Good afternoon and welcome to Skyworks Solutions Second Quarter Fiscal Year 2022 Earnings Call. This call is being recorded. At this time, I will turn the call over to Mitch Haws, Investor Relations for Skyworks. Mr. Haws, please go ahead.

Thank you, Rachel. Good afternoon, everyone and welcome to Skyworks’ second fiscal quarter 2022 conference call. With me today are Liam Griffin, our Chairman, Chief Executive Officer and President and Kris Sennesael, our Chief Financial Officer. Before we begin, I would like to remind everyone that our discussion will include statements relating to future results and expectations that are or maybe considered forward-looking statements. Please refer to our earnings press release and recent SEC filings, including our annual report on Form 10-K, for information on certain risks that could cause actual outcomes to differ materially and adversely from any forward-looking statements made today. Additionally, the results and guidance we will discuss include non-GAAP financial measures consistent with our past practice. Please refer to our press release within the Investor Relations section of our company website for a complete reconciliation to GAAP. With that, I’ll turn the call to Liam.

Thanks, Mitch and welcome everyone. Despite a challenging macro backdrop, I am pleased to report that Skyworks delivered record second quarter results, with double-digit year-over-year growth in both revenue and earnings per share. We continue to benefit from a broad and diverse product portfolio. And with an expanding set of customers in high growth markets, we are well-positioned to outperform in the current environment. Looking at the quarter in more detail, we delivered record Q2 revenue of $1.34 billion, above consensus and up 14% compared to last year, highlighting both our growing content within Tier 1 mobile and the increasing diversification of our customer base and technology reach. In fact, our broad market revenue rose to a record $523 million in the quarter, up 10% sequentially and 36% year-over-year. In addition, we continue to drive solid profit margins, exceptional cash flow and consistent cash returns. We achieved gross margin of 51.2% and operating margin of 36.8%. We posted earnings per share of $2.63, up 11% year-over-year. We generated operating cash flow of $393 million and we returned $509 million to shareholders through dividends and share repurchases. Our strong results this quarter were driven by a vast expansion of use cases from content-rich smartphones to complex IoT devices, to innovative solutions for the automotive markets, industrial and infrastructure. Specifically in mobile, we supported the top 5 OEMs with our Sky5 architectures, including flagship models from Google, Samsung and other Tier 1s. In parallel, we leverage our in-house temperature compensated SAW, BAW and gallium arsenide technologies, to extend the reach across further content opportunities in 5G. In Enterprise and IoT, we powered Comcast’s latest WiFi 6E residential gateways, partnered with T-Mobile for their integrated 5G fixed wireless access service. We debut the industry’s first WiFi 6E gaming router featuring ultrafast quad-band performance.…

Thanks, Liam. During the second fiscal quarter of 2022, Skyworks delivered record Q2 revenue of $1.34 billion, an increase of 14% year-over-year. Broad market revenue was a record $523 million, representing 39% of total Skyworks revenue in the quarter. Gross profit in the second quarter was $683 million, resulting in a gross margin of 51.2%, up 40 basis points compared to Q2 of last year. Operating expenses were $192 million or 14.4% of revenue, reflecting our investments in support of future growth. We generated $491 million of operating income, translating into an operating margin of 36.8%. We incurred $13 million of other expense and our effective tax rate was 9.6%, driving net income of $432 million. And based on a further reduction of our weighted average share count to 164.4 million shares, we achieved earnings per share of $2.63, up 11% year-over-year. Turning to our balance sheet and cash flow, second fiscal quarter cash flow from operations was $393 million and capital expenditures were $127 million. In terms of capital allocation during the quarter, we returned $509 million to shareholders, paying $91 million in dividends and repurchasing 3 million shares of our common stock for a total of $418 million. During the first half of the fiscal year, Skyworks returned $871 million to shareholders through dividends and share repurchases. In summary, the Skyworks team delivered another solid quarter, with Q2 record revenue and earnings per share, while continuing to make the investments in our technology and product roadmaps to support future growth in mobile and broad markets. Now, let’s move on to our outlook for Q4 of fiscal 2022. We expect to deliver double-digit year-over-year revenue and earnings per share growth in the June quarter. Specifically, we anticipate revenue between $1.2 billion and $1.26 billion. At the midpoint of $1.23 billion, revenue for the quarter is expected to increase 10% year-over-year. This outlook takes into account our current view of recent pandemic-related supply chain disruptions, which are impacting the ability of our customers to fulfill end market demand. Gross margin is projected to be in the range of 50.75% to 51.25%. We expect operating expenses of approximately $190 million to $192 million. Below the line, we anticipate roughly $10 million in other expense and a tax rate of approximately 9.5%. We expect our diluted share count to be approximately 163.5 million shares. Accordingly, at the midpoint of the revenue range, we intend to deliver diluted earnings per share of $2.36, an increase of 10% over Q3 of last year. And finally, given our consistently strong cash flow and confidence in our outlook, we are investing for diversified growth while returning cash to shareholders through both share repurchases and dividends. And with that, I will turn the call back over to Liam.

