Skyworks Solutions, Inc.

Good afternoon and welcome to Skyworks Solutions' fourth quarter and fiscal year 2021 earnings call. This call is being recorded. At this time, I will turn the call over to Mitch Haas, Investor Relations for Skyworks. Mr. Haas, please go ahead.

Thank you, Rachel. Good afternoon, everyone, and welcome to Skyworks' fourth fiscal quarter and year-end 2021 conference call. With me today are Liam Griffin, our Chairman, CEO, and President, and Chris Senesal, our Chief Financial Officer. Before we begin, I would like to remind everyone that our discussion will include statements relating to future results and expectations that are or may be considered forward-looking statements. Please refer to our earnings press release and recent SEC filings, including our annual report on Form 10-K, for information on certain risks that could cause actual outcomes to differ materially and adversely from any forward-looking statements made today. 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. Before I touch on the fourth fiscal quarter results, I want to highlight the significant accomplishments that underpinned a record-breaking year for Skyworks. Total revenue grew to $5.1 billion, 52% ahead of last year, representing an increase of over $1.7 billion. We increased earnings per share to $10.50, up 71%. Operating cash flow expanded to $1.8 billion, an increase of 47%. And we completed a strategic and compelling acquisition, immediately diversifying our product portfolio and expanding our market reach. Finally, with the investments we've made, Skyworks navigated a complex supply chain environment, leveraging world-class manufacturing capabilities across strategic technologies. Now turning to Q4, where Skyworks delivered record performance. Revenues in our mobile and broad markets portfolios both grew at double-digit rates sequentially and year-over-year. as we capitalized on broad-based momentum fueled by demand for our unique connectivity solutions. Specifically, we delivered revenue of $1.31 billion, achieved gross margin of 51% and operating margin of 37.2%. We posted earnings per share of $2.62, exceeding our guidance by 9 cents, and generated strong operating cash flow. totaling $398 million in the quarter. The complexity inherent in 5G and the demand for highly integrated solutions were major catalysts in driving our performance. The momentum in global 5G carrier subscription is building with estimates of 580 million users today, expanding to more than 3 billion users by the end of 2025. As expected, smartphones are leading the early transition But new innovative use cases are emerging, from automotive and industrial IoT to enhanced virtual reality, gaming, and telemedicine. Importantly, the power of 5G is increasingly being harnessed to drive sustainability efforts across industries worldwide, providing the wireless backbone to AI-powered ecosystems, combining measurement, analysis, and optimization. For example, a major US manufacturer is combining wireless sensor-enabled cameras with artificial intelligence to reduce chemical usage by 90%. And a European startup is deploying wireless climate sensors in agricultural applications to drive crop yield up to three times. Looking ahead, 5G has the capacity to manage diverse connections across industries, as it becomes the universal connector from the home to the office to the factory floor and to the farm. Skyworks is uniquely positioned and capitalized on this transformation with decades of connectivity leadership. The acceleration of 5G powered a broad set of use cases in Q4, with design wins encompassing the newest, most innovative smartphones and IoT devices, as well as gains in wireless infrastructure. Specifically in mobile, we accelerated the reach of our Sky5 portfolio, powering the latest launches at leading Tier 1 smartphone OEMs, supporting more than 20 platforms. In addition, we shipped Sky5 solutions across Samsung Galaxy's tablet portfolio. And in IoT, we continue to gain new customers and extend content. We delivered 5G CP connectivity solutions to Nokia. We partnered with Swisscom. to launch their Wi-Fi 6 GPON residential gateway. We ramped Wi-Fi 6 and 6E platforms at Netgear and Cisco, launched connectivity and home security devices with Amazon, Ring, and Comcast, and captured design with Edgarment, supporting mobile fitness applications. In automotive, we supported autonomous driving systems with a market-leading robo-taxi platform. and enabled advanced charge control unit systems for a tier one European automotive OEM. Across the infrastructure markets, we provided power isolation solutions to a strategic manufacturer of PV, including residential solar and energy storage systems. And we secured multiple design wins in next generation MIMO and small cell base station installations. Moving ahead, we see a multi-year secular technology evolution with our aperture widening from smartphones to industrial, automotive, and an expansive set of IoT devices. Skyworks is fueling this dramatic technological shift with our unique capabilities, integrating not only 5G, but increasingly with our other critical connectivity protocols, including high-performance Wi-Fi, Bluetooth, and precision GPS. As these opportunities emerge, Skyworks is positioned to win. With the breadth and depth of our customer relationships established over 20 years, our experience across multiple technology transitions, and a dedicated and talented workforce that executed extraordinarily well during fiscal 2021. With that, I will turn the call over to Chris.

