Mitchell J. Haws - Skyworks Solutions, Inc.

Liam K. Griffin - Skyworks Solutions, Inc.

Kris Sennesael - Skyworks Solutions, Inc.

Vivek Arya - Bank of America Merrill Lynch Blayne Curtis - Barclays Capital, Inc. Craig A.

Ellis - B. Riley & Co.

LLC Atif Malik - Citigroup Global Markets, Inc. (Broker) Christopher Caso - CLSA Americas LLC Kulin Patel - BMO Capital Markets (United States) Timothy Arcuri - Cowen & Co.

LLC Craig M. Hettenbach - Morgan Stanley & Co.

LLC Vijay R. Rakesh - Mizuho Securities USA, Inc.

Vincent Celentano - Raymond James & Associates, Inc. Ian L.

Ing - MKM Partners LLC Edward Snyder - Charter Equity Research

Thank you, operator. Good afternoon, everyone, and welcome to the Skyworks Fourth Fiscal Quarter and Year End 2016 Conference Call.

On the call today are Liam Griffin, our President and Chief Executive Officer, 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.

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 today are from non-GAAP financials, consistent with the format we have used in the past.

Please refer to our press release in 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 discovered solid Q4 and fiscal 2016 results, demonstrating the resiliency and power of our business model.

To put a few metrics in perspective, we achieved record revenue of $3.3 billion, expanded gross margin by 280 basis points, delivered 37.8% operating margin, generated record operating cash flow of $1.1 billion, allowing us to return $727 million in cash to our shareholders in the form of dividends and share repurchases, more than double the amount from last year. And despite headwinds with one of our leading customers, we are pleased with our ability to deliver record results in fiscal year 2016.

Now, at a high level, we see strengthening dynamics in the core markets we serve. Specifically, we are in the midst of a massive sea change in the mobile usage case.

Given the utility and value that connected devices are bringing to the world, we are supporting and, in many ways, enabling a mobile ecosystem that is cannibalizing traditional brick-and-mortar industries, transforming the way we live, work and play. Wireless platforms have become virtual hubs for e-commerce, enterprise to cloud, social media, gaming and entertainment portals.

Ultimately, these devices are a conduit for a new multi-trillion connected economy across a wealth of innovative technology players. Consider that the top five S&P 500 companies, namely, Apple, Google Alphabet, Microsoft, Facebook, and Amazon, are all monetizing these themes with mobile-centric business models.

At the same time, smartphone architectures are evolving to accommodate this rapid increase in mobile data across a densely crowded spectrum. The usage case is a catalyst for higher speed, lower-latency, secure and always-on connectivity, which is challenging the capabilities of existing hardware and the supporting cellular infrastructure.

Our mission at Skyworks is resolving this daunting complexity with customized, custom-level solutions, unburdening our customers while improving the user experience with higher levels of efficiency, enhanced streaming capabilities and expanded network coverage. All of this translates into an expanding opportunity for Skyworks.

Recall that our focus is on the wireless connection, the most critical function linking the user to this incredible ecosystem. In addition to the rise of mobile data, we are actively addressing two parallel growth drivers.

First, connecting the unconnected. There remain 2 billion people that have yet to benefit from this dynamic ecosystem, and Skyworks will play a leading role in bringing this population online.

In addition, we are committed to connecting every thing, as we address an estimated 20 billion new devices brought to market over the next five years. Skyworks is seamlessly enabling these massive opportunities with highly customized system solutions supporting a broad set of protocols, including cellular LTE, to Wi-Fi, Bluetooth, ZigBee and emerging 5G standards.

In an effort to facilitate the explosive growth of data delivery, creation, movement and storage, our customers are implementing methods to improve performance with carrier aggregation, receive diversity and MIMO functionality. This dynamic involves a step function increase in levels of requisite analog and mixed signal performance, enhanced power efficiency and high precision filtering, as well as configurable systems integration capabilities.

Skyworks' broad portfolio in systems-level expertise are well aligned to resolve the intense performance demands facing our customers. And further, 5G will be yet another industry catalyst and significant content driver for Skyworks.

