Q4 2022 Skyworks Solutions Inc Earnings Call

Good afternoon, and welcome to <unk> solutions fourth quarter fiscal full year 'twenty two earnings call. This call is being recorded.

I would like to turn the call over to Mitch Haws Investor Relations for Sky works. Mr. Haws. Please go ahead.

Thank you David Good afternoon, everyone and welcome to Sky works sports fiscal quarter and year end 2022 conference call.

With me today are Liam Griffin, our chairman, Chief Executive Officer, 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 consist.

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 reviewing the fourth fiscal quarter results I want to highlight the significant accomplishments that underpinned another year of record financial performance for Sky works.

Specifically for fiscal 2022, we generated a record $5 $5 billion in revenue.

A 7% year over year increase.

We achieved a record $2 billion in revenue for our broad markets up 37% year over year, representing 36% of total revenue.

We drove earnings per share to a record of $11 24.

And we've returned $1 3 billion to shareholders through dividends and share repurchases.

Now turning to the September quarter, our diversified portfolio and expanding set of customers drove record Q4 performance.

We delivered revenue of $1 4 billion, a Q4 record and above consensus estimates.

We achieved gross margin of 51, 3% and operating margin of 37, 6%.

And we posted earnings per share of $3 <unk>.

Exceeding our guidance by <unk> 12.

In addition to the record financial results. We continued building a foundation for long term growth with strong operational execution.

And design win momentum.

In mobile we delivered integrated platforms to the leading <unk> smartphone Oems, including.

Including flagship and mid tier launches at Google Samsung and others.

In Iot, we continue to gain new customers and extend content, we partnered with Vodafone to launch the Uk's first Wi Fi six <unk> platform.

We shipped into Tri band platforms for Frontier Communications.

And we launched connectivity solutions with Amazon supporting their Wi Fi six power over Ethernet access points.

Across the infrastructure and industrial markets.

We provided programmable timing solutions for leading optical transport OEM.

Simplifying 400 G capacity in data centers and telco networks.

We captured new infrastructure wins at Samsung, enabling service providers to expand mid band capacity and coverage.

And we delivered comprehensive timing technologies <unk>.

Liberty fuels, leading all ran small cell provider.

In automotive we achieved another record quarter another record of quarterly results.

Going forward mobility, the ship to the cloud and the electrification of automobiles are all key catalysts driving demand for our unique solutions.

The value and utility of mobile data continues to grow with estimates of 750 million mobile subscribers being added by 2027.

In parallel global cloud revenues are expected to reach one trillion dollars by 2028, representing an annual growth rate of 16%.

And by 2030, an estimated 96 per cent of new vehicles or feature onboard connectivity and nearly 25 years of those vehicles.

Will be electric.

Each of these trends require complex connectivity engines underpinning the need for high speed ultra reliable low latency performance.

Skyworks is uniquely positioned to crap faster smaller and more efficient form factors.

Seamlessly integrating in customizing for an expanding set of customers and markets and applications.

As these opportunities emerge skyworks is poised to win with a talented team that has executed extraordinarily well in the face of macroeconomic and geopolitical headwinds.

With our market, leading profitability and scale, we are leveraging strategic technologies.

From high performance filters to custom gallium arsenide, an advanced packaging, while elevating performance for a coveted set of diverse customers.

With that I will turn the call over to Chris.

Thanks Liam.

Skyworks revenue for the fourth fiscal quarter of 2022 was 1.407 billion up 7% year over year and up 14% sequentially driven by both Manuel and growth markets.

Marcus was particularly strong just over $500 million of revenue in the quarter up 30% year over year, and representing 36% of total revenue.

Gross profit in the fourth quarter was 721 million, resulting in a gross margin of 51.3% up 30 basis points you get over the years.

Operating expenses were 192 million or 13.7% of revenue.

Regenerated $529 million operating income translating into an operating margin of 37.6%.

We encourage 50 million of other expenses and I would effective tax rate was 5.3% driving net income of $486 million.

Top line growth and execution on margins drove diluted earnings per share of $3.02 ahead of consensus estimates and representing growth of 24% sequentially and 15% compared to Q4 of last year.

Turning to cash flow for fiscal quarter cash flow from operations was $236 million in capital expenditures 142 million.

In terms of capital allocation during the quarter, we returned 179 million to shareholders spending $99 million in dividends and repurchasing approximately 800000 shares of our common stock for a total of 80 million.