Thanks, Liam. Skyworks revenue for the fourth fiscal quarter of 2021 was $1.311 billion, up 17% sequentially and up 37% year-over-year, driven by both mobile solutions and broad markets. Gross profit in the fourth quarter was $668 million, resulting in a gross margin of 51%, up 40 basis points sequentially and 60 basis points year-over-year. Operating expenses were $180 million, or 13.8% of revenue, demonstrating leverage in our operating model while continuing our strategic investment in support of future growth. We generated $488 million of operating income, translating into an operating margin of 37.2%. We incurred $11 million of other expenses, and our effective tax rate was 8%, driving net income of $439 million. So top-line momentum and execution on margins drove diluted earnings per share of $2.62, ahead of consensus estimates. EPS grew 22% sequentially and increased 42% compared to Q4 of last year. Turning to the balance sheet and cash flow, forward fiscal quarter cash flow from operations was $398 million, capital expenditures were $263 million, and we paid $93 million in dividends and repaid $250 million of our term loan. Let's also review our record-breaking full fiscal year performance. Revenue grew 52% to $5.1 billion, adding over $1.7 billion in incremental revenue over fiscal 2020. Gross profit was $2.6 billion, resulting in a gross margin of 50.9%. Operating income increased 73% to $2 billion, with an all-time record operating margin of 38.2%, up 450 basis points from the prior year. Net income was $1.8 billion, translating into $10.50 of diluted earnings per share, up 71% year over year. Cash flow from operations was up 47% to $1.8 billion. And during fiscal 2021, we returned $536 million of cash back to the shareholders, with $340 million in dividends and $196 million in share buybacks, all during Q1 of fiscal 21. Starting in Q2 of fiscal 21, we temporarily suspended our share repurchase programs. in connection with the acquisition of the infrastructure and automotive business from Silicon Labs. Given the strength of our business and the progress we have made on integrating the acquisition, and given the low leverage ratio of less than one turn, going forward, we will, from time to time, consider share repurchases as part of our capital allocation strategy, depending on market conditions, and in addition to our dividend program, and further term loan repayments. In summary, the Skyworks team executed exceptionally well, delivering record revenue, profitability, and cash generation, while making the investments that advance our technology leadership and manufacturing footprint in order to drive long-term profitable growth. Now, let's move on to our outlook for Q1 of fiscal 2022. We expect to deliver another quarter of double-digit sequential revenue and earnings per share growth in the December quarter. Specifically, we anticipate revenue between $1.475 billion and $1.525 billion. At the midpoint of $1.5 billion, revenue for the quarter is expected to increase 14% sequentially. Gross margin is projected to be in the range of 51 to 51.5%. We expect operating expenses of approximately 184 to 187 million. And 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 167.5 million shares. Accordingly, At the midpoint of the revenue range, we intend to deliver diluted earnings per share of $3.10, an increase of 18% sequentially. And with that, I'll turn the call back over to Liam.

Thanks, Chris. Skyworks' record financial performance demonstrates our ability to capture robust demand across a diverse set of customers and end markets. Our execution has been powered and fortified by deep customer relationships. coupled with decades of investments, with a square focus on execution and best-in-class performance. Looking ahead, Skyworks will continue to strategically invest in next-generation technologies and capital expansion, positioning us for market leadership and sustainable growth as the transition to 5G and other advanced connectivity technologies accelerates. That concludes our prepared remarks. Operator, let's open the line for questions.

Thank you. And as a reminder, to ask a question, you will need to press star one on your telephone. And to redraw your question, just press the pound key. Given time constraints, please limit yourself to one question and one follow-up. Thank you. Please stand by while we compile the Q&A roster. Your first question comes from the line of Gary Mobley from Wells Fargo Securities. Please proceed with your question.

