qorvo (qrvo) earnings report: q1 2016 conference call...

CompanyName:QorvoIncCompanyTicker:QRVOSector:T echnologyIndustry:Electronics

EventDescription:Q12016EarningsCallMarketCapasofEventDate:7.75BPriceasofEventDate:53.87

©2014TheStreet,Inc.Al l R ightsReserved Page1of22

Qorvo(QRVO)EarningsReport:Q12016ConferenceCallTranscriptThefollowingQorvoconferencecalltookplaceonAugust10,2015,04:00AMET.Thisisatranscriptofthatearningscall:

CompanyPart icipants

DougDeLieto;QorvoInc;VPofIRBobBruggeworth;QorvoInc;President&CEOSteveBuhaly;QorvoInc;CFOEricCreviston;QorvoInc;PresidentofMobileProductsJamesKlein;QorvoInc;PresidentofInfrastructureandDefense

OtherPart icipants

VivekArya;BankofAmericaMerrillLynch;AnalystGabrielaBorges;GoldmanSachs;AnalystMikeBurton;BreanCapital;AnalystHarshKumar;StephensInc.;AnalystEdwardSnyder;CharterEquityResearch;AnalystSteveSmigie;RaymondJames;AnalystVishayRakesh;MizuhoFinancialGroup;AnalystQuinnBolton;Needham&Company;AnalystTomDiffely;D.A.Davidson&Company;AnalystCodyAcree;AscendiantCapitalMarkets;AnalystTimLong;BMOCapitalMarkets;AnalystIanIng;MKMPartners;AnalystBlayneCurtis;Barclays;Analyst

MANAGEMENTDISCUSSIONSECTION

Operator :

Goodday,ladiesandgentlemen.WelcometotheQorvoQ12016conferencecall.

Today'scallisbeingrecorded.

IwouldnowliketoturnthecallovertoDougDeLieto.Pleasegoahead,sir--VicePresidentofInvestorRelations.

DougDeLieto (VPofIR):

Thanksverymuch,[Katherine]Hi,everybody.WelcometoourJune2015earningscall.

Thiscallwillincludeforward-lookingstatementsthatinvolveriskfactorsthatcouldcauseouractualresultstodiffermateriallyfromManagement'scurrentexpectations.WeencourageyoutoreviewtheSafeHarborstatementcontainedintheearningsreleasepublishedtoday.AswellastheriskfactorsassociatedwithourbusinessinourannualreportonForm10-KfiledwiththeSEC,becausetheseriskfactorsmayaffectouroperationsandfinancialresults.




Intoday'sreleaseandontoday'scall,weprovidebothGAAPandnon-GAAPfinancialresults.Weprovidethissupplementalinformationtoenableinvestorstoperformadditionalcomparisonsofoperatingresults,andtoanalyzefinancialperformancewithouttheimpactofcertainnon-cashexpensesorotheritemsthatmayobscuretrendsinourunderlyingperformance.

Duringourcall,ourcommentandcomparisonstoincomestatementitemswillbebasedprimarilyonnon-GAAPresults.ForacompletereconciliationofGAAPtonon-GAAPfinancialmeasures,pleaserefertoourearningsreleaseissuedearliertoday,availableonourWebsite,www.qorvo.com,underInvestors.

Infairnesstoalllisteners,weaskthateachparticipantpleaselimitthemselvestoonequestion.SittingwithmetodayareBobBruggeworth,PresidentandCEO;SteveBuhaly,ChiefFinancialOfficer;EricCreviston,PresidentofQorvo'sMobileProductsGroup;andJamesKlein,PresidentofQorvo'sInfrastructureandDefenseProductsGroup.I'malsojoinedbyothermembersofQorvo'smanagementteam.

Andwiththat,I'llhandthecallovertoBob.

BobBruggeworth (President&CEO):

Thanks,Doug.Goodafternoon,everyone,andwelcometoourFY16first-quarterearningscall.LedbystrengthinMobileProducts,Qorvo'sJunequarterlyrevenueincreased6%sequentiallyand23%year-over-yearwhencomparedtothecombinedrevenueofRFMDandTriQuintintheJune2014quarter.

WewerepleasedtoseeMobileProductsgrow12%sequentiallyand35%year-over-year,aswecontinuedtosuccessfullycaptureabroadarrayofopportunitiestofortifylong-termtrends.Inparticular,theglobaldemandforbroad-baseddatacontinuestoproliferate,whilefront-endcomplexityandtheperformancerequirementsofRFsolutionscontinuetoexpand.

ThestrengthinMobileProductswassufficienttooffsetasharpsequentialdeclineinwirelessinfrastructurerelatedtoapauseinLTEbasestationdeployments.Outsideofwirelessinfrastructure,IDPrevenuegrewapproximately9%versuslastyear.Withinthisopportunity-richenvironment,Qorvoiswinningbyleveragingourexpandingportfolioofproductsandtechnologies,andofferinghighlyintegratedsystem-levelsolutionstocustomers,channelpartnersandmobileoperators.

Asabroadmeasureofsuccess,ourMobileProductsGroupsurpasseditsoperatingmodelof30%operatingincomeonapreliminarybasis.That'sallthemoreimpressivewhenyouconsiderourmobileproductportfolioinJuneconsistedentirelyoflegacyRFMDandTriQuintparts.Andwe'dyettoin-sourcelegacyTriQuintassembly,ourlargestcostsynergy.

We'redesigninganddevelopinganincreasingnumberofdifferentiatedsystem-levelsolutionsthatintegrateourlegacycapabilities.AndtheseQorvopartswilldrivegrowthandimproveprofitabilitynextfiscalyear.

SomeearlyexamplesincludeourBAW-basedhighbandRFFusion,whichsecuredmultipledesignwinsduringtheJunequarter.AndourrecentlyintroducedBAW-basedRFFusioniFEMformobileWi-Fi,whichwasannouncedlastquarterandhasalreadyreceivedproductionorders.Theseproductsdemonstratewhatourorganizationcanachievebyleveragingourcombinedcorecompetencies.Therewillbemanymoretocome.

WithinIDP,wesawsequentialstrengthacrossallourmarkets,otherthanwirelessinfrastructure.Inparticular,IwouldliketohighlightsomeofourachievementsinWi-FiandGaNapplications.

QorvoistheleadingsupplierofRFGaN,andwehavereleasedover100GaNproductsduringthepast18monthsinbothhigh-powerandhigh-frequencyapplications.Weoffertheindustry'sbroadestportfolioof




GaNcapabilities,withadvancedlow-costpackagingtechniques,andwearetransitioningto6inchwafersthisyear.Withover15yearsexperience,QorvoistheonlyGaNsupplieratmanufacturingReadinessLevel9.Andwearerecognizedgloballyforenvironmentalrobustnessandindustry-leadingreliability.

Wecontinuetoseestrengthinboththecable,anddefenseandaerospacemarkets,whereQorvoistheGaNleader.WealsosampledGaNmacrocellpoweramplifierstomajorbasestationcustomers.AndwecontinuetoseeGaNasadisruptivetechnology,displacingsiliconLDMOS,whichisthedominanttechnologytoday.DuringJune,GaN-relatedrevenueincreased30%comparedtothesamequarterlastyear.

InWi-Fi,thedesignpipeline,especiallyfor5gigahertzintheenterpriseWi-Fispace,isverystrong.Qorvoisexpandingourstrategicrelationshipswiththemajorchipsetproviders,aswellastheleadingsuppliersofenterpriseequipment.Inautomotive,QorvowasrecentlyselectedtobethepreferredsupplierforfouroutoffiveRFcomponentsinanext-generationautomotiveantenna.

