Good day, everyone and welcome to the Qorvo Incorporated Q3 2018 Conference Call. Today’s conference is being recorded. At this time I would like to turn the conference over to Mr. Douglas Toledo, Vice President of Investor Relations. Please go ahead, sir.

Thanks, very much, Rebecca. Hello, everyone and welcome to Qorvo’s third quarter fiscal 2018 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 and 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 the 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, qorvo.com under Investors. In fairness to all listeners, we ask that each participant please limit themselves to one question and a follow-up. Sitting with me today are Bob Bruggeworth, President and CEO; Mark Murphy, Chief Financial Officer; Eric Creviston, President of Qorvo’s Mobile Products Group and James Klein, President of Qorvo’s Infrastructure and Defense Products Group as well as other members of Qorvo’s management team. And with that, I will hand the call over to Bob.

Thank you, Doug. Qorvo delivered an exceptional December quarter, with revenue and EPS exceeding our guidance range. In infrastructure and defense, quarterly revenue grew 20% year-over-year to a record $203 million led by strength in defense, IoT and GaN. In mobile products, revenue increased sequentially to $642 million led by a very strong ramp in support of our largest customer. The December quarter played out largely as expected. IDP’s business continued to strengthen, while smartphone ramps were consistent with our expectations. Beginning late in the quarter, demand trends in mobile deteriorated at our largest customer and also in China. This weakness is impacting our near-term expectations and is reflected in our guidance for the March quarter. As we look forward, we expect continued robust growth in IDP in 2018 and in mobile we are gearing up for an aggressive ramp of a custom mid/high-band PAD in the second half of the calendar year. This is the most valuable and highly integrated placement in mobile RF representing what we call the integration hub in the main path of the RF system. This is a significant customer validation of our BAW technology and multiplexing expertise. Coupled with gains in antenna tuning and envelope tracking we expect this to drive another generation of year-over-year growth with these top customers. Across the mobile landscape, leading phone manufacturers and baseband suppliers are adopting more highly integrated mid/high-band architectures. This is increasing the customer demand for high order BAW-based multiplexing from industry leaders like Qorvo and we are migrating a greater percentage of our design resources to higher volume BAW-based RF solutions. To that end, we have sampled a custom mid/high-band PAD to another Tier 1 smart phone customer for our 2019 platform. In addition to these engagements with marquee customers, we have commenced production of…

Thanks, Bob and good afternoon everyone. Qorvo’s revenue for the third quarter was $845 million exceeding the midpoint of our guidance by $5 million. Mobile revenue of $642 million was driven by product launches at our largest customer. IDP revenue of $203 million reflects continued strength in defense, including advanced radars and other electronic warfare products and in connectivity including Wi-Fi and emerging IoT applications. This was the seventh consecutive quarter of double-digit year-over-year growth in IDP. Non-GAAP gross margin in the December quarter was 48%, 50 basis points higher than our guidance, a sequential increase of 60 basis points and a year-over-year increase of 370 basis points. We expect continued progress on gross margins as we optimize our product portfolio and drive additional operational improvements. Operating expenses were $151 million or 17.9% of sales, down $7 million sequentially on ongoing productivity efforts and development program spend timing. We are ahead of schedule with OpEx reductions, but by no means are we letting up on our focus on getting more efficient. We have additional productivity initiatives underway to sharpen R&D spend and lower SG&A. Operating income for the quarter, was $254 million or 30.1% of sales, up 200 basis points sequentially and 480 basis points versus last year. Last year, we committed to achieving quarter in fiscal year ‘18 with an operating margin exceeding 30% and we delivered on that commitment in the December quarter. This is a particularly noteworthy accomplishment when you consider that mobile volumes and fab utilization have fallen short of our expectations this fiscal year. We are pleased that our broad-based efforts are yielding results and intend to continue our disciplined approach to controlling costs and improving margins. On net income, I will start with our GAAP results. In the December quarter, a GAAP loss of…

Thank you. [Operator Instructions] And your first question will come from Krysten Sciacca with Nomura/Instinet.

