思佳訊 (SWKS) 2012 Q2 法說會逐字稿

Good day, everyone, and welcome to the Skyworks Solutions second quarter fiscal year 2012 earnings call.

This call is being recorded.

At this time, I will turn the conference to Mr.

Steve Ferranti, Investor Relations for Skyworks.

Mr.

Ferranti, please go ahead.

Thank you, Jamie.

Good afternoon, everyone, and welcome to Skyworks' second fiscal quarter 2012 conference call.

Joining me today are Dave Aldrich, Don Palette, and Liam Griffin.

Dave will begin today's call with a business overview, followed by Don's financial review and outlook.

We will then open the lines for questions.

Please note that our comments today will include statements relating to future results that are forward-looking as defined in the Private Securities Litigation Reform Act of 1995.

Actual results may differ materially and adversely from those projected as result of certain risks and uncertainties including, but not limited to, those noted in our earnings release, and those detailed from time to time in our SEC filings.

I would also like to remind everyone that the results and guidance we will discuss today are from our non-GAAP income statement, consistent with the format we have used in the past.

Please refer to our press release within the investor relations section of our Company website for a complete reconciliation to GAAP.

With that, I will turn the call to Dave for his comments on the quarter.

Thanks, Steve, and welcome, everyone.

I'm pleased to report another strong performance for our second fiscal quarter of 2012, in which we exceeded prior guidance, and we outpaced seasonal trends.

Our second quarter results demonstrate how our diversification strategy, our flexible business model, and ongoing focus on operational execution contributed to healthy financial returns in the seasonal trough, but, more importantly, positioned us to outperform through the remainder of the year.

Specifically, during the second quarter, we posted revenue of $365 million.

That's ahead of our guidance of $360 million, and it's up 12% year over year.

We maintained best-in-class margins, producing second quarter operating income of $84 million.

We earned $0.42 in diluted earnings per share, and that's $0.02 better than our guidance, and we generated cash flow from operations of $117 million.

And looking back at the first half of our fiscal year, despite a product transition at one of our key customers, and despite March quarter seasonality, we maintained strong profitability, producing accumulative $189 million in operating income.

We earned a combined $0.92 in diluted earnings per share, and we produced $194 million in cash flow from operations.

These accomplishments demonstrate Skyworks' differentiation, and highlight the sustainability of our business model.

And we see our momentum strengthening in the current June quarter, and accelerating in the September quarter, based on strong first half design win activity, and a robust opportunity pipeline.

At a higher level, the global mega-trends of mobile computing and ubiquitous connectivity will provide powerful growth engines for Skyworks in the coming years, and are fundamentally reshaping the world around us.

As an example, wireless is becoming the next strategic pipe for content delivery.

Upcoming smartphone and tablet platforms feature multi-core processing, high definition displays, and lightning fast data speeds, making them the ideal third screen for consumers, and blurring the traditional boundaries between televisions, PCs, and mobile devices.

Cloud based services are expanding at an incredible pace.

Content providers like Google, like Microsoft, HBO, Amazon, and many others are building out massive libraries of cloud based on demand content, and the result is an exploding demand to be connected to the cloud.

Also, mobile is displacing land line broadband.

Today, the capabilities of LTE can exceed equivalent wireless services like DSL to a point where mobile broadband is becoming a viable alternative to wireline.

This is a especially the case within the emerging markets, where virtually all of the growth in new broadband subscriptions is from mobile devices.

These mega-trends are in the early stages, and they will play out in the span of the next decade, but there are some very tangible off-shoots that we see strengthening our business today.

During 2012, LTE devices will hit critical mass.

A recent forecast by Strategy Analytics suggests that LTE shipments could grow by nearly tenfold in 2012.

As demand for global roaming expands, smartphones and tablets that incorporate only one or two regional LTE bands will begin to adopt additional LTE frequencies, along with fall backward compatibility to 3G and to 2G.

Also during 2012, smartphone adoption will skyrocket in developing countries.

According to recent market research, smartphone growth in China and India could nearly double this year, and approach 200 million units.

The imbedded base of 2G subscribers is tremendous, creating a massive upgrade cycle that will play out over the next few years.

And finally, wireless connectivity will expand into even more consumer devices.

By 2016, analysts forecast that there will be over 10 billion connected devices.

Wireless attach rates are exploding in traditionally unconnected devices like gaming platforms, like televisions, appliances, set-top boxes, and many others.