LeadingparticipantsfromacrossthemobiledataecosystemareengagingQorvotocontributemorebroadlyandmorestrategicallytoindustrygrowth,givenourabilitytodeliverbest-in-classsystemsolutions.Aswe'vediscussedpreviously,wehavesignedmultipleNDAswithleadingcustomers.

AndintheJunequarter,wepursuedadditionalopportunitiestolayeronincrementalrevenue,andwearemovingaggressivelytomovetheseprogramsfromtheprototypingandsamplingphasetoproduction.We'realsoworkingcloselywiththeworld'sleadingmobileoperatorstoimprovespectralefficiencyandhelpthemtomaximizetheirinvestmentsintheiravailablespectrums.Weareengagedwithdozensofoperators,andwecontinuetoaddtoourcarrierprogram.

BecauseQorvooffersacomprehensivesuiteofproductsandtheindustry'sbroadestportfolioofenablingtechnologies,weareuniquelypositionedtoimplementsystem-levelsolutionsthatleveragebothactiveandpassivesemiconductorcontent,withoutabiasoranyonetechnologyorapproach.Withallmajortechnologiesunderoneroof,wecanmatchtheoptimumtechnologytoeachcustomer'sapplication,balancingthetrade-offbetweenperformanceandcost.

Weareintheearlyinningsofthedeploymentofreceivedcarrieraggregation,whichimprovesspectralefficiency.Thisisanimportanttrendinthemigrationtowardsglobalandsuper-regionaldevices.It'splacingasignificantpremiumonhigher-performancefiltersandswitches,andit'sgivingQorvoexcellentvisibilityintheleadingsmartphonearchitecturesfor2016and2017.

Ascarriersfocusincreasinglyonspectralefficiency,wealsoseetransmitcarrieraggregationdrivingRFcontent,firstinChina,andmigratingelsewhere.Longerterm,theglobalwirelessindustryisworkingtowardsagoalof1-gigabitpersecondspeedonthedownlinkandtheuplink.

AnothersignificantdriverfortheRFTAMisthemigrationfromthree-modetofive-mode,andevensix-modedevices.Lastyear,itwasestimatedthatlessthan40%of4GdevicesinChinawerefive-mode,andweexpectfive-andsix-modedeviceswillrepresentthevastmajoritywithinthenextfewyears.

Lookingatdiversityreceivemodules,anincreasingpercentageofthesesolutionsareexpectedtocombinedpremiumBAWfilterswithhigh-performance,highthrowcountswitches--twoareaswhereQorvomaintainsacompetitiveadvantage.Thismarketisvaluedatapproximately$1billiontoday,andthat'sforecastedtoexpandtoapproximately$2billionoverthenextthreeyears.

SotheincreasingglobaldemandfordataisdrivinganexponentialincreaseinRFcomplexity,RFcontent,whilethetrendtowardsuper-regionalandglobaldevicesmeansgreaterperformanceandmorefunctionalityneedtobepackedinthesmaller-sizeimplementations.Thearrivalof5G,projectedinthe




2020timeframe,willbringmorebands,andlikelyhigherfrequencies,andeventougherRFchallenges,extendingthelong-termrevenuegrowthopportunityforQorvo.

Pullingbackalittlebitcloserin,therearemovingpiecesimpactingindustrydemandandourSeptemberguidance.First,theLTEbasestationmarketissoft.ThisisacontinuationofwhatwesawintheJunequarter,andweexpectwirelessinfrastructuretobedownsequentiallyintheSeptemberquarter.

Forcontext,theinfrastructuremarketprovidedaboutone-thirdofIDPrevenueinMarch.Itdroppedapproximately40%sequentiallyinJune,primarilytoapauseinLTEbasestationdeployments.Thatsaid,thewirelessinfrastructuremarketremainsagreatmarket,whereQorvocandoextremelywell.We'relookingforwardtothereturnofthewirelessinfrastructuremarket,andwe'rebringingoutnewGaNandSOIproductstosupportthismarketandthecontinuedglobalrolloutof4Gnetworks.

Second,we'veseenaslowingamonghandsetcustomersinChina.QorvohassecuredexcellentgrowthopportunitiesinChina,andChinaIncwasourlargestcustomerinJune,ifyoucombineallChina-basedbrands.WecurrentlybelievesomecustomersinChinahaveafewweeksofexcessinventorytoworkdown,andthis,too,isreflectedinourSeptemberguidance.WhiletheChinamarkethasgreatfundamentals,itcanbechoppy,andwe'reseeingabitofthatnow.

Atahighlevel,lookingacrossourbusinesses,weareverymuchlookingforwardtothereleaseofseveralmarqueesmartphonesthroughouttheremainderofthiscalendaryear.Andlong-termindustryfundamentalsarestrong.Designactivityisrobust.Engagementsareexpandingwithcustomers,channelpartnersandcarriers,andweareontracktoachieveourfinancialmodel.

We'reproudofouraccomplishmentsinJune.Weexpecttofinishthecalendaryearverystrong.Andwebelievecalendar2016willbeanevenstrongeryear,andthebestindicatoryetofwhatQorvocanachieve.

Andwiththat,I'llturnthecallovertoSteveforanin-depthreviewofourfinancials.

SteveBuhaly(CFO):

Thanks,Bob.

IntheJunequarter,Qorvogrewrevenue23%year-on-yearto$673million,whencomparedtoRFMDandTriQuintonacombinedbasis.Thisabove-marketgrowthwasledbyMobile,up35%to$551million.

IDP'srevenuedeclined13%to$122million,drivenbyasharpdeclineinbasestationopportunities.Outsideofwirelessinfrastructure,IDPrevenuegrewapproximately9%.Qorvohadtwo10%customers,thelargeratapproximately33%ofrevenue,representingtheaggregateddemandofmultiplesubcontractorsforthisend-customer.Oursecond10%customerduringthequarterwas[Waway].

Grossmarginwasarecord51.5%,upsequentiallyfrom50.4%,andupfrom44.8%intheprior-yearperiodforRFMDandTriQuintonacombinedbasis.TheimprovementinQorvo'sgrossmarginwasprimarilyattributabletofavorableproductmixandsynergies.

Operatingexpenseswere$159millionfortheJunequarter.Year-on-year,operatingexpensesgrewathalftherateofrevenuegrowth.Withinthis,R&Dgrew19%,aswepursueopportunitiesinahealthygrowthmarket.Andallotheroperatingexpenseswereflat.

Therealizationofsynergiesisallowingustogrowinvestmentinproductandprocessdevelopment,whilemakingsolidprogresstowardsouroperatingexpensemodel.Operatingincomewas$187.8millionversus$103.2millionintheyear-agoperiodforRFMDandTriQuintcombined.ThisdramaticimprovementwasledbyMobile,whichonapreliminarybasis,achievedover30%operatingincome,whilegrowingthetop




lineby35%.

NetincomefortheJunequarterwas$168.5millionor$1.09perdilutedshare.Thiscomparesfavorablytotheoriginalguidanceof$1to$110.

We'vebeenQorvoforsixmonthsnow,andthere'salottobeproudof.Revenueisup33%overthecombinedTriQuintandRFMDrevenueayearago.Themostexcitingpartisthegrowthinoperatingincome--up178%.

Synergyachievementandoperatingleveragearedrivingrealimprovementsinourbusiness.Wecontinuetomakegoodprogressonachievementofoursynergygoals,andexpecttoexceedtheminbothyears.

Lookingforward,weseesignificantopportunitiesduringcalendar2016,primarilyingrossmargin.Wehaveadedicatedteamandprocessfocusedonexecutingthecostreductionopportunitiespresentedbythemerger.