Thanks, Chris. Despite macro headwinds and supply chain disruptions, Skyworks remains squarely focused on delivering above-market growth across a diversified set of applications and end markets. Capitalizing on in-house technologies, scale and strategic customer relationships, we look forward to generating continued increases in revenue, earnings, profitability and free cash flow. Finally, our efficient balance sheet and consistent cash generation provide a formidable platform for long-term growth as we invest for the future and deliver premium returns to our shareholders. Operator, that concludes our prepared remarks, so open the lines for questions.

Thank you. [Operator Instructions] Our first question comes from the line of Timothy Arcuri with UBS. Please proceed with your question.

Hi, thanks a lot. So Kris, I just had a question around the dynamics in the quarter. Revenue was pretty much in line, but the mix was much different. Broad markets was supposed to be flattish and it was actually up a lot and mobile was supposed to be a little better than normal seasonal on the easier comp from your large customer, given some of their issues with respect to the supply chain. But in fact, mobile was much weaker and broad markets was much better. So I guess the question is one, what happened in the quarter? And two, can you give us a sense of what the split will be between mobile and broad markets that’s assumed for the June guidance? Thanks.

Yes. First, reflecting on the March quarter, mobile as a group came out on or about as we expected, with strong performance at a large customer, very strong performance at Samsung, which is now back being a plus 10% customer for Skyworks as well as a really nice ramp with Google in the Pixel 6 form. It’s no surprise we have seen some softness in the China market in part as a result of the COVID-related lockdowns. On the flipside, our broad market business was doing really well and it was across the board, IoT, automotive, infrastructure, but also of course, the I&A business that we acquired from Silicon Labs was performing really well during the quarter, setting a new all-time revenue record. So, that is for March. I think in June, in mobile, of course, we will continue to see some COVID-related supply chain disruptions that are impacting the ability of our customers to fulfill the strong end customer demand and so that is being contemplated into our June guide. But we will there as well on the flipside in broad markets continue to see strong sequential as well as year-over-year growth in the, call it, high 30s, approaching 40% year-over-year growth in broad markets.

Thank you. And then can you give us what the percent of revenue was for your largest customer in March? Thanks.

Yes. In March, the large customer was approximately 54% of total revenue. That clearly demonstrates strong demand from that customer as well, of course, as strong content gains that Skyworks have been able to obtain with that customer. Revenue for that customer was up more than 20% on a year-over-year basis in the March quarter.

Thank you. And our next question comes from the line of Chris Caso with Raymond James. Please go ahead.

Yes, thank you. Good evening. Maybe we could dig into some of the China supply constraint issues a little more deeply. And you can you help us, I mean, one, to quantify the magnitude of how much that may impact the June quarter, whether that’s more supply related or on your customer side that you can’t accept the product? And then finally, what that means for the September quarter, does that allow because that’s impacted now, do you presume that some of that comes back in September and the second half of the year?