That's also review our fiscal year 22 performance revenue grew 7% to a record of $5.5 billion gross profit was $2.8 billion, resulting in a gross margin of $51 2%.

Oprah dating income reach 2 billion, we have an operating margin of 37.3% net income was 1.8 billion translating into a record of $11.24 of diluted earnings per share up <unk>.

7% year over year cash.

Cash flow from operations was 1.4 billion in during fiscal 2002, we return 1.3 billion of cash back to shareholders with $373 million in dividends and $887 million and share buybacks.

So in summary disc.

<unk> team delivered record revenue and earnings per share in fiscal 2002.

While fortifying the business with the investments that advance our technology leadership and support long term profitable growth.

Now, let's move on to our outlook for Q1 of fiscal 2023.

Given broad demand weakness, we expect revenue to decline on a sequential basis.

Specifically, we anticipate revenue between 1.300 billion and $1 billion $350 million.

Gross margin is projected to be in the range of $51, 25% to 50, 175%.

We expect operating expenses of approximately 192 $193 million.

Below the line, we anticipate roughly $16 million and all that expense and a non-GAAP tax rate of approximately 12.5%.

The increase in the tax rate from prior fiscal years reflects the impact of the U S tax laws, requiring the capitalization and amortization of R&D expenses for tax purposes, starting in Q1 of fiscal 2003.

Absent legislative action to reverse the R&D capitalization rules, we expect our full year fiscal twenty-three non-GAAP effective tax rate to be consistent with the 12.5% we are estimating 421.

We also expect our diluted share count to be approximately 165 million shares accordingly at the midpoint of the revenue range of $1.325 billion, we intend to deliver diluted earnings per share of $2.59.

And with that I'll turn the call back over to Liam.

Thanks, Chris.

As a record financials demonstrate our portfolio is powering an increasingly broad set of applications across the market's most essential and fasting growing fastest growing segments.

Are proven execution deep customer partnerships position skyworks to outperform.

Moving board Ah revenue diversification profitability and cash generation.

Long term growth, while increasing shareholder returns through dividends and share buybacks.

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

Thank you ladies and gentlemen should you have a question. Please slowly presti Starkey followed by the number one on your Touchtone phone, you'll hear a three tone prompt acknowledging your request should you wish to withdraw from the question queue. Please press the Starkey followed by the number two given time restraints. Please limit yourself to one <unk>.

<unk> and one follow up please press star one now if you have a question we'll take our first question from harsh Kumar with Piper Sendler. Your line is now.

Yeah, Hey, guys Neon Christian team first of all congratulations he's an amazing results come back to the rest of the people in the industry.

<unk> and Chris He's talking about macro when you talked about the guide.

I wanted to understand how much of a function.

China in inventory problems in China is part of the decline further December corner or is U S. A part of that as well and then most folks are indicating that China is pretty off I'd be curious about.

What how your business is doing in China is there any color you have there would be appreciated and I've got a follow up show.

I appreciate the question.

Yeah, it's certainly been a volatile across across the space, but I would say that China markets had been.

Lee a unique unique situation now.

Now as you know for US we've been much more.

Focused on the higher end brands, although we're exposed to global global markets broadly what we have seen is Android markets contract quite a bit and within their the <unk> portfolios and mobile had been hit quite hard but the good news for us harsh and I think you know this is that we've been slowly.

Driving more towards the high end higher end brands the exposure to the X markets have been radically reduced in derisks in our portfolio, even going back to the early days of the Huawei and C. T E and coming down to the O B X market sob, we've been able to manage through.

Those those headwinds, but I I would say that as we go forward.

The portfolio that we have in front of US is outstanding the technology developments that we put forth the investments that we've made in scale and technology.

Diversification themes that we put forth are all going to be incredible benefits and.

Tailwinds for us once these markets normalize so we feel really good about it China definitely a weak spot I think in terms of relative strength.

Some opportunity for us, but it's definitely a bumpy part of the landscape today.

Thanks to the Internet for my follow up you know the question of are already getting from investors is that.

You know everybody else is sort of hurting and hurting in the industry running into you guys. So so so the question that we're getting is maybe as we started to look past December do you think that the flushing in China for at least thyroid is largely contain number December corner or do anything is possible.

Oh that China against materially worse for you as you look into the March and maybe even the June corner.

