Q2 2020 Earnings Call
Good afternoon, and welcome to Skyworks solutions second quarter fiscal year 2020 earnings call. This college being recorded at this time I will turn the call over to admit Tosh Investor Relations for Skyworks. Mr. HOS. Please go ahead.
Thank you Cheryl good afternoon, everyone and welcome to the Skyworks second fiscal quarter 2020 conference call with me on the call today, or Liam Griffin, our president and Chief Executive Officer.
Senate, So our chief financial Officer.
Before we begin I'd 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 pressure lease and recent F.C.C. filings.
Including our annual report on form 10 K.
For information on certain risks that could cost actual outcomes to defer mature really and adversely from any forward looking statements made today.
<unk>.
The results and guidance, we will discuss include non gap an answer measures consistent went past practice.
Refer to our press release within the Investor Relations section of our company website for complete reconciliation to gap.
Without altering the constellium.
Thanks, Mitch and welcome everyone before we begin the overview of the business in our cute your results I wanted to provide an update on the covert 19 outbreak.
Impacting individual companies governments in markets across the globe.
Our thoughts or what the millions what to separate the effects of just global pandemic.
At Skyworks, we are deeply engaged with our own employs a team of more than 9000 deployed across the globe.
Since the crisis began we have taken early in aggressive actions to protect our people.
We've implemented multiple safety protocols, including social distancing.
Daily temperature testing and heightened sanitation standard.
In addition, we initiated rotating shifts that our global manufacturing sites.
Limitation of these protective measures has collectively allowed skyworks to better safeguard employee health.
While simultaneously supporting our business in manufacturing sites worldwide.
Finally, an update on the temporary suspension of activity in our Mexicali facility.
After working in close collaboration with the state and local officials in Mexico.
We were given permission to resume operations last week.
Assuming no further interruptions, we do not expect the temporary suspension they have a significant impact on our business going forward.
Now looking at the second quarter in more detail.
We reported revenue at $766 million in line with our revise guidance.
We produce gross margin of 50.2%.
And operating margin of 32.5%.
We posted earnings per share of a dollar and 34 cents.
Regenerate strong operating cash flow.
Totaling 280 million in the corner.
Further argue assigned when momentum reflects our execution across a rapidly evolving business environment.
One in which all wireless technologies are playing an essential and critical role.
We are neighborly markets from Tele medicine to emergency response remote work.
Online education real time security screaming entertainment unsafe store to door food delivery.
Our mission at the connecting everyone and everything all the time has never been more relevant.
During this time of social distant thing a decrease travel the technology Skyworks provides have become a primary means of connecting people all over the world.
The roll out in adoption of five G. and other advance wireless technologies, such as white by six and enhanced G.P.S. have become the pillars in support of the bass connected economy.
Skyworks is proud to play an integral role and making these vital technologies and essential connections a reality.
During the March quarter, we expanded <unk> engagement with leading customers.
Securing cheat assign went across numerous applications.
From the mobile phone to wireless infrastructure IOTV automotive machine to machine in medical applications.
In mobile we are leveraging our sky five platform across multiple flagship fight G. launches.
Including Samsung, although the though <unk> and other tier one players.
And expanding our technology reach across dark customize diversity receive platforms with new five g. centric solutions driving sharp gains in design when count.
In I.O.G., we are supporting high performance by G.N.Y. find able tablets.
Typically developed for health safety and tell him medicine applications.
Across mobile operators.
Powering five g. hot spots <unk> supporting expanding work from home trend.
We're extending our market leadership and wife by six with home and enterprise gateways at Cisco.
We're neighboring home security applications at Honeywell.
And ramping remote patient monitoring systems with key.
We're also launching asset tracking in fleet management solutions with Juniper Blackberry.
Moving to the infrastructure space.
We're supporting fight G. massive <unk> small cell base station deployments.
Across the U.S. Europe and Japan.
And an automotive work celebrating connectivity content with leading brands, including Volkswagen <unk> <unk> and Nissan.
These highlights demonstrate our technology leadership underpinned by a diverse in growing set of critical product categories.
Resolving increasingly complex architectures and preparing our customers for the performance gains demand didn't find cheap.
And these unprecedented times are existing technologies and connectivity protocols are processing extraordinarily high data traffic.
This explosion in data consumption is taxing networks with real time video high speed processing.
