Qorvo, Inc. (NASDAQ:QRVO) Q2 2024 Earnings Call Transcript

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Chris Caso: Okay. Thank you. Just as a follow-up, if you could talk about the competitive environment some and one of the things that was noted with the Huawei phone that came out as there was some Chinese RF there, and it’s a very different architecture from the phones that you’re supplying into your China customers. But I guess the question is, are you seeing anything different with regard to the capabilities of some of the local Chinese suppliers that would have some effect on the market?

Dave Fullwood: Yeah. I think from a capability standpoint, I mean, we don’t see anything out of the norm. I mean there’s certainly some key technology areas that they’re definitely behind in. And so — and I think if you look across the phone, even outside of the RF, there’s probably a lot of areas that the technologies behind and maybe even up to years behind. So I think from a competitive environment, we don’t see any big change just because of that Huawei phone ramp.

Operator: The next question comes from Blayne Curtis of Barclays. Please go ahead.

Blayne Curtis: Hey, thanks for squeezing me in. And I apologize if you said this earlier. But in terms of the September quarter, mobile came in a bit better than you were expecting. I believe the expectation was that you weren’t going to see much Android growth. Can you just clarify if that upside came from Android to your largest customer? And I don’t know if you gave the percentage [of two 10%] (ph) customers? So are you willing to give those out?

Grant Brown: Yeah. Thanks, Blayne. This is Grant. No, we didn’t give out the percentages. We’ll do that annually, but I just did mention that we had two. In terms of the quarter, the upside in revenue was largely driven by ACG and it was predominantly our largest customer, but not entirely so.

Blayne Curtis: Got you. And then I wanted to ask, just follow back up on that gross margins. I’m trying to understand, I guess, your mix has shifted dramatically to this largest customer, and I’m just trying to figure out if that, how much of an effect does that have on your gross margins, the customer mix versus the utilization of your fabs? Does that have any impact or not?

Grant Brown: Yeah, sure. So maybe if we just look at bridging Q1 to Q2, so there is 470 basis points of improvement there sequentially. Of that, maybe 2.5% was moving from the 800 basis points of underutilization to 550 basis points. So there’s 2.5% and that was largely anticipated in the guidance of 45% to 46% for Q2. And then that leaves a little over 200 basis points left. Now that included some quality and other items, but it was primarily the product mix that I mentioned in the prepared remarks, where we are producing that product on silicon foundries outside of Qorvo’s factory network and then processing them at OSATs that are third parties. So, that doesn’t carry the same burden as the higher cost inventory we’ll be selling in the second half.

Operator: This concludes our question-and-answer session. I would like to turn the conference back over to management for any closing remarks.

Bob Bruggeworth: We want to thank everyone for joining us on today’s call. We appreciate your interest in Qorvo and we look forward to speaking with you at upcoming investor events. Thanks and have a great night.

Operator: The conference has now concluded. Thank you for attending today’s presentation and you may now disconnect.

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