Q4 2021 Skyworks Solutions Inc Earnings Call

Good afternoon, and welcome to Skyward solutions fourth quarter and fiscal year 'twenty 'twenty. One earnings call. This call is being recorded at this time I will turn the call over to Mitch Haws Investor Relations for Sky Regs. Mr. HUS. Please go ahead.

Thank you Rachel good afternoon, everyone and welcome to <unk> fourth fiscal quarter and year end 2021 conference call with.

With me today are Liam Griffin, our chairman, CEO, and President and Chris <unk>, Our Chief Financial Officer.

Before we begin I would like to remind everyone that our discussion will include statements relating to future results and expectations that are or may be considered forward looking statements.

Please refer to our earnings press release and recent SEC filings.

Including our annual report on Form 10-K for information on certain risks that could cause actual outcomes to differ materially and adversely from any forward looking statements made today.

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

Before I touch on our fourth fiscal quarter results I want to highlight the significant accomplishments that underpinned our record breaking year for Sky works.

Total revenue grew to $5 1 billion.

50% to 52% ahead of last year, representing an increase of over $1 7 billion.

We increased earnings per share for $10 50.

71%.

Operating operating cash flow expanded to $1 8 billion, an increase of 47%.

And we completed a strategic and compelling acquisition.

Immediately diversify our product portfolio and expanding our market reach.

Finally, with the investments we've made sky works in navigating a complex supply chain environment, leveraging world class manufacturing capabilities across strategic technology.

Now turning to Q4, where skylarks delivered record performance.

Revenues in our mobile and broad market portfolios, both grew at double digit rates sequentially and year over year as we capitalized on broadcast broad based momentum fueled by demand for our unique connectivity solutions.

Specifically.

We delivered revenue of 1 billion 131 billion.

Achieved gross margin of 51% and.

And operating margin of 37, 2%.

We posted earnings per share of $2 62.

Exceeding our guidance by <unk> <unk>.

And generate strong operating cash flow totaling $398 million in the quarter.

The complexity inherent in <unk> and the demand for highly integrated solutions for major catalyst in driving our performance.

The momentum in global <unk> carrier subscription is building with estimates of 580 million users today expanding to more than 3 billion users by the end of 2025.

As expected smartphones are leading the early transition.

But new innovative use cases are emerging.

Automotive and industrial Iot to enhanced virtual reality gaming and telemedicine.

Importantly, the power of <unk> is increasingly being harnessed to drive sustainability efforts across industries worldwide.

Providing the wireless backhaul to AI powered ecosystem, combining measurement analysis and optimization.

For example, a major U S manufacturer is combining wireless sensor enabled cameras with artificial intelligence to reduced chemical usage by 90%.

And a European startup is deploying wireless climate sensors and agriculture agricultural applications to.

To drive crop yield up to three times.

Looking ahead <unk> has the capacity to manage the first connections across industries as it becomes the universal connector from the home to the office to the factory floor and to the farm.

Scott works is uniquely positioned to capitalize on this transformation with decades of connectivity leadership.

The acceleration of <unk>.

How would a broad set of use cases in Q4 with.

With design wins encompassing the newest most innovative smartphones and.

And Iot devices as well as gains in wireless infrastructure.

Specifically in mobile we accelerated the reach of our Sky Phy portfolio.

During the latest launch at that leading tier one smartphone Oems supporting more than 20 platforms.

In addition, we shipped sky five solutions across Samsung Galaxy tablet portfolio.

And in Iot, we continue to gain new customers and extend content.

We delivered five CPE connectivity solutions to Nokia.

We partnered with Swisscom to launch their Wi Fi six <unk> residential gateway.

We ramped Wifi 6060 platform set netgear and Cisco.

Launch connectivity and home security devices, with Amazon ring and Comcast.

And captured design wins at Garmin supporting mobile fitness applications.

In automotive, we supported of autonomous driving systems with a market leading robo taxi platform.

<unk> enabled advanced charge control unit systems for a tier one European automotive Oems.

Across the infrastructure markets, we provided power isolation solutions to a strategic manufacturer EV <unk>.

Including residential solar and energy storage systems.

And we secured multiple design wins in next generation Mimo and small cell base station installations.

Moving ahead, we see a multiyear secular technology evolution with our aperture widened from smartphones to industrial automotive and an expansive set of Iot devices.

Sky works is fueling is dramatic technological shift with our unique capabilities.

