Good afternoon, and welcome to Skyworks Solutions 4th Quarter and Fiscal Year 2019 Earnings Call. This call is being recorded. At this time, I will turn the call over to Mitch Haws, Investor Relations for Skyworks. Mr. Haws, please go ahead.
Thank you, Rob. Good afternoon, everyone, and welcome to Skyworks' 4th fiscal quarter year end 2019 conference call. With me on the call today are Liam Griffin, our President and Chief Executive Officer and Chris Senesol, 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 ks, 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 prior 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 over to Liam. Thanks, Mitch, and welcome, everyone. The Skyworks team delivered solid profitability and strong cash flow in Q4 and throughout the fiscal year, demonstrating our technology leadership and the resilience of our business model, despite a challenging end market.
During the 4th fiscal quarter, we grew revenue 8% sequentially and excluding Huawei, revenue was up 20% sequentially. We produced gross margin of 50.3 percent and operating margin of 34%. We posted earnings per share of $1.52 ahead of our guidance and up 13% sequentially. And we generated exceptional operating cash flow totaling $417,000,000 For the 2019 fiscal year, we delivered revenue of 3,400,000,000 dollars earnings per share of $6.17 and operating cash flow of $1,400,000,000 We generated free cash flow of nearly $1,000,000,000 up 16% from the prior year, representing a free cash flow margin of 29%, approaching our model target of 30%. And we returned nearly $1,000,000,000 to shareholders through buybacks and dividends.
At a higher level, the 5 gs upgrade cycle is now fully underway, expanding across 4 continents with over 80 carriers and an expanding set of smartphone and IoT customers. We expect a substantial upgrade cycle as the 5,000,000,000 mobile subscribers today migrate from their 3 and 4 gs devices to 5 gs, creating a significant opportunity for Skyworks. Stakeholders are now seeing the compelling economics that this substantial technology inflection brings, with the momentum building into 2020 beyond. As we've said in previous calls, 5 gs is a technology, not a product. It offers gigabit speeds, ultra low latency and greatly enhanced network capacity, catalyzing a wide set of usage cases, while becoming the universal connector.
Although the smartphone will lead the transition of 5 gs, we see an even more compelling opportunity in new markets and applications, including industrial IoT, autonomous transport, smart cities, artificial intelligence and the proliferation of high definition streaming media. More importantly, highly integrated connectivity engines will play a pivotal role in the deployment of this next generation standard. By resolving the daunting analog and RF complexities that challenge the capabilities of existing hardware and networks. Skyworks is squarely at the forefront of this sea change in connectivity. We have a rich heritage in the design and execution of highly integrated and customizable system solutions, earning the trust of market leaders as they cross the chasm from 4 gs to 5 gs.
Our operational footprint goes far beyond units and scale. It is centered on unique strategic technologies crafted in our own fabs while creating sustainable competitive advantage. Our technology strength is fortified by world class performance and scale across a broad array of capabilities, including TC SAW and bulk acoustic wave filters, an expanded family of MIMO solutions and ultra high band and diversity receive modules. Our highly customized system solutions support a broad set of wireless protocols, including GPS, Wi Fi, Bluetooth, LoRa, ZigBee and of course 4 gs and 5 gs. From our breakthrough SkyOne Sky5 uniforming platform, our 5 gs small cell solutions, Skyworks' comprehensive approach across both infrastructure and user equipment facilitates powerful high speed end to end connectivity.
Now in our mobile business, traction in 5 gs is accelerating with design wins at leading OEMs leveraging our broad and growing set of platforms. Our solutions are purpose built to offer interoperability and customization across all baseband suppliers, including Qualcomm, MediaTek, Samsung LSI and HiSilicon. And with the successful launch and expanding capabilities of our BAW filter portfolio, we are positioned to extend our reach across a broader spectrum of 4 and 5 gs bands. Moving to the Internet of Things, we are ramping more than 10 new LTE based design wins, supporting Tier 1 automotive customers. We are powering Sonos' 1st all in 1 indooroutdoor portable smart speakers, delivering LTE powered IoT engines to Sierra Wireless for their industrial and transportation gateways, enabling a range of wearable devices leveraging our GPS, Wi Fi and cellular connectivity engines, expanding our reach into high performance audio with the introduction of our cognitive chipsets, and we are executing on the launch of our Wi Fi 6 platforms, expanding our customer set with leaders including Amazon, ARRIS, AT and T, Juniper, Linksys and NETGEAR.