This technology will drive band proliferation at higher frequencies and play squarely into our ability to address complexity with fully integrated systems. The breadth of our portfolio and our unique market reach continues to fuel a robust and diverse design win pipeline.

To illustrate, during the most recent quarter, we leveraged our leadership SkyOne architecture across scores of 4G LTE platforms, with customers like Huawei across their Honor 8 premium lineup. We are also powering the first Google-branded LTE Pixel smartphone.

And we are capturing design wins across broader markets in the Internet of Things. In particular, we continue gaining traction with customers like Amazon, supporting their Echo and Tap digital assistants.

We are also enabling NETGEAR's Orbi home router system and providing an integrated solution to Trilliant for use in their smart grid platforms. In addition, we are deploying small-cell solutions for several leading infrastructure providers in China.

And in automotive, we are delivering 4G LTE solutions for use in both Land Rover and Jaguar models. These wins and others demonstrate our expanding customer and end market reach across both mobile platforms and the IoT.

At this point, I will turn the call over to Kris for his financial review.

Thanks, Liam. Revenue for the fourth fiscal quarter was $835.4 million, up 11% sequentially and exceeding our guidance and consensus.

Gross profit was $425.9 million or 51% of revenue, in line with our guidance and up 100 basis points from the fourth quarter last year. Operating expenses were $107.5 million, consistent with our guidance for flat sequential spending.

We generated $318.4 million of operating income, translating into 38.1% operating margin. Our cash tax rate was 12.6%, driving net income of $277.6 million dollar or $1.47 of diluted earnings per share, exceeding our guidance by $0.04.

Turning to the balance sheet and cash flow. Cash flow from operations was a record $455 million, driven by high profitability and significant improvements in working capital on a sequential basis.

In particular, DSOs declined from 69 days to 45 days and days of inventory declined from 108 days to 94 days, and we expect further reduction of inventory dollars and inventory days in Q1. Capital expenditures were $16 million versus $57 million in Q3, reflecting the lower investment level now required for our TC-SAW filter production.

Further, in Q4, we repurchased 3 million shares at an average price of roughly $66 a share. And for fiscal 2016, we've repurchased 8 million shares at an average price of just under $66 per share, helping us to reduce our share count from 195 million shares entering the fiscal year to 189 million shares exiting Q4.

We also distributed over $200 million in dividends over the course of fiscal 2016, up 63% year over year. In summary, Skyworks returned 81% of our free cash flow, or $727 million, to our shareholders over the fiscal year, up from the 64% distributed in fiscal 2015.

Now moving on to our outlook. For the first fiscal quarter of 2017, we anticipate our revenue to be up 7% to 9% sequentially.

At the mid-point of $902 million, we expect gross margin in the low 51% range. We expect operating expenses to be $112 million, further reducing our overall OpEx ratio to 12.4% of revenue.

Below the line, we anticipate around $1 million in interest and other expenses and a cash tax rate of approximately 15%. We expect our share count to be roughly 187 million shares.

With our revenue growth and continued operating leverage, we plan to generate non-GAAP diluted earnings per share of $1.58 in the first fiscal quarter. With that, I'll turn the call back over to Liam.

Thanks, Kris. So to quickly summarize, we delivered above-guidance results in the fourth fiscal quarter, closing out another record year driven by increasing global demand for high-speed connectivity coupled with strong operational execution.

Skyworks systems-level expertise and scale advantages are positioning us to capitalize on the rapidly expanding mobile and IoT ecosystems, particularly with 5G on the horizon. Our profitability and strong cash generation capabilities allow us to fund growth and deliver increasingly higher returns to our shareholders.

Clearly, we remain well-positioned to realize our vision of connecting everyone and everything all the time. That concludes our prepared remarks.

Operator, let's open our lines for questions.

Thanks for taking my question. Liam, for my first one, your December sales outlook is above Street expectations.

When I look at it, though, it is still somewhat down year-on-year. When do you think you will get back to what has been the historic high-single, double-digit growth rate from a top-line perspective?

And as part of that, how's the visibility into content gains and to flagship phones for next year?

Sure. Thank you, Vivek.

