Okay. Good morning. Let's go ahead and get started. Welcome to the third day of JP Morgan's 51st Annual Technology, Media and Communications Conference. My name is Harlan Sur, semiconductor and semiconductor capital equipment analyst for the team. Very pleased to have the team from Qorvo here with us today. We have Bob Bruggeworth, Chief Executive Officer, Frank Stewart, President of Qorvo's Advanced Cellular Group here with us today. It's been a pretty busy earnings season. I've asked Bob to kick us off with a brief overview of the company, summary of the March quarter results, June quarter outlook, and profile for the year. Gentlemen, thank you for joining us today, and let me turn it over to you.
Good morning, everyone, and thank you, Harlan, for inviting us. It's a pleasure to be here today. I thought first maybe what I would do is just remind the group it was about a year ago where we went from two product groups to three. We had IDP and mobile. In IDP, there were three product lines that we moved into what's our CSG group, and that is we moved our Wi-Fi, our automotive connectivity business, along with our SoC that did BLE, Zigbee, Thread, and Matter. That's what went into CSG. And then in the mobile business with three product lines that also went into CSG, Wi-Fi, our pressure sensor business, along with our SoC for ultra-wideband.
That's the three product groups. I wanna make sure we have that. Recapping the quarter, Harlan, just wanna say that, you know, from a HPA, which was one of the businesses, we had a very strong quarter in our power device business. That's our silicon carbide. That's the United Silicon Carbide acquisition that we had made, along with our defense business is doing very well. Our infrastructure business is suffering from, we talked about inventory. Some of the infrastructure manufacturers built up a lot of inventory. They were expecting a much more robust rollout of 5G, and as the world economy slowed down, they ended up with too much inventory, and we said that's gonna take well into probably next fiscal year to clear. That business is doing well. We like how that's positioned.
On CSG, we saw some pretty good business there, and particularly in Ultra-Wideband in filling in the funnel.
some of the activities that are going on there. Wi-Fi is also one of the businesses that's, you know, struggling a little bit from consumer-facing businesses, access points to what have you. we're going through there, and that's bottoming out and also expected to grow. Then in ACS, we talked about we had an extremely strong ramp at Samsung, where we had large dollar content that I know Frank will love to talk about.
What's going on in his business unit. We saw strength there. We believe we saw a bottoming in the Android ecosystem, in particular in China. As just to remind the group, we have been significantly reducing channel inventories. We've been shipping way lower than what the market demand is. We reduced our channel inventories about 20% two quarters ago, and last quarter, 25%. We expect that to persist through June, September-
Yeah.
Pretty much be clean by the end of the quarter. As we talk about a little bit further out in the year, I wanna point out that one of our competitors yesterday, Broadcom, had an 8-K, and they talked about an agreement they have with our largest customer. Well, I'd like to at least share with you that we also have a multiyear agreement with our largest customer. I mean, these are common. We don't disclose them because we don't see it as a risk factor. It's just how we do business with them. You know, that leads me to when we kinda look at the September quarter, 'cause there are questions about, you know, how can you guys grow 50%.
Mm-hmm.
September versus June. What we talked about was, you know, we've seen content gains and share gains. I'll take a minute just to talk a little bit about that at our largest customer. The one area that we have done extremely well for multiple years is our tuners and other small components that I love when people tear down phones, they can't find all our content. We continue to gain share there, so that's one of the largest share gainers we have, and the added content. I don't think people understand, you know, how much tuner content there is in phones, particularly when we get into foldable phones, which Frank can also talk about. At any rate, that's the largest part.
The other point I'd make is, you know, we have been in the ultra-high band socket, which is ultra-high band PA in a, in a filter for three years now, and we've shared that with other competitors all along the way. I point out, Broadcom has always had an agreement, and we still were able to grow that business. We'll gain some share there, just a small amount of share there, but that's most of the content gain. That's why we're confident in our ability to grow in September because it's already known what we've won. We're not planning on a market recovery. We made that clear on the call. What we are saying is our channel inventories are coming down, and we'll slowly start to grow our business, and we talked about that as well. Things are looking pretty good there.