Sure, Chris. This is Liam. Clearly, there has been some disruption around COVID and specifically in China. It happens to be a very, very strategic for back end assembly and test for a number of our customers, including some of the bigger ones. So for the most part, that’s where the inflection was, trying to manage through that dynamic with pretty stark walk-downs and operational sites. So for Skyworks, obviously, the things that we do internally, we are continuing to execute with our filtering technology, our gallium arsenide, our in-house assembly and test. But again, it all comes down to your customer set. So we are doing the work today with some great companies, helping everybody get back on track in terms of demand. It is not a lack of demand issue at all, it really is a supply chain issue and every company has their own elements, whether it’s at a chip level or it’s at the back end assembly and test. So that’s kind of what’s going on. We certainly think that this is going to abate as we go forward. It’s not a long-term issue. We have great partnerships with the customers that we’re leaning into. We’re helping them, and we expect things to get a lot better as we get through the next few months.

Yes. Chris, as it relates to September, as you know, we only guide one quarter at a time, and I’m going to stick to that guiding only one quarter at a time. But having said that, and as Liam just expressed, right, we feel good about our technology and product road maps. We have deep customer engagements and very strong design win momentum. And we have the size and scale of our manufacturing assets to support some big important product launches and ramps in the second half of the calendar year as well in mobile and broad markets. And so, we are very well positioned to see some strong sequential as well as year-over-year growth in the second half of the calendar year, of course, assuming no worsening of the geopolitical or macroeconomic or pandemic-related issues that we have seen in the past.

Thank you. As a follow-up, I’ll ask on gross margins. And we’ve been kind of hovering around this 51% plus or minus for a bit of a while. I know last year, you said there were some pandemic-related costs that were persisting. And I presume into June, some of the impact is persisting again, just kind of on a lower revenue base. What’s the prospect for getting the gross margins a bit higher? What’s your expectations for gross margin progress as we go through the year from here?

Yes. So in March, we did 51.2%, which was up 40 basis points on a year-over-year basis. We are guiding on or about the same maybe slightly down for June on a sequential lower revenue. But then again, as we look into the back half of the year and see some steep ramps in September and December, we are geared up for to deliver some gross margin expansions. And again, I talked about that before, right? It’s higher value add, higher complex custom build specific products for our customers that are ramping. Of course, size and scale helps as well. And then, of course, we have a little bit of a tailwind from broad markets that typically has some higher gross margin compared to the mobile space. And when you combine all of that, we have confidence in improving the gross margins towards our target model of 53%.

Thank you. And our next question comes from the line of Blayne Curtis with Barclays. Please go ahead.

Hey, thanks taking for taking my questions. And I apologize, a lot going on tonight, so I apologize. But Chris, I thought you said that broad markets was $523 million up in June and the year-over-year would be kind of high 30s or 40%. I’m starting with that math, maybe they doing something wrong, but I just want to clarify by segment, that’s what you’re looking for?

So broad market was $523 million in March, which was up 10% sequentially and up 36% year-over-year, and we do expect further sequential growth in June that translate into a very similar year-over-year growth as well.

Okay. I guess I can check with you on the call back on that. The – I guess the byproduct of that is mobile is down and you talked about the supply disruptions. I’m just kind of curious to your outlook on the overall handset market, maybe it’s a lame question, but I think the overall market has kind of weakened. There is outlook for kind of even down 10%. Obviously, RF can grow faster. But just kind of curious your perspective on the overall market.

Yes. So I mean, overall market, as Kris mentioned, I’m going to get to mobile in a second. But really, we’re also really excited about what we’re doing in broad markets and the numbers we just reiterated $523 million in the quarter with a lot of momentum going forward. So just on the broad market story, things are looking very strong, very diverse, new customers, new end markets and growth in technology. So that’s one important lever. On the mobile side, we’re actually continuing to do very well. We were somewhat surprised that the continued COVID restrictions came down. It’s not a case, honestly, where there is a demand issue. This is really about chain. We know the customers that we’re working with, and we’re extremely close in terms of the dynamics of where products need to be and when they need to be there and we feel very good about that, and that will drive our business forward into the second half on the mobile end. We also have made incredible strides with Samsung. And there is a customer that – they are a great company, but we haven’t done that much with them. A lot of it had to do with just technology. We’re trying to go a high end and a lot of the opportunities there were a little bit more lower market. And we now moved up big time within that account. And so we have three of the most important companies in mobile right now, all with very good share and outlooks going into the second half of the year around new technologies and more around 5G, but also a lot of things that are coming up in the IoT side, looking at things even in WiFi that have all really stepped up. So we feel really good about the business right now. These lockdowns came in a little bit late for us. And so it was a bit of a surprise, but we wanted to do the appropriate thing and reflect that in our guidance, but we feel very good about the second half of the year. We know the products that we’ve designed into. We know what our content looks like. And we’re looking forward to fulfill that demand when sky is clear a little bit and demonstrate that through earnings.