Congratulations on the quarter. Thanks for letting me ask the question. I just want to clarify one point in particular. So far for the super-PAD did you say that you are sampling at an additional marquee customer?

As far as mid/high band PAD as with one of the bullets in the press release as well, we did begin sampling another Tier 1 customer a well.

Okay, thank you. And then further ramp at your largest customer in the second half of calendar ‘18 do you expect those content gains to be let’s say more or less than what you saw in this past ramp?

This is Eric. I will take that. We are currently projecting we will have the largest actual generation-over-generation content increase we have seen driven by many product categories and then we see tuning continuing to increase, envelope tracking as well as BAW-based product.

Great, thank you.

Thanks, Krysten.

And next we will hear from Bill Peterson with JPMorgan.

This design win is a terrific result after a lot of effort. I guess the question is how should we really think about seasonality, I know it’s difficult to provide out-quarter revenue guidance, but how should we think about seasonality beyond the March quarter with the second half in mind? Thank you.

Yes, Bill, at this point, we are not going to give guidance beyond the March quarter. I don’t think we can make any changes yet about seasonality, because we haven’t gotten customer demand signals yet and we are actually in our plan process at this moment. So we will provide more detail around both fiscal year ‘19 and about seasonality during the May call.

Okay. Let me try different angle, I guess, you mentioned that you expect the China Telecom/Unicom lowering the price points as you should increase carrier aggregation, you talked about the middle of the year. I guess how should we think about tax rates of this and if we consider ETP tuning at ISMs in China, how should we think about your content growth opportunities in China I guess specifically this year?

Yes, this is Eric. I will take that as well. We look at the attach rate of the Band 1/3 cloud plexer to enable carrier aggregation going from about 15% – maybe 15% to 20% as we exited CY17 up to about 50% attach rate based on the guidance of the carriers for any handset over RMB 1,500 to require the capability. So, that’s such a pretty significant step up and gets us back to where we were frankly in 2016 with the attach of that component. And as we look forward as you mentioned, ET is moving into that tier where we are seeing a lot of design work with our customers for our Phase 6 solution. We are the first to market with that solution and ramping into production now. Phase 6 does several things for our customers. It increases the integration level, which speeds their time to market. It also reduces the size by at least 40% and in most cases about 50% of their current design and it increases the output power at the same time enabling Power Class 2. So, we do all of that in fewer placements by integrating the vast majority or in some cases all of the filter content into our two-placement solution that does all that for the front-end. So, we see that integration factor and the Phase 6 opportunity for us is being a very key content for us throughout this year.

Okay. Thanks.

From Raymond James, Chris Caso.

Yes. Thank you. I guess the first question with regard to gross margins and the impact of utilization, given what you are expecting in China as well as the high/mid PAD where do you think you get the utilization exiting this year of the BAW facilities and what impact does that have in the gross margin?

Are you talking this calendar year Chris or are you talking fiscal year?

For the calendar year?

Yes. So we are not going to give specific guidance on gross margin not far out. I will make a few comments on gross margin. This will certainly help the Richardson fab in particular. But I will get to that in a moment. But our December quarter we were up again 50 basis points. So excluding the hurricane effects in the September quarter and we would be five out of our last five gross margin guidance. And if you look at our guides the five previous before five ago, we didn’t do so well. So we have certainly – we have certainly become more predictable and that’s the positive allowing us to get more productivity, better visibility and so forth. We have also had obviously steady progression on gross margin from what was the low in the second quarter of ‘17 of 42.8% to our current guide which is 48% to 48.5%. So we are really back at levels that we were back in fiscal year ‘16. So again undoubtedly we are getting better forecasting and we are clearly getting better on improving the business since we are up 500 basis points from trough to the midpoint of the current guide. All this has been an environment of weak volume, it’s been with the low margin low band PAD and has been candidly in a company that was still working its way through a transition. So if we look where we have been and we think about the progress that we have made, we have great confidence about the gross margin as we look out. Fabs are running exceptionally well. We have got capacity available that we are going to fill. The fabs are competitive and ready for business. The technology investments we have made are allowing us to move into the markets that are most attractive and we are securing wins now. And then you have got a management team that’s absolutely focused on gross margin and free cash flow and exhibiting the right behaviors. So the market of course Chris is going to dictate at the end short-term utilization of the fabs. But we do expect to at least in a quarter touch 50% in fiscal year ‘19, that’s certainly what we are working through as we are building our plan now. And I am confident that we will certainly be above 49% for the year average. And that contemplates Richardson, our largest fab moving up over 80% utilization in the next 6 months as well as increased utilization in gas as I mentioned in my comments and over 80% utilization in our back end operations. The one headwind is what I mentioned during my prepared remarks about our SAW utilization going down. On average fab utilization should be a positive effect going into ‘19.

