Qorvo Inc (QRVO) — Q3 2021 Earnings Call Transcript

Good day, and welcome to the Qorvo, Inc. Q3 2021 Conference Call. Today's conference is being recorded. At this time, I'd like to turn the conference over to Douglas DeLieto, Vice President of Investor Relations. Please, go ahead.

Thank you, Doug, and thanks to everyone for joining our call. Qorvo exceeded our third fiscal quarter guidance on revenue, gross margin, and EPS. Our performance was supported by multi-year technology upgrade cycles and was broad-based across markets and customers. The Qorvo team is executing very well, and we are pleased with our operating performance. The growth drivers in Qorvo's markets are supported by durable long-term trends. In smartphones, 5G units are set to approximately double year-over-year. 5G also presents opportunities beyond smartphones, with advanced network capabilities for more data, lower latency, and machine-to-machine communications. We expect our technologies will be increasingly critical to cloud gaming, connected car, industrial IoT, remote medicine, smart homes, and other growth categories. In Wi-Fi, we are early in the rollout of Wi-Fi 6, and industry analysts expect rapid adoption to continue. Our next-generation front-end modules and BAW-based filtering products are optimized for higher frequency and wider bandwidths of Wi-Fi 6 and 6E, enabling faster upload and download speeds, increasing capacity, and improving efficiency. Across our markets, complexity is increasing as functionality is added within shrinking form factors, while more demanding next-generation specifications must be met. This is favoring higher performance, more densely integrated system solutions from proven suppliers with large-scale manufacturing expertise. Take, for example, the migration to dual-transmit architectures beginning in the premium tier of smartphones for 5G. Dual-transmit architectures require integrated transmit and receive filtering in the traditional receive-only diversity path. This requires better performing, more functionally dense solutions, making high-performance BAW multiplexing a proven differentiator. Industry analysts estimate there were over 250 million 5G phones sold in 2020. For 2021, we forecast approximately 500 million 5G phones. Within these phones, the front-end content is increasing by $5 to $7 versus 4G, including in the mid-tier, where content can approximately double. The addition of 5G is driving a shift from discrete products to higher-value content, including our highly integrated solutions. For the 5G reference designs ramping now, Qorvo was the first to integrate filters, switching, power amps, LNAs, and CMOS control in fully shielded compact solutions. In doing so, we address customer size, performance, and time-to-market challenges. Demand has been strong for these complete main path solutions, and customers are increasingly sourcing all three, including the low, mid-high, and ultra-high band placements. When combined with our PMICs, tuners, antennaplexers, and dual connectivity modules, Qorvo offers customers a compact front-end solution with minimal placements delivering world-class performance. As a result, we enjoy increasingly collaborative relationships with our customers. During the quarter, we were recognized by two leading Android manufacturers with highly selective annual awards. Qorvo was the sole RF supplier to win vivo's Excellent Quality Award for 2020, and we were the sole electronics supplier to win OPPO's esteemed Joint Development Award. We're extremely proud of both honors. As I referenced earlier, during the quarter, we increased shipments of our complete main path solutions across the leading 5G basebands. We also secured new design wins for our next-generation complete main path solutions in support of upcoming Android 5G launches. For the diversity path, we launched our first generation of dual connectivity module for the mid- and high bands and commenced shipments to the leading Android smartphone manufacturer. We also released a next-generation BAW process, which reduces insertion loss, increases bandwidth in ultra-high band and Wi-Fi 6E applications. In mobile Wi-Fi, we