Thank you. And your next question comes from the line of Ambrish Srivastava with BMO. Your line is open.

Hi, thank you very much. I just wanted to come back to the – it’s always trying to figure out as well as I’m sure you guys whether it’s demand versus supply-related issues. But the China market has been in sunk for quite some time, Liam. So is there a point that you’re seeing there, okay? This is not just supply? And what we’re hearing is that the China handset guys have an over index exposure to the European market in Eastern European in particular? Is that causing concern to you? And kind of related to that, how big is the China market geo-wise for Skyworks?

Yes – no, great question. So there is two elements. One is China itself, the geography. And that has – so what we’re dealing with now is more around China, the workforce, the assembly and test, the back end, all of that where there is been tremendous – it doesn’t matter whether it’s a smartphone or whether it’s an IoT device, right? So the lockdown issues are more around issues in China, COVID related. And that is a blanketed type of thing around technology. That’s one. On the other side, we’ve consolidated our China business right now is really pushed by the higher end players. They are not necessarily the China brands. We have exposure with OBX, of course, but we are growing our business with the higher-end brands within China. So companies that may be in the U.S. that are doing really well in China or companies that are maybe have great technology in Korea and they are sold into China. So it’s really about where the products land from a geographic perspective. But I will tell you, in all of those three companies, the major top three in mobile are gaining share, are producing unique content. We really like our position. And some of the lower-end brands quite frankly, are rolling off a little bit for us, and it’s not really the business that we’re interested in, but we’re growing and gaining share and gaining value with the top players. So that’s kind of how it shakes out. So it’s a geographical issue, with COVID and then also looking at the elements of each of the mobile players in how we address those. So – and honestly, the playbook that we have right now is working very well. We will get through this bump here, around COVID in China, and things look very good from there. And we know the partners that we have are counting on us in terms of their execution as well. So it’s a good spot to be in.

And so Ambrish. So the total Chinese customers for total Skyworks is on or about 11%. Actually, in broad markets that’s slightly higher. That means in mobile, it’s less than 10% of revenue coming from the Chinese mobile customers.

So I mean, we’ve effectively de-risked that low end market at this point and driving our attention and our content to higher value, higher margin players.

May I ask a quick follow-up, please? On the broad markets business, I don’t think I’ve heard you guys talk about it. Has extended lead times really impacted this business at all? And I asked because there is a concern that all of us have is that is the demand real or not? And when you’re guiding for 30%, 40% kind of growth year-over-year, that again begs the question, how much of that is because of lead times at setting out. Thank you.

Yes. No, it’s not a lead time thing. I think right now, we’ve – quite frankly, if we could execute the full bill of materials on the end products, our numbers would be higher. I mean we – in often cases, we’ve got a little bit ahead of the end market with our technology. But you have to stay in pace, right? You have to stay in the lane with your customer because ultimately, these devices that we’re working on, whether they are IoT, whether they are automotive, whether they are mobile, right, they are complex, very, very complex goals of materials. And those builds of materials have to be 100% on point and working in perfect harmony when they get shipped. So what you see in this industry now is a lot of complexity, a lot of exposure in companies that did not invest, which is much harder. But the ability for us to kind of weave through some of those bumps around supply chain, I think it has been a – it’s not easy. It’s not something that we wish for, but it tends to be an opportunity for us to outperform given our own operational levers here inside the building, all the way from, again, gallium arsenide do assembly and test a bulk acoustic wave for temperature compensated. So, all the elements are there. So it’s a little choppy there, but the demand is absolutely viable. It’s just about getting these products together integrated in a seamless way and get the technology delivered to the end market.