Integrating not only <unk>, but increasingly with our other critical connectivity protocols, including high performance Wi Fi Bluetooth and precision GPS.

As these opportunities emerge skywalk is positioned to win.

With the breadth and depth of our customer relationships established over 20 years.

Our experience across multiple technology transitions, and a dedicated and talented workforce that executed extraordinarily well during fiscal 2021.

With that I will turn the call over to Chris.

Thanks Liam.

<unk> revenue for the fourth fiscal quarter of 2021 was $1 311 billion.

Up 17% sequentially and up 37% year over year, driven by both mobile solutions and broad markets.

Gross profit in the fourth quarter was $668 million or so.

And our gross margin of 51% up 40 basis points sequentially, and 60 basis points year over year.

Operating expenses were 180 million or 13, 8% of revenue demonstrating the leverage in our operating model, while continuing our strategic investments in support of future growth.

We generated $488 million of operating income translating into an operating margin of 37, 2%.

We incurred $11 million of other expenses.

And our effective tax rate was 8% driving net income of $439 million.

So top line momentum and execution on margins drove diluted earnings per share of $2.62 ahead of consensus estimates.

<unk> grew 22% sequentially and increased 42% compared to Q4 of last year.

Turning to the balance sheet and cash flow for fiscal quarter cash flow from operations was $398 million.

Capital expenditures were $263 million, and we paid $93 million in dividends and repaid $250 million of our term loan.

That's also review our record breaking full fiscal year performance.

Revenue grew 52% to $5 1 billion, adding over $1 7 billion in incremental revenue over fiscal 2020.

Gross profit was $2 6 billion, resulting in a gross margin of 59%.

Operating income increased 73% to $2 billion, we have an all time record operating margin of 38, 2% up 450 basis points from the prior year.

Net income was $1 8 billion translating into $10 50.

Diluted earnings per share up 71% year over year.

Cash flow from operations was up 47% to $1 8 billion.

And during fiscal 2021, we returned $536 million of cash back to shareholders with $340 million in dividends and $196 million in share buybacks. All during Q1 of fiscal 'twenty one.

Starting in Q2 of fiscal 'twenty, one we temporarily suspended our share repurchase program in connection with the acquisition of the infrastructure and automotive business from Silicon labs.

Given the strength of our business and the progress we have made on integrating the acquisition.

And given the low leverage ratio of less than one turn going forward. We will from time to time consider share repurchases as part of our capital allocation strategy, depending on market conditions and in addition to our dividend program and.

Further term loan repayments.

In summary, <unk> executed exceptionally well delivering record revenue profitability and cash generation while.

While making the investments that advance our technology leadership and manufacturing footprint in order to drive long term profitable growth.

Now, let's move on to our outlook for Q1 of fiscal 2022.

We expect to deliver another quarter of double digit sequential revenue and earnings per share growth in the December quarter.

Specifically, we anticipate revenue between $1 $4 75 billion and $1 525 billion.

At the midpoint of $1 5 billion revenue for the quarter is expected to increased 14% sequentially.

Gross margin is projected to be in the range of 51% to 51, 5%.

We expect operating expenses of approximately $184 million to $187 million.

And below the line, we anticipate roughly $10 million in other expense and a tax rate of approximately nine 5%.

We expect our diluted share count to be approximately 167 5 million shares accordingly at the midpoint of the revenue range, we intend to deliver diluted earnings per share of $3.10, an increase of 18% sequentially and with that I'll turn the call back.

Over to Liam.

Thanks, Chris Sky works record financial performance demonstrates our ability to capture robust demand across a diverse set of customers and end markets.

Our execution has been powered and fortified by deep customer relationships, coupled with decades of investments.

Our square focus on execution and best in class performance.

Looking ahead Sky works will continue to strategically invest in next generation technologies and capital expansion.

Positioning us for market leadership, and sustainable growth as they're trained as a transition to <unk> and other advanced connectivity technologies accelerates that concludes our prepared remarks, operator, let's open the line for questions.

Thank you and as a reminder to ask a question you will need to press star one on your telephone and do we draw. Your question press the pound key given time constraints. Please limit yourself to one question and one follow up.

Please standby, while we compile the Q&A roster.

Your first question comes from the line of Gary Mobley from Wells Fargo Securities. Please proceed with your question.