Totalcashandinvestmentswas$558million,andcashflowfromoperationstotaled$141million.Capitalexpendituresare$89million,primarilytoaddresscontinuedgrowthincustomerdemandforourpremiumfilters.TheCompanyrepurchasedapproximately602,000sharesatatotalcostof$50million.

Nowlet'sturntoourbusinessoutlook.InQorvo,we'vecreatedanewleaderinRFthatcanoutpacethegrowthrateofourunderlyingmarkets.

TotaladdressablemarketformobileRFisforecastedtogrowatacompoundannualgrowthrateof10%to15%overthenextfewyears,drivenprimarilybyunitgrowthof4GphonesandtheassociatedincreaseinRFcontentandcomplexity.It'snoteworthythatQ1'syear-on-yearrevenuegrowthof23%easilyexceededthis,despitesignificantheadwindsinthebasestationmarket.

Withaproductportfolioservingthefastergrowingpartsofouraddressablemarket,we'reexcitedaboutourgrowthprospects,andfeelwecanexceedtheindustry'sgrowthrate.Achieving28%operatingincomereflectsgoodprogresstowardsourfull-yeargoalof30%.Addinthesubstantialsynergiesyettocome,andwefeelconfidentwecanhitourmodel,whilemakingsubstantialinvestmentsintheprocesstechnologies,andgreatproductsthatsustainandenhanceourcompetitiveadvantage.

Qorvocurrentlybelievesthedemandenvironmentinitsend-marketssupportsthefollowingnon-GAAPexpectationsforthequarterendingOctober3.Quarterlyrevenueofapproximately$690millionto$710million,up4%atthemidpoint.Grossmarginofapproximately50%to51%.

Ataxrateintherangeof10%to15%.DilutedEPSintherangeof$1.05to$1.15,basedonapproximately155millionshares.Actualquarterlyresultsmaydifferfromtheseexpectations,andsuchdifferencesmaybematerial.

WecurrentlyexpecttoreportSeptemberquarterresultsonNovember5.Withthat,wewelcomeyourquestions.

QUESTIONS&ANSWERS

Operator :

Thankyou.

(OperatorInstructions)

VivekArya,BankofAmericaMerrillLynch.




VivekArya(Analyst-BankofAmericaMerrillLynch):

Thanksfortakingmyquestion.Bob,whenIlookattheSeptemberguidance,it's[missive]about$40million,plusorso.CouldyouhelpusquantifyhowmuchisonthefurtherweaknessinIDP?HowmuchisthatexcessinventoryinChina?Howmuchcouldbeweaknessoranycontentchanges,actuallargeUSandKoreancustomer?Ithinkwereallyneedthiskindofdetailtogiveusmorecomfortaroundwhatcausedthemess,andwhetherit'sashort-termeventorwhetherthereissomethingelsehere.


Vivek,thanksforyourquestion.Asfaraschangestotheoutlook,again,wedidnotguidefortheSeptemberquarteruntiltodaysoIdon'tknowthatIcanbridgetowhatwasinyourmind.ButItriedtosize,inmyopeningcomments,howsignificantthewirelessinfrastructurebusinessisforus.It'swellover$20million--almost$25millionfromthehighthatwesawjustacouplequartersago.It'saverysignificantnumber.Obviouslynogrowththere.There'satleast$25millionofsomeofthatgrowth.Andsomeoftheslowdownthatwe'veseeninChinathatwebelieveisgoingtobedeletedoffoverthenextfewweeksandwillpickbackup,andwe'llbebackontrackintheDecemberquarter.Wefeelprettygoodaboutthat.

Idon'tknowthatIcansizethat,becausewedidn'tgiveanyguidanceforit.Butasfarascontentchangesinanyofthephones,ormajorlosses,Idon'tseeanythingchanginginwhatourexpectationsareforwhatwefeltwehadwon,whatwehadwon,andhowwethinkit'sgoingtoplayoutfortherestoftheyear.Don'tseeanycontentchanges,morejustwhat'sgoingoninthemarketinChina,andwhatwesaidinthewirelessinfrastructuremarket.


MaybeifIaskthatquestionadifferentway,whichis


Ithinkthat'sagreatquestion,Vivek.Again,that'swhywespentsometimeexplaining.Lastquarter,ifyou'reremember,wesaidwethoughtthattheIDPbusinesswouldbedownslightly.Itendedupbeingdownsignificantly,asStevehaspointedout--downabout13%quarteroverquarter,orthereabouts.Andthatwasmorethanmadeupfromthestrengththatwesawinourmobilebusiness.Thisquarter,weexpectingIDPtobeflat.Soallthegrowthisinthemobilebusinessthisquarter.

DougDeLieto (VPofIR):

Gotit.Andjustlastly--


Vivek,ifIcould,whatIsaidinmyopeningcommentsis,weareexpectingthewirelessinfrastructuretobedown,offsetifyouwill,bywhat'sgoingoninJames'sotherbusinesses.IDPisroughlyflat.


Andthenlastly,intermsofOpEx,Ithinkitwasin[winorwean]intermsofthecostsynergiesthatyouhadoutlinedbefore.HowshouldwethinkabouttheOpExtrajectoryforthenextfewquarters?Thankyou.


Steve,doyouwanttohandlethat?Youhadsomecommentsinyourscript.




SteveBuhaly(CFO):

Youbet.IexpectOpExtocontinuetobeinthe150s,probablymid-150s,asweaverageoverthequarters.WedidspendabitinR&Daswepursuedsomeadditionalopportunitiesthatcametoourattention,primarilyengineeringmaterials,prototypematerials,typeexpenses.Ifyoulookyearonyear,orsixmonthstosixmonths,almostanyofthecomparisons,SG&Aisflatyearonyear,despitesignificantrevenuegrowth.Thatreallyreflectssynergiesoffsettinginflation-kindofcosts.R&Disuplessthantherateofrevenuegrowth.Andthesynergiesthereareallowingustopursuesomeoftheseopportunities,whichwefeelverygoodabout.


Thankyou.

Operator :

GabrielaBorges,GoldmanSachs.

GabrielaBorges (Analyst-GoldmanSachs):

Thankyoufortakingmyquestion.

Maybejustalittlemorecolorontheweaknessthatyou'reseeingintheChinamobilemarket?IsitprimarilyontheLTside,or3Gside?Anycoloronwhetherit'sconcentratedonacoupleofcustomersormorebroad-basedthanthat?Andifyouhaveanysenseanecdotallyonwheninventorycouldbebackatmorenormalizedlevels?Thanks.


Sure.Thankyou,Gabriela.

Onahighlevel--andI'llletEricgivealittlemoreofthedetails.WerestillverymuchenjoyinggrowthinChina.Wethinkthemarketis,likewesaidearlier,intheveryearlyinningsofitsmigrationto4G.Wereseeingthetrendofmovingfromthree-modetofive-mode,six-mode.AllthemacrothingsthatweseeinChinaareallintact.Themarketscontinuetomigrate2Gto3G,andsomegoingto4G.Sosubsarebeingadded.Wefeelrealgoodaboutthat.WedidseealittlebitstrengthlastquarterinourChinamarket,andthey'redigestingsomeofthat.

I'llletErictalkalittlemore.