Our next question comes from the line of Matt Ramsay with Cowen. Your line is open.

Good afternoon. Thank you very much for let me on. The first question, guys, I had was with respect to the broad markets business. my team covered Silicon Labs for a long time and a couple of the businesses that were in that I&A segment that we thought they could have done maybe a better job of scaling and maybe you guys have an opportunity to do that is the voltage isolation franchise and EVs, which you sort of addressed a bit in your script and also the timing business there had been sort of concentrated in wireless infrastructure, and there was a move to make a push into cloud. I wonder if you guys might comment a little bit on those two initiatives and those are things that you’re investing in to grow that franchise further? Thank you.

Yes. Excellent. I’m really glad you asked that question. So at a very high level, the transaction with the I&A portfolio has been great. I mean we are really excited. It’s doing better than we expected. And it’s also had to endorse some supply chain issues because they are more granular around outsourced fabless players. But the great news is actually – literally, line-by-line, you just mentioned are things that we’re working hard on. Timing is a very, very interesting, attractive market and there is not many players that are going after it. The portfolio within I&A is very strong. It’s very capable. It’s got a great technology edge. And what we really need is for those great things to be matched up with significant powerhouses the industry companies that can scale with it. So we’re working on that. Again, the technology is there. This is about taking devices and technologies that already been honed in and have been diversified tremendously, but we also need to get scale, right? So we’re working on that, making good strides, teams doing well. Isolation – power isolation, specifically in automotive is a big, big market. And here again, leveraging some of the relationships that we have at Skyworks and some of the scale opportunities that we can bring to end customers, we’re making really good progress on that end. Data center is another market that they have, supercool technology and just need more muscle to try to get it out more sales folks, more marketing people, more people, boots on the ground, leveraging customers that we already have, great customers that can put tremendous scale and have those customers meet the technologies that were in the I&A portfolio. So we’re really excited about it. I think Kris mentioned it already. We’re ahead of our expectations so far, early innings, but I really, really feel great about that deal and the team really driving behind it. So look forward to more things on that end. But again, broad markets at a high level. These are big numbers we’re talking about now. We just – we put over a $500 million print. We’re creating tremendous diversification. It’s a $2 billion run rate. This is not Skyworks 3 years ago. We were at 3.3% in 2020. We’re in the mid $5.6 billion level now with a much more diversified portfolio. So we’re looking forward to reflecting that in our valuation and delighting our customers.

Thank you very much for all the color there. Just switching gears for my follow-up. You guys mentioned it sounded like some share gains within the portfolio at Samsung with them becoming a 10% customer again. I think last week, there was commentary from San Diego that they had upped their processor and baseband share at Samsung on the Galaxy 22 as opposed to the internal solutions. I wonder if you might comment about how you’re aligned with that change there and how sustainable you think it might be? Thanks.

Yes. I mean on the modem side, the baseband processor, we don’t make that product, but we have technologies that will wrap around just about anybody’s baseband, whether it’s friend or foe. So we’re agnostic to that. And our customers are really going to make the decisions that they need to make to get the best performance. So, you could very well see a high-content device populated with a lot of very unique Skyworks Solutions that are all in-house, custom crafted, not fabless, done in-house in our building, in our factories with people that live and breathe wireless. And those same applications could have a baseband from Qualcomm or someone else. So, we live with that all the time. But the interesting thing is with baseband, you have got a single kind of monolithic high-performance device. When you think about what’s happening in a mobile phone today as we move into 5G and beyond, the number of connected things, the content, the size of the semiconductor devices thinking about filtering all the way from TC-SAW to Bulk Acoustic Wave, leveraging gallium arsenide. There is a lot of complexity. And it’s not done by any one company. So, I think if you look at the number of nodes that we address within mobile, it’s really, really high and diverse. So, there are some cornerstone pieces, of course, in every device. But our solutions are gaining a lot of share and the flexibility that we have, given that in-house fabrication and assembly and test and in-house filtering. So, we can do a lot of things that are a little more crafted unique, customer-centric approach, I would say and it served us well. So, there is room for more than one or two players in a high-end mobile device, but we feel really good about it. And I will say that we have been in this industry – I have been this in a long time, and I am really excited about the appreciation that our customers see and the technology that we can bring. And it’s actually very clearly demonstrated with the leading brands. And oftentimes, the mid-tier players, they want to get better, they want their technology better, and they come to us to try to help them make that leap. So, we feel good about that side.