Dreaming content in a long list of critical services.
All dependent upon seamless reliable and ubiquitous connectivity.
To illustrate how the pressure on the network capacity is intensifying.
Just over the last few months.
We've seen visits the Amazon website rise more than 30 per cent year over year.
Zoom video conferencing, passing a milestone of 300 million daily participants.
[noise], Microsoft teams platform logging a single day record of 2.7 billion minutes.
And now with by G., just beginning to launch the average user today is still working with legacy technologies.
Showing system weakness in his high data demand environment.
Clearly more than ever always on connectivity is paramount.
Skyworks in our partners in the mobile and wireless ecosystems are anticipating in accelerating the development and delivery of much needed cutting edge technologies.
Led by by G. wife by six enhanced G.P.S. and other networking protocols.
As Sky works in the World navigate this challenging environment, our focus will continue to ensure streamlined high speed connectivity.
Delivering a path reliable constant and save communication, reaching all of our customers and they are buried applications.
With that I will turn the call over to Chris.
Q too in our outlook for Q3.
<unk>.
It works revenue for the second fiscal quarter of 2020 was 766 million.
Inline the March for updated outlook, what we reduced I would revenue guidance for the coffee 19 impact by approximately 45 million.
At 766 million revenue is down 5% for years. However, excluding why Waverly just revenue in both your tool fiscal 19 and fiscal 20 revenue is up 40 per cent beautiful <unk>. Despite the negative impact from corporate 19.
Gross profit in the second quarter was 384 million, resulting in a cross marginal 15.2%.
Operating expenses would one under 35 million flap year over year as we continue to prudently manage opex, well, making the necessarily investments to accelerate future growth of the business.
Regenerate it 249 million of operating income translating into an operating margin of 32.5%.
Although the income was 4.5 million and I would affect effects rate was 9.4% driving net income of 230 million or one door and 34 sense of diluted earnings per share.
[noise] turning to to balance sheet in cash flow.
Fiscal for for the cash flow from operations was 280 million and capital expenditures for 60 million.
<unk> in 220 million no free cash flow on seven under 66 million of revenue translating into a strong free cash flow margin of 29%.
We paid 75 million and dividends and repurchased 3.2 million shares of our common stock for a total of 284 million.
During the last 12 months, we have returned 92% of the free cash flow back to the shareholders through a combination of dividends and share buybacks.
We ended the second fiscal quarter with caution investments of 1.1 billion and we have no depth.
Now, let's move on to I would outlook for pure three Oh fiscal 2020.
Given to supply chain on demand disruptions associated with golf at 19.
Usability is limited for the June quarter, resulting in a white of revenue range compared to probably get caught fish.
The third fiscal quarter of 2020, we anticipate revenue to be between 670 and 710 million.
We expect gross margin to be approximately 50% and operating expenses flats with you too at approximately 135.5 million.
Below the line, we anticipate roughly 2.5 million and all that income and a tax rate of 9.5%.
We expect that we'll do that shared account to further to Jews to approximately 170 million shares.
Accordingly at the midpoint of the revenue range, we intend to deliver diluted don't expect share of one dollar and 13 cents.
Lastly, I would like to highlight that the company declared a cash dividend Oh 44 cents per share for two or three and we intend to continue we've I would share repurchase program, if that I'll turn to call back over to Liam.
Despite the macro Headwins skyworks remains uniquely positioned every market leader in the most important sectors in technology.
Capitalizing on our strengthened by G. and other advanced wireless protocols.
We have made the critical investments in human capital intellectual property in manufacturing scale to Usher in a new era of ubiquitous connectivity.
[noise] are relentless focus on solving our customers most challenging problems positions are partners to win.
Resolving complexity in advancing user experience.
I worked customer first philosophy drives our product Roadmaps, where we leverage unique customize system based solutions.
Purpose built offer interoperability unprecedented levels of performance.
Powered by the strength of our balance sheet in our cash generation capabilities. We are funding the investments that drive sustainable growth.
Differentiating skyworks as both the leading technology innovator and a strong provider of consistent cash returns to our shareholders that can that concludes our prepared remarks, operator, let's open the lines for questions.
To ask a question. Please press star one given time constraints. Please limit yourself to one question and one follow up.
Yeah.
Mm.