began production shipments of our Wi-Fi 6E solutions to top Android OEMs, increasing capacity and lowering latency in a range of smartphones and mobile devices. In Ultra-Wideband, we extended our capabilities to include open, fully supported system solutions, enabling ultra-precision location applications in mobile, IoT, and automotive markets. During the quarter, we increased our Ultra-Wideband customer engagements in a broadening range of consumer applications, including tracker tags, smart speakers, smart TVs, and other smart home appliances. Customers and channel partners are evaluating a broad range of applications, and we continue to believe Ultra-Wideband adoption in smartphones will be the catalyst for a growing ecosystem of connected devices. We see Ultra-Wideband proliferating quickly and representing an exciting opportunity for Qorvo. In IDP, we're very proud to have been selected by the National Institutes of Health for its Rapid Acceleration of Diagnostics initiative, or RADx, to add COVID-19 testing capacity. In this program, we will use our Omnia test platform, a complete test solution enabled by Qorvo's high-frequency BAW. This platform is currently pending Emergency Use Authorization from the Food and Drug Administration. Qorvo's antigen testing has demonstrated high levels of sensitivity and specificity in clinical studies. That means it's capable of producing accurate results with very low levels of false readings. We believe this BAW sensor technology may be able to deliver a new approach to diagnostic testing, ultimately providing central lab testing accuracy at the point of care. Elsewhere in IDP, we continue to support a broad range of multi-year trends, including 5G, Wi-Fi 6 and 6E, GaN defense, radar and communications, programmable power management, C-V2X, automotive Wi-Fi, and ultra-wideband. Our team has done an outstanding job developing products and ramping production to support initial 5G base station deployments in Asia. Today, we are in the early stages of multi-year rollouts, and we have strong momentum as 5G continues to deploy. We've been selected by multiple OEMs to supply GaN PAs in addition to our small signal components and modules, and we see the focus on power consumption, bandwidth, and higher frequencies supporting the continued migration to GaN PAs. During the quarter, Qorvo secured design wins with multiple base station OEMs to support 5GC band in the U.S., for which the spectrum auctions are in the process, and initial deployments are expected later this year. We also received the Best Comprehensive Performance Award from ZTE, recognizing our 5G portfolio and customer support during the initial rollout of 5G base stations. In defense, we achieved strong growth in domestic radar and communications applications and game defense products for international radar programs. In connectivity, we ramped shipments of our 5-gigahertz Wi-Fi 6 BAW filters and sampled our 6-gigahertz Wi-Fi 6E front-end modules for routers and gateways, maximizing throughput and range for high-bandwidth applications such as video conferencing and online gaming. Demand for our Wi-Fi 6 solutions has been strong across MSOs and retail segments, and we see continued strength as Wi-Fi 6 deployments are still in the early phases. In the connected car, we were selected to supply 5G LTE, C-V2X, and Wi-Fi automotive qualified products to multiple OEMs, including Audi, BMW, and Volvo. In low-power wireless, Qorvo was selected to supply the leading television manufacturer with our low-power multiprotocol SoC and custom software, enabling a solar charging remote control. Before handing the call over to Mark, I want to say a word about Qorvo's workforce. The team delivered an outstanding performance in the December quarter. They adapted quickly in a dynamic environment and helped support exceptional results. I'm extremely proud of their responsiveness and dedication to our customers' success. As 5G, Wi-Fi 6 and 6E, ultra-wideband, and other connectivity protocols are rolled out globally, Qorvo is well-positioned to delight customers and expand our technology reach. And with that, I'll hand the call over to Mark.