Okay, that’s very helpful. My follow-up question was actually going to be on SAW and if perhaps you could clarify some of those comments, I mean it sounds like that with the success in BAW there would be a less emphasis in SAW and that’s understandable given the margin structure there, but as we get into the second half of the calendar year, should we expect SAW to actually be down year-on-year where would be some shift from SAW to BAW because of some of these in design engagements or is that just sort of less emphasis from a design win perspective going forward?

Yes. Our current projection would indicate SAW will be down year-over-year in the second half. We are investing in a lot of key technologies in SAW which will help enable many different products that are coming, but with majority of those products that we are going to focus going forward on products that combined BAW with SAW to really make unique product offerings and leverage that asset further.

That’s helpful. Thank you.

Thanks, Chris.

From Longbow Research, Mike Burton.

Hey, guys. Thanks and congrats on the design wins. First, I guess maybe for Eric, could you talk about the China market and maybe inventory levels at the end of 2017, you guys had been a relative gainer as you have got back on track at Huawei. What percent of sales were the China OEMs and how do you expect that to trend in Q1, obviously down, but we saw MediaTek this morning guiding for shipments down about 30%. I am wondering if you kind of subscribe to that sort of that level?

Yes. So, we are doing our best to maintain tight control of the channel inventories. And so we are following the volumes as they come. You see that in our guidance essentially. To answer your question specifically, in the December quarter, the China guys were roughly 20% of our revenue and that’s of course lower than historically. And looking into March, we are consistent with our guide, we are following the directions and taking our judgment to their current plans and trying to make sure that first and foremost we keep the channel tight, so that whenever the end-market recovers we will see that demand immediately.

Okay. And then maybe a two-parter for Mark, just the low band PAD trajectory obviously you have talked about it being down in Q1 and you’ve spoken in the past about being able to migrate to – you are going to migrate to a new low-band PAD with in-source filters. When is the timing of that migration and can you help us size kind of the margin impact for that? And then also the second part is just the shape of CapEx and OpEx going forward, I am just curious if that’s – if you can help us understand that relative to the high-band PAD win and also the potential for a new customer next year? Thanks.

Yes, on low-band PAD, I think all I will say in that is it we have continued to make improvements of the product. There have been some changes in the filter, slight filters required by the customer and that’s helped a bit, but mostly it’s just improved manufacturing efficiencies and improvements in that product over time. Yes, it’s still a net drag on the business, so as it sort of tails off in the portfolio, yes, there is a positive mix effect associated with that and that helps us into margin going forward. As far as the outlook on CapEx, we are making great strides in becoming less capital intensive. We are doing everything we can to leverage the foundry network where we can and then where we have unique device requirements that require our own production. We are being very thoughtful about what we add and of course driving all the productivity programs you have heard before. And that’s helped us achieve this lower CapEx profile as we see going forward. This year will be below 10% of sales CapEx. Next year, we think will probably be below 8% of sales on CapEx. And one example is we are going to be able to increase our BAW capacity 70% from current capacity to fiscal year ‘20 at only about $80 million of spend. So, a lot of positive things there on CapEx, which of course when you combine it with the growth we expect and the margin expansion we see a very strong free cash flow story. Again, we are in the midst of the planning process, Mike, so I am not going to give specific dollar guidance on OpEx, but what I will say is Bob and part of his productivity drive is really working the organization become more efficient on OpEx. And we have seen great progress this year as evidenced by this quarter actually, where we were at 17.9% of sales and really at a $600 million run-rate number. Now of course, you are not forecasting that, But what I will say that in – we are striving to build a plan that’s certainly below 20% of sales on OpEx for not fiscal year ‘19.

