly, the end gross margin that we have is going to be driven by the utilization and all the things we get there. Having said that, I mean, clearly, this will represent a tailwind, both in factory utilization, CapEx reduction, OpEx improvement and overall utilization of fixed cost assets. And so it should remain a tailwind, and we'll continue to guide that as it goes on. Rob, do you have any other comments on that? Robert A. Schriesheim: Yes, a couple of comments. First of all, having been on this Board for almost, I'm embarrassed to say, 20 years, one of the things we were excited about when we brought Phil in was not only is he got heavy operational focus and chops and discipline, but he thinks very strategically and he acts very decisively, and the fab consolidation or optimization was very much in line with that. He made that decision very quickly, and it was clearly focused on where the business is going, where the industry is going to forward invest in more advanced technologies. As to your second question on operating expenses, as I indicated in my prepared remarks, $235 million to $245 million in the September quarter, and we just did $230 million in the June quarter. Now that $235 million to $245 million in the September quarter includes about $7 million related to the 14th week. So excluding that, OpEx is up only modestly quarter-over-quarter, and we'd expect it to trend lower in the December quarter. So for the full year, the 16% year-over-year increase in FY '25 reflects both the timing dynamic and targeted investments we've made to support R&D programs. But I would also say, looking ahead to FY '26 and beyond, Phil has made it very clear that we're going to be very disciplined. Operator: [Operator Instructions] Our next question comes from Vivek Arya with Bank of America Securities. Liam Yevgeny Pharr: This is Liam Pharr on for Vivek. On the first one, just what is your content visibility in flagship phones into next year? Philip Gordon Brace: Well, I'm hesitating on the question because, I mean, clearly, it depends on lots of things. If you're asking what the next down- selection happen, that typically doesn't happen until the late fall in the Christmas, January time frame. So we won't have any other visibility other than that, other than what we've already shared. Having said that, right, I mean, I think you can see our results suggest that we've -- our customers shipping good mix of the phones where we have high content now. And if I look out long term, what am I encouraged about? I'm encouraged about RF content growth as more transmit capabilities come online, as the internal modem comes online and as, frankly, if the customer gets a good uptick in the refresh cycle. So all those things will kind of affect our performance going forward. Liam Yevgeny Pharr: Makes sense. Okay. So then in terms of kind of this pricing environment and you're bidding for new sockets, has there been any material change there over the last kind of 90 days or 6 months as you kind of continue to work for those sockets for expanding off of your current base, but also maybe regaining the ones that you've lost at your top customer? Philip Gordon Brace: Yes. I mean look, the pricing -- it is a highly competitive environment. We compete with very, very capable and credible competitors. And those competition makes us stronger. I mean it's -- when you're playing in this game, you got to like that game. It's a competitive game and you got to thrive in that. And we do. And I think that the pricing environment really hasn't changed. They expect us to deliver the best part at the best price, and we're kind of focused on doing that. I mean long term, what I'm encouraged about is we've got some of the stuff I talked about. Long-term content drivers include the movement to internal modem, more transmit capability, a balance of increased transmit, which will drive more RF content and frankly, a refresh capability on AI. So I kind of look at it. And stepping even further back, I go 99-point as far out as you can go, percent of the devices connected to the Internet are going to be connected wirelessly. And kind of I feel good about that spot, too. So... Operator: [Operator Instructions] Our next question comes from Edward Snyder with Charter Equity Research. Edward Francis Snyder: Great. So Phil, I don't know if you want to pontificate about it or not, but we've talked about it before. Do you feel like this year is probably your low point in content at your largest customer, given all the other trends? Philip Gordon Brace: Well, yes, look, I mean, we've obviously had a couple of down-selections that have not worked in our favor. And I think someone quoted happiness as an upward sloping line. And so I think we've got to change the trajectory of the downward sloping line to the upward sloping line. I think we're all laser-focused on that. Edward Francis Snyder: And then if I could ask, Woburn is being closed out, and I know you don't want to give too many specifics about the factory. But obviously, I would imagine one of the goals here is to increase utilization in Newbury Park. Philip Gordon Brace: Yes. Edward Francis Snyder: When are we likely to see the first results of that? Is it something we're going to see in a quarter or 2? Do we wait until next calendar year? And then any... Philip Gordon Brace: No, not the next quarter or two. I mean some of the products that are there, we've got to actually transition them to the Newbury Park side, and some of them are long lead time items. So it will take a little while. But long term, look, you're 100% correct. Long term, this positions us to invest in leading technology in Newbury Park, drive increased factory utilization, better fixed cost utilization which should benefit gross margin and reduce CapEx and all the rest of it. So that's kind of where we are. Edward Francis Snyder: Any color on the timing [ in Woburn ]? Is it 2 years or 1 year? Philip Gordon Brace: No comment right now. Edward Francis Snyder: Okay. And then am I correct assuming that it's all gas in Woburn? And is most of that gas for Broad Markets or Mobile or is it split? Philip Gordon Brace: It's split. I mean the gas technology is used for as for amplifiers, right? So it's split. Edward Francis Snyder: But it is all gas, right? Philip Gordon Brace: Yes. Operator: Our next question comes from Krish Sankar with TD Cowen. Krish Sankar: I actually had like 3 of them. First one, in terms of the auto business, can you say how big the auto business is today? Is it mid-single- digit percentage, 10 percentage? And could this double in the next year? How to think about it? And then I have 2 follow-ups. Rajvindra S. Gill: Yes. It's a great question, Krish. This is Raji. So automotive is now tracking around $60 million a quarter and up significantly on a year-over-year basis. And in the press release, we talked about a number of programs that we won, particularly at BYD, Nissan, Ford. And it's really across a variety of our products, whether it's 5G telematics, infotainment, power isolation. So we are quite bullish on that business, and it's very long design cycles and more durable revenue stream. So we have a good pathway there to continue to accelerate that revenue. Krish Sankar: Got it. And then on the Mobile side, how solid is the visibility of your largest customer versus Android compared to, let's say, 3 months ago? Are you seeing stronger sales due to content or units? Or any color on iOS, Android visibility versus 3 months would be helpful. And then I have one last follow-up. Philip Gordon Brace: I don't -- I mean, right now, our -- I mean, if you -- right now, our visibility is strong across the board. Primarily, book-to-bill is higher than 1. Channel inventories are low. And so -- and our visibility is solid at this point. We don't see any material difference between the two. Krish Sankar: Got it. And then lastly, how do you think about OpEx into next year like -- or I should say, OpEx this year relative to pursuing opportunities in 2026? Is there flexibility on it? Or should we assume that's going to kind of grow for future revenue growth? How to think about the OpEx? Philip Gordon Brace: Yes. I think when I started, I kind of mentioned, look, we're going to be taking a very disciplined view of the OpEx. I think over the past couple of years, the company has made significant increased investments, and you can look at that as OpEx. And that was really designed to, frankly, focus on our R&D. We are an engineering-focused company. And to the extent we do have some -- any modest increase in OpEx, it will be really targeted on core R&D. Having said that, we're going to be disciplined about that. I wouldn't expect anything other than kind of nominal rates of OpEx improvement over time. Operator: Our next question comes from Nicolas Doyle with Needham. Nicolas Emilio Doyle: Asking about the infrastructure networking cloud subsegment. In fiscal '24, you guys talked a lot about inventory digestion impacting the business, and I think that lasted through the year. But we're seeing a lot of positive demand signals from those end markets. So can you just talk about how that business is performing in the quarter and any specific demand drivers? I think you mentioned 800 gig and 1.6T transition helping as well. Philip Gordon Brace: Yes. I mean I think you got it exactly right. I think in the past couple of quarters, we talked about that, the fact that we did continue to see a little bit of inventory overhang in that space. That does appear to be behind us at this point. Inventory seems to be low, and Yes. Nick, this is Raji. So our top customer in the quarter in June was roughly 63% of sales. The split was roughly 85% Mobile, 15% supply/demand is kind of aligned with consumption at this point. Nicolas Emilio Doyle: Okay. On the Apple Broad Markets piece, I mean, any reason to think that's very different from the average 15% of overall Apple revenue in 3Q or 4Q? Rajvindra S. Gill: Broad Markets, thereabouts, and we expect both a similar percentage of sales and a similar split going into the September quarter. Operator: I'm showing no further questions at this time. I'd like to turn the call back over to Phil Brace for closing remarks. Philip Gordon Brace: Great. I'd like to thank everybody for participating on today's call, and I look forward to speaking with you at upcoming investor conferences during the quarter. Thank you. Operator: Thank you for your participation. You may now disconnect. Good day.

Operator: Good afternoon and welcome to Skyworks Solutions Second Quarter Fiscal Year 2025 Earnings Call. This call is being recorded. At this time, I will turn the call over to Raji Gill, Vice President of Investor Relations and Corporate Development for Skyworks. Mr. Gill, please go ahead. Raji Gill: Thank you, operator. Good afternoon, everyone and welcome to Skyworks second fiscal quarter 2025 conference call. With me today for our prepared remarks is Phil Brace, our Chief Executive Officer and President, and Kris Sennesael, Chief Financial Officer for Skyworks. This call is being broadcast over the web and can be accessed from the Investor Relations section of the company's website at skyworksinc.com. In addition, the company's prepared remarks will be made available on our website promptly after the conclusion during the call. Before we begin, I would like to remind everyone that our discussion will include statements relating to future results and expectations that are or may be considered forward-looking statements. Please refer to our earnings press release and recent SEC filings, including our annual report on Form 10-K, for information on certain risks that could cause actual outcomes to differ materially and adversely from any forward-looking statements made today. Additionally, today's discussion will include non-GAAP financial measures consistent with our past practice. Please refer to our press release within the Investor Relations section of our company website for complete reconciliation to GAAP. With that, I'll turn the call over to Phil. Philip Brace: Thanks, Raji and welcome everyone. I'm excited to join you today for my first earnings call as CEO of Skyworks. Over the past few months, I've engaged with our customers, partners, employees and shareholders, and I'm energized by the opportunities ahead. Since stepping into the role, I spent time getting to know our teams across the company and I've been incredibly impressed by the depth of talent and expertise throughout the organization. We have some of the smartest engineers I've ever worked with, and there's a real energy and passion for innovation that you can feel everywhere. There's also a competitive edge and a hunger to win. It's been exciting to jump in and be part of such a strong and capable team. Skyworks sits at the center of the wireless revolution, backed by a rich history in RF innovation. Our proprietary technologies power some of the most demanding connectivity platforms in the world, from 5G and WiFi to automotive and edge IoT, and we're continuing to push the bounds of what's possible. Now let's review our fiscal Q2 results. Skyworks delivered solid performance driven by our diversified portfolio and disciplined execution. We posted revenue of $953 million, delivered earnings per share of $1.24 and generated free cash flow of $371 million. Revenue, gross margin and EPS exceeded the midpoint of our guidance. We returned a record $600 million to shareholders through share repurchases and dividend payments, the highest amount ever. This underscores our confidence in the long-term outlook as well as our commitment to delivering value to shareholders. Let's provide some additional color on the business. In mobile, we experienced typical seasonal patterns during the March quarter while executing on multiple new product launches with our leading mobile customers. Smartphones are evolving with AI driving more uplink intensive workloads like real time voice processing and enhanced imaging. Over time, this trend should drive higher transmit power, better efficiency and expanded uplink MIMO areas where Skyworks is strongly positioned. In our diversified businesses, we've seen a steady recovery underway for more than a year with five consecutive quarters of sequential revenue growth and two quarters of positive year-over-year comparisons. This improvement is being driven by strength in Automotive, Edge IoT and Wi-Fi 7 adoption across consumer and enterprise devices. Demand signals are firming, bookings are improving and in most segments, we're seeing inventory normalization across the distribution channel. In Edge IoT, Wi-Fi 7 adoption is accelerating to meet real time demands like high resolution video and smart sensors. Its advanced capabilities are driving greater RF content per system, creating strong momentum for our connectivity portfolio. In addition, we've already begun early development on Wi-Fi 8 to solidify our technology leadership in the next generation wireless connectivity. In automotive the move to software defined vehicles is driving the need for robust wireless connectivity as these vehicles rely on over the air updates, real time sensor data processing and interconnectivity between vehicle systems. The RF content should also scale up. Lastly, as AI drives more complex data center workloads, the need for tighter integration between timing devices and processors is growing. While still early, we see a long-term opportunity to capitalize on this trend with our precision timing portfolio. Overall, we're encouraged by the momentum in our diversified businesses. Our position in next generation product cycles from automotive connectivity to edge IoT to timing reinforces our long-term trajectory. Turning to our quarterly business highlights, we secured design wins across 5G premium Android smartphones and for in vehicle infotainment systems with major OEMs. We also expanded Wi-Fi 7 across enterprise access points, routers and home mesh networks. Before I turn the call over to Kris for a discussion of last quarter's performance and outlook for Q3 of fiscal '25, I would like to highlight some changes to the executive leadership team. First, Mark Dentinger will be succeeding Kris as the CFO of Skyworks, effective June 2, 2025. Mark brings significant CFO level and strategic experience across the technology sector. His deep expertise and proven track record make him a strong addition to the Skyworks leadership team. Kris will be stepping down to pursue another professional opportunity. On behalf of the entire board and everyone at Skyworks, I would like to thank him for his valuable contributions and wish him success in his new endeavors. Second, Todd Lepinski will be succeeding Carlos Bori as Skyworks Senior Vice President, Sales and Marketing, effective June 2, 2025. Todd brings experience driving global revenue growth and building high performance teams in the semiconductor and technology sectors. Carlos will be shifting to an advisory role to help ensure a smooth transition. I'm looking forward to partnering with Mark and Todd and leveraging their strong leadership capabilities as we execute on our long-term strategic initiatives. Kris Sennesael: Thanks Phil. First of all, I would like to thank all Skyworks stakeholders including the board, the executive team and employees around the world for many years of strong collaboration. It's been an honor and privilege to serve as Skyworks CFO for the last eight years. I only work for a short period of time with Phil, but I know that under his leadership, with the help of Mark and Todd and the rest of the executive team, Skyworks will prosper in the years ahead. Now let's turn to the quarterly results. Skyworks revenue for the second fiscal quarter of 2025 was $953 million above the midpoint of our outlook. Mobile revenue was 62% of total revenue, down 17% sequentially, consistent with historical seasonal patterns as demand normalizes following peak holiday shipments. Revenue from our broad markets portfolio, which includes Edge IoT, automotive and industrial and infrastructure, networking and cloud, increased 2% sequentially and grew 3% year-over-year, marking our fifth consecutive quarter of growth since reaching a cyclical low in the December quarter of 2023. This sustained momentum reflects the expanding diversification of our business even amid a volatile microenvironment and ongoing inventory digestion in certain end markets. Gross profit was $445 million with gross margin at 46.7%, exceeding our expectations, driven by favorable mix, continued execution on our cost reduction initiatives and operational efficiencies. We also made further progress in improving our working capital position, marking our ninth consecutive quarter of inventory reduction. Operating expenses were $223 million, aligned with our strategic priorities. These investments support our long-term technology and product roadmaps. Looking ahead, we remain focused on striking an appropriate balance, investing in innovation and strategic market expansion while maintaining cost controls to protect and grow profitability. We delivered operating income of $222 million, translating into an operating margin of 23.3%, demonstrating financial discipline as we invest for growth. We generated $5 million of other income and our effective tax rate was 13.4%, driving net income of $197 million and diluted earnings per share of $1.24, $0.04 above our guidance. We demonstrated robust cash generation with operating cash flow of $410 million, capital expenditures of $39 million and a free cash flow of $371 million, or a 39% free cash flow margin. Our ability to consistently convert earnings into cash is a cornerstone of our financial strategy. Throughout the second fiscal quarter, we remained committed to disciplined capital allocation, returning value to shareholders through both dividends and share repurchases. During fiscal Q2, we distributed $111 million in dividends and repurchased 7.4 million shares of our common stock for a total of $500 million, translating to over $600 million capital return to shareholders, the largest quarterly return ever. After the end of the quarter and through May 2, we repurchased an additional 3.6 million shares of our common stock for a total of $212 million under an established 10b5-1 program. At quarter end, we maintained a solid cash position and a well-structured balance sheet with over $1.5 billion in cash and investments and $1 billion in debt, providing us with financial strength and flexibility to support both near and long-term priorities. We view our strong balance sheet and consistent free cash flow as key strategic assets. Before we go into the details of our outlook for Q3 of fiscal 2025, I'd like to briefly address the recent macroeconomic and tariff developments. While the evolving tariff landscape presents new complexities, we believe our diversified global supply chain positions us to navigate potential disruptions. As this is a dynamic environment, we will continue to actively monitor the situation. With that context for the third quarter of fiscal 2025, we anticipate revenue of $920 million to $960 million. We expect our mobile business to decline low single digits sequentially in-line with typical seasonal patterns. Broad markets remain on track for another quarter of sequential growth, with year-over-year trends accelerating. We are encouraged by improving bookings, backlog and channel sell through. Gross margin is projected to be between 46% and 47%. We anticipate operating expenses in the range of $220 million to $230 million. As we continue to invest in our technology and product development roadmaps fueled by our strong cash flow generation. Below the line, we anticipate $5 million in other income, an effective tax rate of approximately 13%, and a diluted share count of approximately 152 million shares. Accordingly, at the midpoint of the revenue range of $940 million, we intend to deliver diluted earnings per share of $1.24. Now let me hand it back to Phil for some final remarks. Philip Brace: Thank you, Kris. As we wrap up, I want to take a moment to reflect on some key business initiatives. First, we must reinforce our leadership position in mobile, focusing on what we do best, developing the most innovative solutions in the industry and delivering the highest performance RF products to our customers. Second, accelerate the growth in our diversified businesses. Third, optimize operational efficiency with cost discipline and gross margin improvements. Before I close, I want to thank our employees for their incredible dedication and our customers and partners for their continued trust and collaboration. Operator, let's open the line for questions. Operator: Thank you. We will now begin the question-and-answer session. [Operator Instructions] We'll go first to Chris Caso at Wolfe Research. And Chris, your line is open. You may have yourself on mute. Chris Caso: Hi. Good morning. I hope you can hear me now. So welcome, Phil and Kris. We'll certainly miss you. But perhaps, Phil, the first question would be for you. You haven't been at Skyworks long, but I'm sure you've been working hard to kind of dig in here. Perhaps some initial thoughts about strategy, about sort of where you're looking to take the company, just kind of an assessment of, what particular strategic changes you might be contemplating at the moment. Philip Brace: Yes, thanks. Thanks, Chris. Appreciate the acknowledgment. Some of the things I've been most excited about so far, I mean, first, when you look at the core technology and the core engineers that we have, some of the smartest people I've worked with in my career and really are at the foundation of kind of the core wireless capability you have. And so, one of the things I'm most excited about when you, when you think about where Skyworks position long-term, you look at how many devices are out there connected to the Internet, and the vast majority of them are and will be connected wirelessly. And some of our core technology is right in the center of that. And so, I think you can imagine that some of the things I'm looking for going forward is how do we take and build upon that core wireless capability and look for adjacencies that continue to fuel that growth. And that's really where I'll be focused some of my energy. Chris Caso: Great. As a follow up question, it's with regard to broad markets and it sounds like you've seen a little bit of bookings improvement and certainly some sequential growth there. What sort of, I guess in the short-term, what sort of growth do you think? Well, I guess to start, you know, do we think that customer inventories have now normalized and therefore, we're getting on a more normal growth path here? And what do you think that growth path is likely to be? Where do you see the longer-term growth in this broad markets business and where's the trajectory for the rest of the year? Philip Brace: Yes, I think, you know, that's a good question. I think in general, like if we look, step back and look overall at those businesses in general, I think if we look in general, a lot of those businesses still had pretty significant inventory corrections post Covid. In many cases, some of the business, some of the businesses had the infamous golden screw, right? And so as a result, customers just bought just tons and tons of inventory. I think in general across the landscape we've seen a normalization of that. We started to see inventories getting back to normal positions, booking trends continue. So, I think in general what we're seeing is kind of that hangover that we experienced, we think that's behind us. If we dig down, right, and look at the kind of the three segments underneath it with Edge IoT, that's really about Wi-Fi 7 adoption, right? That is really at the early ages or early innings, I would say, of deployment that has more RF content per device, more performance, strong customer value proposition. I think that'll be a tailwind for us going forward. On the automotive side, we're seeing good year-over-year growth there. And it's really important to note that what we're seeing there really is not just tied to EVs or particular how the combustion engines, whether it's EV combustion engines or hybrids, it's really around the software defined vehicles and all the connectivity that's around that. And so we're seeing good growth there. And then on the infrastructure networking cloud, that's an area where it's still a little bit choppy from that side. But I think long-term, some of the secular trends with respect to what's happening in the data centers and the connectivity space I think that's going to continue to normalize there as well. So on balance I think we've seen right overall inventory correction. We're starting to see some return to normal growth. And then underneath that it's Wi-Fi 7 connected cars and infrastructure networking cloud. That's kind of how we see that. Operator: We'll move to our next question from Karl Ackerman at BNP Paribus. Unknown Analyst: This is Yan Pooh for Karl Ackerman. Thank you for taking the question. So, I just want to touch on tariff. I know it's a fluid topic but I just want to understand how your view, how do you view tariffs and what portion of your cogs could get qualified for USMCA import exempt status given that you have the Mexico fab. As you address that, could you also discuss how you can how much of your ability to pass down tariff cost to other customers? Like, thank you very much. Philip Brace: Yes, so this is Phil. Maybe I'll just take a high-level remark and then I'll pass it over to Kris for any particular details on it. Look, in general the tariff environment is incredibly dynamic, right. As you can probably imagine. I'm not telling you any news there. I think our current assessment though, given our supply chain and where we are, the current guidance really reflects any impact that we see from that and we're continuing to monitor that daily. And I think our guidance reflects what we believe to be the current environment right now. And I think our diversified supply chain where we ship things, how we ship them, where we get them, manufactured with free trade zones, all sorts of other things that are happening. I think all of that is reflected in our current guidance. Having said that, obviously we monitor every single day and we'll continue to do so. But right now, the current guidance reflects what we believe is the current environment for tariff. Kris, any other comments you want to say? Kris Sennesael: No, just I mean based on our current understanding of the tariff landscape, we don't see any major direct impact on our business. Obviously we will continue to work with our customers and supply chain partners but for now as it stands, no major direct impact on our business. Unknown Analyst: Thank you. And as a follow up can you discuss will you be able to maintain your CapEx outlook or do you have any intention to move around your manufacturing locations to avoid tariffs? Thank you. Philip Brace: Our CapEx spending is really focused honestly on new product, new technology development versus any sort of production capacity. So, any, most of the CapEx you see, the vast majority of it is on new technology development. So I wouldn't necessarily see, I wouldn't expect to see any change with respect to our CapEx plans based on that. Kris Sennesael: Right. And just CapEx is running on or about mid-single digits as a percent of revenue. Unknown Analyst: Thank you very much. Operator: We'll go next to Edward Snyder at Charter Equity Research. Edward Snyder: Thank you very much. A couple questions if I could. First off, it looks like based on the content in your largest customer's phone, from the teardowns we've done and other folks have done and stuff we saw from last year, that is it fair to assume that you think your content will bottom end of this year and then maybe make a slow recovery? I know it depends a lot on mix and I know that's hard to predict. I think Qualcomm guided for 30, 30-70 mix favoring their solution. So I just want to get an update on your view of where you think your content will bottom into your largest customers? And then I have a follow up. Thanks. Philip Brace: Yes. Hey Ed, it's Phil. Nice to talk with you again. You know, as you might imagine, we can't really comment on specific customers plans and what's getting going, but generally speaking, let me try and give you a little bit of color. I mean, when I look holistically, I think we have some tailwinds behind us in that regard. The first is we've got to deliver better products and compete for the sockets that we believe we have the chance to win. And I think we're putting our best foot forward there on that. Second, I think there's going to be a trend that's going to have more RF content as I talked about with complexity, workloads, MIMO capabilities and those kind of things. And then thirdly, I do think there's some potential content differences that may happen with respect to certain solutions that may happen on the baseband side. And I think some of those trends right, should play in our favor. So look, I think overall, I think there's, there's three things and then you overlay that where hopefully you get some tailwind on the unit side. Respect AI adoption and I think we've got some things that work in our favor. Look, we have to continue to execute. As I've always said, we've got to deliver great products. You have a great product, you win, you have a jump ball, you split and you have a bad product, you lose. And, and that's the game we're playing. So that's what we're focused on. Edward Snyder: Okay. My follow up, I know that. Well, your filters are built out of Japan. BAW is anyway. And then the part that you kind of gave up to Avago, used a lot of those. And so you got utilization issues there. First of all, between the lower utilization and some of the advances you made in filters reducing the die size, is it fair to assume that even if you were to win a larger module that takes a lot more filters, you wouldn't have to put a lot more capping into that facility or it depends on the module like the mid high band, et cetera? It's got 22 filters in it. No matter what, if that were to come about, you're still going to need CapEx expansion even with where you are today? Philip Brace: Yes, I just want, thanks, Ed. I think one clarity is, you know, the particular area you talk about. I would characterize that as a jump ball where we split versus clear win, where we got 100%. So it wasn't a -- I would just say that. And the other to your point on CapEx expansion, I mean, look, right now I think we are sufficiently capitalized from a production capability and I don't expect to have any capacity concerns with respect to that. Our capacity investments right now are really focused on new technology development that we need to power the innovation forward. So right now, I'm not expecting, certainly not expecting any incremental capacity need for production based on what I can see. As far as the -- I can see. Edward Snyder: Okay, but just to be clear, you have to have the capacity in place before you're awarded a big modular, any big OEM. Correct. This can't be done after the fact. Correct? Kris Sennesael: Right. And so Ed, we do have plenty of capacity in place to absorb a potential large upside to the business. Edward Snyder: Great, thank you. Operator: Next, we'll move to Gary Mobley at Loop Capital. Gary Mobley: Hi guys, thanks so much for taking my question. I really just have a multi part question and that's it. Phil, you highlighted your three priorities, one of which is stabilizing and maybe regrowing your business with your leading smartphone customers. So do you feel any differently today versus what you communicated last quarter with respect to your blended content in the upcoming, you know, smartphone launch at your largest customer? And then with respect to optimizing operational efficiency, could you give us a sense of where your utilization rates are now and what those, what the goal may be in terms of, in terms of optimizing that manufacturing footprint? Philip Brace: Yes, let me, let me try and I'll have Kris jump in here. You know, I think the one thing, you know, the, I guess I would characterize if you look at, in general, the mobile business in general, it's characterized by very short product cycles. You got to earn the business every year or every other year. You got to deliver highly competitive parts and it's a very competitive landscape. I believe we've got some of the best, if not the best RFA engineers on the planet. But sometimes having the best team on the floor doesn't necessarily mean you win every game. But I'm feeling very good about where we are, the investments we're making, the people we've got, and we're working really hard to do it and we're laser focused on doing it. And frankly, I'm taking a no excuses kind of thing. Right. We just got to deliver better parts, period. The answer is we've got to deliver better parts. There was a lot of rhetoric around stuff being done to us, and I just don't like that rhetoric at all. I think the reality is we got to deliver the best parts and we'll take care of ourselves and that's what we need to be focused on. I think your other question was around? Kris Sennesael: Yes. So, Gary, as it relates to utilization rates, obviously we have multiple factories in the U.S. in Japan and Singapore and in Mexico. The utilization rate varies by manufacturing location. But I would go back to my previous answer. We have plenty of capacity in those factories. And so as future revenue growth is going to fuel better factory utilization, that will lead to gross margin improvements without us having to put much capacity in place to fulfill future revenue growth. And Gary, maybe as it relates to, of course, the blended content at the next upcoming phone, that obviously has not changed. Gary Mobley: Thank you, guys. Operator: Our next question comes from Christopher Rolland at Susquehanna. Christopher Rolland: Hi guys. Thanks for the question and welcome Phil and Kris, sorry to see you leave. Phil, you mentioned some wireless excellence at the company and looking at adjacent markets also, you came from the IoT world previously. Could that be an adjacency for you, whether it's cellular or unlicensed? Philip Brace: Yes, look, I'm not going to comment on particular areas of focus there. Obviously, I came from the IT side, but I would say my purview is a very wide, wide landscape. I mean, some of our core technologies are, you know, acoustic resonators, filter design, some of the core processes that are involved in that packaging, multi, multi-chip packaging modules, very tight integration. I mean, the technology required to deliver some of our solutions is just incredible. And so, you know, I look to a wide, a wide range of things where we could go there. So, I'm not going to comment on specific, specific areas, as you might, you might guess. Christopher Rolland: Fair enough. And then secondly, saw and typically lower frequencies. You have made a push into BAW, but we haven't had any major updates there, I think in a little bit. Is this a focus for you and is there kind of, do you see any evidence of greater traction in BAW moving forward and doubling your efforts there? Thanks. Philip Brace: Look, I think BAW is like a critical component of our technology and we remain significantly invested in that and we've got a very robust roadmap going forward. And so I think we've seen good traction in that and that continues to be a cornerstone of our investment. Christopher Rolland: Thanks a lot. Operator: Our next question comes from Tom O'Malley at Barclays. Thomas O'Malley: Hey guys, thanks for taking my question and Phil, Mark, congrats on the roles. Look forward to working with you. A tactical one first and then a longer-term one in the March and the June quarter. Can you guys give what Android did in both of those quarters in the mobile business? Kris Sennesael: Yes. So Android was in the March quarter flat on a sequential basis. So, in that call it on about $70 million range. But we do expect a sizable sequential bump up in the June quarter for Android. Thomas O'Malley: Okay. And then I guess the second one is the broader one and that kind of encompasses the answer there. But when you're looking at what you think is pulled forward, obviously there's a new phone that's launching or that just launched here that's going to help you with some content. But obviously buying patterns are a bit different and Android traditionally isn't seasonally up in June. Can you guys try to parse out to the extent that you can, what you're seeing, what is a pull forward, what is better demand and how you guys are going about that internally to protect against potentially like stronger first half, weaker second half? Thank you. Philip Brace: Yes, that's a good question. Look, we continue to monitor that care, you know, closely. I don't think, you know, order patterns now represent what we've seen historically and represent seasonality. And if you look at kind of our results, it was kind of in where we in the range or a little bit above the range where we started in January, which is before a lot of this turbulence. And so I would say that what we've seen is what pretty typical order patterns at this point. Obviously, we're trying to manage it closely and we're keeping a close eye on it, but that's the best we can say now. No evidence of anything other than what we'd expect to see seasonally at this point. Operator: Our next question comes from Harsh Kumar at Piper Sandler. Harsh Kumar: Yes, hey, congratulations, Phil. Looking forward to working with you. Kris, I've worked with you multiple years. We'll certainly miss you and best of luck to you. So Phil, I wanted to ask you about follow up maybe on the new modem at this large customer and what that means to you. Typically, with that there comes a lot of shifting around of content and provides a lot of opportunity for people. So, I'd be curious how you view this content and maybe you could talk about what this means to you and what you might have won and what you think you can do with this. And I've got a follow up. Philip Brace: Yes, so look, I think that we can't really get into those specifics per individual customer and segments and what happens really, it's not something we can do. But let me just comment just in general, why I think there's some tailwinds there and I would focus on probably what I would say is more secular long-term trends with respect to increased RF content as a result of things like more transmit, higher power requirements, lower battery requirements, new frequency bands and certainly any particular choice they have with baseband may result in some potential incremental content opportunities for us. But I think in general I would just focus on, I think that over time we're going to see increased RF content as the workloads demand it, as the RF complexity gets harder and the requirement to kind of manage power continues to be a key component. So I think in general, I think we do now clearly, we have to execute, we have to deliver the best parts, but I think we've got the canvas upon which we can draw a pretty good picture. Harsh Kumar: That's it, thank you. That's it for me, thanks. Operator: Next, we'll move to Timothy Arcuri at UBS. Unknown Analyst: Great, thank you. This is Jamal Cohen for Tim. Phil or Kris, I wanted to double click on the guidance specifically what changed versus 90 days ago, what segments you've seen improve, what got worse? And can you speak to that bump up in Android in the June quarter? What's driving that? Philip Brace: Well, I mean I'll let Kris jump in here because he was in the park. I mean I don't think we necessarily guided two quarters ahead. So I think what we're doing now reflects our current view of the next quarter ahead. And I would say that in general, certainly on the mobile side we're seeing pretty typical order patterns, the Android segment up as a result of new product launches that we talked about. And in broad markets we're just seeing continued, you know, sequential year-over-year, you know, sequential growth and continued year over growth as I talked about. So I wouldn't say there's anything abnormal. And so mobile, I would say, is seasonal added on a product launch and in broad markets, it's kind of a continuation of the trend we've seen for the past few quarters. Unknown Analyst: Got it. And then one quick one on pricing at your largest customer. Do you expect to see any sort of pricing pressures in the coming quarters, given the most recent tariffs? Philip Brace: No, I'm obviously not going to comment on that. I'll just say it's a highly competitive market and we are expected to deliver the best performance parts at a very aggressive cost point. And that continues to be the game across the board in this industry. So, I don't think there's anything changed. And we have to deliver great parts at the right price. Unknown Analyst: Thanks, guys. Operator: Next we'll go to Joe Moore at Morgan Stanley. Joseph Moore: Great, thank you. In terms of your priorities for the business, you talked about growing the diversified part of the business. Can you talk about organic versus inorganic priorities there and just how you think about that? And do you think M&A is even sort of doable in the current environment? Philip Brace: Yes. Hi, Joe. Nice to. Nice to talk to you again. Yes. look, when we look at overall strategies and certainly capital structure and capital allocation priorities, I think we have enough firepower to enable us to pursue a number of different options, both organic investments, and I talked about some of those. I mean, we clearly continue to invest in a level that allows us to sustain robust innovation road map that we have, and so I feel good and comfortable about that. And clearly, on the M&A front, I mean, there's a number of different things we can look at. I'm going to be really focused on making sure that's in our strategic priority. We can get the right value and focus on making sure that we can deliver value to shareholders as we look at that. I think with respect to the overall M&A environment, it's obviously a little complex right now. But I think that there's no shortage of things we can look at and it certainly is something I'll be spending some time on as CEO. Joseph Moore: Appreciate it. Thank you. Operator: Our next question comes from Peter Peng at JPMorgan. Peter Peng: Hey, guys, thanks for taking my question. You guys talked about seeing seasonal trends on the wireless side for the March and June quarter. But then when you listen to the earnings call from your largest customer, they're clearly talking about some inventory build for some tariff mitigation. So I'm just wondering why there's this kind of discrepancy between what your end customers saying and between some of the suppliers we're seeing. Kris Sennesael: So Peter, maybe I'll take a shot at that. As you know, there are it's a very complex supply chain, and there are multiple partners between us and the end customer. There are distributors, there are contract manufacturers. Each of them act a little bit as a buffer and have their own inventory dynamics. Again, if you look at the March quarter, we guided to $950 million, and we delivered $953 million. So we did not really see pull-ins or anything like that. And as we guide for the June quarter, we assume there's no pull-ins. And we have no clear evidence of that. Peter Peng: Got it. Okay, that's helpful. And then just for the broad markets. You guys are back in the year-on-year growth for a number of quarters now. Can you maybe just talk about within that bucket which markets are showing here in your growth, which still has some work to do to get to a year-on-year growth trajectory? Philip Brace: Yes, this is Phil. I'll take a crack at that. I mean, look, the strongest tailwind you have growth is WiFi 7, right? That's and I think that's in early days, and we're seeing -- that will be -- that should be a tailwind for us for a while. I think only a small percent of single-digit percentage of the units out there are WiFi 7. So I think we're in the early innings of that. So that's a strong one. Automotive is another good year-over-year growth comparisons, as I talked about. As more and more cars are being connected, independent of their combustion mechanism. And then I think the other area where we've got some more work to do, as I would say, is on the infrastructure side on that side. It's kind of inching along a little bit, but there's more ups and downs, and we'll be seeing some growth there, but that's probably the area where we've got some more growth that we need to see in the future. Peter Peng: Perfect, thank you. Operator: Next we'll go to Nick Doyle at Needham. Nicholas Doyle: Hey guys, thanks for taking my questions and welcome Phil and Mark. How big was a large customer in the quarter? And directionally, how is there a broad markets piece performing? Thanks. Kris Sennesael: Yes. So the largest customer in the March quarter was approximately total revenue, and we've seen a split between mobile and broad markets in line with historical trends there, roughly 85%, ends up in mobile and roughly 15% or maybe a tad more in broad markets and we expect that to continue in the next couple of quarters. Nicholas Doyle: Thank you. And then for the gross margins, they're kind of holding steady above this $45 million percent level now, even with revenue dropping down a little bit next quarter. I guess how are you able to hold these above 45% even as we kind of -- the utilization levels remain a little bit lower? Thank you. Kris Sennesael: Yes, Well, if you look at the June quarter, you have mobile being down sequentially and broad markets being up sequentially. And so you have a continuous benefit there from a mix point of view, as I said before, even within broad markets, we see some mix shift that is favorable for gross margins, and that's why we're comfortable to guide to this 46%, 47% range for the June quarter. Operator: And we'll go to our next question from Vivek Arya at Bank of America. Unknown Analyst: Hi, this is Liam Farr on for Vivek. Thank you so much for taking our questions. Just looking at the Android market. You've been pretty selective on pulling back somewhat in some parts of the Android ecosystem. As AI and RF complexity arises, how do you think about reengaging more deeply with Android OEMs to capture more incremental content? Or are you just kind of remaining to focus -- keeping focus on that high-end tier of the Android ecosystem? Thank you. Philip Brace: Yes, look, I guess what I would say is, I mean, we're certainly always open to working with customers where we can deliver value and get to value the performance and the solutions that we provide in an economic that's economically viable for us. And so to the extent that there's trends that lend itself to that favor, then we're going to be trying to take advantage of that. But I think we're just -- we're taking an economic ROI-based view of where we do. We've got -- the opportunity cost for engineers is really high. A lot of these solutions are highly complex, highly engineered and tightly integrated. And frankly, we look for environments where we can deliver the value to the customer and frankly, get paid and return ourselves. And so we'll continue to look for those solutions. Unknown Analyst: Thank you. And then just a quick follow up on your largest customer. Looking ahead at 2026 models and 2027, how are you too the time line of engagement with that customer? When should investors be looking to hear from that? And how are you kind of betting up to hedge against any more jump balls that are split? Philip Brace: Well, I mean, it's -- obviously, I can't comment on specific things like that, but let's just say this, we have been engaging deeply with that particular customer, but all our customers in general, but that went for a long, long time. And so there's a typical investment design cycle that happens year in and year out. And frankly, in many cases, you're continuing to invest ahead of the curve to develop technologies that can go there. And you work and you're self-critical along the way, to use a sports analogy, you're looking at game film. You're trying to understand what you did, what you didn't do better. You're doing competitive analysis, you're trying to look at the limit of what's possible with the physics you're developing new technology, and you're putting all those things together and you're delivering a part and that gets benchmarked to get other parts competitively. If you do a good job, you win, and that's what we're trying to do. I really don't think there's any change in dynamic. And I think with respect to insulating what we can do, I think that frankly, the best insulation is continuing to execute and execute cleanly. That customer is a very demanding customer and requires a lot of focus on it. And -- but it's such a big customer that you can't necessarily take your foot off the gas, you have to keep pedal to metal all year one, and that's what we need to do. Unknown Analyst: Thank you. Operator: Ladies and gentlemen. That concludes today's question and answer session. I'll now turn the call back over to Mr. Brace for any closing comments. Philip Brace: Great. Thank you. Thank you for participating in today's call. I look forward to speaking with you at upcoming investments during the quarter and we'll talk soon. Operator: And ladies and gentlemen, this concludes today's conference call. We thank you for your participation. You may now disconnect.

Operator: Good afternoon and welcome to Skyworks Solutions First Quarter Fiscal Year Earnings Call. This call is being recorded. At this time I will turn the call over to Raji Gill, Vice President of Investor Relations for Skyworks. Mr. Gill, please go ahead. Raji Gill : Thank you, operator. Good afternoon, everyone and welcome to Skyworks’ first fiscal quarter 2025 conference call. With me today for our prepared remarks is Liam Griffin, our Chief Executive Officer and President, and Kris Sennesael, Chief Financial Officer for Skyworks. Following the conclusion of the prepared remarks, Kris will be available for Q&A. This call is being broadcast over the web and can be accessed from the Investor Relations section of the company’s website at skyworksinc.com. In addition, the company’s prepared remarks will be made available on our website promptly after the conclusion during the call. Before we begin, I would like to remind everyone that our discussion will include statements relating to future results and expectations that are, or may be, considered forward-looking statements. Please refer to our earnings press release and recent SEC filings, including our Annual Report on Form 10-K, for information on certain risks that could cause actual outcomes to differ materially and adversely from any forward-looking statements made today. Additionally, the results and guidance we will discuss include non-GAAP financial measures, consistent with our past practice. Please refer to our press release within the investor relations section of our company website for a complete reconciliation to GAAP. With that, I’ll turn the call over to Liam. Liam Griffin: Thanks, Raji, and welcome, everyone. Before we get into the details of the results, I want to address the succession planning we announced today. After an incredible 20-plus years at Skyworks, with the last nine as President and CEO, I will be stepping down. Skyworks has chosen Philip Brace, as our next President and CEO. He will join the Company on February 17, at which point I will shift to an advisory role for a few months to help ensure a smooth transition. Today we also announced that Christine King, who has been our Skyworks’ Lead Independent Director, has been appointed Chairman of the Board. She is an excellent choice. Phil’s appointment follows a robust succession planning process by the Skyworks Board. Phil is an accomplished technology executive who has served as President and CEO of Sierra Wireless from 2021 to 2023. He currently serves on the Board of Directors of Blackberry, Lantronix and Inseego. He brings a deep knowledge of the technology industry and extensive experience in scaling and leading successful businesses. I want to offer my sincerest congratulations to Phil on his appointment and am excited for you to meet him. I look forward to watching Skyworks’ business prosper under his leadership through continued innovation, ingenuity and hard work. Let’s now move into a discussion of Skyworks’ first fiscal quarter of 2025. Skyworks began the new fiscal year with solid results. We posted revenue of $1.068 billion. We delivered earnings per share of $1.60, and generated free cash flow of $338 million. Revenue, gross margin and EPS met or exceeded the mid-point of our guidance. In Mobile, our revenue grew 6% sequentially, as we successfully supported multiple product launches across our top mobile customers. The global adoption of generative AI on smartphones is still in its nascent stage. We anticipate this to be a multiyear trend that will catalyze smartphone upgrades and increase the complexity and requirements for RF solutions. In Broad Markets, we have experienced modest growth for four consecutive quarters. We anticipate further growth as demand signals and backlog improve. In certain segments, supply and demand dynamics are in equilibrium, and channel inventories have normalized. Meanwhile, industrial and infrastructure remain subdued due to persistent inventory challenges. Overall, we are encouraged by the recent momentum in Broad Markets and are energized about new product cycles in automotive electrification, edge IoT and AI data center, fueling long-term growth. In edge IoT, we are observing higher levels of intelligence and combined with more nodes being added to the edge of the network, driving higher levels of RF complexity. Artificial intelligence and machine learning increases the range of functionality, running models like voice and computer vision. RF connectivity is the conduit for secure, robust and lower power AI applications. Moreover, the adoption of Wi-Fi 6e and 7 systems, by customers is contributing to the improvement in demand. These systems, characterized by enhanced complexity and utilization of additional bands, enable transmission of higher value content. We are currently in the emerging stages of a multi-year upgrade cycle, with Wi-Fi 7 shipments experiencing a ramp-up. We are seeing growth in wireless gaming, wireless home audio and wireless headsets where customers are adopting Skyworks’ connectivity and audio technology. In Automotive, we returned to year-over-year growth, despite a soft demand environment, as design wins in the connected car, onboard charging and infotainment are gradually converting into revenue. Specifically, we expect our RF content per vehicle to grow, driven by, 5G cellular, Wi-Fi, Bluetooth and V2X Lastly, the industrial segments remain a headwind as we continue to undership demand. Turning to our quarterly business highlights. We secured 5G content for premium Android smartphones including, Samsung Galaxy, Xiaomi, Asus, and several others. We supported Gemtek’s launch of the first AI router with voice-enabled AI-powered healthcare service. We enabled Asus’s award-winning quad-band Wi-Fi 7 gaming routers and expanded our design win pipeline in automotive with cellular connectivity and power management solutions. With that, I will turn the call over to Kris for a discussion of last quarter’s performance and our outlook for Q2 of fiscal ‘25. Kris Sennesael : Thanks Liam. Skyworks’ revenue for the first fiscal quarter of 2025 was $1.068 billion, slightly above the midpoint of our outlook. Mobile revenue was 67% of total revenue and increased 6% sequentially, as we successfully supported multiple product launches. Broad Markets was up slightly sequentially and returned to year-over-year growth at 2%. Q1 fiscal ‘25 marked the fourth consecutive quarter of modest sequential growth since the Q1 fiscal ‘24 bottom, despite a muted demand environment and ongoing inventory digestion across selective end-markets. Gross profit was $497 million, with gross margin at 46.5%, in-line with expectations. Also, during Q1, we further decreased our internal inventory slightly below $700 million, resulting in eight consecutive quarters of reductions. Operating expenses were $212 million, reflecting our strategic investments in our technology and product roadmaps. We delivered $285 million of operating income, translating into an operating margin of 27%. We generated $9 million of other income, and our effective tax rate was 12.2%, driving net income of $258 million and diluted earnings per share of $1.60, $0.03 above our guidance. For the first quarter of fiscal 2025, we demonstrated robust cash generation, with operating cash flow of $377 million, capital expenditures of $39 million, and a free cash flow of $338 million, representing a 32% free cash flow margin. During fiscal Q1, we distributed $112 million in dividends. Our cash and investment balance increased to approximately $1.75 billion, while we maintain a debt level of $1 billion, providing us with ample financial flexibility. Now, let’s move on to our outlook for Q2 of fiscal 2025. We anticipate revenue of $935 million to $965 million. We expect our mobile business to decline mid-to-high teens sequentially, in-line with historical seasonality. In broad markets, we anticipate additional sequential growth, and a further improvement in year-over-year growth. We are seeing positive momentum in booking trends, backlog and sell through patterns across Broad Markets. However, inventory headwinds remain acute in industrial and infrastructure. Gross margin is projected between 45.5% and 46.0%, which is seasonally adjusted for lower sales volume. We anticipate operating expenses in the range of $220 million to $228 million, utilizing our robust cash flow generation to invest in technology and product roadmaps. The sequential increase is mostly driven by a reset of the social charges at the beginning of the calendar year, as well as an increase in R&D project expenses. Below the line, we anticipate $6 million in other income, an effective tax rate of 12% to 12.5%, and a diluted share count of approximately 158.5 million shares. Accordingly, at the mid-point of the revenue range of $950 million, we intend to deliver diluted earnings per share of $1.20. Finally, our board of directors has approved a new $2 billion stock repurchase program as part of our disciplined capital allocation strategy. Before moving into Q&A, I want to briefly reflect on our business and address our strategic partnership with our largest customer. Over the past 25 years, we have built a strong technology company, a leader in RF connectivity for mobile solutions, and expanded those RF capabilities with analog and mixed signal expertise, in our growing broad markets business. And over the last 18 years, we have benefitted from a truly collaborative partnership with our largest customer, who has constantly pushed us to develop innovative, high performance and highly integrated RF solutions. We have partnered with that customer since the launch of their first phone, which has resulted in significant content and revenue growth over the years. However, the last couple years have been challenging as the competitive landscape has intensified. As it relates to the upcoming phone cycle, expected to be launched in the fall of 2025, the Skyworks team developed a suite of high-performance RF solutions. Despite our rich product offering, we did not get the result that we targeted. Although we were able to secure multiple sockets, including several highly integrated RF modules, our content position is expected to be down 20% to 25%. This decline will start impacting our revenue in the fourth quarter of fiscal ‘25, and throughout fiscal ‘26. While we are disappointed with this outcome, we remain steadfast in our commitment to invest and innovate around our technology roadmaps. We have already started the development of a new suite of solutions for the next generation phone, with an expanding set of products, and addressing more opportunities than ever before. In addition, we will continue to pursue growth opportunities with our other mobile customers, although on a selective basis, focusing on those segments of the market that demand high performance RF. And, we will continue to drive our diversification strategy, supported by multiple secular growth trends in broad markets. We expect those opportunities to partially offset the revenue decline at the large customer in fiscal ‘26 and position us for growth in fiscal ‘27. Now let me hand it back to Liam for some final remarks. Liam Griffin : To wrap it up, I would like to thank all of our Skyworks’ employees and stakeholders for their support during the last 25 years, it has truly been a privilege and the highlight of my career to lead this company. I strongly believe the Skyworks team, with support of our board of directors, and under new leadership, will execute on the strategic path of profitable growth. I will turn it over to Kris now, who will be taking Q&A this quarter. Kris Sennesael: Operator, let’s open the line for questions. Operator: Thank you. [Operator Instructions] Now first question coming from the line of Edward Snyder with Charter Equity Research. Your line is now open. Edward Snyder : Thanks very much. First off, Liam, I guess, congratulations on retiring. I am going to miss you. You did a phenomenal job. Always appreciate how frank and straightforward you've been on everything, and I think you did a bang-up job. So I'd see you go. Hope things are better when you're off on the sunset or whatever you're going to want to be doing. As for Apple or your largest customer, I know it sounds like the new competition is in one of your largest modules. And I know you guys are making a big push towards that in the fall. And there is a whole another round of this coming up in the year out. First off, I'd like to get a feel for if you think it is a target you can hit given how -- which that part is in BAW filters. And secondarily, you guys are probably one of the most favored suppliers to your largest customer. There's a lot of other parts on this version, and what’s going to be the next couple of versions that will change over the years. Maybe you could help characterize what the content opportunity is in other areas. I don't necessarily involve a lot of BAW filters. But maybe more on the WiFi side of the section, the ultra-high band that sort of thing. So maybe you can give us an idea of what you think the landscape looks like in the next couple of years. Kris Sennesael : Yes, this is Kris here. And so thanks for your question and your remarks. As you know, I can't really go into too much specifics, as it relates to our largest customer and go into specifics on specific sockets or certain design wins. But having said that, right, I think we have a long partnership relation with that customer. We developed really high performance RF solutions. And unfortunately, we didn't really get what we targeted. And a part of that is most of the sockets that we targeted, we actually were able to keep but instead of being single sourced on one particular socket, it's being dual sourced. And that's a little bit of a setback. Having said that, we are already working on the next generation phone that is expected to be launched in the fall of 2026. We actually have been working for many months on that. And as we said in the prepared remarks, we are expanding our reach. We are developing more parts than ever before, targeting more opportunities than ever before. And we collaborate very strongly with our customer on that. And we want to continue to support our customer in their baseband transition, and that's what we need to do. Edward Snyder : Okay. If I could, I'm sorry for the interruption. Yes, so you are sharing a socket that you may not have shared last year. Is that what you're saying? Kris Sennesael : That is correct. Edward Snyder : Okay. So actually, then you are competitive in that. I thought -- I'm sorry, the way we be characterizing it and I thought you didn't qualify at all. So actually, you are competitive for that socket, and now it's going into be horse trading from here on now, right? You didn't lose the whole thing? Kris Sennesael : That is absolutely correct. Again, we have been investing for many years in our technology and product road maps. We've been investing in our filter technology, both [PC SAW] (ph) and BAW. And as I said many times before, I do believe we are at the gold standard. Our BAW filters are as good as anybody else. Now you still need to develop a product and get to the best performance. And in many cases, we do get to the best performance, but as you indicated as well, the competition has intensified. It used to be -- there are on or about five major RF players and we used to swim in our own swim lanes. But more recently -- including Skyworks, right? We are reaching out and we cross swimlines. And so the competition has intensified, but we’re stepping up. We are developing more products. We keep expanding our technology and improving our technology. And the customer is asking, the customers are demanding and asking for better and higher RF products, in part because, as you all know, they are bringing AI capabilities to the phone, which is increasing the technological burden inside the phone. They're asking for smaller footprint, lower power consumption, lower latency and higher throughput and overall higher performance and we are stepping up. We are -- we demonstrated that our technology and products can do it. Unfortunately, right, we didn't get a single source, we were dual sourced on one important part. Edward Snyder: Great. Thanks Kris. Operator: Thank you. And our next question coming from the line of Christopher Rolland with Susquehanna. Your line is now open. Christopher Rolland : Hi, thanks for the question. And congrats to Liam and Phil. Yes, just a little more clarity on the down [‘20 to ‘25] (ph). So it sounds like you're sharing a socket instead of sole sourced. I'm assuming that would be the rumor. So you've been hearing about diversity receive. I don't know if that would fully account for the '20 to '25. And the other question is the lost sockets to Qualcomm. Would you take those back? And then, sorry, the last question here is, is this for all phones coming in the fall? Or is this just for the ones with the new modem. Thank you. Kris Sennesael : Yes. So the content loss is really a result of the share loss. That accounts for all of it because we actually, in certain sockets, we have been able to win back slots that we lost that we talked about nine months ago. So we've been executing well there. We've been gaining content. But unfortunately, on an existing slot, we lost share as we move from single source to dual source. And so I assume that answers your question. Christopher Rolland : Yes, I did, except just the follow-ups to that or any update on the Qualcomm socket and getting that back that you lost? And then is this just for all the phones or just the phones with the new modem? Kris Sennesael : Right. So again, I can't really go into the specifics, but we've indicated that it is unlikely or impossible that we win back those sockets, as it relates to the Qualcomm modem, but we've done well as it relates to the internal model. And maybe last point, we -- so we indicated a range of 20% to 25%. The reason of that is because we are dual sourced. And so the final results will still depend on the mix. And the mix, of course, you have to think about new product versus legacy product and also the mix within the new product between different basebands, as well as within a certain baseband, the mix between certain SKUs that are lined up. And so a lot of it will depend on where the demand will materialize and how that all plays out. Operator: Thank you. Our next question coming from the line of Karl Ackerman with BNP Paribas. Your line is open. Karl Ackerman : Yes, thank you gentlemen. I wanted to -- I was hoping you could clarify whether you're able to repurpose some of the RF designs that you've spent so much time on within R&D for some of these new content wins within 5G Android and Samsung. And then secondarily, while the content in iOS devices, at least in the handsets is not what you targeted, I was hoping you could discuss your dollar content opportunities you see across the consumer electronic markets such as watches, tablets and PCs over the coming quarters? Thank you. Kris Sennesael : Right. So I mean, we developed technology for our mobile business that of course, can be deployed at a large customer and within Android with Google, Samsung and China and some of that actually does spill over into our broad markets as well. So that is the technology building blocks. As it relates to the product development for certain products for our large customer, obviously, they are proprietary for our large customer. And there, again most of the developments we did are resulting in revenue, unfortunately, not in a single source position but in a dual-source position. And typically of course, what we learn from the large customer, the technology and the expertise that we learn, we can leverage that and develop in the Android market. The Android market, as you probably know, and we've talked about that before, we are going to remain selective. We focus on the high-end of the market where the demand high-performance RF. And we believe that we are well-positioned to grow that part of the business going forward. As it relates your second part of the question, as you probably know, we have substantial revenue with a large customer, roughly 85% of that revenue is related to the phone and approximately 15% of that is related to all their other products that they bring to market, the watch, the tablet, the PC, the home port, the vision product and so on. And in that part of the business, we continue to do well in terms of design wins. And we do expect this year and next year, that part of the business will continue to grow. Karl Ackerman: Very helpful. Thank you. Operator: Thank you. And our next question coming from the line Toshiya Hari with Goldman Sachs. Your line is open. Toshiya Hari : Hi, thank you so much for taking the question. I just had one question for you, Kris. Given the content dynamics of the largest customer, I'm curious if you plan on making any permanent changes to the manufacturing footprint of the company and how to think about gross margins going forward as part of that. And then similarly for OpEx, I know you are guiding OpEx to grow in the near-term, but any intent or any plans to adjust to the new backdrop, if you will? Thank you. Kris Sennesael : Yes. No, that's a series of good questions there, and I will try to address them one by one. First of all, as it relates to CapEx, we are currently operating the business with a lot less capital intensity. As you probably know, we have underutilization in our factories, and so we didn't have any capacity expansion CapEx in our plans. And obviously, now that we recently learned about the down selection for the upcoming phone, we do not have to add or subtract any of the CapEx. So the CapEx plan will remain on or about the same. As it relates to manufacturing footprint, we do not plan to make changes there. But of course, independent of what just recently happened, we will always continue to evaluate our overall manufacturing footprint and make the necessary adjustments if and where we can. As it relates to the gross margin, I've talked before about gross margin, and there is basically three major drivers for gross margin improvement. First is revenue growth that translate into better factory utilization. Second, its operational efficiencies and cost reductions in our internal factories as well as throughout the supply chain and working with our suppliers. And then thirdly, it's a mixed tailwind as broke markets grows faster than mobile and broke markets has above average gross margin. Obviously, here with the latest information revenue growth is going to be challenged. And so we are going to remain with underutilization in our factories for a little bit longer then we initially anticipated. And so that is not going to help in gross margin improvement. But of course, we are going to continue and actually double down on trying to find operational efficiencies in our factories as we deal with this situation. And thirdly, the gross margin tailwind from broad markets is actually going to blow stronger as broad markets is going to become a bigger part of the overall business. And then maybe last on operating expenses we will of course, continue to manage our operating expenses like we've always have done at Skyworks. We run a very tight ship here. But we have already, as I indicated also, we've already started for many months, the development of new products, a whole new suite of products in support of our large customer more products than ever before, right, addressing more opportunities than ever before. And obviously, we are going to continue with those developments that position us well to capture more content in the next-generation form that's expected to be launched in 2026. In addition to that, and we've talked a little bit about that in the prepared remarks. Our broad markets business is back to year-over-year growth. We expect that year-over-year growth to accelerate and improve over time and we see plenty of growth opportunities based on secular growth engines. And of course, we need to continue to invest into the growth of our broad markets as well. Having said all of that, we understand that the setback on revenue will require a deep dive, and we will, as a management team, continue to look at every opportunity to limit the OpEx spending. Obviously, there will be an adjustment to the variable compensation as we will not hit the targets that we set for ourselves and we will continue to look at any opportunity to further decrease or discretionary spending. Operator: Thank you. Our next question coming from the line of Peter Peng with JPMorgan. Your line is now open. Peter Peng : Hi, thanks for taking my question. I think just bigger picture. I think for like two years in a row, you've lost some content not because of your technology positioning, but your relationship. How are you thinking about your relationship with that customer longer term? And does this kind of put you into a more diversification – [saw your] (ph) diversification strategy even faster? Kris Sennesael : No, we are not changing the strategy here. I mean, again, we've been working with that customer for 18 years. We've built a very strong relationship. That relationship remains intact. Obviously, the last couple of years has been challenging, right, in part because the competition has been intensifying in part because of the multiyear baseband or modem transition, which has created some turbulence amongst the RF players. But we continue to collaborate very strongly with that customer. And as I said before, we are developing more parts than ever before addressing more opportunities than ever before, in part because we've been asked by that customer to go do that. And so we definitely will continue that relationship. Having said that, [diversification] (ph) and focusing on broad markets has always been part of the strategy, and that will of course, remain the case. We like our broad markets business -- it's a very diverse business addressing multiple end markets from consumer to enterprise, to infrastructure, networking and cloud and industrial and automotive markets. We have some key technologies and product offerings in those markets with strong customer relationships and of course, we will continue to invest in that market and drive growth. As I said before, we think our broad markets business should be growing double-digits, more than 10% year-over-year, and that's the target, and we will continue to invest and support that business. Peter Peng : Got it. And then on the Android space, what was the revenue number for the quarter? I think last quarter it was somewhere in that $75 million. Do you think that we are at a stable level and we can grow from those levels? Kris Sennesael: That is correct. It was in December quarter, flat sequentially. And as you know, the Android segment is Google, Samsung and China there is seasonality in that business. And sometimes it is offsetting seasonality, but there is definitely seasonality in that business as well. We continue to have a strong relationship with Google. We have already won substantial design wins for the -- for next year and the year after. And so I think we are well-positioned there. And then as well, as it relates to Samsung and China, we will remain selective. But there is design win momentum that starts turning into revenue. And we do believe that we can grow our Android business, as a whole this year and the year after and beyond. Operator: Thank you. And our next question coming from the line up Timothy Arcuri with UBS. Your line is open. Unidentified Analyst: Good afternoon. This is [indiscernible] on for Tim. Thanks for taking our question. And Kris, maybe just first on your largest customer. I was hoping you could speak to competitive dynamics there in the sense and more specifically, do you see this dual-sourcing strategy potentially reverse in future bonds? Kris Sennesael : So at a large customer, you win because you have the best performance parts. That's the rule. And so if there is only one supplier, obviously, that supply will win the business. If there are two or more suppliers, but one supplier has a substantially better part than anybody else, that supplier can get all the business, if there are two or three suppliers, and they are tight in terms of performance, the customer could decide to do outsource that, especially on the larger, more expensive parts. And I think that's a reality and we have to acknowledge that and face that. And so it's up to us and the team to, again continue to strengthen our technology road maps to develop high-performance parts and sockets that are better than our competitors. We -- again, we have the teams in place. We have the R&D resources and the strength and the capabilities in place but we need to focus on execution and get those best performance parts in front of our customer. Again, in the one particular socket that is causing some pain here, we developed a really high-performance part that is as good as our competitors part. But it wasn't necessarily much better. As a result of that, the customer decided to dual source it. Unidentified Analyst: Got it. Very helpful. And then maybe just a housekeeping item. If you could just tell us what the percentage of your largest customer was this quarter? Thank you. Kris Sennesael : Yes. In the December quarter, the largest customer was 72% of total revenue, which was up 9% sequentially, as we supported that customer with the ramp of their current phone. Also, again, I want to reiterate that, right, that revenue with a large customer is not just on the phone, roughly 85%. It fluctuates a little bit from quarter-to-quarter, but roughly 85% of that revenue is related to the phone. The other 15% is related to all other products that, that customer has out in the market. Operator: Thank you. And our next question coming from the line of Vivek Arya with Bank of America. Your line is now open. Liam Pharr: Hi. This is Liam Pharr on behalf of Vivek Arya. Thank you for taking my question. I wanted to focus on China. With the competitor sort of exiting that market, what is your longer-term strategy for China? And if you could how do you expect tariffs to come into play to the inventory in the overall market? Thank you. Kris Sennesael : Right. So with China and Samsung, we are remaining selective. We have a long-standing relationship with those customers, but many years ago, we've decided not to compete for their mid or low end of their products, but we compete for sockets with them and the high end of the market. That's where they need us or our competitors, right? That's what they need high-performance RF, and we see opportunities there. As I said before, we are getting some design win momentum that is starting to ramp up in revenue, and we will continue to do that on a selective basis. Liam Pharr: Thank you. And just as a follow-up, looking forward to June, how are you looking at seasonality and how you are seeing it kind of shape out in its first half. Thank you. Kris Sennesael : Yes. So we only guide one quarter at a time, but I don't see anything different right now than normal seasonality in our business. Operator: Thank you. And our next question coming from the line of Kris Sankar with TD Cowen. Unidentified Analyst: Hi guys. This is Eddie for Kris. Thanks for taking my question. It sounds like your competitor has improved the performance of their product meaningfully this year, which pushed your main customer to dual source. But I wonder if you can quantify where the performance gap stands today between your product and that competitor's product? And how that compares to last year? And I wonder if you can share any metrics or technical specifications that we can follow that would give us an idea how that gap is developing going forward between you guys and your main tier. Thank you. Kris Sennesael : Right. So again, we can't really go into the specifics at that detailed level as it relates to our large customer. And performance is being measured on 5 or 10 different parameters and so this would become a very technical discussion. But I want to go back to the beginning of your question, it's not that our competitor improved a lot their performance of their part. That competitor in the past has not competed for that product, and it was the first year that, that competitor competed for that product. And so that's the dynamic there. Unidentified Analyst : Got it. Thank you. Operator: Thank you. And our next question coming from the line of Nick Doyle with Needham. Your line is now open. Nicholas Doyle : Thanks for taking my questions. Broad markets should see improving growth next quarter, and it sounds like that's driven by the large customer and WiFi, where inventory is more aligned, do you have any indication of how long inventory headwinds will slow the industrial and infrastructure piece? When can it reach that double-digit growth year-over-year that you discussed? Thanks. Kris Sennesael : Yes. That's a very good question. But unfortunately, visibility is not that great. I mean, I'm listening to all my peers and competitors that have huge exposure to industrial and infrastructure markets there as well. And it seemed -- we all struggle a little bit with lack of visibility there. And part of that is because there is persistent excess inventory at the customer level where we don't really have good visibility. But now the inventory and the distribution channel is clean has been cleared out, but there is still inventory at the customer level. Again, for Skyworks, that is not the biggest part of our broad markets, right? We're a much bigger player in our connected IoT devices, which is roughly 40% to 45% of the business. Our automotive business, which is roughly 20-or-so percent of our broad markets business. And so we have less exposure on some of those markets where there is still, unfortunately some persistent inventory correction. Nicholas Doyle : Thank you. And can you expand on the socket or anything around the type of 5G premium Android content that you won? Maybe how big is the combined opportunity, any timing? Thank you. Kris Sennesael : Sorry, the 5G, can you repeat that? Nicholas Doyle : Yes, the kind of the first point in your press release talked about a 5G premium Android content win. Kris Sennesael : Yes. Well, I mean, again, we've -- in Android, we continue to be selective we have design wins, including with Samsung in the Galaxy and as well as many of their other products and that will continue going forward. Operator: Thank you. And ladies and gentlemen, that concludes today's question-and-answer session. I'll now turn the call back over to Mr. Sennesael for any closing comments. Kris Sennesael : Yes. I would like to thank everybody for your participation at today's call, and I'm looking forward to talk to you together with Raji and Phil at upcoming investor meetings. Thank you. Operator: Ladies and gentlemen, this concludes today's conference call. We thank you for your participation. You may now disconnect.