Well, as you outlined, the guidance here for the current quarter is up strong, 7% to 9% coming off an 11% sequential here in Q4. So we certainly see the momentum coming back into our business.

With respect to year-over-year comps, we're confident that we will be up on a year-over-year basis in Q2, fiscal Q2. We continue to see great momentum with the flagship players, not just the leading U.S.

player, but globally. We're starting to see strength there and that's being represented in our numbers.

Got it. And as my follow-up, maybe one for Kris.

On gross margins, if you could address the impact on gross margins from both fab utilization and just the market pricing. Because I think you had mentioned you would take down inventory over the next one or two quarters.

What is the impact on utilization and gross margins? And part B of that is your competitor just reported very weak gross margins.

And I'm wondering if that's a company-specific for them or are you seeing any pricing issues from a market perspective? Thank you.

Yeah, I can't speak to what happens to our competitor. And we haven't seen any major changes to the pricing environment.

That has been very consistent over the last couple of quarters. And looking forward, we don't see any major changes there.

Let me just on the gross margin highlight that, in fiscal 2016, we improved the gross margins with 280 basis points exiting the year at 51%, which clearly demonstrates a strong operational execution in terms of margin improvement. And we definitely want to continue to further drive operational efficiencies.

And we believe that we can improve the gross margins with another 100 basis points exiting the fiscal year of 2017.

Hey, guys. Thanks for taking my question and nice results.

Thank you.

Just curious to follow up on a prior question. When you're looking at the year-over-year and being down, are you still working through that specific customer issue?

And when do you think you'll resolve that and be able to back ship the total run units (14:47)?

Sure, Blayne. In our $902 million, we don't have the full complement of what would be the legacy products with one of our customers.

So some of that had been invoiced earlier in the year, as we articulated. But I will tell you that by the time this quarter is exited, we're clean, we're back on track.

Again, we're pleased with the ability to bring up a 7% to 9% top line off of an 11%. We feel really good about our content position with the leading platforms.

But there's a slight – an abating headwind, but a bit of a touch of that in the $902 million versus the prior year.

Thanks. Then maybe just a bigger picture question as you look out next year.

You mentioned several drivers. Just curious when you look at carrier aggregation, obviously you are combining bands.

And some of those bands may historically be a broadband. Just curious of your view in terms of whether SAW and TC-SAW can address a lot of the transmit in terms of carrier aggregation.

And when you look at next year, where do you see your biggest gains? You're able to get and receive game content in the larger phones.

Where else do you see picking up decent content next year?

That's a great question. So as you articulated, there's a couple of dynamics.

We've been known for leadership in the transmit chain with Power Amplifier and Power Amplifier plus Duplex or SkyOne-like systems. That continues to be beneficial for us.

We're probably 30% to 40% of the way of penetrating the market now. New names like Huawei are adopting the technology, players like Oppo and Vivo in China, and certainly the larger Tier 1s have been with us for a while.

So in the transmit chain, we continue to move up in frequency. So we've done a great job in low band.

We're starting to win mid band. We can address high band with foundry partners for BAW.

So that part of the food chain looks really good. When you look at the receive side, we have a very unique strategy, a leadership strategy.

We've been able to implement high content, high-performance solutions with the leading players in the market. That again now is starting to round out into China and some other spaces where that value is quite unique, and the performance requirements on the downlink side are immense.

So we can handle that. As you move further along, though, you start to look at 5G, et cetera.

We think that the way that transmission will occur with TDD as well as FDD, where you have time-division duplexing, our ability to leverage TC-SAW looks very good there. So we can encroach frequencies that had been the domain of bulk acoustic wave with our TC-SAW with performance advantage and also taking advantage of the unique protocols that we see in 5G.

Hey. Yeah, thanks, guys, for taking my questions.

This is Richard (17:31) in for Harsh. And congratulations on the quarter.

Thank you.

Just wanted to start off and look a little bit deeper into the December quarter guidance, up 7% to 9%. What are some of the base assumptions for broad-based growth versus growth in mobile?

What are you seeing at your largest customer? And then also, within China, some of the buy-siders that we talked to have talked about double ordering taking place over there.

Are you seeing anything like that?

