Good afternoon, and welcome to Skyworks Solutions fourth quarter fiscal year 2022 earnings call. This call is being recorded. At this time, I'd like to turn the call over to Mitch Haws, Investor Relations for Skyworks. Mr. Haws, please go ahead.
Thank you, David. Good afternoon, everyone, and welcome to Skyworks' fourth fiscal quarter and year-end 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 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. 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. Before reviewing the fourth fiscal quarter results, I wanna highlight the significant accomplishments that underpinned another year of record financial performance for Skyworks. Specifically, for fiscal 2022, we generated a record $5.5 billion in revenue, a 7% year-over-year increase. We achieved a record $2 billion in revenue for our broad markets, up 37% year-over-year, representing 36% of total revenue. We drove earnings per share to a record of $11.24, and we returned $1.3 billion to shareholders through dividends and share repurchases. Now, turning to the September quarter. Our diversified portfolio and expanding set of customers drove record Q4 performance. We delivered revenue of $1.4 billion, a Q4 record, and above consensus estimates.
We achieved gross margin of 51.3% and operating margin of 37.6%, and we posted earnings per share of $3.02, exceeding our guidance by $0.12. In addition to the record financial results, we continued building a foundation for long-term growth with strong operational execution and design win momentum. In mobile, we delivered integrated platforms to the leading 5G smartphone OEMs, including flagship and mid-tier launches at Google, Samsung, and others. In IoT, we continue to gain new customers and extend content. We partnered with Vodafone to launch the U.K.'s first Wi-Fi 6E platform. We shipped into tri-band platforms for Frontier Communications, and we launched connectivity solutions with Amazon, supporting their Wi-Fi 6 power- over-e thernet access points.
Across the infrastructure and industrial markets, we provided programmable timing solutions for a leading optical transport OEM, simplifying 400G capacity in data centers and telco networks. We captured new infrastructure wins at Samsung, enabling service providers to expand mid-band capacity and coverage. We delivered comprehensive timing technologies to a leading O-RAN small cell provider. In automotive, we achieved another record quarterly results, with revenue strength highlighting our connectivity and power isolation portfolio. We secured digital radio platforms with the global EV leader, as well as a top European luxury brand. We developed onboard charging solutions for a leading Korean OEM, and we received a key supplier award from Schneider Electric, highlighting the capabilities of our power isolation portfolio.
Moving forward, mobility, the shift to the cloud, and the electrification of automobiles are all key catalysts driving demand for our unique solutions. The value and utility of mobile data continues to grow, with estimates of 750 million mobile subscribers being added by 2027. In parallel, global cloud revenues are expected to reach $1 trillion by 2028, representing an annual growth rate of 16%. By 2030, an estimated 96% of new vehicles will feature onboard connectivity, and nearly 25% of those vehicles will be electric. Each of these trends require complex connectivity engines, underpinning the need for high speed, ultra-reliable, low latency performance. Skyworks is uniquely positioned to craft faster, smaller, and more efficient form factors, seamlessly integrating and customizing for an expanding set of customers and markets and applications.
As these opportunities emerge, Skyworks is poised to win with a talented team that has executed extraordinarily well in the face of macroeconomic and geopolitical headwinds. With our market leading profitability and scale, we are leveraging strategic technologies from high-performance filters to custom gallium arsenide and advanced packaging, while elevating performance for a coveted set of diverse customers. With that, I will turn the call over to Kris.
Thanks, Liam. Skyworks' revenue for the fourth fiscal quarter of 2022 was $1,407,000,000 , up 7% year-over-year and up 14% sequentially, driven by both mobile and broad markets. Broad markets were particularly strong at just over $500 million of revenue in the quarter, up 30% year-over-year and representing 36% of total revenue. Gross profit in the fourth quarter was $721 million, resulting in a gross margin of 51.3%, up 30 basis points year-over-year. Operating expenses were $192 million or 13.7% of revenue. We generated $529 million of operating income, translating into an operating margin of 37.6%.
We incurred $50 million of other expenses and our effective tax rate was 5.3%, driving net income of $486 million. Top line growth and execution on margins drove diluted earnings per share of $3.02, ahead of consensus estimates and representing growth of 24% sequentially and 15% compared to Q4 of last year. Turning to cash flow. Fourth fiscal quarter cash flow from operations was $236 million, and capital expenditures were $142 million. In terms of capital allocation during the quarter, we returned $179 million to shareholders, paying $99 million in dividends and repurchasing approximately 800,000 shares of our common stock for a total of $80 million. Let's also review our fiscal year 2022 performance. Revenue grew 7% to a record of $5.5 billion.