[noise] covering we're ready for the first question.
Yeah.
Yeah.
Sure.
Yeah. That's the line is open.
Oh, sorry, I didn't realize that thanks. Thanks for taking my question I actually had to run on the June quarter, and then second on the calendar second half expectations, Oh, so them on the June quarter, I was hoping you could give us some more color I I know it to the early Visibilities limited, but how have the bookings played out.
Oh, so far if it could give us some colored by geography and molded Bush says brought markets and you know, there's some glimmers that China might be the covering have have you seen that.
Business, just some more colored around what you have seen so far in your June quarter.
<unk> absolutely.
Well, we have seen you know coming through.
Marched period, and then moving in April we're starting to see some improvement in the demand profile. So obviously weathered some very bumpy sees here in the early part of the year Oh the whole industry.
So you know our ability to continue to drive design went through some of the design wins that we consummated earlier in at the end of the end up 2019 started to pick up at that so we were seeing a pretty rough pureed here coming to the end of March but things have gotten <unk> improved I I would say quite a bit as we'd gotten into all the first month.
If our June quarter, and and we do expect you know again, there's some visibility issues out there, but we feel very confident about the range. We put out on the June quarter, and we feel very good about the bottom ended that range and we certainly feel like there's a potential for us to go much higher.
Oh, It and then I'll leave them on the second half how are you thinking about the sees another ramps because what do you have heard from some a few appears to end the mobile supply chain is that overall foreign volumes are lower but the five g. unit expectations I kind of hanging in there around the 170 to to hunt.
Million units number for this calendar year is that consistent with what you're heading just in general how should we think about your seasonal <unk> going into September.
Right the expense to be are strongest sequential growth. Okay. Thank you yeah. Great question. So couple of things, we we have high conviction in a really happy with the design when position we have going into the second half of the year.
It is really about timing that back it really yes, we think the appetite from the consumer is very very high.
There were supply chain issues earlier in the year for everybody and I think once those supply chain issues resolved and they are resolving the consumer then has an opportunity to take to capture that demand with with high end product. So we have very good position with the leading players both in the U.S. and abroad, and we do believe that the second.
Half calendar year and Q. for for Ross are going to be much longer than what you see and Q3.
Thank you.
The next question comes from an <unk> <unk> <unk> demo. Please go ahead you line is open.
Hi, Thank you very much Chris <unk> I just wanted to.
Get a better sense for your operating plan how are you modifying it in light of what we're seeing uncovered and specifically I should really thinking about AAPEX beyond a quarter <unk>.
Tap allocation or you're going to continue with your fairy buyback.
So just one more color on those.
Yes.
So we are not changing our operating plan.
And of course, we going to continue to drive to top line Grove and actually I'm just pointed out we see a lot of strength, especially all we expect a lot of stress, especially in the second half of the calendar year, we are holding I would've margins up all 50% and as the business starts growing we will see back in.
Movements from a gross margin point of view from an Opex point of view as you know we <unk>. We are running a very lean ship. We will continue to do so we will continue to manage that <unk> discretionary spending reductions that we are putting in place but at the same time, we will continue to make the necessary investments in all in D.
And sales and marketing to support our customers and to support the Grove.
The second half data as well.
From a capital allocation very similar we will continue with our complex plan. We will continue to manage that so where we can see and and possibly make some reductions we will not hesitate to do that but keep in mind that most of the complex is driven by technology new technology in filter.
Ball filter very complex Assembly and test new technologies, and we will make those investments to support five g. ramps and so on and that last but not least us we indicated.
We will return most of our cash well free cash flow back to the shareholder combination of out with David Dunn program as well as continue to execute on our share buyback program.
Okay sounds good sounds. Thank you very confident about things that you can control in light of.
He had though very quick follow up on the inventory Dave.
Days went up a lot we were expecting March in absolute daughters to go up.
Scuffle up so since you're on the in the trees outside.
No. So from an inventory point of view, we are running slightly higher than normal.
We we actually increased in van three into March quarter of the of 44 million dollar and days of invent three is now what 155 days, which is slightly higher than normal, but but it is by design right. We have increased our buffer stalks, we have increased even finished goods inventory.
We we kept the loading and I would factories again, it's all in support of the <unk> in the second half and we want to make sure we continue to.
<unk> on time to our customers.