Hey, guys, thanks for taking my question. I want to start out just simply by asking about the revenue mix between broad markets and mobile, not only for the quarter, but is embedded in your guidance.

Yes, Gary, I'll start with that, and I'll provide some numbers, and then Liam can provide some more qualitative commentary. In Q4, the September quarter that we just closed, Broad markets was approximately 29% of total revenue. So that was basically up 31% on a year-over-year basis and up 13% sequentially. Also, I just want to point out on a full year basis, broad markets was over $1.4 billion in revenue, growing at 45% on a year-over-year basis. So very strong performance in our broad markets business. On the flip side, of course, we had mobile. In Q4 was 71% of our revenue, up 40% year-over-year, and up 19% sequentially. So really strong execution there, of course, as we supported the ramp of new phone platforms at our largest customer. On a full-year basis, just in mobile, we did more than approximately $3.7 billion of revenue, up 55% on a year-over-year basis. clearly supported by the early adoption of 5G. And maybe, Liam, if you want to add something on broad markets?

Yeah, I mean, to reiterate Chris's comments, we continue to catalyze our broad market portfolio, gaining customers, gaining content, moving into new industries. The customer roster continues to get better and stronger. Names like Honeywell, names like Ford, looking at some of the plays that we see in the infrastructure space with Nokia and others, and plenty of room to grow from there. So good work in broad markets. As Chris noted, we've got some substantial top line. We're going to continue to drive that. Our research and development folks are driving innovation every day, not just in broad, but also deeply in mobile. And that recipe is working very well. In addition, the manufacturing assets that we have and the technology development that we put forth really gives us the flexibility to to hit each and every one of those customers in a way that they want to see the products.

Appreciate the call, guys. This is my follow-up. I wanted to do sort of a welfare check on the INA acquisition to maybe perhaps ask if we can get an update on if it performed according to your expectation for the quarter, if it's performing according to your expectation as we start the new fiscal year. And then, as well, now that it will be a full-year contributor, what the overall impact to the company's gross margins may be. Thank you.

Yes, Gary. So we closed the acquisition of the infrastructure and automotive business of Silicon Labs on July 26th. And so we had two out of the three months included into our September quarter. We are very excited and pleased with the acquisition. Again, I believe we paid a fair price for a very talented group of people with great technology, a strong product lineup in some really high growth markets like electrical vehicles, the solar business, data center, data communication, 5G infrastructure, and so on. So the business, since we've acquired it in the last two months in September, has performed really well in line with our expectations. We are not going to break out every revenue of every subproduct line that we have in our portfolio. We will report the revenue contributions within our broad market segment. But, again, the business is performing well. We are really happy with the acquisition, and we will continue to drive further growth in that business, as we explained at the time of the acquisition.

Thanks, guys.

Thank you. The next question comes from the line of Harsh Kumar from Piper Sandler. Please proceed with your question.

Hey, guys. First of all, let me just congratulate you guys on some pretty solid results based on all the volatility in the market and supply issues. I wanted to follow up on Gary's question earlier. You were gracious enough to give us a September breakdown, but may I trouble you to ask about how you think mobile versus broadband will perform in the December quarter, and then I've got to follow up.

Yeah, so we just guided for total company at $1.5 billion, which is up 14% sequentially, and we do see both mobile and broad markets growing at double digits sequentially, probably a little bit stronger in mobile than in broad markets, but both at the double-digit sequential growth.

Okay, understood, guys. And then there's a lot of talk about China trends right now, and there's a lot of mixed signals being given by the earnings that are coming out. I was hoping, Liam, you could talk about what kind of trends you're seeing in the Chinese market, if you're seeing any mixed shift up or down, either ways that may be benefiting you or not benefiting you. Just curious what color you got in China.