So as an enabler of wireless connectivity in all its forms, Skyworks is uniquely positioned to capitalize on these trends.

With see all of these driving substantial growth in our TAM, driven primarily by three factors.

First, the average dollar content will continue to rise within our RF front end market.

As smartphones replace feature phones, our core TAM will grow a 15% compounded rate, as band count and complexity rise with the adoption of new LTE bands.

Second, on top of all this, we are capturing incremental new dollar content within mobile devices with our growing portfolio of antenna switch modules, or ASMs, wireless networking front end solutions, a GPS low noise amplifiers, and now, power management, and display and back lighting solutions.

And I think it's worth noting that none of these products were in our portfolio just 18 months ago.

In fact, today we find ourselves pursuing as many as seven or more addressable sockets per device, as compared to one or two PA sockets just a couple of years ago.

And finally, we are leveraging the core competencies from our mobile segment to expand in entirely new high margin vertical markets.

For example, within our high performance analog products, we are seeing a tremendous of activity in wireless networking and wireless networking solutions.

Wireless connectivity is becoming a critical link to access content in the cloud, or to stream video and other rich media content.

And next generation technologies like 802.11ac utilize multiple transmit and receive chains, dramatically ratcheting up RF complexity.

Much like the cellular market, performance requirements are becoming more critical, complexity is going up, and overall RF dollar content is rising.

And Skyworks has established a strong early-mover leadership position, and we have already secured over 20 design wins across a variety of 802.11ac-enabled devices, including routers, set-top boxes, netbook PCs, USB dongles, and others.

And we expect to begin high volume product shipments later this year, in support of late 2012 product launches.

Okay, now turning to our second quarter and our mobile internet business, we secured new design wins on Samsung's Galaxy S3 platform, with an entire suite of Skyworks products.

These include multi-mode transmit modules, they include high-efficiency LTE amplifiers, wireless LAN front ends, GPS LNAs, antenna switch modules, and power management products.

In addition, during the quarter we captured now socket wins on a host of new smartphone and tablet platforms from Huawei, including the LTE enabled media pad, and a [send] smartphone lineup.

We ramped our integrated multi-mode engine on the HTC One smartphone platform.

And finally, we entered into high volume production with our Sky High family of ultra-high efficiency amplifiers in support of several major platform launches for 2012.

These are the highest efficiency amplifiers on the market today, and we were seeing tremendous design win activity across our customer base.

Now, within our high performance analog business, we captured new design wins in the quarter across a number of very diverse applications.

These include connectivity sockets in Sony's high end gaming platforms, custom switch modules in a military avionics applications for ITT systems, a 16 channel backlighting controller for high definition LED televisions from LG and others, and next generation, leadless, implantable defibrillators with our portfolio of optocouplers, and remote gas meter reading solutions with Aclara.

Increasingly, across all of our markets, we see a narrower pool of competitors with the engineering capabilities and the full technology portfolio of Skyworks.

Looking ahead, we see this trend accelerating with the advent of more sophisticated RF signal processing, and more complex modulation requirements to support higher and higher data rates.

So in closing, our second quarter marked another strong performance for Skyworks.

We believe our strategy of continuing to diversify our business, expanding into new vertical markets, while maintaining a laser focus on operational execution is clearly working.

And with that, I will turn that over to Don for his financial review.

Thanks, Dave, and thanks for joining us, everyone, today.

I will first provide a summary of our second quarter results, and then outline our business outlook for the third quarter of fiscal 2012.

Revenue for the second fiscal quarter was $364.7 million.

That's up 12% year over year.

Gross profit was $157.5 million, or 43.2% of revenue.

Operating expenses were $73.7 million, consisting of R&D expense of $45.4 million, and SG&A expense of $28.2 million, which yielded $83.9 million of operating income, and a 23% operating margin.

Cash taxes were $3.8 million, translating into a 4.5% tax rate, slightly better than our prior guidance.

Net income was $79.8 million, or $0.42 of diluted earnings per share, $0.02 better than our guidance, including a $0.01 tax benefit.

Turning to our second quarter balance sheet and cash flow statement, we generated $117 million in cash flow from operations.

We invested $26 million in capital expenditures, and had depreciation of $18 million.

We expect capital expenditures to remain above depreciation levels through the remainder of fiscal 2012, as we increase capacity across all of our facilities in preparation for second half product ramps.

These investments, these Cap Ex investments, consist of equipment add-ons within our existing facilities which have a very quick pay-back that expands our product margins and our return on invested capital.

