Good day, and welcome to the Qorvo, Inc. Q3 2022 conference call. Today's conference is being recorded. At this time, I'd like to turn the conference over to Douglas DeLieto, Vice President in Investor Relations. Please go ahead. Thanks very much, Cody. Hello, everybody, and welcome to Qorvo's fiscal 2022 Q3 earnings conference call. This call will include forward-looking statements that involve risk factors that could cause our actual results to differ materially from management's current expectations. We encourage you to review the safe harbor statement contained in the earnings release published today, as well as the risk factors associated with our business in our annual report on Form 10-K filed with the SEC, because these risk factors may affect our operations and financial results. In today's release and on today's call, we provide both GAAP and non-GAAP financial results. We provide this supplemental information to enable investors to perform additional comparisons of operating results and to analyze financial performance without the impact of certain non-cash expenses or other items that may obscure trends in our underlying performance. During our call, our comments and comparisons to income statement items will be based primarily on non-GAAP results. For complete reconciliation of GAAP to non-GAAP financial measures, please refer to our earnings release issued earlier today, available on our website at qorvo.com under Investors. Joining us today are Bob Bruggeworth, President and CEO, Mark Murphy, Chief Financial Officer, Philip Chesley, President of Qorvo's Infrastructure and Defense Products Group, Eric Creviston, President of Qorvo's Mobile Products Group, as well as other members of Qorvo's management team. With that, I'll turn it over to Bob. Thanks, Doug, and welcome everyone to our call. Qorvo delivered fiscal Q3 results above the midpoint of the outlook we provided November 3rd on our earnings call. Demand during the quarter was broad-based across markets and included multiple new product categories, including 5G transmit diversity, ultra-wideband, Wi-Fi 6E and 7 E, power management, and other power solutions. In Mobile Products, Qorvo gained content in flagship and mass-market 5G devices. The fundamental challenges with increased complexity in 5G content are being driven by network efficiency and carrier requirements for the device architectures. In addition to new 5G bands, requirements are increasing for carrier aggregation band combinations in both the transmit and receive to maximize bandwidth to and from the device. These are long-term trends impacting 5G devices independent of tier. In addition, new industrial designs like foldable phones are increasing RF challenges, demanding more advanced antenna management systems. Lastly, because Qorvo's smartphone portfolio includes cellular RF, ET PMICs, Wi-Fi, and emerging categories like ultra-wideband and MEMS-based sensors, Qorvo can participate broadly across OEMs, product tiers, and chipset providers. Qorvo offers a broad portfolio of key enabling technologies, and Qorvo stands to benefit as connectivity continues to proliferate. More critically, Qorvo is leveraging the same competencies that placed us at the forefront of connectivity to grow in new markets. In IDP, revenue increased sequentially and growth was broad-based across markets. The integration of United Silicon Carbide is proceeding well and enhancing our opportunities in higher voltage applications that demand maximum power efficiency. These include EVs, charging stations, and renewable energy systems. Now let's look at some of the quarterly highlights, starting with mobile. For a Korean-based smartphone OEM, we ramped shipments in support of flagship and mass-market smartphone launches. We expanded customer sampling of highly integrated main path solutions as well as secondary transmit solutions, which increase content as these architectures are adopted more broadly. In ultra-wideband, we achieved an important strategic milestone, supplying our first complete ultra-wideband solution in an Android smartphone. This speaks to the strength of our core technology and highlights the opportunity across the Android ecosystem. For industrial and enterprise applications, we introduced a fully integrated module combining our ultra-wideband chipset with Nordic's BLE solution to address a wide range of industrial and enterprise applications. In Wi-Fi, design activity continues to be robust. For mobile applications, we've secured new Wi-Fi 7 chip on board reference design engagements and began customer sampling of Wi-Fi 7 FEMs, offering superior performance and design flexibility. For home and enterprise applications, we ramped Wi-Fi 6E FEMs for mesh networks and released 5 gigahertz IFEMs with BAW filtering for tri-band applications. In cellular infrastructure, Qorvo was selected by a base station OEM to supply 3.4-3.8 gigahertz, 8-watt GaN power amplifier modules for massive MIMO 5G deployments in Europe. We see infrastructure market strengthening in 2022 worldwide, with significant growth in the rest of the world, excluding China. In automotive, Qorvo was selected to provide cellular V2X connectivity for a leading Europe-based automotive OEM. In power, we secured design wins to supply silicon carbide for onboard chargers and DC-to-DC converters in support of leading automotive OEMs in Europe and in Asia. Sales of Phoenix for video processors and solid-state drives were strong, as were sales of motor control solutions for battery-powered tools. To expand our power franchise, we are combining our power management and silicon carbide technologies to deliver superior levels of power efficiency in high-power applications. Our first products are for the defense industry, and we are broadening the portfolio to serve additional markets, including infrastructure and automotive. In bio, we were awarded a $4.1 million follow-on contract with the NIH RADx initiative, supporting