Sure, sure, Harsh. Appreciate it. Yeah, well, as you know, we've been a player in China for years and have been able to navigate the ecosystems and the platforms, regardless of baseband partnerships. And that continues. So, you know, we've got a great position with the OVX portfolios, continuing to drive them up into the 5G lanes, which brings content up for us. The business has been very solid for us. Now, we know there's tremendous upside given the the low base relatively in China smartphones. So we're certainly well positioned to navigate through that. We definitely have the technology that is needed to make that lift in China. And our numbers there continue to look very strong. So it's a great part of the portfolio. It definitely is an opportunity to kind of enrich the technology within those phones. They're still a little bit lighter than some of the flagships that we have in the U.S., But we have to know how to do it. The other thing about the China market is they want integration. They want labs to fabs types of products. They want our applications engineers. They need people that can make the job easier for them and fulfill a smooth transition to the consumer. So all that stuff around the edges, that's our bread and butter. So we are a great advocate there, and we're a great partner to those OEMs.

Thank you, Liam.

Thank you. Your next question comes from the line of Timothy Arquery from UBS. Please proceed with your question.

Thanks a lot. Chris, now that the fiscal year is over, can you give us a sense of what your top customer was for fiscal 21?

Yes, the top customer came in at 59% of total revenue on a full year basis. By the way, in Q4, that was approximately the same, 59%. which is slightly up from the Q4 of fiscal 20, which was at 56%. But of course, you have to take into account the timing of the launch of some of the new smartphone platforms there. I mean, this is a big number, but it really underscores the deep customer engagement that we have with this customer. By the way, not only in their smartphone lineup, but almost in every other product that they have and that they sell, you will find Skyworks inside. Also, in Q4, the quarter we just closed, the Skyworks team really executed well, supporting the launch and the ramp of a new smartphone platform that yet again, for now almost 10 or 13 times in a row, we were able to obtain higher dollar content per phone. as witnessed by the teardowns that came out when the phone came out. And you can see when you look at the teardowns, we really provided multiple high-performance, very complex, highly integrated solutions, multiple sockets in that phone that include, in many cases, multiple best-in-class filters, including TC-SAW and bulk acoustic wave technology across the transmit chain, the receive chain, as well as many other functionalities, including GPS and Wi-Fi, of course. So, great execution there by the team.

Thanks a lot for that, Chris. I guess as my follow-up, there's kind of a lot of noise in the China market. I know that you don't have as much, you know, exposure to the domestic, you know, market or at least, you know, Chinese OEMs as, you know, some of your peers do, but there's some diverging data points. I mean, you know, end market sell-through is not great, but definitely the, you know, high tier seems pretty tight. So, Can you just talk about what you're seeing in China? Maybe you can have a distinction between sell-in and sell-through. Thanks.

Yeah, I mean, the China market is important to us, and we've played that quite well. We have great partnerships with all the leading brands. I think the key here, and Chris kind of mentioned it, it's all about performance. It's not phone-to-phone. It's technology-to-technology, and you see a very, very different technology in the higher-end players in China, where they are embracing technology. all the kinds of increasingly complex signals that Chris mentioned, using bulk acoustic wave, using RTC saw, using an integrated approach, a Sky-5 approach. In that side of the field, it's great, and we have a tremendous opportunity. We're continuing to grow the content because the complexity is going up. The complexity is what's driving the content. So we're making that adoption happen rapidly, independent of market conditions. And we're also trying to uplift the lower end. there's still a pretty high percentage of lower end phones in China that we want to uplift and bring them the full 5G capability. And in those cases, you could have a $2 to $3 content that could move to $4 to $5. And so there's pretty good leverage on that side. So you've got multiple market focuses within China. We're able to address all of them from the highest to the most economical. And that's one of the strategies that's worked for us. And very often, you know, the first phone that we may work with with a customer is we'll have that customer for five to ten years and continue to move the dial on content and performance as we step along. So it's really a strategy around bringing the best technology to the customer and having that be enjoyed and celebrated by the end user.

Thank you, William.

Thank you. Your next question comes from the line of Ambrish Srivastava from BMO. Please proceed with your question.

All right. Thank you very much. Liam, we heard conflicting commentary yesterday from two of your peers. Just wanted your perspective on constraints. And it clearly seems like it's not impacted your business. But how has that trended? And more importantly, given the very well-publicized shortfall in one of the large customers, what does that mean for the March quarter seasonality? And then I had a follow-up for you, Chris.