Now moving to the infrastructure markets. Skyworks is leveraging its vast capability in gallium arsenide, BAW technology and ceramics to support strategic customers as they deploy their 5 gs networks. 5 gs infrastructure requires new technologies and capabilities, which drive the need for a unique set of complex solutions. For example, massive MIMO increases RF content up to 8 times per base station with new antenna systems utilizing multiple channels and beam steering to deliver gigabit speeds. As a company, we remain focused on driving diversification across high value markets, while our customer set continues to expand and is now numbered in 1,000.
In addition, we are gaining momentum in new verticals, enabling wins with automotive leaders like Continental, Audi and BMW, along with industrial players, including Honeywell, Siemens, GE, Phillips and Rockwell. So in summary, Skyworks has strategic partnerships with the leading smartphone and IoT providers along with a burgeoning set of entirely new customers enabled by the capabilities of 5 gs. Differentiated system solutions with unmatched levels of integration and performance, focused and strategic investments, expanding our product portfolio, IP and scale and finally, a predictable business model that yields premium profitability and strong cash flow. The strength of our design win pipeline coupled with our experience across multiple technology generations position us well to convert these market opportunities into sustainable growth. With that, I will turn the call over to Chris for a discussion of our Q4 and fiscal year performance as well as
our outlook for Q1. Thanks, Liam. Skyworks revenue for the 4th fiscal quarter of 2019 was 827,000,000 dollars up 8% sequentially and $2,000,000 above the midpoint of the outlook we provided in August. When excluding the revenue from Huawei in both the June September quarters, our revenue increased 20% sequentially. This represents one of the strongest sequential growth rates for Skyworks.
Gross profit in the 4th quarter was 416,000,000 dollars resulting in a gross margin of 50.3 percent in line with expectations. Operating expenses were 135,000,000 dollars flattish to the March June quarters. Going forward, operating expenses will come down as we implemented certain cost reductions during the 4th fiscal quarter. We generated $281,000,000 of operating income, translating into an operating margin of 34%, up 110 basis points from fiscal Q3. Other income was $3,000,000 and our effective tax rate was 7.7 percent, driving net income of 262,000,000 dollars or $1.52 of diluted earnings per share, up 13% sequentially.
Turning to the balance sheet and cash flow. 4th fiscal quarter cash flow from operations was $417,000,000 and capital expenditures were $84,000,000 dollars resulting in $333,000,000 of free cash flow, translating into a free cash flow margin of 40%. We paid $75,000,000 in dividends and repurchased 1,900,000 shares of our common stock for a total of $146,000,000 As this is the Q4 of fiscal 2019, let's also review our annual results. We generated $3,400,000,000 of revenue with gross profit of 1,700,000,000 dollars resulting in a gross margin of 50.6 percent. Operating income was 1,200,000,000 dollars with an operating margin of 34.5 percent.
Full year effective tax rate was 8.5% and net income was $1,100,000,000 translating into $6.17 of diluted earnings per share. Cash flow from operations was $1,400,000,000 up 8.5% from last year with CapEx at $398,000,000 resulting in a strong free cash flow of close to $1,000,000,000 and our target free cash flow margin of 30%. We returned $932,000,000 to shareholders in fiscal 2019, just under 100 percent of our free cash flow, with $274,000,000 of dividend payments and $658,000,000 in share buybacks as we repurchased 8,900,000 shares throughout the fiscal year. We ended the fiscal year 2019 with cash and investments of $1,000,000,000 and we have no debt. Now let's move on to our outlook for Q1 of fiscal 2020.
The initial launch of 5 gs and gains across a diverse set of high performance mobile solutions, matched with solid traction in broad markets are driving accelerated growth into the December quarter. For the 1st fiscal quarter of 2020, we anticipate revenue to be between 870 $1,000,000 and $890,000,000 representing sequential growth of 6.5% at the midpoint of the range. We expect gross margin at approximately 50% and operating expenses of approximately 132,000,000 dollars which is $7,000,000 below Q1 of last year as we continue to manage our operating expense level. Below the line, we anticipate roughly $2,500,000 in other income and a tax rate of 9%. We expect our diluted share count to further reduce to approximately 171,000,000 shares.