Gross profit was $2.8 billion, resulting in a gross margin of 51.2%. Operating income reached $2 billion, with an operating margin of 37.3%. Net income was $1.8 billion, translating into a record of $11.24 diluted earnings per share, up 7% year-over-year. Cash flow from operations was $1.4 billion, and during fiscal 2022, we returned $1.3 billion of cash back to the shareholders, with $373 million in dividends and $887 million in share buybacks. In summary, the Skyworks team delivered record revenue and earnings per share in fiscal 2022 while fortifying the business with the investments that advance our technology leadership and support long-term profitable growth. Now let's move on to our outlook for Q1 of fiscal 2023.
Given broad demand weakness, we expect revenue to decline on a sequential basis. Specifically, we anticipate revenue between $1,300,000,000 and $1,350,000,000 . Gross margin is projected to be in the range of 51.25%-51.75%. We expect operating expenses of approximately $190 million-$193 million. Below the line, we anticipate roughly $16 million in other expense and a non-GAAP tax rate of approximately 12.5%. The increase in the tax rate from prior fiscal years reflects the impact of the U.S. tax laws requiring the capitalization and amortization of R&D expenses for tax purposes starting in Q1 of fiscal 2023.
Absent legislative action to reverse the R&D capitalization rules, we expect our full year fiscal 2023 non-GAAP effective tax rate to be consistent with the 12.5% we are estimating for Q1. We also expect our diluted share count to be approximately 160.5 million shares. Accordingly, at the midpoint of the revenue range of $1,325,000,000 , we intend to deliver diluted earnings per share of $2.59. With that, I'll turn the call back over to Liam.
Thanks, Kris. As our record financials demonstrate, our portfolio is powering an increasingly broad set of applications across the market's most essential and fastest-growing segments. Our proven execution and deep customer partnerships position Skyworks to outperform. Moving forward, our revenue diversification, profitability, and cash generation will fuel long-term growth while increasing shareholder returns through dividends and share buybacks. That concludes our prepared remarks. Operator, let's open the line of questions.
Thank you. Ladies and gentlemen, should you have a question, please slowly press the star key followed by the number one on your touch- tone phone. You'll hear a three-tone prompt acknowledging your request. Should you wish to withdraw from the question queue, please press the star key followed by the number two. Given time restraints, please limit yourself to one question and one follow-up. Please press star one now if you have a question. We'll take our first question from Harsh Kumar with Piper Sandler. Your line is now open.
Yeah. Hey, guys. Liam, Kris, and team, first of all, you know, congratulations. These are amazing results compared to the rest of the people in the industry. Liam and Kris, you talked about macro when you talked about the guide. I wanted to understand how much of a function China and inventory problems in China is part of the decline for the December quarter, or is U.S. a part of that as well? Most folks are indicating that China is pretty off. I'd be curious about, you know, how your business is doing in China. Any color you have there would be appreciated. I've got a follow-up.
Sure, Harsh. Appreciate the question. Yeah, it's certainly been volatile across the space, but I would say the China markets have been certainly a unique situation. Now, as you know, for us, we've been much more focused on the higher-end brands, although we're exposed to global markets broadly. What we have seen is Android markets contract quite a bit, and within there, the OVX portfolios in mobile have been hit quite hard. The good news for us, Harsh, and I think you know this, is that we've been slowly driving more towards the higher-end brands. The exposure to the OVX markets have been radically reduced and de-risked in our portfolio.
Even going back to the early days of, you know, the Huawei and ZTE and coming down to the OVX markets, you know, we've been able to manage through those headwinds. I would say that as we go forward, the portfolio that we have in front of us is outstanding. The technology developments that we put forth, the investments that we've made in scale and technology, the diversification themes that we put forth are all gonna be incredible benefits and tailwinds for us, you know, once these markets normalize. We feel really good about it. China, definitely a weak spot. I think in terms of relative strength, you know, there's still some opportunity for us, but it's definitely a bumpy part of the landscape today.
Thanks, Liam. Then for my follow-up, you know, the question that we're already getting from investors is that, you know, everybody else is sort of hurting in the industry relative to you guys. The question that we're getting is, maybe as we start to look past December, do you think that the flush in China for at least Skyworks is largely contained in the December quarter? Or do you think it's possible that China gets materially worse for you as you look into the March and maybe even the June quarter?