EricCreviston (PresidentofMobileProducts):

Ithinkyoucoveredthehighpointsreallywell.Long-term,nothing'schanged.WethinktheChinamarketisverymuchontrack,andinoneofourgreatestgrowthopportunities.Wethinkourcontentthereissettogrow,aswellasourshareopportunities.WedidhaveaverybigquarterlastquarterinChina.BasicallyalloftheupsidethatweexperiencedtoourexpectationswereduetoChina.Andconsequently,we'regoingthroughacooling-offperiod,digestingsomeofthatgrowth.Aswesaid,wethinkthisisweeks,notmonths,ofacorrectionhere.Bytheendofthisquarterweexpectthingstobebackontrack,headingoutofthequarter.


Andjustafollow-upthen,onthe(short)positioninChina,relativetothreemonthsorsixmonthsago.AnyupdateonhowyoufeelthetractionforproductslikeRFFlexandRFFusionarematerializingwithallofitsexpectations?Andhowyoufeelaboutyourpositioninreferencedesigns,aswell?Thankyou.





Thanksforthequestion.WedidannounceintheearningsreleasethatweareinproductionwithRFFlex.Lastquarterwesaidwehaddesign-in,nowwe'realreadyshippingproduction,justaswewereexitingthequarter.Soweareseeingadoptionofthat.Andwe'rehavingalotofdesign-inactivityaroundFusion,bothwithreferencedesigns,aswellaswiththeendcustomersthere.

Sogreattractionwiththehighlyintegratedproducts,whichgivesustheopportunitytoaddressvirtuallyalltheRFcontentinanyofthesehandsets.Wealreadyhavemanyoftheflagshipdevicestherewiththeleadingsuppliers,inwhichwehavemultipledollarsofcontent.Weseeagoodbaseandalotofopportunitytogrowfromthere.


Iappreciatethecolor.Thanksverymuch.


Thankyou.

Operator :

MikeBurton,BreanCapital.

MikeBurton (Analyst-BreanCapital):

Thanksforlettingmeaskaquestion.First,atwo-parter.I'mhopingyoucanhelpusunderstandhowyourorderstrackedduringthequarterandintotheSeptemberquartersofar,that'scausingthebelow-seasonalguidefortheSeptemberquarter.Andthensecondly,ifthereissomeinventoryinChina,howdoyouexpecttheDecemberquartertolookatthispointversusnormalseasonality?

Irealizeitbouncesaroundquiteabit,butit'sbeenrightaroundthe5%range.Andlastly,justinlinewiththat,inarecentconferencecall,youguysspokeaboutsecondhalfrepresentingroughly55%to58%oftherevenuefortheyear.I'massumingthat'schangedalittlebit.Iwaswonderingifyoucouldupdateusonthat?Thanks.


Thanks,Mike.Alotofpartstothat,andI'lltakeastabatthat.Asfarasorderstrackedinthequarter,otherthanthesurprisethatwesawinthewirelessinfrastructure,thingsprettymuchwereontrack.Ifyoutakethedropthatwesawinthewirelessinfrastructure--Imentionedsomewhereintheneighborhoodof$25million--asanexample,Imean,that'sthedifferencebetweenourguideandroughlyan8%guidequarteroverquarter.Whichactuallywouldbequitehealthythisseason.WetypicallyexpecttheSeptemberquarteroverJunetobeinthemid-singledigits,followedbysomethingalittlebithigherintheDecemberquarter.

Weactuallythink,again,themobilebusiness,that'smuchhowourmobilebusinessisrunning.Andwhatwe'reseeingisthelackoftheinfrastructurebusiness--likeIsaid,we'reseeingthatdown.Soifyoutakewhatthat'sdownandaddittoourguideoverwherewewereaquarterago,we'requitehonestlytrackingjustlikeyousaidthere.Asfarastheweightingbetweenthetwoparts,Ithinkwetypicallyhavesaidmorelike45/55.AndSteve,doyouwanttotakethat?

SteveBuhaly(CFO):

Yes,Ithink45/55isasgoodasany.Occasionally,basedonmypriorexperienceatTriQuint,wewould




wanderupintothe57%,58%.Ithinkthough,longterm,55/45isagoodmetrictogowith,andIthinkthat'sasgoodaguessasany.


Okay.Andthenalsolookingforwardatthecarryaggregationcommentsthatyoumade,justwonderingonthetimingfromwhatyou'rehearingfromsomeofyourcustomers,astowhenthesearegoingtohappen?ObviouslyyoumentionedfirstonTDLT,butthenlookingforwardtoFTD,Iwaswonderingifyougiveussomevisibilitythatyou'rehearingabout,whenwewouldstarttoseethatimplementedintothehigh-endphones?Thanks.


TheconeIthinkyou'rereferringtoisonthetransmituplinksidecarryaggregation,soI'lltalkaboutthat,aswellasonthereceiveside.Asyouknow,receivecarrieraggregationisintheearlyinnings,butalreadybeginningtorollout,ineffect,thepremiumtiers,especiallyintheUS.

Wethinkthereceivecarrieraggregationcontinuestoproliferateglobally,andactuallyintoChinaaswell,earlynextyear.Andthenreallywhatyougetonthereceivecarrieraggregationsideisarealproliferationofmodesandbandcombinations,thatyoutrytobuildglobalskews.That'soneofthelargestdriversfortheRFTAMoverthenextcoupleyears.

Now,thecommentsonTX,oruplinkcarrieraggregation,wedoseethatactuallybeginninginChinabytheendofnextyear.Andthenfromthere,itwillbegintogoouttotherestoftheworld--or2017and2018.You'regoingtoseemostoftheTAMdriverandCAonthereceivesideforthenextyear.Andthenonthetransmitside,kickinginafterthat.


Okay,andthen,sorry,justtofollowuponmyfirstquestionagain,becauseI'mrunningthemathherefast.Ithinkthe45/55impliesaprettymassiveDecemberquarter.Wasthatcommentreallyforhowyouexpectthesplittogoonago-forwardbasis?Andthenareweexpectingaseasonalbuildinthemid-singledigits,whichthenIthinkwouldputyouryear-over-yeargrowthkindofflattish?Isthatreallytherightwaytothinkaboutitatthispoint?Justanyhelpthere.Thanks.

SteveBuhaly(CFO):

Ithinkwe'rebetteroffstickingtothatasageneralruleofthumbversusprovidingguidanceforthecalendarfourthquarter.Sopleasetreatitasageneralseasonalitycommentversusanattempttoguidebackintotheyear.


Okay,thanks,guys.

Operator :

HarshKumarwithStephens.

HarshKumar (Analyst-StephensInc.):

SothequestionIhadis,Ithinkthebigconcernaroundyourguidetodayisaboutyourgrowthratebeinglessthantheotherguysthatsupplytoyourlargestcustomer.We'vehadacoupleofthoseguysreportthosecompany'sreport.Couldyoucommentrelativetoyourbusinesswithyourlargestcustomer,ifbasicallythatbusinessisuptoyourexpectation,andalliswholewiththatparticularcustomer?Andthe




issues,firstofall,arelargelyChinaandIDP?That'sonequestion,andIhaveafollow-up.


Sure,thanks,Harsh.Eric,doyouwanttotakepartofthat?


Sure.Iwouldsay,justasBobsaidearlier,there'snochangeinourcontentexpectationsonanyoftheplatformsthatweseerampinginthesecondhalf.


Great,that'shelpful.Andthenthesecondquestion,IwanttocomebacktoVivek'squestion.Ithinkthatthestreetscenethatinvestorswanttotriangulateonsomeparttothemix,.CouldyoumaybetellushowmanyweeksofinventoryisthereinChina?Howmuchofahitthatwas,eitherindollarsorunits,toyou?Andifitis2G,3G,orLT?Andalsosomesimilarcommentary--howmuchofahitdoyouthinkyou'retakingontheinfrastructuresideinyourrevenueguide?