Accordingly, at the midpoint of these ranges, we intend to deliver diluted earnings per share of $1.65
With that, I'll turn the call back over to Liam. Thanks, Chris. Skyworks continues to deliver consistently solid profitability, while generating strong cash flow. Looking ahead, our market leading solutions are at the forefront of the next major cycle in connectivity. However, unlike the prior 3 gs and 4 gs upgrades, which were largely paced by smartphone units, we see 5 gs as a transformational technology that will impact, disrupt and fuel a connected economy that we have not yet seen or comprehended in our markets today.
We address this opportunity with a proven culture of success, driven by a talented team, deep customer relationships, strategic investments and global scale, positioning us to succeed at this very important stage of technology inflection, while executing the financial discipline to ensure shareholder value. That concludes our prepared remarks. Operator, let's open the line for questions.
And your first question comes from the line of Karl Ackerman from Cowen. Your line is open.
Hey, good afternoon, gentlemen. Thanks for letting me ask a question. I wanted to focus on 5 gs for a moment. So some of your peers have got at least 200,000,000 5 gs phones for next year. I would appreciate how you are thinking about your opportunity for 5 gs with regard to geography and whether or not we should anticipate the 40% content uplift that you've alluded to from 4 gs to 5 gs, should that be realized over the duration of the ramp?
Or is that recognized more immediately on initial devices? And I have a follow-up.
Sure. Well, 5 gs, of course, is going to impact multiple markets, multiple customers and the timing that can be different depending on the geography and the specific OEM. We are 100% engaged with all the leading players. We have a really significant opportunity to gain content. We're rolling that out now.
The reach of our portfolio continues to expand. And we have some really significant customers that are in production now. And we also have some really big customers they're going to be launching next year. So we're in great shape. We're demonstrating the capabilities that we've discussed in prior calls.
I will tell you that the 5 gs implementation is incredibly powerful for the consumer, but very challenging for the OEM. And our job is to get in there and do the hard work with our customers and deliver the right kind of technology to make their systems work. And that's what we're doing.
I appreciate that. On 5 gs infrastructure, you referenced some design wins, for massive MIMO and the content being nearly 8 times higher than 4 gs. Do you see the revenue inflection more of a 2021 event? Or is that something that can ramp in the back half of twenty twenty? Thank you.
Yes. No, that's a great question. So the infrastructure side of 5 gs is still a little bit behind schedule. So we are seeing some great adoption with the handset players and they'll be ready to roll. But infrastructure has been a little bit slow.
We've made some great progress specifically with Nokia and with Ericsson on Nokia's platforms. We've got opportunities that are measured in the $10 to $15 per base station, significant opportunity. We're looking at antenna arrays that are very rich, high content, complex, high margin, going to be pivotal to that. And they use a lot of unique technologies that we also bring to market, including some ceramic technologies and other filtering technologies as well as our gallium arsenide expertise. So we do have a great hand in the infrastructure side that will work adjacent to what we see in the mobile phone.
Your next question comes from the line of Vivek Arya from Bank of America Merrill Lynch. Your line is open.
Thanks for taking my question. Liam, for my first one, how are you positioned OpEx and CapEx wise when it comes to addressing the 5 gs market? I think you mentioned some OpEx rightsizing in the quarter, which areas did you rightsize? And just overall, and where my question is coming from is that in the past you had one really large customer, but as we come to the 5 gs opportunity, you'll probably need to address a much wider range of customers, I imagine, over a much wider range of products. So how are you managing OpEx and CapEx going into the 5 gs cycle?
Sure. Great question. So just to start, some of the reductions in OpEx were more around 2 gs, 3 gs products and legacy devices and moving R and D resources to higher end platforms like Sky5 and the 5 gs rollout. So that's one part of it. We are addressing all the customers and working across our market to deliver the right technology.
Also note when you mentioned CapEx, one of the things that we do at Skyworks is we craft our technology and build it in house. We don't we very rarely outsource. We do it in house. We have incredible capabilities to customize a wide range of TC SAW products, TC SAW based products with that filter inside and also our bulk acoustic wave portfolio. So the CapEx that we have is actually strategic technology investments.
These are not filters that we could buy in the open market. They're filters that we craft and customize and work customer by customer to implement. So it's a very different business dynamic and business model than some of our peers.