Well, let me start with Q1 and then we can touch on China. So we are seeing Q1 seasonally being strong in mobile across all of our major accounts in mobile looking good.

And with a great enrichment and content really steering the ship there. So we see that the IoT and broad markets business continues to look good.

We're up substantially on a year-over-year basis. IoT was up into the high teens on overall broad markets.

For the full fiscal year, we're up about 12%. So we continue to see opportunities there.

And then if you think about China, we have – fortunately, China has changed a bit in the last couple of years. It's moved away from this 10 to 12 white-box players where there's a great deal of distribution and just hoping for the best in terms of upgrade cycles and ensuring that you've picked the right horses.

What's happening now is it's starting to coalesce around three or four or maybe five players with names like Huawei leading, Oppo, Vivo, Xiaomi, and then you get into a long tail of others. So we play that directly with the top four or five, with direct engineer-to-engineer engagements.

We also play the entire China theater with our base band partners, so close collaboration with MediaTek, Spreadtrum, HiSilicon, even Qualcomm provides a buffer of diversification. So right now, China has been a solid market.

We handicap it quite well. We analyze the data from our distributors, we look at the pull rates and the upgrade data that we get from China Mobile and others, and we feel we have a very balanced outlook.

I don't expect any volatility through any double ordering or anything like that. I don't see that.

But we'll maintain a cautious view as we look out.

That's extremely helpful. And then wanted to get your sense on what you look for, what are your criteria for M&A?

And what's the appetite for M&A right now?

Sure. Sure.

Well, the good news for us is that we're very bullish on the opportunities in front of us today at Skyworks. There's a great deal for us to do in our core markets in mobile and IoT and expanding our broad portfolio.

We like what we see there. There's a tremendous need to support great customers looking forward.

So M&A isn't something that is mission critical for Skyworks. But having said that, we continue to look at opportunities if they come about.

Our track record, as you know, reflects that we are highly disciplined when it comes to M&A. A deal needs to meet all of our stringent criteria.

You can see that we've done a few deals in the last few years. The Panasonic JV has closed, bringing great TC-SAW technology in-house.

We did a SiGe deal a few years ago for Wi-Fi technology that's played out beautifully. And even a power management deal with Advanced Analogic.

And all of those elements play very well into our long-term strategy. So we'll keep our lens open for opportunities as they come about.

But, again, very stringent financial criteria here.

Thanks for taking the question and congratulations on turning the corner in sequential growth in your on-hand inventory. Liam, I wanted to start with a longer-term question on the growth of the business.

So one of the supply chain players early in the reporting season noted they think that smartphones will grow about 5% through 2020. I'm not asking you to endorse that.

But if that were the industry's growth rate, what growth rate would you be satisfied with organically? And do you feel like you've got enough leverage in the portfolio to drive sufficient organic growth, or do you need to have a blended organic and inorganic strategy?

Well, I think organically, Craig, if you look at the unit growth which is approximately, as you indicated, about 5% on smartphones. It's the content lever that we're most excited about.

And if you listen to the prepared remarks, one of the reasons why we talk about this mobile ecosystem and some of these great companies that are monetizing it, is that they really are driving change. They're driving change with our customers and our customers are driving that change to us.

And often it's a give and take. In many cases, we're at the drawing board in crafting these incredible systems that move data.

So we see content being really the key focus. So we see unit growth could be 3% to 5% growth, maybe as high as 7% in top-line units.

But it's the content lever that is unique. And I think that is where – I know that is where Skyworks outperforms.

The higher the content in terms of the complexity and the performance needs, that's when we do our best work. So with that said, we would expect to be at or around double-digits across the board.

Could be higher in some cases, depending on the market and the mix.

That's helpful. And then one for Kris.

Kris, you mentioned that you'd expect gross margins to be up 100 basis points. That's solid, but it is just 40% of what the business had done in the just completed year.

So as we look at the performance of the business, should we expect that as the expanded manufacturing facility, both with Panasonic and Impact Gene (23:03), as that really ramps and hits its operational stride, that longer term we can get back to years where gross margins can improve on a multi-hundred basis point basis, or is this the new run rate for the business?