They came in pretty handy as you know we had a temporary suspension and I would mexicali factory, we weren't able to continue to deliver products to our customers. Luckily that situation now has been resolved.
While we are building this invent read it it's very few or little risk from yeah, an old point of view.
And and despite all of that we continue to deliver a very strong free cash flow.
Good question comes from it Chris Paso up Raymond James. Please go ahead. Your line is open.
Yes. Thank you for first question can you break down the the revenue from the various segments and specifically with abroad market business. If you could talk about the the near term trends that you're seeing in that business as you go into you.
Yes, Chris so into March quarter, more about what's approximately 70% of total revenue.
Which was down <unk> basis, which is somewhat in line with normal seasonality and it was flat on a year over year basis.
That includes the reduction in Y way, because if I exclude y way into tool fiscal 19 and to to a fiscal 20 <unk> revenue was actually you up nine almost 10% on a euro for the year basis, driven by content games as well as early five G. Ram.
If I were Chinese customers.
So I what brought markets business.
Was approximately 30% off total revenue into March quarter. It was down mix single digit sequentially, but we do expect it to be up.
Sequentially into June quarter.
Driven by the work from home learn from home trends.
That results in strength in P.C. tablets, Wearables why fight hot spots.
The adoption of life, I, six and all that wireless protocols.
Okay, great. Thank you as a follow up perhaps you can give us a little more color on the trying to business and in particular.
Helpful to you in a separate perhaps some of the production issues. Some of your customers may have had in the March quarter. When someone they were facility shot and you know obviously it it it would have gotten better from there, but but perhaps once you get to the extent you have visibility in what's happening within demands and how those customers.
Three phones as they get to at least some degree of of what's going to be the new normal, particularly within China.
<unk>, Yeah, and what we're seeing his software to the Chinese accounts actually recovering faster than some of the other players in the U.S. anything with the first though.
To be hit by the virus and did the first to come out of it. So we are benefiting from some of the key brands <unk> may even some some new growth now coming up with by G., which Samsung.
And that portfolio right now is actually it's not quite where where it was you know a year ago, but it's starting to move the five g. penetration is strong in the velocity is picking up so I think the unit growth is starting to pick up but the content within that units is really important to watch so we're seeing.
Very meaningful content improvement in by G. in China.
And we talked about it before but you have to have that backward compatibility for three G. force <unk>. So this it really nice incremental move for Ross. There's also a great deal of complexity for the customer in our job is to resolve that in in lever the integrated solutions like Sky five to make it really easy for that for the for the client.
So we are starting to see that in in the Chinese friends. Today are are really you know starting to move this there's still a lot of upside there from our base today, but they are starting to show some real good progress.
Thank you.
Yeah next question comes from Craig.
<unk> Morgan Stanley. Please go ahead get alignments open.
Great. Thank you just phoned up on the broad markets business and any additional contact you have in terms of.
You know supply demand certainly there's been some demand impact here, but also you know customers kind of looking to secure supplies you just curious to how you're seeing that play out in your bread markets business.
Schork right, you're right I mean, there was definitely a period of time and it's still being resolved with some imbalances in supply and demand is spent quite a bit of demand and broad markets for technologies like why fight wife by six even some of the G.P.S. technologies and we deliver those oh. So we we fortunate we do the lion's share of our business.
In house, right friend or under our watching her own factory. So we've been able to be you know more active more agile and executing ought to those demands and a lot of those demands as Chris mentioned were driven by new applications work from home.
You know again all of the the services that are starting to create.
The opportunity right, we're seeing today, whether it's whether it's safer home entertainment whatever it may be the technologies that we make not just by G., but the why find G.P.S. are really moving fast. So we were getting to a point, where you're the supply and demand intersection is is closing, but we do see a meaningful change in in in in.
User appetite for for the technologies right I think you're going to see more and more folks now truly adopt tele medicine or truly adopt video conferencing. Some of these things that were kind of nascent and and and and really hadn't been played out.
So we're looking forward to that and the wife by six technologies as I said I, probably the leader in broad market.
But we're also generating new wins with.
Very very important customers globally that three or four years ago.
Work on our list names like G.E. names like Honeywell Raytheon to continue really broad not that reach and that side of the market.
Got it and then just Lamb just for follow up to the flagship phones in the back. After this year can't talk about just kind of year to year, how you're feeling about kind of that content.