Okay, we'll try to unpack that one at a time. With respect to our ability to execute and deliver in cases maybe where some others were not able to do that, it's really about investments that we've made and investments that we made early. So if you let me indulge here for a minute, go back to where we were a year ago. We went from $3.3 billion to $5.1 billion in one year. in one year with no M&A. How do we do that? Well, we made those investments months and months, six to 12 months before to ready ourselves to win. And also knowing that we had the right customer set that appreciated the performance and technology that we could bring to the market. And so that worked great for us and we executed tremendously. So the upside of that is those capital assets and those technology investments are there. They're on the job today, but there's a lot more we need to do. So, of course, we were nipped up a little bit here in the supply chain issues and shortages, but having our assets in-house, and you've heard me talk about this for a long time, having those assets in-house are strategic, it's critical, it's what customers want to see, all the way from gallium arsenide to packaging, assembly and test, TC saw, bulk acoustic wave, standard saw, all of that. we can mix and match to put the right solution together. So that is one of the reasons why our numbers here that we're talking about today, they're very strong. And certainly, you know, we're experiencing the same market environment, but it was the ability to invest early, drive that cash flow, drive that performance to continue to do that, and then bring those products to market in ways that are very flexible and having the ability to go from IoT to 5G to Bluetooth to the Wi-Fi, whatever the connectivity protocol may be, we will have the technology execution vehicles within our company to execute for our customers.

Sorry, and what about the seasonality for March?

Yeah, I mean, we're not going to get into March at this point. You know, March tends to be, you know, a little bit of the soft spot in the year. I mean, that's been traditional, but we don't really have a guide here to March at this point.

Got it, got it. Okay, thank you. Chris, I had a quick one and a longer one, sorry. The quick one is CapEx for this fiscal year. And really just looking at your cap intensity, I think it ties back to what Liam just said. It's much higher than at least your closest peer. So you should be expected to stay in the high single digit, double digit. And then longer term, you now have a business that has a much bigger footprint of higher margin, broad, diversified business segments within that. So isn't it time to revisit the long-term margin target, and why should it not trend up versus what you have given us in the past? Thank you.

Yeah, so first of all, on the CapEx, in fiscal 21, CapEx was running at about 12% to revenue, which is somewhat in line with the last couple of years' we've been in that 10%, 12% range. And we're very fortunate that we did make the investment. I mean, as we just explained, we grew the revenue more than 50% year over year. If we would not have made the necessary investments in our manufacturing footprint, by the way, not only just expanding the capacity, but also adding new technology and improving the performance of of our technology and our products. That was a very smart decision by the team here, proactively putting that capacity in place. And that's why, I mean, there is a lot of supply issues in the world, but it's not necessarily because of scours. I mean, there is tightness and we're not perfect. right? The demand is higher than the supply, but Skyworks has, compared to peers and competitors and other industry players, executed really well because we did not hesitate and put the CapEx in place. And again, this is just the beginning of a long 5G cycle, the beginning of Wi-Fi upgrade, the beginning of proliferation of of 5G outside of mobile into broad markets. And so we are not going to hesitate, and we are going to make the necessary investments to further continue and support the growth of the business. As it relates to gross margin, we did 51, so we were up 40 basis points sequentially, up 60 basis points year over year. I mean, we all wish it was higher. And the team will continue to work and drive and drive it higher. But I've talked about that before. We are still facing COVID-19 headwinds. And yes, it is a tight supply constraint environment. And we are facing some input cost increases right now. Again, the team is handling it very well. We continue to drive further operational efficiencies. And when you put it all together, we have a path to further improve gross margins over time.

Thank you, Chris.

Thank you. Your next question comes from the line of Chris Caso from Raymond James. Please proceed with your question.

Yes, thank you. Good evening. The question is on the magnitude of the content gains this year. And based on your guidance, it looks like second half mobile revenues up about 9% year on year and looking at the second half to normalize for the different product launches. But I guess the question is out of that 9%, is that all attributable to content? Is there any kind of unit growth in there? Is there any unit decline baked in those numbers? I recognize that we're coming off some pretty exceptional content gains last year, but trying to gauge what they look like this year.