Operator: Good afternoon and welcome to Skyworks Solutions Fourth Quarter Fiscal Year 2024 Earnings Call. This call is being recorded. At this time, I will turn the call over to Raji Gill, Vice President of Investor Relations for Skyworks. Mr. Gill, please go ahead. Raji Gill: Thank you, operator. Good afternoon, everyone and welcome to Skyworks fourth fiscal quarter 2024 conference call. With me today is Liam Griffin, our Chairman, Chief Executive Officer and President; and Kris Sennesael, Chief Financial Officer for Skyworks. This call is being broadcast live over the web and can be accessed from the Investor Relations section of the company's website at skyworksinc.com. In addition, the company's prepared remarks will be made available on our website promptly after their conclusion during the call. Before we begin, I would like to remind everyone that our discussion will include statements relating to future results and expectations that are or may be considered forward-looking statements. Please refer to our earnings press release and recent SEC filings, including our annual report on Form 10-K for information on certain risks that could cause actual outcomes to differ materially and adversely from any forward-looking statements made today. Additionally, the results and guidance we will discuss include non-GAAP financial measures consistent with our past practice. Please refer to our press release within the Investor Relations section of our company website for a complete reconciliation to GAAP. With that, I'll turn the call over to Liam. Liam Griffin: Thanks, Raji and welcome, everyone. Skyworks executed well during the fourth fiscal quarter of 2024. We posted revenue of $1.025 billion. We delivered earnings per share of $1.55 and generated free cash flow of $393 million. Revenue, gross margin and EPS met or exceeded the mid-point of our guidance. Our business model continues to deliver robust cash generation. For the second year in a row, annual free cash flow was well above $1.6 billion, providing a strong foundation to invest in our technology and product roadmaps to support future growth. In mobile, our revenue grew 21% sequentially, and we expect further growth in the December quarter, as customer orders and channel inventory have normalized, and we continue to support seasonal product ramps. Based on our technology leadership position and in close collaboration with our mobile customers, we expand our reach, developed best-in-class high-performance connectivity solutions, and drive more integration with advanced packaging, reducing the footprint and increasing energy efficiency. We believe that AI is poised to ignite a transformative smartphone upgrade cycle, propelling the demand for higher levels of RF complexity. As AI capabilities continue to advance, smartphones will evolve into more sophisticated and intelligent companions, demanding more powerful solutions to support their enhanced functionalities. We are in the early stages of this multi-year trend and Skyworks is well-positioned to capitalize on it. In broad markets, we have seen signs of stabilization and have grown modestly since the bottom in the December quarter of 2023, despite uneven demand dynamics and high customer inventory in certain segments. Long-term, we remain bullish on broad markets given secular trends in edge IoT, automotive electrification and advanced safety systems, as well as AI-enabled workloads driving cloud and data center upgrades. In edge IoT, demand continues to improve as customers adopt Wi-Fi 6E and 7 systems, which carry higher dollar content due to increasing complexity and additional bands. We are in the early stages of a multi-year upgrade cycle with Wi-Fi 7 shipments now ramping. As we indicated, at the beginning of the year, inventory levels in traditional data center and wireless infrastructure remain stubbornly elevated, which is delaying the recovery. We continue to undership natural demand. However, over the medium to-long-term, we remain bullish on our product roadmap and design win funnel targeting AI data centers. Lastly, global demand remains muted in automotive and industrial markets, as Tier 1s and OEMs work down excess inventory. Despite near-term headwinds, we continue to convert design wins into revenue across our connectivity, power isolation, and digital broadcast solutions for the connected car and EV markets. Turning to our quarterly business highlights, we secured 5G content for premium Android smartphones including Google Pixel 9, Samsung Galaxy, Oppo OnePlus and several others. We expanded our Wi-Fi 7 design win pipeline with Linksys, Charter, NETGEAR, Commscope and TP-Link. For emerging IoT applications, we powered advanced audio solutions for wireless gaming and clinical-grade hearing aids. Lastly, we increased our design win momentum in automotive including 5G front-end modules, infotainment and digital isolators. In summary, the Skyworks team executed well despite a challenging macroeconomic climate. We intend to leverage our robust cash generation to make critical investments that drive long-term profitable growth while diversifying the overall business. With that, I will turn the call over to Kris for a discussion of last quarter’s performance and our outlook for Q1 of fiscal 2025. Kris Sennesael: Thanks Liam. Skyworks’ revenue for the fourth fiscal quarter of 2024 was $1.025 billion, slightly above the midpoint of our outlook. Mobile was approximately 65% of total revenue, up 21% sequentially, as we successfully supported the ramp of new products at our mobile customers. Broad markets were approximately 35% of total revenue, up $1 million sequentially. Gross profit was $476 million, with gross margin at 46.5%, in line with expectations. Gross margin grew 50 bps sequentially, reflecting our ongoing cost reduction actions. Also, during Q4, we further reduced our internal inventory, resulting in seven consecutive quarters of reductions. Operating expenses were $203 million, reflecting our strategic investments in our technology and product roadmaps. We delivered $273 million of operating income, translating into an operating margin of 27%. We incurred $2 million of other expenses, and our effective tax rate was 8%, driving net income of $250 million and diluted earnings per share of $1.55, which is three cents above our guidance During the fourth fiscal quarter, we delivered impressive cash generation, with cash flow from operations at $476 million, capital expenditures at $83 million, resulting in a free cash flow of $393 million or 38% free cash flow margin. For fiscal 2024, we generated well over $1.6 billion of free cash flow, our second year in a row and ended the year with a record 40% free cash flow margin, translating into approximately $10.40 of free cash flow per share and a free cash flow yield of approximately 11.5%. We continue to drive robust cash flow through steady levels of profitability, prudent working capital management and moderating CapEx intensity. During fiscal Q4, we paid $112 million in dividends. Cash and investments grew to approximately $1.6 billion, and we have $1 billion in debt, providing us with excellent optionality. Now, let’s move on to our outlook for Q1 of fiscal 2025. We anticipate revenue of $1.05 billion to $1.08 billion, up 4% sequentially at the mid-point. We expect our mobile business to be up mid-single-digits sequentially driven by seasonal product ramps. In broad markets, we anticipate further modest sequential growth, and a return to year-over-year growth. The pace of the recovery is more measured than we anticipated, given excess inventory in select segments, like industrial, automotive, infrastructure and networking. Gross margin is projected to be 46% to 47%, and we expect operating expenses in the range of $209 million to $215 million with sequential increases reflecting typical adjustments made at the start of a new fiscal year, including variable compensation accruals. In addition, we are leveraging our strong cash flow generation to invest in technology and product roadmaps to drive share and increase diversification. Below the line, we anticipate $3 million in other income, an effective tax rate of 12.5%, and a diluted share count of approximately 160 million shares. Accordingly, at the mid-point of the revenue range of $1.065 billion, we intend to deliver diluted earnings per share of $1.57. Operator, let’s open the line for questions. Operator: [Operator Instructions] And our first question coming from the line of Peter Peng with JPMorgan. Your line is now open. Peter Peng: Hey, good afternoon. Thanks for taking my questions. And good job on the execution. Can you, on your mobile business, can you talk about your Android portion of it and what kind of trends are you seeing? I think your peers talk about some weaknesses there. So I know this is a smart grid business that any can collaborate what you are seeing in the Android part of this business? Liam Griffin: Sure absolutely. We have a very robust pipeline with the Android players, specifically Google. They’ve been doing a great, great job and also Samsung. So we have incredible design wins there. Fortunately, they are investing in technology, the performance that we are seeing in those devices have been amazing for us. It’s a great natural Skyworks to get some opportunity really to demonstrate our technology reach, our scale and also moving into a diversified portfolio, as well. So we are doing very well as a business and we expect much more in that company. Kris Sennesael: Right, and then, Peter just to level set, right our android revenue in more than $1 billion of revenue, we just did last quarter is less than $75 million of revenue in the quarter. Roughly, less than $75 million of revenue in the quarter, roughly half of that is with Google, 30%, 40% or so is with Samsung and less than 10% is with the China players. So, we definitely have derisked our position with China. We’ve talked about that before. We are very selective as it relates to that part of the android business with Samsung in China. We all playing with those valued customers, but only in the areas where they value what we bring to the table, which is high performance RF connectivity. That plays out really well with Google. Google is making a lot of investments in their product roadmap who are switching the AI-enabled phones, that drives a lot more complexity inside the phones and that's all music to our ears and that’s why we have a strong relationship with them. Peter Peng: Perfect. Thank you. And then, on the broad market could see you guys, driving, I think for the December quarter, that'll be probably your fourth quarter of sequential growth. I know there's a lot of puts and takes in that business, but as we kind of look into 2025, can you talk about the sustainability of this recovery? Or do you think that there's going to be some seasonality that might impact growth into 2025? Kris Sennesael: Yeah. And so, you you're absolutely right. Our broad markets business bottomed in the December quarter of 2023 and we had now three quarters in a row of modest sequential growth. We are guiding to further modest sequential growth in the December quarter and a return to year-over-year growth again, somewhat in the mid-single-digits year-over-year growth in our broad markets business. We do anticipate that at a certain point, the sequential growth is going to accelerate. But we have not really seen that for now. And we all know why that is. There is still some excess inventory in certain markets like, automotive industrial infrastructure and networking. We are undershipping natural demand. But if actually that’s going to clear and eventually our growth is going to accelerate. We are very well aligned with some secular growth engines in our broad markets, as we talked about in the prepared remarks Edge, IoT devices where we see an upgrade from Wi-Fi part 6. Wi-Fi 6, 7 in automotive with Advanced Safety systems and electrification and as well, in AI data centers and networking where we play with our timing solutions. And so, when I put this all together we still believe that in the longer term, in a neutral microeconomic environment, our broad markets business can grow mid-teens year-over-year. Operator: Thank you. And our next question coming from the line of Edward Snyder with Charter Equity Research. Your line is now open. Edward Snyder: Thanks a lot. Maybe if we touch on guys, obviously, with what's going on with your largest customers called kind of a little bit about, temporary up [Indiscernible]. What’s you're feeling in terms of 2025 now for specific guidance all that, but it's already clear from what you're down that there's some content changes in the last flagship phone and when we can gather there's going to be some additional changes. There's a lot of things moving - a lot of moving pieces, here. What's your view of - let me put it this way, the long term say 2025 to 2026 in terms of your ability to getting back content And then when they make a big shift, and then perhaps go up from there, I know we've talked about AI in the past about its impacts on the RFID, given the roadmap suffer three years, what are you seeing in terms of generic content growth in that kind of flagship of front-end from AI? And then I have a follow-up. Thanks. Liam Griffin : Okay. Okay. I'll unpack that with you here. I mean, certainly, there's tremendous opportunity for us to continue to grow in mobile. We got an incredible technology bench with a scale. We have the physical plant and we have the flexibility to do what our customers need and I'm sure as, you know, we have a very good partnership with our largest customer. So that back and forth is always going. But going our way. We’ve got great people on both sides and make it work. And we expect to have more growth. Certainly, we had a last couple of quarters – are great but we are popping up now. If we look at the roadmap that we're putting forward, it’s very, very potent, and we definitely have the team to make that execution done. It’s got to take a little time, of course, but we have the scale, we have the people. We have the ambition to make it happen. And most importantly, we have the confidence of our most important customer. Edward Snyder: Okay, maybe if I could follow-up first housekeeping. What was the percentage of your live discussion we are in the second, are you been a representative to Samsung for a while and again stands are shifting there in terms of as we - what's the prospect for that in the next, let's say year or so in terms of it becoming a larger customer for you, given that I think their more open slots available to you. Are you seeing good design traction in spring or fall or at the beginning of any occasion of that at all right now? Thanks Kris Sennesael: So, in the September quarter our largest customer was approximately 69% of our total revenue, which was up 21% sequentially. So the team really executed well supporting our largest customer ramping up their new products. And I’ll turn it over to Liam for the rest of your question. Liam Griffin : Yeah, sure. I mean, as we spoke this, just tremendous opportunity there. We are diving much deeper in some of those platforms. So, and I would say the technology pipeline that we have at Skyworks and the investments that we’ve been making are really going to yield opportunities for us in growth. So that's kind of what we're looking at right now. There's a lot of opportunity we're executing our engineers are making incredible progress on the next generation solutions. There is a lot more going, as you get into the AI world. And you can expect that Skyworks is right there ready to go where under the hood so to speak with some really incredible people on our side and with our partners. So should we look forward to that. That work is being done now. And we look forward to putting that into products very shortly. Operator: Thank you. And our next question coming from the line of Timothy Arcuri with UBS. Your line is now open. Timothy Arcuri: Thanks a lot. Kris, can you talk about what's included for the largest customer for December? It seems like you did see some pull-ins in the September, just like most others did. It was a little higher than what I think you thought it would be. Usually that customer is about flat in December, but maybe it's down a smidge because of the Helene. Can you can you kind of talk about that? Kris Sennesael: Yeah, first of all, the – we can’t really go into the specifics as it relates with our large customer, but I can tell you that the business and the demand is fully in line with our expectations. So we didn't see any surprises in September. Didn’t see any – or don't expect any surprise in December that the demand is in line with our expectations and so as I just answered the question before that the large customer was up 21% sequentially in the September quarter and we expect it to be up further in the December quarter in the 5% to 10% range on a sequential basis. Timothy Arcuri: Great, great, Kris. Thanks. And then, I noticed that the repo was quite low despite the strong free cash flow, I might have thought it would have been a little stronger. Can you kind of talk? Kris Sennesael: Yeah, yeah, absolutely. So first of all, I want to highlight here, as well that we do have very strong free cash flow and as we indicated in the prepared remarks, right for the second time in a row more than $1.6 billion of free cash flow and that does take into account that we continue to make the necessary investments in our business. We continue to strengthen our technology and product roadmaps and there's no hesitation there. We know where the opportunities are. We are making the necessary investments there to capture those opportunities. In addition to that, we continue to invest in our manufacturing footprint although at a much more moderate pace, as we have seen in the last couple of years. But we continue to invest in as well. And so, our free cash is very strong. Our balance sheet is very healthy. We have $1.6 billion of cash on the balance sheet. And only $1 billion in debt. We have no near-term maturities. And so we have plenty of optionality. We have optionality to do M&A, although you know us, we're going to remain disciplined but we have that optionality and we have optionality to return excess cash back to the shareholders through a combination of our dividend program and our share buyback program. On the dividend program, we just recently increased the dividend 3% to now $0.70 per share and so that’s turning into a really nice dividend yield and we have the optionality to do buybacks. The Board and the management team are taking into account and into consideration multiple elements. But as a matter of policy, I can't really share the details of those considerations. Having said that, it’s our intent to continue to return all the excess cash back to the shareholders over time. Operator: Thank you. And our next question coming from the line of Krish Sankar with TD Cowen. Krish Sankar : Yeah. Hi, thanks for taking my question and I think I want to thank for the color on the December quarter and your large customers. I'm just kind of curious, when you look at the December quarter compared to history, how was the demand linearity trending? And what is that implies on March quarter’s seasonality? And I have a follow up. Kris Sennesael: So again, I will repeat what I just answered them on the previous question, right? It is fully playing in line with what we expected. A strong ramp in September, followed with further ramp going into the December quarter. Obviously, March is seasonally down and we expect here again our March quarter, especially in mobile to be seasonally down. Obviously, we only guide one quarter at a time. So it’s too early to be more specific. We do however, our broad markets business to continue to grow sequentially. And we expect broad markets to be up modestly in the March quarter and beyond. But as combined, of course, for Skyworks, we will have normal or expect normal seasonal declines into the March quarter. Krish Sankar : Got it. Thanks for that Kris, and I appreciate it. And then a quick follow up on the Wi-Fi 7 upgrade cycle. It seems like it's been pretty good for you. I'm just curious like historically how long has the growth inflection lasted for a Wi-Fi upgrade cycle and how to think about how this profile would be versus prior cycles? Thank you. Kris Sennesael : Sure, sure. Yeah, I mean, actually, you're right. The Wi-Fi cycle had been somewhat muted here for a while. Fortunately, with Skyworks team, we’re in great position. The next-generations Wi-Fi solutions, Wi-Fi 7 we are working with companies like Motorola. We are looking at companies like Logitech. We get them automotive plays in there as well. So the broad market businesses are coming up, it had been kind of a rough right there. But we're starting to look better. Next year is another player in their Charter Communications, where industrial markets we are engaged with Mercedes Benz even on the auto side. So there has been a lot of activity and strength here. And the broad market is just out of the design win pipeline is filling and we’ll get back to revenue. So we are very encouraged about the signs we are seeing there. Operator: Thank you. And our next question coming from the line of Vivek Arya with Bank of America Securities. Your line is now open. Michael Mani: Hi. This is Michael Mani on for Vivek Arya. Thanks so much for taking our questions. To start just across the various end-markets that broad markets plays in, which areas have become maybe incrementally worse or better over the last 90 days and just where are you still undershipping to demand? Kris Sennesael: So, in broad markets, there is just three parts, there is the Edge IoT connectivity where we play mostly with Wi-Fi with any other wireless connectivity protocol. We are definitely seeing improvements in that area. Again in part driven by a big step up in content as the transitioning – the multi-year transitioning is happening from Wi-Fi 6 and 7. I think we are still somewhat undershipping natural demand there. But there is definitely improvement in that area. The second part is our networking infrastructure and cloud. I think that’s very well documented there. There is excess inventory that’s being worked down. That will take multiple quarters. I think we start seeing some improvements there. Bookings is improving. Backlog is improving, but it's still shipping way under natural demand. And then, last but not least, you have automotive and industrial, I think that’s very well documented as well by many of our peers who talked about that part of the business that would definitely undershipping natural demand there. Again, we are, I think we are doing fairly well given some design wins that we have able to put on the book a year or two years ago. Those design wins continue to ramp up and turn into revenue but it's a soft environment. And so, I think that it will continue to improve over time here and that's why as a whole, we are pleased on one hand that our broad markets continue to grow sequentially, although modestly. But eventually that sequential growth will accelerate. Again, December year-over-year growth and that year-over-year growth will accelerate over time, as well. Michael Mani: Great, thank you and just on gross margins. Given that broad markets might be taking a more measured up turn expected previously. What are the puts and takes with the gross margin expansion from here? I know you guided somewhere not at the midpoint. But how do you think of about expansion into 2025? And then maybe more broadly, as you think about an eventual return to 50% or greater gross margins, what would you rank order as the most important drivers to achieve this between utilization, product mix and a recovery in broad markets or any other factors? Thank you. Kris Sennesael: Yeah. So as it relates to gross margin, we did 46.5% in September, which was up 50 basis points. So that's, that's a step in the right direction. For December we guide 46% to 47%. So kind of flattish at the midpoint, but the range is 46% to 47%. Looking ahead to fiscal ’25 and longer term, as you called out correctly, we drive gross margin improvements through better factory utilization, through cost reductions, and we have a mix tailwinds because broad markets has above average gross margin compared to the mobile. I think the team continue to execute well. We start seeing some improvement on the factory utilization. The team is executing well on cost reductions internally, as well as externally. But as we talked already, the mix tailwinds is not blowing as strong as we initially anticipated. Right? I think over time broad markets will accelerate. But currently the sequential growth is modestly and so the mix tailwind there is not as strong as expected. As a result of that for now, we think that fiscal ’25 on a full year basis, gross margins is going to be flattish, compared to fiscal ‘24. It will, of course start improving towards the end of fiscal ‘25 and sets us up well for further gross margins expansions in fiscal ’26 and beyond. We want to get as fast as we can back to the 50% gross margin. And then we are going to keep grinding to our long-term target model of 53%. Michael Mani: Thank you. And our next question coming from the line of Karl Ackerman with BNP Paribas. Your line is open. Karl Ackerman: Yes. Thank you. Kris, I just want to follow up on that gross margin comment with regard to fiscal ’25. I guess, do you have an inventory days target? Because you continue to make good strides in reducing inventory days now in the 130 range, broad markets continues to improve. And so if inventory days are at normal, presumably, margins should go up. So, again, maybe tying the inventory days comment with what your comments just were around gross margin as how we see it stepping up over the next couple quarters. Kris Sennesael: Yeah. First of all, we have been reducing our internal inventory for seven quarters in a row now. It’s peaked up well above $1.2 billion and we are down to less than $800 million. I think we can continue to drive inventory down a little bit more. Obviously, that’s not helping from a factory utilization point of view and it’s not helping from a gross margin point of view, but I think it’s the right thing to do. We want to right-size the inventory and I think we still can reduce that a little bit. And so, again, when you put it all together there, I think gross margins going to be flattish and fiscal ’25 start improving towards – and we will have seasonality there, right? We will have seasonality typically gross margins go down in the March and June quarter and then start improving in the September and December quarter. Inventory days, again there is seasonality and so revenue goes up and down. The inventory doesn’t follow necessarily the seasonality on the revenue side. But from an absolute dollars point of view, we are sub 800 continue to drive it down a little bit further. Michael Mani: Got it. Thank you. As my follow-up, do you believe the M&A environment is more favorable from a regulatory and funding perspective in ’25? And if not, because of your very strong free cash regeneration then perhaps ability to further reduce inventory, can you be more aggressive on a buyback if so? Thanks. Kris Sennesael: Yeah, I mean there's all kinds of options that we have with the cash flow that we’ve put in forth, which is a great, great tool for us. So, we're always looking for the optimum mix, whether it’s an M&A play. Whether another factor. And so those are great options for Skyworks. And it’s a testament of the ability to drive that cash and it’s going to be a hallmark of this company. So we look at everything. We are very disciplined. We think about our shareholders. We think about the longevity of the technology. And it’s been a strategy that’s worked quite well and I think it will continue to be really purposeful for us as we go forward. Operator: Thank you. And our next question coming from the line of Ruben Roy with Stifel. Your line is now open. Ruben Roy: Thank you. Liam, I had a question on Edge IoT to start with. And, just wondering, how are you thinking about AI impact if any, on the Edge IoT business. You've talked a lot about the smartphone side of it. Just wondering if there's anything investors should be thinking about in terms of AI and potential impacts as we look out over the next 12 to 18 months? Liam Griffin : Yeah, absolutely. So, I think, we got a couple of things. Certainly, on the smartphone side, we are deeply entrenched with the most important customers learning together executing and driving excellence. So that’s really, really key and we are doing great work there. And then, but that’s flipping back to the broad markets, so we're doing very, very well in the IoT space. And really engaging with companies that are real hallmarks in the business. We talked about Google and Samsung, but also the broad markets businesses. We've got design wins with Mercedes. We have design wins with Netgear, Ambient Networks, Motorola. Really, really meaningful companies that are now part of that portfolio that we have in broad markets. And I'm 100% confident that our team will continue to drive that with more opportunities, more diversification and more cash and more earnings for us. So look forward to that. But things look much better there in that market. Ruben Roy: Thanks, Liam. And a couple of quick ones for Kris. Kris, can you uh, tell us about the impairment charge during the quarter? And was that was your related to and then, finally on CapEx. It picked up a little bit. Any initial view on how we should think about CapEx for fiscal ’25? Thank you. Liam Griffin : Right, so, we did take an impairment charge in Q4 of fiscal ‘24, which was related to a process R&D related to I&A acquisition we did with Silicon Labs. So you should probably know at the time of an acquisition, you have to identify all the in-process R&D projects and have to put evaluation around that. As time goes by, some projects are being accelerated. Some projects are being pushed out. Some projects are being redefined and so that's all being taken into account and could potentially result in an impairment charge, which we took in Q4. The business itself that we acquired is part of our broad markets business. We are going through some inventory correction there. Of course, a lot of that business plays in the industrial, automotive area, but we are still very pleased with that business. That business has great technology, great people, good customer contacts and as we get through the inventory correction is well positioned for growth. As it relates to CapEx, CapEx is running in fiscal ‘24 on or about 3% to revenue, which has been one of the lowest in many, many years. Part of that of course is we didn’t have to do any capacity expansion, CapEx during fiscal ‘24, but all the CapEx we did was mostly for technology reasons. But going forward, we think CapEx will remain moderate - mid to longer term in the mid-single-digits as a percent to revenue. Operator: Thank you. And our next question coming from the line of Srini Pajjuri with Raymond James. Your line is now open. Srini Pajjuri: Thank you. A couple of follow-ups. Kris, on the broad market side. There are lot of moving parts in there. Just trying to understand how big auto, industrial and IoT and infrastructure businesses are individually and also you talked about some inventory on the infrastructure and cloud networking, I think you have a bit more exposure on the telcos. I just want to make sure, because from everything that we see in here, the cloud business is very strong right now. So I am just curious as to what’s causing that inventory build. Kris Sennesael : Yes. So, our broad markets, it's roughly 40% 50% is the Edge IoT, connectivity, 35% 40% or so is our networking infrastructure and cloud and then 20%, 25% is industrial and automotive. As it relates to cloud and data center, we do see some good traction in the AI-related investments that, where we play with our timing solutions. But investments in the more traditional cloud and data is somewhat muted. And there is still some ongoing inventory correction in that part of the market. Srini Pajjuri: Okay, that's clear. And then, on the - I guess on the December guidance you talk - you kind of mentioned that everything is kind of tracking as you expected originally but it is slightly below your normal seasonality I think historically you have done kind of high-single-digits in December. So my question is, is that primarily on the Android side, the weakness, or broad markets? And then, given the lower base, should we expect your March quarter to be slightly above seasonal? Thank you. Kris Sennesael : Right. So the revenue and the business with the large customer is fully in line with expectations. And more normal from a seasonal point of view. We're guiding slightly below street expectation, mostly because of broad markets. Again, on one hand pleased that we continue to see for a fourth quarter in a row, sequential growth but the sequential growth is less than what we anticipated three or six months ago. Operator: Thank you. And our next question coming from the line of Vijay Rakesh with Mizuho Group. Your line is now open. Vijay Rakesh : Hi Liam and Kris. Just wondering on 2025, if you were to take a look at how do you see adds in growth year-on-year within that 5G? And then a follow-up. Liam Griffin: So, we only guide one quarter at a time and we're going to stick to that. I mean, visibility is I think, okay. It's not bad or great. But as a matter, we only guide one quarter at a time and we are going to stick to that. Vijay Rakesh : Right. Talking more of the industry, but as you look at one of the things that one of your peers have talked about is in China there is a trend towards entry level and some of RFs side moving to discrete. Are you seeing any of that? That's it. Thanks. Liam Griffin: Yeah, we actually don't do much in China in those markets. And if we were in it we really low end stuff. And so we are naturally kind of out of that space and upgrading more with some of the other players that we talked about earlier, the Googles and Samsungs, et cetera. So, we still have a great Android business it just happens to be much more important strategic one. Operator: Thank you. And our next question coming from the line of Nicholas Doyle with Needham & Company. Your line is now open. Nicholas Doyle : Hi guys. Thanks for taking my question. You mentioned tremendous opportunity in Android? Can you be any more specific in terms of products or maybe the connectivity if it's RF or a Wi-Fi type opportunities and I guess I assume that’s mostly with Google? Thanks. Liam Griffin: Yeah, I mean, you have two really strong players here that we are engaging with Google and Samsung. And what I really like about those companies is that, they are – these are enterprise companies. It’s great that they're smartphone players and we can engage that’s wonderful. But they are also technology companies. They are companies that play in AI and other markets. So it’s really a great opportunity for us. We are pleased that we are able to engage at that level. We are learning a lot from those customers, very, very smart people with a lot of ideas and a lot of applications. So it’s a broad market business of its own within the portfolio. So, you should expect more from us with those companies. We're making great progress and looking forward to continuing to raise the bar and so we are happy to be there. Nicholas Doyle : Okay, thanks. And maybe just a broader strategy question. You've seen broad markets grow modestly, quarter-over-quarter, yet you've been undershipping kind of this whole time. So, why not halt those shipments more aggressively at the beginning of the year? And kind of burn through that inventory quicker. Is there any sort of business strategy around that decision or that's just how business goes? Thanks. Liam Griffin: No, no\. I mean, we always very careful and when we talk about inventory, we talk about inventory in the channel and at the customer level. And we always trying to get a good read about that and there's no advantage or any good reason to go and build up channel inventory or excess inventory at the personal level. We always trying to ship in line with real end-customer demand. Now, sometimes our customer don’t have it right either than they are prominent able to get more parts and then their end-customer demand doesn’t materialize and you end up with excess inventory somewhere in the channel could be at the distribution or could be at the end customer. Nobody wants that and we always try to manage that very carefully. Operator: Thank you, ladies and gentlemen, that concludes today’s question and answer session. I will now turn the call back over to Mr. Griffin for any closing comments? Liam Griffin: Thanks for participating on today's call. We look forward to talking to you at upcoming investor conferences during the quarter. Thank you. Operator: Ladies and gentlemen, this concludes today’s conference call. We thank you for your participation and you may now disconnect.

Operator: Good afternoon and welcome to Skyworks Solutions Third Quarter Fiscal Year 2024 Earnings Call. This call is being recorded. At this time, I will turn the call over to Raji Gill, Vice President of Investor Relations for Skyworks. Mr. Gill, please go ahead. Raji Gill: Thank you, operator. Good afternoon, everyone and welcome to Skyworks third fiscal quarter 2024 conference call. With me today is Liam Griffin, our Chairman, Chief Executive Officer and President; and Kris Sennesael, Chief Financial Officer for Skyworks. This call is being broadcast live over the web and can be accessed from the Investor Relations section of the company's website at skyworksinc.com. In addition, the company's prepared remarks will be made available on our website probably after their conclusion during the call. Before we begin, I would like to remind everyone that our discussion will include statements relating to future results and expectations that are or may be considered forward-looking statements. Please refer to our earnings press release and recent SEC filings, including our annual report on Form 10-K for information on certain risks that could cause actual outcomes to differ materially and adversely from any forward-looking statements made today. Additionally, the results and guidance we will discuss include non-GAAP financial measures consistent with our past practice. Please refer to our press release within the Investor Relations section of our company website for a complete reconciliation to GAAP. With that, I'll turn the call over to Liam. Liam Griffin: Thanks, Raji and welcome, everyone. Skyworks delivered solid results for the third fiscal quarter of 2024. We posted revenue of $906 million, delivered earnings per share of $1.21 and generated free cash flow of $249 million. Revenue, gross margin and EPS met or were slightly above our prior guidance. Importantly, year-to-date free cash flow was $1.3 billion or 40% free cash flow margin which reflects strong working capital management and operational excellence. In mobile, we are seeing encouraging signs that inventory levels and order patterns are normalizing. We are energized about the prospects of generative AI, catalyzing a meaningful smartphone replacement cycle and driving higher levels of RF complexity. We expect new AI features will only be available on the latest next-generation smartphones, potentially fueling a multiyear upgrade cycle. We are uniquely positioned given our long-standing relationships with the leading smartphone OEMs, best-in-class RF technology and a global manufacturing footprint. In broad markets, we delivered 2 consecutive quarters of sequential growth since the December bottom and we anticipate modest growth for the balance of 2024. In edge IoT, where demand is improving, we have a strong design win funnel for WiFi 7 systems and we expect a healthy multiyear upgrade cycle given faster data transfer speeds and lower latency. In traditional data center and wireless infrastructure, inventory levels remain elevated which is prolonging the recovery as we continue to under-ship natural demand. However, once industry conditions stabilize, we expect end customers to replenish inventory back to normal levels. Lastly, in automotive and industrial, we are working through excess inventory levels but seeing signs of stabilization. We remain bullish on our design win pipeline across our power isolation, RF and digital broadcast solutions for the connected car and EV markets. Over the medium to long term, we believe generative AI will migrate to the edge. Most significantly, we believe the rollout of compelling AI applications will drive a smartphone replacement cycle, one that is currently the longest in history, standing at over 4 years. In edge IoT, AI-enabled devices increasingly incorporate machine learning to support language and computer vision models. Robust RF is critical to facilitate the continuous training to inference between device and cloud. Over time, automotive OEMs will train on big data in the cloud and screen software downloads through over-the-year updates, supporting higher levels of autonomy and vehicles. To facilitate these trends, OEMs need power and extremely fast RF connectivity. For next-generation data centers, complex workloads supporting large language models will propel upgrade cycles in switch, compute and optical networks. Over the medium to long term, Skyworks is well positioned with our high-performance timing solutions, targeting 800 gig and 1.6 terabit Ethernet switches in optical modules. Ultimately, our view is there will be a hybrid approach to AI computing, a combo of on-device and cloud-based. Data can be trained in the cloud and deployed to the edge for inference on new inputs. More complex AI tasks will be processed in the cloud and less complex on-device. In addition to these new usage cases, AI-enabled smartphones will further elevate the technological burden, resulting in premium for onboard space, requiring higher levels of integration in advanced packaging, energy efficiency translating to lower power consumption, low latency, pushing the boundary of signal integrity and higher throughput and connectivity upgrades with 5G advanced and 6G. These increased technological demands play to Skyworks' strengths, given our deep customer relationships, exceptional engineering talent and strong IP portfolio. Turning to our quarterly business highlights. We secured 5G content for premium Android smartphones, including Google Pixel 8a, Samsung Galaxy M and Oppo Reno12, among others. We supported the launches of WiFi 7 tri-band routers and access points with NETGEAR, TP-LINK and Cambium Networks. We accelerated our design win pipeline in automotive, including telematics, infotainment and CV2X. Despite a challenging demand environment, we continue to make strategic investments in our long-term growth areas, expand our customer base and diversify the reach of the business. With that, I will turn the call over to Kris for a discussion of last quarter's performance and our outlook for Q4 of fiscal 2024. Kris Sennesael: Thanks, Liam. Skyworks revenue for the third fiscal quarter of 2024 was $906 million, slightly above the midpoint of our outlook. Mobile was approximately 61% of total revenue, down 21% [ph] sequentially. Broad markets were approximately 39% of total revenue, up 1% sequentially. Gross profit was $416 million with gross margin at 46%, in line with expectations. Gross margin grew 100 basis points sequentially, reflecting our ongoing cost-reduction actions and favorable mix shift. Also, during Q3, we further reduced our internal inventory, resulting in 6 consecutive quarters of reductions. Operating expenses were $197 million reflecting our strategic investments in our technology and product road maps. We delivered $219 million of operating income, translating into an operating margin of 24%. We generated $3 million of other income and our effective tax rate was 12%, driving net income of $195 million and a diluted earnings per share of $1.21 which is in line with our guidance. Third fiscal quarter cash flow from operations was $274 million. Capital expenditures were $24 million or less than 3% of revenue, resulting in a free cash flow of $249 million. Year-to-date, we generated $1.3 billion of free cash flow or 40% free cash flow margin. We continue to drive robust cash flow through consistent levels of profitability, careful working capital management and moderating CapEx intensity. During fiscal Q3, we paid $109 million in dividends and repurchased 764,000 shares of our common stock for a total of $77 million. Cash and investments grew to nearly $1.3 billion and we have $1 billion in debt, providing us excellent optionality. We remain committed to delivering shareholder value through a disciplined approach to capital allocation. Given our conviction in Skyworks' long-term strategic outlook and consistent strong cash generation, we announced a 3% increase to our quarterly dividend to $0.70 per share. Now let's move on to our outlook for Q4 of fiscal 2024. We anticipate revenue of $1 billion to $1.04 billion. We expect our mobile business to be up approximately 20% sequentially as demand and supply patterns appear to be normalizing. In broad markets, we anticipate modest improvements, representing 3 consecutive quarters of sequential growth. Gross margin is projected to be in the range of 46% to 47%, increasing 50 basis points sequentially at the midpoint. We anticipate gross margin expansion during the remainder of 2024, driven by our cost-reduction actions, favorable mix shift and higher utilization rates. We expect operating expenses in the range of $197 million to $203 million as we continue to make strategic investments in mobile and broad markets to drive share gains and increase diversification. Below the line, we anticipate roughly $3 million in other income, an effective tax rate of 12% and a diluted share count of approximately 161 million shares. Accordingly, at the midpoint of the revenue range of $1.02 billion, we intend to deliver diluted earnings per share of $1.52. Operator, let's open the line for questions. Operator: [Operator Instructions] And our first question coming from the line of Matt Ramsay with TD Cowen. Matt Ramsay: Guys, I guess, for my first question, I mean lots, your company and all of your industry peers have been through this cyclicality, in broad markets for you guys and lots of industrial businesses for your competition. And it's great to see us get back on sort of a sequential growth from a revenue perspective and a chain of that which will, I assume, continue as you guys come out of the cyclicality here. But as you've revisited that diverse set of businesses, I mean it's a question that a lot of companies in this space get. Any sense now of what the sort of, I don't know, kind of equilibrium sell-through revenue level is that this business supports right now? We were obviously over-shipping for a bit and then have under-shipped for a bit to try to clear the channel. But any sense of where you are right now on the shipping levels you guys are guiding to relative to end consumption and when we might get back to equilibrium? Liam Griffin: Yes. Sure. This is Liam. So if we start to take a look at those markets, we are actually gaining some share and driving revenue. We're seeing opportunities in auto that have substantially been grown. We see the connected car as a significant opportunity for Skyworks. We already have meaningful design wins and I know we can do much more. We're looking at more and more opportunities in safety systems, driver assist. We talked a little bit about that. All those markets are actually doing quite well and we have a lot of room to grow. Then moving into some other markets that are quite powerful today are the WiFi cycles. We have a WiFi 7 upgrade today that is going really well. Very important technology, lots of volume coming. And certainly, an extension here as we get to more and more opportunities. Home enterprise, commercial, industrial, wearables, all of these markets fall into that category and have been really powerful for us and we expect that to continue. And further, we have some great opportunities in infrastructure, leveraging networking and cloud. We talked about 800 gig and 1.6 terabit speeds. A lot of really powerful vectors there that can come about here as we move into the next quarter. Matt Ramsay: Got it, Liam. I guess as my follow-up, if we look into the wireless market, there's -- it seems like the market has some fairly bullish expectations on units with your largest customer and you guys had talked last quarter about how the content had changed there a little bit. I just wonder if you could give us any early thoughts, Kris, on sort of the shape of the year or this cycle in your wireless business? Maybe you have a chance to lean into Android a little bit more. And there's the dynamics in both directions that I mentioned with Cupertino. So if you have any early thoughts, we'd appreciate it. I know it's early to ask about that but I get asked about it a lot. Liam Griffin: Yes. Look, I mean there's a lot of opportunity there. We are seeing stronger signals in demand for sure. We're starting to see that actually accelerate, leveraging some of the more unique products that we have within the Skyworks bench. So a lot of opportunity there. Our outlook looks very good as we look forward. The technologies that we're working on right now are really difficult. They're very, very challenging. It takes great companies and great people to make it happen. As you've heard many, many times, our labs-to-fabs approach really does work. There's a lot of customization as we start to grow into some of these new markets, mobile and others. So we feel really good about that. And I think there's an opportunity for us to continue to move forward. We're just beginning to now engage in AI and we see that in the phone. We definitely see that as a major, major catalyst for smartphones. And I'll tell you, I don't think there's a company that can do that better than Skyworks. So we look forward to the opportunity. We've got the key pieces in place and it's a time for us to just put up a little bit more revenue there. Operator: And our next question coming from the line of Chris Caso from Wolfe Research. Chris Caso: The first question is on broad markets. And it seems like that revenue is just kind of bouncing along the bottom here. You mentioned expectations for some modest growth going forward. Can you speak to the different end markets within broad markets? I'd imagine that some of the consumer markets that corrected earlier are perhaps some of the ones that are coming out. But I know some of the industrial markets still have some inventory to go through. What's the stage of the inventory correction and kind of how much of that business is normalized? And how much of that still has customer inventory that needs to be burned through? Kris Sennesael: Yes, Chris, great question. So first of all, we did call out broad markets at the bottom in the December quarter. And so we really turned a corner there. And we have seen now 2 consecutive quarters of sequential growth and we do expect further growth in the September quarter that's incorporated in our guidance. And we do beyond the September quarter, further sequential growth and actually an acceleration of that sequential growth returning back to year-over-year growth in our broad markets business. Now as you know, there's multiple different end markets there. As it relates to consumer enterprise where we mainly play with our connectivity solutions, I would say that's getting a more stable environment. Most of the inventory correction is over there. And we are growing the business there mostly because of our content uplift story, right? As Liam indicated, WiFi 7, a lot of good traction there. That's a big step-up in content compared to WiFi 6. Some of those other end markets, there's still an inventory correction ongoing. Automotive, industrial markets, very similar to what our peers and competitors have seen in that market. But again, as Liam indicated, we have strong design win momentum there, we have great opportunities in EVs with our power isolation or in the connected car with our connectivity solutions, WiFi, 5G, digital radios. And so we are able to buck the trend there and see some stronger revenue growth opportunities. Chris Caso: As a follow-up, I wanted to ask a question on gross margins. And I understand you're guiding up 50 basis points for the September quarter. I know that you've taken some cost-reduction actions, depreciation's coming down. What would you say is the trajectory for gross margins as perhaps some revenue comes back and utilization comes up? What's sort of the slope and the destination for the gross margins as those things occur? Kris Sennesael: Yes, Chris, so there as well, March was the bottom for us at 45%. You saw already 100 basis points improvements in the June quarter. And we just guided another 50 basis points improvement going into the September quarter. And we do expect further gross margins improvement in the December quarter. Obviously, then there is seasonality in our business. But when I look at fiscal '25 or '26 and beyond, we do expect further gross margins improvement. And it's basically a combination of multiple factors, right? We continue to execute on cost reductions into our factory. As the top line is growing, we are getting better utilization into our factories. We are bringing higher value products to the market for which we are getting paid. And we have a little bit of a tailwind from a mix point of view as broad markets is growing at higher than above gross margins. So we think we are on the right track here and we will see ongoing further gross margins improvement. Operator: And our next question coming from the line of Timothy Arcuri with UBS. Timothy Arcuri: Kris, can you give us a sense of how big the large customer was for June? And then in September, it's ranged between mid-50s when Android was higher to the high 60s last year. Any sense of how to think about how that's going to trend and what you're embedding in the guidance? Kris Sennesael: Yes. So our largest customer in the June quarter was approximately 65% of total revenue. That was down sequentially, maybe a little bit more than normal seasonality and we explained that at the last earnings call, where we saw some buildup of inventory in March, April time frame. And so we pushed the brakes in June. But looking ahead now into September, we think the largest customer will be slightly above 65% of total revenue and it will be up on or about 20% sequentially, right, as we execute and support our large customer in ramping up new products that they are bringing to market. Timothy Arcuri: And then can you give us a sense also of what December -- I mean, December is kind of all over the map seasonally but it's up in the range of 10% usually. Is that a reasonable bogey to think about for December? Kris Sennesael: Yes. So we only guide 1 quarter at a time and I would really stick with that. But yes, it's clear that we do expect further sequential growth going into the December quarter but we will guide next quarter on that. Operator: And our next question coming from the line of Christopher Rolland with Susquehanna. Christopher Rolland: You referred to some AI smartphones. And I think we all got excited about some new AI announcements this quarter, driving a refresh cycle. So I guess my first question is how much of this kind of acceleration or pull-in in the refresh cycle did you see or is in your September guidance? Did you see kind of the same excitement that we all kind of felt? Or do you think this is something really to play out December and onward as we move through time and new product launches? Liam Griffin: Yes, great question. I think this is the early stage of a very, very long ramp in mobile. There's no question that AI is going to make an impact. I really believe that and I think most of the market does. But what comes with it is also a challenge. You have to have very, very difficult challenges to be able to manage the AI world. Fortunately, with Skyworks, this is what we do all the time and we're a deep technology company, we know how to handle the really challenging opportunities. We're dealing with higher levels of MIMO; more paths, uplink and downlink; bringing in carrier aggregation, better filtering. And you know that at Skyworks, really, really important to get those filters down and new frequency bands. So it's a very challenging ask to deliver. But fortunately, at Skyworks, these are technologies that we understand. So we are looking forward to this. It's very early stages but I believe and our team believes that we're going to have a very meaningful cycle in mobile, led by these technology innovations. Christopher Rolland: My next question is around Android. So you talked about a couple of cool Android phones, Google, Samsung Galaxy M, Oppo. Can you point to any marquee sockets, either new areas that you're playing or big chunky sockets? And then just more generally, how would you describe the Android environment and kind of your outlook there and revenue contribution moving forward? Liam Griffin: Yes, that's great. I mean we are certainly engaged in Android and most specifically, with Samsung and Google. There's some great products there. The Pixel phone is an amazing phone. There's other products as well. Great partnership with Google actually. And the technology inside is very rich, very, very impactful. So we should see more and more of that from Skyworks, probably less of the low end in China, of course. But the higher end in Android has been really powerful. I think there's a lot more we can do from there. Operator: And our next question coming from the line up Craig Ellis with B. Riley Securities. Craig Ellis: And Liam, nice to hear the enthusiasm about a smartphone refresh cycle in the middle of the 5G cycle. I wanted to follow up on that. So as you look at the opportunity for AI to drive more up and downlink content, increased carrier aggregation and some of the other technologies that the company specializes in, can you talk about the content gain opportunities that might exist in Gen 2 and Gen 3 smartphones? Because I think from commentary a quarter ago, we may not be looking at so much in this year's version of your largest customer handset. But what could we look at in coming years from AI on the content gain side? Liam Griffin: Yes. I think this is going to be a long, long run here and a successful run in the industry if the technologies come about the way that we see it. So we have some of this technology in place right now and we're able to capitalize on that. But this is going to -- Craig, this going to be a long-term cycle here, very meaningful, akin to the first 5G cycle in my expectation. But I think it's going to be much more powerful. The challenges are much more demanding, more challenging. Fortunately, for Skyworks, we can do a lot of this stuff in-house, very difficult but we can do it in-house and we can craft and curate account by account to get it right because we're not seeing one fits all here. This is going to be a customized platform when you get into AI and each customer has its own needs and specs. So it's early innings. The companies that are deeply involved are going to win. The customers that we pick are also going to be really important to us but we're looking forward to it. I think it's going to be a significant move in the industry and certainly for Skyworks. Craig Ellis: Got it. And then a two-part follow-up. The follow-up specifically to the implications for revenue is, is what does this mean for the company to get back to the gross margins that it was executing at a couple of years ago in the 50% range and maybe even up to that 53% target? And then switching gears, the company just continues to throw off tremendous cash. You talked about it in your comments. The dividend just raised again. You have very little debt. How are you thinking about what happens next with cash return? Is there a lot more buyback? Or are you thinking about strategic M&A? And if so, what type of cards might you be thinking about playing there? Kris Sennesael: Yes. So maybe first on the gross margins, I think I already answered that question, right? I think we're going to continue to see further gross margins improvement. Obviously, we've accelerated revenue growth. We will have better utilization in the factories and that will exponentially result in further gross margins improvements. That is very clear. As it relates to the financial output of this company, it's just outstanding, right? Just if you look at in the first 9 months of the fiscal year, we generated $1.3 billion of cash. That's a 40% free cash flow margin. I think that is outstanding in the semiconductor business compared to many of our peers and competitors. In addition to that, we have a strong balance sheet. We have almost $1.3 billion of cash on the balance sheet and only $1 billion of debt with -- which is cheap debt with long maturities. So we have a very strong position here that allows us to, on one hand, continue to invest in our business, in our technology and product road maps, continue to invest in our factories if and when needed. And so currently, the capital intensity of the business has come down a lot. But if and when needed, of course, we can make those investments as well to maintain our leadership position. And in addition to that, there's not going to be any hesitation. We are going to return all the excess cash flow back to the shareholders. And we do that consistently through our dividend program and our share buyback program. On the dividend program, we just announced a 3% increase up to $0.70 per share. Right now, that's translating into a 2.4% dividend yield. And as you noticed, in the June quarter, we restarted the buyback program. And so there's not going to be any hesitation to that. In addition to that, we still have optionality for M&A, right? But you know us, we're not going to do anything stupid. We're going to remain disciplined on that. And if there are no deals, we will return the cash flow. Operator: And our next question coming from the line of Kevin Cassidy with Rosenblatt Securities. Kevin Cassidy: When you mentioned AI in the handsets and I understand the improvement that you'll get in content, what about AI is moving out into all types of robotics and IoT type of products? Do you have accelerated opportunities in that market, too? Liam Griffin: Great question. Great question. The good news is the technologies that we have can absolutely work in those environments. We just haven't gotten there yet. So we're making those investments. Obviously, we've got a great position in smartphones and the technologies that we work there. But to take that through an IoT cycle, across multi-markets is going to be a real powerful opportunity for Skyworks. The good news is we know what the technology is, how they work, where they need to be. It's just about putting it together and getting into the right markets, the right partners. But we really do believe this could be a very powerful cycle independent of the smartphone looking at the IoT opportunity. So we look forward to it. It's a great question and we'll hopefully update you more as we get more information but we're very, very interested in making that happen. Thank you. Kevin Cassidy: Okay, great. Just maybe as a hint is -- do you need more scalability to be able to service more customers? Liam Griffin: Well, I mean, we have customers that are actually working with us and asking us how they can engage in AI and using IoT as a vector. And so we're working with companies like that, that we know already. But there's a whole range of other opportunities and applications that we haven't yet addressed. So I think it's going to be a meaningful part of the strategy at Skyworks here as we move forward with a lot of runway that hasn't been covered. Operator: And our next question coming from the line of Quinn Bolton from Needham & Company. Nick Doyle: This is Nick Doyle on for Quinn. If your largest customer switches to an internal modem, can you talk about how that change -- how that would impact Skyworks' content opportunity? Liam Griffin: Yes, I hear you. We really can't go into specifics with that customer. But certainly, we have a great relationship. We're a trusted partner. There's a lot of opportunities that we can pursue but we just really can't get into any details here. Nick Doyle: Okay. You mentioned that inventory remains elevated in the traditional data center and wireless infrastructure. Do you have a sense of how much inventory remains in days or dollars? And what types of products have the most inventory left? Kris Sennesael: That's really hard to answer that question. I mean it really depends from end market to end market. As I said before, I think in consumer enterprise, most of the inventory correction is over. Automotive, industrial, you've heard it from peers and competitors. There's definitely some excess inventory that's being flushed out. And then if you look more at the infrastructure, networking, data center, there is still some excess inventory but the demand is definitely improving in those areas. And it will be a long recovery in those markets. So again, it really depends end market to end market. But again, when you look at our broad markets business, we're growing it sequentially for 3 quarters in a row and we'll start growing it on a year-over-year basis. And so there's definitely some good traction for Skyworks. Operator: Our next question is coming from the line Thomas O'Malley with Barclays. Thomas O'Malley: Mine was just a broader industry dynamic on integration. A competitor at the recent analyst like kind of showed a slide with the mid- high-band socket integrating diversity receive over time in high-end Android. Can you talk about are you seeing the integration in some of the design wins that you're competing for today? And then could you just maybe speak to the fact is that only going to appear in high end markets? Do you see that across broad markets? Just where are you seeing the industry move to in terms of maybe silicon getting integrated into smaller duct space? Liam Griffin: As you know, we really can't get into details with our customers and our design wins. But we certainly have the best-in-class RF technology and the manufacturing scale to compete to win for sockets. And frankly, the tech stacks are getting harder and harder every year. On top of that, our customers are relentless in terms of driving higher levels of performance. And in this environment, only the strong will survive. And Skyworks, of course, this is what we do. This is our bread and butter. RF technology continues to get more and more difficult. And that's the way we want it. And so we expect more opportunities and more engagement, especially with the top-tier customers as we go forward. Thomas O'Malley: Helpful. And then just more broadly, when you talk about AI proliferating to the edge, I think people have generally a good idea of how they see that playing out. But when it comes to AI in the smartphone, do you think you could talk specifically as to where you see the content uplift? Is that just additional bands? Is that additional filtering? Like can you just point to where you think in the near term you see additional content as it relates to AI in the smartphone? Liam Griffin: Yes I mean just at the high level, think about transmit back and forth, right? Transmit and receive, the burden to be able to do that in an AI environment, the speeds, the latency, all of that, the filtering, the range, all of those issues become problems that need to be solved and that's exactly what we want to do. And this is the stuff we do all the time. So we're going to take all the know-how, our own IP, our technologists, our capital assets, our scale in our factories to curate solutions that will meet the demands of AI. So it's not going to be a one-fits-all kind of thing. It's going to be highly curated and custom-ated [ph]. Operator: And, ladies and gentlemen, that concludes today's question-and-answer session. I will now hand the call back over to Mr. Griffin for any closing comments. Liam Griffin: Thanks, everybody, for participating in today's call. We look forward to seeing you at upcoming investor conferences during the quarter. Thank you. Operator: Ladies and gentlemen, this concludes today's conference call. We thank you for your participation. You may now disconnect.

Operator: I would like to introduce Raji Gill, Vice President of Investor Relations for Skyworks. Raji Gill: Thank you, operator. Good afternoon, everyone, and welcome to Skyworks' second fiscal quarter 2024 conference call. With me today is Liam Griffin, our Chairman, Chief Executive Officer, and President; and Kris Sennesael, Chief Financial Officer for Skyworks. This call is being broadcast live over the web and can be accessed from the Investor Relations section of the company website at skyworksinc.com. In addition, the company's prepared remarks will be made available on our website promptly after the conclusion during the call. Before we begin, I would like to remind everyone that our discussion will include statements relating to future results and expectations that are or may be considered forward-looking statements. Please refer to our earnings press release and recent SEC filings, including our annual report on Form 10-K for information on certain risks that could cause actual outcomes to differ materially and adversely from any forward-looking statements made today. Additionally, the results and guidance we will discuss include non-GAAP financial measures consistent with our past practice. Please refer to our press release within the Investor Relations section of our company website for a complete reconciliation to GAAP. With that, I'll turn the call over to Liam. Liam Griffin: Thanks, Raji and welcome everyone. Skyworks posted solid results for the second fiscal quarter of 2024. We delivered revenue of $1.046 billion. We posted earnings per share of $1.55 and generated $300 million of operating cash flow, which reflects strong working capital management and operational excellence. 6E: We are in the early innings of a multiyear upgrade cycle, with high end access points now being offered. Over the coming quarters, we anticipate retailers to roll out mainstream models, followed by carriers and MSOs for their gateways and router products. The wireless infrastructure and traditional data center markets remained soft. We continue to undership natural demand as we allow the distribution channel and customers to consume excess inventory. Despite near-term headwinds, we remain bullish on AI workloads, driving upgrades to Ethernet switches and optical modules, a positive long-term driver for our advanced precision timing solutions. Lastly, automotive and industrial markets remain under pressure as they continue to undergo a steep inventory correction. However, we see opportunities for long-term growth in our automotive business. Automotive OEMs are increasingly focused on software defined vehicles, the connected car and in-cabin user experience, all of which are generating higher levels of radio complexity. Despite near-term headwinds, we remain positive on growing EV penetration, creating demand for our Power Isolation products. Our strategy is to leverage connectivity technology across multiple growth segments, including edge connected IoT devices, automotive electrification, and advanced safety systems and AI infrastructure. Connectivity is crucial in enabling AI on decentralized edge systems. Our RF technology powers applications like the connected home, building automation, smart cities, machine-to-machine, and wearables. We are particularly excited about the industry mandates and regulatory tailwinds leading to higher levels of connectivity inside the car. For example, the number of radios and antennas are growing in vehicles to support various communication standards, including 5G cellular, Bluetooth, Wi-Fi, ultra wideband, NFC, and CV2X. The multitude of radios create challenges around coexistence, external interference, and latency. Our advanced RF solutions can solve these complex problems for our OEMs. In data center, accelerated workloads supporting large language models are catalyzing networking and optical upgrades. We have a timing portfolio targeting next generation 800 gig and 1.6 terabyte Ethernet switches in optical modules enabling AI infrastructure. During Mobile World Congress in Barcelona, we were excited to see several AI enabled phones being introduced to the marketplace. We believe AI could propel a meaningful replacement cycle in the smartphone market, fueled by applications like real-time language translation, voice assistance, advanced camera and imaging, and on-device personalization. Over time, AI enabled phones could drive higher levels of RF complexity, including robust connectivity, higher throughput, further integration, and lower power consumption. Turning to our quarterly business highlights, we delivered integrated platforms to the leading 5G smartphone OEMs, including flagship and mid-tier models with Samsung, Google, Oppo, and others. We expanded our design win pipeline and initiated new programs in automotive, including infotainment systems, traction inverters, cloud enhanced driver assist, and CV2X. We secured several audio SoC designs with Sony and Samsung. In summary, Skyworks continues to execute well despite a challenging macro environment. While we are navigating near-term headwinds, we remain bullish on our long-term strategy. With that, I will turn the call over to Kris for a discussion of last quarter's performance and our outlook for Q3 of fiscal 2024. Kris Sennesael: Thanks, Liam. Skyworks revenue for the second fiscal quarter of 2024 was $1.046 billion, slightly above the midpoint of our outlook. Mobile was approximately 66% of total revenue, down 19% sequentially. Broad markets were approximately 34% of total revenue, up 1% sequentially. Gross profit was $471 million with gross margin at 45%, in line with expectations. Gross margin was down 140 basis points sequentially reflecting our seasonally weakest period. Also during Q2, we further reduced our internal inventory by $91 million to $836 million, which reflects five consecutive quarters of reductions. Operating expenses were $192 million, below the low end of the guidance range, reflecting our disciplined focus on managing discretionary expenses while continuing to invest in our technology and product roadmaps. We generated $279 million of operating income, translating into an operating margin of 26.7%. We generated $4 million of other income and our effective tax rate was 11.3%, driving net income of $251 million and diluted earnings per share of $1.55, which is $0.03 above the guidance that we provided during the last earnings call. Despite the quarterly volatility, Skyworks business model generates strong cash flow. Second fiscal quarter cash flow from operations was $300 million. Capital expenditures were $28 million or less than 3% of revenue, resulting in a free cash flow of $273 million. We continue to drive robust cash flow through high levels of profitability, prudent working capital management and moderating CapEx. Also during fiscal Q2, we paid $109 million in dividends. Our cash balances grew to over $1.2 billion and we have $1 billion in debt. Our solid capital structure provides us with excellent flexibility and optionality. Now let's move on to our outlook for Q3 of fiscal 2024. We anticipate revenue of $900 million plus or minus 2%. We expect our mobile business to be down sequentially below normal seasonal patterns as excess inventory clears. In broad markets, we anticipate further modest sequential growth as inventory levels appear to be normalizing in certain end markets. Gross margin is projected to be in the range of 45% to 47%, improving 100 basis points sequentially at the midpoint. We anticipate gross margin expansion during the remainder of 2024, driven by our cost reduction actions, favorable mix shift and higher utilization rates. We expect operating expenses in the range of $192 million to $198 million as we continue to make strategic investments in mobile and broad markets to drive share gains and increase diversification. Below the line, we anticipate roughly $2 million in order income, an effective tax rate of 11.5%, and a diluted share count of approximately 161.5 million shares. Accordingly, at the midpoint of the revenue range of $900 million, we intend to deliver diluted earnings per share of $1.21. Operator, let's open the line for questions. Operator: Thank you. [Operator Instructions] Our first question comes from Chris Caso with Wolfe Research. Your line is open. Chris Caso: Yes, thank you. Good afternoon. I guess the first question with regard to the worse than seasonal mobile business, you speak about excess inventory. We've unfortunately been hearing excess inventory in mobile for some time. Could you give a few more details on that? And specifically, was this from the Android space or was it beyond the Android space? Kris Sennesael: Yes, Chris. This is Kris here. Happy to provide some more color as it relates to our guidance for the June quarter. So, specifically in our mobile business, towards the end of the March quarter, especially in the month of March, we saw some below normal seasonal trends with lower than expected end market demand and unfortunately, that resulted in some buildup of inventory in the channel and that was somewhat across our mobile business. Unfortunately, those trends also continued during the four weeks of April. And so we took that all into account as we set our guidance for the June quarter and we do expect our mobile business to be down sequentially 20% to 25%, which is well below normal seasonal patterns. And it's mostly due to the fact that we have to clear out the excess inventory in the channel. On the flip side, in our broad markets business, we do expect to see some modest sequential growth in addition to the modest sequential growth that we saw in the March quarter as well. Chris Caso: Thank you for the clarification. I guess, as a follow-up, what does this mean for the second half of the year? And typically, you don't guide for the second half on this call, but do you expect those inventory headwinds to persist? Obviously, you have new product launches as you go to the second half, what does that mean for normal seasonality as you go through the second half of the year from these levels? Kris Sennesael: Yes, Chris, we only guide one quarter at a time, it's somewhat unpredictable what's going to happen three, four quarters down the road. But we do expect that most of the inventory clearance will be done during the June quarter. Chris Caso: So does that suggest kind of a back to a normal revenue levels or I guess what you're saying is this is a very short-term issue in the June quarter? Kris Sennesael: Yes, from a demand point of view, that is correct. Chris Caso: Okay, thank you. Operator: Thank you. Our next question comes from Matt Ramsay with TD Cowen. Your line is open. Matthew Ramsay: Thank you very much. Good afternoon, everybody. Guys, I wanted to follow on to Chris' questions there on the mobile segment and is there any correlation at all that we should draw between, is this just a unit and inventory thing or is there any correlation we should draw to potentially expected content and programs that would launch later in the year? Is there a quarter of drawdown of inventory because maybe content has changed one way or the other or should we just not try to make that conclusion? Thanks. Liam Griffin: Yes, this is Liam. So there's this interesting dynamics here, and I really can't comment on specifics related to our largest customer. However, we will provide as much directional color as possible here. So we were placed in a unique situation with our largest customer, where we were unable to consummate an award that we expected and frankly thought we had earned. As a result, we expect content headwinds from the upcoming cycle. At the same time, we are strategically aligned with our largest customer and we're ready to engage in all of their strategic initiatives going forward. Kris Sennesael: Yes, and Matt, just to add a little bit more color there, and again, as you know, we can't really go into the specifics as it relates to the large customer, but we were able to partially offset the socket loss that Liam just talked about it with some additional content gains, including some new sockets that we don't have in the current version of the phone. And so, as a result, on a net-net, we expect the content to be down a little more than 10% compared to the current phone model, and that will start having an impact in the September quarter. Matthew Ramsay: Got it. Guys, I appreciate that very much, and I know it's super sensitive. I kind of need to ask a follow-up here, which is, Liam, if you could try to characterize maybe the chain of events that happened to the extent that you're able to with this, any kind of a performance or quality or product issue with Skyworks program, specifically was this a program change that they made? Any context as to when you guys sort of learned about this and how the whole thing came to pass? Again, I appreciate it. It's super sensitive here on a public call. Liam Griffin: Yes, I mean, this is not performance related. It's not technology related. In fact, the product has been a stalwart in the portfolio, so nothing like that. Just a unique situation. Can't get into all the details. We're looking forward. We are partners with our largest customer. We expect to do more work in the future and looking forward to that. Matthew Ramsay: All right. Fair enough. I appreciate the candor. I'll jump back in the queue. Thanks, guys. Operator: Thank you. Our next question comes from Edward Snyder with Charter Equity Research. Your line is open. Edward Snyder: Great. Thanks a lot, guys. A couple of questions, if I could. So, Liam or Chris, doesn’t matter, you've got incremental gains in sockets you didn't have last year. I think the general idea here is you won some Wi-Fi that is obviously coming out of mobile, not broad markets, first of all. And secondly, would you characterize any content losses in the second half of the year to be in a, what I would say, a primary product that tends to be very performance driven or is it kind of a marginal product where a number of different people compete and you can qualify for two or three different vendors? Then I have a follow-up please. Liam Griffin: Yes Ed, unfortunately, I can't give you too much detail here, but as you know, we're striving to gain share in every sockets that we're addressing today, whether the largest customer or some of the other players. The technology's there. I mean, this is not a technology gap. This is really some commercial issues that were unique and we're getting through it and we expect to be able to turn up the revenue here as we go forward. Edward Snyder: Okay, maybe we can go out a little bit further and I know you don't like to give guidance, but just generally characterizes the content picture saying 2025, I don't know if you want to go out to 2026 or so, but it's clear that from our research, the AI showing up in phones, in any of the phones, especially the flagship models, is impacting the RF section in kind of an unforeseen way in that you are obviously not participating in the machine learning part of it, but to make room for batteries, make room for more processing, and to squeeze the battery consumption in the footprint, it sounds like especially your flagship customers are starting to turn the screws to the RF guys to get smaller packaging. So even if the performance doesn't change, it sounds like the packaging is, which is already quite difficult, is going to get substantially more. So what impact do you expect this to have, generally speaking, on revenue in flagship phones? And will it occur in 2025 or we have to wait to 2026 to start seeing these results? Thanks. Liam Griffin: Yes, Ed, great question. I'm glad you asked. So, as you know, if we think about the mobile phone today, which we can't live without. Right? Everybody needs it. So much activity on that device and it's an incredible, incredible product. But when you start to go into Generative AI, as you know, the compute power is going to be so, so high, the current consumption, all of that action is going to burn up your battery. So you've got to step up into a new set of solutions that we're working on right now that will be more power efficient that will be mark-to-market around mobility, but with Gen AI right in this rife zone. So we're really excited with that and we've been talking to the larger customers and players with that as well. We have the toolbox to create unique solutions across multiple customer sets. But if you think about it, the technology burden there is going to be so high. The amount of data back and forth from the handheld to the server is going to be immense. It's going to be very, very difficult. So I think it's going to narrow down the playing field in mobile for customers that you see, and then opportunities at Skyworks to really work with the best and brightest in our space to create elegant new solutions. So we're really looking forward to that and more to come. Operator: Thank you. Our next question comes from Karl Ackerman with BMP Paribas. Your line is open. Karl Ackerman: Yes, thank you. I realize you've been moderating CapEx following a significant investment year in 2022, but CapEx is also down over 50% in the first half of 2024 relative to last year. And so I was curious, Kris, if you could give an updated view on your CapEx this year and how do we reconcile that outlook with your longer-term opportunities that you discussed in broad markets as well as 5G handsets? Kris Sennesael: Yes, Karl, we've talked about that before. We had multiple years where CapEx was running in the 10%, 11%, 12% to revenue, where we build out our manufacturing assets, especially our filter operation, adding substantial amount of capacity, but also in our back end operation where we do very complex integration, assembly and test. So those heavy CapEx years are behind us. We are now focusing more on driving efficiency, yield improvements, test time reductions, die shrinks, and we are creating additional capacity in doing so and focusing on those operational improvements. In addition to that, as you know, revenue has been down year-over-year, so we do have underutilized factories right now. We can substantially grow the revenue without having to add a lot more CapEx. There will always be some CapEx because we need to continue to advance our technology, advance our product roadmaps, and that will require some level of technology driven CapEx. But it's going to remain for many, many years here in the low single digits as a percent to revenue, and that will continue to fuel a very strong free cash flow. Karl Ackerman: Yes, I appreciate that. If I may sneak in another one, Kris you also mentioned about an expansion of gross margins in the second half. It sounds like broad markets is improving throughout the second half. It also sounds like gross margins have troughed in the March quarter. But perhaps could you just discuss some ways to which you can improve margins in the mobile business as volumes come back and perhaps could we also see 50% margins over the next couple of quarters and any thoughts on timing of that? Thank you. Kris Sennesael: Yes Karl, so we did 45 in March. We guided up 100 basis points at the midpoint of the guidance range for June. We also said in the prepared remarks that we continue to see further gross margins improvements in the remainder of 2024 and beyond. And the three key drivers, which is applicable to our broad markets as well as to our mobile business is driving cost reductions internally as well as externally with all the suppliers that we have. I already indicated that in my previous answer, yield improvements, test time reductions, overall cost reductions, and we are making good progress and we actually can do a lot more and the teams are working really hard on that. The second element, as you indicated, yes broad markets has above average gross margin compared to mobile and so we have a little bit of a mixed tailwind there as well. And then thirdly, it's factory utilization. Keep in mind that we have been drastically reducing our internal inventory for five quarters in a row by now and so we are, I'm comfortable with where inventory levels are right now, so that is no longer going to be a headwind as well. And so as revenue will start growing here and no longer inventory reductions, we will start seeing improvements in factory utilization. And a combination of all of that gives me confidence that gross margins will continue to improve from here. Karl Ackerman: Thank you. Operator: Thank you. Our next question comes from Thomas O'Malley with Barclays. Your line is open. Thomas O'Malley: Hey, thanks for taking the question. Two parter here for Chris. In the March quarter could you give the percentage of revenue for your largest customer? And then just kind of following up on your comments related to March, you talked about some inventory work done at the customer. Could you to your best of your knowledge, try to describe whether that's existing inventory that's related to the current phone or do you think that is early stages of potentially working down the socket that may be associated with the next phone as well? Are they separate issues or could they potentially be related? Kris Sennesael: No, it's all related to the current phone. We are not shipping for the next launch yet, so this is all related to the current phone. The large customer was approximately 68% of total revenue in the March quarter. That was down 19% sequentially, which is somewhat in line with normal seasonality. It was down 3% year-over-year. But as I indicated, we probably built up a little bit of inventory in the channel. Thomas O'Malley: Helpful and then just trying to parse out the pieces for June, you're kind of saying that mobile is down 20% to 25%. Even if you set kind of your largest customer in that range, you still need to see double digit declines on the Android side. So could you maybe describe what's happening in the Android business? I think some of your peers had talked about maybe a weaker Q2, but what are you seeing with those customers there? Thank you. Kris Sennesael: Yes, our Android business has been stabilizing. So it's approaching $100 million a quarter. All our Android, which is Google, Samsung, and the China players, it has been stabilizing. Obviously there is some seasonality into that business. And yes, June is a little bit of a weaker seasonality in that business, but overall it has been stabilizing. The inventory correction is over. We are making some good traction with design wins that as end customer demand will continue to improve over time, new design wins roll in, we do expect that business to contribute to some nice year-over-year growth in the next four, eight quarters here. Operator: Thank you. Our next question comes from Ruben Roy with Stifel. Your line is open. Ruben Roy: Yes, thank you. Liam, I want to switch over to broad markets and just talk about sort of how you're seeing things. Great to see the bottom in December and the modest growth in March and the outlook for June, but relative to 90 days ago, how would you kind of characterize the recovery? Are you still sort of thinking incremental growth quarterly or has anything changed with inventory levels in some of the markets? The data points around auto and industrial have been mixed. So maybe just if you could talk us through the big buckets, IoT, auto, industrial and common infrastructure, that would be helpful? Liam Griffin: Yes, absolutely. So there's a lot of opportunity and growth that we're seeing in the broad markets. We've been doing a great job with the automotive segments, a lot of technology there, a lot of opportunity. We're growing that business. We continue to look at other players in the space doing quite well. Industrial markets are coming up for us right now. Solar markets are coming up. We're seeing some good action in PlayStation as well. So we've got kind of a consumer play there, but a lot of volume and a lot of content. So the portfolio is growing, it's diversifying and there's a lot more opportunity out there. We've been kind of focused more on some of the bigger names, but now we start to see a longer roster of opportunities that we can capture. And also just some of the technologies that we brought in from our MSSX lab deal is giving us more green shoots and opportunities as we look long. Ruben Roy: Thanks for that, Liam. I guess just a quick follow-up just on the inventory levels around those buckets. Have they improved to kind of where you thought they would or have any of the big buckets been a little bit slower or not? Kris Sennesael: Yes, it depends on which part of the broad markets you are looking at. If you look more at the consumer IoT, the edge IoT connectivity products, that has been improving for many quarters now. I think that market is getting stronger. We obviously have some strong technology transfer that is going on as we upgrade to Wi-Fi 6E, and 7 and bookings has been improving with a book-to-bill above one in that part of the market. When you look at infrastructure networking data center, that market has been, as you probably have heard from peers and competitors, a little bit soft. There is some inventory that needs to be cleared out. So we are under-shipping natural demand right now. It's going to take a couple of quarters for that business to really bounce back and in the meantime we have to clear out the inventory. And then automotive and industrial there again you've heard from peers and competitors, there is definitely in certain spots, some excess inventory that needs to be flushed out. Again for Skyworks, we're doing real reasonably well in that market, given just the product cycle, the ramp of connectivity in the car, the ramp with our power isolation for EV, we're doing well with our radio processor in the car. And so we are bucking the trend there a little bit in a tough environment. Ruben Roy: I appreciate the detail, Kris. Operator: Thank you. Our next question comes from Timothy Arcuri with UBS. Your line is open. Unidentified Analyst: Hi, this is Amaan here jumping in for Tim. I just want to ask, what was the China mobile revenue, China as a percentage of total mobile revenue and what is your expectation for that business going forward? As you know, sell through at certain China OEMs appears to be bouncing back. So how should we think about the trajectory of that going forward? Thank you. Kris Sennesael: Yes. Our China mobile revenue is still de minimis. It has been improving quarter after quarter, but still on a relatively low level. I mean, we have great relationship with Oppo, Vivo, Xiaomi, the three main players there. Design win momentum is picking up a little bit, but the overall end customer demand environment is still somewhat soft. I think that's the best way to characterize that. But again, I think over time, especially when I'm looking forward to fiscal 2025, we do expect to see some meaningful year-over-year growth in that business. Operator: Thank you. Our next question comes from Peter Peng with JPMorgan. Your line is open. Peter Peng: Hi. Thanks for taking my question. On the Android point, you talked about it approaching $100 million. I believe your previous peak was kind of closer to $200 million per quarter. As you kind of look out into 2025 and 2026, is there anything that precludes you to getting back to those kind of levels? Kris Sennesael: I think it's going to be difficult to get back to the highest peaks that we have seen in the past because that was overdrive. Remember, that was in the COVID years where all customers were screaming to get more parts and then they ended up with a lot of excess inventory that took more than a year to burn off. But directionally, yes. I mean, it's at $100 million. I mean, we want to get back to $125 million or $150 million, $200 million. And we are focused on that. We do have the technology. We are adding more resources in terms of product development to go after those opportunities. And as end customer demand improves and the design wins roll in, we will see some really good revenue growth in those segments. Liam Griffin: And I'll just jump in on that. If you think about where we are with Android, we've got really strong engagement with Google and Samsung, high end players, a lot of volume. So it's not so much the Oppo, Vivo, Xiaomi for us, but it's more around the Samsung and Google players that right now are ramping very well. Peter Peng: Got it. And I have a problem on the broad market. So you have one out of the three segments that's actually bottoming and recovering and your still -- the implicit growth rate is 4%. So as we kind of look into the back half of the year, as things kind of -- inventory adjustment abate in the other two segments, should we kind of be expecting more of an accelerating sequential growth as we move through the year? Kris Sennesael: Absolutely, absolutely. So currently it's only modest. Like in March it was 1% sequentially. In June we expect 2%, 3% sequentially, but then as we look out in the next couple of quarters, we do and expect an acceleration of that sequential growth getting back to initially modest year-over-year growth, but then translating into strong double digit year-over-year growth in our broad markets business. Peter Peng: Thank you. Operator: Thank you. Our next question comes from Cody Acree with The Benchmark Company. Your line is open. Cody Acree: Yes, thanks, guys, for taking my question. You didn't mention Huawei in your specific comments around China. I guess like any comments on that OEM, given their success in that market? Liam Griffin: Yes, we're still not engaged with Huawei. But again, we will work the Android markets with some of the other players that we talked about. So but Huawei for now, I think, has really been kind of on the bench. Cody Acree: Is there any specific reason for that? Liam Griffin: Well, there are still just a couple things. I mean the product quality there that we look at is just not really up to, that's not for us, and still just very difficult environment in that marketplace. Cody Acree: Okay. And then I guess just lastly, any further comment on your AI comments in prepared remarks about content and dollar content opportunities in both, in addition to just unit volume replacement cycles, any framework of how you expect those dollar content increases to layer in as we're just now starting to get any kind of real Gen AI unit volumes across the channel? Liam Griffin: Yes. Great question. So, if you actually think about it right now, we've been really long in the tooth here with upgrades across the board in mobile, across the whole market. So without AI, the market is, we believe is going to inflect with resurgence of growth in terms of units. That's one part. But when you get into the AI side, we talked about it a little bit earlier, we're going to need to do some tremendous things in the smartphone world to actually catalyze what AI needs to do. There's going to be upgrades in servers, there's going to be upgrades on the device, and it's going to drive tremendous power. And power is really, really important. When you think about data center, you hear all these things from Nvidia. They're powered. They're powered to a server. Mobile is mobile or untethered. So the burden on technology in the smartphone world is really going to go up and it's going to narrow the playing field. And I love our chances. We've got a great business. We've got in-house technologies, great engineering, a long, long live set of solutions and know how that we built over the years. So we're really looking forward to it. I think we talked about it already. The smartphone market today already is kind of slowed down. It's turned for an upgrade right now. So the intersection between AI and smartphone growth could be really special. So we're looking forward to it. We have a lot of the key building blocks and our engineering teams know exactly what to do to turn this on. So we're definitely anticipating some upside here. Cody Acree: Liam, thanks for that. I guess just further that though, are there specific areas of the front end module that you expect to benefit more in the short-term as processing rates are going higher, as connectivity demands are increased? Is it more a thermal issue? Is it more a transferability or switching or intended tuning for that matter? Liam Griffin: Yes, I mean, there are more paths, uplink and downlink. You got carrier aggregation here, better filters that we do in-house, engaging in with Wi-Fi as well. And there's also going to be a range of new frequency bands as you move forward into those devices, so there's a lot to do. And just that technology alone is going to be amazing. But also the smartphone opportunity today with all those legacy phones that want to turn over to a new upgrade, I think are all going to come together, so we're looking forward to that. We're doing the technical work to make it happen, and we'll keep you posted. Cody Acree: All right, great. Thank you. Liam Griffin: Sure. Operator: Thank you. Our next question comes from Quinn Bolton with Needham & Company. Your line is open. Quinn Bolton: Hey Liam and Kris, thanks for taking my question. I guess, I wanted to start; you opened the call kind of talking about the slower demand environment in March and April that's led to this inventory correction in the June quarter. But I guess I'm, I haven't heard you guys say that you've necessarily seen the end of that demand softness. And so what signals are you looking for? Have you already seen that give you confidence that this inventory correction is going to be limited to only the June quarter? Are you starting to see demand signals strengthen as you look past the June quarter? Kris Sennesael: And, Quinn, so this is not a major, major correction, right? This is just some softer than expected demand that we see. We're not talking here about a huge major correction. And again, based on customer forecasts and our own intelligence about what's going on into the market, we think that we'll be mostly flushed out in the June quarter and in the guide that we provided for the June. Quinn Bolton: Okay, so it sounds like the forecast from customers that lead you to believe it's largely limited to the June quarter. Kris Sennesael: That's correct. Yes. Quinn Bolton: Understood. And then I know it's sensitive, but just coming back to the socket loss at the large customer, it sounds like your think this may be sort of a near-term commercial issue. But I guess I just wanted to ask, do you think there's any read throughs from this that might signal a move to sort of a multi-sourcing strategy at that customer where they're looking to bring in additional suppliers across all sockets just for supplier diversity reasons or again, do you think it's kind of more limited to one year, one socket? Liam Griffin: Oh, yes. It's one year, one socket, for sure and we have very, very good eyes on that. Like I said, we'll wrap it up, but the product in question, we know how to make, and we look forward to continuing to deliver that and others as we go forward, so we appreciate that. Quinn Bolton: Thank you. Operator: Thank you. There are no further questions at this time. I'd like to turn the call back over to Liam for closing remarks. Liam Griffin: Thanks, everyone, for participating in today's call. We will look forward to talking to you at upcoming investor conferences during the quarter. Thanks. Operator: Thank you for your participation. This does conclude the program and you may now disconnect. Everyone have a great day.

