Greetings, and welcome to the Qorvo Incorporated Q4 2023 Conference Call. At this time, all participants are in a listen-only mode. A brief question-and-answer session will follow the formal presentation. [Operator Instructions] As a reminder, this conference is being recorded. It is now my pleasure to introduce your host, Douglas DeLieto, VP, Investor Relations. Thank you. You may begin.

Thanks very much. Hello, everybody, and welcome to Qorvo’s fiscal 2023 fourth quarter 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 provided supplemental information to enable investors to perform additional comparisons of operating results and to analyze financial performance without the impact of certain noncash 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 a complete reconciliation of GAAP to non-GAAP financial measures, please refer to our earnings release issued earlier today available on our Investor Relations website at ir.qorvo.com under Financial Releases. Joining us today are Bob Bruggeworth, President and CEO; Grant Brown, CFO; Dave Fullwood, Senior Vice President of Sales and Marketing; and other members of Qorvo’s management team. And with that, I’ll turn the call over to Bob.

Thanks, Doug, and welcome, everyone, to our call. Qorvo’s fourth quarter results were consistent with the outlook provided during our February 1st earnings call. Looking at our end markets, the quarter played out largely as expected, with lower end market demand in some markets, primarily those with consumer exposure and channel inventory consumption with the majority of that being in the Android ecosystem. We made significant progress clearing channel inventory. At the same time, we continued to introduce new products and secure new designs, positioning Qorvo to best support our customers as end markets recover. We are seeing increased strength in customer design activity across our businesses, and we are confident in our ability to grow. In High-Performance Analog, we enjoyed relative strength in power devices and defense markets, offset by our management markets with consumer exposure and inventory digestion at infrastructure OEM. We continue to enjoy broad-based multiyear design win activity that we see contributing to long-term growth. In our Connectivity and Sensors Group, relative stability in automotive during the quarter was offset by continued inventory draw-downs and weak end market demand for Wi-Fi enabled products and cellular IoT. Design activity was strong across a variety of applications, including smart home, precision location, indoor navigation, Automotive Connectivity, automotive smart interiors and enhanced human machine interfaces. In Advanced Cellular, total Android revenue was up sequentially on the strength of a large customer flagship ramp with record Qorvo content. We believe March was a low point for China-based Android quarterly revenue, and we expect total Android revenue will grow sequentially in June, while channel inventories continue to be consumed. Design activity during the quarter continued to be favorable across all leading smartphone OEMs. Now, let’s turn to some quarterly highlights. In High-Performance Analog, Qorvo was selected by an industry leader to…

Thanks, Bob, and good afternoon, everyone. As a reminder, our references today will be to our three operating segments: High-Performance Analog or HPA, Connectivity and Sensors Group or CSG, and Advanced Cellular Group or ACG. In our upcoming 10-K, we will provide historical financial information that reflects these operating segments. I’ll now turn to our latest quarterly results. Revenue for the quarter was $633 million. Non-GAAP gross margin was 41.3%. And non-GAAP EPS was $0.26. Relative to our expectations as provided on our February earnings call, results exceeded the midpoint of guidance, despite a weak demand environment and channel inventory reduction efforts. As considered in our fourth quarter guidance, we held factory production at characteristically low volumes, which created underutilization impacts that negatively affected margins. On a non-GAAP basis, gross margin of 41.3% improved sequentially, given a modest increase in factory utilization. Charges related to low factory utilization continued to weigh on margins on a year-over-year basis. Non-GAAP operating expenses in the quarter were $227 million. Consistent with our expectations, OpEx was up sequentially given the timing of seasonal employee-related expenses such as payroll taxes, the timing of vacation accruals and other items. In absolute dollar terms by functional area, the sequential increase was principally driven by R&D as we support our customers and invest in future growth opportunities. In total, non-GAAP operating income in the quarter was $34 million or 5% of sales. Breaking out operating margin by each segment, ACG was 14%, HPA was 13% and CSG was negative 51%. During the quarter, Qorvo Biotechnologies reduced CSG operating income by approximately $11 million. As a reminder, we are currently in the process of seeking strategic alternatives for this business. Non-GAAP income was $26 million, representing diluted earnings per share of $0.26. Fiscal Q4 GAAP results were impacted by…

[Operator Instructions] Our first question comes from Toshiya Hari with Goldman Sachs.