Thanks, Bob, and good afternoon, everyone. Qorvo's revenue for the fiscal 2021 third quarter was $1.095 billion, $35 million above the midpoint of our guidance, up 26% or $226 million versus last year and up approximately 11% sequentially, adjusting for the 14-week September quarter. As a reminder, our fiscal year 2021 is a 53-week fiscal year, and the September quarter was a 14-week quarter versus a typical 13-week quarter. In the December quarter, mobile products drove the sequential growth, with revenue of $826 million on seasonal demand effects and the ramp of higher content 5G smartphones. Infrastructure and Defense Products revenue of $269 million was up 30% versus last year on robust Wi-Fi demand and double-digit growth from defense, programmable power management, and IoT markets. Non-GAAP gross margin in the third quarter was 54.4%, which was above our guidance due to better-than-expected volumes, price, and mix, and lower-than-expected manufacturing and inventory costs. The combination of strong end market demand and our ongoing efforts to improve the portfolio, drive productivity, and carefully manage inventories yielded record results. Non-GAAP operating expenses in the third quarter were better than expected at $194 million and 17.7% of sales, largely due to timing on development programs. As a result, we forecast OpEx to pick up in the March quarter to levels previously guided. Non-GAAP net income in the third quarter was $357 million and diluted earnings per share of $3.08 was $0.43 above the midpoint of our guidance. Cash flow from operations in the third quarter was $404 million and CapEx was $36 million, yielding free cash flow of $368 million and free cash flow margin of 33.6%. We repurchased $160 million of shares during the quarter. As discussed on the last earnings call, we retired our 2026 notes during the quarter. We also called the remaining 2025 notes. We ended the quarter with $1.7 billion of debt and $1.2 billion of cash. Our leverage remains low, our revolver is untapped. The weighted average maturity of our debt is late 2029, and we have no material near-term maturities. With our financial flexibility, we can focus on developing technology, supporting customers, and making prudent organic and inorganic investments that support long-term earnings and free cash flow growth. To that end, we continue to advance our BAW, SAW, GaN, GaAs, packaging, and other core technologies and fund UWB, programmable power management, biotechnologies, MEMS, and other promising areas. Turning to our current quarter outlook, we expect revenue between $1.025 billion and $1.055 billion, non-GAAP gross margin of 50.5% to 51%, and non-GAAP diluted earnings per share of $2.42 at the midpoint of guidance. Our March quarter outlook reflects sustained broad customer demand stemming from multi-year technology upgrade cycles. In mobile, demand for 5G is adding RF complexity and driving higher content. The breadth of our customer base and firm demand signals provide confidence and stability in our outlook. We forecast mobile revenue in the current quarter to be approximately $770 million at the midpoint or up over 35% year-over-year. In IDP, we project revenue of approximately $270 million in the current quarter, sustaining strong double-digit growth driven by Wi-Fi 6 demand and other markets, even as 5G infrastructure build-outs remain uneven. Our March quarter gross margin guide is in line with the gross margin outlook discussed on our last earnings call and up over 100 basis points year-over-year at the midpoint. Non-GAAP operating expenses are projected to increase in the March quarter to around $207 million. At the midpoint of our March quarter guidance, operating margin is forecasted to be over 30.5% for the third consecutive quarter. Our operating margin outlook for the year is 31.5% at the midpoint, clearing the lower end of the margin model we laid out previously. Qorvo was built for the integration of advanced technology trends critical to customer success in 5G and other growth markets. With broad and robust end market growth, we're now leveraging a more focused footprint. Our product portfolio is better matched to customer needs, and our culture of continuous improvement is thriving. We project our current quarter and full year non-GAAP tax rate to be below 7.9%. With our year-to-date earnings and March quarter EPS guide, our fiscal 2021 EPS estimate is over $9.40 per share at the midpoint or up nearly 50% year-over-year. Capital expenditures will step up in the March quarter as we work to intersect near-term demand and support long-term supply agreements with multiple customers. We still forecast CapEx to remain below $200 million or less than 5% of sales in fiscal 2021. Currently, we project free cash flow of approximately $1 billion this fiscal year. As the December quarter results and our March quarter outlook show, Qorvo continues to operate well through a challenging period while delivering premium technology to a broad spectrum of customers in 5G, Wi-Fi, IoT, defense, and other growth markets. In closing, I'd like to join Bob in thanking Qorvo employees again for their continued efforts during this time. Now I'll turn the call back over to the operator for questions.