Ontherevenueguide,Italkedabouttheinfrastructureside.WhatIcan'tansweriswhatthestreetexpectedtheinfrastructurebusinesstodo,Harsh.ButwhatI'vesaidis,we'redown$20million,$25millionoverwherewewerejustacouplequartersago.Ibetthestreetwasexpectingthattogrow,notdeclinesignificantly.

Ithinkfromnormalseasonality,that'sanormalseasonalgrowthforus,is,youtakewhatthestreethadusinat665,goingto745.That'sclosertodouble-digitgrowth,sothat'salotgreaterthantheindustry.Theprimarydeltathatweseeistheinfrastructurebusiness.AndjusttobeclearontheinventoryinChina,wejustsaidit'safewweeks.


Gotit.Thanks,Bob.Thanks,guys.


Thankyou.

Operator :

EdwardSnyder,CharterEquityResearch.

EdwardSnyder (Analyst-CharterEquityResearch):

SoEric,ifordersoutsideofIDPwerefairlynormal,whytheexcessinventoryinChina?Andwhydoyouthinkit'sweeks,insteadofmonths,ofacorrectionthere?Isthatwhatyourcustomersaretellingyou?Aretheseonhubs?Justgiveusafeelif,youcould,onwhyyou'resooptimisticthatit'snotgoingtobealong-termcorrection?

AndthenJames,thebighitobviouslytoinfrastructure--anditsoundslikeit'sgoingtobeflat.Whydoyouthinkit'sgoingtobeflatinsteadofdown?Dotheorderpatternssuggestthat,that'sfirmingup?Andwhatotherbigareasofyourbusinessdoyouhavethatkindofexposureto?IthinkBobsaiditwaslike30%.Soifyoujusthelpusreallyunderstandwhatarethebigchecksthatgouptomakeupyourrevenuethatwouldprobablybehelpfultoo.





Allright,James,whydon'tweletEricgofirst?

JamesKlein (PresidentofInfrastructureandDefense):

Yougoahead,Eric.


Sure,Ed.ItisalittlehardtotrackexactlywhereallthepartsaregoinginChina.Mostofourpartsaresoldacrossmultiplecustomers,aswellasmultiplebasebands,insomecases.Andastheyareshiftedbetweenbasebandsandalsobetweencustomers,andthenwithinmodels,asyourcustomers,it'snotpossibletotrackexactlywhereeverypartisgoing.Again,wesawaverystrongJunequarterinChina,andaveryhealthyshift-in.Andthenwesawalotofmixchangeatourcustomers.AndIthinksomeoftheminparticularendedupwithalotmoreinventorythantheywereplanningbytheendofthequarter,andtheyjusthavetodigestthroughthat.


Eric,letmetalkalittlebitatthischangeaboutwirelessinfrastructure.Weweredown,asBobsaid,about40%quarteroverquarter.Ithinkwefaredalittlebitbetterthansomeofourcompetitorsinthatmarketplace,butweweredownabout40%.Goforwardbasis,wethinkwe'llbedownalittlebitagainthisquarter.Butitdoesfeellikeit'sbottomingout.We'reseeingsomepositivesignsfromthemarket.Andreallyourfocusnowistomakesurewe'rereadyforwhenitbouncesback.Wecertainlyseethatthedemandwillbetherelongterm,andcomeback.Andthere'snoshortageofdemandforthedeploymentof4Garoundtheworld.

Soasfarasotherbusinesses,wehadarecordquarterincable,opticalandWi-Fi,andautomotivebusinesseswereallstrong.Ourdefensivebusinesswasrelativelyflatquarteroverquarter.Butthat'stypicallybeenfairlylumpyforus,andwe'reexpecting,onthedefenseside,tohaveastrongsecondhalf.ToBob'snoteearlier,Ithink,again,itreallywasawirelessinfrastructurepauseforus,andwefeellikewe'restartingtoseethebottomofthat.


AndthenSteve,yourmarginperformancewasexcellent.You'reguidingforalmostasimilar--alittlebitofadecline.ItwassuchasteepdeclineinIDPintheJuneperiod,whichistypicallymuchhighergrossmarginsthanyourcellularbusiness.Andyourcellularbusinessdidn'ttail--or,theconsolidatedmarginsdidn'ttailoffhere.Doesthatsuggestthatyourblendincellularispermanentlyincreasedtoahighermargin?IsthistheBAWbusinesskickingin?

Iknowwetalkedaboutthepastexpansions,andforthesecondhalf,isthathappeningatthispointnow?AndyourCapExisjustmoreofthesameinthesecondhalf?Justtryingtogetanideaofhowthemarginmixnowbetweenbusinesses--especiallyduringtheBAW--isshakingout.

SteveBuhaly(CFO):

Yourthesisisbasicallycorrect.Wesaw,aswehaveinotherquarters,above-averagegrowthinourhigher-marginpremiumfiltersandswitchesportionofMobile.Andoverall,Ericandteam,alongwithhisfriendsinmanufacturing,didaterrificjobofimprovingtheoverallbaselinemarginsinMobile.Betweenthosetwothings,wewereabletoovercomethehitinthewirelessinfrastructuremarket.





AndSteve,yourconsolidatedmarginsarestilllowerthanIDP,correct?

SteveBuhaly(CFO):

That'scorrect.


SoonceIDPcomesback,andassumingthatitdoes,thenyourconsolidatedmarginprofilewillbealittlehigherthanJune,giventhesteepdropinIDP.Isn'tthatafairassumption?Ifitweretocomeback--

SteveBuhaly(CFO):

Certainlythelastpartofitwillbeaccretive.Now,mobilealwayshasacapabilityofoutgrowing,James,prettyhandily.Soyourmileagewillvaryalittlebitquarterbyquarter.Butagain,yourthesisiscorrect.Seeingthewirelessinfrastructurecomebackwillbeveryhelpfulforouroverallmargin.


AndthelasttimewespokeaboutBAWcapacityexpansionIthinkwas--intheDecemberperiod,youweretalkingbutdoublingitbyJune,andIunderstandthathasoccurrednow.Itsoundslikeyou'recontinuingtoexpand.WhendoyourunoutofspaceinTexas?

SteveBuhaly(CFO):

Thebigmovenextforenhancedcapacity--andweretalkingforthe--handlingthepeakdemandthatwe'dtypicallyseeayearfromnow,willbeconversionofasubstantialpartoftheBAWmanufacturinglineto8-inchwafers.


Historically,that'sbeenrealnightmare.Iknowyouguyshavebeenworkingonit.Whereareyouonthat?Haveyougotproductionstuff,ordoyouhavestuffoutoftheengineeringlabthatlookslikeitcouldbeinproduction?Anyideaatallwhenyou'dhave8-inchrunning?

SteveBuhaly(CFO):

Wehaveapilotlineinplace.We'recomfortablewiththeprogress.WethinkourarchitecturemaymakelifealittlebiteasierthansomeoftheotherarchitecturesoutintheBAWmarket.


Weexpecttobeprototypingsomesamplesbytheendoftheyear,andinproductionnextyear.Theteamisprettyexcitedaboutwhatthey'reaccomplishedsofar.Andquitehonestly,thingsareontrack.

SteveBuhaly(CFO):

Andasyouknow,Ed,younotonlygetspacesavings,whichhasbecomemoreofanissueforusintheTexassite,youalsogetsomefairlysignificantcostreductions.Sowe'reprettyexcitedaboutit.Isanimportantprogramforus.


Great.





ThisisJames.IfIcanadd,we'realsotransitioningourGaNto6-inchinTexas,andthat'srightonthetailofmovingourPMto6-inchinTexas,aswell.Soquiteabitoftransition.