I guess my first question, hoping you could talk a little bit about full year ‘24 revenue. Grant, you gave good color on gross margin and OpEx as well. But how are you thinking about the top line in fiscal ‘24? And if you can kind of provide context around or color around the three segments, that would be super helpful. And then I have a follow-up.

Thanks, Toshiya. I appreciate the question. This is Grant. In terms of the full year fiscal ‘24 guidance, based on our current view and barring any macroeconomic deterioration, right, we’re not forecasting a significant jump in handset unit sell-through. In fact, we actually believe smartphones to be down year-over-year, but 5G phones to be up in the 5% to 10% range. So, that underpins our overall fiscal ‘24 view for ACG. We do expect some growth in HPA and CSG as well, especially as the year progresses. But generally speaking, not a terribly aggressive back half of the year. That said, just walking through the quarters, margin will follow mix, as I pointed out in my prepared remarks. Although there is no change to our view of returning to 50% in the gross margin line, it’s unlikely in ‘24. If I take it quarter-by-quarter beyond the June quarter guidance, our fiscal Q2 in September, we would expect revenue to be up approximately 50% sequentially. Again, this is driven by strong content gains and to a large seasonal ramp. Gross margin will also be up in the neighborhood of approximately 400 basis points quarter-on-quarter as mix begins to favor some newer products, which are less burdened by those higher unit costs associated with underutilization. In the December quarter, our fiscal Q3, we expect revenue to be approximately flat and continuing off of September. Gross margin will be down 100 to 150 basis points as utilization begins to ramp down following that large seasonal ramp and mix begins to modestly shift to some of that higher cost inventory. And finally, in the March quarter, our fiscal Q4 of calendar year 2024, we expect Android to be a higher percent of our mix, but decline less than might be historic seasonality due to a clean channel and returning to shipping to end demand. However, gross margin will be down 200 to 300 basis points quarter-on-quarter as mix reflects that higher cost inventory. As I mentioned in the prepared remarks, beyond June, I gave some color around OpEx for the year, which would exclude Bio in the $240 million to $245 million per quarter, with some of the variability there related to product development spend and other items. Generally speaking, we have a good degree of confidence in content for our September period. And then as we clean the channel in the Android ecosystem in ACG, we feel comfortable of returning to shipping to end market demand. Tax rate is probably in that 13% to 15% range, consistent with the fiscal ‘23. And we believe share count will be approximately 100 million shares or less.

Thank you. Our next question comes from Gary Mobley with Wells Fargo Securities.

Grant, thanks for that very explicit fiscal year ‘24 revenue guide. It’s quite helpful. But I wanted to ask about something one of your competitors was talking about this evening. That is some subseasonal shipments to their largest customer, I presume Apple, their modem-only customer. I’m wondering if that factors into your guidance or is factored into your guidance, what maybe some of the undercurrents going on there, how that made impact to you from a competitive standpoint or just from a customer-specific standpoint?

Hi. This is Bob. Gary, thanks for the question. And as you know, we don’t normally talk a lot about our largest customer. I think what I can say is ACG will be down quarter-over-quarter. So we are expecting from a smartphone revenue to be down. And historically, it is a lower quarter for our largest customer. So, I don’t know why -- whoever said whatever you just said. But I think we have a real good handle on the market. We talk a lot about our model and how things work. So, we feel good about what we’ve said for sure, no doubt.

Okay. Do you mind if I ask a follow-up?

Absolutely. Go ahead, Gary.

All right. So I guess the $64,000 question is what will the new normal look like with your Android customers, once they’re through draining their excess inventory? What’s your best feel based on design win traction? Do you think you can achieve a new revenue high at some point in the future in your Android customer base specifically?