Yeah, there are definitely multiple levers to improve gross margins. As Liam just explained, we see some above-market revenue growth.

And, of course, incremental revenue and volume growth help to absorb our fixed cost structure. Secondly, we are insourcing the filters in our own filter fab, and that is driving further margin expansion.

And then, of course, there is the normal tackle and blocking and operational efficiency improvements, including cycle-time reduction, yield improvements and internal and external cost reductions. And maybe last but not least as well, we do see a further mix improvement in some other areas outside of mobile that have slightly above-average gross margin.

And when you put it all together, we are comfortable that we can further improve our gross margins.

Hi. Thanks for taking my question and good job on the execution.

Liam, the first question, you talked about the criteria for M&A. And I think in the past, Skyworks has talked about maybe acquiring something in the $2 billion to $3 billion range kind of size of the company.

Can you just remind us what are some of the criteria you're looking at? And is this still the right size of the deal you're looking at?

Yeah, I wouldn't really want to put any boundaries on deal size. I think it's more about the merit of the opportunity and how it plays within a Skyworks franchise, so to speak.

So we definitely look for opportunities that – everyone talks about synergies in terms of accretion and financials. But I also want to see entities that really do better with the Skyworks brand than they would separately.

We talked about some success stories. SiGe, Panasonic, even AATI, are example of that.

So we would like to have the kind of acquisitions that really raise the overall franchise, that bring us into new technology opportunities that perhaps augment our strength already in the positions in the market that we enjoy today. So it's a complex answer.

There isn't one simple thing that we're looking for. It's a number of things.

We do have a very, very high bar. We've looked at a lot of franchises and a lot of assets.

And for us, the bars are quite high. And I like that.

I think we've worked really hard to generate the cash that now has been phenomenal for us and I think we're on a great track record to continue to do that. We have the powder to do the right deals when they come along, but we'll continue to be very vigilant.

Sure. And then as a follow-up, you guys had a pretty good design win in the latest iPhone and diversity receive modules.

And Murata was quoted in an EK (26:13) article in Japan that they could take pricing down by like one-third to get the sockets back. Can you just talk about the stickiness of these wins?

And how should we think about you guys extending this content going to next year?

Sure. Yeah.

All of these complex solutions that you eluded to, whether they're with the lead customer or the top three or four, are highly customized. I know what we offer.

It's highly customized. It is very sticky.

These are engineer-to-engineer developed solutions, highly calibrated within the customer's ecosystem. There's little risk that anyone will be unseated or there will be any kind of pricing action post design-win.

And then it's the incumbency and the ability to execute, the ability to manage your capacities and execute the supply and all those other things that keep you in it the long term. So we feel really good about our position with the leading accounts and our ability to grow with highly complex solutions that in every new cycle, upgraded, altered, changed to meet customers' needs.

Yeah, thank you. The first question is regarding the inventory levels.

Could you take a bit about where you expect those to be exiting the quarter? I'd suppose you'd want to have the inventory levels down entering the seasonally slower March quarter.

Just talk a little bit about that, about the magnitude of any potential reduction and where you'd like to see them exiting the year.

Yeah, so during Q4 we reduced our days of inventory from 108 days to 94 days. That's a 13% reduction.

We are pleased with that. We do expect in Q1 to further reduce inventory, both as an absolute dollar level as well as in terms of days of inventory where we target to get to approximately 85 days.

Okay. That's 85 days by the end of the year?

Or is that a target for the future?

There will be some seasonal fluctuations as you go through the normal seasonality, but on average that's what we target.

Hi. This is Kulin Patel calling in for Ambrish.

Thanks for taking my question. For your revenue headwind, you mentioned headwind at your largest customer.

Is all the headwind due to legacy units, or was there any share loss?

No. No share loss.

This is really just about some headwinds on legacy units that were shipped earlier in the year, trued up now here by the middle of the end of this quarter.

Okay. And for the CapEx, you mentioned it's down because of lower investments in TC-SAW.

How do we think about it for the new fiscal year? What's your CapEx plans for the year?

Are there any investments in the pipeline?

No, just normal course. In fiscal 2016, we spent roughly $189 million.