Yeah, you know, it's it's hard to tell for sure harsh, but I I would say that the relationships that we have with the key customers and you know that those visions that we have together on opportunities. We still feel like you know there can be some recovery here of course. This is unique circumstances for the industry in general.

But I I definitely would look at Sky works to outperform on a relative basis. There there may be some headwinds here. It continued.

I expect that our team is going to be able to navigate that better than others.

It's not just words the ability to to manage our fads.

To deliver very very high performance solutions in our factories and put those together with our customers day to day. So you know we're not a company that puts products on the shelf and looks for our customers the pole.

We work together to drive demand curve to to be very very much in lockstep with the players that were with Ah and hopefully that has been and that has been in the past and hopefully we'll continue that we can continue to to drive success with our customers knowing that were proven proven supply are proven solution for them yeah.

And then maybe a weed out there that is December for the China is definitely the low point it can't get much lower than that the question is when does it switch back home is it in March we we expect some of it to start in March or the following quarter, but but again.

December it's completely derisks can get much lower than that.

Okay next we'll go to a Matt Ramsey with talent. Your line is now open.

Yeah. Thank you very much guidance good afternoon, and I I guess, where my first question, maybe you could talk to me about the the non.

Mobile business and there I know there'll be a lot of questions around.

Inventory corrections and whatnot and the smartphone market in China in with your largest customer, but I wanted to focus on the the brought markets business, because it's a bit more diverse.

Maybe you could kind of walk us through the different sort of sub segments.

Of that collection of businesses and stuff that you acquired the the core Skyworks business.

And if there's any puts and takes on on where you are seeing weakness I know, there's some folks that across consumer devices. There's certainly some some weakness there's been hints at the start of some weakness in industrial.

You guys don't expose the data center, where and wireless where there's some different trends in different markets, but if you could just kind of walk through the puts and takes there and what you expect that brought markets business to do in the guidance on a sequential basis that would be really helpful. Thank you.

Sure sure good question.

It's just they gotta kick that off we ended our fiscal twenty-two with a 2 billion dollar broad markets business. So that's really good 36% of annual revenue there. So a lot of good work going on but the opportunity. There is outstanding if you look at some of the markets that we have today.

Good position, a lot of strength and mobile and that will continue but the broad markets business.

It has an entirely different set of opportunities it's much broader the technology nodes more far reaching.

And the customers Sac is extremely large I think those are important important points.

Think about where we're going right now.

We're making strides in the automotive business, we're making more and more headwind year or more upside and infrastructure. The Iot portfolios continue to grow a lot of connectivity and that but also.

Looking at more industrial applications and industrial customers.

So there's a lot going on there in broad markets and.

Our sales and marketing teams are working every corner of the globe here to drive revenue, there's definitely for Skyworks a lot of headroom coming from our current base.

And we expect that to be a key driver going into FY twenty-three and beyond.

Got it thank you for that.

It just says my follow up Kristen Kristen quick clarification and in the guide for December up down flat for broad markets and and I guess my my.

My second question is we talking to the folks at Qualcomm last night, they have a pretty good view of the global smartphone market given their breath and and they talked about weakness in mid tier Android in China, which has been there for awhile sort of expanding to weakness globally and moving into higher.

[noise] tears.

Of the market, including the premium tier with customers wanting to hold less inventory basically across the board and smartphone is is that something that you guys are observing and sort of the premium tier of the market as well. Thank you.

Yeah. So so clarification on brought markets in the guides to December so it's kind of flattish on a sequential basis.

But still up on a year over year basis low single digits.

Alright next we'll go to Rajiv Bill with Needham and company your lines open.

Yeah. Thank you for taking my question, then and congrats as well and I'm kind of better than expected results relative to peers for the December guide, but.

I'm just curious about going.

Going back the December guide and the commentary around China, My understanding that you had significantly.

Some difficulty derisk, you're trying there has been business December of last year and he started stopped basically should be into the channel and.

In China was a.

A relatively small percentage of revenue to three or 4% in terms of smartphones I might might be mistaken there.

And so I'm just curious you know the the sequential decline in mobile phone when you when your current your top customers been ramping pretty pretty well.

Better than the expectations. So just curious why the the the smartphone business is down.

<unk> chili in queue for giving your top customer ramp and then given your limited exposure in in China.

Yeah. So there's two parts to the business ride. So there is the largest customer and done as Android.