You know, as we look at the year, there's no change in our guidance because of that announcement, whether it's the June quarter, our comments on September, or for the full fiscal year. We stand behind what we said. If you step back and we look at what's driving our growth, clearly the transition to 5G, as most of you know, in the Android ecosystem, most of those phones are not yet 5G. We see that growing out. You know, we've got Wi-Fi 7 coming. In fact, the migration from Wi-Fi 6 to 6E has really slowed. Many of these manufacturers are moving to Wi-Fi 7. You know, we've got what's going on with our power device business. That, like I said, that funnel's growing nicely. We've got our SoC for Ultra-Wideband and Matter and things like that.
We've got many growth drivers as we look forward.
Perfect. That's a great overview. I'll kick it off with the first few questions, and then I'll turn it over to the audience to see if they have any questions. Since we have Frank here today, I'd love to start off with Frank's view of the 5G smartphone market. You know, based on our hardware team's estimates, there are about 585 million 5G smartphones shipped last year. Fairly muted growth, right? Because most of us had 5G smartphone shipments coming into last year, you know, targeted at about 650 million, 700 million. Clearly, the macro environment muted consumer demand profile, you know, during post-COVID were factors, especially in China.
The good news is that if we look at the Android market, as you mentioned, Bob, you know, a key focus for the team, 5G is still only 40%-50% of the Android mix. How do you guys see the 5G Android penetration mix unfolding over the next few years? Where do you think things start to really sort of saturate out?
Yeah. Yeah. Thank you. Overall, I'd say our models are roughly aligned. I think we're on the same page. We do see 5G growing this year, 5G smartphones. We see the overall market continuing to be soft, but that growth of 5G is gonna continue this year. We've said in the 5%-10% range this year. Going forward, we see that 5G penetration continuing. We think we're gonna grow off of the... Especially in Android.
Mm-hmm.
Like you said, we entered this year with 5G smartphones, on the Android side only being at about a 40% penetration rate. We think that's gonna have double-digit growth on an annual basis for the foreseeable future.
Perfect. You know, the team has articulated, you know, RF content per 5G smartphones increasing $5-$7. You also continue to gain main path, you continue to gain Wi-Fi, power management content as well. You've done a great job of bringing more integrated RF solutions to the market, and the design win pipeline is strong, right? Given all of the success, is the $5-$7 step-up in content looking into your forward design win pipeline across all of your customers, is that ending up to be too conservative of a view of the content capture for the team?
Yeah. Thanks. I would say it's still a good estimate, but maybe I'll emphasize a couple points. One, when you go from 4G to 5G, that is new opportunity for Qorvo in a big way. We've been very focused on 5G, so we've got little to no footprint in 4G. When you go from a 4G phone to a 5G phone, even in the entry space, that's all new opportunity for us. That is a big driver of the future. Also, as you look into the smartphone space, and we can talk about this more in a little bit. When you look at the flagship portion.
Yes.
-of smartphones, we see added content there, coming to us nicely in the next few years.
So, uh-
Harlan, can I make one comment?
Sure.
When you say $5-$7, just to be clear, that's the RF content. That's not whether or not we're addressing the power management, Ultra-Wideband...
Yes.
things like that.
Good point.
The additive content of, you know, Wi-Fi, 'cause now they're running, you know, Wi-Fi MIMO and that, things like that. That's added dollar content for Qorvo, but $5-$7 is on the RF side.
The RF cellular side.
Yes. Just to be clear.
Okay. 6 to 60 to 7 transitions-
Mm-hmm.
that will be incremental.
Correct.
That's right.
Okay. No, that's helpful. This year, as Bob mentioned, team is looking for a very strong step-up in the second half of the year. Most of it is content-driven, right? I think consensus has the team modeled up, revenues up 50% calendar year second half, revenue growth versus calendar year first half. Qualitatively, and I know you addressed some of this, Bob, how much of the second half step-up is share gain versus content growth on higher complexity versus just new complexity?