Operator: Good afternoon, and welcome to Skyworks Solutions First Quarter Fiscal Year 2024 Earnings Call. This call is being recorded. At this time, I will turn the call over to Raji Gill, Vice President, Investor Relations for Skyworks. Mr. Gill, please go ahead. Raji Gill: Thank you, operator. Good afternoon, everyone, and welcome to Skyworks' first fiscal quarter 2024 conference call. With me today is Liam Griffin, our Chairman, Chief Executive Officer, and President; and Kris Sennesael, Chief Financial Officer for Skyworks. This call is being broadcast live over the web and can be accessed from the Investor Relation section of the company website at skyworksinc.com. In addition, the company's prepared remarks will be made available on our website promptly after the conclusion during the call. Before we begin, I would like to remind everyone that our discussion will include statements relating to future results and expectations that are or may be considered forward-looking statements. Please refer to our earnings press release and recent SEC filings, including our annual report on Form 10-K for information on certain risks that could cause actual outcomes to differ materially and adversely from any forward-looking statements made today. Additionally, the results and guidance we will discuss include non-GAAP financial measures consistent with our past practice. Please refer to our press release within the Investor Relations section of our company website for a complete reconciliation to GAAP. With that, I'll turn the call to Liam. Liam Griffin: Thanks, Raji, and welcome everyone. Skyworks continued to execute well during the first fiscal quarter of 2024 despite a volatile macroeconomic environment. We delivered revenue of $1.202 billion. We posted earnings per share of a $1.97, and generated $775 million of operating cash flow. Free cash flow was also a record at $753 million or a 63% free cash flow margin, which reflects strong working capital management and moderating CapEx intensity. Let's review both near and long-term secular trends in our end markets. After two challenging years across Android ecosystems, we see signs that the industry is stabilizing. Excess supply conditions are abating and inventory levels in the distribution channel and at the OEM level are normalizing. Customers are starting to restock inventory, albeit gradually as supply and demand dynamics improve and new phones are introduced into the market. Moreover, we've made strategic investments in product development, positioning us to compete for design wins and share gains focusing on highly integrated platforms for the leading mobile OEMs. We are pleased with our competitive positioning and technology roadmap and are poised to return to growth when the markets recover. Within broad markets, we see crosscurrents, but many factors are moving in the right direction. In consumer IoT, we believe that we are past the bottom, as inventory levels in the channel have normalized and demand signals are improving. Furthermore, we are executing on the upgrade cycle to WiFi 6E and 7. We see significant design win momentum across our retail, carrier, and enterprise channels. These systems carry substantially higher dollar content, because of the addition of the new 6 gigahertz band and the inclusion of BAW filtering technology. We expect wireless infrastructure and traditional data center will remain a headwind throughout 2024, as OEMs continue to digest excess inventory. Despite this, we remain bullish on several new product cycles, including major design wins in ethernet for high bandwidth networks and 400-gig and 800-gig optical module upgrades. Lastly, automotive and industrial markets are experiencing a near-term inventory correction. However, we see opportunities for growth in our automotive business driven by higher adoption rates of connectivity in the vehicle, along with growing EV penetration, driving demand for our power isolation products. Taken together, we anticipate December quarter represents the bottom in the broad markets business. There are several long-term secular growth dynamics that leverage our differentiated technology, including the proliferation of intelligent edge connected IoT devices, automotive, electrification and advanced safety systems, and AI enabled workloads, driving cloud and data center upgrades. Each of these trends require intricate connectivity engines underlying the need for speed, ultra reliable low latency performance. In addition, 5G technology is expanding beyond the smartphone into more use cases in broad markets, including private cellular networks in factories and stadiums, customer premise equipment supporting Verizon and T-Mobile and multi-band, automotive, telematics, and wearables to name a few. We also remain bullish on the long-term RF content story in smartphones, coupled with growing 5G penetration, we see increasing levels of complexity and content with each new generation. For example, 5G Advanced is driving higher RF content, including the addition of satellite bands 4x4 MIMO on the downlink and uplink, higher bandwidth, more carrier aggregation, upgrades to WiFi and GPS and other innovations. Lastly, we are energized about the prospect of generative AI migrating to the smartphone, sparking a potential major upgrade cycle, as the performance bar rises every year to support AI enabled phones, the complexity requirements of RF will continue to increase driving the need for more integration, lower power consumption, smaller footprint, and spectral efficiency. 5G is the ideal standard for on-device AI applications as it takes advantage of lower latency, faster transmission speeds and higher frequency ranges. In addition, AI enabled workloads are driving demand for high speed connectivity for data intensive infrastructure and cloud upgrades, accelerating the demand for our high precision timing products. Turning to our quarterly business highlights, we secured several design wins in infrastructure, including optical transport products with a major operator in India, and timing devices for 5G small cells for private networks. We expanded the WiFi design pipeline with Cisco's enterprise access points, Linksys tri-band mesh router, and TP-link’s tri-band gaming router. We increased design win momentum in automotive, including telematics, infotainment systems, and onboard chargers across the leading OEMs. Lastly, in emerging IoT, we delivered next-generation smart energy solutions with Google's Nest temperature sensors and introns residential gas meters. In summary, Skyworks delivered solid financial results despite a challenging macro environment. Our strong balance sheet, record cash flow and profitability reflect our resilient business model, diverse customer base, and technology scale. With that, I will turn the call over to Kris for discussion of last quarter's performance and our outlook for Q2 of fiscal 2024. Kris Sennesael : Thanks, Liam. Skyworks’ revenue for the first fiscal quarter of 2024 was $1.202 billion, slightly above the midpoint of our outlook. Mobile was approximately 71% of total revenue, an increase of 7% sequentially, as we supported the ramp of new high-performance solutions at our largest customer. Android-related revenue with Google, Samsung and the Chinese OEMs grew modestly sequentially. Broad markets were approximately 29% of total revenue, down 18% sequentially, mostly driven by some specific inventory corrections in wireless infrastructure, automotive and industrial. Gross profit was $557 million, with gross margin at 46.4%, in line with expectations. Gross margin was down 70 basis points sequentially, driven by an unfavorable mix shift, resulting from lower broad markets revenue. Also, during Q1, we reduced our internal inventory by $193 million to $927 million, well below our target of $1 billion. Operating expenses were $191 million, below the low end of the guidance range, given our ongoing focus on managing discretionary expenses, while continuing to invest in our technology and product roadmaps. We generated $366 million of operating income, translating into an operating margin of 30.4%. We incurred $7 million of other expense, and our effective tax rate was 11.7%, driving net income of $317 million and diluted earnings per share of $1.97, which is $0.02 above the guidance that we provided during the last earnings call. Skyworks’ business model continues to generate very strong cash flow. First fiscal quarter cash flow from operations increased to an all-time record of $775 million. Capital expenditures were reduced to $22 million or less than 2% of revenue, resulting in an all-time record free cash flow of $753 million or 63% free cash flow margin. Strong profitability, combined with great working capital management and lowering the CapEx intensity of the business, drove the record cash flow numbers. Also, during fiscal Q1, we paid $109 million in dividends, and repaid the remaining $300 million on our term loan. We ended the quarter with over $1 billion in cash and investments, and $1 billion in debt, creating a net positive cash position, and an optimal capital structure, providing us with superior flexibility and optionality. Now, let’s move on to our outlook for Q2 of fiscal 2024. We anticipate revenue between $1.020 billion to $1.070 billion. We expect our mobile business to be seasonally down, consistent with historical patterns, while in broad markets, we anticipate modest growth off the December bottom, as inventory levels are normalizing in certain end markets. Gross margin is projected to be in the range of 45% to 46%, reflecting our seasonally weakest period of the year. We anticipate margin expansion during the remainder of 2024, benefiting from our disciplined management of our manufacturing and operational cost structure, both internal and external, along with higher factory utilization rates. We will also benefit from a favorable mix shift as our broad markets business recovers and accelerates. We expect operating expenses in the range of $193 million to $197 million as we continue to make strategic investments in mobile and broad markets to drive share gains and increased diversification. Below the line, we anticipate roughly $4 million in other expense and an effective tax rate of 11.5% and a diluted share count of approximately 161 million shares. Accordingly, at the midpoint of the revenue range of $1.045 billion, we intend to deliver diluted earnings per share of $1.52. Operator, let's open the line for questions. Operator: [Operator Instructions] And our first question coming from the line of Matt Ramsey with TD Cowen. Matt Ramsay: Liam, I wanted to ask a bit about the broad markets trends and it's obviously as the name implies, a diverse business. I was pleasantly, but I was a little bit surprised at the commentary that you had visibility for that business to be up so quickly, I guess, in March, it's been an inventory correction that's lasted a bit longer. And some of your peers and in other companies, and we've seen industrial maybe get a little bit worse. So I mean, if you could maybe expand -- I know you did some in the prepared script, but if you could expand a little bit on maybe some of the individual end market trends you're seeing in broad markets. And maybe what the pace of this potential recovery starting from March and through the rest of the year could look like coming off the bottom? Liam Griffin : Sure. Sure. Absolutely. One of the interesting things here with our broad markets business is that there's so many opportunities that we haven't yet scaled. So if we look at the business unlike some of the other mobile markets that are well defined and there's still great opportunities. We look at the broad markets as more of an open-ended play for us. We're leveraging the technologies that we know how to work with. We have a great set of customers and that continues to grow and expand. But yes, I mean, the team has done a really good job. This has been a tough year across the landscape across semis. We're happy to deliver some positive results here today, and we do think there's a turn. Again, in that portfolio, it's very diverse. And mobile is a part of it, but the lion's share is really diversified products. With some really great names as well. And most of those broad market companies, we have low share. There's still a tremendous amount of room to grow within those accounts. So I think those are some of the themes. We've been working on this for quite a while. And finally putting up some meaningful top line, leveraging that broad markets business. The other thing, we continue to remind our customers and even the investors, a lot of the stuff we do in-house. So we're able to craft and curate specialty products. We have our own fabs. We do things a little bit differently, and I think that helps our outcome. Matt Ramsay: Got it. I guess, as my follow-up, and this is going to be a thematic that we talk about in the PC market maybe this year and then into next year in the smartphone market, as you alluded to, sort of AI making its way into these products and potentially catalyzing a bit of an upgrade cycle. So I guess my question is, I mean, it's pretty straightforward for us to envision if you get air interface upgrades from 4G to 5G to what comes next, that can expand the RF TAM pretty meaningfully for your smartphone business. Are you anticipating the growth potential from AI and smartphones to be primarily a unit driver for the market and therefore, for your company? Or are there things that you guys can do in AI-enabled phones that could meaningfully change the content? Or are we sort of waiting for the next air interface before the content could possibly inflect for the TAM again? Liam Griffin : Yes, I think it's a secular opportunity. This is a really unique period for us and in the industry. The way we look at it, you look at AI and a lot of that is really intense servers data center, and that's extremely important. Then you take it down kind of to the middle ground and then you're kind of in a different position. But getting that to mobile is going to be a challenge. It's going to be a challenge, but it will happen. The consumer wants that. The consumer wants to have that compute power in their hand. And it's not there yet, but we really believe that it will come. And I think it's going to set up the industry for a whole range of new opportunities still carrying radio frequency. So really excited about it. And again, we have the building blocks and the know-how to do really interesting things and do it account by account as well. Not everybody wants the same solution. But we really do believe that heavy compute power has got to get matched up with something in your hand. That handheld device has got to step up. It's got to grow, it's going to be more -- it's going to need to be faster, lower latency. And that's all good because those are problems that we can solve. Operator: And our next question coming from the line of Chris Caso with Wolfe Research. Chris Caso: First question is about the Android market right now. It sounds like that market has finally grown for you after several quarters of inventory correction. Can you speak to what your expectations are for that as you go through the year? I suppose at this point, the inventory correction is behind us. What's your level of optimism of getting back to more normal growth rates in that part of the business? Liam Griffin : Yes, Chris. Yes, you're right. It's been a little bit bumpy through the ecosystem here, but we see green shoots here popping up and Android. We know how to make these products. I think there was a little bit of a soft spot there in the industry. The newer phones are coming up with a little bit more technology. We like that. And we can broaden that base. So we are going to -- in the prepared remarks, we commented on that, and you should expect more growth in the Android ecosystem as we go forward. These are products that we can execute to in the pipeline right now and give us continuing strength getting in -- going through '24 and '25. Chris Caso: Okay. As a follow-up on gross margins, if you speak to your expectations as we proceed through the year. One thing you mentioned is it sounds like you're internal inventory was below target. Should we read that to mean utilization starts going higher? And what the effect on that will be on gross margins as we go through the year. Kris Sennesael: Yes, Chris. So I'm really -- when you look at gross margins, right, we did 46.4% in Q1. We're still impacted there by underutilization, a little bit of a headwind from a mix point of view as well, that continues somewhat in the March quarter that we guided. But then when I look beyond the March quarter, we will see some really nice gross margin uplift in the remainder of the fiscal and the calendar year. Part of that is higher utilization because we will no longer have to focus on a reduction of inventory. That is behind us. We reduced the inventory by almost $200 million in the December quarter. There is maybe still a little bit of opportunity there, but we feel good about the inventory levels where they are right now. In addition to that, our broad markets business is going to grow faster than the mobile business. And so that gives us a little bit of mix tailwind as well. And then in addition to that, we will really benefit from all the cost reductions that we've done over the last 12 months. We really focused on taking out structural parts of the cost structure. We focused on operational efficiencies, driving yield improvements and test time reductions. And in addition to internal cost, we also start seeing some benefit from external cost. And so when you put it all together, we will see some nice gradual gross margin improvement after the March quarter. Operator: And our next question coming from the line of Christopher Rolland with Susquehanna. Christopher Rolland : I guess, first of all, in broad markets, if you can -- you had some great color as to how you break those out into kind of sub-segments. I would love to know kind of what those look like, how they're trending. And then also, you alluded to the gross margin benefits as we move through the year. I don't know if you can talk to the broad markets effect on gross margin as we move through the year. Kris Sennesael: Yes. So as it relates to broad markets, roughly 40%, 45% is IoT, more consumer IoT, right, where we provide connectivity solutions in tablets, in wearables and PCs, your home connectivity with routers and all the access points that tap into that. In that market, the inventing -- there has been an inventory correction for multiple quarters, but we are getting towards the end of the inventory correction there. In addition to that, we see strong growth in that part of the market due to an uplift in content as we transition from WiFi 6 into WiFi 6E and 7 type of solutions that has a substantially higher RF content of Skyworks inside. The next 30%, 35% is infrastructure, cloud, data center, enterprise networking. There is definitely an inventory correction going on in that part of the business that has started in the December quarter and will continue for a couple of quarters here. Nevertheless, that as well. I think in that market, we're very well-positioned with some key customers, including our timing solutions for data centers. And then the last part is 20%, 25% is automotive and industrial. There as well, I think we're well-positioned. But you've heard it from many of our peers, there is an inventory correction going on I don't think it will be a long drag-out inventory correction. It's probably December, March, two quarters of an inventory correction. And then again, we are very well-positioned in that market the connected car that eventually become an autonomous car as well as EV, where we play with our power resolution solutions. And so again, when you put it all together, December is the bottom for our broad markets. We start seeing some sequential growth in March and beyond. And as you know, yes, those markets typically have a higher gross margin compared to broad markets, and that will help us to lift the gross margin. Christopher Rolland : You guys already talked about AI smartphones, but also you called out AI-enabled workloads driving cloud and data center upgrades. You also talked about 800-gig and this being an opportunity for you. Is that all related to your timing business from your acquisition? Or are there other ways that you're leveraging infrastructure around AI as well? Liam Griffin : Yes, largely through the infrastructure business that we have and some of the technology that we brought forth in our Silicon Labs deal, that's driving new vectors for us in the industrial markets and the data center markets, and it's a really vibrant growth source for us, and there's a lot of room to grow there as well. So lots more to do, but we've been making some great progress in that area. Operator: Our next question is coming from the line of Edward Snyder with Charter Equity Research. Edward Snyder: I'd like to touch on, if we could, later this year, especially in mobile, it seems pretty clear at this point, given your largest customer scrambled to get their thing done by 2025 that most all attention on that and that we're going to have kind of a -- I don't know the best way to put it, but basically, kind of on hold -- not on hold, but a repeat of what we've seen before, nothing -- not much new in the new one and the competition scrip. So basically, I would expect in the fall, you're going to see more competition or you already know it now. Sure Qualcomm going to talk about a lot on Wednesday. So I'm trying to get a feel for the profile of your mobile business in the second half of the year. It sounds like it might be weaker than we normally since Qualcomm share got to come out of somebody. If you could maybe characterize or just without getting into too much detail about what should we look at in terms of the mix in the second half you're already talking about broad markets being much stronger. The mobile by implication is going to be a little bit weaker. And is that mostly just organic growth? Or is there going to be some share loss? Or how do we think about that? And then I have a follow-up, please. Liam Griffin : Yes. Well, of course, Ed, we're deeply engaged with mobile in all angles, right? So we have a broad set of technologies that are applicable to multiple customers, including the largest. And that's our craft. That's the largest part of our portfolio. We're growing across other markets, but certainly the know-how that we have in RF, the ability to do things in-house, as you know, and the vectors that we put forth to drive this company. So we're all over it at every angle, and we're continuing to work on market share and new innovations. Delighting our customers, over current consumption, expanding the reach, doing a little bit more in the Android markets that we've kind of hinted around that. We're going to continue to execute there and still drive the best performance solutions that we can. Edward Snyder: Okay. Maybe I could follow up with a different angle here. You're going to grow in Android, you've kind of been under-earning there for several years. I think on purpose because you've done very well outside of that market. R&D is going up to in order to address the products yet because it's a different product market. But margins typically are lower in that whole market. Competition is a lot more intense one, should we expect to see revenue growth in the second half? It's a little early, but revenue growth the second half of the year, whether it's on an inventory snapback or new product wins in Android try to take up some of that slack. And then, Kris, maybe you could articulate how that -- how you're going to offset the margin, the natural margin dilution of Android over, say, the U.S. customer and then, of course, all mobile dilution against broad markets in the second half, if you could, please. Liam Griffin : Yes. So yes, we're with you on that. So there's a lot of opportunity for us to be more aggressive across the Android ecosystem. It's not just China. You get names like Google and Samsung, they are tremendous opportunities that we can drive. We're built for this kind of stuff. And we have an end-to-end process that we continue to improve and refine at every turn. It helps our customers. It helps our gross margin our utilization. We have incredible factories, homegrown stuff that we have here in Irvine that really, really is the solution of choice as far as I know, with our technology know-how and the ability to be flexible and customizable to each account. And I think that's an asset for us, and I think we'll continue to drive that portfolio. . Kris Sennesael: Yes, as it relates to gross margin, the gross margin profile of our mobile customers is on or about the same. And part of that is because now we are somewhat selective. We are not sliding down in the mid or low end of the market. We stay at the high end. We stay at the high-performance part. And in that part of the market, you compete based on performance. It's not a price competition. You compete based on performance. And again, that's why gross margins are somewhat the same in -- with all the customers in that segment. Operator: Our next question coming from the line of Gary Mobley with Wells Fargo. Gary Mobley: I want to start with a quick housekeeping question. What was the mix of revenue from your largest customer in the quarter? Kris Sennesael: The largest customer was approximately 73% of total revenue which is high, obviously, because the December quarter is the top quarter with the largest customer. And given that the broad markets was bottoming out in December, you get to on or about 73%. Obviously, when you look forward on full year basis or even in March, it will be well below the 73%. Gary Mobley: I want to ask Ed's previous question and perhaps a more direct way. Doing the math, it would indicate that your Android-related mobile customers are trending now at about a $400 million annualized rate or at least that was the case for the December quarter. But in the past, fiscal year '22, I believe that level is closer to $800 million. And so my question is, if we see a rebound in the Android market. And based on your design win footprint that you currently have today, can we expect that segment of your business to bounce back to the previous level? Liam Griffin : Yes, absolutely. We've got, as I said, a lot of opportunity to go harder and stronger and more direct on the Android ecosystem. We absolutely have technology to make it work. We have the scale manufacturing scale and know how to get it done. So yes, I mean, it's certainly a play for us there, and I think we'll take advantage. Operator: Our next question coming from the line Karl Ackerman with BNP Paribas. Karl Ackerman: Two questions, if I may. On mobile, your largest customer is down on a seasonal basis in March. But at the same time, given your improving execution within Android, does Android grow sequentially in March? How do we think about that within mobile, please? And I have a follow-up. Kris Sennesael: Yes. Android is kind of flattish, slightly up into March. Karl Ackerman: Got it. At the same time, I do want to touch on mobile. One more time. It's been asked in several different ways, but I guess I'll try it again. You are less tied to China MPRS. But are you seeing any changes to the competitive landscape in China. I ask because there are anecdotes supporting China RF suppliers winning content in low band saw and TC-SAW. But at the same time, as you indicated earlier, Kris, you're not necessarily competing in that particular on the market. So if you can just highlight the committed landscape and what you're seeing in China that would be very helpful. Liam Griffin : Yes. I mean the OVX players, we do some reasonable business there. We could probably do a little bit more on the Android side, but we really don't step down much further there. We're not in the low end at all. We could be, but I think we generate a better outcome for our customers and our shareholders to drive that mid and high end. So it's something we can do. But I think the way our business runs, I think, we're more accretive as a company going down the playbook that we have today. Operator: Our next question coming from the line of Vivek Arya with Bank of America Securities. Blake Friedman: This is Blake Friedman on for Vivek. I just wanted to focus on OpEx, it seems spending has returned to levels seen prior to the industry downturn. So I was curious how we should think about the trajectory of OpEx for the remainder of the year. Kris Sennesael: Yes. So as it relates to OpEx, I think we did a good job in the December quarter at $191 million we are guiding with a little step-up in March to $195 million. Keep in mind that this is the start of a new calendar year. And so you get a reset of the social charges and some of that, that kicks in. In addition to that, we are going to continue to invest in our technology and product road maps. We feel good about our position with our mobile players. As Liam articulated, we have plenty of opportunity in our broad markets. And we're going to continue to invest. Now we're going to do it the Skyworks way. We focus on efficiency, effectiveness. We're not wasting any dollars here. And so -- but yes, we're going to continue to invest. And so OpEx will continue to gradually move up in the remainder of the fiscal and calendar year. Blake Friedman: Got it. And then kind of quickly circling back on some of your comments. I know the broad markets business is a key initiative for Skyworks. And just with the business kind of returning to this cash positive level and generating pretty strong cash flow from here. Just curious how you think about M&A and anything in particular you guys would look to add to the broad markets assets? Kris Sennesael: Yes. First of all, the cash flow is outstanding, and it's definitely something that we focus on. And so we generate a ton of cash. As you have seen in the last couple of quarters, we have used that cash flow. Of course, we continue to invest in the business. We pay our dividends every quarter. And we have been paying off the term loan that, as you probably know, had a variable interest rate and was getting a little expensive there. But we are done with that. And so now, again, looking forward, we have -- we will continue to drive a very strong free cash flow. It's not going to be every quarter 63%. We feel we have a sustainable plus 30% free cash flow margin on a fiscal or calendar year basis. But that's generating a lot of cash. And of course, we want to put that cash to work we have optionality. We can switch on the buybacks or we can be active from an M&A point of view. And as you know, we -- yes, we focus on becoming a more diverse company despite the fact that we like the mobile business, but we focus on becoming a more diverse company in part through organic investments in that business but we have the optionality to accelerate through M&A, and we're working that. Operator: And our next question coming from the line Thomas O'Malley with Barclays. Thomas O'Malley: I just wanted to understand the underutilization charges into the March quarter. Obviously, gross margin being guided down slightly. But you're seeing broad market step-up. So that mix should help you. Where are you seeing more of those underutilization charges? Are those as a percentage basis coming more on the mobile side or more on the broad market side? Kris Sennesael: So no, it's not really tied to one of the businesses. But we have been bringing down the utilization of our factories in part because the revenue is down year-over-year, but also because we have been focusing on driving down the inventory, right? We are taking our medicine now. We're not just building inventory to protect the gross margin. Now it takes a little bit of time for those underutilization charges to hit the P&L. It goes through an inventory cycle, right? That's why you continue to see slightly down gross margins on a sequential basis into the March quarter. But again, we have confidence that March is the bottom in terms of gross margin, and you will start seeing gradual improvements after the March quarter. Thomas O'Malley: Helpful. And then just on the moving pieces for the back half of the fiscal year. It sounds like Android is getting better typical seasonality on the -- on your largest customer side in mobile. But I just want to get a feel for what you guys kind of are looking at in terms of the reacceleration of broad markets. If you look at March for your guidance, up slightly. You're still down 20% year-over-year. Do you think that kind of exiting your fiscal year, are you looking to kind of be growing year-over-year? Or just can you give us any kind of color on the pace of recovery there just because I know things are improving, but just how quickly is something that I think is a little more difficult to wrap our heads around. Liam Griffin : Yes, sure. There's a lot there, but I think I get your point. So we definitely believe there's going to be more acceleration in revenue in the broad markets. We have a roster of incredible companies that we're serving right now for Cisco to Ford, Daimler, Nest, we talked about before Google Company. It's a very diverse set of products and customers in the broad markets portfolio, and that's what we like. Each one has their own vector. And we're continuing to nurture that and grow into that. And it also have a great opportunity on the sales side because we do have quite a bit of revenue in mobile. But the number of accounts that we haven't served yet is still very, very high, and that's a great opportunity for us to go after. Operator: And our last question in queue coming from the line of Quinn Bolton with Needham. Quinn Bolton: It’s been a couple of questions on the call that seem to be alluding to perhaps you guys may be losing content at your largest customer in the second half of the year. And I haven't heard you guys specifically address that. Can you give us any thoughts as you look into the second half, how you're feeling content-wise at that largest customer? And then I've got a follow-on for Kris on the gross margins. Liam Griffin: Yes. I think we have a great position with our largest customer. Nothing really is concerning on that point. I mean we know exactly who we are and who they are, and we have great partnerships and will continue to drive success. Quinn Bolton: Okay. And then for Kris, you've kind of talked about the gross margin drivers. Potentially pretty quick recovery post the March bottom. I'm just kind of curious. Is there -- can you give us any sense how quickly can you get back to 50%? Is that something you think you can do in the calendar year ‘24? And does it require you to get to a certain revenue level to get rid of some of those underutilization charges or are things like product mix, a much bigger factor as well as the cost reductions you've taken to getting back to that 50%, so it tends to be maybe a little bit less driven by a certain revenue level? Just what's the best way to think about getting back to 50%? Kris Sennesael: Yes. I mean, we guide only one quarter at a time, and there's a reason for it, right? There's a lot of puts and takes that go into the equation. But again, we have confidence that March, 45%, 46% guide is the bottom. We will start seeing gradual improvement from there. We obviously want to get as fast as we can back to the 50%, right? And then once we get back to the 50%, we're not going to stop there. Our long-term target model calls for 53% gross margin, and we believe we can do that. There is no structural impairments in the business that will prevent us that. But obviously, yes, we need revenue growth and we need to get better factory utilization that in combination with all the cost efficiencies internally and externally that we have been working on and will continue to work on, right. Keep the conviction that we will get back to the 50% in a reasonable amount of time. And then we're going to keep driving it towards our target normal of 53%, but we'll provide an update on a quarter-by-quarter basis. Operator: Ladies and gentlemen, that concludes today's question-and-answer session. I'll now turn the call back over to Mr. Griffin for any closing comments. Liam Griffin: Thank you all for joining. Look forward to seeing you at upcoming conferences. Thanks. Operator: Ladies and gentlemen, this concludes today's conference call. We thank you for your participation. You may now disconnect.

Operator: Good afternoon, and welcome to the Skyworks Solutions Fourth Quarter Fiscal Year 2023 Earnings Call. This call is being recorded. At this time, I will turn the call over to Raji Gill, Vice President, Investor Relations for Skyworks. Mr. Gill, please go ahead. Raji Gill: Thank you, operator. Good afternoon, everyone, and welcome to Skyworks' fourth fiscal quarter 2023 conference call. With me today are Liam Griffin, our Chairman, Chief Executive Officer, and President; and Kris Sennesael, Chief Financial Officer for Skyworks. This call is being broadcast live over the web and can be accessed from the Investor Relation section of the company website at @skyworksinc.com. In addition, the company's prepared remarks will be made available on our website promptly after the conclusion during the call. Before we begin, I would like to remind everyone that our discussion will include statements relating to future results and expectations that are or may be considered forward-looking statements. Please refer to our earnings press release and recent SEC filings, including our annual report on Form 10-K for information on certain risks that could cause actual outcomes to differ materially and adversely from any forward-looking statements made today. Additionally, the results and guidance we will discuss include non-GAAP financial measures consistent with our past practice. Please refer to our press release within the Investor Relations section of our company website for a complete reconciliation to GAAP. With that, I'll turn the call to Liam. Liam Griffin: Thanks, Raji, and welcome everyone. Despite macroeconomic headwinds and volatility, Skyworks executed well during the fourth fiscal quarter. We delivered revenue of $1,219 million, posted earnings per share of $2.20, and generated $366 million of operating cash flow. During fiscal 2023, free cash flow was well above $1.6 billion, which reflects our efficient business model despite a challenging macroenvironment. While excess supply conditions are modestly improving in the Android market, we continue to under ship to natural demand as the industry rebalances. Within broad markets, we see softer demand extending from consumer to certain durable sectors as customers adjust to normalize lead times and reduce excess inventory. After two years of unprecedented events due to COVID and historical supply chain shortages, the semiconductor industry is returning to a normal supply and demand balance. We are responding to these dynamics by actively managing our inventory levels, making strategic investments in growth areas, and diversifying the reach of our business. We are well positioned to capitalize when demand inflects from a technology and roadmap, manufacturing capacity and financial perspective. Over the medium to long term, we remain bullish on several sectors and trends. In our mobile business and our broad markets businesses, in mobile we see opportunities to expand RF content over the coming years. On the path to 6G, we anticipate RF content increases will be driven by additional bands, enabling satellite connectivity, growing usage of uplink carrier aggregation, further adoption of 4x4 MIMO, and other innovations in RF. Switching gears to broad markets, which accounted for approximately 37% of our total revenue in fiscal 2023. We expect to benefit from three long-term secular trends. First, the proliferation of intelligent IoT connected devices on the edge. Second, the rapid transition towards electrification and advanced safety in vehicles. And third, high speed connectivity for AI enabled data intensive infrastructure in cloud applications. Within IoT, we are excited about the upgrade cycle with Wi-Fi 6E and 7. Driving additional content as incremental higher frequency bands drive more stringent filter requirements, including the need for BAW. Wi-Fi 7 has several use cases, including 8K video screaming, immersive AR and VR, cloud gaming, industrial IoT and telemedicine. Shifting to automotive, Skyworks is well positioned to benefit from the electrification and adoption of advanced safety in vehicles. According to internal analysis and third party estimates, we expect RF automotive semiconductor TAM to reach $1 billion. Within automotive, we are focused on high growth segments and content opportunities, including power isolation chips for onboard chargers, powertrains, and battery management systems in EVs. Connectivity, such as cellular engines, Wi-Fi, Bluetooth, and GPS, in-vehicle infotainment systems, driven by digital radios, and lastly, ADAS solutions for autonomous driving. We have the experience and ability to execute at scale with some of the leading brands in the world. In addition, we believe AI can be a catalyst for more efficient wireless communication and could fuel the need for more complex and higher performance wireless solutions. Over time, we expect high performance smartphones will be a critical platform for advanced AI capabilities, and in turn could spark a major upgrade cycle. Furthermore, over the past two years, we've made significant investments in BAW technology and scale, which has led us to competitive differentiation. We've expanded our reach within the smartphone market, and today, nearly 50% of our mobile revenue is tied to BAW. That's more than double from last two years. Our BAW investment has also resulted in key design wins in our broad markets business, which represents more than 10% of our business. Wi-Fi 7 is a perfect example of BAW technology being a critical requirement for the new standard. Now, turning to our quarterly business highlights, we secured 5G design wins for premium Android smartphones, including Google, Samsung, and several models in the VOX ecosystem. We accelerated design wins in Wi-Fi, including NETGEAR’s Wi-Fi 7 mesh system, Linksys 6E tri-band mesh router and TP-Link’s quad-band Wi-Fi 7 router. We expanded our reach in automotive segments by winning several designs for onboard chargers, battery management systems, and digital broadcast products across the leading brands. And lastly, in emerging IoT, we enabled next-generation smart energy solutions with Trilliant and Samsara. In summary, Skyworks continues to deliver solid results despite a challenging macroenvironment. At the same time, our advanced technology and product roadmaps are aligned to long-term secular trends, further expanding and diversifying our customer base. Our strategic customer engagement, resilient business model, and experience will help us weather through this cycle's volatility. With that, I will turn the call over to Chris for discussion of last quarter's performance and our outlook for Q1 of fiscal 24. Kris Sennesael : Thanks, Liam. Skyworks revenue for the fourth fiscal quarter of 2023 was $1,219 million, up 14% sequentially and slightly above the midpoint of our outlook. Mobile was approximately 65% of total revenue, an increase of 25% sequentially, as we supported the ramp of new high-performance solutions at our largest customer. Broad markets were approximately 35% of total revenue, down 3% sequentially. We continue to see inventory digestion within broad markets, including consumer IoT, enterprise, and telecom infrastructure. Grosso profit was $575 million, resulting in a gross margin of 47.1%. Gross margin continued to be impacted by temporary factory underutilization as we right-sized our inventory levels. During Q4, we reduced our internal inventory by $116 million to $1,120 million. And we are on track to further reduce it below $1 billion by the end of the December quarter. Operating expense of $177 million was down 3% sequentially and down 8% year-over-year, given our ongoing focus on managing discretionary expenses. We generated $398 million of operating income, translating into an operating margin of 32.6%. We incurred $7 million of other expense. And our effective tax rate was 9.7%, driving net income of $353 million and diluted earnings per share of $2.20. EPS was $0.10 above the guidance that we provided during the last earnings call. Now turning to cash flow, Skyworks business model continues to deliver robust cash generation. Fourth fiscal quarter cash flow from operations was $366 million and capital expenditures were $70 million, resulting in free cash flow of $296 million. For the full fiscal year, we generated $1,856 million of cash flow from operations. Capital expenditures were $210 million or 4% of revenue. As a result, we delivered a record $1,646 million of free cash flow, an increase of 76% year-over-year, driving a record free cash flow margin of 34.5% and translating into approximately $10.30 of free cash flow per share and a free cash flow yield of approximately 12%. In fiscal 2023, we significantly reduced our capital expenditures in line with our business model. After major investments during prior years to expand our manufacturing footprint, including bar filtering, we expect our capital intensity to moderate. We focus on driving operational efficiencies through yield improvements, dice rings and test time reductions, creating additional available capacity. We believe we are currently well positioned from an equipment and tooling standpoint to support a demand to recovery. Also, during fiscal Q4, we paid $108 million in dividends and repaid $200 million of our term loan. In early October, we repaid $150 million of outstanding borrowings under the term loan, and we intend to pay off the remaining $150 million by yearend. Entering calendar year 2024, we are comfortable with our capital structure and debt levels of $1 billion, which provide us with superior flexibility and optionality. Now, let's move on to our outlook for Q1 of fiscal 2024. We anticipate revenue between $1,175 million and $1,225 million. We expect our mobile business to demonstrate momentum, while in broad markets, we expect to continue digesting excess inventory affecting our revenue outlook. Gross margin is projected to be in the range of 46% to 47%, reflecting the ongoing cyclical impact of lower factory utilization, reduction of internal inventory, and an unfavorable mix shift given the lower proportion of broad markets as a percentage of total revenue. We expect operating expenses in the range of $193 million to $197 million as we continue to make strategic investments in mobile and broad markets to drive share gains and increase decertification. Below the line, we anticipate roughly $6 million in other expense and an effective tax rate of 12% for Q1, as well as full fiscal year 2024. We expect our diluted share count to be approximately 161 million shares. Accordingly, at the midpoint of the revenue range of $1,200 million, we intend to deliver diluted earnings for share of $1.95. Operator, let's open the line for questions. Operator: [Operator Instructions] Our first question comes from Chris Caso with Wolfe Research. Chris Caso: Yes, thank you. Good evening. I guess for the first question, if you could give some color with regard to the December quarter guidance, the prepared remark suggested that the incremental weakness was still coming from broad markets if you can give some more granular detail about what you expect from mobile and broad markets in the December quarter. Kris Sennesael : Yes, Chris. So you have it right. We do expect in the December quarter our mobile business to be up sequentially as we continue to execute to ramp with our largest customer and as we will continue to see some further modest improvement in the Android mobile part of the business as well. On the flip side, we have our broad market business which we expect to be down sequentially as we will continue the digestion of access inventory in the channel as well as at the end customer level. Chris Caso: That's helpful. As a follow-up, and obviously we've been going through this for a bit of a while in the mobile space, burning off inventory and I guess broad markets was affected a little bit later. Where do you think we are with regard to the inventory correction in each one of those markets particularly as we look into the March and June quarters? What's the prospect for when we can get some bottoming out here and we go back to shipping to actual real consumption? Liam Griffin: Sure Chris, this is Liam. There's actually kind of like two dynamics there. In the mobile business we absolutely know where the dollars are and where the opportunities are and we have eyes on all that and we'll continue to drive that portfolio very strong. On the other side, the broad markets business is still a wonderful opportunity for us but unfortunately going through the semiconductor cycle and the inventory issues that we just mentioned on the call here have been a bit of a problem. Now we know how to fix it. These products are all solid but they just slow down through the channel and I think in some cases, levels of distribution and another layer between the buy and sell position can sometimes mute some of the results. So we understand it. Some of that stuff we can just handle ourselves directly and also drive more and more opportunities broadly in those markets. There's a lot of opportunity, Chris. I mean it goes way beyond what you see today. Portfolio that we've been driving with I&A business, the automotive gains. We're in data center today just a really whole different set of broad markets opportunities, but we certainly have our teams working hard to execute and demonstrate that success. Operator: Our next question comes from Karl Ackerman with BNP Paribas. Karl Ackerman: Yes, thank you. I have two questions, please. First and foremost, if I could just narrow down on your Android opportunity. Media Tech earlier suggested that 5G units should grow double digits next year, certainly above overall smartphone unit expectations of maybe flat to up low singles next year. And I'm just curious to hear about some of the expanding opportunities you have with China Android OEMs. I mean, you kind of mentioned how that is picking up in the December quarter and I think going forward for you. So at the same time, Huawei I think is also coming back in the market. So I wanted to hear your perspective on what is your opportunity in China Android near-term, both in the summer quarter and then, secondarily, how does Huawei impact your TAM opportunity for the China Android ecosystem, both near-term and perhaps in calendar ‘24? Thank you. Liam Griffin: Yes, sure. A little bit to unpack here. Clearly, we know the players. We know the landscape in China. Very familiar with the VOX ecosystem and great opportunities for us to continue to grow. Although, we've been conservative in that area because of the risks of inventory glut. And as you know, we've been running really lean. So there's no downside there. As we start to go further. You have opportunities that can continue to grow. A lot of these handsets in China have a lot of upside ability to drive more content and more benefits for the user. Those products are still sub-scaled vis-à-vis a US-type product. So the appetite for the China consumers to get more technology, to have higher speeds and data rates and more efficiency in their solution. So that can come through VOX, of course. But don't forget big players like Google and Samsung, really strong Android players that create a nice buffer from us with our larger customers. So it's a really good mix and as you know about our business, we're very flexible. We don't sell one part to everyone. It's very, very unique engagements. I think that's a signature for Skyworks. But always room to grow from here and we are starting to see, I think, light in the tunnel I would say in the VOX channel. And with Huawei, I don't think that that's a big issue. We can certainly deliver product that's better than Huawei right now, but it's not really where we want to be as a company. And I think the technology is really lagged for Huawei to reengage. But we've got a lot of opportunity in front of us that we can execute and deliver. Karl Ackerman: Yes. Thanks, Liam. Kris, perhaps a question for you. You talked about the significant amount of free cash with the generation that you had just this upcoming this most recent quarter. Are you taking a step back? How are you and the management team thinking about M&A, longer term, just given the fact that valuations have come down across the space, in areas within your broad markets business. Just any commentary on that would be helpful as well. Thank you. Kris Sennesael : Yes, Karl, first of all, you're absolutely right. I mean, we have very strong free cash flow. The good news there is that it's sustainable. So for many years to come, we target a free cash flow well above 30%. In addition to that, we have a clean balance sheet, right? By year end, the debt will be on or about $1 billion with on or about $1 billion of cash. And so we have a clean balance sheet. We continue to generate a ton of free cash flow. That gives us a ton of optionality, right. And so on one hand, of course, we will continue to invest in our organic business, making sure we invest in our technology and product roadmaps. But we also have optionality to further diversify the business. As you know, we've done a very successful transaction in 2021. We're very happy with that transaction. And so there is definitely optionality there. Operator: Our next question comes from Ruben Roy with Stifel. Ruben Roy: Yes. Hi. Thank you for letting me ask a question. Kris or Liam, I want to go back to the broad market and I think in the prepared commentary in terms of the, kind of the areas of weakness you were seeing, consumer obviously has been weak for a while and I think you mentioned a couple of other areas that weakness spreads to, but I didn't hear industrial and automotive. And so can you maybe give us a little bit of detail on what you're seeing there, what you saw there in the September quarter and how you see that playing out over the next quarter or two. Thank you. Liam Griffin: Yes, that's a great question and I'm glad you brought it up. We talked a little bit through the prepared remarks, but our business and automotive is actually really moving well. We're growing the portfolio. We hadn't really been in that market at all two, three, four years ago. This is another kind of nod to the Silicon Labs transaction because they were significant in that piece. We continue to do very, very well. We rattled off a number of the brands and a number of the names that are in the industry and we have design wins. We're investing aggressively. We see that as an incredible opportunity for Skyworks and we're underweight. We have the technology to win, but we're not big enough yet and so we're continuing to grow. But I would say on a ballpark level, Chris, I mean we're in hundreds of millions of dollars in terms of automotive. So it’s not, relative to the scale of Skyworks, it's not a significant piece, but on an absolute basis, it's got some real opportunity to grow and we look forward to that. Ruben Roy: Thanks, Liam. Thanks for the detail. I guess just a quick follow-up in terms of the CapEx commentary and kind of where you sit from the utilization and capacity perspective. Can you remind us of where you ended up now? Sort of in source to outsource? I guess are you at target there? I guess that means you are at target, but can you remind us of these details around in source to outsourced certification. Kris Sennesael : Yes, Ruben, as you know, we are a not only a developer of world-class technology, we also manufacture most of that technology in-house, and that's a key differentiator. That's how we win at our largest customers being able to secure the supply. As you know, we do all our gallium arsenide power amplifiers in-house. We do all our filters, TC SAW, N BAW, in-house, and we do most of the very complex assembly and packaging and testing in-house. Some parts of the business, like the business we've acquired from I&A, and some other parts of the business is being outsourced, but the vast majority is in-house. And again, that's a key differentiator for us. Having said that, we for many years we have done major investments, expanding our capacity footprint. Currently, we are focusing more on driving operational efficiencies into that footprint that is creating additional capacity for us. And so going forward the capital intensity will be much lower. You saw last year it was on or above 4% revenue. Going forward we expect it to be in the mid-single digits as a percent to revenue. And so we have a tremendous amount of upside there that will further drive gross margin improvements and stronger free cash flow. Operator: Our next question comes from Christopher Rolland with Susquehanna. Matt Myers: Hey guys, this is Matt Myers on for Chris. So you guys have talked historically about 10% annual content increases. So I was curious about how we should think about it from this past cycle. And then again looking into next year, do you think you can grow content another 10 %? Liam Griffin: Well certainly our ambition is to continue to grow that content and diversify the level of content as well. And I think what you're going to see from Skyworks and it's already embedded in some of our numbers is diversification within mobile. So it's not going to just be one or two products as you know, but the breadth of the technology is right there for us. So we're going to continue to do that. You've already seen us demonstrate very well execution and getting into things like all acoustic wave, very, very tough technology, years and years of work, and then the scale to actually produce. So those are the kind of challenges and opportunities that we like. I know we talked a little bit about automotive already, but markets like that have a tremendous time TAM opportunity for Skyworks and we're really just scratching the surface there. So we're going to take some of that core technology and port it out into multiple applications. So it's really kind of a fungible asset and look at the pools of opportunity and revenue that we can address. And I think it's going to be a great journey for us along the way. We're learning a lot more. Our teams together are executing an outstanding way. And we're committed to growth and diversification and certainly matching the challenges with our top tier customers. Matt Myers: Got it, that's helpful. And then on gross margins, I know you guys have had gross margins hit from lower utilizations, but curious where utilization stand now versus 90 days ago. And where do you expect them to be in the next quarter? I would assume down again, given the gross margin guide down. And how are you guys thinking about your outlook for gross margin into next year? Kris Sennesael : I mean, the utilization of our factories is stable right now. On one hand, the demand is improving, but on the other hand, we are still further reducing our internal inventory levels. And so that will be played out by the end of December. In addition to that, as we alluded to in the prepared remarks, we have a little bit of a mixed headwind. Now with broad markets temporarily, a little bit softer due to the excess inventory. And that's why we guided slightly down in the December quarter. Looking ahead, couple quarters, obviously March and June are our seasonally slower quarters in terms of top line. And typically you see a modest reduction of gross margins during those quarters. And then beyond that, you look at the second half of the calendar year, September and December, we will start ramping up again, and you will see gradual improvements of the gross margins. Operator: Our next question comes from Tim Arcuri with UBS. Tim Arcuri: Thanks a lot. I had two quick ones. Kris, first of all, can you talk about your largest customer as a percent of revenue in September? Kris Sennesael : Yes, the largest customer was in September was approximately 68% of total revenue on a full year basis, it was approximately 66% of total revenue. Keep in mind that the vast majority of that is for the smartphone, but we also have great content in every other device that that customer brings to the market. Tim Arcuri: Thank you for that. And then as a quick one, can you give us a sense, Kris, for what you consider off of this base, what you consider sort of a normal seasonal March would be? I think mobile is usually down 25% in March. Is that a reasonable number off of this base to sort of think about? I know that broad market is kind of all over the place and going through digestion, but I guess I'm just asking about, seasonality in mobile in March? Kris Sennesael : Yes, so we're not going to guide to March, but directionally you think about it the right way, right? So, and you were referring just to mobile. This is not total Skyworks revenue, but yes, mobile is down in that 20% -25% sequentially in the March quarter from our top quarter, which is the December quarter. Yes, going normal seasonality. Operator: Our next question comes from Edward Snyder with Charter Equity Research. Edward Snyder: Thanks a lot. So, Liam, I mean, you're underrepresented in Android today. It happened for a while, but given the pricing for many of the modules that sell in Android, especially relative to your largest customer, why shouldn't we consider gains in the Android as an increased pressure on gross margin? Because I think it's widely understood that price competition is a bit more and performance is a bit less in the Android chain and it is at your largest customer. So, I'm just kidding. I feel we talk about diversification mobile. That's it. Then I have a follow-up. Liam Griffin: Yes. I mean, on the initial question, I agree with you on that. I think, as you know, and you go deep in the technology and you see what we do, and so we're very, very capable to do more. Quite frankly, the attractiveness of the portfolio at the time was pretty weak. It wasn't as compelling as some other opportunities, and we deployed our resources in different places successfully. But now, kind of taking a look at the landscape a bit, I think it's time for us to be a little bit more aggressive. We absolutely have the knowledge and the execution and the scale in our factories to do more. So it's been more of a choice, rather than a no-go from the customer. The customers won’t sense. So, I think we're going to do a little bit more work there and get a little bit more aggressive. And I think it'll be good for the company and our shareholders. Edward Snyder: Yes, that's been our impression too. So then if I could, on your largest customer, you had fewer modules than you had last time, and I know that's not where all content is. Clearly, year-to-year, there's increases in existing modules. But we've done the chared and a lot of it, especially the largest modules, looked to be identical to last year. So one, did you see material increase in content in existing modules? If not two, I'm just trying to get a feel for where your content gains were in the latest round, and mostly to try to get a feel for what's going to happen in the future, because if you're kind of giving up a few modules to marauder, marauder mostly, I guess, why wouldn't that trend persist in the next year? Thanks. Liam Griffin: Yes, I mean, we're going to do everything we can, as we always do, to create the best answer and the best outcome for the shareholders and our customers. And that's what we always do. I mean, as you know, our business and our company, we have a very, very extended bench of opportunities and technologies and knowhow. We can do a lot of really interesting things, and we've created a lot of categories that just didn't exist. And so we'll lean on that and continue to leverage the high-class engineering talent that we have at Skyworks, the scale that we have, the customer relationships. Also, really happy to see that we're doing more outside the largest customer, great customer, but we'd like to do more with others. So the setup process is certainly going to improve. We're going through this cyclical load that we're all in, in the industry, but we look forward to executing and clicking the steps again to continue to drive the RF technology. Operator: Our next question comes from Matt Ramsay with TD Cowen. Matt Ramsay: Thank you very much. Good afternoon. Liam, I don't think it's a huge surprise given what’s going on. What's so many of your peers with the industrial markets that Broad Markets is the source of the weakness. But I wanted to spend a little bit of time trying to unpack the different pieces of Broad Markets. So I would have, I mean, the timing business that you guys acquired from SLAB had wireless infrastructure and telco exposure to it. I'd be interested to hear about that, given what's going on there. There's been Tesla unit weakness and consternation about EVs in China and maybe that's turning. So there's some voltage isolation business in there. Just things that might have to do with IoT, given what's going on in some of those places. If you could just, maybe, and I'm sure I'm missing some sub segments for sure. So if you could just kind of walk through those different buckets and are there any where we're closer to the end in the beginning of the correction is what I'm trying to get at. Thanks. Liam Griffin: Yes. No, I got you, I appreciate it. And I'm going to start with, I think it's going to get better for everybody in the industry. I really think that we're getting through it. But one of the things that's interesting, and I'm really glad that you threw the question here, with Skyworks, we obviously, we have an incredible franchise built around mobile technology and adjacent technologies. We'll continue to leverage that. And we're very profitable in those markets with our scale, with our execution, and our know-how. But I'll tell you what, we have, as I said, a tremendous opportunity to take the technology knowhow that we have, the scale that we have, and go into broader markets. So the automotive right now, maybe on a macro level slow, but for us, would not that be where it's going to be a problem. So when you're really big and you're a 30%, 40% share player, and you get knocked down, it's going to hurt you. But when you're going from 5%, 10%, 15% to 20%, growing up into the markets, like automotive, you look at Skyworks three or four years ago, we wouldn't talk about cars at all. And now they're a meaningful piece. Adding the I&A business from Silicon Labs is only fueled more opportunities for us. So there's a lot of opportunities like that. We've got design wins and data Center now. Didn't have that two, three years ago. The Wi-Fi portfolios are really strong right now. I think everybody in the industry is going to recognize that Wi-Fi 7 is going to be a catalyst for significant growth, enabling a lot of broad categories from consumer to industrial. So we're really excited about that. We have the technology to do that today. So I think the difference is you've got mobile, and we all understand it, and everyone on this call probably has a really good view on that technology and that market. But when you go to the broad markets, the real broad markets, there are so many different endpoints. We're trying to pick and choose the right ones, but the good news is we're not heavily concent-, other than mobile. There's not a lot of concentration, so you are getting big diversified technology play at Skyworks with scale, with technology knowhow, with the ability to hit the fastballs with the toughest customers. We can deploy that across multiple markets. If we're doing that today, but it's a long way from now on how we can get even better. Our teams are excited about that. Matt Ramsay: Thank you very much for all the perspective there. Maybe just building on some, I mean, we've been going through this correction and sort of the broader markets for a while now, and companies like yourselves have the balance sheet and the margin structure to sort of lean into it and bear it until it gets better. I imagine there are smaller competitors in lots of those diverse end markets that maybe don't have the balance sheet and the scale to get through. So, I guess my question is, how active is the M&A funnel right now? And if it's not, why isn't it? Liam Griffin: Yes, well, it's one of those things that's off until it's on, right? So clearly, the dynamics, it feels like 10 years have happened in one, right? A lot of activity up and down, seeing some pretty wild swings with significant companies that are really strong players. So we are fortunate, and we've worked hard to get there to deliver the kind of cash performance that will put us in position to do the right kind of transactions. And as you know, at Skyworks, we're very, very picky. But I think in this case, honestly, I think there's more opportunities for M&A and the like than I've seen in a long time. This has been kind of a really interesting time in semiconductors and in other markets. And I think the stronger going to get stronger, and I think the weaker, probably not going to do as well. And I know what side we're going to be on. So it's an opportunity for us to take advantage, leverage the balance sheet, you look at the free cash flow margins that are sustainable. I mean, these aren't one quarter stats. And so yes, I mean, we will continue to be very, I will say picky, I guess, I've run some of these transactions because we know how good our company is. So but the opportunity to step up on that is definitely there. Operator: And our last question comes from Vivek Arya of Bank of America. Blake Friedman: Hi, this is Blake Friedman on for Vivek. Thanks for taking my question. One of the questions on the China smartphone market. I know in the past it's been hard to precisely nail down share. [Inaudible] So how do you make that determination in the future on how many orders to fulfill? So there no inventory issues thereafter just walking us through that process would be helpful. Thanks. Kris Sennesael : So in the China market there is still some excess inventory, right? But as you point out, it's a complex market. There are multiple players. Some of that is for the domestic market. Some of that is for the export market. They also have flagship models all the way down to mid-level, low-level, going into 4G and 3G. Obviously, we focus mostly on the flagship level, maybe one or two steps below that, that of course translate with a potential bigger focus on their export markets. But we also of course support them in their domestic market as well. And there is still some excess inventory. It has been coming down. It's improving, our revenue for three, four quarters now with China Android has been up substantially on a percentage basis, not necessarily on an absolute dollar basis, but has been up substantially on a sequential basis on a relative percentage basis. And I think we are, as Liam said, we're seeing light at the end of the tunnel. We are nearing towards completion of the inventory correction. We have the design wins with those customers. We are ready to go. And I think you will continue to see that in the next couple quarters. It's going to be a gradual process. I personally don't believe in a snapback. It's a gradual process. And we're there, we're well positioned, and you will see us there. Blake Friedman: Got it. And then just following up as well, just kind of domestic competition within China. I guess maybe if you can walk us through how you've seen the developments there over the past two to three years, and maybe moving forward what you think domestic competition will be like, I guess two to three years from now. Liam Griffin: Yes, certainly we have the technology to handle the broader markets there and the mobile markets in China. Ultimately, we think that there's an upside opportunity there and the gap is widening from a technology perspective. So you think about kind of the have and have nots there. There's a segment in China that really is lower end. It's great for some consumers, but it hasn't been a driver force. But if you go back to the VOX ecosystem, a lot of opportunity for us to continue to drive that. We haven't been as aggressive as we should be there and we will take a look at that again. But also just throughout the other markets as well that we talked about, there's a lot of energy around mobility. There's a lot of energy around IoT. Some of the markets we talked about before, of course, automotive are great, but the aperture continues to widen. And what happens with us is when we penetrate a segment, we go in hard. And this is where the balance sheet, the tenacity of the team, the scale of our operations, where a lot of our stuff is done in-house, makes us very unique. And it's an opportunity for us to continue to demonstrate the growth curve as well. Operator: Ladies and gentlemen, that concludes today's question and answer session. I'll now turn the call back over to Mr. Griffin for any closing remarks. Liam Griffin: Thank you all for participating on today's call. We look forward to talking to you in upcoming investor conferences during the quarter. Thanks again. Operator: Ladies and gentlemen, this concludes today's conference call. We thank you for your participation. You may now disconnect.