a COVID flu combo assay and a COVID antigen pooling application. We also signed a channel partnership agreement for distribution in the U.S. and submitted a CLIA waiver application to the FDA to expand deployment in point-of-care settings. In both mobile and IDP, Qorvo is capturing diverse opportunities supported by multiyear secular growth drivers in 5G, IoT connectivity, defense, and power. We are operating well and expanding the markets we serve while investing to sustain product and technology leadership across our portfolio. With that, I'll hand the call over to Mark. Thanks, Bob, and good afternoon, everyone. Qorvo's revenue for the fiscal year 2022 Q3 was $1.114 billion, $99 million above the midpoint of our guidance. Mobile Products revenue of $848 million was stronger than expected on higher flagship volumes. Infrastructure and Defense Products revenue was $266 million, with infrastructure and programmable power management up sequentially and year-over-year. Non-GAAP gross margin in the December quarter was 52.6%, 35 basis points above the midpoint of our guidance on better-than-expected mix and yields. This was the company's fifth consecutive quarter above 52%. Non-GAAP operating expenses in the Q3 were $214 million, down $8 million sequentially on lower incentive compensation and timing of development programs. Year-over-year OpEx was up $20 million on new product and technology investments, including recently acquired company OpEx, partially offset by lower incentive comp. Non-GAAP operating income in the December quarter was $372 million and 33.4% of sales. Non-GAAP net income in the Q3 was $330 million, and diluted earnings per share of $2.98 was $0.23 above the midpoint of our guidance. Cash flow from operations in the Q3 was $117 million, reflecting payments associated with the long-term supply agreement discussed on last quarter's call. As mentioned then, we believe supply agreements allow us to advance our differentiated technology position and simplify our long-term planning. Qorvo is building longer-term and more collaborative partnerships to provide our customers supply assurance and to address their product and technology needs. Capital expenditures in the December quarter were $50 million and remain concentrated in core areas such as BAW and GaAs, where we enjoy a differentiated position and see continued growth. Free cash flow was $67 million, and we repurchased $302 million of shares during the quarter. We continue to repurchase shares based on our long-term outlook, low leverage, and other factors. Turning to the balance sheet, in December, Qorvo issued its first investment-grade note. The proceeds from this $500 million three-year note were used in part to retire our $195 million term loan. As of the December quarter end, we had $2 billion of debt and $1 billion of cash. Our net debt to EBITDA increased to over half a turn. Now turning to our current quarter outlook, we expect revenue between $1.135 billion and $1.165 billion, non-GAAP gross margin of approximately 52%, and non-GAAP diluted earnings per share of $2.94 at the midpoint of guidance. Our March quarter revenue outlook reflects an improving supply situation, high-volume smartphone launches, and stronger IDP volumes. Forecasted revenue of $1.15 billion at the midpoint is up 3% sequentially and 7% year-over-year. We expect mobile to be flat sequentially and up around 5% year-over-year on flagship and mass-tier phone launches and content gains and a more stable supply-demand situation. We project IDP to return to year-over-year growth in the March quarter, with broad-based demand supporting revenues over $300 million. Our March quarter gross margin guide of approximately 52% results in full year FY 2022 outlook about 30 basis points higher than last fiscal year. We project non-GAAP operating expenses to increase in the March quarter to approximately $232 million due to increased investment in core technologies and new capabilities as well as early calendar year payroll effects. For the full fiscal year, our OpEx is projected to be just over 19% of sales, down from close to 20% of sales last fiscal year. Below the operating income line, other expenses will increase to approximately $17 million on the additional net debt. We project our non-GAAP tax rate in the current quarter to be approximately 7.5% and the full year rate to be 8.2%. Capital expenditures are projected to be around $55 million in the March quarter as we manage spend to intersect demand and support long-term supply agreements with multiple customers. We are still supply constrained in some areas and forecast to remain so beyond our fiscal year-end. We continue to expand bond gas capacity along with some assembly and test to support growth. In summary, our results exceeded the midpoint of our December quarter guide. Our March quarter guide is consistent with our previous comments, including sequential growth in the March quarter. At the midpoint of our current quarter guide, for fiscal year 2022, we expect revenue growth over 15% and operating margin over 33%. We project our full fiscal year EPS to be approximately $12.18, up 25% year-over-year. Looking beyond this fiscal year, Qorvo is well positioned to serve secular growth trends in connectivity and power, and to deliver growth and earnings and free cash flow. As mentioned last quarter, looking at the business by end market highlights Qorvo's growth potential over the next several years. We expect solid growth on our advanced cellular products for smartphones. As 5G mix grows, RF complexity increases and content expands. In our broader connectivity solutions, we expect strong double-digit growth as connected devices increase and use cases proliferate. Finally, we expect infrastructure, defense, and power markets to support double-digit growth as 5G build-outs pick up outside of China, defense spend mixes to higher performance electronics, and requirements increase for power semis