Yeah. You know, it's hard to tell for sure, Harsh, but I would say that the relationships that we have with the key customers and, you know, the visions that we have together on opportunities, we still feel like, you know, there can be some recovery here. Of course, this is unique circumstances for the industry in general, but I definitely would look at Skyworks to help perform on a relative basis. There may be some headwinds here continued, but I expect that our team is gonna be able to navigate that better than others. It's not just words, the ability to manage our fabs, to deliver very, very high-performance solutions in our factories and put those together with our customers day to day.
You know, we're not a company that puts products on the shelf and looks for our customers to pull. You know, we work together to drive a demand curve to be very, very much in lockstep with the players that we're with. Hopefully that has been in the past, and hopefully will continue that we can continue to drive success with our customers, knowing that we're a proven supplier, a proven solution for them.
Yeah. Maybe I would add there that, you know, December for China is definitely the low point. It can't get much lower than that. The question is, when does it switch back on? Is it in March? We expect some of it to start in March or the following quarter. Again, in December, it's completely de-risked, can't get much lower than that.
Okay. Next, we'll go to Matt Ramsay with Cowen. Your line is now open.
Yeah. Thank you very much, guys. Good afternoon. I guess for my first question, Liam, maybe you could talk to me about the non-mobile business and the trends there. I know there'll be a lot of questions around inventory corrections and whatnot in the smartphone market in China and with your largest customer, but I wanted to focus on the broad markets business because it's a bit more diverse. Maybe you could kinda walk us through the different sort of sub-segments of that collection of businesses, the stuff that you acquired, the core Skyworks business, and if there's any puts and takes on where you're seeing weakness. I know there's some folks that across consumer devices, there's certainly some weakness.
There's been hints at the start of some weakness in industrial. You guys are exposed to data center where, and wireless, where there's some different trends in different markets. But if you could just kinda walk through the puts and takes there and what you expect that broad markets business to do in the guidance on a sequential basis, that would be really helpful. Thank you.
Sure. Good question. Just to kinda kick that off, we ended our fiscal 2022 with a $2 billion broad markets business, so that's really good. 36% of annual revenue there. A lot of good work going on, but the opportunity there is outstanding. If you look at some of the markets that we have today, really good position, a lot of strength in mobile, and that will continue. The broad markets business has an entirely different set of opportunities. It's much broader, the technology nodes are more far-reaching, and the customer set is extremely large. I think those are important points. If you think about where we're going right now, we're making strides in the automotive business. We're making more and more headway here or more upside in infrastructure. The IoT portfolios continue to grow.
A lot of connectivity in that, but also, you know, looking at more industrial applications and industrial customers. There's a lot going on there in broad markets and, you know, our sales and marketing teams are working every corner of the globe here to drive revenue. There's definitely for Skyworks, a lot of headroom coming from our current base, and we expect that to be a key driver going into FY 2023 and beyond.
Got it. Thank you for that, Liam. Just as my follow-up, Kris, a quick clarification in the guide for December, up, down, flat for broad markets. I guess my second question is talking to the folks at Qualcomm last night, they have a pretty good view of the global smart mobile market given their breadth. They talked about weakness in mid-tier Android in China, which has been there for a while, sort of expanding to weakness globally and moving into higher tiers of the market, including the premium tier, with customers wanting to hold less inventory basically across the board in smartphone. Is that something that you guys are observing in sort of the premium tier of the market as well? Thank you.
Clarification on broad markets in the guides to December. It's kind of flattish on a sequential basis, but still up on a year-over-year basis, low single digits.
All right, next we'll go to Raji Gill with Needham & Company. Your line's open.
Yeah, thank you for taking my questions and congrats as well on kind of better than expected results relative to peers for the December guide. I'm just curious about going back to the December guide and the commentary around China. My understanding that you had you know significantly de-risked your China handset business you know December of last year as you started to stop basically shipping into the channel and China was a relatively small percentage of revenue 2%, 3%, 4% in terms of smartphones. I might be mistaken there. I'm just curious you know the sequential decline in mobile phone when your kind of top customer has been ramping pretty well, better than expectations.
Just curious why the smartphone business is down sequentially in Q4, given your top customer ramp and then given your limited exposure in China.
