Ross Seymore: I want to focus on the handset guidance for the next quarter fiscal 2Q being flat sequentially. Can you just talk about the puts and takes that are getting you to flat? And Akash, last quarter, you gave a framework about, I think, $2 billion of inventory burn headwind. I just wonder if you were indeed successful in getting halfway through that, or is the issue now pervasive because just demand has dropped? So just the puts and takes on that would be helpful.
Akash Palkhiwala: Yes, Ross. So, from a handset perspective, what we’ve assumed in the March quarter is a standard seasonal decline, and I said this in my prepared remarks from December into March. So, it’s what you would expect seasonally happens once you go between the quarters. And so, that’s what we’ve assumed, and that informs our QTL forecast for the quarter as well.
Ross Seymore: But you guided flat sequentially. So, I’m just trying to — from December to March, are you saying it would be down, except for now it’s going to be flat because you’re burning less inventory?
Akash Palkhiwala: Okay. So I understand the confusion. So, the — what I talked about was the total handset market, which we are expecting to be down quarter-over-quarter, consistent with seasonal trend. What we said was flat was QCT handset revenue, we expect to be flat. And of course, that’s a function of mix of chips and also inventory drawdown differences.
Operator: The next question comes from Joe Moore with Morgan Stanley.
Joe Moore: Going back to how much inventory you’re reducing in handsets. What’s your visibility into that? And I mean, are you — are there certain customers where they sort of didn’t take anything in December and so you know that they’re coming back? Just can you give us a sense of are you sure this is all inventory reduction and not end demand?
Akash Palkhiwala: Yes. Joe, we have a sense of kind of what sell-through the OEMs had because of our QTL business. And then we have the ability to compare that with what’s happening in QCT. So, we do have a pretty good sense of what is happening in the industry. And we’re confident that a large portion of it was inventory drawdown.
Joe Moore: Okay. Great. And then specific to the China region, I think you mentioned some new launches in the March quarter, but it sounds like the situation there is pretty challenging in terms of visibility. Like, is China different than the rest of the world for you right now?
Akash Palkhiwala: Yes. The uncertainty in China definitely reflects in our customers’ purchases, and that’s what we talked about that we expect until there is more visibility, we expect customers to be careful with additional purchases and draw down on inventory. But in terms of handset launches, we are still seeing the OEMs being extremely active and planning handset launches on the regular cadence and driving functionality within the market.
Cristiano Amon: This is Cristiano. Let me just add one thing. If you look at the China handset market, the majority of sales, even though they have a big online component, the majority of sales is offline market. So, as we have — saw, with the lockdowns and the COVID situation, there was a big impact in the handset market in China. Common sense, and that’s how some of our OEMs are also thinking is as the COVID gets behind China, you should expect the markets to open up. And what we have visibility right now is a lot of the new device launches preparing for that and some of it, which is going to be announced at Mobile World Congress. It’s too early to draw a conclusion. So, let’s go back to that conversation that there is optimism that second half could be better.
Operator: Our next question is from Blayne Curtis with Barclays.
Blayne Curtis: I guess kind of a combination of the two. I’m curious inventories are up on your balance sheet, Akash. Just kind of curious whether you need to work those down as well? And then I guess for Cristiano, just going back to a prior question, on the midrange. I’m curious about the pricing environment. I mean, MediaTek is having a tough first half as well. Can you just comment on what that environment is? And then, your kind of just thoughts in general about pricing and moving for share within the modem business? You did a good job navigating at the high end during the shortages, but just kind of curious, favoring profitability versus share? What are your thoughts? Thanks.
Akash Palkhiwala: Sure. Blayne, it’s Akash. I’ll take the first one, and then I think Cristiano will take the second one. From an inventory perspective on our balance sheet, you’re seeing something similar to what you’re seeing on our peers and customers as well, the same set of drivers. As you know well, for leading-edge nodes, which is where we operate, the lead time is 5 to 6 months now for the foundry and chip production. And so, we were clearly starting wafers based on a different market expectation and before the inventory drawdown. So, we’ve calibrated that down. We are working with our suppliers and over time, we’ll get to a reasonable place. It is important to also remember that when you look at three years ago versus today, we’ve grown tremendously in terms of revenue and scale across our businesses.
And then also supply has caught up to demand. So those two factors would naturally increase inventory anyways. But the remaining we’ll be working through, as I mentioned.
Cristiano Amon: Hi Blayne, Cristiano, I’m going to take your second question. Look, it’s probably clear, both us and the other chip supplier in the handset market, dealing with the same challenges, which is the demand weakness and inventory drawdown. In the areas that we have more competition, which is mid- to low-tier, we also saw that’s the one that’s most impacted by the demand weakness. So, as we think about the market open up, our view is we’re very well positioned from a competitive perspective. We have visibility into the design pipeline. And we will remain disciplined on pricing, which is consistent to how we have behaved over the past few years.
Operator: The next question comes from the line of Brett Simpson with Arete Research.
Brett Simpson: I wanted to ask about fixed-wireless access. And I think you talked about in the prepared remarks that you saw a big opportunity in India playing out over the next couple of years with fixed wireless access. But can you maybe just talk a bit about the ASPs that Qualcomm gets from a typical device in fixed wireless access? And how do you see the business evolving in the next couple of years as you start to attack that in the opportunity and you can see some of the success you’ve had in the U.S. so far here and maybe other markets? Just maybe help us understand how this really plays out for Qualcomm? Thank you.