For fiscal 2017, we target $200 million to $220 million of CapEx.

Yeah, let me just add, if you go back to a couple years back we were at about $400 million to $430 million to really outfit and install the significant TC-SAW facility, which is a $3 billion unit per year producer of high-performance filters. So that's a big bump up.

With that behind us, the run rate CapEx that Kris mentioned is sustainable. It's enough for us.

We can do a great job with that capital and monetize our assets and filters as well.

Thank you. My first question is whether you can segment revenue out by PA, IMS and broad markets?

Yes, so broad market was approximately 25%, mobile approximately 60%, and PA 15% during the fourth quarter of 2016.

Thank you for that. And then I guess I had a question about the revenue minus your largest customer.

You had guided it up in the range of 10% to 12% for the September quarter. Can you give us what that actually came in at?

And what the guidance implies if I exclude your largest customer?

Yeah, so in terms of the full year, I can give you the full year of 2016, the balance of our business ex our largest customer was up about 11% to 12%. And it's a portfolio of broad market, other mobile absent the largest customer and other IOT businesses.

So that's kind of the roughest cut at the high level. In Q1, our largest customer is seasonally strong, of course, going into a seasonal ramp.

But the top-three Tier 1 accounts are also ramping aggressively into Q1.

Yes, thanks. Question on the gross margin outlook for the December quarter.

Typically, you'd see some fall through in terms of the higher volumes. I know you mentioned you're working inventory.

Maybe that's an influence. Anything else potentially from a mix perspective in terms of some of the new wins, what they might carry versus a year ago?

No. From a mix point of view, Q1 traditionally has a higher mobile revenue, which is slightly below average.

And so that has an impact on the gross margin.

Okay. And then as a follow-up, there's a number of questions asked on M&A and capital allocation.

The diversification angle specifically, how important is that to the company as you explore potential deals out there?

Well, diversification is an element. It's something that we look for.

But really, it isn't the only criteria. It's not the underlying criteria.

We're looking for opportunities that really drive the entirety of the business. And as we said, we feel really good about what mobile is bringing.

It's a lot more than what the market expected three or four years ago or five years ago. And what we are seeing from our customers is just a daunting and relentless push for performance.

And what we're also enjoying are product developments and revenue streams that weren't on the radar screen five years ago, diversity receive, we talked about, Wi-Fi has been taking off. Our GPS location systems are taking off.

We are seeing more and more reach into our filter franchise. There's just a lot to do.

So we wouldn't look at a deal on the merit of diversification as a primary motive. It would be nice in some cases, but we would also entertain opportunities that really help us advance our core business.

Yeah, hi, guys. I'm just looking at the gross margins for the December quarter.

Last year when your top line (33:23) was up 5%, your margins improved pretty nicely, 100 bps, 140 bps. Here you're guiding flat.

Are the incremental gross margins much lower than what you've had historically?

Our incremental gross margins are in the mid-50%s right now.

Sure. And as you look at the BAW roadmap, I know you guys said you are getting BAW from your foundry partners.

Can you update us on how your roadmap looks there? Are you expecting any BAW products launching here, or still expect TC-SAW to take that part of the bands, too?

Thanks.

Sure. Well, there are significant growth opportunities in the areas that we are strong today across TC-SAW.

We continue to push the frequency range in TC-SAW quite nicely. We're winning a lot of products there, not only on transmit, but also on diversity receive.

So BAW technology is not critical. It's not mission critical.

We understand where it is in roadmaps, where it isn't in road maps. We are making great progress again in raising the market opportunity for our TC solutions.

And also when you look at things like 5G, what we're seeing is that there's more and more TDD capability in 5G than FDD. So when you go to TDD, time division duplexing, you don't require a BAW filter or a BAW duplexer.

You can do it with TC in many of these frequencies. So that's another expanding opportunity for us.

Now having said all that, we have access to BAW. We're using it today with some of our flagship products with foundry partners.

We always take a look at make versus buy, is it an opportunity for us to invest in-house. We'll continue to weigh that balance.

But be sure that we're going to be able to address the market as we need to. We'll be able to address the filter opportunities and the systems engines that we've been delivering for years.

So there's no stop on that.