Thanks.CanyoutalkabouthowbigGaNisforyounow?


Well,Iwon'tgointothedetailednumbers,butwearenumberoneinthemarketincableandindefense.Weseebothofthosemarketscontinuingtogrowataprettystrongpace.Defenseisreallyourstrongestnear-termgrowthopportunity,andwe'redoingverywellthere,bothdomesticallyandinternationally.Ithinkaswesample--Bobtalkedearlieraboutsamplingproductsintothebasestation,OEMs.Andwebelievewe'repositionedwellforrevenuereallytostartinthatmarketin2016.Overall,verypositive.Ithinkwe'llgrowfasterthanwhatweseetheGaNmarketpredictedtogrow.


Great,thanks,guys.


Thanks,Ed.

Operator :

SteveSmigie,RaymondJames.

SteveSmigie (Analyst-RaymondJames):

Thanksalot,guys.Ijustwantedtofollowupquickly.AswelookouttoDecember,isitpossibletogetsomethinginthat$800millionrevenuerange?Andifthat'sthecase,doesthatrequirearecoveryinthetelcoequipmentbusiness,orcouldyoudothatonwireless?


Steve,asyouknow,wedonotguideouttwoquarters.Ithinkit'ssafetosaythatwhatwearecomfortablewithis,wecankeepupwithindustrygrowthrates.Andit'sobviously--westayedatourplan,istogoslightlyfasterthanthat.Andwe'regoingtostaywiththosecommentsatthistime.


Okay,fairenough.Andyouguyssaidyoustartedtoseealittlebitofrecoveryinthattelcoequipmentbusiness.SodoesthatsuggesttoyoumaybeQ4isthequarter?Iknoweveryoneistryingtogetatthisacrossmultiplesemiconductorsuppliers.Butdoesitseem,Q4,likeagoodquarterwherewecouldseesomeofthebounce-backfromthatsharpdecline?OrmaybemoreQ1?


Well,again,Ithinkit'simportantthatwefeellikewe'veseenthebottom.Andwe'restartingtoseesomesignsthatit'sgoingtostarttopickbackup.I'mnotprojectingthatwe'llbebackintostrongrevenueinQ4,butIdofeellikewe'reontheuptick,andthingsarestartingtogetbetter.AndIagree--alotofreportsofwhetherit'sgoingtobeQ4orQ1,orwhenthatbusinessreturns.





Isitfairtosaythat--obviouslyitdroppedoffsharply,largelyduetoChina.Isitfairtothinkthat,thatmightrecoversharply?Orareweatsomewhatlowerlevels?


Well,Ithinkit'sfairtothinkofthisasrecoveringquickly.Andthat'sreallythegenesisofmycommentsearlieraboutmakingsurewestayveryclosetoourcustomers,andwe'rereadyforthereturn.

SteveBuhaly(CFO):

Remember,theunderlyingexpansionof4GphonesinChinahasnotsloweddownawholelot,right?Andatsomepoint,thosephonesaregoingtoneedbasestationstocommunicatewith.Sowethinkthisisadisturbance,ifyouwill,inthemarket,causedbysomeexternalactivities,versusapermanentreductionindemandfortheseproducts.


Great.IfIcouldstickonelastonein.AndBob,Iapologize,becauseyou'reright,I'vealreadybuggedyouaboutQ4,andI'mgoingtohavetopushitbygoingtoQ1.ItsoundslikeyouweresayingQ4,noreasonyouwouldnotseeindustrystandards.SoisitfairtothinkatthispointforQ1thatseasonalorindustryperformanceiswhatyou'dexpectinQ1also?


Yes,asyouwell-know,andeverybodyelseonthecallknows,Marchistypicallyadownquarter,andnothingthatwe'veseenischangingwhatwecurrentlyexpectfortheindustry.TheprimarythingIwanteveryonetounderstandis,wedon'tfeelwe'velostanymajorsocketssincethelasttimewetalkedtoyou.Wehaven'tseenanyopportunitiesthatwethoughtweweregoingtowinthatwecan'tstillwinorhavewon,fromallthoseperspectives.Fromthemobilebusiness,wefeelverygoodaboutourposition,andwebelievewecontinuetogrowfasterthanthemarketthisyear,aswellisnextfiscalyear.

SteveBuhaly(CFO):

I'daddtothat.Ithink2017haseverychanceofbeingagreatyear,calendar2016.We'regoingtoseesometrulyintegratedproductdesignscomingoutofJames'sandEric'sshops.Youreallybringswitchesandfilterstogether,forexample,toservecustomerneeds.Andyou'regoingtoseeusreallystartingtoaddtotheCOGsynergies,aswemoveexTriQuintmobilepartsintoournewChinaassemblyandtestfacilities,amongotherthings.Butthat'sthelargestsynergythat'syettocome.SoIthinkcalendar2016,FY17,isreallygoingtohavealotgoingforit.

Operator :

[VishayRakesh],Mizuho.

VishayRakesh (Analyst-MizuhoFinancialGroup):

Justaquestiononyoursecondhalf.WhenyoulookatyourSeptember,Decemberquarters,yourkindofSeptember,Decemberquarters.[Theyarewhileactuallyplanned],youusuallyhaveDecemberquarterstrongerthanSeptemberquarter?Ortheyaresplitequally?


Typically,weseemid-singledigitsgrowthinSeptemberoverJune,andpushinghigh-singledigitsinDecember.Typically,DecemberismuchlargerthantheSeptemberquarteringrowthrate.





Gotit.Andaswelookatyourcapacitythatyou'readdingontheBAWside,haveyouchangedanyexpectationsthere?HowmuchcapacityareyouaddingontheBAWsidefortheyear?Andifyouhavethoughtaboutnextyearaswell.Thanks.

SteveBuhaly(CFO):

Steadyasshegoes.We'vecompletedthemajoraddssupportingthisbusysellingseason,andasstatedearlier,we'reworkingonaconversionofasubstantialpartofourmanufacturingto8-inchcapability,tosupportthe--ayearfromnow.


Allright,thanks.

Operator :

QuinnBolton,Needham&Company.

QuinnBolton (Analyst-Needham&Company):

JustwantedtofollowuponthatsplitofrevsbetweenSeptemberandDecember.IthinkSteve,backatTriQuint,youguysoftencautionedinvestorsthatthetimingoftherampofthelargestcustomer,ifitshiftedoutaweek,itreallyaffectsthetimingofrevsbetweenSeptemberandDecember.I'mjustwondering,isthatatallinplayherefortheSeptemberquarterguide?Areyoutakingamorecautiousviewonthetimingofthatramp?Orit'swhatyoumightcallamorenormalrampforthelargestcustomer,anditreallydoesn'thaveanyimpactonthetimingofrevsbetweenSeptemberandDecember?AndthenI'vegotafollow-up.

SteveBuhaly(CFO):

Quinn,yourmemoryisexcellent.Ioftendocaution,andIcontinuetocaution,thatverylargecustomers'ramptimingcanandhasmoveditaweekhereorthere,andreallypushesthesequentialcomparisonsaround.Idon'tbelievethat'safactorinourguidetoday.Thatdoesn'tmeanit'snotgoingtohappen.Itmeans,ifit'sgoingto,wedon'tknowaboutityet.


Gotit.Understood.Okay,great.

AndthenforEric--youtalkedaboutthetransmitCAstartingtodrivecontentlatein2016.Justwonderingifyoumightbeabletogiveussomesense,what'sthedollarcontentincreasesofphoneimplementstransmitcarrieraggregation?