Gary, thanks for the question. And as you pointed out, always forecasting the future is quite difficult. Here’s what I do know. If we go back and look at where we’re gaining share and what we’ve been talking about, the great work we’ve done in the Android ecosystem, whether that’s Samsung and Google and already what we believe we’ve started to win in ‘24. And as you know, what we’ve been facing are these headwinds with not shipping up the demand and reducing the inventories that Grant went through, the 20% last quarter -- or two quarters ago, 25% last quarter that. As that comes and we continue to gain share there. I believe we can get back there or better. No doubt about it. But again, you have to forecast our largest customers done quite well in gaining share in some of their markets. So, the good news is we’re positioned, and I think this is what’s important. We’re the only strategic supplier of the top six Android manufacturers, and we’ve got a great business that we’re growing with our largest customer. So, when we look at it from that perspective, what we’re convinced is we can continue to grow.

Our next question comes from Vivek Arya from Bank of America.

Bob, I’m curious, what do you think is the visibility of kind of retaining this new content over the next several years? Because customers in the market have a habit of making different architecture decisions every year. So, as you start ramping this new content, how do you think you are able to sustain it over the next few years?

Yes. I think what’s interesting, Vivek, is, I mean, over time, we’ve done a pretty good job of holding in the areas that we’re winning nice share and growing, and as they add content in those areas, we’ve done well. So as we look out, we feel pretty good about things. And I even commented and Grant did as well that we believe we can continue to grow content at our largest customer, whether it be BAW-based or our discrete components that we sell there. So, we feel good about the outlook there for multiple years.

And for my follow-up, do you think this was a competitive win, or do you think this is a new technology that customers are adding in this area? So, is this expanding the pie, or do you think this is kind of a competitive win from something they might have been using from somebody else before?

Yes. I think I answered this question last quarter, I believe, on a similar topic, and it was both. We’re gaining content through both share gains as well as, to your point, making the pie bigger. Both.

Our next question comes from Karl Ackerman with BNP.

I guess, based on your comments on channel inventory realignment for Android, why wouldn’t channel inventory be aligned with sell-through by the end of the June quarter, given the further improvements that you’re seeing? And as you address that question, how would you characterize the inventory balances and timing of reaching normalized inventory in your infrastructure and IoT businesses?

Yes. This is Dave. I’ll take that question. So in the Android ecosystem, you’ve got to remember, we ship a lot of products into a lot of different customers. So, it all depends on their program ramps, how well their phones sell through relative to their expectations. So, in some cases, you’re right, we’re going to be in pretty good shape by the end of the June quarter. In other cases, it will probably take a little longer, depending on the customer and their business. So -- but as Grant said, by the second half of the year, we definitely see the Android ecosystem. We should be clear of all the channel inventory and back to shipping to true customer demand. Base station is going to take a little longer. I think some of those customers built up more inventory during the tight supply conditions of last year. And so it’s just going to take some of those customers longer to burn that off. So, we see that probably taking through this calendar year and into the early part of next year.

Hey Karl, this is Grant. Let me jump in there. And maybe if I take it up a level. Our view on channel inventories is incorporated in our guide. So, our 50% increase in the September quarter is predicated largely on content gains. Sequentially, we would expect the channel to begin clearing and us to begin shipping to more normalized demand later in our fiscal year. Again, it doesn’t incorporate anything aggressive in terms of unit growth. This would be simply a return to what could be considered somewhat normal, and that would be incorporated in our guide. So, you can make at least the quantification of it based on that.

Our next question comes from Edward Snyder, Charter Equity.

You guys seem very confident about gains in the fall. Bob you said both share gains and new content. Maybe we do a little bit further down to the share gains aspect. Is this areas that you’ve not before because you guys tend to focus on specific areas, and there have been some kind of back and forth in a couple of slots, or is it going to be something completely new? And then, you mentioned kind of an all-in-one, mid-high band, DRx, et cetera. Watching that -- the channel has been looking at that for some time, it’s been attempted in the past, but there’s too constrained. It sounds like more Android guys are open to that. Question there is, all in one -- it gives you more defensible position because you’re one of the few companies that have actually built an all-in-one, but doesn’t it also compress the total ASP or the total revenue available versus selling separate modules? Can you give us a feeling on how that tradeoff works? And then, I had a follow-up, please.