Operator: Good afternoon, and welcome to Skyworks' Third Quarter Fiscal 2023 Earnings Call. This call is being recorded. At this time, I will turn the call over to Mr. Kris Sennesael, Chief Financial Officer for Skyworks. Thank you. Please go ahead. Kris Sennesael : Thank you, Lina. Good afternoon, everyone, and welcome to Skyworks' third fiscal quarter 2023 conference call. With me today is Liam Griffin, our Chairman, Chief Executive Officer and President. Before we begin, I would like to remind everyone that our discussions will include statements relating to future results and expectations that are or may be considered forward-looking statements. Please refer to our earnings press release and recent SEC filings, including our annual report on Form 10-K for information on certain risks that could cause actual outcomes to differ materially and adversely from any forward-looking statements made today. Additionally, the results and guidance we will discuss include non-GAAP financial measures consistent with our past practice. Please refer to our press release within the Investor Relations section of our company website for a complete reconciliation to GAAP. And with that, I'll turn the call over to Liam. Liam Griffin : Thanks, Kris, and welcome, everyone. The Skyworks team continued to execute well during the third fiscal quarter despite macro headwinds, delivering in line revenue, along with solid profitability and strong cash flow. Specifically, we delivered revenue of $1.071 billion, posted earnings per share of $1.73, and generated $306 million of operating cash flow. During the quarter, we continued to advance our technology roadmap and introduced new high-performance connectivity and analog solutions while supporting product launches at an expanding set of mobile and broad market customers. As a result, we expect double-digit sequential revenue and earnings growth in the September quarter. Turning to our quarterly business highlights. In mobile and IoT, we secured 5G content for Android smartphones across all tiers. We delivered Sky5 platforms for broadband CPEs of leading North American carriers. We supported Wi-Fi 7 launches, our tri-band routers for NETGEAR and TP-Link and Powered Bell's Wi-Fi 6E home gateway. In addition, we continue to gain design win momentum with our 5 gigahertz cognitive wireless audio solutions, supporting Samsung's Q-Symphony soundbars. Across infrastructure and industrial, we enabled 5G small cell deployments with a top North American operator and ramped timing solutions for AI data centers at a leading cloud provider. In automotive, we continue to post double-digit year-over-year revenue growth while capturing design for telematics applications across a broad range of manufacturers. And we extended our engagements by leveraging our power isolation portfolio with a North American EV supplier. These highlights demonstrate Skyworks' technology leadership in mobile, while executing on a diversification strategy in high-growth end markets. Additionally, several disruptive market trends are now unleashing new meaningful growth opportunities for Skyworks. For example, generative AI is proliferating on a global scale with rapid adoption, sparking exponential growth in the amount of data accessed from the network edge to the cloud. In turn, this will further drive complexity in wireless infrastructure networks as AI will require higher throughput, more secure connections, lower latency and improved power management. Skyworks is uniquely positioned to benefit from these trends with our advanced integrated solutions, supporting wireless infrastructure, cellular connectivity for mobile devices as well as other leading wireless protocols used in billions of IoT products. With that, I will turn the call over to Kris for a discussion of last quarter's performance and our outlook for Q4. Kris Sennesael : Thanks, Liam. Skyworks' revenue for the third fiscal quarter of 2023 was $1.071 billion, slightly above the midpoint of our outlook. Mobile was approximately 59% of total revenue with broad content gains across our largest customer product portfolio, offset by ongoing weakness in demand from the Android ecosystem as these OEMs continue to reduce inventories. Broad markets were approximately 41% of total revenue. We have another strong contribution from the automotive, infrastructure and industrial markets. Gross profit was $509 million, resulting in a gross margin of 47.5%, in line with expectations. Gross margin was down 370 basis points year-over-year, mostly driven by temporary factory underutilization as we right-size our inventory levels. Operating expenses of $182 million declined 4% sequentially and year-over-year, given our ongoing focus on managing discretionary expenses. We generated $327 million of operating income, translating into an operating margin of 30.5%. We incurred $8 million of other expense and our effective tax rate was 13.2%, driving net income of $276 million and diluted earnings per share of $1.73, exceeding the guidance that we provided during the last earnings call. Now turning to cash flow. Skyworks' business model continues to deliver very strong cash generation. Third fiscal quarter cash flow from operations was $306 million and capital expenditures were $31 million, resulting in free cash flow of $274 million. In fact, for the first three quarters of the fiscal year, we've generated record free cash flow of $1.350 billion and record free cash flow margin of 38%. Also during fiscal Q3, we paid $99 million in dividends and repaid $500 million of our 2023 notes at maturity. Now let's move on to our outlook for Q4 of fiscal 2023. We expect to deliver double-digit sequential revenue and earnings per share growth in the September quarter. Specifically, we anticipate revenue between $1.190 billion and $1.240 billion, at the midpoint of $1.215 billion, revenue for the quarter is expected to increase 13% sequentially. This outlook considers the seasonal impact from major product launches, leveraging our technology leadership, deep customer engagements and world-class in-house manufacturing capabilities. Gross margin is projected to be in the range of 47% to 48%, reflecting the cyclical impact of lower factory utilization, while we are reducing our internal inventories. We expect operating expenses in the range of $178 million to $182 million, down 6.5% year-over-year at the midpoint as we continue to optimize operating efficiencies while making the necessary investments in technology and product development to further enhance our leadership position in mobile and drive diversification and growth in our broad markets business. Below the line, we anticipate roughly $8 million in other expense and an effective tax rate of 13.5% to 14%. We expect our diluted share count to be approximately 160 million shares. Accordingly, at the midpoint of the revenue range of $1.215 billion, we intend to deliver diluted earnings per share of $2.10, an increase of 21% sequentially. Lastly, given our conviction in Skyworks' long-term strategic outlook and consistent strong cash generation, we announced a 10% increase to our quarterly dividend to $0.68 per share. And with that, I'll turn the call back over to Liam. Liam Griffin: Thanks, Kris. Skyworks continues to deliver solid financial results despite a challenging macro environment. At the same time, we have further advanced our cutting-edge technologies and product road maps, targeting leading market segments that allow us to both expand and diversify our customer base. In addition, we are well positioned to benefit from powerful market trends, including the electrification and automation of vehicles, the expansion of the Internet of Things, the emergence of augmented and virtual reality and the rise of artificial intelligence, just to name a few. Looking ahead, we expect to capitalize on these opportunities and deliver growth in our highly profitable business with sustainable strong cash generation. Operator, let's open the lines for questions. Operator: [Operator Instructions] And your first question comes from the line of Harsh Kumar from Piper Sandler. Harsh Kumar : Congratulations, Liam, Kris and the Skyworks team. Solid results and very significant leverage in the September guide. My first question was regarding your largest customer who typically comes out with a new phone in the September time frame, Liam. Can you talk about your content at that new particular phone that might be coming out this time around? Liam Griffin : Sure, Harsh. Of course, I can't give you all the granularity here. But obviously, our engagement and our technical vectors here continue to be sharp. We expect to be among the leaders with our largest customer. We've got -- we have the know-how. We have the breadth of technology. We have the people and the manufacturing capabilities to execute. So we look forward to that, but we really can't give any further guidance, Harsh, as you know. But we certainly feel like our opportunities with our largest customer continue to be very quite large. Harsh Kumar : That's fair enough. Liam, if I can ask about your gross margin, you're working through some inventory that's affecting your margins. But if I look -- let's just say I look forward, what would be some of the drivers that you have to improve your gross margins from where they are? Would they be more sort of industry dependent such as Android and sort of handset unit dependent? Or would there more be kind of Skyworks specific actions that would be bigger drivers of your gross margin? Kris Sennesael : Yes, Harsh, I'll take that question. So first of all, we delivered 47.5% in the June quarter, in line with expectations. And at the last earnings call, I indicated that gross margins were going to trend sideways for a couple of quarters. And so we just guided September 47% to 48%, which is pretty much in line with what I said during the last earnings call. The main issue why gross margins are temporarily a little bit lower compared to the historical levels, which was in the low 50s is mainly because of the macro headwinds and the softer demand environment, especially, as you indicated, in the Android ecosystem, while those customers are themselves reducing their internal inventory levels. And so as the business over a couple of quarters, will eventually get back and stronger, especially in Android as well as our broad markets business, we will see further improvements in our gross margins. In addition to this as well, Harsh, as you know, we are also reducing our own inventory levels on the balance sheet. This is probably something Skyworks specific that will take a couple of quarters. That is also contributing to the underutilization. But once we get to the more normalized levels of internal inventory, we will increase factory utilizations and ramp up the gross margins. I do expect the gross margins, again, over time, gradually improve to the low 50s. And then we will continue to work it towards our target model of 53%. Liam Griffin : Yes. And in addition to that, Harsh, as you may know, on the plus side, if you look at the cash generation that we're putting forth, very, very strong results. We're looking at 30% to 35% free cash flow, and that's sustainable. So you've got the margin hit, which is basically underutilization, but all of that has been paid for. And we have now the upside opportunity with free cash flow. Operator: And your next question comes from the line of Chris Caso from Wolfe Research. Chris Caso: I guess just to start, a general market question, when we've been going through an inventory correction here for a number of quarters. It looks like it be the fourth quarter of double-digit revenue declines on a year-on-year basis. So where do we stand now with that inventory correction at your customers? Are we getting to the point where those customers are getting a bit back to normal? And what does that imply for the next couple of quarters in terms of revenue outlook? Liam Griffin : Sure, Chris. Yes. I mean we do feel that the bottom is here but most of the markets here that we address, and we should be seeing improving financials as we go forward. And if you look at our guide today, it's pretty strong relative to the peers. But also the aperture that we have, not only with the larger players in mobile, which is certainly important, and we're very well positioned. But the broad markets business continues to grow. We're doing a lot of good work in automotive. We're doing a lot of good work in data center, a wide range of customers that are engaged with us that are also going through their cycle. But what we're seeing now is a bit of a turn up. We think it's sustainable. I think it's been a tough cycle in semis and tech in general. But our view is a little bit more optimistic now than it was last quarter for sure. Chris Caso : Okay. And just a follow-up on perhaps, China, specifically, and that's an area where we've heard some more cautious commentary from one of your peer -- from some of your peers. Do you think that demand from your China customers has also turned the corner? And what should we expect there? What are you seeing now? And what should you expect there? Liam Griffin : Yes. It's starting to turn up, Chris. It's not where we want it to be yet, but we've been very, very careful the way we're guiding and have and put kind of pretty low vectors on top line. So I don't think that we're going to be surprised at all in any way. So you look at that portfolio, it's still bumpy. But on the flip side, you have other markets in Android that are doing quite well. Samsung has an opportunity to continue to grow. You've got a few other players out there that are important. Google is another customer has a lot of great opportunity in mobile and other products that we work with. But it does, like I said, it feels like what we're seeing and the dialogue we have with our end customers being more constructive. Operator: And your next question comes from the line of Matt Ramsay from TD Cohen. Matt Ramsay : Yes. maybe you could -- you guys report, obviously, the broad markets business and -- but there's a bunch of different end markets represented in there that I would imagine are seeing one thing I think the semiconductor cycle that you were speaking about has taught us is that different parts of the industry have different cycles that are not in amplitude or X, Y axes trying to be lined up with each other, and they're all over the place a bit. So maybe you could break down what you're seeing in the broad markets business. I would assume maybe stronger in automotive, weaker in some consumer areas. But if you could go through the different subsectors, that would be really, really helpful. Liam Griffin : Yes, sure. I'll give you as much as I can on that. So you mentioned automotive. That's a market that if you look back two, three years ago at Skyworks, you'd see very, very little revenue at all. We're -- now we're well above the $200 million run rate. We expect that to accelerate substantially, a lot of great IP and technology that we brought forth with the Silicon Labs transaction. And also a lot of really organic work inside of Skyworks to drive more opportunities within these vehicles. So that's going to be an important part of the business. It already is. If we look at some of these other new markets, cloud, for example, we've got design wins in that area now. We're doing extremely well in an important category in Wi-Fi 6 and Wi-Fi 7. It's going to be a grower in the industry. I think it's going to be meaningful for the RF players with Skyworks being certainly at the top of the pack. And it's just a lot of general diversified products that we came in with the slab transaction that just very, very broadly, which has a number of design wins across multiple categories that's also growing. So good stuff there. Plenty of room to go. I mean all these markets that we're dealing with have pretty, very significant TAM opportunities for us to grow into. So we're excited about that. We've made a lot of strategic additions in our sales force as well to try to penetrate more of these new markets and create that diversification vector. So we feel good about it. And we're just going to have to -- you're going to have to see it in the numbers, but we're certainly driving to those outcomes and expect we can do it. Matt Ramsay : Just as my follow-up, Kris, maybe you could talk a little bit about your view into OpEx in the next few quarters. I think it was a hair below where we had modeled it anyway. And with some of the gross margin pressure given the utilization, maybe that makes sense. But there's a lot of opportunity ahead for you guys as well, particularly in the broad market to invest in. So if you could just kind of level set us on the next few quarters on the OpEx line, that would be helpful. Kris Sennesael : Yes. Thanks for that question. And so we can't control the macro, right? And we can control some of the softness in some of the end markets that everybody industry is going through, but we can control, of course, our own operating expenses and the investments that we make in the business. And there, again, we're not hesitating. We are going to continue to invest and play to win. But at the same time, we're going to continue. And Skyworks is pretty good at that, continue to focus on efficiencies and really spending the dollars where we get the biggest bang for the buck. And as you saw from the prepared remarks, we have been able to trim down a little bit the OpEx, again, without cutting into our key technology development and product road maps, just focusing on effectiveness and efficient processes. Some of that was also we reduced a little bit of the variable compensation because of the top environment that we play in. That will kick back a little bit as we start the new fiscal year in the December quarter. But overall, I feel good about the level of spending that we do in support of our growth. Operator: And your next question comes from the line of Edward Snyder from Charter Equity Research. Edward Snyder : A couple of questions, if I could, please. First, there's been a lot of talk earlier this year that Skyworks is going to lose some share in Wi-Fi and the high-end handsets, not the CPE units or the stuff that goes into homes with handsets. And I guess there's some basis for that given how much content you have. I think you have and have had all the remote PAs for both 5-gigahertz and 2.5 as well as some flagship phones. Maybe you could provide a little color on that. Should we expect your share to moderate a little bit in the second half of this year? Do you feel like you're not giving up anything there given kind of your dominance of that space over the last several years, actually? Liam Griffin : Yes. Ed, that has been a stalwart within the business and the Wi-Fi cycle is very strong. We have great position, 6 and going into Wi-Fi 7. I mean, you know these technologies, they're not easy, and there's a big leap between those two cycles, but we're in great shape. There's certainly a tremendous amount of consumer activity that hasn't been consummated. Wi-Fi is a really important technology. I think everybody knows that. And it's used in so many different applications that we try to really deliver the best solutions. And that's been very powerful for us and our customers like the technology. And I think we've got a great opportunity over the next several years. Edward Snyder : Okay. And if I could, the transmit DRx module, which is quickly -- it already has become one of the most lucrative modules and some of the high-end phones out there. You guys kind of own that space, but it's been really clear in the last year or so, that the competition for that spot has increased dramatically. I think even Avago is now trying to get into that. I know Qorvo tried to fill a piece. Qualcomm's always talked about, et cetera. Incumbency has a lot of inertia with it. We've seen that year after year after year in iPhone. Is that still the case of this? Because the flip side of this, we haven't seen incumbency really help anybody in the ultra-high band. That shares bounced back and forth. You had some of it last year, Qorvo and Avago split it. This year, Qorvo is getting a little bit. So I'm just trying to get a feel for is incumbency worth more in the transmit diversity section, do you think -- and think you'll continue to dominate that spot? Liam Griffin : Yes, I would look at it at a high level, not necessarily any 1 specific customer, but performance wins and flexibility wins and supply chain wins and having incredible people on our team that can work shoulder to shoulder in the lab to create amazing outcomes. And I think that really is what differentiates us. And it's not just talk. I mean these are real actions, the people in our fabs. Our factories we're using our own technologies, as you know, whether it's BAW, TC-SAW. All those recipes are really homegrown. I think it makes it unique for us. Our customers love it because they have a voice in the product. And if there's any fine-tuning or tweaking, technically, we could do it. So we love that. And some of those products that you mentioned, you know probably more than anybody. These are really, really hard products, really difficult with demanding customers. But if you're able to handle that and hit that fast ball, it's great for the customer, and it's great for the supplier like us. So we're looking forward to more of that. We love challenges, and we're ready to do more. Operator: And your next question comes from the line of Vivek Arya from Bank of America. Blake Friedman : This is Blake Friedman on for Vivek. I might have missed it in the prepared remarks, but I was hoping you could provide what percent of revenue came from your largest customer. And in addition to that, if you're able to quantify the percentage of your broad market sales that come from this largest customer, that would be helpful? Kris Sennesael : Yes. So the largest customer in the June quarter was approximately 64% of total revenue when -- if you do the math correctly, you will see that's kind of flattish, slightly up, maybe 1% on a year-over-year basis, which clearly illustrates that we continue to win big with that large customer. And as you indicate, yes, we went with that customer, not just at the phone, but in every product that they have and every product that brought to the market and that they will bring to the market in the future. And so you will find not only Skyworks content in the iPhone, but you will also find it in the iPad and in the iMac and in the home part and in other products that it will bring to the market. And that's roughly on or about 15% of that revenue with the customer. Blake Friedman : Got it. Helpful. And then just maybe a longer-term question thinking about the recovery of certain aspects of the business. I know you derisked your China Android exposure early into the cycle, I believe they only account for 5% of sales or so. So as the market normalizes, I'm just trying to get a perspective on how we should think about your long-term China and broad disclosure in terms of total revenue? Kris Sennesael : Yes. So currently, it's very low, right? As you point out, yes, China is less than 5% of our revenue. Samsung is less than 5% of our revenue. We still have Google, but also currently less than 5% of our revenue. As we all know, there is inventory overhang at most of those customers, they -- especially inventory overhang at the phone level that needs to be clear, it's improving. We see higher demand, higher bookings from those customers, but it's improving slowly. Eventually -- and it's hard to predict the timing, but towards the start of 2024 that will be done and then there will be tremendous upside for us because we continue to win designs with those customers. And again, as that business will start ramping again, we are well positioned. Operator: And your next question comes from the line of Christopher Rolland from Susquehanna. Christopher Rolland : Thanks for the question. I would love to get into inventory and DOIs and play into your gross margins and underutilization. You kind of hit on this, but would love a little bit more detail in terms of your outlook longer term. So ultimately, where do you guys want your DOIs to go? When do you think you can get there? And I believe the assumption should be gross margins would kind of hang around here for a while until you reach that level? Is that the correct assumption? Kris Sennesael : Yes. So first, on inventory, we have now two consecutive quarters where inventory came down slightly in absolute dollars despite the fact that this was our two slowest seasonal quarters. Looking forward to September and December with much stronger revenue and strong sequential revenue growth into September and further into December. We will continue to substantially bring down inventory in absolute doors and of course, on higher revenue as well in terms of days of inventory. The target is to try to get inventory on or about $1 billion or slightly below that. And -- but to your point, it will take a couple of quarters for us to be able to do that. And so the gross margin will trend sideways for a couple of quarters until we get through this inventory reduction on our side. And until, of course, the overall business starts picking up again, as we discussed with Android, the large customer, stronger tailwinds in the broad markets business and then the gross margin will start picking up again. Christopher Rolland : And perhaps one for Liam. You guys haven't emphasized at least on your call, your opportunity in BAW in some time. How are you guys feeling about that? I think you guys have done well, putting it into diversity receive. But would you expect some standalone BAW opportunities to kind of move the needle this year? Liam Griffin : Yes, absolutely. We have certainly the most significant customers in very good shape and a lot of great development, shoulder to shoulder work, and that's been going well. But there's also BAW deployments in other markets that we can dive into, even in some of these things, access points and routers and infrastructure products. Think of BAW as a technology, not a product. So it's a very difficult technology and only a few companies know how to do it and also the manufacturing scale and the technology there as well is very unique, and there's just a few companies that can do it. But the aperture around bulk acoustic wave filtering is really strategic. It's hard to do, and it doesn't have to be handset only, as you mentioned. And we do have a number of examples even in Wi-Fi and some other markets in infrastructure. So it's a key technology. Not a lot of companies do it. There's certainly folks on this call that are listening to peers that do it, but it's not an easy job. But I think our teams have worked really well. And the aperture that we have is quite wide. We continue to bring on more accounts. We also do a really good job of adopting -- of getting our customers to adopt the higher levels of performance that you get in bulk acoustic wave. So some of that is demonstrated in products and usually in the more difficult and challenging operating conditions, BAW really makes sense, and we're quite good at executing there. Operator: And your next question comes from the line of Joe Moore from Morgan Stanley. Joe Moore : I wonder if you could address any long-term ramifications from Huawei potentially coming back with its own 5G solution? Does that create long-term opportunity for you? Does that create risk to your existing Chinese customers? Just anything that we should think about that affects Skyworks. Liam Griffin : Yes. It appears that Huawei is really off the shelf right now. So it's not even in the forecast. Having said that, there's still opportunity for the China market to grow. Kris mentioned it a little bit. We talked about the opportunity for Android to turn back up and you get the Oppo, Vivo, Xiaomi players. So there's a lot of opportunity there. But Huawei itself as it is at this stage, it's really a nonstarter, could change. But in today's environment, it's really not a customer that we're working with. Operator: And your next question comes from the line of Srini Pajjuri from Raymond James. Srini Pajjuri: Kris, you alluded to the December quarter growing as well. So given that we're coming off of a cyclical trough in Android, should we expect December to be somewhat about seasonal? If you can talk about directionally how you're thinking about December? That will be helpful. Kris Sennesael : Yes. As you know, we only guide one quarter at a time, and so I'm going to stick to that. But directionally, yes, we do expect December to be up sequentially following a normal seasonal sequential growth patterns that we've experienced in the past. Srini Pajjuri: Okay. Got it. And then maybe for Liam. Liam, there has been some news about China banning gallium and the germanium exports. Just wondering, given a lot of your products you use those materials. Just wondering if there's any impact that you see in the short term on that. Liam Griffin : Yes. We saw the note there. And I will tell you, there's really no risk for us right now. We understand those materials. We've been using them for a while. And our teams have looked deeply at this and looked at the opportunity, and we should be fine. I wouldn't worry about it. We've assessed that there's very little risk to the business we're experts in these solutions and the materials behind it. So it's not -- in our view, it is that something to worry about. Operator: And your next question comes from the line of Karl Ackerman from BNP Paribas. Karl Ackerman : I know the seasonality is a bit thrown out the window in the current down cycle. But I was hoping you might be able to comment, Kris, on the outlook between mobile and broad markets in September, particularly broad markets, broad markets is usually up, but I think we're going through a little bit of excess inventory. So if you could just highlight perhaps your outlook between mobile and broad markets for September? That would be quite helpful. Kris Sennesael : Yes. So obviously, September is a very strong mobile quarter, especially with the content that we have at our large customer and a big ramp that we have supported over the last 10 or 12 years. And so most of the sequential growth in the September quarter is coming from our mobile segment broad markets might be flat to slightly down a couple percent on a sequential basis for the reasons that you just mentioned, right, there is a little bit of inventory overhang in some of those end markets, very similar to what our peers and competitors have indicated over the last two weeks at their earnings calls. We are obviously not immune to that. Although, again, I think our broad markets business, we are -- as Liam indicated earlier, we are well positioned. There's a couple of spots, including automotive, right? That continues to grow double digit year-over-year. But overall, there's a little bit of inventory overhang that needs to be flushed out in the next couple of quarters. And then broad markets will start growing faster as well. Karl Ackerman : Got it. I guess maybe just to follow up on that, if I may. If you could just speak broadly to how your inventory looks outside of the handset business. Again, it sounds like we have some inventory depletion that is still needed to reoccur. But the flip side of that argument then is how do you refill the channel once the channel is depleted, perhaps that exits perhaps it's more clean channel exiting the year. Just any thoughts into 2024 at a higher level in terms of how you look at broad markets once this inventory overhang abates? Kris Sennesael : Yes. And maybe first, a clarification, right. A lot of the inventory overhang for -- as it relates to Skyworks is not in the distribution channel at the component level. We typically manage that proactively and try to keep inventory at the component level, at a healthy level. The issue is more that certain customers put components into products and then the products didn't fully sell through to the end customers at the level they were expecting. And so that needs to burn off. As I said, like it's probably going to take a couple of quarters. But to your point, yes, once that is done, business will come back and will probably come back stronger as we will transition from under shipping to potentially shipping in line with end customer demand, and that will, by its self, fuel the growth. Operator: And your last question comes from the line of Ruben Roy from Stifel, Nicolas. Ruben Roy : Liam, when you went through the segments or the various units in the broad markets piece, you didn't talk about communications infrastructure. And I think that historically, if you look at core Skyworks and then you add on top some of the timing stuff that you got from the I&A acquisition, that was probably a decent chunk of the business. And so I was wondering if I'm right about that. And then secondly, if you can give us an update on what you're seeing. It sounds like that's a pretty tough market right now and not a lot of visibility rest of this year and maybe even into next year. So would love to kind of understand how you're thinking about that business. Liam Griffin : Yes. No, great question. Actually, I should have given that answer already. But no, we actually have meaningful numbers in the infrastructure side. And actually, in the last quarter, we actually had a record in the infrastructure side. So with all of the other chop that we see in handsets and some of the consumer products, the infrastructure business is actually quite, quite strong. There's a lot of room for us to grow into that portfolio. We have very good relationships, and the infrastructure industry tends to be a little bit cyclical, and we're starting to see more opportunity there. Now some of that is just moving further up in 5G in other markets and even some of the upgrades that we see in Wi-Fi and technologies like that. So they're all important to us, but infrastructure is still very solid, and we expect that to be a driver in '24. Ruben Roy : Okay. Okay. And then I guess just as a quick follow-up, Liam, kind of another high-level question around sort of the macro and how you weigh that against design activity. It sounds like things are going well in some of these new areas that you're addressing, auto. Obviously, Wi-Fi has a cycle coming up. But I mean, generally, outside of mobile, if you look at broad markets, how would you assess design activity sort of as you look into the second half of the year versus maybe this time last year? Liam Griffin : Yes. I tell you, it's really getting better. The design win activity is better, the customer engagements and discussions that we're having are getting better and more forward-looking. The portfolio is broader than it ever has been. We've got a lot more talent in the organization. Operationally, we've gone through some cyclical hits here with depreciation that we talked about with CapEx, but that's turning into a cash flow play right now that's going to really drive the business and allow us to put forth more powerful investments. So we feel good about it. And I think the pieces can really drive a great 2024. We're getting through these quarters right now, the business is starting to improve, and we expect to have double-digit performance as we go forward. Operator: Thank you. Mr. Griffin, there are no further questions at this time. Please proceed. Liam Griffin : Well, thank you all for participating on today's call. We look forward to talking to you at upcoming investor conferences. Thank you. Operator: Thank you. Ladies and gentlemen, that does conclude our conference for today. Thank you all for participating. You may all disconnect.

Operator: Good afternoon, and welcome to the Skyworks Solutions Second Quarter Fiscal Year 2023 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: Thank you, [Joel] (ph). Good afternoon, everyone, and welcome to Skyworks’ second fiscal quarter 2023 conference call. With me today are Liam Griffin, our Chairman, Chief Executive Officer and President; and Kris Sennesael, our Chief Financial Officer. Before we begin, I would like to remind everyone that our discussion will include statements relating to future results and expectations that are or may be considered forward-looking statements. Please refer to our earnings press release and recent SEC filings, including our annual report on Form 10-K for information on certain risks that could cause actual outcomes to differ materially and adversely from any forward-looking statements made today. Additionally, the results and guidance we will discuss include non-GAAP financial measures consistent with our past practice. Please refer to our press release within the Investor Relations section of our company website for a complete reconciliation to GAAP. With that, I'll turn the call to Liam. Liam Griffin: Thanks, Mitch, and welcome everyone. The Skyworks team executed well in a challenging market environment, delivering second quarter revenue above consensus estimates with solid profitability and strong cash flow generation. Looking at Q2 in more detail, we delivered revenue of $1.153 billion. We drove gross margin of 50%, and operating margin of 33.5%. We posted earnings per share of $2.02 and we generated $412 million of operating cash flow. In addition to the financial results, we expanded our design-win pipeline, reflecting our success in diversifying our customer base and product portfolio. Across mobile and IoT, we delivered Sky5 platforms for Samsung's newly released smartphones, we launched WiFi 6E and WiFi 7 gateways for CommScope and ASUS, and we secured 5G content with a mobile computing leader. Across infrastructure and industrial, we enable small-cell deployments with the Japanese telecommunications company. We provided enhanced Power-over-Ethernet functionality to Cisco for their enterprise networks. We shipped programmable timing solutions to the top U.S. satellite provider and leveraged our expanding industrial product suite with the leader in smart meter technology. In automotive, we continue to post year-over-year revenue growth, while capturing EV onboard charging content with a top European supplier, and ramping digital radio products with a leading Korean OEM. These engagements highlight the increasingly diverse and expansive nature of our business, supporting the broadest array of customers and applications in our history. Several key market trends underscore the growth potential of advanced connectivity in the rapidly evolving EV industry. For example, WiFi continues to expand globally as the world's most affordable method of connecting the unconnected. Cisco forecast that number of hotspots worldwide to reach 600 million this year. And as a market leader, Skyworks is uniquely positioned to benefit as deployments expand and the shift to WiFi 7 drives increasing complexity. In addition, the average U.S. household today has more than 10 wirelessly connected devices. Each of these devices requires fast connections, low latency and efficient battery life. All enabled by our integrated solutions. Further, the market for electric vehicles is expected to expand four-fold by 2027, leveraging our power isolation platforms, which are becoming a leading choice for global EV manufacturers. Skyworks' success in enabling these major technology transitions is underpinned by increasing demand for our leading-edge systems solutions, differentiated by performance, integration, and most importantly, customer value. Moving forward, Skyworks is strategically equipped to capitalize on the rapidly changing connectivity landscape with an expanding set of customer relationships built over more than two decades, global scale and world class manufacturing capabilities, a seasoned and talented workforce with a proven record of execution across multiple semiconductor cycles, and an efficient cash flow engine that funds innovation while providing consistent cash return. With that, I will turn the call over to Kris for a discussion of last quarter's performance and our outlook for Q3. Kris Sennesael: Thanks, Liam. Skyworks' revenue for the second fiscal quarter of 2023 was $1.153 billion, exceeding consensus estimates. Mobile was approximately 60% of total revenue with year-over-year revenue growth at our largest customer, reflecting growth content gains across their product portfolio. This revenue growth was offset by weakness in demand from the Android ecosystem as it continues to destock inventory. Broad markets reached 40% of total revenue for the first time, with a strong contribution from the automotive, infrastructure and industrial markets. Gross profit was $577 million, resulting in a gross margin of 50%. Operating expenses of $190 million declined on a sequential and year-over-year basis, given our focus on managing discretionary expense. We generated $386 million of operating income, translating into an operating margin of 33.5%. We incurred $13 million of other expense and our effective tax rate was 13.4%, driving net income of $323 million and diluted earnings per share of $2.02, in line with the guidance that we provided during the last earnings call. Now turning to cash flow. Skyworks' business model continues to deliver very strong cash generation. Second fiscal quarter cash flow from operations was $412 million and capital expenditures were $45 million, resulting in a free cash flow of $366 million and cash flow margin of 32%. Through the first half of the fiscal year, we've generated record free cash flow of $1.1 billion and 43% free cash flow margin. Given our consistent level of profitability and lower CapEx spending, we expect free cash flow margin to remain well above our target of 30% for the fiscal year. Also, during fiscal Q2, we paid $99 million in dividends, repurchase $9 million of Skyworks stock and repaid $200 million of our variable-rate term loans. In addition, we increased our cash and investment balance to almost $1.1 billion to provide sufficient liquidity to repay $500 million of bonds that will reach maturity during fiscal Q3. Now let's move on to our outlook for Q3 of fiscal 2023. Taking into account the ongoing challenging macroeconomic environment and a slower than expected recovery and inventory destocking, especially in the Android ecosystem, we anticipate revenue for our third fiscal quarter between $1.05 billion and $1.09 billion. Gross margin is projected to be in the range of 47% to 48%, reflecting the cyclical impact of lower factory utilization, while we are reducing our internal inventory levels. We expect operating expenses of approximately $183 million to $187 million, down sequentially and year-over-year as we are optimizing operating efficiencies. We will continue to make the necessary investments in technology and product development to further enhance our leadership position in mobile and drive diversification and growth in our broad markets business. Below the line, we anticipate roughly $13 million in other expense and an effective tax rate of 13.5% to 14%. We expect our diluted share count to be approximately 160 million shares, accordingly at the midpoint of the revenue range of $1.70 billion, we intend to deliver diluted earnings per share of $1.67. And with that, I'll turn the call back over to Liam. Liam Griffin: Thanks, Kris. Skyworks has delivered solid results through the first half of our fiscal year, demonstrating strong profitability and record free cash flow generation. With deep customer engagements, underpinned by decades of technology investments in scale, Skyworks is well-equipped to lead and continue to outperform. Moving forward, the Skyworks team remains focused on driving operational efficiency while leveraging leading-edge technologies to capture opportunities across a dynamic market for connectivity. That concludes our prepared remarks. Operator, please open the line for questions. Operator: Thank you. Ladies and gentlemen, we will now begin the question-and-answer session. [Operator Instructions] One moment please for your first question. Your first question comes from Ambrish Srivastava with BMO. Please go ahead. Ambrish Srivastava: Hi, thank you very much. Excuse me, Kris and Liam, you guys have spoiled us. I've to go back -- I don't know, eight, 10 years to see a four-handle on gross margin, and you have navigated through many quarters of sequential decline, even I'm going back 10 plus, 15, 20 and you have still been able to hold margins. So my first question is, what's going on on the margin front? Is it pricing, is it something structurally different this time versus now going back to last eight, 10 years? Kris Sennesael: Yes. Ambrish, well I will take that question of you. And so, first of all, Q2 we delivered 50% gross margin, which was within our guidance range. But we started already seeing some of the underutilization charges hitting our income statement in the second quarter. For Q3 -- fiscal Q3, we guided 47% to 48% as we are experiencing 400 basis points to 500 basis points of underutilization charges, which are partially offset by ongoing cost reductions and operational efficiencies that we're driving. And the reason for the underutilization charges is a slower than expected recovery in the Android smartphone markets. As they continue to work down inventory, their internal inventory in a somewhat soft-demand environment. And initially, we were anticipating a stronger second half of the fiscal year and calendar year, but we do see some signs of recovery, although I would say later and slower than initially anticipated. As a result of that, we are adjusting our factory utilizations across all our factories, that's resulting in those 400 basis points to 500 basis points of under-utilization charges. And I would like to note that, unfortunately, those underutilization charges are having a negative impact on the gross margin, but they do not have a negative impact on our cash flow. And we will continue to generate strong cash flow. And maybe last, we have been operating our business at a slightly elevated level of inventory, in anticipation of a stronger recovery in the back half. Now that the recovery is going to be slower than expected, we are also going to adjust our internal inventory levels and right-size that. Again that doesn't help our gross margin, but it will further bolster our strong cash generation. Ambrish Srivastava: And my -- just my follow-up is on the gross margin side -- inventory you're sitting at 185 days. And target level is 85, if I remember correctly, two years ago or three years ago, you had given that to us. So, if it has to come back to that level, then that headwind could sustain for more than a quarter, it could be a couple of quarters before inventory at least two, three quarters before it normalizes. Am I thinking about it the right way? Kris Sennesael: Yeah. You think about it the right way. Well, first of all, inventory came slightly down already in Q2, but days were up on lower revenue. And so, days will always be elevated in our two slowest seasonal quarters and we'll improve in our stronger seasonal quarters. But we will bring down inventory in absolute dollars as well as in days of inventory on a normalized level. And that of course will -- as a result of that, the gross margin will be on or about the same level for multiple quarters. And then eventually, we'll -- as the business starts improving, margins will get back. And I'll get back to your first question, right? So this is not a pricing issue or this is not a major cost issue. It is just a temporary underutilization issue. Operator: Your next question comes from Blayne Curtis with Barclays. Please go ahead. Blayne Curtis: Hey, guys. Thanks for taking my question. I had two. Maybe I wanted to ask, you highlighted the weakness in Android I think, some other customers have seen some inventory correction to their largest customers. So I was curious, what the percentage was in March and if you also have to work through some inventory at that customer? Kris Sennesael: So the largest customer in March was approximately 64% of total revenue. And in terms of inventory, they manage their supply chain very well. Blayne Curtis: Okay. And then a perspective on the guide on broad markets, just kind of curious, it was down a little bit in March, kind of how do you see that trending in June? Liam Griffin: Yeah. Blayne, I mean, we definitely continue to diversify the broad markets portfolio. It continues to be very strategic for us. We're capturing new design wins every month. Automotive has been strong, we've got a little bit more action going in WiFi 7 and also in some of the infrastructure market. So that business is looking really strong and also the contribution from the I&A portfolio continues to track well. So, still a lot of bright spots there. And the other side of the business, obviously, Kris mentioned, some of the unique headwinds in mobile, but there are also some really dynamic activities going on in the broad market space. Operator: Your next question comes from Vivek Arya with Bank of America. Please go ahead. Vivek Arya: Thanks for taking my question. I wanted to go back to where Skyworks is being the inventory issues. Because Liam and Chris, I remember you guys are very early [indiscernible] and prudent to recognize the weakness in the China market last year. So, I thought you had already taken care of the Android issue. And any new issues what come with your largest customer. So I just wanted to reconfirm that the weakness you're seeing right now is still Android and not at your largest customer? Kris Sennesael: So, Vivek, that is correct. The weakness is at Android. And you are correct, we have proactively managed that as good as we can in terms of our component inventory in the channel. What we cannot control is the inventory level at the customer -- at the phone level and that's where the main culprit is and that we see our customers continue to destock in a soft demand environment. Vivek Arya: Got it. And finally, a follow-up. The fact that you are reducing factory utilization ahead of what is typically your strongest seasonal quarter, should we also be toning down our expectations of mid-teens plus kind of sequential growth that you usually have in September, given all these macro factors? Kris Sennesael: So we only guide one quarter at a time here. But sitting here today, we do expect some good sequential growth in September and December. As you know, our largest customer ramps up their new product launches. And as in the past, we will have some really good content in those phones that will ramp up in the back half of the calendar year. Operator: Your next question comes from Karl Ackerman with BNP Paribas. Please go ahead. Karl Ackerman: Yes, thank you. I guess, Kris, I wanted to just follow-up on some of the inventory discussions earlier. Obviously, June tends to be the seasonally weakest period of the year for you. But do you think you're actually shipping in line with sell-through at this point ahead of this seasonal ramp that you normally see in the second half of the year? Kris Sennesael: So not in the Android ecosystem, we are still shipping below consumption, because they still are burning through excess inventory at the phone level. Karl Ackerman: Got it, got it, okay. And then I guess, just going back to the margin discussion. When would you anticipate underutilization charges to abate, and I guess as you address that question, are there any risks to inventory obsolescence, if you could just discuss that as well, that would be very helpful. Thank you. Kris Sennesael: Right. So this is -- as I've said before, this is a multiple-quarter event because it just takes time to -- for those underutilization charges to actually hit the income statement right. It goes through inventory turns until it hits your income statement. But we are seeing the soft demand environment in Android, it's improving, but slightly slower than expected. We are reducing inventory at the same time. And so, this is a multi-quarter event. In terms of excess and obsolete, we don't see any major risk, we've managed pretty well through that. Liam Griffin: Yes. And just to jump in here, this is Liam. Obviously, this is kind of a macro cycle that we're going through. I mean every company has their own nuances here. But I would remind you, the cash returns are very, very solid. We paid our bills on CapEx. Free cash flow margins are going to be sustainable, 30%-plus. So there is a lot of positives around that. And we'll get through the cycle. We're very, very much focused on execution, and it has been a little tough from some of our customers and so working with them and getting the inputs that drive our business. But we continue to drive design win penetration in new markets, whether they're in broad or even some of our mobile players and IoT players. So there is a lot of positives there. And yes, we're enduring a tough cycle, and I think we're doing the right things here to ensure a better future as we go forward. But the business is still quite solid. Cash returns are robust. We've got customer engagements that continue to ramp, and we're very confident on the outlook. Operator: Next question comes from Gary Mobley with Wells Fargo. Please go ahead. Gary Mobley: Hi, guys. Thanks for taking my question. I want to ask about your largest customer. In the first half of the fiscal year, you've managed to grow your business for them narrowly. So my question to you is based on the content gains that you may see in the next-generation platform from them and all other things considered, do you think you can grow your revenue with them for the full year or more importantly, second half this year versus last year? Liam Griffin: Yes. Yes. I mean we can't give you the specifics, but we absolutely aspire to drive a better position in the second half on continuing to cement new programs that we'll get into 2023 and 2024. Gary Mobley: Okay. And on OpEx management, you're doing a good job with, I guess, tamping things down and if not decreasing your OpEx in this tough time. Is that -- does that involve any, I guess, proactive measures on head count or might it in the future? Kris Sennesael: Yes. So we have been doing that. And you know at Skyworks we have been doing that consistently in the past. We add head count when needed in support of our technology and product road maps. And when things are getting tougher, we adjust. And we've made some downward adjustments in that area as well, of course, making sure that we can continue to support our major customers, our major programs. And it's really focusing on driving operational efficiencies and trying to trim down some discretionary spending. That's what we focus on. Operator: Your next question comes from Edward Snyder with Charter Equity Research. Please go ahead. Edward Snyder: Thanks a lot. I'm a little confused, Liam. Maybe you could clear it up. Do you expect that [model] (ph) to see content up or down or flat in the second half of this year? Liam Griffin: Ed, I missed the first part, Ed. Can you give... Edward Snyder: Sorry, I'm just -- I'm not looking for revenue guidance at all because I just got all tangled up with macro and units and all that. I'm just looking at content in terms of new model releases year-over-year in the second half. Do you expect your content to be up? Or should we expect it to be flat or down? Liam Griffin: Yes. I mean we expect it to be up. That's our game plan. There is a lot of new technologies that emerge in the leaders, and we're hanging around the hoop on every one of them. We've got our teams working with the best customers and fielding the best opportunity. So we'll have to see how that plays out in the second half, but that's definitely where we're headed. Edward Snyder: So in a fantasy world, the flat units year-over-year, no change at all? You would naturally expect to be higher in revenue to largest customer in the second half of the year? Liam Griffin: That would be our plan, yes. Edward Snyder: Perfect. Okay. And then on the Android, I know it's still kind of a mess. But there are some architectural changes going on at some of the flagship phones, even the low-end phones that are involved. I don't want to say integration, but more higher density modules that will show up probably in the next year or so. I know Skyworks has kind of avoided some of that competition in the past just because there was ASPs associated with it. But given that it kind of separates you from a lot of the domestic suppliers in China, is it like -- is it reasonable to assume that Skyworks would participate more aggressively in the Android food chain, say, in 5G smartphone with their entry or flagship in the next two years? Liam Griffin: Yes. Ed, I would say yes to that, because now as those models in Asia -- and Android become more complex, that's right up our alley, right? I mean so we -- our aperture is more to the mid to the high end, and we want to lift those customers and help them create a better engine and a better solution. So we're there. And there's a lot of upside for us in that characteristic because we just -- we've been a little bit more high-end play. But as the complexity gets more and more embedded, that creates more and more opportunities for us. It's really -- it's hard to hit the hard pitch, right? We know how to do that, but we also got to take care of the other business as well. So we feel good about it. We definitely have the know-how to make it work, and I think it will be part of the recovery here as we get through the middle of the year. Operator: Your next question comes from Harsh Kumar with Piper Sandler. Please go ahead. Harsh Kumar: Yes. Hi, guys. I was curious, Liam, if you could give us a sense of how much excess inventory of complete handsets is in the Chinese end market? In other words, I guess what I'm trying to understand is, I know you're under-shipping, but curious how long or how many quarters it might take for sell in [indiscernible] sellout? Kris Sennesael: Right. Harsh, we don't have a specific number on the number of excess inventory on the handset level. But it is a couple of quarters, right? And initially, we anticipated it to be a couple of quarters, but now it might be a couple of quarters more. And that's what we -- that's the feedback we are getting from the customers. That's the feedback that -- and remarks that we see by our peers and competitors. Harsh Kumar: That's fair, guys. And then, for my follow-up, if I can ask you, if you could help us out with broadband. Do you think that broadband might be up in the June quarter on a sequential basis or a year-over-year basis? Any color would be great. Kris Sennesael: Right. So our broad markets business will be slightly down on a sequential basis into the June quarter. Again, it's -- as Liam already talked about that, right, we see certain areas of strength in automotive, some of our industrial markets. But there is some inventory overhang in some of the more consumer enterprise-oriented markets, again, very similar to what has been mentioned by peers and competitors that play in this field. Harsh Kumar: Fair enough, guys. Thank you. Operator: Your next question comes from Ruben Roy with Stifel. Please go ahead. Ruben Roy: Thanks you. Thanks for letting me as a question. Harsh asked the essence of my question, Liam. But I guess specifically on auto, was it up in the March quarter? And do you expect auto to continue to remain strong as you sort of characterized? And the reason I'm asking that is, obviously, there were some long lead times and that type of thing in auto components. I'm wondering how lead times look. Are they coming in and what the inventory assessment is in that market specifically as you think about the rest of the year? Thank you. Liam Griffin: Yes. Sure. Great question. As you know, we actually hadn't done much in automotive two, three years ago, and we're now really making great progress. So the good news there, there's a tremendous amount of new territory that we can cover in automotive. We've already won a number of platforms and programs with key OEMs, EV players, et cetera. The partnership with our I&A business has been a real catalyst there as well for us. So it's a fast-growing part of our portfolio. It has tremendous upside. We have low share relative to the pie. And that's going to make for pretty dynamic opportunities as we go forward. And it's definitely a grower for us this year. Despite all this inventory stuff we talked about, the auto market will definitely grow. Ruben Roy: That's helpful. Thanks, Liam. And then just a quick follow-up on Ed's question earlier. Sort of thinking through design activity for next year, maybe in Android, how would you characterize that? It seems like there are a lot of in services moving to single module right now. Do you -- would you characterize design activity as strong right now, ahead of sort of those ramps? Or do you think that's still something on the [indiscernible] that you guys will be participating in [indiscernible] in later this year? What's the timing on that, I guess, is the question. Liam Griffin: Yes. Well, I mean, as you know, we've been focusing more high end, mid-tier, et cetera. But obviously, now the good news is that our customers want better performance. So we had been a little bit more cautious in engaging in some of the lower-end markets, but some of those products now and the appetite for connectivity is raised, which makes it much more profitable and more in the kind of down the alley for Skyworks. So you're going to see more opportunities for us emerge in the Android cycle. Samsung is doing a lot better. Google is a player now for us. We're doing a lot there, and obviously, the players in China. China has been a little tough, but I think that, that will come back and that will be another catalyst for us. So we know how to make all that stuff and the stuff is not new at all. We know exactly how to handle it. Automotive, again, is a new market that we're doing very well on. And I think we get through some of these macro headwinds, we'll be able to really kind of shine a light on some of these strategic design wins that we have. Operator: Your next question comes from Harlan Sur with JPMorgan. Please go ahead. Harlan Sur: Good afternoon. Thanks for taking my question. On broad markets, I think 90 days ago, you guys had anticipated driving full year growth in this segment. But as you just mentioned, you've got dynamics in the consumer IoT market. I think even data center enterprise, telco markets have continued to soften a bit here. So does the team still believe that they can drive full year growth in broad markets? Kris Sennesael: Yes. I think -- Harlan, I think that's going to be a challenge, right? So we -- what we said is that, we were expecting some modest year-over-year growth on a calendar year basis. But given some of the macroeconomic challenges that we have seen with high inflation and increased interest rates and the impact it has on consumer and enterprise spending, I think this is going to be challenging. Having said that, I mean now I'm looking beyond calendar year 2023 into fiscal 2024, we do expect our broad markets business to grow in fiscal 2024 over fiscal 2023. Harlan Sur: Perfect. And then the team has done a great job proliferating your filter technology. I think last year, I think the team drove about 45% BAW filter attached to your mobile revenues, right? Given the design win pipeline for this year on new model launches in the second half, where do you see that attach rate moving to? Liam Griffin: Yes. That attach rate continues to move higher and higher and there is multiple nodes in bulk acoustic wave. So it's not one that fits all. There's a lot of innovation. There's a tremendous amount of R&D. And one of the other things that we talked about a little bit is our capital intensity. That's a plus for us as well. We've already gone through a pretty significant cycle in raising the capability and technology nodes with BAW. We have a lot of capacity right now that we're ready to roll on. And it's a strategic technology. Not many companies know how to do it. And it can go beyond the smartphone as well. So the applications certainly today are in handsets, but there's a broader set of opportunities where BAW filter is a meaningful part of the strategy and a meaningful part of the performance. So you'll be able to see that more as we go through this year and following years. Operator: Your next question comes from Kevin Cassidy with Rosenblatt Securities. Please go ahead. Kevin Cassidy: Yes. Thanks for taking my question. And just to understand too, as you cut back on utilization, what's the shape of being able to bring that back up again? I guess if it -- your lead times start to stretch out and that's when you build your utilization back up again? Just kind of what's the strategy as business starts to come back? Kris Sennesael: Yes. So a lot of it will depend on how strong the business will bounce back. And once we start seeing -- we already see it, right, some of recovery in the Android market. Once that gets stronger in combination then, of course, will continue to grow our broad markets business, as we just indicated, and doing well with our largest customer, we will start ramping up the factory utilizations. But as I said earlier, it's a couple of quarters and then that will bounce back. Kevin Cassidy: Okay. But to bring utilization back up, it's just a matter of rehiring people? Like it doesn't mean new equipment, you've just turned the equipment off? Liam Griffin: No. The equipment is there. I mean, we basically -- we know how to handle that, the capital, the scale, all that's ready to go. This is just more of a demand issue, but we know how to handle it. And there's going to be a tremendous amount of activity that will go through those cycles and go through those factories leveraging that capital, which is in great position and has a tremendous opportunity over the next several years to populate not only smartphones, as we said, but other bulk acoustic wave type of engine. Operator: Your last question comes from Matt Ramsay with TD Cowen. Please go ahead. Matt Ramsay: Thank you very much, guys. Good afternoon. I guess for my first question, some of your peer companies that also have some pretty high revenue exposure to your largest customer talked about a dynamic of maybe them buying a bit more early in this calendar year, pulling in some of their own inventory purchases and leaving a bit of air pocket before things ramp in the back half. Are you guys -- is some of the stuff reflected in the guidance that type of dynamic? Or am I -- or is it more lean toward Android as you've mentioned in some of your prepared comments? Thanks. Liam Griffin: Yes. It's more towards the Android side at that point the way we go here. And so I think that's maybe what you're saying. But -- and there, again, I mean, we know how to manage through it. Matt Ramsay: Got it. I guess, Kris, I wanted to ask a longer-term thing as my follow-up, and it's on free cash flow. You mentioned that some of the utilization charge, things that are going to happen in the short term with the factories are not cash flow hits. But given the dynamics in the business, could you talk a little bit about how -- are there any specific floors of free cash flow that you're managing to in terms of a free cash flow percentage? And just how do you think you plan to manage the business over the next two, three years on a cash flow basis? I think that would be helpful. Thanks. Kris Sennesael: Yes. No, that's a great question. And so our target model is a free cash flow margin of 30%. And last couple of years, we have been operating the business in the mid to high 20s. And the reason why we were not at 30% is, as Liam just explained, we have made major investments in our technology, in our manufacturing assets, building out very high-class manufacturing capabilities. And -- but looking forward over the next couple of years, instead of running CapEx at 10% or 12% to revenue, we believe that in the next couple of years, we can run the business at mid-single digits as a percent of revenue for CapEx. In addition to that, of course, we will continue to grow the business and run the business at high profit levels. And when you combine that with good working capital management, we believe we will be able to sustainably run this business at 30%, 30-plus percent free cash flow margin. And again, just in the first six months of the year here, we've already generated more cash than we did last year, right, with $1.1 billion of free cash flow at 43% free cash flow margin. But again, sustainably well above 30% for the remainder of -- or the total of the fiscal year. Operator: There are no further questions at this time. Please proceed. Mitch Haws: Thanks for participating in today's call. We look forward to talking to you at upcoming investor conferences during the quarter. Thank you. Operator: Ladies and gentlemen, this concludes your conference call for today. We thank you for participating and ask that you please disconnect your lines.

Operator: Good afternoon, and welcome to the Skyworks Solutions First Quarter Fiscal Year 2023 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 : Thank you, JP. Good afternoon, everyone, and welcome to Skyworks' first fiscal quarter 2023 conference call. With me today are Liam Griffin, our Chairman, CEO and President; and Kris Sennesael, our Chief Financial Officer. Before we begin, I would like to remind everyone that our discussion will include statements relating to future results and expectations that are or may be considered forward-looking statements. Please refer to our earnings press release and recent SEC filings, including our annual report on Form 10-K for information on certain risks that could cause actual outcomes to differ materially and adversely from any forward-looking statements made today. Additionally, the results and guidance we will discuss include non-GAAP financial measures consistent with our past practice. Please refer to our press release within the Investor Relations section of our company website for a complete reconciliation to GAAP. With that, I'll turn the call to Liam. Liam Griffin : Thanks, Mitch, and welcome, everyone. Skyworks delivered solid first fiscal quarter results with revenue exceeding consensus estimates, strong profitability and record cash flow performance. Looking at Q1 in more detail. We delivered revenue of $1.329 billion, drove gross margin of 51.5% and operating margin of 37%. We posted earnings per share of $2.59 and we generated $773 million of operating cash flow, a quarterly record for Skyworks. In addition to the solid financial results, we expanded our design win pipeline in several emerging high-growth segments. In IoT, we extended our broadening technology portfolio across a growing customer base. We partnered with AT&T to launch their first WiFi 6 gateways, unveiled the industry's first WiFi 7 networking system with TP-Link and leveraged our advanced connectivity portfolio to support 6 gigahertz fixed wireless access points at Cambium Networks. Across infrastructure and industrial markets, we integrated Power-over-Ethernet functionality in Cisco modular switches for enterprise networks. We ramp timing platforms to meet high precision and speed requirements for the leading data centers. And we delivered frequency generation and clock distribution technology for 5G massive MIMO deployments. In automotive, we achieved our sixth consecutive quarter of record revenue, strengthening our EV design win pipeline with onboard charger content at a Japanese automotive supplier. And securing design wins for digital radio platforms with a top European OEM. Moving forward, the rapid expansion of mobile network traffic, advances in cloud and edge computing, IoT and the electrification of vehicles are major trends that drive complexity and demand for our highly integrated and customized solutions. A few highlights underscore these remarks. Wireless connections continue to proliferate with mobile network traffic doubling over the past two years. Market estimates project over 25 billion IoT devices to be installed by 2027. The automotive industry is undergoing a revolutionary shift towards electrification of autonomous vehicles with EVs projected to make up over 30% of the U.S. market by 2030. Skyworks is well positioned to capture growth upon these opportunities in transformative markets, leveraging key technologies, human capital and significant scale. Collaborating with our partners and customers, we are leveraging key technologies from PC soft to high-performance bulk acoustic wave filtering, gallium arsenide and state-of-the-art packaging. These skills and capabilities position Skyworks to play a leading role in this fast evolving, rapidly growing landscape. With that, I will now turn the call over to Kris for a discussion of last quarter's performance and our outlook for Q2. Kris Sennesael : Thanks, Liam. Skyworks' revenue for the first fiscal quarter of 2023 was $1.329 billion, exceeding consensus estimates. Mobile was approximately 65% of total revenue with weakness in Android as customers work down their inventory levels. Broad markets was approximately 35% of revenue with a strong contribution from automotive, infrastructure, industrial and the global shift to WiFi 6E and 7. Gross profit was $684 million, resulting in a gross margin of 51.5%, up 30 basis points year-over-year and up 20 basis points sequentially. Operating expenses were $193 million or 14.5% of revenue. We generated $491 million of operating income translating into an operating margin of 37%. We incurred $16 million of other expense and our effective tax rate was 12.8% driving net income of $415 million and diluted earnings per share of $2.59. Turning to the cash flow. First fiscal quarter cash flow from operations was an all-time record of $773 million. Capital expenditures were $64 million, resulting in a record free cash flow of $709 million and a free cash flow margin of 53%. We paid $99 million in dividends and repurchased approximately 1.8 million shares of our common stock for a total of $166 million in the quarter. On a trailing 12-month basis, we have returned $1.2 billion to shareholders through dividends and buybacks. Also today, we announced that our Board of Directors has approved a new $2 billion stock repurchase program, highlighting their confidence in our business and its ability to continue generating strong free cash flow. Now let's move on to our outlook for Q2 of fiscal 2023. We anticipate revenue between $1.125 billion and $1.175 billion. Gross margin is projected to be in the range of 50% to 50.5%. We expect operating expenses of approximately $189 million to $191 million. Below the line, we anticipate roughly $19 million in other expense and an effective tax rate of 12.5% to 13%. We expect our diluted share count to be approximately 159.5 million shares. Accordingly, at the midpoint of the revenue range of $1.150 billion, we intend to deliver diluted earnings per share of $2.02. And with that, I'll turn the call back over to Liam. Liam Griffin : Thanks, Kris. Skyworks delivered solid first quarter results, demonstrating strong profitability and record free cash flow generation. Importantly, our technology-centric operational scale and expanding set of innovative solutions are fueling a robust design win pipeline, positioning Skyworks to continue to outperform. Despite a challenging macro environment, Skyworks remains well positioned with the most diverse customer and solution set in our history, a technically seasoned and talented workforce, a strong balance sheet and predictable cash generation underpinning our ability to fund future opportunities while returning cash to our shareholders. That concludes our prepared remarks. Mitch Haws : Operator, can we begin the question-and-answer session? Operator: [Operator Instructions] Your first question comes from the line of Ambrish Srivastava from BMO Capital Markets. Ambrish Srivastava : That was pretty short prepared remarks, Liam and Kris. Always appreciated. But I just wanted to get a little bit of your thoughts on excess inventory. Qorvo has talked about maybe a whole year before component inventory comes back in check. MediaTek has talked about finished goods inventory and overall 3.5 months, if I remember correctly, winding down to two months. So what's your take on the inventory -- excuse me, your inventory as well as in the channel? And then a quick follow-up on your own balance sheet, inventory was up quite a bit. How should we think about it going forward, Kris? Liam Griffin : Sure. Yes. This is Liam. Of course, at Skyworks, we're a very operational-centric and technology company together. And a lot of our products, the lion's share of our products are done in-house in our own fabs and our own assembly and test locations. So we have really good eyes and ears on the balances here whether it be inventory on our sites or even with our partners. So we are very, very careful to ensure that we are aligning our revenue with natural demand. We always want to be right on step with our customers. I think our teams have done an incredible job. There are markets today right now that -- there has been some excess inventory, and we're just -- we're letting that bleed down. And our exposure there is extremely small. Some of the markets in China are a little bit more volatile. But in those cases, we have very little exposure. So I think it's important to note that we can control our ship and our products, working with the best customers out there, lots of great communication with our customers as well. So everybody is on the same page, and we feel really good about that. And I think it's something we'll continue to work through and be well positioned for the back half of the year. Kris Sennesael : Yes. And Ambrish, as it relates to the inventory on our balance sheet, it's definitely somewhat at an elevated level, but I'm very comfortable with the level of inventory that we have right now. You have to take into account that we came out of a period where supply chains were challenged. We definitely wanted to make sure we support all the customer demand, we've been increasing some of the buffer stocks. And now more recently, of course, we have seen some softness due to some macroeconomic challenges. And we have been adjusting our wafer starts and factory loadings accordingly. We've been doing that for a couple of quarters now proactively. Having said that, again, it's a little bit elevated. So -- but you have to keep in mind that we are level loading our factories, and we do expect, based on known design wins the business to bounce back, especially in the second half of calendar year 2023. And so we will continue to level-load to support those big ramps based on known design wins with many of our customers. We also do expect some of the Android-based business in Korea and China to bounce back in the second half of the year. And so we will continue to make adjustments. I do expect that the days of inventory will come down back to a more normalized level in the second half of the calendar year. Operator: Your next question comes from the line of Blayne Curtis from Barclays. Blayne Curtis : I had two. And obviously, it's a tough mobile backdrop. I think these are pretty good results. Just curious if you can level set us for December. I don't know if you're willing to give how much your largest customer was but then in the March guidance, if you could just talk through how you're thinking about the iOS versus Android there? I mean, does Android bottom in December or March? And any thoughts on the recovery for Android. Kris Sennesael : Yes. So as it relates to the large customer revenue with that large customer was approximately 68% of total revenue. That clearly demonstrates great execution by the team supporting that large customer in the ramp of their new phone lineup. We have some great content in that phone, some really high-performance complex devices, many of those devices leveraging our bulk acoustic wave filtering. And so I think we did really well in the December quarter despite the fact that, as you know, the large customer talked about that, they were somewhat supply constrained due to some COVID-related issues in China. But the team here executed really well in December with that customer. Liam Griffin : Yes. And Blayne, just to follow up. We are starting to get back on the saddle here with the Android portfolio. And as you know, we've actually been holding back because there was some inventory in that channel. I think there still is, but it's been bleeding. And the opportunity for us to have incremental gains there is a very high given the fact that we kind of stay on the sidelines until these inventory levels got to a more normalized position. It's not about the product. The products are ready to roll. We've got everything we need to drive that business, but we just want to be careful as the markets move forward. So -- but we have the design win momentum for sure. Blayne Curtis : And then I wanted to ask you on broad markets. Whether you think that business would be up in March as part of the guidance? And then I know you had a record I&A quarter in September. Just kind of curious how that business is doing trajectory-wise? Kris Sennesael : Yes. So in the broad markets, as we said, was in December, roughly 35% of our overall revenue. It was slightly down on a year-over-year basis as we see similar things that some of our peers and competitors are seeing in that market due to some macroeconomic headwinds, there's a little bit of a softer demand. But on the flip side, we definitely saw strength for Skyworks Solutions in the automotive segment, some parts of the infrastructure and industrial segments. And as we said as well, we see some really good traction in the upgrade to WiFi 6E, which is a big step-up in content as well as some early design wins that are being turned into revenue for WiFi 7. As it relates to the March quarter, we do expect broad markets to be slightly down sequentially, somewhat in line with normal seasonality. Operator: Your next question comes from the line of Gary Mobley from Wells Fargo. Gary Mobley : There have been some teardown reports out there that have highlighted your content associated with the satellite link, I guess, in particular, with your largest customer, somewhere in the order of 4 or 5 specific sockets for you guys. Can you speak to the content opportunity for you, not only the iOS world, but as well the Android world? Liam Griffin : Yes. I think we are engaged with all of the relatives and meaningful applications. And I think if you're referring to Satcom, is that right? Gary Mobley : That's right. Liam Griffin : Yes, sure. Absolutely. So we have the technology, the IP and kind of the building blocks to make that work. It's an early -- it's still early in the global market, but it's definitely an opportunity to bring more scale to units. And so we definitely are -- we're engaged, we're involved. We have the technologies to make some of these work. We also have the partnerships with the companies that can do some of the -- kind of the groundwork to have that network evolve. And it would be a great opportunity for a company like Skyworks. We have many of the building blocks. We understand in the radio frequency space deeply and in the Satcom world as well. So it's an evolving opportunity, and we'll definitely be at the table we are today, but more upside to come as the markets evolve. Gary Mobley : Okay. Just my follow-up, I want to ask about utilization of your supply. It sounds like you won't have any underutilization charges associated with internal supply, at least not for the intermediate term. But maybe if you can speak to external supply, purchase commitments there and your ability to fully utilize those without taking these sort of reserve. Kris Sennesael : Yes, Gary. As indicated before, we have been managing this proactively for many quarters right now. And we are adjusting our factory loadings all the time, depending on the demand that we see. And of course, the earlier you do that, the more attractive you are, the more you can take the time to, of course, accordingly adjust your cost structure, taking out cost where needed. While at the same time, of course, continue to work on operational efficiencies, yield improvements and so on. We've done that with our internal factories. We've done that with our third-party purchases and vendors as well. Having an open dialogue, making sure we have, on one hand, enough capacity in place, but at the same time, not overcommitting as well. And I think the team has executed pretty well on that. Operator: Your next question comes from the line of Toshiya Hari from Goldman Sachs. Toshiya Hari : Liam, I was hoping you could provide a little bit more context, a little bit more color around your broad markets business. I think you talked about record revenue in your automotive business and strength across comms and the industrial end market as well. But specifically, I was hoping you could size those individual buckets within broad markets in calendar '22 where you landed from a revenue standpoint across those key end markets? And how you're thinking about the forward? And on the forward, I guess, the commentary on automotive from most of your peers continues to be pretty bullish and pretty positive. But there are signs of moderation in comms and industrial. So I was hoping to hear what you're seeing in those markets as well. Liam Griffin : Sure. Well, we put a lot of energy into those markets, and we're getting great returns. And the size of the opportunity there is substantial and some of those products and markets that were not really the purview of Skyworks two, three, four years ago, but they are now. So the automotive opportunity for Skyworks has been incredible leveraging some of the IP that we brought in with the SLAB I&A deal, coupled with our own internal developments and design wins and technology partners. We've got a business now that is in the hundreds of millions of dollars a year, really at a time where EV and electrification of vehicles is really just starting. So I think this is going to be an incredible piece for us, one of the markets that will drive our broad market portfolio. The other thing is the IoT space generally is really clicking now for us. And you've heard for years that if we think about our solutions, they're not just handsets. We leverage the handset because it's a great opportunity to demonstrate what benefits we could have as a user but we're starting to drive the same types of technologies in IoT, things like WiFi, for example, GPS, many other sensor technologies that we can populate with our solutions. So some of that core wireless engines don't have to be specific to smartphones, but that technology, that know-how, that scale, the ability for Skyworks to uniquely develop end market solutions, I think, is quite a differentiator. And we're really just getting the wheels turning on those opportunities, but there's definitely quite a large opportunity set for us over the next four to five years. Toshiya Hari : Got it. And then as a quick follow-up, one for Chris on gross margin. In the December quarter, your margins came in in-line. They were up a little bit both sequentially and year-over-year despite revenue declining both sequentially and year-over-year. So curious what were some of the positive offsets in December? And then more importantly, for the March quarter, you're guiding gross margins down, I guess, roughly 100 basis points, give or take. I mean is that primarily revenue or something else going on? Kris Sennesael : Yes. First of all, I'm pleased with the fact that in December, we did 51.5% gross margins, up 30 basis points year-over-year, up 20 basis points sequentially despite the challenging macroeconomic environment. And I think, again, kudos to the team who continue to drive operational efficiencies into our factories with great execution there. And that's really, I think, the main driver there, how we are able to keep up the margins where they are. Again, despite some of the adjustments that we make in terms of factory loadings. As it relates to March, you have a little bit of a mix that comes into play and some of those headwinds, right, the revenue, as you indicated, that translate into the adjustments we make on the factory loadings. When you put it all together, I'm guiding margins in the low 50s. On one hand, I'm not happy with it. I wish it was 53%, and we're going to continue to work hard to get at 53%. But on the other hand, I'm happy with where we are from a margin point of view right now. Operator: Your next question comes from the line of Matt Ramsay from Cowen. Matt Ramsay : Yes. I wanted to ask about sort of inventory levels. I mean there's been tons of conversation through this earnings cycle around inventory levels in the smartphone space. But I'm maybe more curious about the broad markets business. You guys mentioned a couple of times the obvious macroeconomic things that are going on and maybe affecting that business, having it be down a little bit. How diverse is the inventory situation in the broad markets business? Maybe you just kind of walk through what business goes direct, what business goes through the channel and how you're seeing inventory levels just for broad markets in the near term? Liam Griffin : Sure. Sure. This is Liam. The good news here is the broad market portfolio is very diverse, extremely diverse. And it's leading towards a lot of great opportunity in many different end markets. So we have a pretty decent play there. And our teams on the operational side are highly sophisticated, we have our own supply chains. We do most of our stuff in-house. So we have a really good read on inventories are and where they should be. And I think we're managing it quite well. There's certainly some pockets of inventory out there, but really nothing that's going to impede the progress of the business. I think the really cool thing is the number of new customers that we're bringing in. And there's a mix issue when you're doing kind of the $10,000 and $20,000 accounts versus the $1 million accounts that you may have in some of the smartphone space. So a little bit of a different play. But the diversification, the margin profiles are outstanding. And like you know, Skyworks is an operator. We do just about everything in-house. And the ability to do that also includes great supply chain management, our sales teams being online, understanding where distribution plays versus direct, there's a lot of angles there that we can control. It's not easy, but it's the way we work this business. And I think we're starting to really see the benefits there in broad market and the diversification. We've talked about a few major new segments like automotive. Automotive is really tough. You've got to get certification. You got to prove your ability to execute in challenging environments. There's a lot there. We've done all that work. And we've really kind of flexed our muscles in some of the tough cases in mobile over the years, but those -- the efforts there and the knowledge that we've built is applicable for so many other markets. So we look forward to it. There's always going to be a couple of bumps and a few wrinkles, but the diversification is playing well. The customer set is growing. And the lion's share of our top tier customers are really accounts and companies that matter. So we're looking forward to more as we go forward. Matt Ramsay : Really appreciate it. Kris, just to follow up on that topic. You had said in your script about the business snapping back in the mobile business in the back half of the calendar year, and I think we're all kind of modeling that as we work our way through the inventory correction in smartphone. But just seasonally or based on the inventory comments that Liam just made, how do you think about the shape of the year potentially in broad markets? Is that a business that can still grow again for the fiscal year and just how should we think about the shape of that as it comes back? Kris Sennesael : Yes. No, we -- our broad markets business, as you know, it's a $2 billion -- on or about $2 billion business on an annual basis. And despite some of those macroeconomic headwinds and challenges and somewhat softer demand and maybe a little bit of inventory correction that is going on, we do believe that we can grow our broad markets business this year. And I'm not going to repeat what Liam just said, but we have strong design win momentum. We play in some high-growth markets with some really key technologies. And based on all of that, we do believe we can grow our broad markets business. Operator: Your next question comes from the line of Edward Snyder from Charter Equity Research. Edward Snyder : Sounds like you're doing very well at your largest customers and you plan to do well again this year. But a real quick question about Samsung and first of all, did they broach 10% this quarter? More importantly, both in Samsung and in China, you've kind of missed a falling knife there because you don't really participate very much at all. I know that Samsung is converting over to modules in the masters, et cetera. What are your prospects for, let's say, revenue growth because everything is going to be content growth, specifically at Samsung this year because phone demand slowing for them, the ASPs in their flagship are way below where they were when they were doing a custom design. I know that the flip side is true for the master, but you don't play bigger than master. So I'm trying to get a better profile of what you think seriously could occur this year, calendar year '22 at Samsung given all the different moving parts and the fact that luckily you weren't playing much there at all in the last year or two. And then if you maybe you could break that down between flagship and master, what you think about each of those prospects, that would be helpful. And then I had a follow-up, please. Kris Sennesael : Yes, just add. So Samsung was less than a 10% customer. I think it's very well documented. They are going through an inventory burn-off period right now. And again, proactively, we have reduced our shipments to that customer, especially in the December quarter. And I'll hand it over to Liam to provide some more color on Samsung. Liam Griffin : Yes. I mean it's -- look, Samsung is a major player in the industry, and I think they got banged up a bit here in the cycle as did some other Android players. So we've been working through that, Ed. And the irony is like we've actually got some pretty good content in those phones. And so we look forward for the inventory to get cleared and we'll be up and to the right in terms of our business there. But I think some of that is just the volatility that the semiconductor industry and even beyond, I mean, the technology industry is going through and trying to sort through ways to get back on their feet, so to speak. And we're very focused on our own inventory and our own supply chain. So we have eyes and ears. We never want it too hot or too cold. We want to be able to deliver what the customers want. We stepped back a bit on Android as the inventory levels were building in the channel. We didn't want any part of that. Samsung is a great, great customer. Just having some bumps, we're going to work with them and ensure that we can do everything we can to help not only on the technology side, but even on the fulfillment side. So I think that's a temporary blip, honestly, I think Samsung is going to continue to do very well. They're a significant company with a lot of technology and the markets in Korea are very dynamic in cell phones and technologies that we make are vital and viewed as a really critical asset for a person there. So we think that's going to flow over and we'll start to see more accretive revenue in the second half. Edward Snyder : And if I could, you've done particularly well at your BAW. Actually, it was rather surprising to see you go head to head with some of the leading BAW guys and actually win in that. So I'm trying to get my arms around second half of the year, say, content growth. We saw you took the satellite. We don't tear down. We got your satellite part. I think we illustrated that you got twice as many BAW filters in your Tx, your transmit DRx module as last year. And I know it sounds from this call and from what we've picked up is that you're pretty optimistic about second half content. Is it going to be a new class -- should we be looking for new classes of parts like you did with satellite? Or is it going to be more content, especially in the BAW side of the business with some of the existing as capabilities spread because we're also obviously hearing -- Qorvo didn't make no sequel, the fact that they're going to gain some in areas they had before like antenna-plexers. So I'm just trying to get my arms around how competitive the market is going to be in BAW and where you guys think you'll fit in with that given what you've done in the last couple of years? Liam Griffin : Yes. No, that's great. That's great. I mean you know the business and you know the technology. So the nice thing here is I felt like some of the technologies were ready to go, but the market wasn't there, right? The appetite, the consumer appetite or the customer appetite wasn't really jumping all over this technology. But now you're starting to see, as we get more and more nodes and we're starting to get more efficient in delivering high-speed data and it's just becoming an opportunity for us now for -- at a more broad level. And I think you're going to see a small set of players of which we're going to be one, of course, that can do what needs to be done with these incredible customers. I mean the customers today, it's changed so much from a standard cell phone that needs the requirements, the current consumption, the ability to run globally, it's becoming more and more complex, and we love that. That's exactly what we want to see. We want to solve the tough problems. You know from the technology side, and this stuff is not easy, right? When you're bringing in all these disparate technologies into one simple module, apparently simple, right? It's really hard to do. And it's one of the things that our teams here at Skyworks love to do, our technologists, our operational team, all the way to sales. And so we love that opportunity. We love that complexity and the more use cases that emerge are great for us. Kris Sennesael : And just to illustrate that point, our revenue from devices that have BAW filters inside is getting really close to a $2 billion annualized run rate and so it's definitely a major success story, and we believe that number will continue to go up to the ride. Operator: Your next question comes from the line of Chris Caso from Credit Suisse. Chris Caso : A question about the Android business in general and how that translates to linearity through the year. And you said last quarter that you thought that the China business would be the low point in December. What -- did that turn out to be true? Is that true in general for Android either in December or March and if that business is sort of bottoming out, does that have any implications for June? Do you think that March quarter would be the low point in the year for revenue? Kris Sennesael : Yes. I think that's fair. December was low. March will continue to remain low as especially China, Vivo, Xiaomi and to a certain extent, Samsung as well are still going through this inventory burn-off process. But then I think we will start seeing some improvements in the June quarter and then for sure, in the back half of calendar year 2023. Chris Caso : Got it. That's helpful. And maybe a little longer term, as we look at the revenue prospects over the next two years or so after we get through this inventory correction that's going on right now, what do you expect to be the relative growth rates between the mobile business and broad markets? I know you've spoken a lot about the content that you expect to get in the mobile business. But do you expect that you can grow the mobile -- I'm sorry, the broad markets business at a faster rate? And maybe two years out, what do you expect broad markets to be as a percentage of revenue? Liam Griffin : Yes. I would -- definitely, Chris, we're expecting double-digit top line in the broad markets for sure, mid-level top line, and we should be in the teens, I believe, given what we can do, what our products look like and obviously, when the air gets cleaned, the markets will be stronger. I think we're going to be in great shape. And then even on the mobile side, there's a lot of invention and unique technologies that are being brought up in mobile that people haven't really seen yet, but the best customers in the world know what they're doing, and there's a lot of incredible opportunity. For the right types of technologies and the technologies that we make are those technologies. So I think we're going to have a nice combination with, again, our strength in mobile, which is a disciplined approach. We know what we're doing. We're working with the right people. It's not easy. We've made great steps in capital. A lot of our CapEx is behind us right now. It's another key point. We talked about the free cash flow on the call already. And then the diversification theme, Chris, is really playing nicely. You heard questions about satellite, for example, you look at the broad markets. Think about our hundreds of millions of dollars of automotive revenue that we didn't have three or four years ago. So we are -- we have really core technologies that we can take across a broad set of mobile and connected devices, but this is an extrapolation now of new applications. That is really driving the business. And you're going to see more and more of that as we go through it. It's unfortunate right now that the market is just -- we're all in kind of a bit of a slowdown here as we’re emerging, but we've got great stock that's ready to go and design wins that have been cemented, and those will roll out in the second half of the year for sure. Operator: Your next question comes from the line of Karl Ackerman from BNP Paribas. Karl Ackerman : Two questions, if I may. First, I know you have little exposure to China Android right now. But one of the investor concerns is that you may have lost content and so perhaps you won't receive as much of a snapback as some of your peers when China demand eventually recovers. I was hoping you could address why those concerns might not be warranted? I have a follow-up. Liam Griffin : Yes. I mean I'm glad you asked the question. We're ready to roll with Android. We have the technologies. We have the products, but we're not going to fill the channels, right? I mean there was a bit of an overhang there. We want to run discipline in our business. But I will say that inventory overhang is going to -- is starting to abate already. We see it. We have product ready to go, high-quality, top-of-line technology that we can move in. And that's just -- I can't tell you exactly when, but it's definitely happening. And we're ready. So it's an upside in our pocket that we haven't really rolled out. But we've had years and years of great position in China, OVX, specifically, Oppo, Vivo, Xiaomi and then Samsung on its own vector, which is a huge company. And it's just unfortunate that those markets got banged up because they're going through an inventory cycle now. But on our end, we never built the inventory up. We were trying -- we try to meet the demand as it is. We don't want to get ahead of it. And our teams were very disciplined. And you could see, even in the last quarter, we talked about China revenue is below 5%. That's because the market didn't need more than that, and we didn't want to sell more than that. So I do think as we get through this quarter and starting to see towards the second half of the year, more improving macro environment, we will be very well positioned to execute. And if things change, we can move faster if we need to. But it's not a technology issue. It's not an execution issue. It's really just trying to manage the business in the appropriate way for our shareholders. Karl Ackerman : Very clear, Liam. Kris, if I may, a question for you, more of a simple one, I suppose, but what's driving the big step down in CapEx in December? And I'm curious if this implies anything for content as we think about calendar '23. Kris Sennesael : Yes. No. As it relates to CapEx, we definitely expect our CapEx trend to moderate compared to what we have been doing over the last five years. Just as a reminder, the last five years, we were in the 10% to 12% of revenue. We've put a lot of capacity in place. We put a lot of technology-related investments in place, especially as it relates to bulk acoustic wave and now we have to leverage that capacity. We are focusing on yield improvements. We are focusing on die shrinks. We can create more capacity without putting more equipment in place. And as a result of that, you will see a little bit of a more moderate, less capital intense CapEx in the next couple of years here. But again, we feel good about the investments that we make. And it really will help to further improve our strong cash flow that we have already. We started the year very strong. We expect further strong cash flow the remainder of the year, again, based on some moderate CapEx but we could drive our free cash flow over 30% in this fiscal year. Liam Griffin : Yes. Just to reiterate that, the capital base that we have, okay, is -- it took a long time to get to this scale. We did a tremendous amount of work, brick-and-mortar, site level in our own facilities, and it positions us now for kind of a downhill run from CapEx. We still have great technology, great equipment, but it's brand new, right? So we spent that money over the last four or five years, strategically to build up a competency in bulk acoustic wave and other filter technologies, very, very difficult stuff. It's not available in the merchant market. So it was a make versus buy approach. We did the make. And so we developed solutions that are purpose-built for Skyworks and purpose-built for our customers. The great news is the capital is up and running. It's humming along. And sure, there'll be incremental CapEx spend over the next several years, but it won't be at the level that you look back in the last three or four because now those investments are in-house, at scale and running. Operator: Your next question comes from the line of Brett Simpson from Arete Research. Brett Simpson : Liam, I wanted to get your perspective on new 3GPP Release 17 and also WiFi 7 using 6 gigahertz. And when it comes to these upgrades, when do you think they're going to ramp more broadly, particularly in smartphones and consumer devices? And then just maybe from a business perspective, how should we think about the overall RF content when you start to scale up WiFi 7 and Release 17 5G versus today's devices. It seems to be quite big architecture changes. So I was just curious how you think about this and the extent to which Skyworks could benefit. Liam Griffin : Yes. No, that's a great question. Those technologies are just starting to emerge now, and they do add a great deal of complexity, and you mentioned that in your words. The good news here for us is that we've been making in-tandem investments and technology. So we've got, of course, the WiFi cycle that's going from 6 to 6E and WiFi 7. And that has its own set of incredible opportunities and kind of on the launch pad there and the complexity and the newest cycles and the new devices has been incredible for us. So we could definitely hit that and then back on other connectivity nodes, adjacent connectivity the IoT line. So those types of technologies we can deliver to the end market solutions. And that would be a big part of our broad market portfolio. And some of the most relevant players in that space, we've already had design wins with them at earlier stages, and we have a good trusted partnership. So it's definitely further into the year, but definitely an opportunity for us to get into '23, '24, '25 as we look out. But definitely another cycle that we can leverage. And as you said earlier, much more challenging from a technology perspective, but the consumers benefit there would be amazing. So I think those new technologies, they're hard to do. We've got the IP, we've got the know-how and they can create their own cycles within the next set of IoT devices. Brett Simpson : And is there a meaningful step-up in content, Liam just -- I mean, WiFi 7,for example, I think 6 gigs and quite a lot of changes on the modulation side and the MIMO side. So I'm assuming this should be a fairly healthy step-up in IF content base. I don't know if there's any numbers you can sort of here with us on the upgrade to WiFi 7. Liam Griffin : Yes. No, it's hard to handicap the numbers, but it's meaningful. I think you're going through. And it's kind of a pretty long step from from WiFi 6 to 7. There's a lot of work being done there. And so work also means a lot of technology being embedded. So I think we could get a 10% to 15% CAGR on that segment. And then also kind of -- that's just on content. But then if we get the user count up, you've got a double whammy. So that's kind of what we're looking for and anything along the way there is going to be incremental. Brett Simpson : And maybe just one quick one for Kris. Just on the BAW filter, CapEx moderating. Can you talk a bit more about where the capacity for BAW looks today? And how should we think about Skyworks addressing 6 gigahertz with your BAW technology? And are you able to address that going forward? Kris Sennesael : Yes. Again, if you look at the CapEx over the last couple of years in the $500 million, $600 million per year, the vast majority of that CapEx was going into expanding our bulk acoustic wave filter operation, where we have, of course, from a small base, doubled and doubled and doubled again the capacity there. Again, we're focusing really now on driving operational efficiencies, die shrinks, yield improvements, which gives us a lot more capacity, leveraging the installed base of the equipment that we have. And we are not done. I mean we're going to keep expanding that as we see fit. And we do believe that our revenue from devices that has bulk acoustic wave filters in will continue to grow very strongly. And we're ready for that, and we will not hesitate to put more capacity in place if and when needed. Operator: Your next question comes from the line of Harsh Kumar from Piper Sandler. Harsh Kumar : Very incredible results, to be honest with you, in this turbulent environment. Liam, let me ask you about China. I'm sure you're tired of it, but I know that this is hopefully the last question on this topic. You’ve de-risked China completely last go around. I think the message was that it was very close to zero. But what do you think the China opportunity is? And do you even want this business, given the volatility, the geopolitical nature of it and if you can remind us at the peak, let's say, how much it got to, let's say, over the last 5 years, maximum as a percentage of sales. I just want to gauge where you're playing and what you're really going after. Liam Griffin : Yes, yes. Good question. Well, we've always been -- we'll work with anybody that needs our technology. We'll partner with anyone. So there really isn't any bias around where we're going to go in our markets. But China has been a challenge, I think, for ourselves and the peers in the U.S. here. And you think about even back to the Huawei situation with Huawei shutting down, that was a big business for a lot of companies in our space. It's been a volatile market operationally and some of that is COVID and all kinds of things going on. But the technologies and the work that we're doing is applicable for anybody, right? There's no reason why -- I mean the China opportunity is as good as any opportunity. But unfortunately, there had been some inventory here that we've all talked about, not specific to Skyworks, but just in general, where the markets kind of got out of sync and created a bit of an inventory overhang. And that kind of weighs on the sector, I would say. But turning it back to Skyworks, you've heard us talk about our operational efficiencies and our know-how and labs, the fabs approach. It's not -- those aren't just words. That's how we run this business. So we're very keen on what we're doing with our customers. We want to be great partners, but we also want to stay in sync with the market, right? That's really important for us. And this is just a case like that now. I think we've got a situation in China where that was in the inventory. There were some lockdowns. There were a lot of things that would impede the natural flow of revenue and engagement. And that's kind of where that market is. So we're standing ready to step back in. We have the -- it's not a technology issue. It's not even a gross margin issue really. It's about managing inventory and making sure that we're delivering to the right cadence. That's what we want to be able to do. So having said that, long dialogue, I would tell you that we think things will get better. Things will get better as the markets start to really kind of recover. And the technologies that we have are really good and we can populate just about anything out there with the solution suite that we have. So there's really -- at this point, the bad news is flushed out for us and the opportunity to grow into those markets and deliver incremental growth is right there. So we're looking forward to making that happen. And I think things are starting to warm up a little bit already. So we feel good about that as we exit. Harsh Kumar : Okay. Liam, can I just ask maybe the similar question in a different way. Is it fair to say that you mostly look to sell standard products in China? So it doesn't -- it's not a lot of work for you outside of what you already do. And then you look to sort to service those customers while leveraging your own facilities. Is that a fair way to think about it without too much effort? Liam Griffin : Yes. I mean, sure, we can take the business and the technologies. I mean every market has its own flavor and there's different technology nodes, higher or lower to more complex, and we're able to scale through all of it. So I would say that over time, the markets are going to get -- the markets are actually going to embrace higher levels of technology. I think a lot of the stuff that we're talking about right now, two, three years today is going to be much harder, much more difficult and companies like Skyworks, I think, will have an incremental advantage. So I think you've got a China market that solved some macro things that weren't specific to mobile. But as we wake up here and the markets start to recover, the technologies have not sat by on the sidelines. The technologies have gotten more complex and more challenging and more powerful for the users. So the one thing I would say is in the China market, have they been able to catch up with that technology? I'm not quite sure it's there. But I know that we can do that with the partners. So it's not a technology gap with us. It's not a revenue issue. It's really getting the China market to get back on their feet and then get that partnership where it should be, where it's in a natural supply and demand view. And I think we can do that. And we have no reason why we wouldn't want to do more business in China. But all those things that I mentioned, need to kind of clear up a little bit before the markets and the opportunity for us is what we want to see. Harsh Kumar : Got it. And for my follow-up, it's March. You probably know the content for the year because these wins happen about a year before. Units are going to be pretty depressed. I was curious if you could give us a sense of what to the extent that you can, a sense of content this year? And also maybe a sense of 5G units, whether you expect 5G units to be up this year and then one for you, Kris, the 53% free cash flow number, that's a monster number, to put it bluntly. Is there something onetime out here? You talked about CapEx going down? Or is this something sustainable for Skyworks? Kris Sennesael : So Harsh, I'll take the cash flow question first, and then I'll turn it back to Liam. Very happy with the very strong cash flow and free cash flow, obviously, in December. I would say three elements. Our world-class profitability level, 37% operating margin, not a lot of companies and tax base doing that. Secondly, yes, great working capital management, although a good guy and a bad guy, right? Inventory is still somewhat elevated. We will work it down over time. But we definitely had strong collections in the December quarter, which is a little bit of a onetime item. And then thirdly, as we discussed earlier, some moderate CapEx in December and going forward. And the combination of those three, delivered strong cash flow, and we'll continue to deliver strong cash flow. And then I'll turn it to Liam on the other question. Liam Griffin : The content, yes. Exactly. So yes, when we think about content it's -- the way we're seeing it now with the customers that we're working with, especially at the high end. It's not more of the same thing. It's not, hey, we had two devices now, there's three devices. It's really about what's going on inside. We're seeing a lot of innovation and performance and the new suite of technologies. Now I'm not going to give you the time line on this because this is kind of a cycle of improvement. So stay with me on that. But there's no question that if you look at where a high-end smartphone is today and the content that is available versus what we see one, two, three, four, five years out is going to be dramatically different. We really believe it. We have great engagement with customers, and we -- they're all kind of in the same spot. Everyone has a different way to get there. So the units I think are going to continue to be where they are. There'll be more growth. But the content and the usage cases are going to expand. And I say usage cases because that doesn't mean just a mobile phone. If you think about technologies like 5G, they're technology vectors. They connect things wirelessly. It could be an automobile, it be connected to a data center, a HiFi WiFi solution. There's so many different applications with the right use cases. And I think if you think about Skyworks, it's not just about mobile. Mobile is an important vector, but all the other technology vectors that we can work through IoT and other markets will continue to grow. And the other thing that's great about that is they're on their own cyclical path. It doesn't go through the same kind of annual cycle that we do see in mobile, which is fine. But the opportunity to have an uncorrelated path in technologies that are not in a mobile phone. And I think we're going to see that more and more things like automobiles and data centers and some of these other really interesting IoT devices. So keep that in the back of your mind because that part of the business is really moving. Mobile is doing great. We have super technologies. We're going to continue to do well. But the other side of the field is an incredible opportunity for our investors and the opportunity for Skyworks to deliver world-class solutions. So I'll leave you with that. Operator: Ladies and gentlemen, that concludes today's question-and-answer session. I'll now turn the call back over to Mr. Griffin for any closing comments. Liam Griffin : Great. Thank you all. I appreciate your participation in today's call. Look forward to seeing you in upcoming conferences. Take care. Operator: Ladies and gentlemen, that concludes today's conference call. We thank you for your participation. You may now disconnect.