Great. Thanks.

Next we will hear from Quinn Bolton with Needham & Company. Your line may be muted, please see.

I am sorry can you hear me?

Yes.

Great. Thanks. Hi guys congratulations on the next December results, wanted to ask a question on your comments about SAW utilization dropping in the second half of calendar ‘18, a read into that that your low band patch share is declining, I mean is there a socket change going on the low band patch site that’s behind that lower SAW utilization? And then I get a follow-up. Thanks.

Yes. Quinn thanks for the question. I think it’s best to say that our utilization is going down. Yes there is some percentage in share shifts in the low band PAD. I think what is important is that as Eric has already mentioned and I commented in my script that we are shifting our resources to what we believe is a more attractive profitable, but in the same time we still see plenty of opportunities to utilize the technologies that we developed in SAW where we can leverage both BAW and SAW. So I think that’s the best way to answer that.

Great. Thanks Bob. And then just a question on Samsung, they tend to have a stronger March quarter obviously, you guys are guiding March down reflecting your largest customer and what you are seeing in China, just wondering if you could give us any sense as you look to the next marquee platform at your large screen customer, what do you see in terms of your content in that ramp as we look in the March?

Yes, this is Eric, I will address that and actually I will talk maybe Huawei at the same time. Throughout last year we had talked about we had gotten a little out of step with Samsung and as well as with Huawei. We began to turn the corner with Huawei in their fall flagship launch. I think that’s clearly demonstrated now. We are also committing to increasing our content from each platform forward with Huawei. So we will have greater content in their spring lunch and even greater in next fall beyond that. So, we have begun the turn with Huawei, but we have also been clear that we don’t expect that to be the case with Samsung in this launch. So the spring cycle for Samsung we are not expecting any growth in content, not expecting much help there. However, second half of this year both in the last year and in their second half flagship launch we do expect to turn the corner and start to see meaningful change in share and particularly large opportunities for Samsung. And in their spring next year launch we did mention we have sampled a second custom mid-high band PAD to know the marquee customers as an example. And I think James would love to talk about Samsung as well.

Yes. I want to talk a little bit, Samsung is becoming a very strong customer for IDP and we mentioned in the press release how we have had a great design win with their remote controls, that’s really with our of the ZigBee, so great win for that organization. And on top of that we are also starting do very well with their infrastructure business. So you are seeing us supply into things like their demonstrations that are going to go into the Olympics next month and also into other 5G trials.

Great. Thank you.

Moving on we have from Edward Snyder with Charter Equity Research.

Thanks a lot. Mark, looking if I could touch on real quick, how should we be thinking about the margin improvement when it comes to your low band PAD over one of the old one, are you talking hundreds or thousands of bps or is there even a new one on the horizon in terms of production or has most of that being coming from peeling off of the old one. And then Eric you mentioned you called out ET a couple of times as an area of growth this year, is that just more OEMs adopting ET or spreading it to 4 months, are you starting to see or expecting to see some demand for more ET up from carrier aggregation in production this year? And if I could maybe James, 802.11ax appears to have some fits and starts in the handset side of the business on your side are you seeing this coming in size of next year or so, was it just beginning of where do you stand on the ax ramp? Thanks guys.

James and I will let James go first.

Yes. We will go first on ax, so we are seeing that ramp I believe this year. We already have the products that are going out now. Standard is not released, but the products that are in development to support that standard are in development now. The pullout of the products that we released last year, were in support of start of the evolution towards that. So, we are doing very well in AC today and we think we are positioned very well for the 8x ramp is going to happen during this calendar year.