Yes. Thanks, Ed. And as you know, for our largest customer, we won’t talk about any future architectures, but I’m sure once you turn down the phones, you’ll see where we want. And as I said, we’re very confident in our ability to continue to grow there. And Dave, do you want to take out of the work that we’re doing there? Second part of his question.

Yes. Ed, you referred to it as an all-in-one. And what we talked about on the bullet there was a solution that combines the mid-high-band plus the diversity receive. So that diversity receive, that’s all new content for us. We don’t traditionally service that part of the phone. But in general, we’re supporting our customers, I think, with a very high performance, small size is what they’re looking for. So that’s creating a lot of value as well. So we don’t see it as an ASP issue. It’s a very high-performance small-sized solution that’s going to drive.

Great. And then, if I could, you took another charge on the silicon supply agreement. I understand things are slow here. On my calculations, you probably have what you’ve got maybe $60 million to $70 million left on that. Any feelings about how that will play out? I mean, you used your deposit to offset the cash cost this quarter. Will that continue if you’re underpurchasing from that supplier? I’m just trying to get a feel for how that plays out the next several quarters.

Sure, Ed. This is Grant. I’ll take the question. Quarter-on-quarter at a high level, our revenue outlook for fiscal ‘24 hasn’t changed. If anything, it’s actually improved. What has changed would be our current forecast of mix over the out years in that contract, right? As you understand, wafers aren’t fungible, once they’ve been fabricated and our demand profile is complex. The supply agreement covers multiple products, technologies, customers across multiple years. So, there’s a significant mix impact. Furthermore, we can’t order wafers for products that haven’t been defined yet. So there’s a timing element as well. But since we have to place those well in advance, we have to make sure we manage our inventory accordingly. And we’re comfortable with our current inventory based on forecasted demand. So, we’re applying our prepaid deposit, as you mentioned, to the wafers that we don’t believe we’d ultimately need. And we know there’d be continued variability in the mix over the remaining life of the agreement. It could be better, it could be worse. But this is something we analyze each quarter and we’re continuing to work with the supplier in that case to stay aligned.

Our next question comes from Matt Ramsay with Cowen & Company.

Obviously, really appreciative of all the additional fiscal ‘24 detail and guidance color, and I know there’s content things that are happening. But I guess I just want to think about philosophically right now, giving all that additional detail and guidance on a per quarter basis all the way through the fiscal year. I mean, we -- a lot of us are listening to MediaTek commentary out of Asia. Just got off the Qualcomm call listening to their comments, where, certainly, it seems like a lot more uncertainty in the handset market all the way around at your largest customer in terms of volumes and in terms of the market recovery in China. So I guess the question I have is really just about the choice to give all that granular detail right now through the next four quarters and the level of confidence sort of underpinning those estimates, just given all that’s going on in the macro despite the content gains you have. Thanks.

Yes. Sure, Matt. This is Grant. Let me take the question. First off, we usually give some color around the forward fiscal year as we start it. So it’s something that we do as a matter of practice. I think it’s extremely helpful, in this case, given the volatility in the market. So I hope that it’s helpful for you as you’re putting your models together. In terms of the quarter-by-quarter guidance, it’s so specific to the margin profile given the mix of products and the inventory balances we’re carrying, that I wanted to make sure that we were upfront and helping people understand the margin is going to follow that mix and to a degree the utilization associated with those customer ramps. So, it’s important to understand that it will vary on a quarter-by-quarter basis. So, I wanted to make sure that we gave as much color as we could there. Underpinning our overall view, again, is nothing overly aggressive from a recovery or a step function jump in handset unit sales. So, I don’t want to be overly conservative, but there’s nothing aggressive there. As we’ve said, we’re really looking to just clear the channel inventory. We’ve been working aggressively to do so. And I think we’re making a lot of progress there. As we return to normal in the channel later in our fiscal year, we should see some incremental improvement just simply being able to shift to what would be considered end market demand.

As my follow-up, it’s great to see the inventory in Android coming down. I think you guys mentioned 20% reduction last quarter and then another 25% reduction now. So maybe just could you level set us on an absolute dollar terms or maybe a unit terms of where you see the inventory that needs to still be worked through in the Android community or how much of a drag is it still for another couple of quarters? If there’s any kind of quantification there, that would be helpful as we think about maybe modeling beyond the inventory burn over the next couple of quarters? Thanks.