And finally, we exited the quarter with $307.3 million in cash.

I wanted to briefly highlight for you how the strength of our business model has translated into strong earnings and cash flow, and that's enabled us to significantly improve our balance sheet and capital structure.

Since the beginning of fiscal 2011, we've generated a cumulative $560 million in cash flow from operations.

We retired the remainder of our convertible debt at favorable terms, and without any equity dilution, that makes us debt-free for the first time in Skyworks history.

We completed strategic all-cash acquisitions which significantly expanded our addressable markets, and we repurchased 3.5 million shares of our common stock at an average price in the low $20 range.

Now, for our third quarter 2012 business outlook.

We are guiding third quarter revenue to be up 5% sequentially.

So assuming revenue of $383 million, we suggest modeling gross margin in the 43.5% range.

Looking ahead, we do see gross margins continuing to improve, as revenue growth accelerates through the remainder of the year, and as we realize synergies associated with our recent acquisitions.

We expect third quarter operating expense to be roughly $76 million.

Below the line, we expect $300,000 in expenses from interest income and other expenses, and we now expect our cash tax rate to be around 7% for the remainder of fiscal 2012.

And as a result, we expect our non-GAAP diluted earnings per share to be $0.44, and that's on a base of 192 million shares.

So that concludes the prepared remarks.

Operator, why don't you go ahead and open up the lines for questions?

Thank you, sir.

(Operator Instructions) We will take our first question from Parag Agarwal with UBS.

Hey, guys, congratulations on solid numbers here.

Thank you.

The first question is, there has been some shortages of baseband from Qualcomm on 28-nanometer shortage.

Just wondering if the shortage has impacted your reserves for the up-tick for the next quarter, and by how much?

Thanks, Parag.

This is Dave.

We have seen some demand push-out based on shortages.

It's been factored into our June guidance, and I will just add that diversification in our end markets, and diversification among our customer set within our mobile business always helps us to minimize the impact of these kinds of swings.

But it's all been factored in to what we talked about in our Q3 guidance.

Okay.

Fair enough.

Second question is that you are leading to a strong second half, starting from the September quarter.

Just, I'm not asking for a specific item, but do you think this trend in your business will be better than seasonality in the second half?

I do, and it's really driven by specific program ramps across both our high performance analog and our mobile business.

We will take our next question with Vivek Arya with Banc of America-Merrill Lynch.

Hi, guys.

It's Anne Edelstein calling in on Vivek's behalf.

We just had some questions about your diversification strategy.

Seems like you guys did a did a good job with that in the past quarter.

We were wondering how, exactly, your strategy is going to change as the top two players, Apple and Samsung, continue to concentrate smartphone handset customers, and as your competitors seem to steadily gain share at both platforms?

How you can differentiate yourself?

Okay.

Well, that's a pretty broad question.

Let me kind of break it up a little bit.

The way we are able to deal with customer concentration is the best way possible, which is to try to be a strategic partner, and aligned with all of the customers, at least all of the major customers.

We have done a very good job of being able to do that.

Furthermore, we focus on our chipset and baseband partners, and by being lined out with virtually every chipset in the market today, we are able to address those swings.

So, as OEMs look to bring forth a new platform, and they begin with a reference design, we are on that reference design, and we're well positioned with that chipset partner.

Those I think those two things allow us to be as diversified as one can be within the mobile business.

It has some inherent concentration.

Beyond that, we look to diversify into new markets logically.

We have a high performance analog business.

We have a strong, robust catalog business.

So, we are able to address markets like wireless, infrastructure, automotive, we talked today about medical.

So, that we have a diverse set of markets we address, which also gives us an opportunity to have less volatility.

Okay.

Then can you just tell us how many, and if so, which ones are your 10% customers -- 10% or greater, and if any of them are over 20%?

Sure, Ann.

We had three 10% customers for the quarter, and they were Foxconn, Samsung, and Nokia.

We don't break it out beyond who the top 10% customers in the quarter.

We will take our next question with Blayne Curtis with Barclays.

Hey, guys.

Nice job.

Just as a frame of reference, if you could just, in the March quarter, break out RF and linear.

When you look at the strength you are seeing in June, clearly one of your competitors had a customer that was down in June, and you seem to be able to offset that.

Any color on where your offsets are coming from would be helpful.

Blaine, I will just take the housekeeping question first.

For the quarter, we were at 35% linear HPA, and 65% handset smartphone, which is consistent with the percentage we were at last quarter.