Yeah. Most of it's content gain.
Mm-hmm.
Not necessarily share gain. Again, we've been very conservative on the market. We expect smartphone sales to actually be down, you know, in that 5%-10%, we do expect 5G to grow. If you wanna call that added, you know, content, that's fine.
Mm-hmm.
We look at it that way, not necessarily share gain, as Frank pointed out. We don't really participate in 4G-only phones.
Right.
We have obviously the 4G included in our 5G solution, so we look at that. It's primarily that. What we also, as I said earlier, we've been under shipping to end demand in the Android ecosystem.
That's right.
You know, when you get to the back half of our fiscal year, like I said, we'll pretty much have our channel cleared out, best we can tell by the December quarter, so you start to see that growth really in March to offset seasonal decline in our largest customer.
You mentioned Samsung. The unfortunate thing about where we are in the cycle and the smartphone demand dynamics is that the design win pipeline, the content capture has been totally masked, right, by the weaknesses. Maybe you, Frank or Bob, you guys can help us understand what the traction has been like with Samsung, what the content capture looks like, and what the forward pipeline looks like with one of your largest customers.
I think Frank, you ought to go through, you know, what you've done both with the flagship as well as the mass tier. I think Google, when talking about the Fold, would be a good example.
Yeah.
of the antenna content as well.
Yep.
Yeah. A lot of-
It's masked.
Absolutely. Absolutely.
Yeah.
A lot of good stuff. Maybe, start with Samsung. We've talked about the Galaxy S23. Super excited about what our team accomplished there. Inside the Galaxy S23, we've got Qorvo's ultra-high band, mid-high band, low band, tuning content, Wi-Fi content. It was really a breakthrough for us in terms of our footprint in their flagship phones, and it's something we're really excited about, and we're excited about that going forward as well. The beautiful thing is a lot of those products that are in the Galaxy S23 are the same products that we provide for Samsung in their mass tier, which is great from a volume and scale perspective. That's a strong area for Qorvo. Maybe the other one to emphasize, as Bob said, is what we're doing at Google.
Mm-hmm.
They just released a really nice foldable phone that's got a lot of Qorvo content inside, including our MHB. One thing to really emphasize, Bob said before about a lot of times it's underestimated how much antenna tuner content is in these phones. We've got a really strong footprint in a standard smartphone today. When you go to a foldable phone, we're seeing significant increases in tuner content, sometimes upwards of a 70% increase in the amount of tuning content that you need to add to a foldable phone versus a standard phone. That's a really nice growth driver for us. Then maybe, looking into the future to the pipeline question.
Yes.
One of the things we've talked about that we're excited about is our next generation mid-high band product, where, in addition to a lot of content that's already there, we're adding secondary Rx, MIMO, diversity receive content in that MHB. That's a whole new content area for Qorvo that we've typically not addressed in the past.
Actually, on that note, you guys had introduced that triple combo. I don't know how you guys wanna call it, right? Mid-High Band plus Integrated Diversity Receive.
Mm-hmm.
Very small footprint, more efficient cost, obviously more efficient power envelope. I think you guys started sampling that first half of this year. Maybe can you give us an update, first half sampling? Are customers already taking it through qualification? When do you expect this to start to contribute to revenue?
Yeah.
Yeah.
Yeah, very exciting product for us. We have sampled. We do have a lead customer. We're on track to bring that to production in about a year, so summer of next year.
Mm-hmm.
We're looking forward to expanding that to other customers as we proceed through sampling and development.