Matt, I’ll make a couple of comments and then turn it over to Dave. But we really don’t want to get into giving dollars and units and all that because it moves around based on future demand. I think what we can say is that we’re going to continue to reduce the channel inventory. So, we have a ways to go. And what we said was we’ll reduce it this quarter and probably continue to reduce in September. It’s probably going to take till December on the overall channel inventories. And I think we were one of the first saying, hey, we were going to do this, to your point. And I can’t speak for the others that you’re listening to, but we started a throttle back on this a long time ago and others are just seeing it. I also think our lead times are much shorter than theirs, which is why we saw this before they did and saw now coming back differently. Coming back in a sense, not the market’s coming back, that we’ve made significant progress on reducing the inventories in the channel. So, the headwinds are subsiding and slight tailwinds are going to be behind us as we start shipping into the end demand, even though it’s significantly lower than what we saw a year ago. So, I think I captured that. Dave, if you want to add any color to that, feel free.

No, I think they’re all good comments, Bob. And we did see that the Android sales, we think that bottomed in December and our sales into China bottomed in March. And so, as Bob said, we’ve still got some work to do to clear that inventory in the next couple of quarters, but we do see that improving already. Bookings are up. Customer demand is coming back. And so, it’s only a matter time at this point.

The next question comes from Ambrish Srivastava with BMO Capital.

I actually had -- Matt asked a good question, just simply along those lines. On the gross margin side, Grant, is that largely a factor of utilization? Could you please quantify for us because -- and it’s not under your watch, but gross margin performance has been pretty volatile. So, just help us understand, is utilization at its lowest ever or in the recent past? And so, is that the biggest driving factor that gives you the confidence on the gross margin side?

Sure, Ambrish. This is Grant. I’ll take the question. Yes, by far, in the Pareto, underutilization is the largest item. I think last quarter, we quoted over 900 basis points, and it’s -- in this Q4 period just ended, it was approximately 1,000 basis points. So very consistent headwind there from an underutilization standpoint, again, the largest factor. That underutilization plays into higher unit costs that we’re carrying for the products that we have in inventory. As those work their way through the P&L, be it COGS, you’re going to see that continued pressure from underutilization going forward for some period of time, which was the comments we made last quarter as we began to talk to fiscal ‘24 and reinforced by my guidance today. So, underutilization, to your point, is by far the largest item. The next item, which I’ve commented again on before is the headwind associated with inflation. We’re seeing in the neighborhood of 80 basis points, maybe 100 basis points there. So, a distant second to underutilization.

Okay. Super helpful. And we all appreciate the details. Just real quick on the assumptions for the plus 50% Q-over-Q growth. Is that largely inventory normalizing -- because you pointed out that demand continues to be uncertain. Is that largely driven by some sense of normalization on the Android side and then the second factor being the content gains at your large customers? Is that the right way to think about it?

I would turn that around. Very little expectation of the channel clearing in time for the September quarter, very much dependent on content gains and a large seasonal ramp.

The next question comes from Ruben Roy with Stifel.

Grant, I wanted to just talk a little bit about HPA and CSG in terms of how you’re seeing the rest of the year play out. You mentioned that you’re not very aggressive, but you do think there’s going to be some growth progressing through the year. So, I wonder if you could talk a little bit about the pricing environment in those markets. There’s been a lot of discussion around pricing, when things were tight last year and how you’re thinking about that as we flow through this year? And then also if you could just comment on where we are in inventory and when you think that normalizes when we get back to sort of your longer term kind of growth targets for those two businesses. That would be great.

Thanks for the question. I’ll take the first part. I’ll let Dave comment on pricing. In terms of our HPA and CSG businesses, we would expect to see strength in defense and power devices within our HPA business that will grow over the course of the year. And then in our CSG business, we’ll see growth in Wi-Fi business and then the other connectivity elements, including UWB. So a strong sense and confidence on those businesses given where they’re standing today and the growth trajectory over the year. Dave, if you don’t mind comment on pricing.