Sure sure well as I said, we've got some pretty important players launching five g. in the five G. story is all about incremental content, all also incremental complexity and and I think it will be.
Revealed that our our solution so they're very very well in our content opportunity was was meaningful and we executed on that so some of that stuff hasn't hit the market yet, but we know we know we're winning in in in where we're headed and it's it's a pause it and we'll we'll start to see that into two four and into our our fiscal Q1, which would be that December quarter. So.
Before September through December you going to see a lot of that a lot of that tracking launch.
Yeah next question comes from blamed Curtis Barclays. Please go ahead. Your line is open.
In fact, taking that question that we May I'm, just curious I. You know you went through your own factory shut down but the the the handsome Prince went through.
That issue in Q1, you end up quarter, it's hard to disseminate because you're obviously I think coming off a very low level and maybe gaming some share, but I'm just kinda curious your perspective on the Android market.
Was there any inventory those building keyuan and decided rectify itself. Thank you too with it's got it.
Yeah, I think it feels like where normalizing right now Blaine and starting to get to a point, where there's real acceleration in supply chain. As you noted throughout this period you know getting from February to now there's been a tremendous amount of supply chain breakdowns everywhere. You know, we're fortunate that we'd have a long facilities and we can manage.
Our house pretty well, but it's very challenging for the overall industry with you know some locations and some factories, just not being able to get employees right for obvious reasons for health reasons, but but I feel like that's starting to abate now and we're in we're seeing more improvement off if you look at the Android cycle, we have really good print position with Mediatech as an example, and they've been a.
A real strong feeder for Asia and other emerging markets also you know <unk>, we're seeing some really good things as I mentioned with the <unk> shall me names.
We go forward and the supply chain, Hey, again, <unk> are getting cleaned up pretty quickly specifically in in China, and other Asian market. So we feel like that could pick up. It's another thing that you know the overall theme here is that we've got a great technology in five t. globally, the industry and the consumer has not had a chance to get there right we had supply chain.
Issues, we had some shock supply seen shocks in some cases, where the technology wasn't there we have people staying at home, they're not going to the stores. This is all going to we're bay and the demand and the consumption for the technology is going to be there and I think wireless and this period of time that we'd all been dealing with here stay at home period, we recognize that the wireless devices.
We have really are the bread and butter about communication, our ability to work our ability to communicate with family, it's really important and and and and I think the the appetite for the technologies can only increase.
Opportunity for companies like Skyworks.
We're we're happy to play a role in advancing those technologies into the future.
Thanks to ask you on your boy effort than you know qualcomm's in very vocal about their confidence in their saw technology. You saw this fraud come out that I get hopefully not get sold you point out anything that in terms and what's your shipping today for a ball and then as you look out in the back out there.
Next year in terms of shipping in the mid high band a module.
Where do you see that for Skyworks down there.
Sure.
He's getting better and better Blaine with respect to boss. So we have faults and meaningful design wins that had been shipping, but the quantity of the device count now it's going way out so what broadening the set of customers and then some of that it's very strategic customers. The volume's in units there are picking up so we actually I'm going to give ya got highlight reel sat here we.
Cost 100 million units a ball unable devices about two weeks ago, Oh since we launched the ball technology. So we really pleased at the launch Oh, it's taken a little time, but we're accelerating we have opportunities across the board with new customers. We have designed wins with strategic customers today, and we're going to continue to advanced that technology.
All that stuff being done in house with our engineering teams are fads, R.I.P. and just driving a technology solution that customers really want.
Question come spreading I poured Snyder charter equity research. Please go ahead to alignments open.
Thank you very much Liam you mentioned the sharp.
Modules content or design wins based on five g. content is any but due to finally getting a transmit function.
To support my mower, C.A. or diversity or is it still on the receive side and are you in production on the board duplexer yet.
Yeah, I mean, it's a great question. So the D.R.X. category as you know has really been incredible off.
Former in mobile device, you know capitalizing on down like.
There's so many variance AD for us so we have a really wide portfolio in that technology and you know we are starting to see.
Greater usage across the board you know there's there's there's so many different versions whether to D.R.X.D.S.M. Ultra high band mid band you can go across the board and were able to play in each one of those categories and you know it's a technology that requires very strong very powerful filtering oh, the ability to work collectively with Putin.