to support electrification trends. Now, Cody, would you please open the line for questions? Absolutely. Thank you. If you'd like to ask a question, please signal by pressing star one on your telephone keypad. If you're using a speakerphone, please make sure that your mute function is turned off to allow your signal to reach our equipment. In order to accommodate as many questions as possible, we do ask that you please limit yourself to one question and one follow-up before reentering the queue. Once again, that is star one if you'd like to ask a question. We'll take our first question from Toshiya Hari with Goldman Sachs. Please go ahead. Hi, guys. Good afternoon, and thank you so much for taking the question. I guess my first question is on the supply front. Mark, I think you mentioned that supply constraints eased a little bit, but you also noted that you expect supply constraints to kind of stay around beyond the current quarter. Can you kind of elaborate on what you saw in the quarter and what's embedded in guidance going forward? I think last quarter you talked about, you know, gallium arsenide capacity constraints, which are internal to Qorvo, and then also matched set issues on the part of your customers. If you can kind of describe what you're seeing from a supply perspective, that would be helpful. Sure. I'll start and others can add. Yeah, during last quarter's call, Toshiya, we were in the midst of the most disruptive supply chain effects of the past two years. These effects impacted and added further complexity to the demand picture. We provide the best view we could, and we've seen it play out largely as expected. To your specific question on supply chain effects, they did moderate in the quarter, and we expect the supply environment to continue to improve through this quarter and the calendar year. You know, specifically on businesses, we're still seeing some chipset shortages in Wi-Fi, which impacted that business. In the defense supply chain, there's still some disruption, COVID related. Then there's other pockets here and there. Toshiya, it did improve as we expected, and even though we expect some continued supply disruptions in the March quarter, we expect it to be less than the December quarter. Toshiya, this is Bob. The only thing I'll add is we've made significant progress in bringing on our capacity in our gallium arsenide, and we're in pretty good shape there. We've made good progress there. In our IDP business, some of the silicon supply in our connectivity business there, along with some of our power management systems business there, we still see tightness there. That's been impacting us. As Mark pointed out, we do expect things to improve through the quarter and throughout the year. Yeah. That's great. Thank you so much for the context. As my follow-up, for the March quarter, I think the guidance you provided for both mobile and IDP is pretty consistent with what you had guided to three months ago. I'm guessing, though, the mix, particularly within mobile may have changed, may have evolved over the past three months. Can you speak to, you know, what you're seeing in sort of the respective regions in mobile and in the U.S. and Korea and broader China, how you see those regions playing out? As a quick follow-up to that, any sort of guidance on fiscal 2023? I know it's early, Mark, but any revenue outlook or gross margin guidance on fiscal 2023 would be super helpful as well. Thank you. Yeah, Toshiya, this is Eric. I'll start with the mix in Mobile. You know, no particular meaningful changes. We expected when we had our earnings call last quarter that we would see strength in Korea due to a lot of new design wins on ramping platforms across mass tier and flagship as well. Those are playing out very consistent with our expectations. We did see a bit of mix shift within our China customer base. You know, it's clear looking back into December sellout data in the channel, there was some mix shift between them. So far, we're early in this quarter, but it's beginning to moderate back to normal. Really not any significant changes versus what we expected. Yeah, Toshiya, on the outlook beyond this fiscal year, we'll plan to provide more on our fiscal 2023 and the rest of calendar 2022, on our next earnings call. What we can say is based on what we guided, we know this March 2022 quarter is stronger than typical, and that's based on the timing of phone launches, content gains, and the profile of IDP demand. Thank you. We'll take our next question from Karl Ackerman with Cowen. Yes, thank you. Good afternoon. Two questions, if I may. First, a clarification. May you comment on the overall revenue contribution, your largest customer contributed to in the quarter? I have a follow-up. Karl, as you know, we don't report quarterly what we do with our largest customer. You'll find that, you know, when we report the K at the end of the year, we'll clearly give you what our largest customer was. Yep. I try my luck. I appreciate that. Just on the guide- Hey, Karl, we're consistent, though. Give us That is true. Hey, on the guide, you know, one of the concerns from investors is that capacity constraints may limit the adoption of 5G handsets this year. While you have less control over the number of 5G phones being sold, I was hoping you could discuss the content opportunities you see collectively from UWB wins, design engagements across Android mid-range, as well as what sounds like share gains in Wi-Fi for flagship devices. If you could just discuss that'd be helpful. Thank you. Yeah. I guess the first part of it regarding chipset constraints affecting, you know, the amount of 5G. I think to the extent that there are, you know, chipset constraints in, you know, the modem side of the business, I would assume those suppliers are gonna prioritize 5G and, you know, latest technologies. We doubt that's gonna be a major factor. You know, when we look at, for example, our China customer