Operator: Good afternoon, and welcome to Skyworks Solutions Fourth Quarter Fiscal Year 2022 Earnings Call. This call is being recorded. At this time, I'd like to turn the call over to Mitch Haws, Investor Relations for Skyworks. Mr. Haws, please go ahead. Mitch Haws: Thank you, David. Good afternoon, everyone, and welcome to Skyworks' fourth fiscal quarter and year-end 2022 conference call. With me today are Liam Griffin, our Chairman, Chief Executive Officer and President; and Kris Sennesael, our Chief Financial Officer. Before we begin, I would like to remind everyone that our discussion will include statements relating to future results and expectations that are or maybe considered forward-looking statements. Please refer to our earnings press release and recent SEC filings, including our annual report on Form 10-K, for information on certain risks that could cause actual outcomes to differ materially and adversely from any forward-looking statements made today. Additionally, the results and guidance we will discuss include non-GAAP financial measures consistent with our past practice. Please refer to our press release within the Investor Relations section of our company website for a complete reconciliation to GAAP. With that, I'll turn the call to Liam. Liam Griffin: Thanks, Mitch, and welcome, everyone. Before reviewing the fourth fiscal quarter results, I want to highlight the significant accomplishments that underpinned another year of record financial performance for Skyworks. Specifically, for fiscal 2022, we generated a record $5.5 billion in revenue, a 7% year-over-year increase. We achieved a record $2 billion in revenue for our broad markets, up 37% year-over-year, representing 36% of total revenue. We drove earnings per share to a record of $11.24, and we returned $1.3 billion to shareholders through dividends and share repurchases. Now turning to the September quarter. Our diversified portfolio and expanding set of customers drove record Q4 performance. We delivered revenue of $1.4 billion, a Q4 record and above consensus estimates. We achieved gross margin of 51.3% and operating margin of 37.6%. And we posted earnings per share of $3.02, exceeding our guidance by $0.12. In addition to the record financial results, we continued building a foundation for long-term growth, with strong operational execution and design win momentum. In mobile, we delivered integrated platforms to the leading 5G smartphone OEMs, including flagship and mid-tier launches at Google, Samsung and others. In IoT, we continue to gain new customers and extend the content. We partnered with Vodafone to launch the UK's first Wi-Fi 6E platform. We shipped into tri-band platforms for Frontier Communications, and we launched connectivity solutions with Amazon, supporting their Wi-Fi 6 Power over Ethernet access points. Across the infrastructure and industrial markets, we provided programmable timing solutions for a leading optical transport OEM, simplifying 400G capacity in data centers and telco networks. We captured new infrastructure wins at Samsung, enabling service providers to expand mid-band capacity and coverage. And we delivered comprehensive timing technologies, delivered to a leading O-RAN small cell provider. In automotive, we achieved another record of quarterly results, with revenue strength highlighting our connectivity and power isolation portfolio. We secured digital radio platforms with a global EV leader, as well as a top European luxury brand. We developed onboard charging solutions for a leading Korean OEM, and we received a key supplier award from Schneider Electric, highlighting the capabilities of our power isolation portfolio. Moving forward, mobility, the shift to the cloud and the electrification of automobiles are all key catalysts driving demand for our unique solutions. The value and utility of mobile data continues to grow, with estimates of 750 million mobile subscribers being added by 2027. In parallel, global cloud revenues are expected to reach $1 trillion by 2028, representing an annual growth rate of 16%. And by 2030, an estimated 96% of new vehicles will feature onboard connectivity and nearly 25 of those vehicles will be electric. Each of these trends require complex connectivity engines, underpinning the need for high-speed, ultra-reliable, low latency performance. Skyworks is uniquely positioned to craft faster, smaller and more efficient form factors, seamlessly integrating and customizing for an expanding set of customers, end markets and applications. As these opportunities emerge, Skyworks is poised to win, with a talented team that has executed extraordinarily well in the face of macroeconomic and geopolitical headwinds. With our market-leading profitability and scale, we are leveraging strategic technologies from high-performance filters to custom gallium arsenide and advanced packaging, while elevating performance for a coveted set of diverse customers. With that, I will turn the call over to Kris. Kris Sennesael: Thanks, Liam. Skyworks revenue for the fourth fiscal quarter of 2022 was $1.407 billion, up 7% year-over-year and up 14% sequentially, driven by both mobile and broad markets. Broad markets were particularly strong at just over $500 million of revenue in the quarter, up 30% year-over-year and representing 36% of total revenue. Gross profit in the fourth quarter was $721 million, resulting in a gross margin of 51.3%, up 30 basis points year-over-year. Operating expenses were $192 million, or 13.7% of revenue. We generated $529 million of operating income, translating into an operating margin of 37.6%. We incurred $15 million of other expenses and our effective tax rate was 5.3%, driving net income of $486 million. Top line growth and execution on margins drove diluted earnings per share of $3.02, ahead of consensus estimates and representing growth of 24% sequentially and 15% compared to Q4 of last year. Turning to cash flow. Fourth fiscal quarter cash flow from operations was $236 million and capital expenditures were $142 million. In terms of capital allocation, during the quarter, we returned $179 million to shareholders, paying $99 million in dividends and repurchasing approximately 800,000 shares of our common stock for a total of $80 million. Let's also review our fiscal year 2022 performance. Revenue grew 7% to a record of $5.5 billion, gross profit was $2.8 billion, resulting in a gross margin of 51.2%. Operating income reached $2 billion with an operating margin of 37.3%. Net income was $1.8 billion, translating into a record of $11.24 of diluted earnings per share, up 7% year-over-year. Cash flow from operations was $1.4 billion. And during fiscal 2022, we returned $1.3 billion of cash back to the shareholders with $373 million in dividends and $887 million in share buybacks. So in summary, the Skyworks team delivered record revenue and earnings per share in fiscal 2022, while fortifying the business with the investments that advance our technology leadership and support long-term profitable growth. Now, let's move on to our outlook for Q1 of fiscal 2023. Given broad demand weakness, we expect revenue to decline on a sequential basis. Specifically, we anticipate revenue between $1.300 billion and $1.350 billion. Gross margin is projected to be in the range of 51.25% and to 51.75%. We expect operating expenses of approximately $190 million to $193 million. Below the line, we anticipate roughly $16 million in other expense and a non-GAAP tax rate of approximately 12.5%. The increase in the tax rate from prior fiscal years reflects the impact of the US tax loss requiring the capitalization and amortization of R&D expenses for tax purposes, starting in Q1 of fiscal 2023. Absent legislative action to reverse the R&D capitalization rules, we expect our full year fiscal 2023 non-GAAP effective tax rate to be consistent with the 12.5% we are estimating for Q1. We also expect our diluted share count to be approximately 160.5 million shares. Accordingly, at the midpoint of the revenue range of $1.325 billion, we intend to deliver diluted earnings per share of $2.59. And with that, I'll turn the call back over to Liam. Liam Griffin: Thanks, Kris. As our record financials demonstrate, our portfolio is powering an increasingly broad set of applications across the market's most essential and fast and growing -- fastest growing segments. Our proven execution and deep customer partnerships position Skyworks to outperform. Moving forward, our revenue diversification, profitability and cash generation will fuel long-term growth, while increasing shareholder returns through dividends and share buybacks. That concludes our prepared remarks. Operator, let's open the line to questions. Operator: Thank you. [Operator Instructions] We'll take our first question from Harsh Kumar with Piper Sandler. Your line is now open. Harsh Kumar: Yes. Hey, guys. Liam, Kris and team, first of all, congratulations. These are amazing results compared to the rest of the people in the industry. Liam and Kris, you talked about macro when you talked about the guide. I wanted to understand how much of a function China and inventory problems in China is, part of the decline for the December quarter, or is US a part of that as well? And then, most folks are indicating that China is pretty off. I'd be curious about what -- how your business is doing in China. So any color you have there would be appreciated. And then, I've got a follow-up? Liam Griffin: Sure, Harsh. Appreciate the question. Yes, it's certainly been volatile across the space. But I would say the China markets have been certainly a unique situation. Now, as you know, for us, we've been much more focused on the higher-end brands, although we're exposed to global markets broadly. What we have seen is, Android markets contract quite a bit. And within there, the OVX portfolios and mobile have been hit quite hard. But the good news for us, Harsh, and I think you know this, is that we've been slowly driving more towards the higher-end brands. The exposure to the OVX markets have been radically reduced and derisked in our portfolio. Even going back to the early days of the Huawei and ZTE and coming down to the OVX markets, we've been able to manage through those headwinds. But I would say that, as we go forward, the portfolio that we have in front of us is outstanding the technology developments that we put forth, the investments that we've made in scale and technology, the diversification themes that we put forth, they are all going to be incredible benefits and tailwinds for us once these markets normalize. So we feel really good about it. China is definitely a weak spot, I think, in terms of relative strength, there's still some opportunity for us, but it's definitely a bumpy part of the landscape today. Harsh Kumar: Thanks, Liam. And then for my follow-up, the question that we're already getting from investors is that, everybody else is sort of hurting in the industry relative to you guys. So the question that we're getting is, maybe, as we start to look past December, do you think that the flush in China, for at least Skyworks, is largely contained in the December quarter, or do you think it's possible that China gets materially worse for you as you look into the March and maybe even the June quarter? Liam Griffin: Yes. It's hard to tell for sure, Harsh. But I would say that, the relationships that we have with the key customers and the visions that we have together on opportunities, we still feel like there can be some recovery here. Of course, this is unique circumstances for the industry, in general, but I definitely would look at Skyworks to outperform on a relative basis. There may be some headwinds here continued, but I expect that our team is going to be able to navigate that better than others. It's not just words. The ability to manage our fabs, to deliver very, very high-performance solutions in our factories and put those together with our customers day to day. So we're not a company that puts products on the shelf and looks for our customers to pull. We work together to drive a demand curve to be very, very much in lockstep with the players that we're with. And hopefully, that has been in the past, and hopefully, we'll continue that we can continue to drive success with our customers knowing that we're a proven supplier and a proven solution for them. Kris Sennesael: Yes. And maybe I would add there that December for China is definitely the low point. It can’t get much lower than that. The question is, when does it switch back on? Is it in March? We expect some of it to start in March or the following quarter. But, again, in December, it's completely derisked. It can’t get much lower than that. Operator: Okay. Next, we'll go to Matt Ramsay with Cowen. Your line is now open. Matt Ramsay: Yes. Thank you very much, guys. Good afternoon. And I guess for my first question, Liam, maybe you could talk to me about the non-mobile business and the trends there? I know there'll be a lot of questions around inventory corrections and whatnot in the smartphone market, in China and with your largest customer, but I wanted to focus on the broad markets business, because it's a bit more diverse. Maybe you could kind of walk us through the different sort of subsegments of that collection of businesses, the stuff that you acquired, the core Skyworks business. And if there's any puts and takes on where you're seeing weakness? I know there's some folks that across consumer devices, there's certainly some weakness. There's been hints at the start of some weakness in industrial, you guys are exposed to data center where -- and wireless, where there's some different trends in different markets. But if you could just kind of walk through the puts and takes there and what you expect that broad markets business to do in the guidance on a sequential basis, that would be really helpful? Thank you. Liam Griffin: Sure. Sure. Good question. Just to kind of kick that off, we ended our fiscal 2022 with a $2 billion broad markets business. So that's really good. 36% of annual revenue there. So a lot of good work going on. But the opportunity there is outstanding. If you look at some of the markets that we have today, really good position, a lot of strength in mobile, and that will continue. But the broad markets business has an entirely different set of opportunities. It's much broader. The technology nodes are more far reaching, and the customer set is extremely large. I think those are important, important points. If you think about where we're going right now, we're making strides in the automotive business. We're making more and more headwind here or more an upside in infrastructure. The IoT portfolios continue to grow, a lot of connectivity in that, but also looking at more industrial applications and industrial customers. So there's a lot going on there in broad markets. And our sales and marketing teams are working every corner of the globe here to drive revenue. There's definitely for Skyworks, a lot of headroom coming from our current base, and we expect that to be a key driver going into FY 2023 and beyond. Matt Ramsay: Got it. Thank you for that, Liam. Just as my follow-up, Kris, a quick clarification in the guide for December, up, down, flat for broad markets. And I guess my second question is, we were talking to the folks at Qualcomm last night, they have a pretty good view of the global smart mobile market given their breadth. And they talked about weakness in mid-tier Android in China, which has been there for a while, sort of expanding to weakness globally and moving into higher tiers of the market, including the premium tier, with customers wanting to hold less inventory basically across the board in smartphone. Is that something that you guys are observing in sort of the premium tier of the market as well? Thank you. Kris Sennesael: Yes. So clarification on broad markets in the guide to December, so it's kind of flattish on a sequential basis, but still up on a year-over-year basis, low single digits. Operator: All right. Next, we'll go to Raji Gill with Needham & Company. Your line is open. Raji Gill: Yes. Thank you for taking my questions and congrats as well on kind of better-than-expected results relative to peers for the December guide. But I'm just curious going back to the December guide and the commentary around China. My understanding that you had significantly derisked your China handset business December of last year, as you started to stop basically shipping into the channel. And China was a relatively small percentage of revenue, 2%, 3%, 4% in terms of smartphones, I might be mistaken there. And so, I'm just curious, the sequential decline in mobile phone when you're kind of your top customers have been ramping pretty well, better than the expectations. So just curious why the smartphone business is down sequentially in Q4, given your top customer ramp and then given your limited exposure in China? Kris Sennesael: Yes. So there's two parts to the business, right? So, there is the large customer and then is Android. Within Android, there are two large players as well. There is China, basically Oppo, Vivo, Xiaomi and then there is Samsung. We definitely have been derisking China for the last couple of quarters, given the COVID-19 lockdowns and the well-documented softness in end customer demand in the China market. But there is also a Korean player in Android where we have been doing really well. We have seen very strong year-over-year revenue growth in fiscal 2022 with that customer. However, that customer is also not immune to some of the softness on the global demand, including some of the European markets. And so, that -- it's very well documented as well there. There is some inventory overhang at that customer and that's definitely having an impact on our December guide. Liam Griffin: Yes. I would also say that, despite the near-term bumps with that customer, there's a great opportunity for content gains, and so we're excited about that. And there's really -- there isn't anything that's going to impede on an effort. So there's a lot of opportunity for us to round that out. I think the China case, we have derisked appropriately, but we have a great deal of opportunity with the other leading smartphone players. So -- and we're -- our teams are all over that. Raji Gill: Yes. Thank you for that. And just for my follow-up, just a question on the inventory, both kind of internal inventory as well as inventory in the channel. So if I look at the absolute dollar inventory, it's up about almost 30% on a year-over-year basis relative to revenue growth of 7%. So number one, I just wanted to get understanding of how you're managing internal inventory? And then, how would you characterize, I guess, smartphone channel inventory or any inventory in the broad market? That would be helpful. Thank you. Kris Sennesael: Yes. So as it relates to the internal inventory, I'm comfortable with where inventory is on our books. Actually, in the September quarter, it came down six days in terms of days of inventory. You have to keep in mind that the products and the solutions that we bring to market are very complex, highly integrated solutions, and we're actually doing more and more in that. That also means that actually, your production cycle times are getting extended as you have to integrate more and more, especially filters, more and more filters into our integrated solutions. In addition to that, I've talked about that before. In a supply chain challenged environment over the last couple of years, we definitely have increased buffer stocks, making sure that we can supply to our customers. In addition to that, we are level-loading our factories. We have seasonality in our business, and we are trying to maximize factory utilizations through level loading. Having said all of that, I think, the supply chain disruptions and the tightness in the supply chain is probably going to get a little bit easier. So that will allow us to potentially in the future, reduce some of those buffer stocks and will further help us to gradually bring down the days of inventory. That's on the internal inventory, on the external. In terms of channel inventory, we manage that very carefully, I would say, that's at a normal level. I think we're -- the bigger issue is some of the inventory at our customers at the phone level, and again, that's been very well documented. There's definitely pockets of elevated inventory at the phone level, especially in the Android part of the business. Operator: And next, we'll go to Gary Mobley with Wells Fargo Securities. Your line is open. Gary Mobley: Hey, guys. Thanks for taking my question and I need to congratulate you as well on a strong finish to the year. I wanted to start off by asking about some customer mix percentages for the fourth quarter. Specifically, what was the mix from your largest customer? And were there any other greater than 10% customers in the fourth quarter? Kris Sennesael: Yes. So our largest customer in the September quarter was approximately 63% of our business. So great execution by the team here, reporting the launch of our largest customer, new products that translated into a 30% sequential growth or a 14% year-over-year growth. I know, there is always a lot of question about is Skyworks game content or not. While those numbers clearly illustrate that we had a major uplift in content in the new products that have been launched by our large customer. Gary Mobley: The other greater than 10% customers? Kris Sennesael: No. That was the only plus 10% customer in the quarter. Gary Mobley: Okay. As my follow-up question, what sort of big or double-clicks into your Q1 guide. So it looks like it's about few hundred million dollars shy of what you would normally expect, given the normal seasonal sequential comp. Can you quantify how much of that is just general market weakness versus what is inventory drawdown from what sounds like your -- on Samsung? Kris Sennesael: I think the biggest culprit is definitely an inventory overhang in Android, right? In China -- I'm talking at the phone level, not necessarily at the component level. China with Oppo, Vivo, Xiaomi and then more, recently as well with our Korean customer. That is definitely the main culprit here. Operator: Next, we'll go to Amber Srivastava with BMO. Your line is open. Amber Srivastava: Hi. Thank you very much. What is the percent of the China Android business for you now, Kris? Kris Sennesael: Very small. Very small. As I said, we've derisked it. We've been bringing it down over the last couple of quarters, because we noticed that there was an inventory overhang building up, and so we derisked it and it's now very small. Liam Griffin: Yes. And that being, largely -- we're talking about China here. Obviously, we have other Android players that are continuing to drive solutions and have some -- I think some really good opportunities that will flow through the year. Amber Srivastava: That's okay. I understand. And so, just to make sure, when you say very small, it's like low single digit as a percent of total sales. And what was it at the peak? And then a quick follow-up, Kris, what's the CapEx for the full year? Kris Sennesael: So in fiscal 2022, we did $489 million, $490 million of CapEx, which was 9% to revenue. So we definitely will continue to invest in the business, but we also will do that in a smart way. And given some of the demand softness that we experience now, we definitely are going to manage our CapEx accordingly. Operator: Next, we'll go to Blayne Curtis with Barclays. Your line is now open. Blayne Curtis: Hey, guys. Thanks for taking my question. I just wanted to ask you, on March, and I know you don't want to guide March probably, but just the moving pieces, obviously, big misses from Qorvo and Qualcomm, but they did both highlight content games at Samsung. That seems to be the one offset for March. So I guess it's two part. How do you feel about your content and growth at that customer? And then if you can, just more thoughts as to the two moving pieces, should the box inventory, I guess, zero, you're shipping basically nothing, but should the Korean inventory situation be done by then? And I guess, your prospects for growth kind of with new business there? Liam Griffin: Sure, Blayne. This is Liam. The content opportunity for us continues to grow. We have penetrated some really unique solutions with our largest customer and really the opportunities going forward are very bright. The engagement is outstanding. And our ability to outperform technically with that customer is continuing, and I don't think that's going to change at all. So we're really bullish on that. When we go back to things like Samsung, I think there's a lot of opportunity there. We just got an odd turn right now the way that market grow it out. But the opportunities continue to be strong. We are, I think, right now dealing with some really nice new technology that we're bringing forth in the portfolio beyond handsets. If you look at where this business is going to go after some of the inventory burns down. And we're very, very tight on that, by the way. We know how to work with the largest customer. We've been doing this for years, and we're very close in terms of the signals that we have that will help us manage inventories, et cetera. But a lot of good stuff going on there, and we should definitely expect from us to do more on the Android side, maybe absent some of the China players. Blayne Curtis: Thanks. And then, I just wanted to go to Matt's question on broad markets and the moving pieces, because obviously, consumer Wi-Fi sounds very weak, maybe service provider and more mixed. And then, you tell me, I guess, I'm curious the direction that the Silicon Labs business is, because I know they were shorted for a while and have more in terms of exposure, maybe more industrial communications and such. So just thoughts on those kind of moving pieces, as to what drove the beat? And then you're not seeing much of a dip in December. Are you seeing weakness in one area and its offset, or are you just not seeing much weakness? Liam Griffin: Yes. So I would look at two things. On the MSF lab portion, really good stuff. I know you've heard it from us before, but honestly, this is a deal that has gone better than we expected and it continues to increase. So we're really excited about that; a lot of new opportunities. But then on the Wi-Fi portfolio, as we start to move through Wi-Fi 6 and 6E, we've got a great lead in that product line. There's a lot of technology that we're bringing to bear. It's higher grade. It's higher performance. Consumers are just now starting to buy into that, think of that Wi-Fi as kind of a cycle similar like 5G. There's a lot of replacement and new engagement around that portfolio, and we have a great solution. So we're feeling good about that. And then another market that's popped up, obviously through the SLAB deal was automotive, and we didn't talk that much about it today yet, but it's a really critical part of the portfolio. We've got a power isolation business that's doing incredible things. We've got customer engagements with names that we wouldn't have had with the Skyworks two or three years ago. So we're really excited about that. The brands are starting to extend the application set is getting stronger, and the technologies that we're populating are really, really critical and unique. Operator: Okay. Next we'll go to Karl Ackerman with BNP Paribas. Your line is open. Karl Ackerman: Yes. Thanks Liam and Kris. I appreciate taking my question. I want to follow up on Blayne's last one, which was your comps in broad markets being flattish for December, that does seem exceptionally strong versus peers after coming off outperformance in September versus your previous guide, I think, to the tune of roughly 10 points. And so, I guess, how much of the outperformance is from some of the backlog you have serviced that I think was initially challenged by match set issues in the last quarter or two, that seems to be loosening up. So, I guess, how much of that outperformance is driven by that? And then I have a follow-up. Liam Griffin: Yes. I mean, there's some gains with kind of unfreezing that backlog. But the truth is, it's really new design wins and new opportunities. And I know we've said it before in other calls, but the organization is really melting now into a period where we've got great technology. We have engagements with customers on both sides, the SLAB side and obviously the core Skyworks, and the business development is going really well. The revenue is growing better than we thought actually, and we continue to see more and more opportunities for growth. And also, you've got pretty solid margins in that portfolio as well. So it's going really well. A lot more to do. I would bet hard on data center and automotive here and that portfolio, that's starting to really ramp. But it's been a great transaction, and there's a lot more to go from there. Karl Ackerman: Yes. No, I appreciate that, Liam. I guess to that point, the I&A division you acquired brought you new opportunities in automotive connectivity and power isolation for electric vehicles and data center hardware. Could you just talk about that? Could you just see click on some of those opportunities, because they seem to be gaining much traction. So maybe any things you might call out on that. Thank you. Liam Griffin: Yes. I mean -- so I'll give you an example. We're dealing with companies like AWS and Google Cloud and data center. That wasn't there a year or two ago. We didn't have that business. We come around and look at automotive, power isolation, really critical technologies. We didn't have those a year ago or two years ago. There's a lot of great stuff going on in the infrastructure markets that we have had a position in, but now we're expanding. And you get deeper into the automotive space, there's just an amazing set of technologies that require wireless and/or high-performance semiconductor products, and that's what we do really well. It also helps us, as we start to move further and further into autonomous, where high-speed connectivity, wireless high-speed connectivity, is absolutely critical. We all know that. So it is really a -- it's a dovetail between great customer engagement, technology and also really diversified end markets that are growing. So we're excited about it. And like I said, we've been outperforming on that transaction. We're putting more investment into that portfolio, because it's returning phenomenally. And there have been some sticky spots with supply chain, and you mentioned that in your question, that was one of the things that would drag a bit, and I think we're getting through it. But it's a different business where Skyworks is a little bit more of a big game hunter approach, and that's fine. But the I&A portfolio is much broader. And with the support and funding from the larger Skyworks, I think there's just incredible things that we can do competitively, and we're looking forward to that. Operator: Next, we'll go to Timothy Arcuri with UBS. Your line is now open. Timothy Arcuri: Thanks a lot. I have two. Kris, I have a question on the December guidance. I mean, even if I zero out China Android and zero out Samsung, the big customer is down about 10% year-over-year, and you were down 30% year-over-year in September. The units at least aren't a really big mystery for September. So I'm just trying to foot that and reconfirm that you actually gained share this launch. I think you were planning to gain 5% to 10% content. And maybe if you did gain the share, could it be that maybe that customer bought parts for this launch much earlier, because of how much money they left on the table during the last cycle due to the constraints. Can you just help us fit all that? Kris Sennesael: Yes, Tim, I think we probably will have to take that offline and go into a deeper dive there. I think you have to take into account that part of the large customer revenue is in broad markets, as we sell many of our solutions into other devices than their phones, and I think that's part of the reconciliation there. But again, the business, as I said before, with the large customer is strong. It was strong in September and continue to be relatively strong in December, as we execute with content gains in the new form lineup and continue to support their ramp. Timothy Arcuri: Okay. Yes. Let's take it offline. I guess then the second question is really on March. And I know there was a question just asked about this, but to ask it maybe a little different way. So seasonality this year, obviously, is a bit wonky, because December is usually not down, and it's down this time. March is usually down low teens, sequentially. I would think maybe it could be a little bit better than that. Can you sort of give us a little bit of a sense on March, just in light of how December is like so much below normal seasonal? Thanks. Kris Sennesael: Tim, so this is a very volatile environment. There is macroeconomic headwinds. There is a war going on in Europe. There is COVID flares. So we're going to stick to guiding one quarter at a time. But, I mean, some of the elements that you mentioned there, of course, could potentially have an impact on the March quarter. We discussed before, it will depend to a certain extent on how the inventory at the phone level gets resolved and when some of that Android business start picking up again. Liam Griffin: Yes. And I will say that, we definitely will have visibility. So we're not blind. We're really close to the customers. And so, we're on top of the transaction. So everything that Kris said is exactly true. And I would just add that our ability to look through the channel and be engaged with our customers and our suppliers is very strong. Operator: And next, we'll go to Edward Snyder with Charter Equity Research. Your line is now open. Edward Snyder: Thanks a lot. Liam, first of all, congratulations on the content gain through largest customer, especially the transmit DRx parts, but I suppose that puts the rest, at least for the next year, the prelaunch rumors of a net decline in content and share loss. Our test around the part showed a lot of our filters, which has been a trending for you over the last several years. I was just wondering, has this brought you to the point where you feel confident about competing for something like a mid-high band module, or is this reliance still on really complex MUX filters put it out of reach unless we see like an RFP architecture change that would pull those modules out. I'm just trying to get a feel for -- you saw really good content gains over the last several years, largely on new parts. So I'm just wondering, if you're going to start looking at poaching off some of the stuff that been around for quite a long time, but you didn't have the technology for in the past. And then, I have a follow-up. Liam Griffin: Yes, yes. Good question and I appreciate that. Yes, I mean, you've heard me say it before, we like to take the fast ball early, right? So we try to really capitalize on the most challenging opportunities and then kind of go downhill, and that's what we've been doing. And we really do our best work in the higher-end, most challenging environments and our design teams are exceptional, and they really enjoy this -- again, they like the hunt as well. So you're going to see us to -- I appreciate your visibility on what we've done already, which is pretty solid and more to go. But our design teams and our engineers are fired up. They want to take more. We're going to try to grow the portfolio with the largest customer, but also with many, many others outside the largest customers. So as you know, performance wins, complexity, resolution wins, having the ability to put that all together and make it look really easy, that's what we try to do, and hopefully, that trend will continue. Edward Snyder: Okay. And then, just as a kind of housekeeping there. By our calculations, that was in excess of about 10% content gain. I just want to check, Kris, maybe if you could give us a reality check on that. Is that in the ballpark, or do we feel like we're a little low there? And then if I could, Liam, should we expect the architectures -- Wi-Fi 7 is coming? And should we expect the architecture of that, especially in phones to shift back to external amps? And if so, can they use SiGe, the frequencies will have to be gas, because Qorvo, obviously mentioned last night, it's an area of growth for them. So I was just curious about the technology breakdown for that and then if you're seeing more competition in that area. Kris Sennesael: Yes. So, first, yes, you did a great job at the teardowns and your conclusion of content gains in excess of 10% is absolutely true. Operator: And our final question comes from Vivek Arya with Bank of America. Your line is now open. Blake Friedman: This is Blake Friedman on Vivek Arya. So just a quick question on your large Korean customer. I know one of your peers last night also highlighted various design wins there. So just curious, from your perspective, if you're seeing an overall expansion of the TAM at this customer or if you believe you're seeing share gains in any way? Liam Griffin: Yes. Honestly, here, we're starting to see an expansion of TAM with the largest Korean customer. That's always been kind of a battle for lower cost versus performance, and what we're seeing is that performance is the driver. And if you look at the incremental user experience between a mid to a higher-end phone is exceptional. And we see it here in the US with the leading player, but it's also a great opportunity for mid-tier. So there's a lot to do there, and I think that's a great opportunity for us with the largest Korean player. We've got the China business derisked, and we've got a great position with the top brand. So we're looking forward to getting through some of the bumps that we're dealing with right now and moving into a stronger 2023. Blake Friedman: Great. And then, just kind of a follow-up to that, maybe more at a higher level outside of the unit we test, more on the content side. At this point with 5G penetration, being about like 55%, 60% of the overall market and your largest customer mostly transitioned to a full 5G suite. I was just kind of hoping you could talk about the future content opportunities as the cycle matures, and more importantly, from generation to generation, what the -- on average maybe the expected content growth should be? Liam Griffin: Yes. I mean, the utility of these high-end smartphones is so critical to the user. So we've been seeing consistently opportunity for growth in what we call content, our technology reach, and we're not seeing that abate. And the nice thing is it's also branching out. It isn't just -- we've done some great work with Bulk Acoustic Wave and TC-SAW and capitalizing on our in-house gallium arsenide, all these unique solutions and bringing them together in a holistic solution that can go into multi-end markets. The good news is, the companies that we deal with, especially the largest ones, they want to push the envelope. They want the performance to get stronger. They want the performance to drive more applications, and that drives more technology reach for Skyworks. So we really don't see that change. And the usage cases around mobility and connectivity, I think everyone on this call, we all know it. It's really vibrant. -- we'll have pockets at quarters where things get bumpy, but the net output here is going to be up onto the right and the technologies and the know-how to put that together and engage with the right customers is, I think, very critical, and it's something that we continually try to improve upon. Operator: Ladies and gentlemen, that concludes today's question-and-answer session. I'll now turn the call back over to Mr. Griffin for any closing remarks. Liam Griffin: Thank you all for participating in today's call. We look forward to talking to you at upcoming investor conferences during the quarter. Thanks again. Operator: Ladies and gentlemen, that does conclude today's conference call. Thank you for your participation. You may now disconnect.

Operator: Good afternoon, and welcome to Skyworks Solutions Third Quarter Fiscal Year 2022 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: Thank you, Joanne. Good afternoon, everyone. And welcome to Skyworks third fiscal quarter 2022 conference call. With me today are Liam Griffin, our Chairman, Chief Executive Officer and President; and Kris Sennesael, our Chief Financial Officer. Before we begin, I would like to remind everyone that our discussion will include statements relating to future results and expectations that are or maybe considered forward-looking statements. Please refer to our earnings press release and recent SEC filings, including our annual report on Form 10-K, for information on certain risks that could cause actual outcomes to differ materially and adversely from any forward-looking statements made today. Additionally, the results and guidance we will discuss include non-GAAP financial measures consistent with our past practice. Please refer to our press release within the Investor Relations section of our company website for a complete reconciliation to GAAP. With that, I'll turn the call to Liam. Liam Griffin: Thanks Mitch, and welcome everyone. Skyworks delivered record third quarter results with double-digit year-over-year growth and revenue and non-GAAP earnings per share, highlighting our resilient business model and disciplined execution. With strong design win momentum across an expanding and diverse customer set, we are well positioned to drive sequential growth into the second half of the calendar year. Looking at the quarter in more detail, we delivered record Q3 revenue of $1.23 billion, above consensus and up 10% compared to last year. Highlighting our content expansion in premium 5G enabled smartphones along with growth in automotive, data center and network infrastructure. We achieved gross margin of 51.2%. We posted earnings per share of $2.44, up 13% year-over-year. We have continued to return cash to shareholders through dividends and share repurchases. And today, we announced an 11% increase to our quarterly dividend that marks our eighth consecutive year of dividend increases. In addition to generating solid results in a challenging macro environment, we are leveraging decades of targeted investments to drive a pipeline of design wins, spanning an array of market critical solutions. Specifically in mobile, we delivered Sky5 platforms to the leading smartphone OEMs, including launches at Google, Samsung and many others. Skyworks Technology leadership, innovation and scale has allowed us to continue to capture an outsize share of our mobile revenue from high performance 5G platforms. In Enterprise and IoT, we powered tri-band access points at Cisco, ramped Orange Livebox 6, Europe's first carrier-grade 6E platform. We launched advanced solutions with Verizon for integrated WiFi and cellular gateways and supported Google's newest Pixel Watch with our cellular GPS, WiFi and Bluetooth technologies. In automotive, we achieved an all-time record revenue and quarterly – at this last quarter. As we executed on our vision to drive connectivity and lead the ship to electrification. During the quarter, we ramped next-generation wireless and EV power technology across multiple top OEMs. We leverage our timing solutions with a market leading robo taxi and driverless vehicle provider. And finally, in infrastructure and industrial, we captured multiple design wins at European equipment and service providers, fueling massive MIMO deployments. We delivered integrated timing solutions to the market leaders and data center, and network infrastructure. And we ship modules for high power industrial and IoT applications, supporting a prominent brand and smart energy. Moving forward, we see a continued expansion in data consumption, dependent on seamless, reliable and ubiquitous wireless connectivity. A few statistics illustrate this point. Global wireless data traffic is expected to grow at a 27% annual rate over the next five years. Machine to machine connections, the fastest growing IoT category will soon surpass 15 billion users. By 2030, we expect 650 million connected cars each consuming 25 times the data that we see in today's smartphone. Over the past two decades, Skyworks has made critical investments to power this connectivity transformation. Addressing all key network technologies from cellular to advanced-WiFi, enhanced GPS and Bluetooth among others. Capitalizing on both organic growth and strategic acquisitions, we are gaining momentum in high growth verticals, while at the same time, diversifying our revenue and customer set. Looking ahead, our design win pipeline and unique in-house capabilities are positioning us for continued outperformance. Leveraging decades of innovation, we deliver purpose-built solutions underpinned by in-house gallium arsenide temperature, temperature-compensated SAW filters, bulk acoustic wave technologies and customized packaging. With that, I will turn the call over to Kris for discussion of Q3 and our Q4 outlook. Kris Sennesael: Thanks Liam. During the third fiscal quarter of 2022 Skyworks delivered record revenue of $1.23 billion, an increase of 10% year-over-year. The growth was fueled by expanding our technology reach at the largest smartphone OEMs including Samsung and Google, partially offset by soft demand from China customers. Mainly as a result of the lockdowns early in the quarter. In addition, broad markets revenue was up 38% year-over-year. As we continue to drive design wins and revenue with innovative solutions for fast growing end-markets, including automotive, industrial, data center and network infrastructure. Gross profit in the second quarter was $631 million resulting in a gross margin of 51.2% up 60 basis points compared to Q3 of last year. Operating expenses were $191 million slightly down on a sequential basis. We generated $440 million of operating income translating into an operating margin of 35.7%. We incurred $11 million of other expense and our effective tax rate was 8.1% driving net income of $394 million. Based on a further reduction of our weighted average share count to 161.5 million shares, we achieved earnings per share of $2.44 exceeding consensus estimates and up 13% year-over-year. Turning to cash flow, our third fiscal quarter cash flow from operations was $214 million and our capital expenditures were $125 million. In terms of capital allocation during the quarter, we returned $209 million to shareholders, paying $90 million in dividends and repurchasing 1 million share of our common stock for a total of $119 million. During the first nine months of the fiscal year, Skyworks has returned more than $1 billion to shareholders through dividends and share purchases representing 129% of our free cash flow. In summary, the Skyworks team delivered another solid quarter with Q3 record revenue and earnings per share, while making the investments in our technology and product roadmaps to support future growth. Now let's move on to our outlook for Q4 of fiscal 2022. We expect to deliver double digit sequential revenue and earnings per share growth in the September quarter. Specifically, we anticipate revenue between $1.375 billion and 1.425 billion. At the midpoint of $1.4 billion revenue for the quarter is expected to increase 14% sequentially. This outlook takes into account the seasonal impact from major product launches, leveraging our technology leadership, deep customer engagements and world class in-house manufacturing capabilities. Gross margin is projected to be in the range of 51% to 51.5%. We expect operating expenses of approximately $190 million to $194 million. Below the line we anticipate roughly $12 million in other expense and a tax rate of approximately 9%. We expect our diluted share count to be approximately 161 million shares. Accordingly at the midpoint of the revenue range, we intend to deliver diluted earnings per share of $2.90 an increase of 19% sequentially. Lastly, given our conviction in Skyworks long-term strategic outlook and consistent cash generation, we announced an 11% increase to our quarterly dividend to $0.62 per share. And with that, I'll turn the call back over to Liam. Liam Griffin: Thanks Kris. Skyworks decades long investments are driving increasing opportunities across the market's fastest growing segments. Fueling our momentum going into the second half of the calendar year, with our customer count doubling year-over-year in a broad markets portfolio on pace for $2 billion in annualized revenue, our business is more diverse than ever. Finally, our consistently strong profitability, cash generation and diverse revenue streams fund our ability to invest and win while returning cash to our shareholders. That concludes our prepared remarks. Operator, let's open the line for questions. Operator: [Operator Instructions] First question comes from Raji Gill at Needham & Company. Please go ahead. Raji Gill: Yes. Thank you for taking my questions and congrats on managing, providing good results through a kind of a crazy cycle. Just a question on China. I know it's about 10% to 15% of your revenue, but wondering kind of what you're seeing in terms of the inventory situation there across the China handset OEMs? And just in general, if you can make a distinction on the premium level of handsets in the overall market versus low-to-mid tier, how would you characterize the demand landscape there and the level of channel inventory in the market as you see it today? Liam Griffin: Sure. Yeah, it's been certainly a challenging market in China and there's several factors that played out here, right? Of course you had lockdowns in some of the major provinces and across many of the factories that impeded demand even with the larger customers. And then you also had a group of folks that were just a little bit less prepared for the lockdowns as well. So if you look at the high-end market, China is still a market where you can get some very, very strong activity, tampered bit by lockdowns, which we think are going to abate rather quickly. But on the lower-end, the OBX brands really hadn't performed too well at all. So that was an area that was weak generally. But if you look at the way Skyworks has been positioned, our aperture has been much more towards the mid-to-high tier. So our exposure to the OBX market has come down. In many cases it was our position to do that and our choice to do it. At the same time in parallel, we had tremendous schemes with names like Google and some of our other flagship players Samsung even doing quite well. So a lot going on there, China was definitely bumpy, but it's still a market that consumes the technology. And we do think that some of the manufacturing issues and supply chain problems are going to abate and we see even more of a tailwind. Raji Gill: Appreciate that. For my follow-up, last quarter that you cited $50 million push out related to your top customer as they were having challenges, assembling final components given the lockdowns in China and in Singapore. And to account for that last month in April, you attempt to kind of de-risk the June quarter and guided it down 7% to 8%, and you're kind of falling in that range. Wondering how you're thinking about the ramp in the September and December quarters as your top customer is through that process and starts to launch new platforms with your content. Liam Griffin: Sure. Raji Gill: Are you still expecting a steep ramp? Thank you. Liam Griffin: Yeah. So we have a lot more clarity on that side of the field. Again, we work with everyone, but we have a high degree of visibility in some of those premium brands and we feel very good about that. For two reasons, we think the appetite for the technologies continues to grow, the use cases continue to grow around connectivity and mobility. And the market leaders, the market leaders are actually consolidating. And we know who the market leaders are and we're very well positioned. So we're excited about that. We feel very good about where our technologies are going, the breadth of our offering, driving some incredible technologies with our bulk acoustic wave, our in-house gallium arsenide packaging, doing all of this in our amazing fabs admits a market where everyone's challenged with supply chain. So a lot of good work going on there, and we do expect strength as we go into the second half of the year, really buoyed by some of these content gains that we've been discussing. Kris Sennesael: Yeah. Maybe Raj just to add there. So we just guided September up 14% sequentially and obviously that is more and higher in terms of sequential growth at the large customer, based on the known design wins that we are shipping today and we do expect further sequential growth into the December quarter with that customer as well total Skyworks revenue. Operator: Next question comes from Gary Mobley at Wells Fargo Securities. Please go ahead. Gary Mobley: Hey guys, thanks for taking my question. Could you share with us how big your largest customer was in the quarter and were there any other greater than 10% customers in the quarter? Liam Griffin: Yes, so we have two plus 10% customers in the June quarter, obviously the large customer, which was approximately 55% of total revenue. Just to compare last year in June, that was 53%. So we've continued to execute very well with that. And then Samsung is yet again plus 10% customer. Again, great execution, great design wins at their flagship level as well in the rest of their product lineup. Gary Mobley : Okay. So I know not all of your sales to your largest customers go into smartphones, but I think dominant portion of it does. And so kind of doing back of the envelope calculation in your mobile business, I presume your business with customers outside that that large customer is in the ballpark of what $90 million to $100 million for the quarter? Liam Griffin: $90 million with the large customer in broad markets. Gary Mobley : What I'm trying to get to is trying to get a sense of how much of your mobile business is comprised of customers outside of your largest. And just trying to get a sense of maybe where you stand with respect to bottom in the Android market and whatnot? Liam Griffin: Yeah, the vast majority of our broad markets revenue is not related to the large customer, right. We have more than 6,000 customers spread over connectivity solutions, automotive, which was an all time record revenue, industrial customers. We have our audio business, we have our infrastructure, networking business in there and that's now on a $2 billion annualized run rate. Kris Sennesael: Yeah, and I would just say, in addition to the largest customer, we have several other significant ones. We mentioned, obviously Samsung, very strong and even Google. So it's a balanced mix here. Operator: Next question comes from Vivek Arya at Bank of America Securities. Please go ahead. Vivek Arya: Thanks for taking my question. Liam or Kris, I'm curious how much of a year-on-year headwind has China Android been for June and September, and does China Android bottom for you in December or March or when? So just how much of a headwind year-on-year, because when I look at your implied September mobile guidance, it still seems to be kind of flattish to down somewhat year-on-year. So I imagine that's the China Android headwind. So how much is that? And when does China bottom for you? Liam Griffin: So as it relates to China we definitely saw some softness from a demand point of view. That's very well documented. We have played it very carefully. Even in the December quarter, almost a year ago, we started pushing the brakes. We actually pushed the brakes pretty hard in March and June. We did not want to end up with major inventory into the channel. We do expect relatively minor revenue in the September guide for the China customers, but we do expect beyond that, of course, that the demand will bounce back. You already started seeing that in the June numbers where they were close than 29 million, 30 million phones being sold in China. And so we do expect the bounce back but that's not included in this September guidance. Kris Sennesael: Yeah. And I'll just add one more comment is that the complexity in the performance nodes are getting more and more difficult and more challenging, which is great for us. And that's what we want to see. So there are some pockets in China that are very, very low-end, that are not really interesting for us and that's fine. But we're building up a strong base in mid-tier and certainly leading the pack when it comes to the premium players. Vivek Arya: Got it. And for my follow-up, I wanted to ask about your balance sheet inventory. So I understand and appreciate the need, that your customers have for supply assurance and you are making a very wide range of products I get that, but when I look at inventory days I think that among the highest that we have seen. So how are you planning to manage utilization and what impact, if any will it have on your gross margins for the next handful of quarters? Kris Sennesael: Yeah, so Vivek, so we feel good about the business, right? And we just guided up 14% sequentially for September. We do expect further sequential growth into December and that is all based on known design wins with the large customer, with other mobile players and even within broad markets. And as you know, we always level load our factories. We have higher filter content in many of those new devices that we bring to market. Filters typically are built many weeks or months in advance of product shipments and that accumulated into higher inventory, but the inventory is fully in line with our expectations and will help us in support the steep ramp here in September and December. Operator: Next question comes from Harsh Kumar of Piper Jaffray, please go ahead. Harsh Kumar: Yeah. Hey guys, first of all congratulations in a very tricky environment managing the business so well. We certainly appreciate it. Maybe I missed it in the press release, but could you – would you mind giving us a breakdown of the mobile business versus the broadband business in June? And the second part of that same question is how do you see the trends in September? I would suspect that mobile would be up in September given the largest customer or is that incorrect assumption? Kris Sennesael: Yeah. So the breakout was, broad market was 38% of our total revenue. It was up 38% year-over-year, so very strong performance there. Mobile was 62% of total revenue. It was slightly down on a year-over-year basis, despite the fact that we had strong performance at a large customer, strong performance with Samsung and Google, but offset with the softness that we just discussed in the China market. And going-forward, looking forward to the September quarter, obviously that is a very strong mobile quarter as we execute on some of those launches with the large customer as well with many of our other customers, but we still expect our broad markets to be up double digit year-over-year in the September quarter. Liam Griffin: Yeah. And remember that, as we discussed at the beginning here the lockdown dynamics and some of the supply chain volatility did put a little pressure on what would be a normal seasonal guide. So all those factors played together, we had much less exposure to China, which is very helpful, but these weren't issues that were related to demand. I mean, the demand is there. The demand was there and it still is. And we need to go execute on that, but some of the early lockdowns in, the ripple effects there in supply chain added a little bit of nip-tuck to the quarter. Harsh Kumar: Understood, Liam and maybe from my follow-up question Liam one for you, so the 5G handsets went to a rapid period of growth and sort of feature addition, and mode and band edition, are you still seeing very good content increase in the flagship mobile phones, even at this point, like the ones that are coming up, maybe you can talk about? And maybe talk to us about some of the things that are driving that, are the bands still being added or is it things like wireless, DRX just any color we would appreciate that? Liam Griffin: Yeah. I mean, there's a great deal of enhancements that come through the cycle with the leading players and we have to back that up with great technology. And if you look at CapEx that we've been delivering and one of the themes that we've been talking a lot about is the level of customization and basically crafting those technologies in-house, right? We're a rare breed that that manufactures end-to-end from high-end bulk acoustic wave, temperature compensated soft filtering, in-house gallium arsenide, in-house customized assembly and test all those vectors come together and allow us to do very unique things customer-by-customer. So we're able to go after a much, much broader set of accounts when we have that level of customization and technology knowhow. And that's one of the reasons why the mid-to-high tier really appreciates Skyworks, because we can do a lot of good work with those partners and really help lift their business with our teams beneath them under the wings here, supplying the right kinds of technology. So it's a good partnership there for both sides. Operator: Next question comes from Blayne Curtis at Barclays. Please go ahead. Blayne Curtis: Hey thanks for taking my question. I just want to ask on September guidance. Two things, one, you said broad markets would still be of double digit, I guess that doesn't give me an idea of which direction it is sequentially. So you had the issues that I think you talked about supply chain in June, what's the outlook for broad markets in September? Kris Sennesael: So as I just said, September will still be up double digit year-over-year. It will actually be slightly down on a sequential basis. You have to keep in mind in broad markets that we continue to see very strong demand. In some cases, the demand is higher than the supply, that's the case in our audio business. That's the case in some of the automotive and infrastructure business that we have. In addition to that, we also continue to see many of our customers still having kitting issues. They don't have the complete bomb as a result of that, they don't need the [indiscernible] parts for now, but assuming that the ship shortage will get resolved over time they will have to catch up and that will then further fuel the growth for Skyworks content as well. Blayne Curtis: Okay. And then maybe just some comments on your own supply chain. I mean, the fact that you're able to build that much inventory. Can you just talk about the constraints, if any, that you're still seeing on your business from a foundry and backend perspective? Kris Sennesael: Yeah. As I just said, in the vast majority of our business, we are able to supply to what our customers want, especially as it relates to the products and the vast majority of the products that we do in-house, we have proactively invested in capacity and technology in our gallium arsenide fabs in our filter operation, in our back-end operation. Where we struggle is on some of the smaller businesses that we have that are in a far plus business model where we depend on foundries and/or back-end, where in some cases we don't have enough capacity. We are working it, we are working at hard, we are making improvements, we are getting and securing more capacity to fulfill the strong demand that we have in some of those areas and we'll continue to work it. Liam Griffin: Yeah. And I'm just going to add. I mean, there's been a tremendous amount of technology investment in the portfolio. And a lot of that really has come through, you can see in the CapEx line. So with some really important things playing that, we're doing that sort of are under the hood so to speak, really driving performance in bulk acoustic wave, which is a tough technology. We've improved the efficiency of our TC-SAW capabilities. We have – as you know, for years, we've had customized gallium arsenide. It's a very unique technology in RF, and we've been upgrading that at every cycle. So there's a lot of really interesting building blocks that go into the finished product here and the flexibility that we can bring. I think it's one of the reasons why the discerning higher end customers really appreciate that they have a voice in the decision with us. There's a lot of collaboration when we launch technologies and products, we can do a great deal of customization, understanding where the carriers are going to be and where those phones will roll. So there's a lot going on and it comes with the capital that we put forth. And I think it's an advantage right now. And despite the ups and downs in supply chain, I'd rather have that in our house that we can deal with it. We can make decisions, we have a voice and we can do the right thing for the customers. Operator: Next question comes from Ambrish Srivastava at BMO. Please go ahead. Ambrish Srivastava: Thank you. Kris, I just wanted to come back to the days of inventory and actually more importantly, free cash flow. I know in the past you have said that inventory does go up in March and June. So that's fine. That's consistent with your past comments, but I was looking at free cash flow to sales and I had to go back to, we're all going back to many years past. As a percent of sales, it's really at a very low number. And I had to go back to June 2018 to get that number. I get the change in working capital, but how should we think about the trajectory of free cash flow and good to see that you raised your dividend, but I just want to understand if I'm not missing anything on the actual absolute free cash flow number. Kris Sennesael: Yes, Ambrish. So we can't manage the free cash flow quarter by quarter, and I look at it more on a 12-month trailing basis or 12-month rolling forward basis. And our free cash flow now is in the mid-20s as a percent to revenue and based on further growth of the top line and further expansion of the profitability, we have line of sight to get to plus 30% free cash flow margin. And I think that's a pretty good number. Also take into account what Liam just said, right. While we continue to invest in our technology roadmaps, in our product roadmaps and continue to invest in our own factories, that gives us a very strong competitive advantage to deliver high performance products to our customers. And I think that's a pretty darn good number. Again, I'm not concerned about the June free cash flow, which is indeed was a little bit muted because of the inventory built that we did fully supported by the known design wins and the revenue ramp that we will experience in the September and the December quarter. Ambrish Srivastava: Got it, Kris. I understand. And I don't look at just on a quarterly basis. I just want to make sure I wasn't missing anything. Just a quick clarification on the December quarterly, what's the rate for, to think about it. You did say you'll grow, should we think seasonal, sub-seasonal, or how should we think about it for modeling purposes? Thank you. Kris Sennesael: Yes. I mean, it's still a little bit early, but I can tell you what moves the needle is, is the technology and what we're able to do to drive that. And what we call is kind of really a technology reach, how do we create something more impactful for the customers. And we're doing that. And it's not one or two parts. I mean, the breadth of the technology and the reach of our performance, the engineer to engineer line-up is awesome, the relationships are awesome with the largest customer. And we certainly feel good about execution and the opportunity for the second half of the year, very much so. And there's a lot of new invention going on, so to speak and a lot of technologies that are opening up, that are providing even more revenue opportunity for Skyworks as we go forward. So we feel really good about that cycle, great collaboration with the people that matter and getting in again, shoulder to shoulder and our fabs together. It's lot of really good work being done to ensure leadership at the high end. And we feel very good about that. And I absolutely expect that to play out in revenue and in our numbers. Operator: Next question comes from Edward Snyder at Charter Equity Research. Please go ahead. Edward Snyder: Thanks a lot. Liam, can we sit back and look at mobile from a holistic point of view. I would think from what we know of your product line and from what you said here, that you're much more exposed to high end models than mid-tier. I know you don't do much on low end, no one does. But if you had to break it out, I mean, you're not big in China. You're big in, you mentioned Samsung in the flagship. I'm not sure if that means you're getting big gains in A Series and of course, your largest customer's all high end. So I'm just trying to get an idea if you could maybe bracket it for us if you had to break out mobile, would you say it's 60/40, and I know it's an approximation, but just in general, 60/40 high end, or is it something closer like 75/25? Liam Griffin: Yes, it's probably more 70% high end, Ed. And what we're trying to do is actually take the low end and bring them along towards a higher level of technology and performance. And as a result, it would be revenue for us and also great for the consumer that gets a better product. So certainly, we – our business, the way I think about it is that we want to hit the fastball first, right. We want the hundred mile an hour pitch. And then from there, we can go downhill and take care of everybody else. But the DNA in our company is to go after the hard things and solve the hard problems and delight the customer, right. And sometimes, the customer doesn't even realize the amount of work and energy and technology know-how that comes through this, but ultimately it's a great solution that they get. And so that's the way we can do this. Now, we like to start with the tough problems and then go downhill, as I mentioned. And there's still a lot of really good work to do. You now hear, a lot of discussion about some other customers that we haven't talked about too much, Samsung, Google, there's many others in mobile and many others in connectivity that we can serve. So it's a model that's worked for us and it's all about customer, customer performance and uplifting their product and their ability to drive to their consumer market. So it's always been a challenge for us, but we love that challenge and it makes what we do really matter for us here at Skyworks. Edward Snyder: Okay. And given that if I could, it seems clear from the report so far, what was report last night and PI and everybody else talking that in the low, in the mid-tier, they're getting hit a lot harder with weakness due to varying fact, the recession now obviously is starting to take hold on that. It hasn't really hit the high end yet at all. But if it gets worse, obviously most people think that it will. In that kind of a profile, especially with regard to your largest customer because it's kind of a unique relationship, when it sometimes to start building the new model, it's like the gate opens and you can ship as much as you want, but you have to true up in the end of the year. And I know the last time they had a basic dislocation was many years ago of success, but I'm just trying to get a feel with this of when you normally would get indications that things are slowing down on that high end or at Samsung's the high end. I mean, the launch starts, you usually sell like a lot of phones to the people, et cetera, but then the real demand starts showing up in January or February 6. So last time I think it all happened in December and January. So just visibility wise, I know it looks good for a while. When do you think if there were a problem you'd first see it? Liam Griffin: Yes, no, that's a good question. You know what it's interesting, Ed, now is the curve ball is the lockdown situation. So it's kind of an unusual thing. We all went through COVID and we knew what was going on there and it was just dark everywhere, right. There really wasn't any pockets of opportunity. I think what's happening now is just a little bit of a bifurcation. You've got those that played very hard in China and the OVX land. I think that much more exposed to the downside. On the other hand, at Skyworks, we were continuing to raise mid and high end, which has been beneficial for us and more profitable. So it's kind of a tale of two different markets and different stories. We want to pursue opportunities globally across every account, obviously. But the way our business has really kind of grown up here is, like I said, the high end going down, we have opportunity to do more in some of the low end markets. It's really more of a choice for us than a technical problem. We know how to do it, but we do think that the opportunities are still looking very good. There's a lot of demand that was not shift, with these issues in China. Some of these lockdowns really pinched some supply chain areas that still not unplugged today. And that's real. I mean, we can measure that in our hubs and we have very good visibility on where that demand is. So it definitely gives us some color and some positive view on where we see the second half can go and maybe there's a delay, with delays that go further into the second – the early part of next year as well. So there's a lot going on there, the nuance being this supply chain wrinkle, not COVID related necessarily, but the hard lockdown that we saw at the end of the quarter. So it kind of mixes all together, but we still feel really good about the opportunity. And of course, we have great communication with our customers. So we're always in sync with what they need. Operator: Next question comes from Srini Pajjuri at SMBC Nikko Securities. Please go ahead. Srini Pajjuri: Thank you. I have a question on broad markets, Liam, obviously it's growing nicely on a year-on-year basis, but sequentially, it was down almost to 10%. And then you're guiding down for another sequential decline, environment, which seems pretty stable. Especially on the consumer side, you have a lot of secular drivers like WiFi, IoT, et cetera. So I'm just curious as to what the headwind is for that business in the short-term. And then along the same lines, some of that business is probably still sourced from external foundries and obviously the costs have been increasing. Have you implemented any pricing actions to kind of offset those cost increases and if you can talk about where we are in that cycle in terms of the pricing actions, that'll be helpful. Thank you. Liam Griffin: Yes, no, very good question. Yes, certainly the challenges in the broad markets business, we can see more of an impact there with supply chain issues. So we don't have kind of the clarity that you have in a mobile device. That's very, very – we know exactly where we're going and where it's headed. Broad markets is more diverse. It goes to multiple customers with actually a broader set of technology. So and it ties back to your question on supply chain. So if you think about broad markets, it wasn't a demand constraint. It was a supply chain constraint. So that's an area, less so in mobile but more so in broad market that we saw that. And with respect to pricing, we did take some action in pricing that was necessary. We do everything we can to keep our customers healthy and strong, but together as partners it was required that we had to raise our prices a little bit and it was fine. And I think that was healthy, but we do feel like the opportunity in broad markets is still a really strong part of our portfolio, lots of opportunities. We talked about the growth rates, 38% year-over-year revenue broad markets, that's outstanding. And there's still a lot of stuff out there that we haven't hit. It's a huge pool of broad market opportunities that await us as we go forward. Lot of great things that are not at all tagged into our mobile business, a lot of unique markets, unique customers that are on their own vector in terms of top line so looking forward to that. Srini Pajjuri: Got it. Thank you. Operator: Next question comes from Melissa Fairbanks at Raymond James. Please go ahead. Melissa Fairbanks: Hi guys. Thanks very much. And just maybe as a follow up to that, just wondering how much pricing inflation has played into your overall revenue growth versus say unit volumes or just mix trending higher. And then as a follow up, I know this is one of your favorite questions. What should we expect in terms of generational content growth going forward? Where does content begin to max out? Are we even close to that? Kris Sennesael: So on the pricing as Liam just explained, right. So in certain parts of our broad market business, especially which is based on the fabless foundry model, we've experienced some input cost increases and we've been passing that on to our customers that is a relatively small part of the overall Skyworks business. So I think that answers your first question. Liam Griffin: Yes. And with respect to content and content reach, we thought most of us here at the table here have been in this market for quite some time. And we do see incremental opportunities year after year after year. But I think what's changing now is that the, if you think about Skyworks, it isn't just mobility. Mobility is great and wireless technologies are great, but what's different right now is the customer set and the application set that we're playing in. We talked today about data center. We talked about electric vehicles much more in the infrastructure side. We have high performance audio. We have technology nodes that were not available to us two, three years ago. And we created these new technologies, bulk acoustic waves, et cetera, in house with our own people and our own capital. So I guess what I would say to you is, think about connectivity at large and think about the markets that require this, right. It's a mobile phone of course, but IoT, industrial, healthcare, business to business. All these interesting end markets rely very much on the kind of technologies that we bring. So we're looking forward to that. We we'd love to give you guys more info around that vector, but we certainly see pools of opportunity that Skyworks and Skyworks Technologies can address. Melissa Fairbanks: Excellent. Thanks very much. Liam Griffin: Thank you. Operator: Your final question comes from the line of Matt Ramsay at Cowen. Please go ahead. Matt Ramsay: Good afternoon. Thanks very much guys. I wanted to ask a couple of questions about the acquisitions of the I&A business and sort of how that's playing out. So the first one is on the timing segment, I guess the thesis there was, there was some really good timing technologies at the Silicon Labs, and you guys were going to add scale to those in the telco market, in the switching market, and then maybe into cloud over time. And I just – there's some big server disruptions that are going on in the cloud space. And I wonder if you might give me a little bit of an update as to how that thesis on the timing side is playing out there and what you're seeing. And then I have a follow up on the automotive market. Thank you. Kris Sennesael: Yes, Matt, let me just start high level. And I've said before, we are not breaking out every sub product line, but let me tell you that we are very pleased with the performance of the acquired business. It's exceeding our expectations by a lot both from a revenue, gross margin and operating margin point of view. And there is still a lot of opportunities that we are working on. Keep in mind that again, that business is supply constraint. The demand currently is a lot higher than what we are able to supply, but despite all of that exceeding our expectations. And so I'll turn it over to Liam to answer your question on timing. Liam Griffin: Yes, so certainly great opportunities coming out of our – what we call MSF portfolio, which was the I&A business of SLAB, really pleased with not only the products, but with the people in the execution. So all good, markets like data center right now are really critical for the timing solutions that we have very high performance timing solutions and growing that. With additional investments from the larger core of Skyworks, we're also looking at a lot of EV work coming out of that portfolio as well. The I&A team had some great technology there that we're scaling. And I think it's a case where you've got super technology in great performance and great engineering talent. And now it's really going to be about scale, right. It's really going to be about scale. So one of the things that we do very well at Skyworks, you've heard that from us, we’re vertically integrated. We do a lot of hardcore manufacturing, technology development in-house, but we also do very, very well in high scale, big dollar markets. And it sounds easy to say, but there's a lot of work behind that. And if you look at our business and the kind of the way that we talk to our customers and markets and the way we communicate to investors. We really are a company that looks at markets that can really move the dial. We've got some of these here. These are coming up, they're growing right now for us, it's early stage, but the tough part is getting the technology right. And the team and MSF from Silicon Labs have gotten it right. So it's about scaling now and driving our sales and marketing teams further and capturing a great deal of opportunity that we haven't seen. So we're excited about it. And we'll certainly give you more color in the next call. Matt Ramsay: Yes. Thanks for that guys. As my follow-up, I'm going to ask, I was kind of intrigued with some of the automotive announcements. A lot of the call here is focused on handsets, but I guess the question in the automotive space for you guys is the opportunities that you're seeing, how would you characterize them in terms of split and in terms of sort of the competitive landscape across cellular WiFi, V2V, V2X. There's RF opportunities in a lot of different domains in automotive that are different than the handset market. So I just – be interested in where you're seeing the traction and what the competitive landscape looks like? Liam Griffin: Yes. There's a lot of interesting nodes that come together here in the EV side. You've got certainly technology coming through wireless, wireless nodes and 5G. We've got a lot of EV accounts right now that are being developed that we have design wins in now. And there's going to be a lot of investment that we put forth. And certainly when you go further into EV, connectivity and wireless connectivity is going to be pivotal, it's going to be one of the most critical elements in the whole process. And just think about from a safety perspective, from a latency perspective, there's going to be a lot of technology development that hasn't yet come through around electric vehicles, autonomous vehicles in that whole specter. So we're looking forward to it. But like I said, we've got a beachhead with our partners in Texas here. And we also have some great, great engineering minds and knowhow across the greater Skyworks team to turn that into big dollars as we move forward. So it's going to be one of the bigger markets going forward for sure. And it is a market that absolutely needs high performance, low latency, high quality solutions. And those are the kind of things that we like to do. And we we've already been working with many, many players in the EV space. Many of those customers don't want to have the conversations publicly about what we do. So we will respect that, but please note that we're deeply involved in the development and we're putting a great deal of investment into that part of the market. Operator: Ladies and gentlemen, that concludes today's question-and-answer session. I'll now turn the call back over to Mr. Griffin for any closing comments. Liam Griffin: Thank you all for participating on today's call. We look forward to talking to you at upcoming investor conferences. Thank you. Operator: Ladies and gentlemen, that does conclude today's conference call. We thank you for your participation.