Got it. And for my follow-up, on gross margins, I think, Chris, you mentioned that it would be approximately 50%. So I'm just curious, is it just mix that's driving them perhaps kind of flat to slightly lower? And then how should we think about the trajectory of gross margins getting into March, which tends to be a seasonally down quarter?
Yes, yes, Vivek. So first of all, I'm pleased with our gross margin which was our 2nd largest customer and most of those products were actually manufactured in house. So that was a serious headwind for us, but I think the company managed it very well. So we are guiding for December approximately 50%. So we still have some lingering issues there with the Huawei business.
And then of course, when you look ahead into March June, we will go through our normal seasonality. But then in the second half of twenty twenty, as we get back to sequential growth, growth that is fueled by 5 gs, new complex highly integrated products as well as our broad markets business, we will start seeing gross margin improvements all the way up to our target model of 53%.
And your next question comes from the line of Ambrish Srivastava from BMO. Your line is open.
Hi, guys. This is Jameson calling for Ambrish. So I was hoping that you guys could talk about a little bit more about 5 gs and piggybacking on Karl's commentary. With Qualcomm, he has talked about 2 100,000,000 5 gs smartphones in 2020. And assuming you are able to get 50% market share and maybe half of the $25 content you've talked about in front end value, that would imply about $1,300,000,000 in 5 gs revenue possible for you guys in 2020.
So I was wondering if you guys could talk about the revenue and percentage mix of 5 gs in your mobile segment this quarter? And where do you expect revenues and mix to land in 2020 beyond? Thank
you. Yes. We don't we're not going to guide mix to 5 gs, but I will tell you that we are at the forefront. As we stated in the prepared remarks, we're at the forefront of this inflection without question. It's difficult to handicap how many units.
But I will tell you there's a lot of units coming. There's a lot of complexity on the table. Everyone's going to come to market with a different play, but it's a great opportunity for this industry. It really is. And what we love about our company is the flexibility that we have and the tools that we have to put together configurations with every customer.
And let me also say that we are basically technology agnostic or baseband agnostic. We will sell with a Qualcomm baseband. We'll work with a MediaTek platform. We have incredible content there. We'll work with Samsung LSI.
And if conditions change with Huawei, we'll work with HiSilicon. So we have the tools and technology. We've been investing in this for years. When we talk about decades of technology, it's real. We've been through 2 gs, 3 gs, 4 gs.
We know how hard it is in 5 gs, but it's a great opportunity. So we're going to see an increasing level of revenue in 5 gs and it will not just be smartphone. It will be smartphone, IoT, it will be enterprise, it will be factory automation and some incredible new avenues that we haven't even explored yet. So there's a lot coming and the business is ready to go. We've made great investments in capacity and the right technologies and we're positioned for growth.
Okay. Thanks. And for my follow-up, I was wondering if you could maybe touch on your plan for millimeter wave solutions just for your company given where Qualcomm is with theirs. Any thoughts on the market in terms of viability and revenue for handsets will be appreciated. Thank you.
Sure, sure. Yes. Well, millimeter wave is an interesting technology and does can offer some pretty compelling attributes around speed and performance. The challenge with it though is it has some technical roadblocks, right? You need to have some very complex beam steering to implement this.
There's some line of sight limitations. There's some cost limitations to it. And what we're seeing is, some of our handset partners are just not ready right now to engage in that technology and opting for sub-six gigahertz 5 gs technologies where the market is pretty rich and the opportunity is pretty rich. So I think there's a possibility for millimeter wave to play a role in this industry and high capacity environments, sporting events, college campuses where there's a great deal of density, there could be an opportunity for that. But right now, it's kind of still on the cusp of whether the adoption will take place or not.
Meanwhile, we're hedging our bets. We're investing in the technology. We do a lot of our work internally, as I mentioned, with gallium arsenide and filtering. So we know what the roadmap looks like to be a player in millimeter weight, but we're going to take our time as we progress.
Your next question comes from the line of Blayne Curtis from Barclays. Your line is open.
Hey guys, thanks for taking
my question. Just want to go back to the 5 gs timing. You've seen Qorvo and Qualcomm talk about a March uptick. And I'm just kind of curious as you put that with comments that some of the infrastructure is taking a little bit more time. I know you don't want to guide March, but I'm just kind of curious, would you be able to see an uptick even as early as the March quarter?