Hey guys. Thanks for taking my question, and congrats on a strong quarter and outlook. I wanted to first point out your strong relative performance to the rest of the smartphone market in your mobile business, calling out what appears to be 11% to 12% growth in that business for calendar year 2020 even after adjusting out for the extra week. And, of course, I think it's a backdrop of a declining smartphone market. So my question is, to what extent was that driven by 5G content growth? To what extent is it driven by overall market share? And how do those variables impact your outlook relative to the smartphone market in calendar year 2021?

Thanks, Gary. That's a good question. I'll go ahead and let Eric address that. Thank you for your compliments.

Sure, yes. As Mark had said in his opening comments, Qorvo was built for 5G. I think the complexity of the RF front-end and the new handsets is driving a need for integration, which just naturally drives toward our strengths, given that we have all the leading technologies in-house. And I think the team has done a really good job of bringing the right technologies to maturity in time and then integrating very well and building the right relationships with all of our customers to help them achieve their goals with what they're trying to do with their products as well. So it's coming together really well. We've got the tailwinds of the content growth, and it's not, by any means, over. As you know, we're in the very early innings. And we've got new generations of virtually all of our technologies coming out throughout this year to get even stronger as we enter next year.

Okay. I had a follow-up question for Mark. Hopefully, at some point in this calendar year, we'll all be resuming our normal activities in traveling for work and whatnot. And with that in mind, how should we think about your OpEx progression when we start moving more freely? And in what ways have you benefited? In what ways might there be a step up at some point?

Yes, Gary. We've obviously incurred some additional costs. There are some inefficiencies as everyone is experiencing. But as you know, everyone is also benefiting from less travel, which can be material. So a lot of it washes out. I think as we look forward and as we've talked about over the years, we're going to continue to work to get the best operating leverage we can. And we're running at about 20% of sales OpEx for a year. We would expect next year to be at those levels and maybe slightly below. We're never going to be the lowest OpEx company in the space because as you heard, the DNA of this company is innovation, so we're going to likely be several points higher than what I would call best-in-class as it relates to just costs. So I think that's what you can look forward to as we go forward on an annual basis.

Yes, thank you. I just had a question on the smartphone market overall that Mark, you made a comment about firm demand signals. We know broadly, capacity has been pretty tight. And so just what are some of the things you're looking at in terms of monitoring those demand signals? And how much also does the step-up in 5G kind of help in driving that growth?

Yes, Craig, I'll begin by saying we are seeing very strong demand signals. Pricing is slightly higher than usual as a result. Looking ahead to the June quarter, we feel quite confident. We will assess how demand evolves after the Chinese New Year. Demand signals remain robust, and the distribution channel is healthy. Our inventory levels are also in good shape. We are fortunate to have a diverse customer base and, due to our market position, we have significant visibility across customers and products. This visibility is why we confidently projected 250 million 5G handsets early last year, which is about where we ended up. We not only rely on our detailed internal assessments but also consult external insights to make the best predictions possible. We were only about 3% off in this past quarter, but generally, we are very accurate. Therefore, we feel positive about our guidance for the March quarter of 10.40, and we anticipate reaching around 1 billion if market conditions remain stable in the June quarter.

Got it. Appreciate that color. And then just as a follow-up, with Decawave on board for a few quarters now, I'd just love to get your thoughts in terms of how that acquisition is playing out. I know it's mostly design stage today, but relative to the reason to kind of buy that and the market opportunity, just what you're seeing. And what are some of the milestones to keep in mind for ultra-wideband as we go through the year?

This is Eric. I'm happy to address that. We are very pleased with the integration of the team and the customer feedback we have received. It is exceeding or meeting our expectations. They are leaders in the technology sector and an outstanding organization for design and development. We are contributing our scale and customer relationships to elevate everything to the highest level. Additionally, the acquisition of 7Hugs, which adds a comprehensive software stack, has been a significant benefit. Everything is functioning well. We are also continuing to invest and hire essential resources to capitalize on all available opportunities. Since the acquisition closed nearly a year ago, we have seen increased interaction with mobile handset providers, which is our primary channel. Everyone is eager to integrate UWB technology into the next generation of handsets, and we are noticing the uptake we anticipated. Many companies are also preparing devices that will communicate with those handsets, including consumer electronics and smart home devices. Currently, our revenue base is primarily from industrial IoT, which is continuing to grow and perform at least as we expected. We are also engaging with leading automotive manufacturers, so there is a lot happening. The design activity and market reception are strong, and I believe that adding the software stack enhances our capabilities for the industry substantially.