Hey, guys. Thanks for taking my question I want to share just simply by asking about the revenue mix between broad markets mobile not only for the quarter, but.

So that is embedded in your guidance.

Yes, Gary.

Start with that then I'll provide some numbers and then Liam can provide some more qualitative commentary.

In Q4.

Q for the quarter the September quarter that we just closed broke markets was approximately 29% of total revenue.

That was basically up 31% on a year over year basis, and up 13% sequentially also I just want to point out on a full year basis broad markets was over $1 4 billion in revenue growing at 45% on a year over year basis, So very strong.

<unk> performance in our broad markets business on the flip side of course, we had mobile in Q4 was 71% of our revenue up 40% year over year and up 19% sequentially. So really strong execution that of course as we supported the ramp of new phone.

That forms our largest customer on a full year basis, just in mobile we did more than three points or approximately $3 7 billion of revenue up 55% on a year over year basis.

Supported by the early adoption of <unk> and maybe Liam if you want to add something on broad markets, yes, I'm going to read to reiterate Chris's comments, we continue to catalyze our broad market portfolio gaining customers gaining content.

Moving into new industry. So the customer roster continues to get better and stronger names like Honeywell names like Ford.

Looking at some of the place that we see any in the infrastructure space with Nokia and others.

And plenty of room to grow from there. So good work in broad markets saw as Chris noted we've got some substantial top line, we're going to continue to drive that.

Our research and development folks are driving innovation every day not just in broad, but also deeply in mobile and that recipe is working very well.

In addition to manufacturing assets that we have and the technology development that we put forth really gives us the flexibility to hit each and every one of those customers in a way that they want to see the products.

Appreciate the color guys my follow up I wanted to do sort of a welfare check on the <unk> acquisition.

<unk>.

Maybe perhaps ask if we can get an update on it.

If it performed according to your expectation for the quarter performing according to your expectation as we start the new fiscal year, and then as well now that it will be a full year contributor what the overall impact to the comp.

<unk> gross margins may be thank you.

Yes, Gary So we closed the acquisition of the infrastructure and automotive business of Silicon Labs on July 26.

And so we had two out of three months included into our September quarter. We are very excited and pleased to have the acquisition.

Again.

I believe we paid a fair price for a very talented group of people with great technology, a strong product lineup and some really high growth markets like electrical vehicles. The solar business data center data communication five five <unk> infrastructure and so on so the.

Business since we've acquired it in the last two months in September.

Really well in line with our expectations, we are not going to break out every revenue of every sub product line that we have in our portfolio.

We will report the revenue contributions within our broad market segment.

But again the business is performing well we are really happy with the acquisition and we will continue to drive further growth in that business as we explained at the time of the acquisition.

Thanks, guys.

Thank you. The next question comes from the line of harsh Kumar from Piper Jaffray. Please proceed with your question.

Hey, guys first of all let me just congratulate you guys on some pretty solid results based on all the volatility in the market and supply issues I wanted to follow up on Gary's question earlier you. Your question just wanted to give us the September breakdown, but may I trouble you to.

I'll ask about how you think mobile versus broadband will perform in the December quarter, and then I've got a follow up.

So we just guided for total company at $1 5 billion, which is up 14% sequentially and we do see both mobile and broad markets growing at double digits sequentially.

Probably a little bit stronger in mobile than in broad markets, but both at the double digit sequential growth.

Okay understood guys and then.

There's a lot of talk about China trends right now and there's a lot of mixed signals being given by.

By the by the earnings that are coming out I was hoping you could maybe you could talk about what you what kind of trends youre seeing in the Chinese market.

Youre seeing any mix shift up or down either ways that may be benefitting you are not benefiting you just curious what color you got in China sure sure. Appreciate it yes, well as you know we've been a player in China for years and had been able to navigate the ecosystems and the platform saw regardless of baseband partnerships.

And that continues so we've got a great position with the <unk> portfolios.

Continuing to continuing to drive them up into the <unk> lanes, which brings content up for us.

The business has been has been very solid for US now we know theres tremendous upside given given the low base relatively in China smartphones.

Certainly.

Well positioned to navigate through that we definitely have the technology that is needed to make that lift in China and.

And our numbers are continue to look very strong so it's a great part of the portfolio.

It definitely is an opportunity to kind of enrich the technology within those phones are still a little bit lighter than some of the flagships that we have in the U S.

