The operator introduces the Skyworks Solutions First Quarter Fiscal Year 2024 Earnings Call and hands it over to Raji Gill, the Vice President of Investor Relations for Skyworks. Gill is joined by Liam Griffin, Chairman, CEO, and President of Skyworks, and Kris Sennesael, CFO. The call will include forward-looking statements and non-GAAP financial measures. Despite a volatile economic environment, Skyworks had a successful first fiscal quarter of 2024, with $1.202 billion in revenue, $1.97 earnings per share, and $775 million in operating cash flow.

The company's free cash flow reached a record high, driven by strong working capital management and moderate CapEx intensity. The mobile industry is stabilizing after two challenging years and the company has made strategic investments to compete for design wins and share gains. In the consumer IoT market, inventory levels have normalized and demand signals are improving, and the company is seeing design win momentum for their upgraded systems. However, wireless infrastructure and traditional data center markets will remain a headwind for the company in 2024. The automotive and industrial markets are currently experiencing an inventory correction.

The company sees potential for growth in their automotive business due to increasing adoption of connectivity and electric vehicles. They also anticipate the bottom of the broad markets business in the December quarter. Long-term growth opportunities are driven by trends such as IoT, automotive electrification, and AI-enabled workloads. The company is also optimistic about the potential for 5G technology in various markets, including smartphones and private cellular networks. The increasing complexity of 5G technology and the potential for generative AI on smartphones will drive the need for more integration, lower power consumption, and spectral efficiency.

Skyworks reported solid financial results for the first fiscal quarter of 2024, with revenue of $1.202 billion and gross margin at 46.4%. The company secured several design wins in infrastructure, expanded their WiFi design pipeline, and increased design win momentum in automotive. Despite a challenging macro environment, their strong balance sheet and record cash flow reflect their resilient business model and technology scale.

In the first quarter, Skyworks' gross margin decreased due to a shift in product mix and a reduction in internal inventory. Operating expenses were lower than expected and the company generated strong cash flow. They also paid dividends and repaid debt, resulting in a positive cash position. For the second quarter, they anticipate a decrease in revenue in their mobile business and modest growth in broad markets.

Gross margin is expected to be in the range of 45% to 46% for the company's weakest period of the year, with potential for expansion in the remainder of 2024 due to disciplined management of costs and increased factory utilization. Operating expenses are expected to be in the range of $193 million to $197 million, with investments in mobile and broad markets to drive share gains and diversification. The company anticipates a diluted earnings per share of $1.52 at the midpoint of the revenue range of $1.045 billion. The first question from an analyst on the earnings call is about the trend in the broad markets business, which the CEO says has shown a quick recovery in March and is expected to continue growing. The CEO also discusses individual end market trends and the potential pace of recovery for the rest of the year.

The broad markets business for this company offers many opportunities for growth, with a diverse portfolio and a strong customer base. The team has done well despite a tough year for the semiconductor industry. The company is able to leverage its in-house capabilities and expertise to create specialty products. The upcoming trend of AI in the PC and smartphone markets could potentially lead to an upgrade cycle and expand the company's RF TAM (total addressable market).

Liam Griffin, the CEO of a technology company, is discussing the potential for growth in the market due to the increasing use of AI and smartphones. He believes that the demand for AI-enabled phones will continue to grow and that the industry is in a unique period of opportunity. The company has the necessary components and expertise to capitalize on this trend and believes that the handheld device market will need to evolve to keep up with the demand for more computing power. The company has seen growth in the Android market after a period of inventory correction and expects this trend to continue throughout the year.

Liam Griffin and Kris Sennesael discuss the company's performance in the Android ecosystem and their optimism for growth in that area. They also mention that the company's gross margins were impacted by underutilization and a mix of products, but they expect an uplift in the remainder of the fiscal and calendar year due to higher utilization and growth in the broad markets business.

The speaker discusses how they will benefit from a mix tailwind and cost reductions, resulting in gradual gross margin improvements after the March quarter. They also provide details on their broad markets, with 40-45% in IoT and 30-35% in infrastructure, and mention an inventory correction in both segments.

The speaker discusses their company's strong position in the market, particularly with key customers in the data center and automotive/industrial sectors. They mention an ongoing inventory correction in these markets but expect it to be short-lived and anticipate sequential growth in the future. The company is also leveraging AI and infrastructure technology to drive growth in the data center and industrial markets.

Edward Snyder asks Liam Griffin about the profile of their mobile business in the second half of the year and if it will be weaker due to competition from Qualcomm. Griffin responds by saying they are deeply engaged in the mobile market and have a broad set of technologies applicable to multiple customers, including the largest one. They are also focusing on market share and new innovations to expand their reach and satisfy their customers. Additionally, they are working on Android markets.

The company plans to continue focusing on the Android market and driving performance solutions. Revenue growth is expected in the second half of the year, and the company is confident in their ability to offset margin dilution through their end-to-end process and flexible factories. The gross margin profile of their mobile customers is similar, and they are selective in choosing which customers to work with.

The company is focused on the high end of the market and competes based on performance rather than price. This is reflected in their consistent gross margins across all customers in this segment. Their largest customer accounted for 73% of revenue in the December quarter, but this is expected to decrease in the future. The company sees potential for growth in the Android market and plans to capitalize on it. Two questions were asked by analysts regarding the company's performance in this market.

The speaker is discussing the performance of the company's mobile division, specifically in relation to Android and the competitive landscape in China. They mention that Android is slightly up in March and that they are not heavily involved in the low-end market in China. They also touch on OpEx, stating that it has returned to pre-downturn levels and is expected to increase slightly in the upcoming quarter.

Skyworks plans to continue investing in technology and product development while also focusing on efficiency and cost-effectiveness. They anticipate an increase in operating expenses and have a strong focus on generating cash flow. They have the option to use their cash for buybacks or potential mergers and acquisitions.

The company is focused on diversity and has the option to accelerate through M&A. The underutilization charges in the March quarter are not tied to one specific business. The company is focusing on driving down inventory, which will result in slightly lower gross margins. Android is expected to have better seasonality, but broad markets are still down 20% year-over-year.

Liam Griffin, CEO of Skyworks Solutions, discussed the company's growth strategy and potential for revenue acceleration in the broad markets. He also addressed concerns about losing content at their largest customer, stating that they have a strong partnership and are not concerned. Kris Sennesael, CFO, mentioned potential drivers for gross margin improvement and a quick recovery post the March low.

In response to a question about when the company expects to reach 50% gross margin, the CFO states that they only guide one quarter at a time but are confident that the current 45-46% margin is the bottom and will gradually improve from there. They aim to reach 50% as quickly as possible and then work towards their long-term target of 53%, which will require revenue growth, better factory utilization, and cost efficiencies. They will provide updates on a quarterly basis and look forward to meeting with investors at upcoming conferences. The call concludes with a closing statement from the CEO.

This summary was generated with AI and may contain some inaccuracies.