Good afternoon, gentlemen. Thank you for taking my questions. I have two. First, just on gross margins. I understand that volumes are working against you in March, but mix does not appear to be a factor. And so I guess, are there competitive factors at play or maybe other manufacturing costs that I'm not fully appreciating that is influencing your outlook?

Yes. So Karl, this is Mark. The outlook builds on what I discussed last quarter. We have become quite proficient in forecasting our direction. However, we did significantly miss expectations in the December quarter, which is important to consider for understanding the March quarter. The March quarter results are not surprising; rather, the December quarter performed much better than anticipated, and we are genuinely pleased with that. Our long-standing strategies of investing in technology, managing our portfolio actively, enhancing productivity, and maintaining capital discipline have all contributed to what we achieved in December. This success demonstrates what's possible through years of dedication and exceptional execution by our team, along with favorable market conditions. Several positive factors aligned in the December quarter, leading to a 54.4% result. Volume was not only stronger but exceeded our expectations, and we maintain a robust outlook, which aids in sustaining loadings and fixed-cost absorption. Our spending controls are exemplary, especially considering the challenging operating environment our team faces. The pricing conditions are somewhat more favorable than usual, with a tight market allowing us to meet customer expectations for timely product delivery. Additionally, we are transitioning towards integrated modules, which is proving beneficial, particularly in our mid, high-band, and BAW-related products. We also have other highly differentiated products contributing positively, alongside several other favorable factors like lower-than-expected inventory charges and beneficial yields. Overall, things progressed positively in the December quarter. Looking ahead to March, we anticipate a gross margin decline to around 50.5% to 51%, which is an increase of 100 basis points year-over-year, showcasing our commitment to margin expansion, even though there's a sequential decrease due to multiple factors. We're focused on keeping inventories low, which will impact absorption. We are also ramping up some lower-margin products, which are essential for the long term, but will negatively affect margins in the near term. Additionally, there will be changes in mix dynamics, including reduced defense products in March. We cannot expect all the advantages we had in December to recur, and we anticipate the pricing environment might normalize and inventory write-offs to return to typical levels. Overall, we feel confident in what we accomplished and are comfortable with our guidance, and I'll leave it at that.

Very helpful, Mark. For my follow-up, with results and an outlook this strong that you've just described, the elephant in the room is about sustainability, with some investors arguing that this is a peak. But I'm not asking you to discuss your peers, but it would be very helpful if you could share your perspective whether your order book is outstripping your ability to supply near-term? And then second, how you are managing the demand pull from multiple customers across multiple markets because as you described, there appear to be quite many of them across both smartphones and IDP with Wi-Fi 6. So if you could discuss those, that would be very helpful. Thank you.

Karl, this is Bob. I'll do my best to answer your question because it’s not as simple as many outsiders believe when you’re working in the business. First of all, yes, there is tightness in the supply chain. It’s quite well-known in the industry that silicon is constrained, whether in communications or automotive. This serves as a limit on the current situation. We’ve been fortunate that our team has strong relationships and agreements with our suppliers, and we are satisfied with that. I’m confident we still have some revenue opportunities out there. Mark mentioned in his opening remarks that we’ve secured long-term agreements with our customers to ensure their confidence in demand. When we analyze our market model, which Mark also referred to, we feel we understand the market well based on our observations from last year. Many people anticipated that the number of 5G handsets wouldn’t align with our projections. As we review our market models and current orders, and considering the notable increase in 5G usage, we see promising developments with Wi-Fi as well. We are moving from two streams to three streams for communication, which enhances capacity significantly. So when we take all this into account along with customer orders, we feel optimistic about the commitments being made to us. It’s important to remember the recent shifts at Huawei, as they were not utilizing the best components available. We discussed how they are shifting to local sources due to U.S. government pressures. The companies picking up Huawei’s market share are using high-quality components, which we believe Huawei would have chosen if they had access to them. Looking at everything currently happening, as Mark said, we feel positive. We already have insights into June, which he mentioned. As we outline the year, we’ll see how the sell-throughs perform around Chinese New Year and consider various conditions like the pandemic and vaccination efforts, but we feel good about our current communication and outlook.