base, you know, they're still, you know, well under half their shipments are 5G. You know, they've got a lot of 4G shipments, especially in the export market that'll be more impacted probably than the 5G, I think. Yeah, looking forward, we're real pleased with the Pixel 6 launch, you know, and a lot of content there we talked about last quarter beginning and, you know, across integrated modules and antenna control, but also of course UWB. That's a great foothold for us. Gets our software stack proven, and that makes it a lot easier to go across the rest of the Android ecosystem. You know, we were already talking about wins in the consumer home devices for UWB, Xiaomi, for example, with their connected home products. We're beginning to put the whole Android space together for UWB, so that's great. You know, in addition to that, the integrated modules generally, power management, we definitely see both APT, Average Power Tracking and ETIC power management systems getting a lot of traction from Qorvo. Lastly, of course, our antenna control solutions continue to be strong, transitioning to MEMS-based as we exit the next fiscal year. A lot of potential areas for strength throughout the year. Thank you. Thank you. We'll hear next from Vivek Arya with Bank of America. Thanks for taking my questions. onsemi, the first one, just to clarify, I thought, Mark, you said that March is stronger than typical. What does that say about June versus seasonal trends? Yeah, Vivek, it's a good question. You know, as I answered the earlier question, we're gonna refrain from talking about next fiscal year in any sort of detail until we finish this fiscal year. You know, I think it's just in this environment, it's too early to call, yeah, the June quarter. It really depends on volumes and some of the supply situation that we've discussed earlier. As you point out, given the strength of March, you know, we may see a sequential decline in June, but again, it's too early to call. In any case, we would expect a return to year-over-year growth in September if that were to happen. That's all I'll say at this point. I see. The follow-up to that is just a clarification on inventory. If my model is right, it is up to, I think, over 114 days or so. I imagine the supply chain is tight everywhere, but what's happening with your balance sheet inventory, and how should we think about your, you know, the direction of that inventory, you know, what that implies for utilization and, you know, its impact on gross margins over the next several quarters? Sure, Vivek, you're right on. It's about 115 days. As you point out, we ended the quarter at over $700 million of inventory. I think the first thing I would say is this was in line with our forecast. When viewed historically, it's high, but it's within the range of experience that we've had. Having said that, you know, given our focus on cash flow and capital returns and risk management, it's certainly higher than we want it to be and higher than it's run over the past year and a half or so. We have clear line of sight in bringing it down. It's elevated for a number of reasons, including build aheads for ramps that you're seeing now, and sustained volumes in Flagship and also content gains in Flagship and Mass Tier. The increases in IDP and there are other demand factors, such as supply-demand alignment in China as some share shifts there. But, you know, we're working through those. We understand why it's up. We forecasted it. We have a plan that rolls off over the next few quarters, and we expect more normal turns as we move through the year. Thank you. We'll take our next question from Blayne Curtis with Barclays. Hey, thanks. Same question. I'm gonna try again on June a little bit. I expect you don't wanna give a number out. I guess Qualcomm just guided it down in June. Cirrus is talking about just a down. Maybe you could just talk about you have a lot more higher exposure to Android market. So maybe, without giving us an actual amount, can you maybe just talk about that Android market? Obviously, there's some new ramps in terms of new modems from some vendors that you should do well with. You're clearly growing in March. So it may not be the same iOS story that others are indicating. If you can walk us through the kind of moving pieces for June, that would be helpful. Eric, do you wanna take a shot? Yeah. 'Cause, I mean, we have two parts to our business, Blayne. We have our IDP business and our mobile. I think we'll let Eric talk a little bit about the mobile side. Yes. I think, yeah, to your point, Blayne, the Android ecosystem is pretty exciting right now and growing especially, you know, growing exports. It's not just a China story by any means and, you know, high-end products from Google, for example, and Samsung, obviously, we believe is gonna be a very good story for us this year. Our alignment there, we'll start out, you're beginning to see the phones, you know, come to market. You'll see a portion of the content, I think, throughout the year will continue to grow content as more devices move out from them. You know, that'll be a good story for us this year. We mentioned Wi-Fi earlier as well. Wi-Fi, you know, across the Android ecosystem has really opened up for us since you go to 6 E, 6E, and 7 E. It's getting harder. You know, the filtering is definitely getting harder, and they're implementing it with Chip on Board front-end solutions instead of fully integrated modules. That's a very good trend for us, and we're seeing broad traction across Android with very complex Wi-Fi front-end modules now. All of that goes to what we think is gonna be a good year for us in content growth in Android. Okay. I guess my follow-up. I did wanna ask about the growth you're forecasting in IDP for March. You know, I think the connectivity part of IDP has been kind of flattened down, so I know supply has been a big issue. Can you talk about the drivers for that double-digit sequential