Any comments on the direction there and then the pace to the rest of the year would be helpful.
Sure. I mean, there should really be no difference between the peer group on what the units are going to be, right? So we can all handicap that. I think the issue and the opportunity, Blaine, is what we do, how do we execute and what kind of content can we gain in this industry. That's kind of more to the point for us.
So a couple of things. If you look at the company year over year, we've done incredible enhancements in our TC SAW capability and rounding out low band pad and DRx across the board, which is great. But we've also uplifted the technology with bulk acoustic wave. We're already delivering ultra high band solutions right now that are very compelling and our customers love them. We're moving into mid and high band also with accounts.
And then you have just an incredible inflection in infrastructure that we talked about. And then further on, we'll start to see the 5 gs opportunity really penetrate multi markets, automotive, machine to machine applications. We talked a little bit about that. Enterprise, a lot of really cool stuff that we're talking to customers about. And some of that may be later into 2020 late 2020 into 2021, but there's a really significant tail on that.
But in the meantime, all the companies that you named and all the OEMs that are on the table, we are deeply engaged and we have been for quite a while and feeling really good about where this is moving.
And then maybe just
for Chris, just if you can give us any color in the September quarter, the mix between mobile and broad markets and any perspective into December between those segments in terms of growth?
Yes, absolutely. So broad markets in the September quarter was approximately 33% of total revenue. So it's running now well above €1,100,000,000 in annualized run rate. This was down slightly on a sequential basis, but you have to take into account that we also had Huawei related revenue in that broad market business. If I exclude Huawei, actually, it was up sequentially as well as year over year in the mid single digits.
So very pleased with our performance in broad markets. There's multiple drivers there, the Wi Fi 6 adoption, the 5 gs opportunity beyond the mobile phone as well as some good traction in our audio play that we have as well.
Yes. And Duane, let me add a couple of other interesting points here. In addition to kind of the run rate opportunities in broad markets, we've really been focused on what I call customer acquisition, going out there and finding new accounts that we can populate with our technology. And we've made some really good progress, design wins now with Honeywell, design wins with Ford, design wins with Continental, Rockwell, Siemens. We have some other great accounts that we can't talk about yet that are on the cusp.
So we're really happy with the ability to run broad markets in a diversified way, but also capture significant customers that just haven't been part of the Skyworks family, right? Just we haven't been selling to these guys. And with the technology inflection in 5 gs and the need for these companies to go to a wireless engine, it's a great chance for us to do our work. So there's some other cool things happening in broad markets that really weren't on the table a year or 2 ago.
And your next question comes from the line of Craig Ellis from B. Riley FBR. Your line is open.
Yes, thanks for taking the question and congratulations on the performance guys. Liam, I wanted to follow-up with some of the 5 gs commentary both prepared and in Q and A. So I think if we look back at 4 gs, integrated mobile was a business that could consistently be a mid teens year on year grower. And now with 5 gs, the company has expanded its filter portfolio with BAW. You've got internal filter supply.
We've never had that before in an interface transition and you've got it top to bottom. So my question is, as you look at the engagements that exist across your different OEMs, do you feel like you're gaining the line of sight for that segment to not only return to growth, but to potentially return to mid teens double digit year on year growth?
Yes. I think the as you noted, the opportunity is very, very strong right now. And the indications we have with the customers we've been working with are powerful. And the complexity is way up. And some of points that you just made about owning our facilities is a big deal.
It's a big deal. We could have gone outside and do that and had a lower performing engine. It's not that's not the way we want to go. So there's a lot of complexity right now. There's a customer engagement with us.
We're always reaching into our accounts, but they're coming into us too. So it's a difficult transition to make technically, but it has incredible benefits. And so we saw a lot of great action in the last quarter, a lot of action in design wins, lots of discussions, lots of visits to our sites from our leading customers to go in and really kick the tires and some of the things that we're working on and those customers walking away with confidence. So we think this is going to be a very significant this is a more than a mobile inflection. This is a technology shift that's going to disrupt the markets that we all play in here, right?
So I think there's some great stuff going on. And we'll start to see more and more customers evolve, classic mobile customers, but then kind of that second wave into IoT, enterprise, etcetera, where there's just a long tail of opportunity. So, we feel good about it. I feel that the design win activity in the last 6 months or so has really accelerated. The sampling activity across a whole set of OEMs.