Operator: Good afternoon and welcome to Skyworks Solutions Second Quarter Fiscal Year 2022 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: Thank you, Rachel. Good afternoon, everyone and welcome to Skyworks’ second fiscal quarter 2022 conference call. With me today are Liam Griffin, our Chairman, Chief Executive Officer and President and Kris Sennesael, our Chief Financial Officer. Before we begin, I would like to remind everyone that our discussion will include statements relating to future results and expectations that are or maybe considered forward-looking statements. Please refer to our earnings press release and recent SEC filings, including our annual report on Form 10-K, for information on certain risks that could cause actual outcomes to differ materially and adversely from any forward-looking statements made today. Additionally, the results and guidance we will discuss include non-GAAP financial measures consistent with our past practice. Please refer to our press release within the Investor Relations section of our company website for a complete reconciliation to GAAP. With that, I’ll turn the call to Liam. Liam Griffin: Thanks, Mitch and welcome everyone. Despite a challenging macro backdrop, I am pleased to report that Skyworks delivered record second quarter results, with double-digit year-over-year growth in both revenue and earnings per share. We continue to benefit from a broad and diverse product portfolio. And with an expanding set of customers in high growth markets, we are well-positioned to outperform in the current environment. Looking at the quarter in more detail, we delivered record Q2 revenue of $1.34 billion, above consensus and up 14% compared to last year, highlighting both our growing content within Tier 1 mobile and the increasing diversification of our customer base and technology reach. In fact, our broad market revenue rose to a record $523 million in the quarter, up 10% sequentially and 36% year-over-year. In addition, we continue to drive solid profit margins, exceptional cash flow and consistent cash returns. We achieved gross margin of 51.2% and operating margin of 36.8%. We posted earnings per share of $2.63, up 11% year-over-year. We generated operating cash flow of $393 million and we returned $509 million to shareholders through dividends and share repurchases. Our strong results this quarter were driven by a vast expansion of use cases from content-rich smartphones to complex IoT devices, to innovative solutions for the automotive markets, industrial and infrastructure. Specifically in mobile, we supported the top 5 OEMs with our Sky5 architectures, including flagship models from Google, Samsung and other Tier 1s. In parallel, we leverage our in-house temperature compensated SAW, BAW and gallium arsenide technologies, to extend the reach across further content opportunities in 5G. In Enterprise and IoT, we powered Comcast’s latest WiFi 6E residential gateways, partnered with T-Mobile for their integrated 5G fixed wireless access service. We debut the industry’s first WiFi 6E gaming router featuring ultrafast quad-band performance. And we embedded Sky5 technology in rugged mobile computing devices for industrial-grade factory automation. In automotive, we are executing on our vision to lead the global transition while accelerating the shift to electrification trends that pave the way for cleaner and more efficient autonomous transport. Over the past quarter, we enabled next-generation wireless technologies across multiple leading OEMs. Further, our power isolation portfolio continued to gain momentum, with the global EV market leaders. And finally, in infrastructure and in industrial, we captured milestone design wins at Tier 1 equipment and service providers for 5G macro and small cell deployments. We ramped high performance clock solutions at used network systems, supporting LEO satellite networking and we extended the reach of our cutting-edge timing portfolio across the leading fiber backhaul and data center equipment providers. Moving forward, ubiquitous connectivity, cloud computing and the massive shift to EVs are fundamentally reshaping the way we live. As complexity intensifies, with billions of intelligent edge compute nodes that demand for high-speed ultra-reliable, low-latency solutions is accelerating. Skyworks is uniquely positioned to engineer and seamlessly integrate these advancements to increasingly smaller, more efficient form factors, purpose-built and customized for specific end markets and applications. Lastly, our business aperture and market reach have never been broader as we scale investments in core and new technologies. We are pioneering the breakthroughs in RF, signal processing, power isolation, timing, audio, among others, propelling our diversification and growth into the future. With that, I will turn the call over to Kris. Kris Sennesael: Thanks, Liam. During the second fiscal quarter of 2022, Skyworks delivered record Q2 revenue of $1.34 billion, an increase of 14% year-over-year. Broad market revenue was a record $523 million, representing 39% of total Skyworks revenue in the quarter. Gross profit in the second quarter was $683 million, resulting in a gross margin of 51.2%, up 40 basis points compared to Q2 of last year. Operating expenses were $192 million or 14.4% of revenue, reflecting our investments in support of future growth. We generated $491 million of operating income, translating into an operating margin of 36.8%. We incurred $13 million of other expense and our effective tax rate was 9.6%, driving net income of $432 million. And based on a further reduction of our weighted average share count to 164.4 million shares, we achieved earnings per share of $2.63, up 11% year-over-year. Turning to our balance sheet and cash flow, second fiscal quarter cash flow from operations was $393 million and capital expenditures were $127 million. In terms of capital allocation during the quarter, we returned $509 million to shareholders, paying $91 million in dividends and repurchasing 3 million shares of our common stock for a total of $418 million. During the first half of the fiscal year, Skyworks returned $871 million to shareholders through dividends and share repurchases. In summary, the Skyworks team delivered another solid quarter, with Q2 record revenue and earnings per share, while continuing to make the investments in our technology and product roadmaps to support future growth in mobile and broad markets. Now, let’s move on to our outlook for Q4 of fiscal 2022. We expect to deliver double-digit year-over-year revenue and earnings per share growth in the June quarter. Specifically, we anticipate revenue between $1.2 billion and $1.26 billion. At the midpoint of $1.23 billion, revenue for the quarter is expected to increase 10% year-over-year. This outlook takes into account our current view of recent pandemic-related supply chain disruptions, which are impacting the ability of our customers to fulfill end market demand. Gross margin is projected to be in the range of 50.75% to 51.25%. We expect operating expenses of approximately $190 million to $192 million. Below the line, we anticipate roughly $10 million in other expense and a tax rate of approximately 9.5%. We expect our diluted share count to be approximately 163.5 million shares. Accordingly, at the midpoint of the revenue range, we intend to deliver diluted earnings per share of $2.36, an increase of 10% over Q3 of last year. And finally, given our consistently strong cash flow and confidence in our outlook, we are investing for diversified growth while returning cash to shareholders through both share repurchases and dividends. And with that, I will turn the call back over to Liam. Liam Griffin: Thanks, Chris. Despite macro headwinds and supply chain disruptions, Skyworks remains squarely focused on delivering above-market growth across a diversified set of applications and end markets. Capitalizing on in-house technologies, scale and strategic customer relationships, we look forward to generating continued increases in revenue, earnings, profitability and free cash flow. Finally, our efficient balance sheet and consistent cash generation provide a formidable platform for long-term growth as we invest for the future and deliver premium returns to our shareholders. Operator, that concludes our prepared remarks, so open the lines for questions. Operator: Thank you. [Operator Instructions] Our first question comes from the line of Timothy Arcuri with UBS. Please proceed with your question. Timothy Arcuri: Hi, thanks a lot. So Kris, I just had a question around the dynamics in the quarter. Revenue was pretty much in line, but the mix was much different. Broad markets was supposed to be flattish and it was actually up a lot and mobile was supposed to be a little better than normal seasonal on the easier comp from your large customer, given some of their issues with respect to the supply chain. But in fact, mobile was much weaker and broad markets was much better. So I guess the question is one, what happened in the quarter? And two, can you give us a sense of what the split will be between mobile and broad markets that’s assumed for the June guidance? Thanks. Kris Sennesael: Yes. First, reflecting on the March quarter, mobile as a group came out on or about as we expected, with strong performance at a large customer, very strong performance at Samsung, which is now back being a plus 10% customer for Skyworks as well as a really nice ramp with Google in the Pixel 6 form. It’s no surprise we have seen some softness in the China market in part as a result of the COVID-related lockdowns. On the flipside, our broad market business was doing really well and it was across the board, IoT, automotive, infrastructure, but also of course, the I&A business that we acquired from Silicon Labs was performing really well during the quarter, setting a new all-time revenue record. So, that is for March. I think in June, in mobile, of course, we will continue to see some COVID-related supply chain disruptions that are impacting the ability of our customers to fulfill the strong end customer demand and so that is being contemplated into our June guide. But we will there as well on the flipside in broad markets continue to see strong sequential as well as year-over-year growth in the, call it, high 30s, approaching 40% year-over-year growth in broad markets. Timothy Arcuri: Thank you. And then can you give us what the percent of revenue was for your largest customer in March? Thanks. Kris Sennesael: Yes. In March, the large customer was approximately 54% of total revenue. That clearly demonstrates strong demand from that customer as well, of course, as strong content gains that Skyworks have been able to obtain with that customer. Revenue for that customer was up more than 20% on a year-over-year basis in the March quarter. Operator: Thank you. And our next question comes from the line of Chris Caso with Raymond James. Please go ahead. Chris Caso: Yes, thank you. Good evening. Maybe we could dig into some of the China supply constraint issues a little more deeply. And you can you help us, I mean, one, to quantify the magnitude of how much that may impact the June quarter, whether that’s more supply related or on your customer side that you can’t accept the product? And then finally, what that means for the September quarter, does that allow because that’s impacted now, do you presume that some of that comes back in September and the second half of the year? Liam Griffin: Sure, Chris. This is Liam. Clearly, there has been some disruption around COVID and specifically in China. It happens to be a very, very strategic for back end assembly and test for a number of our customers, including some of the bigger ones. So for the most part, that’s where the inflection was, trying to manage through that dynamic with pretty stark walk-downs and operational sites. So for Skyworks, obviously, the things that we do internally, we are continuing to execute with our filtering technology, our gallium arsenide, our in-house assembly and test. But again, it all comes down to your customer set. So we are doing the work today with some great companies, helping everybody get back on track in terms of demand. It is not a lack of demand issue at all, it really is a supply chain issue and every company has their own elements, whether it’s at a chip level or it’s at the back end assembly and test. So that’s kind of what’s going on. We certainly think that this is going to abate as we go forward. It’s not a long-term issue. We have great partnerships with the customers that we’re leaning into. We’re helping them, and we expect things to get a lot better as we get through the next few months. Kris Sennesael: Yes. Chris, as it relates to September, as you know, we only guide one quarter at a time, and I’m going to stick to that guiding only one quarter at a time. But having said that, and as Liam just expressed, right, we feel good about our technology and product road maps. We have deep customer engagements and very strong design win momentum. And we have the size and scale of our manufacturing assets to support some big important product launches and ramps in the second half of the calendar year as well in mobile and broad markets. And so, we are very well positioned to see some strong sequential as well as year-over-year growth in the second half of the calendar year, of course, assuming no worsening of the geopolitical or macroeconomic or pandemic-related issues that we have seen in the past. Chris Caso: Thank you. As a follow-up, I’ll ask on gross margins. And we’ve been kind of hovering around this 51% plus or minus for a bit of a while. I know last year, you said there were some pandemic-related costs that were persisting. And I presume into June, some of the impact is persisting again, just kind of on a lower revenue base. What’s the prospect for getting the gross margins a bit higher? What’s your expectations for gross margin progress as we go through the year from here? Kris Sennesael: Yes. So in March, we did 51.2%, which was up 40 basis points on a year-over-year basis. We are guiding on or about the same maybe slightly down for June on a sequential lower revenue. But then again, as we look into the back half of the year and see some steep ramps in September and December, we are geared up for to deliver some gross margin expansions. And again, I talked about that before, right? It’s higher value add, higher complex custom build specific products for our customers that are ramping. Of course, size and scale helps as well. And then, of course, we have a little bit of a tailwind from broad markets that typically has some higher gross margin compared to the mobile space. And when you combine all of that, we have confidence in improving the gross margins towards our target model of 53%. Operator: Thank you. And our next question comes from the line of Blayne Curtis with Barclays. Please go ahead. Blayne Curtis: Hey, thanks taking for taking my questions. And I apologize, a lot going on tonight, so I apologize. But Chris, I thought you said that broad markets was $523 million up in June and the year-over-year would be kind of high 30s or 40%. I’m starting with that math, maybe they doing something wrong, but I just want to clarify by segment, that’s what you’re looking for? Kris Sennesael: So broad market was $523 million in March, which was up 10% sequentially and up 36% year-over-year, and we do expect further sequential growth in June that translate into a very similar year-over-year growth as well. Blayne Curtis: Okay. I guess I can check with you on the call back on that. The – I guess the byproduct of that is mobile is down and you talked about the supply disruptions. I’m just kind of curious to your outlook on the overall handset market, maybe it’s a lame question, but I think the overall market has kind of weakened. There is outlook for kind of even down 10%. Obviously, RF can grow faster. But just kind of curious your perspective on the overall market. Liam Griffin: Yes. So I mean, overall market, as Kris mentioned, I’m going to get to mobile in a second. But really, we’re also really excited about what we’re doing in broad markets and the numbers we just reiterated $523 million in the quarter with a lot of momentum going forward. So just on the broad market story, things are looking very strong, very diverse, new customers, new end markets and growth in technology. So that’s one important lever. On the mobile side, we’re actually continuing to do very well. We were somewhat surprised that the continued COVID restrictions came down. It’s not a case, honestly, where there is a demand issue. This is really about chain. We know the customers that we’re working with, and we’re extremely close in terms of the dynamics of where products need to be and when they need to be there and we feel very good about that, and that will drive our business forward into the second half on the mobile end. We also have made incredible strides with Samsung. And there is a customer that – they are a great company, but we haven’t done that much with them. A lot of it had to do with just technology. We’re trying to go a high end and a lot of the opportunities there were a little bit more lower market. And we now moved up big time within that account. And so we have three of the most important companies in mobile right now, all with very good share and outlooks going into the second half of the year around new technologies and more around 5G, but also a lot of things that are coming up in the IoT side, looking at things even in WiFi that have all really stepped up. So we feel really good about the business right now. These lockdowns came in a little bit late for us. And so it was a bit of a surprise, but we wanted to do the appropriate thing and reflect that in our guidance, but we feel very good about the second half of the year. We know the products that we’ve designed into. We know what our content looks like. And we’re looking forward to fulfill that demand when sky is clear a little bit and demonstrate that through earnings. Operator: Thank you. And your next question comes from the line of Ambrish Srivastava with BMO. Your line is open. Ambrish Srivastava: Hi, thank you very much. I just wanted to come back to the – it’s always trying to figure out as well as I’m sure you guys whether it’s demand versus supply-related issues. But the China market has been in sunk for quite some time, Liam. So is there a point that you’re seeing there, okay? This is not just supply? And what we’re hearing is that the China handset guys have an over index exposure to the European market in Eastern European in particular? Is that causing concern to you? And kind of related to that, how big is the China market geo-wise for Skyworks? Liam Griffin: Yes – no, great question. So there is two elements. One is China itself, the geography. And that has – so what we’re dealing with now is more around China, the workforce, the assembly and test, the back end, all of that where there is been tremendous – it doesn’t matter whether it’s a smartphone or whether it’s an IoT device, right? So the lockdown issues are more around issues in China, COVID related. And that is a blanketed type of thing around technology. That’s one. On the other side, we’ve consolidated our China business right now is really pushed by the higher end players. They are not necessarily the China brands. We have exposure with OBX, of course, but we are growing our business with the higher-end brands within China. So companies that may be in the U.S. that are doing really well in China or companies that are maybe have great technology in Korea and they are sold into China. So it’s really about where the products land from a geographic perspective. But I will tell you, in all of those three companies, the major top three in mobile are gaining share, are producing unique content. We really like our position. And some of the lower-end brands quite frankly, are rolling off a little bit for us, and it’s not really the business that we’re interested in, but we’re growing and gaining share and gaining value with the top players. So that’s kind of how it shakes out. So it’s a geographical issue, with COVID and then also looking at the elements of each of the mobile players in how we address those. So – and honestly, the playbook that we have right now is working very well. We will get through this bump here, around COVID in China, and things look very good from there. And we know the partners that we have are counting on us in terms of their execution as well. So it’s a good spot to be in. Kris Sennesael: And so Ambrish. So the total Chinese customers for total Skyworks is on or about 11%. Actually, in broad markets that’s slightly higher. That means in mobile, it’s less than 10% of revenue coming from the Chinese mobile customers. Liam Griffin: So I mean, we’ve effectively de-risked that low end market at this point and driving our attention and our content to higher value, higher margin players. Ambrish Srivastava: May I ask a quick follow-up, please? On the broad markets business, I don’t think I’ve heard you guys talk about it. Has extended lead times really impacted this business at all? And I asked because there is a concern that all of us have is that is the demand real or not? And when you’re guiding for 30%, 40% kind of growth year-over-year, that again begs the question, how much of that is because of lead times at setting out. Thank you. Liam Griffin: Yes. No, it’s not a lead time thing. I think right now, we’ve – quite frankly, if we could execute the full bill of materials on the end products, our numbers would be higher. I mean we – in often cases, we’ve got a little bit ahead of the end market with our technology. But you have to stay in pace, right? You have to stay in the lane with your customer because ultimately, these devices that we’re working on, whether they are IoT, whether they are automotive, whether they are mobile, right, they are complex, very, very complex goals of materials. And those builds of materials have to be 100% on point and working in perfect harmony when they get shipped. So what you see in this industry now is a lot of complexity, a lot of exposure in companies that did not invest, which is much harder. But the ability for us to kind of weave through some of those bumps around supply chain, I think it has been a – it’s not easy. It’s not something that we wish for, but it tends to be an opportunity for us to outperform given our own operational levers here inside the building, all the way from, again, gallium arsenide do assembly and test a bulk acoustic wave for temperature compensated. So, all the elements are there. So it’s a little choppy there, but the demand is absolutely viable. It’s just about getting these products together integrated in a seamless way and get the technology delivered to the end market. Operator: Our next question comes from the line of Matt Ramsay with Cowen. Your line is open. Matt Ramsay: Good afternoon. Thank you very much for let me on. The first question, guys, I had was with respect to the broad markets business. my team covered Silicon Labs for a long time and a couple of the businesses that were in that I&A segment that we thought they could have done maybe a better job of scaling and maybe you guys have an opportunity to do that is the voltage isolation franchise and EVs, which you sort of addressed a bit in your script and also the timing business there had been sort of concentrated in wireless infrastructure, and there was a move to make a push into cloud. I wonder if you guys might comment a little bit on those two initiatives and those are things that you’re investing in to grow that franchise further? Thank you. Liam Griffin: Yes. Excellent. I’m really glad you asked that question. So at a very high level, the transaction with the I&A portfolio has been great. I mean we are really excited. It’s doing better than we expected. And it’s also had to endorse some supply chain issues because they are more granular around outsourced fabless players. But the great news is actually – literally, line-by-line, you just mentioned are things that we’re working hard on. Timing is a very, very interesting, attractive market and there is not many players that are going after it. The portfolio within I&A is very strong. It’s very capable. It’s got a great technology edge. And what we really need is for those great things to be matched up with significant powerhouses the industry companies that can scale with it. So we’re working on that. Again, the technology is there. This is about taking devices and technologies that already been honed in and have been diversified tremendously, but we also need to get scale, right? So we’re working on that, making good strides, teams doing well. Isolation – power isolation, specifically in automotive is a big, big market. And here again, leveraging some of the relationships that we have at Skyworks and some of the scale opportunities that we can bring to end customers, we’re making really good progress on that end. Data center is another market that they have, supercool technology and just need more muscle to try to get it out more sales folks, more marketing people, more people, boots on the ground, leveraging customers that we already have, great customers that can put tremendous scale and have those customers meet the technologies that were in the I&A portfolio. So we’re really excited about it. I think Kris mentioned it already. We’re ahead of our expectations so far, early innings, but I really, really feel great about that deal and the team really driving behind it. So look forward to more things on that end. But again, broad markets at a high level. These are big numbers we’re talking about now. We just – we put over a $500 million print. We’re creating tremendous diversification. It’s a $2 billion run rate. This is not Skyworks 3 years ago. We were at 3.3% in 2020. We’re in the mid $5.6 billion level now with a much more diversified portfolio. So we’re looking forward to reflecting that in our valuation and delighting our customers. Matt Ramsay: Thank you very much for all the color there. Just switching gears for my follow-up. You guys mentioned it sounded like some share gains within the portfolio at Samsung with them becoming a 10% customer again. I think last week, there was commentary from San Diego that they had upped their processor and baseband share at Samsung on the Galaxy 22 as opposed to the internal solutions. I wonder if you might comment about how you’re aligned with that change there and how sustainable you think it might be? Thanks. Liam Griffin: Yes. I mean on the modem side, the baseband processor, we don’t make that product, but we have technologies that will wrap around just about anybody’s baseband, whether it’s friend or foe. So we’re agnostic to that. And our customers are really going to make the decisions that they need to make to get the best performance. So, you could very well see a high-content device populated with a lot of very unique Skyworks Solutions that are all in-house, custom crafted, not fabless, done in-house in our building, in our factories with people that live and breathe wireless. And those same applications could have a baseband from Qualcomm or someone else. So, we live with that all the time. But the interesting thing is with baseband, you have got a single kind of monolithic high-performance device. When you think about what’s happening in a mobile phone today as we move into 5G and beyond, the number of connected things, the content, the size of the semiconductor devices thinking about filtering all the way from TC-SAW to Bulk Acoustic Wave, leveraging gallium arsenide. There is a lot of complexity. And it’s not done by any one company. So, I think if you look at the number of nodes that we address within mobile, it’s really, really high and diverse. So, there are some cornerstone pieces, of course, in every device. But our solutions are gaining a lot of share and the flexibility that we have, given that in-house fabrication and assembly and test and in-house filtering. So, we can do a lot of things that are a little more crafted unique, customer-centric approach, I would say and it served us well. So, there is room for more than one or two players in a high-end mobile device, but we feel really good about it. And I will say that we have been in this industry – I have been this in a long time, and I am really excited about the appreciation that our customers see and the technology that we can bring. And it’s actually very clearly demonstrated with the leading brands. And oftentimes, the mid-tier players, they want to get better, they want their technology better, and they come to us to try to help them make that leap. So, we feel good about that side. Operator: Your next question comes from the line of Edward Snyder with Charter Equity Research. Please go ahead. Edward Snyder: Thanks a lot. You seem to be pretty excited this year about the content gains in mobile, especially in the second half of this year. I was just wanted to dig into that a little bit. Should we expect similar gains in dual connectivity because that seemed to be a big growth last year, maybe fewer bands being added and more content for the bands you have? And to the extent that a millimeter wave comes out of phones, it sounds like the rumblings, maybe not for this year, maybe for the next year, does that have much of an impact on Skyworks’ content? And then I have a follow-up, please. Liam Griffin: Sure. Yes. No, we are excited about the opportunity, and we feel really good about the design win positions that we have with strategic customers, some products haven’t yet been taken to market, but they are ready. We are seeing more and more complexity in mobile device. A lot of opportunities still to grow, and our conviction is to continue to gain share and gain content, and I feel quite positive that, that will happen again in different ways and also with more specific devices as well which is good. So, that feels really good. And as we go forward, there are just a lot of other tools here that we are working. Our bulk acoustic wave technology is growing. It is continuing to hit higher and higher levels of performance and gaining value in some of the Tier 1 players with multiple Tier 1 players right now. So, there is a lot more to go on that end. We are still doing a great job on the broad market side. We talked about the numbers here. We are over 500 million clicks. And a lot of that technology as you know, that can be transferred. You could have a 5G engine that can go into a data center application it go into a mobile phone, it could go into an IoT device. So, we really want to be the universal connector there around 5G and related technologies supporting multiple end applications. Edward Snyder: And then for my follow-up, if I could. You brought 10% on Samsung this quarter. I am sure it will drop below that in your big ramp for your largest customer in the second half of this year. But one, do you expect it to be 10% for the year overall? And then secondarily and may be more importantly the big change going on here, because it was pretty small. You were down to 3% to 4% of revenue at one point in the last year or so. and now you are back above 10%. Is this largely due to their shift to modules in the mass tier, or are you also seeing – and to the extent that it is, how far into that program, do you expect your, I mean that’s a very big product line, so it’s going to take several years to penetrate. How much more runway do you have in the shift to modules in the master, if that’s where your content gain is? And maybe you could scale for us, how much of it is due to maybe a better content growth in the flagship, too? Thanks. Liam Griffin: Yes. No, that’s a good question. And I know you seek this follow-through. So, we have always been a partner with Samsung, but it had been challenging to sort of leap into the richer and more complex, more powerful connectivity modules and nodes. I am just doing a lot of really good work, shoulder-to-shoulder work engineer to engineer work with our team and the folks at Samsung to try to develop a more powerful solution that really demonstrates all these wonderful things that we can do with 5G. And so fortunately, our engineering teams and the know-how that we drop to market in other areas allowed us to do a great partnership job with the number two player out there, and it’s awesome. And it’s not a one single – one-trick pony deal at all. I mean there is a lot of room here for us to go. There is a lot of complexity that hasn’t been resolved. We love that, and the value opportunity for us is going to be very strong. So, we are really excited about it, quite frankly. I know we already talked a little bit about that in the call itself. But we are working with the top-tier players and the flexible customer-first approach, purpose-built technology is the way to go. We are not really focusing on last year. We are leveraging high-performing assets, most of those being procured and delivered right out of our own factory. So, we are excited about it. And those mid to premium players love it. They want to see that. They want to see trust. They want to know where the products are being built. They want to have a decision on it and a voice and all that stuff and going well. So, we think there is more to go. And we are pleased with Samsung, of course, coming into 10%, but there is still a lot of room for everybody else. Operator: Thank you. And your next question comes from the line with Gary Mobley with Wells Fargo. Please go ahead. Gary Mobley: Hey guys. Thanks for taking my question. Let me first apologize for the background noise. Going back to Chris’ question to try to quantify what some of these shutdowns may mean for your June quarter revenue. Your large customer gave a specific impact range, which I believe is 4% of their overall revenue, 5% of product revenue. Is that about the right way to think about the impact for you in the June quarter, let’s call it $50 million? Kris Sennesael: Yes, I think, Gary, that’s not about right. If you look at – we guided down sequentially 6% to 10%, 8% at the midpoint. I think if you look at average historical sequential declines, it’s in the 3% to 5% range. And so the only difference here is really the fact that our large customer as well as some other customers, right, are leaving revenue on the table in the June quarter, specifically because of the COVID-related lockdowns in April. You have heard from many of those customers that the situation has improved since then, and the factories are reopening, and they are going to try to work hard to fulfill that strong end customer demand that they see. But it’s going to be hard to make that all up in the June quarter. Gary Mobley: Appreciate the color there, Kris. And for the share buyback, I guess probably the best word to use to describe your buyback in the March quarter was aggressive, $420 million. Can you sustain that pace? And are you willing to maybe be creative in the way you fund your share buyback given the per share price? Kris Sennesael: Yes. It’s something that we look at it day-by-day, week-by-week, $418 million in the March quarter was an all-time record. We have never spent more than that amount in one given quarter. We still have some firepower there, and we definitely are continuing to generate strong free cash flow. And we will use that cash flow to, of course, continue to pay the dividend, and there is room for improvement there as well and to use it for share buybacks. Liam Griffin: Yes. I mean given where the valuation is right now, obviously, we are all over that. So, as Kris said, there is room for more, and I am glad we did what we did so far. But if more needs to be done, we can absolutely do it. The cash flow engine is very strong. The business is very solid. And we think as we go forward, more and more, that’s going to come through here in the numbers. Operator: Your next question comes from the line of Harsh Kumar with Piper Sandler. Please go ahead. Harsh Kumar: Yes. Hey guys. I have two questions. One, Liam, I was thinking – I was hoping that you could give us some clarity on the issues in China. I hate to focus on just 11% of your business, but it’s causing some issues. The phones that are made in China for Chinese consumption, COVID aside, do you think that, that – do you think, first of all, if there is any inventory of those on sold phones in China? And then secondly, COVID aside, do you think by the end of the June quarter, hopefully, that’s burned off. So, you get into the build season, you just see pro growth? And my follow-up, my second question, I will ask that right now. Can you help us think about your role with your large customer in a world where they are using their own motto? And what kind of help can you provide to them at that point in time? Liam Griffin: Okay. Alright. Harsh, I will try to start from the beginning here. Well, certainly, the China situation, there is a lot of factors, right. I mean the overarching factor right now is really just the final stages of assembly and test, where you see Foxconn, Pegatron – that is China is where the lion’s share of technology assembly and test and outbound, it’s the biggest hub in the world. So, many, many companies go through that hub, in multiple factories, multiple technologies. So, that’s just – that is a macro China situation that I think will get better. There is not too much we can do right now. And therefore, we had to lower guidance based on the risk and conservatively take our numbers down. But if you look at where we see things coming out, the appetite for the technology is still very, very robust. This is not – I don’t think that it’s going to be a major, major hit to the industry at all. I think we are going to get through it. It’s well understood. We know the parts of the equation that we manage our teams are all over technologies. Our fabs are working great. Our filter fabs are up and running. We are doing well here on the COVID side in the U.S., of course, you know that. But there are still some bumps. And I think that those bumps will be smoothed out in a matter of months. And we will do everything we can to make that happen. And meanwhile, we have also within China have kind of stepped up a little bit more towards the mid to higher end tier within mobile within China. So, we are starting to see a little bit more consumption in China, but not necessarily with the China brands. So, some of the China brands are rolling off a little bit, but some of the major brands, the top three are actually gaining. And that’s been a very important vector for us and it’s something that we anticipated where the smaller companies really need to step up and do more or they are going to follow by the wayside and the top three majors are going to continue to drive. So, that’s the dynamic that is in play. And that’s actually positive for us, quite frankly, because we are seeing more and more names like a Samsung that are stepping up and driving technology and working with Skyworks and others to try to really make that happen. So, that’s a positive for us rather than how do we make a lower cost bill of materials. And then your last comment with respect to largest customers generically here, so I will just say this. We have a very powerful relationship with very strategic customers, and we respect that every day. It is extremely important. It’s not just the people side, which is great. It’s also the technology and collaboration and the trust and the execution. And that comes with great people, but also comes with investments in the assets and know-how around the portfolio and understanding the nuances between the carriers and the manufacturers and all of the drill systems that we work with. And the way that works is it’s a partnership where we can provide great technology to make our customers better. That’s the initiative, that’s what we want to be able to do. And we have been able to do that with some really important high bar players, and we love it. And I think that’s going to change. And with respect to modem changes, not going to be a problem, we have worked with top-tier customers with Qualcomm on the modem, with Intel on the modem, with MediaTek on the modem that we are agnostic, and we have to be. We would not be able to run the business the way we do if we didn’t have that flexibility. We have talked a little bit about that before, but just to reiterate, Skyworks’ ability shoulder-to-shoulder, engineer-to-engineer, we know how to solve problems. We know how to create success with our customers and that’s the culture of our business. So, that’s not going to change. But I appreciate that was actually a good question just to really kind of cover some of the nuances around the real dynamics behind the technology. And we don’t take any of that for granted. And every day, we just want to make our customers happier. Operator: Thank you. And ladies and gentlemen, that concludes today’s question-and-answer session. I will now turn the call back over to Mr. Griffin for any closing comments. Liam Griffin: Thank you all for participating in today’s call. We look forward to seeing you at upcoming investor conferences. Thank you. Operator: Ladies and gentlemen, that concludes today’s conference call. We thank you for your participation.

Operator: Good afternoon, and welcome to Skyworks Solutions' First Quarter Fiscal Year 2022 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. Mitchell Haws: Thank you, Rachel. Good afternoon, everyone, and welcome to Skyworks' First Fiscal Quarter 2022 Conference Call. With me today are Liam Griffin, our Chairman, CEO and President; and Kris Sennesael, our Chief Financial Officer. Before we begin, I would like to remind everyone that our discussion will include statements relating to future results and expectations that are or may be considered forward-looking statements. Please refer to our earnings release and recent SEC filings, including our annual report on Form 10-K. For information on certain risks that could cause actual outcomes to differ materially and adversely from any forward-looking statements made today. Additionally, the results and guidance we will discuss include non-GAAP financial measures consistent with our past practice. Please refer to our press release within the Investor Relations section of our company website for a complete reconciliation to GAAP. With that, I'll turn the call to Liam. Liam Griffin: Thanks, Mitch, and welcome, everyone. Skyworks delivered a strong start to the fiscal year, establishing all-time quarterly records for revenue and free cash flow. Looking at the quarter in more detail. We delivered revenue of $1.51 billion, above consensus and up 15% sequentially, demonstrating the strength of our broadening product portfolio. Specifically, the mobile business grew 12% sequentially, driven by increasingly complex architectures in 5G phones at our largest customer and momentum across the Android ecosystem. In parallel, our broad markets business achieved a record $477 million in the quarter, up 23% sequentially and 46% year-over-year. Our growth was fueled by both the continued adoption of our solutions across 5G, IoT, automotive and wireless infrastructure, and an expanding set of new customers and markets from our recently acquired I&A business. Importantly, Skyworks continues to drive strong profit margins and exceptional cash flow. We achieved gross margin of 51.2% and operating margin of 38.8%. We posted earnings per share of $3.14, above consensus and up 20% sequentially. Finally, we generated record Q1 operating cash flow of $582 million. As our first quarter results illustrate, the growth trajectory we established in fiscal 2021 is extending into fiscal 2022. We continue to see deployments accelerating with 5G cellular subscriptions predicted to grow from 700 million today to more than 4.4 billion by the year 2027. As connectivity becomes more vital to the ways we work, educate and play, devices are increasingly integrating 5G with advanced WiFi, precision GPS, Bluetooth, Zigbee and other wireless protocols, creating the seamless and ultrafast experience demanded by our customers. The rapid adoption of new wireless technologies enables a proliferating set of use cases with design wins spanning mobile and broad markets, further bolstered by contributions from our recently completed acquisition. Specifically in mobile, we shipped Sky5 platforms across leading smartphone OEMs, including Samsung, Oppo, Vivo and Xiaomi, among others. In enterprise and IoT, we supported WiFi access points at Siemens, powered NETGEAR's latest WiFi 6 and 6E mesh system, partnered with British Telecom to launch 5G home routers, ramped WiFi 6 and 6E modules at Juniper Networks and Telus, and provided digital isolation solutions for GE Consumer Appliances. Moving to automotive. We leverage Sky5 technology to enable telematics, security, driver assist and other advanced services at leading OEMs. We scaled volume production of timing and isolation products, enabling the leading EV manufacturers. And finally, across the infrastructure and industrial space, we captured design wins at Quectel for enterprise M2M platforms, delivered industrial IoT solutions to Itron, Honeywell and Thales, supporting smart energy and factory automation. We also expanded our position in timing applications at the top 5 data centers. And as markets evolve, we expect to deploy billions of wireless devices, capitalizing on a strong multiyear growth trend. Advances in cloud and edge computing, autonomous vehicles and factory automation, together with the emergence of the Metaverse, we are intensifying the burden on existing networks, catalyzing demand for our highly integrated and customized platforms. From inception, Skyworks has been a driving force empowering the wireless network revolution, connecting people, places and things. We invested early and extensively to develop and fabricate cutting-edge technology at massive scale. Today, we're a global leader providing the essential elements required to deliver the highest performance connectivity platforms in the industry, producing billions of units, integrating core technology nodes, including gallium arsenide, bulk and surface acoustic wave, as well as the most advanced multi-chip module test and assembly capabilities in the world. Underpinned by this powerful foundation, we are leading the transition of 5G, inspiring a new era of unrivaled innovation. The strength of our balance sheet and consistent outperformance demonstrates the significant value of our vertically integrated model and the compelling advantages it delivers. Looking forward, we are committed to supporting the strategic investments in technology, product development and world-class manufacturing scale to further extend our market leadership. With that, I will turn the call over to Kris. Kris Sennesael: Thanks, Liam. Skyworks' revenue for the first fiscal quarter of 2022 was $1.51 billion, up 15% sequentially, driven by continued strong demand across our entire portfolio. Gross profit in the first quarter was $773 million, resulting in a gross margin of 51.2%, up 20 basis points sequentially. Operating expenses were $187 million or 12.4% of revenue, demonstrating leverage in our operating model while continuing our strategic investments in support of future growth. We generated $586 million of operating income translating into an operating margin of 38.8%, up 160 basis points sequentially. We incurred $9 million of other expenses, and our effective tax rate was 9.3%, driving net income of $523 million. So strong revenue growth and execution on margins brought diluted earnings per share of $3.14, up 20% sequentially. Turning to the balance sheet and cash flow. First fiscal quarter cash flow from operations was a Q1 record of $582 million. Capital expenditures were $96 million, resulting in an all-time record free cash flow of $486 million and a free cash flow margin of 32%, driven by strong profitability and great working capital management. In fact, inventory levels were reduced by 22 days to 103 days, and receivables were reduced by 5 days to 47 days. In terms of capital allocation during the quarter, we paid $93 million in dividends and repaid $50 million of our term loan, and we repurchased 1.7 million shares of our common stock for a total of $269 million. In summary, the Skyworks team continues to execute well, delivering strong profitability and rapid free cash flow in the December quarter, with design wins across our growing product portfolio and customer set, positioning us to outperform through 2022. Now let's move on to our outlook for Q2 of fiscal '22. We expect to deliver double-digit year-over-year revenue and earnings per share growth in the March quarter. Specifically, we anticipate revenue between $1.3 billion and $1.36 billion. At the midpoint of $1.33 billion, revenue for the quarter is expected to increase 13.5% year-over-year. Gross margin is projected to be in the range of 50.75% to 51.25%. We expect operating expenses of approximately $186 million to $188 million. Below the line, we anticipate roughly $10 million in other expense and a tax rate of approximately 9.5%. We expect our diluted share count to be approximately 166 million shares. Accordingly, at the midpoint of the revenue range, we intend to deliver diluted earnings per share of $2.62, an increase of 11% over Q2 of last year. And finally, given our strong cash flow and confidence in the business model, we will continue to focus on investing in our business, while returning cash to the shareholders through both share repurchases and dividends. And with that, I'll turn the call back over to Liam. Liam Griffin: Thanks, Kris. Despite macro challenges in supply chain specific headwinds, Skyworks delivered excellent first quarter results, underscoring the increasingly diverse composition of our customer base and extending our track record of strong profitability and robust free cash flow generation. This strong performance and outlook reflect our critical position within the wireless ecosystem and how complexity favors Skyworks with its vast IP, deep customer relationships, differentiated manufacturing capabilities and market-leading solutions. The momentum established in Q1 positions Skyworks for another year of record revenue and earnings. That concludes our prepared remarks. Operator, let's open the lines for questions. Operator: [Operator Instructions]. Your first question comes from the line of Chris Caso with Raymond James. Christopher Caso: I guess for the first question, can you help us detailing the breakout of broad markets versus mobile in the quarter? And what your expectations are for those markets as we go forward into March? Kris Sennesael: Yes, Chris. So as we indicated in the prepared remarks, we had very strong performance in growth markets. It was roughly 32% of our total revenue compared to 22% last year. And so we saw a very strong growth, 23% sequentially, 46% on a year-over-year basis, and the growth was driven by ongoing strong demand for wireless connectivity, especially as it relates to IoT solutions. In addition to that, we have a strong contribution, all-time record from the acquired business of the Infrastructure & Automotive business as well. So great execution in growth markets. On the flip side, of course, you have mobile, which was in the December quarter, approximately 68% of revenue. It was up 12% sequentially. It was down 13% year-over-year, but you have to take into account the timing of the ramp of flagships, especially last year, where you -- just to remember, the large customer was -- had a condensed ramp with a late launch in the late October, early November time frame. This year, the launch was spread over the September and the December quarter, but great execution there as well in mobile. As it relates to the March quarter, we typically don't really guide by segments, but we just provide the guidance for the March quarter, which is up 13.5% year-over-year. We do expect both segments to grow double-digit year-over-year, of course, stronger in broad markets than it is in Mobile. Christopher Caso: Okay. And just following on to some of the comments that you made with respect to seasonality. And last year, seasonality was skewed, as you said, because of the late launch of the phones. But this year, there were also capacity constraints affecting your customers also. So as your largest customer said that they weren't able to ship as much as they wanted in the December quarter. How does that affect seasonality for the March quarter this year? And does it have any implications for June as well, if some of your customers perhaps are catching up with unfulfilled demand during the March quarter? Kris Sennesael: Yes, Chris. So again, if you look at the guide we provided for March, down 12% sequentially, up 13.5% year-over-year. But the down 12% sequentially is actually slightly better than normal seasonality if you compared to the last 5 years for the March quarter. As you probably remember from the call of our large customer, they left some revenue on the table in the December quarter, and they're still trying to catch up, and they see improvements going into the March quarter. Looking ahead for June, again, we only guide 1 quarter at a time, but sitting here today, I don't see any reason why June would not be in line with normal seasonality. So we do expect normal seasonality for the June quarter. Also, keep in mind that June is just a transition quarter, right? We feel very strong, based on our technology road map, the products, the design win momentum, and the design wins that we have on the book right now, we feel very strong for further sequential growth into the September and December quarter typically, as you see, with strong performance in the second half of the year. Operator: The next question comes from the line of Gary Mobley with Wells Fargo Securities. Gary Mobley: I'm going to pick up right where you left off Kris, and ask specifically what you would classify or quantify as a typical June quarter-over-quarter seasonal comp focusing specifically on the Mobile business? And then I have a follow-up. Kris Sennesael: Yes. So for the total company, if you look at the average of the last 5 years, in June, we have been flat to down 5%. So call it, an average 3%, 4% down sequentially in the June quarter. That's the average over the last 5 years. Gary Mobley: And that's Mobile specifically, to be clear? Kris Sennesael: That is mostly driven by Mobile. Gary Mobley: Okay. All right. And then switching gears over to the Broad Markets business. I know that you have been capacity constrained for that business, but I presume given the upside that you delivered in the December quarter, that's less of an issue or turned out to be less of an issue. So maybe if you can give us an update on where you stand with expanding capacity to support the Broad Markets business, how the backlog is trending for that business in relationship to the improved supply? And that's it for me. Liam Griffin: Yes. Sure. This is Liam. Well, as noted in the prepared remarks, we had a record Broad Market quarter, $477 million, 46% year-over-year. There's just a lot more for us to do in those areas. We are extending the reach of customers -- new customers. We're driving more complex cellular engines, IoT engines to our customer base, also gaining some traction -- meaningful traction with the I&A portfolio from Silicon Labs. So that's coming together in. There's so much opportunity in the Broad Markets business, and we're happy to see the numbers that we're discussing now. But the market TAM there is substantial. If you think about the scale and scope of where we can take our products. So there's a lot of work to be done there, but we're really pleased with the effort. Our team is doing well, having some new customers in our corner is always great, and we're going to continue to drive in that way. So good stuff and a lot of good technical synergy as well. So most of these products do have a kind of a common core in some cases. So it does help us drive through our supply chain very effectively in high velocity and leveraging that scale that we talk so much about. Operator: The next question comes from the line of Ambrish Srivastava from BMO. Ambrish Srivastava: Apparently tight execution on the balance sheet and on the cash flow side. Kris, just a quick -- this is a housekeeping. What should we expect CapEx to be for this year? And then I had a quick follow-up, please. Kris Sennesael: Yes. So CapEx in the quarter was $96 million, which is somewhat light, but we don't really manage the CapEx quarter-by-quarter. We will definitely continue to invest. This is still early stages in a multiyear 5G upgrade cycle. As Liam just explained, there's a lot of growth opportunities and growth markets. And so we will continue to further invest in our manufacturing, adding more size and scale, but at the same time, also supporting the technology road maps. We have major success with bulk acoustic wave, and so we are -- the revenue of integrated devices that have BAW filters inside is growing very strong, and we're supporting that. We're also making the necessary investments in Mexicali, in our back-end operation, supporting advanced packaging and test. And so again, we have a lot of growth opportunity for us. We will support that, and we will continue to expand the capacity and pay CapEx. Ambrish Srivastava: Sorry, Kris. So just in terms of numbers, double digit, low double digit is the right number to be modeling? on top intensity? Kris Sennesael: Double-digit. Ambrish Srivastava: Okay. Okay. And then for my follow-up is, Liam, for you on the broad markets business. What's now that you have included the Silicon Lab business, what's the right way to think about the longer-term CAGR for this business? Liam Griffin: Yes, absolutely. We definitely see great opportunity in that portfolio as it is right now. And so levering around that is a very substantial sales team from the core Skyworks still leveraging the I&A portfolio. We've done really well in the last couple of months of introducing the I&A products and technologies to customers that we already have, proven customers that we do a lot of business with, which is a great synergy for us. We are scaling operationally, the majority of the portfolio and the I&A business had been more of a fabless play. Over time, we're going to bring that technology under our own roof here at Skyworks and leverage the great scale that we have. So it's a lot of really interesting things that we're doing on the inside, inward looking, but there's tremendous opportunity on the outbound side. So lot of activity, great people. The spirit and the business there is very high and the opportunity that we have is tremendous. We really have a small piece of the total opportunity size that product line can bring. So I think we're excited about the opportunity. We'll continue to report on our results. But thus far, things have been going really well. Operator: The next question comes from the line of Blayne Curtis with Barclays. Blayne Curtis: Just wanted to follow back on the Mobile side and just make sure I heard you saying, just because we've heard it from so of the other companies. But in terms of the March seasonality, I mean, we've heard that the largest customer has been pulling more product and maybe has less than a typical seasonal period. They're also launching a new phone to add 5G. So that's all good. So I'm just trying to understand, are you seeing that -- because you made comments that June should be normal, and I think you've now had a couple of companies talk about June being down more, because March is stronger. I want to just go back to that point and make sure I understand what you're saying. Liam Griffin: Sure, Blayne. This is Liam. Yes, I think what you may see here is relatively typical demand cycle. But then within that demand cycle, where is the technology and how do you grow that technology even in constant units, right? So I mean, it won't be constant units, but if we have a baseline. Some of the enthusiasm around our view going into June is really about design wins that we have squarely in our sight. In some cases, design wins that have been consummated, they haven't shipped yet. So a lot of that is Skyworks specific. But the typical calendar or fiscal cycles that we tend to see are still relatively in place. But I will tell you that the opportunity within the devices that we're serving and with the customers that we're serving, we're seeing growth potential there. And that's much more predictable for us. Because we know exactly what we're winning, we know exactly where that's going, we know how to prepare that operationally, and still do that shoulder-to-shoulder with the leading customers. So we feel really good about it. The macro seasonality could be a little bit different, but we feel very confident in what we're going to do. Blayne Curtis: And then just a question for Kris. I think when you bought the Silicon Labs business, you're going to require -- retire debt quite quickly. I think you were actually pretty active on the buyback for December. So with the pullback in the stock, are you thinking about that differently? And anything you can talk about for the remainder of this fiscal year in terms of buybacks versus debt retirement? Kris Sennesael: Yes, Blayne. So currently, we have still $2.2 billion of debt on the balance sheet in addition to $1 billion of cash. So we feel really good about our liquidity position today. In terms of even gross debt, it's less than a turn of EBITDA. And so given where the stock is trading today and what it was trading over the last 3 months, we have switched on the buybacks again, and we will continue to do so going forward. Operator: The next question comes from the line of Edward Snyder with Charter Equity Research. Edward Snyder: A couple if I could. So Liam, Skyworks traditionally has been very strong in Wi-Fi, the 2.4 gig section, I think you own when they use external amps. But that's always been shipped in the phone business into a SIP, a system in a package from somebody else, combined with a lot of other products. But it looks like now finally, the Android ecosystem is moving to more of an RF module architecture and where they'll break out the RF separately. So I kind of understand what that means from a content point of view, especially with WiFi 6E, but I suppose as a problem does it, I mean because now in addition to the amps, you've got to have the best filters, 2.4 uses a tough BAW filter and WiFi 6E will use a tough BAW filter. So one, are you seeing this shift to modules in WiFi finally? And two, does it present any difference in content opportunity for you? Does it go up? Does it go down? Does it stay the same? How do you characterize Skyworks' positioning if the Android world moves in mass to this new architecture? And I have a follow-up. Liam Griffin: No, that's a good question. I think -- I don't know if everybody followed that, but I know where you are. So the bottom line on that, which is correct, we have an outstanding position in WiFi today. Just let me make that clear, very substantial. And it's been going great. But there has been improvements in technology and demand for higher speeds and higher performance. And in those cases, bulk acoustic wave is a critical element within the WiFi system. So we have ramped WiFi -- we have ramped our bulk acoustic wave technology, obviously, in smartphones with a lot of work, a lot of investment, and that's been going great. And now we're seeing that move into WiFi. And we have design wins now that capture bulk acoustic wave within a WiFi system, multiple customers. So it's another vector of growth for Skyworks. And a lot of that is in the Broad Market side. It's very diverse. It's certainly -- we love our handset business, but you've got a handful of customers. When you get into the connectivity nodes around WiFi and other cases, you have a broadening there. So we're in good position there and a great position also now to start to lever up bulk acoustic wave beyond the mobile phone. Edward Snyder: So it's safe to say you're shipping a coexisting BAW filter at 2.4 gig, which is one of the reasons I thought you even started the BAW to protect your WiFi business... Liam Griffin: We do we have that. We do have those today, and we're going to continue to go higher in frequency as we move along. Edward Snyder: Okay. Then if I could. You did very well on flagship phones last round. They're now finally moving the transmitter into the diversity section and you landed that, which is a big coup. So 2 questions if I could. What does the content opportunity look like at your large customers in that area? Because it tends -- you tend to really dominate the diversity section and of course, the low bands, too. But now that they've already added that, are we going to see any bigger kickers or have we got most of what we need there. And then how does this play out with everybody else, Samsung, in the Chinese OEMs? One, when do you think they'll move to the transmit in DRx? 2, do you think the same dynamic competitively will play out where you're going to kind of sweep that out and push wherever else like Murata, out of it like you did on the flagships? Liam Griffin: Yes, yes. So on the higher end, the opportunity there, we talked about driving higher performance and filtering and moving up the data rate going to 6E, all that's working. But then if you go down to the mid-tier, there's just -- there's tremendous opportunity, because there's still -- the vast majority of phones in the Android world in some of the markets in China are just now stepping up with the higher-performing filters. And they get great performance return for that. So we're doing a lot of work and shoulder-to-shoulder design and work with customers to make sure they see the merits of this technology. And the performance upside that they gain for a couple of incremental dollars. So I think there's a great opportunity there, coming from a low base, too. So that's not -- isn't just a simple upgrade cycle. It's coming from a very low base to mid- to higher end, and we'll continue to work along that curve. And the know-how that you build in Mobile and in RF translates very well. So all the hard work and the engineering talent that we have at Skyworks that's been working on flagship phones for years and years. They know how to scale when it goes into WiFi and some of these other wireless technology. So we look forward to leveraging that skill set as we meet with new customers. Operator: The next question comes from the line of Craig Ellis with B. Riley Securities. Craig Ellis: Congratulations on the nice quarter and cash flow. I wanted to start with an operational question. So clearly, we've got a very strong demand environment out there right now. And Kris, it sounds like you expect the business to be seasonally strong in the back half of the year. So can you just talk a little bit about how you plan to manage manufacturing loadings as we go through the calendar first and second quarter or your fiscal second, third quarters? Should we expect to see that you'll build inventory to put yourself in a position or for whatever reason would inventory stay at a relatively lower level here? Kris Sennesael: Yes, Craig. I mean we do that every year, because we do have some large seasonal swings in our business, right? We have typically strong sequential growth in September, December and then down in March and kind of flattish to slightly down in June. That's the seasonal pattern. We're, of course, trying to maximize factory utilization and drive efficient use of our capital equipment. And so we are always level loading as much as we can. It's not perfect. That's why you also see some seasonal fluctuations in the gross margins there as well. But we definitely will try to maximize that. Also, you know in this business, the design wins, we know them way ahead, right? So we know what we win, we know the product. We can start building to a certain extent ahead of it, and we do that every year. Craig Ellis: Yes. Got it. That's helpful. And then I'll flip one over to Liam. Liam, I think there's a general view out there that this year will be a year for somewhere around 40% growth in the smartphone market, really as we ship a lot more midrange 5G smartphones. So I know you just talked about some of the things you're excited about on the Android ecosystem. But is it possible to put a quantification around the degree of content gain that's left at that tier of the market and beyond that tier what's still possible for Skyworks? Liam Griffin: Sure. Sure. Yes. I mean we have 2 vectors, right? We have kind of the mid-tier moving up and then you have the premium devices really stepping up with high performance. And both of those portfolios have been great for us. And I think our ability, the years and years of time and investment, and shoulder-to-shoulder engineer work, we basically follow the lead with our customers. So we're very flexible. We can go to the highest end and we can also bring companies that haven't engaged and get them on board. And so that continues to grow. And the merits of mobility and wireless connectivity, everyone on the call knows how important that is. So there's a lot of opportunity there. And then if you move out of smartphones, Craig, we had a question on that a few minutes ago. We just -- we're really excited by the potential for proliferating connectivity everywhere, right? You're hearing more about M2M, you're hearing more about automotive. These are real. These are real markets right now. There's WiFi opportunity. It could be cellular. All of these end markets have great promise for us beyond just the mobile phone and the technologies that we have and the in-house scale that we have really creates flexibility. So we don't have a one-stop shop. We can be very crafty and configured -- configurable with our customer, depending on the application. So there's a lot of really interesting design wins that we have that really come about with customer problems and our engineers huddling together to solve it. So it's really cool to see. And you're going to see more and more growth around that. But still, the connectivity vector is the primary element here to make it all work. Operator: The next question comes from the line of Brett Simpson with Arete Research. Brett Simpson: Maybe two big picture questions, and maybe for Liam. First, just Android as a market opportunity for Skyworks. I guess your mobile business is much more skewed towards iOS historically. But if I look at Android, we probably look at about $1 billion of revenue for Skyworks every year, and there's more than 1 billion units shipping for Androids. So you're getting sort of less than $1 today of RF content on average. And I guess just moving to 5G and more modules, can you perhaps just talk about the opportunity that you see ahead of yourselves in terms of getting more strategic with customers or where you think you can really start to sort of grow your average content per unit in the Android ecosystem? Liam Griffin: Sure. Sure. That's a great question. Yes, and you're right. I think there's a lot more opportunity in Android now for us to go get. And it's really about an education opportunity for us. And we're working with these customers. We're demonstrating what a little bit of incremental content can do in terms of the end user's experience. So there's a lot more of a drive there. We absolutely -- it's not a technical hurdle for us. I mean we know how to do it. It's more around how do we craft the solution that provides the technology and the performance and does it at a price point and a cost point for us, where it makes a lot of sense. And that's happening now, because as you start to see 5G really accelerate, to really get the performance that's been promised and that's been desired, you've got to put in more content -- you got to put in more filtering as we talked about already in the call. You need to raise the performance of your gallium arsenide technologies, you got to bring them in. You got to look at your packaging and test, and the coexistence issues that happen when you have more and more of these technologies in a single application, whether the application is a phone or something else. So there's a lot there. A couple of things I would say. In the last several months, we've been doing much, much better at the higher end of Android. Customers like Samsung have been very strong. And these are on the new platforms. These are on the highest performing new platforms that they're offering. And then we're going to bring along the Oppo, Vivo, Xiaomi, players. In aggregate today, those are still very significant for us, but the content opportunity from today's baseline and where it could go over the next 2 to 3 years is quite substantial. So the point that you made at the beginning is definitely well taken. So that's how we see that, and we've got great inroads right now on products that will -- they have a little bit of a different cycle than some of the large U.S. players, but you should see a lot more content from Skyworks in Android products going into the second half of the year and into 2023. Brett Simpson: Great. Maybe just a follow-up, Liam, on Ed's question on WiFi. I guess, there's something like over 4 billion units of Wi-Fi that ship every year. And I'd just love to understand the RF TAM or the opportunity set that you see, especially with the transition to 6E and some of the changes that we're going to see and how this is packaged up. But I guess we could expect PCs and routers and smartphones and TVs to move quite aggressively towards 6E over the next sort of year or two. But is there anything you can share with us in terms of your strategy and how you plan to address this? Because I guess this transition should be quite positive for RF players like Skyworks that's done very well traditionally in the WiFi space. Liam Griffin: Yes. No, that's a great point. So the appetite for high-end WiFi has really accelerated, and you can see the use case opportunity everywhere now, right? You do consumer products all the way to the super high end, you have WiFi, whether it's 6 or 6E. So that's all going to move in the right direction for us. And so one of the things that will happen as we move along the curve in Wi-Fi, it will actually create a cycle, not unlike what you see in mobile, where content grows and then content continues to move as the application and the burden on the technology rises, right. That the more important -- the higher the speed, the more efficient it needs to be, that's going to require better technology on the semiconductor and the filtering side. So that plays together very, very well for Skyworks. And think about us as kind of the mid- to high-tier player, but we can step into that low end of the market, too. But we are seeing a lift when you start to look at 6 and 6E in Wi-Fi. There's bulk acoustic wave filters there that we've already talked about on this call, but very, very important in the higher-end WiFi. And not today, highly populated. It's a cycle there that is on the upswing and it's still early. And we have the know-how to do it. So the wonderful thing there is we have the key elements to get it done. Similar elements that we would have in a high-end smartphone, but position and scale that configured in a way to deliver WiFi signals versus cellular. So there's a lot of opportunity there, and it plays into core technologies that we have in-house. So that's a really good question, and it is a key element in our strategy in Broad Markets is to do more and raise the bar there on overall WiFi performance. Operator: The next question comes from the line of Tristan Gerra with Baird. Tristan Gerra: So you've talked about the strength and opportunities in the Android ecosystem. A few years ago, you really had a greenfield of opportunities in the 3 to 6 gigahertz range, notably at your key customer. So how should we look at the competitive landscape now with Qualcomm recently announced ultraBAW RS in the sub-70 gig range, MediaTek also getting in that segment. So it feels like that 3 to 6 gig segment is where you've gained a significant share a few years ago starting to get more crowded. And I'm wondering whether there could be ramifications of that, including in the Android ecosystem. Liam Griffin: Yes. I mean we're actually in a pretty significant growth path with the bulk acoustic wave filtering technology that would populate the 3 to 6 gig range. We also have a great deal of know-how and complexity on both transmit and receive and also the way to integrate the complexity around that. So when you're dealing with the high-end smartphones that would demand that kind of performance, you got to have the isolation, you've got to have the form fit and factor to integrate all of that. Because you're going to carry all of the existing 4G ,5G stuff around it, and then you have to populate when you get to 3 to 6 gig, there's going to be some additional filtering. And that has to all be coexisting in a way that makes perfect sense within the device itself, current consumption, et cetera, size and scale. So we know how to do that. There's absolutely no gap at all, and we are populating 3 to 6 gig now. And as we mentioned, our BAW filter technology is very robust, extremely competitive in populating some of the most iconic highest-performing phones today. So that same recipe can scale across Android, can go to the highest end, Smartphones, can find itself in applications that are not mobile applications, like automotive, for example. So we have the keys for that. So that's something to work on. The market, in some cases, is just starting to demand this technology. In some cases, the market has been behind the technology. But now we're starting to see the intersection with the high-performance technology and the needs of the consumer and the market together. And I think that's where things really are going to accelerate. Tristan Gerra: Okay. Great. And then as a quick follow-up, obviously, you have opportunities for content increases and share gains. How do you look at the inventory situation in China smartphone OEMs? And is that something we should get concerned over the next few quarters? Liam Griffin: Yes. For us, we don't see anything -- I mean, there's some bumpiness there, but not in the portfolios that we're driving right now. We keep a very, very lean view of our products. And Kris mentioned, it in terms of our days of inventory, et cetera, we're very -- we're not a big distribution play. We're kind of like, we go direct. So we have a very clear view of where the demand is, where the products are. And for the most part, things have been kind of short in terms of supply chain, which has limited some of our customers and created some imbalance. I think some of that's getting ironed out now. With Skyworks, as you know, we -- the lion's share of our business is done in-house. We have our own gallium arsenide technology. We have our own TC-SAW, standard SAW, bulk acoustic wave, assembly and test, all that stuff is in-house. So we're able to execute extremely well even if the conditions are choppy out there in the supply chain. So there can be some movement around that. But we feel very good about our ability to execute in that way. Operator: The next question comes from the line of Kevin Cassidy with Rosenblatt Securities. Kevin Cassidy: I'm just -- we're getting a lot of information around input costs going up. And I wonder how you're controlling that. It looks like even your OpEx stays kind of flat next quarter, but also just for all your manufacturing. How are you controlling input costs? And what's the outlook for the rest of the year? Kris Sennesael: Yes, Kevin, I mean, this is not a Skyworks specific issue. There's definitely some input cost increases. But as Liam just said, I mean, we control a lot of our own supply chain. And we have -- most of the supply chain is actually in-house. Now we still do buy some third-party materials, and we have seen some increases there as well. But if you look at the gross margins, I mean, we have been able to slightly improve our gross margins, in part because we do have also a dynamic pricing policy. And that means we increase or decrease prices where we can, depending on our competitive landscape and depending on certain increases or decreases in our cost structure as well. Kevin Cassidy: Okay. Great. And just a reminder on the I&A business that you just acquired, what's the manufacturing strategy with that for the longer term? Liam Griffin: Yes. I mean right now, we are still operating in kind of the fabless play, although still leveraging our teams in a way that's very cohesive. But there's definitely operational scale advantages with bringing some of the core technologies from the I&A lab business in the core Skyworks facilities. I mean, I think that's -- well, we know. I mean, that's something we're working on right now. And it is 100% in our control. We don't need help for it. We know exactly what we need to do. We just need to get it done. And we'll do a lot of things, because it will open up the portfolio greatly. There'll be more scale to drive the products. And there's also, as I said earlier, a great synergy with the technologies that we have today and how they can dovetail with the I&A business, but also the very, very large roster of customers that the slab I&A business has that we can generate and engage our customers today with them. So there's going to be some great synergy there, upside synergy around revenue, and also synergy around operations. So looking forward to seeing that more as we pursue the business longer. Operator: Thank you. Ladies and gentlemen, that concludes today's question-and-answer session. I'll now turn the call back over to Mr. Griffin for any closing comments. Liam Griffin: Thank you all for participating on today's call. We look forward to talking to you at upcoming investor events. Thank you. Operator: Ladies and gentlemen, that does conclude today's conference call. We thank you for your participation.