There really wasn't a change in it.

Blaine, the second part of your question, we are seeing some strength in our Korean customer base.

We are seeing strength with some of our Chinese customers like Huawei.

Our HPA portfolio is performing very well.

The catalog business is strong, and we are seeing wi-fi, and some the connect rate with the gaming and some the home automation markets doing well for us.

It's a combination of those things.

Thanks.

Then maybe just following up on the wi-fi, you highlighted 802.11ac.

You talked about late year ramps.

I was wondering if you could just frame -- I know it's a high content, maybe just frame the unit opportunity this year and next, as far as adoption curve there.

Thanks.

Sure.

I think, this year, we have, right now -- just to give you a little bit of a backdrop.

We have a strong position with the leading chipset provider, and by virtue of that have a fairly strong insight into the OEMs and the ramp that we will see late 2012 and into 2013.

So we believe it's going to be a pretty aggressive phase-in, where you bring in ac11 and we'll roll out, you see gigabyte speeds with 11ac, you see MIMO.

We have literally multiple streams, so you double or triple your RF content.

We see that playing out late 2012 as a ramp, and then into 2013 and beyond.

We are really excited about it, and as I said, we have very good visibility into the chipset and the OEM side.

We will take our next question from Alex Guana with JMP Securities.

Thanks for taking my question.

Let me echo the congratulations.

I was wondering if you could talk about your Nokia exposure that is greater than 10%.

How is that revenue trending for you?

I know you can't get into too much detail, but with regard to upgrade cycles and some of the legacy exposure, how should we think about that as a risk factor for you, or an opportunity?

Thank you, Alex.

Liam?

Alex, this is Liam.

Certainly, Nokia has not indicated they are a 10% customer for us.

We have a very broad footprint, from 3G very high end, even LTE enabled phones end of this year, down to the lower end 2G business.

We continue to work very hard to gain share.

I think one of the things that you should expect from us, as we get into 2013, is to go beyond the power amplifier space.

We are currently working with them on GPS products.

We have a great opportunity for the antenna switch modules, and quite frankly, the power management IP that we bring forth today could be a real driver for us into 2013.

I think, just to add on to that, Alex.

It really is, again, part of our diversification.

Nokia has been a great customer of ours.

They build a lot of phones.

As we see shares move and strategies change, we just always want to make sure that as we see how OEM share shifts, we are there to address the entire base, and we do a pretty good job of that.

To follow up on that, could I ask, you mentioned Huawei earlier.

Are there any other players getting close to that 10% mark?

I know HGC has been important to you.

Huawei.

How are those second tranche customers doing, anybody knocking on the door of 10%?

Huawei and ZTE both, they are not 10% customers, but I think that they are really the big guns there in China, of course.

What we like is, unlike some of the challenges that you see with 2G business in open market China, Huawei and ZTE, really, have been playing up with 3G and LTE ramps.

We also like the infrastructure opportunity there, as you start to see subscribers increase in China, more smartphone adoption, and that's predicated, now, by a ramp in infrastructure.

We play there as well.

So that's a story we like.

We'll take our next question from Craig Ellis with Caris & Company.

Thanks for taking the question.

Just a follow-up on the 802.11ac activity that you are seeing.

Liam, when we look at applications like notebooks, or home routers, or dongles for TVs, how should we think about the dollar content for Skyworks and those types of applications?

Sure, Craig.

Thanks.

We actually are seeing a couple of things.

First of all, on a unit per unit basis, the 11ac product is more complex.

You are driving 256k QAM versus 64k.

The channel bandwidth virtually doubles versus 11n.

So, on a part-by-part by basis, this is a more complex device, higher ASP, higher value.

But now when you bring in MIMO, multiple-in-multiple-out you could take two, three, or four streams.

So you have an individual part increase, and then you have the multiplication of MIMO.

So there is a substantial TAM pop for us.

Okay, and can you put any numbers to that, Liam?

Is it from $1 to $2 up to mid single-digits, or any further quantification there?

I mean, it's certainly a multiple of 2X to 3X what you would see in 11n.

In the MIMO routers, the dollars are huge.

The dollars are huge, because that's certainly, you want to stream, and you also look at extended range.

We are really pleased by it, and I will say that we have had the benefit of early engagement with the leading chipset provider, and that has put us in a great leadership position.

Then just related to that business, but at a higher level.

For Don perhaps, as you look at the deals that you have done, how do you look at the integration progress?