<unk> another technologies and then integrate in a way that works for the customer. So we're we're doing really well there.
We do want to continue on the boss side to advance the technology into higher and higher bands, Oh, and capture more and more of that pie Oh, and I think yeah. We have some some important customers and accounts at work with us that collaborative we were trying to get to that solution together.
Along the way the D.R.X. solutions are gaining a lotta share a lot of attraction to extremely valuable to the customer. It's it's a it's a high end solution at at very fair pricing.
Oh and allows the customer to get a great great and solution. So it's that technology continues to move.
The bulk acoustic wave technologies again continue to move up with demonstrated some volume now, but we still have a lot of room to move from here I mean, it's there but by no means have we captured all the businesses a lot out there for us to go after.
Ultra high band, if I could sub six bands in China, requiring unit will 70, 779, and chemo Hot sprints, Ben 41 for five Gee I mean, we're seeing up to five new transmit receive change being added to some of the high end phones, how many of your customers are putting more <unk>.
Favoring you're doing a bad solution versus flexibility on so like the individual bands. It's more of the kind of approach to China's take I'm trying to get a feel for.
And what solution is being favorite into are you seeing a lot of people opting for that kind of the four and high in solutions that would require more integration. Thanks.
Yeah, no. It's a great question, so you're right I mean and 77 in 79 really important right now in the five G. landscape and you are also you hit another point I didn't make.
The integration is so why don't we don't the integration for US isn't just kind of a cool thing to package. It is really about densifying the product and Chris mentioned some of our capital investments are really around packaging advancements. We of course, we're developing filters and trying to raise the bar on frequency it without filtering technology, but you also have to have increase.
Double technology on the packaging side to create that nature station and with more and more technology. Squeeze then you've got three g. four G.N. by G. incremental you've got transmit you've got receive it's very very complex architecturally. So those technologies that we have are critical and customers do wanted integrated I mean, there. There's you know there.
As an appetite in some cases for discretes, but that's really moving in <unk> in in the rear view mirror and the new technology, specifically in five g. are going to be around densification packaging and and bringing all those elements to the customer in an easy easy form factor.
Your next questions comes from.
Of Goldman Sachs. Please go ahead to alignments open.
[noise] Hi, guys. Thanks for taking the question My first one was on your exposure in China.
Chris I think last quarter, you guys were kind enough to sizes your business with the non hallway <unk> at around $100 million and doesn't sound recorder I'm curious, how how big those those guys were into March quarter, and what the outlook was into June and related to that we're getting quite a few headlines.
Related to the U.S., China, you know trade relationship any of those kind of potentially impact you guys down the one that I have a <unk>.
Yeah.
Business.
Remains on what about 20% off a total revenue.
And we definitely see strength, we've all people wish I won't me.
They're five g. phones, we've strong skyworks content in it Unfortunately, the business with why Wei remains that much lower level than it was historically, although we we we are able to continue to ship.
We were under under the band, which is still effective right now.
Got it and then a quick follow up on gross margins.
Positively surprised to see gross margins in the corridor essentially come in line, but.
Guidance to spite lower revenue and I guess similarly into into junior regarding to essentially flat gross margins. What's a reduced struck me I'll look so I guess I was curious what were some of the <unk> offsets and the March quarter. Chris you spoke to you know maintaining factory loading so maybe that's an explanation but whether on.
Positives that sorta materialized in March and what are some of the potential of substances Ya. Thank you.
Yeah, No I mean, we we could do you have to work really hard to improve gross margins and as I talked about that before and one of the most important things is of course is advancing technology higher complexity more value new products, especially with five g. wife, I six that we bring to market and people.
Those high order complex type of products demand, a higher gross margin and so as we bring those new products to market you will see a boost from from that Unfortunately, yes. There is some disruption into supply chain in some inefficiencies as a result of covert 90.
And so that's why we know that 53% gross margin today, but we hope that ones. All those disruption gets out of the supply chain then restart ramping the business, we will see so nice further improvements on the gross margins.
Yeah question comes from Craig Alice.
B R. Please go ahead.
Okay.
Yeah. Thanks for taking the question and congrats on that financial performance and leave them on the internal bomb milestone that's a big one for the company.