Perfect. Before I continue, are there any questions from the audience? Just feel free to raise your hand, and we'll get a mic over to you. You were able to reduce Android channel inventories, as you mentioned, right, 20% in December quarter, another 25% in the March quarter, expecting it to reduce again this quarter. Your Android business is growing this quarter, but that's more just, I think, shipments moving more closer towards consumption, right, as you've worked down inventories. You're not baking it into your forward guidance, but it certainly helps if end demand were to pick up. Are you starting to see some signs of a pickup in sell-through, especially in China, where, you know, post the reopening, the demand profile has just been very muted?
Yeah. We agree that it would be nice if end demand would start to pick up. As you said, we're happy that we're seeing the channel clearing out.
Mm-hmm.
We're staying conservative on our outlook in the smartphone space. We're, if it improves, that's great, but it's not in our model. It's not in our plan. We're continuing to stay conservative on how the year's gonna play out from a shipment perspective.
Yep, go ahead.
If I could. On the call, we talked about that, you know, we had a record booking quarter.
That's right.
which was a good sign. Not record, but the largest in a year.
For your China business.
Also for our China business.
Right. Right.
Again, I think people start to say, "Oh, that's end demand." No, we've been under shipping so much, they started to place orders because we're starting to come off the bottom.
Yeah.
That's all we were trying to signal. It is not a comment on end demand picking up.
Perfect. Your assumptions around channel inventories normalizing, as well as your second half profile, is, I think, not dependent upon a pickup in China.
It is absolutely not required. Any end demand change, if it stays flat, goes down a little bit, we'll be fine.
Perfect.
We're under shipping to the demand.
Okay, good. Based on your discussions with your customers, I assume, or just give us a sense of how the overall demand picture looks like outside of China. North America, Asia ex China and Europe?
Yeah. Staying conservative is probably the best I would say to that. We don't see enough yet to make us feel like the demand environment is improving, so we're continuing with that conservative view in our models.
We commented, I think it was 2 quarters ago, that, you know, given what's going on in the world and the consumers, et cetera, that, you know, no tier in the smartphone market.
Mm.
immune from what's going on.
Right.
To Frank's point, we've taken a pretty conservative look. I think also, you know, what's affected our business is many of our customers based in China also have an export market.
Yes.
They went into Eastern Europe, and, you know, that's not exactly blooming right now either. That's also impacted what we've seen, not just the China market. There's a lot of good data on the China market.
Yeah
It's their export market that's also been impacted.
You know, the current environment, sort of the weak environment masks a lot of the upcoming advancements that are happening in the cellular parts of the market, right? Obviously, the 5G air interface is not a static interface. There are multiple upgrade cycles, multiple standards enhancements. There does appear to be a lot of focus on the upgrade to advanced, 5G-Advanced, right? I think they call it Release 18. What's the timing of this transition? What enhancements does it bring to the 5G interface? More importantly, how is this gonna benefit the team?
Yeah, yeah, good question. We agree there's gonna be 5G-Advanced just like there was 4G-Advanced.
Mm-hmm
... when we went between 4G and 5G. I would say it's more of a continuum than a discrete event, so, it started with some of the enhancements in Release 17. As you said, it's gonna flow through Release 18, and it's gonna culminate with, more advancements in Release 19. You're gonna see incremental, additions to requirements and RF content in each of those releases as we go through the next five, six, seven years together. Some examples. Satellite or non-terrestrial networks is an addition to the RF section of the phone, and And again, it's not just a 01.
Yeah.
It's not just a single event. It's going to be continued added content, added bands, added support, and added capability. We're gonna go from emergency services to data capability, and you're gonna see increased power levels. And you're gonna see increased power levels, not just for those NTN networks, for other bands in the phone as well. Some of you know Power Class 2, and now we're even talking about Power Class 1.5, so that puts a lot more demands and opportunity on the RF. We're talking about added MIMO.
Mm-hmm.
Additional RX and TX. There's even talk in one of the releases of a third uplink as a possibility. We talked before about as we address new form factors like foldable phones, you've got added tuner content.
Yeah.
Yeah, we're excited. Again, it's not just one event. It's not like, okay, in year 2026, there's gonna be Release 18, and you're gonna go 0 to 1.