Yes. I mean certainly, the pricing environment that you referred to a year or two ago is a little different now, but we don’t see anything out of normal from what we see in the market. And we’re pretty excited about in 5G entry. I think Bob mentioned that only 40% of Android phones last year had converted to 5G. So, we still got a long way to go there. We see that growing at double digits for the next several years. And that’s all new content for us because we really haven’t participated in the 4G entry space for many years. So, as customers start to migrate more and more of their portfolio to 5G, that’s all new opportunity for us. So, we’re pretty excited about that growth opportunity as well.

Ruben, maybe I’ll give you just a little bit more color here on the segment revenues in Q4, and then I’ll compare it to a year ago, just for reference. HPA in Q4 was $133 million in revenue, CSG was $82 million in revenue and ACG was $418 million. If you look back one year at the March quarter in our fiscal ‘22, HPA was $211 million, CSG was $179 million and ACG was $777 million. So as we get back to those levels of growth we would expect over time, we should see some forward progress throughout the fiscal ‘24 year.

That’s great. Thanks for that perspective, Grant. I appreciate the breakout for Q4 before the K came out. If I could, just really quickly, Bob, on -- I guess, following up to Ed’s question on ASP. With all the content kind of moving up, to kind of the BAW filter content in one of your placements, is $5 to $7 still the right way to think about kind of the ASPs in a typical 5G handset or do you think at some point we start to push that higher with the value being added?

Yes. I think your number is probably on the low side. If we look at the average smartphone, it’s much higher than that. But we see that pretty stable over time. I mean, of course, there’s going to be ASP erosion, but the conversion from 4G to 5G is going to be a big driver to offset that. And there’s also new content. Wi-Fi 7 is going to add new content. We talked about our BAW filters there, but also as you look backwards in time, in a lot of cases, Wi-Fi 5 and prior, there wasn’t even a FEM involved. And so Wi-Fi 6 and now Wi-Fi 7, there’s opportunities there for us with our FEMs and our Wi-Fi portfolio, and we’re well represented across all the reference designs there. And then even in 5G, there continues to be new capabilities, new requirements coming in 5G advanced. And that’s going to increase complexity, increasing the performance requirements. And in a lot of cases, there’s new content opportunities there as well. So, all that’s going to be easily enough to offset any ASP erosion that we see.

Our next question comes from Srini Pajjuri with Raymond James.

Bob, just a question on China. I think you’re guiding for sequential growth in second quarter, June quarter. So, I’m just curious, it’s slightly more optimistic than what we heard from some of your peers. Is this driven by the smartphone side, or is it more non-smartphone business that you’re seeing, a little bit of a pickup there? In general, if you can talk about what you’re seeing in China because there’s been a lot of expectation? I think we’re still kind of not seeing a whole lot of pickup since the reopening. So, any comments there, I think, would be helpful.

100% agree with your last comment. We’re not seeing any pickup either. What we’ve been making clear now for the second quarter now, we continue to reduce the channel inventories. So, as you do that, we’ve reduced the inventory. Customers do need to order some parts. So, all we’re saying is in our revenue, we’re going to see an uptick. That has nothing to do with end demand. It means we’re signaling we’re heading towards the bottom of cleaning up the channel. I think Dave just mentioned that our bookings were up strong. In fact, we had the largest bookings in China for almost two years now. So, all we’re showing is the momentum is changing, not in the end market, not in the end market. We don’t disagree with anything that you guys have heard from others. It’s -- we’ve done a very good job over the last two quarters of significantly reducing the channel inventory. So, all we’re saying is we’re starting to see that bottom. And as I mentioned earlier, the headwinds are subsiding and the tailwinds are starting to come. But that’s not an end market comment. That’s a comment about our revenue.

Got it. And thank you for that clarification. And then, Grant, on the gross margin, I know a lot of questions have been asked about utilization. If I take your, I guess, guidance, it looks like you’re going to exit the year in low-40s. So I’m just trying to bridge the gap between that and your long-term model. So, is it primarily utilization, or are there any other factors that are going to, I guess, help you get to that 50% plus levels?

