Bob Bruggeworth: Sure. Thanks, Ruben. Extremely excited about what the team’s accomplished and some big wins in ultra-wideband. One of the Android phone manufacturers, Google, we’ve been in for a couple generations now. So we’ve talked about that and that’s — you can get teardowns, I think from our comments who the next one is. What surprised us about ultra-wideband is, again, I think we said this a year ago or more than when we first acquired Decawave, that we were on the original platforms in our largest customers phones with the RF front-end for ultra-wideband. And what we believed was going to happen is it was going to take off in phones first and automotive second. What’s actually happening is we’re picking up a lot more in the automotive side and handset seems to be trailing it, at least in the adoption.
Now, as you know, it takes a little bit longer to get to market in a car, so they’re out winning platforms now and building those in. So our expectation is we’re going to lead in design wins in automotive, but phones are going to come up fast. And Dave mentioned earlier in his comments that we’re working with many of the other Chinese handset OEMs to introduce ultra-wideband. The thing I want to point out is in the Tier 1 German manufacturer that we won in, the current win is now to support a German Tier 1, but they will take that same platform to other US and other manufacturers around the world, that platform, plus we’ve been working with others on platforms that will also go into the automotive areas. So we see a lot of opportunity there.
And placements in automotive can go from five or six up to nine or 10. So they can be big wins depending on how they adopt to use the ultra-wideband in a car. And it’s more than just, ‘keyless entry.’ And I think that’s what’s really exciting about the opportunities there. So if I look at that and I look at handset, also a couple quarters ago we talked about ultra-wideband and access points — Wi-Fi access points for indoor navigation, which is another exciting opportunity. And we’re just seeing it now going into other types of products, we’re working with various manufacturers, OEMs, for other things in your home that need that kind of technology. So we’re very excited about the things that are going on there. Really appreciate your question.
Ruben Roy: Thank you for all that detail, Bob. I have a quick follow-up for Grant. Just in terms of inventory, and I see the on-balance sheet inventory coming down, ahead of hopefully and potentially a growth year next year. Do you have sort of a target level either in DOI or dollar for inventory or how you’re thinking about that as you go forward post December quarter?
Grant Brown: Yeah, sure, and we usually have commented on our target around four turns. So high threes to four would be a pretty typical range for us to look to achieve.
Operator: The next question comes from Edward Snyder of Charter Equity Research. Please go ahead.
Edward Snyder: Thanks a lot. First, a housekeeping. Can you give us a percentage of revenue for each of the three businesses? Sorry, if I missed that. And then, Grant, if I take a look at your China revenue over the years, actually, it looks like if you exclude the arrow when you were over shipping and the arrow when you’re under shipping, your average is probably close to $250 million to $300 million a quarter. And I know you did about $150 million last quarter. We haven’t seen the [cadence] (ph) for September yet, but doesn’t it suggest you’re dealing with maybe $100 million, $150 million of inventory burn per quarter? I’m just trying to bracket those numbers.
Grant Brown: Yeah. Sure, Ed. I can help you with the percent of revenue, but we haven’t commented on the China revenue in the quarter. ACG was 77%. HPA was 14% and CSG was the balance of about 9%. And yeah, we haven’t commented on what a normalized level of Android revenue or China revenue would be outside of the comments we’ve already made, but I don’t know if there’s…
Bob Bruggeworth: All we’d add is we are still under-shipping to end demand best we can tell. But we’re coming up near the end of it.
Edward Snyder: Right. But when it snaps back to something more normal, you said inventories are normalizing, and I know demand changes year-over-year, but given your kind of incumbent position as a preferred vendor for most of those phones being sold…
Bob Bruggeworth: Yeah. We’ve been — and maybe this will help — as we bring it down, that means revenues do go up. I mean, it’s not — we haven’t been shipping. So we’ve been up the last two quarters.
Grant Brown: Yeah. And maybe, Ed, I would also make the distinction between channel inventory and our own inventories. So channel inventories, we think, are relatively healthy, maybe even earlier than we had commented on in the past where we thought it would take until December. So that’s an improving situation. Our own inventories as we’re selling through them requires us to achieve the mix shift that we’re going to see in the second half. So we’ll start selling through our own high-cost inventories in Q3 and Q4 largely and we do expect growth in Q3.
Edward Snyder: When you said you saw the largest bookings in two years in the last quarter and normally those bookings are for what, a year out or so, I know it varies, but…
Bob Bruggeworth: No, not a year ahead.
Edward Snyder: Yeah.
Bob Bruggeworth: Normal lead times for us.
Operator: The next question comes from Srini Pajjuri of Raymond James. Please go ahead.
Srini Pajjuri: Thank you. Just a clarification on the China business, either Bob or Grant. I think one of the comments is that, yeah, the inventories are coming down and businesses from the trough levels is growing sequentially. But at the same time, I think, Bob, you said in your comments about the March quarter, you’re expecting China to be seasonal. Given that inventories have kind of pretty much normalized, I would have thought China would be better than seasonal in March. So just if you can give some clarification on why it will only be seasonal in March?
Bob Bruggeworth: Because what I meant was from a demand perspective, in March, that’s typically a seasonally low point for China. That’s what I said.
Srini Pajjuri: Okay. But, doesn’t mean that your business is going to decline seasonally in March quarter — your China business?
Bob Bruggeworth: What I also said is we’ve come — we pretty much cleared out most of the inventory. So we are seeing growth, which is what I just said to Ed this quarter in our Android business in China.
Srini Pajjuri: Got it. Got it.
Grant Brown: Yeah. Maybe I’ll restate what Bob had commented on earlier. Just in terms of next quarter, we do see growth in Android. But March, we do expect to see the typical decline there, which is on the other side of our largest customer’s ramp and March is also historically a seasonally low point for handset sales in China. So those two factors are somewhat offset by the largest Android customer and their timing of phone launches, plus the fact that the channel is healthier. So with all that said, we do think it will be better than typically seasonal. But again, it’s anyone’s guess as to what seasonality means.
Bob Bruggeworth: Our largest customer has the largest impact on March. So let’s see how their sales do.