Good afternoon. Thanks for taking the question and congratulations on the strong results and the strong outlook.

Thank you.

Yes. Perhaps the first question is for Eric. Bob, you somewhat addressed this in your previous response, but I’m curious about how you are approaching seasonality in your mobile business. This year has been unusual with supply constraints and new product launches happening later than normal, among other factors. Specifically, you seem optimistic about March and its performance, but what are your thoughts on June and potentially September? I also have a quick follow-up.

Yes, the March seasonal trends appear to be notably lower than usual. As Bob mentioned, the situation will largely depend on supply in the near term, not just our own supply chain but also the materials our customers need. Therefore, we expect a supply-constrained environment for at least the next few quarters. However, once everything fully reopens, we are very optimistic about the potential for 5G to grow significantly. Even in the worst-case scenario, we believe 5G will still see double the growth this year.

Got it. Thank you. And then as my follow-up on gross margins, Mark, great job in December. To your point, you've got multiple moving parts, and I guess, margins can be very lumpy on a quarter-to-quarter basis. But when you think about calendar 2021 in its entirety or maybe fiscal 2022, I realize it's kind of early, but how are you thinking about gross margins? It’s pretty clear that structurally and through cycles, you're doing a lot better. But can we sort of extrapolate the trajectory that you've been on? Or are you sort of approaching peak-ish kind of levels as it relates to gross margins? Thank you.

Yes, Toshi. At this time of year, since we have a March fiscal year, we receive questions regarding calendar 2021 or the next fiscal year. I appreciate that. As you mentioned, it's a bit early for those discussions, and we plan to provide more details during our next earnings call when we conclude fiscal 2021 and begin fiscal 2022. Before diving into gross margins or overall margins, let me share some insights about fiscal 2022. Currently, demand remains strong, as Bob and Eric have highlighted. Our business is diverse, which is evident in the December results and March quarter guidance. The markets we serve, including 5G, Wi-Fi, defense, and IoT, are expected to grow over multiple years. We believe that Qorvo's technology and products, along with our continuous customer engagement, position us favorably in these markets. We feel quite confident about the June quarter, as Eric noted, it appears to be more of a supply constraint rather than a demand constraint at this stage. We are reasonably optimistic about achieving nearly $1 billion in revenue for the quarter. We'll assess the situation further after the Lunar New Year and continue monitoring the market channels. Regarding the rest of the profit and loss statement, as you might expect, it is more challenging to provide guidance for the remainder of the year. We are currently in our planning cycle, and several factors will influence the outlook, including loadings, absorption, business mix, inventory, and operational expenditures related to future investments. All these factors will affect our results, and we need to complete our planning process. We have provided revenue guidance for March and June, indicating supply constraints. For the June quarter, we anticipate a slight decline in margins, with gross margins expected to be below 50% and operating margins below 30%. This is due to pricing, mix, and cost factors. However, for the year, we still expect operating margins to be above 30%. We achieved that this year and are committed to working to expand operating margins further. We will share more detailed information in our next call.