But we have the know how to do it the other thing about the China market as they want integration they want labs to fats types of products. They want our applications engineers, they need people that can make the job easier for them and fulfill a smooth transition to the consumer so all of that stuff around the edges.

Our bread and butter. So we are a great.

Advocate, there and we're a great partner to those Oems.

Thank you Ian.

Thank you. Your next question comes from the line of Timothy Arcuri from UBS. Please proceed with your question.

Thanks, a lot Chris.

Chris now that the fiscal years over can you give us a sense of what your top customer was for fiscal 'twenty one.

Yes, the top customer came in.

59% of total revenue on a full year basis by the way in Q4 that was approximately the same 59%, which is slightly up from the Q4 of fiscal 'twenty, which was at 56% but of course, you have to take into account the timing of the launch of some of the new.

Smartphone platform staff.

I mean, this is a big number but it really underscores the deep customer engagement that we have with this customer by the way not only in the smartphone lineup, but almost in every other product that they have and that they sell you will find sky works inside.

Also in Q for the quarter, we just closed the skybox team really executed well supporting the launch and the ramp of new smartphone platform.

Yet again for now almost 10 or 13 times in a row, we were able to obtain higher dollar content per phone.

As witnessed by the tear downs that's came out when the <unk> came out then and you can see when you look at the Teardowns, we really provided multiple high performance very complex highly integrated solutions multiple sockets in that phone that includes in many cases multiple best in class.

Filters, including TC saw and bulk acoustic wave technology across the transmit side.

Chain to receive chain as well as many other functionalities, including GPS and Wi Fi of course, so great execution by the team.

Thanks, a lot for that Kris I guess as my follow up.

There's kind of a lot of noise in the in the China market I know that you don't have as much.

Exposure to the domestic market.

Or at least the Chinese Oems as some of your peers do but but theres. Some diverging data points I mean end market sell through is not great.

But definitely the high tier seems pretty tight so can you just talk about what youre seeing in China maybe.

Maybe you can have a distinction between sell in and sell through.

Thanks.

Yes, I mean, the China market is important to us and we played that quite well we have great partnerships with all of the leading brands I think the key here.

And Chris kind of mentioned it it's all about performance. It's not just it's not going to phone, it's technology that technology and you see very very different technology and the higher end players in China, where they are embracing.

The kinds of increasingly complex signals that Chris mentioned using bulk acoustic wave using our TC saw it using an integrated approach sky five approach.

That side of the field, it's great and we have a tremendous opportunity we're continuing to grow the content because the complexity is going up the complexity is what's driving the content. So we're making that adoption happen rapidly depending independent of market conditions and we're also trying to uplift the lower end, there's still a pretty high percentage of lower end phones.

China that we want to uplift and bring them to full <unk> capability and those cases, you could have a two to $3 content that could move to four to five.

And so there's pretty good leverage on that side. So you've got multiple market focuses within China.

We're able to address all of them from the highest to the most economical and that's one of the strategies. That's worked for us and very often the first phone that we may work with where the customer will have that customer for five to 10 years and continue to move that move the dial on content and performance as we step along so it's really a strategy around bringing.

The best technology to the customer and having that be enjoyed and celebrated by the end user.

Thank you.

Thank you. Your next question comes from the line of Ambridge Srivastava from BMO. Please proceed with your question.

Alright, Thank you very much.

Conflicting.

Commentary yesterday from two of your peers just wanted your perspective on <unk> and <unk>.

Clearly it seems like it's not impacted your business, but how has that trended.

Currently.

Given the very well publicized shortfall in one of your large customers what does that mean for the March quarter seasonality and then I have a follow up for you Chris.

Okay, we will try to unpack that one at a time.

With respect to our ability to execute and deliver and cases, maybe where some others were not able to do that.

It's really about investments that we've made and the investments that we made early so if you let me indulge here for a minute go back to where we were a year ago. We went from $3 3 billion to $5 1 billion in one year and one year with no M&A.

How do we do that but we made those investments months and months six to 12 months.

Six months to 12 months before.

To ready ourselves to win.

And also knowing that we had the right customer set that appreciated the performance and technology that we could bring to the market.

And so that work great for us and we executed tremendously so the upside of that is those those capital assets and those technology investments are there they are out there.

In traditional but we don't really have.

Our guide here in our market at this point.

Got it got it okay. Thank you, Chris I had a crystal ball.

Quick one and that long ago.