Your next question comes from the line of Edward Snyder with Charter Equity Research. Please go ahead.

Thanks a lot. You seem to be pretty excited this year about the content gains in mobile, especially in the second half of this year. I was just wanted to dig into that a little bit. Should we expect similar gains in dual connectivity because that seemed to be a big growth last year, maybe fewer bands being added and more content for the bands you have? And to the extent that a millimeter wave comes out of phones, it sounds like the rumblings, maybe not for this year, maybe for the next year, does that have much of an impact on Skyworks’ content? And then I have a follow-up, please.

Sure. Yes. No, we are excited about the opportunity, and we feel really good about the design win positions that we have with strategic customers, some products haven’t yet been taken to market, but they are ready. We are seeing more and more complexity in mobile device. A lot of opportunities still to grow, and our conviction is to continue to gain share and gain content, and I feel quite positive that, that will happen again in different ways and also with more specific devices as well which is good. So, that feels really good. And as we go forward, there are just a lot of other tools here that we are working. Our bulk acoustic wave technology is growing. It is continuing to hit higher and higher levels of performance and gaining value in some of the Tier 1 players with multiple Tier 1 players right now. So, there is a lot more to go on that end. We are still doing a great job on the broad market side. We talked about the numbers here. We are over 500 million clicks. And a lot of that technology as you know, that can be transferred. You could have a 5G engine that can go into a data center application it go into a mobile phone, it could go into an IoT device. So, we really want to be the universal connector there around 5G and related technologies supporting multiple end applications.

And then for my follow-up, if I could. You brought 10% on Samsung this quarter. I am sure it will drop below that in your big ramp for your largest customer in the second half of this year. But one, do you expect it to be 10% for the year overall? And then secondarily and may be more importantly the big change going on here, because it was pretty small. You were down to 3% to 4% of revenue at one point in the last year or so. and now you are back above 10%. Is this largely due to their shift to modules in the mass tier, or are you also seeing – and to the extent that it is, how far into that program, do you expect your, I mean that’s a very big product line, so it’s going to take several years to penetrate. How much more runway do you have in the shift to modules in the master, if that’s where your content gain is? And maybe you could scale for us, how much of it is due to maybe a better content growth in the flagship, too? Thanks.

Yes. No, that’s a good question. And I know you seek this follow-through. So, we have always been a partner with Samsung, but it had been challenging to sort of leap into the richer and more complex, more powerful connectivity modules and nodes. I am just doing a lot of really good work, shoulder-to-shoulder work engineer to engineer work with our team and the folks at Samsung to try to develop a more powerful solution that really demonstrates all these wonderful things that we can do with 5G. And so fortunately, our engineering teams and the know-how that we drop to market in other areas allowed us to do a great partnership job with the number two player out there, and it’s awesome. And it’s not a one single – one-trick pony deal at all. I mean there is a lot of room here for us to go. There is a lot of complexity that hasn’t been resolved. We love that, and the value opportunity for us is going to be very strong. So, we are really excited about it, quite frankly. I know we already talked a little bit about that in the call itself. But we are working with the top-tier players and the flexible customer-first approach, purpose-built technology is the way to go. We are not really focusing on last year. We are leveraging high-performing assets, most of those being procured and delivered right out of our own factory. So, we are excited about it. And those mid to premium players love it. They want to see that. They want to see trust. They want to know where the products are being built. They want to have a decision on it and a voice and all that stuff and going well. So, we think there is more to go. And we are pleased with Samsung, of course, coming into 10%, but there is still a lot of room for everybody else.