Thank you very much. Eric, you are shipping many main path modules, tuners, some ET, and a one-off received DRX. Are you currently producing antennaplexers? When do you expect to start production on Transmit DRX? Additionally, was the Transmit DRX included in your $5 to $7 TAM increase for 5G for your company or the industry, or will it be additional to those figures? Also, James, it seems like infrastructure is slowing down again. I'm particularly interested in the build-out. There has been feedback indicating that China is slowing down because they are focusing on rural areas, and the US has not accelerated yet. Is that the pattern you're observing? If so, when do you expect the US to begin building out C-band? Will they be utilizing a lot of GaN, or do you think they'll focus on MIMO, or should we anticipate a bit of a hold? Thanks.

Okay. This is Eric. I'll go first. We're currently in production with both categories you mentioned, specifically antennaplexers for multiple customers, and we expect our portfolio to continue expanding. We also have several generations of BAW in development, which will help drive growth over the next couple of years. Regarding what you referred to as TX DRX, we call it dual-connect modules, and we've mentioned these in recent discussions. There's a notable crane handset that was recently launched, and we are providing dual-connect module capabilities for that. This is exciting because it allows us to diversify, moving away from the traditional RX-only models that have heavily relied on SAW filters and are highly competitive. This year, we're looking at multiple TX channels that will increase BAW filter usage, particularly in the higher frequency range. It's a fascinating new category that's emerging, and we're pleased to be at the forefront of it.

Yes, this is James. Our base station business is on a pace to set all-time records for fiscal revenue for the year. So we'll be up about 60% full year over full year with the guide that we provided today. It was driven mainly by strength in deployments in Asia and the adoption of massive MIMO antennas, where GaN has been selected many, many times over LDMOS. And, of course, we've been able to support many of the major frequency bands that have been rolled out in China. Looking ahead, I think you're pretty close. Deployments will slow during the first half of the calendar year, and then we expect those to start to accelerate in the second half. And additionally, with the C-band auctions nearly complete in the U.S., we do expect deployments to start later in the year, and we do expect those to include both massive MIMO antennas and GaN power amplifiers. And then, obviously, we're in the early stages of 5G deployment, and we expect those deployments to continue both in China and around the world as we go through the next several years.

Yes. Hey, guys, congratulations on a solid results, solid guide, so we appreciate the execution. There's been no normal in this year with respect to revenue and seasonality. But I think your guide for March is less seasonal than typical March. I was curious if you could point to the factors maybe relative to what you guys are assuming for China in March versus U.S. business? That was question number one. I had another one.

Yes. Thanks, Harsh. I mean, typical seasonality, as you know, is the IDP business roughly flat. That's roughly what we guided. The mobile business seasonally down. We're not going to break it out in geographies or customers. But, obviously, our mobile business is not going to be off as much as normal. I think we do know the timing of marquee phones just maybe shifted a little bit from prior years, and then layering on top of that, the China business is doing well. And like we said in our comments already answering questions, we'll see how Chinese New Year goes. But that's the way I'd like to answer that.

Yes. So Harsh, this is Eric. In fact, primarily, we are shipping these into 5G phones today. As 4G became more complex over the past couple of years, the move towards integration began to take off. And then when 5G emerged, there really was no looking back for our customers that are bringing out new high-performance handsets. So a lot of the main path, including ultra-high band, the low-band and the mid-high band, we're selling fully integrated modules, in many cases, all of them into the same handset to support the 5G ramps right now.

Thank you and congratulations on the impressive momentum. I have a question regarding the infrastructure. Your company has demonstrated significant strength in GaN for base stations, and I would like to get your update on GaN adoption among other base station vendors beyond ZTE in China. What is the adoption rate with those customers? Additionally, how do you view the competitive landscape? It seems that another competitor in the LDMOS space is beginning to ramp up their GaN solution, so I’m curious about how we should interpret these dynamics as we move into the second half of this year and into next year.