Android that are too large players as well as China basically Opal people show with me and then there is Samsung we definitely have been Derisking, China for the last couple of quarters, given the COVID-19, lockdowns and well documented softness.

And and customer demand in the China market, but there is also a Korean player in Android we have been doing really well we have seen very strong you'd over the year revenue growth in fiscal 2002 with that customer. However, the customer is also not immune to.

Some of the softness of the global demand, including.

Some of the European markets and saw that it's very well documented as well there. There is some inventory overhang at that customer and that's definitely having an impact on our December guide.

Yeah, I would also say that despite the near term bumps with with that customer there's a great opportunity for content games and so we're excited about that and there's really there isn't anything that's kind of heat.

So there's a lot of opportunity for us to round that out I think the China case, we have derisked Ah appropriately, but we have a great deal of opportunity with the other leading smartphone player so and where our teams are all over that.

Yeah. Thank you for that and just from my follow up just.

Just a question on the inventory both gonna internal inventory as well as inventory in the channel. So if I looked at the absolute dollar inventory, it's up about you know almost 30% on a year over year basis.

Relative to you know revenue growth of 7% so.

So number one just wanted to get a better thing and how you're managing internal inventory and then how would you characterize I guess smartphones channel inventory or any inventory in the broad market that'd be helpful. Thank you.

So as it relates to the internal inventory I'm comfortable with what inventory is on our books actually in the September quarter. It came down six days in terms of data of inventory.

To keep in mind that the broad extender solutions that we bring to market are very complex highly integrated solutions and we actually doing more than more than that that also means that actually your production cycle times are getting extended as you have to integrate more and more especially for.

<unk> more and more filters into our integrated solutions. In addition to that I've talked about that before and Ah and supply chain challenged environment over the last couple of years, we definitely have increased but for stocks, making sure that we can supply to our customers.

In addition to that we are level loading our factories, we have seasonality in our business and we are.

Trying to maximize factory utilizations through level loading having said all of that I think the supply.

Shame disruptions and tightened as in the supply chain is probably going to get a little bit easier. So that will allow us to potentially in the future reduce some of those buffer stocks and will further help us to gradually bring down the days of inventory.

On the on the internal inventory on the on the external in terms of Ah Ah Ah Ah channel inventory, we managed that very carefully I would say that sat in a normal level I think we're the bigger issue.

U as some of the inventory our customer at the phone level and again, that's being very well documented this definitely pockets of elevated inventory at the phone level, especially in the Android part of the business.

Okay next we'll go to Gary Mobley with Wells Fargo Securities Your lines open.

Hey, guys. Thanks for taking my question and and I need to congratulate you as well on the trunk bridge to the year.

I wanted to start out by asking about some customer mix.

Percentages for the fourth quarter, specifically what was the mix from your largest customer and were there any other query within 10 per cent customers in the fourth quarter.

Yeah. So our largest customer was in the September quarter was approximately 63% of our business. So great execution by the team here supporting the launch.

Our largest customer new products Ah that translated into a 30% sequential grove.

Order, a 14% year over year growth and older is always a lot of question about that skyworks gain content or not well those numbers clearly illustrate that we had a major uplifting content and a new products that have been launched by our large customer.

Any other greater than 10 per cent customers.

No that was the only plus 10 per cent customer in the court.

It's been a follow up question I went to.

Two of dig our double click into your two one guy so it looks like it's about a few hundred million dollar shy what you would normally expect given given the normal seasonal sequential calm.

Can you quantify how much of that is just general market weakness versus what is inventory drive down from what it sounds like you're you're Samsung.

No I think the the biggest culprit is definitely an inventory overhang, an android right in China, and I'm talking about the phone level not necessarily at the component level China with.

And more recently as well we have our Korean customer that is that is definitely the main culprit in here.

[noise] next for about two <unk> with BMO your lines open.

Alright. Thank you very much what is the percent of the China Android What's next for you Chris.

Oh very small very small.

As I said, we've we've derisked it we've been bringing it down over the last couple of quarters.

Because we we we noticed that there was.

An inventory overhang building up and so we we do rested and is now very small yeah not being largely.

We're talking about China here, obviously, we have other Android players that were continuing to drive solutions.

And have some more I think some some really good opportunities that will flow through the year.

<unk>, Okay <unk> uhm, so just just to make sure. When you survey small it's it's like low single digits per cent of total sales and what was it that the peak and a quick follow up quiz, what's the capex work for Ya.