Quick one is capital into Capex for this just can you and really just looking at your cap intensity I think it ties back to what Liam just said.

Much higher than your at least your closest peer so should we expect it to stay in the high single digit double digit and then longer term as you now have a business that has a much bigger footprint of higher margin broad diversified business segments within that.

Is this a time to revisit the long term margin target and why should it not end up versus what you have given us in the past. Thank you.

Yes, so first of all on the Capex.

In fiscal 'twenty, one capex was running at about 12% to revenue, which is somewhat in line with the last couple of years.

We've been in that 10% to 12% range and we're very fortunate that we did make the investments.

Just explained we grew revenue 50 more than 50% year over year. If we would not have made the necessary investments in our manufacturing footprint by the way not only just expanding the capacity, but also adding new technology and.

Proving the performance of our technology and our products.

That was a very smart decision by the team here proactively putting that capacity in place and that's why I mean, there is a lot of supply issues.

In the world, but it's not necessarily because of Sky works I mean, there is tightness in there we are not perfect.

The demand is higher than the supply, but skywest has compared to peers and competitors and other industry players executed really well because we did not hesitate and put the capex in place and again. This is just the beginning of a long <unk> cycle, the beginning of Wi Fi upgrades to beginning.

Yes. Thank you. Good evening a question is on the magnitude of the content gains this year.

And based on your guidance it looks like second half mobile revenues up about 9% year on year.

Looking at the second half to normalize for the different product launches, but.

I guess the question is out of that 9% is that all attributable to content.

Is there any kind of unit growth and there was there any unit decline.

And those numbers are recognize that we're coming off some pretty exceptional content gains last year, but trying to gauge what they look like this year.

Yes, Chris I mean, we certainly see the opportunity.

Again put forth greater content greater value and it comes with technology right. So I think our teams are constantly.

Crafting and developing next generation solutions.

So broadening the reach so it isn't just a certain set of customers, it's a broader set of customers.

And what we find is that there's just a tremendous need for performance right. I mean performance is really what's going to drive this.

And then performance really means that you've got to deliver the technology behind that so we're spending a lot of money in that area, but strategically.

We've got some great R&D folks in house that are crafty, they know how to get stuff done.

Developing solutions for the next wave right markets like Wi Fi six and <unk> are also right now in a great position for growth as we move forward.

And I think connectivity around Wi Fi is going to be great and will complement what we're doing and classic mobile device. So I think there's a lot of good stuff going on the appetite with our customers is fantastic I mean, there's no end to the ideas and the inquiries and the challenges that we're being asked to address.

Which is great.

Much rather talk about that then worry about supply chains.

Walk up a finished product.

And everybody understands that so it does create some wrinkles, but I would say that given the work that we've done at Sky works for years, and then more lately as we talked about.

As evidenced by the $3 3 million to $5, one the ability to stretch and scale of the business.

It's a pretty good indicator of what our capabilities are so.

I believe that we're going to do very very well when we've got a tailwind and we're going to do we're going to do well when it's a muddy field, we're capable of doing it either way.

And again, a lot of that has to do with managing your own technologies, making those investments.

With your own people your own teams and platforms that you know exactly where theyre going to go. So that's kind of our strategy as we go forward and I think that that's where I was going to work very very well for the future.

Thank you.

Yeah.

Thank you. Your next question comes from the line of Edward Snyder from Charter equity Research. Please proceed with your question. Thanks, a lot Chris.

One of the Sterno parts that you landed your largest customers the transmit diversity module, which is a very rich part uses ball filters as well as I'm sure Tc saw.

Before I know, it's one part among many but.

Given the content and that part I would expect the margins on that are going to be better than <unk>.

At least the average if not the highest among that and given the customer the uniforms it'd be pretty high.

Should we expect if we see more of those not just at that customer, but others as Samsung those folks moved to to more of the sophisticated five G features.

That would be a significant margin driver for you given the size of mobile and the size of these customers.

So I assume you can understand I can't discuss specific gross margin those specifics parts for specific customers.

But I think it was a trend I'm looking for the trend because <unk>, obviously for the high end phones is now moving from basic activity versus the more advanced connectivity and part and parcel that we're gonna be transmitted to Eurex modules and this is the first time, we see so as we see more of those and all phones, especially from you should we expect margin to increase too.

No absolutely and I've talked about that before right.

The largest contributor to our overall gross margin.

Late next year or so to see further gains.