Yes. Thanks for the question, Raji. We're definitely engaged across really all of the major OEMs and what most would consider even Tier 2 OEMs with GaN programs and being incorporated into both macro and massive MIMO antennas. And we've got production shipments that have occurred into numerous of those OEMs. So I would say adoption is pretty broad across the industry. And we're obviously very bullish about our technology. We've got a tremendous amount of products. I think last time I counted, we have over 200 products that are released in our GaN technology, covering a broad range of frequencies and markets and everything like that. We've been in GaN for well over 20 years and continue to focus on developing the technology and bringing new capabilities in and really focused on scale and cost. So I'm certainly very confident about where we stand with the technology and excited about all the markets that are adopting it going forward. So I think, long term, it's going to continue to be a great thing for IDP and for the company.

For my follow-up about RF content increases, last year saw a notable rise from 4G. I'm curious about your perspective on the content increases this year with more 5G smartphones available in the market. The upgrade cycle remains robust, but it's starting from a higher base. How should we evaluate the RF content gains in terms of dollar value year-over-year, particularly comparing 2020 to 2019? Thank you.

So I assume you're referring to the smartphone space, right? Yes, in terms of the transition from 4G to 5G, there hasn't been any real change in the outlook. As mentioned earlier, we've indicated that across tiers there is anywhere from $5 to $7 worth of additional content when you choose a 4G phone and upgrade it to 5G capability. We believe that will remain consistent this year as well. The main difference is that there will be about 250 million additional handsets added to the total addressable market compared to this year. However, there hasn't been any change in the actual 5G addition that we are forecasting.

Yes. Thanks for taking the question. Nice job on the quarterly execution and guide. First question for Eric in Mobile. You mentioned that you have the new dual transmit. I wonder how the design win pipeline is beyond this customer, how should we think about this being proliferated across the mobile ecosystem? And additionally, for Mobile, you've talked about antennaplexing, less spoken about Decawave today, but there are other drivers too in the business. I'm hoping you can help break these in terms of the opportunities you see as we look out through the year.

Right, right. So when we look at just the coming year, if you will, it's going to be highly leveraged towards BAW-based products. In particular, our R&D team is bringing us a fresh technology on a regular cadence now; we're taking that into highly differentiated discretes as we talked about with antennaplexers, but then also those can help make multiplexers as well that sell not only in discrete but enable these highly integrated modules. So we're going to be focusing on places where we can take that BAW technology and leverage it into larger modules to a large extent. And then continuing to really leverage our franchise around the antenna, we are clear leaders at helping our customers manage their antenna networks, whether it's tuning or we've got impedance tuning, we have aperture tuning. We have the antennaplexing that we've talked about. And it's getting to be more and more of a problem for our customers as new GPS bands and new bands are added in C-band and CBRS spectrum and so forth. So there's a lot of work around that antenna, and we've got a lot of very unique capability to bring technology but also modeling and app support there. So these are large opportunities for us in the near term, really leveraged on the complexity of 5G and our basket of technologies, which is broad and unequaled in a lot of ways. The UWB, we look at, as more of a driver in the next two to three years, really, where it begins to get to the scale because we're starting very, very low now, of course, as an industry, and just beginning to take off. But no question in our mind, that's going to be a large driver. If you look out two to three years from now, it's going to be a big part of our business.

Thanks, Bill. In the current quarter, we are seeing a lot of strengths. Although, as Bob mentioned, defense will see a slight dip, our Wi-Fi business is experiencing strong growth. Our Power Management business is also performing well, along with several other markets like broadband. Many underlying markets are contributing positively to our performance. When comparing the first three months of this year to the same period last year, we're up nearly 47%, with most of those underlying businesses showing double-digit growth. We experience some fluctuations from quarter to quarter, but there's significant strength in our Wi-Fi business as Wi-Fi 6 continues to be implemented. Looking long-term, I remain very optimistic about the underlying trends in our business, even with some expected variability from quarter to quarter. Trends like the adoption of GaN, the proliferation of massive MIMO, and the rollout of 5G and Wi-Fi 6 are all positives that will support our continued growth.

Thank you for joining us this evening. Qorvo will be presenting at multiple investor conferences in the coming weeks, and we invite everyone to listen in. Thanks again, and have a good night.