Yeah, Chris, I mean, we certainly see the opportunity to, again, put forth, you know, greater content, greater value, and it comes with technology, right? So I think, you know, our teams are constantly, you know, crafting and developing next-generation solutions and also broadening the reach so it isn't just, you know, a certain set of customers. It's a broader set of customers. And, you know, what we find is that there's just a tremendous need for performance, right? I mean, performance is really what's going to drive this. And then performance really means that you've got to deliver the technology behind that. So we're spending a lot of money in that area, but strategically, we've got some great R&D folks in-house that are crafty, that know how to get stuff done, and developing solutions for the next wave. Markets like Wi-Fi 6 and 6E are also right now in a great position for growth as we move forward. And I think connectivity around Wi-Fi is going to be great and will complement what we're doing in classic mobile device. I think there's a lot of good stuff going on. The appetite with our customers is fantastic. There's no end to the ideas and the inquiries and the challenges that we're being asked to address, which is great. I'd much rather talk about that than worry about supply chains. I think on the supply chain side, we're doing quite well, but if we really want to continue to raise our bar with our technology and our R&D teams and our execution, to bring customers, you know, the performance levels that they really need.

Okay. Well, I was going to ask you a follow-up question on the supply chain then, so something you don't want to talk about. But with regard to, you know, some of the supply constraints and, you know, we've heard from many others in the industry that you weren't able to – many haven't been able to ship everything that the customers wanted. here in the second half of the year. Is that still happening with you folks? Are you still constrained to the fact that you can't ship everything that customers ask for? And does that suggest that there's going to be some catch-up in terms of your shipments as you go into the seasonally slower first half of the calendar year?

Yeah, I mean, it's a tricky situation, you know, on one hand. The fact that we have our own manufacturing assets allows us to be really close to the demand curve. So we're not subject to these big overhangs where we're waiting and waiting and waiting and waiting for parts. We're making our parts. So we're largely an in-house technology company. Around the edges, we will use some fabulous parts. So our exposure to that is much, much lower than others. Do we still have some effects? Of course, because it only takes one or two parts that could muck up a finished product, you know, and everybody understands that. So it does create some wrinkles. But I would say that, you know, given the work that we've done at Skyworks for years and then more lately as we talked about, you know, as evidenced by the 3.3 to 5.1, the ability to stretch and scale the business is a pretty good indicator of what our capabilities are. So, you know, I believe that we're going to do very, very well when we've got a tailwind and we're going to do well when it's a muddy field. You know, we're capable of doing it either way. And again, a lot of that has to do with managing your own technologies, making those investments with your own people, your own teams, and platforms that you know exactly where they're going to go. So that's kind of our strategy as we go forward. And I think that that strategy is going to work very, very well for the future.

Thank you.

Thank you. Your next question comes from the line of Edward Snyder from Charter Equity Research. Please proceed with your question.

Thanks a lot. Chris, one of the standout parts that you landed your largest customer is the transmit diversity module, which is a very rich part. It uses ball filters as well as I'm sure TC saw. You've not had that before. I know it's one part among many, but given the content in that part, I would expect the margins on that are going to be better than at least the average, if not the highest among that. And given the customer, the uniform should be pretty high. Should we expect if we see more of those, not just at that customer, but at others as Samsung and those folks move to more of the sophisticated 5G features, that would be a significant margin driver for you given the size of mobile and the size of these customers?

So I assume you can understand I can't discuss specific gross margin on specific parts for specific customers. But it was a trend.

I'm looking for the trend because 5G, obviously, for the high-end phones is now moving from basic connectivity to vastly more advanced connectivity. Part and parcel of that are going to be transmit DRX modules, and this is the first one we see. So as we see more of those in all phones, especially from you, shouldn't we expect margins to increase too?

Yeah, no, absolutely. And I've talked about that before, right? I have the largest contributor to our overall gross margin improvement strategy is to bring higher complexity, higher value added, more highly integrated parts that really enhances the performance of the product of our customer. And our customers understand that that requires a lot of R&D, that that requires CapEx dollars to be invested, and that requires a certain value to be paid for that. And that is how we have been driving the gross margin improvements for the last 20 years as we moved from 2G to 3G to 4G and now to 5G and indeed adding more value to our products. You're absolutely right about that. Okay.