<unk>, Yeah, you're welcome what I wanted to do with the first question is just to make sure I'm looking at what you're saying within a gradient mobile correctly over the same the 12 to 18 months time period. So yeah. We we have been shifting sky five we continued to do that sounds like broad Mar over young.
Basing a quarter and it's about <unk> well for the back half you've got five feet diversity receipt and I wasn't clear. If you were saying that was going to ship in volume and the second half were really for next year, but in the second half or five G. unit should at least double tap on hamper industry, just given that projections that are out there from some of the big Guy.
Next year, you know hopefully we don't have a situation, where we lose 10% of our sales stage to do a a virus crisis. So <unk> helped me one understand it but timing for something new product to someone.
Line in terms of their impact on financial sing and what does that mean per an extra scroll with our we salt Lake back in double digit growth not sure per integrated mobile.
Yeah, Great Great question saw and want lots and lots of ways to think about it. So I'll tell you what we see now Craig and and and how it plays out into the teacher. We we really are feeling good about the design.
Information that we've made here and all and and those products a lot of those products have not yet yet and you hit a couple of key points Sky five.
Gray traction Lawter room diversity receive we're we're delivering that in low band big band in high band.
On the receipt side with some great technologies all of that and do then we start to get into the broad markets were seeing more and more I mean, Chris touched on some of that but we're seeing a real nice run up in some of the wife I technologies <unk> and those are not low in products. Those are very very high performing data drivers and then this working at home.
Firemen and some of the new applications that have been stimulated through this are not going to go away. The appetite is there.
So when you get to the macro view up you how to that part of the numbers come together, it's really about timing the magnitude of the dollars will be up we know that and we know we <unk>, we believe that with with great conviction.
We're coming off of a low point as well I mean this is our <unk> do three is our pippin quarter. This is our pippin quarter, we're going to be up into the right from here and it's just about the rate of change at the rate of revenue in the timing right. You mean, the world really doesn't care about 90 day quarters.
It's just about the actual growth and confirmation of the demand. So we feel really good about it and there's reason for it the products are better defy g. technologies are much faster than more reliable.
Better latency you can moving in Ohio, T., there's just a lot to do and unfortunately. This this Kobe 19 thing showed up no one expected it put the brakes on the business and now we're starting to recover but we still feel really good about the outcome and where we're headed our factories or positions.
Extremely close communication with every one of our customers working.
Hand in hand to consummate in in in in in in intersects their supply or demand their demand are supplied working it together. So it's it's it's a great opportunity for for companies like Skyworks to shine, we have a wrong facilities.
We develop at a chip level, then integrate at a systems level, we can create flexibility.
Whenever market the customers want to Rome, and what their size constraints, maybe what their current consumption, maybe and we've that altogether for solution, but we feel really good about.
Mackerel theme here, it's been delayed unfortunately, but what we see that starting to come back.
By the end of this quarter and certainly into our Q4 and the second half calendar.
That's helpful. And then the pile up was just on crop markets on one of the comments from your marks and I don't really are.
She went through some of the applications core which broad market since you're saying.
Good demanding and had some run like whether the auto worker or other things I don't think I'd heard previously focus on today's call was tele medicine and so the question is in the world, but for now in beyond Tele Medicine are there other application areas that are climbing into the broad markets portfolio Esnou incremental Champ for you in it so.
Maybe thanks.
I I think the video conferencing dynamic is incredible I'm sure everybody. That's on this call is it's been using that recently and and you know even the best technology out there today is still not good enough in my opinion.
Oh, and I think the appetite for that is is really going to create some interesting dynamics for us.
I think that's one really important one.
I think the service community is going to be big deal right now and the people are you you're seeing how the world has evolved we talked about some stats about whether it's Microsoft teens are zoom or you know stay at home food delivery. These are things that I don't think they're going to go away even when even when the covert 19 pandemic is done I think there's gonna be some lasting behavior.
In some of that is very good behavior for for our business, where the consumer is going to rely more and more and wireless technologies and remote technologies.
I have to live their life and and you know, whether it's education, whether it's health care, whether it's entertainment all of those all of those services are provided and can be provided through wireless technologies that we bring to market.
Yeah next question from the old Peterson of J.P. Morgan. Please go ahead Caroline is helping.