So in in fiscal 22, we did 489 490 million dollar of cutbacks, which was 9% to revenue. So we definitely will continue to invest in the business, but we also will do that and.

Smartway and and given some of the demand softness that we experience now we definitely are going to manage our capex accordingly.

We'll go to blame Curtis with Barclays. Your line is now open.

Hey, guys Thanksgiving My question I, just wanted to ask you on March and I know you don't want a guy March probably but just the moving pieces, obviously big Mexicans from Corvo and Qualcomm, but they they did bolt highlight content games and Samsung that seems to be the one off set for March So I guess <unk> how do you.

You feel about your content and growth of that customer and then give you guys more thoughts.

Two moving pieces should the Ba'ath inventory I guess zero you know your your shipping basically nothing but should the Korean inventory situation be done by then and I guess you know your your prospects for growth you know kind of with new business there.

Sure blame this is Liam you know the content opportunity for us continues to grow.

We have penetrated Ah.

Some really unique solutions with our largest customer and really the opportunities going forward are very bright.

Gage minutes outstanding.

And our ability to you all perform technically with that customers is continuing and I I don't think that's going to change. It also would really bullish on that.

You know we go back to things like Samsung I think there's a lot of opportunity then we just got a an odd turn right now.

Oh that market threw it out.

But the opportunities continue to be strong we are I think right now dealing with.

Some some really nice that new technology that we're bringing forth in the portfolio beyond handsets.

If you look at where this business is going to go after after somebody Ernie.

Inventory Burns down and we were very very tight on that by the way we know how to work with the largest customer we've been doing this for years and we're very close in terms of.

The signals that we have that that will help us manage inventory et cetera.

A lot of good stuff going on there and we should definitely expect from us to do more on the on the Android side may be absent somebody to join a players.

And then I just wanted to go to Matt's question on broad market and the moving pieces, because obviously consumer Wi Fi sounds very weak maybe service wider and more mixed and then you tell me I guess I'm curious the direction that the silicon lives business since cause I know they were shorted for awhile and have more in terms of exposure may be.

More industrial communications and such so <unk>.

Thoughts on those kind of moving pieces that what drove the beep and then you're not seeing much of a dent in December are you seeing weakness in one area and it's all set or are you just not saying much mucus.

Yeah. So I would I would look at you and thanks on the on the MSS lab portion really good stuff I know you've heard it from us before but honestly. This is this is a deal.

That is has gone better than we expect and it continues to increase so we're really excited about that a lot of new opportunities Ah, but then on the Wifi portfolios as we start to move the Wifi sixth <unk>, we've got a great Lee.

And that product line, there's a lot of technology that we're bringing to bear it's it's higher grade is higher performance.

Consumers are just now starting to buy into that thinking that Wi Fi.

It's kind of a cycle similar like like five G. There's a lot of ball replacement.

Engagement around that portfolio and we have a great solution. So we're feeling good.

And then another market that's popped up obviously through the slab deals automotive and we didn't talk that much about it today, yet, but it's really critical part of this of the portfolio, we gotta power isolation business that's incredible.

Incredible things, we've got customer engagements.

Names that we wouldn't have had with the Sky works two or three years ago. So we're really excited about that the brands are starting to extend the application that is getting stronger and the technologies that we're populating are are really really critical and unique.

Okay.

Next I'll go to Carl Ackerman with BNP Paribas your lines open.

Yes, Thanks, Liam and Chris I I. Appreciate you taking my question I wanted to follow up on blames last one which was.

Your comes from Brian markets being flattish for December .

Does seem exceptionally strong versus peers.

After coming off outperformance since September person your previous guide you to the tune of roughly 10 points.

So I guess you know how much of the outperformance is from you know some of the backlog you have service and then I think was was.

We usually challenged by match set issues and you know in the last quarter to that seems to be loosening up. So I guess, how much of that outperformance is driven by that and then I'll follow up.

Yeah, I mean, there's some there's some gains with kind of unfreezing that backlog, but the truth is it's really new design wins and new opportunities and and.

And I know, we've we've said it before in other calls.

But the organization is really melding now enter into it.

A period, where we've got great technology, we have engagements with customers on both sides. The the slab side and obviously the core Skyworks [noise].