Any positive or negative surprises, now that we've got [2.5 to 2.75] of SiGe underneath the belt, and a full quarter of AATI underneath the belt.

Craig, this is Liam.

With respect to the integration, with both of these franchises we are very pleased with what we have seen.

Certainly, SiGe we've had under our wing, here, for a little more time.

I think what you are seeing, now, is the benefit our customer engagements.

The Skyworks sales force, and the relationships we forged.

With AATI, we love the product, we love the technology.

I think you are going to start to see real benefits again, as we roll that out to Tier 1 accounts that had not been addressed in the past.

I think when you think of it, Craig, it's a timing thing, and as Liam said, SiGe we've just had integrated longer.

So, we are starting to go up the benefits curve a little faster, but we fully expect AATI to be there, as well.

It's just a question of timing.

But they are going very, very well.

We will take our next question from Aalok Shah with D.A.

Davidson.

Hey, guys.

Just a couple quick questions.

Liam, if you could talk about the China market a little bit more in detail.

We have been hearing that, of course the 2G markets have definitely been a pricing war between all you guys, but trying to get a sense of how you view the 2G market going forward in China, is that a market you want to continue to play in?

How do you think pricing looks like?

Plus, Liam, secondly in terms of 3G, can you give us a sense of how we should think about 3G market for you guys in China, market share-wise and even pricing?

Sure.

The 2G market in China, as we indicated earlier, it is really a very broad open market portfolio of small OEMs, and a number of chipset providers.

We have a very good position there.

We have been a partner with MediaTek for quite some time.

That portfolio, now, in general, as a market is compressed, the ASPs have come in a little bit, and the overall share of China's overall demand is lessened in 2G.

Having said that, we are excited with the 3G ramp.

We are starting to see that being led by the two name players I mentioned before, Huawei and ZTE.

We have a very good position there.

They tend to use chipset and baseband that we know well.

Very often, we leave with a reference design, and those accounts are also more willing to leverage the complexity and the value, and add additional components, ASMs, et cetera.

I would add to that, that we have established a product line of everything from CMOS devices, of an acquisition we did a couple of years ago of ultra-low cost and very high performance, very low cost HPT devices for the next tier of that 2G market.

So, the way we think about this is, while the ASP pressure has been felt in that part of the market, we are convinced that we have, by far, the lowest cost structure.

We have the scale, and we've got the right position on the right reference design.

So for us, it's points of market share, and we leverage that volume to continue to drive down the cost curve in our factories, and drive our utilization higher.

So we like that business, but we were careful with it, to make sure that it continues to have a positive contribution, and that we maintain our overall worldwide market share, because that's very important to us.

We will take our next question from Ittai Kidron with Oppenheimer.

Thanks, and congrats, guys, on good rules in a complicated quarter.

Can you give us -- Dave, I want to go back in to your comments about TAM.

As you started going through the three, four opportunities that you see ahead for yourself.

You've talked about, if I'm not mistaken the opportunity in your core cellular business of 15% CAGR.

Correct me if I'm wrong.

You are right, Ittai.

If we layered that in, and assuming that we add the other things that you've talked about which are -- the antenna switch modules, GPS LNAs, displays, power, and also the 802.11, like the high margin market that you've talked about.

Then is that the assumption we need to take, that your business, starting 2013 and thereafter, will grow north than 15%?

Is that the conclusion here?

I will say it a little bit differently.

The market is going to grow for the core RF TAM by more than 50%, and as you know, we have been clear that we intend to gain share.

So, that 15%, by the way, is looking at multiple bands of amplification, of looking at the complicated switching and conditioning and filtering that occurs -- that needs to occur.

Fortunately for our us, all of that complexity is creating real problems with size, with shielding, with interference, and so we've spent a great deal of time and effort working with our customers to solve those problems for them.

As a result, we're able to not only take points of share, but really work through a real issue that they have right now, which is hitting the current consumption battery talk time, with all of this -- as they try to add more functionality into these devices.

So, it's really a great time for us.

So, in short, is that a yes?

Yes.

Okay.

(Laughter) Don, it's been awhile since you've gone through the two acquisitions in the last couple of quarters, and clearly you have been working internally to straighten those out, as they say.

But can you give us a little bit more color, now.

Have you given some thought on how do you think, then, longer term, your margin profile needs to look like, and now, with the addition of these two businesses.

What are the margin profile we need to think about, let's say 24 months out, that is something aspirational?

Clearly, there has been no change in our aspiration to have a 30% operating model.