And then if I could, you've kind of been under-earning a little bit at Samsung. They were high single-digit percentage revenue probably last quarter, and I know they're on the way up here. Did they broach 10% this quarter? And more importantly, if I look at the next couple quarters, especially the beginning of next year, should we expect you to continue to gain ground here or will mix, because I know they're favoring more of the lower-end products at this point, will mix kind of hold the lid on it for the short term and then we just look for out periods maybe late next year or so to see further gains?

Yeah, so Ed, so they were not a 10% customer, but you are right. They are up to the right, so the trend is changing. the business is growing sequentially as well as year over year. As Liam pointed out before, we have great design wind momentum with them, as you can see in some of the teardowns as well, with some very rich, complex parts in their foam lineup. And by the way, similar to with the large customer, not only in their foam lineup, but many of their other customers devices that they sell that have wireless connectivity embedded as well.

And if I could give you a final one, Liam, for you. It's no secret that Qualcomm is getting some share in the low-end China phones. Low-band, they've landed some of those, even got a mid-high band. There's a lot of, well, there's a lot of chatter in the chain anyway that it's kind of a combination of things. The performance of low-band filters has improved, certainly. But also, as we saw yesterday, The shortages in chips is giving them even greater leverage and kind of compelling some of the smaller OEMs or the low end of the bigger OEMs to use some of their RF products. How do you see that shaking out for your share in China short term? And maybe you could comment on the long-term trend with that. Do you think it will be sticky given the supply in the modem? Or once the supply chain eases up, we'll get a reversion back to the mean?

Yeah, I think there's a lot of opportunity in China. We've been in the market, the OBX portfolios and the Android portfolios for quite a while. It seems like over the last year or so, the larger kind of higher end players have done better vis-a-vis the overall market. Now, having said that, we serve everybody. One of the things that is really advantageous for Skyworks, and we talked about the technologies and the in-house capacity and scale, It's going to help us quite a bit in China because in China, as you know, the content is not as rich as it is in some of the higher-end phones, but there's a tremendous opportunity to lift that content. And a lot of that comes down to the technical know-how in demonstrating what a couple of dollars of incremental content can do to the user experience, to the performance of the connected devices. And it's significant, and I think those that are deeply in this industry know that. So we have to do a little bit of engagement there to continue to demonstrate with our customers what performance can really mean to the user. And we're getting very, very good response to that, and that's going to drive our content. Because you've got to have a catalyst to get that content up there. And I think when users can see the performance levels that really are right there in front of them and just need to embrace it, there's an opportunity for them to see and gain a much better experience with connected solutions that we can provide. And we do that with many, many other customers with much higher end performance marks. We know how to do it. We have great application engineers that can work across each baseband as well. So there's a lot to do there, and I think it's one of the areas in the market that still has a tremendous opportunity of growth, despite some of the things that we're talking about in supply chains.

Great.

Thanks. Sure.

Thank you. The next question comes from the line of Toshia Harry from Goldman Sachs. Please proceed with your question. Toshia, your line is open.

Let's move to the next.

Toshia, if you're on mute, please unmute your line.

Rachel, go ahead and go to the next question.

Okay, no problem. Our next question comes from the line of Blaine Curtis from Barclays. Please proceed with your question.

Hey, thanks for the question. I just want to follow up on the broad markets. I guess I was a little bit confused. So the business is up about $40 million. I think the acquisition adds more than double that. So I guess I didn't hear from you what's weak. Is it a supply issue? I think. If I had it right, I think Wi-Fi might have been a little weak in June, and I think you were looking for it to come back. So it's a respect of what's weak, and then I guess you're forecasting it to rebound in December. What's driving that?