Yeah. There's two parts to the business, right? There is the large customer, and then there's Android. Within Android, there are two large players as well. There is China, basically OPPO, vivo, Xiaomi, and then there is Samsung. We definitely have been de-risking China for the last couple quarters given the COVID-19 lockdowns and the well-documented softness in end customer demand in the China market. There is also a Korean player in Android where we have been doing really well. We have seen very strong year-over-year revenue growth in fiscal 2022 with that customer. However, that customer is also not immune to some of the softness of the global demand, including in some of the European markets. It's very well documented as well there.
There is some inventory overhang at that customer, and that's definitely having an impact on our December guide.
Yeah. I would also say that, you know, despite the near-term bumps with that customer, there's a great opportunity for content gains. We're excited about that, and there isn't anything that's gonna impede on that effort. There's a lot of opportunity for us to round that out. I think the China case, we have de-risked appropriately, but we have a great deal of opportunity with the other leading smartphone players. Our teams are all over that.
Yes. Thank you for that. Just for my follow-up, just a question on the inventory, both kinda internal inventory as well as inventory in the channel. If I look at the absolute dollar inventory, it's up about, you know, almost 30% on a year-over-year basis, you know, relative to, you know, revenue growth of 7%. Number one, just wanted to get an understanding of how you're managing internal inventory, and then, how would you characterize, I guess, smartphone channel inventory or any, inventory in the broad markets? That'd be helpful. Thank you.
Yeah. As it relates to the internal inventory, I'm comfortable with where inventory is on our books. Actually, in the September quarter, it came down six days in terms of days of inventory. You have to keep in mind that the products and the solutions that we bring to market are very complex, highly integrated solutions, and we're actually doing more and more in that. That also means that actually your production cycle times are getting extended as you have to integrate more and more, especially filters, more and more filters into our integrated solutions. In addition to that, I've talked about that before, in a supply chain challenged environment over the last couple of years, we definitely have increased buffer stocks, making sure that we can supply to our customers.
In addition to that, we are level loading our factories. We have seasonality in our business, and we are trying to maximize factory utilizations through level loading. Having said all of that, I think the supply chain disruptions and the tightness in the supply chain is probably going to get a little bit easier. That will allow us to potentially in the future reduce some of those buffer stocks and will further help us to gradually bring down the days of inventory. That's on the internal inventory. On the external, in terms of channel inventory, we manage that very carefully. I would say that's at a normal level. I think where the bigger issue is some of the inventory at our customer at the phone level.
Again, that's been very well documented. There's definitely pockets of elevated inventory at the phone level, especially in the Android part of the business.
Okay. Next, we'll go to Gary Mobley with Wells Fargo Securities. Your line's open.
Hey, guys. Thanks for taking my question. I need to congratulate you as well on a strong finish to the year. I wanted to start off by asking about some customer mix, you know, percentages for the fourth quarter. Specifically, what was the mix from your largest customer, and were there any other greater than 10% customers in the fourth quarter?
Yeah. Our largest customer was in the September quarter approximately 63% of our business. Great execution by the team here, supporting the launch of our largest customer new products. That translated into a 30% sequential growth, or a 14% year-over-year growth. I know there is always a lot of question about, did Skyworks gain content or not? Well, those numbers clearly illustrate that we had a major uplift in content in the new products that have been launched by our large customer.
Any other greater than 10% customers?
No, that was the only + 10% customer in the quarter.
Okay. As my follow-up question, I wanted to sort of dig or double-click into your Q1 guide. It looks like it's about a few hundred million dollars shy of what you would normally expect given a normal seasonal sequential comp. Can you quantify how much of that is just general market weakness versus what is inventory drawdown from what sounds like your Samsung?
Yeah. I think the biggest culprit is definitely an inventory overhang in Android, right? In China. I'm talking at the phone level, not necessarily at the component level. China with OPPO, vivo, Xiaomi, and then more recently as well, with our Korean customer. That is definitely the main culprit here.
Next, we'll go to Ambrish Srivastava with BMO. Your line is open.
Hi, thank you very much. What is the percent of the China Android business for you now, Kris?
Very small. As I said, we've de-risked it. We've been bringing it down over the last couple of quarters, because we noticed that there was an inventory overhang building up, and so we de-risked it and it's now very small.
Yeah, and that being largely, we're talking about China here. Obviously, we have other Android players that we're continuing to drive solutions and have some more, I think, some really good opportunities that will flow through the year.