That's still where we're focused, and the best way for you to step back and look at our business is -- and we have talked about this a lot.

We are still dropping through our incremental revenue on a gross margin line 48% to 50%, so you start with that.

We are going to be making some targeted investments in OpEx in future opportunities.

You see that in our Q3 guidance.

Those aren't going to be material, but they will be something there.

So, you are still going to see leverage.

As you layer in this revenue, and drop it through at 50%, you get a real good feel as to when that 30% target is doable.

That is really, Ittai, the best way to do it, but that goal is clearly in front of us.

We're going to continue to expand product margins, and there is a tremendous of leverage in the business.

There is no doubt, in the short term, that the acquisitions have stalled that a little bit, because as we were synergizing them and incorporating them into the business, they have had a little bit of muting impact on the incremental returns.

But we're going to blow through that, and as the revenue ramps, you are going see the leverage in the model.

That's best for you to do that, to run those scenarios, and you see it.

We will take our next question from Edward Snyder with Charter Equity Research.

Thanks.

A couple questions if I could.

First off, on the high efficiency PA, SkyHi.

You are one of the very few people, companies that have this.

Who else are you seeing when you compete for the sockets, if you can give me a rundown of maybe who else you would think your competition is on that.

Then Don, the linear business is doing particularly well.

Any color at all on what your aspirations are for growth in the next quarter, and maybe for the full year, but you've added a couple of new companies that's given you a lot more traction.

I know part of the rationale for that was to port their products into your much larger client base.

How is that going, and what can we expect for growth on it?

Then I had a couple of questions on pricing.

Ed, the SkyHi PA, as you said that, that is a product line that's really tailored to our ultra-high efficiency.

They're not amplifiers, LTE bands, and the like, and the difference in our model over the last couple of years is, we see different competitors when we sell PADs, when we sell discreets, multi-mode devices, ASMs, we tend to see a different customer set.

To answer your direct question about SkyHi, we probably see RFMD more than anyone else today.

Sure.

Ed, with respect to high performance analog, we certainly expect to be at least growing as fast as our mobile business.

But that benefit of some of the new product categories we have, and design win traction that we are pursuing right now, we hope to do even better than that getting into 2013.

We will take our next question from Cody Acree with Williams Financial.

Great.

Thanks, guys, and congrats.

Thank you.

Maybe if you could go back to the dollar content question I think was asked earlier, and look at it on an incremental PA, as we grow band into 3G and 4G.

Then also, as you are layering in things like the antenna chip modules and the power management, can you talk about, maybe, the percentage growth that you expect over the years for just dollar content growth, as you get into the new markets?

How those might offset this typical ASP decline?

Cody, maybe I misunderstand the question.

I think that's the 15% answer.

The way we get to 15% is we increase the number of bands the way we think the market will morph over years.

We take the 2G market, which of course has the lowest ASP, and that is now in decline, fairly rapid decline, as a matter of fact.

It's not going to go away, but it's in decline.

Then we look at the mix of high end, mid tier, and low end smartphones, those that may be addressing a local, more regional content, and therefore have fewer bands.

When we do that, and then factor in ASP, on a phone-to-phone basis over time, we think that 15% for the next few years is a good number.

In fact, we've come at that many ways, and we seem to come close to that answer cut lots of different ways.

Then of course, the other products we are talking about that we didn't previously address, that expands beyond that.

You are going to begin to see in 2012, as you look at tear-down reports, and so on.

You are going to start to see lots of examples of Skyworks having a front end, having a PAD, having filter and PA technology, ASMs, and GPS products, multiple modes of wi-fi.

You're going to see that being not an atypical lineup for Skyworks in tear-down reports.

But some of these markets are relatively new for you.

So, would you expect that, while maybe 15% CAGR over a longer term, that you have an acceleration of that growth in the shorter term, as you start to get in some of these new markets.

That's absolutely the intent.

We will take our next question from Matt Thornton with Avian Securities

Good afternoon, guys, and nice quarter.

Thank you.

It makes for a better night than last night.

Can you guys break out in the March quarter, 2G versus 3G.

Then as we look out, too, to the June quarter and beyond.

If I understand you correctly on some prior comments, should we continue to think about 2G as in continuous decline, here, and then HPA piece and the 3G-4G piece growing in step with one another over time, here?

Is that a fair way to look at that?

Matt, I'll just give you the statistics real quick.

The 2G was roughly 25%, EDGE/ WEDGE with WCDMA was roughly 75% for the quarter.