growth for IDP for March? Blayne, this is Philip. Yeah, you know, we are seeing really you know, strong demand in most of our end markets. If you look at you know, the cellular infrastructure side of the business, what you see is you know, really the deployments moving into you know, the U.S. and into Europe. We are strongly positioned in those segments, and so we're seeing some of those tailwinds. When you look at our defense and aerospace business, again, you know, we continue to see you know, big programs coming in that we're positioned well on. You know, we are excited about what that business looks like going forward. on power, you know, we continue to see, you know, a lot of strength both on the, you know, programmable power management side of the business, but also on the United Silicon Carbide side of the business. You know, we've kind of lumped those two together. You know, we feel that we have a real strong advantage, both from a technology and product side on the United Silicon Carbide side, but also as we put the, you know, silicon side of power and create system-level solutions for our customers, you know, we see, you know, a lot of opportunities for SAM expansion in that market as well. You know, we feel we're positioned well, and we like where we are right now. Yeah, Blayne, I would just add that, as Philip said, the growth is broad-based, and virtually every business line in IDP is up sequentially and year-over-year. The exception is Wi-Fi, and that's related to some of the chipset issues we talked about earlier. We expect that business to pick up in FY 2023. Thank you. We'll take our next question from Gary Mobley with Wells Fargo Securities. Hi, everyone. Thanks for taking my question. Wanted to go back to the next question and double-click on the inventory topic. Are the days of inventory up primarily because of you anticipating some good growth in fiscal year 2023, or is it up in relationship to some of your long-term supply agreements? Maybe you can give us a little more detail on how you plan to roll off that inventory. Sure, Gary. It's not related to the supply agreements. It's a combination of one to support the growth that's in front of us. You know, we've talked about the flagship and mass tier and the success we've had there and the strong, you know, the atypical growth profile you see here in March. So there are absolutely demand factors. You know, there is a demand realignment in China and we've all seen that. We feel great about our position in China. Over time, you know, on the other side of that alignment, we're in a great position, and we've got agreements in place that will support the demand and working down that inventory. We've got a good plan. We've got you know the guidance I've given before on our target 52% gross margin. That is still something we adhere to, and we're working to expand off that. Yeah, and then we'll provide you more guidance in the next earnings call. Okay. As my follow-up, I wanted to ask about some of the emerging revenue opportunities, perhaps on the silicon carbide side. Can you give us a sense of where you may be on an annualized revenue run rate as we perhaps exit fiscal year 2022? And then on ultra-wideband, is there an opportunity here in the automotive end market? I know that hasn't necessarily been a big end market for you, but you know, should we think about UWB as being primarily smartphone centric for Qorvo? Yeah, this is Philip. Yeah, so Gary, I'll take that. In terms of United Silicon Carbide, you know, I don't think we are giving out specific kind of revenue numbers on that business. But I can tell you that the number of opportunities that we see coming in to our sales funnel is impressive. You know, we feel like we have a real significant opportunity there. You know, when you think about the world as we electrify, as we go towards more carbon neutral systems, you know, energy efficiency is one of the key factors that's driving that, right? With that drives this, you know, this power need to look at, you know, compound semi-type solutions, and really that's in our wheelhouse at Qorvo, right? That's what we do. You know, we feel really good about that business. You know, the opportunities continue to scale. onsemi UWB, I'm gonna pass that over maybe to Eric. Yeah, sure. When we did the acquisition of Decawave, I know one of the key markets we talked about was automotive, and that certainly hasn't changed. There's no question that next generation key fobs will be UWB based, and that will, you know, grow throughout the years up to seven UWB points in each car, plus one in each key fob. It's gonna be a great market. In terms of units, of course, you know, it's a couple hundred million a year sort of automotive units. For us, you know, anchoring in the handset is super exciting when you look at the, you know, the 1 to 1.5 billion handsets available and anywhere from three to five accessories for each one, before we even start talking about connected home things. You know, it's going to take some time for a new technology like this to roll out. There's a lot of activity in the standards bodies now. Everybody's on board. It's clearly happening. That's a broad area. We also mentioned one of our strategic highlights was around a module combining our UWB with the Nordic BLE and targeting a completely different segment, which is, you know, sort of enterprise and industrial IoT applications. There's hundreds of use cases for these sorts of devices around the enterprise for asset tracking and also in industrial applications for similarly asset tracking and other things like tags. It's really a broad market in applications, really based on a very, you know, similar radio architecture. There's a lot of leverage in our core technology development in UWB, both in the software and in the hardware. Thank you. We'll now move on to our next question from Edward Snyder with Charter Equity Research. Please go ahead. Thanks a lot. I've