Yes. Regarding envelope tracking, the market there continues to be very exciting. It’s enabling many things not just lower current consumption, but also higher output power in many markets as we talked about as you can imagine content increasing due to performance improvements, also the dual uplink when we get to that point will require additional envelope tracking content. So, we are seeing content increases with the OEMs and baseband partners we are working with now, but in addition to that, we are engaging quite meaningfully with the new baseband partners, which will add potential revenues this calendar year.

Yes, Ed, it’s Mark. On the low band PAD between versions we have now there is between 5 and 10 points margin difference, but as we have said even the improved one is still well below the mobile average margin. And these low band PADs are going to become a less important part of the portfolio going forward. I think we are going to be as Eric said we have a very capable SAW design team outstanding technology. We have proven our ability to compete in the most difficult low band PAD placements and ramp at the highest volumes with the most difficult customers. So, it’s not a case of not being able to do it, it’s a case of where do we want to spend our time and it’s really about for us with this confirmation of our technology on BAW ball as it relates to mid/high band really focusing resources there. And I think it’s important to note that our revenue mix over time is pretty dramatic and its helping us drive our margins as we look out. So, in this year, it will be less than 25% of mobile’s portfolio will be BAW related revenue. Next year, fiscal year ‘19, we view that being over 30%, in fiscal year ‘20 it’s over 40% and in fiscal year ‘21 it’s nearly half the mobile business is around BAW related opportunities, some of which will require the SAW filter content as well. So, I think that’s the story today as aggressive portfolio management.

Just a quick follow-up, I am a little confused, Mark, because the SAW comes out of Florida and that’s not a BAW fab which you saw there. You started a SAW fab in North Carolina and all your BAW comes out of Richardson and then you got Farmers Branch as a backup. So, I know we will be talking about it’s kind of an either/or, so are you saying you are putting BAW capacity into Florida and what does that mean for Farmers Branch, because you haven’t really started production there?

No, Ed. Just to be clear and try to make it clear in the comments, we will have our utilization and our SAW capacity will go down and it will be a headwind in fiscal year ‘19. That is what we are currently planning and we are – we will plan to fill the capacity that we have over time with more selective SAW opportunities.

But to be clear, our BAW production will be in Richardson as well as Farmers Branch in the future.

And from Piper Jaffray, we will hear from Harsh Kumar.

Yes, hey, guys. Great job on free cash flow on meeting your gross margin goals. Quick question, Bob, if I go back to the December quarter, could you give us a sense of magnitude of – sorry the March guide, can you give us a sense of magnitude between your largest customer and the ramp and all the public stuff there. That’s been talked about in China, what were the factors? And then second question as my follow-up was the super PAD or the mid/high PAD that you are talking about, is this additional TRAM, because there is some confusion about whether it’s brand new content or it replaces some of the things, maybe you could just explain or shed some color on it and if you can maybe ASP if possible?

Harsh, I want to make sure I understood your first question in our March guide, December results yet. Yes, I think it’s safe to say that it’s our largest customer along with China. There has been a lot of things in the press as you have already reported out there. I think we wanted to make sure as you understood how much it impacted us since many of our customers have reported, I think it’s best we not get into a lot of details, but it’s primarily our largest customer in China is why we are guiding down in March. IDP is flat to up slightly in the single-digits, but IDP is continuing to do well just like last quarter. Eric, you want to take the TAM question?

Yes. I’ll try Harsh, not exactly sure how to answer the question, it’s not brand new TAM for the market, it’s a particular function within advanced smart phones that has grown pretty dramatically in terms of capability and content generation over generation and we believe it will continue. We mentioned calling it the integration hub. It’s got essentially all of the main path mid and high-band functions within it and we see over time how it can grow and actually take over other mid and high-band functions, for example, in the diversity path. So, it’s a great deal high-value, very high performance sort of heartbeat of the modem.

Got it, thanks. Thank you.

From Bank of America, Vivek Arya.

Thank you for taking my question. What is the sustainability level of maintaining the socket in future years, because some of this content was with the different suppliers, now it’s flipping over to you guys, what were the factors behind the win and then importantly what is the visibility in maintaining this content as you go out in time?