Also some really good work with baseband partners. We've done some exceptional work with MediaTek, for example, transitioning from a strong position in Phase 6, now shifting to Phase 7, which is all 5 gs, launching the higher frequency bands with BAW. So it's a compelling time right now for Skyworks to execute. We're not opportunity constrained. It's about getting out there and helping our customers win.
That's really helpful. Chris, the next question is for you and I wanted to follow-up on the comments that the gross margins could move from current levels up towards the 53% target model. What I wanted to do is break that down and get your help just on identifying what the specific drivers are. So can you just help us understand how we get from first 50% to 51%? Is that all just going to be volume coming back and kind of make up for the loss of Huawei?
And then more significantly, I think, getting from 51% to 53%, if you could just help us understand how much of that is help from broad markets, Avnera, mix shift within the integrated mobile portfolio from 4 gs to 5 gs, etcetera, it would help give us some clarity on how we get to 53%. Thank
you. Yes, that's a good question. And so I've answered in the previous question there, right? Some of the headwinds, of course, is Huawei revenue that almost disappeared. And Huawei was running on or about 15% of total revenue.
And so that's definitely a headwind. But nevertheless, I think we have been able to keep the margins above the 50%. And looking forward, there are 3 major blocks to drive margin improvement. And the first one, the most important one, is continue to develop highly integrated, complex, high value added type of products to our customers that make their product better and that make the user experience better. And we do that all the time.
And 5 gs is a great opportunity to demonstrate our technology leadership and help improve, as a result of that, our margins. Of course, in addition to that, we will continue to work our operational cost structure and drive down the cost in our factories and with our suppliers and all of that. And then last but not least, of course, yes, there is a little bit of a tailwind in terms of mix. Our broad market business has higher gross margin than our mobile business, and our broad market business has been growing and will continue to be growing faster than mobile. And so we get a little bit of a tailwind there as well.
Yes. And I will add one thing to that comment. I think that if you look at 5 gs and the complexity of 5 gs and the types of unique systems and engines that are being deployed, the margins there are going to be higher. I think there's going to be fewer players in the industry that can execute to the level that our customers need to be successful. So I think you've got a case where the 5 gs inflection and the power of that connection and the value that that's providing is going to translate to better gross margins.
It's just the way that's going to run. Now working within our factories is going to make it even easier for us. But there's going to be and there should be for us meaningful margin move with the rollout of 5 gs as we get a higher level of concentration there.
Your next question comes from the line of Craig Hettenbach from Morgan Stanley. Your line is open.
Yes, thanks. First question just Liam to follow-up on the BAW activity. Are you seeing that mostly in diversity receive at this point? And then just how you think about it in the future layering into you mentioned kind of ultra high band pad and things like that?
Sure, Craig. Yes. So we actually right now today have been shipping in high volume on an ultra high band path that includes our BAW device. And that's running at about 3.3 gig, Craig. So we're looking at high frequency, high band devices.
We're sampling more than 10 customers with our bulk acoustic wave technology across a broad set of frequencies and spectrum. And we've had strategic customers come and test our metal and they like what they see. So we're going to continue to advance in that category. And we'll use the filtering technology that's best equipped for the application. We'll continue to use TC SAW in some areas.
We'll use Bulk Acoustic Wave in some areas. Maybe it will be in diversity receive. Maybe it will be in transmit chain. So again, just having the ability to create that unique customization for each and every one of our accounts is important for us. So we've made those investments and you should expect more from us on the BAW side as the year turns here, we get further into 2020.
Got it. And then just a follow-up for Chris. I know you guys have talked about as you in source filters, the inventory is kind of higher than historic. Just how you're thinking about managing that into what's typically the seasonally weaker March quarter?
Yes. So I feel comfortable with where we are from an inventory level. Actually, the days of inventory came down 4 days to 135 days and is expected to continue to come down in the December quarter. But looking forward, inventory is going to fluctuate between 120 days to 140, 145 days. And again, that is higher than a couple of years ago, mainly driven by our filter manufacturing, right?
We continue to expand the capacity, not only in TCSO, but now also having made major investments to get bulk acoustic wave capacity into our filter operation. And so that is driving the inventories into the 120 to 145 days.