got a couple. Mark, it's clear there's a large overshoot on shipments to the Chinese OEMs last year. You guys were shipping everything you could get your hands on, I guess, in March and June, and then we had an overshoot. It was reflected in last quarter's guide and this quarter's inventory. I know you don't have hubbed inventory with any of the Chinese, so your visibility into what's actually happening there is very limited. You've already got a quarter now underneath your belt. Given that one quarter and with the burn rates going on, what you see now with the When do you think you'll get more back to a normal inventory level and your shipments into China will start reflecting really sell out versus, you know, what we've seen so far, which is just they'll take everything they can get? Then, Eric, if I could, given the big changes in Samsung's phone business with Broadcom out now, and their move to modules in the mass tier, can we expect Samsung will break the 10% revenue level for you, for Qorvo this calendar year? As kind of a sub-question, given all these shifts, who do you think you're taking share from, especially in the mass tier, given that was more of a quasi-discrete design, you're gaining there, who do you take it from? I have one for IDP. I'll start, and then Eric can even add more color on the China channel. I think we've got better visibility than you may think, and we're certainly monitoring it very closely. There were actually some positive signs in the December quarter. Sell-through is decent. We've been looking at the channel-end phone inventories, and they're actually very healthy. It's just a matter of some of the components kind of working its way through, and we've got an eye on how that will play out. We're certainly minding the channel and adjusting our own manufacturing as a result. Yeah, we've also got these long-term agreements, and that's, you know, as intended, helpful in managing the process. Yeah, I cannot, you know, overstate how excited we are about the market long term. Yeah, we're optimistic about that growth, the exports that they do, and then and on our position serving it. We'll work through this over the next couple of quarters and be in a, I think, in decent shape by sometime in the summer. Regarding Samsung, it's a broad family of products. As I touched on earlier, there's a lot of BAW content. I think you'll see us kind of starting out in more mass tier and expanding toward flagship as the year progresses, with heavy BAW content. But also like, the power management aspect is also very significant. And antenna tuning, which we've always been quite strong, that'll continue to be strong. And then, Wi-Fi, as we've been mentioning, the chip on board trend. So, you know, I'm not gonna speak specifically to who we're taking share from, but we're. It's not any one thing. It's a broad product portfolio alignment, which has been in the works with Samsung, you know, for some time. It's good to see it finally come to fruition. Do you think you'll break 10% with Samsung this year, calendar year? Yeah. We had 2 10% customers in the quarter, but that's all I'd say. Thank you. We'll now move on to our next question from Ambrish Srivastava with BMO. Hi, Mark. I wanted to come back to the cash flow statement and balance sheet again. Your free cash flow as a percent of sales, and you have spoiled us delivering double-digit. My model almost froze. I had to go back to 2018, when you actually had a single-digit free cash flow to sales number. I get the inventory increase and then payables went down quite a bit as well after shooting up the quarter before. Is that kind of related to the obligations that you talked about. Yes securing supply in advance? I just wanna make sure I understood all the moving parts for free cash flow to sales being 6% odd versus, you know, the double-digit that you've been posting for several quarters. No, that. You've got it, Ambrish. It's as I talked about last quarter, we signed this long-term agreement which had a considerable payment to make, which we made in the December quarter. As you pointed out, there was the increase in payables, which I mentioned last quarter, and then we paid that out in the December quarter. That was disclosed in the 10-Q filing as well. As a number I've noted, our inventories were up. Excluding these two effects, you know, we have what is our normal very strong free cash flow generation. We've talked about, you know, the nature of both of those. I would expect free cash flow this year to still end up, you know, near $900 million, and then I would expect it next year to grow. Got it. I had a quick follow-up on inventory, Mark. I just want to make sure I understood. When you're talking about there's been realignment, we are all aware of that. My head is not in the sand, but I wanna make sure I understand what you're talking about. You're talking about customer change from what was a lot of shipments, well, a big market share at Huawei, and then everybody else was trying to grab that market share. So that's been one shift. The other has also been some sort of, kind of like a bifurcation in low-end versus high-end. Is that what you're referring to, or is this something else? And is there a risk of a write-down coming on the inventory side? Thank you. No. No, no. No, and if there were a risk, we would've written stuff off in the quarter. Our view, and Eric can expand on this, you know. I'll bring it back to our last call. We had a substantial dislocation in supply and created, you know, pockets of components in the supply chain. That's, you know, that's one factor. Then concurrently, you have a demand factor where you have both a realignment amongst OEMs in China and some share shift associated with that. It'll shake itself out here, and it's ongoing. No matter what scenario plays out, we think we're fine. I would say a third factor has been, over the past few months there probably has been some macro effect to end