That's right. Okay. I understand. Just to make sure, when you say very small, it's like low single digit as a percent of total sales? What was it at the peak? A quick follow-up, Kris, what's the CapEx for the full year?
In fiscal 2022, we did $490 million of CapEx, which was 9% of revenue. We definitely will continue to invest in the business, but we also will do that in a smart way. Given some of the demand softness that we experience now, we definitely are going to manage our CapEx accordingly.
Next, we'll go to Blayne Curtis with Barclays. Your line is now open.
Hey, guys. Thanks for my question. I just wanted to ask you on March, and I know you don't wanna guide March probably, but just the moving pieces. Obviously big misses from Qorvo and Qualcomm, but they did both highlight content gains at Samsung. That seems to be the one offset for March. I guess this is two-part. How do you feel about your content and growth at that customer? And then if you've got just more thoughts on as to the two moving pieces. Should the box inventory, I guess, zero, you know, you're shipping basically nothing, but should the Korean inventory situation be done by then? And I guess you know, your prospects for growth, you know, kind of with new business there.
Sure, Blayne. This is Liam. You know, the content opportunity for us continues to grow. We have penetrated some really unique solutions with our largest customer, and really the opportunities going forward are very bright. The engagement is outstanding. And our ability to outperform technically with that customer is continuing, and that. I don't think that's gonna change at all. We're really bullish on that. You know, when we go back to things like Samsung, I think there's a lot of opportunity there. We just got an odd turn right now the way that market rolled out. The opportunities continue to be strong. You know, we are, I think right now, dealing with some really nice new technology that we're bringing forth in the portfolio beyond handsets.
If you look at where this business is gonna go after some of the inventory burns down. We're very tight on that, by the way. I mean, we know how to work with the largest customer. We've been doing this for years, and you know, we're very close in terms of the signals that we have that will help us manage inventory, et cetera. A lot of good stuff going on there and you should definitely expect from us to do more on the Android side, maybe absent some of the China players.
Thanks. Then I just wanna go to Matt's question on broad markets and the moving pieces, 'cause obviously consumer Wi-Fi sounds very weak, maybe service provider more mixed. You tell me, I guess I'm curious the direction that the Silicon Labs businesses, 'cause I know they were shorted for a while and have more in terms of exposure, maybe more industrial, communications and such. Just thoughts on those kind of moving pieces as to what drove the beat. You're not seeing much of a dip in December. Are you seeing weakness in one area and it's offset, or are you just not seeing much weakness?
Yeah. I would look at two things. On the MSS lab portion, really good stuff. I know you've heard it from us before, but honestly, this is a deal that is Wi-Fi portfolios as we start to move to Wi-Fi 6 and 6E. We've got a great lead in that product line. There's a lot of technology that we're bringing to bear. It's higher grade, it's higher performance. Consumers are just now starting to buy into that, think of that Wi-Fi as a kind of cycle similar like 5G. There's a lot of replacement and new engagement around that portfolio, and we have a great solution. We're feeling good about that.
Then another market that's popped up obviously through the SLAB deal is automotive, and we didn't talk that much about it today yet, but it's a really critical part of this, of the portfolio. We've got a power isolation business that's doing incredible things. We've got customer engagements with names that we, you know, wouldn't have had with the Skyworks two, three years ago. We're really excited about that. The brands are starting to extend. The application set is getting stronger, and the technologies that we're populating are really critical and unique.
Okay. Next we'll go to Karl Ackerman with BNP Paribas. Your line's open.
Yes, thanks, Liam and Kris. I appreciate you taking my question. I wanted to follow up on Blayne's last one, which was, you know, your comments on broad markets being flattish for December, that does seem exceptionally strong versus peers, after coming off outperformance in September versus your previous guide to the tune of roughly 10 points. I guess, you know, how much of the outperformance is from, you know, some of the backlog you have serviced, that I think was initially challenged by matched set issues, you know, in the last quarter or two that seems to be loosening up. I guess how much of that outperformance is driven by that? Then I have a follow-up.
Yeah. I mean, there's some gains with kind of unfreezing that backlog, but the truth is, it's really new design wins and new opportunities. I know we've said it before in other calls, but you know, the organization is really melding now into a period where we've got great technology. We have engagements with customers on both sides, the slab side and obviously the core Skyworks. You know, the business development is going really well. The revenue is growing better than we thought actually. You know, we continue to see more and more opportunities for growth. Also you've got pretty solid margins in that portfolio as well. It's going really well. Lot more to do.