And your next question comes from the line of Chris Caso from Raymond James. Your line is open.
Yes, thank you. First question is on Huawei. And I think last quarter, Could you give an update on where that stands now? How much Huawei is in the guidance right now? And do you expect that to come back at some point going forward from speaking to the handset side?
Yes. So the Huawei revenue played out exactly in line with our expectations. In the September quarter, we expected approximately $10,000,000 of revenue and that's what it came in. So looking forward, we believe that Huawei will continue to run at approximately that level. Maybe it might be picking up a little bit, but a lot of that will depend on this whole situation with Huawei and the export ban will evolve.
Yes. I mean, Chris, this is really just about being in compliance with the export ban. It's not about share loss or gain. It's about being in compliance. And as Chris said, dollars 10,000,000 was the number for the quarter.
Over time, if things change, we could be right back in the saddle with this customer. They were a number 2 customer for us not long ago. So it's not a cape it's not about technology on our end or market share. It's really about staying in compliance with U. S.
Law at this point. And if things change, we'll be ready to alter.
All right. As a follow-up, I guess a follow-up on that. And there have been some investor concerns over other fallout around the trade tensions where perhaps some Chinese customers would seek to be less reliant on U. S. Content, perhaps even backsliding into discrete solutions.
Could you talk to that what the customers are telling you? Or is there any evidence where you've got customers that perhaps would like to go away from U. S. Content? And as you move into 5 gs and the more and the higher complexity, is that even a feasible solution at this point?
Can you develop a 5 gs phone, that uses discrete solutions?
Yes. So I'll start I'll get the second part and then I'll go to the other the front end of your question. So I think it's very difficult to deliver the kind of compelling technology that is needed in a 5 gs device, right? I really do. I believe that.
And I think U. S. Companies have played a vital role in that area. And I think we have this great technology. It's difficult to do it without some of the things that we make here at Skyworks and some of our other peers.
So that's one. But at the other side here is the Huawei situation is a Huawei situation. There are trade issues in China, we get it. But if you look outside Huawei and you look at Oppo, Vivo and Xiaomi, our business is very strong, very strong. And there's a lot of 5 gs launches going on right now with Skyworks.
There were some initial launches where we had a baseband provider in there and there was some content in there that we didn't win, but that's turning over. So we see tremendous momentum in what we call the OBX side, the Oppo Vivo Xiaomi side within China. So that continues to go on. And as Chris noted, we're playing it down with Huawei. We've got a number now that's conservative.
We're going to focus on everybody else. And if Huawei comes back, like I said, that revenue will come back.
Your next question comes from the line of Edward Snyder from Charter Equity. Your line is open.
Thanks a lot. Lien, if I could, there's been a lot said about ultra high band and sub-six stuff Qualcomm obviously based on their comments is going to take it all. They said something like virtually all baseband antenna solutions for 200 something different 5 gs devices. Leaving that aside for now, any comments you want to make on what you're seeing competitive threats on that. But more importantly, it looks like the architectures that are coming out in the next year by each China Mobile will include all the 79 bands.
Is it what's your opinion now on content for that device? The ultra high band has been out for a while, probably normally about $2 in content. Are you seeing this rise much faster than expected because you're including these extra bands in this and you expect to capture your traditional share, which has been relatively high in that spot, for the next year or so? Or are you getting more competition? And then I have a follow-up.
Yes. No, that's a great question. I had a lot of insight to that. So we are seeing some real good action on the UHB pad running around 3.3%, 3.5%. And so what you've got there is some great opportunity to continue to expand that.
That's working out great. We're also looking at a number of other solutions with our China customers and other OEMs. And then the other major catalyst for us in this area is MediaTek. And you know these guys really well. We've done a lot of work with MediaTek back to the 2 gs days.
And we had nice position on Phase 6. But when you start to roll into Phase 7, our platform position at MediaTek is really compelling. We've got Sky5. We've got DRX technology. We have UHV opportunities and just some incredible new technologies across that platform.
And we feel really good about that. We could be looking at a $7 to $8 handle on MediaTek chipset attach here in Phase 7. So we're excited about that. And in the meantime, we're continuing to do the work with Oppo, Vivo, Xiaomi, despite the baseband provider, whoever it may be, if it's MediaTek or not MediaTek, if it's Samsung, LSI will work it, if it's Qualcomm will work it. It.