I think the answer to the second part of the question is, yes, you should see 3G and 4G continuing to displace, and become a bigger percentage of our business, as it will become a bigger percentage of the market, as well.

Got you, and then one final one if I could.

On the next gen Samsung Galaxy product, sounds like -- I think I probably lost count, but there was at least five sockets that you rattled off, there.

Do you care to throw a content dollar number around that, and would that be the global variant, or is that a CDMA-only variant, or any color you have there?

It would be the global variant, and I'd really rather not get into the specific dollar content.

That's a little proprietary, and our customer probably wouldn't appreciate that.

But it is high, and I think you are doing the part count right.

It's one real good case study of seeing the diversification.

You see RF product in there, traditional product, you see switch product, wireless LAN, GPS, and even some other technology.

So I think it's a great example of what we are capable of doing, now, with this full suite of technologies.

It's also -- I will add on to what Liam said, it is also a case, if you look at a lot of products, we've talked over time about there being discreet, high dollar content, high performance, and then much more highly integrated.

Even in those sockets where the amplifiers themselves are highly integrated, there is a lot of opportunity.

So, I think it reverses this notion that, when you put a lot of bands in a multi-mode device, all of a sudden your TAM drops.

That's really not the case.

We are not seeing that.

We'll take our next question from Dale Pfau with Cantor Fitzgerald.

Good afternoon, gentlemen.

Once again, my congratulations, great quarter.

Thank you.

Let's talk about your antenna switch modules.

As I look at the competitive landscape out there, that seems to be one of the areas where you are really beginning to differentiate yourself.

There has always been only a handful of guys who are really good at switches.

Could you talk a little bit about what you are seeing there in the competitive landscape -- how many people there might really be able to address some of these multi-throw switches?

Even the multi-throw that we are going to see in wireless LAN?

Then how fast do you think that TAM could actually grow?

I think that could grow much faster than your 15% CAGR.

Sure, Bill.

So a couple things.

As you know, Skyworks has been a major supplier of switch for many years.

We ship over 0.5 billion devices here, primarily out of Woburn.

So we understand that business, but what has been great is, as you move into these multi-band phones, you always need to be switching among bands, right?

So you need to basically be communicating across bands, you need isolation, you need low insertion loss, and we have been masters at that for quite a while.

The beauty now is that the throws are going out.

The number of bands that we need to interact with are going up substantially.

Our technology, and our R&D team here is well equipped to do that.

We also have the unique advantage of working very closely with the RF amplifier team at Skyworks, so we can build solutions that work in concert.

So, with having said all that, we are seeing an opportunity, now, in some of these handsets where the ASM value is over $1, in some cases, $2, and we're starting to enjoy our first taste of those design wins into the second half of this year.

Dale, one of the reasons why we steered away from the market in the past is, while did a lot of switches, bode switches, TR switches and the like.

The antenna switch module in a simple dual band phone, for example, it's more about the filter device.

The switching was done in PIN diodes and it really wasn't that complex.

The ASPs were low.

What's happening with the complexity is that it can no longer be done with a PIN diode matrix on a hunk of LPCC or some ceramic.

It is, really, now, requires a pretty sophisticated signal processing and multi-throw switches.

We do a lot of that in SOI, for example.

We don't even do that in gallium arsenide, where we can integrate some logic and functionality.

So, it now become semiconductor heavy, so it plays into Skyworks strength.

My question there, is the TAM on that growing at faster than a 15% CAGR?

For us, yes.

I think for the market, as well, because of the complexity.

We will take our next question from Jonathan Goldberg with Deutsche Bank.

Hi, guys.

Thanks for taking my question.

I wanted to dig in a little bit more to something you said in your opening remarks about your platform wins.

The Huawei Ascend, the Samsung Galaxy 3, and HTC One.

Could you just talk a little bit more about which products you are selling into those, because those are three -- aside from Apple, those are probably the three leading smartphone platforms out there.

I wanted to get a better sense of what your content there looks like.

It's a little different curve, but it is, in all cases, it's fairly broad.

It has amplification, so transmit amplification.

In some cases, it's more functionality, where we are sweeping in things like ASMs.

So amplifiers in all cases, but ASM, GPS, LNAs, wi-fi devices and I think maybe wi-fi --

Some power management, and I think in some cases, Jay, we have some really customized multi-mode, multi-band engines in RF.

So, we noted those as marquee wins that reflected the customer, but also some of the newer technology that we are releasing.