I would bet hard on data center and automotive here and that portfolio that's starting to really ramp. It's been a great transaction and there's a lot more to go from there.
Yep. No, I appreciate that, Liam. I guess to that point, you know, the I&A division you acquired brought you new opportunities in automotive connectivity, and power isolation for electric vehicles and data center hardware. Could you just talk about that? Could you just double click on some of those opportunities because they seem to be gaining much traction. Maybe any things you might call out on that. Thank you.
Yeah, I mean, so, you know, give you an example. You know, we're dealing with companies like AWS and Google Cloud and data center. That wasn't there a year or two ago. Didn't have that business. You know, we come around and look at automotive, power isolation, really critical technology. We didn't have those a year ago or two years ago. You know, there's a lot of great stuff going on in the infrastructure markets that we have had a position in, but now we're expanding. You know, when you get deeper into the automotive space, there's just an amazing set of technologies that require wireless and/or high-performance semiconductor products. And that's what we do really well.
It also helps us as we start to move further and further into autonomous, where high speed connectivity, wireless high speed connectivity is absolutely critical. We all know that. It's really a dovetail between great customer engagement, technology, and also, you know, really diversified end markets that are growing. We're excited about it. Like I said, we've been outperforming on that transaction. We're putting more investment into that portfolio because it's returning phenomenally. You know, there have been some sticky spots with supply chain, and you mentioned that in your question. That was one of the things that would drag a bit, and I think we're getting through it.
It's a different business where, you know, Skyworks, a little bit more of a big game hunter approach, and that's fine. The I&A portfolio is much broader. With the support and funding from the larger Skyworks, I think there's just incredible things that we can do competitively, and we're looking forward to that.
Next, we'll go to Timothy Arcuri with UBS. Your line is now open.
Thanks a lot. Kris, I have a question on the December guidance. I mean, even if I zero out China Android and I zero out Samsung, the big customer is down about 10% year-over-year, and you were down 30% year-over-year in September. The units at least aren't a really big mystery for September. So I'm just trying to foot that and reconfirm that you actually gained share this launch. I think you were planning to gain 5%-10% content. Maybe if you did gain the share, could it be that maybe that customer bought parts for this launch much earlier because of how much money they left on the table during the last cycle due to the constraints? Can you just help us foot all that?
Yeah. Tim, I think we probably will have to take that offline and go into a deeper dive there. I think you have to take into account that part of the large customer revenue is in broad markets as we sell many of our solutions into other devices than their phones. I think that's part of the reconciliation there. Again, the business.
Yeah.
As I said before with the large customer, is strong. It was strong in September, continued to be relatively strong in December as we execute with content gains in the new phone lineup and continue to support their ramp.
Okay. Yeah, let's take it offline. I guess then the second question is really on March. I know there was a question just asked about this, but to ask it maybe a little different way. Seasonality this year obviously is a bit wonky because December is usually not down, and it's down this time. March is usually down low teens sequentially. I would think maybe it could be a little bit better than that. Can you sort of give us a little bit of a sense on March, just in light of how December is like so much below normal seasonal? Thanks.
Right. Tim, this is a very volatile environment. There is macroeconomic headwinds, there is a war going on in Europe, there is COVID flares. We're gonna stick to guiding one quarter at a time. I mean, some of the elements that you mentioned there, of course, could potentially have an impact on the March quarter. We discussed before, it will depend to a certain extent on how the inventory at the phone level gets resolved and when some of that Android business starts picking up again.
Yeah. I will say that, you know, we definitely will have visibility, so we're not blind. You know, we're really close to the customers. You know, we're on top of the transaction. Everything that Kris said is exactly true. I would just add that, you know, our ability to look through the channel and be engaged with our customers and our suppliers is very strong.
Next, we'll go to Edward Snyder with Charter Equity Research. Your line is now open.
Thanks a lot. Liam, first of all, congratulations on the content gain to the largest customer, especially the transmit DRx part. I suppose that puts to rest, at least for the next year, the pre-launch rumors of a net decline on content and share loss.
Yeah.