Yeah, Hi, good afternoon. Thanks, taking the questions I guess the first question as it relates to cope with 19 impacts in this case on the supply chain. It's it's good to see how this one mexicali coming back but.
There's obviously a lot of talk or multiple stages of this virus I'm wondering I guess, what percentages comments and <unk> <unk> what are the opportunities or have you considered outsource need and what a contingency plans and I guess, how considerable is it if you didn't need to bring up a second barrier for for a third party to.
Sexist on their products.
Yeah. So bill so approximately 70, 75% of the revenue is being generated although the back end facility and and and Mexicali now before this whole covet 19 pandemic started we would already.
Building and more diverse supply chain and so we have already started to.
Part of our supply chain way, if a third party assembly in test houses.
Out there mostly in in Asia, and so that's obviously a trend that we will continue to do so.
Okay. Thanks for that I know you guys does it cost to talk about no crafting solutions working side by side with customers.
With a lot of a lot thousand place globally.
How does how was I didn't talk to your design activities.
Prism, obviously your second hot design ones are well locked and loaded but as we think about next year. How are you working with your customers to crappy solutions.
Yeah I, we we we are doing that but it's it's not it's been.
Far less off base the face a hand to hand kinda communication right. So we're not shoulder to shoulder the way we used to be and we will be again, but in the meantime, you know we've got really clever engineers with with customers that are very smart and we're using the technologies. We talked about we're doing video conferencing, Microsoft teens Lotta conference calls a lot of sharing a powerpoint.
And openness as we go through this so it is a different dynamic.
I think most the bus prefer you know that they did in person contact but it's one of the things that may change right I think the world May change as a result, there could be more and more distant space communication and again, that's more of a wireless play but in the meantime, we're staying extremely close with our customers.
We're taking care of our people.
Being good good citizens in that regard and you know, we're hoping that we can all get through this together and and look forward to better days.
Yeah last question comes from a <unk> Kumar Piper Sandler. Please go ahead your line or something yeah, Yeah, Hey, guys things for us squeezing man, so them or or Chris question for you and the last six months revenues are down roughly call. It 200 million, but to my Ginger, but then.
Band basically 30 2030 basis points. So the question is how I mean, what have you guys done here to basically keep your margins up despite the fact that you're utilization as you Miss down quite a bit. Despite the fact that you might have both a little bit of inventory I'm just curious.
No hard I mean this is.
As as I indicated before and a lot of hard work from the team and and and just multiple elements that go into play right through this.
More complex hi, you're.
<unk> products that we bring to the market. That's very important we continue execute well secondly of course, it's driving down.
The cost and I would factories in our third party suppliers building, a very efficient operations and that of course, we do have a little bit over tailwind from a mixed bondo few us broke markets is growing and has some.
Higher margins compared to the mobile business.
I I was you know our target model is 53% if it wasn't for the head wins.
You just indicated we would have been that already but unfortunately, we have to deal with those headwinds and and we're dealing with it and so as I indicated before in the second half 2020 and beyond when when <unk> headwinds become Tailwinds, we will see some nice photo gross margin and.
Movements.
It's it's pretty impressive guys said just wanted to to ask there was anything going on and then secondly, we've heard a lot you you guys have called how China, particularly the new five do phones generally works cetera. In the last few calls and I was curious you. Two guys are actually you think you're actually getting a lot of share.
Or is it just a situation where China as a country is going to five he and you're just getting your fair share their.
No way, we see it and and we have really good in telling this is that we are gaining a lot of sharing part of it is the ability to do that integration.
And make it easy Oh for the customer so there's a great deal of interest and appetite and demand in China, four or five g. product and what we're doing is we're bringing in a highly complex configured customer by customer Sky five platform. So that those customers don't have to deal with all the complexity and burden of laying out.
You know 40 50 different discrete devices to great to create by G. engine, we're going to do it for them and so that's that's that's been really they the play for us and it's worked out great. It gives our customers a faster time to market. It lowers their need for engineering burden. We can do that for you and then we bring it to the market uniquely undifferentiated.
[noise]. Some gentlemen that includes today's question unanswered question I will now tend to call back over to Mister <unk> for any closing remarks.
Thank you all for participating on today's call. We look forward to talking with you what upcoming events. This corner. Thank you.
Ladies and gentlemen that does concrete today's conference call. We thank you for your protection.
[music].