Inthefirstwaveoftransmitcarrieraggregation,itwillbedoneintra-band,whichmeansthatwithinthesameband.Sothere'sminimalimpacts.Thinkofitas$0.50orsoofadditionalcontent.That'sstillsignificantonthetypeofunitswe'redoing.Butwhenwegettothenextphaseafterthat,2017,2018,that'swherewebegintoseemultiplepoweramplifierpacks.Andyoucaneasilygetto$1.50ofadditionalcontentbeyondthat.

Inthenearterm,thereceivecarrieraggregationdrivingmorelike$1to$1.50incontenthappening,andthenandanother$0.50withintra-bandTX,andanother$1.50ontopofthatwithintra-band.Butafter




that--allofthat[addstryingtodevelopto]migratingfromthemajoritytoday,three-modegoingtothevastmajoritybeingfive-orsix-modeoverthatsametimeperiod.That'swhywe'reexcitedaboutbeingattheverybeginningofalong-termgrowthintheoverallTAMinChina.


AndEric,justanotherfollow-uponthat.Wouldthatmeanifyouhaveintra-bandtransmitcarrieraggregation,youmightactuallyhavemultiplePAsperfrequencybandorforfrequencybandrange?Isthatwheretheextracontentcomesin?


That'sexactlyright.Aswellasadditionalcontentintheswitches,ofcourse,todrivethat,andfiltersandeverythingthatcomesalongwithit,basically.There'salotofthingsundertheplanningnow.Thisisabigpartofourworkwiththecarriers,andourprogramtoworkwiththemobileoperatorsanddrivetheserequirements,andunderstandthebenefitsofitandwhichbandswewanttooperateatthesametime.We'rehelpingtodefinewhatcanbedone.Andofcourse,we'reencouragingthemtomaketheRFrequirementsverystiff.Makeitreallyhard.Becauseweinvesttechnologiestoenablethat,andthey'llgetthemostreturnontheirinvestmentwhentheydo.


Great,thankyou.


Thanks,Quinn.

Operator :

TomDiffely,D.A.Davidson.

T omDif f e ly(Analyst-D.A.Davidson&Company):

Goodafternoon.FirstSteve,onthemarginside,howmuchmarginvariancedoyouhaveinsideamobile?Andisvolumediscountingthebiggestvariablethere?

SteveBuhaly(CFO):

Sorry,yourlastcommentwasvolumediscounting?


Well,IwaswonderingifvolumediscountswerethebiggestvariableinsidetheMobilemarginstructure?

SteveBuhaly(CFO):

No.Iwouldn'tcharacterizeitasvolumediscounting.Mostofourhighervolume--manyofourhighervolumesarecustom,sothere'snotreallyacomparisonlikethat.Thereisreasonablevariationamongstourmargins,bothbycustomerandbyproduct,andbyproducttype.Sothere'snotareallyveryeasyanswerthere.Butyes,mixisafactor,bothwithinIDPandmobile,andbetweenthetwo.


Onanabsolutebasis,afewhundredbasispointsvarianceiscommon?OrwhatkindofrangewouldyouexpectinsideofMobile?




SteveBuhaly(CFO):

Itreallydependsonthemix.Ican'tgiveyouasimpleanswerthere.Toomanyparts,toomanycustomers,toomanyproducts.


Okay.AndontheBAWfilterside,what'syourviewofthemarketrightnow,thetotalmarket,thesupply/demandequation,forBAWfilters?


Westillseethat,ofcourse,asoneofthemostexcitingpartsofthemarket,growingveryrapidly.WedoseealotofpotentialnewapplicationsforBAW.We'vetalkedaboutdiversityreceivemodules,forexample,theWi-Fiintegratedfusionmodulesinwhichwe'llreallybeanchoredaroundourBAWfiltercapability.Again,workingwiththemobileoperators.

Lookingoutfurtherandfurther,weseealotofbandsthatweretraditionallydoneinthe[sourTCsaw]thatmayrequireBAWgoingforward.Becausewe'retryingtogetmorethroughputoutofthefrequencyrange.Soallthisaddsuptomoreofthesame.It'soneofthefastest,maybethefastestgrowingpartoftheRFTAMforthenextfewyears.Andintermsofsupply,we'rejustkeepingupwithdemand.It'saveryrationalmarketrightnow.Wehaveprettygoodvisibilityintotherequirements,andwe'rekeepingup,justkeepingpace.


Okay.Itsoundslikeyourcompetitorisjustkeepingpaceaswell,sothere'snot--youdon'thaveperiodslikeglutsinthemarketplace?


That'sexactlyhowitfeelsrightnow.It'saverygoodbalanceofdemandandsupply,managingthroughaprettyhigh-growthmarketprettywell.


Allright,perfect.Thankyou.


Thanks,Tom.

Operator :

CodyAcree,AscendiantCapital.

CodyAcree (Analyst-AscendiantCapitalMarkets):

Thanks.Eric,maybewiththeexcessinventoriesinChina--doyouhaveabalancedviewof2Gand3GversusLTE?


Sure.Ithinkwe'rereallytalkingabout4Ghere.2G,3Gis,Ithinkwesaidlastquarter,diminimustous,lessthan5%ofrevenues,basically.So3Gisfallingoffprettyrapidlyintermsofunitsbeingreplacedby4G.Andthedollarcontentdifferencebetween2Gand4Gisdramatic.Reallywhatwe'retalkingabouthereis




wholly4G,inourcase.


Andareyouseeinganypositiveornegativeimpactsofthebasebandmarketshareshifts,particularlywithsomeofthelargestOEMs?


Longterm,itdoesn'tmakethatmuchofadifferencetous.Wehavegreatopportunitiesonallthebasebandsoutthere,includingtheverticalones,andthemajorindependentones,ofcourse.Nowofcourse,inanygivenquarter,themixbetweenthosebandsandwhichcustomersareusingthemandwhichmodelsyou'rein,candefinitelyhaveabigeffect.Butit'snotfundamentallybecauseoftheshiftbetweenbasebands.It'smorejustmixandchurninthemarket,andhowthingsendattheendofthequarter.


AndSteve,justgiventimingonthelayeringinofsomeofthelargergrossmarginimprovements,thein-sourcingorsomeofthenewproductscomingoutfornextyear?

SteveBuhaly(CFO):

It'salittletoosoontosay,butrightnow,Iwouldjustflyitrateablythroughtheyear.


Allright,great,thanks.

SteveBuhaly(CFO):

Thanks,Cody.

Operator :

TimLong,BMOCapitalMarkets.

T imLong (Analyst-BMOCapitalMarkets):

Thankyou.Twoquestions,ifIcould.

First,anynewchangesinthecompetitivelandscape,particularlyanytractionatallwithanyoftheCMOSplayersinthemarket?Andthensecondly,ifyoucouldtouchontheotherlargevendors--Samsung,theyhadbeenadouble-digit,greater-than-10%customer.Theyarenolonger.Butitseemslikethelatestroundenhancementsdidhavemorecontentthough.Couldyoutalkalittlebitaboutwhatmightbehappeningwiththeotherlarge[hence]vendor?Thankyou.


Yes,thisisEric.I'dbehappyto.

Firstofall,regardingourcompetitivelandscape,nosignificantdifferenceatall.AndcertainlynochangeintermsoftractionwithCMOSandsoforth.Overall,verysimilarlandscapetowhatwe'vebeendealingwiththisyear.Sothat'sontrack.ThequestionregardingSamsung,wetalked,Ithink,lastquarteraswell.Wedefinitelyseethatasoneofourgreatestopportunitiesforgrowth.We'renotatallhappywithoursharetherethisyear,andit'sgotalotofroomforgrowthnextyear.