Operator: Good afternoon and welcome to Skyworks Solutions Fourth Quarter and Fiscal Year 2021 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: Thank you, Rachel. Good afternoon everyone and welcome to Skyworks' fourth fiscal quarter and year-end 2021 conference call. With me today are Liam Griffin, our Chairman, CEO and President, and Kris Sennesael, our Chief Financial Officer. Before we begin, I would like to remind everyone that our discussion will include statements relating to future results and expectations that are or maybe considered forward-looking statements. Please refer to our earnings press release and recent SEC filings, including our annual report on Form 10-K for information on certain risks that could cause actual outcomes to differ materially and adversely from any forward-looking statements made today. Additionally, the results and guidance we will discuss include non-GAAP financial measures, consistent with our past practice. Please refer to our press release within the Investor Relations section of our company website for a complete reconciliation to GAAP. With that, I'll turn the call to Liam. Liam Griffin: Thanks, Mitch. And welcome everyone. Before I touch on the fourth fiscal quarter results, I want to highlight the significant accomplishments that underpin a record breaking year for Skyworks. First, total revenue grew $5.1 billion, 52% ahead of last year, representing an increase of over $1.7 billion. We increased earnings per share to $10.50, up 71%. Operating cash flow expanded to $1.8 billion, an increase of 47%. And we completed a strategic and compelling acquisition, immediately diversifying our product portfolio and expanding our market reach. Finally, with the investments we've made, Skyworks navigated a complex supply chain environment, leveraging world class manufacturing capabilities across strategic technology. Now turning to Q4 where Skyworks delivered record performance. Revenues in our mobile and broad markets portfolios both grew at double-digit rates sequentially and year-over-year as we capitalized on broad based momentum fueled by demand for our unique connectivity solutions. Specifically, we did revenue of $1.31 billion, achieved gross margin of 51% and operating margin of 37.2%. We posted earnings per share of $2.62, exceeding our guidance by $0.09 and generated strong operating cash flow, totaling $398 million in the quarter. The complexity inherent in 5G and demand for highly integrated solutions were major catalysts in driving our performance. The momentum in global 5G carrier subscription is building, with estimates of 580 million users today, expanding to more than 3 billion users by the end of 2025. As expected, smartphones are leading the early transition. But new innovative use cases are emerging from automotive and industrial IoT to enhanced virtual reality, gaming and telemedicine. Importantly, the power of 5G is increasingly being harnessed to drive sustainability efforts across industries worldwide, providing a wireless backbone to AI powered ecosystems, combining measurement analysis and optimization. For example, a major US manufacturer is combining wireless sensor-enabled cameras with artificial intelligence to reduce chemical usage by 90%. And a European startup is deploying wireless climate sensors in agricultural applications, to drive crop yields up to three times. Looking ahead, 5G has the capacity to manage diverse connections across industries as it becomes the universal connector from the home, to the office, to the factory floor and to the farm. Skyworks is uniquely positioned to capitalize on this transformation with decades of connectivity leadership. The acceleration of 5G powered broad set of use cases in Q4 with design wins encompassing the newest, most innovative smartphones and IoT devices, as well as gains in wireless infrastructure. Specifically, in mobile, we accelerated the reach of our Sky5 portfolio, powering the latest launches at leading tier 1 smartphone OEMs, supporting more than 20 platforms. In addition, we shipped Sky5 solutions across Samsung Galaxy's tablet portfolio. And in IoT, we continue to gain new customers and expand content. We delivered 5G CPE connectivity solutions to Nokia. We partnered with Swisscom to launch their Wi-Fi 6 GPON residential gateway. We ramped Wi-Fi 6 and 6E platforms at NETGEAR and Cisco. Launched connectivity in home security devices with Amazon Ring and Comcast. And captured design wins at Garmin supporting mobile fitness applications. In automotive, we supported autonomous driving systems with a market leading robo taxi platform and enabled the advanced charge control unit systems for a tier 1 European automotive OEM. Across the infrastructure markets, we provide power isolation solutions to a strategic manufacturer of EV, including residential solar and energy storage systems. And we secured multiple design wins in next generation MIMO and small cell base station installations. Moving ahead, we see a multiyear secondary technology evolution with our aperture widening from smartphones to industrial, automotive and expansive set of IoT devices. Skyworks is fueling this dramatic technological shift with our unique capabilities. Integrating not only 5G, but increasingly with our other critical connectivity protocols, including high performance Wi-Fi, Bluetooth and precision GPS. As these opportunities emerge, Skyworks is positioned to win, with the breadth and depth of our customer relationships established over 20 years, our experience across multiple technology transitions, and a dedicated and talented workforce that executed extraordinarily well during fiscal 2021. With that, I will turn the call over to Kris. Kris Sennesael : Thanks, Liam. Skyworks revenue for the fourth fiscal quarter of 2021 was $1.311 billion, up 17% sequentially and up 37% year-over-year, driven by both mobile solutions and broad markets. Gross profit in the fourth quarter was $668 million, resulting in a gross margin of 51%, up 40 basis points sequentially and 60 basis points year-over-year. Operating expenses were $180 million or 13.8% of revenue, demonstrating leverage in our operating model, while continuing our strategic investments in support of future growth. We generated $488 million of operating income, translating into an operating margin of 37.2%. We incurred $11 million of other expenses. And our effective tax rate was 8%, driving net income of $439 million. So, top line momentum and execution on margins drove diluted earnings per share of $2.62, ahead of consensus estimates. EPS grew 22% sequentially and increased 42% compared to Q4 of last year. Turning to the balance sheet and cash flow. Fourth fiscal quarter cash flow from operations was $398 million. Capital expenditures were $263 million and we paid $93 million in dividends and repaid $250 million of our term loan. Let's also review our record breaking full fiscal year performance. Revenue grew 52% to $5.1 billion, adding over $1.7 billion in incremental revenue over fiscal 2020. Gross profit was $2.6 billion, resulting in a gross margin of 50.9%. Operating income increased 73% to $2 billion with an all-time record operating margin of 38.2%, up 450 basis points from the prior year. Net income was $1.8 billion, translating into $10.50 of diluted earnings per share, up 71% year-over-year. Cash flow from operations was up 47% to $1.8 billion. And during fiscal 2021, we returned 536 million of cash back to the shareholders, with $340 million in dividends and $196 million in share buybacks all during Q1 of fiscal 2021. Starting into fiscal 2021, we temporarily suspended our share repurchase program in connection with the acquisition of the infrastructure and automotive business from Silicon Labs. Given the strength of our business and the progress we have made on integrating the acquisition, and given the low leverage ratio of less than 1 turn, going forward, we will, from time to time, consider share repurchases as part of our capital allocation strategy, depending on market conditions and in addition to our dividend program and further term loan repayments. In summary, the Skyworks steam executed exceptionally well, delivering record revenue, profitability and cash generation, while making the investments that advance our technology leadership and manufacturing footprint in order to drive long-term profitable growth. Now, let's move on to our outlook for Q1 of fiscal 2022. We expect to deliver another quarter of double-digit sequential revenue and earnings per share growth in the December quarter. Specifically, we anticipate revenue between $1.475 billion and $1.525 billion. At the midpoint of $1.5 billion, revenue for the quarter is expected to increase 14% sequentially. Gross margin is projected to be in the range of 51% to 51.5%. We expect operating expenses of approximately $184 million to $187 million. And below the line, we anticipate roughly $10 million in other expense and a tax rate of approximately 9.5%. We expect our diluted share count to be approximately 167.5 million shares. Accordingly, at the midpoint of the revenue range, we intend to deliver diluted earnings per share of $3.10, an increase of 18% sequentially. And with that, I'll turn the call back over to Liam. Liam Griffin : Thanks, Kris. Skyworks' record financial performance demonstrates our ability to capture robust demand across a diverse set of customers and end markets. Our execution has been powered and fortified by deep customer relationships, coupled with decades of investments, with a square focus on execution and best-in-class performance. Looking ahead, Skyworks will continue to strategically invest in next generation technologies and capital expansion, positioning us for market leadership and sustainable growth as the transition to 5G and other advanced connectivity technologies accelerates. That concludes our prepared remarks. Operator, let's open the line for questions. Operator: [Operator Instructions]. Your first question comes from the line of Gary Mobley from Wells Fargo securities. Gary Mobley: I want to start out just simply by asking about the revenue mix between broad markets and mobile narrowing for the quarter that is embedded in your guidance. Kris Sennesael: I'll start with that and I'll provide some numbers and then Liam can provide some more qualitative commentary. In Q4, the September quarter that we just closed, broad markets was approximately 29% of total revenue. So, that was basically 31% on a year-over-year basis and up 13% sequentially. Also, I just want to point out on a full-year basis, broad markets was over $1.4 billion in revenue, growing at 45% on a year-over-year basis. So very strong performance in our broad markets business. On the flip side, of course, we had mobile in Q4 was 71% of our revenue, up 40% year-over-year and up 19% sequentially. So, really strong execution there, of course, as we supported the ramp of new phone platforms at our largest customer. On a full year basis, just in mobile, we did approximately $3.7 billion of revenue, up 55% on a year-over-year basis. Clearly supported by the early adoption of 5G. And maybe, Liam, if you want to add something on broad markets. Liam Griffin: To reiterate Kris' comments, we continue to catalyze our broad market portfolio, gaining customers, gaining content, moving into new industries. The customer roster continues to get better and stronger. Names like Honeywell, names like Ford, looking at some of the plays that we see in the infrastructure space with Nokia and others. And plenty of room to grow from there. So, good work in broad markets. As Kris noted, we've got some substantial top line. We're going to continue to drive that. Our research and development folks are driving innovation every day, not just in broad, but also deeply in mobile. And that recipe is working very well. In addition to manufacturing assets that we have and the technology development that we put forth really gives us the flexibility to hit each and every one of those customers in a way that they want to see the products. Gary Mobley: As my follow-up, I wanted to do sort of a welfare check on the I&A acquisition to maybe perhaps ask if we can get an update on – if it performed according to your expectation for the quarter, if it's performing according to your expectation as we start the new fiscal year. And then as well, now that it will be a full year contributor, what the overall impact to the company's gross margins may be. Kris Sennesael: We closed the acquisition of the Infrastructure and Automotive business of Silicon Labs on July 26. And so, we had two out of the three months included into our September quarter. We're very excited and pleased with the acquisition. Again, I believe we paid a fair price for a very talented group of people with great technology, a strong product lineup in some really high growth markets, like electrical vehicles, the solar business, data center, data communication, 5G infrastructure, and so on. So, the business since we've acquired it, in the last two months in September, has performed really well, in line with our expectations. We are not going to break out every revenue of every sub product line that we have in our portfolio. We will report the revenue contributions within our broad market segment. But again, the business is performing well. We are really happy with the acquisition and we will continue to drive further growth in that business as we explained at the time of the acquisition. Operator: The next question comes from the line of Harsh Kumar from Piper Sandler. Harsh Kumar: First of all, let me just congratulate you guys on some pretty solid results based on all the volatility in the market and supply issues. I wanted to follow-up on Gary's question earlier. You were gracious enough to give us a September breakdown. But may I trouble you to ask about how you think mobile versus broadband will perform in the December quarter? And then I've got a follow-up. Kris Sennesael: We just guided for total company at $1.5 billion, which is up 14% sequentially. And we do see both mobile and broad markets growing at double-digit sequentially. Probably a little bit stronger in mobile than in broad markets, but both at the double-digit sequential growth. Harsh Kumar: There's a lot of talk about China trends right now. And there's a lot of mixed signals being given by the earnings that are coming out. I was hoping, Liam, you could talk about what kind of trends you're seeing in the Chinese market. If you're seeing any mix shift, up or down, either ways, that may be benefiting you or not benefiting you. Just curious what color you got in China. Liam Griffin: As you know, we've been a player in China for years and have been able to navigate the ecosystems and the platforms regardless of baseband partnerships. And that continues. So, we've got a great position with the OBX portfolios, continuing to drive them up into the 5G lanes, which brings content up for us. The business has been very solid for us. Now, we know there's tremendous upside, given the low base relatively in China smartphone. So, we're certainly well positioned to navigate through that. We definitely have the technology that is needed to make that lift in China. And our numbers continue to look very strong. So, it's a great part of the portfolio. It definitely is an opportunity to kind of enrich the technology within those phones. They're still a little bit lighter than some of the flagships that we have in the US. But we have to know how to do it. The other thing about the China market is they want integration, they want labs to fabs types of products, they want our applications engineers, they need people that can make the job easier for them and fulfill a smooth transition to the consumer. So, all that stuff around the edges, that's our that's our bread and butter. So we are a great advocate there. And we're a great partner to those OEMs. Operator: Your next question comes from the line of Timothy Arcuri from UBS. Timothy Arcuri: Kris, now that the fiscal year is over, can you give us a sense of what your top customer was for fiscal 2021? Kris Sennesael: The top customer came in at 59% of total revenue on a full-year basis. By the way, in Q4, that was approximately the same 59%, which is slightly up from the Q4 of fiscal 2020, which was at 56%. But of course, you have to take into account the timing of the launch of some of the new smartphone platforms there. This is a big number, but it really underscores the deep customer engagement that we have with this customer. By the way, not only in the smartphone lineup, but almost in every other product that they have and that they sell, you will find Skyworks inside. Also, in Q4, the quarter we just closed, the Skyworks team really executed well, supporting the launch and the ramp of new smartphone platform that yet again for now almost 10 or 13 times in a row, we were able to obtain higher dollar content per phone, as witnessed by the teardowns that came out when the form came out. And you can see, when you look at the teardowns, we really provided multiple high performance, very complex, highly integrated solutions, multiple sockets in that phone. That includes, in many cases, multiple best-in-class filters, including TC-SAW and Bulk Acoustic Wave technology across the transmit chain, the receive chain, as well as many other functionalities, including GPS and Wi-Fi, of course. So great execution there by the team. Timothy Arcuri: I guess as my follow-up, there's kind of a lot of noise in the China market. I know that you don't have as much exposure to the domestic market or at least Chinese OEMs as some of your peers do. But there are some diverging data points. End market sell-through is not great. But, definitely, the high tier seems pretty tight. So, can you just talk about what you're seeing in China? Maybe you can have a distinction between sell-in and sell-through? Liam Griffin: The China market is important to us. And we've played that quite well. We have great partnerships with all the leading brands. I think the key here, and Kris kind of mentioned it, it's all about performance. It's not phone to phone. It's technology to technology, and you see a very, very different technology in the higher end players in China, where they are embracing the kinds of increasingly complex signals that Kris mentioned, using Bulk Acoustic Wave, using our TC-SAW, using an integrated approach, Sky5 approach. In that side of the field, it's great. And we have a tremendous opportunity. We're continuing to grow the content because the complexity is going up. The complexity is what's driving the content. So we're making that adoption happen rapidly, depending independent of market conditions. And we're also trying to uplift the lower end. There's still a pretty high percentage of lower end phones in China that we want to uplift and bring them to full 5G capability. And in those cases, you could have a $2 to $3 content that could move to $4 to $5. And so, there's pretty good leverage on that side. So, you've got multiple market focuses within China. We're able to address all of them from the highest to the most economical. And that's one of the strategies that's worked for us. And very often, the first phone that we may work with with a customer, we'll have that customer for 5 to 10 years and continue to move the move the dial on content and performance as we step along. So, it's really a strategy around bringing the best technology to the customer and having that be enjoyed and celebrated by the end user. Operator: Your next question comes from the line of Ambrish Srivastava from BMO. Ambrish Srivastava: Liam, we heard conflicting commentary yesterday from two of your peers. Just wanted your perspective on constraints. And it clearly seems like it's not impacted your business. But how has that trended? And more importantly, given the very well publicized shortfall in one of your large customers, what does that mean for the March quarter seasonality. And then I had a follow-up for you, Kris. Liam Griffin: We'll try to unpack that one at a time. With respect to our ability to execute and deliver, in cases maybe where some others were not able to do that, is really about investments that we've made and investments that we made early. So, if you let me indulge here for a minute, go back to where we were a year ago, we went from $3.3 billion to $5.1 billion in one year. In one year. With no M&A. How do we do that? Well, we made those investments months and months, 6 to 12 months before to ready ourselves to win. And also, knowing that we had the right customer set that appreciated the performance and technology that we could bring to the market. And so, that worked great for us and we executed tremendously. The upside of that is those capital assets and those technology investments are there, they're on the job today. But there's a lot more we need to do. So, of course, we were nicked up a little bit here in the supply chain issues and shortages. But having our assets in-house, and you've heard me talk about this for a long time, having those assets in-house are strategic, it's critical, it's what customers want to see, all the way from gallium arsenide to packaging, assembly and test, TC-SAW, Bulk Acoustic Wave, standard SAW, all of that. We can mix and match to put the right solution together. So, that is one of the reasons why our numbers here that we're talking about today. They're very strong. Certainly, we're experiencing the same market environment. But it was the ability to invest early, drive that cash flow, drive that performance to continue to do that and then bring those products to market in ways that are very flexible and having the ability to go from IoT to 5G to Bluetooth to Wi-Fi. Whatever the connectivity protocol may be, we will have the technology execution vehicles within our company to execute for our customers. Ambrish Srivastava: And what about the seasonality for March? Liam Griffin: We're not going to get into March at this point. March tends to be a little bit of a soft spot in the year. That's been traditional, but we don't really have a guide here to March at this point. Ambrish Srivastava: Kris, I had a quick one and a longer one. Sorry. The quick one is capital and CapEx for the fiscal year. And really just looking at your cap intensity, I think it ties back to what Liam just said. It's much higher than at least your closest peer. Should we expect it to stay in the high single-digit, double-digit. And then longer term, you now have a business that has a much bigger footprint of higher margin broad, diversified business segments. Isn't it time to revisit the long-term margin target and why should it not trend up versus what you've given us in the past? Thank you. Kris Sennesael: First of all, on the CapEx in fiscal 2021, CapEx was running over about 12% to revenue, which is somewhat in line with the last couple of years. We've been in that 10%, 12% range. And we're very fortunate that we did make the investments. As we just explained, we grew the revenue more than 50% year-over-year. If we would not have made the necessary investments in our manufacturing footprint, by the way, not only just expanding the capacity, but also adding new technology and improving the performance of our technology and our products. That was a very smart decision by the team here, proactively putting that capacity in place. There is a lot of supply issues in the world, but it's not necessarily because of Skyworks. There is tightness and we're not perfect, right? The demand is higher than the supply, but Skyworks has, compared to peers and competitors and other industry players, executed really well because we did not hesitate and put the CapEx in place. And again, this is just the beginning of a long 5G cycle, the beginning of Wi-Fi upgrade, the beginning of proliferation of 5G outside of mobile into growth markets. And so, we are not going to hesitate and we are going to make the necessary investments to further continue and support the growth of the business. As it relates to gross margins, we did 51%. So, we went up 40 basis points sequentially, up 60 basis points year-over-year. We all wish it was higher and the team will continue to work and drive and drive it higher. But I've talked about that before. We are still facing COVID-19 headwinds. And yes, it is a tight supply constrained environment and we are facing some input cost increases right now. Again, the team is handling it very well. We continue to drive further operational efficiencies. And when you put it all together, we have a path to further improve gross margins over time. Operator: Your next question comes from the line of Chris Caso from Raymond James. Chris Caso: My question is on the magnitude of the content gains this year. And based on your guidance, it looks like second half mobile revenues up about 9% year-on-year. And looking at the second half to normalize for the different product launches. But I guess the question is, out of that 9%, is that all attributable to content? Is there any kind of unit growth in there? Is there any unit decline baked in those numbers? Recognize that we're coming off some pretty exceptional content gains last year, but trying to gauge what they look like this year? Liam Griffin: Chris, we certainly see the opportunity to, again, push forth greater content, greater value, and it comes with technology, right? So, I think our teams are constantly crafting and developing next generation solutions. And also broadening the reach. So it isn't just a certain set of customers. It's a broader set of customers. What we find is that there's just a tremendous need for performance, right? Performance is really what's going to drive this. And then, performance really means that you've got to deliver the technology behind that. So, we're spending a lot of money in that area. But strategically, we've got some great R&D folks inhouse that are crafty, that know how to get stuff done. And developing solutions for the next wave, right? Markets like Wi-Fi 6 and 6E are also right now in a great position for growth as we move forward. And I think connectivity around Wi-Fi is going to be great and will complement what we're doing in classic mobile device. So, I think there's a lot of good stuff going on. The appetite with our customers is fantastic. There's no end to the ideas and the inquiries and the challenges that we're being asked to address, which is great. I'd much rather talk about that than worry about supply chains. And I think on the supply chain side, we're doing quite well. But we really want to continue to raise our bar with our technology and our R&D teams and our execution to bring customers the performance levels that they really need. Chris Caso: I was going to ask you a follow-up question on supply chain then. So, something you don't want to talk about. But with regard to some of the supply constraints, we've heard from many others in the industry that you weren't able to – many haven't been able to ship everything that the customers wanted here in the second half of the year. Is that still happening with you folks? Are you still constrained to the fact that you can't ship everything the customers asked for? And does that suggest that there's going to be some catch up in terms of your shipments as you go into the seasonally slower first half of the calendar year? Liam Griffin: It's a tricky situation. On one hand, the fact that we have our own manufacturing assets allows us to be really close to the demand curve. So, we're not subject to these big overhangs where we're waiting and waiting and waiting, waiting for parts. We're making our parts. So, we're largely an inhouse technology company. Around the edges, we will use some fabless partners. So, our exposure to that is much, much lower than others. Do we still have some effects? Of course. Because it only takes one or two parts that could muck up a finished product. And everybody understands that. So, it does create some wrinkles. But I would say that, given the work that we've done at Skyworks for years and then more lately, as we talked about, as evidenced by the $3.3 billion to $5.1 billion, the ability to stretch and scale the business is a pretty good indicator of what our capabilities are. So, I believe that we're going to do very, very well when we've got our tailwind and we're going to do well when it's a muddy field. We're capable of doing it either way. And again, a lot of that has to do with managing your own technologies, making those investments with your own people, your own teams and platforms that you know exactly where they're going to go. So, that's kind of our strategy as we go forward. I think that that that strategy is going to work very, very well for the future. Operator: Your next question comes from the line of Edward Snyder from Charter Equity Research. Edward Snyder: Kris, one of the standout parts that you landed your largest customer is the transmit diversity module, which is a very rich part, uses BAW filters, as well, as I'm sure, TC-SAW. You've not had that before. I know it's one part among many. But given the content of that part, I would expect the margins on that are going to be better than at least the average, if not the highest among that. Given the customer, the unit volumes should be pretty high. Should we expect if we see more of those, not just at that customer, but at others as Samsung and those folks move to more of the sophisticated 5G features? That would be a significant margin driver for you, given the size of mobile and the size of these customers? Kris Sennesael: I assume you can understand I can't discuss specific gross margin on specific parts for specific customers. Edward Snyder: But it was a trend. I'm looking for the trend because 5G, obviously, for the high end phones is now moving from basic connectivity to vastly more advanced connectivity. And part and parcel of that are going to be transmit DRx modules and this is the first one we see. So, as we see more of those in all phones, especially from you, shouldn't we expect margin to increase to? Kris Sennesael: Absolutely. And I've talked about that before, right? The largest contribution to our overall gross margin improvement strategy is to bring higher complexity, higher value added, highly integrated parts that really enhances the performance of the product of our customer. And our customers understand that that requires a lot of R&D, that that requires CapEx dollars to be invested. And that requires a certain value to be paid for that. And that is how we have been driving the gross margin improvements for the last 20 years as we move from 2G to 3G to 4G, and now to 5G. And indeed, adding more value to our products. You're absolutely right about that. Edward Snyder: If I could, you've kind of been under earning a little bit at Samsung. They were high single-digit percentage revenue probably last quarter. I know they're on the way up here. Did they broach 10% this quarter? And more importantly, by looking at the next couple of quarters, especially the beginning of next year, should we expect you to continue to gain ground here? Or will mix – because I know they're favoring more the low end products at this point, will mix kind of hold the lid on it for the short term and then we should look for out periods maybe late next year or so to see further gains? Kris Sennesael: Absolutely. They were not a 10% customer, but you are right, they are up to the right. So, the trend is the business is growing sequentially, as well as year-over-year. As Liam pointed out before, we have great design win momentum with them, as you can see in some of the teardowns as well, with some very rich complex parts in their phone lineup. And by the way, not dissimilar to with the large customer, not only in their phone lineup, but many of their other devices that they sell that have wireless connectivity embedded as well. Edward Snyder: If I could, maybe a final one. Liam, for you. It's no secret that Qualcomm is getting some share in the low-end China phones, low band. They've led in some of those. [indiscernible] mid, high band. There's a lot of chatter in the chain anyway that it's kind of a combination of things that performances [indiscernible] has improved certainly. But also, as we saw yesterday, the shortages in chips has given them even greater leverage and kind of compelling some of the smaller OEMs or the low end of the bigger OEMs to use some of their RF products. How do you see that shaking out for your share in China short-term? And maybe you could comment on the long term trend with that. Do you think it will be sticky given the supply in the modem? Or once supply chain eases up, we'll get a reversion back to the mean? Liam Griffin: I think there's a there's a lot of opportunity in China and we've been in the market, the OBX portfolios and the Android portfolio for quite a while. It seems like over the last year or so, the larger kind of higher-end players have done better vis-à-vis the overall market. Now, having said that, we serve everybody. One of the things that is really advantageous for Skyworks, and we talked about the technologies and the inhouse capacity and scale, it's going to help us quite a bit in China because, in China, as you know, the content is not as rich as it is in some of the higher end phones, but there's a tremendous opportunity to lift that content. And a lot of that comes down to the technical know-how in demonstrating what a couple of dollars of incremental content can do to the user experience, to the performance of the connected devices. And it's significant. And I think those that are deeply in this industry know that. So, we have to do a little bit of engagement there to continue to demonstrate with our customers what performance can really mean to the user. And we're getting very, very good response to that. And that's going to drive our content because you've got to have a catalyst to get that content up there. And I think when users can see the performance levels that really are right there in front of them, just need to embrace it, there's an opportunity for them to see a much better – gain a much better experience with connected solutions that we can provide. And we do that with many, many other customers that put much higher end performance marks. We know how to do it. We have great application engineers that can work across each baseband as well. So there's a lot to do there. And I think it's one of the markets – or one of the areas in the market that still has a tremendous opportunity of growth, despite some of the things that we're talking about in supply chains. Operator: The next question comes from the line of the Toshiya Hari from Goldman Sachs. Toshiya, your line is open. Our next question comes from the line of Blayne Curtis from Barclays. Blayne Curtis: I just want to follow-up on the broad markets. I guess I was a little bit confused. So, the business was up about $40 million. I think the acquisition add more than double that. So, I guess I didn't hear from you what's weak? Is it a supply issue? I think if I had it right, I think Wi-Fi might have been a little weak in June and I think you were looking for it to come back. So, second, what's weak? And then I guess you're forecasting it to rebound in December, what's driving that? Kris Sennesael: Blayne, you're absolutely right. When Liam talked about some of the tightness in the supply chain, it's especially more so in the broad markets business. By the way, not only because Skyworks is not able to supply, but the issue of full bill of materials or keeping issues, right, some of our customers are struggling to get parts from peers and competitors or other players in the industry. And so, as a result of that, they don't necessarily need the Skyworks parts right now. They will need them later. So, that I think was driving most of that in broad markets. But again, looking ahead to December and then beyond, we do assume that some of the tightness in the supply gets resolved, that they will get to full bill of materials. And that, of course, also Skyworks can resolve some of the tightness in its own supply chain and that will further drive revenue growth in broad markets. Because if you look at it overall high level, there is very strong demand for connectivity in a broad set of products. If you look at automotive, industrial, some consumer type of applications, there is very strong demand, and we don't see that slowing down. Blayne Curtis: Can I ask a similar question on the mobile side? Given the Apple revenue that you reported, it's not perfect math, but it does seem like Android is down in September, maybe double digits. And I'm just kind of curious, if I had that math right, is it a similar issue with kitting or something else? And I guess for December, the whole mobile group should be up double digits, as you said, but I was just kind of curious if Android would be part of that, given it was down in September. Kris Sennesael: No, that's how it has been for the last five years that I have been with the company, right? In September and December, when the large customer launches their new platforms, they have priority in the supply chain, not only with Skyworks, but with many of the peers and competitors. And so, Android understands that and they are not going to put up a fight for supply with the large North American customer. Especially this year when it's very tight, even more so than then in the last five years, you will see some seasonal fluctuations there. Absolutely. Operator: Our final question comes from the line of Karl Ackerman from Cowen and Company. Karl Ackerman: I wanted to focus on your broad markets business, if I may. You now do have a more diversified products and end markets within broad markets through the integration of SLAB's auto industrial business. I was hoping you could describe whether the acquisition is performing in line with your initial expectations. And if you could peel back the onion and discuss some of the opportunities you are seeing for your timing, power isolation and Wi-Fi products. Kris Sennesael: I'll start. And as I said before, yes, the I&A business, we've now two months under our belt in September quarter and one month more here in the December quarter. We're really excited about that acquisition. And great people, great technology, great product, great customer relationships, high growth markets, and the business is doing really well. By the way, it's a fabless business model, as you know. So, there's definitely some tightness from a supply point of view, the demand is bigger than the supply, but there the team as well is working on creating more supply and bringing on more supply. And so, it's working out well. Liam Griffin: Let me add to that. There's a tremendous diversification lever here with the I&A business from SLAB. There's tremendous opportunity in the technologies. We have scale that is just incredible compared to the size that had been there before. So, we are working very closely on the strategic technologies within the I&A portfolio. We're seeing some great, great opportunities there. And we're going to bring a lot of that stuff inhouse, into our sites, into our factories and streamline. We're also going to do some strong cross pollenization of the sales team to make sure that we understand exactly where the opportunities are and the scale plays are. And I think there's a lot that can be done there. There's great technology there. We just need to bring it to the right customers and raise the game. The supply chain issues kind of hit that portfolio a little bit harder than others. But it doesn't take us off our track. And the technologies that we acquired are outstanding, and we're going to cultivate and grow those technologies with customers, for sure. Karl Ackerman: For my follow-up, if I may. I know this has been asked several times. I want to try and ask it a different way. You suggested that mobile will grow double digits next quarter. I'm curious if that reflects some moderation of mobile products within China? And I ask because it seems that some of the demand in China has pushed from December into March. And I'm curious if you would endorse that view. Simply put, is this a supply issue? Is this a demand issue? And how would you see that being rectified over the next few quarters? Kris Sennesael: When you look at the data, the demand for 5G phones in China continues to be very strong. There's no question about that. I'm not talking here about 4G, 3G or 2G phones. I'm talking about 5G phones. demand in China continues to be very strong. And there's multiple suppliers. Of course, the large North American customer supplies into China and is doing really well there. And then, of course, there's the Android players as well. Now, as I said before, there is seasonality to that business. And September and December are not the strongest seasonal quarters for that business because a lot of the supply goes to the large North American customer. But you typically see some somewhat of a rebound into the March quarter as well with Chinese New Year being part of that March quarter. And we expect that to play out this year as well. Operator: Thank you, ladies and gentlemen. That concludes today's question-and-answer session. I'll now to Mr. Griffin for any closing comments. Liam Griffin: Thank you all for participating on today's call. We look forward to talking to you with you at upcoming investor conferences. Thank you.

Operator: Good afternoon, and welcome to Skyworks Solutions Third Quarter Fiscal Year 2021 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: Thank you, Rachel. Good afternoon everyone and welcome to Skyworks' third fiscal quarter 2021 conference call. With me today are Liam Griffin, our Chairman, CEO and President; and Kris Sennesael, our Chief Financial Officer. Before we begin, I would like to remind everyone that our discussion will include statements relating to future results and expectations that are or maybe considered forward-looking statements. Please refer to our earnings release and recent SEC filings, including our Annual Report on Form 10-K for information on certain risks that could cause actual outcomes to differ materially and adversely from any forward-looking statements made today. Additionally, the results and guidance we will discuss include non-GAAP financial measures, consistent with our past practice. Please refer to our press release within the Investor Relations section of our company Web site for a complete reconciliation to GAAP. With that, I'll turn the call to Liam. Liam Griffin: Thanks, Mitch, and welcome everyone. Skywalks delivered record third quarter results with strong year-over-year growth in both revenue and earnings per share. Further, the completion of our acquisition of the Infrastructure and Automotive business of Silicon Labs, we have significantly expanded our market opportunity while accelerating our top and bottom line growth. Here are a few highlights. In the quarter, we delivered revenue of $1.116 billion, 52% above Q3 of last year. We posted a new Q3 record for earnings with EPS of $2.15, above consensus and representing a year-over-year increase of 72%. And given our strong and predictable cash generation, we announced a substantial increase to our quarterly dividend. Looking ahead, we expect continued momentum as we execute on strong design wins with our mobile and broad market customers, levered by the performance gains of 5G. We are seeing a tipping point with 5G acting as the catalyst transforming entire industries from telemedicine and autonomous driving to factory automation and intelligent energy management. By increasing efficiency, these 5G-enabled applications are also lowering carbon footprints and driving renewable energy. Skyworks is at the center of this unique technological shift and its reliance on wireless connectivity, with innovative solutions developed over 20 years and across multiple technology transitions. The combination of our innovative solutions, broad customer reach and unrivaled manufacturing scale drove another quarter of strong design win execution. In mobile, we expanded the reach of our Sky5 portfolio, powering upcoming smartphone launches at Tier 1 manufacturers, including Google, Oppo, Vivo, Xiaomi, among others. In IoT, we secured wins across a diverse set of customers. Specifically, we delivered Wi-Fi front-end modules to Facebook for their new portal launch, captured design wins at Peloton supporting home fitness applications. Partnered with Linksys on their newest Wi-Fi 6E mesh network system, and ramped additional advanced Wi-Fi platforms at Altice, Charter Communications and Aruba Networks. We also launched connected home and security solutions at Honeywell and shipped cognitive audio platforms to Samsung and Vizio for their home theater systems. In wireless infrastructure, we continue to leverage our small cell and advanced MIMO expertise in support of multiple Tier 1 OEMs. And finally, in automotive, we strengthen our position across the global ecosystem, with our integrated solutions enabling advanced telematics for leading auto manufacturers. In summary, Skyworks trusted technologies play a pivotal and essential role in the way we live, work, play and educate, enabling ubiquitous, reliable, ultra-fast connections, positioning our business for continued growth. Skyworks success is underpinned by unique strengths, including our highly integrated connectivity engine, powering applications across an increasingly diverse array of customers in multiple high growth end markets. A differentiated manufacturing footprint levering strategic technologies, from high performance filters to custom gallium arsenide and advanced packaging. And finally, along with our seasoned and diligent workforce, we maintain deep collaborative relationships with our customers. These advantages will be further enhanced by the acquisition of the I&A business. This combination immediately broadens our product portfolio, augments our engineering prowess and expands our market reach, while diversifying revenue and enhancing profitability. With that, I will turn the call over to Kris for a discussion of Q3 and our outlook for Q4. Kris Sennesael: Thanks, Liam. Skyworks posted another quarter of strong financial results, delivering record Q3 revenue of 1.116 billion, exceeding the midpoint of our guidance. Total revenue grew 52% year-over-year, demonstrating exceptional performance across both mobile and broad markets. Mobile revenue grew 52% year-over-year, as we capitalized on technology-rich content, powering an impactful set of 5G customers. In parallel, broad markets revenue was 50% year-over-year, benefiting from strong demand for IoT solutions, including Wi-Fi 6 and 6E, and smart audio, as well as emerging use cases in industrial and automotive markets. Gross profit in the quarter was 565 million, resulting in a gross margin of 50.6%, up 50 basis points year-over-year. Operating expenses were 161 million or 14.5% of revenue, demonstrating spending discipline while continuing our strategic investments to drive growth. We generated 403 million of operating income, translating into an operating margin of 36.1%, a 480 basis points improvement over Q3 of last year. Other expense was 3 million, reflecting a partial quarter of interest expense associated with the recently completed acquisition of the Infrastructure and Automotive business of Silicon Labs. Our effective tax rate was 10.4%, resulting in net income of 359 million or a net income margin of 32.1%. Execution on top and bottom line growth, while expanding gross and operating margins, drove record Q3 diluted earnings per share of $2.15, beating the guidance by $0.02 and an increase of 72% when compared to fiscal Q3 of 2020. Turning to the balance sheet and cash flow. Third fiscal quarter cash flow from operations was 273 million, capital expenditures were 115 million, and we paid 83 million in dividends. We ended the quarter with a net cash position of 1.5 billion, with 3 billion in cash and investments and 1.5 billion in debt. Moving to our outlook now for Q4 of fiscal 2021. Based on continued robust demand for connectivity solutions in mobile and broad markets, and the inclusion of a partial quarter of revenue from the recently completed acquisition, we expect continued growth into the September quarter. Specifically, in the fourth fiscal quarter of 2021, we anticipate revenue to be between 1.27 billion and 1.33 billion with non-GAAP diluted earnings per share of $2.53 at the midpoint of our revenue range. This represents revenue growth of 36% and non-GAAP diluted earnings per share growth of 37% compared to the fourth fiscal quarter of 2020. Exclusive of acquisition-related revenue, we expect double digit sequential growth in both mobile and broad markets. Gross margin is projected to be in the range of 51% to 51.5%. And we expect operating expenses to be between 180 million and 183 million. Below the line, we anticipate roughly 11 million in other expense, reflecting the interest expense associated with the acquisition financing. We expect a tax rate of approximately 10.5% and a diluted share count of approximately 167.5 million shares. And lastly, given our conviction in Skyworks strategic outlook and predictable strong cash generation, today we also announced a 12% increase to our quarterly dividend to $0.56 per share. And with that, I'll turn the call back over to Liam. Liam Griffin: Thanks, Kris. Skyworks is clearly on track to deliver record financial results for fiscal 2021. As mentioned, the addition of the I&A business further propels our expansion into strategic growth segments. And with a widening array of usage cases, the proliferation of 5G is driving significant momentum for Skyworks. Our powerful cash generation capabilities, technology-centric operational scale, and global reach are fueling a robust design win pipeline. And finally, the strength of our balance sheet allows us the flexibility to invest to win, while delivering consistent shareholder returns. That concludes our prepared remarks. Operator, let's open the line for questions. Operator: Thank you. [Operator Instructions]. And given time constraints, please limit yourself to one question and one follow up. Our first question comes from the line of Craig Ellis from B. Riley Securities. Sir, your line is open. Craig Ellis: Yes, thanks for taking the question and congratulations on the financial results, guys. Kris, I wanted to start with you and just see if I could get you to put a finer point on the contribution from A&I in the fiscal fourth quarter. Can you be a little bit more specific on what you expect from a revenue standpoint and the earnings contribution from the deal? Kris Sennesael: Yes, Craig. So we are not going to report on any specific business line or product line within the quarter. But given that you asked, first of all, we are very excited about conclusion and the closing of the acquisition on July 26, so earlier this week. It's a great business, very diversified, new revenue streams and high growth markets for us. The business was running. And we told you that when we announced the deal at approximately $400 million of revenue on an annualized basis, so approximately $100 million of revenue on a quarterly basis if it's a full quarter. But this is only a partial quarter. So we only get two out of three months in this September quarter. We will get three out of three months in the December quarter. So I hope that answers your question. Craig Ellis: That helps. And then I'll just stick with A&I, but make it a longer term, more strategic question, and I'll flip it to you Liam. Under Silicon Labs, this was a very high quality business that steadily grew over time in two different end markets and now you have it. And I'm just hoping that you could spend a minute talking about your vision for what you can do from a synergy standpoint with channels, with customers, with product roadmaps, and what do you think that means for the growth rate of the business on a multiyear basis from the base that Kris talked about, which is a $400 million business. Liam Griffin: Yes, absolutely. Well, first of all, as Kris mentioned, we really are excited about taking on this acquisition; great people, great technology, fabulous end markets. And the other really important thing is this is all uncorrelated to what we do in mobile. So this is really unique for us. One of the things, Craig, that we absolutely will capitalize on is the quality of the technology that the Silicon Labs team has brought and our ability at Skyworks to scale at high level. So we look at these products now that are great, and we think we can take them as is and bring them to newer customers, broader scale opportunities, proliferate much further than what we see today. And it's going to be a lot of fun doing that. And our folks at Skyworks, our operational team, the ability to do work in our own fabs, which is very strategic right now, we'll definitely put some fuel behind it. So we're excited about a lot of great end markets, improves margin, improves versification. There's some customers that we know very well that we can take these products, and there's some new accounts that we're going to find together. So we're really excited about the opportunity. It's very early, but we're very excited about what we can do. Craig Ellis: Got it. Thanks, guys, and good luck. Liam Griffin: Thanks. Operator: Thank you. Our next question comes from the line of Ambrish Srivastava from BMO. Sir, your line is open. Ambrish Srivastava: Hi. Thank you very much. Liam and Kris, can you comment on shortages? In this case is a public comment Apple makes, so I can name them. I know we're not supposed to name your customers. But they talked about shortages getting worse than the third quarter. From your perspective, are you seeing that impact your business in the third quarter -- in the calendar third quarter? And then I had a quick follow up please. Liam Griffin: Sure. Well, on a general basis, there is a supply chain crunch around semiconductors. I think we all understand that. And it's affecting everybody to some degree. I would say that Skyworks, and if you know the company here, right, we’re an investor in technology and we have the lion's share of our technologies in-house, in our own fabs all the way from Gallium Arsenide to assembly and test the bulk acoustic wave filtering, TC-SAW, a lot of really complex portfolios that we have and technologies that we bring in our own house. So we have a -- the benefit of that scale and the investments that we've made over the years fortify our position in supply chain. Now having said that, as we all know that any given platform, whether it's a smartphone or a piece of the infrastructure pie, all the components have to come together to create a solution for the customer. So if anything is short anywhere in the food chain, it can impede demand, right, execution around demand. So, we are certainly seeing that. I feel like our teams are doing a good job navigating through, but it's clear that there's more demand opportunity now, that hasn't really been executed. So I think we're going to do work on our end to support our customers. We're certainly doing the work in our fabs, in our labs to be a little bit more efficient there and driving the technology. But it's clear that there is an impediment in demand right now globally in supply chain. So that is a real issue. Ambrish Srivastava: Got it. Thank you. And you did set your supply chain capability, if I remember correctly, in the December quarter. I had a question on gross margin. Maybe Kris, you can address that. And I'm just trying to do my math on the fly. Is it the delta, and we haven't seen this level in a while. This delta is coming from impact from the contribution from the Silicon Labs business, because the cost headwinds are there and it seem to be getting -- not getting any better. So can you just walk us through the delta in gross margin please? Thank you. Kris Sennesael: Yes. Well, first of all, I'm pleased with our execution on gross margin. We did 50.6% gross margin in the June quarter, up 50 basis points year-over-year and that's just pure organic. We guided 51 to 51.5. So that's up another 65 basis points sequentially, or up 85 basis points on a year-over-year basis. As we indicated before, the I&A business is helping there because that's running at or on about 60% gross margin. But you can clearly see as well that we continue to make further improvements in gross margins in our organic business as well, as we execute on our technology roadmaps, get more and more 5G, Wi-Fi 6, Wi-Fi 6E, higher level of complexity, higher performance parts in our product mix. Ambrish Srivastava: Thank you. Operator: Thank you. Our next question comes from the line of Karl Ackerman from Cowen. Sir, your line is open. Karl Ackerman: Great. Thank you very much. I wanted to focus first on the SLAB I&A division that just closed. I know you just closed it a couple of days ago. But during your due diligence process, have you been able to find areas of cost overlap that may drive incremental synergies over the next few quarters? And I guess as you address that question, could you also describe any early indications on sale synergies in the broad markets division, now that that acquisition has closed that actually will allow you to have a much broader solution set for customers? Liam Griffin: Yes, absolutely. So on the cost side, clearly, the ability to take Skyworks $5 billion run rate revenue company and the infrastructure that we already have in-house and the technology knowhow that we have is definitely a strategic piece of the equation with the Silicon Labs deal for sure. And then on the customer side, there's some great products that are ready to go right now that we just have as a team can lever up some of those portfolios so that the Silicon Labs team is brought to us and we know where to take it. And we're also a big volume player at Skyworks. So we are absolutely ready to go after big game. We have the scale for it, we have the appetite for it, we have the technology knowhow and prowess to make that happen. So there's a lot of really good technologies that are there in the SLAB I&A team that we can scale with known customers and known markets. And that's going to be an important part here. And we've spent a lot of time working on it as we went through diligence on this process. And both of those vectors are going to be strategic for us as we go forward. And we have the game plan to make it happen. Karl Ackerman: I appreciate that, Liam. For my follow up, your outlook for September looks to be up 11% sequentially on even just an organic basis on par with one of your RF peers who reported this week. That peer indicated that some of the slowdown in Android production did impact results, but is more really due to supply constraints. And I guess some of that would improve in the September quarter. My question and maybe dovetailing to an earlier question today, I was hoping you could address whether you see improvements in assembly and test or other areas of constraint that could allow you to propel strong results from here? Thank you. Liam Griffin: Sure. No, that makes total sense and that's what we're seeing. So for the most part, we have a great deal of control in our supply chain, because we have our assets. But it only takes one or two devices that you don't make to create an impediment of demand. So there's clearly levels of demand that are being delayed in terms of execution due to supply chain constraints. It's kind of a global issue right now. We're doing some really good work on our end. We're levering what we can on our side and working with our partners where -- the outside partners that we may have. And I don't think this is going to be a long-term problem. But it's certainly a problem that it is making its way through the semiconductor cycle. Some companies have it worse than others. Again, with our internal capabilities, I think we have some strengths there that others may not have. But it is certainly a unique case where demand is being impeded to some degree with supply chain issues. And that is just kind of a global issue now in the semiconductor space, a lot of work being done to get that free flow of demand again. But the demand opportunity is there. So I want to make that clear. I think the demand opportunity for the products that we have and the appetite from our customers is still very strong. The technologies that are coming to market are rich and powerful. And I think that's all going to come to market here soon. Karl Ackerman: Thank you. Operator: Thank you. Our next question comes from the line of Timothy Arcuri from UBS. Sir, your line is open. Timothy Arcuri: Thanks a lot. Kris, this is probably a tough question to answer given the addition of the SLAB revenue, but I'm just kind of wondering as you look into December, if you were to strip that out, like it seems like December is normally up low teens. So I'm wondering if you can look out into December and if you excluded SLAB, is that sort of how you see things trending into December? Kris Sennesael: Yes. So, Tim, as you know, we only guide one quarter at a time. And we feel really good about the guide that we provided for September. Having said that, looking to December, you're absolutely right. We typically see further strong sequential growth into that December quarter as we execute on some high content rich, 5G phone ramps. And we do expect our broad markets business organically to further continue to grow into the December quarter. And so -- plus in addition, as I mentioned before, we will have three months of the I&A business in the December quarter. And so when you put that all together, we feel really good about December. Timothy Arcuri: Thanks, Kris. Thanks for that. And I guess, typically, your concentration from your largest customer in the June quarter is somewhere in the 45% to 50% range. And I just -- typically it sort of gives us a sense of where that came in. Was it in that same range, 45% or 50%? Thanks. Kris Sennesael: Yes. So in June, it was slightly above 50%, which by the way was exactly the same percentage a year ago in the June quarter of 2020. Timothy Arcuri: Thank you, Kris. I appreciate it. Operator: Thank you. Our next question comes from the line of Ed Snyder of Charter Equity. Sir, your line is open. Edward Snyder: Thanks a lot. Liam, I think SLAB is a great acquisition. But if I look at this, it's very different than something else that you’ve done. I think one of the best -- probably the best you ever did, one of the best in the industries was SiGe back in 2011. But that was a screamer, primarily because the technology they had was excellent and was coveted by some of your largest customers, your largest customer, but they couldn't buy from them because you're too small. So when Skyworks got a hold of it, off to the races you went, and it's been a huge success I'm sure. This looks to be more like TI National acquisitions where it's kind of plug-and-play diversification role. I'm not clear. I know you plan on growing it. I know they've got a lot of great technologies and excellent profile in terms of margins. But can you give us some examples of ways that you can grow this into your customer base? And most of it I imagine is going to be in broad markets, so there's probably little chance that you'd see anything close to the growth in this revenue line that you saw with SiGe, because it's not going to go into your mobile customers, right? So maybe you can help us flesh that out a little bit more on what the growth rate could be like, and where you're going to see that go specifically, if you could? Thanks. Liam Griffin: Sure, Ed. So, obviously, through the process, we had deep dives into all the elements of the I&A business. They have a very strong timing portfolio, which we can take the multiple customers and customers that we have right now. They have an isolation business that's very strong. Their automotive portfolio is outstanding. There's a lot we can do there. There's quite a bit of customer and sales synergy here that we can unlock. One of the things I would say is, is their portfolio’s very strong technically, but hadn't been as broad in terms of scale, right, going after the very, very large players. And that's something that we do very well here. So we're going to lever up the scale. We're going to enhance the technology. We're going to invest in this portfolio. Some great, great folks there, some people, great end markets that we can pursue. And we think it's going to really be a special deal for us. And the early innings here what we're seeing and the engagements with their customers and what we're doing with our sales channel, I think is going to be unique. And then the manufacturing benefits, right. For the most part, the I&A business has been outsourced. And I think there's a great deal of synergy that we can use in our assembly and test operations, even if there's some fabless elements. Just having the packaging, assembly and test in-house is a strategic advantage as well. So we're really excited about it. And we spent a great deal of time working through this transaction. And we haven't done a lot of deals here at Skyworks. We're very conservative with that. And it has to fit before we go about an acquisition. And this is one of those transactions that as we move through the process, we liked it more and more. And we really like it now and look forward to demonstrating that opportunity as we go forward. Edward Snyder: Great. And then if I could shift to mobile perhaps. I mean your largest customer leads the field and the complexity and sophistication [indiscernible]. I think everybody knows that. And some of the things that they implemented last year and look to implement this year, [indiscernible] to Skyworks’ strength, obviously. We saw the December quarter of last year was phenomenal. But in terms of the rest of the world, especially in regard to China, they lag and it looks like they're moving in that direction. Now if you step back [indiscernible] Skyworks is kind of under earned in China over the last several years, maybe over earned domestically. But I'm wondering, as those technologies move into the Vox [ph] group, does that present opportunity? Do you think you'll be able to exploit that to gain a larger share? So should we expect to see more acceleration in growth in the Chinese OEMs Android [indiscernible] for Skyworks next year? Liam Griffin: Yes, great comment. I'm glad you brought it up. And the answer is, we are seeing a great opportunity there. We went through the last calendar year with great success. We'll continue to do that with flagship models, largely domestic U.S. players. And we're starting to see now the incremental move with the Oppo, Vivo, Xiaomi, MediaTek players as they bump up and bring their technology along in 5G. And that's a great opportunity. And the content delta there can be substantial. And we're working that very hard. We mentioned it in our prepared remarks. And that's a very strategic lever for Skyworks. And we're engaged. So this isn't a case we have to break in and form a relationship. We're already a supplier to these key players. But we're seeing the technology lift within their devices. It’s exactly what we anticipated. So we should expect more from that corner of the world. Mitch Haws: Next question? Operator: Thank you. Our next question comes from the line of Gary Mobley from Wells Fargo Securities. Sir, your line is open. Gary Mobley: Hi, guys. Thanks for taking my question. One of your competitors on the RF side has been talking about certain available opportunity of roughly $10 billion that has opened up largely because of Huawei business essentially dying on a vine and that being redistributed amongst more influential customers. I’m wondering -- I was hoping to get your perspective on how that has benefited Skyworks in recent quarters, what inning we may be in with respect to that redistribution of market share, and how it may impact you guys looking forward? Liam Griffin: Yes. That's an interesting question. As we just mentioned with the last caller, we're deeply engaged in China across all the platforms, and we have good relationships there. We formed those for years. So we've always been a trusted partner. We have the knowhow to create custom engines with our Sky5 portfolio that allows our end market customers to step in quickly with a solution that we've architected. So we see that demand opportunity as well as anyone. We have a more diverse portfolio that can address those markets as well. So it's not a single solution. We can crack it. We can customize it. We can reach into our Sky5 portfolio and do exactly what the customer needs. And so we look forward to that growth. So we see that same opportunity, and it can be upside for us as we see China move into 5G accelerate. Gary Mobley: Okay. For my follow up, I want to ask you about content growth at your lead customer, but I won't go there. But I was hoping maybe you can give us a little more detail on sort of the frequency band support that will be needed as we move from one 5G phone to the next generation. In other words, the cycles within a cycle, so to speak, as it relates to air interfaces. What sort of content growth do you think you can see long term in broad market related as these flagship phones need to support more frequency bands, in particular things like millimeter wave support. And then related to that, perhaps what your current stance is with respect to millimeter wave? Thank you. Liam Griffin: Sure. Well, as you've seen, the frequency opportunities continue to expand. If you look at the C-band option, for example, that opened up a tremendous amount of technology, 3 to 6 gig where we can capitalize immediately. I think the appetite -- if we go high level, the appetite for this technology is really strong, right? The mobile technology that we see every year gets more complex and more challenging, whether it's in China, whether it's in the U.S., and we love that, because we're a company that focuses on the high end, we focus on technology, we focus on excellence in our products. And we see that opportunity be rewarded with our customers. So we can hit all of those nodes, whether it's a China play, whether it's the high end of the U.S., and we've grown the technology along with it. So that's how we go to market. There's nothing new about the news around Huawei or anything like that. All that stuff is completely understood. Millimeter wave you mentioned, millimeter wave is an interesting technology. It works in certain areas. It has some drawbacks as well that are well known. We listen to our customers and we have great engagement with all the players that we need to work with. And together, we resolve the complexity and work on the end market solution. So, we have investments across that entire spectrum. We know what we need to do to win. We also know what we need to do to allow our customers to win. And that's the recipe that's been working. Operator: Thank you. Our next question comes from the line of Blayne Curtis from Barclays. Sir, your line is open. Blayne Curtis: Thanks for taking my question. I just want to revisit the September guide. So I guess when you look at it on an organic basis, it's a little over $100 million sequentially. If you look back last year, your lead customer kind of contributed that amount. And with the earlier launch and content gains, you’d think it would be some more. So just trying to understand, are there some segments that are down? Are you adding some conservatism? Just trying to understand with the acquisition, I know it's a great sequential, but just from looking at the moving pieces should be a bit more in my mind. So just trying to figure out what I'm missing? Kris Sennesael: Blayne, I think as we indicated, organically we see double digit sequential growth into September, both in our mobile and broad markets business. And we have really done well and executed well on the design win side. We have higher content in multiple forms at all OEMs that are launching, and that will be launched here in the next couple of months or so. And so sometimes it becomes a little bit of a unit place. As you know, we always are somewhat conservative in our unit assumptions. There is definitely strong demand for the products. We do take into account, as Liam earlier expressed, some of the global supply issues which are there, right, and we need 100 parts to make a phone. If there are only 95, including the Skyworks parts, but they are missing some other parts from somebody else, you can’t make a phone. So that's all being taken into account. Again, the growth will continue into the December quarter. And so when you look at how we will execute in the second half of the calendar year, September and December combined, I think you will see some really nice strong year-over-year growth. Blayne Curtis: Got you. And I guess maybe just drilling a finer point on broad markets. I know you don't want to break out the contribution, but maybe can you talk about would it be up on an organic basis into September? Kris Sennesael: Yes, that's exactly the point. So our broad markets business will be up double digit sequentially, excluding any contributions from the I&A business. And when you look on a year-over-year basis, it's up strong double digits. We continue to be in that, call it, on or about 30% year-over-year growth. Blayne Curtis: I appreciate it. Thank you. Operator: Thank you. Our next question comes from the line of Chris Caso of Raymond James. Sir, your line is open. Chris Caso: Yes. Thank you. First question on broad markets, and I know that Wi-Fi is a big part of the broad markets or organic business and that's been strong on the Wi-Fi 6 ramp. I guess the question is for how long do you expect that Wi-Fi 6 ramp to continue? It has been -- Wi-Fi has been one of the segments that's benefited from work from home. But I guess we've also heard is there's also an enterprise refresh on Wi-Fi 6 that has to happen, and I guess I'm not sure on the size of those particular segments on whether that gives it enough strength, even if some of the work from home trends should subside, if that allows that Wi-Fi 6 trend to continue? Liam Griffin: Yes, Chris, the Wi-Fi cycle in some way is almost parallel to what we're seeing in 5G. We're seeing high complexity moving into 6E, really complex stuff from consumer to enterprise. It continues to grow. We have really good technologies in this area. We have great relationships with our customers. It's kind of a ubiquitous player in terms of connectivity. So it's been a strong driver for us and the complexity in the devices continues to go up. We have really good business. Wi-Fi enhances it. But then we also have incredible opportunities when we look at the access point in routers that we're seeing today that are really scaling up significantly in terms of the performance and the data rates. And so that's continuing to move. I don't think it's really just a work from home. I think we're starting to see that become a really must-have type of technology. So that's been a play for us. Other areas in broad markets continue to grow. We're doing really good work on the infrastructure space. We got customers like Honeywell in the industrial area. The wireless infrastructure side with names like Nokia and Ericsson are stepping up a bit. And as Kris mentioned, you're talking about 50% year-over-year in that business. So it is a unique portfolio. It continues to grow, very diverse and also a great partner to tag with our I&A portfolio. So I think we're going to be able to bring some cross selling and new customer engagement through that process as well. So we look forward to -- the Wi-Fi as you said at the beginning is really strategic and we're very well positioned. Chris Caso: Okay. As a follow up with some of the costs that you've been absorbing that have been a headwind to margins, particularly some of the COVID costs that some of the production facilities haven't been running quite as efficiently as you've wanted. We've seen some reports that some of the subcontractors in Southeast Asia have had to take some shutdowns again. What's your view of that? What the headwind that you're still seeing from these costs? And is there a timeframe that you could see that some of these costs would come out and therefore be a positive for gross margins? Kris Sennesael: Yes. Chris, so again we executed well on gross margin with 50.6%, up 50 basis points year-over-year, despite the fact that there are still a couple of headwinds. The COVID-19 headwind costs are still there. And I think honestly they're going to stay there for a couple more quarters. We’re working it hard. We're getting better at it. But those headwinds are still there. In addition to that, as we discussed earlier, it's a very tight supply environment. And so, again, that's not really helping us. But despite that, we are further improving our gross margins. A lot of that, of course, helps as we scale up the business. Last year, we did $3.3 billion, $3.4 billion of revenue. This year, we will be doing more than $5 billion of revenue. So we are able to mitigate some of those headwinds. And as I said before, we keep on climbing the technology ladder, right, higher complexity, higher performance, more 5G, more Wi-Fi 6 and 6E. And then in addition, you have the I&A business at higher margin. So you combine all of that, you will see continue further gross margin improvements. Once some of those headwinds will start turning and become tailwinds, we will make further improvements towards our target model of 53%. Chris Caso: Thank you. Operator: Thank you. Our next question comes from the line of Toshiya Hari of Goldman Sachs. Sir, your line is open. Toshiya Hari: Hi. Thank you so much for taking the question. I've got two as well. My first one is on broad markets. In the June quarter, it grew really nicely on a year-over-year basis. I think you said 50%. On a sequential basis, I think it was down about 10, which was a little bit below what you guys had guided to. So just curious what the delta there was with some of the puts and takes? And then on the flipside, obviously you're guiding that business up double digits in September. So if you can kind of speak to the drivers in September within broad markets, that would be super helpful? Kris Sennesael: Yes. First of all, we went up 50% year-over-year in broad markets in June. So I would say great execution. Maybe it was slightly below what we anticipated. And some of that, to be honest, is supply because the demand is a lot stronger there but we weren't supplying. And as Liam pointed out, we had some minor bumps. And so that's part of it. Again, we continue to see strong growth into September, guiding up sequentially double digits, continue to see very strong year-over-year growth across all those end markets. Toshiya Hari: Got it. And then as a quick follow up, I wanted to ask about cash usage going forward. Congrats on closing SLAB. You talked about raising the dividend as well. So that's pretty clear. Between CapEx and perhaps deleveraging the balance sheet and buybacks, how should we think about the balance going forward? Thank you. Kris Sennesael: Yes. In terms of cash and cash usage and cash allocation, I would say, first of all, we will continue to invest in technology and innovation with our research and development activities. That is key to what Skyworks is doing. Secondly, we will also continue to further expand our manufacturing assets in Gallium Arsenide, in filter, advanced packaging, and so we will continue to contribute substantial amounts of CapEx to further expand our reach and expand our manufacturing assets. Despite all of that, we will continue to deliver strong free cash flow. We have a free cash flow target of 30%. We'll continue to make further improvements towards that target. And the free cash flow will be used first of all to pay the dividend. And we just announced a 12% increase in dividend now at $0.56, and there is further room for improvement there. Secondly, we will focus on repaying the debt. We have 2.5 billion of debt on the balance sheet as of today, including 1 billion term loan. We are going to focus on repaying that term loan. We do have an authorized share buyback program, but we have temporarily suspended that, as we for now focus on repaying that term loan. But at a certain point in time, we can, of course, switch that back on. Toshiya Hari: Thank you for the details. Operator: Thank you. Our next question comes from the line of Tristan Gerra of Baird. Sir, your line is open. Tristan Gerra: Hi. Good afternoon. I just wanted to expand a little bit on a prior question about RF content in next generation 5G phones. That increase in the first gen 5G phone was probably in the 30% range year-over-year. You even mentioned things like C-band that's going to continue to drive content increases. But how should we look at that in second gen 5G phones this year? Wouldn't be the increase down to maybe high-single digit year-over-year in terms of content? And then the follow-up question is in China. You did mention opportunities in China. But the adoption rate for 5G phones there is almost 80%. So are you expecting to gain market share, or is it that the second gen 5G phones in China are going to use much more RF content than the first generation, because clearly the adoption rate is up there already? Liam Griffin: Sure. Let me try and unpack that question here. Well, first of all, what I would say is there's tiers of 5G in China. So you have a 5G phone that has a certain level of complexity. But you could have another 5G phone that has much higher complexity and performance. And we can scale through all of those nodes. So the penetration may be still relatively high. There's still a tremendous amount of 5G phones in China that need another click in performance to really move. And we know that, because we see the entire market. We see the market from end-to-end from the U.S. to Europe to Asia. And so there's a lot of opportunity for content gains from the current position in China. If you look at other markets, we're seeing the same push for technology higher performing. We're seeing more features or applications and a higher burden that's put on these smartphones in 5G. And that's all good stuff for us. It gives us the opportunity to come in with our solutions all the way from TC-SAW, bulk acoustic wave, assembly and test, packaging in-house [indiscernible]. So we're really excited about it. So we do see continuous growth and continuous growth in content, but the content is getting harder. It's not more things. It's more complex things. And so you need to have an architect that can bring this together and make it easier for our customers to assimilate. That's what we do. So every year, it's not just phone to phone. The technology, the complexity within the device is rising. And that for us is very, very good. And it limits the competition, and it puts us in a great position to delight the customer. So we look forward to that. And overall, 5G penetration at a high level is still very low right now. There's a lot of room to move from here. And there's a lot of upgrades that haven't yet commenced. So we're looking forward to it. But the technology is not stagnant. It continues to get tougher and tougher, higher bar and opportunities for just a few players like Skyworks to execute. Tristan Gerra: Great. Thank you. Operator: Thank you. Our last question comes from Kevin Cassidy of Rosenblatt Securities. Sir, your line is open. Kevin Cassidy: Thank you. Thanks for taking my question. Just wanted to understand a little more about your order visibility. Are you getting orders that are -- do they have to be scheduled now into the fourth quarter or even going out to the fourth quarter calendar quarter, that would be -- or the first quarter of calendar 2022? Liam Griffin: Yes. Well, in general terms, the ability to get that demand through has been impeded, right, as we discussed through the call today. I would say that Skyworks uniquely with our own fabs, our own assembly and tasks and assets, we're a manufacturer as well as a developer of technology. So we should be able to do better than peers that are more fabless. But at the same time, we're all dealing with this global chip shortage as we say. And so that is an impediment to demand. We talked a bit about that and hopefully that can be unstuck to some level, but we are working with our customers closely. We're doing a -- our teams are working very hard to resolve any impediments in demand execution, and we certainly think that it will abate over time, but it does play through in the current quarter and into the second half a bit. Kevin Cassidy: Okay, great. And just to make sure I understand that. So if your customer isn’t getting the full bill of material, they're asking you to hold up deliveries? They're not building inventory of your product, waiting for other products. Liam Griffin: Yes, somewhat that's true. It just depends on how it's going. Sometimes all parts are ready. And we're not holding anybody up but someone else is holding us up, right. So it's kind of a -- everything has to be complete for an end product to ship. So anything in the food chain that goes sour, it can be an impediment. But I think we'll navigate our part. And we do see some – the clouds kind of cleared here in the next couple of few quarters, and we should benefit from that. Kevin Cassidy: Okay, great. Thank you. Operator: Thank you. Ladies and gentlemen, that concludes today's question-and-answer session. I'll now turn the call back over to Mr. Griffin for any closing comments. Sir, please go ahead. Liam Griffin: Thanks everyone for participating today. We look forward to talking to you at upcoming conferences in the quarter. Thank you. Operator: Ladies and gentlemen, that does conclude today's conference call. We thank you for your participation.