consumer demand and pick up in lockdown. There's probably that factor, though we're not as concerned with that because end phone demand is actually pretty lean. I think, Ambrish, it's just a case of this will settle out. We've got, you know, we've got agreements in place. We've got firm orders. We have line of sight on the inventory working down, and, you know, believe we'll be in a good spot in several months. Got it. Thanks for all the clarifications. Thank you. We'll take our next question from Christopher Rolland with Susquehanna. Hi, guys. Thanks for the question. I think last call you guys mentioned that maybe you were opening up Farmers Branch again. Just wanted to confirm that was happening, that that's ramping and you know, where might utilizations go there as we move through the year? That's a good question, Chris. Of course, we're continuously looking as to whether we, you know, need investment or not. You know, there has been some reduction in loadings 'cause obviously we've got some inventories, and we're rightsizing the factories. In the case of Farmers Branch, yes, we are still planning to turn that on and utilize that in fiscal 2023. Great. Secondly, you know, Qualcomm, I think, has an ultraBAW product coming, maybe working into parts of your market there. I know you guys really haven't seen too much there so far, but have you seen a little bit more over the past few quarters, and would you expect, are you preparing for more competition in 2022? Thanks. Well, we haven't seen a lot, frankly at this point. I can't comment on competitiveness and so forth. I think we're continuing, you know, head down, pushing hard to advance our technology and, you know, already sampling 7 GHz BAW and integrating a lot of it into modules which we're shipping soon. As we've talked about many times, it's not just about what frequency you can get to with the filter, it's about how well you can combine them and working and multiplexing and combining multiple filter technologies together in the same module. You know, there's a lot of complexity going on. It's a very valuable and key part of the communications market. You know, there's gonna be, you know, a lot of people investing in it and trying to develop the capability. Thank you. We'll take our next question from Rajvindra Gill with Needham & Company. Yes, thank you for taking my questions. I appreciate it. The growth margins continue to be resilient in a challenging environment. I think last quarter you mentioned that you were benefiting from premium products, better pricing power and maintaining utilization of your factory network. I'm wondering how to think about margins as you migrate to a better demand-supply dynamic throughout the year. And also, I would love to hear a little bit more about the pricing situation as you kind of move upstream with respect to your products. Yeah, Rajvindra Gill, I'll start. You know, we've been talking about this 52% level for several quarters. You know, GM, gross margin's gonna move around quarter to quarter, of course, based on, you know, customer product mix, business mix, yields, factory loadings, price, and other factors. Yeah, we do believe that the current business set up of the products we've got, our footprint, productivity efforts, and so forth, support this 52% level. We are definitely working to improve that over time. You know, I think, you know, all I can say is we're gonna try and do the same things we've been doing, applying that same discipline of, you know, investing in the technology to maintain leadership, actively managing the portfolio, and producing products where we're valued most. I would add that some of the new areas we've talked about today, power, defense, UWB, they all have favorable gross margin profiles. Yeah, we're driving productivity. That's especially important in this period where there's pockets of inflation. We, you know, the last question about Farmers Branch, we're always looking for ways to make sure we're supporting the business in the most capital efficient way. That should hopefully allow us to sustain and expand from here. Great. For my follow-up, you had mentioned that you expect 5G infrastructure build-outs to, you know, begin to kind of re-accelerate throughout the year outside of China. I wonder if you could elaborate further in terms of what you're seeing specifically, which region. You were very successful in China with the penetration of your GaN base stations and your dominance in GaN technology. I want to get a sense when you're thinking about the build-outs outside of China, how that is affecting your kind of IDP business and kind of your market share position in GaN. Yeah, this is Philip. I'll take that question. You know, when we look at the overall market, you know, this year or, you know, this calendar year, you know, what we see is, you know, kind of China being similar to what it was, you know, in, you know, last calendar year. But really where we see most of the real deployments and growth is in Europe and in America. You know, we've spent, you know, a tremendous amount of time and energy, you know, creating a family of technologies and products that really are kind of optimized, you know, for those markets. You know, we see our GaN technology is, you know, a critical piece to that. Same with kind of our small signal product families that we have. You know, we like how we're positioned. You know, right now, if you were to look at kind of, you know, backlog and where things are in that business, you know, we're excited about that. Hopefully that answers your question, Rajvindra. Thank you. We'll take our next question from Harsh Kumar with Citi. Thank you for taking my questions. Mark, I hate to beat you on the China demand realignment commentary, but when you guided the December quarter last year, you broke out the supply impact as well as the demand impact. My question is for the March quarter guide, are you seeing similar demand or supply