And the business development is going really well the revenue is growing better than we thought actually and you know we continue to see more and more opportunities for growth and also you've got you know pretty pretty solid margins in that in that portfolio as well. So it's it's going really well lot lot more to do I would bet hard on.

Data center and automotive here in that portfolio that starting to really ramp.

But it's been a great transaction and there's a lot more to go from there.

Yep I appreciate that Liam I guess to to that point you know the irony Division you acquired brought you new opportunities in automotive connectivity in power isolation for electric vehicles and data center hardware could.

Could you just talk about that could you just double click on some of those opportunities because they seem to be gaining much traction. So maybe any any things you might call out on that thank you.

Yeah, I mean, so yeah give me, giving examples you know we're dealing with companies like AWS and Google Cloud and data center that wasn't there a year or two ago, but didn't have that business yeah, we'd come around to look at Automotives power isolation really critical technologies, we didn't have those a year ago or two years ago.

Yeah, there's a lot of great stuff going on in the infrastructure markets that we have had a physician and but now we're expanding.

When you get deeper into the automotive space. There is just an amazing set of technologies that require wireless Andrew a high performance semiconductor products and that's what we do really well. It also it also helps us as we start to move further and further and further into economists.

Where high speed connectivity wireless high speed connectivity is absolutely critical we all know that so.

Is it really a it's a dovetail between great customer engagement technology and also.

Really diversified.

And markets that are growing so we're excited about it and like I said, we've been outperforming on that transaction, we're putting more investment into that portfolio because it's returning.

Nominally.

And you know there have been some sticky spots with with supply chain and you mentioned that in your question.

That was one one of the things that would drag it that and I think we're getting through it but it's a different business where skyworks.

A little bit more of a big game Hunter.

Approach and that's fine.

But the <unk>.

Portfolio is much broader and with the support and funding from the larger Skyworks I think there's just incredible things that we can do competitively and we're looking forward to that.

Next we'll go to a Timothy R. Curie with UBS. Your line is now open.

Oh.

Thanks, a lot I had to it Chris I'm I have a question on the December guidance, I mean, even if I zero out China, Android and I zero at Samsung the big customers down about 10% year over year, and you were down to 30% year over year in September .

The units at least aren't really big mystery for September So I'm, just trying to <expletive> that and reconfirm that you actually gain share. This this launch I think you were planning to gain five to 10 per cent content and maybe if you did gain the sure could it be that maybe that customer bought parts for this launch much earlier because of how much money they left on the table.

During the last cycle due to the constraints can you just help us with all that.

Yeah, I think we're probably will have to take that those line I'm going to a deeper dive down and I I think you have to take into account that <unk>.

Part of the launch customer revenue as in broad markets as we sell many of our solutions into other devices than their phones and I think that's part of that's part of the vehicles tradition.

But but yeah as I said before.

With a large customer is strong it was strong in September continuing to be relatively strong in December as we execute we've content games into a new phone line.

And continuing to support their rump.

Mmm, Okay, Yeah, let's take it take it up the line I guess then the second second question is really on March and I know there was a question just asked about this but to ask it maybe a little different way. So seasonality of this year, obviously is a bit wonky because December usually not down and.

And it's down this time.

March is usually down low teens sequentially I would think maybe it could be a little bit better than that can you sort of give us a little bit of a sense on March just in light of of how December is like so much below normal seasonal thanks.

So this is a very volatile and vitamins.

It is microeconomic headwinds there is a war going on in Europe. There's there is COVID-19 flares. So we we going to stick to guiding one quarter at the time, but I mean, some of the elements that you mentioned that of course could potentially have an impact on.

The March quarter, we discussed before it will depend to a certain extent on how the inventory at the phone level I gets resolved and and when some of the Android business starts start picking up again and I will say that we definitely will have visibility. So we're not blind.

We were really close to the customers.

And so we're on top of the transaction so everything that Chris said is exactly true.

And I would just add that you know our ability to look through the channel and be engaged with our customers and our suppliers is very strong.

And next will go to Edward Snyder with charter equity Research. Your line is now open.

Thanks, a lot in first of all congratulations on the content gain Ah largest customer, especially the trends with your export I suppose.

What was up with the rest at least for the next year. The prelaunch rumors of a net decline of content and sheer laws.

Or turn it around the park showed a lot of ball filters, which has been a trend for you over the last several years I was just wondering is this brought you to the point, where you feel confident about competing for something like a mid high ban module or is this reliance still don't really complex MX filters put it out of reach unless we see like an RFP architecture change that would pull those Muslim.