Vivek, let me first say, it’s nice that we are able to demonstrate the capabilities. Second, as you well know, not all funds are created equally and utilized the same architectures. So, I want to take a little bit issue with you on that. What I can say is yes, we are working on future generations and more importantly we are also working on these opportunities at other customers. So, I do believe we are at the beginning of the growth here. I think as we said all along when it was just a single BAW filter or few BAW filters in a module, we were able to compete when things got to higher order multiplexing, yes, we were behind and we talked over the last several quarters about how we have to first improve the resonator improvement performance, then work on how we can design multiplexers and then how we can put multiple multiplexers in a module along with PAs and switches what have you. I think what’s important is we now have demonstrated that capability. We are in the game and it’s our belief that we are going to be able to continue for multiple generations and more importantly of multiple customers.

Got it. Very helpful, Bob. And as my follow-up if you look back at the low band PAD example, there were some initial growing pain from manufacturing and a gross margin perspective. Obviously, this is a very different product, but I am just curious to know, what’s your level of confidence in yield and margins as I imagine this is a significantly more complex product than low-band PAD?

Yes, fair point. I mean, it is a very complex product. However, the process itself has been very well rung out as you can imagine. We did have a very high volume ramp of the high-intensity BAW content product a couple of years ago that went incredibly smoothly and very, very well. So far, our 8-inch wafers in BAW are yielding at least as good as the 6-inch ones were. The entire manufacturing line seems to be running very well. We are already running quite high volume samples of the product to prove out manufacturing variances with credit quality issues and so forth. So, we are doing everything we can to assure smooth ramp. There is no recent belief it won’t go very well.

Got it, thanks and congratulations on these sockets.

Thank you.

Thanks, Vivek.

Next, we’ll hear from Craig Hettenbach with Morgan Stanley.

Yes, thank you. Just following up on the comments of Huawei in the fall in terms of regaining some momentum, any thoughts as you kind of transitioned into the spring in terms of do you see carry through there or how are you thinking about Huawei for 2018?

Yes. I mentioned earlier that we turned the corner on the fall 2017 flagship. We have clear visibility into increasing content on the spring flagship launch. And we are very excited about the engagement so far for the next fall flagship launch, but we believe we have the capability of significant share gains there as well.

Got it, thanks. And then just a follow-up on the super PAD just given the confidence in terms of the ramp in the second half, is there anyway for you to gauge in terms of relative spread of that business for you versus what’s available or any of the context in terms of how you viewed the opportunity into the back half?

It’s a great opportunity. It’s not many people are able to pull off this way of sophistication and this level of performance and be able to manufacture in high volume and high yields. I think we are seeing a lot of customer for this type of product. Now that we have demonstrated the performance ability and going forward, I think just to add to what Bob said earlier, we see a lot of reasons and ways for us to differentiate the capability as power levels go up. We have a lot of power handling capability in our filter technology and so we are well aligned I think with the future architectures.

Got it. And then I am sorry if I could just slip one more in, in terms of how you will get the percentage of customers, so for the December quarter what’s your largest custom in any of the 10%?

There is one 10% customer, Craig.

And the next question will come from Toshiya Hari with Goldman Sachs.

Great, thanks for taking the question and congrats on the win. You guys talked about design wins and IDP being up 40% year-over-year in the quarter. Can you maybe provide some color there if you could point to one or two or three key contributors there from an end market or end product perspective that will be helpful? Then I have a follow-up.

Okay, thanks. So as you said really strong design win again this quarter, 40% year-over-year and really the same story is our revenue growth led by defense and IoT, strong design wins combined with the funnel really gives us pretty bullish outlook for the business for future growth. Couple of specific examples, are things that we talked about in the press release you saw our design win with Samsung on TVs and so that’s a nice future growth prospect for our low-power wireless business. And then we have also had a string of nice design wins inside the Wi-Fi business as well.

Great, thank you. And then the second one is for Mark, clearly, you guys are doing a great job in improving free cash flow here and going forward, how should we think about capital allocation over the next couple of years in terms of how you guys prioritize investments versus capital return and perhaps M&A? Thank you.