impact or no, because the March quarter is in line with what you were thinking last year? Yeah, on our last earnings call, you know, we broke it out with the specificity we could. It is, you know, the March quarter is playing out as we expected. I will say that, you know, there are both supply factors still, there are demand factors still. You know, that balance is probably more equally distributed now than it was then. It was certainly a predominantly supply issue then. We still have both and, you know, it's reflected in our guidance. Great. Another question on supply. If you're expecting supply to improve through the rest of the year, does that lower your competitors' ability to bundle RF frontends to apps processor as the supply eases? I'm not sure there's a direct correlation to that necessarily. I mean, there's you know, there's a lot of things that go into the customer's buying behavior. You know, there are you know, certain times when there are bundling factors, of course. I don't think this is necessarily a main theme of it. I mean, it's a broad market and you know, we're selling across many different basebands. Yeah, it's a bigger picture than that, I think. Thank you. We'll now take a follow-up from Edward Snyder with Charter Equity Research. Thank you very much. I had a question on IDP. I have to say I'm a bit confused by your silicon carbide power business at all. I know you guys acquired UnitedSiC. But maybe you could articulate what the strategy is here. Again, I get, I understand what you're doing with GaN. You're a huge supplier in defense. That's a U.S.-based business really with U.S.-based suppliers. Well, it used to be your biggest competitor, Cree, has kind of dropped by the wayside, Wolfspeed now. But on SiC power, SiC's the other way around at this point. They're about to build and turn on their new New York fab, which will make them the largest silicon carbide device power manufacturer on the face of the Earth and their cost basis is 50% lower than anybody else. You're buying wafers from them, more than likely, maybe one of the folks, and you're gonna pay twice as much as they're paying, and they're addressing this market, on a scale and a cost-wise that even STMicroelectronics and onsemi are gonna have a problem with. Is it that you're selling SiC power into niche markets that wanna diversify away from them? I don't understand the marketing game of this at all, 'cause you're gonna be an under-scale player purchasing materials from the guys who are producing the devices on a scale that you can't compete with. Maybe you can articulate what you think this is gonna do for Qorvo, or how does it fit in with your model in the long term? Thanks. Well, Ed, there's a lot there. They both told you to just go home now. There's a lot there. You can pick and choose. Just pick what you wanna answer in that whole. In five minutes, I don't know if I could, you know, get through all of that, but. I have a follow-up. Oh, geez. you know, Ed, look, I think that, when we look at the business, okay, and we look at it from a capability perspective, you know, what we like about our silicon carbide technology is, one- You know, we have a leadership position in efficiency, you know, in the specific technical, you know, areas that drive that efficiency. I think that's important. I think that capability is why you see, you know, the business having, you know, quite a bit of traction. I mean, you can see in the release there's, you know, announcements about onboard charging wins in automotive, and DC-to-DC. I think the other piece to it is that when you look at the technology that we have, you know, we can generate, you know, about twice the revenue per wafer, silicon carbide wafer than our competition can. Because of that advantage, we feel like we have, you know, the ability to, you know, use a more of a foundry model as opposed to, you know, an in-house model right now. When you look at, you know, specifically the silicon carbide substrate supply, what we see is, you know, more and more, you know, investment in that area and we see more and more, you know, entrants coming into that space, which we think will make that more competitive over time. I mean, those are some of the economic dynamics that we see, okay? I would also say that, again, you know, silicon carbide is in our wheelhouse. You know, we are a compound semiconductor company, right? We have a lot of those relationships. You know, I hear you. You know, I understand your view, but you know, we think there's a real opportunity there for us. The market, let's just talk a little bit about the market. It's a very large market. Even what you may be calling niche, and I would assume maybe you're talking outside of automotive, you know, you look at IT infrastructure, you look at, you know, other areas, you know, it's still a very large opportunity. We feel like we have the opportunity to build a meaningful franchise. Then when you combine that with our programmable power management, where I can build systems, I can put that into module capability, which is at the core of what we do, you know, we feel like we maybe have a better shot at it than you know, you're giving us credit for right now. That's short and sweet and, you know. I guess one last thing. You know, I've been an executive in the power business and analog, and I've been doing this for 25+ years and, you know, I think there's something there. I really do. I'm excited about it, and I think it can be a meaningful franchise for us here at Qorvo. Great. Thanks. Thank you. That does conclude today's question and answer session. I'd like to turn the conference back over to management for any additional or closing remarks. I wanna thank everyone for joining us today. We look forward to speaking with you again at upcoming investor conferences. Thanks again. Hope you have a great night. Thank you. Thank you. That does conclude today's conference. Thank you all for your participation.