So there's a lot of action going on there. But I would say that the MediaTek transition is going to be quite strong. It hasn't happened yet, but it's headed for the second half of the year to be a really compelling driver.
And then I'm glad that you brought that up. That was my second question basically. I mean the Chinese OEMs, they're toeing Phase 6 last year, so first full module design. And for safety sake, it looked like the Corvo took most of the main path. You guys were all over the place in the other sections of it.
But it sounds like now they liked it a lot to really accelerate the deployment of both Phase 6 and Phase 7s even before MediaTek gets their 5 gs out. We certainly saw that in some of the reports coming out on the quarter, big upside and not only number of 5 gs phones, but the number that are using more of these high content modules. You kind of were set back a little bit last year just because on the transition to this new architecture, a lot of volumes went for safety. And I know you're taking some of that back, but outside of, say, the DRx and all the other areas, you guys were in tuners, we saw that. Outside of that back at the main path, do you expect to gain back some of the share now that the OEM is getting comfortable with that design?
Or are we going to see a bifurcation here where it's you and Qorvo taking nearly all the content in this phone and it's just going to be bifurcated main path for them and almost everything else for you guys? What's your feeling on that?
Yes. I think well, I think you got a lot of that captured. You definitely have an increased opportunity and we're certainly not going to get all the business. We'd like to get the lion's share. I think we will.
But it's an increased opportunity. And the complexity that you see in these new phones, these 5 the Phase 7 devices specifically are daunting, right? It takes the best and the brightest to go out there and execute. So we're seeing that. But I will tell you that in addition to the traditional stuff that you've seen low band pad and maybe some of the DRX, we're starting to move up to mid and high band.
We're starting to move up with mid and high band pads, which could be a really meaningful high potency opportunity for us for content. You mentioned we talked about the UHP that's continuing to gain not just with MediaTek but with some other accounts. So the aperture has widened a bit. But one of the common themes here is complexity. Like you said, the number of devices, the number of handoffs, carrier aggregation, the power consumption and the efficiency required to drive these 5 gs devices is just going to be a game changer in terms of challenge.
And that's exactly what we want to see. So there's some really good stuff out there. We hope to lead in this market, but it's a great opportunity for the industry as well.
And our last question comes from the line of Bill Peterson from JPMorgan. Your line is open.
Yes. Hi, thanks for sneaking me in. I have some questions around the broad markets business. And I guess first as a follow-up to Blayne's question, do you anticipate sequential growth in the December quarter? I mean, now that Huawei is kind of running at a low level.
And then I guess as you think about the fiscal year based off your design win pipeline, you talked about Wi Fi 6 and some of the other opportunities. How should we think about growth in that? Can that return back to double digit growth as we think about that in this fiscal year?
Yes. Just for the December quarter, broad markets, normal seasonality is down 8% to 10%. We saw that in fiscal 2018. We saw that in fiscal 2019. And so we expect something similar in the December quarter of fiscal 2020 normal seasonality.
Having said that, on a full year basis, yes, we do believe that broad markets, given all the drivers that we talked about it, could be back to double digit year over year growth.
Yes. And recall, if you look at the proxy for semis in 2019, you're looking at double digit declines for most of those markets. So broad markets within our business, we felt that it behaved pretty well and grew pretty nicely, but we're going to continue to invest and drive that into 2020.
Okay. Thanks for that color. And I guess just lastly, housekeeping. How should we think about OpEx trajectory throughout the year? You're bringing it down here in December quarter.
Should we expect that to kind of grow somewhat in line as revenues continue to grow and maybe return to year on year growth? And then your tax rate, I guess, 9%, should we just assume that for the fiscal year as well?
Yes. On OpEx, we're going to remain disciplined, but at the same time, we're not going to hesitate to make the necessary investments to fuel the growth of the business and make those necessary investments in technology, 5 gs, broad markets, support of the broad markets. So yes, over time here in fiscal 2020, we will see some modest increases in the OpEx. It's running on or about 16% or so to revenue right now, which I do believe is world class, and we'll continue to manage it. And then on the tax rate, yes, on a full year basis on or about 9% is a good number.
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 on today's call. We look forward to seeing you at upcoming investor conferences during the quarter. Thank you.
This concludes today's conference call. You may now disconnect.