Operator: Good afternoon, and welcome to Skyworks Solutions Second Quarter Fiscal Year 2021 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: Thank you, Rob. Good afternoon, everyone, and welcome to Skyworks' second fiscal quarter 2021 conference call. With me today are Liam Griffin, our President and Chief Executive Officer; and Kris Sennesael, our Chief Financial Officer. Before we begin, I would like to remind everyone that our discussion will include statements relating to future results and expectations that are or maybe considered forward-looking statements. Please refer to our earnings press release and recent SEC filings, including our annual report on Form 10-K for information on certain risks that could cause actual outcomes to differ materially and adversely from any forward-looking statements made today. Additionally, the results and guidance we will discuss include non-GAAP financial measures, consistent with our past practice. Please refer to our press release within the Investor Relations section of our company website for a complete reconciliation to GAAP. With that, I'll turn the call to Liam. Liam Griffin: Thanks, Mitch, and welcome everyone. Skyworks delivered another record quarter with strong year-over-year growth in revenue, margins and earnings per share for Q2. We continue to leverage our expansive technology reach and deep customer engagements, spanning both mobile and broad markets to capture the exploding demand for connectivity. And with our planned acquisition of the infrastructure and automotive business of Silicon Labs, we expect to accelerate that momentum further. Here are few highlights in the quarter. We delivered revenue of $1.17 billion, 53% percent above Q2 of last year. Our broad markets portfolio generated record revenue of $385 million, 67% growth over the same period last year. We posted a new Q2 record for earnings per share of $2.37, representing a year-over-year increase of 77% and demonstrating strong operating leverage. Importantly, we drove $616 million in operating cash flow, a new quarterly record for the company. Looking ahead, the technology bar has never been higher as billions of daily interactions move online spanning a growing set of used cases from remote work, virtual education, touchless commerce, cognitive audio, machine-to-machine communication, and autonomous transport. These advances rely on radical upgrades in speed, latency and reliability with comparable requirements for power efficiency and smaller form factors. For nearly two decades Skyworks has prepared for this opportunity, investing in innovative technologies, human capital and manufacturing infrastructure positioning us to capital on the secular global transition. Notably, our strong cash generation fortifies our ability to fund deep investments in technology, fabs and manufacturing, scale. Further our proven and flexible model is squarely aligned with the complex demands of our customers. Our demonstrated operational expertise allowed us to drive yet another strong quarter of design win execution. In mobile, we expanded the reach of our Sky5 portfolio across premium and mid-tier 5G smartphone launches at Samsung, Oppo, Vivo, Xiaomi and other leading OEMs. In the IoT space, we secured wins across a diverse set of customers, specifically we partnered with Netgear to deploy WiFi 6 and 6E routers, launch WiFi 6 gateways at Deutsche Telekom, Nokia and Altice, ship home security solutions to Xfinity, capture design wins with Google Nest, and we delivered low latency cognitive audio systems powering wireless gaming headsets at Microsoft and Sony. Moving to the industrial space; we delivered IoT modules to QuickTal and Gemalto, and in infrastructure we leveraged our wireless portfolio to deploy MIMO base stations with Nokia and Ericsson. And finally in automotive, we ramped Telematics and driver assist platforms with Volkswagen, LG and GM OnStar. Moving forward, we see a multi-year technologically - technology evolution with our aperture widening from smartphones, industrial to automotive to an expanding set of IoT devices. Today we support a global network that extends to over 20 billion interconnected devices spunning a new class of ecosystems from autonomous transport to smart cities and robotics. Skyworks is fueling this dramatic shift with our unique capabilities; integrating not only 5G but other critical protocols including high performance WiFi, Bluetooth and precision GPS. Finally Skyworks is well positioned to win with deep customer relationships established over 20 years, experience across multiple technology transitions, a technically seasoned and talented workforce, and an efficient cash flow engine that funds a pipeline of market-leading solutions while providing strong returns to our shareholders. With that, I will turn the call over to Kris for discussion of Q2 and our outlook for Q3. Kris Sennesael: Thanks, Liam Skyworks posted another quarter of strong financial results delivering record Q2 revenue of $1.172 billion, exceeding the midpoint of our guidance. Total revenue grew 53% year-over-year based on early 5G adoption as well as strong demand for our broad market solutions. Mobile revenue grew 47% year-over-year, largely driven by widespread content increases as 5G phones are ramping across smartphone OEMs worldwide. Broad markets revenue grew further in Q2 to an all-time record of $385 million; this reflects revenue growth of 67% over Q2 of last year, benefiting from a diverse set of used cases, including the adoption of technologies such as WiFi 6 and 6E, 5G wireless infrastructure, and automotive along with the continued positive momentum in our audio solutions business. Gross profit in the quarter was $595 million resulting in a gross margin of 50.8%, up 60 basis points year-over-year. Operating expenses were $155 million or 13.2% of revenue demonstrating spending discipline while continuing our strategic investments to drive growth. We generated $440 million of operating income translating into an operating margin of 37.6%, a 510 basis points improvement over Q2 of last year. Other income was $1 million, and our effective tax rate was 10.5% resulting in net income of $395 million or a net income margin of 33.7%. Execution on both, gross and operating margins, drove record Q2 diluted earnings per share of $2.37 beating the guidance by $0.03 and an increase of 77% when compared to fiscal Q2 of 2020. Turning to the balance sheet and cash flow. Second fiscal quarter cash flow from operations was $616 million, a quarterly record for Skyworks. Capital expenditures were $141 million resulting in a record $475 million of free cash flow translating into a strong free cash flow margin of 41%. We paid $83 million in dividends, and given the recently announced acquisition of the infrastructure and automotive business of Silicon Labs, which we expect to close in the September quarter, we have temporarily suspended our share repurchase program. Now, let's move on to our outlook for Q3 of fiscal 2021. Based on robust demand for connectivity solutions in mobile and broad markets, we expect continued momentum and year-over-year growth in the June quarter. Specifically, in the third fiscal quarter of 2021, we anticipate revenue to be between $1.075 billion and $1.125 billion. We have non-GAAP diluted earnings per share of $2.13 at the midpoint of our revenue range; this translates into year-over-year revenue growth of 49% at the midpoint of the revenue range, and year-over-year non-GAAP diluted earnings per share growth of 70%. Gross margin is projected to be in the range of 50.25% to 50.75%. We expect operating expenses to be between $159 million and $161 million. Below the line we anticipate roughly $1.5 million in other income and a tax rate of approximately 10.5%. We expect, our diluted share count to be approximately $167 million shares. And with that, I'll turn the call back over to Liam. Liam Griffin: Thanks, Kris. Skyworks is on track to deliver record results for fiscal 2021 clearly demonstrating the value of our technologies as we address an increasingly broader landscape of impactful customers and applications. Further the pending acquisition of the INA business fits squarely with our strategic priorities. To expand our market reach accelerate revenue diversification and drive industry leading profitability and cash flow. In parallel Skyworks is solidifying its global leadership, technology breadth and vast operational scale powering the connected experience in Mobile, Industrial, Automotive, Enterprise and other emerging application. That concludes our prepared remarks. Operator we can open the line to questions. Operator: [Operator Instructions] And your first question comes from the line of Karl Ackerman from Cowen and Company. Your line is open. Karl Ackerman: Thank you, gentlemen. If I could, one of your RF peers who report last evening spoke about new content wins across the Android supply chain with its integrated modem, and as a result, I think some investors have concluded what's good for them is perhaps bad for you in terms of your opportunity in certain areas of the RF supply chain. And so I know you're probably limited in discussing specific OEM wins, but I was hoping you could discuss your conviction in RF content gains across the mobile market that would be helpful as we think about your, the growth trajectory beyond the June quarter? Thank you. Liam Griffin: Sure. Good question. Well, we are very bullish about our outlook in RF and other elements in our portfolio; you can see the results that we just reported a very, very strong, substantial double-digit returns and compares across the space. We have an incredible view going forward; we have a rich set of technologies that we continue to grow. We're expanding the aperture of the componentry that we put in, with these devices, we're leveraging our integrated solution Sky 5 that brings in filtering, bulk acoustic wave, core gallium arsenide and other elements to provide a turnkey solution for our customers and we've been doing this for years. This is not new. What is new is the outlook that we have and we start to see 5G really pick up the complexities in 5G and having a fill a full system solution. As we have at Skyworks to put our customers in place to win. So we feel really good about it. We always have competition there is no change there at all. But if you look at how we play and how we work with our customers and the technologies that we deliver in the ways that our customers want to consume it, it's a recipe that works. Karl Ackerman: Appreciate that. If I may, in broad markets very, very strong results, although result is strong and the, also in the room is about sustainability and some SMEs across the supply chain. I've spoken about some modest inventory restocking at non-distribution channels addressing consumer electronics. And so, perhaps you could discuss your lead times here and what proactive measures you may be taking that could limit any double ordering for your WiFi [ph] solutions. Thank you. Liam Griffin: Sure. We have a very close look at the pipeline and the supply chain. Of course. So one of the things that I'm sure you know about Skyworks is that we're vertically integrated. So we're building product in our own factory we're customizing in our own factory from filter to gallium arsenide to packaging and test all of that is done in-house. So there's two things that are, number one, it mitigates substantially mitigate some of the risks that we're seeing with the overall chip supply chain constraints there still some but we going to fare much better than others, but on the other end, we are very close to our customers and the channel, we try to keep that as lean as possible, so we get the real demand a natural demand and that's the way we want it. The diversity in broad markets though is a theme that we should think about here, because we really are expanding the aperture, it's multiple technologies, whether it's WiFi or WiFi 6 or Bluetooth or GPS. But then there is a broadening set of customers that have stepped up and joined the Skyworks design win team. So there's a lot of diversity within the broad market portfolio, but there's also a lot of technology differentiation that allows us to gain share and we're looking forward to continuing to put up above market results in that category. Operator: Your next question comes from the line of Blayne Curtis from Barclays. Your line is open. Blayne Curtis: Hey, good afternoon and thanks for taking my question. I just wanted to ask on gross margins. And then as part of that, if I know you are catching up in March after a very strong December, particularly one customer. So maybe related, but kind of two parts there just how are you in the process of catching up and if you just comment on the gross margin, it is down a bit in June obviously revenues are 50% been kind of 50 and change range for a while what's the drivers of the margin to be down in June? Liam Griffin: Yes Blayne. I'll start with the gross margin question, first of all, I was pleased with our actual result at 58.8 in fiscal Q2 up 60 basis points on a year-over-year despite a somewhat challenging and tight supply chain environment, as you well aware. We are guiding here 50.5 at the midpoint for fiscal Q3, which is up 40 basis points year-over-year is slightly down from Q2 on slightly lower revenue as we are going into our slowest seasonal quarter of the year, but we do of course expect further gross margin improvement in the second half of the year as we start ramping as we usually do in the September and the December quarter. Blayne Curtis: Thanks. And then maybe just the first part of the question just catching up on the customers if any additional color as to how you are in that process into June? Liam Griffin: Yes, no, I mean this is an environment where there is very strong demand across the board and as we pointed out, you as well. We've done really well meeting that demand despite the tight supply environment. We control that through our own factories, we've been putting in a lot of capacity proactively because we knew that is big strong cycle with 50% year-over-year growth was coming towards us as we are moving into 5G and so we've been executing well we do buy some stuff from third parties and that's a little bit tight. But given the size and scale that Skyworks have and a strong team that we have, we've been executing pretty well there. Operator: Your next question comes from the line of Chris Caso from Raymond James. Your line is open. Chris Caso: Yes, thank you. Your first question is regard to the China OEM business, could you describe what's going on there. We heard MediaTek report earlier this week. It's a really strong first half their guidance seems to suggest some flattening out into the second half. How is that going for your business? Liam Griffin: Sure, Chris. Well, obviously the off the China market is very important to the overall ecosystem and we are doing very well in that space, again players like Oppo, Vivo, Xiaomi and then MediaTek a whole another angle, which we've been working with MediaTek for years, a very strong baseband provider and we have unique technologies that wrap around their core baseband and we've been doing that for quite a while. So we still feel very good about China. It is lifted off first in the 5G landscape of course there's a tremendous amount of opportunity between now and the next four or five years and more as we populate and drive subscriptions in 5G but with the MediaTek side we gaining market share at MediaTek and their platform is getting stronger, it's more powerful, more potent and it is one of the leading platforms when we look at APAC and again populating some of these brands and also hitting some new markets as well. So the MediaTek relationship we have is outstanding. It's a technically driven relationship. We know the company, we've been working with them for years and those solutions often portfolio out and the Android ecosystem with the names that we mentioned the OVX et cetera. So we've got a very good handle on that and the other thing, Chris here is that these customers really like the fact that we grow our own technologies develop our own packaging and test can get very, very flexible, can integrate in a Sky5 solution that makes it very easy for them to go to market. So there are some unique elements in the Skyworks strategy that go beyond just kind of the parts. Right. So that's always been a key play for us and players like MediaTek that's an ideal solution for them. Chris Caso: Thank you. As a follow up question is on OpEx and it's a moderately on a year-on-year basis, but obviously up a lot less than the revenue growth rate and not necessarily talking for the short term, but over the next couple of years, what's the plan and OpEx do you invest some of the cash flow that you're getting now from the substantially higher rate is this OpEx level that you're at right now sufficient enough to kind of drive the sort of growth that you guys want to see? Kris Sennesael: Yes, Chris, I mean we've been talking about that a lot. We will continue to invest in our business and we are a technology leader. We want to continue to expand our reach into that very rich ecosystem and we are not hesitating down. So at the flip side, of course, we are very efficient in how we do it and what we do. Our total OpEx is running on or about 13% to revenue, that's an area zip code, where we want to keep it. Obviously, there are, if you look at it during the year. There are seasonal swings as the revenue goes up and down, but longer term, and that's somewhat like 13% to revenue, that's a good place to be. Liam Griffin: Yes. And I'll just to add to that. Remember the leverage that we have in our business and we are a company that we're driving the broad market portfolio with big dollars in a mobile portfolio. So our business is very much focused on that execution and our design teams know how to develop products that have an incredible market reach. So that's the thesis behind that and certainly we're funding R&D to the level it needs to be funded. We know exactly where we're headed there and we're investing in aggressively technology investments in our fabs, in our packaging houses and really just the platform that we have in Sky5 as we move forward. So all that kind of we used together and you get leverage because these are really strong markets that have a pretty potent unit our curve on them as well. So it - part of the strategy is to really drive a solution that can then spin off derivatives, but still have that same core. So that's a unique element Skyworks and, as Kris said having your own fab, having your own manufacturing, assembly and test all of that under multiple groups, but our own makes a big difference for us. Operator: Your next question comes from the line of Gary Mobley from Wells Fargo Securities. Your line is open. Gary Mobley: Hey guys, thanks for taking my question. At a multi-part question to start out with. I think when you started the fiscal year, you had pretty optimistic view on your mobile related to revenue tied to the non-iOS community. And my question to you is, are you at a point in the year now that we're in somewhat of a law that you're able to service those Android Smartphone customers to the fourth extent or are you really are perhaps been over extended by you're trying to service your largest customer? Liam Griffin: Yes, that's a great question and I'll tell you this, the Android ecosystem right now is really strong and we're putting up excellent numbers in that part of the part of the landscape. So there is no law, there were some supply chain hiccup here and there, but we're still executing to a very aggressive path. We've got the demand, we have the technology that's needed and we're doing that with, in parallel with great outcomes with our largest customer. So that's definitely moving in the right direction, and it's for the reasons we talked about, we have a great 5G multi-year. And I mean really multiyear opportunity here for us and others. And we have a technology curve that we talked about in the prepared remarks stuff is getting, this is really challenging stuff now and companies that have invested in R&D and invested in their fabs and work closely with their customers are going to be the winners. And we're going to be at the top of that list. So we feel really good about that and it's absolutely our mission to deliver across all the different segments and mobility. Gary Mobley: I appreciate the color, Liam and as my follow-up. And I don't want to nitpick here, you guys have been producing is great results, but you had a higher mix of broad markets revenue in the March quarter. And I think it was pretty substantial mix upside for that particular business unit and so my question is why were you guys not able to deliver more upside to the gross margin, just given that higher than expected mix of broad markets? Liam Griffin: Yes, so the broad market mix in the quarter came in line with expectations, so there was no surprise there. I mean, we did $22 million or better than what we guided, but that was somewhat across our full revenue portfolio. So there was no change there. And again, from a gross margin we were up 60 basis points year-over-year despite a challenging supply chain environment. There are some increased input costs that needs to be absorbed and despite all of that. We continue to demonstrate year-over-year gross margin improvements. Operator: Your next question comes from the line of Ambrish Srivastava from BMO Capital Markets. Your line is open. Ambrish Srivastava: Hi. Thank you, Kris. On the margin front, when should we expect the input cost increases that resulted due to COVID and then I have a follow-up after that? Kris Sennesael: I mean there are already input costs. Right. This is not new. The tightness in the supply chain has been there now for several months and so it's there, of course, again we're working at really hard. We have long-term relationships with our suppliers, we have the size and scale there as well and again the team is working at really hard. And I think we'll definitely see some improvements there, going into the second half of the calendar year. Ambrish Srivastava: Okay. And with respect to second half calendar year Liam, maybe a question for you. There is no such thing as normal seasonality but given everything that's going on the supply chain. What's the best way you could describe for us to in terms of expectations for the second half calendar year that we should expect versus what a normal seasonal year would be? Kris Sennesael: Yes, sure. I mean we absolutely expect to grow in the second half. All there's a lot of opportunity out there is still very early in 5G. The broad market trend that we put out what really matters there, I can't show this to you in the conference call but if you saw the breadth of customers the breadth of customers. Number one, really, really stepped up and then the diversity of the technologies that those customers consumed was also a really incredible opportunity for us and to be realized. So that's the important thing. And then you go to the strength in mobility, which will come in the second half. We know what we've won, there were a lot of really difficult challenging opportunities that we've been able to win and that should be apparent here in the second half. So there is some stuff happening right now that we're not going to cover a couple of the ball off and broad markets while diversity with customers, diversity in the technologies we bring. And then in core mobility or the second half of the year, we think will be strong and we know what we want to, we know what we've consummated in the key designs and it's all good on that front. Operator: Your next question comes from the line of Timothy Arcuri from UBS. Your line is open. Timothy Arcuri: Hi, thanks a lot. Kris, I think your largest customer last quarter you said was 70% of revenue. Obviously, it was down this quarter, but can you give us a sense of maybe how large it was in March? Kris Sennesael: The largest customer, it was approximately 50% of total revenue. Timothy Arcuri: Okay, awesome. Thank you much. And then I guess a question on what's assumed in the mix for the June guidance typically broad markets is sort of, I mean there is not really that strong seasonality in broad markets but usually it's up about 10% sequentially in June is that about the right assumption for broad markets, and we can vet out mobile to get the mix review. Kris Sennesael: Also on total company we guided June, down 6%. And so when you look at mobile and broad markets, broad markets is going to be flat to slightly down. And of course, on the flip side, you have the mobile business. Timothy Arcuri: Yes. And you have a year-over-year number that is 60% year-over-year in Q3. Kris Sennesael: All right. So total business is up 49% to 50% on or about and saw broad markets, there continues to do really well more than 50% closer to 60% on a year-over-year basis. Operator: Your next question comes from the line of Harsh Kumar from Piper Sandler. Your line is open. Harsh Kumar: Yes. Hey, guys. Sticking to that theme of broad markets. Could you maybe help us understand where that strength that you saw that incremental spend in broad markets where did it come from. I know you mentioned it was broad, there was a leaning towards any one particular technology or end market? Liam Griffin: Yes, it was quite diverse harsh. But I would say unique strength and higher end WiFi, WiFi 6 and 6E a lot of connected home applications that we consummated. Wireless infrastructure has picked up a bit, Nokia and Ericsson we mentioned them in the prepared remarks and starting to do a little bit more with automotive as well. So it was a great quarter and broad markets, it's the type of output that we're capable of doing, consistently growing consistently, as I said earlier in the call, the diversity of the customers was really unique from our more and more companies that had not been customers of Skyworks are now customers of Skyworks and we love to see that and once we establish a beachhead with some of these players, we can do a lot more. So names you heard today names like Microsoft the names like Sony or names like GM and OnStar and moving into industrial markets. That's all coming together in the nice thing is it's using the kind of the needs, and we need the technology that we have and we have it ready for them. So, it's is in the case where we have to spin up something unique by and large, the technologies that we have now are ready to go. So we're able to deliver those solutions in WiFi, deliver those solutions in the cellular format whether it's 5G or otherwise. We have the technology protocols to address what the customers want, and we'll continue to do that. And I think some of the impacts that we've seen with the COVID crisis is that the ability to be flexible and adapt, and we've seen this usage case change where we have customers that were not interested in some of the things that we did or didn't have a need for, and now mobility and connectivity has become paramount in critical and essential and that's driving our business in ways that we really didn't anticipate. But we understand that deeply, and as we move forward, we're going to continue to develop those customers and bring the best technologies we can to each and every one of their own applications. Harsh Kumar: Liam, I wanted to - that was very helpful by the way. I wanted to switch to mobile and ask a longer-term type question. Since as long as I've covered you guys for the entire 4G cycle, content increases were somewhere in the - call it 7% to 10% range, consistent and on that was always the case. How do you see that cadence for 5G? There is a lot more band, there is a lot of stuff going on, there is - different frequency is being added; Spectrum, C-Band, etcetera. Is that number a number that is likely to go - is - the content add number on a yearly basis; is that a number that's likely to creep up because of all that 5G brings? Liam Griffin: Yes, absolutely, it's really necessary. So if you just think about at a high level, even the backward compatibility of the mobile function and you still have 4G running completely, and sometimes even 3G; so you have elements of 3G, then 4G, and then you have 5G. We're also extending the spectrum; more typically, if you looked at a 3G or 4G phone, you're somewhere between 700 meg to 1 gig. Now we go from 1 gig to 6 gig and even higher; so there is new spectrum in the 5G world, there is new challenges, there is new technologies that need to be brought to bear, and then the ability to integrate in a fungible assets to be delivering that as a complete system that our customers can assimilate that is really special. And we do that and that's back to the comments that Kris and I made about having our own technology, having our own factories, having unique packaging assembly and test to really customize a full solution. And the complexity is going up substantially, and the complexity is what drives the content gains. Operator: Your next question comes from the line of Craig Hettenbach from Morgan Stanley. Your line is open. Craig Hettenbach: Yes, thanks. Just going back to broad markets, I know for parts of that business you've been supply chain constrained. Are you catching up or there is still pockets in terms of where you're trying to kind of catch up to demand in broad markets? Liam Griffin: Sure, Craig. That is one area that we are - we're getting there but there is still some catch-up work to be done. Broad market is more diverse, it's a set of customers that is 10 times broader than what we have in mobile; so to design specifically each one of those applications is a great opportunity we're pursuing, but there have been a few bumps in supply chain. As Kris mentioned, we are faring better than most because we do have our own fabs, we have our own assembly and test, we can control our destiny for the most part. But there is still are a few wrinkles in supply chain that are being ironed [ph] out, and it does have a slight headwind on GM and cost as you - there could be some lack of price reductions with some of our suppliers, there is logistics issues with Next Flight Out and things like that. So there is a couple of things that pop in that create a bit of a headwind, but the broad markets business will continue to move and I think we'll certainly see these supply chain hiccups get ironed out very quickly. Craig Hettenbach: Got it. And then just as a follow-up Liam, any update on some of the bar design activity that you're seeing? Liam Griffin: Yes, the bar designs are doing great. You could see in the current lineup of phones today across multiple customers. Our Sky5 solution is bringing in more and more bulk acoustic wave, there is also some bulk acoustic wave technologies in some of the WiFi engines that we have. And as we start to look out into the second half of the year, you should expect more content underpinned by our own organic fab systems as we move forward. So we feel really good about it, we've also made the investments in our fab technology to deliver that - to deliver those solutions, so there is lot of good work that's been done and we're going to be able to reap the rewards of that as we go forward into the second half and beyond. Operator: Your next question comes from the line of Kevin Cassidy from Rosenblatt Securities. Your line is open. Kevin Cassidy: Thank you. I was just wondering if you had some visibility into infrastructure deployments, maybe as you go out into the second half of the year? In particular, maybe the C-band. Is that deployments in the antennas coming in the second half? Liam Griffin: Yes, that's a great question. Couple of things. So first of all, infrastructure had been lagging a bit in this whole mobility ecosystem and specifically in 5G. So as we mentioned in the call, we are starting to see more energy and rollouts with some of the key players in Europe; the Nokia's and the Ericsson specifically. We have great technology there with my MIMO solution, small cell solutions, a lot of the core recipes that we need in gallium arsenide and other places; so we feel really good about it. It's been slow but it's starting to pick up, and it's necessary as you move into 5G; it's necessary as we build out that spectrum. And then as you mentioned, the C-band option is great now because that money has been spent and the carriers want to deploy more and more - they basically want to leverage that technology as quickly as possible. So the infrastructure is going to pop up a little bit there, and it also could add content opportunities to core mobile device. So you have a two-pronged approach there with the infrastructure side and we have positions there. And then of course, when we look at C-band and unique spectrum there, there's going to be devices that will need to be navigating and populating that spectrum within the handset; so that's something that's starting - it's been happening but there is definitely lots of room to move on that end. Kevin Cassidy: Okay, great. Thank you for that answer. And just your CapEx spending, can you say is there anything new in what you're spending it on or is it mostly just capacity expansion? Kris Sennesael: Our CapEx, there is two main drivers there; of course, one is just expanding the capacity as the business is growing at 50% year-over-year right now, and so we definitely to support that. But in addition to that, there is a big part of the CapEx that is technology-related making the investments in our gallium arsenide power amplifier fabs, making the investments in our filter operation TC SAW [ph], and as Liam talked about the bulk acoustic wave, also in our backend operation with more complex higher performance packaging technologies. And so that is really driving a differentiated product offering, that's why we win in the marketplace but we have to support that, of course, we are putting up the CapEx dollars in our own fabs. Operator: Your next question comes from the line of Harrison Barrett from Arete Research. Your line is open. Harrison Barrett: Hi, thanks for taking my questions. Could we get some color on your share into the China OEMs? Is there an RF product area where you're seeing particular traction or are you tending to see a broad mix across your addressable content? Liam Griffin: Yes. I mean the demands in APAC have been very solid, very strong and oftentimes, we have customers that were 3G, 4G and the lift into 5G is actually quite substantial. Some of the comments I just made with the last caller; there is unique technologies that are required in 5G that we're not in a 4G phone; so we're seeing a lot of that pickup. So beachheads with accounts were in that have been strong in 3G and 4G now need to augment and extend their content to be a player in 5G; so we're starting to see that happening, it's been building up. China has a long way to go to really match some of the premium brands that we see in in the US and some other countries, but there's a lot of opportunity to grow that technology and grow the business there. It's also a market that really does value connectivity and mobility, it's a core and essential element within that marketplace and in that region, and we differentiate with our ability to offer that complete Sky5 solution, and really remove some of the complexity that our customers may have when they're launching new technologies. Harrison Barrett: Great. And then, sort of continuing on that theme. There was a lot of commentary about millimeter wave traction in Asia, I think China particularly, from one of your competitors yesterday. Do you have any updates on your millimeter wave roadmap? Liam Griffin: Yes. We're working on millimeter wave but it is really kind of a narrow slice within the mobility architecture right now. So we've got some work to do on the infrastructure side but we know how to do that, and we've got some investments in the handheld side as well to augment; so we're continuing to drive that. But at the same time in the core RF, let's say 1 gig to 6 gig, the opportunities continue to move and the spectrum needed continues to be more and more complex, the C-Band option that was just mentioned is a big driver. And it's really - that's a technology that you take anywhere; the challenge with millimeter wave is that you have substantial current consumption needs, you have a physical size that is - there is a challenge in a mobile phone. And then you have point to point interference; so it's a technology that could have use in certain environments, walk going into stadiums or campus environments, unimpeded, of course. It works but if you look at what we can do in 5G to A with the solutions that we have today and the spectrum that we have today, it's incredible; the speed, the performance, the latency, and the ability to roam and expand that signal anywhere unimpeded. So it's going to be a challenge, but look at anything else, I mean there is layers in the cake, right. There is - you have your low-band, your mid-band, your high-band, you could have a unique spot at the top that delivers a millimeter wave cycle. So it's all there, we understand it. We know how to navigate through it and we know how to work with our customers to ensure that they get the best solution. Operator: And your final question comes from the line of Raji Gill from Needham and Company. Your line is open. Again, Raji Gill, your line is open. Raji Gill: Yes. Great, Chris. Thanks for taking my questions. I was wondering if you could discuss the linearity in the quarter. I think last quarter it started a little bit slower and then accelerated significantly. Wondering how that's shaped up this quarter. And wondering if you, if there is any signs of pull-ins during the quarter? Liam Griffin: So let me first talk about the March quarter. The linearity was just perfect, it was evenly spread amongst the three months within the quarter and of course now in June, we are going through our slowest seasonal quarter. So somewhere in the middle of the quarter you hit the bottom and then you start ramping up, ramping up towards the second half of the calendar year where we're, again we're very bullish about the opportunity there to produce strong sequential growth into September and December. Raji Gill: And Liam, you mentioned you're integrated modular approach particularly giving you an advantage. I'm wondering how you would characterize the RF content gains this year versus; say, last year, what kind of the first initial rollout of the 5G phones. Is this integrated modular approach providing kind of more tailwinds in terms of RF content, particularly in kind of the mid-range of the market in China. Any color there in terms of how you're leveraging the integrated approach to either a gain share or increase RF content? Thank you. Liam Griffin: Yes, thank you. Great question. Yes, this is exactly why we developed our Sky5 solution. We know how hard it is to deliver a 5G socket with all the bells and whistles that can handle spectrum across the board. I'll handle the complexity of roaming the size constraints, the current consumption. It's really hard. So we spent a great deal of time creating a solution that makes it very easy for our customers to go to market. Although the hard work underneath within the Skyworks cover discovery module is not easy. So we have the ability to deliver the filtering technology that we use all the way from [indiscernible] to bulk acoustic wave. Our own customized gallium arsenide devices, unique assembly and test and packaging in house and wrapping that together with a lot of these players that really need that know how it's been a great, great opportunity. This is something that we have been thinking about and working on for a year. So this is a purpose-built solution. It is not something that we just turned on this year. This is something that we've been working on for quite a while but the higher the complexity that we see in the market in the handset. The better we do, and you'll see that across the board, you'll see that with launches this year, you'll see that with phones that are out there now and the complexity continues to rise. That drives content and the consumer demand for the technology around mobility just continues to grow. So it's a great market to be in, but there are a lot of problems to be solved and that's what really gets us excited and puts us in a position to outperform. Operator: Ladies and gentlemen that concludes today's question-and-answer session. I'll now turn the call back over to Mr. Griffin for any closing comments. Liam Griffin: Thank you all for participating on today's call. We look forward to talking to you at upcoming conferences, during the quarter. Thank you. Operator: Ladies and gentlemen, that does conclude today's conference call. We thank you for your participation.

Operator: Good afternoon, and welcome to Skyworks Solutions First Quarter Fiscal Year 2021 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: Thank you, Rob. Good afternoon, everyone, and welcome to Skyworks' first fiscal quarter 2021 conference call. With me today are Liam Griffin, our President and Chief Executive Officer; and Kris Sennesael, our Chief Financial Officer. Before we begin, I would like to remind everyone that our discussion will include statements relating to future results and expectations that are or maybe considered forward-looking statements. Please refer to our earnings press release and recent SEC filings, including our annual report on Form 10-K, for information on certain risks that could cause actual outcomes to differ materially and adversely from any forward-looking statements made today. Additionally, the results and guidance we will discuss include non-GAAP financial measures, consistent with our past practice. Please refer to our press release within the Investor Relations section of our Company website for a complete reconciliation to GAAP. With that, I'll turn the call to Liam. Liam Griffin: Thanks, Mitch, and welcome, everyone. Skyworks delivered record quarterly results in the first fiscal quarter of 2021, leveraging our expansive technology reach and deep customer engagements, spanning both mobile and broad markets. We established new quarterly records for revenue, operating margin and earnings per share, demonstrating both the power of our financial model and unique opportunity to lead the global transition to more advanced wireless communications. Now, looking at the quarter in more detail. We delivered revenue of $1.51 billion, more than $455 million above the midpoint of our guidance. We posted earnings per share of $3.36, exceeding our guidance by $1.30, effectively doubling year-over-year earnings. We achieved gross margin of 51.1% and record operating margin of 41.2%. And we generated strong operating cash flow, totaling $485 million in the quarter. As our results demonstrate, the demand for always-on connectivity is accelerating and extending into new applications, including telemedicine, high speed video conferencing, remote learning, autonomous transport, essential services for the infrastructure markets, store-to-door delivery, and touchless commerce. This is a global phenomenon, where upgrades of key technologies are increasingly critical in the face of the ongoing pandemic. The investments we've made over the last two decades have prepared Skyworks to address these challenges. The mobile and wireless ecosystems will benefit from these dynamics, yet outsized gains will largely accrue to those companies that have invested deeply in core technology and scale. These gains are being driven by both, a growing device count and an expanding content per device, in some cases, doubling or even tripling for Skyworks. We are proud to play an instrumental role in shaping the fast-evolving landscape, collaborating with our partners and customers, leveraging key technologies from TC-SAW to high-performance BAW filtering, SOI, gallium arsenide, and state-of-the-art packaging technologies. Our strong results in Q1 demonstrate our execution around these themes. Specifically in mobile, we accelerated the ramp of our Sky5 portfolio, supporting the next wave of 5G launches at Samsung, Oppo, Vivo, Xiaomi and other Tier 1s. In IoT, we captured design wins across a diversified array of new and existing customers. Specifically, we partnered with ASUS, delivering the world's first Wi-Fi 6E connected home router. We shipped Wi-Fi 6 solutions for access points at top network OEMs, including Cisco, NETGEAR, CenturyLink and Aruba. We captured new wins at Google for their latest Fitbit smartwatch. And we delivered low latency cognitive audio solutions, powering wireless gaming headsets at multiple Tier 1 accounts. In industrial, we ramped Itron’s multi-standard ISM connectivity solutions for smart cities. In infrastructure, we deployed 5G amplifier and receive modules, supporting multiple European base station OEMs. And finally in automotive, we accelerated shipments of advanced connectivity solutions supporting the world's premier EV manufacturer. We leveraged V2X solutions with Volkswagen and Toyota for their enhanced safety systems, and partnered with MediaTek for 5G reference design, specifically targeted at automotive applications. Moving forward, we are seeing the confluence of multiple market developments, a significant rise in device complexity and expansion in wireless spectrum and band count combined with a technology bar that has never been higher. These trends directly translate to increased opportunity for Skyworks with both new and existing customers. With essential technologies and scale propelling performance gains across a broad set of applications, our purpose-built solutions address all key network protocols, spanning 5G, Wi-Fi enhanced UPS and Bluetooth. Additionally, we expect the current C-band auction to be a catalyst, with new spectrum creating significant content opportunities for our Sky5 platform. While smartphones were the first to embrace 5G, the performance gains will power a broad set of use cases, extending into billions of IoT devices. Looking ahead, we see 5G as a transformative technology, catalyzing new applications, while acting as the universal connector from the home to the car to the factory floor. In summary, Skyworks is solidifying market leadership as connectivity meaningfully alters the way we live, work, play and educate, not just from home, but from anywhere. Our record performance clearly reflects this dynamic. With that, I will turn the call over to Kris for a discussion of Q1 and our outlook for Q2. Kris Sennesael: Thanks Liam. Skyworks started fiscal '21 with very strong Q1 results, delivering all-time record revenue of $1.51 billion, adding more than $550 million of incremental sequential revenue and exceeding the midpoint of the guidance for Q1 by $455 million. Revenue was up 58% sequentially, and up 69% year-over-year, driven by increasing adoption of our mobile solutions with all smartphone OEMs along with record broad market revenue and customer reach. Mobile revenue grew 80% sequentially, as well as on a year-over-year basis, largely driven by widespread content increases as 5G phones are ramping with all major smartphone brands worldwide. Broad markets revenue grew to $326 million, establishing a new quarterly record. This reflects revenue growth of 35% over Q1 of last year, benefiting from a diverse set of use cases supporting work, play, learn from anywhere, and increasing adoption of technologies such as Wi-Fi 6 and 6E along with the continuous momentum in our audio solutions business. Gross profit in the first quarter was $771 million, resulting in a gross margin of 51.1%, up 70 basis points sequentially, and up 100 basis points year-over-year. Operating expenses were $149 million or 10% of revenue, demonstrating strong leverage in our operating model, while continuing our strategic investments in support of future growth. We generated $622 million of operating income, translating into an all-time record operating margin of 41.2%. Other income was $1 million, and our effective tax rate was 10%, resulting in net income of $560 million or a net income margin of 37.1%. Top-line momentum and execution on both gross and operating margins drove record diluted earnings per share of $3.36, beating the guidance by $1.30. EPS grew 82% sequentially and doubled when compared to Q1 of last year. Turning to the balance sheet and cash flow. First fiscal quarter cash flow from operations was $485 million. Capital expenditures were $119 million. We paid $83 million in dividends and we spent $196 million to repurchase 1.4 million shares of our common stock at an average price of approximately $139 per share. Additionally, as noted in our separate press release issued today, Skyworks' Board of Directors has authorized a new $2 billion stock repurchase program. This new buyback plan reflects our Board's confidence in Skyworks' business model and in management's ability to consistently produce strong free cash flow, allowing us to leverage share repurchases and dividends to generate higher stockholder returns. Now, let's move on to our outlook for Q2 of fiscal 2021. We expect the continued and rapid adoption of multiple wireless protocols and expanding use cases to drive strong year-over-year growth for Skyworks. Specifically, in the second fiscal quarter of 2021, we anticipate revenue to be between $1.125 billion and $1.175 billion, with non-GAAP diluted earnings per share of $2.34 at the midpoint of our revenue range. This translates into year-over-year revenue growth of 50% at the midpoint of the revenue range, and year-over-year non-GAAP diluted earnings per share growth of 75%. Gross margin is projected to be in the range of 50.5% to 51%. We expect operating expenses to be between $150 million and $152 million. And below the line, we anticipate roughly $1 million in other income and a tax rate of approximately 10%. We expect our diluted share count to be approximately 166.5 million shares. And with that, I will turn the call back over to Liam. Liam Griffin: Thanks, Kris. Skyworks started the new fiscal year with record results, clearly demonstrating the breadth and depth of our business model, from Tier 1 mobile to thousands of broad market customers. Importantly, the multiyear wireless transition is now underway, creating a burgeoning set of new opportunities and use cases. With deep customer engagements, underpinned by decades of technology investments in scale, Skyworks is uniquely positioned to lead. Finally, our high levels of profitability and strong cash generation afford us the flexibility to invest and win, while generating consistent returns to our stockholders. That concludes our prepared remarks. Operator, let's open the lines for questions. Operator: [Operator Instructions] And your first question comes from the line of Karl Ackerman from Cowen & Company. Karl Ackerman: Hey. Good afternoon, gentlemen. And thank you for letting me ask a question. I guess, with results and an outlook this strong, the elephant in the room is about sustainability, both in terms of revenue growth but also profitability. We know that 5G handsets will increase this year, but I would really appreciate if you could talk perhaps qualitatively of how you see that outlook for the balance of the year, as well as your view on broad markets too, given what appears to be a multitude of design ramps across your Wi-Fi 6 portfolio. Thank you. Liam Griffin: Sure, absolutely. Well, a couple of things. The 5G cycle really is just beginning, and that's clear. And I think, if you listen to Skyworks and what we've been saying, it's all about complexity, it's all about content gains, and the culmination of those coming together with a tremendous unit launch in 5G. And again, very early in 5G. The estimates for unit uptake at 5G, if you think about 2020, maybe there were 200 million, 220 million phones. Those numbers are going to be more than double going into '21, and they'll continue to move. You've got almost 7 billion subscribers on the planet, and the percentage that own a 5G phone are very, very low. So there's a tremendous upside there in our core business in mobile, and also advanced by great technology execution with our team. So, that's one big driver. The second driver that's been bubbling up for a while is our broad market portfolio. We had tremendous gains in our broad market portfolio, 35% year-over-year with a broad set of customers, names like Nokia, names like Honeywell, names like GE, Bosch, just an entirely new landscape of customers that we've been able to engage with. And then, we talked a lot about usage cases here in the call. Usage cases, new applications that require connectivity, whether it's Wi-Fi, whether it's Bluetooth, whether it's 5G. All of those trends are moving in the right direction for us, and they're sustainable. Karl Ackerman: I appreciate that very much. If I could, for a follow-up, one of the baseband companies in Asia, the other day spoke about how they do not see any evidence of a build of inventory across the channel. Similarly, it's now well-known that there remains tightness across the foundry and component supply chain. My question is, how are these dynamics driving your discussions on both pricing and volume commitments to your customers? Thank you. Liam Griffin: Sure, great question. I think, one -- and by the way, you're right about the tightness in supply and some of the challenges operationally. And I would say that the Skyworks team did an incredible job executing in the Q1 period. And I think we'll continue to see that opportunity extend into the full year. But, I will say this. We have made the unique investments in capital and scale. We have our own 10 billion unit TC-SAW factory for customized filtering. We have bulk acoustic wave in-house. We have our own assembly and test and packaging capabilities that are unique and purpose-built for this market. So, we were able to avoid some of the real challenges in supply chain because we've built a lot of this in-house in our own factories. But, there certainly have been some bumps on the execution side throughout the landscape, the technology landscape and the connectivity landscape, but we're starting to see that clear. And fortunately, we're able to execute through that in the December quarter. Operator: And your next question comes from the line of Ambrish Srivastava from BMO. Ambrish Srivastava: Hi. Thank you. Liam and Chris, I was fooled for a second. I thought I was reading a TI or ADI earnings release with that kind of operating margin. So, that's pretty solid, guys. But, let me address maybe a baby elephant that's running around, at least in our minds, which is China. So, there's been a lot of talk about overbuild in China, especially in the bots complex and how they're trying to take share from Huawei. So, maybe if you could just give us some sense, quantitatively, how big was the China business? And then, qualitatively, can you just help us understand what's going on? And then, I had a follow-up for Kris. Liam Griffin: Sure. Well, we've been a key element, a key supplier for the Oppo, Vivo, Xiaomi ecosystem, and that continues. And we had great results with those accounts this year. There's a lot of opportunity to grow their 5G base as well, and that's something that we should be looking forward to throughout the year. And it's a multiyear cycle, of course. But again, one of the things that we continue to say here at Skyworks, and it really rings true is our ability to get in and help these customers customize and configure the complexity around 5G, leverage solutions like Sky5 that really integrate that tremendous amount of components and complexity and make it easy for the customer to go to market. So, we had some strong uptake there in the China space. We continue to see that looking good. Obviously, there you have a Chinese New Year opportunity here as we get into our new year. So, I think there's going to be some good signs of growth. But, we have a good position there today. And I think there's just more room to move on units, as we go through the year. Ambrish Srivastava: What was the growth in China on the end Q-over-Q? Kris Sennesael: So, our China business in the December quarter was up double digits sequentially, and of course, very, very strongly on a year-over-year basis. And of course, looking into March, we will have stronger than seasonal growth, double-digit growth, accelerating our year-over-year growth with those accounts. Ambrish Srivastava: Okay. And a quick follow-up for you, Kris, since you are on the line. Just remind us on the capital allocation priorities, good to see the $2 billion buyback. But just kind of just walk us through divi, buyback and M&A. And I'm assuming M&A would mostly be in the broad markets. Thank you. Kris Sennesael: Yes. We're not changing our strategy there. We did have a $2 billion buyback program in place that had a two-year life cycle. And so, that came to an end. And so, we are replacing that program with a new $2 billion buyback program. And so, we will continue to return most of our free cash flow back to the shareholders, a combination of our dividend program and now the new $2 billion buyback program. Operator: Your next question comes from the line of Timothy Arcuri from UBS. Timothy Arcuri: Hi. Thanks. I guess, the first question is, the beat was so significant, and you guided just in early November. And you typically get pretty good visibility from your biggest customers. So, I guess my first question is sort of like what drove the big beat? Was it a pull-in from your large customers? Can you just sort of double-click on what drove the beat? And then, I had a follow-up. Thanks. Liam Griffin: Sure. Yes. Well, it was certainly not pull-ins. That's for sure. I mean, it was a quarter that started a little slow and really accelerated through the period, a tremendous amount of technology execution behind this on the mobile side. But again, in broad markets, we had a record 35% year-over-year. So, it's a culmination of strong 5G launches with the most important customers, within those launches, an extended reach of technology from Skyworks. The content that we're putting forth right now is significantly more advanced and more impactful than what we've had in prior years. And that comes through our own technology fabs, our own investments in R&D and then scale to make that happen. So, you had a very strong mobile opportunity. And then you had a broad market opportunity in parallel that was leveraging some of the core technology as well. But again, things like Wi-Fi moved, GPS, Bluetooth, all the connectivity protocols, the new usage cases, popped up customers that we didn't have before, emerged. So, it was a culmination of multiple factors. But those factors are sustainable. I mean, those customers that we've won are going to stay with us as we go through the next couple of quarters and years. And we look forward to more opportunity there. Timothy Arcuri: Okay. Got it. And then, I guess, Kris, oftentimes, you give us what your largest customer was in terms of revenue in the quarter. I think, last December, it was in the low-60s. So, I imagine that's probably that or even higher in December. So, can you give us that number? Kris Sennesael: Yes. Revenue with the largest customer in the December quarter was approximately 70% of total revenue. Obviously, it was a great quarter with that large customer that just launched their first 5G phones, which with very rich content inside, we talked about that and we indicated that 9, 12 months ago. In addition to that, we do have some very nice and good content, and some of their other products that have large customer sells as well. But again, so great execution there, we have a large customer. But, as Liam indicated, the strength in the December quarter was not just with the large customer. All our other customers, all our other segments, every region was up double digits sequentially and strong double digits on a year-over-year basis. Liam Griffin: Yes. And just to follow-up with Kris. I think, it is important to note that the growth with our large customer is also accelerating in their new application. So, it is not all just about smartphones, a lot of other opportunities there that require the connectivity protocols that we bring to market, which is really great. Operator: Your next question comes from the line of Blayne Curtis from Barclays. Blayne Curtis: Hey guys. Thanks for taking my question. And just truly amazing results. Maybe you can just help us a little bit with March, obviously, your large customer, that very high numbers should have some seasonality. Curious your outlook maybe between mobile and broad market, do you expect broad markets to -- I guess, typically, it would be down, but within that outlook for March, do you expect it to be up? Kris Sennesael: Yes. No, absolutely. So, the guide that we provided for March has some seasonality with the large customer, as you can expect. But, if you look at the revenue in mobile outside of a large customer, as well as the revenue in growth markets, it will be up double digits sequentially, which is actually stronger than normal seasonality, a lot stronger than normal seasonality. And it further accelerates our year-over-year revenue growth with all those accounts, the Korean, the Chinese as well as thousands of broad market customers. Blayne Curtis: Got you. And then, I want to ask you also, I guess, within broad markets but it has a mobile play as well. On Wi-Fi 6E, Samsung launch a phone without, I'm assuming you'll see another mobile customer with that. And then, I guess, at some point, you'll see access points. Can you just talk about the content driver for you for Wi-Fi 6E? Liam Griffin: Sure. Yes. I mean, we are seeing that roll out now very quickly. A lot of great design wins with key customers today now. And so, I mean, there's a technology pop there, Blayne, when you look at the Wi-Fi 6E product, there's even bulk acoustic wave opportunity within those systems. And the data rates and speed are demonstrably more powerful. You could see that in your Zoom calls or whatever. So, Wi-Fi 6E is a big driver for us as is Wi-Fi 6. And that's one of the things to think about with Skyworks. It's really about connectivity. Connectivity can be 5G, connectivity can be Wi-Fi 6, Wi-Fi 6E, can be Bluetooth, all those protocols are there, but Wi-Fi 6 and 6E are meaningful, and they are really now the product of choice in the work-at-home, work-from-anywhere dynamic. And I think that's an opportunity for continued gains for us, and with content and also with adding additional customers. Operator: Your next question comes from the line of Kevin Cassidy from Rosenblatt. Kevin Cassidy: Thanks for taking my questions. And I'll add to the congratulations on the stunning quarter. For your outlook, is there any capacity constraints in your own manufacturing, or is -- you brought inventory down, is there -- is that a constrained number? Liam Griffin: No. I think, right now, we are in good shape from a capacity point of view. In fact, I think, we've been able to broaden the aperture a little bit on execution and drive more technologies through our own fabs. So, we should be in good shape. I mean, obviously, the December quarter really tested our metal in terms of execution. Team did very, very well. We still had to navigate some supply chain hiccups here and there that were outside of our supply chains. But, for the most part, we executed very well, and we can take that momentum and the lessons learned through the December quarter to put us in better position to come through strong through the calendar year 2021. Kevin Cassidy: Okay, great. Thanks. And just, can you give us a time line for the C-band? How does that move into revenue? And what kind of percentage increase would you expect those handsets with C-band having? Liam Griffin: Yes. No, that's a great question. So the C-band auction now is pretty much commenced. And what it does, which is great, as it opens up new spectrum in mid-band. So, let's call it mid-band 1 gig to 6 gig. There's a lot of opportunity there that had been really kind of tied up pre-auction. That will be very beneficial for Skyworks because we have a great portfolio of products in mid-band. We have great product in ultra-high band and high-band as well. But C-band is going to be unique here. It's going to be an important piece of the 5G landscape, a very necessary piece going from low to mid to high, kind of the layer cake approach, if you will with low-band at the bottom, mid-band in the middle and then technologies like millimeter wave narrowly at the top. So, that C-band auction will drive more technology. We will be delivering 5G signals through that new spectrum, will require upgrades in our Sky5 platform that we're ready to go on, and it will be able to add content. Operator: Your next question comes from the line of Chris Caso from Raymond James. Chris Caso: I guess, the first question is just digging into what was different from your expectations going in the quarter again? And if I guess, the question maybe a little differently, we had talked about some supply constraints coming into the quarter. Was the nature of this beat just that you were able to get more supply out the door this quarter than you had expected? And otherwise, when you guided back in September that perhaps more of this would have been pushed into the March quarter? Was it that either content or demand from your customers turned out to be better? Liam Griffin: Yes. Chris, it really is a lot of -- there's elements of each comment. So first of all, there was an accelerating demand signal here in the December quarter, which was great. Things were a little bit slower in the Q4 period, and we started really seeing the wheels turn in the right way in December. And that accelerated. That was -- the December quarter was a quarter that accelerated. It didn't decelerate. We've had other periods where we had launches that started out great and kind of tailed off. That didn't happen. And so, what it did is to put a lot of focus on execution, supply chain execution. And fortunately, and if you look at obviously our filings, we've been spending money on capital, on CapEx. And that really isn't just adding lanes of new equipment. It's actually bringing new technology to the market. So, it was a culmination of supply chain execution, largely within Skyworks. And then, we had a couple of hiccups outside. We don't make everything in-house, but most of it's done in-house. So, owning our own factories, delivering within our facilities, being efficient there, managing the constraints, but then also bringing that technology up. And we learned a lot in that period. It puts us in a much better position as a company. The lessons learned when the intensity was high I think really are key for us and will make us a better company as we supply further. But then, some of the other things that Chris mentioned, this was not just the mobile launch. Mobile was great and was the highlight, but we really executed in our broad markets. And I'm really proud about that, some of the customer names I already rattled off at really high-quality accounts that were not customers of Skyworks a year ago, and they are today and they will be in the future. Chris Caso: Thank you. As a follow-up, with the big revenue growth, what can we think about margins as we go into next year? And I know that you may have been leaning on some production outsourcing, given all the supply constraints and the big ramps that happened this year. With the investments that you're making now, will that allow you to get some more margin leverage on these very large revenue numbers and start to grow the gross margin line as we go into next year? Kris Sennesael: Yes. Chris, great question. And so, first of all, I'm pleased with the fact that we delivered 51.1% gross margin, up 70 basis points sequentially, up 100 basis points year-over-year and 35 basis points above the high end of what we guided, right? Despite the fact that, as you pointed out, it was a very tight supply chain environment. And keep in mind, we still have some COVID-19 headwinds out there as well. But as Liam indicated, great execution by the operational team, delivering more than $1.5 billion in revenue to our customers, right? And so, as we move forward and as we move, of course, through our seasonal trends here, and as some of those headwinds I just talked about will abate over time, we definitely will see further gross margin improvements here. And maybe just to add there, of course, I mean, we are focused on driving top line growth and we are focused on driving gross margin improvements all the time, but we also focus on overall profitability and operating margins improvements. And so, there as well, very pleased with the delivery of the 41.2% operating margin in the December quarter. Operator: Your next question comes from the line of Edward Snyder from Charter Equity Research. Edward Snyder: Thank you. Excellent results, guys. Congratulations. Kris, I'd like to ask, if possible. I mean, obviously, you've got a big boost from your largest customer, the results yesterday, your comments on today's call and clearly, your revenue line show that. But in terms of sustainability, why shouldn't we expect things to actually get materially better? Because if you look at your content, I mean, you have a big content increase on the latest model, something like by our own teardown, about 20%. But, you still have a lot of runway at the Korean and Chinese customers, where you've been kind of under earning last year. That seems to be coming back. So, can you maybe help characterize revenue growth maybe to '21? You've got a very strong one with the domestic suppliers, what should we expect for the Koreans and China? Thanks. Liam Griffin: Sure. Ed, I'll take this for the first question. And if you have a follow-up, I'll throw it to Kris. Yes. I mean, great question for you there. I appreciate it. And I think one of the things that you know very well is the complexity in 5G and the nuances around that technology. And really, all key elements need to come together. So, we were able to put that forward with of course our largest customer, but we're also gaining in China with key players, the Oppo, Vivo, Xiaomi, we've got great attachment with MediaTek as well. It's still so early. If you look at units in 5G versus where they could be in a couple of years, right? You've got 6.5 million to 7 billion mobile subscribers and we're talking about a couple of hundred million units of 5G phones in 2020. It'll probably double in 2021, but there's still a great opportunity for us at Skyworks. And the other thing that we do well is we are an under-the-hood player. We get in there with those customers and help them stitch together the necessary technologies to make it work in 5G. When you look at the Oppo, Vivo, Xiaomi, I mean that the people support that we provide is very unique. The Sky5 platform is highly integrated and really puts them on a fast time line of market, which is ideal. We're also seeing our large customer perform extremely well, extremely well and taking share globally, in our view. So, there's a lot of positives there, and it's sustainable. 5G, again, still early innings, we believe this is a multiyear thematic cycle for us and others. And then the inflection towards other markets, automotive, IoT, so many other markets that will consume these technologies. I think, it just comes together for a good long-term thesis here. Edward Snyder: So, maybe my follow-up then kind of hits on that issue. I mean, it was only, what, 18 months ago, 2 years ago that people were fighting about Chinese OEMs -- or component guys replacing the U.S. suppliers after the Huawei ban, which seems ridiculous on its base, and it's clearly not the case now. So, what I'm trying to -- I guess, the question really is, is that the complexity that we've already seen in the largest customers and is now being designed into some of the Chinese phones to acquire some of these more elaborate modules with all the system design, et cetera. That's also kind of porting into Wi-Fi 6E and almost every wireless solution in the current standard point at this point. Are you seeing -- is the competitive dynamic changing much at all? I mean, do you -- Qorvo, less to much lesser extent, Oahu, because they don't play in all of these things. Outside of that group, are you seeing anybody else, or is it the reverse content that they were providing, especially some of the quasi discrete phones is now accruing to you and the other leader? Liam Griffin: Yes. Ed, it was even in the prepared remarks, we are seeing a consolidation. I mean, this stuff is -- it's great technology. It's wonderful. It's amazing for the consumer, but it's really, really hard. And for those companies that have the ability to invest in scale and technology are going to win. And it’s not for everybody. I mean, it's not for everybody. And it's -- we're not the only game in town. I think we've done a great job of advancing in that area and developing the technology. And we build our stuff in-house, which has been strategically advantageous for us. But, when you look at China, we provide the perfect recipe. We can scale, we can provide content. We can provide coaching and flexibility in the architectures and bring them the market in a technology that is just incredible today. So, all that comes together. And as you said, the smaller players right now, it's a difficult task. It's a difficult task. The technology bar is really, really high in 5G. So it's not a slogan, right? It's not a -- it's a really, really high bar to get there. So, I think fewer and fewer companies can do it. Those that can are going to be successful, and we want to be part of that. Operator: Your next question comes from the line of Harrison Barrett from Arete Research. Harrison Barrett: I just need to ask about millimeter wave. So, what steps -- whether it's partnerships or investments? What steps have you taken towards millimeter wave capability? And from your perspective, how do you see the adoption curve changing over the next couple of years? Liam Griffin: Yes. It's a great -- well, certainly, it is -- it has been launched. It is available with certain carriers and certain phones. It is still a bit of a challenging technology today. There's line of sight issues, there's power consumption issues and there's cost issues. So, it is early innings for millimeter wave. In time, over time, it's possible that, that footprint could expand, and millimeter wave become more pervasive in the smartphone. But I'll tell you, the interesting thing though is the C-band auction here opens up new spectrum that will allow immediate lanes of transmission back and forth that just haven't been there today that could step up and provide another path for 5G. So, I think millimeter wave will continue to move on and it's a great application in certain environments, line of sight environments, campus environments, large stadiums, things like that would be perfect. But, it's a bit more difficult for broad stream technology. So, it's quite possible that as we build out 5G and the advancements are made, you're going to see that layer cake low-band, mid-band and then millimeter wave at the top for certain applications. So, I think all technologies there can play, millimeter wave right now is probably the lowest in terms of introduction and exposure. But I think there's opportunity for it to grow. And we're making investments in millimeter wave as well here at Skyworks to make sure that we're close to the action and doing what we need to do to support our customers. Harrison Barrett: Great. Thanks. And as a follow-up, how should we think about M&A at Skyworks over the next couple of years? Are you guys looking to bolster board markets further at this space? Liam Griffin: Yes. No. Great question. First of all, we love our organic outlook. We love our business. And the markets that we play in have been incredible. They've been dynamic. They've been challenging. But, they've been incredibly rewarding for us. And so what we do though is as we pursue opportunities and work with customers, ideas and M&A opportunities come about, right, naturally. So we continue to have our eyes and ears open on that front. The opportunities do pop up. We have a tremendous cash machine at Skyworks. You heard the data with our free cash flow margin and just the net cash that we have. So, with the right opportunity comes together, we'll be ready to take advantage. Operator: Your next question comes from the line of Tristan Gerra from Baird. Tristan Gerra: In the -- the 3.5 gigahertz band, as we see more bands being added and some of that will come from the new C-band opportunity, at which point over the next few years you think that module moves from SAW filters to BAW filter? And how do you think you're positioned for -- ahead of that transition? Liam Griffin: Yes. So, if you think about the transition here, as we move forward, we have great technology in TC-SAW, standard SAW and also ultra-high band bulk acoustic wave. So, we have the ability to play along that spectrum, that frequency spectrum and capture more and more opportunities. I think where you're going to see probably the most incremental growth on the Skyworks front is the delivery of our bulk acoustic wave technology. And if you look back at our Company a couple of years ago, we talked a little bit about BAW, but we were honest, and we said, look, we just don't -- we don't have to scale a couple of years ago. Now, we're shipping hundreds of millions of units of bulk acoustic wave, and that technology is purpose-built for mid and high-band spectrum. So, that is being laid out. You're seeing it now in some of the teardowns or some of the phones that we're working with today that are on the shelves. And you'll see further advancement in our bulk acoustic wave technology embedded in new phones as we go out to the next set of devices in 2021, 2022. Tristan Gerra: Okay, great. And then, as a quick follow-up, how would you characterize inventory level at -- in the smartphone supply chain, notably in China, as some of the OEM you've mentioned are basically battling for market share, taking grabs from Huawei? Kris Sennesael: Yes. In fact, we are still at a record low level, both internally at Skyworks, but also in the supply chain and in the distribution channel. Keep in mind that there still has been somewhat of a demand supply unbalance, although that is improving as we now move into the March quarter. But, given all of that, the inventory in the channel is extremely low. Operator: And our final question comes from the line of Craig Ellis from B. Riley Securities. Craig Ellis: Yes. Thanks for taking the question. Congratulations on the tremendous revenue strength and getting gross margins back up to 51% first time in eight quarters, nice to see. Liam, the question I wanted to ask, and I typically wouldn't ask it this early in the year, but it really seems to be big, given the strength of the business in the December quarter and in the March quarter. As we look ahead at the calendar year, I think, we'd typically think that seasonally, the business would be down a few percent in the calendar second quarter, just given the pause between first half builds and second half builds. But, you did mention earlier the doubling in 5G smartphone units and ongoing content gains, and you and Kris both touched on the secular dynamics in broad markets. And so, the question is, in part, just how are you thinking about the gives and takes as we look towards the middle of the year? And then, given the strength we're seeing to start the year, can we still expect to see the typical type of seasonality we would expect in the second half of the year, or are we just starting so robustly that for whatever reason linearity would be flatter? Liam Griffin: Yes. That's a great set of questions here, Craig. I think, what we're seeing now is, again, great adoption right out of the gate with our 5G portfolio. We're thrilled to see that early innings. So, there's a lot to do. And then in parallel, these broad market opportunities are really scaling right now. We talked a lot about Wi-Fi 6, we've got Bluetooth, we've got GPS and we're in platforms that are just prolific -- even with our largest customer that the amount of revenue derived in non-phone devices or not noncellular devices can be incredible, and that's a new area for us to see. So, that's continuing to advance. And broad markets, again, 35% year-over-year, incredible numbers. And we're just really -- and that's a market that there is so much share that we haven't captured, it's just -- it's compelling to continue to make those investments in people and in technology to grow that. And then, the mobile business will continue to do very, very well. If you look at where we see the market, we continue to see new content opportunities that we chase and variably win. We've got a China position now that I think is going to inflect higher as the content there on a relative basis is still lower than it is in other markets. So, there's a great opportunity to move. And then, the expansion of use cases, so it's customers and use cases that we just haven't seen. Some of that came through the pandemic, a difficult period of time. And some of that were technologies that just emerge. And you think about Zoom, you think about Peloton, store-to-door delivery to your house, touchless payments, all of this stuff is not going to go away. It's not going to go away. But it's also going to be powered by connectivity. It's going to be connected by the kind of things that we offer. Again, whether it's Wi-Fi, whether it's 5G, whether it's Bluetooth, I mean so there's a parallel market here that is building and creating unique momentum. I'm incredibly excited about the 35% broad market number in a period of time that typically was all about mobile. So, we're really demonstrating the ability to create diversification, but still in many cases, use common technology cores that run through our factories. Craig Ellis: That's really helpful. It's pretty amazing to think that by late this year, those two businesses could be annualizing at $5 billion and $1.5 billion each. So, my follow-up really is for you and Kris, on the share buyback. So nice to see the $2 billion buyback. The question is this. With $700 million remaining on the existing buyback, can you just give us some color on why now with the new authorization? And what was it that dictated the $2 billion was the right amount versus, say, $1 billion or $1.5 billion or even $2.5 billion to $3 billion? Kris Sennesael: Yes. It's very simple. The time expired on the prior authorization. It's a $2 billion program for two years. So, that previous plan was put in place in January 2019 and expires in January 2021. And so, we are putting in place a new $2 billion program covering the next two years. Operator: Ladies and gentlemen, that concludes today's question-and-answer session. I'll now turn the call back over to Mr. Griffin for any closing remarks. Liam Griffin: Thank you all for participating on today's call. We look forward to talking to you at upcoming investor conferences, during the quarter. Thank you. Operator: Ladies and gentlemen, that does conclude today's conference call. We thank you for your participation.