Our teardown on the part showed a lot of BAW filters, which has been a trend for you over the last several years. I was just wondering, has this brought you to the point where you feel confident about competing for something like a mid-high band module, or is its reliance still on really complex multiplexer filters put it out of reach unless we see like an RFFE architecture change that would pull those modules out? I'm trying to get a feel for, you showed really good content gains over the last several years, largely on new parts. I'm just wondering if you're gonna start looking at poaching off some of the stuff that's been around for quite a long time, but you didn't have the technology for in the past. I had a follow-up.
Yeah. Good question, Ed. Appreciate that. Yeah, I mean, you've heard me say it before, we like to take the fastball early, right? We try to really capitalize on the most challenging opportunities and then kinda go downhill. That's what we've been doing. You know, we really do our best work in the higher end most challenging environments. Our design teams are exceptional, and they really enjoy this. Again, they like to hunt as well. You're gonna see us. I appreciate your visibility on what we've done already, which is pretty solid and, you know, more to go. Our design teams and our engineers are fired up. They wanna take more.
We're gonna try to grow the portfolio with the largest customer, but also with many others outside the largest customer. You know, as you know, performance wins, complexity resolution wins. You know, having the ability to put that all together and make it look really easy, you know, that's what we try to do, and hopefully that trend will continue.
Okay. Just as a kind of housekeeping there. By our calculations, that was in excess of about 10% content gain. I just wanna check, Kris, maybe if you could give us a reality check on that. Is that in the ballpark or do we feel like we're a little low there? If I could, and Liam, should we expect the architectures Wi-Fi 7 is coming, and should we expect the architecture of that, especially in phones, to shift back to external amps? If so, can they use CMOS at those frequencies or will it have to be GaAs? 'Cause Qorvo obviously mentioned last night it's an area of growth for them. You know, I was just curious about the technology breakdown for that, if you're seeing more competition in that area.
Yeah, at first, yeah, you did a great job at the teardowns and your conclusion of content gains in excess of 10% is absolutely true.
Our final question comes from Vivek Arya with Bank of America. Your line is now open.
This is Blake Friedman on from Vivek Arya. Just a quick question on your large Korean customer. I know one of your peers last night also highlighted various design wins there. Just curious, from your perspective, if you're seeing an overall expansion of the TAM of this customer or if you believe you're seeing share gains in any way.
Yeah. Honestly, here we're starting to see an expansion of TAM with the largest Korean customer. That's always been kind of a battle for, you know, lower cost versus performance. You know, what we're seeing is that performance is the driver. If you look at the incremental, you know, user experience between a mid to a higher-end phone is exceptional. You know, we see it here in the U.S. with the leading player, but it's also a great opportunity for mid-tier. There's a lot to do there, and I think that's a great opportunity for us with the largest Korean player. You know, we've got the China business de-risked, and we've got great position with the top brands.
You know, we're looking forward to, you know, getting through some of the bumps that we're dealing with right now and moving into a stronger 2023.
Great. Then, just as kind of a follow-up to that, maybe more just a higher level, you know, outside of the unit weakness, more on the content side. At this point, with 5G penetration being about like 55%-60% of the overall market and your largest customer mostly transitioned to a full 5G suite, I was just kind of hoping you could talk about, you know, the future content opportunities as the cycle matures, and more importantly, from generation to generation, what the, you know, on average, maybe the expected content growth should be.
Yeah. I mean, the utility of these high-end smartphones is so critical to the user. We've been seeing consistently, you know, opportunity for growth in what we call content or technology reach. We're not seeing that abate. You know, the nice thing is it's also branching out. It isn't just, you know, we've done some great work with bulk acoustic wave and TC- SAW and capitalizing on our in-house gallium arsenide, all these unique solutions, and bringing them together in a holistic solution that can go into multi-end markets. The good news is, you know, the companies that we deal with, especially the largest ones, they wanna push the envelope. They want the performance to get stronger.
They want the performance to drive more applications, and that drives more technology reach for Skyworks. We really don't see that change. The usage cases around mobility and connectivity, I think everyone on this call, you know, we all know it's really vibrant. You know, we'll have pockets where quarters where things get bumpy, but you know, the net output here is gonna be up and to the right, and the technologies and the know-how to put that together and engage with the right customers is, I think, very critical, and it's something that we continually try to improve upon.
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 remarks.
Thank you all for participating in today's call. We look forward to talking to you at upcoming investor conferences during the quarter. Thanks again.
Ladies and gentlemen, that does conclude today's conference call. Thank you for your participation. You may now disconnect.