Yes, you are right. As evidenced in the December quarter, the guide in March and then the outlook for ‘18 is the free cash flow generation has been very strong and we expect it to continue. We have been clear that we intend to maintain a 1.5x debt to EBITDA ratio. So, we are currently fine there. We are actually under that. So, no need to pay down debt possibly take-out the 23 notes in this calendar year for some lower cost financing, but other than that, we would like to sustain those levels of leverage. So with that and with the greater flexibility on cash, with the new tax law, we have got both significant balance sheet flexibility and capacity. We have been clear that our first priority is to invest in the business, which we have been doing. And we believe we are going to be a lot less capital intensive going forward. So, that frees up even more of its operating cash flow to be fall down into free cash flow and then we will look at M&A activity. And I am really excited about what James has done with the IDP business, lot of growth factors in that business, so certainly keen on bolt-ons that are where we are focused and so always looking at opportunities in James’ business to bulk up and diversify core of overall. And then to the extent, our leverage is okay and there is no immediate acquisition, then we will return cash to shareholders.

Thank you.

From Citigroup, Atif Malik.

Hi, thanks for taking my question. If I look at the American smartphone maker, the number of models or SKUs, they are putting out are doubling this year from our 4 models versus 2 last year. So when I look at your content being up over last year, this year how should we think about the unit impact that they are more models and from the volume diversification and maybe you can help out just providing the top line growth expectations for this year and I have a follow-up?

I am really sorry, but any future predictions that our largest customer architectures number of phones etcetera. I am sorry we are going to stay away from that. I am sorry we can’t help you with that, maybe you can ask them tomorrow.

Sure. Just RF top line growth the market growth 10% to 15%, are you expecting your top line to outperform?

Yes. We are still looking at the long-term RF market as 10% to 15% opportunity in mobile due to all the drivers that we have spoken about many times, really driven by the demand for mobile data. So we are thinking this calendar year obviously off to bit of a slow start and I think closer to the low end of that in terms of total market. And in terms of our own growth we are committed to growing at or ahead of our market while expanding gross margin and really focusing on cash flow as we go.

Great and then follow-up.

I am going to jump in for IDP, so we will have another 20% growth year as we close out FY ‘18 with strength in IoT and defense. Again, we are going to stay focused on our high growth markets. We model those underlying markets to grow at an average of 10% to 15% as well. And I expect it will grow at or greater than those growth rates.

Great. And then the follow-up, I mean Qualcomm has announced a memorandum of understanding with a major Chinese smartphone manufacturers Oppo and Vivo on the RF front and can you just talk about the impact of this on your China opportunity? Thank you.

Yes. We don’t see any obvious impact certainly nothing immediate and obviously Qualcomm is already a supplier into that market with various filters and ET and so forth. So like we understand the motivation for the announcement, we don’t think it necessarily has any implications on us.

And next we will hear from Blayne Curtis of Barclays.

Hi, guys. Thanks for taking my question. Just want to ask you on this mid/high band PAD, just if you can just walk us through when this got determined and then just try to get your visibility give a very specific free cash flow number, just if you can think about any sensitivities to that, obviously and other generations mix is mattered in such, kind of just any indications of what your visibility is and what the put factors could be in terms of what that and when could be?

Yes. I don’t think we can really give any more detail around the mid/high band PAD other than just say we are progressing forward. It’s on track. The team has done just a fantastic job developing an incredibly competitive product and we can’t really get into anymore detail.

And then just I wanted to go back to gross margin and BAW utilization, it’s a nice result to see gross margin up a little with the top line coming down, are you starting to build filters ahead of this win for the second half?

No Blayne, we are not. We will be soon not now.

Okay.

And that does conclude today’s question-and-answer session. I would now like to turn the conference over to management for any additional or closing remarks.

I want to thank everyone for attending tonight’s call. We look forward to meeting many of you at upcoming conferences. And we ask that you save the date of May 23 for 2018 Investor Day. Thanks again and good night.

Ladies and gentlemen that does conclude today’s presentation. We do thank everyone for your participation and you may now disconnect.