Wedothink,evenonsofttodownunits,thatthedollarcontentatSamsungisgoingtogrownicelyyearoveryear.Wearereallylinedup,withourinvestmentsoffullystaffed.Alotofprogramstocapturesignificantvalueinhandsetswiththatcustomerwillbelaunchingearlynextyearr.


Okay.AndwhatyouthinkthemainchallengewithSamsungforyouhasbeenthisyear,makingitatoughyear?


It'sreallythatthearchitectureshiftthattheymadegoingtohigherlevelsofintegratedmodulesdidnotfavorRFMDandTriQuintproducts,andwebasicallymissedthegeneration.Ofcourse,that'swhyweformedQorvo,istofixthisproblem.Andnowthosearetheexactproductsthatwe'refocusedon,andprobablythebestpositiontogainin.

Theymadethearchitectureshiftagenerationsoonerthanwethoughttheywould.It'sgoodnewsforusinthelongrun.Butwe'vegottoclosethoseproductgapsandgetourfairsharenextyear.


Okay,thankyou.

Operator :

IanIng,MKMPartners.

IanIng (Analyst-MKMPartners):

Thanksfortakingmyquestion.

Eric,earlier,youmentionedamixchangeledtosomeexcessinventoryattheChinahandsetcustomers.WasthatashiftbetweendifferenttypesofSKUsortiers?


Iwasreferringnotonlytothat,butprimarilybetweencustomers.It'sprettyremarkablehowvolatiletheactualcustomersharecanbe.Thewinnersandlosers,sotospeak,withinaquartercanchangefairlysignificantly.Ithinkoverall,again,we'vegottremendousopportunitiestogrowwithallthesecustomers.Butthere'sstillagreatvariationbetweenonecustomertoanother,oronemodeltoanother.Soyoucanseethischoppingisreallyaffectingwhatyouendupwith,intermsofinventoryattheendofthequarter.


SoonlysomeChinaOEMsareover-inventoriedrightnow,itsoundslike?


Yes,correct.


Okay,great.Andthenmyfollow-up.

Youtalkedaboutsomeco-developedpartsshowingupatthesecondhalfofthisyear.Whatlevelsofco-developmentarepossibleeachmodelyear?Ithinkinitially,you'retalkingaboutmulti-chippackages,




doingsomeintegrationsthere.Whenarefullmonolithicpartspossible,andyoucandojusteverythingpotentiallyoutthere?


That'saninterestingquestion.TheinterestingthingaboutRF,andespeciallythewayweapproachit,isthateachindividualcomponenthasitsowntechnologywhichisuniquetoit.We'renotlookingatmonolithicintegrationismuchasmulti-chipmoduleintegration.Whichgivesusnotonlythebestperformance,butthebestflexibilitytoreallycustomizethepartsforeachindividualcustomer.AndtodayatQorvo,we'reveryfortunatetohavethebroadestportfolioofthoseindividualtechnologies,whichallowsustoaddressvirtuallyeverysinglesocketinthemarket.

Sowe'refocusingtheinvestmentsontheoneswherewethinkwe'vegotthemostdifferentiation.ObviouslyBAWfilters,high-performanceswitching,high-performancepoweramplifiers,envelopetracking--thesearetheareaswhereweseeleadershiptoday.We'refocusingfirstonthesemodules.

WetalkedalotaboutthehighbandRFFusionawardsinthepressrelease.We'reseeingalotoftractionforthat.Andwhat'sexcitingis,it'snotjustthetop-tierflagshipguysgoingwiththatkindoffusion--whichisfullofcapabilitymodule--butit'salsogoingintothemid-tier,andintomanyotherhandsetcustomers,andreferencedesigns,andevenintoChinabeforeweknowit.

Thefusionlevelofintegration--whichispoweramplifiers,switching,allthefiltersandpowermanagement,allintegratedintoonehigh-performance,small-placementmodule--thatisdefinitelythetrend.Andit'scertainlyanopportunity-richenvironmentforusnowtoexecuteonthat.


Okay.,thanks,Eric.

Operator :

BlayneCurtis,Barclays.

BlayneCurt is (Analyst-Barclays):

Ijustwantedtofollowbackup,Ithinkyousaidearlierinthecallthatnochangetoyourcontextrotationsinthesecondhalf.Totheextentthatyoucancomment--Iknowit'salwaystough--there'salreadypicturesofyourlargestcustomer'sphone,anditlookslikethere'sahighbandpad.Sowhenyousaynochangetoyourexpectations,couldyoucommentonwhatyouexpectyourcontenttobewiththelargestcustomer?BecauseobviouslyChinaisweakforyou,butthatseeminglyshouldbegoingwellforyou.


Blayne,asyouknow,it'salwaysdifficulttotalkaboutourlargestcustomer.WhatIcantellyouisthatwehave,betweenus,continuedtogainshare.IfyoucouldaddthetwoCompaniestogetheryearoveryearoveryear,it'sourcurrentexpectationsthisyear,it'sourcurrentexpectationsnextyear.


Okay.Andthenasimilarcomment--theopportunityforyouinthesecondhalfwastogainshare.YoujusttalkedaboutSamsung,butalsoChina,someofthemediatechplatformsandsuch.Doesthisinventorycorrectiondelaythat?OrareyoustillabletogainsomecontentwiththosecustomersasyoulookatDecember?





Eric,doyouwanttotakethat?


Yes.

IguessIhadn'tthoughtaboutitasadelay,becauseinanyoneparticularslot,everythingisstillontrack.Butwiththeinventoryandthemixshiftbetweenslots,Iguessyoucouldlookatthatasadelay,yes.Butnotasignificantchangeinthetrajectory,justinthetimingofallthoseslots.Ourcontentgrowthopportunitiesoneachoftheplatformsarestillveryhigh.


Great.AndthenIwanttoaskyou,Bob,anothertoughquestion,sodon'thateme.

Asyoulookouttonextyear,obviouslyforthelargeplatforms,youhavetosubmityourpartsalready.Howareyoufeelingabouttheroadmapthatyouhaveinplace?Obviouslythecombinedpartsarecomingtogethernow.Didyouhavetherightpartsinplace,intermsofperformance,tocontinueyourcontentgainstothelargestcustomer?


Blayne,notthattoughaquestion,soIappreciatethatone.

AndIwanttoclarifymycommentonthepriorquestion.Ishouldhavesaidcontent--thatweexpecttobeabletogrowourcontentthisyearandnextyear.AndIwouldbroadenthistonotjustourlargestcustomer,butmanyothercustomers.Marqueephonesnextyearisreallywherewegetourtechnologyroadmapsandcapabilitiesbetweenthoselegacies--TriQuintlegacy,RFMD--aligned.We'refeelingverygoodaboutnextyear'smodels,thosemarqueephonesthatwillbelaunched,verygoodaboutourpositioningforthosephones.


Okay.Thanks,Bob.


Thankyou.

Operator :

Thankyou.Andatthistime,I'dliketoturntheconference

overtomanagementforanyadditionalorclosingremarks.


Thankyouforjoiningusonourfirst-quartercall.Evenasweachieveourinitialsynergiesanddeliverrobustleverage,webelieveQorvoisjustbeginningtodemonstratewhatwe'recapableof.We'reexcitedtobuildonoursuccessasweintroducenewproductscombiningourlegacycapabilities,outgrowourmarkets,andrealizethefullrunrateofoursynergies,andachieveourfinancialmodel.Thankyou,andgoodnight.

Operator :

Thankyou.Andagain,ladiesandgentlemen,thatdoesconcludetoday'sconference.Thankyouall




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