Thanks. This is Vincent Celentano on for Steve.

I was wondering if you could tell us during the quarter how many handset customers did you have and if you can you give us an idea of how big the overall Chinese handset OEMs were as a percentage of revenue for the smartphones base?

So we have two more than 10% customers, Foxconn at about 40% and Samsung at about 10%.

Okay. Great.

With respect to China. So China all-in, I don't have the itemization of the handset versus the broad market.

All-in China is about 25% in that. And then if you look at the mobile portion would be led by Huawei, for example.

But all-in, 25%.

Okay. Great.

And the obviously, this past March was more of an abnormality in terms of your normal seasonal trends. So just going forward, as you look in the March quarter, is there any reason you wouldn't see the normal trends you had seen the past few years before this past March?

Correct. I think as we anticipate typical market seasonality for our space is maybe 10% to 15% down in the March quarter.

Our mission is to offset that to some degree. We're confident we can do it.

Last year was a bit of an aberration. So our job is to out-perform that market in March.

Welcome, Kris. Looks like broad markets went down about 5% if it went from 29% of sales to 25%.

So is that just lumpiness or anything happening in Wi-Fi or IoT?

Yeah, the issue there was more around infrastructure more than anything else. The IoT space was about flat.

That will come up again in about March. And infrastructure was a bit of a drag on broad markets in this quarter.

Okay. Thank you.

And then maybe talk more about SkyBlue. It looks like you've got some nice power efficiency solutions that go beyond envelope tracking.

It sounds like you had Panasonic. Should we expect any progress in some other geographies and other OEMs?

Great question. I'm glad you brought that up.

So SkyBlue is a method that Skyworks uses really as another way to provide efficiency in the amplification and transmission food chain. And so we do that with a very unique proprietary architecture we call SkyBlue.

It is embedded in some of our systems solutions. If you look at some of the leading platforms that we've announced and you can see through tear-downs, those devices are apparent there.

They've made up with our SkyOne solutions to provide higher levels of efficiency. Incredible levels.

Higher than ET in many cases. It's a device that is base band agnostic.

We are working with all the key chip providers as well, and it is very early for us right now. We have a long way to go with this solution.

We are continuing to provide new and additional revs with upgraded performance. But it is in production with four or five key brands today.

Thanks, Liam. If iPhone 6s inventory is all consumed by the time you exit December, as you indicated, why shouldn't we expect to see orders for those parts to you from Apple if they keep selling that phone in 2018?

Is that an erroneous assumption? But if the phone is still being built after they consumed all their raw material from you, then I would expect you'd see some sort of revenue for that product.

And then on MediaTek Phase 2/Phase 3, China has been strong for you and your competitors. And I know that Phase 2/Phase 3 only use modules with switches and amplifiers.

But it sounds like MediaTek may be moving to pads earlier than expected. You currently do not sell discrete filters into that market.

But if they go to pads and you're one of the two big suppliers of those parts already, why should we expect that your filter demand should step up significantly because MediaTek would obviously be buying those filters from whoever is buying the modules, and that's going to be you and maybe Corbo (39:37).

Yeah, great insights, Ed. So on the first one, certainly if there were additional demand requirements for the Legacy products with our lead customer, it would be well positioned to deliver, and that could be incremental revenue for us.

So that is one. And then with respect to MediaTek, you got it right.

So right now we have a very strong partnership with MediaTek. And one of the products that has done really well in that ecosystem is our SkyLiTE product.

So the SkyLiTE product, and I know you get this, but for everyone. It is really a SkyOne solution absent the filter.

So we lay out all the required amplification, transmit, receive, switching, and we do everything but the filters. And we allow the MediaTek ecosystem, the customers that use the MediaTek chipset, to pick and choose filters.

That's been the lay of the land here for a while. Next rev we are looking at integrating, leveraging our TC-SAW capability to bring in a complete pad or SkyOne-like product to these MediaTek customers.

So it's a great opportunity. We are working on it right now.

Hopefully we'll have more to report to you here in the next quarter.

Well, thank you all for participating on today's call. We look forward to seeing you at upcoming conferences and events during the quarter.

Thank you.