Right.
It's gonna be more of a continuum over the next five years.
Well, the nice thing about the Qorvo team is for a lot of these enhancements, it's not only at the smartphone level, it's back at the radio access network, right? You guys both benefit on the HPA side of your business, obviously with the benefits on the, advanced cellular part of the business.
Yeah, we've got a real strong position there, particularly in a lot of small signal components. You know, the 5G that's rolling out in India, we're participating in. Like I said, some of the 5G elsewhere slowed down. The other area we're pretty excited about is we're taking a lot of the same technologies that Frank has in his group and doing power amplifier modules for massive MIMO applications as well. Bringing all that in and then also working on filters to also be able to handle that higher power. You know, we're building some of those same type of parts now to be able to roll out for 5G as well there.
I apologize. We also have up on stage with us, Douglas DeLieto. He's the Vice President of Investor Relations.
Thanks, Harlan.
No, thank you. Competition always seems to come up. You know, we have an Asia team. There's a lot of noise that comes out of Asia, right? Lot of chatter on increasing competition from the China RF-based companies, MaxLinear, Richtek, Vanchip. You know, you can name a whole bunch more. They seem to be making some progress on more integrated RF solutions, but still seem to be two, three step behind the team's very highly integrated solutions. Certainly, they don't have the type of in-house capability and technology. What are your thoughts there? Do you see the China competitors as legitimate threats to your market share, maybe over the next sort of three to five years?
Yeah, it's a good question. What I would say is that, us having, local China RF competition is not new. If you go back over the past 15 or 20 years, there's always been a local competitor dynamic, that has come and gone. The names have changed.
Yes
a number of times over those 15 or 20 years. There's always been something to deal with. What we're excited about is that the architectures that we're very big on, which is integrated modules, pulling all of that content into something that's really compelling to our customers, that continues to grow and expand. Our design win activity is strong, so we're excited about that. We are deeply engaged with every smartphone player in the market, talking about next generation, architecting that next generation together with them. We're excited about that, and the future's looking good.
I guess maybe the best way to think about it is if you look at your design win pipeline with your China Android customers pre, right, pre this weakness, and you compare that to your design funnel now with your China customers, how does that look?
Yeah. I would say solid, strong, stable.
Mm-hmm.
Going in the right direction. Those, that's how I would try to characterize it.
Perfect. Before I move to the high-performance analog and connectivity section, does anybody have any questions for the team? Again, feel free to just raise your hand. We'll get the mic over to you. Let's pivot over to your HPA and your connectivity and sensors business. I really like this business. It, you know, through cycle, I think it brings a level of stability, but it really exploits the product portfolio, technology portfolio for the team, right? Back in 2021, you acquired United silicon carbide, very timely, right? Given all the focus on wide-bandgap transistor architectures for power applications like electrification, EV, energy infrastructure. Your silicon carbide architecture is actually quite different, right? Using your JFET transistor architecture versus conventional MOSFET-based transistors. I read some of your white papers.
Some of the figure of merits like on-resistance is much better than conventional MOSFET, right? That drives better performance, better power efficiency. Why has this transistor architecture not become more mainstream? From a design win perspective, you know, designing cycle times for customers in auto and energy infrastructure can be quite long. Maybe articulate how large the forward revenue pipeline is.
Yeah. Let me start with the acquisition has been very successful.
Mm-hmm.
In its first year, it actually did better than the forecast that we put together. Collectively, we thought we would do. You know, check the box there into your question, the sales funnel has been filling in very nicely. One of the challenges that the organization had, quite honestly, was they didn't have the balance sheet to continue to expand, and quite honestly, a lot of these players wouldn't bet on a startup. You know, once we made the acquisition, you know, things really started to accelerate. We feel really good about that. As far as the JFET architecture goes, to your point, we've got a lot of know-how as well as IP around how to actually drive that device to make it so you get that efficiency.