Those are substantive, meaningful dollar contents in all of those.

In each case, yes.

Great.

That's it for me.

Thank you.

Thanks.

We will take our next question from Jaeson Schmidt with Craig-Hallum.

Hey, guys.

Congrats.

Thank you.

Just two quick questions for me.

Don, what's your backlog coverage to your guide.

Then just wanted to get your thoughts on channel inventory.

Our backlog coverage, as we do typically when we provide an outlook, is we are pretty much 100% booked at this point in time.

That's combination of hard purchase orders, and also the hub pull.

It's a combination of both forecasts that get us to that level.

Then, just your thoughts on current channel inventory.

I think current channel inventories normal.

I don't see any areas where there is excess inventory.

So, I think it's pretty normal for this time of year.

We will take our next question from Suji De Silva with ThinkEquity.

Thanks.

Nice job on the quarter, guys.

Thanks.

In terms of just under a year ago, you guys pulled off two big acquisitions.

I want to understand, today, sitting here, maybe the conditions are different in terms of thinking about more acquisitions?

Or whether there are any holes you would still need to plug to do more acquisitions?

Well, our strategy has been pretty clear.

We look for acquisitions that are very quickly, or immediately accretive, and that have an opportunity for us to add a platform that we can grow from.

So, these aren't bolt-on wedge pillars, we are really looking for growth engines.

So, we don't see any technology gaps, per se, today, at least not major ones.

So you ought to think of us looking at it that way.

We opportunistically look for a cultural fit, something that we can integrate very quickly, and something that would be immediately accretive.

Okay.

Then a follow-up to the Samsung Galaxy 3 questions.

Across the variance around the world, are you sole source around the PAs for those, or is that shared through the variance?

It's not typically -- we are not sole source on the platform, although on the models it would be sole source.

So the custom per model, but not on the platform.

We have Company on the platform.

We will take our next question is from Vijay Rakesh with Sterne Agee.

Hi, guys.

Good numbers here.

Just want to catch up on the mix, in the 3G what was it, and how did it grow Q-on-Q?

The 3G mix?

Well, the 2G was 25%, and as I said, our EDGE, WCDMA mix was 75%.

Then what was, when you look at the switch side module, what percent of revenues was it in the March quarter?

What revenue was the ASM?

Yes.

It was a few million dollars.

Below $10 million.

It's really just beginning, but it ramps solidly in the second half.

We will go next to Quinn Bolton with Needham & Company.

Hi, guys.

Congratulations.

Don, a quick question, you talked about acceleration in revenue growth based on the new platform ramps.

Just wondering if that was a comment you were talking about in calendar year or fiscal year?

Then was just wondering, Dave, you talked about the customer diversification in the prepared comments.

Is there a way you can quantify that, maybe, say looking outside of your top customer -- what the next, say, numbers two to five?

Is there some metric you can give us about how you're spreading it out over the customer base?

Thanks.

As far as the growth opportunity, that really refers to the fiscal quarters for us through the calendar year, as well.

We just see with the design pipeline, and the wins that we've had in place, early in the year, we just see some really nice growth opportunities for the balance of our fiscal and the calendar year, as well.

I think, Quinn, it's a little tough to answer that question, because it really depends upon how the market evolves.

In the case of, we are about 65% in the mobile space, 35% in our diversified HPA business, within the high performance analog.

Within that 65%, our goal would be to be as diversified as we possibly can be with the products that we address.

In which case a really good strategy would be implemented such that we mirror the customer concentration of the market, and that's as good as we can do.

We are not exactly there today, but we are pretty close.

So when you look at who is beyond the top two or three, it really is a who is who among OEMs.

So, you would look at LG, you would look at ZTE, you would look at Huawei, Motorola, and others, almost stacked as if you would see them in the market.

Right.

Then within HPA, you can expand that sweep beyond mobile, so you can start looking at gaming opportunities.

You can look at the wireless infrastructure space, and there is a lot of things, now, with our power management suite that we can expand.

So you have got customer diversification across the major Tier 1s, but there is also a whole other opportunity base, now, with newer products coming in through acquisition and organic growth, and also newer verticals that we are penetrating.

That does conclude our question-and-answer session.

At this time, I'd like to turn the call back to you, Mr.

Aldrich, for any additional or closing remarks.

Thank you for participating on today's call, and we look forward to seeing all of you at upcoming conferences.

And that does conclude today's conference.

We do thank you for your participation.