Thank you. And your next question comes from the line with Gary Mobley with Wells Fargo. Please go ahead.

Hey guys. Thanks for taking my question. Let me first apologize for the background noise. Going back to Chris’ question to try to quantify what some of these shutdowns may mean for your June quarter revenue. Your large customer gave a specific impact range, which I believe is 4% of their overall revenue, 5% of product revenue. Is that about the right way to think about the impact for you in the June quarter, let’s call it $50 million?

Yes, I think, Gary, that’s not about right. If you look at – we guided down sequentially 6% to 10%, 8% at the midpoint. I think if you look at average historical sequential declines, it’s in the 3% to 5% range. And so the only difference here is really the fact that our large customer as well as some other customers, right, are leaving revenue on the table in the June quarter, specifically because of the COVID-related lockdowns in April. You have heard from many of those customers that the situation has improved since then, and the factories are reopening, and they are going to try to work hard to fulfill that strong end customer demand that they see. But it’s going to be hard to make that all up in the June quarter.

Appreciate the color there, Kris. And for the share buyback, I guess probably the best word to use to describe your buyback in the March quarter was aggressive, $420 million. Can you sustain that pace? And are you willing to maybe be creative in the way you fund your share buyback given the per share price?

Yes. It’s something that we look at it day-by-day, week-by-week, $418 million in the March quarter was an all-time record. We have never spent more than that amount in one given quarter. We still have some firepower there, and we definitely are continuing to generate strong free cash flow. And we will use that cash flow to, of course, continue to pay the dividend, and there is room for improvement there as well and to use it for share buybacks.

Yes. I mean given where the valuation is right now, obviously, we are all over that. So, as Kris said, there is room for more, and I am glad we did what we did so far. But if more needs to be done, we can absolutely do it. The cash flow engine is very strong. The business is very solid. And we think as we go forward, more and more, that’s going to come through here in the numbers.

Your next question comes from the line of Harsh Kumar with Piper Sandler. Please go ahead.

Yes. Hey guys. I have two questions. One, Liam, I was thinking – I was hoping that you could give us some clarity on the issues in China. I hate to focus on just 11% of your business, but it’s causing some issues. The phones that are made in China for Chinese consumption, COVID aside, do you think that, that – do you think, first of all, if there is any inventory of those on sold phones in China? And then secondly, COVID aside, do you think by the end of the June quarter, hopefully, that’s burned off. So, you get into the build season, you just see pro growth? And my follow-up, my second question, I will ask that right now. Can you help us think about your role with your large customer in a world where they are using their own motto? And what kind of help can you provide to them at that point in time?

Okay. Alright. Harsh, I will try to start from the beginning here. Well, certainly, the China situation, there is a lot of factors, right. I mean the overarching factor right now is really just the final stages of assembly and test, where you see Foxconn, Pegatron – that is China is where the lion’s share of technology assembly and test and outbound, it’s the biggest hub in the world. So, many, many companies go through that hub, in multiple factories, multiple technologies. So, that’s just – that is a macro China situation that I think will get better. There is not too much we can do right now. And therefore, we had to lower guidance based on the risk and conservatively take our numbers down. But if you look at where we see things coming out, the appetite for the technology is still very, very robust. This is not – I don’t think that it’s going to be a major, major hit to the industry at all. I think we are going to get through it. It’s well understood. We know the parts of the equation that we manage our teams are all over technologies. Our fabs are working great. Our filter fabs are up and running. We are doing well here on the COVID side in the U.S., of course, you know that. But there are still some bumps. And I think that those bumps will be smoothed out in a matter of months. And we will do everything we can to make that happen. And meanwhile, we have also within China have kind of stepped up a little bit more towards the mid to higher end tier within mobile within China. So, we are starting to see a little bit more consumption in China, but not necessarily with…

Thank you. And ladies and gentlemen, that concludes today’s question-and-answer session. I will now turn the call back over to Mr. Griffin for any closing comments.

Thank you all for participating in today’s call. We look forward to seeing you at upcoming investor conferences. Thank you.

Ladies and gentlemen, that concludes today’s conference call. We thank you for your participation.