There was just a power conference in Europe, and it was quite flattering to see the world's largest competitor we have in this actually have us on their chart saying, "We have the best MOSFET efficiency, but there's this company called Qorvo that actually has better." It's quite challenging. You know, we've got a great architecture, great product, and a great team, and it's filling in very nicely. To your point, we're already in auto, we're in the charging stations, we're in solar inverters, we're getting into data centers, and it just takes a little bit of time 'cause they're more the infrastructure plays coupled with the automotive industry.
Right.
Feel really good about that business.
Within your HPA business also, your team has a strong footprint in aerospace and defense with your pretty broad compound semiconductor, you know, portfolio. Obviously, portfolio of wide-bandgap silicon carbide. You have gallium nitride. In addition, you do have Department of Defense ITAR trusted foundry status with your domestic manufacturing facilities. Defense spending outlook is quite strong. In addition to that, this kind of went a little bit unnoticed, but the National Defense Authorization Act, which was approved by Congress in December, actually had some additional restrictions around China-based semiconductor products into U.S.-based government applications. Has this been a catalyst in driving more government programs your way? That's the first question. The second question is, give us a snapshot of the types of aerospace and defense programs that the team does participate in.
Let me start with we haven't seen a significant shift in our business due to that requirement that's out there. What I will say is, you know, as you pointed out, we're a trusted foundry, so that's for our filter capabilities, it's for our gallium nitride capabilities, it's for our high-performance GaAs as well. All of that. We, we've also talked about the SHIP program, which is, a packaging that we're actually doing in the U.S. as well. We're kind of like the one-stop shop for this. What's going on is primarily for radar, is one of the areas that we're very big in. You need to continue to reduce the size because we're going from, as we say, one to many.
Mm-hmm.
Used to be one airplane to now drones. Size is very important. That's an area that we're doing very well. The other point is, you know, we've got a lot of allies as a country, we're picking up business.
Yeah
... with other countries' defense systems as well. We're seeing that. We haven't seen any shift in demand for the where maybe the U.S. government suppliers were buying from, China or anywhere like that. Great business, great backlog, you know. Just a little lumpy from quarter-to-quarter, but continues to grow year-over-year.
I know you gave us some examples over the last couple of earnings calls. A good example of sort of leveraging the technology development across portfolios, your BAW filter capability, right? I think you've been able to take that BAW filter capability that you're doing quite well with now on cellular and kinda moving it into CSG, HPA, and so on, right?
That's correct. You know, I touched on a little bit earlier of working on some filters with higher power to be able to work for Massive MIMO applications. That would be one for the infrastructure side.
Mm-hmm.
We're also working on it in Wi-Fi for Wi-Fi 7. We talked about some of the new releases where we're covering all three bands there now. To your point, we are able to proliferate that. What the team's really done extremely well in BAW filter technologies is reducing the size. That part that Frank talked about, that's a mid-high band PAD with the diversity receive, has almost twice the number of filters as a regular MHB, and the footprint's actually smaller.
Mm.
It's our next generation die shrink for our filters that's going to be coming out next year. I also want to give kudos to the team for also expanding where we can apply the technologies, but also reducing the size, and that's what gets into your question on the integration, being able to continue to integrate more in a smaller size, which is much harder for some of our-
Right
... competitors to keep up with.
In 5G infrastructure, radio access networks, you mentioned a little bit about this, you know, strong position in RF power, RF frontend, mixed signal analog. You are burning through some excess inventories here. How do you see the timing of driving your shipments more towards consumption levels, and what are the geographies that are gonna drive maybe that next wave of 5G RAN expansion?
Our primary customers for this are in Europe, it's no secret they've got too much inventory. You know, by our estimations, it's gonna be the next calendar year before they really burn through a lot of that. They were gearing up for tremendous rollouts of 5G. Thought they would pick up even some in China. They did not. You know, India is a bright spot.
Mm-hmm.