Yeah, Blaine, you're absolutely right. I mean, when Liam talked about some of the tightness in the supply chain, it's especially more so in the broad markets business. By the way, not only because Skyworks is not able to supply, but the issue of full bill of materials or kitting issues. Some of our customers are struggling to get parts from peers and competitors or other players in the industry, and so as a result of that, they don't necessarily need the Skyworks parts right now. They will need them later. So that, I think, was driving most of that in broad markets. But again, looking ahead to December and then beyond, we do assume that some of the tightness in the supply gets resolved, that they will get to full bill of materials. And that, of course, also SkyWars can resolve some of the tightness in its own supply chain, and that will further drive revenue growth in broad markets. Because if you look at it overall, high level, there is very strong demand for connectivity in a broad set of products. If you look at automotive, industrial, some consumer type of applications, There is very strong demand, and we don't see that slowing down.

Great. And then can I ask a similar question on the mobile side? I mean, given the Apple revenue that you reported, it's not perfect math, but it does seem like Android's down in September, maybe double digits. And I'm just kind of curious if I had that math right. Is it a similar issue with Kitting or something else? And I guess for December, the whole mobile group should be up. double digits, as you said, but I was just kind of curious if Android would be part of that, given it was down in September.

That has been for the last five years that I have been with the company. In September and December, when the large customer launches their new platforms, they have priority in the supply chain, not only with Skyworks, but with many of the peers and competitors. Android understands that and they're not going to put up a fight for supply with the large North American customer, especially this year when it's very tight, even more so than in the last five years. You will see some seasonal fluctuations there, absolutely.

Thank you. Our final question comes from the line of Carl Ackerman from Coven & Company. Please proceed with your question.

Yes, thank you. I wanted to focus on your broad markets business, if I may. You now do have more diversified products and end markets within broad markets through the integration of Slab's auto industrial business. I was hoping you could describe whether the acquisition is performing in line with your initial expectations and if you could peel back the onion and discuss some of the opportunities you are seeing for your timing, power isolation, and Wi-Fi products.

Yeah, I'll start. And as I said before, yes, the INA business, we've now two months under our belt in September quarter and one month more here in the December quarter. We're really excited about that acquisition. And great people, great technology, great product, great customer relationships, high growth markets, and the business is doing really well. By the way, It's a fabulous business model, as you know. So there's definitely some tightness from a supply point of view. The demand is bigger than the supply. But there the team as well is working on creating more supply and bringing on more supply. And so it's working out well.

Yeah, and let me add to that. I mean, there's a tremendous diversification lever here. with the INA business from SLAPP. I mean, there's tremendous opportunity in the technologies. We have scale that is just incredible compared to the size that had been there before. So we are working very closely on the strategic technologies within the INA portfolio. We're seeing some great, great opportunities there, and we're going to bring a lot of that stuff in-house into our sites, into our factories, and streamline. We're also going to you know, do some strong kind of cross-pollinization in the sales team to make sure that we understand exactly where the opportunities are and the scale plays are. And I think there's a lot that can be done there. There's great technology there. We just need to bring it to the right customers and raise the game. You know, the supply chain issues kind of hit that portfolio a little bit harder than others, but, you know, it doesn't take us off our track. And the technologies that we acquired are outstanding, and we're going to cultivate and grow those technologies with customers for sure.

I appreciate that. For my follow-up, if I may, I know this has been asked several times, but I'll try and ask it a different way. You suggested that mobile will grow double digits next quarter. I'm curious if that reflects some moderation of mobile products within China. And I ask because it seems that some of the demand in China has pushed from December into March. And I'm curious if you would endorse that view. Simply put, is this a supply issue? Is this a demand issue? And how would you see that being rectified over the next few quarters? Thank you.

So when you look at the data, the demand for 5G phones in China continues to be very strong. There's no question about that. I'm not talking here about 4G, 3G, or 2G phones. I'm talking about 5G phones Demand in China continues to be very strong. And there's multiple suppliers. Of course, the large North American customer supplies into China and is doing really well there. And there, of course, is the Android players as well. Now, as I said before, there is seasonality to that business. And September and December are not the strongest seasonal quarters for that business because a lot of the supply is goes to the large North American customer. But you typically see somewhat of a rebound into the March quarter as well with Chinese New Year being part of that March quarter. And we expect that to play out this year as well.

Thank you very much.

Thank you, ladies and gentlemen. That concludes today's question and answer session. I'll now turn the call back over to Mr. Griffin for any closing comments.

Thank you all for participating on today's call. We look forward to talking with you at upcoming investor conferences. Thank you.