Sure. It’s really the two factors, right? There’s both utilization and mix. So, as we’re selling newer products that didn’t run through the factories when they were underutilized, obviously, they carry better unit costs, and you see that in gross margin in the September quarter. In the December and March quarters, you start to see more sell-through of products that we have already on the shelf and that incorporates higher unit cost due to prior underutilization. So it’s a bit of mix and utilization.

Okay. Is there any revenue level, Grant, that you think you need to get to before we see a 5 handle on the gross margin side?

I wouldn’t say that it’s a revenue. Again, it goes really back to mix. It depends which products we’re selling through and what kind of contents are in those products. So it’s not an absolute revenue level, but again, really related to mix. Sorry, just to follow up on that. I do feel confident in the path back to 50%. As I pointed out earlier, in the Pareto of gross margin, it’s dominated by underutilization. So really, in terms of the path back, it’s just a question of filling up the factories in order to get there.

The next question comes from Atif Malik with Citi.

Grant, I have two questions. How do we look at kind of the strategic exposure to your largest customer? You said fiscal ‘23, Apple was 37%, Samsung 12%. It sounds like based on the content gains this year, you will grow those percentages, both these customers. And historically, Apple in terms of profitability has not been kind of the best exposure name. So how are you balancing content growth with profitability?

Sure. Well, as Bob pointed out, high degree of confidence in our content there. We’re fully supporting all of our customers, that one of course, as well. As we look forward, we’ve never guided to any particular customer as a percent of revenue. So, I’d hesitate to do that now. But as we mentioned, we do feel good about our positioning there. In terms of managing profitability going forward, as I pointed out in my prepared remarks, we are -- heavily investing in multiyear opportunities at multiple customers. And those R&D dollars are spent today for revenue in the out years. But we feel like we’re positioned to win. We have the technology in place to do so. And we’re confident in our development and the investments we’re making.

I understand. And then on the power devices, silicon carbide, and I understand you’re growing from a small base and the multiple million dollar order on inverter side. How strategic is this business to Qorvo? How are you investing your R&D dollars towards this business? And could this be a 10% type business maybe in a couple of years?

Yes. We think it’s a very strategic investment for Qorvo, right? It’s similar to a lot of the other compound work we do. We have a differentiated solution with our JFET technology. We have a lot of customer demand. And in terms of the investment there, I think it’s well placed. We do expect to grow significantly. And as you’ll see in the 10-K, we will be paying a contingent payment to the shareholders of United Silicon Carbide, which reflects a lot of success in that business that we’ve seen since we’ve taken it over.

The next question comes from Harlan Sur with JPMorgan.

You guys are set to ramp into new smartphone models across your customers in the second half of this year. I appreciate the new and higher content gains. How are the pricing trends on like-for-like components on these new model ramps either versus prior generation or on a year-over-year basis?

Yes. I don’t think we can comment on a like-for-like. I mean, every generation, there’s always new challenges to solve. And so, we’re just excited about the content gains that we have. As Bob mentioned, in some cases, that’s new content, in some cases, it’s share gain. And that’s probably true as you look across the customer base, similar story plays out.

Okay. Perfect. I believe it’s spread across both, your HPA and Connectivity segments, but wanted to get your views on the broadband access markets, cable, fiber-to-the-home. On the infrastructure side, where are we in the DOCSIS 3.1 upgrade cycle? Seeing lots of activity on DOCSIS 4.0. On the gateway side, hearing Wi-Fi 7 home gateways may be starting next year. So, the team has multiple tailwinds here. What is the team’s sense on timing? And then more near term, like what’s the state of the access market’s demand wise? And are you guys also burning through excess inventories here?

Yes. I think the timing of what you said, I think that’s pretty consistent with what we’re seeing, and we do see a lot of new design activity in the newer standards, and we’re very well positioned there with our technology. And to your point, we do see some inventory challenges there as well that we’re working through. So, we think that’s relatively near term, but there will be a little bit of challenge there to get through in that business.

Thank you. At this time, I would like to turn the call back over to management for closing comments.

We want to thank everyone for joining us today. We appreciate your time. We look forward to meeting with you at upcoming investor conferences. I hope you have a good night. Thank you.

Thank you. This does conclude today’s teleconference. You may disconnect your lines at this time. Thank you for your participation, and have a great day.