Yeah, so and so they would not a 10% customer but you are right. They are up to do right. So the trend is.

The business is growing sequentially as well as year over year as we pointed out before we have great design win momentum with with them as you can see in some of the tier downs as well with some very rich complex parts.

In their phone line up and by the way not the similar to the large customer not only in their phone lineup, but many of the other.

Devices that they sell that have wireless connectivity.

<unk> as well.

And then if I could maybe a final one for.

Hugh.

No secret that Qualcomm is gaining some share in the low end, China phones low band.

Some of those he began in mid high band.

There's a lot of well there's a lot of chatter in the chain anyway that its kind of a combination of things that performance is low band filters has improved certainly but also as we saw yesterday.

The shortages and chips is giving them, even greater leverage in kind of compelling some of the smaller Oems or the low end of the bigger Oems to use some of their RF products.

How do you see that shaking out for your share in China short term.

Any other customers with much higher and performance marks.

We know how to do it we have great application engineers.

That can can work across each baseband as well so theres a lot to do there and I think it's one of the markets and one of the areas in the market that still has a tremendous opportunity of growth. Despite some of the things that we're talking about supply chains.

Great. Thanks.

Sure.

Yeah.

Thank you. The next question comes from the line of <unk> Hari from Goldman Sachs. Please proceed with your question.

Yeah.

This year your line is open.

Let's move to the Nokia if you're on mute. Please UN mute your line.

Great. So go ahead and go to the next question Okay.

Okay. No problem. Our next question comes from the line of Blayne Curtis from Barclays. Please proceed with your question.

Hey, Thanks for taking my question I, just wanted to follow up on the broad markets I guess it was a little bit confused. So the business is up about $40 million I think the acquisition adds.

Revenue growth in broad markets, because if you look at it overall high level. There is very strong demand for connectivity and a broad set of products. If you look at ultimate.

Automotive industrial.

Some consumer type of applications.

There is very strong demand and we don't see that slowing down.

Great and then can I ask a similar question on the mobile side I mean, given the Apple revenue that you reported it's not perfect math, but it does seem like Android down in September maybe double digits and I'm just kind of curious if I have that math right.

Similar issue with kitting.

Something else and then I guess for December the whole group should be the whole mobile groups should be up.

Double digits as you said, but I was just kind of curious if advantage rate would be part of that given.

It was down in September.

No that has been for the last five years that I've been with the company right.

In September and December when the large customer launches their new platforms. They have priority in the supply chain not only with scours, but with many of the peers and competitors and so Android understands that and they are not going to put up a fight for supply with the large north.

And let me add to that I mean, there is a tremendous diversity.

Diversification lever here with with the <unk> business from flat I mean, theres tremendous opportunity and the technologies. We have scale that is just incredible compared to the size of it.

Had been there before so we are working very closely on the strategic technologies within the <unk> portfolio.

We're seeing some great great opportunities, there and we're going to bring a lot of that stuff in house into our sites into our factories and streamline.

We're also going to do some some strong kind of cross pollination in the sales team to make sure that we understand exactly where the opportunities are and the scale plays are and I think there's a lot that can be done there. There's great technology. There, we just need to bring it to the right customers and raise the game.

The supply chain issues kind of hit that portfolio, a little bit harder than others, but don't take us off our track and the technologies that we acquired are outstanding and we're going to cultivate and grow those technologies with customers for sure.

I appreciate that for my follow up if I may.

I know this has been asked several times.

Try and ask it a different way you suggested that mobile will grow double digits next quarter I'm curious if that reflects some moderation of mobile products within China and I asked because it seems that some of the demand in China has pushed from December into March and I am curious if you would endorse that view simply put is this a supply issue.

Is this a demand issue and how would you see that being rectified over the next few quarters. Thank you.

So when you look at the data could demand for <unk> in China.

<unk> continues to be very strong.

There's no question about that I am not talking here about <unk> I'm talking about <unk> demand in China continues to be very strong and there's multiple suppliers of course, the large north American customer supplies into China and is doing really well there and then of course, there's the Android players as well now as I said before there is.

His analogy to that business.

And.

In September and December are not the strongest seasonal quarters.

That business because a lot of the supply goes through the large north American customer.

But but you typically see some somewhat of a rebound into the March quarter, as well with Chinese new year being part of the March quarter, and we expect that to play out.

This year as well.

Thank you very much.

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