I'm trying to get a feel for you you should really good content gains unless several years largely on new part. So I'm just wondering if you're going to start looking at putting off some of the stuff that I've been around for quite a long time, but you didn't have the technology for in the past and I have a follow up.

Yeah. Good question and I appreciate that yeah, I mean, you've heard me say before we we'd like to take the fast ball early right. So when he tried to really capitalize on the most challenging opportunities and then kind of go downhill and that's what we've been doing and and we really do our best work in a higher and more most challenging environment.

<unk> Ah.

And our design teams are exceptional and they really enjoy it again.

Again, they they they they like to hunt as well so you're going to see <unk> I. Appreciate your your your visibility on what we've done already which is pretty solid and more to go but our design teams and our engineers are fired up they wanna take more we're going to try to grow the portfolio with the largest customer but.

I'll also with many many others outside the largest customer so as you know performance wins complexity resolution wins.

Having the ability to put that all together and make it look really easy.

That's what we try to do and and hopefully that that trend will continue.

Okay, and then just kind of housekeeping there by our calculations that was an excess of about 10% content gain I I just wanted to check Chris maybe you could give us a reality check on that is that in the ballpark or do we feel like we're a little low there and then if I could.

Should we expect the architecture's Y Wifi seven is coming and should we expect the architecture of that especially in phones, you shift back to an external amps and if so can you see those frequencies, we will have to be gas cause Ah Corbeil, obviously mentioned last night that scenario of growth for them. So you know I was just curious about the technology break down for that.

And then if you're seeing more competition in that.

Yeah.

So at first you know.

Rachel fought the tears downs and your conclusion of contact gains in excess of 10 per cent is absolutely true.

And our final question comes from <unk> with Bank of America. Your line is no open.

Yeah. This is Blake Friedman I'm from Quebec ARIA. So just a quick question on your large Korean customer I know one of your peers last night also highlighted various design wins. There. So just curious from your perspective, if you're seeing an overall expansion of a tan, but this customer or if you believe you're seeing share gains in any way.

Yeah, I I honestly here, we're starting to see an expansion of Pam with with the largest Korean customer that there's always been kind of a battle for.

Lower cost versus performance and what we're seeing.

Is that performance is the driver and if you look at the incremental.

User experience between the mid to a higher end phone is exceptional and and you know we see it here in the U S with the leading player but it's it's it's also a great opportunity for mid tier. So there's a lot to do there and I think that's a great opportunity for us with the largest Korean player. We've got the China business Derisk and we've got great position with the <unk>.

Top brand so.

We're looking forward to getting through some of the bumps that we're dealing with right now and and moving into a stronger 2023.

Great and then just kind of a follow up to that maybe more to the higher level you know outside of the the you know we just more on the content side Uhm.

At this point with five G penetration being about like 50, 560% of the overall market and your largest customer mostly transition to a full five G. Sweet I was just kind of hoping you could talk about the future content opportunities as the cycle matures and more importantly from generation to generation what the you know on average maybe the expected content.

It should be.

Yeah, I mean, the utility of these high end smartphones is so critical to the user. So we've been seeing consistently you know opportunity for growth and what we call content in our technology reach and and we're not seeing that a bait and.

This thing is it's also branching out and it is it isn't just you know we've done some great work with bulk acoustic wave at T. C saw an capitalizing on our in house gallium arsenide. All these unique solutions and bringing them together in a holistic view holistic solution that can go into a multi in markets.

The good news is you know.

The companies that we deal with especially the largest ones they want to push the envelope. They want the performance to get stronger they want the performance to to drive more applications.

And that drives more technology reach for skywalk, So we really don't see that change.

And the usage cases around mobility and connectivity I think everyone on this call.

We all know, it's really vibrant will have pockets swept quarters, where things get bumpy, but the net output here, it's gonna be it's gonna be up until the right and the technologies and to know how to put that together and engage with the right customers is I think very critical and and and it's something that we continually try to improve upon.

Ladies and gentlemen that concludes today's question and answer session I'll know I'll turn the call back over to Mister Griffin for any closing remarks.

Thank you all for participating in today's call. We look forward to talking to you at upcoming industrial conferences during the quarter. Thanks again.

Ladies and gentlemen that does conclude today's conference call. Thank you for your participation you may now disconnect.

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