Srini Pajjuri: Got it. Got it. Makes sense. And then this year has been in terms of the content expansion for you, Bob, it’s been pretty impressive. And I think some of those content gains also came from share gains. So as you look out to the next six to 12 months, how are you feeling about, because I do get this question about sustainability of some of the content gains from this year. So if you could help us maybe to the extent you have visibility, how should we think about your content gains both in premium as well as in the mid-tier.
Bob Bruggeworth: Yeah. I can speak to the high-end phones. And I’ll start with our largest customer because it’s been questioned before. But our growth this year and our largest customer really speaks to the strong position we have there, and we are one of their trusted suppliers as well as the investments we’ve been making to deliver them these great technologies and products. This year, we grew mostly from new content and gained some share in sockets that we held for many years. So we feel good about that. Now remember, they are a performance-driven customer. We’re winning where we’re bringing strong capabilities and have consistently done well. Now if you look at the available TAM there, we remain underrepresented. So clearly, that’s a target of growth for us, and we’ll continue to invest to be able to win there.
Now that’s also regardless of the baseband they decide to use. We enjoy multiple opportunities to grow our content not only in the areas where we’ve been strong in the past, but also in areas that will be new sockets for Qorvo. Again, that’s about our largest customer. In my prepared remarks, I talked about the leading Android smartphone manufacturer and our ability to continue to gain share there. and we talked about ultra-wideband along with all those types of components. Dave also spoke about in China and bring out our new technologies where we’ve integrated the mid-high band plus the diversity received into that module. That’s going to be the ability to grow there as well. Dave also talked about ultra-wideband in some of those handsets, some of our sensors, power management.
So I think as we look across the portfolio, we feel pretty good at our ability to continue to grow our dollar content in handsets whether it’s a flagship premium tier or the mass market.
Operator: The next question comes from Vivek Arya of Bank of America Securities. Please go ahead.
Vivek Arya: Thank you for taking my questions. For the first one, you were guiding December sales down 9% sequentially or so. I thought the original intention was to kind of stay flattish. The large customer, I imagine, should be flattish. And I think one of your competitors mentioned a sharp ramp in terms of their China shipments getting into December. So I’m curious, Bob, what is leading you to kind of guide sales down when some of these big customer trends seem to be growing sequentially? Or is it just conservatism? Or is it noncellular market that’s guiding that outlook?
Bob Bruggeworth: Thanks, Vivek. And I know I’ve said this before, but I’ll remind you and the audience, we ship a majority of our parts that are not on the motherboard. So the timing of when we see the ramp is different than maybe you’re talking about a baseband customer, I don’t know. They’re on the motherboard. A lot of what we have goes to the flex circuits. So they build those ahead of the motherboard. So our timing can be different. So I just want to make sure that. That’s also, if it’s the baseband customer, if you remember, they had an inventory build that they blamed at that customer. We didn’t see that build. So therefore, we naturally follow the progression of the builds. They may have had a pause. And as you point out, the inventory will go down, then they would see a quick ramp up.
So I can’t comment on their business, but I can tell you the timing, we typically lead the ramp because of how much product we have on flex circuits, which is different than most of the products that are on the motherboard.
Grant Brown: Maybe, Vivek, I’ll just pick up from there. In terms of our prior discussion around the December quarter, the flat comment was relative to $1 billion Q2, and we’ve just exceeded that by $100 million. So to Bob’s point on timing, plus or minus a couple of weeks that our largest customer can make a very big difference. But those two quarters combined are still ahead of where we were communicating previously. So on the net, a positive trend in the top line.
Vivek Arya: Got it. Makes sense. And then on gross margins. So December, 43.5%, I guess, at midpoint. March, I guess, seem to be implying closer to 41%. And I think the explanation you’re giving is that because these two quarters, you are using your internal high cost inventory. So does that impact get over by March as we start conceptually thinking about modeling gross margins from June onwards. What is that starting baseline that we should keep in mind? Is it low 40s? Is it mid-40s? I understand you’re not going to give guidance for next year, but I just don’t know how to think about what is normalized gross margins as we start thinking about your next fiscal year?
Grant Brown: Sure. And, now some of this depends on the inventory, as you pointed out, that we’re carrying the high unit cost inventory that we sell through and the mix of that in the March quarter. Some of this also relates to the utilization within the March period as we start to look forward to the demand that we see in the coming year. So it’s a difficult or complex question to answer prospectively. But nonetheless, in terms of the gross margin for the March quarter, as I mentioned, our full year guide of 44% and now saying a bit better than that could imply that we have upside to the March to what you’ve just described. And then in terms of our fiscal ’25, it’s going to be a gradual continuation from there upwards, I would expect, because the June quarter is still seasonally weaker for us as we head into the larger ramp in September from a seasonal perspective.
So hopefully, that gives you at least some idea of how we’re going to track into fiscal ’25. Maybe going back to some of my prepared remarks, I did say that I believe we could achieve 50% gross margin at first on a quarterly basis and then subsequently on an annual basis across an entire year when we get through the inventory as well as return utilization levels to more normalized levels.
Operator: The next session comes from Chris Caso of Wolfe Research. Please go ahead.
Chris Caso: Yes, thank you, good evening. The question is on cash flow and on your ability to start ramping the cash flow again once the market comes to a fuller recovery? I suppose that’s going to depend a lot on what the CapEx needs are and for how long. And so if you could talk about that, the kind of expectations for cash flow and for how long you can kind of keep the CapEx at lower levels, so you can drive some cash in the next cycle.
Grant Brown: Sure. So obviously, we’d expect cash flow to improve materially given the improvement in the P&L. It’s a bit of a lagging indicator as we collect receivables. So we should see that. I wouldn’t expect anything different in terms of our guidance on CapEx at around 5% of sales or less. Again, that can fluctuate, of course, but I wouldn’t expect too much difference there from a free cash flow perspective.