We're seeing that go. The U.S. has throttled back some, the same with Europe. We do expect that to pick up next year as well. The other point I would make, Harlan, is, you know, we're also developing now power management for some of those applications as well. The power management that's in HPA now, you know, we're looking at it in the defense industry, we're looking at infrastructure, we're looking at it in some of the mobile phone industry. You know, all different places there. Yeah.
I've got a question from one of our investors that's listening on the webcast. Thanks for the presentation. Bob, you mentioned in your prepared remarks that a lot of the content uplift, 50% content uplift at your large customers, more content growth. Can you help us understand what are the architectural dynamics of these next generation phones that is causing such an expansion of content, right? You mentioned the diversity receive, I believe, right? Or no. You mentioned the tuner capabilities, right? Give us some examples of where you do see a bigger than expected shift in or growth in content because of the complexity of these next smartphone platforms coming to the market.
Yeah, let me clarify one thing. What we said is our revenues will be up 50%...
Right
in September over June.
Yes.
Let me just clarify that.
Right. Right.
What's adding that content is Frank talked about all the complexity that's going on and the number of radios and the different frequencies that are going on, that's what creates antenna problems, and they run out of space. Tuners enable them to use the same antenna for multiple frequencies.
Mm-hmm.
As you continue to add radios, you continue to have a challenge with the tuners. The primary area that our growth is in is actually in tuners.
Mm.
We did gain some share there as well.
Yeah.
Again, that's a strength that we've had for years and years since they've been using tuners there.
Right.
You know, we've built on that. That's primarily the number one driver. I said, "Hey, we're gonna pick up some share in the...
Mm-hmm
... ultra-high band," but we've been sharing that socket for three years now.
Yes
with various competitors, so.
Right.
That's the two primary areas where we're growing.
Perfect. On the financials, you guided 44% gross margins for this fiscal year. Underutilization is driving 10 percentage points of the gross margin headwinds. Got a little bit of inflationary pressure as well. How should we think about these headwinds reversing if the inventory worked on profile plays out as you expected, the launch of new models, content gains plays out as you expected? You know, how do you expect that to play out? Does the team think you can get back to 50%+ gross margins next year?
The team absolutely believes we will get back to 50%, full stop. The timing of that, to your point.
Mm-hmm
... depends on how we work through what we call our higher cost inventory that's been burdened with the factories that were under utilized over the past year. What I think is, you know, one of the reasons why we wanted to shape the year this year was because a lot of our business that's our largest customer is outsourced. It's like we're in that sense, we're a fabless company, so it's not burdened with the absorption of the factories when they were not utilized, right. As we move forward, we're working through that. We didn't guide when we'll be through all this.
Right.
It's not gonna be this fiscal year. It'll be next fiscal year, by the time we burn through all that inventory. You know, those products that are outsourced for us that were silicon-based, you know, we're not burdened with that and it's got very attractive margins, which is why we said our margins will go up.
Yeah
Come back down, which follows the normal profile of our largest customer.
On the manufacturing front, and we've touched upon this several times, but I feel like this is a key differentiator for the Qorvo team, right? The integrated solutions using our BAW filter technology, you've done a great job continuing to scale that technology, right? Die shrinks, 6-inch to 8-inch wafer transition, then I think often overlooked is, you know, blocking and tackling just yield, manufacturability, efficiencies. I mean, what else is the team doing to unlock more capacity and drive a lower cost profile for the BAW portfolio?
More of the same. I mentioned we're just coming out with the next generation, next year die shrink in the BAW filters. We've got another generation that'll be coming out after that. They continue to do fantastic work there. We've got about everything to 8 inch now. We've still got some work to do there as well.
Perfect.
Lots of activity. Real pleased with how they're executing. Harlan, thank you very much for having us.
No, thank you.
I appreciate you saving the tough question for Doug.
Thank you very much.
Thank you, everyone.
Appreciate it. Thanks, Harlan. Thanks, sir.
Yeah, thank you.
Thank you.
Thanks. Thank you.
Thank you.